14 November 2012

Zambia: Kagem Leads Way in Gemstone Mining

DESPITE the huge potential that lies with the gemstone industry and in particular emerald mining, the sector has over the years performed below par falling short of contributing immensely to Zambia's economic and social development process.

This is seen by the minimal number of operating mines accounting to only four out of the registered 400 gemfields which are currently dormant for reasons ranging from among others, the lack of capital investment especially that emerald mining is a multi-million Kwacha undertaking.

A good demonstration showing that emerald mining is a serious and expensive venture to undertake, is Kamanga Gemstone Mine (Kagem) Limited in Lufwanyama which has sacrificed huge resources to be where it is today.

The Gemfield-owned Kagem mine is slowly but steadily raising the profile of emerald mining in Zambia mainly known for its copper production on the world market.

Before three to four years ago, Kagem was on the bandwagon of the many emerald mines whose bearing on the country's economy was insignificant given the fact that the company was a loss-making side of the coin.

The acquisition of 75 per cent stake in 2008 by Gemfields in Kagem, previously wholly owned by the Zambian Government marked a turning point in the transformation of not only the emerald-producing company but the whole of the gemstone industry in the country.

According to Gemfields corporate communications and public relations manager Pia Tonna, who was recently in the country, Kagem financial fortunes have been turned around with the company boasting a record US $15 million paid to the Zambian Government in taxes within the four-year period that the company has been making profit.

Ms Tonna accompanied by compatriot senior manager-geology Robert Gesiner, and Kagem Head of corporate affairs Jonas Mwansa was last week on hand to provide information regarding the success of Kagem when they led local journalists on a conducted tour of the mining operations.

The London-based corporate communications and public relations manager's mission in Zambia was not merely to demonstrate how Kagem had been transformed, but also to give direction and vision held by Gemfields over Zambian emeralds.

Ms Tonna said Gemfields, whose strategic goals include the consolidation of the coloured gemstone industry, with the view to becoming the ultimate industry authority as well as the provision of a consistent supply of coloured gemstones to the world markets, said the company interest was to allow local communities and national economies to benefit from its operations and expertise.

"Together with the Zambian Government, we have turned Kagem around from loss-making to profit making.

"The coming in of Gemfields has enabled Kagem mine to decrease its operating costs by over 55 per cent and in the same vein, enabled the mine to increase its production by an average of 300 per cent," Ms Tonna said.

She singled out transparent and ethical manner in which Zambian emeralds were being mined and sold as some of the factors that had raised the popularity of Zambian emerald.

"The Zambian emerald is becoming more and more popular as seen from the recent auction conducted in Singapore recently where Gemfields managed to raise $27 million from its sale," she said.

Ms Tonna said Zambian emeralds were on course in gaining recognition on the world market as seen from the increased demand they were now attracting during auction sale.

She said Gemfields whose total investment at Kagem Mine was now $110 million, was happy with the increased demand for Zambian emeralds currently standing at 30 per cent of which 90 per cent of the figure was Kagem's products.

Previously, Colombian emerald had widely dominated the emerald market but that the trend was steadily shifting in favour of the Zambian gemstone.

Ms Tonna attributed the increased market for Zambian emerald to team work and coordinated effort put in the production and sale of the product by all stakeholders who include employees and Government.

"The Zambian emerald has been up against Colombian emerald but I must say the Zambian stuff has gained popularity with the current world market consisting of 30 per cent for Zambian emerald of which 90 peer cent of it is from Kagem," she said.

Ms Tonna was happy with the transformation Kagem had undergone in the last three to four years since the company was taken over by Gemfields, which injected in $60 million to recapitalise the mine.

"Within three to four years since we took over, the company has been transformed from loss-making to profit-making and this, we say, we have achieved together with the Zambian Government," Ms Tonna said.

Ms Tonna said now that Kagem had been transformed into a profit-making company, Gemfields' priority now would be to further increase the popularity of Zambian emerald so that it could continue fetching high on the world market.

She said Gemfields planned to do that by embarking on a global advertising programme for Zambian emerald coupled with a systematic marketing and promotion strategy.

"Gemfields is spending over $2.2 million in global advertising for Zambian emeralds in 2013 and the company will spend a further $7 million through marketing and promotions to ensure there is constant demand for Kagem's Zambian emerald," Ms Tonna said.

Ms Tonna was categorical in her sentiments that without Gemfields constant push and financial investment for these rare coloured gemstones, the demand for Zambian emerald would fall and that this would impact on the growth and well-being of Kagem mine.

Given the highlighted transformation record for Kagem, Zambians desire is to see this translate into increased benefits for local residents in terms of corporate social responsibility (CSR) programmes.

Ms Tonna said Kagem's involvement in CSR to date had only been the beginning.

To underscore this, a two-year plan and budget had been put in place which would be addressing community requirements and selected projects totaling over $900,000.

The list of projects include; a school in rural Kafwaya region, three-nurses quarters at the Nkana Clinic where a four-ward building consisting maternity, male, female and children wards were earmarked for construction as well as construction of two round abouts in Kitwe among several other projects.

With this, one can only wish Kagem more success under Gemfields and that the other dormant emerald mines can be operationalised so that the trickle down effect from the gemstone industry is increased.

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