Gemfields, a leading player in the gemstone industry, has announced significant cutbacks and restructuring efforts in response to declining revenues and market challenges. The company will suspend mining activities, cut jobs, and even sell some of its iconic assets.
Key Measures Announced by Gemfields
- Suspension of Mining at Kagem Emerald Deposit:
Mining at Zambia's Kagem emerald site will be halted for up to six months. However, the company will continue processing existing ore stockpiles to maintain some operations. - Freezing Nonessential Spending in Mozambique:
Spending at its ruby development projects—Megaruma, Campos De Joia, and Eastern Ruby Mining—will be paused. - Shutdown of Nairoto Gold Project:
Operations at Mozambique's Nairoto gold project will cease, and the company is seeking a buyer for this business. - Sale of Fabergé Luxury Brand:
Gemfields is also looking to divest its renowned Fabergé luxury brand to streamline its focus. - Job Cuts Across the Group:
The company plans to implement "targeted rationalization" to reduce operational costs.
Struggling Sales and Revenue Declines
Gemfields' recent sales figures highlight its financial struggles:
- The latest emerald auction recorded its worst performance in over two years, with only 70% of lots sold, generating $16.1 million.
- Ruby sales for the six months ending June 30 dropped 17%, totaling $128 million.
- Net profit plunged 25% to $13.7 million.
The downturn is attributed to global oversupply caused by a competitor flooding the market with discounted Zambian emeralds, combined with lower ruby production at the Montepuez mine in Mozambique.
Economic and Geopolitical Pressures
Economic instability in China, geopolitical tensions, and civil unrest in Mozambique have further exacerbated the challenges facing Gemfields. The company has faced logistics and supply chain interruptions linked to post-election violence in Mozambique, adding to its difficulties.
Future Plans Amid Cutbacks
Despite these setbacks, Gemfields is committed to completing its second ruby processing plant in Mozambique by mid-2025. The project is deemed "critical" for increasing production and generating additional revenue.