Gemfields Group has said that the results of its recent auction of predominantly commercial quality rough emerald held in Lusaka, Zambia from August 19-22, 2019 have revealed that the early signs of recovery in the emerald sector noticed at the May 2019 auction in Singapore, continue to strengthen. The auction yielded revenue of US$ 18.6 million at an average price of US$ 4.75 per carat, it was reported.

The emeralds put up at the auction were extracted by Kagem Mining Ltd in Zambia (75% owned by Gemfields and 25% by the Industrial Development Corporation of Zambia).

The Company stated that 34 companies participated in the auction, the highest number of participants at any of its commercial quality auctions held in Lusaka, and of the 35 lots offered, 26 were sold (74%).

In terms of carats, 37% of the total (10.68 mn cts) on offer was sold. Gemfields clarified that the unsold lots included 5 million carats of beryl, which was included at an auction in Lusaka for the first time in the last five years.

The Company also said that as per its established practice, and given its long-term vision and loyalty to the true value of Zambian emeralds, it elected to retain auction lots that it believed should command higher prices than those presently offered by the market.

Gemfields’ 33 auctions of emeralds and beryl mined at Kagem since July 2009 have generated US$ 608 million in total revenue.

Adrian Banks, Gemfields’ Managing Director of Product & Sales, commented: “We are pleased that the green shoots of recovery in the emerald sector first observed at our May 2019 emerald auction in Singapore have continued to grow in Lusaka. The Indian market, which is particularly important when it comes to commercial quality emeralds and which has been navigating challenging conditions for some time, appears to have turned the corner and we hope will continue to go from strength to strength.”

Banks also congratulated Caibaocheng on becoming the first Chinese customer to win at any Gemfields emerald auction.

The Gemfields MD also drew attention to the 15% Zambian export duty imposed on emeralds since 1 January 2019, which he described as “Kagem’s biggest impediment”.

Banks pointed out that when this was combined with the pre-existing 6% mineral royalty tax, Zambian emerald exporters must now pay an effective 21% turnover tax on their revenues. “The financial impact is being acutely felt by incumbent producers like Kagem, severely inhibiting money available for capital investment in growth and handing the tactical advantage to other emerald producing countries like Brazil and Colombia, neither of which have any export duty on emeralds.”

He said that Gemfields continues to liaise with the key government departments in “seeking resolution and remains hopeful that a solution will be found”.

Gemfields stated that as always, the proceeds of this auction will be fully repatriated to Kagem in Zambia, with all royalties due to the Government of the Republic of Zambia being paid on the full sales prices achieved at the auction.