By Dickson Jere
The Zambian government yesterday announced the suspension of the 15% export tax imposed on gemstones and precious stones – barely two months after it became effective – thereby triggering massive debate in the country.
Zambia is the second largest producer of emeralds from Colombia – with Kegem Emeralds Mine (Majority owned by London based Gemfields Group) being the biggest precious metal mining company in Zambia.
In December 2024, the company announced a controversial decision to suspend operations at its mine citing “over supply” of the gemstones on the international market. It closed shop for six months and workers
asked to stay home.
But that decision was made barely few weeks before the coming into effect of the 15% export duty on precious metals as announced by the Zambian government. Was it a coincidence? I did question the rationale behind the suspension of operations at the mines at that time.
Fast forward, Kagem issued another statement saying it had also suspended the sale of precious metals on account of the new 15% tax announced by government. It claimed that it was already paying 6% mineral royalty and the additional 15% meant the taxes would be 21% on the precious metals.
Kegem made it clear that it will lobby government for the immediate removal of the 15% taxes or lay off workers. Just a month after that statement, the Zambian government has given in and suspended the exports duty – just what Kagem wanted!
Now, this is not the first time this has happened. In 2019, under the PF government, a similar 15% export duty was introduced on gemstone and precious metals exports. It did not last even at that time. Government suspended the tax and zero rated the medals following similar threats and lobby by these companies.
Why was this tax reintroduced then?
If five years ago, we had similar problems, why didn’t the technocrats look into that before reintroducing the same tax in 2025? It looks like the issue is more of blackmail from the investors on this aspect of taxation. For government to have brought this tax back, it means the pros and cons of it was analyzed. There was some thinking that went into the decision.
Anyway, my point is that government should never bend to blackmail. The tax should have remained on our laws until the next budget cycle without being changed. What would stop other companies in different sectors from doing the same – suspend operations and sales – then argue about the impact it would cause to the economy.
A bad precedent is being set by the company. Arm twisting it is called.
And so far, it has worked twice!
