UPDATE 2-Gemfields looks to expand trading in precious stones

* Trading could contribute "sizeable chunk" of revenue - CEO

* CEO expects to obtain trading approval in Zambia

* First-half core earnings more than triple (Adds details, CEO comment, share price)

By Mamidipudi Soumithri

March 9 (Reuters) - Trading in precious stones could accountfor "a sizeable chunk" of Gemfields Plc's revenue withinfive to 10 years, the company's chief executive said on Monday.

Gemfields holds ambitions of creating a stable world marketfor coloured gemstones, polishing their image in the way thatAnglo American Plc's De Beers has championed diamondsfrom London's Bond Street to China.

London-listed Gemfields gets about 90 percent of its revenuefrom the auction of emeralds, rubies and amethysts that it minesin southern Africa. It also owns the Faberge jewellery business.

Gemfields, which produces about a fifth of the world's roughemeralds, does not disclose its trading revenue separately.Analysts say trading currently accounts for only a small portionof its revenue.

Asked about the future contribution of Gemfields' tradingbusiness to revenue, CEO Ian Harebottle said his past experiencein the business suggested gemstone trading had the potential tocontribute close to 40 percent.

"It certainly has the potential to be a sizeable chunk," hetold Reuters.

Gemfields expects shortly to win approval to trade preciousstones in Zambia, home of its 75 percent-owned Kagem emeraldmine. It already has approval to trade in Mozambique and SriLanka, where it mines rubies and sapphires respectively.

The company reported first-half core earnings of $61.7million on Monday, more than triple the amount earned a yearearlier, after selling more stones at auction.

Revenue for the six months ended Dec. 31 rose 57 percent to$103.4 million.

Gemfields' trading business involves the purchase ofcoloured stones at a premium from local miners. The stones arethen sold at auction, Harebottle said.

As its trading business grows, the company has beenentrusted with selling stones on behalf of local miners, earning"a small commission" in the process, he said.

Gemfields formed a joint venture in Sri Lanka last year withthe aim of mining and trading sapphires.

Sri Lanka is a source of sapphires of all colours and isknown in particular for the sought-after padparadscha sapphire,pinkish-orange in colour.

Gemfields' shares were down 1.5 percent at 50.075 pence at1426 GMT in thin trading on the London Stock Exchange. (Editing by Gopakumar Warrier, Anupama Dwivedi and RobinPaxton)