Pricing and marketing of minerals from small-scale mining operations: The case of Gemstones

Abstract

This study analyses the factors which are involved in the determination of prices and marketing of mineral commodities.Its emphasis is on gemstones. The experience of Zambia, Zimbabwe and Tanzania have been used to illustrate problems facing less developed countries trying to use small-scale mining for development.The study shows that it is not easy to regulate supply in times of low prices and it is primarily demand which quickly responds to changes in business cycle in industrialized countries which dictate price fluctuations.The study also establishes that high quality gemstones are luxury goods and are mainly demanded by wealthy countries for jewellery and speculative purposes.From an examination of the three African countries studied it is clear that most less developed countries lack expertise to value and establish realistic prices.The problem is compounded by the fact that these less developed countries sell their gemstones in monopolistic markets.De Beers and other coloured stones dealers are clear examples. The organization of the gemstone industries in Zambia and Tanzania has not been satisfactory.Zimbabwe though may be a country on the threshold of developing appropriate structures for running a viable gemstone industry.