Gemfields to Halt Some Operations, Sell Businesses Amid Market Woes 

Gemfields plans to curtail many of its business operations and cut jobs as it struggles with the market downturn and other issues affecting its bottom line. 

The company will suspend all mining at its Kagem emerald deposit in Zambia for up six months, it said Monday. However, it will continue to process ore from the site’s current stockpile, it noted. The miner will also halt all nonessential spending at its three ruby development assets in Mozambique: Megaruma, Campos De Joia and Eastern Ruby Mining.  

Additionally, Gemfields is shutting operations at the Nairoto gold project in Mozambique and seeking a buyer for both that business and its iconic Fabergé luxury brand. The miner will also potentially cut jobs in a “targeted rationalization of operations and businesses across the group,” it explained. 

The move follows persistent decreases in revenue at its latest auctions, which saw results that were “materially lower than the company has experienced in recent years,” it noted. At its most recent emerald auction, Gemfields sold only 70% of lots on offer, reaching a total of $16.1 million, its lowest in more than two years. Meanwhile, sales of rubies fell 17% to $128 million for the six months that ended June 30, while profit dropped 25% to $13.7 million. 

“The group announces that it has taken, and will continue to undertake, actions to cut costs and streamline business activity amid four key challenges being encountered concurrently,” the company said. 

A global oversupply, due to a competitor in Zambia flooding the market through multiple sales and discounted prices during the second half of the year, has hampered Gemfields’ emerald business, it said. Lower production of rubies at its Montepuez mine in Mozambique has also impacted the miner. Much of the savings will be used to ensure the completion of a second ruby processing plant, which is “critical” to increase production and “deliver additional revenue,” Gemfields noted. That project should be completed in the first half of 2025.  

Economic difficulties in China and geopolitical turbulence have weakened the luxury and gemstone market, also affecting the company’s sales. Ongoing civil unrest and associated supply chain and logistics interruptions in Mozambique as a result of the general election has been compounding all of those issues. While the company’s operations are as-yet unaffected, the potential threat remains, the miner added. 

The company’s share price has fallen 16% since the start of trading Monday following the announcement. 

Image: The Lion emerald. (Gemfields)