Berlin, London, Apr 4 2008
Director of the Asian Development Bank's Private Sector Operations
Department, Robert Bestani, notified the Bank's Board last week that it
will no longer ask for approval of the Phulbari Coal Project in
Bangladesh. The ADB's Board was slated to approve a US$ 100 m loan and
US$ 200 m political risk guarantee for the project on June 3, 2008.
This comes as another major blow to the UK based company GCM Resources
(formerly known as Asia Energy), which aims to establish one of the
world's largest open pit coal mines near the town of Phulbari in
northwestern Bangladesh. GCM/Asia Energy was forced to shut down its
operations and flee the project area after a major protest of over
50,000 people in 2006 that resulted in three deaths and hundreds people
injured as government-backed paramilitary forces fired upon the
Since then and in spite of the Bangladesh
Government's Emergency Power Rules that ban major civil liberties,
widespread opposition in the project area has continued. National
opposition has been led by the National Committee to Protect Oil, Gas,
Mineral Resources and Ports (NC). Although its General Secretary Prof.
Anu Muhammad has received death threats and its local leader Mr.
Nuruzuman was publicly tortured by the military in February 2007, the,
NC and other civil society organizations have remained undaunted in
their opposition to the Phulbari project.
says: "The area around Phulbari is extremely fertile and densely
populated. It is also one of the few regions in Bangladesh that are
safe from flooding and other natural catastrophes and therefore plays a
key role for the food security of the entire country. The proposed
"development" project is merely a scheme to loot natural resources from
a poor country for the rich. We will not allow GCM Resources to turn a
land of food for the people into a black hole for corporate profit."
According to the company's own estimates, the mine would displace some
50,000 people. However, an expert committee commissioned by the
Bangladesh Government in 2005 found these numbers to be grossly
underestimated. The expert committee reports that 130,000 people would
be displaced for the mine and a further 220,000 would be impacted
through the massive draw-down of the water table, which is necessary to
keep water from running into the 300 meter deep mine pit. This would
have major impacts on drinking water and irrigation for many miles
beyond the actual mine. Furthermore, the company has no viable plan to
prevent acid mine contamination of the soil and water as a result of
mining 15 million tons of coal for over 35 years.
expert Roger Moody notes: "It is extremely costly to adequately prevent
and mitigate acid mine drainage in a mine of this size. The acid is
likely to stay in the environment for decades after the mine closes
contaminating the land, rivers and streams. And GCM has not provided
any financial details as to who would cover the bill for such an
Various community leaders and
representatives of the Phulbari area wrote a letter to the ADB's
Executive Directors in December 2007, followed by a letter by over 60
international civil society organizations protesting ADB's involvement
in the project. International NGOs point out that the project would
also cause extensive damage to the Sundarbans mangrove forest, an
UNESCO declared World Heritage Site where the port facilities for
exporting the coal are to be constructed. As several of the ADB's
Executive Directors began raising questions about the environmental and
social feasibility of the project, the Bank's management finally
decided to take Phulbari out of ADB's funding pipeline.
Jones of the World Development Movement says: " The Phulbari project is
truly a British and international scandal. GCM Resources is a British
company and is backed by banks such as Barclays (UK), UBS and Credit
Suisse (Switzerland). Among its other investors are the British hedge
fund RAB Capital and the mutual funds manager Fidelity from the US. The
ADB's decision sends an important signal to these institutions about
the unacceptability of their investment into this project."
Bangladesh, British and international civil society organizations are
now calling on these financial institutions to follow suit and pull the
plug on the Phulbari coal project.