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Kingsgate to seek compensation from Thailand over mine closure

Friday, 16 Dec 2016 06:32:32 | Liam Cochrane

Mr Smyth-Kirk says what is happening to his company will have a chilling effect for other foreign investors. (ABC News: Liam Cochrane)

The chairperson of Australian mining company Kingsgate says he will seek compensation from Thailand's military Government over its decision to shut down their gold mine.

Key points:

  • Military junta used article 44 to confirm the mine must shut down by the end of the year
  • Kingsgate said the decision was unreasonable and would scare off foreign investors
  • 1,000 local Thai staff will lose their jobs at the mine

The Chatree mine has been a productive asset for Australia's Kingsgate Consolidated for the past 15 years.

The Thai Government had already announced the mine's forced closure, but this week the military junta used special powers brought in after the 2014 coup — under a clause known as article 44 — to confirm the mine must shut down by the end of the year.

The clause has been used to fast-track development projects, reshuffle officials and now to order the mine to shut down.

Kingsgate said the decision to shut it down by the end of the year was unreasonable and would scare off foreign investors.

Ross Smyth-Kirk, Kingsgate's chairperson, said "in this day and age" the Government should not be able to close down a viable operation without a reason.

"If it continues the way it is we will be seeking considerable compensation and damages," he said.

The reason given at the time of the original closure announcement was that the mine was causing conflicts with local communities, a reference to allegations of health impacts that have been widely stated but never scientifically proven.

'Total lack of understanding to how mining operates'

Why article 44 was used to repeat an order to close the mine has not been made clear.

But Mr Smyth-Kirk said the Government's calls to rehabilitate the vast open pit mine site in just a few months suggested a confused approach.

"When this was first announced there were these strange comments made that we had to rehabilitate it all by the 31st of December and all this kind of thing," he said.

"Which just shows many other things — there's a total lack of understanding at a lot of levels about how large companies operate and how mining operates."

The Kingsgate boss said what was happening to his company would have a chilling effect for other foreign investors.

"In the mining sector, there's no way that any reasonable overseas mining companies will go there," he said.

At a time when Thailand's economy is struggling, 1,000 local staff will lose their jobs at the mine.

Kingsgate makes the most of its last days

Kingsgate has been making the most of the dying light, furiously processing high grade ore to slash debt from $72 million at the end of September to just $13 million this week.

"All we want to do is to continue to keep our heads down and produce for the next few weeks and generate as much cash as we can for shareholders and go forward," Mr Smyth-Kirk said.

The mixed messages from the Thai Government invited at least one takeover bid for the Chatree mine.

"As you're probably aware there was a frivolous attempt by a Thai national to make a takeover bid for our company that was completely thwarted, it was just ridiculous," Mr Smyth-Kirk said.

The offer amounted to about $9 million for just over half the company and it came from Thai businessperson Chatchai Yenbamroong.

Mr Chatchai told the Australian newspaper that if he got control of Chatree his priority would be to lobby the Government to over-turn the ban, saying he had access to decision-makers in Thailand that Kingsgate lacked.

The bid rattled the company, but was ultimately defeated.

AustraliaPlus


 

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