Asia Energy has become issue after long silence. Asia Energy- a foreign investor has been waiting about half of an Age for its project approval. Due to debate over mining method, lack of a clear vision and policy on coal, government still didn't take a decision on Country's Coal extraction.
Recently a home ministry directive raised brought the issue to surface. Directive to deputy commissioner of Dinajpur, home ministry directed for assisting the company for its survey. It said, Asia Energy can conduct techno-feasibility study, planning and other project activities under the existing Mining Rules and license though government did not give them the final approval of mineral resource extraction. Necessary cooperation has to be ensured so that the company can carry out study uninterruptedly.
Apart from that, Recent Recommendations and recognition of open pit mining method as an appropriate way to extracting coal to meet the present demand by Government formed Expert Committee also a major component for ongoing issue.
In these circumstances all these stuffs gave new breath for a new movement. In this situation what is investor's view. Media hardly asked for that. Energy Bangla faced Asia Energy's Chief Executive Officer Mr. Gary N Lye with various questions. Here are the details.....
EB: Why Phulbari?
Gary: Bangladesh has been suffering from Primary Energy. Phulbari Coal alone could generate 4,000 MW# of Power for few decades. The power generated using Phuilbari coal would be cheaper than other source of Energy. Positioning Power plant at the mine site would make generation simplier and more reliable than any other options obviating the need of shipping and associated handling problems. Moreover, utilization of locally produced coal would create many thousands Bangladeshi jobs as well as deliver foreign exchange and balance of payment benefits and many more.
EB: What is Asia Energy’s plan for the Phulbari Coal project?
Gary: The development of the Phulbari Coal Project has been our principal focus since signing of assignment agreement in 1998 and subsequent granting of a mining lease in 2004. This Contract covers full spectrum from exploration to mining of coal in Northern Bangladesh. We have undertaken an extensive exploration program and detailed studies necessary to complete the project’s feasibility study. The feasibility study (Scheme of Development) and a proposal for a mine mouth power plant were submitted to the government for its approval in October 2005. We are ready to move the project subject to final go-ahead from Government.
EB: Why you are moving forward with the project before finalizing the coal policy?
Gary: GCM is aware of the initiative of formulation of a Coal Policy, which is still in draft stage after many reviews. We welcome the move and hope once the coal policy is finalized, will help develop the coal sector in Bangladesh. However, the coal policy is not a requirement to start the development of Phulbari coal mine or any other mine, while there is already a national legislation on mining covering both the underground and open pit mining.
EB: What is your compensation plan for the project affected people?
Gary: It is our commitment that no one affected by the Project will be worse off, and that each person will be fairly and fully compensated and their livelihoods will be restored and improved. To this end, we have developed a comprehensive resettlement plan which recognizes the rights of all affected people. People will get compensation at full replacement value of their assets, which is in line with international guidelines i.e. Equator Principles, IFC Performance Standards, ADB Safeguard Policy on Resettlement. In addition to compensation, there will be reestablishment assistance, improved housing, and training along with preferential opportunities for employment. A full fledged livelihood restoration plan and program will be in place for different phases of resettlement and rehabilitation of the project.
EB: How much you have spent?
Gary: As per the audited accounts submitted to the Bangladesh Board of Investment at the end of the 2011-12 fiscal year, we have spent over US$60 million on the Project’s development activities, which resulted in the establishment of a very large high quality mineable resource. Renowned international and Bangladeshi consultants were involved in our studies which have further been reviewed by independent reviewers engaged by the international financial institutions who have found these to be acceptable and compliant with the international standard.
EB: What your plans for restoring people’s confidence as there was an incident in 2006?
Gary: We value the relationship with the local community and acknowledge that community’s acceptance and support is as important as the government’s approval for implementation of the Project. It is virtually impossible to conduct such extensive studies without a harmonious relationship with the community. GCM has been working with the local community since 1998. Over this period, we have completed pre-feasibility and very extensive feasibility study, which includes temporary acquisition of land and crops for drilling of more than 100 boreholes and installation of various environmental monitoring equipments; house to house visit for demographic and resettlement survey and a number of other social and environmental studies, spreading over 10 km radius from the centre of the Project area. People happily allowed us to use their land and assets with a return of fair and timely compensation award. There was no single example of breaching of contract. We are engaged with the community today and will continue to develop throughout the Project life.
EB: How feasible it is to go for open pit mining here?
Gary: The feasibility of open cut mining has been established through various technical, social and environmental studies. An assessment of alternative mine development technologies have been undertaken to identify the most feasible option for mining of Phulbari resource. The study revealed that regardless of the advantages and disadvantages of the various types of mining, the open cut method is technically and economically the only viable option and to achieve Project objectives i.e. extracting most of the coal resource and minimizing impacts on the environment and the community. The method is appropriate for the given geological, hydrogeological and geotechnical conditions of the Deposit. The study also revealed that underground mining in Phulbari would result in total extraction of only 20 to 40 Mt out of a 572 Mt deposit and there will be many technical challenges and associated health and safety risks.
EB : What is the stance of the government regarding your project?
Gary: Over the past few months we have had constructive meetings with both Divisions of the Power, Energy and Mineral Resources Ministry. The Power Division, being responsible for power generation, is understandably very interested in coal (and our project) as it sees coal as an important energy source that will contribute to some 50 percent of Bangladesh’s power generation, as expressed in the Power Sector Master Plan (Facilitated by JICA 2011). They appear to be looking at the Energy and Mineral Resources Division to develop the coal sector and this Division in turn is looking for policy direction. We continue to pursue approval of the project’s Feasibility Study and believe the best way forward is a partnership with the Bangladesh Government.
EB: There is always a concern on Water issue of Open pit Mining. How do you plan for managing ground water?
Gary: Water management is one of the major challenges for safe and successful operation of Phulbari coal mine. Recognizing the importance of managing the effects of mining on water, this aspect of the Project has been extensively studied as part of the feasibility study and subsequent work. To ensure ground water levels are not unduly affected in the surrounding areas, some of this water is injected into the ground at a distance from the mine. This is a well proven and effective technique for controlling the extent of water table drawdown in existing mining operations elsewhere in the world. GCM has developed a comprehensive Water Management Plan which will ensure that clean water extracted to facilitate mining is a community asset. This water will be distributed for irrigation, village and town reticulated water supplies, local industries, power stations and the environment.
EB: What are your plans to minimize environmental impacts caused by the project?
Gary: The potential environmental impacts on surface and groundwater, noise, air quality, agriculture, biodiversity and ecosystem associated with open pit mining operation have been carefully assessed. The baseline conditions of various environmental parameters have been established and GCM will ensure that the `best practice’ mitigation measures of the mining industry are implemented to control or minimize all the potential impacts to within acceptable limits at all times. GCM has made significant investment to carryout environmental studies (as part of Project’s Feasibility Study) and development of associated management plans. The Department of Environment (DOE) approved the Environmental Impact Assessment (EIA) and issued Environmental Clearance in favor of the Project.
EB: What are the main challenges you have been facing while operating business in Bangladesh?
Gary: We came to Bangladesh in February 1998 and had our contract assigned to us by the government. Setting up in Bangladesh, i.e. opening and registering our office, bank accounts etc was not difficult and to this end the Bangladesh Board of Investment continues to be very helpful. We also had no difficulties in mobilizing people (both Bangladesh and International experts) to work on the exploration phase and then the very considerable studies for the feasibility study. Under our contract, we were obliged to complete our work and submit the Feasibility Study (Scheme of development) to the government within 24 months of the “grant of a Mining Lease”. We did work diligently and met our timeline commitment by delivering the document in October 2005. Under both the Contract and Mines and Minerals rules, Feasibility Study (Scheme of development) should have been approved within 90 days of submission. What we experienced from that moment onwards were a series of obstacles within the bureaucracy which has included a committee established to review our proposal not meeting deadlines and the Coal Policy initiative that continues today, i.e. is in its 7th year.
Although not prevalent during the actual two year exploration and feasibility study period, we did subsequently observe a growing anti-foreign investor sentiment directed towards the energy resource sector which continues today. All new project developments involving foreign investors whether it is in the coal sector or gas sector – are being targeted and as a result, no new significant reserves of commercial energy have been added to Bangladesh’s energy bank.
ET: Is it possible to return the land in previous condition after the 35-years project ends?
Gary: Rehabilitation of land to productive state after mining is a proven technology and well practiced method in the mining world. The process will be even faster given the favorable climatic condition of Bangladesh and fertile nature of soil. In fact, open pit mining is a temporary change of land use. As in Phulbari, mining will advance gradually from the north towards the south and the mine area after coal extraction will be backfilled and rehabilitated to productive uses, including agriculture. A Rehabilitation and Mine Closure Plan has been developed for the Project with the objectives to turning the Project land to conditions capable of supporting prior land use or uses that are equal to or better than prior land use and eliminating adverse effects on surface and groundwater resources. There will be extensive monitoring system in place throughout the mining and post mining period to ensure that the Project objectives are being met and post mining use of the site is beneficial and sustainable.