Gemfields to resume emerald mining in Zambia

Coloured precious stones miner Gemfields (LSE: GEM; JSE: GML) is to resume open-pit mining at its 75%-owned Kagem emerald mine in Zambia, ending a four-month pause triggered by weak market prices and cost-cutting measures.

During the suspension, the company processed existing stockpiles, which produced fewer high-quality emeralds than anticipated. Stronger-than-expected results from recent auctions have renewed management’s confidence in in the emerald market, prompting a restart at key production zones in the Chama pit.

Also, the government in February rescinded a 15% export duty it had reinstated a month earlier. The tax, initially introduced in 2019 and suspended later that year, was reimposed  to boost government revenue. However, Gemfields was among industry players that successfully argued the tax would hinder investment in the sector’s growth.

Shares rise

Gemfields said Thursday it will continue to monitor the market before committing to full-scale operations. The company’s shares rose as much as 3.5% to 4.4 pence in London following the announcement, giving it a market capitalization of ZAR 1.18 billion (about $65 million).

Zambia, the second-largest emerald producer globally after Colombia, holds a 25% stake in the Kagem mine through its government.

Outside Zambia, Gemfields owns a 75% stake in the Montepuez ruby mine in Mozambique and also operates the luxury jewellery brand Fabergé.