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World’s largest emerald mine not exempt from pandemic

RESTRICTED REVENUE Auctions accounted for about 93% of Gemfields’ 2019 revenue, but dates for upcoming auctions are uncertain

MATTER OF PRINCIPLE The suspension of principal operations at Kagem is crucial, owing to the nature of the work at the mine

15th May 2020

By: Tracy Hancock

Creamer Media Contributing Editor

     

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The turmoil stemming from the global Covid-19 outbreak represents one of the most serious challenges that many companies face globally, and the world’s largest emerald mine, Kagem, is no exception, says emerald and ruby mining and marketing company Gemfields CE Sean Gilbertson.

Kagem, in Lufwanyama, Zambia, suspended all but critical operations as of March 30, 2020, in response to the global Covid-19 outbreak.

Gilbertson notes that a significant detrimental impact on the mine’s operations, revenues and business is inevitable this year and possibly beyond.

Last year, about 93% of Gemfields’ revenue was derived from six gemstone auctions, during which clients could carefully inspect the gems before bidding.

However, global travel restrictions in response to the pandemic prevent Gemfields from hosting auctions, and it will take time before the world can return to business as usual once these restrictions are lifted. There is clearly also a risk that travel restrictions may be extended or re-introduced, should a second wave of virus infections take hold in key countries, Gemfields warned in a notice to the LSE.

Therefore, the company is unable to provide reliable guidance as to when it might be able to host its next auctions.

The high-quality emerald and mixed-quality ruby auctions, originally scheduled for May and June respectively this year, are highly likely to be rescheduled for the second half of the year. Should market circumstances not recover adequately, it is also conceivable that the subsequent high-quality emerald and mixed-quality ruby auctions, originally scheduled for November and December respectively this year, may be cancelled altogether, explains the company.

However, Gemfields takes comfort in well-bought gemstones having been regarded as a safe haven in turbulent economic times for centuries, noting that this was evidenced during the 2008 financial crisis, when gemstone prices proved remarkably resilient, compared with equity indices.

Suspension

Owned by Gemfields (75%), in partnership with the Zambian government’s Industrial Development Corporation (25%), Kagem, which employs 1 000 people, has suspended principal operations at its emerald mine in Lufwanyama to safeguard employees during the Covid-19 pandemic.

Staff have been put on leave with full salary for the one month of planned suspension of operations.

Kagem board chairperson Dr Sixtus Mulenga has pledged that Kagem will do all it reasonably can to ensure employee job security, emphasising that the wellbeing of the mine’s employees and communities is its overriding priority.

Gemfields explains that the suspension is particularly crucial, as the nature of the work at Kagem involves close contact during physical searches, biometric fingerprint security procedures and weekly shift changes of production staff.

Kagem has donated disinfectants, cleaning products and public health posters worth ZK100 000 to Lufwanyama District Hospital to give residents hope in the fight against Covid-19 in the province. The donation is part of the company’s community development work, which aims to improve access to quality healthcare in society.

“These materials will help stop the spread of Covid-19 and provide medical personnel with tools for fighting this disease,” said Kagem GM Prahalad Kumar Singh, during the handover of the donation to the hospital on behalf of Kagem on April 2.

“We have demonstrated that, with unity of purpose, we can fight Covid-19. This donation is a glimpse of what we do at Kagem to improve the lives of communities around our mine. We continue to work closely with government in its efforts to provide healthcare for citizens, which is our ongoing commitment,” Singh emphasised.

Lufwanyama District Commissioner Miniver Mutesa hailed Kagem at the handover to Lufwanyama District Hospital for helping government fight Covid-19 in the Copperbelt province.

“When the world is trying to observe the highest levels of hygiene, we have Kagem coming to our rescue.”

As of April 28, the Copperbelt province has recorded four of the 95 Covid-19 cases recorded in Zambia.

Mulenga praises the Zambian government for its swift and decisive action to curtail the spread of the disease in the country.

“Zambia has an indomitable spirit and we can pull together to fight this threat by heeding the guidance of government and ensuring that we all play our part to keep ourselves and our loved-ones safe.”

Gemfields says it is continually adapting its approach, policies and controls as the circumstances of the pandemic develop, and is ensuring the timely dissemination of information to its team members operating in nine countries.

Alongside direction from the host nation government, this includes but is not limited to the commonly deployed measures of increased sanitisation, education and training, physical distancing practices and travel and/or visitor restrictions.

Edited by Nadine James
Features Deputy Editor

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