Thailand faces uphill fight over gold mine closure

THE THAI government faces a formidable legal challenge in its dispute with Australian firm Kingsgate Consolidated Limited over the controversial closure of a gold mine in Phichit province operated by Kingsgate’s subsidiary, according to a Thai academic.

Following the failure to settle the dispute with the Thai government in the aftermath of the decision last Decembern by the National Council for Peace and Order (NCPO) to close the gold mine in Phichit, Kingsgate decided to start arbitration proceedings against Thailand under the Australia-Thailand Free Trade Agreement.

Kingsgate operated the Chatree gold mine under the management of its subsidiary Akara Resources whose operations were closed following the NCPO order on January 1.

To recover the substantial losses it had suffered, the firm appointed international law firm Clifford Chance to represent it in the arbitration proceedings with Dr Andrew Bell being its lead barrister.

“The board of Kingsgate considers that the company has excellent prospects of successfully recovering very substantial damages against the Kingdom of Thailand, and will vigorously prosecute its claim,” the statement said.

As the government had used its special powers under Article 44 of the interim charter to close the gold mine, Decharut Sukkumnoed of Kasetsart University wrote on his Facebook page that the Thai government may face a tough legal problem.

Though the Thai-Australian free trade agreement empowers the Thai government to suspend a project, the action has to be taken according to legal and other procedures stated in the bilateral agreement that ensure fairness to all the concerned parties.

There must also be full disclosure of documents and other evidence to support the action.

However, the Article 44 order appears to have not followed the procedures established in the bilateral agreement. In addition, the reasons provided by the NCPO for the closure were brief and, according to Decharut, there were insufficient scientific and academic documents to substantiate the order.

Decharut said there is much scientific and academic evidence on this matter, but the dearth of its inclusion as direct support for the special NCPO order could become a factor leading to a legal defeat in the arbitration proceedings.

The academic also said it was unfortunate that Thai citizens could not challenge the legality of orders issued under Article 44 of the charter but foreign investors could do so based on the bilateral agreement with Thailand.

However, the Industry Ministry said the government is ready to protect the country’s interests in the arbitration proceedings. 

Pasu Loharjun, permanent secretary of Industry, said residents had filed complaints against the gold mining operation for a long time due to its alleged impact on the environment and people’s health. This led the NCPO to issue the order on December 13, 2016 to resolve the conflict by suspending all gold mining operations nationwide so that agencies concerned could tackle the problems and take remedial measures.

However, Kingsgate Consolidated of Australia, which is the major shareholder of Akara Resources that holds the gold mining concession, said it had suffered as a result of the order and had sought consultations with the government on April 3 under the bilateral Thai-Australian free trade agreement.

Pasu said the government had earlier appointed a multi-agency committee to negotiate with the Australian firm to settle the dispute based on the best interests of the country and residents of the affected areas.

The committee also ensures that there is fairness for all stakeholders and any settlement is consistent with the national reform and strategy on mining operations as stated in a recently enacted law.

The government wants to ensure that there is a balanced approach with all stakeholders’ interests taken into account, covering social, community, environmental, public health, economic, income distribution, and sustainable development aspects.

Pasu said the new law on mining and related operations will lead to more efficiency and transparency in the management of the mining industry in Thailand. The government is prepared to settle the dispute under the international arbitration process sought by the Australian firm.

He said the arbitration process is consistent with the bilateral agreement with Australia and so far the Thai government has not accepted any demands from the Australian firm.