THAILAND - China has stepped up the pace to acquire a share of potash at its doorstep with the Chinese company CHINA MINGDA POTASH applying for a special prospecting licence in the known potash-producing area of northeastern Thailand. The licence would cover an area in the Wanorn Niwas district of Sakol Nakorn province. Preliminary estimates show the possibility of between 1.5 billion and 2.0 billion tonnes of potash in a deposit that could potentially support output of about 1 million tonnes/year over many years.
This latest interest to develop Thailand's potash reserves is not unexpected. Long-time Thai company ASIA PACIFIC POTASH (APPC), whose parent company is Asia Pacific Resources Ltd. of Canada, has already spent US$25 million "in the ground" for drilling, exploration, engineering, environmental studies and other works. The total comes to approximately US$76 million spent to prove up its Udon deposit and complete a feasibility study on the project also located in northeastern Thailand, about 50 km from the Laos border.
China has also shown a strong interest in APPC's Udon project by signing a memorandum of understanding late last year with China's state-owned ENTERPRISE INVESTMENT CO. (CSEIC). The agreement focuses on raising US$300 million to finance the development of the Udon project and also to secure long-term off-take commitments for the supply of high quality potash to the agricultural markets of China, the Thai domestic market and across Asia.
Initially APPC plans to develop the Udon South deposit with a total mineral resource of 302 million tonnes. The second deposit, Udon North, has a resource of 665 million tonnes. A three-year construction program is planned. Initial production will be 1 million tonnes/year with the second stage expansion that will double output. APPC is currently waiting for its mining lease application to be approved to begin work building the project.
The Thai government has pulled out of further work to develop the ASEAN project, noting unfavourable economics. The ASEAN deposit graded just over 10% K2O. Meanwhile the APPC Udon South deposit grades 24% K2O, and the Mingda deposit is yet to be determined.
Thai Industry Minister Pinit Jarusombat recently announced the government would no longer support the ASEAN project saying that, "potash mining is the role of the private sector". The statement is recognition the government sees potash mining as vital to Thailand, but not a government industry. Furthermore, it provides an endorsement that foreign companies will receive government co-operation to get their projects approved after all development, impact and environmental concerns are addressed and satisfied.
While APPC has spent almost US$55 million on its project and raised a further Cdn$10 million two months ago for additional work to bring the mine closer to the beginning of construction, it is expected the China Mingda project will require an initial US$5-25 million to prove up what could become a world-class deposit similar to APPC's Udon South.
In effect, the Mingda project is about six years behind the APPC project, but places it in a good position to follow on from APPC's "paving the way - Udon South Potash Mine", which would have set a track record for the Thai government to become more comfortable with underground mining in the country.
Currently there are no underground mines in Thailand, and much of the delay in granting APPC's mining lease application results from the time required to pass Thailand's Minerals Act. According to Thai law, the Crown owns minerals below 300 metres. The Udon deposit is 350 metres underground. APPC was also required to scrutinize environmental impact to ensure there will be no adverse effects to the almost 4,000 residents of the area.