5 June 2018

Gemfields Addresses Misleading Links To Extremist Activity In Northern Mozambique

Gemfields is aware of an article published by the Telegraph linking Gemfields with alleged extremist activity following an attack in in northern Mozambique on Sunday 27 May 2018.

That article has since been picked up by other news services. For the reasons outlined below, the purported link is misleading. Neither Gemfields nor its 75%-held Mozambican subsidiary, Montepuez Ruby Mining Lda (“MRM”) were afforded the opportunity of commenting on the article prior to its publication and Gemfields is therefore issuing this statement directly (a copy of which has been provided to the Telegraph). Gemfields would like to make the following observations:
  • The attacks occurred in Monjane, Olombe, south of Palma in northern Mozambique.
  • The article contains a map showing the location of the towns of Montepuez (some 30 kilometres west of MRM’s ruby mining operations) and Pemba. The map fails to show the location of the attacks in Monjane.
  • Monjane, 60 kilometres from the Tanzanian border, lies some 375 kilometres by road from MRM’s operations. In fact, Monjane lies outside of the article’s map boundary.
  • The article states, inter alia, that the attack will “also renew scrutiny on Gemfields, a British mining company, whose alleged abuses are said to have created fertile ground for extremist recruitment”. The article fails to identify the source putting forward that uncorroborated and misleading link. Gemfields has also previously addressed, in a statement issued in February 2018, the alleged abuses referred to in the Telegraph article.
  • The article states that “Cabo Delgado, with large oil and gas reserves as well as the world’s biggest ruby and pink sapphire deposits, should be one of Mozambique’s richest provinces. Instead it is among the poorest”. The article fails to point out that the oil and gas projects (which are being developed by other firms) are not in the production phase yet and hence cannot be expected to contribute meaningfully at present. Gemfields also wishes to point out that MRM was the single largest tax payer in Cabo Delgado province in 2015, 2016 and 2017. Since inception, and up to MRM’s last financial year (ending 30 June 2017), approximately 24% of MRM’s aggregate revenues (as opposed to profits) have been paid to the Government of Mozambique by way of production royalties and corporation tax.
  • The article acknowledges that “There is no proof, however, that resentment against Gemfields has prompted any locals to join Ansar al-Sunna.” This acknowledgement unfortunately occurs somewhat late in the article and therefore does not provide reasonable counterweight to the ill-founded assertion at the beginning of the article.
The causes behind attacks of this nature are inevitably complex, as is outlined for example by Joseph Hanlon for the BBC. Gemfields and MRM reject the view that MRM’s approach to formalised ruby mining in the Montepuez vicinity has contributed to attacks some 375 kilometres away. Rather, in the vicinity of Montepuez, the presence of rubies has certainly attracted unscrupulous (and mostly foreign) middlemen who operate a system of smuggling, pay little or no tax to the Mozambican government, and profiteer at the expense of local people. Their approach is unregulated, unsafe, exploitative and opaque. History shows that such activities tend to dissipate over time and as the benefits of formalised methods of extraction and the associated advantages begin to take shape. However, these positive developments are often actively opposed - frequently by incitement and rumour-mongering - by the perpetrators of illegality (who prefer the murky operating environment that is key to their way of business). Gemfields and MRM are working to develop the sector into one that is transparent, responsible and provides sustainable long-term social, economic and environmental benefit. The teams at Gemfields and MRM extend their condolences to the families and communities affected by this appalling attack.