Zambia's Emerald Export Duty Reinstated: What It Means for Gemfields and the Local Economy
In a significant shift for the precious gemstone industry, Zambia has announced the re-introduction of a 15% export duty on emeralds, starting January 1, 2025. This development, highlighted by Gemfields Group Ltd, a prominent gemstone miner and marketer based in London, presents new challenges and opportunities for operators like Kagem Mining Ltd, which is predominantly owned by Gemfields. With the effective tax rate climbing to 21% due to this new duty layered on top of the existing 6% mineral royalty tax, the landscape for emerald exports from Zambia is set to change dramatically.
The decision to revive the export duty comes three years after its suspension at the end of 2019, a move that was welcome news for local emerald companies at the time. Gemfields revealed that the latest statutory instrument, dated December 30, 2024, took many by surprise, as there was no prior consultation or notice about the duty’s reimplementation.
In the absence of the export duty for the entirety of 2023, Kagem Mining was able to contribute a significant portion of their revenues to the Zambian government, equating to an effective tax rate of 31% through various forms like mineral royalty, corporate tax, and dividends. This financial commitment has emphasized the important role that mining companies play in supporting Zambia’s economic landscape.
Despite the initial shock reflected in Gemfields’ share price, which dropped by 12% in Johannesburg and 5% in London following the announcement, the company recognizes the broader context of this decision. They noted that the Zambian government is likely pursuing additional measures to bolster its revenues in the upcoming year.
While changes in taxation may pose an immediate impact on profitability, they also highlight Zambia’s commitment to maximizing the value extracted from its rich natural resources. Companies like Gemfields are renowned for their sustainable and responsible mining practices, and as such, they may play a pivotal role in shaping a robust economic environment amidst evolving fiscal policies.
As the landscape for Zambian emerald exports evolves, stakeholders will eagerly monitor how these tax changes will affect not only local operations but also the wider global market for one of the world’s most coveted gemstones.
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