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| Mila Kunis - the face of Gemfields - wearing a necklace of Zambian emeralds by Fabergé. Photograph: Mario Sorrenti |
Shares in Gemfields, a London-listed company which owns 75% of Kagem, plunged this week after the mining firm warned that Zambia's plans to clean up the gemstone trade would put its profitability at risk.
On Monday, Mines Minister Yamfwa Mukanga said the government planned to ban the sale of Zambian gemstones outside the country, a move which Gemfields claimed would knock its profits.
Gemfields, which recently signed up the Hollywood star Mila Kunis as the face of the company, said any "limitation on selling emeralds in other countries could have the potential to materially constrain Kagem's revenues".
The Kagem mine, which is 25% owned by the Zambian government, produced 21m carats of the precious stones last year. All of the mine's output, worth some $160 million since 2009, has been sold abroad in 11 auctions.
In response to Gemfields’ claims Deputy Minister of Mines and Natural Resources Richard Musukwa told a meeting of investors in London on Thursday that the recent policy change on the sale of Zambian emeralds was aimed at ensuring that the proceeds of the precious resource benefitted the local people.
Musukwa said it was wrong to suggest that the decision to compel Kagem Mine to include Zambia on the Auction Circuit, is meant to stiffle the company operations.
To the contrary, the minister explained, the Zambian wanted to create equity in the distribution of benefits from the precious stones sector.
“We are making Kagem more viable, we are growing the local gems market and increase Zambian participation in the auctions. Zambians must rise to this challenge. We want to re-establish the rapidaries and promote cutting and polishing of the gems locally,” he stated. “Obviously this may not sound good to those wishing to maintain the status quo (of auctioning Zambian emeralds gems abroad only). Our aim is to see value-addition on the Zambian gems. I urge international partners to support the Lusaka auctions in the same way they support Kagem’s international auctions.”
Musukwa explained that the inclusion of Zambia on the Auction Circuit would result in massive investments into host communities.
He added that the changes will also help government curb secondary and illegal dealers who were undermining both the industry and the government in terms of tax losses due to evasion.
This is according to a statement made available by Press Secretary at the Zambian Embassy in London, Amos Chanda.
