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Zambia's emerald conundrum

Small-scale miners see potential in emeralds, but complain that government policies are far from cutting-edge.

Last updated: 10 Feb 2014 08:47
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Zambia produces about 20 percent of the world's emeralds [Noel Sichalwe/Al Jazeera]

Zambia is one of the biggest emerald producers in the world, behind only Colombia and Brazil. One out of every five of the green gems is produced in this southern African country, bringing in about $200m a year.

But a closer look shows that the country's emerald sector faces a number of challenges. Although the government has issued more than 400 mining licences to small-scale miners, only three emerald mines in Zambia are in full production.

The industry has major potential, but lack of capital has slowed its emergence. Makali Mine is a case in point. The road to the mine is bumpy and muddy; the area is covered with thick trees that someone might mistake for a forest instead of a mine.

"This is my mine," Makali Mine operations director Mayank Patel told Al Jazeera. "We have done the explorations on this area, worth more than $165,000, and the geologists have confirmed that it contains all the ingredients needed to find emerald deposits. The problem is that we do not have the equipment like core drilling machines for us to ascertain the exact location, or where to hit the veins that contain emeralds. This equipment is quite expensive, and we don't even have the money to buy one in the first place... That is why we have resorted to finding a partner to start production."

Patel's situation mirrors those faced by many small-scale miners in Zambia - causing widespread frustration within the industry at the lack of government support.

Success stories

On the other hand, the mines that are actively producing emeralds are highly successful. Mining companies such as Kagem Mine have become so productive that UK-based mining company Gemfields bought shares in 2008. Gemfields CEO Ian Harebottle has since expressed delight at the revenue generated.

"The combination of our investments in the mine, our auction, practices, proprietary emerald grading system and global marketing campaigns have delivered dramatic results not only for Kagem, but for the wider Zambian gemstone sector," he noted.

Industry commentators who declined to be named, told Al Jazeera that Kagem Mine's example should be used as a model for other small-scale miners in Zambia.

"It is not right that the government should just focus on supporting the three active emerald mines while neglecting the small players. The country can earn from the sale of emeralds if the government decided to support even 10 small-scale mines from the 400 mines that are dormant. As for now, the situation is that of the government milking a dying cow," said one mine manager who wished to remain anonymous to avoid retribution.

An illegal emerald dealer [Noel Sichalwe/Al Jazeera]

Victor Kalesha, the general secretary of the Emerald and Semi Precious Stones Mining Association of Zambia, is unhappy with the government's management of the emerald sector. Kalesha told Al Jazeera that the failure to develop the sector is due to lack of equipment and funding, as well as the lack of proper geological data.

"You know, some people have spent their pensions while others have sold houses in the hope of recouping something from the emerald mines. But they have ended up losing their life savings. Unfortunately, the greatest challenge is lack of geological information. For instance, Grizzly [emerald mine] started with trial and error, but when they got the right equipment they have started production. Other members started with core drilling but when they exhausted their income, they got stuck with the pits they have dug."

Small-scale emerald miners were offered 30m euros ($40.6m) in financing from the European Union, but Kalesha explained that the programme failed because the conditions were too stringent for struggling miners to meet. He said Chinese investors are now expressing interest in partnering with Zambian mine owners, though their terms of investment tend to be unfavourable for the Zambian companies.

"The Chinese are coming to do joint ventures, although they are claiming a lot. Some are coming demanding, for instance, 80 percent shareholding in a company of somebody that has sacrificed so much. But you cannot hold on to a licence that you can't use. You are better off giving it to somebody who can help you get to production."

Government aid?

For its part, the Zambian government said it is implementing policies to grow the industry, announcing that it has released a grant of 50m kwacha ($10m) towards the development of 400 small-scale emerald miners whose mineral exploration licenses are dormant.

Mines Minister Christopher Yaluma said these funds are intended to address the challenges that limit small-scale emerald miners from undertaking full-time production. The government, he claimed, has been losing revenue to the black-market emerald business, and introducing this programme is one way to curb the trend.

But illegal emerald dealers such as Christopher Mwansa have vowed to resist any government intervention. Mwansa, 25, told Al Jazeera he makes an average of 5,000 kwacha ($1,000) per month to support his young family and his ageing mother.

"In a week, I sell about 10 emerald stones and I am able to find enough money to buy the home requirements... I have already bought a plot in town and I am raising money to start building my own house. I use part of the money I make here to support my mother in town as well," said Mwansa.

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Source:
Al Jazeera
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