MAC: Mines and Communities

BANGLA NAGAR: August 26 2006

Published by MAC on 2006-08-26

BANGLA NAGAR: August 26 2006

28th August 2006

Shocking news came out of Bangladesh last weekend, with the announcement that up to seven people, including a 14-year old boy, were shot dead and perhaps a hundred injured last Saturday (August 26) as they called for the abandonment of a proposed UK-owned coal mine at Phulbari in Dinajpur province. The killings are being attributed to the state paramilitary force, the Bangladesh Rifles. In the three days since, incensed local people are reported to have taken over Phulbari town, forcing the company to close its offices. More actions against the project are planned elsewhere in Bangladesh over the coming weeks. Blame for the violence continues to be traded between many parties in the country but Asia Energy's project leader, Gary Lye, has surely taken the biscuit for hypocrisy. Flatly condemning the demonstrators for triggering the shootings, he expressed his "deepest condolence" to the people who “had lost their children” since they would not be around to enjoy the "benefits"’ of this "wonderful project", adding: "And that is a real tragedy".

In an disturbing echo of justifications made by the Orissa authorities in India, following India's Kalinganagar massacre last January [see:], the Bangladesh Rifles maintain that the violence at Phulbari was initiated by the demonstrators, some of whom (probably local Indigenous Santals) were "armed with bows and arrows." The company has blamed the initiation of the violence on "outsiders": mirroring an identical accusation offered up by government of Orissa, soon after thirteen people were mown down by police at the Tata steel plant site on January 2nd. The allegation was soon disproved.

Ground Zero

As director of Nostromo Research, I traveled to the Asia Energy (AEC, listed on London AIM) project site during April, spending two and a half days in Phulbari and meeting with five communities - two of which were Santal) - in the main lease area. (At least 9% of residents of the area are Indigenous). I was told by three of these groups that the company - despite its claims - had paid only a few visits to assess villagers' opinions of the project and had offered them small gifts (which they refused) - something which struck me as tantamount to bribery. Only one community - a Christian mission station - seemed diffident about expressing opposition to the mine.

I was also asked to address a two hour meeting in Phulbari with some thirty representatives of the protection (dacha) committee of Phulbari and answer their numerous questions which I attempted to do, base on several field experiences of coal mines in India and Indonesia. I can attest that the allegation (cited below) by the UK project director, Gary Lye, is at the least misguided and, in one respect, mendacious. Those agitating for the abandonment of this vast and potentially hugely devastating open-pit mine (it would be the biggest Bangladesh has ever confronted) are predominantly local citizens, representing a large body of opinion. They come from almost all political parties, including the ruling BNP. If they are not united it is in one respect only: some are prepared to endorse an underground mine along the lines of the Araucaria coal mine which currently operates on the fringes of Phulbari town.

Giving the Lye

Together with a Dhaka-based journalist and two residents on the third day of my trip I attended the Asia Energy "information office" at Phulbari - - actually little more than a hastily-converted shop with a small back room. We inspected the visitor’s book which, the company says, shows that eighty per cent of townspeople support the project. In fact, the majority of names in the book were those of people from outside Phulbari, or whose signatures could not be verified.

So much for Mr. Lye's reported assertion that "an unrepresentative outside group has come to Phulbari to cause trouble in our community". If anyone is unrepresentative, it is the company operated by Mr. Lye, his associates and its backers within the BNP government (as well as some from outside, such as the Did - see below). For Lye to dismiss the strength of Sunday's protest on the grounds that some participants came from outside the immediate town should be transparently untenable. As one demonstrator told the New Age newspaper on Saturday night: "'You cannot believe how people in the north feel about the company which wants to displace thousands of people."

Last weekend's demonstration was not an upstart, ill-conceived and politically-motivated manifestation by a small group of agitators, but the culmination of a democratically-organised campaign which has been mounting over the past two years. Opposition to the Asia Energy mine is backed by a raft of prominent and knowledgeable Bangaldeshi citizens [see postings on the MAC site from 2005]. The fact that a reported 20,000 people could turn out to back the protection committee is hardly surprising, considering that a government decision to back the project looked earlier this month to be imminent (Bangladesh government environmental clearance was given in September 2006).

The roles of DfID and ADB

It is well known in Bangladesh - and among some NGOs and industry "watchers" outside the country - that the UK's department for international development (DfID) has backed Asia Energy from the outset, projecting the Phulbari mine as an essential means by which the country can bridge its "energy gap". due to a dearth of natural gas. This is despite the signal fact that, on the company's own projections, of the 15 million tonnes of coal a year which the mine will be delivered at full output, more than half (8 million tonnes) will be sent out of the country. [Environmental Assessment Report: Summary EIA, submitted by Asia Energy Corp (Bangladesh) Pty Ltd to the Asian Development Bank, project No. 39933, August 2006 ( hereinafter known as "EAR 8/2006"), paragraph 7 and para. 198 page 41].

While in Dhaka I was informed by highly reliable sources that the DfID had applied exceptional pressure (it struck me as nothing less than a threat) on a leading Bangladesh-based development NGO, to modify, if not abandon, its opposition to the Phulbari mine or jeopardise its UK-government funding.

The World Bank has so far refrained from investing in the mine (no doubt keenly aware of the disastrous failures of backing for Coal India in the 1990s). However, the Asian Development Bank (ADB) is already committed to partial funding of a "railway component" to speed the export of much of Phulbari's output to international markets - despite the company's own admission that "only a basic EIA [on the export proposal] has been carried out [to date]" [EAR 8/2006, page 34].

No safe port in a storm?

The company's recently-released project Environmental Assessment Report [EAR 8/2006], aimed at the ADB, outlines modalities of the mine and proposed implementation standards. However it concentrates on trying to evaluate the impacts of transporting coal from Phulbari to the point of export at a terminal in Khulna port, 330 km south of the minesite. The Report concludes that:

* 3,200 people "will be removed from Khulna port area" [EAR 8/2006: para. 188, page 46] This is in addition to the 40,000 villagers the company acknowledges will have to be shifted from the mine project area itself.

* Barges will carry the coal from Khulna, a distance of 107 km to Akram point. [EAR 8/2006: para.135 page 36].

(It should be noted that, while the company states that it will employ a range of safety measures and adopt best international standards in operating these barges, the EAR does not address "sudden disaster" events, such as a mid-river accident or collision resulting in loss of most or all of the cargo. According to US data on collisions affecting inland coal barge transportation, safety standards have not measurably improved over the last decade. [See:] ).

* The offloading facility will be situated in a deep-water anchorage at Akram Point which, acknowledges Asia Energy, is "within the Sundarbans". This is not only a World Heritage site, but the "world's largest marine area" - and (adds the company somewhat gratuitously) "is very sensitive. " Somewhat contradictorily the company claims that "the deep water anchorage at Akram Point will be at least 1.3km [[!] from the nearest shoreline which itself is 16 km north of the Sundarbans World Heritage site" while shipping channels "...will pass at least 1.5 km from these protected areas." [EAR 8/2006: page 15].

(NB. Indian legislation states that no industrial facility should be sited less than 25km from a marine site of biological significance).

Focus on India

Integral to exportation of product from Phulbari is an upgrading of the rail link to India. The EAR states that "as many (sic) as eleven trains a day will transport coal from domestic markets throughout Bangladesh, Indian markets via Darsam and international markets...via Khulna" [EAR 8/2006, para.117 page 34].

This places the project firmly within a major debate , currently ensuing in India, over the first use of the country's own mineral resources, as against permitting increased substitution by imports or allowing. A grandiose US$ 3 billion-plus scheme by India's largest private company, Tata, to construct steel foundries within Bangladesh, while gaining control of the country's energy reserves (including coal )has currently been suspended by the Bangladesh government. Although Tata says it is interested in construction of another coal mine at Barapukuria, it would be naive to assume that Tata has not also got its eyes on Phulbari with its huge, 572 million tonnes, deposits (according to Asia Energy)of high quality bituminous thermal and semi-soft coking coal.

On Monday (August 28 2006) a Tata spokesperson claimed the company was digesting lessons from the weekend's killings. What he did not point out was that it was his company's proposed steel plant in Orissa that prompted the protests that led to the Kalinganagar massacre last January.

We shall not be moved!

At this point, I am not offering a detailed critique of the EAR which the ADB - and no doubt DfID and potential project funders - will be mulling over in the coming weeks. However, it is worth taking Asia Energy at its words (or lack of them) in respect of two major consequences should the Phulbari coal mine be allowed to proceed:

* The company (as pointed out) estimates that some 40,000 people will be "relocated" to make way for the mine. In fact, the number is likely to be much greater (other estimates in Bangladesh have ranged between 100,000 and 400,000) as the excavation proceeds, albeit with promised backfilling and site reclamation/revegetation. "[A]t any one stage", according to the EAR, the mine will occupy some 2,189 hectares [EAR: 8/2006, page 15]

Such major dislocation is supposedly offset by an estimated "0.7% - 1%" increase in Bangladesh's GDP, and the promise of "more than 20,000 new and indirect jobs" [EAR page 14]. However, the mine itself will only employ "1,200 to 2,100" full-time workers [EAR 8/2006, para 276], while the company "allow[s] for a multiple for 10 additional jobs for every direct job"[EAR 8/2006, para.268]: an allowance which is not based on any firmly researched evidence. Also highly speculative is Asia Energy's claim that, since "more than 80% of agricultural land will be restored", the net loss of productive land is "only [sic] USD57 million" [EAR 8/2006 para. 276] .

It is obvious that the company is deliberately under-estimating, or even ignoring altogether, the loss of productive capacity in the short-term.

In a moment of rare candidness, Asia Energy agrees with opponents that "a significant reduction in land acquisition and population displacement is not possible [my emphasis] without compromising the economic and technical viability of the project" [EAR 8/2006, page 33].

* Apart from land and income loss, the many people I interviewed in April at or close to the project area were most concerned about potential impacts on water supplies: their availability, quality and the prospect of flooding. While Asia Energy claims it will institute a number of de-watering and water treatment controls, its' discussion of these critical aspects is speculative and based on hydrological/climactic projections which it does not convincingly anticipate [EAR 8/2006 pages 28-29] .

In regard to potential flooding, Asia Energy claims that "[t]he mine and the Phulbari town-ship will be protected against even the most extreme flooding by embankments constructed of material from the mine overburden. " At the same time, i t concedes that the mine de-watering systems, to be initially be installed as a "ring of dewatering bores around the box cut footprint "will have "potential impacts on local hydrology. Dewatering activities will cause groundwater drawdown of approximately 25 m [sic] at a distance of 4 km from the mine pit, and 15 m at a distance of 6 km."

Says the company: “This may result in reduced groundwater availability to the local farming community. However, various mitigation procedures, including injection of water back into the aquifer and a reticulated water supply for irrigation and for affected townships and villages, will ensure that the Project in reality will have a positive effect on the surrounding area. Clean water from the dewatering bores will not require treatment before being released to watercourses and/or directed to irrigation systems, aquifer injection systems, the regional water supply, and the construction camp. Surface-water runoff from rain falling on areas disturbed by the mine will be directed to retention and/or sedimentation ponds. " [EAR 8/2006 page 299].

For comparison it may be pointed out that one of India's largest mines (Neyveli), which has been producing since the country's independence, has experienced considerable problems of pit flooding and water draw-down that are still not being adequately addressed after sixty years of mine operation, while one of India's newer coal mines, at Asansol in West Bengal (not far from Phulbari) exhibits similar problems as the underground aquifers are exposed. And, while Neyveli's annual production is "only" 6.5 million tonnes/year, the projected output from Phulbari, at the height of its operations, will reach more than double this.

At the very least, development agencies, such as the ADB and DfID, should withdraw any further support for this project and call for an immediate moratorium until a fully independent EIA has been performed (adhering at its minimum to the World Bank/IFC's policy and performance standards on social and environmental sustainability and the IFC's disclosure policy). Apart from any other considerations, Asia Energy is a company whose leadership is dubious (see: and which has no pre-existing operational record. It is unacceptable that such a company should be admitted to control of such a massive and potentially damaging undertaking - where the World Bank itself has so far feared to tread. From now on, any permitting process must be informed by far more comprehensive social, human rights, environmental (including regional hydrological and climate studies) than have so far been performed - along with a full range of public hearings (not only in Phulbari but along the coal export route). There must be done without any intimidation, or whiff of corruption, as has already been alleged.

But, in the final event, it is the people of Phulbari who will carry the greatest burden if this mine (and indeed Tata's coal project in the same area) proceeds. They have already made their wishes known, and last weekend these were written literally in blood). If Asia Energy's mine proceeds it will not only bring further conflict to northwestern Bangladesh but enormous social repercussions will be felt elsewhere in Bangladesh and across the Indian border.

Roger Moody, Nostromo Research, London, August 28 2006

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