Gemfields Plc, the world’s biggest emerald producer, said a Zambian gem buying center it opened this week may increase local supplies of the stones by almost a third.
The buying office it opened in the town of Kitwe could eventually provide the company with the equivalent of as much as 25 percent to 30 percent of production from its nearby Kagem mine, the world’s biggest source of the stones, Chief Executive Officer Ian Harebottle said in reply to e-mailed questions on Thursday.
Small-scale emerald miners and traders will get “far higher prices” at the center for their gems than from other buyers, Harebottle said. Many of Zambia’s emeralds end up on the illegal market and are smuggled out of the country, selling for less than a 10th of the price Gemfields may achieve in auction. The office will help boost Zambia’s tax revenue by capturing more of the trade, he said.
The Zambian government estimates that the illegal trade accounts for as much as 40 percent of the southern African nation’s total gem production. Gemfields’ Kagem mine itself loses almost a fifth of its potential revenue to theft, according to the company’s estimates.
The company could end up buying back some stones stolen from its mine, Harebottle said. This would still be preferable as the company would “far rather see them being bought back by our team at the trading center where the true price can then be paid for these gems,” he said.
Kagem accounts for more than half of Zambia’s total known emerald exports and produced 20.2 million carats in the 12 months to June 30, according to Gemfields 2014 annual report.
Gemfields has gained 32 percent over the past 12 months in London trading, giving the company a market value of about 288 million pounds ($420 million). The FTSE 350 Mining Index has declined by almost 20 percent.