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NRC May OK Existing Blue Topaz Stocks

The Nuclear Regulatory Commission (NRC) may be on the verge of
allowing U.S. importers of blue topaz and other irradiated gemstones
to sell their existing inventories. The agency is considering
enforcing old regulations and applying new ones only with regard to
future imports, said a senior official in a recent interview.

From the GIA Insider
September 28, 2007

Industry Analysis: NRC May OK Existing Blue Topaz Stocks

The Nuclear Regulatory Commission (NRC) may be on the verge of
allowing U.S. importers of blue topaz and other irradiated
gemstones to sell their existing inventories. The agency is
considering enforcing old regulations and applying new ones only
with regard to future imports, said a senior official in a
recent interview.

Duncan White, chief of the NRC’s State Agreements and Industrial
Safety Branch, said that, since the beginning of this month, the
commission has been te.sting inventories of irradiated gemstones
held by companies around the U.S. Regulatory agencies in several
states have helped with these tests, he said. Thus far, the NRC
has found no health or safety problems, and consequently is
considering an approach that would substantially soften the
impact of its renewed attention to irradiated gems.

“Right now, we are considering ‘grandfathering’ existing
inventories of all blue topaz within the U.S. - allowing
companies to sell their goods and applying new requirements only
to material still overseas,” White said. “We understand the
effect these changes might have on businesses, and we want to
reach a resolution that is fair to everyone.”

White emphasized that this “grandfathering” policy would apply
only to gems over which the NRC currently has jurisdiction:
those treated in a nuclear reactor. These include the more
intense hues of blue topaz such as “London” and “Swiss” blue, as
well as irradiated colored diamonds, some types of tourmaline,
golden beryl, and cultured freshwater pearls.

White offered no timetable for when the "grandfathering"
approach could become official - “that’s the question on
everyone’s minds” - because the commission is still evaluating
inventories and will continue to do so until it is satisfied
there is no health threat.

Since the 1980s, reactor-treated gems have been subject to
requirements that they be released into the marketplace only
after being tested for residual radiation in an NRC-licensed
facility. This regulation was widely ignored over the past
decade, however, as nearly every NRC-licensed testing and
distribution facility had ceased operating or allowed their
licenses to expire. The gemstone industry had, in the words of
the NRC, fallen into noncompliance. Controversy erupted earlier
this year when the NRC announced it would expand its rules to
cover blue topaz and other gemstones irradiated in a second type
of treatment apparatus: a linear accelerator (linac). The change
is scheduled to be published in the Federal Register shortly,
and the rule will go into effect 60 days after publication.

The NRC has received “a number of applications for license
renewal” in recent weeks, White said. He added that importers
and processors who already hold NRC licenses will have six
months to apply for the additional license for linac-irradiated
gems. Those who do not hold an existing license will have one
year to obtain one.

The “grandfathering” will not apply to the new rule covering
linac treatment, because the NRC will have jurisdiction over
those goods only after the new policy takes effect and the trade
should have sufficient time to bring itself into compliance.
Such goods can currently be sold without restriction, but it is
often difficult to separate reactor-irradiated from
linac-irradiated gems.

The industry’s lack of compliance and the NRC notice prompted
many large retailers to begin pulling blue topaz jewelry from
their display cases, some returning the pieces to the
manufacturer. Dealers surveyed this week noted that demand was
still down, though buying has picked up from the summer, when
sales nearly stopped after the controversy broke.

DIAMONDS: No further has been released about the
alleged 7,000-ct. “diamond” discovered in South Africa earlier
this month, except that it remains unverified as a diamond.
There is good news from the small kingdom of Lesotho, however,
where the Letseng mine has yielded a 494-ct. diamond that is
reportedly the 18th largest ever found.

The Letseng mine, reopened in 2003 by Gem Diamond Corp. of South
Africa, does not produce much in total volume, but the stones it
does produce are huge. The 603-ct. Lesotho Promise, found there
in 2006, sold for $12.4 million to jeweler Laurence Graff at a
special auction in the Antwerp Diamond Center. Over the course
of six days in January 2007, miners recovered four major
diamonds weighing 72, 76, 106 and 112 carats. A few weeks later,
the mine yielded a 215-ct. diamond that sold at tender for $8.3

The grade at Letseng is only about 2 carats per hundred tons
(cpht), compared with 140 cpht for an operation such as Jwaneng
in Botswana. As Letseng is the world’s lowest-grade operating
kimberlite mine, its large (10.8±ct.) diamonds account for
three-quarters of its revenue. While the world average is $65
per carat, Letseng’s production averages an amazing $1,200 per

MACRO: The National Retail Federation (NRF) forecasts a slower
rate of spending as consumers in the U.S. respond to difficult
economic conditions. The NRF, citing the ongoing problems in the
housing and credit markets, said it expects retail sales to rise
4% to $474.6 million during November and December, marking the
slowest holiday sales growth since 2002. The NRF noted, however,
that the luxury segment would show the strongest growth, as low-
to middle-income consumers would be most affected by the
economic slump.

The Conference Board, an economic research group, reported that
consumer confidence took a precipitous drop in September. Its
Consumer Confidence Index fell to 99.8 points, an almost
six-point decline from the revised 105.6 points for August and
well below the 104.5 points analysts had predicted.

The last time the Index fell below 100 was November 2005, after
Hurricane Katrina devastated New Orleans and the U.S. Gulf

“Weaker business conditions, combined with a less favorable job
market, continue to cast a cloud over consumers and heighten
their sense of uncertainty and concern,” said Lynn Franco,
director of The Conference Board Consumer Research Center, in a
press statement. “Looking ahead, little economic improvement is
expected, and with the holiday season around the corner, this is
not welcome news.”

The Present Situation Index, which measures how consumers feel
about the current economy, declined to 121.7 points from 130.1
points in August. The Expectations Index, which measures their
outlook over the next six months, declined to 85.2 points from
89.2 points.

The Conference Board also reported in mid-September that its
index of leading economic indicators dropped a sharp 0.6% in
August, slightly higher than the 0.5% decline analysts were
expecting. The Conference Board report is designed to forecast
economic activity over the next three to six months.

Russell Shor
Senior Industry Analyst

Thanks for the update. I keep seeing blue topaz in retail catalogs,
as well as in wholesale gem supply catalogs, and have been wondering
what was going on. If all the clothing and museum retailers can sell
it, jewelers should be able to also!

Beth in SC