KEY POINTS
- Gemfields urges Zambia to revoke a 15% emerald export duty, citing its impact on sector sustainability and competitiveness.
- Kagem Mining now faces a 21% effective revenue tax, far exceeding rates in Brazil and Colombia.
- Gemfields aims to reinstate the suspension or remove the duty to enhance Zambia’s gemstone market appeal.
Gemfields Group Limited, a leading global miner of colored gemstones, is engaging the Zambian government to address the reintroduction of a 15 percent export duty on emeralds.
The duty, enacted via statutory regulatory legislation, became effective on January 1, 2025, reversing a suspension in place since 2019.
The announcement came forty-eight hours after Gemfields resumed operations at its Montepuez ruby mine in Mozambique. The mine had temporarily ceased activities following attacks by groups linked to illegal ruby mining and trading.
Zambia’s Emerald tax burdens
The export duty directly impacts Kagem Mining Limited, a Zambian emerald operation 75 percent owned by Gemfields and 25 percent by the Zambian government’s Industrial Development Corporation.
With the new export levy combined with a 6 percent mineral royalty tax, Kagem now faces an effective tax rate of 21 percent on revenues, excluding the 30 percent corporate tax.
By comparison, major emerald-exporting nations Brazil and Colombia impose significantly lower tax rates on revenues, at 2 percent and 2.5 percent, respectively. This stark disparity in tax burdens may hinder Zambia’s competitiveness in the global emerald market.
Concerns over sustainability and investment
Gemfields has expressed disappointment over the lack of consultation or prior notice before the duty’s reinstatement. The company notes that the duty adds to an already challenging fiscal environment, potentially deterring investment and undermining the sustainability of Zambia’s gemstone sector.
In 2023, when the duty was suspended, Kagem contributed an effective 31 percent of its revenues to the Zambian government through mineral royalties, corporate taxes, and dividends. The added burden of the export duty threatens to escalate operating costs and strain profitability.
Seeking resolution
Gemfields plans to advocate for the reinstatement of the suspension or the removal of the export duty altogether, emphasizing its commitment to fostering long-term sector sustainability and enhancing Zambia’s investment appeal.
The company has pledged to keep stakeholders informed as discussions with the Zambian government progress.
With Zambia being home to one of the world’s largest emerald mines, ensuring a favorable tax regime is pivotal for maintaining its global standing in the colored gemstone market.
