Polish Amber Industry in 2007

Wiesław Gierłowski

Contrary to earlier predictions about a market offensive by attractive fossil resins from different parts of the world, Baltic amber, i.e. succinite, remains the only amber variety of any significance on the global market.

Essential economic factors
Dominican amber, made famous by Spielberg’s Jurassic Park, may be beautiful and full of intriguing traces of ancient life, but it is extracted in very small amounts and even those cannot be exported from the Dominican Republic. Mexican amber, its close relative from the state of Chiapas, never transcended its role among the local populace as a magic charm and a rarity in natural history collections. Burmese and Japanese fossil resins, which were once extracted in considerable volumes, now appear only in trace amounts on their local markets. Sarawak amber, obtained in large amounts as a by-product of brown coal mining, failed to gain market acceptance because of its unattractive appearance. And so, succinite rules, although its extraction is diminishing, and much of what is extracted comes from illegal practices.

I have presented the estimated data on the drop in extraction in the tables below:
Amber (succinite) extraction and gathering in tonnes – 2000 compared to 2006

	Poland	Russia	Ukraine	Lithuania	Other	Total
2000
legal	7	442	0,4	1,6	1	452
illegal	12	25	20	1	-	58
total	19	467	20,4	2,6	1	510
2006
legal	5	132	3	1	1	142
illegal	12	18	27	1	-	58
total	17	150	30	2	1	200

 

Extraction of workable fossil resins in 2006

name of fossil resin	place of extraction	extraction in tonnes
succinite (Baltic amber)	Central Europe	200
Dominican amber	Hispaniola, the Caribbean	1,2
Mexican amber	Chiapas, Mexico	0,3
burmite	Birma and neighbours	trace amounts
simetite	Sicily and Liguria	trace amounts
Japanese amber	Kuji, Honshu Island	0,5
total		202

The table does not include Sarawak amber, which is not used in jewellery

 

As we can see from the above figures, almost all of the world’s workable amber comes from the Russian Federation (Kaliningrad Oblast’) and the Ukraine. In 2000 it was 95.5%, while in 2006: 90%.
The output from the Russian mines in Sambia, which was close to 1,000 tonnes per year a decade ago, is falling precipitously. Three years ago it was 230 tonnes, two years ago 178 tonnes, and last year it was only 120 tonnes. The supply for Polish jewellery companies is supplemented by illegal extraction in Russia and the Ukraine: this output comes to Poland directly from the Ukraine or most commonly from Russia via Lithuania.

Amber gathering on Polish beaches, amber fishing from the sea, finds in post-glacial deposits (including brown coal mine waste dumps) and the output generated by those licensed to rinse amber deposits from under the Vistula River Delta sediments (11 licenses which have not been used to any significant degree) covers less than 10% of the Polish amber industry’s demand.

Surely, the share of Polish-extracted amber will not rise by any great degree in spite of the licensing of amber rinsing from some dozen small plots owned by the City of Gdansk, a decree for which was signed by Gdansk mayor Pawel Adamowicz on July 7, 2007. This area was prospected legally as early as in 1972, and illicitly for many years thereafter. It would be wrong, therefore, to expect any spectacular results. However, undertaking legal extraction of the amber deposits in the Vistula River Delta, close to the greatest concentration of amber jewellery companies in the world, has a strong symbolic value and will help to weaken the monopolist standing of the Russian mines in Sambia.

And so, in coming years, the Polish and Lithuanian amber jewellery manufacturers, who dominate the market, will remain dependent on the import of raw amber from Russia and the Ukraine. Meanwhile, however, the output in both countries is declining consistently, even though the deposits are enormous and quite well documented from the geological point of view. The obstacle here is the legal red tape involved in getting access to deposits, the tightening of environmental protection standards, and most of all the difficulties in organising the extraction process in a way which would preclude the stealing of the output. The last of these factors leads to losses in mining operations, even in the best natural conditions (in very productive and shallow deposits).

Polish companies have in fact managed to cope quite well with the amber shortage by turning to the manufacture of silver jewellery with increasingly modest amber gemstones. As recently as ten years ago, the gemstones’ share in the overall weight of finished products varied between 13 and 18%. In 2007, it has fallen to ca. 10%. In terms of volume and the visual effect, this gives an equal share of metal and amber, as silver’s specific gravity is ten times that of amber.

Fortunately, there is no shortage of silver and the supply market offers an ever-growing array of semi-finished products with diverse properties. The recent stabilisation of silver prices is a boon, as the share of silver in the production cost is much higher than that of amber gemstones.

Over the last 7 years, the outlays on silver, calculated as a percentage of the sales price of mass-produced items, rose from 30 to 36%. In spite of savings on the weight of the amber gemstones, their cost also rose, from 5 to 9% of the sales price. All told, we can see an increase in the cost of the primary materials by 10% of the finished products’ sales price. However, this did not lead to a drop in profitability. On the contrary, profitability rose because the sales prices of finished products grew even more, by ca. 20%, over the same period.

Larger companies benefited greatly from the introduction of a flat income tax rate of 19%, which made it possible to increase net profit up to well over a dozen percent.

This resulted in increased investment in new manufacturing facilities, equipment and sales outlets. Poland’s entering the common market of the European Union greatly increased its trade with its neighbours, streamlined the documentation procedures and reduced shipping costs.

From the sociological point of view, the drop in employment in the amber industry is an alarming development. This drop was caused especially by the collapse of small family-owned companies making traditional amber necklaces. This has not led to a drop in the supply of finished products, as fine jewellery has replaced these traditional necklaces. As a result, the Polish amber industry has considerably raised its work output, while the rising wages in the larger companies are no threat to the competitiveness of the Polish export offer.

Poland’s dominance in the international amber product market
No country isolates the manufacture from the sale of amber products in its statistical classification. This disregard for amber commerce is a consequence of its minute share in world trade. Less than USD 400 million in export sales of amber products is a truly unimposing figure when compared to the total global trade which reached USD 13 trillion (excluding arms) in 2006. Amber accounts for only 0.3 cents of every thousand dollars in world trade. However, from the point of view of the interests of the considerable manufacturing community, concentrated mainly in the Baltic Sea Region (Pomerania, Russia’s Kaliningrad Oblast’, Lithuania), it would be worthwhile to attempt to estimate the scale of these economic operations, even knowing the risk of errors and inaccuracies.

Production and export of finished products in 2006 (USD million) - estimated figures

	Poland	Russia	Ukraine	Lithuania	Other	Total
total production	360	50	12	100	8	530
including export	150	5	1	25	4	185
turnover within the EU	160	-	-	50	-	210
total international trade	310	5	1	75	4	395

The above table does not account for re-export, the speciality of Danish and Chinese companies. This issue requires separate insight.

The figures point to the dynamic development of the amber industry in Lithuania and the capability of its companies to acquire customers quickly, especially in the European Union. The Lithuanian portfolio has a much greater share of traditional “amber only” products than its Polish counterpart. This is an indication of more effective procurement of raw amber supplies from the Kaliningrad factory than is the case with the Polish industry. Surely, this is the result of many years of trade relations between the two former republics of the Soviet Union.

The domestic market in Poland
In terms of the number of shops selling amber products, a very diverse jewellery portfolio, the beginnings of specialised retail chains (e.g. Boruni Krakow, VNS Gdansk) and the spread of trade outlets throughout the country, the Polish amber portfolio is probably the most comprehensive in Europe.
Poland has both exclusive galleries with a range of expensive objects and unique works of art, and more modest shops and stands, all the way to street vendors, who depreciate amber’s reputation somewhat. This is why a considerable diversity of retail profit margins is possible: from under twenty to several hundred percent of the purchase price. This results in profitability that is much greater than the revenue on capital invested in manufacture. Moreover, trade can largely take advantage of commercial credit given by suppliers in the form of deferred payment for supplies. There is not yet a sufficient nation-wide network of wholesale outlets, which leads to a predominant share of manufacturer–shop transactions in the total trade.

Lithuanian and Russian products are brought to the Polish market, sometimes illegally. For instance unsigned animal figures, often expensive due to their considerable weight, are certainly of dubious origin. In terms of the supply of large amber objects of ornamental art, Poland is clearly behind what Russia has to offer in St Petersburg and Moscow, which is a pity, especially for Gdansk, famous for its traditions in this regard.

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