Gemstone business: Between a rock and a hard place

The much-neglected gemstone business in Pakistan has taken another hit due to the deteriorating security situation

Militancy and the subsequent military operations have left a mark on everything in Pakistan, and the gemstone business is no exception. A lack of government interest in supporting and bolstering the industry has aggravated the situation even further. As a result, the world-famous sapphires from Kashmir, emeralds from Swat, rubies from the northern areas and pink topazes from Katlang, Mardan, have failed to generate the attention and revenue they deserve.



Nearly 30% of the world’s gem deposits are located in the northern parts of Pakistan and adjacent provinces of Afghanistan, according to the Gems and Gemmological Institute of Pakistan. Apart from the famous stones mentioned earlier, good quality zircon, different varieties of quartz, aquamarine, tourmaline, sphene, spinel, zoisite apatite, epidote, morganite, garnet, scapolite, clino zoisite, xenotime, bastnaesite, peridot, nephrite, serpentine, red agate, diopside, pargasite, amethyst, scheelite, pollucite, chrome diopside and kunzite are also found in the mountainous belt from South Waziristan to Chitral.

Semi-precious stones at a gem shop in Peshawar. PHOTO: ABDUR RAZZAQ

. Gems that come in raw form are cut and polished by gem dealers in Namak Mandi. Many dealers who have enjoyed a steady business for decades are now looking for alternatives to survive. PHOTO: ABDUR RAZZAQ

Despite being rich in minerals, traders in Pakistan have little taste or appetite for gemstones. “Until recently, most of the business here was conducted by foreign traders but that has halted since they are too afraid to visit Peshawar now,” says Zeeshan Nawab, a gemstone dealer in Namak Mandi, Peshawar. The market, which was frequented by traders from Europe, the United States, Japan, Thailand and Dubai in the past, now only sees traders from China. “Gems from several mines in Mohmand Agency, namely barokhel, michani, ambar etc, are not being extracted in good quantity [either] due to [the] volatile security situation,” he adds. Nawab’s own business which flourished for the past two decades has been reduced to half its strength due to the ongoing militancy and military operations.

Rough gemstones being cut by a dealer in Namak Mandi. PHOTO: ABDUR RAZZAQ

Previously, traders from the US, Europe, Japan, Thailand and Dubai visited Namak Mandi for business but this has taken a massive hit due to the deteriorating security situation in the area. PHOTO: ABDUR RAZZAQ

Abdul Jalil, president of the Peshawar Gems and Minerals Trade Union and former chairman of the All Pakistan Commercial Exporters Association, further confirms that while huge quantities of gems were brought from Namak Mandi by different countries in the past, traders have now shifted focus to other places such as Afghanistan.

A change in government policy which requires foreign businessmen to make advance payments has damaged export even further. “How can a firm or a businessman send you advance payment without even looking at the goods he is purchasing? It is completely against export rules,” he complains.

Unplanned and improper extraction of gems, which reduces the value of the stones, has further hampered the industry’s revenue potential. “The provincial government generates a nominal revenue of Rs10 million annually from the Swat emerald mines,” says an official from the K-P Minerals Development Department, who spoke on the condition of anonymity. He elaborates that the figures can be much higher if modern methods and equipment are used since it will automatically increase the quantity of emerald obtained from these mines. The government’s negligence of the industry can be gauged from the fact that Namak Mandi does not have a laboratory for testing, despite being one of the biggest gem markets in Pakistan. Moreover, no geological mapping has been carried out in the region due to militancy and inadequate resources and the industry still relies on obsolete methods to extract gems. “If the government is really interested in reviving the gemstone industry, the least it could do is set up a state-of-the-art laboratory in Peshawar, linked to international laboratories,” he adds.

Emeralds from Swat are considered among the best in the world. PHOTO: ABDUR RAZZAQ

The officer also expressed concerns about Pakistan’s inability to compete with Russia, India and China due to a lack of expert miners and modern infrastructure. He elaborated how subsequent governments had failed to allocate sufficient funds to purchase up-to-date equipment and hire skilled labour for gemstone mining.



But the K-P Minister for Mineral Development Zia Ullah Afridi reassures that things will change soon. He claims that while 90% of the gems extracted during the previous government’s tenure were mined illegally, the number has been reduced to 15% now due to strict checks and balances. “Officials who were involved in illegal mining have been terminated. More than 200 mining leases have been cancelled,” says Afridi. He added that the provincial government would begin the bidding of precious stones mines next year, the expected revenue from which will be approximately Rs2 billion per year. Moreover, plans to set up an exhibition centre in Namak Mandi along with a lapidary for gemstone cutting and polishing is also in the works and experts from Bangkok will be brought on board to train local gem dealers on cutting and polishing. But until that happens, existing gemstone dealers have little choice but to move their businesses online or showcase their products at international trade shows if they can afford to do so.



Abdur Razzaq is a Peshawar-based radio and print journalist. He tweets @TheAbdurRazzaq

Published in The Express Tribune, Sunday Magazine, February 15^th, 2015.