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Australianminer Kingsgate resumes gold operation in Thailand

Company ends six-year health and environmentaldispute with Prayuth's government

A worker sprayswater on a truck to reduce the dust at the Chatree gold mine in2011. The Thai government, citing environmental and health concerns,forced the mine to halt operations at the beginning of 2017. © Reuters

APORNRATH PHOONPHONGPHIPHAT, Nikkeistaff writerFebruary 22, 2023 11:30 JST

BANGKOK -- Australia's Kingsgate Consolidated, which run the Chatreegold mine in Thailand, said it is restarting operations there after a six-yeardispute between the company and the Thai government over the health andenvironmental effects of the mine was resolved.

Ross Smyth-Kirk, executive chairmanof Kingsgate, operator of the mine since 2001 under the wholly owned Thaisubsidiary Akara Resources, said the company has received an expandedmetallurgical license and the processing plant has been overhauled.

"The refurbishment engineeringcontractors have started to demobilize, and subject to a final inspection byThai Government agencies and the delivery of key reagents required for oreprocessing, the commissioning of Plant 2 will start this month leading to a rampup into steady state production," he said in a statement.

He said the settlementnegotiated under the Thailand-Australia Free Trade Agreement (TAFTA) is beingconcluded and both parties expect the TAFTA arbitration panel to soonratify the agreement.

The dispute between the Thaigovernment and Kingsgate began in December 2016 when Prime MinisterPrayuth Chan-ocha, who was then the leader of the military government, invokeda legal provision called Section 44 to close the Chatree mine in the northernprovince of Pichit, citing environmental and health concerns.

The powerful Section 44, enacted bythe junta, allows the prime minister, as head of the National Council for Peaceand Order, as the junta is officially known, to take any measuresdeemed necessary to prevent actions that may subvert peace and order.

Kingsgate was forced to haltoperations at the mine on Jan. 1, 2017. The company promptly disputed thegovernment's decision, saying toxic substances found in the area could havecome from pesticides used by farmers nearby, and brought the matter to theTAFTA body for settling disputes.

Cherdsak Utha-aroon, Akara's externalaffairs manager, said the long dispute between the company and the Thaigovernment had been concluded and a lawsuit filed by a Thainongovernmental organization accusing the company of having been illegallygranted a mining license had been dismissed by a court.

Workers for Akara Mining, asubsidiary of Australia's Kingsgate Consolidated, pour ingots. ©Reuters

Cherdsak said the company has spentaround 600 million baht ($17 million) to refurbish Plant 2.

In November 2021, the company hadsaid it was confident a settlement under the TAFTA would be reached byJanuary 2022, allowing the company to resume operations shortly afterward, butthe negotiations then failed.

Critics said the case was apolitical issue that had been triggered by a strict order under the militarygovernment of Prayuth years ago and then came to a sudden end with therevival of all economic activities and business around the Chatree mine ataround the time when Prayuth promised to run in the election dueby May.

Opposition parties accused thegovernment of caving in to Kingsgate after it realized it had little chance ofprevailing and of using the negotiation process to avoid being forced topay massive compensation if it lost.

Thai authorities decline to comment.

Cherdsak said: "There is nonegotiation for any benefit between the two sides. It is the negotiation underthe equal lawful rights of the company and the Thai government."

According to Kingsgate, the minecontains around 6.6 million tonnes of ore, with an estimated 73,000 ounces ofgold and 780,000 ounces of silver.

Cherdsak said the companyaims to hire 160 employees to prepare for renewed operations. Up to 1,700people have applied for jobs at the gold mine, reflecting a warm welcome fromthe community.

"We believed that our businessoperation here has generated up to 3.9 billion baht, or $114 million, of moneycirculating in the Thai economy," Cherdsak said.