Thailand to Shut Largest Gold Mine on Environment Concerns

  • Kingsgate Consolidated halts trading in Sydney after move
  • Decision follows complaints of contamination, health concerns

Thailand will shutter its largest gold mine by the end of the year after the government said concern the project was damaging the environment and sickening workers outweighed its economic benefit.

Kingsgate Consolidated Ltd., the Australian producer which operates the Chatree mine through its Akara Resources Pcl unit, halted its shares Wednesday in Sydney and said it’s seeking clarification of the situation. Kingsgate got 62 percent of full-year revenue from the operation in fiscal 2015, according to data compiled by Bloomberg.

Akara must close and rehabilitate the Chatree mine, about 280 kilometers (174 miles) north of Bangkok, once its metallurgical plant ceases operations by the end of this year, Industry Minister Atchaka Sribunruang said Tuesday. The company had been seeking a five-year renewal of Chatree’s metallurgical license, which was scheduled to expire Friday. The government will allow the company to run the plant to the year-end, it said.

Contamination Inquiries

A decision to shutter the facility comes after Thailand’s government ordered a review of Chatree last year following complaints from local residents. The announcement came “as a complete surprise” to Akara, which said it has “proven conclusively that we cause no harm to the health of our community or to its environment.”

Kingsgate was ordered last year to temporarily suspend output and conduct inquiries into concerns about potential arsenic and manganese contamination in nearby villages. The producer doesn’t use either arsenic or manganese at the site, though it does use cyanide, it said at the time.

A government-commissioned report presented to Thai ministers last month offered a “scientific rebuttal of unsubstantiated and vexatious allegations of contamination,” the producer said in the April filing.

“Even though there is no clear conclusion whether the environmental and health impact and problems of local residents comes from Akara’s gold mining, we need to make the decision for the public’s benefit and to solve the conflicts,” Atchaka told reporters in Bangkok.

Chatree Output

The Chatree mine produces about 130,000 ounces of gold annually and has operated for 15 years, according to a Kingsgate filing last month. The project generated 52 billion baht ($1.5 billion) in revenue in that time, and provided the government with about 7 billion baht in royalties, Atchaka said. Chatree is capable of at least 7 more years of production, according to Kingsgate.

“From the end of December, there will be no gold mine until the issues are clear,” Thailand’s Prime Minister Prayuth Chan-Ocha said in response to questions over the move. The government will need to assist more than 1,000 workers who will be affected by the decision, he said.

Chatree is Kingsgate’s only producing asset after it completed the sale of its Challenger gold mine in Australia in March.

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