Phulbari Coal Project

The Phulbari Coal Project would be an open-pit coal mine in Bangladesh proposed by Asia Energy Corporation. Asia Energy is a wholly owned subsidiary of London-headquartered GCM Resources, a company with coal interests in Bangladesh, South Africa, and China, as well as "uranium interests in West Africa, Sweden, and Australia."

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.”

On its website in 2011, GCM states that it is awaiting approval for the project.

History
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.

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.

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.

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'." 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."

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."

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.”

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.

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.

Impact
The Phulbari mining project involves an open-pit coal mine in Northwest Bangladesh and the construction of at least one 500-MW 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.

Asia Energy/GCM estimates 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.

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.

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.

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.

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. 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.

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.

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.

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.

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.

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


 * Aurora Investment Trust PLC - 29.31% equity
 * Christian Leone - 9% equity
 * Credit Suisse First Boston Equities Ltd - 4% equity
 * LCG Holdings LLC - 8% equity
 * Luxor Capital Group - 36% equity
 * Polo Resources Ltd - 29.83% equity

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.

Citizens groups campaigning on the project

 * Bangladesh Environment Network - see also archive of "Coal & Gas" articles.
 * International Accountability Project
 * Mangrove Action Project
 * Phulbari Resistance
 * Phulbari Resistance, Facebook group
 * Society for Environment and Human Development (SEHD)

Related SourceWatch articles

 * Bangladesh and coal
 * Global use and production of coal

External articles

 * Kate Hoshour and Christine Shearer, "Energy at What Cost? Protests Against Forced Eviction from US-Backed Coal Mine Continue in Bangladesh" Truthout, April 8, 2011.
 * AKM Sahmsuddin, "Exploitation of Phulbari coal deposit is a must", The Financial Express (Bangladesh), May 18, 2010.
 * Kristan Deconinck, "Bangladesh coal divides region", BBC World Service, July 12, 2006.