GEMFIELDS' Kagem emerald mine in Zambia.

GEMFIELDS' Kagem emerald mine in Zambia.

Zambia Softens Stance on Overseas Emerald Auctions

Issue 49, June 2013

London-listed Gemfields appears to be winning government permission in Zambia for emeralds from its Kagem mine to be auctioned overseas. Following a roundtable meeting on Wednesday at the London summit of Mining On Top: Africa, deputy mining minister Richard Musukwa told Global Mining Observer that “there is no ban” on the auctioning of the country’s emeralds abroad, saying sales could be held in Singapore.

Since 2009, Gemfields has auctioned emeralds from Kagem, the world’s largest emerald mine, producing 27m carats in 2012, in London, Johannesburg, Jaipur and Singapore. In April however, Zambia’s mining minister Yamfwa Mukanga said that all Zambian emeralds must be auctioned inside the country. “Zambian gemstones have for a long time been sold on foreign markets, a situation that has contributed to capital flight,” he told the press. “Government has directed that all auctioning of emeralds be held in Zambia.”

The directive added that it aimed to promote domestic processing facilities, boost tourism and give local producers access to a formal market, echoing a ban by Tanzania in 2003 on the export of unprocessed tanzanite. In 2010 the ban was lifted, after it led to a sharp increase in bribes and illegal exports.

In recent days, Zambia has likewise eased its position, replacing Mukanga with Christopher Yaluma, former minister of transport and communications. When pressed in London this week on the ban on overseas auctions, deputy minister Musukwa replied, “What ban? There is no ban. We as shareholders want the best possible price.” He said that auctions could alternate between Lusaka and Singapore. Kagem is 25 per cent owned by the government.

Gemfields has argued that high-end jewellery buyers are unlikely to routinely make connecting flights to Lusaka, opening the market to competitors in Colombia and Brazil. The week before the ban was announced, it said that an auction due to be held in Jaipur would instead be held in Lusaka. 64 per cent of the carats went unsold, with an overall 7 per cent decline in per carat price.

Musukwa flatly rejects comparisons to either Tanzania or Botswana, which has developed its capital Gaborone into a diamond trading hub. “Zambia has its own way,” he says, with a tap to the arm, “Zambia is its own phenomenon.”

“We as shareholders want the best possible price.”

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