Economy

Kagem Holds Successful Emerald Auction In Singapore

Kagem Mining Ltd, 25% owned by the Industrial Development Corporation (IDC) of Zambia, has hosted a successful auction of Zambian emeralds in Singapore this week.

The auction was monitored by officials from the Ministries of Finance and Mines and Minerals Development.
This was Kagem’s 34th auction since UK-based Gemfields acquired a 75 per cent shareholding in Kagem in July 2008.
While the sale of high quality gemstones in Singapore successfully raised US$27.2 million of foreign exchange earnings for the nation – all of which will be repatriated to Zambia – the company has cautioned that the Zambian export duty on gemstones is hampering both production and sector growth.
“The 15% export duty came into effect on 1 January 2019 and is levied in addition to the long-standing 6% mineral royalty tax. This means that law-abiding Zambian gemstone exporters face a 21% turnover tax, compared with just 2.5% and 2.0% in Colombia and Brazil, the world’s second and third largest emerald exporters respectively. In addition to the 21% turnover tax, Kagem’s profits are then taxed at the prevailing 30% corporate tax rate, imposing an aggregate tax rate that has closed the door on foreign investment in the Zambian gemstone sector. Small-scale emerald miners have widely bemoaned their inability to attract investors. Zambia’s 15% export duty has handed the competitive edge in the emerald business to Brazil and Colombia by making them more attractive gemstone investment destinations and more competitive emerald exporters,” according to a statement.

Kagem has stated that it sought to keep Zambian emeralds competitive on the international market by shouldering the export duty itself rather than by passing it on to customers, who would simply reduce their offers by 15% if they were asked to pay the export duty.
“Either way, the export duty means Kagem has significantly reduced funding for the mine, which provides more than 1,150 direct jobs, up from just 421 in 2009. Kagem has held extensive discussions with GRZ regarding the 15% export duty and has welcomed the considerate and constructive manner in which GRZ continues to consider the issue,” it stated.
Adrian Banks, Managing Director of Product and Sales at Gemfields, which owns 75% of the Kagem Mine in partnership with the government’s IDC, which owns 25%, said the emerald mine has realised US$79 million of auction revenues in 2019, the second‐best calendar year performance since the auction system was introduced a decade ago.
“But despite the robust mining and sales performance, the Kagem team’s sterling efforts are unlikely to be rewarded given that the auction revenues of US$79 million are poised to suffer both 15% export duty and 6% mineral royalty tax, totalling US$17 million. The 6% mineral royalty tax itself is then again taxed at the corporation tax rate of 30%, as are Kagem’s profits. The effective tax rate is therefore crippling for any business, in any sector, in any country,” said Banks.
“The recovery being experienced by our auction customers appears to have solid foundations, as is further evidenced by the 48 companies placing bids, a record for any Kagem emerald auction. While the auction’s overall price‐per‐carat was also a record, each auction has a slightly different composition and should not be directly compared. In addition to our stalwart clients from India, we also congratulate Caibaocheng of China and Gemstar of Israel, each of whom won three lots of fine quality Zambian emeralds.”
This week’s auction in Singapore, which was attended by representatives of the Ministry of Mines and the Zambia Revenue Authority, saw 48 companies placing bids and generating total revenues of US$27.2 million with an overall average value of US$85.26 per carat.
The auction saw 88% of the offered carats being sold (or 87% of the number of lots offered).
Gemfields’ 34 auctions of emeralds and beryl mined at Kagem since July 2009 have generated US$635 million in total revenues.

2 Comments

  1. Field

    Sell gemstones pa luse please not uko

    Reply
  2. kelly

    This is a really inclusive idea from Zambia as its has had
    Many tolls taken from the same company sale the auction realizes 30% tax slapped on it for transportation of the well successful business in abroad country its savings for a decade which is Million’s is well taxed by miners and minsters in the event so what’s ever is brought back will help much in the small sectors which need aide as soon as possible.

    Reply

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