Zambia has suspended a 15% export duty on emeralds starting January 1 after discussions with the mining sector to protect large players like Gemfields. The duty suspension helps Zambia compete better against Brazil and Colombia, which have lower tax rates. Gemfields has paused production at its Kagem mine due to market challenges, continuing to process existing stockpiles.
Zambia has temporarily lifted the 15% export duty on emeralds after discussions with the mining sector. This decision, effective January 1, was necessary to prevent potential collapse of the emerald industry dominated by Gemfields, which would have faced a hefty cumulative tax of 21%, including a current 6% mineral royalty. In contrast, its competitors in Brazil and Colombia operate under lower tax rates of 2% and 2.5%, respectively.
CEO Sean Gilbertson of Gemfields expressed gratitude to President Hakainde Hichilema’s administration for addressing the export duty issue promptly. He highlighted that the Zambian emerald industry has prospered significantly over the past 16 years, affirming its position as the world’s largest emerald exporter. Gemfields, which operates the Kagem mine (75% owned by them and 25% by the Zambian government), has seen impressive growth in this sector.
The export duty was reintroduced after being revoked in 2019 due to pressure from the local gemstone industry. This reinstatement was likely aimed at enhancing Zambia’s financial stability amid an International Monetary Fund (IMF) assessment of the country’s economic health. Currently, Gemfields has paused operations at Kagem for up to six months due to unfavorable market conditions for emeralds this year, though it will continue processing existing ore stockpiles.
In summary, Zambia’s decision to suspend the 15% export duty on emeralds is an essential measure to support its leading emerald sector and mitigate potential economic challenges. With competitive tax rates driving the industry, Gemfields remains a crucial player, demonstrating significant growth despite the current market oversupply challenges. The government’s responsiveness is pivotal for enhancing economic stability in the gemstone mining sector.
Original Source: www.miningmx.com
