RATNAPURA, Sri Lanka: Dhakshina cannot forget the day when he thought he had struck it rich.

"I found a reddish-coloured gem this big," the 19-year-old Sri Lankan said, as he plucked a stone the size of a hen's egg from a wicker basket full of gravel.

"It turned out it was not high-quality, but I still got 15,000 rupees (US$150). That is a lot of money."

Dhakshina and seven other prospectors work seven days a week at a small mine near Sri Lanka's gem mining centre of Ratnapura, or "the City of Gems," two hours' drive from the capital Colombo.

Taking turns working at the bottom of a dark, 40-metre shaft, they spend 10 hours a day coaxing the earth to surrender its treasures - sapphires in all shades of blue, green, pink and yellow, rubies and semiprecious stones like amethyst, aquamarine and garnet.

Sri Lanka produces most of the world's gem-quality sapphires, second only to diamonds in hardness, and its vivid blue sapphires are widely considered to be among the world's finest.

"Trends change, with yellow sapphires in fashion one year and pink the next, but blue sapphires are always highly valued and in the most demand," says Tennekone Rusiripala, chairman of the National Gem and Jewellery Authority.

"Our biggest customer by far is the United States, a market which has seen a major recovery, but we want to establish Sri Lankan sapphires as a brand in other areas as well, such as the Middle East."

Buoyed by improved marketing efforts and a recovery in the global economy, Sri Lanka's gem exports have risen steadily in recent years after a sharp drop during the 1997-98 Asian financial crisis.

Last year, they reached a record 6 billion rupees (US$61 million), with blue sapphires making up nearly half of the total.

Japan, Thailand, Italy and China's Hong Kong Special Administrative Region were other major buyers.

It also exported nearly 21 billion rupees (US$210 million) worth of diamonds last year, which are typically imported unfinished from Belgium, Italy and the United States.

Sri Lanka does not produce diamonds.

"We want to become a regional gem centre, processing imported stones and producing our own and making more of our own jewellery," Rusiripala said.

"Both India and China are ahead of us as service centres, but they are mainly focused on their domestic markets, not exports."

Most of the gems on the Indian Ocean island are found in layers of gravel called "illama" in low-lying areas once inundated with rushing water.

Ancient streams and rivers that carved out valley floors are prime hunting grounds for stones deposited along their banks.

In sharp contrast to the elegance of the finished product, the country's gem mining methods are often crude and rudimentary, and have changed little in generations.

Prospectors, often wearing little but loincloths, pound sharpened iron rods several metres long into the soft soil searching for seams of illama.

Shallower deposits are unearthed with long rakes while trial pits are dug to evaluate deeper finds.

Dhakshina and his friends haul nearly 100 50-kilogram bags of gravel from their mine every day before washing the rocks in a nearby pit and sorting through them for valuable stones.

Rough gems are sold in morning markets in Ratnapura, and may change hands many times before reaching lapidaries, who cut and polish them.

Everyone involved in the operation gets a share of the spoils - from the landowners and financial backers to the miners and owners of the pumps that keep the shafts dry.

The stakes are high.

Not long ago, a 500-carat sapphire worth 50 million rupees (US$510,000) was discovered near Ratnapura.

But most prospectors are not nearly so lucky, and miners who do not find anything do not get paid.

"It has been a while since we found something big," Dhakshina admits.

"You would not be able to spare 50 rupees (51 US cents), would you?"

Agencies via Xinhua

(Business Weekly 06/01/2004 page20)