ZAMBIA has suspended a 15% export duty on emeralds following meetings with the country’s mining sector.
Effective on January 1, the export duty would almost certainly have sunk the emerald mining sector led by the London- and Johannesburg-listed Gemfields as it would have faced an overall 21% tax on revenue. (It already pays a 6% mineral royalty tax.)
This compares to an aggregate tax of 2% in Brazil and 2.5% in Colombia which are Zambia’s main competition in emerald exports globally. Gemfields also pays 30% in corporation tax.
“We express our sincere thanks to President Hakainde Hichilema’s government for their prompt and impressive action in addressing the 15% export duty on precious gemstones,” said Sean Gilbertson, CEO of Gemfields. “The Zambian emerald sector has delivered phenomenal growth over the last 16 years and is today – by a significant margin –the world’s largest emerald exporter,” he added.
Gemfields operates the Kagem mine which is 75% owned by Gemfields and 25% owned by the Zambian Government’s Industrial Development Corporation.
The duty was revoked in 2019 after major pressure from the local precious gemstone sector in Zambia on its government. It’s thought the export duty was re-imposed by the government in an effort to improve Zambia’s debt cover amid an IMF review.
Gemfields has suspended production at Kagem for up to six months as a result of a poor emerald market outlook for this year. The miner said it would continue to process surface stockpiles of ore at Kagem, but added that there were “disturbed emerald market dynamics” owing to oversupply from Zambia.