MAC: Mines and Communities

Phulbari mine still on cards in Bangladesh despite massive continuing protests

Published by MAC on 2008-01-09

Phulbari mine still on cards in Bangladesh despite massive continuing protests

9th January 2008

Finally, an advisory committee in Bangladesh has made its recommendations on the country's coal policy. While counseling against export and urging that a state-owned company be set up to distribute mine leases, the committee has not sought a ban on the hugely controversial Phulbari mine.

This UK-led project continues to be vigorously opposed by a large number of Banlgadeshis - not only in the local area but also around the country and internationally.

In December 2007, a number of NGOs wrote to the two main Swiss investors in the mining company, GCM Resources (formerly Global Coal Management plc and, prior to that, Asia Energy plc) emphasising the "grave environmental, social and human rights problems associated with the project."

Both UBS and Credit Suisse responded, lamely arguing that they couldn't necessarily identify those clients for whom they held the shares in the British outfit.

Whether or not it was a result of this pressure, both banks have since somewhat reduced their holdings in GCM.

Residents of Phulbari apprehensive of coal policy

NewAge, Dhaka, Bangaldesh

9th January 2008.

Residents of Phulbari said the interim government was ignoring the sentiments of the locals and betraying the spirit of their movement which led to an agreement in 2006 even as the government goes about preparing a coal policy. Although the draft coal policy being considered by the government prohibits exports, it does however allow open-pit mining as a pilot project, which according to insiders could well be the Phulbari coal mine.

‘I will fight again if people come here for open pit mining. It is a question of uprooting us from the birthplace of our forefathers,’ said Bablu Roy a rickshaw van driver, who had been critically injured and crippled for life. Bablu had been at the Centre for Rehabilitation of the Paralysed for almost a year.

He said open pit mining would destroy the livelihoods of thousands in the area as it would destroy arable land. Bablu said, ‘Such destructive projects must be resisted and sent packing.’ ‘While we expected that the government would abandon this project it is rather making ways for the British mining company to destroy our locality uprooting us,’ said Hafizul a grocery shop owner at Phulbari, a sub-district in Dinajpur.

Manik Sarker, general secretary of the Phulbari Merchants Association, said it was an anti-people act of the government to advance a national coal policy unilaterally. ‘The government has not consulted with at least the inhabitants and probable victims of mine areas.’

Manik who led protesters in Phulbari in August 2006, vowed to initiate movements against open pit mining if the government allowed it. ‘Although it has not dared to come back to Phulbari, Asia Energy remains active,’ said Manik. Several others, along with Manik were disturbed to find out that Asia Energy had begun media propaganda in favour of open pit mining.

In end-August 2006 Phulbari saw a people’s movement protesting against a planned open-pit mine that would affect at least 17,000 hectares across four sub-districts displacing at least 3,50,000 people. Three persons died in police firing on the day while hundreds were injured among a crowd of some 50,000 people. Several days of continued unrest and demonstration by the locals followed, bringing the small town to a halt blocking a major highway that passes through it.

The government eventually signed an agreement with the people on August 30 pledging to withdraw Asia Energy, the British mining company, and prohibit open pit mining in Bangladesh.

Advisory committee submits coal policy to government today Policy forbids coal export but allows open-pit mining as test case

8th January 2007

The high-powered advisory committee, formed to finalise the coal policy, will today submit to the government the coal policy that discourages coal export.

Most of the members of the committee, headed by the former BUET vice-chancellor Professor Abdul Matin Patwari, signed the finalised draft coal policy and the committee's report on Monday evening.

The rest of the members, who were outside Dhaka, will sign the document today before the committee submits the draft to energy adviser Tapan Chowdhury.

The committee finalised the much-talked-about draft coal policy in 21 meetings, some of which were 12 hours long, that started from the last week of July last year after taking the opinions of people of all walks of life.

Officials said that if the Energy Division approved the finalised draft, it would be sent to the law ministry for vetting before being sent to the council of advisers for the final approval.

The BNP-Jamaat government took the initiative to formulate the coal policy in 2005 as it realised that the country's gas reserves were being depleted fast and coal was the only other important energy source. Besides, a number of foreign companies showed considerable interest in developing the coal-fields.

But the then government could not finalise the draft because of severe criticism by different quarters of the first few versions of the draft that allowed coal export and the environmentally destructive open-pit mining.

The interim government formed the advisory committee to finalise the draft and made respected professionals its members, apparently to avert criticism.

The finalised draft discourages coal export as the country does not have adequate coal and gas reserves to meet its own demand.

The policy recommends awarding coal exploration and development licence to a state-run entity that can go for joint venture with local private-sector and foreign companies through competitive bidding and mandatory installation of power plants at mine entrances.

The policy recommends one attempt at open-pit coal mining as a test case, and is forming a coal sector development committee to set the royalty rate on extracted coal from time to time.

It says a holding company titled 'Coal Bangla' will be formed which, along with other government entities like Petrobangla, will also get coal-field exploration and development licences.

The members of the committee are University Grants Commission's chairman Professor Nazrul Islam, BUET's Professor Nurul Islam, Dhaka University's Professor Badrul Imam, Bangladesh Army's engineer-in-chief Major General Ismail Faruque Chowdhury, senior journalist Ataus Samad, Centre for Policy Dialogue's executive director Mustafizur Rahman, Petrobangla's director Maqbul-E-Elahi, Petrobangla's former director Ehsanullah and IIFC's executive director Nazrul Islam.

UBS alerted over Phulbari Coal mine

Human rights concerns for Bangladesh mine investment

Zurich, Utrecht

17th December 2007

UBS, a financial heavyweight from Switzerland, is facing scrutiny by civil society organisations for investing in a proposed coal mine in Bangladesh. The Phulbari coal mine, proposed by GCM Resources Plc, is set to cause major social and environmental upheavals in the region, displacing upwards of 50 000 residents. Despite strong local opposition, investors UBS, RAB Capital and Barclays continue to back GCM with significant shareholdings. GCM Resources' strategic focus is the mine, and financial institutions with sights on easy profits derived from expropriation and significant environmental damage, are propping up a shaky project which has already been stalled for over two years.

Swiss based Berne Declaration and the BankTrack network recently wrote to UBS on behalf of local community representatives outlining the grave environmental, social and human rights problems associated with the project. As proposed, the Phulbari Coal mine is "open cut" meaning that between 140 and 300m worth of earth will need to be removed to access coal seams deep under ground. Some 50 000 residents will need to be relocated, potentially reaching 200 000 should full scale expansion plans be realised. Extensive damage to the UNESCO declared world heritage site Sundarbans mangrove forest, the largest single block of mangrove forest in the world, is also expected from port facilities. Energy production from coal poses substantial impacts on climate change, and is also inappropriate at a time when Bangladesh is appealing to the rest of the world to curb greenhouse gas emissions.

Despite the project having been reportedly cleared by advisors Barclays to satisfy the Equator Principles, development standards which encompass community and social considerations, the undertaking faces immense local opposition. In August 2006, 50 000 people protested outside the local offices of Asia Energy (now GCM Resources Plc). A paramilitary force peppered the crowd with bullets, killing five people, including a fourteen year old boy. Approximately 100 individuals suffered injuries from the shootings.

Since then, GCM Resources Plc has fled the site and the Bangladesh government has signed an agreement with the local communities promising that the coal mine would be stopped. In January 2007, Bangladesh declared a state of emergency, and a military backed government was installed. The current ruling party has proceeded to infringe the fundamental rights of countless citizens whilst maintaining relationships with transnational corporations in an attempt to stoke foreign investment and additional income.

Without the developer's presence in the region and fearing reprimand from a heavy handed government, local opponents to the projects have little recourse within their own country or with project sponsors. Responsible financial institutions have been approached with evidence of environmental damage and extensive social harm, and have been asked to respect the human rights of those affected by divesting.

The Berne Declaration and BankTrack have offered to put financial institutions in direct contact with communities in the area.

Responding to questions about their 11% investment listed in GCM Resources Plc, the second largest listed shareholding, UBS denies any strategic interest in the company. The large multinational communicated that "it does not comment on potential or specific client relations or transactions or its investments in any particular company". UBS vaguely asserts to civil society and the communities affected that its holding may or may not be on behalf of other people.

Andreas Missbach from the Berne Declaration says "responding to victims of actual and potential human rights abuses in this way, UBS has shown complete disregard for its duties to stakeholders, selectively and irresponsibly hiding behind bank secrecy provisions".

The transparency of financial institutions' shareholdings is of major consequence to determine who is responsible for facilitating dodgy investments. Determining whether banks themselves are actual shareholders, or whether they are holding shares on behalf of another party, can sometimes be an impossible task for local communities. Banks have been known to take advantage of these vagaries to shun their responsibilities. Whoever are the real shareholders in GCM, by virtue of their involvement in share listings, financial institutions must fulfil their duty to respect the human rights of stakeholders.


Andreas Missbach

Berne Declaration

tel +41 (0)44 277 70 07


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