Foreign mining companies extract more than a quarter of the world’s production of rare emeralds in Zambia yet declare losses to make themselves tax exempt.
So far, charges of tax evasion filed against Kagem mine, a subsidiary of the London-listed gemstone miner Gemfields, have been unsuccessful – dismissed by the Zambian Revenue Authority.
Gemfields owns 75% of the world’s largest emerald mine in Kagem, northern Zambia. Auctions of 30 Zambian emeralds and 11 Mozambican rubies have brought the company over $1 billion of combined auction revenue, according to the Creamer Media Mining Weekly.
The UK company stated this was a remarkable benchmark for the colored gemstone sector.
Yet Gemfields and the other foreign gem firms are fighting tooth and nail against Zambian efforts to curb corruption in ways that would cut into profits.
A proposed tax increase of 1.5 percent to reduce Zambia’s mounting public debt was met with threats by an industry lobbying group to cut $500 million in capital spending and lay off 21,000 workers, according to the Bloomberg news wire.
Each year, the Zambian government is believed to lose billions in illicit financial flows mainly related to its mineral resources sector. The Kagem probe was part of a government effort to capture more benefits from the sector.
Zambia is also Africa’s second-biggest copper producer with ownership concentrated in a few foreign hands. In 2018 the revenue authority carried out an audit of all major mining companies and, according to Reuters, slapped the India-based Konkola Copper Mines with an $18 million bill.
Suspicions about Konkola were raised when founder Anil Agarwal told a business forum that its Zambian mines made $500 million a year yet declared a loss at the end of the financial year.
In a separate development, Gemfields faces serious allegations of human rights abuses at the Montepuez ruby mine in Mozambique. Charges leveled at Gemfields and its management cite abuses allegedly carried out since 2012.
These included claims by 112 Mozambicans of alleged killings of family members, torture, abuse and humiliation at the hands of security employed by the mine and the state.
A statement by the Mozambique Bar Association’s human rights commission cites “acts of torture” seen in videos showing people bound to trees and beaten with thick wooden sticks, lined up in stress position – images they called “macabre, degrading and inhuman.
This article originally appeared in the Charleston Chronicle.