Asia Cement Plc has set up talks with the Industry Ministry to try to solve the problem of an inconclusive revocation of its licence to operate a limestone mine.
The legal problem has caused huge losses for the company, said Chat Hongtiamchant, director-general of the ministry's Department of Primary Industries and Mines.
Asia Cement was granted a licence to operate a limestone mine on 3,000 rai in Nakhon Si Thammarat province in 1997, expecting the mine would help increase its cement production to meet rising demand in the South.
In 2015, the Ministry of Natural Resources and Environment's Forestry Department issued an order announcing the area was a conserved forest where no activities were allowed, especially mining.
The order automatically nullified the licence granted to Asia Cement and allowed the government to withhold the deposit of 300 million baht the company had put down as a guarantee during the licence application process.
"The government and Asia Cement have set up legal teams to negotiate and seek solutions that are acceptable to both sides," Mr Chat said.
"Asia Cement and the ministry have discussed this issue. We hope to solve this problem."
Mr Chat said the legal problem was not the only issue that had forced the company to stop mining operations in Nakhon Si Thammarat.
Asia Cement wants to quit the mine because the demand situation has changed, making it unlikely the company would break even financially if it continued with the plan, he said.
Mr Chat said Siam Cement Group, the country's largest cement producer, had expanded its cement business by increasing production capacity at its factories in Thung Song district in Nakhon Si Thammarat province.
The expansion increased regional cement supply to 6 million tonnes a year while demand remains at only 2 million tonnes.
Asia Cement's legal team is due to meet senior department officials soon to seek compensation.
The company is Thailand's fourth-largest cement producer with production capacity of 3 million tonnes a year. It has had a huge cement plant in Saraburi province since 1993.