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The country's Office of the Narcotics Control Board announced the seizure on 12 November, saying the 11.5-tonne haul pointed to a multi-national drug network.
Estimates placed the worth of the supposed drugs at 28.7bn baht ($950m; £710m).
However, tests have so far failed to identify any drugs, with Thailand's justice minister Somsak Thepsuthin saying there had been a 'misunderstanding'.
He explained how a 'technical error' in field testing led to the initial false claim - which was declared to be Thailand's largest ketamine seizure.
Lab tests found the substance was actually trisodium phosphate, a compound often used as a cleaning agent.
The product, which looks like a white powder, can also be used as a food additive.
"This was a misunderstanding that our agency must accept," Somsak told reporters.
Somsak said the error occurred because preliminary tests - which turn purple in the presence of ketamine hydrochloride - react the same to trisodium phospate.
Later tests carried out by the Office of the Narcotics Control Board (ONCB) in another laboratory confirmed at least 66 sacks of the suspected drugs were actually the cleaning agent.
Thailand seized 475 bags of the white powder from a local warehouse earlier this month, following a tip-off from Taiwan.
According to The Nation, Wichai Chaimongkhol, ONCB secretary-general, told reporters after the bust: "The drugs are the largest amount ever seized in Thailand, with [an] estimated value [of] 28.7bn baht based on retail price."
But after announcing the haul, officials were then forced to hold a news conference on Tuesday (24 November) to explain they had made an error.
The Bangkok Post reports that Somsak has since admitted the initial announcement may have come too early.
He said: "I accept the fact it might have been premature to hold a press conference to announce the seizure of a substance suspected to be a kind of drug.
"But in this case, the ONCB had been informed of the seizure of ketamine in Taiwan, investigated and found an undeniable link to it. It would have been a mistake if I did not make it public.
"The United Nations Office on Drugs and Crime (UNDC) said this also happened two or three times in other countries. This was the first time in Thailand. Moreover, on the day I held the press conference, I did not say it was 100 percent ketamine."
Featured Image Credit: Office of the Narcotics Control Board
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