“The wellbeing of Kagem’s employees and communities is our overriding priority. As a result, all but critical operations at the Kagem emerald mine have been suspended from 30 March 2020 for what is hoped to be a period not exceeding one month,” said Kagem Board Chairman Dr Sixtus Mulenga.
Almost 1,000 people are employed at Kagem, which is operated by Gemfields in partnership with the Zambia government through the Industrial Development Corporation, which owns 25% of the business.
The suspension is particularly crucial given the nature of the work at Kagem, which involves close contact during physical searches, biometric fingerprint security procedures and weekly shift changes of production staff.
Dr. Mulenga praised Government for its swift and decisive action to curtail the spread of the disease in Zambia, and pledged that Kagem would do all it reasonably could to ensure employee job security. Staff will be put on leave with full salary for the one month of planned suspension of operations, he added.
He also offered words of hope to Kagem’s staff, their families, local communities and the wider nation, saying: “Zambia has an indomitable spirit and we can pull together to fight this threat by heeding the guidance of the Government and ensuring we all play our part to keep ourselves and our loved-ones safe.”
Kagem and Gemfields Chief Executive Sean Gilbertson said: “The turmoil stemming from the Coronavirus pandemic represents one of the most serious challenges faced by many companies globally. Kagem is no exception and a significant detrimental impact on its operations, revenues and business is inevitable during 2020 and possibly beyond.”
In 2019, some 93% of Gemfields’ revenue was derived from six gemstone auctions at which clients were able to carefully inspect the gems before bidding. Widespread travel restrictions mean Gemfields cannot presently host auctions. Once the travel restrictions are lifted, additional time will be required before life and business returns to a relative ‘normal’.
There is clearly also a risk that travel restrictions may be extended or re-introduced should a second wave of virus infections take hold in key countries, warned Gemfields in a notice to the London Stock Exchange.
Due to the prevailing levels of uncertainty, Gemfields is unable to provide reliable guidance as to when it might be able to host its next auctions.
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