Project for Ecological Recovery - letter to International Finance Corporation (IFC)

Jamie Kneen

National Program Co-Lead

Mr. Kent Lupberger
Manager, Mining Investments
International Finance Corporation (IFC)
2121 Pennsylvania Avenue N.W.
Washington DC 20483
3rd February, 2003

Re: Request for information on IFC financing of Somboon Potash mine in Udon Thani province, Thailand

Dear Mr. Lupberger,

It has come to our attention that the International Finance Corporation (IFC) of the World Bank is considering financing the Somboon Potash Mining Project in Udon Thani Province, northeast Thailand. The project is being carried out by Asia Pacific Potash Corporation (APPC), a subsidiary of Canadian mining company Asia Pacific Resources (APR). This information comes from recent APR press releases and interviews but has not been posted on the IFC website.

On February 7, 2001 (see attached press release) APR announced the signing of an Interim Mandate Letter with the IFC, which was to consider providing an 'A' loan comprising of a direct loan allocation, a 'B' loan and an equity investment in the Somboon project.

We would like to request the following information:
1. Status of the financing application
2. Date on which IFC or World Bank will vote on approving the project
3. Size of the IFC loans and equity investment
4. Contact details for the project manager at the IFC

Concerns related to APR's Environmental Impact Assessment

We understand that IFC is in the process of reviewing the EIA for the project and hence we would like to raise a number of concerns on behalf of local communities residing in the planned mining area. Principally these relate to land subsidence that has been predicted over the entire 25 square km mining area and potential salt contamination of soil and water resources.

APR plans to operate the shallowest potash mine in the world at 350m below the surface. Potash mines in Canada, the leading producer, typically operate at more the 1km underground. Moreover, the area that APR plans to mine is densely populated and a productive agricultural area. Subsidence of up to 84cm is predicted in APR's EIA and is therefore likely to have major impacts on infrastructure and farmland, in particular natural drainage. The project area covers agricultural land that is extremely susceptible to soil salinity as watertables are high, soils are poorly drained and extensive salt deposits exist at shallow depths. Disruption of natural drainage by subsidence is likely to cause waterlogging, a precursor to soil salinity problems. The storage of 20 million tonnes of salt tailings at the surface, open to wind and precipitation, is considered too large a risk by local communities, given that a breach of the tailings dam and protective barriers would wipe out agriculture in the entire region.

A number of Thai academics and civil society organisations have criticised the EIA prepared by APR for its failure to conduct baseline soil salinity studies and adequately model the dispersion of salt dust emitted from the processing plant and brine movement away from the tailings area. All new potash mines in Canada, for example, are required to carry out such investigations. There are concerns also that the EIA is ambiguous with regard to whether it is assessing risk of environmental impact on the entire area to be mined under or just where the mining facilities are to be located. The EIA fails to adequately assess the risk of land subsidence and salt contamination, provide a detailed decommissioning and rehabilitation plan and outline mitigation measures in the case of salt leaking from the tailings management area. In addition there has been no proper health impact assessment carried out.

In response to such criticisms and obvious faults in the EIA, APR has undertaken supplementary investigations, however these have not been made available to the public. A number of independent social surveys carried out by Thai academic institutions have reported that local communities have not been properly informed of the project plans nor potential impacts on their livelihoods. The company's aggressive public relations activities are causing violence and conflict within local communities.

Thailand's Minerals Act was recently amended specifically to allow this project to go ahead by granting APR the right to mine beneath farmland without the permission of land holders. 77 senators recently petitioned the Constitutional Court to review the law changes, which they claimed violated land holder rights and local community rights to manage their natural resources as set out under Thailand's Constitution.

We do not believe that this project is consistent with IFC's Sustainability Initiative or its development mandate. In accordance with IFC's policies of public disclosure and that all its operations are carried out in an environmentally and socially responsible manner we seek clarity of IFC's involvement in this project.

We look forward to your earliest response to our request for information regarding the status and details of the financing application by Asia Pacific Resources.

Yours sincerely,

Sayamol Kaiyoorawong
Project for Ecological Recovery


Rashad Kaldany, Director of Oil, Gas, Mining and Chemicals Department, IFC/World Bank
Javed Hamid, Director of East Asia and Pacific Department, IFC
Mining Watch Canada
Probe International, Canada
CEE Bankwatch Network, Hungary
Oxfam America
CUSO Canada
Mineral Policy Institute, Australia
Project Underground, USA
Mineral Policy Centre, USA