Phulbari Coal Project

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The Phulbari Coal Project is a proposed open-pit coal mine and coal plant in Bangladesh. The project is proposed by Asia Energy, a wholly owned subsidiary of London-headquartered GCM Resources.[1]

After fierce resistance by the local population halted plans for the project in 2007, a 2010 WikiLeaks cable revealed US diplomats were secretly pushing the Bangladeshi government to re-open plans for the mine since “Asia Energy, the company behind the Phulbari project, has sixty percent U.S. investment.”[2][3]

In April 2018, GCM Resources signed a preliminary Engineering, Procurement and Construction (EPC) contract with China Gezhouba Group International Engineering (subsidiary of China Energy Engineering Corporation) for a US$3.8 billion, 2,000MW Phulbari mine-mouth coal plant.[4] In September 2018 GCM Resources announced that China's Sinohydro Corporation will undertake a pre-feasibility study on a proposed 4000 MW Phulbari mine-mouth power plant, in addition to the 2000 MW plant.[5]

Location

The map below shows the location of Phulbari Upazila but not the exact location of the proposed plant.

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Original proposal

Background

A proposed coal mine in the region has been proposed since 1994, originally by BHP Minerals, then GCM Resources. The project would also include a coal plant. According to the GCM Resources website, the company proposed a 1,000 MW coal plant to the government, but has also considered larger sizes:[6]

"The Department of Environment approved the Project's Environmental Impact Assessment in September 2005. The Project's Feasibility Study and Scheme of Development report was submitted to the Government on 2 October 2005 for approval. At the same time, GCM delivered to the Government a proposal for developing a coal-fired power station with up to 1,000MW capacity at the mine site and subsequently a capacity increase to 2,000MW has been considered. At full production, the coal mined at Phulbari could support a generating capacity of 4,000MW."

Fierce resistance by the local population halted plans for the project in 2007, but GCM continued to pursue the project, and announced a version of the project in 2018 (see 2018 revival with Chinese partners below).

History

"The Blood-Soaked Banner of Phulbari (Part 1): A Coal Mine Against the People"
"The Blood-Soaked Banner of Phulbari (Part 2): A Coal Mine Against the People"

The Bangladesh Government originally awarded a coal exploration license to the Australian company BHP Minerals in 1994, after the company surveyed coal in the region. BHP eventually decided against developing a coal mining operation, reportedly because the Phulbari coal deposit is between 150m and 260m, requiring deep mining in the flood-prone deltaic region, and posing multiple environmental and engineering problems.[7]

In 1999, BHP's licenses were transferred to Asia Energy. Asia Energy PLC was incorporated in the London Stock Exchange Alternative Investment Market (Ticker code: GCM) in September 2003 and acquired 100% of Asia Energy Corp. It subsequently changed its name to Global Coal Management (GCM Resources) after local protests against the company and the project through 2006 and 2007. According to the company’s 2007 annual report, its major shareholders are RAB Capital, UBS, Fidelity Group, Barclays, Credit Suisse, LR Global, Ospraie Management, Capital Group and Argos Greater Europe Fund.[8]

On 26 Aug 2006, three locals, Salekin, 20, Tariqul, 21, and Amin, 13, were killed and more than 200 people were injured when law enforcers fired on the protesters who were demonstrating against the government decision to introduce open pit mining in Fulbari, Dinajpur. Since 2006, the killings have been memorialized in annual events.[9]

The project was stalled in the planning phase when emergency rule was imposed in Bangladesh in January 2007, after widespread protests against the mine. However, following national elections in December 2008, a new administration began actively reconsidering the mine.[2]

On its website in 2009, GCM stated that the Asia Energy Corporation (Bangladesh) Pty Ltd, "has a contract with the Government of Bangladesh 'for exploration and mining of coal in Northern Bangladesh'."[10] In 2011, GCM stated that it had "completed a Feasibility Study for commercial development of the Phulbari Coal Project. The Scheme of Development was submitted to the Government of Bangladesh in November 2005 and is awaiting approval. The Company has also provided a proposal to the Government for the development of up to 1000 MW of coal-fired power generating capacity at the mine mouth."[10]

The U.S. Geological Survey said that "the project’s environmental impact and feasibility studies had been completed, and mining operations could be done by open pit method. After coal preparation, the final product would be coking coal and thermal coal for both export and domestic use. The bituminous coal resource of 572 million metric tons was large enough for the mine to last more than 30 years at a mining rate of 15 Mt/yr."[11]

GCM released an April 2012 statement outlining a "new approach" to ensure construction of the project.

WikiLeaks reveals State Department pressure to open Phulbari mine

On Dec. 21, 2010, a WikiLeaks cable revealed US diplomats had secretly pushed the Bangladeshi government to re-open plans for the mine. The cable includes comments by US Ambassador to Dhaka James Moriarty stating that “Asia Energy, the company behind the Phulbari project, has sixty percent US investment.” In the cable, sent in July of 2009, Moriarty also states that he urged the prime minister’s energy advisor Tawfiq Elahi Chowdhury to authorize coal mining, saying the “open-pit mining seemed the best way forward.”[2]

Later on in the cable, Moriarty privately noted: "Asia Energy officials told the Ambassador they were cautiously optimistic that the project would win government approval in the coming months." Moriarty also notes that Chowdhury admitted the coal mine was "politically sensitive in the light of the impoverished, historically oppressed tribal community residing on the land". Chowdhury, according to the cable, then agrees to build support for the project through the parliamentary process.[3]

Between 40% to 60% of all GCM shares are owned by companies that make up the Luxor Capital Group, all of which are owned by Christian Leone, a U.S. citizen and former Goldman Sachs employee who also operates a New-York-based hedge fund in his own name.[2]

Impact

The Phulbari mining project involves an open-pit coal mine in Northwest Bangladesh and the construction of a power plant. According to the Asian Development Bank (ADB), at full production about eight million tons of coal will be transported by rail and barges to an offshore reloading facility located in Akram Point. An additional four million tons will be exported to India via railway, and the remaining three million tons will be used for domestic energy consumption.[12]

In 2008, Asia Energy/GCM estimated that 40,000 people would be involuntarily resettled by the project, although activists say the number of people evicted is likely to be ten times more, as the mine and associated infrastructure will use up 10,000 hectares of primarily fertile agricultural land. The project would also divert a river for the water needed, pumping out 800 million liters daily, and lowering the groundwater over an area covering 500 square kilometers. Asia Energy plans to create a huge lake after the project is over, but there are concerns that the water would be toxic.[13]

According to the group Cultural Survival, a government-sponsored study estimates that 130,000 people in more than 100 villages would be immediately displaced by the mine, and another 100,000 would gradually be forced to leave as their wells and irrigation canals run dry from the mining. Independent researchers and the Jatiya Adivasi Parishad (National Indigenous Union) estimate that 50,000 Indigenous people belonging to 23 different tribal groups would be displaced or impoverished by the mine.[14]

Public Resistance

On August 26, 2006, more than 50,000 people took part in protests against the proposed mine. The Bangladesh Rifles, a paramilitary force, opened fire on the protesters. Three young men, Tariqul, son of the municipal commissioner and panel chairman, Ameen, a young carpenter, and Salehin of the adjoining upazila Nawabganj, died instantly. One to two hundred people are reported to have been injured.
[13]

After the 2006 protest, a national strike closed down the country for four days. It ended when the government agreed to ban open-pit coal mining in Phulbari and kick the British company (then known as Asia Energy Corporation) out of the country—a pledge they have not fulfilled. Instead, the government plans to announce a new coal policy by June 2011, and Global Coal expects its mine to move forward. The National Indigenous Union and a broad coalition of human rights and environmental organizations are appealing for international support to stop the mine.[14]

On Feb. 28, 2011, about 2,000 protesters united to blockade a highway in the Phulbari region and demanded that the government honor the six-point agreement signed on August 31, 2006, which bans open pit coal mining throughout Bangladesh, and calls for the permanent expulsion of Global Coal Management from the country.[15] Bangladesh's Rapid Action Battalion (RAB) was deployed to intimidate protesters and guard the office of Global Coal Management. RAB has been denounced by international human rights organizations as a government death squad, due to its routine use of torture and the alarming number of extra-judicial killings that occur in RAB custody.[16]

National opposition has been led by the National Committee to Protect Oil, Gas, Mineral Resources and Ports (NC). According to BanglaPraxis, NC's General Secretary Prof. Anu Muhammad has received death threats, and its local leader Mr. Nuruzuman was publicly tortured by the Bangladesh military in February 2007.[17]

On May 5, 2011, the National Committee reported that local protesters, including women and children, were attacked by "some hooligans backed by the minister." They were protesting Phulbari and joining community-led campaigns in the nearby Barapukuria coal mine region, where a national "pilot project" to open pit mining in Bangladesh is being proposed. Many were reportedly injured, including one National Committee leader, SMA Khaleque, whose hands were broken. Protestors have vowed to remain in place and continue a blockade of key road and railway lines in the region until 10 a.m. on May 6th.[18]

On October 20, 2011, a letter signed by over 80 civil society organisations worldwide was sent to Polo Resources and other Phulbari investors, calling upon them to withdraw their investments from the proposed project. In the letter, the human rights and environmental organisations based in 25 countries identified a wide range of serious human rights violations and environmental risks associated with the project.[19]

January 29, 2013: At the request of the District Commissioner and local police, GCM Resources' CEO Gary Lye was forced to cancel his plans to visit Phulbari and distribute blankets due to resistance from Phulbari's residents, who mounted day-long protests against his visit. According to one press report, "A volatile situation prevailed at Dinajpur’s Phulbari, and its adjacent Birampur and Parbatipur Upazilas with the locals carrying sticks since morning."[20]

Financing

The Asian Development Bank (ADB) was scheduled to approve in June 2008 a US$ 100 million loan and a US$ 200 million political risk guarantee for the project. After pressure by several civil and government groups, the Director of the Asian Development Bank’s Private Sector Operations Department, Robert Bestani, notified the Bank’s Board in March 2008 that it would no longer ask for approval of the project.[21]

According to BankTrack in 2010, the following firms have invested in GCM Resources (although the final tally adds up to above 100%)[22]:

LCG and Luxor Capital Group are owned by Christian Leone, which means that Leone’s companies own an estimated 53.59% of all GCM shares.

  • Credit Suisse manages shares on behalf of GCM.
  • Fidelity Investments holds equity in GCM.
  • Polo Resources holds equity in GCM.
  • As of November 2008, more than half of GCM equity is held by U.S. hedge funds including: Luxor Capital, Hound Partners LLC, L-R Capital partners, Southpoint Capital Advisors, Ospraie, and Capital Group Companies.

2018 revival with Chinese partners

In April 2018, GCM Resources signed a preliminary Engineering, Procurement and Construction (EPC) contract with China Gezhouba Group International Engineering for a 2,000MW Phulbari mine-mouth coal plant at an estimated cost of US$3.8 billion. A definitive EPC agreement will be negotiated upon consent being obtained from the Government of Bangladesh. China Gezhouba Group (or its affiliate or investment partner) has committed to investing up to 30% in the power plant, subject to approval by Chinese authorities, with GCM holding the balance of interest. China Gezhouba Group has also agreed to facilitate financing for the proposed power plant with GCM's assistance.[4]

In September 2018 GCM Resources announced that China's Sinohydro Corporation will undertake a pre-feasibility study on a proposed 4000 MW Phulbari mine-mouth power plant, in addition to the 2000 MW plant.[23]

Citizens groups campaigning on the project

Project Details

  • Sponsor: Global Coal Management
  • Parent company:
  • Location: Phulbari Upazila, Dinajpur district, Rangpur division
  • Coordinates: 25.516667, 88.883333 (approximate)
  • Status: Announced
  • Gross Capacity: 6,000 MW (Phase I: 2,000 MW, Phase II: 4,000 MW)
  • Type:
  • Projected in service:
  • Coal Type:
  • Coal Source: Phulbari mine (undeveloped)
  • Source of financing: China

Articles and Resources

Sources

  1. GCM Resources, "Overview", GCM Resources website, accessed August 2009.
  2. 2.0 2.1 2.2 2.3 "Phulbari Coal Mine, Bangladesh" International Accountability Project, accessed Feb. 2011.
  3. 3.0 3.1 Fariha Karim, "WikiLeaks cables: US pushed for reopening of Bangladesh coal mine" Guardian, Dec. 21, 2010.
  4. 4.0 4.1 Michael Marray, "China Gezhouba Group signs preliminary EPC contract to build 2,000MW power plant in Bangladesh," The Asset, 3 April 2018 (paywall)
  5. "Prefeasibility Study for Further Mine-Mouth Power Plants," GCM, Sep 11, 2018
  6. "Project Status," GCM Resources website, accessed March 2015
  7. Nazrul Islam, "Reflections on Phulbari Coal Project" BanglaPraxis, September 14, 2008.
  8. "Phulbari Coal Mine, Bangladesh" International Accountability Project, access March 2011.
  9. "Phulbari Protest Day Today," New Age, August 26, 2014
  10. 10.0 10.1 GCM Resources, "Asia Energy Corporation (Bangladesh) Pty Ltd", GCM Resources website, accessed August 2009.
  11. Chin S. Kuo, The Mineral Industry of Bangladesh: 2007, U.S. Department of the Interior, U.S. Geological Survey, December 2008.
  12. "Phulbari Coal Mine, Bangladesh" International Accountability Project, access March 2011.
  13. 13.0 13.1 "‘You cannot eat coal’: resistance in Phulbari" Banglapraxis, August 19, 2008.
  14. 14.0 14.1 "Bangladesh: Ban Coal Mine, Save Forests and Farms" Cultural Survival, accessed Feb. 2011.
  15. Kate Hoshour, "Massive protest against Phulbari & Barapukuria coal mines in Bangladesh" International Accountability Project, March 4, 2011.
  16. Kate Hoshour, "Big Coal Emergency in Bangladesh Worsens: Violent crackdown on villagers peacefully opposing coal mine" BankTrack, May 6, 2011.
  17. "Press Release: Asian Development Bank Pulls Out of Controversial Phulbari Coal Project in Bangladesh!" BanglaPraxis, April 3, 2008.
  18. Kate Hoshour, "Big Coal Emergency in Bangladesh Worsens: Violent crackdown on villagers peacefully opposing coal mine" BankTrack, May 6, 2011.
  19. Ansar Ahmed Ullah, "Investors urged to pull out" The Daily Star, Oct. 21, 2011.
  20. "Lye skips Phulbari site trip," bdnews24.com, 29 January 2013
  21. "Press Release: Asian Development Bank Pulls Out of Controversial Phulbari Coal Project in Bangladesh!" BanglaPraxis, April 3, 2008.
  22. "Phulbari coal mine - Bangladesh - Bank Role" BankTrack, accessed March 2011.
  23. "Prefeasibility Study for Further Mine-Mouth Power Plants," GCM, Sep 11, 2018

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