Thailand revises its mineral policies

Thailand has moved to revise its outdated mineral legislation and the revision work has been made a first priority of Prime Minister Chuen Leek Pai’s government.

Policy announcements last November by the Department of Mineral Resources (DMR) were designed to stimulate foreign investment in mining inside the Asian nation.

Gold royalties have been reduced. The digital data from the country’s 1984-89 airborne surveys are now available for purchase.

Serious explorers can now apply for and obtain exploration rights to large tracts of land under special prospecting licences (SPLs) — a major change from the four square kilometres allowed before.

These changes are a fitting culmination to a decade’s effort to develop the mineral industry as a major foreign currency earner for Thailand. Thailand was never colonized by a western power and, therefore, has not benefited from development of its mineral industry by such a power. Some internal development did occur. Tin mining was strong until the tin market crash of 1985. Two underground mines (gold and lead-zinc) were developed by French and German interests in the 1950s.

One major deposit of zinc was developed by Padaeng Industry Co. — a Thai company — with Belgian help.

The remainder of mining efforts have been surface-to-water-table mining of industrial minerals and gems and open-pit lignite mines. However, Thai geologists could see that their country has the same geology as the surrounding countries where mines of all sorts abound.

In 1981, the Thai cabinet agreed to borrow US$50 million from the Asian Development Bank to do an inventory of Thailand’s mineral resources. The Canadian International Development Agency donated $10 million of this. The DMR created the Mineral Resources Development Project. Magnetic, radiometric and VLF surveys were flown over the entire country with five aircraft. Helicopter electromagnetic surveys were flown in five areas. A complete equipping of the DMR was done with geophysical, geochemical, drilling and computer hardware and software equipment.

A new building was constructed. About 250 DMR people received short-term and long-term training. Studies were done on necessary revisions to mineral legislation, royalty structure and taxation. This work started in 1984 and was mostly finished in 1989. These policy announcements are the final steps of the project.

Several major mining houses have begun exploration because of this work. Four concessions for gold exploration were awarded in the Loei area of north-central Thailand. CRA from Australia received 51% of a 300-sq.-km concession along with Padaeng. Teck (TSE) of Vancouver has a 42.5% interest in a second gold concession along with two Thai companies — Aokam Thai and Padaeng. The two other gold concessions went to Padaeng. Work began in 1992 on three of the concessions but CRA has yet to sign an agreement. Newmont (Thailand) Ltd., a subsidiary of U.S.-based Newmont Gold (NYSE), received an 860-sq.-km SPL last October, along with its Thai partner, Ban Pu Coal, to search for gold

and lead-zinc. This area crosses the three most prospective provinces in northern Thailand just south of Chiang Mai. They have applied for a further 400 sq. km. The companies are conducting geology and geochemical programs and will conduct an extensive airborne magnetic and radiometric survey in this year.

Padaeng has begun work on more than 20 prospects in the north. It is seeking a new supply of zinc to feed its refinery when its present deposit is worked out in 1995. Padaeng has also entered into joint ventures with Mitsitomo of Japan to construct a copper refinery and with a Korean company to build a brass mill. It is also pursuing zinc prospects in the surrounding countries. Placer Dome (TSE), BHP Minerals of Australia and Metallgesellschaft of Germany have all had a good look around but they are awaiting the kind of policy changes that have just been announced.

The changes to the land tenure provisions provide greater incentive to junior companies to explore in Thailand. The complicated bureaucracy, coupled with the deficiencies in legislation and royalties, discouraged juniors up to now, although two have tried.

Bateau Resources of Vancouver investigated 14 properties and selected three gold prospects to pursue before running into problems with the Vancouver Stock Exchange. In 1990, Parklane Mines and Minerals of Calgary purchased four exploration prospecting licences (EPLs) and information on 37 other properties from MEM of Australia. The downturn on Canadian stock exchanges of the time led Parklane to abandon these plans.

This year should see an increased involvement of Australian and Canadian senior and junior companies.

Many opportunities exist for joint ventures with Thai companies that have the clout to function in the Thai bureaucracy and the money to participate. They lack the technical expertise that the foreign groups can muster. Exploration will centre on gold, base metals (zinc and copper) and lignite for hydro generation.

Canadian juniors should show a lively interest in the presence of alluvial diamonds and signatures in the aeromagnetic data that may locate source kimberlite.

The revision of the mineral legislation is needed for all of these ventures to succeed. Currently, the minister of Industry has discretion to grant and take away mining licences (MLs) at his whim.

The new legislation will remove this discretion and give first priority for the ML to the company that has had the EPL. This should be in place by year end.

–John Steele, who has worked with the Thai government, is with GeoThai Services Co. of Bangkok, Thailand, and Port Credit, Ont.