Australian miner Kingsgate hopes to settle its dispute with Thailand as arbitration begins under a trade agreement
Australia’s Kingsgate holds out hope of settlement with Thai government
Australia-based Kingsgate has entered the arbitration process against Thailand under the Thailand-Australia Free Trade Agreement (Tafta), as the two sides failed to reach any solution after the company was ordered by the Thai government to completely cease mining operations last January.
Kingsgate is the parent company of Akara Resources Plc, which operated Chatree gold mine in Phichit province. The company said the government’s order was unlawful and caused substantial financial damage to the company.
Executive chairman Ross Smyth-Kirk said that despite best efforts, Kingsgate has been unable to achieve a settlement of its claim against Thailand for unlawful expropriation of the Chatree gold mine.
“The company will commence arbitration proceedings against the Kingdom of Thailand under the Australia-Thailand Free Trade Agreement in order to recover the substantial losses that it has suffered, and continues to suffer, as a result of the measures taken by the Thai Government,” Mr Smyth-Kirk said in a release.
The company has appointed international law firm Clifford Chance for representation.
“The government insisted on its stance to put the health and benefit of Thais as the first priority,” said Industry Minister Uttama Savanayana.
The state has appointed a foreign law firm to defend the Tafta case.
Pasu Loharjun, the industry permanent secretary, said an ad hoc committee was set up yesterday to formulate a strategy of retaliation against Akara, with the conclusions to be submitted to Prime Minister Prayut Chan-o-cha in the coming week.
“It should be noted, however, that the commencement of arbitration still allows both parties to engage in dialogue to settle the matter on mutually agreeable terms, at any point in the proceedings,” Mr Smyth-Kirk said.
Akara had requested a meeting with the prime minister to seek avenues to resuming operations, but the government sent other senior officials to talk with the company.
The cabinet handed down the order on May 10, 2016 after the government received complaints from villagers and non-governmental organisations over health concerns.
Kingsgate then sought a range of remedies, including compensation, from the government, alleging that measures taken against the Chatree gold mine were in violation of Tafta.
The trade pact between Thailand and Australia was signed in 2004 to promote and improve the climate for bilateral services, trade and investment. It entered into force in 2005.
The agreement contains a range of provisions specifically related to investment protection.
Akara said ceasing mining would mean losses of at least 39 billion baht for the company. Since December 2016, Akara has laid off 1,000 employees, leaving 36 to work on machines and equipment maintenance.
The company holds seven licences to continue mining through 2028. Based on the company’s exploratory findings, an estimated 40 million tonnes of gold ore are underground.