Phulbari Coal Mine AEC plan requires shifting of 50,000

While this is not a first for Bangladesh it's a huge project which has been anticipated for some years and its impacts are likely to be huge.

Phulbari Coal Mine AEC plan requires shifting of 50,000

Sharier Khan, The Daily Star

5th July 2005

London-based Asia Energy Corporation (AEC) is preparing a 30-year open pit coal mining plan for Phulbari Project that would require relocating around 50,000 people of about 100 villages and a part of Phulbari town but raise government earning by $200 million a year.

The AEC estimates that Phulbari reservoir has 500 million tonnes of high quality coal, enough to generate 8,000 megawatt power for 30 years. The coal is located at varying depths between 120 metres and 300 metres.

Under the coal development policy, 1993, the government will get only six percent royalty from AEC and different types of taxes. In terms of money, this will stand at $200 million if AEC produces 15 million tonnes of coal per year.

Working in Bangladesh from 1998 under an agreement with Petrobangla, the AEC last year started a $20-million feasibility study, including a $4-million social and environmental impact assessment.

With 75 percent of the feasibility study completed, AEC Bangladesh's Chief Executive Officer (CEO) Gary Lye sees bright prospect in open pit mining in Phulbari area where the company would invest $1.4 billion over 30 years.

Lye says the study will end by September this year and his company will submit to the government its plan that will include details of mine development, and how it could finance and help the government rehabilitate and relocate the affected people of the area.

If the government approves the plan within this year, AEC can start production of 1.5 million tonnes of coal in 2007, six million tonnes in 2008, nine million tonnes in 2009 and finally 15 million tonnes from 2011. It will employ 1,200 to 1,500 people and deploy trucks that can carry up to 350 tonnes of coal each. Digging machines to be deployed there will pick up 50 tonnes of coal in one go.

"Price of the coal at the mine gate is likely to be around $13 per tonne," the CEO said talking to The Daily Star at his Dhaka office.

As per the AEC plan, bulk of this coal could be exported through Chalna port, using the railway link to Khulna from the northern region. While India can be one of the prime and easy export markets, AEC sees a broad market for Bangladeshi coal that is high in calorific value, and cause low environmental pollution.

The company also thinks that 20 percent of the production can be utilised by any steel industry, and another part may go for domestic power generation, brick kilns and other consumers.

But to make it all happen, AEC needs a mining area of 6,500 hectares of land because of its open pit mining, which most Bangladeshi energy experts term socially and environmentally hazardous.

Lye and AEC Head of Corporate Affairs Brian Mooney explained the advantages of open pit mining over shaft mining (used at Barapukuria mine), and why relocation of the affected people is worth the venture.

"In shaft mining, optimal extraction of coal is not possible. If you cannot extract even 10 percent of the coal, what is the point in such mining? Whereas in open pit mining, you can extract 90 percent of the reserve," Lye says.

"Again, shaft mining creates land subsidence (as the mining progressively creates vacuum inside), posing a great risk. But in open pit mining, developers fill up the open pit when extraction in one part is over and then move to a new part. This is much safer than shaft mining," says Brian Mooney.

Lye points out that such mining exists in different areas of Australia and Germany. "There is a mine in Australia where 30,000 people had to be relocated. In Germany, there is a bigger mine in operation for a hundred years. The mine developers move ahead from one point to another, filling up the previously excavated land and giving it five to seven years to stabilise and then return that to people for farming," he said.

He stressed that to undertake a major project that can change socio-economic condition of people, relocation of a community becomes necessary. "Bangladesh had to relocate 50,000 people to build Jamuna Bridge," he mentioned.

Mooney noted that of the 6,500 hectares of Phulbari mining area, AEC will use a maximum of 2,000 hectares as open pit at any given time and move on to developing the next phase once that part is exhausted.

"To do this, eastern part of Phulbari town will have to be relocated, may be to the eastern side of the Jamuna river nearby. This will not be so difficult but it will be more difficult to relocate people from agricultural area, where most part of the mine is located," Mooney said.

On the relocation, the AEC executives say they will follow the high standard set by International Finance Corporation (IFC). The IFC standard dictates that every affected person should be better off when relocated, none will be forcibly relocated, they would be fully compensated, they would be provided with alternative livelihood and housing, and the miners have to inject huge benefits for the community.

"Nearly 300 people are now working on socio-environmental impact assessment of the project. They are talking to people of every village concerned," Lye said.

While producing coal, AEC will also extract white clay used for ceramics, clay for brick fields, gravel, sand and hard rocks as by-products.

Late last month, energy ministry adviser Mahmudur Rahman at a meeting with Petrobangla criticised the AEC agreement for two years for feasibility study. A one-year agreement was good enough for this, he thought.

The adviser also criticised that Petrobangla gave AEC access to a vast area saying if people of the town need to be relocated for exploration, the social cost will be too much for the government to handle. However, he also suggested awarding AEC two new areas for mining exploration.

Mahmud also supports open pit mining over shaft mining, and has advocated a proposal from Tata to allow it open pit method at Barapukuria mine which is already being developed by a Chinese company. The energy adviser suggested Petrobangla to hire an international consultant to see if open pit mining is more profitable than shaft mining.

Most local energy experts oppose open mining on socio-environmental grounds. They also suggest that the six percent royalty under the coal development policy should be immediately revised as it undermines the high value of coal in the present context of high price of petroleum.

Mina de carbón Phulbari: el proyecto de AEC requiere traslado de 50,000 personas

Por Sharier Khan, The Daily Star

5 de julio de 2005

La compañía con base en Londres Asia Energy Corporation (AEC), trabaja en el proyecto de una mina de carbón a cielo abierto cuya explotación durará 30 años. El Proyecto Phulbari requerirá la reubicación de cerca de 50,000 personas residentes en unas 100 villas y parte de la ciudad de Phulbari, pero otorgará al gobierno ganancias de 200 millones al año.

AEC estima que el depósito Phulbari contiene 500 millones de toneladas de carbón de alta calidad, suficientes para generar 8,000 mega watts de energía durante 30 años. El carbón está ubicado a profundidades variables, entre los 120 y 300 metros.

De acuerdo a la Política de desarrollo del Carbón, de 1993, el gobierno obtendrá solamente el 6 por ciento en concepto de royalty y otros impuestos. En términos de dinero, esto alcanzará los 200 millones anuales si AEC produce 15 millones de toneladas en el mismo período.

Trabajando en Bangladesh desde 1998, previo acuerdo con la compañía Petrobangla, AEC comenzó durante el año pasado un estudio de factibilidad de 20 millones, que incluye un estudio de impacto social y ambiental de 4 millones.

Con el 75 por ciento del estudio de factibilidad terminado, el director ejecutivo de AEC Bangladesh, Gary Lye, ve un futuro brillante para la explotación a cielo abierto en el área de Phulbari, donde la compañía piensa invertir 1400 millones a lo largo de los 30 años.

Lye asegura que el estudio estará terminado para septiembre de este año y que la compañía presentará al gobierno su plan, incluyendo detalles del desarrollo de la mina, y cómo financiará y ayudará al gobierno para rehabilitar y relocalizar a los pobladores afectados.

Si el gobierno aprueba el proyecto este año, AEC comenzará la producción de 1,5 millones de toneladas de carbón en 2007, 6 millones en 2008, 9 millones en 2009 y finalmente 15 millones de toneladas a partir de 2011. Empleará de 1200 a 1500 trabajadores y utilizará camiones capaces de transportar 350 toneladas de material cada uno. Las máquinas excavadoras podrán extraer hasta 50 toneladas de una vez.

"El precio del carbón en boca de mina ronda los 13 dólares por tonelada" dice el CEO de AEC a The Daily Star desde su oficina en Dhaka.

De acuerdo al plan de AEC, el carbón podrá ser exportado por el puerto de Chalna, usando el ferrocarril a Khulna. La compañía considera que el 20 por ciento de la producción puede ser utilizado por cualquier industria del acero, otra parte para la generación de energía doméstica, cocido de ladrillos y otros consumos.

Para que todo esto ocurra, AEC necesita explotar unas 6,500 hectáreas de tierra en la modalidad a cielo abierto, a la que varios expertos en energía de Bangladesh consideran como social y ambientalmente peligrosa.

Lye y el director de asuntos corporativos de AEC, Brian Mooney, explicaron las ventajas de la explotación a cielo abierto frente a la de zocavón (que se usa en la mina Barapukuria), y por qué la reubicación de los pobladores vale la pena.

Apuntan también que minas como las que se proponen existen en Australia y Alemania. "Hay una mina en Australia para la que 30,000 habitantes debieron ser relocalizados. En Alemania, hay una gran mina en operación desde hace 100 años. Quienes desarrollan la mina se mueven de un punto a otro, cubriendo el terreno de cada excavación y, luego de seis o siete años de espera para que se estabilice, se la devuelven a la gente para que la cultive" afirma.

En lo que hace a la reubicación, los ejecutivos de AEC dijeron que seguirán los altos estándares que fija la Corporación Financiera Internacional (CFI). La CFI especifica que todas las personas relocalizadas deben estar mejor que en su anterior ubicación, ninguna debe ser reubicada a la fuerza, deben ser compensadas, deberá proveerseles de medios de vida alternativos, y los mineros deberán inyectar beneficios importantes en la comunidad.

"Unas 300 personas están trabajando actualmente en el informe de impacto ambiental, y están hablando con cada villa" dijo Lye.

El mes pasado, el asesor del Ministerio de Energía Mahmudur Rahman criticó el acuerdo con AEC que prevé un plazo de 2 años para el estudio de factibilidad. Aclaró que un plazo de un año era suficiente.

Rahman criticó también que Petrobangla haya asegurado a AEC el acceso a una vasta área, argumentando que la relocalización de los habitantes implicaría un costo demasiado alto para el gobierno.

Casi todos los expertos en energía locales se oponen a la actividad minera en ambientes socialmente sensibles. Sugieren también que un royalty del 6 por ciento debería ser revisado inmediatamente, ya que va en detrimento del alto valor que podría obtenerse del carbón ante el contexto actual de un elevado precio del petróleo.