Emerald buyers converge in Zambia's capital Lusaka where the first high grade auction of emeralds - organised Gemfields, one the world's biggest gemstone mining companies, is expected to protect revenue from the industry.
SHOWS: LUSAKA, ZAMBIA (JULY 17, 2013) (REUTERS) - Precious stones miner, Gemfields Plc - owner of the Fabergé luxury jewellery brand, is hosting an auction of high grade emeralds in Zambia, in line with a government decision to ban foreign sales of the gemstone.
The five-day auction, which ends on Friday (July 19) was initially planned to take place in Singapore in June.
But the Zambian Ministry of Mines, Energy and Water Development issued a directive in April that all auctioning of emeralds mined in the country be held inZambia as their sale in foreign markets contributes to capital flight.
"We need to grow, Kagem is not the only emerald miner, there are many other emerald miners and emeralds is not the only gemstone of Zambia, there are many other gemstones as we build this global awareness. So I think what's important and its not a misconception, but the idea is that what we need to do is we are fining the rules, we are building the policy, so having auctions only outside the country might not be the best idea, having auctions only in Zambia might not be the best idea, the best idea is to what? Is to find something that continues to build the industry, build the profitability, build the presence of Zambia and continue to grow and developZambia as a country," he said while at the auction.
Output from Kagem has been sold solely outside the country since 2009, generating 160 million US dollars of revenue from 11 auctions abroad.
Officials from Gemfields, which has American actress Mila Kunis as its brand ambassador insists that it needs to hold the auctions in places that will attract the highest interest in order to compete with other major emerald exporters likeColombia and Brazil.
Landlocked Zambia's economy is seen growing steadily to expand at 7.1 percent this year.
Increased investment in mining is expected to spill over into the construction sector as it benefits from the development of new mines and more government projects to create jobs through infrastructure spending.
However, like many mineral rich economies in Africa, ordinary Zambians say they have not seen the benefits from emeralds.
There is large scale support for the ban on foreign sales of the gemstones, with hopes that it can translate into more accessible business opportunities in the sector.
"Zambians are not benefiting from the minerals that are mined here in Zambia in the sense that we do the mining and then they are sent out of this country for processing and when they come back here, they are very expensive for an ordinary Zambian to afford, so I think they [minerals] need to be processed right here in our country and then they will be cheaper for every Zambians to buy," said Mwaba Kasese, a Lusaka resident.
However, the hefty profits from the gemstone industry are unlikely directly benefit the majority of Zambians.
Established companies like Jewel of Africa, a jewellery store with seven outlets in upmarket locations around Lusaka, selling pieces for as much as 10,000 US dollars, say the auctions are too expensive.
Raj Sharma, managing director at Jewel of Africa, says the government although the initiative to protect the revenue from gemstones is a step in the right direction, there needs to be increased incentives for local entrepreneurs who want to enter the industry.
"I think our challenge is not that we want discounts and stuff because I think that will be unfair for Gemfields, but what we do want is local help. Help from local banks, local financing institutions will be fantastic. We have got the market, we have got the stores in Zambia, we export, but we need to guarantee the supply as well," said
It is not clear exactly how much revenue the gemstone business contributes toZambia's economy, but Gemfields alone through its Kagem mine poured 4 million US dollars in royalties and 9 million US dollars to Zambia's Revenue Authority in 2012.