Gemfields faces 21% tax as Zambia restores export duty

Shares in Gemfields (LSE:GEM; JSE: GML) fell on Wednesday after the coloured gemstones miner said it faces a high tax bill in Zambia following the government’s decision to re-introduce a 15% export duty on emeralds.

Gemfields criticized the move, stating there was no prior consultation or notice regarding the tax’s reintroduction.

“The company will engage with the Zambian government to seek the re-introduction of the suspension of this export duty or to remove it from the legislation given the impact on sector sustainability and investment attractiveness,” Gemfields said in a statement.

The company’s shares dropped 3.6% in London to 6.75 pence each for a market value of £81.8 million or $145.2 million. They lost 10% of their value in Johannesburg to 1.62 rands, leaving the miner and marketer with a market capitalization of 2.1 billion rands there, or about $160 million.

Tax load

The export tax, reinstated on Jan. 1, was suspended in 2019 following months of negotiations between the government and emerald producers. Its return, the emeralds and rubies producer said, has added to an already substantial tax load. Gemfield’s three-quarter-owned local subsidiary, Kagem Mining, will now shoulder an effective revenue tax of 21%, which includes the existing 6% mineral royalty tax.

Zambia, the world’s largest emerald producer after Colombia, first implemented the 15% export duty in early 2019 and it ceased to apply on Jan. 1, 2020.

In 2023, when no export duty was in place, Kagem Mining paid about 31% of its revenues to the Zambian government through mineral royalties, corporate taxes and dividends, according to Gemfields.

Beyond Zambia, Gemfields owns the luxury jewellery brand Fabergé and holds three-quarters of the Montepuez ruby mine in Mozambique.

Gemfields faces 21% tax as Zambia restores export duty

Tax load

Be the first to comment on "Gemfields faces 21% tax as Zambia restores export duty"

Leave a comment Cancel reply