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Gemfields Shares Sink As Zambia Export Tax Impacts Kagem Profitability

Shares of coloured gemstone producer Gemfields sank sharply after the company admitted that a new tax regime instituted in January by the government in Zambia, where it majority owns the Kagem emerald mine, would have a detrimental impact on its Zambian profitability and cash flow.

Gemfields has already faced challenging situations in Ethiopia, where an armed mob looted emeralds from the company’s mine, and Mozambique, where it agreed at the beginning of this year, to pay $7.8 million to settle claims of human rights abuses.

Company Chairman Brian Gilbertson said, however, that Gemfields’ biggest challenges in the coming months would be coping with the new 15 percent export tax on gemstones instituted by the Zambian government. Combined with the 6 percent mineral royalties already levied by the state, Gemfields will now pay a total of 21 percent tax on its Zambian revenues.

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