Memorandum submitted by GCM Resources
GCM RESOURCES AND THE PHULBARI COAL PROJECT
GCM Resources plc (GCM or the Company) welcomes
the important work being undertaken by the Joint Committee to
inquire into business and human rights, the impact of business,
and the responsibilities of the UK Government.
COMMENTS ON
THE REVIEW
Business, including extractive industries, can
make a positive contribution to human rights in developing countries.
In the case of Bangladesh, the human right to development is being
hampered by the lack of available power and energy to fuel the
economy. The Phulbari Coal Project (the Project), the main asset
of GCM, will make a significant contribution to relieving the
country's energy crisis. The social and environmental impacts
will be managed to international standards and affected people
will be fully and fairly compensated for loss of assets and provided
with new opportunities for development.
We believe that being a good corporate citizen
is a competitive advantage irrespective of the regulation in the
UK or host country. But, in this emerging field of business and
human rights, government has an important role to play in providing
support and advice to businesses and helping to share examples
of good practice.
The activities of business are rightly subject
to review and challenge by other parties and we welcome opportunities
to discuss and debate, explain our activities and learn from others.
It is inevitable that businesses operating in developing countries
are subject to higher levels of scrutiny—we accept this.
In our experience, however, not all comment and analysis is well
informed, balanced or constructive and so any changes to the UK
framework should include safeguards to ensure that a UK company
does not expend unnecessary resources in responding to ungrounded
accusations from ill-informed organisations. Any formal UK process
for investigating complaints against UK companies should include
controls to screen out unsubstantiated allegations at as early
stage as possible so that the company's reputation is not tarnished
nor is it necessary for it to expend significant financial resources
and management time. An absence of such controls would put UK
companies at a disadvantage relative to those incorporated in
other countries where controls are less exacting or nonexistent.
RESPONSE TO
NGO SUBMISSIONS
GCM appreciates the Committee's invitation to
respond to the submissions made by the London Mining Network and
the World Development Movement which mention GCM and its Phulbari
Coal Project. We would like to take this opportunity to clarify
the facts about the Project and restate the strong commitment
GCM has to respecting human rights throughout its business operations.
Firstly, we believe it is important to provide
some information regarding the context in which the Project will
be developed. Bangladesh is currently facing an acute energy crisis,
brought about by reliance on depleting reserves of gas and rising
energy demand. Two thirds of the 150 million people who live
in Bangladesh do not have access to electricity, and those that
do suffer from frequent power cuts from load shedding. Agricultural
production has been hampered as a reliable supply of power is
not available for farmers' irrigation pumps and the Government
is having to ration gas between power generation and fertiliser
production. Other industries are also suffering due to chronic
load shedding. The Project will make a significant contribution
to the country's energy security by providing reliable supplies
of coal to new power stations. Independent studies forecast that
over its 30+ year life, the Project has the potential to increase
annual Gross Domestic Product by up to 1.0 % per annum and
create some 17,000 direct and indirect jobs. In order to
even maintain economic growth levels of 5—6% and continue
to make some progress against the Millennium Development Goals,
Bangladesh must resolve this energy crisis.
Following the terms of its contract with the
Bangladesh Government the Company embarked on detailed exploration
of the Phulbari Coal field in 2004. This led to a Feasibility
Study which included an extensive Environmental and Social Impact
Assessment (ESIA) carried out by SMEC International Pty Ltd, a
leading Australian consulting firm with over twenty years experience
in Bangladesh. The ESIA includes a Resettlement Plan, an Indigenous
Peoples Development Plan (the first of its kind in Bangladesh),
a Livelihood Restoration Plan, various Water Management Studies
and a Public Consultation and Disclosure Plan. Environmental Clearance
was granted in September 2005.
In October 2005 the Company submitted its
Feasibility Study to develop an open pit coal mine in the northwest
of the country, and awaited approval from the Government of Bangladesh
to proceed. Some months afterwards a public debate began regarding
the development of a coal industry in the country, as well as
a debate on the role of foreign companies in the energy and power
sector.
In August 2006, a protest against the mine took
place in the Project area. Estimates of the numbers of people
attending the protest vary but are generally agreed to be several
thousand (certainly not 50,000). The protest included local residents
as well as many who had been transported to the area from outside.
The protest ended in tragedy with loss of life and many suffering
injury reportedly following actions taken by the Bangladesh Rifles
to manage the crowd.
Since 2006 the debate has continued. There
are a number of people who vocally oppose the Project and others
who are strongly supportive. GCM has always welcomed and expects
open debate on all aspects of the planned coal mine. The World
Development Movement refer in their submission to an "Expert
Committee Report". As was reported in the media at the time,
the Committee's final Report is contentious as it was not signed
off by the majority of its members and was therefore never publicly
released.
At the end of 2008, following a two-year State
of Emergency, the Bangladeshi people elected a new government
by an overwhelming majority. As stated in their manifesto, key
issues to be addressed by this new government to add capacity
to the national grid include special initiatives to ensure economic
use of coal and the development of coal-based power plants. The
new government is currently examining the different opinions of
experts within and outside the country, in particular with regard
to the social, environmental and local economic impacts of mining
to form its approach to developing a coal industry in the country.
Important points:
— The Project will adhere to national regulations,
to the social and environmental safeguard policies of any institutional
investor and to the revised Equator Principles (www.equator-principles.com)
which are required by many commercial banks for project financing
and reflect the International Finance Corporation's Performance
Standards on Social and Environmental Sustainability. The Environmental
and Social Impact Assessment (ESIA) prepared by GCM has already
been subject to independent review and this approach will continue
throughout its lifetime.
— The Company recognises that a key component
of the Project is regular and ongoing engagement with the community.
Despite the difficulties of doing so in a complex environment,
the Company continues to meet with numerous groups to explain
the Project (including NGOs and media) and has also provided information
about the Project in Bangladesh on the website: www.phulbaricoal.com.
Once approval is granted the Company will restart extensive consultation
with local stakeholders. Furthermore, considering the delay in
the Project timeline, the Company will also reconfirm various
data regarding who will be impacted and what their preferences
are with regard to resettlement options and livelihood support.
The Project will continue to ensure that local stakeholders are
fully informed and have been consulted prior to Project commencement.
— Compensation measures for the approximately
40,000 people who will need to be resettled will meet the
requirements of the IFC Performance Standard 5 on Land Acquisition
and Involuntary Resettlement. This covers titled and non-titled
landowners and illegal settlers. People will be able to move into
homes in the village resettlement sites and the western extension
of the Phulbari Township. These homes will be an improvement on
their current living conditions and investments will be made in
education and health facilities and improved infrastructure. The
capital budget for all resettlement and community provisions is
the largest single item in the Project development costs.
— The Project itself, while requiring approximately
5,900 hectares of land over its 30+ year lifetime, will only
use around a third of this area at any one time. As mining progresses
southwards the excavated pit will be backfilled and the land rehabilitated.
At the end of the Project's life, agricultural land will be available
once more, along with newly created forest area, and a lake which
will be an important community asset.
— During the Feasibility Study the Company
conducted agricultural studies and field demonstrations, together
with the Department of Agriculture Extension and over 200 local
farmers. The studies show an expected increase in agricultural
productivity in the Project area due to the introduction of improved
farming practices, crop varieties, and year round availability
of water for irrigation.
— Livelihood restoration is an important
component of the overall social management plan for the Project.
To facilitate this, the Company has developed a Livelihood Restoration
Strategy which will enable local stakeholders to take advantage
of the opportunities generated by the stimulation of the local
economy, the establishment of cottage industries and improved
farming methods. Many spin off industries will also be created
through the use of co-products from the mine including sand, gravel,
china clay and rock aggregate and thousands of jobs will be created.
Training and development will be provided and preferential employment
policies will enable local people to benefit from the creation
of new jobs associated with the Project.
— Extensive water management studies have
been undertaken to ensure that the Project manages its impacts
on water. The Company's plans reflect the requirements of farmers
and the community. Water from the Project will be provided for
irrigation, village and town reticulated water supplies. The comprehensive
Water Management Plan includes injecting water into the aquifer
to maintain the water table away from the Project area and to
thus restrict drawdown to the near vicinity of the Project area.
A water distribution system will ensure reliable access to water
for residents, businesses and farmers; existing water bores and
pumps will be upgraded by the Project. This Water Management Plan
is not unique and there are many examples of successful implementation
elsewhere in the world.
Over the last 10 years, the mining industry
has consistently improved the way in which it manages its social
and environmental impacts and GCM takes great care to stay up
to date on such improvements. The various studies contained in
the ESIA are living documents and are subject to regular review
and improvement. As such, while awaiting Government approval for
the Project, the Company has engaged various experts to improve
our social and environmental management plans and keep staff informed
of new developments in best practices. For example, last year,
senior management were trained on the latest developments with
regard to human rights and business and fully understand how our
social and environmental management plans have been developed
to protect such rights. Earlier this year, the Company joined
the UN Global Compact and is actively integrating the 10 principles
into its own management systems.
GCM and its subsidiary Asia Energy Corporation
(Bangladesh) Pty Ltd remain committed to undertaking the Phulbari
Coal Project to the highest international standards and look forward
to helping Bangladesh overcome the current energy crisis, reach
its development goals, and ensure we deliver significant benefits
for all our stakeholders and attractive returns for our shareholders.
In so doing, we believe that we will help protect human rights,
including the human right to development (1986 Declaration
on the Right to Development).
Steve Bywater
Chief Executive
26 June 2009
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