Kagem pays 31% of revenue to Zambian government in 2023

25 April 2024

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FOR IMMEDIATE RELEASE
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APRIL 25, 2024

Kagem pays 31% of revenue to Zambian government in 2023

LUFWANYAMA, ZAMBIA – The Kagem emerald mine in Lufwanyama paid almost a third of its revenue to the Zambian government in 2023, according to latest figures from its parent company Gemfields.

The state received USD 28.3 million of Kagem Mining’s USD 92.7 million revenue in 2023. These figures mean a 31% contribution, as calculated according to Gemfields’ ‘G-Factor for Natural Resources’, a measure promoting greater transparency regarding the level of natural resource wealth shared with the governments of host countries, whether from the mining, oil, gas, timber or fishing sectors, launched in July 2021.

The figures reflect contributions specifically from company revenue, rather than the more traditional measure based on profit after expenses. Gemfields again invited governance bodies, extractive companies, industry observers and host governments to adopt the G-Factor for Natural Resources in order to improve transparency and accountability regarding the share of natural resource wealth paid to a host country’s government.

The G-Factor for Natural Resources is intended to be an uncomplicated indicator of the percentage of a natural resource company’s revenue that is paid to the host country’s government in primary and direct taxes (plus, where the host government is a shareholder, dividends). As such, it is an indicator of the share of natural resource wealth paid to a host country’s government. It is also an indicator of the efficiency of natural resources companies in converting those natural resources into funds for the host government. The G-Factor for Natural Resources takes its name from the “g’s” in “government”, “governance” and “good practice”.

“Given the desire by governments to increase their participation in their country’s natural resources, a practical measure allowing a direct comparison of the sharing of natural resource wealth assists greatly in identifying responsible custodians of host nations’ resources. The G-Factor for Natural Resources provides a simple ‘school score’ allowing observers to assess the relative efficiency of extractives companies in converting natural resources into wealth for host-nations. In order to better align with practices in other countries in our region, we have this year added export duties and levies as an additional parameter in the calculation. We hope the G-Factor for Natural Resources will be voluntarily adopted by other companies, insisted upon by host governments and incorporated into projects such as Extractive Industries Transparency Initiative (“EITI”).” said Sean Gilbertson, Gemfields CEO.

G-Factor for Natural Resources computations for Kagem emerald mine, which is operated and 75% owned by Gemfields and 25% owned by the Zambian government’s Industrial Development Corporation (IDC) are set out below:

The ‘G-Factor for Natural Resources’

The G-Factor for Natural Resources would typically be calculated by each standalone company engaged primarily in the extraction and sale of natural resources, whether in the mining, oil, gas, timber or fishing sectors. Accordingly, multi-national natural resource companies would publish the G-Factor for Natural Resources for each operating subsidiary engaged primarily in the extraction and sale of natural resources.
The G-Factor for Natural Resources is expressed as a percentage and is calculated as:

where:

A = the total mineral royalty (tax on revenue) paid by the reporting company to the host country government during the period
B = the total corporation tax (tax on profit) paid by the reporting company to the host country government during the period
C = the dividends paid by the reporting company to the host country government during the period (where the host country government is a shareholder in the reporting company)
D = the total export taxes or export levies paid by the reporting company to the host country government during the period
E = the total revenues of the reporting company during the period
p = the relevant period, typically calculated for each of (i) the prior year; (ii) the preceding 5 years and (iii) the preceding 10 years
The sums actually paid during the period (rather than the sums accrued or falling due during the period) are used for the purposes of A, B, C and D.

No measure of this type is perfect and it is recognised that:

a. the G-Factor for Natural Resources is a “rule-of-thumb” – while it has broad application and is a practical indicator, it is not suited to every situation;

b. there are numerous additional and indirect taxes which are not included in the G-Factor for Natural Resources and which further increase the contribution made to host nations by natural resource companies. Such taxes include but are not limited to area/surface charges, social security contributions, taxation on the salaries of employees, import and export duties, VAT, etc; and

c. the variety and variations in natural resource deposits, types and occurrences lessens the ability to make direct comparisons between companies.

-Ends-

CONTACT
Enquiries
Gillian Langmead
Langmead & Baker Ltd
Tel: +260 979 060705
info@langmead.com

Head office
Helena Choudhury
Head of PR and Communications
Tel: +44 (0)207 518 3420 / +44 (0)7493 237598
helena.choudhury@gemfields.com

Albertina Namburete
PR Manager
Tel: +44 (0)783 325 7387
Albertina.namburete@gemfields.com

Kagem responsible sourcing highlights

Kagem is committed to ensuring that the community continues to benefit positively from its operations through various sustainability programmes focused on alleviating poverty and aligned with government policies, the UN Sustainable Development Goals (SDGs) and Vision 2030.
Up to December 2022, Kagem Mining had committed more than USD 3 million on community projects.
Kagem constructed, expanded and rehabilitated 5 schools providing education to more than 2,000 students.
Kagem Mining committed USD 345,000 on top of previous provision of USD 345,000 in university scholarships in geology and mining engineering.
Kagem Mining and Gemfields Foundation built and equipped two computer labs at Kapila Primary School and Chapula Secondary School.
Kagem constructed 1 fully equipped health centre, the Nkana Health Centre, serving a population of 10,000.
Improved Chief Nkana and Chief Lumpuma’s palaces and rehabilitated 18.7km road connecting Chief Nkana and Chief Lumpuma’s chiefdoms.
Kagem Mining provides support to 7 farming associations benefiting with more than 100 farmers and their families.
Kagem supports the Zambian Carnivore Programme (ZCP) having committed a total of USD 400,000 since 2018 to 2027 and an one-off donation of USD 70,000 to the North Luangwa Conservation Programme (NLCP).
Kagem signed Memorandum of Understanding (MoU) with the Government of Zambia to fund the construction of the Chapula Vocational Training Centre in Lufwanyama.
Kagem Mining employs more than 1,000 people, of which, 94% are Zambian nationals.

About Kagem Mining

Kagem Mining Ltd, based in Lufwanyama, is believed to be the world’s single largest producing emerald mine. Kagem is 75% owned by Gemfields, in a model partnership with the Zambian government.
Kagem aims to emulate the values of Gemfields and operate in a way that contributes positively to the national economy, while taking a leading role in modernising the coloured gemstone sector and building sustainable livelihoods for the communities around the mine. Kagem believes that coloured gemstones should be mined and marketed by championing three key values – transparency, legitimacy and integrity.
Gemfields is a world-leading responsible miner and marketer of coloured gemstones. In addition to Kagem, Gemfields is the operator and 75% owner of Montepuez Ruby Mining in Mozambique (at one of the most significant recently discovered ruby deposits in the world), as well as bulk sampling licences in Ethiopia, amongst others.
Gemfields has developed a proprietary grading system and a pioneering auction and trading platform to provide a consistent supply of coloured gemstones to the global jewellery market.
Fabergé – an iconic name with an exceptional heritage – is a member of the Gemfields Group. The beauty of Fabergé’s designs and craftsmanship, helps to raise consumer awareness of responsibly sourced coloured gemstones.
As well as supplying a significant share of the world’s rough rubies and emeralds, Gemfields initiates activations to build desire for coloured gemstones: for example, collaborations with international jewellery brands and other creative partners. Often surprising, unexpected and unique, these collaborations are chosen to promote consumer awareness and increase the appeal of coloured gemstones, raising their profile, and, in turn, providing greater benefit to their place of origin in Africa.

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