Until a decade ago, pure white diamonds were in widespread demand, but, increasingly, coloured gemstones are coming into their own, says Pallinghurst chairperson and mining doyen Brian Gilbertson, who now has ‘skin in the game’, together with his partners, former Incwala CEO Arne Frandsen and his eldest son, Sean Gilbertson, and Andrew Willis.

Pallinghurst is now a JSE main board primary listing, following its initial foray on the Bermuda Stock Exchange.

On coloured gemstones’ sudden dominance, Gilbertson notes that the display windows of the upmarket jewellery stores in London and Paris are nowadays resplendent with emeralds, sapphires and rubies.

Even many of the diamonds on display are champagne and pink rather than only white, as in days gone by.

Of the transition from white diamond dominance to coloured-gemstone ubiquity, Gilbertson says: “It’s like the movement from black-and-white to colour TV.”

Interestingly, DiamondCorp CEO Paul Loudon, whose primary listing is also the JSE’s main board, speaks as enthusiastically of the “fancy colours” of the diamonds that DiamondCorp is finding at its Lace diamond mine in South Africa’s Free State, close to De Beers’ new Voorspoed mine.

Moreover, says Loudon, the “lemon yellow, golden yellow and, most excitingly, Lace lilacs” sell at a premium price.

Gilbertson contends, however, that fine rubies, sapphires and emeralds are achieving as much per carat – “if not more” – than the finest diamonds.

He sees “great opportunity” in developing the marketing of coloured gemstones as well as the mining of these gems, and recalls how De Beers brought order to the diamond-mining business a century ago.

He sees a need now to do something similar in coloured-gemstone-mining, where he finds artisanal activity to be the order of the day, “with people almost coming out of the bush with a bucket and spade to mine”.

While coloured gemstones are “absolutely booming” internationally, Gilbertson sees them held back through lack of consolidation and sound investment, a situation Pallinghurst is setting out to remedy.

Higher Margins

Despite the negligible current investment in more efficient mining, Gilbertson finds that the margins are, nevertheless, higher in coloured-gemstone-mining than in diamond-mining.

In the few months of Pallinghurst acquiring an “important stake” in emerald-mining in Zambia – which produces 20% of the world’s emeralds – Gilbertson reports a material improvement in output.

In addition to its mining ambitions, the company is also ambitious about the marketing of coloured gemstones, with its marketing vehicle none other than the iconic Fabergé brand, now being managed by the equally iconic Mark Dunhill, great-grandson of luxury brand pioneer Alfred Dunhill.

But with a high level of marketing excellence comes a great need for strategies to control potential damage to the brand, which is why Pallinghurst is seeing to it that the mining of coloured gemstones is beyond reproach.

To achieve its aim, Palling-hurst is insisting on a form of Kimberley Process for coloured-gemstone-mining.

“You will be able to track an emerald from the mine to the date that it was sourced and you will know that it is ethically sourced,” says Gilbertson.

The “very finest” emeralds will, in turn, have embedded in them the name Fabergé.

Fabergé, says Gilbertson, has “instant recognition” among consumers and invariably achieves a price “higher than its estimated value” at auctions.

The Fabergé brand has been reunited with some of the remaining members of the Fabergé family for the first time since the Russian Revolution and the first collection of Fabergé jewellery will be put on display at the Basle Fair next year.

It will be at Basle that consumers will get a glimpse of the direction in which Pallinghurst is taking Fabergé in the short term.

But, ultimately, stand by for the possibility of luxury Fabergé handbags, eye wear and fine watches, and probably the first Fabergé ‘egg’ since 1915, from the reconstituted House of Fabergé.

It is possible that this reconstitution will take the form of something other than an egg, however, in the form of “something of great artistic value”.

Fabergé eggs have sold at prices ranging from £10-million to £15-million each at auctions, Gilbertson reminds.

Gemstone Beneficiation

Within days of listing on the JSE, Pallinghurst opened a new coloured-gemstone cutting and polishing facility in Jaipur, India, the preserve of Gemfields, a Pallinghurst associate company.

Gemfields reports that the 30-employee cutting and polishing facility – on a two-floor, 4 300-ft2 area – will be used to process high-grade rough emeralds from Gemfields’ Kagem mine, in Zambia.

Gemfields founder and executive vice-chairperson Rajiv Gupta believes Gemfields is currently the only company able to bring high-grade, ethically produced, conflict-free emeralds of certified provenance from mine to market.

The long experience of Rajendra Koolwal, a reported veteran of the business who has been appointed to head of the new processing facility, can apparently be seen in the factory’s excellent layout and fastidious equipment selection, and the success in delivery of the project on time and below budget.

Gemfields also has explor-ation assets in Madagascar and wants to become the leading source of coloured gemstones by consolidating the international participants, with Pallinghurst portfolio company Rox Limited owning 55% of the issued share capital of Gemfields.

Four Parts

Gemfields and Fabergé are but two of the ‘cylinders’ on which the Pallinghurst ‘limousine’ is currently firing.

There are also two others – platinum and ‘steel feed’, the latter being company speak for the ingredients that go into the making of steel – manganese alone at the moment – but possibly also including iron-ore and metallurgical coal in the future.

Gilbertson, whose first job was in platinum prior to his spell as a scientist with South Africa’s Council for Scientific and Industrial Research, offers a researcher’s view of platinum that makes one sit up and take notice.

He contends that “the world just wouldn’t operate without platinum-group metals” (PGMs) and reinforces his proplatinum argument with the assertion that, without PGMs, there would be no fibreglass; no refining of oil; no nitric acid; no nitrogenous fertiliser to grow crops; and none of the estimated 20% of all consumer products that either contain PGMs or require PGMs in their production.

Those setbacks would, of course, be in addition to the items invariably held up as the main PGM consumers, namely automotive catalytic converters and jewellery.

“It’s a critically vital element,” says Gilbertson, who emphasises that 80% of the world’s PGM reserves are in the Southern African region.

“It’s a set of metals that has a wonderful future for the years ahead,” he adds.

Pallinghurst, which hit a R10,50 a share JSE high after its R7 debut, has two platinum projects that Gilbertson believes the company will be able to develop “very successfully”.

Both are on the western limb of the Bushveld Complex, one part of the Moepi group being acquired, and the other at Magazynskraal.

Manganese Outlook

Besides coloured gemstones, Farbegé and platinum, Pallinghurst has manganese, an essential in steel, which is, in turn, essential for economic growth.

“We have acquired a very interesting opportunity in manganese,” Gilbertson says, adding that he is not ready, at this stage, to talk about the “one or two” other areas into which Pallinghurst may move, having not abandoned the idea of creating a “steel-feed corporation”.

Pallinghurst – the name stems from a road in the Johannesburg suburb of Westcliff – is reportedly scouting an iron-ore oppor- tunity in south-west Australia, and has opportunities with privately owned coal-miner AMCI, a coinvesting partner that has extensive iron-ore holdings.

From the outset, Palling- hurst has sought “half a dozen” mining opportunities that investors have not fully recognised and that can be “turned around” in order to realise full value.

“We have four at the moment,” Gilbertson tells Mining Weekly, with two more to come.

Boom Sustainability

On the cyclicality of the resources business, Gilbertson says that the opportunities have to be built to be beneficial to investors, irrespective of whether the cycle is up or down.

With world economic growth dependent on materials like steel, platinum, copper and aluminium, “fundamentally, the outlook is really positive for decades”. “It’s really hard to see prices going back to what they were 20 years ago. Input materials are higher priced, there are no cheap easy-to-mine deposits. So, fundamentally, commodities are a good place to be for a long time,” he says.

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