Miner generates US$18.6 million revenue from Lusaka emerald auction

The world’s largest emerald miner, Gemfields’ Kagem Mine, has raised $18.6 million from an Auction which took place a few days ago in Lusaka the capital of Zambia.

According to the company, the stones were extracted by Kagem Mining, in which it has a 75 percent stake while the Industrial Development Corporation of Zambia owns 25 percent. The company also revealed that proceeds of this auction will be fully repatriated to Kagem in Zambia, with all royalties due to the government of Zambia being paid on the full sales prices achieved at the auction. The auction saw 34 companies placing bids, with 37 percent of the offered carats being sold.

The managing director for product and sales Adrian Banks revealed that the green shoots of recovery in the emerald sector first observed at its May auction in Singapore had continued to grow in Lusaka.

Gemfields’ 33 auctions of emeralds and beryl mined at Kagem since July 2009 have generated US$608 million in total revenue. However, Gemfields said a 15 percent Zambian export duty imposed on emeralds since January 1 remained Kagem’s biggest impediment. This is because when it’s combined with a pre-existing six percent mineral royalty tax, exporters must now pay an effective 21 percent turnover tax on their revenue.

“The financial impact is being acutely felt by incumbent producers like Kagem, severely inhibiting money available for capital investment in growth and handing the tactical advantage to other emeralds-producing countries like Brazil and Colombia, neither of which have any export duty on emeralds,” said Gemfields.

“We continue to liaise with the key government departments in seeking a resolution and remain hopeful that a solution will be found,” Gemfields said further.

Apart from the Kagem mine, Gemfields also owns the Montepuez ruby mine in Mozambique, one of the most significant recently discovered ruby deposits in the world.