Gemfields concerned with potential sale restrictions in Zambia

AIM-listed gemstone miner Gemfields could be hit by a possible ban by the Zambian government of its ability to sell stones outside of the country, the firm announced on Monday morning, causing shares to tank early on.

AIM-listed gemstone miner Gemfields could be hit by a possible ban by the Zambian government of its ability to sell stones outside of the country, the firm announced on Monday morning, causing shares to tank early on.

"Such measures are potentially detrimental to the Zambian gemstone sector and would prevent the company from being able to freely sell its gemstones in the markets where it believes it would realise the best prices," Gemfields said.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

The company's main asset, the Kagem emerald mine, is the single-largest emerald mine in the world. Located in northern Zambia, Kagem is 75% owned by Gemfields and 25% owned by the government of Zambia. Gemfields also co-owns half of the Kariba amethyst mine in the south of the country with the government.

The Minister of Mines, Energy and Water Development (MoMEWD) in Zambia on Friday released a statement restraining Kagem and other producers from selling emeralds outside of the country. According to Gemfields, Kagem's sales have only been abroad, generating $160m of revenue from 11 auctions.

Advertisement - Article continues below

Gemfields' share price was down 21.01% at 23.5p by 08:20.

The firm said: "Gemfields believes that any outright limitation on selling emeralds in other countries could have the potential to materially constrain Kagem's revenues as well as the broader development of the Zambian gemstone sector across the globe. Such a limitation would, inter alia, place Zambian emeralds at a disadvantage relative to other emerald producing countries where no such limitations are in place."

Gemfields is hosting its first auction in Zambia later this month after including it as one of the destinations on its 2013 international auction circuit. However, its next auction is scheduled to take place in Singapore this summer.

The company said that it has requested clarification of the terms, conditions and basis of these measures from the MoMEWD.



Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020
Share tips

Class acts going cheap: buy into Europe’s best bargains

Value investing appears to be making a comeback, while shares on this side of the Atlantic are more appealing on metrics such as price/earnings ratios…
16 Jan 2020

Most Popular


Extraordinary times create extraordinary opportunities – these assets look cheap

With the stage set for some monumental fiscal stimulus, this is most definitely a time to own some gold. And if you’re bold enough, says Dominic Frisb…
18 Mar 2020

How the US dollar standard is now suffocating the global economy

In times of crisis, everyone wants cash. But not just any cash – they want the US dollar. John Stepek explains why the rush for dollars is putting a b…
19 Mar 2020

The helicopters are being warmed up – we might be closer to a bottom than you think

Governments are starting to act to bolster their economies against coronavirus. But, asks John Stepek, will throwing money at the problem slow the mar…
17 Mar 2020

The rare earth metal that won't be a secret for long

SPONSORED CONTENT – You can’t keep a good thing hidden forever; now is the time to consider Pensana Rare Earths and the rare earth metals NdPr.
31 Jan 2020