SourcingDec 19, 2024
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Gemfields to Temporarily Suspend Emerald Mining
The move is one of several cost-cutting measures outlined by the company as it faces a weaker luxury market and other challenges.
Gemfields will temporarily suspend mining at its Kagem emerald mine in Zambia as part of its plans to trim costs and streamline its business.
London—Gemfields announced Monday it plans to temporarily suspend mining operations at its Kagem emerald mine in Zambia alongside other initiatives designed to cut costs and streamline its business as the miner navigates several challenges.
As of Monday morning, shares in Gemfields Group were down 9 percent.
The company has recently reported poor auction results due to an oversupply of Zambian emeralds at discounted prices by a competing Zambian emerald producer; a lower production of “premium” rubies at Montepuez Ruby Mining (MRM) Limitada in Mozambique; and a generally weaker luxury and gemstone market due in part to economic difficulties in China and geopolitical turbulence.
Gemfields’ most recent emerald auction totaled $16.1 million in revenue, while its ruby auction totaled $46.2 million, which are materially lower than the results of previous years.
Though Gemfields described its challenges as “transient,” it is taking measures to streamline its operations.
It will suspend mining at Kagem for up to six months and instead focus on processing the mine’s existing ore stockpiles.
At its ruby development assets in northern Mozambique, Gemfields will halt all non-essential spending and suspend planned capital expenditures, particularly at Megaruma Mining Limitada and Campos De Joia Limitada.
At Eastern Ruby Mining, the core developmental work will continue, but the capital expenditure associated with its originally planned processing plant will be delayed.
At Nairoto Resources Limitada, its gold project north of MRM, it is halting operations and looking for potential buyers.
Gemfields is also “assessing strategic options” for storied luxury brand Fabergé, as well as looking at operations and businesses across the company.
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As of Monday morning, shares in Gemfields Group were down 9 percent.
The company has recently reported poor auction results due to an oversupply of Zambian emeralds at discounted prices by a competing Zambian emerald producer; a lower production of “premium” rubies at Montepuez Ruby Mining (MRM) Limitada in Mozambique; and a generally weaker luxury and gemstone market due in part to economic difficulties in China and geopolitical turbulence.
Gemfields’ most recent emerald auction totaled $16.1 million in revenue, while its ruby auction totaled $46.2 million, which are materially lower than the results of previous years.
Though Gemfields described its challenges as “transient,” it is taking measures to streamline its operations.
It will suspend mining at Kagem for up to six months and instead focus on processing the mine’s existing ore stockpiles.
At its ruby development assets in northern Mozambique, Gemfields will halt all non-essential spending and suspend planned capital expenditures, particularly at Megaruma Mining Limitada and Campos De Joia Limitada.
At Eastern Ruby Mining, the core developmental work will continue, but the capital expenditure associated with its originally planned processing plant will be delayed.
At Nairoto Resources Limitada, its gold project north of MRM, it is halting operations and looking for potential buyers.
Gemfields is also “assessing strategic options” for storied luxury brand Fabergé, as well as looking at operations and businesses across the company.
Gemfields also noted challenges posed by the ongoing civil unrest and the supply chain and logistics interruptions that have developed in Mozambique as a result of the contested general election.
Though mining operations at MRM have not yet been affected, the operating risk has increased, said the miner, noting that the safety of its employees, contractors, and community members is a priority.
Gemfields said it will continue to focus on the completion of the second ruby processing plant at MRM, its principal growth project.
“Gemfields regards the construction of the second ruby processing plant at MRM as a critical project to increase premium ruby production and deliver additional revenue for the group by the end of 2025,” said the company, noting the project is on budget and on schedule.
The company’s management reiterated what it said in its 2024 interim report, noting that it is prepared to take additional cost-cutting measures and look to external funding if necessary.
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