The lower quality of the rubies extracted at the Montepuez mine in northern Mozambique led to the Gemfields group’s profit falling 22% to US$12.4 million in the first half of 2019, the group said in a market statement.
Gemfields’ two main assets are Montepuez Ruby Mining (MRM), in partnership with Mozambican company Mwiriti, Lda, and the Kagem emerald mine in Zambia, with a 75% stake.
MRM’s revenues were down 30.3% to US$50 million, mainly due to the fact that a larger quantity of lower quality rubies was auctioned, with the price per carat falling from US$122.03 to US$51.99, according to CEO David Lovett.
Revenues in the jewellery business through Fabergé fell 44% to US$3.9 million, but the two Kagem mine emerald auctions held during the period generated revenue of US$33.2 million, a year-on-year increase of 57%.
Gemfields also reported that the profit from the sale of emeralds fell by US$5 million due to the Zambian government introducing a new 15% export tax, which added to a 6% mining tax means that the company pays 21% of its revenue to the country’s tax authority.