KAGEM Mining Ltd, which operates the world’s largest operating emerald mine, in Lufwanyama, has reiterated its commitment to the government and people of Zambia, pledging to continue to increase the benefit that the country receives from its gemstone resources.
Kagem, which is 75 percent owned by London-listed Gemfields plc in partnership with the Government of Zambia, which owns 25 percent, produces approximately 20 percent of the world’s global rough emerald supply, with worldwide production estimated at US$500 million (K3 billion) per year.
The company is pioneering a new approach to gemstone mining that integrates world-class mining with a strong marketing strategy and a commitment to local value addition in areas of core competence.
The strategy has already turned Kagem around, from a long history of loss making to one where it has been able to increase achievable prices on the global markets almost ten-fold and where it has been able to contribute more than US$276 million to Zambia’s direct foreign earnings over the past five years alone. All these earnings have been repatriated back to Zambia, where they have been used to clear historic debts inherited from the previous management and continually reinvest in the Kagem mine and the global marketing of Zambian emeralds.
“Gemfields’ goal is to lead the way in terms of coloured gemstone exploration, mining, operational efficiency and global marketing, all the while ensuring that the benefits are fairly distributed among all our various business partners, investors and local stakeholders,” explained chief Executive Officer Ian Harebottle.
Gemfields, a London-listed coloured gemstone mining company, acquired a 75 per cent stake in the then bankrupt Kagem in 2008, with the remaining 25 per cent being held by the Government of Zambia on behalf of the Zambian people.
Kagem produced 20.2 million carats of emerald and beryl in the year to June 30, 2014. Average per carat sales value of high quality gemstones and low quality gemstones increased respectively from US$4.40 per carat in the July 2009 auction to US$59.31 per carat in the February 2014 auction, and from US$0.31 per carat in March 2010 auction to US$3.32 per carat in the November 2013 auction.
And in December 2013, Kagem paid its first ever dividend of US$8 million, of which US$2 million was paid to the Government of the Republic of Zambia, as 25 per cent shareholder in Kagem. This was followed by a further dividend of equal value in February 2014.
The company is committed to the long-term re-capitalisation of the Kagem mine, and this policy has been directly responsible for Kagem’s success in recent years, ensuring that Kagem – and Zambia as a nation – is increasingly recognised as a global leader in the coloured gemstone industry, and allowing Kagem to become the single largest emerald industry contributor to Zambia’s national economy, despite it being just one of Zambia’s numerous registered emerald producers and exporters.
Kagem employs approximately 750 people in Zambia, including permanent staff and contractors. Kagem employees rank among the highest paid employees in the emerald industry in Zambia, with even the lowest paid permanent employees receiving in excess of K2,200 per month including benefits, with each employee additionally receiving production bonuses when defined thresholds are met.
Kagem was one of the first companies in Zambia to implement the Collective Agreement in time in 2012 for the period 2012-2014. At that time, only about 19 employees were unionised and covered in the Collective Agreement. Due to the management’s initiative, all workers were brought under one umbrella, and were unionised and represented by elected representatives. All the employees were put on renewable five- year contracts as opposed to the existing two-year contracts at that time.
Kagem is the only gemstone mine in the country to ensure all its workers are permanent employees, in line with government policy.
Management spent US$1.2 million in addition to its normal monthly expenditure after the successful negotiations in harmonising the labour force and successfully concluded the union negotiation for the period 2014 – 2016 without stoppage of work.
In April 2014, the Mines Safety Department of Zambia awarded Kagem a certificate recognising more than three million shifts free of reportable injuries, believed to be a record in the Zambian mining industry.
In 2014 Kagem also launched its US$1 million programme of community work on a new secondary school at Chapula and Nkana Health Centre in the Lufwanyama district.
“Gemfields remains committed to turning the coloured gemstone business into a transparent market allowing investors, local communities and national economies to benefit from our operations and expertise. Gemfields believes in and sees significant benefit in being fully transparent in all our dealings and partnerships. Full disclosure of information and transparency in our business process is a crucial factor of our success. Our mining ethics go beyond compliance as we aim to set new standards within this sector,” added Mr Harebottle.
Kagem Mining Ltd in Lufwanyama is part of the Gemfields group of companies, a leading gemstone miner listed on the Alternative Investment Market (AIM) of the London Stock Exchange (ticker: ‘GEM’).
In July 2009 Gemfields commenced a formal auction programme for its Zambian emeralds. To date, Gemfields has held 16 auctions of emerald and beryl produced from Kagem which have generated revenues totalling US$276 million.
In addition to the Kagem emerald mine, Gemfields also owns controlling stakes in highly prospective ruby deposits in Mozambique and various licences in Madagascar including ruby, emerald and sapphires deposits.
Gemfields is the world’s foremost coloured gemstone producer, pioneering at the intersection of exploration, mining and marketing.
Natural gems are at the heart of the operation. Its focus – reliable and ethically-produced Zambian emeralds – upholds fair-trade practices while respecting the highest level of environmental, social and safety standards. This mission holds true for every gemstone in its portfolio.
Gemfields’ unprecedented mine-to-market strategy through transparent partnerships with the world’s leading coloured gemstones dealers and manufacturers allows it to provide unparalleled comfort to consumers of a gem’s route to market. ADVERTORIAL BY KAGEM MINING LIMITED