'Sri Lanka getting raw deal in gemstone exports to China'

New Delhi: Sri Lanka, endowed with one of the world's richest gemstone deposits, is caught in a growing debate over who is capturing the real value of this natural treasure, according to media reports.

While Sri Lankan miners and local traders often struggle with fluctuating incomes, foreign buyers, including those from China, are increasingly visible in the gemstone trade, raising questions about whether the country is receiving a fair return for its resources, according to a report in Ceylon Wire News.

Chinese markets in Beijing, Shanghai, Shenzhen, Guangzhou, and Hong Kong have developed into major destinations for high-value sapphires and coloured gemstones sourced from Sri Lanka. Chinese buyers are particularly interested in untreated and certified stones, especially premium blue sapphires and rubies.

The concern expressed by some industry observers is not merely that Chinese traders are purchasing Sri Lankan gemstones. Trade itself is a normal and legitimate commercial activity. The real concern is that much of the value addition often occurs after the stones leave Sri Lanka. In such a system, the country where the gems originate may receive only a fraction of the final retail value.

However, if Sri Lanka is exporting one of the world’s most valuable natural resources, in order to maximise the value of exports, it also needs to focus more aggressively on domestic cutting, polishing, branding, certification, and jewellery manufacturing. Every stage of value addition generates jobs, expertise, tax revenue, and foreign exchange. When the majority of downstream processing takes place overseas, the largest profits inevitably flow elsewhere, the report pointed out.

Reports from the gemstone industry indicate that direct sourcing has become increasingly common. Buyers seek to reduce costs by purchasing closer to mining areas and production centres.

Sri Lanka is globally recognised for producing blue sapphires, padparadscha sapphires, yellow sapphires, pink sapphires, white sapphires, rubies, spinels, garnets, tourmalines, zircon, moonstones, alexandrite, cat’s-eye chrysoberyl, and numerous other varieties. According to the Sri Lanka Export Development Board, Sri Lanka exports top-quality blue sapphires and roughly 75 other gemstone varieties to international markets. The country’s reputation for high-quality untreated stones has made it a preferred source for buyers around the world.

Data published by Serendib Blue Gem Data Hub, citing Sri Lankan industry sources, reported approximately $430 million in gem and jewellery exports during FY2024.

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