Zambia has repealed the 15% export duty on all previous gemstones and metals it reintroduced without warning only last month, amid uproar from the industry.
The levy, which had not been in effect since the government first revoked it in 2019, fell on top of a 6% mineral royalty tax. It landed on Gemfields shortly after it announced plans to cut jobs and curtail many of its businesses, including operations at its Kagem emerald mine in the country, due to a persistent industry slowdown.
The tax suspension will allow local producers to offer competitive pricing and operate more effectively in the global market, the Zambian government said Tuesday. The move should help attract greater interest from international buyers and lead to higher sales volumes and increased economic activity, noted Felix Nkulukusa, secretary to the treasury.
“The initiative will boost overall mineral production and ultimately increase the country’s foreign-exchange earnings through diversified exports,” Nkulukusa explained. “Further, the suspension is expected to have a positive ripple effect throughout the economy, attracting both local and international investors to Zambia’s mining industry.”
While the move takes some of the weight off operators in the sector, which also include Grizzly Mining, it’s unlikely to be the driving force in helping Gemfields get back on its feet, seeing as the miner halted operations in Zambia as a cost-cutting measure a month before the government slapped the 15% tax on its emerald exports. However, it is likely to help the miner reopen the deposit at a faster pace and should also aid in pricing of inventory the company has on hand, as well as goods from ore it processes from its current stockpile until ramping back up — which it said could take up to six months.
“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 Gemfields CEO Sean Gilbertson. “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. The government’s collaborative approach and decisive action are clear demonstrations of its intent to deliver growth and jobs for Zambia, and this step puts our industry back on track to continue that trajectory.”
Image: Rough emeralds. (Gemfields)
