March/April 2003 • Giving Orange a Bad Name • Tucson Sales Surprisingly Solid • Chalcedony: A Gem for the Ages • News & Updates • In This Issue

Orange Sapphire Extended Research | Links and Past Articles | Main Sapphire Feature |
Sidebar: "Japan in Limbo" | Sidebar: "Thailand: Still Burning"

othing breeds excitement in the market like a new rush of bright-colored gemstones hitting the supply chain. But in early 2002, excitement turned to dismay as a new supply of yellow, orange, and padparadscha-colored sapphire that dealers thought had simply been heated turned out to be diffused.

Is there a market for the material? How should the industry deal with the stones that have already been sold? A year later, the trade is still struggling with these questions.

The situation hasn't been helped by the well-publicized reluctance on the part of Thai heaters to label the stones as diffusion treated.

Illustration by Bob Commander.

At the Tucson 2003 gem shows, a closed-door meeting yielded an agreement among American dealers, manufacturers, and jewelry retailers that the treatment should be disclosed as diffusion. Members of the Thai gem industry were present at the discussion, and while no formal commitment was made at the shows, the dialogue was carried back to Thailand. (See "Thailand: Still Burning.")

On February 20, the Chanthaburi Gem & Jewelry Association (CGA) announced through representative Thaigem.com that they would disclose the treatment — not as diffused, but as heated with beryllium. While only the CGA has committed to disclosing that way, its membership includes many of the heat treaters who are performing the beryllium diffusion.

Disclosure among other Thai dealers is still hit or miss.

"There are a handful of producers in Thailand who have yet to admit what is going on," says Richard Hughes of Pala International, a gemologist and gem dealer who was among the first to publicly voice suspicions about the material. "It's no longer in dispute among impartial parties. Now we're in a situation where in Thailand most have admitted yes, beryllium is part of the treatment, but even they're trying to parse the truth and say, well, this is no different [from established heat treatment methods] where hydrogen is diffused into the stone."

Immersion in methylene iodide often reveals color zoning in beryllium-diffused sapphire. An immersed 4-ct. pink sapphire shows an orange rim surrounding a pink center; photo courtesy AGTA.

"In my experience, more people are offering disclosure on the stone," agrees Robert Van Wagoner of Beija-Flor Gems. "But there are still people out there offering these stones as natural or as plain heat treated, and I think that's going to happen for a long time."

The result is a lot of diffused orange and yellow sapphire sitting in gem vaults, waiting for a buyer. "There are a lot of people who invested heavily [in this material], and at the moment it's sitting in the safe, waiting for [the controversy] to die down," says Gavin Linsell, marketing director for Thaigem.com.

The problem of how to sell the material is particularly acute in Japan, a major market for orange sapphire, where tens of thousands of beryllium-diffused sapphires were certified as heat-treated by the gem labs before the new treatment came to light. (See "Japan in Limbo.")

The situation is less severe in the United States, where quick identification of the new treatment may have prevented large quantities from entering the market without disclosure.

"We're very fortunate that the AGTA [American Gem Trade Association] lab found out the problem right away," says Ron Rahmanan of Sara Gem Corp. "The U.S. market was saved because we knew what was going on right from the beginning. [These stones] hit the market in late 2001, and [news of the treatment] was broadcast to all [AGTA] members in January 2002. A lot of people were going on buying trips at that time, and they were aware of the situation. If they hadn't been aware, I'm sure there would have been a big quantity coming into the U.S., and it would have been a big problem."

But that good fortune may be restricted to better-quality stones, which are more likely to warrant the cost of having them certified.

"My only concern is that you cannot send all the stones to the lab," says Omi Nagpal of Omi Gems. "You can only afford to send an expensive larger stone to the lab for correct identification. If they're small or of lesser value, it just doesn't pay to have them certified."

As a result, it's anyone's guess how much beryllium-diffused sapphire has penetrated the market for smaller and commercial-grade fancy-color sapphire.

"I think the biggest problem is that a lot of this merchandise is coming in as finished jewelry from Thailand, and most of the people who buy finished goods have to be very careful, because the stones are not being disclosed properly," says Rahmanan. "I'd say 99 percent of the orange sapphire jewelry from Thailand is the new treated [material]."

Rahmanan's take on the situation is supported by the experience of Krystyna Jutson, a Los Angeles consumer who purchased a $300 orange sapphire ring made in Thailand from ShopNBC in October 2002. Suspicious about the unusually low price for a ring containing 14 3-by-4-mm sapphires that were described on the site as padparadscha, Jutson took the ring to a local gemologist. His assessment was that the stones had been diffusion treated, an assessment later confirmed by a second gemologist.

When Jutson challenged ShopNBC about the apparently treated stones, the company responded with documentation from its suppliers that the stones were heat-treated. At press time, Jutson was waiting for a report from the AGTA Gem Trade Lab to confirm the gemologists' assessment, and the retailer had offered a refund in light of her dissatisfaction with the purchase.

The experience has left a sour taste in Jutson's mouth, however. "On ShopNBC.com, they do have a big matrix of stones and how they're treated, but under sapphire there's nothing about diffusion, just heat," she says. "I think they should be more detailed than that, especially since some diffusion doesn't go all the way through the stones, and the recommendation is not to polish or recut the stone. I think the consumer should know that, since the jewelry may have to be repaired."

Adding beryllium alters a wide variety of colors. Pictured, Umba sapphire before (left) and after (right) beryllium diffusion. Sapphires courtesy Nafco Gems, photo by Morgan Beard.

That type of negative experience among colored stone consumers is exactly what many dealers fear most about the sapphire controversy.

"There's nothing wrong with selling treated stones, but if you don't clearly label them, it's like selling soybean meat cakes as real meat cakes," says Hughes. "The Thais argue that we can get away with saying nothing, but America is the land of the lawsuit, and saying nothing will bankrupt you."

Many in the Thai gem trade are reluctantly coming around to that point of view, although holdouts remain. "The position [on disclosure] in Thailand is not unified. It depends on the individuals," says Linsell. "I think the heaters are still a little on the fringe, but I think that they're getting there and realizing the importance [of disclosure]."

The uncertainty continues to hover over the fancy sapphire market, however. "In general [the diffusion controversy] has hurt demand for real padparadscha and fine orange sapphire. I think people are steering away from that because they're afraid of getting one of these beryllium diffusion [sapphires]," says Van Wagoner. "On simple heat-treated padparadscha, the price and the demand has gone down, and even for finer natural stones, it has impacted demand. A couple years ago padparadscha was very strong, and it was hard to find natural stones. Now it's harder to find a customer for a fine natural."

"Prices have been all over the board, but we've definitely seen a downward turn [in the fancy sapphire market], and I think that's directly attributable to the treatment controversy," says Stuart Robertson, research director for gemstones for The Guide. "We find the market is still operating on two tiers: [On] one tier, they are not disclosing the treatment and are offering the material for $600 to $800 a carat, but those seem to be the exceptions. . . . [On the second tier, the material] is trading at under a couple hundred a carat, which is more consistent with what bulk diffusion material usually [sells for]."

And there's also concern that further revelations await. "What we're always afraid of is what we haven't seen," says C.R. "Cap" Beesley of American Gemological Laboratories. "If we have colors continuing to emerge that we haven't seen, haven't tested, we don't know what to look for. That is always the point of vulnerability."

At a presentation in Tucson, Dietmar Schwartz of the Gübelin Gem Lab in Switzerland reported that gem heaters are now taking unmarketably dark sapphire, diffusing it with beryllium to become colorless or yellow, and then heating it again to produce a nice blue. While he confirmed that those stones are on the market, the quantities seem to be limited.

"I had a chance to talk to one of the treaters. He says they are doing everything now," Schwartz continued. One of the things they have tried is using lithium, which in theory could bond to the molecular structure of a sapphire in a way similar to beryllium. As yet, however, there have been no useful results.

With appropriate disclosure, most predict that the beryllium-diffused material will find its own market niche. "While there is a reluctance to invest heavily in this product, there seems to be little shortage of buyers willing to purchase small to medium quantities," says Linsell. "After all, the results of bulk diffusion includes a wide range of beautiful colors [that are] extremely rare naturally."

"Most of the dealers and the jewelers want to stay away from it because of the controversy, but many of the end users don't seem to mind, if the price is right," says David Weinberg of MultiColour, an online gem company that sells the beryllium-diffused sapphire — disclosed as such. "A lot of the orange sapphires we sell are small stones in the $20 to $30 range, so people don't really care [that they've been treated]. It's different than in the beginning, when they were asking $2,000 for one-carat stones. Now you can buy one-carat stones for $300, $200, maybe $100, so I think that the material is going to sell eventually."

"It's a good color, there's no replacement for it, and it's not overpriced," Weinberg adds. "The only thing stopping it is bad publicity."

Whether the publicity will get any better in the year ahead, though, depends on whether the industry can agree on disclosure. "I describe the problem not as a gem problem, but as a marketing and communication problem, accentuated by cultural barriers," says Linsell. "The only way this is going to be resolved is through communication.