Gemfields pauses Mozambique ruby operation amid political unrest

Gemfields (LSE: GEM; JSE: GML), a coloured gemstones miner, has suspended ruby mining in Mozambique after violent incidents that killed two people.

On Christmas Eve, over 200 people linked to illegal ruby mining tried to invade a village next to Gemfields’ Montepuez Ruby Mining (MRM) operation in northern Mozambique. The groups reportedly set fire to MRM-built community buildings. They tried to breach the site amid unrest from a disputed national election.

The company said a “staged escalation of force” by Mozambican police and military caused two deaths.

On the same day, thieves looted and damaged a vocational training centre in the nearby village of Wikupuri. MRM built it, and Mozambique’s Institute for Vocational Training and Labor Studies manages it.

Gemfields relocated some of its 500+ employees for safety due to a heightened risk. A phased return of staff began on Thursday, the company confirmed.

Contested elections

The unrest follows the top court’s confirmation of the Frelimo party’s election victory. Opposition groups are contesting it, citing electoral fraud. Civil society group Plataforma Decide reports that at least 130 people have died in clashes with police since the election.

Frelimo has denied allegations of vote rigging. The electoral commission has not addressed fraud claims.

The violence has also affected other foreign miners operating in the country, including South32 (ASX: S32).

The Montepuez ruby mine is considered the world’s most lucrative ruby operation.

MRM, 75% owned by Gemfields, employs approximately 1,400 people, according to the company’s website.

Shares of Gemfields rose 5.6% by 2:00 p.m. GMT. The miner has a market capitalization of £84 million (US$106 million).