How to start a gemstone business in Malawi
By Jephter Ngwira (Ravenstein Gems)
Most young people in Malawi want to get employed after leaving secondary school or college, but they can be their own bosses and employ others by being entrepreneurs. One potential business to start is buying and selling gemstones.
When you start a gemstones business you will only be successful if you can overcome the high start-up costs and yield a good profit. Of course, there are some gems which require low capital like red garnets, amethysts and rhodolites. You can start with as low as USD 200 (about MWK 150,000). Gemstones do not usually depreciate in value, at least not quickly, which is why the business remains successful.
If you are interested in venturing into this business, consider the following:
- You should have patience, need time, and money to invest.
- Choose the type of gemstones you want to buy and sell.
- Find quality cutters if you want to do cut/faceted stones, too.
- Identify stable and reliable sources, please be prepared to travel a lot for you to buy stones at an affordable price and to make maximum profits, because in this way you avoid many middle men, third parties or vendors.
- Most importantly, market. Know your clients and what they specifically need!
You cannot grow or make gemstones which means you have to pay for rough or cut gemstones. This cost can be very high depending on the type of gems you are buying. The most expensive are typically diamonds, emeralds, sapphires and rubies and are called precious stones, while the semi-precious ones like topaz, tourmalines, garnets, and aquamarines are cheaper.
- You can travel direct to the mine sites here in Malawi even though we have few established mines. You can travel to Zambia, Tanzania or Mozambique. If you travel, you should have a good eye for quality stones or bring someone who does, so that you do not overpay for bad gems. The more the third party or middle men you have involved in your transactions, the more you will pay for the gemstones.
- You can arrange with sellers or miners to meet you in a place you agree.
- You can visit various gems and minerals shows and purchase from a variety of gems being exhibited there.
- You can also start your own mine here in Malawi.
Most importantly, if you want to succeed in gemstones you must gain a reputation or trust with:
- Contracts from buyers
And as you go along, you will learn more about gems and quality, and meet more clients.
Selecting and grading gems before you buy
SIZE, most of the time try to look for good sized pieces, unless it’s diamond, sapphire or ruby which still sell well in small sizes, under a gram stones are in very low in demand. The bigger the size, the more profit you will make. Also if a piece is big enough you will likely yield good size after faceting/cutting. Gems are measured in carats and grams on a digital scale and sometimes in kilograms if the quantity of parcel is huge. They are also measured in mm after cutting/faceting.
CLARITY, any gem which has got visible black sands, bubbles, cracks, feathers or some layers is said to be included or not clean, such stones fetch low prices on both national and international markets. Buyers need only loupe clean material. Most of the time hands-free optivisors are used to observe very minute inclusions with aid of led light torches. Most local dealers do not have good led light torches or flash lights.
The grading in gems are of the following category:
- F–Flawless (no blemishes or inclusions visible under 10x magnification)
- IF–Internally Flawless (no inclusions under 10x magnification)
- -VVS1 and VVS2– Very,Very Slightly Included (inclusions so slight such that are difficult for a skilled grader to see under 10x magnification)
- -VS1 and VS2-Very Slightly Included (inclusions are observed with effort under 10x magnification but can be characterized as minor and acceptable by buyer)
- -SI1 and SI2-Slightly Included (inclusions are noticeable under 10x magnification)
- – I1, I2 and I3-Included (inclusions are obvious under 10x magnification which may affect brilliance and transparency).
COLOR, color is the most important aspect in choosing gems to buy. Most clients need stones with good color. For example, in aquamarines, people want those with dark colors even though medium blue are also desirable. In color, we consider the following: Saturation, Tone and Hue. These are confusing and difficult to understand.
- saturation, which refers to intensity of color from light to strong to vivid. This depends on the type of gems. For example, garnets which are highly saturated are less preferred than less saturated ones. Even tourmalines in dark colors or highly saturated are not in demand. In garnets and tourmalines, look for light colored pieces. On the other hand, darker shades in aquamarines are rare and highly sought after and valuable.
- tone describes the depth of color from light to dark, most buyers look for “open colors” for example, in garnets and tourmalines. Ideally, a gemstone should have life and brilliance when viewed from direct light. A simple white paper test should be applied. In tourmalines, the two ends called C-axes should be as open as the long horizontal part.
- hue is the basic concept of color such as saying a gemstone is blue or red or green. Almost every gemstone has a primary and secondary color. Most of the time, the preferred ones are those free from secondary colors. In some gems, mixed colors are highly valuable like bi-color tourmalines. A thing you might find hard to understand among buyers but you will learn with time.
The other thing to consider is types of gems luster which are adamantine, vitreous, pearly, silky, greasy, resinous, waxy, dull and metallic.
Opal and turquoise stones appear waxy on their surface. Gems like ulexite show fine parallel threads that look like texture of fabric. Gems like quartz,topaz,and tourmaline have a shiny “glass-like” luster. Adamantine describes gems with a brilliant, mirror-like appearance, like diamond.
SHAPE, before buying also consider shape of a stone. The ones which are flat are less in value. Look for gems which are round, blocky, chunky, oval or square in shape or if rectangular then width should be thick enough.
IMITATION STONES, keep an eye on synthetic stones, experience will always help and if you are not sure, please refer to more experienced dealers. Do not rely on the common testers like diamond needles or internet, you will lose money on useless material. If you can do a fast specific gravity test, which is the ratio of weigh of stone in air to weight in water, it can help, too. Do a glass-scratch test to see hardness or you can scratch against a known stone to see a basic hardness. See or ask also if the stones was heated or treated (it’s important to buy from reliable sources who can tell the truth). All gemstones are measured on Mohs’ Hardness Scale which runs from 1 to 10,diamond being the hardest and talc being the softest. On the other hand, please do not apply any oil if you want to take stones to the market or do not accept an oiled parcel. This is common in aquamarine parcels. Oil tends to hide inclusions and the real color of stones.
Chelsea filter, ruby filter, a magnet and a dichroscope are also the basic tools to use in identifying gems you do not know. A dichroscope measures dichroism in stones.Tourmaline, iolite, tanzanite and aquamarine are highly dichroric.W hen viewed with a dichroscope, two different colored blocks are seen. Glasses, garnets,s pinels and most synthetic stones are NOT dichroic. In sapphire and ruby, the angle of split is very acute such that it’s difficult to see with naked eyes. Spinels and most garnets can be separated by magnets as the latter get attracted to magnets.
Some gems show three colors which are called pleochroic or trichroic. Dichroic gems generally always have hexagonal, trigonal or tetragonal crystalography. Pleochroic have orthorhombic, monoclinic crystallography.
PRICE, try to negotiate on good prices before you pay. Of courses prices will be based on the above factors.
In summary, the gemstone business is on the table! You talk and negotiate prices when a buyer has seen the stones. As already said, this business needs more time for one to learn as there are many obstacles on the way, ranging from scammers to synthetic sellers. Do not be greedy, refer to your friends for knowledge and assistance on materials you are not sure of. Do not have the feeling to get rich today or quickly, take your time, do not lose hope after you have goofed or blundered, be satisfied with what you have profited and please be extra careful!!
Licencing in gemstone trade
Like any other businesses, gemstones are also licenced. If you want to stock, buy and sell gemstones you need to have a licence from the Department of Mines which is under Ministry of Natural Resources, Energy and Mining. The licence currently costs about USD 14 (MWK 10,000) and is renewed annually. You cannot export gemstones if you do not have a licence. When exporting, you will have your stones inspected by the Geology Office and given an Export Permit which is valid for a month and you will pay royalty fees to the government. You will also pay a processing fee to Malawi Revenue Authority (MRA) before you export your parcel.
In Malawi, we have many local buyers like Chinese, Tanzanians, West Africans and Indians. There are both permanent buyers who stay in Malawi for a long time and those who just come for a week or a month. All you need to have are quality gems and at a reasonable price. Even internationally, there is good market like in Tanzania, Mozambique and Zambia; there is huge demand for garnets like rhodolites, aquamarine, tourmalines, and sapphire. Some of the big world markets are in Thailand, Sri Lanka, India, China, while the USA market takes only the very top material.
Before shipping stones make sure you grade according to quality and make invoices and file records which is important when renewing the licence and for returns for the MRA.
Mzuzu-born Jephter Ngwira (Dip.), the author of this piece, runs East Gate Mining with two friends. They are prospecting in Dowa, Mchinji and Lilongwe. He has partnered with Ales Krivanek of Ravenstein Gem Co., which also has the subsidiary Ravenstein Gems, registered in Malawi, to buy stones.
Originally with a background in pharmacy and experience in the health sector, Ngwira developed a passion for minerals in 2013. He plans to attain a qualification in gemology and open an academy and laboratory in Malawi. He also would like to run a non-profit to teach his fellow youth how to run a small business in gems in order to reduce unemployment, which is very high in Malawi.
In June this year, Ngwira organised a training with the Gemstones Association of Malawi. The main facilitators were Rodger and Ginger Dery from Michigan, USA, who own Spectral Gems. See his earlier post on the challenges facing the gemstone business in Malawi.
Contact Jephter Ngwira on: firstname.lastname@example.org.