15 February 2023
Gemfields discloses the latest ‘G-Factor’ figures
The ‘G-Factor for Natural Resources’ was unveiled in July 2021 as a way of promoting transparency on the level of natural resource wealth shared with host country governments.
The ‘G’ in ‘G-Factor’ stands for government, governance and good practice – all three of which lie at the heart of this initiative. The intention is to quantify the percentage of revenues, from the mining, oil, gas, timber and fishing industries, that is paid back to the countries of origin in primary and direct taxes and dividends (where the host government is a shareholder), shining a positive light on those companies making a stellar contribution.
Gemfields released the ‘G-Factor’ figures up to December 2022 as a way of encouraging governance bodies, mining organisations, industry observers and host governments to adopt the ‘G-Factor for Natural Resources’, the idea being that if enough do so, transparency will be greatly improved across the sector. The Kagem emerald mine in Zambia and Montepuez ruby mine in Mozambique are the group’s two mining subsidiaries for which calculations have been included.
Gemfields’ CEO Sean Gilbertson explains the thinking behind the idea: “Given the evolution of resource nationalism, on the one hand, and increasing strategic competition by companies and states for access to resources, on the other, it seems to us that a practical measure allowing more direct comparison of the sharing of natural resource wealth would assist greatly in identifying responsible custodians of host nations’ resources. We hope the ‘G-Factor for Natural Resources’ will be voluntarily adopted by other companies, insisted upon by host governments and incorporated into projects such as EITI.”
The calculation is incredibly straightforward – with a natural resource company’s mineral royalties, corporation tax and dividends paid to a host government divided by its total revenues to arrive at its ‘G-Factor’ rating. For 2022, MRM had a ‘G-Factor’ of 27% and Kagem had one of 17%. This formula allows companies to set targets and aspire to do their best to contribute positively to the countries from which their natural resources originated.