Global Coal Management Plc (formerly Asia Energy PLC)



Overview

GCM Resources plc (GCM) is a London-based resource exploration and development company. Its principal asset is its undeveloped coal deposit in the Phulbari region of Bangladesh, the development of which is awaiting approval from the Government of Bangladesh. It also has investments in other companies with mining interests. The company's shares are quoted on the Alternative Investment Market (AIM). (Ticker code: GCM).

The Phulbari Coal Project is a substantial, world class coal resource that will support a long life, low cost mining operation. It is the only such deposit in Bangladesh that has been subjected to a full Feasibility Study and Environmental and Social Impact Assessment prepared to international standards. In partnership with the Bangladesh Government, civil society and the community, GCM is committed to developing the Phulbari Coal Project to the highest social and environmental standards. By doing this, GCM seeks to maximise the benefits of the Project for both the Company’s shareholders and the people of Bangladesh.

The Company (GCM) under its former name, Asia Energy PLC, was incorporated in England and Wales as a public limited company on 26 September 2003. Asia Energy PLC was admitted to the Alternative Investment Market (AIM) of the London Stock Exchange on 19 April 2004. Through seed capital raising and the subsequent placement of shares, some £14 million was raised.

In November 2005, following submission to the Government of Bangladesh of the Phulbari Coal Project's Feasibility Study and Scheme of Development, the Company placed an additional 7 million shares and raised a further £33 million.

GCM actively reviews investment opportunities in order to broaden its global investment portfolio.

Coal Project facts

■ Energy security and diversity – The Project has a unique role to play in addressing the country’s electricity shortfall as its development will provide the basis for a step change in the country’s electricity generating capacity.
■Regional development – The Project will provide 17,000 jobs (direct and indirect). In addition the development of new industries using the industrial mineral co-products from the mine will create thousands of more jobs. The living conditions of all affected people will be improved and their livelihoods will be restored and in many cases improved. As a result of year round irrigation, improved water quality, improved inputs and improved farming practices it will be possible to produce three crops per year with higher yields than at present.
■Huge economic impact – Phulbari will contribute 1% to Bangladesh’s GDP each year and pay US$7.0 billion in taxes, royalties and service charges to the Government over the life of the Project. The replacement of high sulphur imported coals and other hydrocarbons will have a positive effect on balance of payments and air quality.

In partnership with the Bangladesh Government, civil society and the community, GCM is committed to developing the Phulbari Coal Project to the highest national and international social and environmental standards. By doing this, GCM seeks to maximise the benefits of the Project for both the company’s shareholders and the people of Bangladesh.

Background

Bangladesh is one of the most densely populated countries in the world with some 162 million people living in an area two thirds the size of the United Kingdom or about the size of New York State. Less than one third of its population live in cities while the majority live in rural areas relying on a predominantly subsistence lifestyle. GDP per capita is around US$1,700 (ppp) per annum compared with a world average of US$10,500. Less than half the population have access to electricity. Bangladesh is a country of enormous potential. It has the eighth largest work force in the world and is included in the “Next Eleven” countries that, after the BRICs (Brazil, Russia, India, and China), were identified by Goldman Sachs as having the potential to become the world’s largest economies in the 21st century. 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. For example, between 1980 and 2006 life expectancy has improved from 48 years to 63 years and literacy rates have improved from 29% to 53%.

Bangladesh is one of the most climate vulnerable countries in the world 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 the country is less than five metres above sea level making it vulnerable to the predicted effects of climate change.

Although Bangladesh is vulnerable to the effects of climate change, it is not itself a significant emitter of carbon dioxide. Per capita carbon dioxide emissions (0.3t/capita) are substantially below other countries in the region (Pakistan 0.9t/capita, India 1.4t/capita, China 4.9t/capita) which themselves are substantially less than emissions from developed countries (UK 8.9t/capita, USA 18.9t/capita). Even with the addition of the 4,000MW of electricity capacity which Phulbari coal could support, Bangladesh would still be one of the lowest emitters of carbon dioxide in the world, substantially less per capita than its neighbouring countries.


http://www.gcmplc.com/

"

Dr Tamin pushing the case for coal.

Extract from Financial express article today:

During the last three days Dr. Tamim repeatedly hinted at the gas, fuel price increase making his position clear in favour of the move.

FE Report adds: M Tamim said: "The government will not go for big investment in generating power. It will now go for PPP or will encourage the private sector to invest in power generation project."

The government will give priority to the industry, fertiliser and CNG filling stations for supplying uninterrupted gas. The alternative energy like coal will be popularised," Tamim, who was also a teacher of the Bangladesh University of Engineering and Technology (BUET), said.

Tamim said: "I strongly believe that the country will have no energy crisis for the next 20 years as there are adequate coal and probable gas reserves here. Present energy crisis, which is shorter one, will go in five years time as we have taken massive exploration programmes."


With the price of Oil and Gas rocketing the coal at phulbari is becoming the only alternative for feeding Bangladesh power stations.

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Coal policy draft sent to relevant ministries for opinions
Staff Correspondent
The energy division has sent the draft coal policy to eight relevant ministries for opinions on the finalisation of the draft.
The division, which completed finalising the draft policy on its part, sent the draft to eight ministries, including finance, environment and forest, agriculture, land, law and the National Board of Revenue on Sunday, sources in the division said.
The ministries have been asked to submit their opinions on June 24 before the division convenes an inter-ministerial meeting on June 26 to discuss the comments given by the ministries, they said.
Sources in the division claimed the division had not made any major changes in the draft policy, submitted earlier by the advisory committee, headed by former BUET vice-chancellor Abdul Matin Patwari.
The division dropped a provision off the draft, finalised by the Patwari committee, which said the reclaimed land would need to be handed over to the owner in the original form after completing coal mining.
Sources in the division claimed the existing laws did not support the provision of giving back the land to the owner after the government acquired the land. Besides, it will create complexities and scope of corruption as after 10 to 20 years of mining, many so-called owners will claim the land, observed a source.
One of the members on the Patwari committee, however, told New Age the land could be handed over to the owner if the government had the sincerity. Thousands of poor land owners will need to be relocated for mining. The people should have the right to get back the land. If the government owns the land, it will create scope for corruption, he said.
Citing the example of land acquisition for the Jamuna Bridge, he said the land was handed over by the government to an influential businessman. The people have not got back their land in the Jamuna Bridge area. Now what we see there is a resort for rich people, he said.
The division changed the name of the proposed company, Coal Bangla, to Khani Bangla so that other mines such as rock mine could be brought under the authority of the company.
The details of the mining method could not be immediately known. Sources in the division could not confirm whether any change was made in the recommendations submitted by the Patwari committee regarding open-pit mining.
The Patwari committee recommended operating an open-pit mine first to observe the viability of the method in Bangladesh before adopting the method for other mines.
The division, however, did not make any change regarding the bar on coal export, royalty rate and coal sector development committee.


http://www.newagebd.com/front.html#16

Hard-to-find coking coals price rockets as global steel demand orbits
Text Size
By: Keith Campbell
Published on 20th June 2008
Things, for steelmakers, go better with coke the coke concerned being, of course, the product used in blast furnaces and electric arc furnaces to produce iron and steel.

Coke is 90% carbon and is light, but strong it has to be, to bear the weight to which it is subjected in a blast furnace porous and, when heated, reactive. At the very start of the iron- and steelmaking process, coke fines also known as coke breeze are employed in the sintering of the iron-ore, which converts the irregular lumps (iron-ore fines) of the ore into larger pieces between 10 mm and 25 mm. This greatly increases the efficiency of the smelting process.

Long Post: Full Article..

http://www.miningweekly.com/article.php?a_id=136160

Energy Ministry finalises coal policy
Inter-ministerial meeting on June 26
SHAHNAJ BEGUM
The energy ministry has finalised the coal policy recommending formation of "Khoni-Bangla", a management body to oversee the country's mineral resources including coal, hardrock, lime stone, silica sand and others, an authoritative source told The Independent yesterday.
The energy ministry last week finalised the policy without making major changes in the draft policy prepared by country's renowned experts and sent copies to the ministries of forest and environment, law, land, finance, commerce, power, and NBR with a request letter to give their opinion and join the first interministerial meeting on June 26 following which it will be sent to chief adviser Dr Fakhruddin Ahmed for approval.
"The committee did not say anything about the coal extraction method. The issue should be coal field-specific. We simply brushed and trimmed it without touching the basic content of the draft except the land reclamation issue", a top official of the energy ministry told The Independent.
It may be mentioned that the committee suggested to the government to examine the pros and corns of open-pit mining and that the government should go for open pit on a limited scale. The policy has not mentioned anything on it.
It is learnt that the energy ministry in the policy suggested keeping the land reclamation issue under government's jurisdiction. However, the committee suggested to give the land to its owner. "20-30 years is a long time and the ownership may change in the meantime. Our observation is it would be a difficult task for government to identify the real owner. So we said that land would be kept under government jurisdiction and it would take decision," a top official of the energy ministry remarked.
A 29-member standing committee 'titled: development committee', comprising government officials, experts, business leaders and members of civil society would act as the highest authority to give policy directives to 'Khoni-Bangla' from time to time. "Khoni Bangla", would work under the energy ministry and the Bureau of Mineral Development (BMD).
It would be the authority to oversee coal exploration, marketing and investment through selecting method (open pit or underground mining) giving approval to Go-Private, Go-foreign and private -foreign ventures.
The country has a known reserve of 2.7 billion metric tons of coal but there is yet no specific policy on coal development, although there are some rules and regulations to lease out coal fields to foreign companies.
The main goal of the new policy is to ensure energy security by developing coal-fired power stations in the country. Though the country has five coal fields, four are commercially viable.
The government in 2007 formed the eight-member committee comprising Abdul Matin Patwary, Vice Chancellor of Asia Pacific University (president), Prof. Nazrul Islam of University Grants Commission, Prof. Badrul Imam, Nazrul Islam of IIFC, Prof. Mostafizur Rahman, Muqbul-e-Elahi, Major General Ismail Farooq Chowdhury and Ataus Samad. The committee at its first meeting suggested inclusion of Prof Nurul Islam of BUET and M.A. Zaman (re-settlement expert) in the committee and invited other experts from time to time to know their views. The draft coal policy was prepared by the IIFC last year, which was amended six times.
The policy suggested 6 per cent royalty for open-pit and 5 per cent for underground mining, but it suggested that fixing of royalty would be finalised by the government. Bangladesh Arbitration Act-2001 would be followed if any disputes arose.
To discourage export, the policy said whatever method was adopted to develop a coal field it would produce only that much which would meet the local demand. It said coal is needed to ensure the country's energy security first.
It may be mentioned that to ensure energy security for the next 50 years (at a rate of 8 per cent GDP growth), it needs to produce 41,599 MW of electricity by 2025. Aiming to slap conditions on coal export, the energy ministry upheld the committee's observation that the entire amount of the country's coal reserve is needed to produce electricity in future, as gas would be exhausted by 2015 if new discovery is not made.
However, it allowed a limited export of coal after ensuring the country's 50 years' energy security and said only that portion of coal could be exported which has no market here, and in case of 'cooking' coal, it could be exported but after making it 'coke' (a raw material use in steel making).




http://www.theindependent-bd.com/details.php?nid=86951

TR-1: notification of major interests in shares


1. Identity of the issuer or the underlying issuer of existing shares to which voting rights are attached:
GCM Resources Plc

2. Reason for the notification (please tick the appropriate box or boxes)



An acquisition or disposal of voting rights
X

An acquisition or disposal of financial instruments which may result in the acquisition of shares already issued to which voting rights are attached


An event changing the breakdown of voting rights


Other (please specify):


3. Full name of person(s) subject to the notification obligation:
Morgan Stanley (Institutional Securities Group and Global Wealth Management)




4. Full name of shareholder(s) (if different from 3.):



5. Date of the transaction (and date on which the threshold is crossed or reached if different):
19/06/2008

6. Date on which issuer notified:
20/06/2008

7. Threshold(s) that is/are crossed or reached:
15%

Take immediate step to extract coal
Shamsul Haque

Eminent energy experts and prominent citizens have urged upon the government to take immediate steps for extraction of coal as it has already been proved across the world that coal is an alternate fuel. Eminent experts on energy and mining, geologists, environmentalists and prominent citizens spoke expressed their views at a seminar titled Geo-resources extraction arranged on June 18 at daily Amar Desh office on June 18 in the city.


http://phulbaricoal.wordpress.com/2008/06/23/take-immediate-step-to-extract-coal/

Posted by phulbarinews on June 23, 2008

Abir Mahmud

Geologist of LionOre Australia Pty Ltd, one of the largest coalmines in Australia, Dr Raisuddin Ahmad has categorically termed Bangladeshs coal sector a very promising one to accelerate the countrys national economy.

Coal can be an useful and effective alternative source of energy to ensure the countrys future energy security and help developing the national economy, Dr Raisuddin also a former fellow of Australias number one ranking Australia National University said.

But to utilize the countrys coal reserve potentials a bold decision and its immediate implementation is necessary, Dr Raisuddin Ahmed told the Weekly Economic Times.


http://phulbarinews.wordpress.com/2008/06/

however .......

Pressure on the thermal coal market is expected to ease in 2009 as global exports outpace demand, an Australian government forecaster said on Monday.

But coal prices are likely to remain high as infrastructure constraints among key exporting nations continue to keep a lid on supplies, the Australian Bureau of Agricultural and Resource Economics (ABARE) said in its June quarterly bulletin


it's actually a very long article, but the above extract will suffice

;) ..............Cynic there is another .......,,,,,,, > GPN prospects look good not much sp movement at mo last RNS looked ok ?

Coal Policy Review Almost Complete: Tamim

The Energy Ministry has almost completed a review of the draft coal policy. Prof M Tamim, the Chief Advisors Special Assistant.

Prof Ijaj said coal at the Phulbari mine should be extracted through the open pit mining method. India is extracting coal through open pit mining in 80 mines.

http://truebdnews.wordpress.com/2008/06/24/coal-policy-review-almost-complete-tamim/

Coal Policy Review Almost Complete: Tamim
EP Report

The Energy Ministry has almost completed a review of the draft coal policy. The draft policy is soon to be placed before a cabinet meeting for approval, said Prof M Tamim, the Chief Advisor's Special Assistant.

Speaking as the chief guest at a seminar on 'Energy Security and Development: Perspective in Bangladesh' organized by Bangladesh Institute of Law and International Affairs and Bangladesh Heritage Foundation, Prof Tamim said the review of the draft policy submitted by a working committee to the ministry was almost complete.

No big change has been made in it. Structural adjustment has been made, it will be sent to the Law Ministry within 10 days for vetting. It will then be presented before the advisory council for approval.

To meet the energy demand we'll have to improve coal resources. I ask all to leave it to the experts, have trust in them. Everything will be done on the basis of accountability and transparency. Mistrust has crept among us in the last three decades, Tamim said.

In the power sector, he said, a policy for setting up power plants at government and private initiatives is also being prepared. The government will have 51 percent ownership while the private entrepreneurs will have 49 percent, he added.

BUET professor Ijaj Hossain, who presented the keynote paper at the seminar, said: If we extract a fourth of our total coal reserves and use our gas reserves, 20,000 megawatts of power can be added to the national grid by 2030.

We should bring investment for setting up coal-based power plants. We can also import power directly. A 750 megawatt power plant is being set up in Tripura, from which power could be directly imported.

Prof Ijaj said coal at the Phulbari mine should be extracted through the open pit mining method. India is extracting coal through open pit mining in 80 mines.

The speakers in the seminar stressed establishment of a Regional power grid with neighboring countries to face the power crisis.

The President's Military Secretary Major General M Aminul Karim, Petrobangla Chairman Jalal Ahmed and instructor of the Military Institute of Science and Technology Colonel Moinuddin also spoke.

Director of the Rural Electrification Board BD Rahmatullah presented another paper at the seminar. Bangladesh Heritage Foundation Chairman Waliur Rahman gave the address of welcome.

Fuel-less Electric Bike, Rickshaw Launched
The first ever fuel-less and environment friendly electric bike and electric rickshaw was formally launched at Joydevpur in Gazipur.

Bangladesh Diesel Plant Ltd (BDPL), an enterprise of Bangladesh Army, Sigs International and Lotus Bird of China manufactured the two types of electric transport at BDPL industry at Joydevpur.

Lt Gen Md Jahangir Alam, Quarter Master General and Chairman of BDPL launched the fuel-less bike and rickshaw. Among others present at the function were Geng Yong Ding, President of Lotus Bird, Mohammed Abdul Gani, Chairman of Sigs International and Alhaj Morshed Alam, Chairman of Bengal Group of Industries.

"The price of an electric rickshaw will range from Tk 40 thousand to Tk 50 thousands while the price of electric bike is between Tk 60 thousand and Tk 68 thousand depending on its capacity, said Enayet Ullah Siddique, Managing Partner of the Sigs International.

The rechargeable battery of the bike and the rickshaw will last one year. The price of each battery is Tk 4,000.

Enayet informed that electric bike will hit the market within a week and electric rickshaw two months later.

Lt Gen Md Jahangir Alam said that electric bike and electric rickshaw would save huge foreign currency by reducing diesel use and also reduce air pollution.

"It will reduce transport cost and people of middle and lower income bracket will be able use it for their affordable prices," Geng Yong Ding said.

Col Shahid Sarwar, Project Director of BDP, Col Mohammad Ali, Deputy Managing Director of Bangladesh Machine Tools Factory of Bangladesh Army and other senior officials of Bangladesh Army were present at the ceremony.


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Copyright Energy & Power 2008 Editor: Mollah Amzad Hossain Eastern Trade Center Room 509 56, Inner Circular Road Dhaka 1000 Tel: +880-2-835 4532


http://www.ep-bd.com/report.html

XIN) WB to provide 3.9 bln USD to Bangladesh to meet budget
2008-06-23 13:19 (New York)

deficit
DHAKA, Jun 23, 2008 (Xinhua via COMTEX) -- The World Bank Monday assured
Bangladesh of providing enhanced assistance of 3.9 billion U.S. dollars in the
next three years to meet the country's budget deficit and food, fuel price hike.

"This is to help Bangladesh face the increased prices of food, fuel oil and
fertilizer as well as meet record budget deficit," visiting World Bank Vice
President for Asia Pacific region Praful C Patel told reporters here.

Patel arrived here on Monday on a two-day visit to Bangladesh to discuss with
local authorities the enhanced assistance, private news agency UNB reported.

"We also discussed what more to be done on food crisis that's going on and the
kind of help we provide to reduce subsidy to meet the increased prices of
fertilizer, fuel oil and food," he said after a meeting with Bangladeshi Finance
Adviser Dr Mirza Azizul Islam.

The World Bank approved an assistance of 320 million U.S. dollars last week to
support Bangladesh's power projects and the budget.

Devlopment Project News in Phulbari
Royalty Debate of Coal & Foreign Investment Wednesday, Jun 25 2008
Uncategorized Coal, foreign investment, Power, royalty debate phulbariproject 5:17 am

Zubayer Zaman

The potential for coal sector development of the country has become the topic of discussion once the declaration of 572 million tones of coal discovery in the Phulbari Coal Basin was made. Thanks to Phulbari Coal Project - as it has initiated many debates. Surely we need to unlock our coal resources and guide our country to a new era of economic development. One of the contentious issues now - whether positive or negative - is the much talked about subject of `Royalty for coal mining.

The Mines and Minerals Rules, 1968 (amended up to 2004) sets the royalty rate for numerous minerals and coal, and defines how it is to be calculated and when it is to be paid. The coal royalty is set at 6% for open pit mining and 5% for underground mining. Some consider this rate is too low and it is against the interest of the country. But they fail to suggest the ideal royalty rate that would protect the national interest and will match with the international mine financing practices.

Some people are trying to give explanation of royalty stating that- 6% royalty rate means that government and people of Bangladesh will get only 6% share and the remaining 94% or the coal project earning will go into the investors pocket. Maybe there is some gap in understanding the royalty issue. Maybe it is a deliberate attempt to try to circulate wrong information/explanation on mineral royalty to create a negative impression about coal mining with foreign investment. Simple fact is that the royalty cant be viewed in isolation of other earnings from mining and it has to be seen as part of an overall benefit package.

In the recent past there was an attempt in the debate by illustrating the royalty exercise as a violation of countrys constitution. As stated allowing the mining rights to the foreign company with royalty provision would compromise ownership of the property rights of the country.

The reasons for confusion in the royalty debate possibly is linked with some kind parallel drawn with production sharing contract arrangement, ie; only 6% share for the government and 94% for the investor. Under production sharing contract arrangements such as in place for the gas sector in Bangladesh, companies get the benefit of full capital and operating cost recovery and pay no taxes (either corporate or personnel income tax), royalties or duties. The Bangladesh Government typically gets about a 50:50 share of the gas produced after the cost recovery.

On the otherhand, mining in Bangladesh is not covered by production sharing contract arrangements. Those involved in mining are expected to pay corporate tax (currently 40%), income tax for personnel, VAT, duties, royalties, and other government service charges. To enable some off-setting of the large capital development costs the government through its Board of Investment (BoI) offers a range of fiscal incentives for investors. There is no provision for any cost recovery for exploration and mining industry including for coal and the full financial risk is taken by the investor.

All of these debates, mostly with negative approach, in a view to mislead people deserve some explanation: what does royalty mean? Does royalty of coal in Bangladesh is too low? What is the royalty rate in other coal producing countries?

Royalty is a form of tax, special to mine. The intent of the tax is to charge the producer of the mineral for the right to mine the minerals produced. There are different types of royalty that have been practiced in the world mining industry: unit based royalty, value based royalty or ad valorem royalty, profit based or income based royalty etc.

Unit based and value based royalty both are payable irrespective of whether the mine is making a profit or losing money. However, value based royalty fluctuate following commodity prices. Thus when prices are high, the government will enjoy more revenue than the prices are low. Some nations have moved away entirely from assessing royalty and rely instead only on the general corporate and income tax revenue streams, eg; Greenland, Mexico, Sweden and Zimbabwe do not impose a royalty.

All types of royalty have associated advantages and limitations but whatever the types and rate; royalty is a well practiced mechanism of tax collection in world coal producing nations. The provision of royalty rate for coal in Mines and Minerals Rules, 1968 of Bangladesh is in line with the worlds practices and at 6% is not at all a low rate. Though the royalty rate was only Rs. 2.50 per tonne in the Mines and Minerals of 1968, and for unknown reasons it increased to 20% in 1989. It had no applicability and was amended in 1995 to 6% reviewing royalty rates of different countries through a high level committee to make it realistic with the worlds perspective and to attract foreign investment in this investment intensive sector. Later two amendments of Mines and Minerals Rules in 1999 and 2004 also kept that royalty rate.

Different countries practice different royalty rates but the difference is not significant and is within the range of 1-8%. It is true that Indonesia has the highest royalty rate (13.5%, as per amended laws of 1996) in the world but Indonesian coal is at relatively shallower depth (in some instances at the surface and exposed in water courses), of good quality and moreover easy to transport to the international market directly by sea going large vessels. On the other hand, though the coal resources of Bangladesh (Barapukuria, Phulbari, Dighipara) is of good quality and is within reach of open pit mining operation, a considerable amount of overburden must be removed before first coal is achieved which involves large continuous operating costs and large capital injection. Moreover transportation of coal to international market involves huge investment for infrastructural development including rail network up gradation, building coal terminal in Khulna, deep sea cargo facility, dredging of outer sand bar to maintain the navigability of the channel etc. Compensation, resettlement, rehabilitation and related cost will also be higher as population density is relatively high comparing to other countries.

The world is very much open now and anyone can browse internet to get the latest information about coal royalty in different countries of the world. Here is some information about royalty rates and taxes in different countries of the world:

Country Royalty Rate (%) Corporate Tax Rate (%) Customs (%)
China 0.5-4 30 0
Indonesia Up to 13.5 30 0
Laos 2.5 20-33 0
Malaysia 5 34 -
Mongolia 2.5 40 0-5
Vietnam 1-8 25 0
Peru 0 30 0
Australia 2.5-7.5 30 5
Brazil 3 30 -
Chili 0 35 -
Pakistan 1 35 5
Ghana 3-12 - -
Uzbekistan 5.4 - -

India, the 3rd largest coal producing country in the world had the royalty rate variable with state to state from Rs. 65 to Rs. 250 per tonne depending on the grade and coal fields. Recently on 01 August 2007 India reviewed its royalty rate and introduced a new formula for royalty calculation (coal with similar heating value of Bangladesh Coal requires to pay approximately Rs.102-Rs.133 per tonne royalty depending on coal fields). With that new provisions of the regulations, the royalty rate of coal will be subject to coal quality variations and dependant on coal fields and their locations. It may be mentioned that the increased royalty rate in India will not be applicable for West Bengal coal mines.

The Coal Policy Review Committee shows its dilemma while fixing the royalty rate. The last few weeks discussions were mostly concentrated on royalty rate. The committee is still to come to a conclusion. From the media reports it reveals that some of the committee members are in favour of increasing the royalty rate as high as 30% ignoring the commercial reality; others favour for keeping the existing royalty rate unchanged or bring it down. The Managing Director of the countrys sole underground coal mine strongly opposed the idea of increasing the royalty rate. He expressed this view to coal policy review committee that Barapukuria coal mine has been facing trouble with the existing 5% royalty rate and economic existence of the mine will be in danger if the rate is increased further.

As an operator of the mine with practical experience the MD of Barapukuria mine has realized the economic reality. Increasing royalty doesnt ensure more profit for the Government. It will automatically increase the production cost of coal which obviously will increase power generation and other costs and ultimate sufferer will be the consumers. Higher coal price will encourage other users to go for import of inferior quality coal from neighboring country. These inferior quality imported coal mostly used in the brick kilns cause serious environmental pollution.

Coal mining is a capital intensive sector (more so than oil and gas)of investment and Bangladesh does not have technology, trained manpower and financial capability to develop the sector alone. Bangladesh just cant compare its coal sector with Indian coal mining industry and introduce what they are practicing now for the development of this sector. We must take into consideration that Indian coal mining history which is more than 200 years old and has established huge infrastructural facilities and skilled manpower. On the other hand the coal sector in Bangladesh is in its very early pioneering stage and needs to be nurtured properly. The coal policy should be such that will create an investment friendly environment, a win-win situation for the investor and the government and people of Bangladesh. The adoption of a pragmatic coal policy will attract the investors to develop the coal sector protecting the national interest ensuring capacity building of local human resource and expertise.

Source: http://www.ep-bd.com

Bangladesh to boost gas output by 20 pct by 2011
Wed Jun 25, 2008 5:13pm IST

DHAKA, June 25 (Reuters) - Bangladesh will raise its natural gas production by nearly 20 percent by 2011 with new investment of nearly $100 million, a senior official said on Wednesday.

"We will be able to produce 2.15 billion cubic feet of gas per day from the existing 1.8 billion cubic feet over the next more than three years," Jalal Ahmed, chairman of the Bangladesh oil, gas and mineral corporation or Petrobangla told Reuters.

"At least 15 new wells in different gas fields across the country will be explored and developed by the state-run gas firms to produce additional hydrocarbon," Jalal said.

Bangladesh faced a gas shortage of up to 150 million cubic feet daily (mmcfd) which was an obstacle to industrial and economic activities, Jalal said.

Eight gas-fired power plants are out of action and nearly 300 new manufacturing firms at Chittagong port city cannot start production due to lack of gas supply, officials said.

Three state-run gas firms - Bangladesh Gas Fields Company Limited, Sylhet Gas Fields Limited and Bangladesh Petroleum Exploration and Production Company Limited - produce about 900 mmcfd of gas, half of Bangladesh's total production, they said.

The remainder is produced by four international oil companies (IOCs) - the U.S. based Chevron Corp (CVX.N: Quote, Profile, Research), British firm Cairn Energy (CNE.L: Quote, Profile, Research), Irish company Tullow (TLW.L: Quote, Profile, Research) and Canadian company Niko Resources Ltd (NKO.TO: Quote, Profile, Research).

"Despite our efforts to augment gas supply by the state-run firms, we will also continue to encourage the IOCs in producing more gas," Jalal said.

The authorities say they fear further gas shortages by 2011 when daily demand will rise to 2.4 billion cubic feet per day, nearly 34 percent more than now. (Reporting by Serajul Islam Quadir; editing by James Jukwey)

Posted by phulbarinews on June 26, 2008

Prof. Dr. Ajoy K. Ghose, FNAE


Worlds leading mining expert Prof. Dr. Ajoy K. Ghose thinks Phulbari Coal Mine Project has more potential compared to Barapukuria Coal Mine. It is possible to extract 15 million tonne/year of coal safely. And water management is the major challenge for it. The plan the project authorities have taken is world class. Environment and rehabilitation challenges are also manageable. On the other side, the claim of causing desertification due to withdrawal of water from the mining area is unrealistic. Such a situation will not happen in real sense.

Prof. Ghose has been closely working on mining for five decades. He started his career from a UK mine at the age of 23. But he has long association with teaching profession. Prof. Ajoy Ghose is now visiting Bangladesh at the invitation of UNDP for a study on Sustainable Energy based on Alternative Fuel such as coal. A former Director of Indian School of Mines, he is now a mining industry consultant and Editor of the Journal of Mine, Metals and Fuels. He is also a part-time Director of Central Mine Planning & Design Institute, Ranchi. He talked to Editor of Energy & Power Mollah Amzad Hossain. Following are the excerpts of the interview:

EP: How do you evaluate the energy sector of Bangladesh?

Ajoy: Bangladesh faces acute crisis of energy. The depleting gas resource creates a very critical situation for countrys future energy situation. So, the country needs to exploit all possible energy alternatives to ensure energy mix so that the economic growth does not slowdown because of non-availability of energy supply. Bangladesh has one of the lowest per capita energy consumptions and it has gas reserves, which is fast depleting. There is no recent oil discovery. It has a coal reserve of 2.4 billion metric tonnes and it is a big challenge how the country can ensure maximum use of coal overcoming the hurdles against coal exploitation.

EP: You are saying that coal extraction is a big challenge and difficult task. Why you are saying so, would you explain the matter in details?

Ajoy: There is a water-bearing formation over the coal deposits of Bangladesh North-West region. It is called Dupi Tila and such a formation cannot be found in most of the countries. There is a similar formation in Neyveli Lignite Mine in South India. For extraction of each tonnes of Lignite, it needs to pump out 12-13 tonnes of water. So, without pumping of water, it is not possible to extract Lignite. Water management is a big challenge to work beneath of he Upper Dupi Tila and lower Dupi Tila. It is difficult but possible. And it certainly involves technology and cost.

In Barapukuria, coal is being extracted through underground mining and there is problem with this water-bearing layer too. A big flooding took place once that reduced the quantity of extractable coal. I cannot say definitely but I came to realize through my discussions with officials of Barapukuria who went to Indian Institute of Coal Management it may not be possible to extract one million tonne of coal annually from this mine. And the main reason is that it is very difficult to do such a feat using multi-slice mining in underground method. It is possible under open-cut or surface mining. But in such a situation, water management is also a big challenge. I told you about Neyvely. There are a number of lignite mines of Rheinbraun near Cologne in Germany. Such water-bearing structures are also there. They are mining by pumping out water continuously. There is technology, it is possible but certainly, the entire job is a difficult task.

EP: Would you please explain more elaborately about Indias Neyvely mine?

Ajoy: Over 32 million tonnes of lignite are being extracted every year from these mines and the lignite is being used to produce some 2750 MW electricity and it is the largest power hub in that region.

EP: You are comparing Bangladesh situation with India and German mining. Would tell me in details?

Ajoy: There are open-pit mines in both places Neyvaly and Rheinbraun. I think mining could be done more successfully and much greater scale of operation in open-pit method in Phulbari compared to Barapukuria. I knew about Phulbari, its conditions and saw their mining plan. It is my observation, if the scope is created, it would be possible to extract 15 million tonnes of coal annually that could help to generate 500 MW, 1000 MW and even 2000 MW electricity in phases. It needs 6 million tonnes of coal. The pumping system that has been planned for water management in Phulbari is of high standard.

EP: Petrobangla recently held a symposium on coal where you were present. How do you evaluate the discussions and opinions?

Ajoy: Different people explained the matter in their own ways and they did so without knowing the mining systems. They do not know how it would be possible and how it would not be possible. It should not be right for me to say. But that is what I came to know from that discussion. I think Phulbari is a well-conceived project and the plans that have been made for environmental mitigation are sound and also got environmental clearance from the government. Some people will be displaced, but should be manageable with care. I personally believe Bangladesh economy will benefit once Phulbari project is fully implemented. It is assumed from evaluation that it will add 1 percent to the GDP growth.

EP: Projects face losses due delay in implementation. You have enough experience about mining. What is your observation about the incidences centering Phulbari and the delay in getting approval?

Ajoy: I am not fully conversant with the ground realities. Politics is everywhere. It is not only in Bangladesh, India faces the same situation. Last year, 456 million tonne coal and 32 million metric tonne lignite were extracted in India. Government has taken a policy to allow more of private sector in mining but many are opposing it. But we are observing it that it is not possible to meet the demand of electricity in India without extraction of coal. India gets over 70-71 percent power from coal and it will increase in future because Indias vision is to reach electricity to every body by 2012. I think that Bangladesh needs to extract coal to increase electricity generation. So, the government should take an informed decision on Phulbari without keeping the matter pending.

EP: In India policies are being changed in coal sector. Actually, what is happening there and how the civil society is evaluating these?

Ajoy: India is also facing some problems in extraction of coal. Keep it in mind that civil society is active everywhere and they are demarcating a land as forest even with a few trees and they are trying to prevent coal extraction in the name of forest preservation. Because, environmental clearances are not given in such cases. The Indian government and the regulatory authorities are working together on how to go ahead mitigating such problems. It is governments prime target to extract maximum coal minimizing all adverse effects. In 2006, the Planning Commission formed a committee to review Indias mining policy and that committee presented a set of recommendations highlighting how the license would be given and what the royalty would be. The cabinet approved the policy in the light of those recommendations but it is yet to be passed by Parliament. But this time, Parliament will pass it.

At present, there are a lot of discussions on Coal Mine Nationalization Act. Captive mining is being allowed but they are not given permission to sell coal. Permission must be given to sell coal if anyone is allowed to extract coal.

EP: You are well-aware that the civil society is doing the same thing in Bangladesh. What is observation about it?

Ajoy: Civil society is also focusing on different issues. They are trying to prescribe that underground coal mine is needed in Phulbari but there is no scope to think about such a mine for Phulbari. I want to say it again that there is no alternative but to go ahead with a large-sized open-cut mining plan for Phulbari.
EP: Some experts here are suggesting conservative mining. What is your opinion?
Ajoy: We should not use any term like conservative mining. It should be ensured that maximum extraction of coal should be the target if we think about mining. But it will be a different issue if we want to preserve coal for future generations. Then, there would be no need to have a mine. It is possible to keep closed a gas field after its development but if coal extraction is once started, there is no scope to stop it. And you have to use the extracted coal. There is risk of catching fire by self-heating if we keep coal stacked.

EP: There is also controversy about sustainable energy development. How do you explain it?

Ajoy: Actually, sustainable development, sustainable energy development are nebulous ideas. It is notoriously difficult to give a clear definition. It is said sustainable development means economic sustainability, social and environmental sustainability. I think economic sustainability is the real thing. All others will be taken care of if there is economic sustainability.

EP: You have seen our draft coal policy. Would you comment about it?

Ajoy: I had an opportunity to see it. Actually, it is not a policy paper in real sense. It is an action paper and you must keep it in mind that policy and action are completely different things. Policy is a guideline for what should be done in long term. So small issues included in it could never be part of a policy. The demand of electricity has been mentioned in the policy, which is unnecessary. Policy cannot contain demand figures; it can only articulate the overall intent for the nation.

EP: Some people are saying that it should not be rational to do an open-cut mine with 200-meter depth showing Indias Raniganj mine as example?

Ajoy: It depends on economic considerations how deep you will go to extract coal. I think it is site-specific. In India, coal is being extracted from 250-meter depth and in our country, some 87 percent coal is being extracted from open-pit mines. Underground mining is reducing day by day in India because it has become difficult in terms of costs, production volume and safety.

EP: It has been widely discussed about Phulbari mine that water level will go downward when water will be pumped out and the entire area will gradually turn into desert. What is your observation?

Ajoy: Look, water table will go down when water will be pumped out. But it is possible to solve such a problem through recharging or injecting water back. And those who are talking about desertification are only speculating.

EP: Mining affects farmland. Would re-filling of mining area restore the fertility of land?

Ajoy: Farmland will certainly be affected by mining but if we refilled it after extraction of coal, it becomes possible to vegetate it again. In some cases, the land becomes more fertile and for this topsoil must be preserved. It must be kept in mind that hybrid crops are cultivated by using fertilizer and water is used, the production will certainly be increased. On he other hand, it is possible to turn double-crop land into a three-crop land. It will take time to restore fertility if topsoil is not preserved.

EP: We have to think about community if we develop mine. How we can ensure rehabilitation of community?

Ajoy: It is really a big challenge. If the entire mining area is not developed along with the mine, it will look desert. Under the present system, it would not be enough to rehabilitate the people of the mining area, we must ensure rehabilitation of entire area economically. And for this reason, industries, schools and hospitals will be set up there and bringing back people to their respective professions. We should remember that we are making man-made capital through exploiting natural resources. People must be trained up for the new jobs and we need resources and we need to search for new energy resources. For this reason, coal extraction has become essential for Bangladesh.

EP: It is now worldwide recognized that company community bridging is necessary for developing mine. What is your opinion about it for Bangladesh?

Ajoy: It is true. Coal mines across Europe faces closure, leaving workers jobless and it is responsibility of the governments there to rehabilitate the workers and their children to new jobs through training. But USA, China, India and Australia are extracting coal to meet their energy demand. USA extracts 1000 million tonnes annually, India 450 million tonnes, China 2400 million tonnes, Indonesia 160 million tonnes, Australia 300 million tonnes, South Africa 230 million tonnes and Colombia 100 million tonnes. These countries are extracting coal and ensuring the jobs for their communities. In Bangladesh, the community must be compensated and rehabilitated properly and sensitively.

EP: Coal is being used as main raw material for power production across the world. In Bangladesh, it has been mentioned in the power sector master plan. What is your opinion?

Ajoy: Power sector master plan has been prepared aiming to achieve 8 percent GDP growth and according to this plan, the country needs to produce 43000 MW by 2025. Out of it, 33000 MW must be coal-based. I think it is an over estimate. Bangladesh needs a maximum of 22000 MW power by this period to maintain 6 percent GDP growth. From this point of view, Phulbari coal mine has huge potential because the country will get 15 million tonnes of coal annually from Phulbari and out of it, 3 million tonnes will be semi-soft coking coal, which is not used in Bangladesh. So, this coal can be exported. And remaining 12 million tonnes of coal can be used for power generation, brick fields and other commercial purposes, including coal to oil conversion. This coal can be used for next 35-40 years. In many cases, reserves could be increased with more exploration

EP: What can we do for the development of coal-based industries?

Ajoy: Bangladesh must extract coal for solving energy crisis and ensuring energy security. Steps must be taken to develop gas, coal and other energy resources for a balanced energy-mix. Electricity demand is on rise due to expansion of industries and for improving the quality of life of 135 million people. So, there is no alternative to it.

EP: Would you tell something about Barapukuria coal mine? Is here any scope to set up an open-cut here?

Ajoy: I have no clear idea about it. I think recovery will be very poor here using underground method. But it is very difficult to change it when a mine is fully developed. Emphasis should be given on extraction of maximum coal and reduce coal losses. May be after extraction of first slice, the mine is transformed into open-cut one.

EP: We need efficient manpower for the development of coal industries and we need efficient regulators. What should we do about it?

Ajoy: I think a mining engineering department must be opened in any university immediately to prepare mining engineers for the country. In India, mining engineers used to join IT profession even four years ago. But now they are getting good jobs at home or abroad. Side by side, Bangladesh should start some research institute. For example, if it is not possible to develop Jamalganj coal basin because of huge depth. But it would not be wise to keep resources unused. Some pilot projects on underground coal gasification could be taken up.

EP: Every sector faces some controversy at the beginning level and it is worldwide. Do you think carbon traders have any role against development of coal mine?

Ajoy: There is no way to deny it. But it is not possible to stop carbon emission cent percent by Third World countries like us. I think Kyoto Protocol is a device in real sense that is being used by the developed countries to stop developing countries. Its prime target is China and India. We must lay maximum emphasis on economic development.

smiler
heard from a bangla friend from here(uk) whos relative is married to a govm ministers family,has informed him that the bangla govm has awarded GCM the licence and will make an official announcement within a fortnite..this friend is very reliable and honest and i really believe him never known him to tell lies....IM Gonna top up like mad come monday,SUGEST U DO TO, LIKE MYSELF YOUVE BEEN IN THIS ONE FOR A LONG TIME!!!!

Good to hear, yep been in this over a year so happy to see the tic up !! and good news for Bangladesh ! :))

Issues of Energy Sector of Bangladesh
Saleque Sufi
Sunday, 06.29.2008, 06:41am (GMT)

http://energybangla.com/index.php?mod=article&cat=SomethingtoSay&article=776

We must not waste any more time in unproductive arguments over mining methods of shallow seam coal. Open pit coal mining in case of Shallow Seam mines at Phulbari and Barapukuria must commence without any fuss. The Contract with Asia Energy Corporation may be revisited if any or some of the clauses are against national interests. If legally permitted we may renegotiate. If not we must let it proceed. Exploration for gas in offshore and onshore must proceed aggressively to find new resrves. The known reserves must be further proved through proper reservoir management.

FINGERS CROSSED ajcc ! :-)

sounds good Smiler..... just awaiting the permit to mine and then all systems go (hopefully after all this time......) Lots of positive chatter coming from the Bangla side..... time to sow it all up - not just for the shareholders sake but also for the country and community of Bangladesh.