Mined in the deserts of the Outback and prized for its brilliant plays of light and colour, the opal is Australia's national gemstone.

But the industry is struggling, thanks to the global recession and a flood of synthetic stones into the market.

Demand has plunged so low that the world's only tertiary-level course in opal cutting, in the dusty mining town of Coober Pedy, has just been scrapped. Stuart Jackson, who ran the course, said: "Opal is a luxury item and times are tough. You can't eat it, you don't need it, so people aren't buying it."

Coober Pedy, in South Australia, calls itself the "opal capital of the world", but even there, shops are selling synthetic stones, made from plastic and silica and imported into Australia, mainly from Japan. The same is true of some large showrooms in Sydney, which market their "genuine Australian opal" to tourists. Selling man-made opal is perfect legal, provided it is correctly labelled, according to Boro Rapaic, of the Opal Industry Alliance.

However, he said: "Most of the time it's sold as genuine stuff, and the vast majority of people can't tell the difference. They go into a shop to buy the real thing and end up with a piece of synthetic junk that's almost worthless. They make it so good now, the colours are even better than genuine opal. Even some miners are fooled."

Dealers say that man-made stones are eating into their market and driving down prices. However, like other luxury goods, opals have also fallen victim to global belt-tightening. About 97% of them are mined in the Outback, mostly in the opal fields of South Australia. In Coober Pedy, where the summer heat is so ferocious that many people live underground, nearly everybody is involved in the trade.

At the local college, Stuart Jackson taught opal cutting and polishing for two decades. But student numbers gradually dwindled, and, for those from interstate or overseas, the course had become too expensive. Jackson said the cost of mining had also gone up dramatically.

"Fuel has gone up, explosives have gone up, licences have gone up," he said. "So there are far fewer people mining and there's less opal coming out of the ground. It's very hard to attract young males into the industry now, because it's hard work and it costs a lot of money. "

His students learnt how to transform rough stones into carved, polished gems.

They were also taught some geology, gemology and jewellery-making.

Nearly three-quarters were women, often miners' wives who would prise a few stones out of a chunk of opal-encrusted rock before their husbands sold it. "It's a lovely medium to work with," said Jackson. "It's quite a soft stone, so you can work with it easily and it takes a very high shine very quickly."

Cut and polished, opal is worth up to four times more than rough stone. But the gulf between the value of real and synthetic stone is far larger. Genuine opal costs up to AUS$50,000 (€29,000) a kilo. A kilo of the plastic stuff can be had for $1,500. Rapaic lamented: "Every synthetic stone sold is one less of our genuine opals sold. That's what's killing the market slowly."

John Dunstan, a Coober Pedy miner who also runs an opal shop, said prices had been stagnant for years. "Twenty years ago in Coober Pedy there would always be at least 20 to 30 buyers ready to buy opal on the fields," he said. "Now you're lucky to find three or four of them."