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Thailand: Mining projects update

The new Minerals Act (2017) came into effect on August 30 2017. Our briefing dated April 10 2017 provided some background on the former laws – the Minerals Act (l967) and the Mineral Royalty Rates Act (1966) – and a summary of major amendments. However, rules under the new Act were not enacted for some months, and many are still in draft form.

As of March 13 2018, 38 notifications had been issued, and there were 28 draft MRs, regulations, notifications and orders of the Ministry of Industry (MoI), and of the Department of Primary Industry and Mining (DPIM) posted in Thai on the DPIM's website.

Generally, the new Act aims to provide stricter environmental controls, decentralise administrative power, encourage the use of newer mining technology, and provide those living in mining areas with more protection.

However, there are concerns about the future of mining projects in Thailand.

  • In the past, the board of investment (BOI) provided promotional privileges for exploration and mining companies for all minerals, with few exceptions. Benefits included tax exemptions on the import of machinery and equipment, income tax holidays, and waivers of normal immigration and work permit regulations for all minerals. The BOI has substantially limited promotion for mining, to only potash mining and ore dressing.
  • Formerly, in the case of projects with substantial investment capital, the BOI allowed foreign investors to initially hold a majority or all of the shares, but Thai nationals had to acquire shares of no less than 51% of the registered capital within five years of starting operations. However, under a new MoI notification published on January 30 2018, majority Thai ownership is prescribed and all forms of nominee ownership on behalf of foreigners is prohibited.
  • Royalty rates are capped at no more than 30% of the market price of the mineral, and were to be prescribed under ministerial regulations. On January 30 2018, an MoI notification was published, prescribing rules regarding royalties but with no specific royalty rates.
  • The National Mineral Administration Policy Board is charged with the preparation of a minerals administrative master plan, which will include resource surveys, restrictions on certain minerals and areas, and guidelines for mineral administration that results in appropriate benefits to the economic, social, environmental and health balance. A master plan is to be prepared at five-year intervals. To date, no such master plan has been approved by the Council of Ministers.
  • Before the new Minerals Act came into force, the Chatree gold mine's mineral processing licence was suspended, reportedly due to pollution incidents. The company's Australian shareholders brought a claim under the Australian-Thai free trade agreement, which is still pending.
Albert T. ChandlerBenjamin Folarin

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