The Zambian government has revived a 15% export duty on the country’s precious gemstones to boost revenue, sending shares in Gemfields tumbling.
Gemfields, which has operations in the southern African country, dropped 2.78% in morning trading on the JSE following the news.
The Zambian officials’ decision to revoke a 2019 suspension of the export duty directly affected the Zambian emeralds mined by Kagem Mining, in which Gemfields has a 75% stake, it said.
This comes as the state has taken several measures in other areas of the Zambian economy to enhance government revenue in 2025, as it eyes a recovery from one of the worst droughts in living memory that hit the economy, and left it with a hefty budget shortfall.
But Gemfields noted that “there was no notice or prior consultation” regarding the policy’s reintroduction.
The group said it would engage with the government to seek to reverse its decision or remove the export duty altogether “given the impact on sector sustainability and investment attractiveness”.
The export duty comes on top of an existing 6% mineral royalty tax, taking Kagem’s effective tax on revenue to 21%.
Kagem, which owns the world’s single largest producing emerald mine, also faces a 30% corporation tax.
Zambia is one of the world’s three largest emerald exporters, but its export taxes starkly contrast with those if Brazil and Columbia, the other two nations on the list.
Brazil and Columbia impose aggregate taxes on revenue of 2% and 2.5%, respectively, with corporation taxes of 34% and 33%.
The tax hike comes at a challenging time for Gemfields, which announced last month that it would suspend all mining at Kagem for up to six months, focusing instead on processing the mine’s ore stockpile.
The strategic action was part of Gemfields’ efforts to cut costs and streamline its business as sales of its stones have fallen in the past few months. The group’s recent auction brought in $16.1m (R304m) for emeralds and $46.2m for rubies, materially less than in recent years.
Gemfields attributed its lower sales to an oversupply by Zambian competitors in the second half of last year and conflicting auction dates, which together made for a poor Zambian emerald market outlook for the first half of this year.
The group also cited lower output of premium rubies at Montepuez Ruby Mining (MRM) in Mozambique, where post-election protests have disrupted supply chains and interrupted logistics in recent months.
Business Day reported that Gemfields noted several incidents of illegal miners taking advantage of Mozambique’s civil unrest, including an incident in which more than 200 people attempted to invade the MRM Village, setting fire to the infrastructure built to protect a community cash point.
Added to this was a weaker luxury and gemstone market generally, given economic difficulties in China and geopolitical turbulence.
As Gemfields engages Zambian government officials, it said it would keep the market informed of further developments.
By market close Gemfields’ share price had fallen further, down 10% to R1.62.
With Jacqueline Mackenzie
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