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5 July 2001

ACCC Investigates Opal prices

Claims that the nation's opal industry is being undermined by collusion among gem buyers is being investigated by Australia's competition watchdog ,the ACCC.

Details of the claim have been compiled in a report by the Northern Regional Development Board and refer particularly to the opal mining town of Coober Pedy.

It claimed that prices offered to prospectors were being forced down by buyers. The report found that the industry was achieving between 20 and 50percent of its potential earnings even though the supply was not close to being exhausted.

Andrew Eastwick, spokesperson for the Northern Regional Development Board said, that they were working-with the industry to reach agreement on some of the recommendations, however he recognised that this may only occur in stages.

Excerpts from the strategic assessments are:

The international jewellery and gem community have approved and are teaching the Opal Nomenclature. The Nomenclature is the most widely accepted, but it is still not used by the entire industry. The lack of a uniform trading language has been identified as a significant strategic issue.

The study concluded that the Australian opal industry has declined significantly over the past decade, some say it is at 10 to 30 percent of what it used to be. There are two components to the problem: the decline in the amount of quality opal being found and the fact that the industry is not getting the true value for its product.

The major factors impacting on the reduced performance are:
1.Shortage of supply
2. Undisciplined selling practices
3. Thinness of markets due to shortage of supply
4. Complexity of product and the highly judgemental nature of assessment and valuation
5. The mining culture
6. Steepness of the value chain curve
7. Lack of cohesion between mining fields
8. Lack of marketing and promotion
9. Lack of competitive-ness in processing low grade opal
10. Wealth of the industry being reaped outside of Australia/South Australia.

The second component of the study was to recommend a marketing strategy for the industry to increase the value to Australia. The recommendations included:

*Establishment of a peak body
*Formation of an industry owned entity
*Scheme of accreditation at all levels in the value chain
*Adoption of a uniform trading language
*Establishment of a system of accredited assessment panels
*Establishment of a trading clearing house
*E-commerce trading platform
*Establishment of a finance facility
*Value adding
*Uniform TAFE program
*Research and development program
*Introduction of a generic marketing program
*Formation of a procurement arm

The strategic elements are designed for either a staged rollout or a onestep launch. It should be noted that it may be too ambitious to have a onestep launch, therefore it would be better to rollout the stages step by step.

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