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Backgrounder: Asia Pacific Resources in Thailand

Jamie Kneen Communications and Outreach Coordinator responsible for: strategic research, social media, and public engagement; our Africa program, environmental assessment, and uranium mining.

Catherine Coumans, Ph.D., September 2002

Asia Pacific Resources Ltd. (APR) is a Canadian based company that holds 90% of a potash concession in northeastern Thailand. APR plans to mine this concession through underground mining. There has been no large-scale underground mining in Thailand to date, necessitating an amendment to Thailand's Minerals Act for this project to go ahead.

Local Opposition

There is significant opposition to the project from local communities who fear widespread subsidence, salt contamination of agricultural land, and groundwater contamination.

While potash mines in Canada operate at depths of more than 1km underground and have rarely caused subsidence problems, APR will mine at depths of less than 350m beneath densely populated agricultural communities. The geology above the salt deposits is not stable and subsidence is almost certain to occur. It is predicted in the Environmental Impact Assessment prepared by the company and independent geologists also warn of the dangers. Dr. Sasin Chalermlap, a geologist and environmental engineer at Rangsit University in Bangkok, has evaluated the mining project plans and presented his findings to a provincial committee appointed to investigate the potential impacts. He says that "if mining were to be carried out beneath hard rock the potential for land subsidence is slim, however in the Northeast [of Thailand] there is claystone, which is a soft rock and the mining will be carried out under agricultural area so the impacts will be great."

The first individual protests against the potash mine planned for Udon Thani occurred during the surveying and exploration period beginning in 1993. Since then local opposition to the mine has gained considerable momentum with currently over 1000 people from 21 villages within the concession area, joining regular protest marches and rallies at the provincial hall, local temples and in Bangkok in front of Parliament house. On two occasions villagers travelled to Bangkok to submit petitions to the Canadian Embassy requesting that it ensure the Canadian company followed the same social and environmental standards as required in Canada. Sayamol Kaiyoorawong, Director of Project for Ecological Recovery based in Bangkok is working with the local communities and says that Canadian standards are not been followed. "The company did not pay compensation for damages caused by exploration activities and so the community cannot believe that they will solve problems that will occur as a result of the mining activities," she said.

Ms Sayamol also stressed the lack of public consultation and participation on the part of the APPC. "During the exploration stage neither the company or government informed villagers of the drilling activity nor gave information about the type of mine that was to be built. They only talked about how rich the people would become and increased job opportunities."

In response to this complete lack of public consultation about basic project plans, local communities concerned about the potential social and environmental impacts of the potash mine established the Environmental Conservation Group of Udon Thani in 2001. The group has since worked to disseminate information about the project to surrounding villages. By means of a regular 'walking tour' over 45 villages have been informed of the project and its potential benefits and impacts.

While the protests remain peaceful government officials and local district heads have threatened several local community members with arrest for voicing their concerns. "Conflict within the community is growing rapidly. Several local influential businessmen are being awarded construction contracts by the company in return for gathering support for the mine from other villages," says Mr. Suwit Gulapwong of the Northeastern Mineral Resources Management Committee in the nearby regional centre of Khon Kaen. Mr Suwit has been working closely with the local peoples' movement providing villagers access to technical documents and project plans. He adds, "If this mine goes ahead I foresee great conflict within the community. People are afraid that the impacts will effect their children and grandchildren and that their agricultural based livelihood will be destroyed."

National environmental groups, such as the Project for Ecological Recovery, also oppose the project.

There is strong opposition to the amendment of the Minerals Act from the National Human Rights Commission of Thailand and from independent Senators who argue that the amendment violates landholder property rights under section 48 of Thailand's constitution by allowing underground mining without the permission of, or compensation for, landholders above the proposed mine.

On August 21, 2002, the House of Representatives in Thailand passed the amendments to the Minerals Act. On August 23, 2002, a petition signed by seventy-seven Senators was filed requesting the Constitutional Court to assess whether the new Minerals Resources Bill contradicts the charter. If the court accepts the petition it will put the legislation on hold for at least 3 months (Bangkok Post 28/8/02).

Who is Asia Pacific Resources Ltd.?

Asia Pacific Resources Ltd. (APR) has its head office in Vancouver, B.C., but since April 2, 2002 the company's legal residence changed to New Brunswick. According to APR, the company went through a major corporate and financial restructuring in 2002 to become debt free, appoint a new Board of Directors and management team, and become supported by a "new committed majority shareholder," which is Olympus Capital Holdings Asia "Olympus." Six directors were replaced during this restructuring; four of the new directors are from Olympus. The new President and CEO is John Bovard, who has also managed projects such as Porgera and Ok Tedi in Papua New Guinea. Both of these mines dispose of their tailings by dumping them into nearby rivers. Prior to this corporate restructuring, APR shared directors with Vancouver based Crew Development Corp. (Crew), from whom APR acquired, in 1993, a right to earn a 75% interest in APPC, the company holding the Thai potash concession. In 1994, APR acquired control of APPC. APR now holds a direct and indirect 90% beneficial interest in APPC. APPC is APR's only project. Crew continues to hold 33 million shares in APR and is a 13.3% shareholder. Crew will receive royalty payments of 1.5% of 75% of total potash sales when commercial production commences.

Who is the Asia Pacific Potash Corporation?

Asia Pacific Potash Corporation (APPC) holds a 85,000 ha concession within which it has identified 2 potash deposits, the Udon North and Udon South (formerly known as Somboon) reserves in the province of Udon Thani in Northeastern Thailand. APPC is now trying to secure various development approvals and mining leases from the Thai Government. APR holds 90% of APPC and the Government of the Kingdom of Thailand holds the additional 10%.

The Udon Thani Potash Concession

The Udon Thani Potash Concession is described by APR as a "world-class potash resource" due to "its high-grade, shallow depth" and as "one of the lowest-cost producers in the industry." The Somboon deposit covers an area of 2500 ha and contains roughly 225 million tons of sylvinite in sylvinite ore grading 24% K2O, among the highest grades in the potash industry. It can be processed using standard flotation technology. APR owns approximately 200 ha in the planned mining area for processing facilities, tailings storage and the mine shaft. The deposits are at a depth of about 350m, roughly one-third of the major potash mines in Saskatchewan.

In 1998 a feasibility study was completed by Kilbourne Western for the Somboon deposit, which is expected to have a 25-30 year life at a production of 2.0 million tones per year (APR expects to mine at a slower rate). The study estimated a cost per tonne of less than US$ 50, F.O.B. Gulf of Thailand, including G&A, sales costs, royalties, mining taxes, rail transport to the port and ship loading. According the APR, "potash currently sells for approximately US$120 per tonne F.O.B Vancouver, to which the shipping costs to Asian markets must be added." APR notes that this will be Asia's first major potash mine in a local market with an estimated need for fertilizer of 13 million tonnes per year that is growing by 4-6% per year.

Financing

According to Crew Development Corp. project debt financing is arranged by HypoVereinsbank and the International Finance Corporation (of the World Bank). Crew expects APR to become a takeover target for existing potash companies and mining companies and notes that the controlling shareholder is interested in this option (crewcorp.com/operations/opasia.html)

Permitting

The Thai government has approved the Environmental Impact Assessment (EIA) for the Somboon deposit and the EIA for the Udon deposit is being prepared. APR holds a number of Exploration Licenses under the overall Concession Agreement with the Thai Government. However, the company cannot receive a Mining Lease under the current Minerals Act in Thailand.

Changing Thailand's Minerals Act for a Canadian Company

Thailand has no experience with deep underground mining and Thailand's Minerals Act did not provide conditions for the approval of underground mining. Under section 48 of the Thai Constitution, property rights (surface and sub-surface) are guaranteed by the state. If the state wishes to build roads, railways, or other public utilities, it has to purchase the land or pay compensation. APR's project is the first to seek permission to mine underground in Thailand. But APR has no intention of compensating all the landowners situated above its proposed mine.

Since 1997, the Department of Mineral Resources (DMR) has at least five times submitted to cabinet a Minerals Resources Bill that would amend the Minerals Act and provide APR favourable permitting conditions for its proposed mine. The Bill was rejected each time as unconstitutional and unsatisfactory in terms of public participation and protection of private property rights. On May 8, 2002 the National Human Rights Commission (NHRC) organised a public hearing on the Minerals Bill. Members of the NHRC sub-committee for study and analysis of mining issues, independent academics, NGOs, local community members, and representatives from the Thai Military base near Non Somboon in Udon Thani attended the meeting. As a result of this meeting the NHRC concluded that if the new law were passed the NHRC and the Lawyers Association would appeal to the ombudsman and send the case to the Constitutional Court.

In October 2001 the Senate amended the bill, requiring mining concessionaires to seek landowners' permission before proceeding with mining activities on their land. These amendments caused controversy and prompted the formation of a joint House-Senate committee on 19 October 2001 to scrutinise the legislation. The committee has made significant amendments to the bill, adding legislation that will require a greater degree of public participation and protection of property rights. The bill will potentially allow local communities to request funding for carrying out an independent investigation into environmental, social and health impacts of mining projects where it is deemed that the original Environmental Impact Assessment (EIA) report is insufficient and considerable risk to the environment and livelihoods can be demonstrated. The discretion to allow for such additional studies to be conducted lies with the government however, and not an independent environmental monitoring body.

The House of Representatives passed the amended version of the Bill on August 21, 2002. Although a number of amendments to the original Minerals Bill will favour community rights, public participation provisions are still very weak and the Bill, in essence, continues to contradict Thailand's constitution in terms of landowner rights. According to Senator Jon Ungphakorn, "We believe in community rights as set out under the constitution such as rights to have a say in managing natural resources. This bill allows the government to grant concessions to private companies without requiring permission from the community."

On August 23, 2002, a petition signed by seventy-seven Senators was filed requesting the Constitutional Court to assess whether the new Minerals Resources Bill contradicts the charter. Senator Jon Ungphakorn says: "We are certain that this legislation is being pushed forward specifically for mining of the Udon Thani potash deposit, yet under the constitution a law cannot be passed when it relates to one specific situation." If the court accepts the petition it will put the legislation on hold for at least 3 months (Bangkok Post 28/8/02 "Senators Petition for Ruling by Constitutional Court"). Even if the court rules in favour of the Bill, APPC will have to start its approval process again, there will be a chance to have to be a public hearing and the community may be given funds to carry out an independent EIA.

A Flawed EIA and Concern for Environmental Impacts

The EIA for APR's Somboon project was prepared by Team Consulting Engineering and Management Co., Ltd and has already been approved by the Department of Mineral Resources (DMR). However, issues such as public participation, liability for property damage, and the burden of proof, are not addressed in the EIA, and it is unlikely to meet the conditions of the new Minerals Act.

The EIA that was completed for the Somboon project has also been deemed insufficient by independent experts. The EIA is ambiguous in its assessment of the location of potential environmental impacts. It does not always specify whether the information being presented relates to the 2500 ha proposed mining lease area or to the 200 ha mine site area, which is the parcel of land owned by APPC where the mineshaft, processing plant, tailings pile, and brine pond will be located.

Subsidence - The 2500 ha proposed mining lease area includes residential areas, farmland, a national highway and railway, linking Bangkok with Nong Khai, and military installations. The EIA predicts subsidence of more than 70 centimetres resulting in depressions over the entire 2500 ha mining lease area. The EIA predicts further subsidence after mine closure but does not specify how much. Dr. Sasin Chalermlap, a geologist and environmental engineer at Rangsit University in Bangkok, has evaluated the mining project plans and presented his findings to a provincial committee appointed to investigate the potential impacts. He states that : "if mining were to be carried out beneath hard rock the potential for land subsidence is slim, however in the Northeast [of Thailand] there is claystone, which is a soft rock and the mining will be carried out under agricultural area so the impacts will be great."

Salt Contamination — Salt is a major waste product of potash mining and salt dust will be continually emitted from an exhaust stack during extraction and processing. Furthermore, 20 million tonnes of salt waste will be stored on land in a 40 meter high tailings pile that is to remain uncovered, exposed to wind and rainfall. The EIA did not assess such integral measures as current soil salinity or risks of flooding and salt contamination. Moreover, it did not prepare a modelling of salt dust fallout from processing plant emissions; instead it claims that the fallout will be evenly distributed throughout a 9-km2 area. This assessment obviously fails to consider predominant wind patterns that would concentrate the fallout into a smaller area of farmland. These assessments are basic requirements under the mining laws of Saskatchewan, Canada. There is also concern that dissolved salt will leach into the groundwater from a brine pond contaminating the near surface layer of groundwater that residents rely on for their drinking water and agricultural use.

Water — groundwater quality and flow are expected to be affected throughout the concession area.

Dam failure — In the case of heavy tropical rains, or floods that are prevalent in the region, there is a high risk of dam failure resulting in the release of highly saline tailings into the environment.

Contacts:

  • Ms. Sayamol Kaiyoorawong, Director, Project For Ecological Recovery, Bangkok, Thailand, Tel:662-691-0718-20; e-mail: terraper@comnet.ksc.net.th
  • Ms. Pongtip Samranjit, Coordinator, Rural Reconstruction Alumni and Friends Association, tel:662-9352981 cel: 669 444 7580 e-mail: pongtip@netsiam.com
  • Senator Jon Ungphakorn, Cell Phone (from abroad) 661-665-6320
  • Professor Pradit Chareonthaitawee (MD) — National Human Rights Commission of Thailand — tel:662-219-2943

For More Information See under "Hot Issues" at www.terraper.org:

  • "Potash Mining in Northeast Thailand: Amendment to Minerals Act a threat to environment and landowner rights." Project for Ecological Recovery in Watershed Vol. 8 No.1 July-October 2002.
  • "To Mine or not to Mine Potash: Thailand's policy on underground mineral resource extraction." Ian Stutt, CUSO Cooperant and Project for Ecological Recovery. August 28, 2002
  • "Environmental Law and Mining Regulations Canada and Thailand — A Comparative Analysis." Project for Ecological Recovery and Ian Stutt, CUSO Cooperant, July 2002.
  • "Briefing paper on the EIA and summary of environmental issues." Project for Ecological Recovery. January 7, 2002

Other References and Resources: