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| Emerald miner loses sixth of market value on Zambian anti-corruption plans | |
| (35 minutes later) | |
| The world's biggest emerald miner lost more than a sixth of its market value on Monday after warning that Zambian government plans to tackle corruption in the gem trade would significantly knock its profits. | The world's biggest emerald miner lost more than a sixth of its market value on Monday after warning that Zambian government plans to tackle corruption in the gem trade would significantly knock its profits. |
| Shares in Gemfields, a London-listed company that owns 75% of the world's biggest emerald mine in Kagem, northern Zambia, suffered its biggest one-day fall in more than four years after the mining firm warned that Zambia's plans to clean up the gemstone trade would put its profitability at risk. | Shares in Gemfields, a London-listed company that owns 75% of the world's biggest emerald mine in Kagem, northern Zambia, suffered its biggest one-day fall in more than four years after the mining firm warned that Zambia's plans to clean up the gemstone trade would put its profitability at risk. |
| It comes after Zambia's mines minister, Yamfwa Mukanga, said the government planned to ban the sale of Zambian gemstones outside the country. | It comes after Zambia's mines minister, Yamfwa Mukanga, said the government planned to ban the sale of Zambian gemstones outside the country. |
| All those planning to auction their emeralds should do so in Zambia. If possible, we would want all gemstones to be sold in the country. We expect the ban to enhance transparency and eliminate middlemen. | |
| Gemfields, which recently signed up the Hollywood star Mila Kunis as the face of the company, said any "limitation on selling emeralds in other countries could have the potential to materially constrain Kagem's revenues". | Gemfields, which recently signed up the Hollywood star Mila Kunis as the face of the company, said any "limitation on selling emeralds in other countries could have the potential to materially constrain Kagem's revenues". |
| The Kagem mine, which is 25%-owned by the Zambian government, produced 21m carats of the precious stones last year. All of the mine's output, worth some $160m (£105m) since 2009, has been sold abroad in 11 auctions. | The Kagem mine, which is 25%-owned by the Zambian government, produced 21m carats of the precious stones last year. All of the mine's output, worth some $160m (£105m) since 2009, has been sold abroad in 11 auctions. |
| Gemfields, which also owns Fabergé, said it had agreed to add Lusaka to its international gemstone auction circuit and would hold a sale in the city later this month. | Gemfields, which also owns Fabergé, said it had agreed to add Lusaka to its international gemstone auction circuit and would hold a sale in the city later this month. |
| The Zambian government said holding sales in the country would allow small-scale gemstone miners to get a fair price for their stones and stop them being "forced to sell their emeralds to illegal buyers at depressed prices because of lack of a formal market within the country". | The Zambian government said holding sales in the country would allow small-scale gemstone miners to get a fair price for their stones and stop them being "forced to sell their emeralds to illegal buyers at depressed prices because of lack of a formal market within the country". |
| Anti-corruption campaigners claim more than £5bn has been illegally siphoned out of Zambia over the past decade. The Washington-based group Global Financial Integrity said "crime, corruption and tax evasion" had cost the resource-rich country $8.8bn – equivalent to almost half of Zambia's GDP. | Anti-corruption campaigners claim more than £5bn has been illegally siphoned out of Zambia over the past decade. The Washington-based group Global Financial Integrity said "crime, corruption and tax evasion" had cost the resource-rich country $8.8bn – equivalent to almost half of Zambia's GDP. |
| Ian Harebottle, chief executive of Gemfields, said the Zambian plans "potentially endanger the health of the sector immediately after they have begun to deliver meaningful positive results on behalf of stakeholders". | Ian Harebottle, chief executive of Gemfields, said the Zambian plans "potentially endanger the health of the sector immediately after they have begun to deliver meaningful positive results on behalf of stakeholders". |
| "Kagem's repatriation of foreign currencies, payments of Zambian corporation tax and gemstone royalties stand at all-time highs and we believe the same to be true for total tax and royalty receipts from the Zambian gemstone sector," he said. "This record of success and growth should not be put at risk." | "Kagem's repatriation of foreign currencies, payments of Zambian corporation tax and gemstone royalties stand at all-time highs and we believe the same to be true for total tax and royalty receipts from the Zambian gemstone sector," he said. "This record of success and growth should not be put at risk." |
| He said Gemfields had been trying to turn Kagem into a "Zambian national champion and a shining example of what can be achieved in well-founded partnerships between government and investors". | He said Gemfields had been trying to turn Kagem into a "Zambian national champion and a shining example of what can be achieved in well-founded partnerships between government and investors". |
| Analysts said forcing Gemfields to hold all auctions in Zambia would significantly reduce the sale price of the stones because international jewellery buyers were unlikely to travel to central Africa. | Analysts said forcing Gemfields to hold all auctions in Zambia would significantly reduce the sale price of the stones because international jewellery buyers were unlikely to travel to central Africa. |
| Kunis said: "I truly believe in Gemfields' mission of ethical mining, and I absolutely have fallen in love with the rarity, beauty and history of emeralds." | Kunis said: "I truly believe in Gemfields' mission of ethical mining, and I absolutely have fallen in love with the rarity, beauty and history of emeralds." |
| The proposed ban would also affect Gemfields' amethyst mine in Kariba, southern Zambia, in which the company owns a 50% stake. | The proposed ban would also affect Gemfields' amethyst mine in Kariba, southern Zambia, in which the company owns a 50% stake. |
| Gemfields shares closed down 4.75p – or 16% – to 25p. | Gemfields shares closed down 4.75p – or 16% – to 25p. |