By Mick Elmore

Gem buyers and sellers wait outside a dealing room during the Chanthaburi weekend market, where most gemstone business occurs.

BANGKOK, THAILAND - Fluctuations in ruby supply have brought the market down, as traders struggle to deal with the politics of sourcing.

Perhaps the hardest hit are dealers in Thailand. Gems and jewelry are one of Thailand's top 10 export earners, worth well over a billion dollars a year, with rubies the single most important stone, according to figures from the Thai Gem and Jewelry Traders Association. Myanmar (formerly Burma), the primary source of ruby, has had the greatest problems, mostly because the government is cracking down on trade.

The Mogok mines in Myanmar, which produce the best gems, have been officially closed to foreigners since the summer of 1999. While there are exceptions, dealers rely on Burmese traders to bring the gems out, and the quantity has gone down in the past year.

Mogok rubies remain the most prized, but they have lost a lot of the market to Mong Hsu rubies, found to the northeast of Mogok in Myanmar. The market shift happened for two reasons, according to Bangkok-based gem dealer Tony Brooke of Anthony Chacree Co. Ltd.

“Mogok material saw the price forced down by the Mong Hsu material. There is much more quantity from Mong Hsu,” he said.

The second reason is that some Thais prefer the Mong Hsu rough because they have learned how to improve it by heat treating, or “cooking.”

Several dealers lost a lot of money before they got the process right. But now the Thais are the only ones who have perfected the heating of Mong Hsu rough, so they buy the bulk of it.

Mong Hsu suffered a mysterious explosion at the mines in early January 2000 that reportedly killed hundreds of miners, possibly over a thousand. While the cause of the blast remains a mystery - the Myanmar government didn't comment, and the rumors coming out via traders conflicted wildly - production levels are back to normal, some say even higher than before the accident. However, Mong Hsu produces lower-quality rough, of which there's already an abundance on the market. Fine stones remain in short supply.

Most of the Mong Hsu rough has been coming over the border near Mae Sai, Thailand's northernmost point, in the second half of 2000, Brooke said.

A buyer examines rubies for sale at a street-side table set up for the weekend market, held on Fridays and Saturdays in Chanthaburi. Photos by Mick Elmore.

Other dealers, like Boonchalok Boonbankon, who sells in the gem trading center in Chanthaburi, Thailand, said most of the rough from Myanmar comes over at Mae Sot, a border town about 400 kilometers (250 miles) south of Mae Sai. The answer seems to depend on whom you ask, but dealers can find ruby at both crossings.

Aside from the problems at the mines, the political situation along the Thai-Myanmar border has also helped to tighten supply. The sour relationship between the governments of Myanmar and Thailand has led to increased security along the border, making life harder for the traders who smuggle gems across. At the same time, the government of Myanmar is putting pressure on its ethnic groups - which in the past have put up an armed resistance in their bid for independence - to be more “friendly.” While those ethnic groups still mostly control the ruby smuggling trade to Thailand, the government is using force to try and block it at the border.

As Myanmar becomes an increasingly difficult source of ruby, dealers are supplementing their stocks with material from other countries. One up-and-coming source of gems in Asia is Vietnam, which produces pink corundum that is sometimes sold as sapphire and sometimes as ruby.

“The market is not so popular now for pink sapphire, and [what's coming out] is not the ruby, it is sapphire, although they try to sell it as ruby,” said Boonchalok.

The volume of material coming out of Vietnam has increased, and Brooke said that Vietnam is probably the second-largest source of rubies after Myanmar. But even the gems that are acknowledged as ruby are considered inferior quality.

At the markets in Thailand, however, it's difficult to tell exactly what is Vietnamese. Because the geology of Vietnam is similar to Myanmar, traders can pass the better Vietnamese gems off as Myanmar stones.

“Vietnam [is a good source of gems] also, mostly ruby,” said Khun At, who works for Tanuson, a Chanthaburi-based company. “But they don't say [it's] from Vietnam, they say it is from Burma.”

The gems fetch a better price that way - a ruby from Mogok will get perhaps 30 percent more than a comparable gem from Vietnam or even Mong Hsu. Thailand itself is still a source of ruby, although it produces very little anymore.

While some dealers in Thailand prefer Thai ruby for its clarity, it looks very different from Burmese ruby, and usually commands a lower price. Boonchalok and his wife have run Nangnoi Jewelry in Chanthaburi for more than 10 years, and rubies have remained their main item.

“Ruby [is] still mined in Thailand, in the military area,” Boonchalok said, referring to a 10-kilometer (6.2-mile) wide buffer zone along the Cambodian border. Some miners have “special” deals with the military to mine there, but in general that area is left alone.

Gems are still found in some public areas in Thailand, too, and on farms where they grow durian and rambutan, two native fruits.

Thailand is said to have a lot of potential, even though little ruby is mined there now. Smit Lohploy, a buyer and gem dealer in Chanthaburi, is a gemologist by training. He said he has seen a report that states 70 percent of Thailand's ruby, and gems in general, are still underground, but mostly in military security zones along the Cambodian border or in nature reserves.

The mines around Pailin, Cambodia, across the border from Chanthaburi, are also producing less, Smit added. “There are only 10 or so big mines now, [because they have] no money to manage the mines and they have to pay [bribes]” in order to be able to mine. Land mines, a remnant of the military conflicts after the Khmer Rouge was driven from power, are also a problem for miners.

While ruby remains the number-one gem in Thailand, the slump in the market has caused dealers to diversify, especially in trading centers like Bangkok and Chanthaburi.

Business in Thailand is in general a bit slow because there is little money around at the moment, Boonchalok said.

“The Thai economy is not so good, so the market is down, [and] so the price is not high. Now we count on export,” agreed Smit.

Chanthaburi remains an important gem town, with cutting, polishing, and carving as well as gem selling. The city is also a center for heat treating stones.

Khun At, who sells her gems to the buyers who fill the Chanthaburi market area every Friday and Saturday, said rubies remain the main stone, and Myanmar the main source. It has been that way for years, with slight fluctuations.

Smit confirmed that the rough from Myanmar is tops and will most likely remain so for some time. “Rubies [sold in Chanthaburi] are mostly from Burma, still. The quality, the color is better. But also [there's good material] from southern Africa,” he said.

Ruby has long been Thailand's major seller, but due to the recent slump, less expensive stones from sources like Sri Lanka and Nigeria are picking up the slack. Photos by Mick Elmore.

The dark red rubies from Myanmar may dominate, but walk the market-time streets in Chanthaburi and the rainbow of gemstones offers other colors, too. The new millennium has brought more color to the traditional center of the Thai gem trade.

In the Friday and Saturday gem market, open between about 11 a.m. and 4 p.m., when the natural light is best, visitors can buy yellow and blue sapphires from Sri Lanka, rubellite from Nigeria, and garnets in all colors from across Africa. Sellers also offer sapphire from Tanzania, although, like ruby, the sapphire brings more money if they say it's from somewhere else, usually Sri Lanka. Emeralds go to India mostly, but everything else comes to Chanthaburi in some degree.

“Now more semi-precious stones are coming into this market because the precious stone price is getting high, and there are less of them,” Smit said.

“The [lower] prices [for good] quality are why some of the markets now accept some of the semi-precious stones,” he added. “Like Taiwan - before they didn't accept [gems other than ruby, emerald, and sapphire], but now the economy makes them accept.”

Others say the markets are mostly in Europe and Japan, so the diminished demand for ruby in Southeast Asia has only a slight impact. In the major markets, less traditional gems are becoming more popular, and Thai companies can cater to that.