MAC: Mines and Communities

South Asia update

Published by MAC on 2007-03-25

South Asia update

25th March 2007

Following strident demonstrations by local landholders against Tata's proposed steel plant in Chhattisgarh, the struggle to stop South Korean giant, Posco, sequestering rural territory in Orissa has also stepped up.

While the interim Bangladesh administration imposes even more restrictions on public meetings and civil discourse, a Bangladeshi magazine summarises the state of play regarding attempts by UK company, Global Coal Management (formerly Asia Energy) to impose a huge coal mine on the inhabitants of Dinjapur.

As part of MAC's expanded service to readers (especially community and other NGOs) we also publish a summary of current investors in this company, and its board of directors.

Tata Steel runs into tribal trouble


18th March 2007

New Delhi: India’s SEZ dream is fast turning out to be a nightmare. After West Bengal’s Nandigram and Singur became flashpoints of violent farmer protests, it seems Chhattisgarh is also blipping on the radar.

While it was Tata Motors that ran into trouble in Singur, it’s a proposed Tata Steel plant that’s the source of the rising discontent in the Chhattisgarh polity.

Ruling BJP members have expressed unhappiness over the process of land acquisition by the state administration for Tata Steel project in Bastar. Agencies report that tribal BJP MLAs Lachchuram Kashyap and Subhau Kashyap of Bastar region raised the controversial land acquisition process in the Assembly and demanded a fresh meeting of villagers.

"When Tata's were providing Rs 8 lakh to the farmers per acre of land in Haryana why not in Chhattisgarh," Kashyap was quoted as saying by PTI.

He is the former president of Bharatiya Janata Yuva Morcha (BJYM) Both the MLAs demanded that government must consider the 13-point demand against acquiring of their land given by people from the 10 affected villages.

Here is a list of demands put forth by the BJP MLAs:

* They want the state government to convene a Gram Sabha, under the Panchayat Raj system, to decide whether the villagers are interested to hand over their land or not.

* They are demanding protection from the state government saying, without consent of the local villagers a single inch of their land should not be acquired for Tata.

Former Finance Minister Ram Chandra Singh Deo of Congress asked the state BJP government to ensure that Bastar should not become another Nandigram. Instead of surrendering before the Tata, government should take the consent of farmers, said Ravindra Choubey of Congress.

Land battles threaten POSCO's Indian steel project


19th March 2007

DHINKIA, India - A tense stand-off with farmers unwilling to give up their land threatens India's largest-ever foreign investment project, a $12 billion steel plant planned by South Korea's POSCO.

Opponents of the project have taken heart from events in neighbouring West Bengal, where plans to seize farmland for a chemicals complex were shelved after police killed 14 protesters.

"This has had a very good effect on the people struggling against the POSCO project," said protest leader Abhay Sahu. "This is an opportune time for us to move forward."

The controversy could cast a shadow over India's attractiveness as an investment destination, officials said.

Supporters of the project were already frustrated that the government in the eastern state of Orissa had done little to back it, apparently scared of provoking trouble after protests over another steel plant cost 13 lives last year.

Clashes between supporters and opponents of the POSCO project injured 50 people this month, and angry farmers have erected a bamboo gate at the entrance to the village of Dhinkia to keep outsiders away.

POSCO spokesman Shashanka Pattnaik said the company remained confident the project would go ahead, and was "very, very hopeful" work will start by October, after missing an earlier target date of April.

But a senior government official told Reuters he thought the project might not get under way until early next year and said there was perhaps a 25 percent chance it might never happen.

"POSCO are pretty serious but they can't wait indefinitely," he told Reuters, speaking on condition of anonymity.

"The risk for us is that if we don't get it right, no big-ticket FDI will look easily towards Orissa in particular or generally towards India."

The issue of acquiring farmland for factories has become an explosive one as industrialisation gathers pace in eastern India.

In January 2006, 13 people were shot and killed by police during a protest over a plant proposed by Tata Steel in Kalinga Nagar in Orissa.

That incident has all but paralysed the state government over the land issue, analysts said.

Chief Minister Naveen Patnaik offered little to reassure POSCO's supporters in an interview with Reuters.

"We are trying to convince people but in a humane way and in a rational manner, especially after the tragic incident of Kalinga Nagar," he said. "I certainly hope that it will happen, I think it takes time, but I am sure it will happen."


There are other problems. As part of the agreement signed in June 2005, Orissa promised to grant prospecting and captive mining leases to supply the plant with 600 million tonnes of iron ore over 30 years.

But state-run Kudremukh Iron Ore says it has a prior claim to one prospecting area and has gone to the courts.

POSCO also needs official permission to convert around 2,700 acres of forest for industrial use, a potentially complex and time consuming procedure.

But it's probably in fields around the villages of Nuagaon and Dhinkia that the battle for POSCO's project, which aims to produce 12 million tonnes of steel a year, will be won or lost.

Orissa's government says its rehabilitation package for displaced farmers is among the best, offering cash and employment for at least one member of each family losing all its land.

POSCO has promised to help find plots for landowners.

But many farmers are not convinced, suspicious after other firms broke similar promises and jealous of a livelihood growing betel vines in the sandy soil and fishing in the area's creeks.

"IOCL (Indian Oil) promised to give us jobs when they built a refinery near here but they backtracked, so how should we believe POSCO," said 55-year-old Dhruba Charan Palai, bare chested in the heat with a cotton lungi wrapped around his waist.


POSCO hired 230 villagers to carry out a socio-economic survey to help draft a rehabilitation package. But police advised them not the enter the villages after the latest violence.

"The government has not taken a single step to solve the problem," said Tamil Pradhan, leader of the pro-POSCO movement. "Anti-POSCO people have been beating our people and setting fire to our betel plants."

The problem is that most of the families living in the project site don't own their land, but grow vines -- whose leaves are used to wrap the paan which many Indians chew -- on what is officially government land.

Many have been here for generations, but have no idea what compensation they will get.

"There are 20 million displaced people in India and they are in real trouble," said 48-year-old Sudhir Dalei. "We will be displaced and who will take care of us?"

"We don't want compensation, we just don't want to leave," said 48-year Dhira Pradhan. "If we leave our land, it will be over our dead bodies."

POSCO spokeswoman Soo Jung Kim said the company recognised the concerns and was working to build trust.

"When we say something, we do it," she said. "Here they haven't seen many examples of that, and they have doubts about companies, but our job is to reduce that gap and to prove we are sincere and committed."

Phulbari, Asia Energy and Grassroots Revolt

Megh Barta

17th March 2007

In the last week of August 2006, an unbelieving nation has watched, with increasing concern, tragedy unfold in a coal-rich area of Dinajpur. Popular protests against the Asia Energy Project had resulted in firing by the BDR on citizens, leaving at least three of them dead and more than two hundred injured. In this report Philip Gain looks at the issue and explains the background to the crisis.

The grassroots revolt in Phulbari against the open-cut mining plan of Asia Energy, a British company, seemed like an unstoppable inferno. The anger of the local people was real. They took to the streets of Phulbari town in thousands on 26 August 2006. It was an unprecedented scene. An estimated 50,000 farmers, laborers, members of ethnic communities, teachers, students, politicians—most of them from the mine area—assembled in the Phulbari town to tell the foreign company that it must vacate their land and sacred places. They would rather die than allow the company to open up their land for coal that would require relocation of a huge population.

The protesters had just sticks in their hands. The Santals (the largest ethnic community in North Bengal) joined with their drums, bows and arrows. The National Committee to Protect Oil, Gas, Mineral Resources, Power and Port organized the massive protest event. The protesters began their march towards the offices of Asia Energy at about 3:30 P.M. without understanding that the worst was waiting.

As the massive rally reached the Chhoto Jamuna river, they were stopped by barricades set by the security forces. While the main part of Phulbari town is located on the east of the river with a small bridge over it, the head office of Asia Energy and its warehouse are located on the other side. The barricades were set to stop the protesters from going near the company's head office. The leaders of the national committee talked to the Upazila Nirbahi Officer (UNO), who according to Prof. Anu Muhammad, the member secretary of the committee, gave his words to move Asia Energy out of the town.

This was not the end of the day! As Prof. Anu Muhammad and other leaders of the national committee went back, some protesters crossed the river as reported by eyewitnesses. A rally also approached from the western side of the river. The protesters on the western side of the river suddenly came under massive gunfire from the BDR and teargas shells from the police. At least three people were killed and more than two hundred were wounded.

The bloodshed led to a seemingly unstoppable protest leading to a continued strike in Phulbari. The demand for expulsion of the company from Phulbari and also from the country became stronger. The protesters set the deadline for the foreign company's exit at 11:00 A.M. on 28 August. Given that Asia Energy's employees were still there, the angry protesters burnt the information center of Asia Energy and ransacked its laboratory (warehouse) that stored samples of coal extracted from 150 drilling sites. Finding no way out, the Asia Energy staff then sealed their main office and left Phulbari in a roundabout way, viz., through Dinajpur, under police escort. The people also ransacked and burnt the houses of a number of people identified to be accomplices of Asia Energy.

It was on the fourth day [August 30, 2006] of the continued strike that the Government, in a dramatic turn, submitted to the Phulbari protesters and agreed to meet all six of their demands. Foremost of the demands are to expel Asia Energy from four Upzilas including Phulbari and the country. The government also agreed not to opt for open-cut mining in four Upazilas including Phulbari and any other part of Bangladesh.

The agreement was reached in a meeting at Parbatipur Upazila, neighboring Phulbari and one of four Upazilas in the mine footprint. Rajshahi City Corporation Mayor Mr. Mizanur Rahman Minu signed the deal on behalf of the government while Prof. Anu Muhammad signed it on behalf of the National Committee to Protect Oil, Gas, Mineral Resources, Power and Port.

In accordance with the agreement, the national committee representing the protesters ended the strike and other protest programs. The government conceded to compensate the families of those killed and pay the medical expenses of those wounded. A sum of Taka two lacs was sanctioned to each of the families of the 26 August killings and Taka nine lacs for the treatment of those injured and damages caused in the ransack of hotel, restaurant, houses, etc. The government also gave its word to drop cases filed against the protesters and reinforce inquiries into the killings of August 26 and the alleged hiding of corpses. The government was also to cease from harassing and filing any new cases against the protesters.

While the people became jubilant in Phulbari and quiet for the time being, full implementation of the agreement between the National Committee to Protect Oil, Gas, Mineral Resources, Power and Port and the government seems to be the hardest part of the episode. The initiative to strike a deal with the protesters is reported to be a matter handled solely by the prime minister's office. The energy adviser and the concerned ministry reportedly know nothing officially about the government deal with the Phulbari protesters.

According to the agreement between the government and the national committee, the government was to terminate the contract with Asia Energy within one month from the date of signing it. However, according to Prof. Anu Muhammad the agreement has not been implemented to date. In the mean time, the company (Asia Energy PLC) has changed its name to Global Coal Management PLC (in the second week of January 2007) although the company's Bangladesh subsidiary's name would reportedly remain unchanged.

What has happened in Phulbari is tragic and it is important that all concerned honestly look into the factors that had led to this catastrophic situation.

The Project

An Australian company, BHP, started coal exploration in the Phulbari area. The Bangladesh government signed a contract with BHP through an open tender. In 1998, the contract was transferred to Asia Energy. Asia Energy, after estimating the coal reserve, submitted to the government a plan of operation. The government has already granted environment clearance to the company.

According to Asia Energy, 5,900 hectares or 59 sq. km. land area is required for the mine. The area covers more than a hundred villages of seven unions in four Upazilas—Phulbari, Birampur, Nawabganj and Parbatipur—and part of Phulbari Sadar Upazila, under Dinajpur district. Thousands of acres of cropland fall within its boundaries.

The area of Phulbari Thana Sadar that falls within the project area has brick-built houses, schools, colleges, tarmacked roads, railroads, business facilities and so forth. Outside the township lie vast crop fields, forest patches and plantations. Beneath the expanse of beautiful landscapes lies the 38m thick (on average) coal fossilised over 270 million years. According to Asia Energy the coal reserve in this mine is 572 million tons. The company believes, if explored, more coal will be traced in the south of the present mine.

Who Benefit and Who Lose?

Appointed by Asia Energy, GHD, an international organisation, prepared a report for the company that claims Bangladesh will receive benefits worth US$21 billion over the 30 years of the mine's lifetime. Of this, US$7.8 billion will come as a direct benefit and US$ 13.7 billion, as indirect or multiplier benefits. The mine itself and the coal-fired plant for production of electricity will contribute one percent per annum to the GDP of the country.

How dependable is this estimate of Asia Energy? Economist Prof. Anu Muhammad, in an interview with Sangbad, a vernacular daily newspaper, contended: "This evaluation of the mine project is a kind of deception. It only shows how Bangladesh will benefit from the investment of Asia Energy and suppresses the extent of damage it would cause. This is actually a sham on Asia Energy's part because it intends to cover up the questions about its activities that have already been raised."

The inhabitants of the mine area complain that people living in other parts of the country do not realize their plight, nor do they foresee the disaster the open pit mining is likely to cause to this region.

"We heard there is a coal deposit in this area. But the people engaged by Asia Energy did not let us know that the method for mining would be open cut, which necessitates eviction and destruction of our houses, schools, colleges and all other establishments in the mine footprint. All of us, irrespective of party affiliations, are against it," said Md. Khurshid Alam Moti, leader of the Phulbari Raksha (protection) Committee. He is also the principal of Phulbari Women's Degree College and chairman of Bangladesh Nationalist Party (BNP) in Phulbari.

According to Asia Energy that is in contract with Bangladesh government for exploration of coal, 40,000 people need to be relocated from the mine footprint. But the Phulbari Raksha Committee that is composed of people from all parties at the local level contends the company's estimate. "We understand that about 150,000 people of the mine area will be directly affected and 200,000 to 250,000 would be affected indirectly," said Moti.

Nima Banik, a lecturer at Phulbari Women's Degree College says, "No matter wherever we are put, if we get evicted from our homes, we will lose our traditions, social organization and businesses. These losses are beyond compensation. Moreover, we do not trust Asia Energy. Its estimate is unfounded."

M. Anwarul Islam, Asia Energy's general manager (environment and community) disagreed and said, "We have always mentioned the idea of open pit. In Phulbari, there is no other option."

According to the company all the damages will be compensated and the condition of the inhabitants of the mine area will be better than before. However, the aura of distrust and the demand of the locals is clear: "We do not want open pit mining." From June 2005 the Phulbari Raksha Committee has been organising processions and meetings every Saturday in Phulbari in protest against it.

Asia Energy claims that Bangladesh has no risk in the Phulbari mine project. The company claims that Bangladesh will receive half of the total profit accrued from the mining operation. The profit includes 6 percent royalty, 45 percent corporate tax and 2.5 percent import duty. The other gains of Bangladesh as the company mentions will be "a new source of energy for the country, a new commodity for export, new industries, employment opportunities, regional development, poverty alleviation, growth of nascent industry, new rail and port infrastructure."

Professor Anu Muhammad's fear is: "It is Bangladesh where the coal has been found; and a foreign company will become its owner. There is no proper way to measure the actual benefit of Bangladesh and the price it would have to pay for it. What becomes clear is Bangladesh will have to buy its own coal from the company at an international price."

Impacts on Environment

A serious concern of open pit mining is its environmental impacts. The method requires the mine area to be completely dewatered so that the hollow of the mine does not get immersed in water. Not an easy task. Large pumps are required to suck out underground water around the mine round-the-clock during the entire lifetime of the project. The impact on the already dry Barind Tract is obvious. Water level runs lower in the Barind Tract the during dry season and makes it difficult for the tubewells to draw water. When dewatering starts for the mining, the shallow and deep tubewells will not draw enough water for farmers in the larger area near the mine.

Asia Energy's solution is to distribute the water pumped out among the farmers. It is an open question if the water distribution would be even-handed. The government and non-government organizations have been trying many options including tree plantation for many years now to prevent desertification in north Bengal. If dewatering in the mining area hastens the desertification process, pouring water above the ground remains a doubtful viable option for agricultural sustainability.

According to Asia Energy sources the average thickness of the coal layer in Phulbari is 38m. In order to reach the layer of coal, overburden between 150 and 250m needs to be removed, leaving a thousand-foot deep hollow. Once used up, the hollow will be filled with earth and a new area will be dug out. The area filled up does not become useful for many years. According to a high official in Asia Energy, topsoil will be removed and preserved once the mining operation begins in a particular block. Topsoil will be brought back and spread on the top of the area filled in. But no one can say when the land becomes cultivable again. The other question is: will the company fill the hollow with the same care as is done in developed countries? Non-compliance of existing laws is a common practice in Bangladesh.

At the final stage of the mining operation, about 30 years after the operation begins, Bangladesh will get a huge lake that according to the company will be filled up with fresh water providing a big source of water, fishery and recreation. But mining experts warn that the final hollow, after 30 years of digging and other activities, will contain toxic substances. It may not be realistic to envision this polluted lake becoming a source of fresh water.

Handling the other forms of environment pollution is also a challenge. There will be routine dynamite explosion inside the mine to break the rocks and the coal. Heavy machinery will be set up in and outside the mine. Heavy 240-ton trucks and trains will carry the coal causing noise pollution. Coal dust will be a major source of air pollution. If the enormous amount of polluted water generated from washing of the coal is not properly treated before it is dumped into surrounding water bodies, it will kill fish and other forms of life. Further, the earth through such deep digging and many types of pollution will lose all its micro-organisms. Air pollution from burning of coal to produce electricity is a big concern. Air polluting agents such as sulphur dioxide, nitrogen oxide, volatile organic compounds (VOC), mercury, lead, cadmium, chromium, and arsenic will contaminate earth, water, plants and animals.

Eliminating pollutants is extremely difficult. Asia Energy expects to keep the pollution within a tolerable level. However, there is a fear that the company will not adopt adequate measures to mitigate pollution because these involve much effort and cash.

Transportation of the coal is another concern. In order for marketing, the coal will be carried to the deep seaport through the Sundarbans. New seaport and railroads need to be built for this. On the positive end, this will create employment and bring in revenue, but it also adversely affects the environment of the Sundarbans (the largest mangrove forest on earth). The noise and water pollution created by the Mongla Port has already become a threat to the animals, plants and other life forms in the mangrove forest. The added transportation over the 30 years of the mine's lifetime will increase threats to the Sundarbans.

The environment and social impact assessment (EIA and SIA) of the Phulbari Coal Project has already been carried out and approved by the Department of Environment of Bangladesh government. Three hundred consultants of several international and national companies, some Bangladeshi environmental organizations and individuals have done the EIA and SIA. They have produced 2,600-page reports after 18 months of work. This is where many question if the EIA and SIA commissioned by the same company that will extract the coal have been impartial. Asia Energy claims it will do all that is needed for the protection of environment and social harmony.

Although the people of the mine area and their supporters stand against the open pit project, they are not against extraction of the coal in general. Their understanding is that the ownership of the coal and the fate of the affected people just cannot be handed down to a foreign company. They suggest waiting until the country develops its own mining expertise and technology. "We may give our consent when the country will be able to mine the coal resource with our own technology," said Principal Moti. There are many others whose voices join Principal Moti's.

Asia Energy had turned down the demand of the Phulbari people to wait until Bangladesh built its own expertise and mining technology. It says that by the time Bangladesh has its own mining expertise and resources, the fossil fuel may not be required any longer. The company claims that it is high time to extract the coal. Now the local communities have contested the company with their blood.

Looking Ahead

All that has happened in Phulbari—violence, expression of anger and mistrust of the local communities about Asia Energy—has shaken the whole nation. The whole world has also looked at Bangladesh with concern and curiosity. For now Phulbari has retuned to normal life. But the fear still persists. Application of the state security forces against the people has caused an uproar in their minds. They have sent a very strong message to the state agencies and the company that it is their land that contains 270 million year old coal. It is them who decide if the resource is to be shared in the best interest of the community and the nation. It is the state that must protect the land and the communities. It was certainly a fatal mistake to attempt to resolve a serious human problem with bullets and teargas. If the state of Bangladesh is really for the people, its functionaries must stay bowed before the people's power and respect the commitments that they have made to their representatives. If that happens, it will be a step forward for providing political protection to those who need it most.

Who owns what in Global Coal Management PLC (formerly Asia Energy plc)


Shares in issue: 48.8m 10p Ords

Major Shareholders: % Holding

RAB Capital PLC9,379,511 - 19.23 %
UBS AG5,556,693 - 11.39 %
Fidelity International Ltd/FMR Corp 2,917,051 - 5.98%
Liberty Square Asset Management 2,530,000 - 5.19%
Credit Suisse First Boston Equities
Ltd 2,374,000 - 4.95%%
Barclays PLC 2,106,700 - 4.32%
Credit Suisse Sec(Europe)Ltd 1,904,724 - 3.91%
L-R Global Partners 1,824,087 - 3.80%
Capital Group Companies Inc 1,500,000 - 3.11%

Other Directors Amount % Holding

David Anthony Lenigas• 160,000 0.332 % * - see note below
John Gerard Holden• 26,666 0.055 % * - see note
Gary Norman Lye• 2,000 0.004%

• = Director

Global Coal Management PLC


Executive Directors
Job title, RA

Steve Bywater, Chief Executive

Graham Taggart, Finance Director & Coy Secretary

Gary Lye, Chief Operating Officer

Bill McIntosh, Technical Director

Non Executive Directors
Job title RA:

Gerard Holden Chairman

David Lenigas

R - member of remuneration committee
A - member of audit committee

* David Lenigas is Joint Executive Chairman of Lonhro Africa , along with Gerald Holden who came to Asia Energy/Global Coal from heading Barclays Capital Global Mining and Metals.

Lenigas is chairman of BDI Mining which owns the Cempaka gold property in Indonesian Kalimantan and lies in a protected forest reserve. He was managing director of the ill-fated Emperor Gold Mines in Fiji and is also chairman of Leni Gas & Oil plc (sic)

[Information provided by Nostromo Research, London, 25 March 2007]


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