Kagem Mining, a Zambian unit for Gemfields has suspended principal operations at its emerald mine in Lufwanyama to safeguard employees during the Coronavirus (COVID-19) pandemic.
Kagem Board Chairman Dr. Sixtus Mulenga says the wellbeing of Kagem’s employees and the community is a priority hence all but critical operations at the Kagem emerald mine have been suspended from 30 March 2020 for what is hoped to be a period not exceeding one month on COVID- 19 threats.
Almost 1,000 people are employed at Kagem, which is operated by Gemfields in partnership with the Zambian government through the Industrial Development Corporation (IDC), which owns 25% of the business.
The suspension is particularly crucial given the nature of the work at Kagem, which involves close contact during physical searches, biometric fingerprint security procedures and weekly shift changes of production staff.
According to a statement made available to the Zambian Business Times – ZBT by Kagen Public Relations Consultant Gillian Langmead on March 30, 2020, Dr Mulenga thanked Government for its swift and decisive action to curtail the spread of the disease in Zambia, and pledged that Kagem will ensure employee job security adding that Staff will be put on leave with full salary for the one month of planned suspension of operations.
He also offered words of hope to Kagem’s staff, their families, local communities and the wider nation, saying: “Zambia has an indomitable spirit and we can pull together to fight this threat by heeding the guidance of the Government and ensuring we all play our part to keep ourselves and our loved-ones safe.” Dr Mulenga.
COVID-19 represents one of the most serious challenges faced by many companies globally. Kagem is no exception and a significant detrimental impact on its operations, revenues and business is inevitable during 2020 and possibly beyond.
In 2019, some 93% of Gemfields’ revenue was derived from six gemstone auctions at which clients were able to carefully inspect the gems before bidding. Widespread travel restrictions mean Gemfields cannot presently host auctions.
Once the travel restrictions are lifted, additional time will be required before life and business returns to a relative ‘normal’. There is clearly also a risk that travel restrictions may be extended or re-introduced should a second wave of virus infections take hold in key countries, warned Gemfields in a notice to the London Stock Exchange.
Due to the prevailing levels of uncertainty, Gemfields is unable to provide reliable guidance as to when it might be able to host its next auctions. The emerald (high quality) and ruby (mixed quality) auctions originally scheduled for May and June 2020 respectively are highly likely to be rescheduled for the second half of the year.
Should market circumstances not recover adequately, it is also conceivable that the subsequent emerald (high quality) and ruby (mixed quality) auctions originally scheduled for November and December 2020 may be cancelled altogether.
Gemfields perceives comfort in the fact that well-sought gemstones have for centuries been regarded as a store of value and a guard against turbulent times. This was also evidenced during the 2008 financial crisis when gemstone prices proved remarkably resilient when compared to equity indices.