Gemfields shares slide as Zambia reintroduces gemstone export duty

The AIM-traded firm said the duty, reintroduced via a statutory instrument, applied to emeralds mined by Kagem Mining, a joint venture between Gemfields, which holds a 75% stake, and the Zambian government’s Industrial Development Corporation.

It said the reintroduction of the export duty increased Kagem's effective tax burden on revenue to 21%, when combined with the existing 6% mineral royalty tax, in addition to Zambia’s 30% corporation tax.

That placed Zambia’s tax regime for emerald exporters at a significant disadvantage compared to Brazil and Colombia, the other leading emerald-producing nations, Gemfields said.

It noted that Brazil’s aggregate tax on revenue was 2%, while Colombia’s was 2.5%, with corporation taxes of 34% and 33%, respectively.

In 2023, when the export duty was suspended, Kagem contributed an effective 31% of its revenue to the Zambian government through mineral royalties, corporation taxes, and dividends.

The board noted that the duty was originally introduced in 2019, but was suspended later that year following efforts by the emerald sector to improve the industry’s investment appeal.

Gemfields expressed concern over the absence of prior consultation or notice regarding the duty’s reintroduction, asserting that other financial measures had also been implemented across Zambia to bolster government revenue in 2025.

The company said it planned to engage with the Zambian authorities to advocate for the duty’s suspension or removal, citing its potential impact on the sustainability and competitiveness of the emerald sector.

Gemfields said it would provide updates on any further developments related to the policy change.

At 0826 GMT, shares in Gemfields Group were down 5% at 6.65p.

Reporting by Josh White for Sharecast.com.