By Linda Soko Tembo and Malia Politzer | MakanDay Centre for Investigative Journalism
Gemfields, the London stock-listed company which operates Zambia’s Kagem emerald mine, will on Monday ask its shareholders to approve an emergency cash injection of US$30 million that its auditors say is critical to its survival.
If the fundraising attempt fails, the mining giant’s independent auditor has warned it will not have “sufficient funds to continue trading”. The company recorded an enormous US $100m loss last year.
At stake is the future of Kagem—the world’s biggest emerald mine. Located in Lufwanyama in Zambia’s Copperbelt Province, Kagem produces about a quarter of the world’s rough emeralds, employs 1,589 people and is 25% owned by Zambia’s state-run Industrial Development Corporation. In a November 2024 investor update, Gemfield reported that the mine has paid US $195.1 million in taxes, royalties and dividends to the Zambian treasury since 2008.
Corporate Feud
As Gemfields’ financial future is shrouded in doubt, MakanDay can reveal the company appears to be at war with its rival, Grizzly Mining, Zambia’s second-largest mining company, which runs emerald pits just up the road from Kagem.
Gemfields has hinted that Grizzly has been the reason behind what it describes in its 2024 annual report as “an oversupply of Zambian emeralds”.
It blames this “oversupply” for why it was forced to suspend operations in Kagem for six months and write $47.7 million off the mine’s value.
Grizzly denies it has oversupplied the Zambian market and suggests Gemfields’ own production difficulties is the reason for its rival’s financial distress.
“The company strongly rejects any suggestion of price discounting. Emeralds are far rarer than diamonds – every stone is unique and prices vary on a case by case basis subject to their characteristic,” the company told MakanDay.
“We do not comment on other Zambian producers. The Grizzly emerald mine is a long life low cost mine that will be producing Zambian emeralds for decades to come.”
But in a signal of intense bitterness between the two companies, Grizzly filed a legal action in December against Gemfields for alleged unlawful occupation by Kagem of an area known as “Kamakanga House” and conspiracy to injure business reputation and goodwill.
Gemfields states these claims are entirely without merit. Kagem (which had previously filed its own claim in Zambia against Grizzly, Pridegems and others in mid-November 2024 in relation to another area known as the “BISMA licence”) is in the process of preparing a robust defence in conjunction with its legal advisors.
Grizzly has not commented on the status and merits of legal actions between it and Gemfields.
Accusations of oversupply and counter legal claims appear to be the latest twist in a long running corporate feud between the companies.
Their rivalry five years ago forced the Zambian government to broker a Memorandum of Understanding between Gemfields and Grizzly. In an exclusive interview with Makanday, Mines Permanent Secretary Dr. Hapenga Kabeta revealed for the first time that his ministry had brokered the agreement, which required Gemfields and Grizzly to avoid “predatory behaviour” that could undermine each other’s operations—including scheduling their auctions on the same dates.
“In my view, the MoU is working. There was once some tension between the two companies, with one accusing the other of predatory behaviour. But we encouraged them to recognise that the market is not small—it’s massive—and that they should maintain mutual respect,” he said. “They signed the MoU between themselves, and it is my hope that they continue to uphold its key principles.”
Grizzly confirmed “We have an MOU in place to ensure that our auctions do not infringe on those of other producers. We continue to champion and market Zambian emeralds for the benefit of Zambia as a whole and all our in-country stakeholders.”
This MoU now appears to be at breaking point.
“Price war”
The breakdown of relations between Gemfields and Grizzly can be seen through the prism of emerald auctions held around the world. In May 2024, Gemfields sold Kagem emeralds at auction in Bangkok for US $167.51 per carat, according to the annual report.
Six months later in Dubai, a Grizzly press release said it had sold 96% percent of its “mid-to high-grade rough emeralds” in a November auction. Based on figures from that release, the average price achieved was roughly US $11.8 per carat—just 7% of Gemfield’s earlier price.
Gemfield’s own November auction ended with just 70% lots sold. Its sales performance, the company disclosed, forced it to withhold emeralds which had not achieved “minimum pricing…to maintain pricing discipline.”.
This dynamic echoed those seen at other auctions throughout 2023-2024. It prompted Gemfields to halt production at Kagem mining as a cost-cutting measure, which led to a US $47 million impairment, and helped plunge the company to a US $100.8 million loss for 2024.
In its 2024 annual report, Gemfields CEO Sean Gilbertson singles out the “oversupply of Zambian emeralds at discounted prices by a competing Zambian emerald producer during the second half of 2024, compounded by conflicting auction dates and so giving rise to a poor Zambian emerald market for the first half of 2025” as primary factors driving the company’s poor performance.
Other contributing factors listed included a weaker demand for gemstones from China and political disturbances in Mozambique that could affect Gemfield ruby mining operations.
When Makanday asked if the Zambian competitor frequently mentioned in connection with discounted prices in the 2024 annual report was Grizzly, Gemfields directed reporters towards the last paragraph of its 12 December 2024 ruby auction results announcement which references ongoing litigation with Grizzly.
Monday’s vote, and what’s at stake
In Zambia, the impact of Kagem’s shutdown is already being felt.
The suspension of mining operations has already led to a sharp 66% drop in emerald gemstone production from 6,696.71 tons in the first quarter of 2024 to 2,210.22 tons in the same period of 2025, according to Gemfields’ 2025 first-quarter mining sector performance report. This decline is directly attributed to Kagem Mine’s six-month production halt due to adverse market conditions.
Gemfield directors warn that they may have to “suspend or defer” expansion at Kagem if the rights issue fails, potentially jeopardising those 1,589 jobs and future royalty flows.
If investors vote against the rights issue, auditors and Gemfield management warn that Gemfield will be unable to continue operations.
But Gemfields’ two largest shareholders who together hold a 43% stake in the company have already agreed to lend $13.3 million in advance of its emergency shareholder cash call, known as a rights issue, to help maintain operations. While it means Gemfields’ cash call is likely to be approved on Monday, the company’s finances are still likely to remain in a fragile state in the short term.
Gemfields’ decision to launch a rights issue comes just a week after a May 8th announcement that it would resume operations at Kagem, following a six-month suspension. Management said the limited restart followed “encouraging” auction results on 30 April and will focus only on two high-grade zones inside the Chama pit. The aim is to extract premium emeralds for future high-quality auctions, while limiting waste mining.
However, when—or whether—they plan to fully reopen the Kagem mine remains an open question. “The decision to recommence full-scale mining will continue to be assessed as market conditions develop,” the company cautioned—underscoring how fragile the market remains..”
This article was developed with Finance Uncovered, a UK based journalism organisation
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