Kingsgate begins arbitration proceedings

Kingsgate begins arbitration proceedings

The Chatree mine in Pichit province has been shut down since Dec 31, 2016. (Photos by Sitthipoj Kebui)
The Chatree mine in Pichit province has been shut down since Dec 31, 2016. (Photos by Sitthipoj Kebui)

PHICHIT: Kingsgate Consolidated Ltd, the Australian operator of a gold mine straddling Phichit and Phetchabun provinces, says it has launched arbitration proceedings against the Thai government over the order that led to the closure of the mine.

The parent of SET-listed Akara Resources Plc issued the statement on Friday.

The company said it had held a number of meetings with the Thai government after notifying it in April that it would be seeking a range of remedies, including compensation for the measures taken against the Chatree mine in violation of the free trade agreement.

"Such proceedings could take an undetermined time to resolve, and could involve significant expenditure by Kingsgate," the company told its shareholders, noting that the outcome of the proceedings could also not be guaranteed.

However, Kingsgate added that the start of arbitration proceedings still allowed both parties to engage in dialogue to settle the issue on mutually agreeable terms.

Kingsgate executive chairman Ross Smyth-Kirk said he believed the arbitration could represent a major test of the Thailand-Australia Free Trade Agreement (Tafta), which contains provisions related to investment protection.

"There is a definition of expropriation in the Tafta agreement and this certainly fulfils that and so we want full compensation," the Australian Financial Review quoted him as saying.

"We have had our whole livelihood, our whole business taken off us. We can't operate so we definitely think we have a very good case."

The Thai government, by the order issued under Section 44 of the interim constitution in effect at the time, ordered the Chatree mine to cease operation in December 2016.

No reason was given for the closure. However, in August the government lifted the temporary suspension, allowing for the application for a renewal of the mine’s metallurgical processing licence to proceed. However, the company's licence has yet to be approved. 

However, the government made no offer of monetary compensation for the losses that the company suffered as a result of the closure, or for the expense that would be incurred in restarting operations. 

At issue was the fact that the order was issued under the absolute authority of the National Council for Peace and Order (NCPO), which allows its chief to issue orders with impunity under the Thai law.

Since Akara started mining in 2001, a group of villagers and non-governmental organisations (NGOs) have opposed it, citing several reasons ranging from the environment to health issues.

NCPO chief Gen Prayut Chan-o-cha issued the Dec 13, 2016 order for the suspension of the operation on Jan 1, 2017. Thousands of local people lost their jobs as a result.

After the closure, the Industry Ministry and the Public Health Ministry conducted investigations into the toxicity and pollution claims. They later cleared the gold mine.

Pasu Loharjhun, permanent secretary of the Industry Ministry, said on Friday that a panel set up to settle the dispute would speed up concluding its suggestions and would submit them for cabinet consideration on Tuesday.

“We hope both parties will opt for negotiations rather than arbitration proceedings,” he said.

Deputy Prime Minister Wissanu Krea-ngam said earlier that he was not worried about the Kingsgate action because the order did not force the shutdown of the mine; it only did not renew its licence.

Kingsgate did not reveal the size of its claim but an Akara executive once said the company should have earned 30 billion baht more if the mine had continued to operate.

Local supporters of the Chatree mine show their support in 2016.

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