The Kagem mine is an open-pit emerald mine in the Kafubu area of the Copperbelt Province, Zambia, and is the largest single emerald operation in the world. It is owned 75 percent by Gemfields plc and 25 percent by the Industrial Development Corporation of Zambia, the state-owned investment vehicle of the Government of the Republic of Zambia, and is the principal source of supply for the Gemfields international auction system.

History

Emerald discoveries in the Kafubu area date to the 1920s, with sporadic small-scale mining through the 1930s and 1940s. Modern commercial mining began in the 1970s, when the Reserved Minerals Corporation of Zambia, a state body, developed the area. Kagem itself was established as a separate operation in 1984. The mine passed through several ownership changes during the 1990s before Gemfields acquired its 75 percent interest in 2008. Gemfields has since invested significantly in mechanisation, exploration and the auction-based marketing system that has become the firm's signature commercial mechanism.

Operation

Kagem operates as a large open-pit, with stripping and selective recovery of beryllium-bearing pegmatites and quartz veins from chromium-bearing schists. Recovery is mechanised in the bulk-stripping phase and then becomes hand-sort intensive in the picking phase, where individual emerald-bearing zones are identified and the rough is recovered by trained pickers. The mine produces several million carats of emerald per year, with a mix of fine, commercial and lower-grade material across the production cycle.

Auction system

Gemfields markets the great majority of Kagem production through a series of formal auctions, typically held in Singapore, Lusaka and Jaipur. The auctions are conducted under sealed-bid procedures and generate price-discovery data that is closely watched by the international coloured-stone trade. The auction system was a significant innovation in the coloured-stone trade and has been imitated, with adaptations, by other producers including Gemfields' own Montepuez ruby operations in Mozambique.

Trade significance

For the international emerald market Kagem is the dominant single source of supply by volume and one of the principal sources by value. The mine's auction results are a leading indicator for emerald pricing across the trade, and its commercial-grade goods underwrite a substantial fraction of the mid-market emerald jewellery sold worldwide. The operation is also a frequently cited example of a successful resource partnership between an international mining company and an African state, and its environmental, social and governance disclosures are unusually detailed for the coloured-stone sector.