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London - Gemfields, the world's largest rough emerald producer, expects to take up to two more years to have stopped the losses at the Faberge jewellery business it bought two years ago, its chief executive, Ian Harebottle, said.
London-listed Gemfields, which mines emeralds in Zambia and rubies in Mozambique, bought Faberge in the hope that the brand made famous by Peter Carl Faberge's Russian Easter eggs would help boost demand for jewellery featuring coloured gemstones.
But while Gemfields as a whole has performed strongly since Harebottle took over as chief executive in 2009, thanks to a steep rise in gemstone prices, Faberge is losing about $1m a month.
"We went for Faberge because it is such a phenomenal brand focused on coloured stones artistry. With Faberge we are helping growing demand," he told Reuters in his office in London's opulent Mayfair district.
"But you can't make money overnight after you buy an asset. It's crazy. It takes a while to make it profitable. We are hoping Faberge to be breaking even in 18 months to two years."
Harebottle, a South African national with a passion for motorcycling, said the company is now working on a revamp for Faberge which includes new store designs and locations with new products and pricing to create a more modern brand identity.
Although Gemfields is aiming to increase the number of Faberge stores from five to about 12 to 15 in the next few years it is not looking to grow it further.
"Faberge is always going to be a fragment of our sales and I don't want to compete with our customers but jointly grow our business," Harebottle said.
Shares in Gemfields closed trading on Tuesday at 49 pence to value the company at €265m ($415m), a rise of 50% this year, while the overall AIM market index is down almost 16%.
Aiming high
"All things being equal, we should certainly be a $1bn business in the next 18 months. At that stage we would move from the AIM market to (London's) main board. And from there, who knows?" Harebottle said. "Within the next two to three years I might sit my guys down and say 'shall we buy De Beers'?"
De Beers, the world's largest diamond miner by value, is currently majority owned by diversified miner Anglo American and is worth roughly $15bn.
Nevertheless Gemfields has already benefited from a return to popularity of coloured gems since 2009, with the prices of stones such as rubies and emeralds having risen an average 80% annually in recent years.
This has been helped by the company's advertising efforts, which cost it $14m last year, while De Beers has recently pulled back on promotional spending, according to Harebottle, whose father used to work as a diamond cutter in South Africa.
"There is nothing wrong with Anglo but it's mostly an iron ore company ... in gemstones it is about the right tonnes and about promotion," he said.
"We don't have to be as big as them to buy them. We just have to be going in the right direction and convince the shareholders that they would be better off with us."
