Rule of law driving Kagem success – CEO

ZAMBIA’S strong rule of law and partnership between the Government and Kagem as the world’s largest diversified gemstone company has contributed to its great success, the company’s chief executive says.

Gemfields Plc, owners of Kagem, chief executive officer Ian Harebottle reiterated the company’s commitment to the partnership and praised the country’s strong rule of law during the UK-Zambia Trade and Investment Forum in London recently which was attended by Vice President Inonge Wina and Minister of Commerce, Trade and Industry Margaret Mwanakatwe.

“Kagem is the base from which we grow and it has thrived under the partnership between Gemfields and the Zambian Government,” said Mr Harebottle.

He said Gemfields was a sponsor of the event which attracted about 200 business people, financiers and investors interested in opportunities for investment in Zambia.

Mr Harebottle said Kagem recently declared a US$14 million dividend to its shareholders for the year to June 30, 2015, of which US$3.5 million was paid to the Industrial Development Corporation (IDC), which owns 25 per cent of the company on behalf of the Zambian Government, and US$10.5 million to Gemfields, which owns the remaining 75 per cent.

Mr Harebottle said that was the third dividend paid to shareholders by Kagem and brings to US$30 million the total dividends declared in the last three years.

The dividends were in addition to the more than US$43.7 million in corporate taxes and mineral royalties that have been generated by the company in the last three years.

The last three years of dividends, the first in the Kagem’s history, have been facilitated by the turnaround strategy initiated at Kagem, in conjunction with the Zambian Government, since 2008 when the London-listed Gemfields Plc acquired a 75 per cent stake in the company.

“Gemfields recently reported that Kagem recorded a 49 per cent year-on-year increase in the volume of gemstones produced: 30.1 million carats of emeralds and beryl in its 2015 financial year, compared with the 20.2 million carats produced in the 2014 financial year,” he said.

Mr Harebottle disclosed that since Gemfields took over operation of the mine it had invested US$60 million in turning Kagem around from its long history as a loss-making mine to one where it has been able to increase achievable prices on the global markets tenfold.

He said the company became one of Zambia’s largest taxpaying mining companies, contributing more than US$360 million to Zambia’s direct foreign earnings in the past few years alone.