Local gem auctions benefit Zambia
Lusaka – Zambia’s ban on selling of its gemstones on foreign auction floors has started paying dividends, the government has said.
The new regime means more money is generated and saved locally.
This follows the recent emerald auction by Zambia’s leading gemstone miner, Kagem Mining Limited, on April 19 with 23 out of the 27 emerald grades auctioned being sold above the reserve price.
The four grades that were not sold out did not meet their respective reserve prices of US$2 million, US$300 000, US$180 000, and US$75 000.
Beryl, a gemstone found at Kagem Mine, was not auctioned because bidders did not meet the reserve price of US$1.5m. The gem remains on sale, however.
Mines Deputy Minister Richard Musukwa, who attended the auction, said the successful sales were an indication that Zambia could locally manage such aspects of its mining industry.
He added that local auctioning would improve transparency and accountability in minerals marketing.
“The sale of gemstones locally will create opportunities for small-scale emerald miners to have access to a market where they get a fair return on their produce.
“As we know, most small-scale miners are forced to sell their emeralds to illegal buyers at depressed prices because of lack of a formal market,” said Musukwa.
Kagem Mining Limited is 75 percent owned by London-listed Gemfields, with the remainder of the shareholding held by the Zambian government.
Kagem chairman William Nyirenda said 24 of the invited 31 gemstone cutters attended the auction. They were drawn from India, China, the US, the UK, Israel and Germany.
President Michael Sata banned foreign gemstone auctions early this year to ensure more benefits accrued to the local economy from extraction of natural resources.
Commenting on the auction, Rahim Ullah – who is the MD of India-based Vaibhav Gems Limited, which bought 50 percent of the gemstones on offer – said: “… we are satisfied with the outcome. Zambian gemstones are natural, with no chemicals added.”
Meanwhile, Zambia’s mining sector, which has in recent years recorded more than US$6 billion in direct FDI, continues to attract interest from all over the globe.
Just two years ago, copper output was 750 000 tonnes per annum and this has since grown to 900 000 tonnes yearly, reflecting increased extraction.
Recently, Australian Securities Exchange-listed Zambezi Resources said it was raising US$15.4 million through an entitlement issue on the capital market to complete the oxide bankable feasibility study for its Kangaluwi copper project in the lower Zambezi National Park.
The firm said it reached an agreement with Patersons Securities, an Australian stockbroker, to raise the funds through a seven-for-one renounceable pro-rata entitlement issue – at one US cent a share – in addition to a one-for-three attaching option at the same price.
The entitlement will be partially underwritten to the value of US$10 million.
Zambezi Resources executive chairperson David Vilensky said they had taken this route to eliminate debt and simplify their funding framework.
“We look forward to receipt of the required EIS (environmental impact study) approval and finalising the (bankable feasibility study) at Kangaluwi. We are focused on what needs to be done to get this company into production and we are taking the steps required,” Vilensky said.
The company is targeting production to start by 2015.