Gemfields reports signs of recovery in emerald sector
JSE-listed Gemfields continues to see “encouraging” signs of a recovery in the emerald sector, product and sales MD Adrian Banks said in a statement on Monday.
This follows Gemfields’ latest auction of higher-quality rough emeralds, in Singapore, which generated revenue of $22.4-million and achieved an overall average value of $71.85 /ct.
Seventy-two per cent of the carats on offer, or 80% of the number of lots on offer, were sold during the auction, which was held from May 14 to 17.
The emeralds sold were extracted at Gemfields’ 75%-owned Kagem mine, in Zambia. The Industrial Development Corporation of Zambia owns the remaining 25% of the mine.
The proceeds of the auction will be repatriated to Kagem in Zambia, with all royalties due to the government being paid on the full sales prices achieved at the auction.
Gemfields’ 32 auctions of emeralds and beryl mined at Kagem since July 2009 have generated $589-million in total revenues.
Meanwhile, Banks said the 15% emerald export duty imposed by Zambia since January 1 was of concern to Gemfields.
When combined with a 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 duties of 2.5% and 2%, respectively.
“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 a resolution and remain hopeful that a solution will be found.”
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