Zambia has reintroduced a 15% export duty on all precious gemstones, posing a major hurdle for Gemfields, which operates the country’s Kagem emerald mine.
The government revoked the 2019 duty suspension, effective January 1 of this year, without prior notice, Gemfields said Wednesday. The change imposes the 15% export duty on top of an existing 6% mineral royalty tax, raising the effective tariff on revenues for Kagem to 21%, not including a 30% corporation tax.
The reinstatement of the duty creates a sharp contrast with Zambia’s competitor countries. Brazil and Colombia, two of the world’s largest emerald exporters alongside Zambia, impose taxes of just 2% and 2.5%, respectively, on revenues, in addition to corporation taxes of 34% and 33%.
“In 2023, when no export duty was in place, Kagem paid an effective 31% of its revenues to the government of the Republic of Zambia in the form of mineral royalty, corporation tax, and dividends,” Gemfields noted.
The country introduced the duty in 2019 but suspended it later that year after successful lobbying efforts from the Zambian emerald sector. The latest decision raises concerns about the industry’s ability to remain sustainable and competitive within the market.
“We will engage with the Zambian government to seek the reintroduction of the suspension of this export duty or to remove it from the legislation given the impact on sector sustainability and investment attractiveness,” the company said.
The miner has already instituted a six-month pause in operations at Kagem due to the market downturn. It intends to keep stakeholders updated on further developments as it navigates the financial and operational challenges the tax and other issues affecting its bottom line pose.
Image: Rough-emerald sorting. (Gemfields)
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