Potash mine future in doubt

Development of the Udon Potash Project faces a bleak future after more than 10 years of opposition by non-governmental organisations, and the community, have stalled the issuance of a production licence.

Asia Pacific Potash Corp (APPC), which holds the concession for the potash mining project, is now a 75-per-cent-owned indirect subsidiary of Italian-Thai Development, a major local construction company.

An industry source said progress in getting the mining permit was hard to come by because many groups lacked an understanding of underground mining, and potash miners around the world felt threatened by the entry of a strong rival.

Not many countries operate potash mines. Canada, the United States and Russia do. The development of the project would thrust the local potash export industry to the forefront of the world's biggest growing market for fertiliser products - the Asia-Pacific region.

"It's possible that all the big players don't want this project to move forward because they're afraid of losing the Asian market to Thailand. Obviously, APPC will enjoy a freight advantage over its competitors, which export to this region," the source said.

In 2003, the company lodged its mining lease application, which allows the development of an underground mine covering 75,000 rai. The Udon Potash Project has reserves of 100 million tonnes. It expects to produce 2 million tonnes per year of high-quality potash.

The project still faces some resistance from NGOs and local people although the company has pledged to follow their demands, including re-submitting the environmental impact assessment. About 2,000 villagers are estimated to live within the mining lease area.

In requesting a review of the EIA's approval, the NGOs and community expressed concern over salt emissions from the potash-mining operation because Thailand has no standard to regulate such salt pollution.

However, APPC insisted that the salt produced from this project would be only half of Canadian standards. It had also prepared control measures, for example, enclosing all production equipment and conveyors on site and installing monitoring equipment around the project area.

Italian-Thai Development's president, Premchai Karnasuta, has said  he tried to negotiate with the NGOs and the community and accepted all of their demands. "We accepted that our costs will increase but that will better for our business, the country and local community," he said.

The Department of Primary Industries and Mines plans to educate the public about underground mining by making a television documentary.

"The resistance is mainly caused by a lack of understanding among many groups, which are unfamiliar with underground mining. We try to show them that both underground mining and the community can be developed together," Anusorn Nuangpholmak, director-general of the department, said last week.

"Our fertiliser industry grows quite slowly compared with growth in demand here. Even though we have our own resources, we have to import high-priced potash to make fertiliser," he said.

A geology study has estimated Thailand's potash reserves at 407 billion tonnes. Five potash projects are seeking exploration licences, while two - Asean Potash Mining Project and Udon Potash Project - are waiting for production licences.

Potash is one of the costliest raw materials for making fertiliser because of tight demand and supply in the global market. Global potash demand is 50 million tonnes per year, equivalent to worldwide potash production. Potash fetches about US$1,000 (Bt32,300) per tonne.