Phulbari Coal Mine: AEC plan requires shifting of 50,000 people

As the World Bank turns its dubious hands to improving Bangladesh's chronic lack of electrical power, plans by UK company Asia Energy plc, to shift fifty thousand people from their land for the country's biggest coal mine are proceeding apace.

Last week the company said it had identified 532 million tonnes of coal, with some 288 million tonnes "measured."

Phulbari Coal Mine: AEC plan requires shifting of 50,000 people

Sharier Khan, The Daily Star

July 8 2005

London-based Asia Energy Corporation (Asia Energy plc) 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.

Bangladesh boost for Asia Energy

Growth Company Investor Ltd, London

01 April 2005

AIM-quoted Asia Energy says the Bangladesh Department of Environment has granted environmental site clearance to its 370 million-tonne Phulbari coal project in the north-west of the country, writes Robert Tyerman.

David Lenigas, Asia Energy's joint managing director, says environmental clearance for the company's planned open-cast mine at Phulbari paves the way for formal government approval of the project. He describes the decision as 'a major step towards starting a world-class coal mining operation'.

Consultant SMEC International is working on a full environmental impact assessment for Phulbari, whose projected annual output was last year increased from nine to 15 million tonnes, which will be submitted to the Dhaka government this summer. Asia Energy shares, recommended by Growth Company Investor at 75p a year ago, are 36.5p up today at 793.5p.

They could well go further, in the short term at least, though cautious investors should consider partial profit-taking. Robert Tyerman

Asia Energy To List Its Major Coal And Power Station Project In Bangladesh On AIM

Minesite : March 22, 2004

Coal is making a comeback. Not only coking coal for the steel makers of China, but thermal coal for power stations and this is particularly true of Asia as it is a region short of alternative energy sources such as natural gas, nuclear power and hydro-generation. China itself generates three quarters of its electricity supply from coal and its power consumption rose about 15 per cent last year so its exports are bound to fall according to the Financial Times and more imports will be sucked in. As a result prices are rising dramatically. Thermal coal export prices from Australia have risen by 50 per cent to £25/tonne since December and this is a reflection of the situation all over the world. The problem is that it is impossible to jack up coal production quickly and the shipping industry is over-stretched anyway.

Coal in Bangladesh is therefore of real interest. The country has a population of 130 million and is steadily changing from an agricultural to an industrial economy. At this stage, however, only 18 per cent of the population has access to electricity which is one of the world’s lowest access rates. Gas reserves currently supply 85 per cent of commercial electricity, but reserves are falling and coal will have to make up the gap as electricity capacity in the country is expected to treble by 2015. At the moment most of it is imported, but Asia Energy, a company due to list on AIM next month through stockbrokers WH Ireland, has mining leases over a major coal field in Bangladesh with an estimated in-situ coal resource of 370 million tonnes. And the coal is of significantly higher quality than most of that which is being imported according to the company’s chairman Chris Eager. Remember him? Chief executive of Monterrico Metals which is pushing to new highs on the back of its Rio Blanco copper project in Peru.

Asia Energy is controlled by Deepgreen Minerals Corporation, a Canadian company in the Cambrian Mining stable, though it is hard to find a reference to the latter relastionship in the placing documents. The Phubari coal field itself was discovered by BHP back in 1994 and an inferred resource of 383 million tonnes was estimated for it. However the major decided that it was not to be part of its core holdings during a period of corporate restructuring in 1998 and it was acquired by an Australian company, Asia Energy Corporation Pty . A couple of years later consultants GeoEng were commissioned to carry out a pre-feasibility study which was based on a scoping study which had been completed the previous year.

The new study incorporated all current data plus additional geophysical work that had not been available to BHP. The result was that an open pit mining operation was pronounced viable and the in-situ resource was increased to 426 million tonnes. At this stage it is worth pointing out that the JORC resource is still 370 million tonnes, but as that would give the project a life of more than 30 years anyway, the difference is largely academic as drilling should convert the inferred resource to JORC standards over time. As already pointed out it is high quality coal with a calorific value of 6,600 kcal/tonne and is low in ash and sulphur. Just as important the seam is very thick on a world scale, varying from 15 to 45 metres in thickness. An open pit operation would therefore have a low strip ratio and the directors reckon a 9 million tonne/year production rate could eventually be established.

The big picture is that the Phubari Energy project will supply coal to a mine mouth power plant. When this has been ramped up to an output capacity of 2,500 mega watts, surplus coal will be sold to other consumers in Bangladesh and India. However it will not reach full production with 6 mtpa going into power and 3 mtpa for sale until 2017 and by that time it should still have the best part of 30 years life left. More details of this will be given when the bankable feasibilities on mining and power generation, now in process, are finished but this will not be until next year. What is clear is that this will be a very expensive project which will require the goodwill of the government of the People’s Republic of Bangladesh if it is to keep on track. This it appears to have as successful development of this project could have a significant impact on the industrial growth of the region and the company has been promised a 9 year tax holiday, low import duties, investment allowances and no export duties.

First coal will not be delivered to the power plant until 2010 provided finance is forthcoming and development proceeds on schedule. However World Bank and other similar financial institutions will want to see the emergence of Bangladesh from poverty and it has already shown that it is on the right track as it can field a good cricket team. Shareholders will have to be patient, but Philip Richards of RAB Capital, who has a 15.8 per cent stake from an earlier financing, reckons that the coal in the ground is valued at about one-tenth that of comparable coal fields elsewhere in the world on the basis of he price at which he invested. It is also worth noting that the Barapukuria coal field just to the north is being developed by Chinese contractors working for the Bangladesh government into an underground mine producing 1 million tonnes/annum with a mouth of mine power station producing at a rate of 250 MW and is on the point of starting operations. Phubari is a lot bigger and the precedent has been set.

IFC wants to invest in coal mine sector Unb, Dhaka

http://www.thedailystar.net/2005/09/10/d50910012218.htm

10 September 2005

International Finance Corporation (IFC) is willing to invest in Bangladesh's coal mine sector, particularly in Barapukuria coal field in Dinajpur.

A five-member IFC delegation made the proposal at a meeting with Finance Minister M Saifur Rahman at his Gulshan residence yesterday evening.

The finance minister, however, suggested the IFC delegation to come up with a specific plan for the investment. He also advised the delegation to conduct a feasibility study on the proposed project.

"A Chinese company has already worked at the Barapukuria coal field with an underground mining strategy. But the IFC is interested to work with an open earth coal mining plan which may harm the environment in the area," the minister told reporters after the meeting.

He said they (IFC) should prepare a 'model' so that the environment can be protected and the affected people of the locality are not deprived of the actual compensation.

"I have also advised them to talk to the leading NGOs to assess their (NGOs) attitude towards the proposed scheme," Saifur said, adding, "We don't have unlimited gas... if we can generate electricity from coal, then the pressure on gas and furnace oil will be reduced."

Saifir said, "IFC thinks that a right atmosphere for investment in Bangladesh has come and they have confidence in our coal quality."

IFC Director for South Asia Region Iyad Malas led the five-member delegation. World Bank Country Director Cristina I Wallich was also present at the meeting.

The other members of the IFC team were Director of Environment and Social Development Rachel Kyre, Manager of Strategy and Coordination of South Asia Department Neil Gregory, Resident Representative for Bangladesh and Bhutan Hafeezuddin Ahmed and Regional Representative for Bangladesh, Bhutan and Nepal Per Kjellerhaug.

Phulbari gets environmental tick

Miningnews.net

Thursday, September 15, 2005

ASIA Energy has been given environmental approval for its large open pit coalmine development at Phulbari in Northwest Bangladesh.

As the final part of the approval process, Asia Energy now plans to submit a "Scheme of Development" to Bangladeshi Government in early October, detailing plans for mining and exporting the 572 million tonne resource.

Phulbari, which consists of semi-soft coking coal and high energy thermal coal, is slated to start production in 2007 and to reach capacity output of 15Mt per annum in 2011.

The cost of development is understood to be around $US700 million.

Consultants used for the project feasibility have included GHD (study coordination and resource evaluation), MineConsult (mine design), QCC (coal preparation), SMEC (environment and social), and Barclays Capital (finance advisors).

Thousands protest 'open pit' coal mining in Phulbari - Locals fear loss of property, company sees 10-20 pc loss in coal if open pit method not followed

The Daily Star (Bangladesh)

26 September 2005

Several thousand people from four upazila of Dinajpur staged a demonstration in Phulbari on Saturday protesting the proposed 'open pit method' of coal mining there, saying this will displace thousands of people and destroy the environment.

The London-based Asia Energy Corporation (Bangladesh) is now drilling in the area having an estimated deposit of about 500 million tons of high quality bituminous coal and other valuable minerals including glass sand and white clay. This would be the biggest coal mine in the country.

People from different areas of Phulbari, Birampur, Ghoraghat and Parbartipur attended the rally held Phulbari upazila headquarters.

It was organised by the Phulbari Protection Committee, headed by Phulbari Pourashava Chairman Md Shajahan Ali Sarker Putu as its convener. It was formed in June.

Speakers at the rally gave the government a three-week ultimatum to stop the coal mine project work by the Asia Energy.

With Md Shajahan Ali Sarker Putul in the chair, the rally was addressed by, among others, Sheikh Mohammad Shahidullah, chairman of Oil, gas and mineral resources; Abdul Matin, acting secretary of Bangladesh Socialist Party and Tipu Biswas, a central leader of Commu-nist Party of Bangladesh (CPB). The speakers also included local political leaders and representatives of businessmen, teachers, local NGOs, journalists and people of the four upazilas.

They vowed to resist the mining, saying it will displace over 50,000 people from their ancestral homes. Some people have been forced to leave homes without any compensation, they claimed.

The Asia Energy has by now completed feasibility study and test drilling in five square kilometer area. It has dug 107 wells, the speakers said.

Asia Energy, a subsidiary of UK-based Carbine Mining Group, is planning to start coal extraction next year after completing all studies this month. The project would create employment for about 11,000 people, company sources said.

The mining area will spread to about 6.5 square kilometre area if the open pit method is applied, sources said.

Details will be finalised after assessment of environmental and social impact, they added.

Our Rangpur Correspondent Rafique Sarker adds: Earlier talking to The Daily Star correspondent during a visit, Phulbari Municipal Chairman Shajahan Ali Sarker Putu said the people of Phulbari and nearby areas are opposing the open pit method of mining as it will have a long term environmental effect on the people in about 40 sq kilometre area.

All houses, educational institutions and commercial centres within 6,500 hectares in Phulbari upazila alone will have to be evicted if this method is applied, he said.

Replying to a question, he said, "The people of Phulbari may consider if the method of mining is changed".

Badruzzaman, a geologist of Asia Energy, said the company has chosen the 'open pit method' as 10 to 20 per cent of the coal will be lost if underground mining is done as in Barapukuria coal mine. The Phulbaria coal is deposited at a lower depth, he said.

Sources said the coal is deposited at a depth of 140 to 300 metres.

Badruzzaman said the company has opened an information centre at Phulbari to make the people aware about the giant project.

The people are being told that east Phulbari would go under the mining area and a new township would be developed on the west of Choto Jumuna river as an extension of the existing Phulbari town.

"All affected people will be fairly compensated for loss of land, property, and livelihood", he said. Regarding environmental damage, Badruzzaman said, Asia Energy has engaged SMEC, an international company, to study the environmental and social effects and prepare a 'resettlement action plan'.

"It has completed an initial environment study and the government's Department of Environment has given clearance," he added.

Phulbari Coal Mine Project to turn vast area into desert - Speakers tell roundtable

The Daily Star, Bangladesh

October 18, 2005

Dhaka, Bangladesh - A vast area of Phulbari Coal Mine Project will turn into a desert if the Asia Energy is allowed to implement its plan, said the speakers at a roundtable yesterday. They also blamed the government for lack of transparency in the controversial move. Why is Asia Energy making statements about its different activities relating to Phulbari project instead of the government, the speakers questioned. They urged people to be united to protest the move.

The roundtable on 'Phulbari coal mine: Whose benefit and whose loss' was organised by the National Committee to Protect Oil-Gas Mineral Resources, Power and Port at the National Press Club in the city with its Convenor Engineer Sheikh Mohammad Shahidullah in the chair.

Speaking at the roundtable, Workers' Party President Rashed Khan Menon asked the government to make a statement on the project. He said open pit method not only affects the environment but also agriculture and other resources of the project area. Dr Hossain Monsur, former chairman of Petrobangla, apprehended that a vast area will turn into a desert.

It is high time to protest any move that undermines not only the interest of local people but also the national interest. Prof Samsul Alam of Buet said there is an indication that the Asia Energy is going to get undue advantage like Niko and it is going to implement a project that will make the area a desert.

Why is the Asia Energy spending a lot of money for the project if it didn't get any commitment from the government, he questioned. Sheikh Mohammad Shahidullah said there is no option but to become united and protest the move. Shahjahan Ali Sarkar, convenor of Phulbari Protect Committee, said around half a million population of Phulbari and its adjacent areas would be affected. These people want to live there and don't want to see that the project is implemented, he added. Principal Khurshid Alam, joint convenor of the committee, said local people would not oppose implementing the project if it were an underground one. But as it is an open pit project, they are opposing the move as most of the people would be affected, he explained.

Manjurul Ahsan Khan, president of the Communist Party of Bangladesh, said patriotic people should be united to protest the move and fight against those who are harming the interest of the country. Tipu Biswas, secretary general of the Workers' Party, said gas resource is likely to be finished by 2020 when the country would need coal. "Those who are in power are involved in looting," he said stressing the need for developing local experts and workers to reap the benefit from coal mine projects. Dr Nazrul Islam, Prof T Ali and Bazlul Rashid Firoz also spoke at the roundtable.

Officials of the Asia Energy said they have spent around US$ 20 million only to assess what impact the project would have on the environment. The Asia Energy has already got the clearance from the Ministry of Environment, they added.

Miles protestan contra explotación de carbón a cielo abierto en Phulbari

The Daily Star, Bangladesh

26 de septiembre 2005

Varios miles de personas protestaron contra un proyecto de explotación de carbón a cielo abierto este sábado en Phulbari, y aseguraron que la extracción del mineral demandará el traslado de miles de habitantes y destruirá el medioambiente.

La corporación con sede en Londres Asia Energy está perforando el área que contiene un estimado de 500 millones de toneladas de carbón de gran calidad y otros materiales valiosos como cal. Esta sería la mina de carbón más grande del país.

La manifestación congregó a personas de Phulbari, Birampur, Ghoraghat y Parbartipur, y fue organizada por el Comité de Protección de Phulbari. Los oradores de la manifestación dieron al gobierno un ultimatum de tres semanas para que detenga el proyecto. Entre los oradores hubo políticos locales, empresarios, maestros, representantes de organizaciones locales y periodistas. Todos ellos llamaron a resistir el proyecto, argumentando que desplazará a más de 50 mil personas de sus hogares ancestrales. Aseguraron que ya hay personas que fueron obligadas a mudarse sin compensación alguna.

Asia Energy, subsidiaria de la inglesa Carbine Mining Group, ha completado un estudio de factibilidad y ha perforado en un área de 5 kilómetros cuadrados. La empresa planea comenzar a extraer carbón el próximo año.

En declaraciones al Daily Star, el jefe municipal de Phulbari Shajahan Ali Sarker Putu aseguró que "los habitantes podrían considerar la situación si el método de explotación fuera otro". Por su parte, el geólogo de Asian Energy Badruzzaman comentó que la empresa eligió el método de explotación a cielo abierto porque de hacerse una explotación subterránea entre el 10 y 20 por ciento del carbón se perdería. Según la fuentes consultadas, el carbón estaría depositado a una profundidad de 140 a 300 metros. Badruzzaman agregó que la empresa abrió un local informativo en Phulbari, para que la población conozca los detalles del gigantesco proyecto.