Ruby and emerald miner Gemfields’ share price fell almost 10% on Monday after it announced strategic actions, including suspending for about six months all mining at Kagem Mining, its Zambian emerald mine.
Sales of its stones have fallen. Its most recent auctions brought in $16.1m for emeralds and $46.2m for rubies, materially less than in recent years.
The lower figures are due mainly to a Zambian competitor’s oversupply of in the second half of 2024. The company said this was compounded by conflicting auction dates, giving
rise to a poor Zambian emerald market outlook in the first half of 2025.
Other factors included lower output of premium rubies at Montepuez Ruby Mining (MRM) in Mozambique and a weaker luxury and gemstone market generally, given economic difficulties in China and geopolitical turbulence. Recent post-election unrest in Mozambique resulted in supply chain and logistics interruptions.
“While mining operations at MRM have thus far remained unaffected, the overall operating risk profile has increased with the company’s priority remaining the safety and security of Gemfields employees, contractors and community members,” it said.
Gemfields sees construction of the second ruby processing plant at MRM as critical in raising premium ruby production and delivering additional revenue by the end of 2025.
Construction was materially on budget and on schedule for completion by the end of the first half of 2025 financial year. Gemfields said it was working closely with its partners to deliver this project as planned.
As a result of these four “transient” challenges Gemfields was taking action across the group to cut costs and streamline the business. That included suspending for up to six months all mining at Kagem Mining, 75% owned by Gemfields.
Kagem will instead focus on processing ore from Kagem’s ore stockpile, its recently upgraded processing plant.
The group will halt all nonessential spend and suspend planned capital spending at its ruby development assets in northern Mozambique: Megaruma Mining and Campos De Joia.
Eastern Ruby Mining will continue core developmental work, but will delay capital spending associated with its originally planned processing plant. It will also halt operations at Nairoto Resources, the gold project north of MRM and seek buyers.
Gemfields is assessing strategic options at its Fabergé luxury brand and targeted rationalisation of operations and businesses across the group.
“Gemfields continues to closely monitor its working capital as it navigates the prevailing challenges. As stated in the 2024 interim report, management remains prepared to take additional cost-reduction measures and pursue external funding options as may be required.”
At 11am on the JSE the Gemfields share price was down 9.5% at R1.43.
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