The passing by Thailand’s parliament of legislation that could allow mining with a lesser degree of regulation has come too late to prevent Kingsgate Consolidated from closing its Chatree Gold Project by the end of the year. The closure will see more than 1000 workers laid off and it seems unlikely that the ASX-listed company will return to Thailand.
Despite another statement from the government that it will form a committee with powers that could allow gold mining to resume at a later date, it seems too little and too late for Kingsgate, which has stated that it will not come back unless it gets an ‘ironclad guarantee’ from the government that it will be allowed to operate without interruption. It will now turn its attention to its new Nueva Esperanza project in Chile.
A Cabinet resolution and an executive decree citing environmental and health concerns has forced Kingsgate to make the decision to close Chatree, which is, owned through a Thai subsidiary, Akara Resources.
Kingsgate chairman Ross Smyth-Kirk told The Associated Press: “It’s been a disgrace. There’s still a lot of gold there still to be taken out, needing expertise of people like ourselves who are prepared to spend big investments to get it out. It’s not some tin-pot operation.” Chatree is in central Thailand and is the country’s largest mining operation.
He said given these circumstances Kingsgate could not work in Thailand anymore and was letting go of more than 1000 employees and contractors.
He also said the company was planning a new mine in Chile, and hoped to launch operations there after they finished paying off their debt, which now stands at about $10 million, by the end of the year.
“Chile has a government that understands mining and understands its importance to the economy,” he said.
A company announcement issued earlier this week stated: “The company’s subsequent preliminary investigations indicate that the new Mineral Act must be approved by the King of Thailand within 90 days, and will then not become effective for a further 120 days. Further, it appears that when the Act becomes effective, only miners that hold metallurgical licences at that time may continue to operate without the need for one.
“In light of the above, and given that the metallurgical licence of Kingsgate’s Thai subsidiary, Akara Public Resources Company Limited, expires on December 31, 2016, it appears that the Act will not be effective to allow Akara’s operations to continue beyond December 31.
“Regardless, as a consequence of the Cabinet decision in May, Akara has had to terminate staff and contractors and has taken other measures which will result in Chatree being placed on Care and Maintenance from the end of this month.
“To recommence operations at Chatree would require significant time and capital expenditure as well as the granting of additional licences and approvals.”
A subsequent announcement stated: “The Government of Thailand has clarified its position that all operations will cease at the Chatree Gold Mine as from January 1, 2017.
“Akara Resources has been contacted by the Office of the Prime Minister of Thailand to arrange a meeting for next week with the Deputy Prime Minister. However, Chatree will be placed on Care and Maintenance at the end of this month.”