Zambia Reverses Emerald Export Tax—Will It Solve Gemfields' Financial Troubles?
Zambia has swiftly reversed its controversial 15% export duty on gemstones and metals, following significant industry backlash. The tax, abruptly reintroduced just a month ago, came as a shock to mining companies already facing economic challenges.
Initially introduced alongside an existing 6% mineral royalty tax, this 15% levy added significant financial strain, particularly impacting Gemfields. The miner had recently announced plans to cut jobs and scale back operations at its flagship Kagem emerald mine, citing a persistent global market slowdown.
By suspending the duty, Zambia aims to boost competitiveness for local producers, enabling them to offer better prices internationally, attract more buyers, and ultimately increase sales. Felix Nkulukusa, Secretary to the Treasury, emphasized that removing the tax should encourage higher mineral production, diversify exports, and enhance Zambia’s foreign-exchange earnings. The decision is also anticipated to attract new investors, benefiting Zambia's overall economy.
However, this tax reversal alone might not fully resolve Gemfields' struggles. The miner halted emerald mining operations as part of cost-cutting measures one month before the tax was even reinstated. Still, the decision will likely allow Gemfields to restart operations at Kagem more quickly, benefiting the pricing of existing inventory and future goods processed from stockpiled ore—a process the company says could take up to six months.
Gemfields CEO Sean Gilbertson expressed gratitude to Zambia’s government, especially praising President Hakainde Hichilema’s administration for its quick and decisive response. "Zambia’s emerald industry has shown extraordinary growth over the past 16 years and is now the world's largest emerald exporter," Gilbertson said. "This collaborative approach by the government clearly demonstrates its commitment to promoting economic growth and job creation in Zambia, setting the sector back on its path of continued success."