Brazil: A Gemstone Giant Reawakens

by Touchstone Gems 22. December 2011 17:00

Published on JCK (http://www.jckonline.com)

New production and exciting discoveries are breaking a decade-long slump in Brazil's gem-rich state of Minas Gerais. The finds have substantially increased the availability and diversity of such classic coloured gems as emerald, aquamarine, alexandrite and bicoloured tourmaline.

These and a vast array of other gemstones – including a smattering of diamonds – have long made Brazil a marketplace to the world. Official gem export figures for Brazil hover around $260 million yearly; unofficial estimates – rarely mentioned – are closer to $500 million.

Will these numbers increase? Luminaries such as coloured gem expert Hans Stern say it's impossible to predict the future, given uncertain world demand and political instability in Latin America. But Stern is cautiously optimistic.

Also optimistic are the garimpeiros (independent miners who supply a great portion of Brazil's rough stones), gem dealers and retailers. They fondly recall the gem-strong years of the 1970s and early '80s, when American and then Far Eastern buying was at its peak.

Today, however, Brazil poses some challenges for U.S. gem buyers. Prices often are high because of the dollar's falling value and measures enacted recently to rein in Brazilian inflation. But opportunities exist, and more seem to be on their way. This report focuses on some of these possibilities, on Brazil's beautiful gems and on the often extraordinary people who stand behind them.

Commercial-free zone: The gems have always been there, in Brazil's southeastern state of Minas Gerais (Portuguese for "general mines"). But government meddling in the gem business, high taxation and duties often kept the gems in the ground or encouraged illegal marketing. Now, more than three decades of heavy government involvement in business are giving way to market liberalization, as political and economic changes revolutionize the way Brazil does business.

New President Fernando Henrique Cardozo, a self-described inflation fighter, has agreed to continue measures that have curbed Brazil's runaway inflation, despite the difficult recession that resulted. The rate, which reached absurd highs of 80% per month a year ago, now is a more manageable 3% a month.

And the country is growing stronger. Its new currency, called the real (pronounced ray-AHL), packs more clout than the U.S. dollar. Liberalization measures should foster investment in exploration and mining equipment, say gem dealers. Meanwhile, tariffs and social taxes are being reduced. (For example, Brazil's import duties on machinery have been lowered from more than 100% to an average 14%, according to the U.S. Department of Commerce.)

Even more interestingly, a planned commercial-free zone will have a great impact on the gem industry, says Khalil Elawar, a gem dealer in Teofilo Otoni, the country's main gem marketplace and site of the planned zone. Modeled after one in Sri Lanka, the area will be called ZPE (Zone for Processing and Export) and will be charged with promoting the gem, jewelry and lapidary industries.

ZPE will be a closed, self-controlled area divided into sections like an actual marketplace, says Elawar. It will be free of government control and will be Brazil's only free port for gems. Machinery and raw-material imports will have a 100% duty exemption.

ZPE will provide more incentives to export cut gems, says Marcelo Bernardes, a dealer in Belo Horizonte, the capital of Minas Gerais. "The quality of Brazilian gem cutting has gotten to where it should be," says Bernardes. "We might also be able to import and cut such stones as rhodolite or peridot, which are not Brazilian." The economy will benefit, he says. "Our argument to the government as gem dealers is: you lower taxes and provide import freedoms and we'll pay them and create more jobs."

Emerald: First, you slip the slashed rubber tire ringlets around your leg. Allegedly, these will sustain your descent into the 100-ft. vertical mine shaft.

Next, you don a heavy raincoat, interlock your legs with those of an assisting miner and grab onto a rope that will lower you both into the gaping black hole.

You hear the sounds of distant, gushing water and wonder wildly why you ever agreed to take a mine tour.

The rope creaks as another miner cranks a lever. The rope tightens and, suddenly, you're airborne, dangling over the entrance to one of the many mines at Nova Era, one of the world's largest emerald producers.

Many such holes punctuate the Nova Era emerald site in Minas Gerais. In the six years since emeralds were discovered here, the mountainous area has grown into a patchwork of guarded and fenced properties.

This area first produced light-coloured emeralds, but later started to yield larger crystals of deep saturated greens rivaling some of Colombia's fine colours. When fighting for the finer goods broke out among rival garimpeiros, the government closed the area.

The Nova Era diggings reopened in 1993 as a cooperative; miners hold rights to delineated boundaries. Since then, Nova Era has zipped to the top of the charts with production and quality at high levels. One geologist-miner, Moacyr Martins Dos Santos, describes a recent major find: "In October 1993, we located a big pocket that yielded 120kg of material that was good for cutting. Six months after the big find, the same mine has produced some 80kg of cuttable material."

Combined mining efforts reportedly have produced an average 100kg of emerald rough per month. ICA Gazette, a publication of the International coloured Gemstone Association, reports that 10% of that total is considered to be good facet-grade material.

Nova Era has some half-a-dozen permanent producing mines, with the number expected to grow as larger gem dealers obtain prospecting rights. Sergio Martins of Stone World, Teofilo Otoni, just bought mining rights in the area and plans to start production this year. "There's a good feeling about investing," he says. "Our economy is better – with almost no inflation. At least now we can make plans."

Nova Era emeralds are becoming plentiful on the market, especially in gem centers such as Teofilo Otoni and Governador Valadares. But producers want to make sure supplies don't exceed demand – a situation that would lower prices. While prices of Brazilian emeralds are on the rise, they're still a bargain compared with those from other notable sources. "Who cares?" says Martins. "Emeralds don't have a passport. When they're beautiful, they're beautiful."

Why the sudden craze over Nova Era emeralds? Nova Era is, after all, in the Capoeirana region of Minas Gerais (about 100 miles northeast of Belo Horizonte), an area long known for its emerald production. At Nova Era, though, deposits lie a mere 100-150 feet below the surface, making mining relatively easy and cost-effective. By contrast, the deposits at the Itabira mine (also in Capoeirana) lie much deeper and are more difficult to extract.

In addition, emeralds from Nova Era tend to be a bit larger than the average commercial sizes found in Brazil. "Good gems can be found up to 5 cts.," Martins says.

Brazil earned a spot on the map as a major emerald producer with a 1981 find in Santa Terezhina de Goiás in the state of Goiás. In a 1984 article in Gems and Gemology, a magazine of the Gemological Institute of America, authors Daniel Sauer and J.P. Cassedanne described the find: "The Santa Terezhina emeralds were, in fact, discovered some years ago, when a farm road was opened by a bulldozer. The green stones were collected by children who threw them at birds. Nobody thought they were gems, probably because the crystals collected on the ground were heavily stained by iron oxides. In March 1981, however, a gem dealer from Governador Valadares identified the true nature of the stones." Today, the emerald deposits are as rich as ever, though they're now about 1,000 feet below the surface. Not surprisingly, Santa Terezhina emerald production has grown less important as Nova Era has ascended.

Be sure to keep epoxy resin treatments in mind when buying Brazilian emeralds. While the rest of the world doesn't yet accept the practice of hiding surface-reaching inclusions in cut stones with epoxy resin, it's widespread among Brazilian gem dealers. Some rough also is enhanced with epoxy resin, but dealers strenuously oppose this practice because it's much harder to detect. Overseas buyers should be aware of the trend so their dealings with suppliers are as equitable as possible.

One historical note: A quest for emeralds impelled Portuguese explorers into Brazil's vast hinterlands as early as the mid-1500s. They were eager to emulate the Spaniards' emerald successes in western South America. The explorers eventually found green stones and took them back to Portugal as emeralds. Decades later, however, the stones were found to be green tourmalines. The name "Brazilian emerald" was used instead of tourmaline for several centuries and is still sometimes used today – incorrectly. Tourmaline is a different species that stands on its own merits.

Tourmaline: Markets in Brazil are busy gauging the effects of a very large find of tourmaline in Morro Redondo, near Araçuai in the state of Minas Gerais.

The tourmaline is bicoloured and attractive, with preferred colours evenly divided between salmon-pink and bright green. (Most tourmalines seen in Teofilo Otoni during a recent visit were predominantly muddy pink verging on brown, however, with the green portion generally smaller because of the way the crystals grew.) Better gems show no stress fractures at the colour division. Prices are relatively low because vast quantities of material are reaching the market.

Investment in the gems is cautious because there's just so much of it! But production and supplies will come under stricter control, says mine owner Benvindo Lopez Vazquez. Some gem dealers are optimistic and are buying healthy quantities. Marco Aurelio Nogueira of Belo Horizonte, for example, has sold 1,000 pieces at a healthy margin and believes prices are rising. "The market is accepting it readily," he says, "and I don't think the find will last all that long." Nogueira says green gemstones are becoming more popular. The best greens approximate the colour of an emerald but have a cleaner look and a lot of brightness.

Tourmalines of all colours are found north of Teofilo Otoni in the districts of Araçuai, Virgem da Lapa, Itinga and Coronel Murta. These districts are part of a pegmatitic region characterized by large, dome-like granite geology (called inselbergs) that stretches as far as Rio de Janeiro. Sugar-Loaf mountain, a geologic attraction in Rio, is part of the belt. In fact, some areas lying right under the city of Rio are rich in aquamarine and other gems. Lamentably, they cannot be reached.

Some of the best green and indicolite (blue) material is mined in the Araçuai region along the Piaui River valley. Rubellite (red tourmaline) also can be found here (a nearby small town appropriately is called Rubelita); some of the best and brightest come from the Ouro Fino mine. Production isn't very high despite demand for rubellites, indicolites and greens, say dealers.

Some more of Brazil's most famous rubellite deposits lie farther south, near the city of Governador Valadares. The Golconda, Cruzeiro and Jonas mines in this region are considered some of the country's most important deposits, yielding an array of rubellites, pink tourmalines, bicolours and so-called "sapphire-blue" indicolites.

Today, dealers dreamily recall Paraíba tourmalines, which originated in a small find in the northern state of the same name. For a half dozen years, Paraíba tourmalines virtually revolutionized the market. The vibrant blue-green and sapphire-blue stones are still in demand, though merely a trickle of material is available from the mine. Dealers in Brazil have a surprising stock of Paraíbas, but most aren't in a hurry to sell them. Prices for Paraíbas are sky-high and completely isolated from other tourmaline prices.

Topaz: Who can mistake the colour of imperial topaz – a subtle mix of pink and orange, reminiscent of Brazil's succulent papaya fruit? Other enthusiasts might compare the colour to padparadscha sapphires; indeed, it would be nice if more padparadschas had the classic imperial topaz look!

Brazil is the world's only known source for the material. (Pakistan produces lovely shades of pink topaz, but these don't approximate the mix of pink and orange found in the best topazes from Brazil.) The gem material is found in Ouro Preto, a picturesque colonial city just south of Belo Horizonte. Portuguese explorers founded the city in 1698 and called it Villa Rica ("rich village") because of its vast gold and iron ore deposits. Here's a description of the area from a book titled Travels In The Interior of Brazil, published in 1816 by John Mawe:

"Near a place called Capon, I rode down a hill covered with rich iron ore, in such profusion that tons might have been gathered from the surface. Proceeding a short distance further, we arrived at a house, the owner which, we afterwards understood, possessed a topaz mine in the neighborhood...I had the fortune of finding three topazes, which as they had only one pyramid each, and appeared fractured, I judged to be out of their original place. After collecting a variety of specimens, we returned to our mules and continued our journey over bleak sand sterile mountains, through roads covered with dust and arrived about three o'clock in sight of Villa Rica ...Notwithstanding the fatigue of the journey, which heartily disposed me to sleep, my mind was for some time occupied on reflecting on the place at which we had now arrived, and which had long been the theme of our wonder and conjecture. Villa Rica – the rich village!"

The Ouro Preto area has two topaz mines: Vermillion, owned primarily by an American investor who has chosen not to work the mine, and Capao, owned by Imperial Topaz Ltda., which is a large, mechanized mine. Dr. Wagner Colombaroli, a part-owner of the Capao Mine, says bulldozers are moving ore on about a third of the nearly 3,000 acres owned by Imperial Topaz Ltda. "Over 350 cubic feet of ore are worked per day," he says. "It is heavily washed to form a pulp and is finally screened. After other cleanings, the topaz is gathered by hand." At the end of the day, miners are left with about 4.4 pounds of topaz, with 2% of it considered to be gem material. The colours range from yellow, pink and reddish to peach-pink – the most valuable. The mine has an estimated 15-year lifespan, though Colombaroli says it could be much longer if the government allows other nearby areas to be worked.

Some imperial topaz is subjected to a subtle heating process called "pinking" to soften or remove yellowish colours, leaving a purer pink.

Prices for the material are relatively low but have been increasing steadily. Marketing a gemstone that comes from only one source in the world has some difficulties, dealers say. As one dealer notes wryly: "You can't promote it if you can't show it."

Various areas of Brazil produce colourless topaz that turns blue after irradiation and heating. Most of these stones are sold in the U.S., but dealers say demand is at an all-time low because markets have been largely saturated.

Aquamarine: Gem dealer Khalil Elawar tells an interesting story about aquamarine. "One dark and stormy night in Teofilo Otoni," his buyer called and asked him to hasten to Araçuai to see a 28.6-pound aquamarine crystal that a miner wanted to sell.

Elawar made the trip despite the bad weather and late hour. The miner's hut was dark, without electricity, but he assured Elawar of the stone's quality and pressed for a decision, mentioning another prospective buyer. They settled on $600,000, which Elawar agreed to pay in cash via the mediations of a bank.

The next day, after he had paid for the crystal and taken it home, he realized it weighed only 17.6 pounds. "But it was a very fine crystal," he says. A buyer in England paid $1 million for the crystal, but decided he didn't want it and asked Elawar to return the money. Elawar agreed, then sold the crystal to someone else a few weeks later for $1.6 million. The crystal was cut into thousands of carats of gems, which were sold for almost $2 million – to the person in England who had bought the crystal in the first place.

Aquamarine is mined in the Coronel Murta and Marambaia areas in northern Minas Gerais. Dealers say demand is on the rise – particularly for smaller, calibrated sizes. They expect demand for larger stones to rise as well because they think aquamarines will replace blue topaz in jewelry showcases.

Kunzite: Kunzite is a variety of the gem species spodumene. Brazilian varieties tend to be lighter-toned – a subtle lavender-pink – than varieties from Afghanistan and other countries. Well-cut stones are bright and complement other colours. "It's more of an evening stone for a lady – and it's very affordable, even in the best qualities," says Elawar.

But kunzite has a brittle cleavage and should be faceted by cutters experienced in handling it. Rough kunzite from other sources around the world often is cut in Brazil.

Most Brazilian kunzite is found in the Itambacuri area of Minas Gerais. Supply is kept conservative to match soft demand.

Chrysoberyl: Brazil is one of the world's biggest producers of green to yellow chrysoberyl, cat's-eye chrysoberyl and alexandrite chrysoberyl. In fact, Brazil is perhaps best-known for its alexandrites, discovered in commercial quantities in the mid-1970s at the Hematita mine in Minas Gerais. Top alexandrites from the mine change from a peacock bluish green in daylight to a raspberry red in most artificial lights.

The gems from this area caused such a furor that the government shut it down more than once. Today, the mine's fate remains up in the air. Observers say its owners (a collection of investors) have begun production again.

Alexandrites also are mined sporadically in the Malacacheta and Ichinga regions in northeastern Minas Gerais.

Golden chrysoberyl and cat's-eye chrysoberyl have long been mined in the northeastern valleys of Minas Gerais; much of the production is now in the Barro Preto region. Cat's-eye chrysoberyl is readily available at Teofilo Otoni, albeit in very small sizes (mostly under 0.5 ct.). Alexandrites are available, if you search hard enough – also in smaller sizes. One excellent colour-change alexandrite of about 5 cts. was shown at the offices of Stone World in Teofilo Otoni.

Quartz: The quartz family has members all over Brazil, but the two main sources are in the states of Rio Grade do Sul, Goiás, Tocantins and Para.

Quartz agate, found in Rio Grande do Sul, became Idar-Oberstein's link to Brazil in the mid-1800s by a curious coincidence. Up to that time, Idar-Oberstein's claim to fame had been the carving of agate nodules found along the Nahe River in central Germany. But that supply gave out and Idar-Oberstein fell into a slump until a German cutter who emigrated to Brazil noticed an entire wall of agate nodules on a fazenda (farm). Soon Idar-Oberstein was back in business. Descendants of many German immigrants still own and work in mines all across Brazil, and links to Idar-Oberstein remain strong.

The northern states of Tocantins and Para are among the most productive localities for amethyst. In fact, amethysts from the Pau d'Arco mine in Tocantins caused a big stir worldwide because of their intense saturation and tone. Though colour the likes of Pau d'Arco material is hard to come by, the marketplaces in São Paulo (a traditional market for quartz), Governador Valadares and Teofilo Otoni all have adequate supplies of amethyst.

End notes: Brazil is rich in a huge variety of gems and minerals, far too many to detail in one article. In addition to those mentioned here, beautiful gems such as morganite, opal, brazilianite, andalusite, diamonds and others contribute to the country's gem tapestry.

Generally, production levels are rising in response to growing demand from domestic and foreign customers. While emeralds and tourmalines (especially bicolours) are especially good buys now, other gems such as kunzite or aquamarine are also relative bargains.

As for the future, dealers are prepared to invest more money in exploration and mining of gemstones – if all goes well with the Brazilian economy. And that could mean even more gem bargains and opportunities lurking around the corner.

A Visit With The King Of colour
When you disembark after the 13-hour flight from the U.S. to Rio de Janeiro (perhaps Brazil's best-known port of entry), you notice the elegant H. Stern logo in the airport.

You've heard bits and pieces about this famous retailer, so you force your jet-lagged body over to gaze into the well-stocked window display. "This store is about colour," your mind tells you. H. Stern has made its first important impression on you.

Let's say you win the battle with your wild impulses and don't buy a jewel. No problem. H. Stern meets you once again at the hotel – any hotel – along Ipanema Beach. In fact, the H. Stern logo becomes a comforting sight, a sort of familiar "golden arches," that you can reach for in a foreign land.

You've heard about Rio's crime problem, so you're timid about venturing out. No problem. H. Stern transportation will pick you up for a visit to headquarters (everyone is treated like a VIP). If by chance you aren't invited (upon check-in, hotel guests are greeted by an H. Stern representative and given a brochure about the company), you must stop and request an invitation. The reason is simple: when in Rio, you have to visit H. Stern.

Here's why. Hans Stern (the man behind the logo) has made a lifetime study of educating consumers about coloured gemstones – particularly those mined in Brazil. He has, in effect, created a craving for colour in the minds of millions of consumers worldwide.

The H. Stern headquarters represents a microcosm of this study. Aside from the modest executive offices atop the building, the rest of the structure is a living monument to gems and jewelry. Attractive, personable guides (fluent in various languages) meet you at the entrance to take you on a tour. Elaborate, staged displays demonstrate the genesis of gemstones, the mining, the sorting, the faceting.

As you walk along the corridors, you see designers sketching tomorrow's new jewel. You witness real jewelers at work setting stones. And at the tour's end, you understand the basics of gems and jewels and can fathom the classic notions about gem rarity and romance. If your luck continues, you might see H. Stern's gem and mineral museum, especially unforgettable if you fancy tourmalines.

And, of course, you're invited to the H. Stern jewelry and gift shops. You do the only sensible thing: you buy something. Not to buy would be akin to an outrageous perversion.

H. Stern has 175 retail stores throughout the world, 95 of them in Brazil. The company once enjoyed strong tourist business in Brazil, but that has fallen off as crime has increased. So H. Stern has focused on the domestic market, which traditionally has preferred rubies and sapphires. "We looked inwardly and a miracle happened," says Stern. "We succeeded in convincing Brazilians to buy gemstones from their own country!" In addition to homegrown coloured gems, the company's Brazilian stores also carry silver, watches and ethnic jewelry targeted to domestic consumers.


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