bonjour a tous.
Gemfields sees fortunes slipping following Zambian government's ban on foreign sales
Gemfields, the London-headquartered company that has designs on filing a De Beers-type role in the colored gemstone sector, has been finding the going increasingly rough since the decision by the Zambian government in April to ban the foreign sale of emeralds mined in its territory.
In late May, Gemfield's already weakened share price slipped further after it was announced that the Zambian government had barred the company from exporting emeralds to Singapore, where it planned on holding an auction between June 10 and 14. Gemfields subsequently announced that it was suspending the sale.
Before the suspension, Gemfields had reported that it was discussing with the Zambian Ministry of mining about ways of expanding the emerald sector in Zambia. Gemfields CEO Ian Harebottle noted that there that is currently was no law in Zambia that prohibited the export of emeralds for auction purposes.
"We do not believe that there is any law that makes it illegal to hold an auction offshore," he said in an interview in Lusaka, the capital of Zambia. "We are literally in the process now of working on that export process and I hope we get that export sorted out imminently."
Gemfields shares fell 16 percent in a single day in April after the Zambian government said it would not allow stones mined in the country to be exported for auction, and was down almost 7 percent after news was released about the Zambian government's latest ban.
While it is moving into other gemstone varieties, the major part of the Gemfields sales are sourced from the Kagem emerald mine in Zambia. Gemfields owns 75 percent of the shares in Kagem, with the Zambian government controlling the remaining 25 percent.
To date, Gemfields involvement in Kagem has been lucrative for the government as well. According to the Zambian Revenue Authority, in 2012 the Kagem mine contributed about 80 percent of the gemstone sector's aggregate royalties, and last year alone paid about 40 percent of the total cumulative gemstone royalties collected from the gemstone sector since 2006.
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