Zambian authorities said at the beginning of the just ended Kagem emerald auction that it would lift its ban on selling locally produced precious stones abroad should the auction prove a damp-squib.
Lusaka had been facing an avalanche of pressure from Gemfields, which owns 75 percent of Kagem Mine to re-think the ban.
“The future of auctioning abroad depends on the performance of this auction. If we get zero here, would we allow it to continue auctioning locally? But if the auction performs well, we see no reason why we should go abroad,” said the Zambian Minister of Mines, Energy and Water development Christopher Yaluma.
The auction results of predominantly higher quality rough emerald and beryl came out showing Gemfields smiling all the way to bank.
The company said it had netted revenues of $31.5 million from the auction.
Gemfields said 583,448 carats of emeralds extracted from Kagem were placed on offer and all lots were sold.
It said an average price of $54 .00 per carat was recorded, making it a new auction record.
"Favorable market conditions and particularly strong demand from our customers have yielded excellent auction results and record per carat prices,” said company chief executive Ian Harebottle.
“All indications show that demand for colored gemstones, and especially emeralds, will continue to increase at a steady pace over the coming year.”
He then went on to say a statement that appeared to show the company capitulating from its earlier demands for the Zambian government to lift the ban on the auctioning of the emeralds outside the country.
“We are delighted that this auction underscores Lusaka as a key hub in the international emerald trade and we would like to thank the Zambian government for their support,” said Harebottle.
The Zambian government would likely use Harebottle’s own admission that the auction yielded good results to maintain its position.
One would have never predicted some few months ago that Gemfields would make such a volte-face.
Gemfields executive director Sean Gilbertson said last April that Zambia would not lure buyers of emeralds from around the world regularly.
This followed reports that Zambia’s decision had been encouraged by its neighbour, Botswana, which signed a sales and marketing agreement with De Beers that allowed it, inter-alia, to auction part of its diamonds in the country.
"De Beers is the 800-pound gorilla in the diamond market. Zambia cannot make that same claim. It doesn’t have the same clout in the emerald market that Botswana does in diamonds," he quipped.
"We were taken aback by the announcement... It’s a pretty big shock for us and it clearly took us by surprise."
Harebottle also said at the time that the ban potentially endangered the health of the sector immediately after it had begun to deliver meaningful positive results on behalf of stakeholders.
"Since Gemfields acquired Kagem in mid-2008, we have pursued a strategy for Zambian emeralds not only to compete on the world stage, but to lead the sector internationally,” he said.
“Our ambition has been 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."
Even Indian buyers who attended Zambia’s rough emeralds auction in April said the local auctioning of the green gemstones was an inconvenience.
“We are obviously disappointed with this arrangement because of the distance. It was going to be better if it was done in Jaipur because that is where many of the customers are,” former president of Jewellers Association of India Jagdish Tambi said at the time.
He said illegal emerald dealers in Zambia had been harassing them so that they can get the stones from them instead of buying through the auction, which was being conducted by Gemfields’ Kagem Mining.
“In a way we are very much disappointed. Local (illegal) traders have been pushing us to visit them. This is creating competition between the auction and the illegal traders. It would have been better if the auction was held in Singapore, China or Johannesburg,” he said.
The difference between statements that came from Gemfields’ chief executive recently and the “hair-raising” comments the company and its customers made last April is too glaring even for the blind to see.
It seems miners are interested in profit making.
With Gemfields yielding auction records in Lusaka, there is surely no need for them to continue complaining.
All, we hear now are endorsements of Lusaka being a “key hub” in the international emerald trade.
Funny how things change!
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
