Gemfields Suspends Emerald Sales Amid Zambian Export Duty
Gemfields (LON: GEM) (JSE: GML), a leading miner of coloured precious stones, has paused the sale of emeralds from its Kagem mine in Zambia following the reintroduction of a 15% export tariff earlier this month. The company hopes the Zambian government will reverse the decision soon.
Zambia, the world’s second-largest emerald producer after Colombia, initially imposed the 15% export duty in early 2019, but it was removed in January 2020 following industry pushback.
However, the government reintroduced the tariff this year, prompting Gemfields to halt sales. The company had previously suspended production at Kagem, citing market saturation caused by a flood of heavily discounted emeralds.
“Kagem anticipates that the duty may be revoked, allowing a commercial-quality emerald auction to proceed in Q1 2025,” Gemfields said.
If the tariff remains in place, Gemfields’ 75%-owned subsidiary, Kagem Mining, would face an effective revenue tax of 21%, including the existing 6% mineral royalty tax. This could lead to job cuts, as warned by CEO Sean Gilbertson earlier this month.
Zambia’s government is targeting a 6.6% GDP growth rate, with tax revenues projected to increase by 20%. However, Gemfields’ situation underscores the impact of the tariff on the mining sector.
On a positive note, Gemfields confirmed the resumption of production at its Montepuez ruby mine in Mozambique. Operations had been halted in December due to violent post-presidential election unrest that led to two fatalities.
Despite this disruption, the construction of a second processing plant at the mine remains on track and within budget, with completion expected by mid-2025.
Gemfields plans to release its annual financial results on March 27.
