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/

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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.

WATER, POWER CRISIS CRIPPLES BANGLADESH'S GARMENT SECTOR: ASS'N
Jun 30, 2008
CHITTAGONG - Acting President of Chittagong unit of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) MA Salam on Friday said that Chittagong, known as Bangladesh's commercial capital, has become economically crippled by the water, gas and power crisis.

Addressing a press conference at a local hotel, he alleged that owing to the power crisis production losses in 700 garment factories in this region exceed Tk 100 crore (US$14.6 million) a month.

http://news.tradingcharts.com/futures/2/5/110570852.html


And they need it SOON !!!!!!!!!!!!!!!!!!!!!!!!

Extract from article in Energy Bangla.

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

With oil price creating record high every passing day with no signs of going down what Bangladesh can do? It is a global crisis. Like other pressing national issues it is also national crisis. Can Bangladesh rise above political divide to work out national consensus and keep energy out of politics to meet present and emerging crisis?

Bangladesh urgently requires reducing dependence on imported petroleum products. It must aggressively explore and exploit its own basic energy resources- coal & gas. In this hour of crisis Bangladesh must observe austerity in all possible ways. We can not have the luxury to misuse and waste energy in any form. The massive Government Sector automobile fleet must be regulated properly to arrest misuse. All government vehicles must be converted to CNG within a strict target. Research must be made how to expand the use of CNG driven pumps for irrigation, railway engines and riverine vessels.

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.

Bangladesh coal projects may go ahead after national policy adopted
Posted by phulbarinews on July 2, 2008

M Azizur Rahman, Bangladesh

A number of international companies eyeing investment into Bangladeshs coal sector with foreign direct investment proposals worth around $5 billion may shortly get the go ahead after the government adopts the nations first national coal policy. At least four foreign companies are awaiting government approval for their respective coal-mine development proposals for several years after applying to the state-run Board of Investment.

The companies include UK-based GCM Resources (formerly known as Asia Energy), Indian business conglomerate Tata group, South Koreas Luxon Global and US-based Global Vulcan Energy, said a senior BoI official. He said the foreign investment proposals pending with the BoI include a $2.5 billion project from GCM Resources, a $1.6 billion venture from Global Vulcan Energy, a $1.5 billion investment from Luxon Global and a portion of the $3 billion earmarked from Tata.

GCM Resources proposed in October 2005 the development of an open-pit coalmine at Phulbari with a 1,000-MW mine-mouth power plant. Before submission of the investment proposal, GCM Resources conducted a feasibility study on the Phulbari project at the cost of $18 million, company sources said. Tata plans to spend a portion of its $3 billion investment proposal placed in April 2006 developing the open-pit Barapukuria coalmine with a 300-MW mine-mouth power plant. Tatas proposal also includes investment in steel and fertilizer plants.

Global Vulcan Energy signed a memorandum of understanding with the BoI in 2005 to invest $1.6 billion to develop a coalmine at Jamalganj and set up a mine-mouth power plant. The US company also proposed to set up two organic fertilizer plants in Bangladesh. Luxon Global placed its investment proposal and signed a MoU with the BoI in July 2005 intending to develop a coalmine, a mine-mouth power plant, a fertilizer factory and a liquefied natural gas plant.

Since the first such proposal was placed to the BoI in May 2005, the successive governments are holding up these proposals on the pretext of adopting a relevant policy first. Dr M Tamim, Special Assistant to the Chief Adviser on energy issues, said the companies will have to wait until the adoption of the countrys first-ever national coal policy before receiving a government decision.

We are working on adoption of the coal policy. I am hopeful that it might be done in the next two months, Dr Tamim said. The countrys future coal-sector developments would be based on the coal policy, he added


http://phulbarinews.wordpress.com/2008/07/02/bangladesh-coal-projects-may-go-ahead-after-national-policy-adopted/

Fording and rivals plunge as coal price falls
Wed Jul 2, 1:06 PM

CALGARY, Alberta (Reuters) - Fording Canadian Coal Trust's units fell more than 17 percent on Wednesday, with rival coal miners also falling, as coal prices plunged in Europe and the United States.
Units in Fording, which owns 60 percent of the Elk Valley Partnership, the world's No. 2 exporter of metallurgical coal, fell C$16.00 to C$81.50 midday on the Toronto Stock Exchange. Earlier the units touched C$79.58.

Shares in other coal producers were also hit. Western Canadian Coal Corp dropped C$1.20, or 13 percent, to C$7.76 a share, while Grande Cache Coal Corp fell 16 percent, or C$1.41, to C$7.16 a share.

Coal prices plunged by $20 a tonne on Wednesday, with some September delivery coal in Europe dropping to $207 a tonne and U.S. benchmark coal falling by as much.

The price for metallurgical coal, which is crucial for making steel, had surged this year on burgeoning demand while flooding in Australia cut supplies.

Fording said earlier this year that its average contracted coal price for the 2008 coal year, which began April 1, had nearly tripled to C$275 per tonne from $93 in the year-prior period.

Prior to Wednesday's sell-off, Fording units had risen 179 percent over the past 12 months, the fourth-best performance on the Toronto Stock Exchange.

Draft natl coal policy awaits advisors nod
Posted by phulbarinews on July 7, 2008

M Azizur Rahman

The energy ministry has finalised the national coal policy, which will be sent to the council of advisers soon for their final nod despite opposition from the law ministry against adoption of it, officials said. We have finalised the coal policy and will place it to the council of advisers for approval very soon, Chief Advisers special assistant on energy issues Professor M Tamim has told the FE.

Refuting the law ministrys plea to draft an act instead of a policy to facilitate the process of coal extraction, Professor Tamim said a policy is a broader jurisdiction and deals with a variety of issues like environment, land, mines and minerals. Professor Tamim, however, said the law ministrys comments on the national coal policy would also be sent to the council of advisers along with the policy for their final nod.

Sources said the law ministry last week recommended adoption of an act instead of a policy pouring cold water on the energy ministrys years of efforts to get a national coal policy in place. The energy ministry kept investment proposals worth several billion US dollars on hold in last several years on the plea that the proposals would be considered after adoption of the countrys first ever-national coal policy.

Regarding the draft of the national coal policy as finalised by the energy ministry, Professor M Tamim said the policy has no major deviations from the recommendations of the advisory committee headed by former BUET vice chancellor Abdul Matin Patwary. The advisory committee in its report recommended that foreign companies be allowed to develop the countrys coalmines under a joint venture with a local coalmining company.

No foreign companies would be permitted to develop a coalmine independently, the draft of the national coal policy pointed out categorically. As is elsewhere in the world, coalmines in Bangladesh can be developed by applying either the open-pit method or the underground method, the advisory committee suggested. But the mining method should be determined on the basis of the geological structure and the reserve potentials, the committee observed.

A Coal Sector Development Committee comprising professionals from all walks should be constituted for smooth operation of coalmines and other relevant activities. The committee would fix the royalty rate of different coalmines considering mine-specific geological structures instead of the existing mining rules, in which the royalty rate has been fixed at 6.0 per cent for the open-pit mining and 5 per cent for underground mining, it said. The committee also recommended awarding licences for coal exploration from any coalmine through open tenders, though the existing rules say that the licences will be awarded on the first-come-first-served basis.

The government will follow the countrys existing Land Acquisition Act to acquire required land and compensate the displaced people from the mining sites to ensure smooth development of coalmines and its subsequent utilisation, officials said. To address the environmental and social issues, the government might adopt globally-accepted guidelines of equity principles, the draft of the national coal policy pointed out. Khani Bangla, an entity under the state-owned Petrobangla, would be given the responsibility to look into the developments relating to coal and other issues relevant to the countrys mines and minerals.

The advisory committee, however, had proposed formation of a separate company named Coal Bangla empowering it to monitor the coalmine development activities. There will be no option of coal export other than cocking coal in the coal policy. Cocking coal is a kind of coal, especially used in steel manufacturing plants. Setting up a coal-fired power plant at the mine mouth might be made mandatory for developing any coalmine under the national coal policy.

Source: http://www.thefinancialexpress-bd.info/search_index.php?page=detail_news&news_id=38966

July 7, 2008

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Shahiduzzaman Khan

Footdragging on the passage of the draft national coal policy continues with the law ministry withholding yet its much-awaited vetting. As a result, some important investment decisions are now facing a great deal of uncertainty. The law ministry is now suggesting that the energy ministry should formulate an act instead of a policy. In support of its contention, the law ministry said the existing Mines and Mineral Rules 1968 is an age-old act and it has not been amended as yet to give a boost to efforts for development of the coal sector. Some sections of the draft coal policy, the law ministry pointed out, contradict the existing rules. Under the draft national coal policy licences for exploration or extraction from any coal-field will be awarded through open tenders, whereas the existing rules say that the licences would be awarded on first-come-first-served basis.

Besides, the draft policy says that a proposed coal sector development committee will fix the royalty rate whereas the mining rules say that the royalty on coal extraction would be 6.0 per cent for open-pit mines and 5.0 per cent for underground mines. The existing rules have certain number of flaws and deficiencies that need amendment. But the energy ministry said that an act is necessary for a specific issue but the energy ministry was working to help promote development of the coal sector as a whole by formulating the national coal policy first. The ministry for the last several years concentrated on preparing only the national coal policy leading to keeping several billion dollar investment proposals, in abeyance. It was anticipated that adoption of the policy would give a strong and pro-active signal to initiating efforts, in reality, for large-scale development of the countrys coal sector.

Now the questions arise: why was the government silent for all these years about preparing an act first instead of a policy? Why the law ministry did not instruct the energy ministry to prepare an act at the first instance? Does it look good that the two line ministries, as it appears, should be at loggerheads over this issue? Will the hard labour of the energy ministry officials to prepare a draft coal policy for all these years go in vain? These are the pertinent questions that need to be answered. This sudden but and unpalatable decision has caused further setback to the already pending foreign investment proposals worth around US$ 5.0 billion to develop the countrys coal sector. The companies eyeing on adoption of the coal policy for their investments include UK-based GCM Resources (formerly known as Asia Energy), Indian business conglomerate Tata group, South Koreas Luxon Global and US-based Global Vulcan Energy.

Pending investment proposals with the Board of Investment (BoI) include a $2.5 billion project from GCM Resources, a $1.6 billion venture from Global Vulcan Energy, a $1.5 billion investment from Luxon Global and a portion of the $3.00 billion earmarked from Tata. Among the foreign companies, GCM Resources proposed in October 2005 the development of an open-pit coalmine at Phulbari with a 1,000-MW mine-mouth power plant. Before submission of the investment proposal, GCM Resources conducted a feasibility study on the Phulbari project at the cost of $18 million. Tata plans to spend a portion of its $3.0 billion investment proposal placed in April 2006 for developing the open-pit Barapukuria coalmine with a 300-MW mine-mouth power plant. Tatas proposal also includes investment in steel and fertiliser plants. Global Vulcan Energy signed a memorandum of understanding with the BoI in 2005 to invest $1.6 billion to develop a coalmine at Jamalganj and set up a mine-mouth power plant. The US company also proposed to set up two organic fertiliser plants in Bangladesh.

Luxon Global placed its investment proposal and signed a MoU with the BoI in July 2005 intending to develop a coalmine, a mine-mouth power plant, a fertiliser factory and a liquefied natural gas plant. Since the first such proposal was placed to the BoI in May 2005, the successive governments have been holding up the same on the ground of adopting a relevant policy first. In fact, the draft coal policy does not restrict open pit mining, as was initially demanded by some pressure groups. Instead, the policy identifies mining methods as technical issues that should be decided on the basis of technical viability and individual cases. Though the committee believes that quick action is required to tap the coal resources as the country will face a big energy crisis from 2015, its go-slow approach to foreign and private investment proposals will compound the problem further.

The draft policy says that if Bangladeshs GDP remains as low as 5.5 per cent until 2025, the country will need to generate 19000 megawatt of additional power. If the GDP growth rate rises to as high as 8.0 per cent, it would need 41000 MW of power. But at the same time, Petrobangla has said that production of gas which has been the key source for power generation will start to decline from 2011. This is where the countrys coal resources should play a role. The policy adds that to meet power demands in a GDP growth rate scenario of 5.5 per cent, Bangladesh will need 136 million tonnes of coal until 2025. If the GDP growth rate accelerates to 8.0 per cent a year, the country will need 450 million tonnes of coal. The countrys four existing coalfields of Barapukuria, Phulbari, Khalashpir and Dighipara can cater to this need until 2030 or so. Of these, only Dighipara is being mined at present.

The draft policy does not pay much attention to the scope and necessity for developing and harnessing alternative energy sources, including renewable ones. And it was not expected to do that. A national energy plan has to deal with all such issues. However, there is no denying that, coal can only be one ingredient in a countrys energy mix. Hence, the coal policy has to be an integral part of an overall comprehensive energy strategy covering all existing and potential renewable and non-renewable energy sources.

http://northbengalnews.wordpress.com/2008/07/07/for-ending-the-stalemate-on-passage-of-coal-policy/

Now the questions arise: why was the government silent for all these years about preparing an act first instead of a policy? Why the law ministry did not instruct the energy ministry to prepare an act at the first instance? Does it look good that the two line ministries, as it appears, should be at loggerheads over this issue? Will the hard labour of the energy ministry officials to prepare a draft coal policy for all these years go in vain? These are the pertinent questions that need to be answered. This sudden but and unpalatable decision has caused further setback to the already pending foreign investment proposals worth around US$ 5.0 billion to develop the countrys coal sector. The companies eyeing on adoption of the coal policy for their investments include UK-based GCM Resources (formerly known as Asia Energy), Indian business conglomerate Tata group, South Koreas Luxon Global and US-based Global Vulcan Energy.

Pending investment proposals with the Board of Investment (BoI) include a $2.5 billion project from GCM Resources, a $1.6 billion venture from Global Vulcan Energy, a $1.5 billion investment from Luxon Global and a portion of the $3.00 billion earmarked from Tata. Among the foreign companies, GCM Resources proposed in October 2005 the development of an open-pit coalmine at Phulbari with a 1,000-MW mine-mouth power plant. Before submission of the investment proposal, GCM Resources conducted a feasibility study on the Phulbari project at the cost of $18 million. Tata plans to spend a portion of its $3.0 billion investment proposal placed in April 2006 for developing the open-pit Barapukuria coalmine with a 300-MW mine-mouth power plant. Tatas proposal also includes investment in steel and fertiliser plants. Global Vulcan Energy signed a memorandum of understanding with the BoI in 2005 to invest $1.6 billion to develop a coalmine at Jamalganj and set up a mine-mouth power plant. The US company also proposed to set up two organic fertiliser plants in Bangladesh.

Luxon Global placed its investment proposal and signed a MoU with the BoI in July 2005 intending to develop a coalmine, a mine-mouth power plant, a fertiliser factory and a liquefied natural gas plant. Since the first such proposal was placed to the BoI in May 2005, the successive governments have been holding up the same on the ground of adopting a relevant policy first. In fact, the draft coal policy does not restrict open pit mining, as was initially demanded by some pressure groups. Instead, the policy identifies mining methods as technical issues that should be decided on the basis of technical viability and individual cases. Though the committee believes that quick action is required to tap the coal resources as the country will face a big energy crisis from 2015, its go-slow approach to foreign and private investment proposals will compound the problem further.

The draft policy says that if Bangladeshs GDP remains as low as 5.5 per cent until 2025, the country will need to generate 19000 megawatt of additional power. If the GDP growth rate rises to as high as 8.0 per cent, it would need 41000 MW of power. But at the same time, Petrobangla has said that production of gas which has been the key source for power generation will start to decline from 2011. This is where the countrys coal resources should play a role. The policy adds that to meet power demands in a GDP growth rate scenario of 5.5 per cent, Bangladesh will need 136 million tonnes of coal until 2025. If the GDP growth rate accelerates to 8.0 per cent a year, the country will need 450 million tonnes of coal. The countrys four existing coalfields of Barapukuria, Phulbari, Khalashpir and Dighipara can cater to this need until 2030 or so. Of these, only Dighipara is being mined at present.

The draft policy does not pay much attention to the scope and necessity for developing and harnessing alternative energy sources, including renewable ones. And it was not expected to do that. A national energy plan has to deal with all such issues. However, there is no denying that, coal can only be one ingredient in a countrys energy mix. Hence, the coal policy has to be an integral part of an overall comprehensive energy strategy covering all existing and potential renewable and non-renewable energy sources.

Source: http://www.thefinancialexpress-bd.info/search_index.php?page=detail_news&news_id=38530

http://northbengalnews.wordpress.com/2008/07/07/for-ending-the-stalemate-on-passage-of-coal-policy/

; 0

The downtrend would look at 150p

All hangs on news if good 5+ ... However A sea of red on my watch list today : (

CG for quick use of coal for electricity
July 8, 2008

ET Report

The caretaker government has decided to put major emphasis on extracting coal and installing coal-based power plant to meet the increasing electricity crisis and reduce pressure on coal. The decision came from the meeting of the council of advisers that discussed on fuel situation following the power-point presentation by Special Assistant to Chief Adviser Dr M Tamim Wednesday, relevant sources said.

The meeting has brought the coal issue to midterm importance category from long-term one to mobilise highest efforts for the sector. The issue could not be elevated to short-term importance category, as coal extraction and installation of power plant consume time, they said. The meeting, however, has asked the concerned special assistant to finalise the coal policy within shortest possible time and start woks in the coal sector. It was hinted that coal policy might get its final shape and endorsement within a week, sources said.
The government has already taken policy decision to release maximum gas from power generation for using in coal fired generation. The council of advisers reviewed the coal reserves position in the country and emphasied extractions of the resource to go coal for power generation. The country now experiences around 500 mw stranded power capacity due to gas supply limitation. A decision has been taken not to approve any new gas-based power plant from the existing gas reserves. The council also directed the power ministry to install some non-gas based short-term rental power plants in the Chittagong region under government funds to feed the power-starved port city as they could give power within the shortest possible time.

Dr. Tamim in his presentation showed that the port city will not get rid of load shedding soon as the power plants located in Chittagong cant produce power due to gas shortage, and due to power shortage the PDB could not feed the region through the national grid. The consumption of gas in the last fiscal was around 0.6 trillion cubic feet, although as per the master plan the demand for gas in the country should be 0.6 TCF in 2009-2010. It is learnt that Chief Adviser Dr. Fakhrudding Ahmed expressed deep concern at the power and gas crises in the Chittagong region and asked the power ministry to go for short-term rental plants to serve the port city, as all economic activities there almost ground to a halt due to gas and power shortages.

The government has already taken moves to install seven costly rental power plants, six of them gas-based, in the country but most of the power plants are yet to come into operation as the errant companies selected by the government missed deadlines several times. None of the plants, however, are located in Chittagong. It may be mentioned that despite having serious objections from the Power Development Board (PDB), the Power Division adopted the idea to implement the high-cost rental power plants at the fag end of the BNP-led coalition governments tenure.

Lately, the government has been planning to install the costly (it would be costlier as it would be non-gas based) plants again as it has no other alternatives, a meeting source said. Chittagong is running gas and power shortages. It is getting 40-50 mmcfd less gas than required. On the other hand, the average load shedding in Chittagong is 190 MW to 200 MW. The demand of electricity in Chittagong is 490 MW, a PDB official said. .The country at present is experiencing around 1,500MW of load shedding as the PDB generates around 3,200MW of electricity against a demand for around 4,700MW. Chittagong now faces electricity shortage of around 190MW against its demand for around 490MW while gas shortage in the city has been estimated at around 100 million cubic feet per day.Even if rental plants come into operation, the situation in Chittagong will not improve much as the Chittagong power plants like Raujan and Shikalbaha are facing gas shortage. Power from other parts of the country cannot be transmitted there as it will create voltage problems. Chittagong needs local power plants, said the source.

Tamim, however, apprised the meeting that the electricity situation in the port city would improve slightly after the Kaptai hydropower plant increases production.The meeting also asked the ministry to expedite the process to increase gas supply by enhancing the capacity of pipeline and completing work-over programmes on some of the wells in different gas fields


http://phulbariproject.wordpress.com/2008/07/08/cg-for-quick-use-of-coal-for-electricity/