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Subject:Response to Anita's statement #1
Posted By: Bill Sat, May 17, 2008
Anita, had stated:
"1) Wholesale and retail price of raw nephrite in China of both local and imported are very much different.”
While I in general respect her opinions regarding dynasty jades, I believe her knowledge in the prices and availability of nephrite jades are truly lacking and I believe my response to her deserves a separate thread:
My goodness, Anita, where did you get your information from?
Did you not remember that I had done some researches regarding wholesale prices of nephrite before? Well, please allow me to refresh your memory.
First of all, you cannot find any large amount of nephrite in today’s China, especially large sized nephrite rocks (those that are 2 kg or larger). There are no records of known nephrite mines in ancient China or in modern China.
Therefore, most nephrite rocks especially the large one had to be imported from overseas.
If you refer to the following article “B.C. Nephrite Report, 2004” written by Kirk Makepeace posted at the following link at the Friends of Jade web site:
http://www.friendsofjade.org/current-article/2004/3/29/bc-nephrite-report-2004.html
The article says:
“I mine three of the four nephrite deposits in British Columbia—Polar, Kutcho, and Ogden. Ogden remains closed but stands to reopen shortly as market conditions demand some of its unique jade. The other mines, including Cassiar, with which I have no involvement, worked this summer.
Polar: Polar remains one of the most popular jades for our Asian and North American clients. Polar at its best is ideal for great jewelry and sculptures. Lower-grade Polar, with its tendency to be harder than other nephrites, makes great accessory products such as souvenir carvings, tiles, etc.
Unfortunately, the best of Polar production appears to be over. As the mine goes deeper into the mountain, costs increase enormously so the viability of the Polar mine for long term production becomes increasingly doubtful. About 40 tonnes of high-grade material remains in our Vancouver inventory. The price of this material is rising as demand increases and the likelihood grows that what we have is the “end of the good stuff.”
In 2004 we removed a total of 70 tonnes from Polar, but less than 10 percent was high-grade.
Mining will continue through 2005, but mining beyond that date depends on quality and demand.
Kutcho: A new jade tile facility recently opened in Mexico, which resulted in my optioning the Kutcho jade claims for their production needs. They removed approximately 150 tonnes of B.C. nephrite, the bulk of which was for jade counter tops, tiles, and sinks. Designers and architects are increasingly interested in jade for its architectural backlit properties combined with the lure of its exotic name and its structural superiority. One of the premier hotels in Las Vegas will be unveiling a wall of jade in January, 2005.
Kutcho still holds the largest nephrite deposits on earth, but producing for traditional jade uses is difficult because of rising mining costs. The success of larger scale production for tiles and similar products will allow the production of jewelry and carving jade as a by-product. This combination of uses appears to be a key factor in continuing to operate Kutcho.
Cassiar:The former asbestos mine will likely never be reopened to produce asbestos. However, the infrastructure remains—roads, buildings, and the massive open pit containing the jade deposit. Once the mine closed, management allowed jade scavengers to go through the vast (measured in millions of tonnes) waste dump of serpentine rock in search of blasted and otherwise discarded jade pieces that had never been a priority of the original mine.
Using hydraulic excavators, the jade pickers sift through the rock and pick up pieces of jade ranging from a few lbs to 1-2 tonnes. Although most is of very poor value, they do find enough of the unique chrome-colored and dark green jade to pay their costs of operation.
In 2004 a new access road is being blasted into the old open pit to try to reach the original jade veins. Some very high-grade jade remains at this site, but the costs will be high and production limited. Demand for the unique properties of this jade has allowed prices to escalate to meet the high costs associated with this mining operation. Cassiar jade will be available in limited quantities at prices from $20-$50/kg for bulk exports to China, more than double what it sold for before the asbestos mine closed. Expect smaller amounts available to lapidary and small market users as well as prices about $20-$50 per US pound (not kilos).”
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Sentences that would be with special interests to you would be:
“Polar remains one of the most popular jades for our Asian and North American clients.”
“Unfortunately, the best of Polar production appears to be over. As the mine goes deeper into the mountain, costs increase enormously so the viability of the Polar mine for long term production becomes increasingly doubtful. About 40 tonnes of high-grade material remains in our Vancouver inventory. The price of this material is rising as demand increases and the likelihood grows that what we have is the “end of the good stuff.”
“In 2004 we removed a total of 70 tonnes from Polar, but less than 10 percent was high-grade.”
“Kutcho still holds the largest nephrite deposits on earth, but producing for traditional jade uses is difficult because of rising mining costs.”
“Cassiar jade will be available in limited quantities at prices from $20-$50/kg for bulk exports to China, more than double what it sold for before the asbestos mine closed. Expect smaller amounts available to lapidary and small market users as well as prices about $20-$50 per US pound (not kilos).”
“Prices in Canada, stated in US dollars:
Grade aa (jewelry) $20-$50/kg
Grade a $10-$15/kg
Grade b (carving) $5-10/kg”
“These prices are for bulk exports (mine run), based on 5000-20,000 kg purchases. Prices for small collectors, users, individual carvers would be double this.”
What did these tell you? The wholesale prices of nephrite jades are cheap? Remember, the report came out in 2004 and now the Canadian dollar are at par with U.S. dollars, that means the price of nephrite from B.C will cost at least 40-50% more in today’s market.
Well to obtain this bulk price for the grade B nephrite, a Chinese merchant would have to purchase at least 5,000 kg of them. Wow, if he uses only 2 kg to carve one of these "modern Hongshan fakes", he would end up with 2,500 pieces of them. Did you see the whole streets in China full of these large Hongshan nephrite jade carving selling for US $20 a piece? You once told me even a small Hongshan style nephrite jade turtle (about 100 gram) would cost me US $20.
In another more recent article written by the same author and posted in the same site:
http://www.friendsofjade.org/current-article/2006/7/27/the-state-of-the-worlds-jade-markets.html
The State of the World's Jade Markets
“The dramatic decrease of the value of the US dollar and resulting increase in value of the Canadian dollar has hurt the profitability of mining operations. The producers have been conditioned to expecting much of their profit on the difference between the two currencies. In 2001 the difference in the rates was 1.60 CDN to $1.00 US; now, instead of a 60 percent Canadian premium, the currencies are virtually at par: 1.09 CDN to US$1.00. As almost all jade sales are conducted in USD, the exchange rate has seriously affected our Canadian cash flow. Buyers are reluctant to accept a currency fluctuation as a strong argument for increasing our prices. Other inflationary costs, (OIL, OIL, OIL) have also hurt jade operations. Government regulations continue to tighten, making mining in Canada viable for only the very rich and well-financed large corporations. It would be difficult to bring a new jade discovery in Canada into production.”
One of the major problems with mining “new” nephrite is if the cost of mining nephrite is lower than that of the wholesale price of nephrite, then nephrite mining would be reduced or even completely stopped. Same phenomenon had ad happened to both silver and gold mining. This article was published on July 27, 2006. Almost two years later, the current situation is much worst, because as of today, $1 Canadian is equal to exactly $1 US and the cost of oil had gone up immensely. This means higher production costs in mining the nephrite and higher transportation costs in delivering the nephrite to China. Using common sense, how can they obtain nephrite from overseas in such low "wholesale prices" as you claimed and the delivered them to China to make these large nephrite fakes. Then sell them back to U.S.A. for less than US $18 a piece. Is that not a little bit absurd.
In short, even the middle of the grade nephrite would not cost less than US $20 per kg. Other than Canada, there are really not many countries who can rival the quantities of B.C. nephrite being exported to China. May be now you would argue there was a new nephrite mine being discovered in Vietnam and since the labor costs there were dirt cheap, therefore they could sell cheap nephrite to China at $1 a kg and it would only cost $1 in labor cost in making them. If that is indeed the case, I guess I have admit you are absolutely right.
I wonder next time you are going to China, can you look around for any large nephrite rocks than would weigh 2 kg and has a length of at least 12 inches and see how much you have to pay for it.
Good luck.
Bill
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