On December 24 last year, the Montepuez Ruby Mining (MRM) operation in Mozambique — one of Gemfields’ most prized assets — was thrust into chaos. A violent confrontation erupted as more than 200 illegal ruby miners stormed the residential village next to the mine, which the company had built to house MRM workers.
The attackers set fire to buildings and attempted to invade the ruby deposit that Gemfields controls. They were met with force by security teams consisting of military and police positioned to protect Gemfields’ interests. This resulted in two of the invaders getting shot and killed at the mine site.
On the same day, an MRM-built vocational training center in the nearby village of Wikupuri was looted and vandalized. Among the items the perpetrators stole from the center was farming equipment that was supposed to go to 800 local farmers as part of Gemfields’ community outreach work to promote sustainable livelihoods.
This night of violence underscores the volatile environment in Cabo Delgado, Mozambique’s northernmost province, where Gemfields mines for rubies. Political unrest and terrorist activity plague the area. This has led the US Department of State to label Cabo Delgado a “Do not travel” zone — a level 4 travel advisory, the department’s highest — and rank Mozambique in general just below that at advisory level 3, “Reconsider travel.”
The political backdrop
The invasion at MRM, while shocking and with a devastating outcome, was not unexpected. Trouble has been brewing around the Montepuez mine for some time, with frequent attacks and kidnapping attempts by illegal miners trying to dig for rubies on Gemfields-controlled land. In December 2024, Gemfields chief executive Sean Gilbertson told Rapaport Magazine that “the insurgency has picked up again,” citing the political unrest across Mozambique as one of the driving factors.
Foreshadowing what was to come, Gemfields released a statement on the morning of December 24 warning that “based on the trajectory of the ongoing situation, there may be interruptions to Montepuez’s mining operations resulting from this unrest.”
The situation in question was the December 23 ruling by the Mozambican Constitutional Council to uphold the country’s widely disputed election results. Mozambique experienced massive civil upheaval following the October 9 elections, in which ruling party Frelimo’s candidate Daniel Chapo won the presidency. Since then, the country’s security forces have shot and killed more than 130 people during protests and arrested more than 3,500 citizens, according to estimates from NGOs Human Rights Watch and Amnesty International.
This all built to a crescendo when the council officially upheld the election, sparking looting, vandalism and violence across the country — including at Montepuez.
Following the December 24 attack, Gemfields temporarily halted operations at Montepuez and moved some of its staff off site for their protection. The company also heightened security measures to protect its remaining 500-strong workforce. Within 96 hours of the incident, staff returned to the targeted residential village, according to Gilbertson.
“The processing plant restarted soon afterward, and I am now also pleased to say that after some issues with fuel deliveries due to the logistics issues caused by the civil unrest, the mining aspect is also fully up and running,” he tells Rapaport Magazine in a January follow-up interview.
Questions of viability
Things have generally been calmer since Chapo’s inauguration, according to Gilbertson. “There are some strikes in the country surrounding a lack of civil-servant pay, but it seems the political unrest has eased off somewhat, and we hope that will continue to be the case as the new government settles in.”
But despite that relative calm and the resumption of mining at Montepuez, the unrest and precarious operating conditions have raised questions over the future of Mozambique rubies. Besides Montepuez, Gemfields operates the Campos De Joia and Eastern Ruby Mining deposits. It also had a ruby project at Megaruma Mining, but has “shelved” it, according to Gilbertson, as part of a broader cost-cutting initiative amid declining revenues at the company.
Gemfields’ December 2024 ruby auction yielded a total of $46.2 million, down from $69.5 million the previous year. At the time, Adrian Banks — the company’s managing director for product and sales — partially attributed the “softer prices and thinner bidding” to “ongoing economic challenges in China and geopolitical turbulence worldwide.”
In the same statement, though, he highlighted the tightrope the company had to walk between safeguarding employees and maintaining production levels. “Mozambique poses a number of material operating challenges at present, including as a result of the contested election, the arising civil unrest, and the associated supply-chain and logistics interruptions. Gemfields’ priority remains the safety and security of our employees and contractors.”
Extending to emeralds
Gemfields’ challenges are not confined to Mozambique. In Zambia, the company announced a temporary suspension of mining activities at the Kagem emerald mine, the world’s largest producer of high-quality emeralds. During the six-month hiatus, the company will process ore from existing stockpiles rather than actively mining.
The suspension was allegedly due in part to a competitor “flooding the market” with lower-priced goods, according to Gilbertson, who foresees a negative impact on the rough-emerald market for most of this year’s first half as a result.
Gilbertson has named Grizzly Mining as the competitor. Rapaport Magazine has reached out to Grizzly numerous times about these claims, but the company has so far declined to comment.
Gemfields’ November 2024 auction of Kagem emeralds generated just $16.1 million, with only 70% of lots selling. This was a sharp drop from the $35 million its previous auction garnered in May of that year.
“While the top-quality lots in this auction saw bidding within touching distance of our all-time records for emeralds, the overall result for this auction is very disappointing, driven by fewer and poorer bids for lesser-quality grades,” said Banks after the November sale.
Compounding matters, the Zambian government reinstated a 15% export duty for emeralds on January 1 with no prior warning. The country had introduced the duty in 2019, but suspended it later that year after successful lobbying efforts from the Zambian emerald sector. The change now adds the 15% duty to an existing 6% mineral royalty tax, raising the effective tariff on Kagem revenues to 21%, not including a 30% corporation tax. This contrasts sharply with the tax rates in Zambia’s competitor countries: Brazil and Colombia, two of the world’s other largest emerald exporters, impose taxes of just 2% and 2.5% on revenues respectively, in addition to respective corporation taxes of 34% and 33%.
The reinstated duty could also have an impact on Kagem’s staff. Under the suspension-of-mining plan, employees on forced leave remain on full pay, but Gilbertson says Gemfields will have no choice financially but to lay them off if the 15% export tax stays in place.
“The 15% export duty is clearly a major blow, especially as it came out of the blue and at a time when Kagem was already struggling,” says Gilbertson. “That said, we have found a very receptive ear in the key players in the Zambian government and are quietly confident that a solution will be forthcoming in due course.”
Strategy for the future
The operational disruptions in Mozambique and Zambia coincide with broader financial difficulties for Gemfields that have forced the company to reconsider its strategic priorities. In December, it announced plans to halt all nonessential capital expenditures at its ruby-development assets in Mozambique, including Eastern Ruby Mining. In addition to ceasing operations at Megaruma, it has shut down Nairoto Resources, a gold project in the country.
The miner is also seeking a buyer for luxury jewelry brand Fabergé — which it acquired in 2013 — to boost its coffers and let it focus on its core mining business. Gilbertson expresses confidence about finding a purchaser, telling Rapaport Magazine that a “surprising number of parties” have shown interest. Gemfields has appointed New York firm Dyens & Co. to handle the potential sale.
Despite these headwinds, there are glimmers of hope for Gemfields and Mozambique rubies. Gilbertson says there will only be “minimal scaling back” at MRM as part of the wider cost-cutting drive, and that the construction of a new processing plant at Montepuez — which will increase its ore-processing capacity from 200 tonnes per hour to 600 — “miraculously” remains on track for completion by June. And even amid all the corporate and regional struggles, the company’s December auction set a new per-carat price record of $321.94, reflecting continued demand for top-quality Mozambique rubies.
Main image: Rough rubies from Montepuez. (Gemfields)
Human-rights controversies
Gemfields has a checkered history in Mozambique. In 2019, the miner agreed to pay GBP 5.8 million ($7.5 million) to settle a court case that a group of more than 100 Mozambicans had brought against it over alleged human rights abuses by security forces at the Montepuez ruby mine.
The claims in the lawsuit include defendants being “shot, beaten, subjected to humiliating treatment and sexual abuse, unlawfully detained, and/or forced to carry out menial labor,” per a 2018 statement by their lawyer Leigh Day. The terms of the settlement, which did not admit liability, included establishing an independent operational grievance mechanism at Montepuez, and a GBP 500,000 ($650,000) fund for community projects such as skills-training to boost local residents’ job prospects.
Today, there is controversy over the number of illegal miners who have died while trying to access Gemfields’ ruby deposits. Gemfields, which keeps records, estimates that at least 92 miners have died on its premises in collapses of the illegally dug pits. These incidents, says the company, were not due to any interference from Gemfields, but were a result of the illegal pits being hastily and poorly constructed under dangerous conditions, leading to frequent cave-ins. Gemfields says it employs strict safety procedures when closing any illicit mining sites it finds on its property, and offers humanitarian support to the illegal miners themselves in the event of collapses.
Company CEO Sean Gilbertson admits that the mining operation is not entirely free from human rights issues, but stresses that it operates under strict codes of conduct in a very difficult environment. “We do see the occasional human rights abuse,” he says. “[In a] very large-scale incursion during this political unrest, we saw one instance where a member of the military — which [the authorities had] brought in specifically to help with the size of the incursion — hit one of the illegal miners with the butt of his rifle. Unpleasant as that is, we clearly need to do the right things at that point in time: deal with the military, make sure, to the extent that we’re able to do so, that they have disciplined the individual, ban those individuals from coming back onto our license, and also make sure, where we have the time, to actually provide voluntary principles on security and human-rights training to both the police and the military who are in that area, something we do a great deal of.”
Gilbertson is aware that rumors of wrongdoing have dogged his company, but he believes most of this can be linked back to its early days in Mozambique. “Am I sitting here saying to you today that the human rights risk profile at MRM when we started in 2012 with 10,000 or 12,000 artisanal miners on site was easy? Absolutely not.”
But things have changed, he asserts, particularly following the 2019 court case. “If anybody presents us with the evidence that our colleagues or our contractors have been permitting or covering up or committing human rights abuses, I’ll sign the prosecuting papers myself.”
Then there is the question of whether it’s ethical for gemstone buyers to source Mozambique rubies from Gemfields, considering it mines in an area thick with terrorist activity and that the taxes from the ruby sales go to a government that has been responsible for killing and imprisoning its own people. Gilbertson’s personal view is that a strong, responsibly run business can do more good by being in the area than by not being there. “[Setting up a gemstone mine in a politically complex area] ain’t easy, but I absolutely know that the right thing to do is to lean in and do everything you can to run a lighthouse project in a province that really needs it,” he maintains. “The worst thing you can do is run away and leave 1,600 jobs in the lurch.”
