Companies bid for Indochina's hearts and
mines By David Fullbrook
BANGKOK - By 2010 Indochina should be a growing
producer of valuable minerals as clearer mining laws and
improved technology are fueling independent mining
companies' curiosity. But while the prospects are
promising, a circuitous path lies ahead negotiating
stilted bureaucracy and villagers' environmental fears.
Mining companies, especially majors such as
Australia's Broken Hill and Rio Tinto, the world's
third-largest mining company, have paid little attention
to Southeast Asia in the past due to wars, cool
investment climates and few in-depth surveys. The one
exception has been Indonesia, where massive mineral
deposits guaranteed majors mining companies' interest.
Small companies known as juniors, often
comprising a few dozen geologists plus support staff,
are now taking a fresh look at Indochina - defined here
as Vietnam, Laos, Cambodia, Myanmar and Thailand - with
an interest in Thailand in particular. Rising demand,
better infrastructure and friendlier governments are
bringing change.
While the region's small
pick-and-shovel mines now lie exhausted, those in close
proximity may indicate more extensive deposits that
high-tech mining firms can dig profitably.
"Our
feeling is that some of these deposits are indicative of
larger deposits," says Dr Gerald Wright, president of
Amanta Resources. "Many of the small mines have been of
quite high-grade deposits."
Amanta has targeted
Southeast Asia, particularly Thailand, now because its
geology, infrastructure, mining regulations and
investment incentives stand out. Thai minerals include
gypsum, calcium sulfate, gas, oil, and rock phosphate.
"Thailand appears to have quite significant amounts of
mineral resources," says Assistant Professor Adis
Israngkura, an environmental economist at the National
Institute of Development Administration.
In
Satun, in the south of Thailand, Amanta is exploring for
gold. It is also examining industrial mineral deposits,
including tungsten, fluorspar and stibnite, in Phrae,
and nickel in Myanmar, a country whose poor human-rights
record keeps many majors away. Meanwhile, Australian
gold-mining company Kingsgate runs Chatree, a lucrative
gold mine north of Bangkok. This is a success mining and
exploration companies Tongkah Harbor and Oxiana both aim
to repeat in Loei, a Thai province where Pan Australian
is developing a copper mine.
North of the Mekong
River in Laos, Oxiana is mining gold and copper, and Pan
Australian is exploring promising deposits there.
Another mining company, Tiberon, controls and is
developing one of the largest tungsten-fluorspar
deposits located outside China, near Hanoi.
Elsewhere in Vietnam, the Vietnam National
Mineral Corp (Vimico) is studying an aluminum-ore
project in the Central Highlands. Amanta is discussing a
possible gold mine with the government.
These
projects indicate that negotiating bureaucracy and local
concerns is possible. "I think they are demonstrations
there is a system there and it works," says Wright.
On the other end of the scale is potash, a key
ingredient in agricultural fertilizer. "If you said
tomorrow you wanted to look for potash, this would be a
good place to start. But you might be looking at 10
years and US$50 million," says John Bovard, president of
Asia-Pacific Potash Corp (APPC).
While the
juniors' relatively small, typically open-cast projects
are fairly manageable, potash is different because of
the scale of operations. Two projects aim to mine potash
from northeastern Thailand's vast deposits.
In
Chaiyaphum, the ASEAN Potash Mining Co (APMC), a joint
venture bringing together core governments of the
Association of Southeast Asian Nations (ASEAN) and Thai
investors, has sunk a test shaft. However, investors are
struggling with the financing - they need to raise $300
million, perhaps $500 million, for the project.
A few hours' drive to the north, APPC is working
to mine two concessions in Udon Thani that will produce
top-grade potash for at least 25 years. Production will
satisfy Thailand's annual needs of 300,000 tonnes,
eliminating imports and cutting farmers' costs, and
still leave 1.7 million tonnes for export. Potash
production in Thailand will also benefit other countries
in the region.
"In China there's a mixture of
declining arable land requiring an increasing amount of
potash to maintain yields and feed a rising population,"
says Matthew Blackwell, APPC's vice president of
operations. "Being in the heart of Asia reduces shipping
costs somewhat."
At present, most of Asia's
potash comes from Canada and Russia. Fast-rising demand
means suppliers are in a good position. Farming depletes
potash, which is found naturally in soils, eventually
turning fields barren. While perhaps this century's
greatest challenge is powering a world without oil, in
two or three centuries hence it may well be how to feed
the world without potash.
China will be a big
customer. Its fields are disappearing under concrete,
and farming is intensifying on those that are left. By
2015 China's potash imports will be running at 17
million tonnes, up from 5 million tonnes currently.
Industrializing South Asia, which unlike China has no
potash deposits, will also need more potash to grow
crops for a its more than 1 billion mouths - increasing
fast in the absence of effective birth control.
Argentina holds the only other unexploited,
significant deposit of potash. Accessing it, however,
requires laying new roads, water and power supplies into
a mountainous desert lying 500 kilometers from the
nearest port, in Chile.
Huge underground potash
mines present unique challenges in countries such as
Thailand, which is new to such projects. APPC has been
conducting extensive exploration on the Udon Thani
concessions for 10 years, during which political,
legislative and social conditions changed markedly. "I
think the political risk here is still quite high. There
is no mining culture, unlike [in] other countries such
as Australia. Transparency International puts it
mid-scale for efficiency and corruption," says Bovard.
APPC is negotiating an extension of its
exploration license with the Thai government. It is also
arguing against demands from some senators, academics
and campaigners for a new environmental-impact
assessment (EIA) conducted in accordance with the
stricter 1997 constitution. The Natural Resources and
Environment Ministry is trying to find a middle path.
"There are many data conflicts between the old EIA and
the information academics and NGOs [non-governmental
organizations]," says Sasin Chalermlarp, a geologist who
independently examined the project.
EIAs,
time-consuming as they are with their public hearings,
are becoming harder and harder to avoid. "I think more
and more we are going to see public hearings about
mines, here and around the world," says Amanta's Wright.
He believes locals can be an important asset,
not just a labor force. "The local people can teach you
a hell of a lot that can save a lot of money. Mining
companies can definitely benefit from involving local
communities," he says.
During the past decade,
environmental awareness has grown markedly, along with
deepening skepticism toward industrial projects. "Too
many companies in the past have destroyed the
environment, leaving a legacy of distrust and suspicion
among local people. This is what APPC has to overcome,"
says Sasin.
It takes time, patience and
understanding to have any chance of winning communities
over as juniors have. "If a company applies the highest
standards and consults the local people from the
beginning and throughout the process they will succeed,"
Sasin adds.
APPC insists it will apply the
necessary environmental safeguards to prevent pollution
and manage subsidence. Some villagers remain
unconvinced. Without regulations covering pollution and
other issues, they are unwilling to trust a corporation,
despite the lack of evidence suggesting APPC will cut
corners as some companies have elsewhere. In any case,
the Thai government still needs to monitor APPC's
activities closely - a tall challenge.
"I am not
worried about APPC. What worries me, though, is the
government's lack of capacity to oversee the project. If
the officials have the technical expertise to match the
company's engineers, the people are more likely to put
their faith in the government to ensure the project is
properly implemented," says Sasin.
Adding
complications to the matter are the dozens of government
agencies required to sign off on the project.
"Coordination between agencies and authorities is weak.
There is no law to maximize the national interest," says
Adis, the environmental economist. "It's the lack of
collaboration between departments, and between laws and
regulations that often conflict, that are the biggest
barriers to the industry. These problems have been
around for quite some years."
Such problems are
a feature of Thailand's business landscape. "Our law is
not always clear-cut between various ministries and
various departments within government. That is our
problem. The information from various departments often
seems contradictory," says Plengsak Prakaspesat, vice
chairman of the Federation of Thai Industries, and
APPC's honorary chairman.
They also reflect the
absence of a mining strategy that balances the needs of
miners, communities and the country. "The 2002 Mining
Act solved some of the problems, but not all. The
utilization is not being done in the most efficient
manner. There are also no mechanisms to deal with the
impacts on the surrounding areas. That's not to say
mining should stop, but that mining companies should
take account of these impacts and internalize them,"
says Adis.
That APPC has gotten this far proves
that such large mines have prospects in Thailand. Bovard
and Blackwell have no doubt that patience, perseverance
and negotiations will pay off.
While 10 years
seems a long time, even in developed countries with
extensive mining experience such as Australia it often
takes 15 years to bring a major mine into operation. "If
we can solve the problem together with APPC, it will set
a good standard for mining in Thailand," says a Thai
consultant familiar with the project.
Meanwhile,
the juniors will be getting on with their mines. "Maybe
Southeast Asia is where South America was 25 years ago,"
says Wright.
(Copyright 2004 Asia Times Online
Ltd. All rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
