Traditional Rulers Seek Mineral Royalties from ‘Precious Stone Diggers’ in Zambia

The peace and tranquility that has characterized the Lufwanyama district, the home of precious stones in Zambia, may soon change with the local people now demanding for royalties from investors in the gemstone industry.

The Lamba and Lima tribes, who live in the gemstone-prone area, have resolved that all investors in gemstone mining in Lufwanyama district in northern Zambia must start paying mineral royalties to the Copperbelt Royal Council of Chiefs, which is in charge of the area at the Government agreed rate.

In a statement by the Lamba/Lima Royal Council of Chiefs and signed by Senior Chief Chiwala, the chairperson, additionally, the unpaid royalties from the mining of gemstones not remitted for the past 10 years until December 2013 by mining investors, should be released to the royal council of chiefs.

“The unpaid royalties to the council of chiefs for the past 10 years up to December 2013 by the mining investors should be released to the Copperbelt Royal Council of Chiefs,” the council said.

During the meeting it was further resolved out rightly that all mining licenses be issued with the involvement of their royal highnesses.

These were part of the resolutions made by the 15 Lamba Chiefs that attended a meeting held recently and dealt with various national matters relating to the chiefdom and seen by mining news Zambia.

Lufwanyama district hosts two of Zambia’s leading gemstone mining companies, Kagem Mining Limited and Gemfield Plc, all which have contributed more than US$40 million to the country’s treasury during recent auction floors undertaken in Lusaka.

Gemstone mining in Zambia spans several decades although trading of the brown and coloured stones which were initially done outside the country hence inhibited Zambia from realizing real returns from the precious metals endowed in Ndola in Northern part of the country.

President Michael Sata last year directed players in the gemstone industry to relocate their gemstone and precious auction floor to Zambia than use foreign markets which he argued deprived the country of revenue as well as jobs for the local people.

The stakeholders had initially argued that the local market floor was not ideal to realize real returns from their business hence suggested that they still be allowed to remain on the foreign auction floors where business was lucrative.

Their arguments were further advanced by the lack of a reliable gemstone auction floor in Zambia which forced the key players in the industry to look elsewhere to generate enough foreign exchange.

However, despite their concerns, the change of floor to Zambia has been a blessing in disguise for the country. It has in turn netted more than US$40 million in direct revenue which has helped the treasury.

President Sata had maintained that the outside auction floors were depriving the country of a lot of revenue which could help the country meet and finance various developmental projects including infrastructure being undertaken countrywide under the Six National Development Plan.

This he maintained was one of the reasons why the auction floor needed to be relocated to Lusaka.

The President had argued that more money was eluding Zambia through such auctions and should instead use the local markets as opposed to a situation where Zambia has been losing millions of Kwacha annually, because the money realised from the gemstone sales abroad does benefit Zambians.

Kagem Mining Limited, Zambia’s leading emerald miner had feared had that they could lose more since the local market was not developed. Various policies, they said needed to be put in place to enhance market development.

Its counterpart, Gemfields Plc, the majority owners of Kagem Mines also charged that the intention to ban the sale of gemstones outside of Zambia is potentially detrimental to the country’s gemstone sector, it said in a notice to shareholders posted on the London Stock Exchange website earlier.

Gemfields claimed the possible ban by the Zambian government on the Company’s ability to sell its gemstones outside of the country is potentially detrimental to the Zambian gemstone sector.kegem

Gemfields had argued that the ban would prevent it from being able to freely sell its gemstones in the markets where it believes it would realise the best prices, he further argued.

Gemfields’ principal asset, the Kagem emerald mine in Lufwanyama which it owns 75 percent shares is the single largest emerald mine in the world.

Gemfields also owns 50 percent of the Kariba amethyst mine in Siavonga, with Government owning the other 50 percent stake.

Since 2009, Kagem’s production has been sold only outside of Zambia, generating USD 160 million of revenue from 11 auctions.

Representatives of Government have routinely attended those auctions. However, despite the concerns that were raised by the key players, Gemfields and Kagem, the auctioning of precious stones in Zambia is now paying dividends as evidenced by the revenue being generated and paid out to the Government in various taxes, a move which has elated the Government.

President Sata in his recent observation over gemstones said the outcome of the successful auctions leaves no doubt about the country’s ability to hold these auctions locally and maximize revenue which might have been understated through various manipulations.

On the insistence of Government, Kagem Mines Plc held a low grade rough emeralds auction from 15th – 19th April, 2013 which realized US$15.2 million -which was the highest value ever realized,” the President said.

“Similarly, from 15th – 19th July 2013 another auction of high grade emeralds was held at which US$31.5 million was realized. This is the second highest auction revenue achieved to date and the best in terms of value per carat sold.”

The average per carat price of US$54 has set a new record. Furthermore, all the 583,448 carats placed on offer were sold.

President Sata is happy to note that the selling and auctioning of gemstones locally has created employment, enhance value addition through cutting, polishing and jeweler making activities as well as enhance revenue collection as a result of proper monitoring mechanisms.

“Additional spillover effects to other sectors of the economy will also be enhanced as international buyers who come and stay in the hotels will end up visiting other tourist attractions as well as having an interest in investment opportunities in various sectors of the economy,” President Sata said.

He reiterated government’s commitment to diversifying the economy away from copper and promoting value addition industries in the mining sector in line with the PF Manifesto.

President Sata commended the Ministry of Mines, Energy and Water Development for implementing his directive on gemstone auctions without delay.

When all is said and done, the Kagem Mining Limited, the country’s largest emerald producer, has since declared a dividend of K41.6 million (or equivalent of US$8 million), of which K10.94 million (US$2 million) has been paid to the Government, representing a 25 per cent shareholder in the company.

It remains to be seen on the future of the gemstone industry with the latest demands by traditional leaders in Lufwanyama district-the ‘nest’ for Zambia’s precious and emerald stones that have helped put the country on the world map as Africa and global leading producer of not only the red metal-copper but also precious stones.

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