Gemfields targets Colombia entry as profit surges

Company’s gross margin of 66% makes it the most profitable company among global peers.
Gemfields, the world’s biggest emerald producer, hopes to buy a mine in Colombia this year as rising profit enables the company to look beyond Africa.

“We’ve increased the number of people, and the amount of energy and time we can dedicate to something new,” Chief Executive Officer Ian Harebottle said in a telephone interview Wednesday. “I’m hopeful we should be able to finish something this calendar year.”

The London-based company and owner of Faberge said March 9 that earnings were bolstered by rising emerald and ruby output from mines in Zambia and Mozambique. Gemfields’ gross margin of 66% makes it the most profitable company among global peers tracked by Bloomberg by that measure.

Colombia’s total emerald output was 2 million carats last year, a decline of 25% from 2013, according to the country’s mining agency. Formerly the world’s biggest producer of the green gemstones, Colombia has slipped behind Zambia and Brazil in recent years as its aging mines lack investment in new machinery, Oscar Baquero, the head of the country’s emerald federation, said in September.

Gemfields typically holds a 75% interest in its mining assets, leaving 25% with local stakeholders, Harebottle said. Colombia’s emerald mining is focused in the central province of Boyaca and has experienced periodic violence in the past.

Right partner

In the late 1980s, thousands died when Gonzalo Rodriguez Gacha, the Medellin cocaine cartel boss, attempted to wrest control of the emerald zone from Victor Carranza, dubbed the “emerald Czar” by Colombian newspapers. Carranza, who survived wars with Marxist rebels and rival emerald clans, died from cancer in April 2013.

“We still see a massive amount of potential in Colombia,” Harebottle said. “It’s very easy to identify attractive assets. To find the right one with long-term potential, with the right partner at the right price, that takes a bit longer.”

Gemfields entered into a joint venture in September with East West Gem Investments to develop opportunities in sapphire and gemstones in Sri Lanka.

©2015 Bloomberg News

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