Speech for “Il Salone della CSR e dell’innovazione sociale”, October 10th, 2025, Milano
The precious gem industry (mainly rubies, emeralds and sapphires) is worth about 10 billion dollars a year and is active in almost 50 countries on almost every continent. With approximately 80% of the mined production attributable to Artisanal and Small-Scale Mining (ASM), the industry employs many millions of people around the world. It is very difficult to have the exact number of gemstone mines, but we can assume that they amount to about 300 on a global scale. They are almost all concentrated in India, Burma and Sri Lanka, which are historical centers of the global industry of these stones with established networks for processing and trade. Other regions are emerging and taking an important share of the market such as Kenya, Zambia, Tanzania, Colombia, Mozambique and Madagascar.
The gemstone trade plays a crucial economic role for many developing countries. However, the supply chains of colored gemstones are extremely complex, often originating in countries with weak governance and involving many different actors before reaching the final consumer. This complexity can put environmental, social, and governance issues at risk throughout the supply chain.
THE SUPPLY CHAIN: CHARACTERISTICS AND CHALLENGES
The nature of the gemstone supply chain often leads to a lack of fragmented data and information. These data vary for each individual kind of stone and by country of origin. Gemstones are minerals formed by geological processes that occur deep within the Earth’s crust and mantle, involving heat and high pressure. These processes give rise to the formation of stones, determining their individual characteristics, such as color, structure and durability. These characteristics vary greatly, resulting in over 130 different varieties of gemstones that can be classified into different groups, depending on how they formed and/or the physical properties they share. A broad distinction is between those considered “precious” and those considered “semi-precious.” Diamonds (they are not analyzed in this article), rubies, sapphires and emeralds are considered precious stones, while semi-precious stones are considered everything else (depending on their rarity and value), including some stones made from other types of organic materials, such as coral or pearl.
Over millions of years, precious stones formed within the earth’s crust have been gradually brought closer to the earth’s surface and exposed through erosion processes. Their proximity to the earth’s surface determines how they are extracted.
Stones are found in “primary” deposits or in “secondary” deposits. The primary deposit of gems is the original deposit, i.e. it is the place where the stones were first formed. The extraction of these stones is an expensive and energy-intensive process, requiring significant resources and infrastructure to excavate, quarry, and crush the rock to access the stones. Such mines are underground and often involve the use of explosives to move large volumes of rock.
A secondary deposit of precious stones, on the other hand, is the place where gems – already extracted from the original rock – have over time been deposited through natural processes of water or wind erosion, for example, in the accumulations of gravel in river beds or in the layers of sedimentary rock. Unlike primary storage, these accumulations are easily accessible without too much technology or money expenditure. Local communities can exploit these mineral resources by using simple tools and processes such as hammers and pickaxes to extract the gemstones.
An example of a primary deposit is emeralds from Zambia, while for secondary I mention rubies from Mozambique.
The gemstone supply chain is one of the most complex. Among the factors that contribute to this complexity, I mention the weak regulatory supervision of the sector, the lack of traceability in the commercial phases and therefore of local taxes, the lack of transparency in the various steps from extraction to retail.
A gemstone can pass from hand to hand as many as fifty times after leaving the mine, passing through traders, graders, polishers, brokers, producers and dealers before reaching the end customer. This characteristic, typical of the small ASM craft industry, traditionally based on personal relationships based on trust rather than on transparent systems sanctioned by formal contracts, is what determines the absence of traceability.
Sometimes it is also difficult to certify the country of origin of a gemstone.
The typical supply chain of a stone is as follows: Production (mine) – Cutting and polishing – trading – Jewellery – Retail
After leaving the mine, the gem will be exchanged and undergo several processes before being transformed into a sparkling stone: polishing is usually done by skilled workers even in sites far from the mine; subsequently the commercial phases are carried out in several countries while the production of the jewel and therefore the product is carried out in countries subject to stricter regulations, such as Europe. The great dilemma, still unresolved today, is how to make the two systems dialogue, bringing ethical and traceability practices to the advantage to the detriment of systems that are often illegal and untraced.
THE CASE OF BURMA
Burma produces some of the most beautiful rubies, sapphires and jades in the world. However, the mining industry also feeds the finances of the irregular army, raising concerns about the ethical value of its precious stones.
The uncertainties surrounding the reform of the mining law have proved particularly damaging to the country. The current picture is anything but positive: lack of transparency, little consideration for local communities, abundance of licenses often delivered in a non-transparent way.
Foreign companies have only one way to do ethical business: to actively engage in making the reform a reality. An example of this is that of collaborating with the EITI (Extractive Industries Transparency Initiative) to push the government to intervene on the ethical and sustainable issue in mining extraction. Responsible investment is a key requirement in this process and is a direct driver of effective sustainable development.
Humanitarian associations, also thanks to private funding, are often on the front line to provide support to those populations whose lives have often been endangered, providing them with education and basic health services. Their goal is also to take decisive and bold steps to help end the Rohingya crisis.
Some companies continue to assess and monitor the situation with an approach of continuous improvement to ensure compliance with the Code of Ethics. Being part of a constructive dialogue with key strategic stakeholders and committing to constantly improving and ensuring that the highest standards are applied throughout the supply chain, seems like the only possible solution.
CONCLUSIONS
Today we have a difficult path ahead of us, aggravated by the ongoing wars that by definition reject any good practice on human rights and on Sustainability in general, but we also have important levers to reach new goals together, a new Sustainability based on real and tangible things. The path must be that of processuality, let’s not worry about the weight that every change sometimes brings but let’s worry about whether we have provoked and followed a process. This consideration is particularly valid for the mining sector, where a synergic and all-encompassing approach is needed by all those who work in the sector. There are concrete solutions even in the difficult area of this supply chain, but alliances and a new pragmatic approach to sustainability are needed and we need to involve Governments and Public actors in that.
References:
https://aisec-economiacircolare.org
https://agta.org/education/gemstones/
https://www.ft.com/content/1d5c27b6-e7c8-11e2-babb-00144feabdc0
https://www.gemguide.com/learning/education-colored-gemstones/value-factors/
https://www.gemsociety.org/article/inner-workings-gem-trade/
https://www.gia.edu/gem-encyclopedia
https://www.sustainablegemstones.org/supply-chain/mining-techniques/
https://www.worldfinance.com/markets/diamonds-arent-forever-coloured-stones-come-into-favour
