MAC: Mines and Communities

Bangla Nagar update

Published by MAC on 2006-09-03

Bangla Nagar update

3rd September 2006

Bangladesh coal mine cancelled - but for how long?

Accusations made against UK development department

Last week the Bangladesh government announced cancellation of the vastly controversial Phulbari open-pit coal project, owned by UK-listed Asia Energy plc. According to the National Committee to Protect Oil, Gas, Natural Resources and Ports, this marks a resounding victory for those who demonstrated against the project on Saturday August 26th, only to be met by the bloody firepower of the state's paramilitary Bangladesh Rifles force.

The official death toll has risen to six, with at at least fifty wounded, while a policeman died during a confrontation with demonstrators in the capital, Dhaka, on Wednesday.

Spokespeople for Asia Energy (and some in government) continue to blame "left wing" parties from outside the area, for the protest which sparked the violence, clearly flying in the face of evidence of vehement and longstanding local opposition to the coal mine, including a prominent role played by Santal indigenous communities. There has been growing cross-party support for a mine-ban from around the country.

Although it seems clear there be will be no contract with the company before the next elections (scheduled for early 2007) , there are fears that the government's announcement was aimed at quelling public unrest, rather than permanently banning open-pit mining in Phulbari - or anywhere else in Bangladesh.

Asia Energy's shares tumbled by 60% in the middle of last week leaving, as the Guardian newspaper noted, some embarassment among the company's directors, who include "a former senior executive from Rio Tinto at the top", and its brokers "the very smart folk of JP Morgan Cazenove."

The Rio Tinto legacy

In fact, Asia Energy's board was almost cloned from Rio Tinto: both Steve Bywater (the company's CEO) and Finance Director, Graham Taggart, worked for Rio Tinto Coal in Australia shortly before joining Asia Energy; Taggart was also chief financial officer for Rio Tinto's controversial Kaltim Prima coal mine in Indonesian Borneo and director of finance for the even more heavily-criticised Kelian gold mine in the same region.

Gary Lye, Asia Energy's Chief Operating Officer at Phulbari, who's been so active in defence of the project over the past few months, worked for twenty years at Rio Tinto's most castigated mine - Panguna, on Bougainville. Doubtless he doesn't savour the irony of having been forced to withdraw twice in succession from a "world-class" project, due to the outrage of neighbouring communities. What hasn't been widely publicised, but was pointed out on this website back in June, is that Barclays Capital secured 2.1 million share options in Asia Energy two years ago; while Gerald Holden, its chair, hopped nimbly from the headship of Barclay's Global Mining and Metals onto the hot seat of the junior company last May , carrying with him a fist of his own share options in Asia Energy. [].

Other investors include Fidelity Trust, UBS AG, Cambrian Mining, RAB Capital, Goldman Sachs and Credit Suisse.

Meanwhile, long-standing speculation that Action Aid Bangladesh had come under heavy pressure from Britain's Department for International Development (Dfid) to drop its opposition to the Phulbari project received an airing yesterday by the Observer newspaper [see below and:]

The London newspaper reported allegations that DfiD was somehow involved in the tragic death of Nasreen Huq, former head of Action Aid Bangladesh, who was run over by her own car in April.

While that theory can almost certainly be dismissed, far more credibility should be given to the claim (strenuously denied by DfiD in Dhaka) that Ms. Huq had been told by the UK government department to tone down her campaign against Asia Energy, or face the possibility of Action Aid's funding from the department being cut.

That is what Nasreen Huq told this author when he met her just two weeks before she died

[Roger Moody, Nostromo Research, London, September 3 2006] ]

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