Kingsgate's Thai mine a lesson in failed community management

In mid January, the Thai Government’s Department of Primary Industries and Mines ordered the 30-day suspension of activities of Akara Resources, a Thai gold mining subsidiary of Australia’s Kingsgate Consolidated Limited.

The suspension followed a protracted dispute between Akara and local villagers. The locals claimed – and this was voiced predominantly by women – they had been adversely affected by the mine’s activities.

Despite the concerns raised by villagers, Akara continued to issue environmental impact studies that failed to address the concerns.

But when the Thai government assessed the mine’s impacts on the environment and health, arsenic and manganese were found to exceed acceptable levels in 282 villagers living near Kingsgate’s Chatree gold mine in Pijit Province.

Kingsgate responded by arguing that “arsenic and manganese are not used or stored at the Chatree Mining operation now or at any time in its history”. Indeed, it is cyanide rather than arsenic or manganese which is used to leach gold from ore.

Following a public hearing of key community stakeholders in February, the Department of Primary Industries and Mines announced it would lift the suspension order if Akara Resources were to prove its operations do not pose a threat to health. Apparently this did not happen to the government’s satisfaction, as an additional 45 days suspension has been applied.

How could things have gone so wrong?

The current situation in this mining community offers many lessons for Australian companies investing in developing nations. The systematic lack of engagement of all villagers in Pijit to actively participate in decision-making has led to frustration and dissatisfaction, contributing to the current crisis.

As part of our Department of Foreign Affairs and Trade funded project on mining and equitable employment for women in Thailand and Laos, we conducted interviews with 43 locals holding various roles – community leaders, workers, protesters, NGOs and farmers – in this controversial mining community. Villagers told us of their hopes for improved economic status and a better life.

The legacy of political decentralisation promoted while Thailand was under the rule of the Shinawatra siblings, is the expectation rural communities will be involved in decision-making processes impacting their welfare. At the same time, most villagers we interviewed consider themselves “uneducated” and “powerless”.

Annually, Akara injects 37 million Thai baht (A$1,465,011) into funds for 27 villages close to the mine. However, it generally places spending of funds in the hands of community leaders. Although villagers themselves would dearly like to participate in this decision-making process, in practice most still defer to village heads and local administrators. So these funds tend to be tightly controlled by the heads of villages, all male, and those closest to them. Additionally the company provides disparate financial support to different villages. When resources are accessible, those who have a say on their utilisation are mostly men of relatively high socio-economic status.

Akara provided villagers a range of social initiatives to help secure goodwill and social licence to operate in the community; education, microfinance and infrastructure development.

Divergent agendas

The situation is complex. Demands on the company have risen from many quarters including government departments, micro-communities from different villages, schools, sub-contractors, workers and their family members, and even those who have nothing to do with the company. Also, locals are deeply concerned, and in some cases fearful, of the mine’s environmental and health impacts, whether related to polluted water, dusty air or noise.

Akara also appears aware and somewhat open about the mine-related environmental issues, listing eight challenges in its sustainability report; dust, contaminated water, underground water, water management in the community, noise, carbon dioxide emission, green energy, and cyanide management. Regardless, it appears Akara has been unable to find a way to effectively address the community’s diverse agenda and concerns about the mine’s real and perceived environmental and health impacts.

Resources from the company, whether direct incentives to local government or corporate social responsibility schemes, must create opportunities for the community. It has to be shared equitably among all stakeholders. More importantly, resources from the company should not create disparity among those from low and high socio-economic statuses. The lack of true community consultation that include members from all walks of life seems to have exacerbated the environmental blame from some community members in Pijit.

Mining by Australian companies can be a development tool in host countries. But the companies involved must be clear about the rationale for the distribution of benefits. Mining companies should facilitate, but not dominate, inclusive decisions by local communities.

Despite the current outcry, all villagers in our study said they wanted the mine in their community. Yet they want a company that is trustworthy and systematically demonstrates strong commitment to environmental protection. Most of all they want equitable benefit from a mine operating in their backyards, especially given they, equally, suffer its negative consequences.

Nattavud Pimpa receives funding from the Department of Foreign Affairs and Trade (DFAT) through the Australian Development Research Awards Scheme (ADRAS) .

Timothy Moore receives funding from the Department of Foreign Affairs and Trade (DFAT) through the Australian Development Research Award Scheme (ADRAS) .