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KAGEM sets out strategy for Zambian emeralds

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KAGEM Mining, which operates the world’s single largest emerald mine, has set out its strategy for putting Zambian emeralds at the forefront of the world’s fine jewellery industry.

The company, which is 75 percent owned by UK-listed Gemfields plc, and 25 percent owned by the Zambian government, is pioneering a revolutionary approach to the gemstone sector that integrates world-class mining with a strong marketing strategy and a commitment to local value addition in areas of core competence.

Kagem has now embarked on a new phase of its strategy, after being rescued from bankruptcy in 2008 by Gemfields, which has turned it from a loss-making, debt-ridden shell into a thriving enterprise that now produces approximately 20 percent of the world’s global rough emerald supply.

“Kagem is proud to be partnering with the Zambian government to build the nation’s gemstone sector into a strong vibrant industry that upholds the highest standards of business ethics and also maximises profitability for the benefit of employees, suppliers and shareholders, including the people of Zambia, who own the mine through the government’s stake,” said Kagem and Gemfields Chief Executive Officer, Ian Harebottle.

Worldwide production of emeralds is estimated at US$500 million (ZMW 2.6 billion) per year, of which Zambia accounts for around one third – or US$167 million (ZMW 860 million). Kagem is responsible for mining approximately 50 percent of Zambia’s emeralds or US$80 million (ZMW 410 million) – yet is estimated to pay up to 90 percent of the tax generated from the gemstone sector, added Mr Harebottle.

Kagem, which is based in Lufwanyama, employs 672 staff and contractors in Zambia and has an on-going programme of employee training and development designed to constantly improve the lives of its employees and the local people resident in the communities in which it operates.

On the revenue side, Kagem has helped push rough emerald prices up ten-fold in the last three-and-a-half years thanks to a worldwide focussed and consistent marketing campaign aimed at increasing demand for Zambian emeralds. Kagem’s emeralds are sold to international buyers at world class auction venues overseen by Zambian government officials and with all of the revenue received from these auction sales repatriated back to Zambia, helping boost the country’s foreign earnings, and with royalties paid on the full and final auction prices attained.

In terms of cost, the company has worked on constantly improving efficiency at the mine, where five million kgs of earth and rock are excavated in order to glean just 1kg of gemstones.

The increase in production and price, coupled with the improvement in operational efficiency, has resulted in Kagem being restored to profitability for the first time in its history.

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