Gemfields blames Zambian export duty for decrease in exports

Gemfields announced the results of higher quality rough emeralds held in Singapore last week. In its report it said that 75 per cent of the emeralds were extracted from its Kagem mine in Zambia. One of the largest emerald mines in the world, Kagem is 75 per cent owned by Gemfields and 25 per cent by the Industrial Development Corporation of Zambia.

The report said that the proceeds of this auction will be fully repatriated to Kagem in Zambia, with all royalties due to the Government of the Republic of Zambia being paid on the full sales prices achieved at the auction. The result said that 80 per cent of the auctioned emeralds were sold – that is, of the 35 lots, 28 lots were sold.

The report said that since July 2009, Gemfields has conducted 32 Kagem auctions and has generated a revenue of USD 589 mln. The Singapore auction saw 45 companies placing bids and generating total revenues of USD 22.4 million with an overall average value of USD 71.85 per carat, an all‐time record for any Gemfields emerald auction.

Adrian Banks, Gemfields’ Managing Director of Product & Sales, said, “The biggest issue Kagem presently faces is the 15% Zambian export duty imposed on emeralds since 1 January 2019. When combined with the pre‐existing 6% mineral royalty tax, Zambian emerald exporters must now pay an effective 21% turnover tax on their revenues. By contrast, the world’s second and third largest emerald exporters, Colombia and Brazil, levy 2.5% and 2.0% respectively, bringing about a watershed shift in tactical advantage. While the 15% export duty shuts the door on foreign investors and new entrants interested in the Zambian emerald sector, the financial impact is being acutely felt by incumbent producers like Kagem. We continue to liaise with the key government departments in seeking resolution and remain hopeful that a solution will be found.