Written evidence submitted by Global Coal Management

 

PHULBARI COAL PROJECT - a Bangladesh perspective

 

Bangladesh

 

Bangladesh is one of the most densely populated countries in the world with 160 million people living in an area two thirds the size of the United Kingdom. It has enjoyed more than 6% economic growth in real terms over the last five years as well as substantial improvements in measures of human development. It has also been identified as one of the countries most vulnerable to the effects of climate change with a significant proportion of the population living in remote or ecologically fragile areas such as river islands or cyclone prone coastal areas. Two thirds of Bangladesh is less than five metres above sea level.

 

Energy is an essential component in the fight to eradicate poverty. Unfortunately the majority of Bangladeshis do not have access to electricity and those that do experience frequent load shedding. This energy and power shortfall is a major obstacle to the country's future growth and ability to combat climate change.

 

Electricity & United Nations Human Development Index (UNHDI)

 

The United Nations Development Programme shows greater access to electricity can improve nutrition, health facilities, education levels, water quality and sanitation. For Bangladesh, with extremely low per capita electricity consumption, small increases will deliver substantial improvements in UNHD indicators.

 

The Government has linked the country's prosperity, and the attainment of the Millennium Development Goals, to achieving annual GDP growth rates of 8-10%. However the country's electricity generation of 3,800-4,200MW is inadequate and, with a growing population, the demand for energy in Bangladesh will also increase. In order for economic growth to continue even at 6%, a 50% increase in electricity generation is needed within the next five years.

 

Natural gas is currently the country's main source of commercial energy, with 90% of electricity generation reliant on gas. However, the gas reserve is rapidly depleting and supply cannot meet current demand. There are an estimated 2.9 billion tonnes of coal reserves in Bangladesh, the equivalent in energy terms to over five times its current natural gas reserves.

 

Phulbari Coal Project

 

The Phulbari Coal Project (the Project) is a landmark project for Bangladesh. It embodies a unique opportunity to contribute to Bangladesh's energy security while also being a catalyst for wider economic and social development. The Project is located in one of the least developed regions of the country and should be viewed as one component of a broader energy development plan, which includes a 2,000MW mine mouth power plant, upgraded transmission lines connecting to major cities and regional infrastructure.

 

GCM Resources plc (GCM) has established a coal resource of 572 million tonnes (JORC compliant) near the town of Phulbari in North West Bangladesh. Thermal coal represents 80% of the resource with the remainder being semi-soft coking coal. The coal will be extracted by the open cut mining method. In addition, a variety of co-products (gravel, aggregate, silica sand, kaolin, clay) will be recovered from the overburden.

 

GCM has invested over £25 million to date, in preparing the Feasibility Study, Scheme of Development, ESIA, Management Action Plans and extensively explaining the Project to a wide range of stakeholders.

 

The approval of the Feasibility Study and Scheme of Development has been delayed by political and social uncertainty arising in the 2006/07 election year which continued into the period when Bangladesh was governed under a state of emergency by Caretaker Governments. The December 2008 elections returned a Government with a significant majority and a stated intention to address the country's energy and power problems.

 

 

 

GCM plc - Corporate Responsibility

 

The effective management of social and environmental risks is an essential component of any successful mining project. The Board and management of GCM recognise that long term stakeholder value can only be created if social and economic benefits are produced and the environment protected at a national, regional and local level. In partnership with government, civil society and the community, GCM will develop the Phulbari Coal Project to the highest international standards.

 

GCM ensured its activities, including preparation of the Project Feasibility Study, the ESIA and its associated Management Plans, complied with the Equator Principles, (which includes eight different Performance Standards relating to different issues such as Involuntary Resettlement and Land Acquisition and Indigenous Peoples). The first principle is to avoid any adverse impacts and where this is not possible, to mitigate against these.

 

In January 2009, GCM became a signatory to the UN Global Compact, and has joined the UK Network and Bangladesh Local Network of the UNGC. In doing so, GCM has agreed to embrace, support and enact a set of principles in the areas of human rights, labour, the environment and anti-corruption.

 

Impacts and Benefits

 

Energy Security: Within four years the mine could be supplying new power stations.

 

Economic: In early 2006, an independent study concluded the Project would increase GDP by 1% and deliver revenues of approximately US$7 billion to the Government over the Project's life. Listing on the Dhaka Stock Exchange would provide local equity participation.

 

Infrastructure: The improved infrastructure necessary to support the Project (including rail network and port facilities) will provide a catalyst for further development.

 

Resettlement: The Project will require resettlement over a 10 year period of approximately 40,000 people, including around 2,300 indigenous people. Resettlement sites constructed will have improved services and infrastructure. New schools, religious centres and medical centres will also be built. No one will be worse off and each person adversely affected will be fairly and fully compensated.

 

Water Management: Open pit mining will require the ground water level at the mine site to be drawn down to maintain dry working conditions. This will be achieved by pumping water continuously from deep tube wells (bores). The Phulbari Water Management Plan will ensure the high quality extracted water will be made available to the community for drinking, agricultural irrigation, and use by local businesses. Water will also be released in a controlled manner into seasonal water courses, rivers and wetlands to preserve and in many cases improve the environment.

 

Environment: Any adverse environmental impacts will be closely monitored and mitigated. A forest will be established and a wildlife corridor created. Bangladesh imports around five million tonnes of poor quality high sulphur thermal coal which is used by the country's numerous brick kilns. Replacing it with the high quality Phulbari coal will significantly improve air quality across Bangladesh.

 

Agriculture: The "life of Project" mine footprint will occupy 5,200 hectares, although at any one time only a third will be actively mined and the rest will either still be cultivated (prior to mining) or rehabilitated back to productive use (post mining). An Agriculture Improvement Plan based on improved farm management practices will deliver an additional crop per annum and higher yields per crop. Rice production alone will more than double as a result.

 

Job Creation and Livelihood Restoration: The Project will create an estimated 17,000 new jobs (both direct and indirect) and preferential employment policies will be applied to maximise the benefits to the local community. The use of Phulbari coal in power generation, combined with the co-products, has the potential to support many spin-off industries involving the creation of a significant number of new jobs.

 

Indigenous Peoples: An Indigenous Peoples Development Plan has been prepared - the first of its kind in Bangladesh. A number of consultative meetings were held with the indigenous groups to understand their requirements for resettlement. This plan will be updated once approval is received.

 

Stakeholder Engagement: The Company recognises a key component of the Project is regular engagement with its community. Meetings with numerous groups to explain the Project (including local and international NGOs and media) are ongoing and Project information in Bangla is provided on the company's website: www.phulbaricoal.com. GCM will ensure local stakeholders are fully informed and consulted prior to Project commencement and throughout the Project's life.