Precious stones miner Gemfields (LON: GEM), the world’s biggest emerald producer, said the Zambia government's ban on overseas auctioning of gemstones would hurt revenue at its flagship Kagem emerald mine in north Zambia.
Shares in the company plummeted as much as 27% on the news, hitting the steepest decline in more than four years.
“Gemfields believes that any outright limitation on selling emeralds in other countries could have the potential to materially constrain Kagem’s revenues,” the company said in a written statement Monday.
The company, which currently sells its emeralds at auctions in Singapore and India, produced 21 million carats of the precious stones from its Kagem mine last year. Gemfields said it has written to Zambia’s minister of mines, energy and water development to request clarification of the terms of the new measures.
Emerald production from Kagem has been sold exclusively outside Zambia since 2009, generating $160 million of revenue from 11 auctions abroad.
Kagem had revenue of $77.6 million in 2012, compared with $8.8 million in 2008, when Gemfields acquired the mine.
The ban would also affect Gemfields' Kariba amethyst mine in south Zambia, in which the company has a 50% stake, the firm said.