Gemfields Achieves Record-Setting Revenue from Ruby Auction
AIM-listed Gemfields PLC has announced the results of its recent ruby auction in which total sales hit $43.2 million, a new record for the multinational natural resources company.
Hosted in Singapore from December 3-8, the auction saw over 62,936 carats sold, with over 50 companies from Austria, China, Germany, India, Israel, Japan, Sri Lanka, Thailand, the United Kingdom and the USA bidding on items.
The auction consisted of predominantly higher quality rough rubies (treated and untreated material) that were extracted from the Montepuez ruby deposit in Mozambique by Montepuez Ruby Mining Limitada.
"We are delighted to announce yet another set of record-breaking auction results, said CEO of Gemfields Ian Harebottle. “The Montepuez ruby deposit, coupled with Gemfields’ transparent and well-regarded auction platform, have had an indelible and positive impact on the global ruby market and we look forward to participating in the continued growth of this industry.”
The record-breaking auction also included the sale of its 40.23 carat “Rhino Ruby”, which was sold for an undisclosed amount. According to Harebottle, the sale of the African ruby will assist in countering rhino poaching.
“Due to the size and character of this ruby, and the sheer magnitude of the challenge of protecting African rhinos, my colleagues and I have named it the ‘Rhino Ruby’ and we look forward to following its progression from its current rough form all the way through to a faceted gem and finally being set in a magnificent piece of jewelry.”
This is the third auction by Gemfields this year.
“The three auctions we have hosted so far this financial year, two of emeralds and one of rubies, have yielded aggregate revenues of $94 million, a superb performance for Gemfields which every member of our devoted and disciplined team should be deservedly proud,” Harebottle said.
Proceeds from the auction will be paid to Montepuez Ruby Mining Limitada, which Gemfields has a 75 percent interest in, as well as all royalties due to the Government of Mozambique being paid on the full sale price achieved from the auction.
Low carbon world needs $1.7trn in mining investment
According to a new report from consultancy Wood Mackenzie, mining companies need to invest nearly $1.7trn in the next 15 years to help supply enough copper, cobalt, nickel and other metals needed for the shift to a low carbon world.
Cutting carbon emissions
The United States, Britain, Japan, Canada and others raised their targets on cutting carbon emissions to halt global warming at a summit in April hosted by US President Joe Biden.
Meeting those targets will need large-scale deployment of electric vehicles, storage for power generated from renewables and electricity transmission, all of which require industrial materials, such as lightweight aluminium and metals used in batteries such as cobalt and lithium.
Wood Mackenzie analyst Julian Kettle calculated miners needed to invest about $1.7trn during the next 15 years to “deliver a two-degree pathway - where the rise in global temperatures since pre-industrial times is limited to 2°C”.
“At an industry level, there seems to be reticence around investing sufficient capital to develop future supply at the pace and scale demanded by the energy transition (ET),” he said.
Mining firms are wary of making heavy investments after their experience of the last decade when they invested in new capacity just as demand peaked, leading to a collapse in prices and revenues. They also need to please investors, who are unlikely to want to see dividends diverted to capital spending.
Rising demands of investors related environment, social and governance (ESG) issues further add to the challenge.
Australia, Canada and Western Europe carry a low ESG risk but some of the best resources are in high-risk areas, such as Democratic Republic of Congo, which sits on about half the world’s cobalt reserves according to the U.S. Geological Survey. “Given the need to meet tough decarbonisation and ESG targets, Western governments, lenders, investors and consumers will need to get comfortable operating in jurisdictions where ESG issues are more complex,” Kettle said.
Kettle said government support was needed to help miners comply with ESG issues to ensure production from high-risk areas was conducted in an acceptable way to consumers.
“Then, and only then, will the West be able to secure sufficient volumes of the raw materials needed to pursue the energy transition in the timescales envisaged.”