Overview
The Phulbari mining project involves an open-pit coal mine in Northwest
Bangladesh and the construction of at least one 500-MW power plant.
According to the Asian Development Bank (ADB), at full production about
eight million tons of coal will be transported by rail and barges to an
offshore reloading facility located in Akram Point. An additional four
million tons will be exported to India via railway, and the remaining
three million tons will be used for domestic energy consumption.
International financial flows
Public finance:
Despite the clear social, environment and human rights risks associate
with this project, the Asian Development Bank (ADB) is considering the
provision of significant financing—in the range of $300 million—to the
project sponsor, Global Coal Management (GCM) Resources based in the
U.K. The ADB purports that its safeguard policies will bring a value
added to the project, making a severely socially and environmentally
destructive project less risky.
However, whether or not ADB involvement makes the
project marginally more accountable should not be the sole determining
factor for supporting such a project. ADB financing sends an important
signal to project sponsors and the Bank has a responsibility to
consider the full range of risks and the benefits of the project, and
determine, among other things, if it is feasible for displaced people
to reestablish their livelihoods so that, at minimum, “their economic
and social future will generally be at least as favorable with the
project as without it,” and, ideally, that they benefit from the
project and improve their standards of living.
Private finance: The Bangladesh
Government originally awarded an exploration license to the Australian
company BHP Minerals in 1994, which however, decided against developing
a coal mining operation in the area. In 1999 its licenses were
transferred to Asia Energy Corporation (Bangladesh) Pty Ltd. Asia
Energy PLC was incorporated in London Stock Exchange Alternative
Investment Market (Ticker code: GCM) in September 2003 and acquired
100% of Asia Energy Corp. It subsequently changed its name to Global
Coal Management after August 2006 killings in Phulbari and to GCM
Resources Plc in December 2007. According to the company’s 2007 annual
report, its major shareholders are RAB Capital, UBS, Fidelity Group,
Barclays, Credit Suisse, LR Global, Ospraie Management, Capital Group
and Argos Greater Europe Fund.
Policy Issues
The ADB’s Safeguard Policies Update (SPU): While
Phulbari stands out as a particularly egregious case, the concerns
raised by this project are by no means unique. Unfortunately, they are
representative of concerns raised almost across the board in
ADB-financed projects causing involuntary resettlement. The fierce
struggle of the communities in Phulbari vividly shows how strongly
these thousands of local people mistrust and disagree with the course
of development being imposed on their region, and the measures being
proposed to mitigate its harm on their lives. Their protest is
occurring at a time when the importance of strong social and
environmental safeguards is being increasingly recognized, from the
grassroots to global policy arenas. However, amidst this array of
demands for stronger safeguards to ensure just and sustainable
development, the ADB is revising its safeguard policies in a manner
that threatens to weaken existing procedures and standards. Read more about the ADB SPU…
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