21 December 2012
Report and reflection by Richard Solly, London Mining Network
Yesterday was nearly the shortest day, and the weather in London was heavy, grey and wet, and inside the GCM Resources AGM everyone felt gloomy.
Company Chairman Gerard Holden had a cold, but hoped his voice would hold out till the end of the meeting. A number of shareholders clearly felt gloomy about the prospects of the company ever getting permission from the Government of Bangladesh to go ahead with its proposed Phulbari coal mine, and were worried that there were things the company was not telling them. Others – people from London Mining Network, World Development Movement and our friends – felt gloomy about what would happen if the mine does go ahead.
The only bit of seasonal cheer was delivered right at the end, when Father Christmas arrived, courtesy (apparently) of the Climate Justice Collective – but more of that in the report below.
Director Steve Dattels, up for re-election, was not there. That may have been wise, given the questions raised by the continuing scandal in Namibia over the sale of assets by Uramin, another company that Mr Dattels was involved with. But nobody mentioned that.
There was plenty of criticism of the company, however, over the potential impacts of the Phulbari mine. And the answers given by both Gerard Holden and Executive Director Gary Lye painted a picture of paradise on earth. If only the pesky locals and their political allies would wise up, accept the enlightened western vision of progress and drop their absurd objections to the mining project, everything would be better for everyone – more houses, more water, more crops, more electricity, more jobs, more money.
What they seemed unwilling to address was what happens if, despite the fact that the company has explained the supposed merits of the project, local people still don’t want it – partly because they don’t believe the company’s assurances (and why should they, given the track record of the mining industry elsewhere?) and partly because they feel an attachment to their land and way of life (and why shouldn’t they?) and don’t want them to disappear down an enormous hole in the ground. And local people, in enormous numbers, have been making clear for years that they don’t want the project. What part of “No” does GCM not understand? To date, local people’s expressions of dissent have been met by armed repression by State forces. Does GCM really want to press ahead with this project at the cost of continued violence? Why not just cut their losses and leave?
The full works: report and commentary on what went on at the AGM
Reportage below is in normal type; commentary in italics.
After a brief introduction, during which he suggested that general questions be left until the end of the meeting, Gerard Holden called for a vote to accept the company’s Annual Report and Accounts. I pointed out that shareholders could hardly be expected to vote on the report without having a chance to ask questions on it. So Mr Holden called for questions.
I asked about access to water. I said that Catarina de Albuquerque, the UN Special Rapporteur on the human right to safe drinking water and sanitation, has stated that “Access to safe drinking water for some 220,000 people is at stake,” at Phulbari. The water table may be lowered by 15-25 metres over the life span of the mine over an area extending some kilometres beyond the mine site. Page 4 of the company’s Annual Report, Poised to Deliver, says that “overall water quality and availability for people in the affected area will be improved.” I asked the company to explain how.
Gerard Holden said that the mine will impact on the water table and that the company had done a lot of work in its feasibility study about water table flows. He said that you get a cone depression around an open pit. The mitigation in the company’s plan is to move water so that people continue to have access to it for drinking, irrigation and other uses. In fact, the water table around the mine will be depressed for more than six miles beyond the mine’s footprint, affecting more than 190 square miles. The plan includes diverting the Khari Pul and Namissa rivers, as well as dredging of the Pussur River to allow for coal transport. Details on Water Management on GCM website include this: “To ensure that ground water levels are not unduly affected in the surrounding areas, some of this water is injected into the ground at a distance from the mine.”
Gerard Holden said that the mine site is in an aquifer running from the Himalayas to the coast. This is similar to the situation around Cologne in German, so GCM sought advice from a mining company there on management and modelling of water flows. The German company, RWE Power International, is the water consultant for the project (the source for this is ‘International Advisers and Consultants’ for the project on GCM’s website.
Gerard Holden said that the UN Special Rapporteur had drawn her information from the public domain and had excluded information based on fact, engineering or modelling. In fact, information was drawn from the Final 2006 Report of the Expert Committee formed by the Government of Bangladesh to assess the proposed project. GCM had offered this information and it had been declined. The UN Rapporteurs had not visited the site. Executive Director Gary Lye added that the UN had not checked the facts and that the company had given them the water management plan. It would be necessary to extract water from the mine pit but GCM would deliver much of this water to the nearby township as tap water. At present, people have to pump water out of the ground but do not have electricity for pumping. Experts are concerned about the risk of desertification in northwest Bangladesh. Roughly 30% of the tube wells used to access water are already inoperable during the dry season as a result of declining groundwater resources and nearly half of all people in Phulbari report that they do not currently have enough water to meet their needs.
Gerard Holden said that GCM will deliver water for domestic, agricultural and industrial use. One third of the water withdrawn from the pit will go back into the ground. The mine will be surrounded by bore holes and about one third of the water extracted from the pit will go back into the ground, ensuring more water is available in the areas where it is reinserted, and maintaining the water supply.
Gerard Holden said that each time he visits Phulbari he is troubled by the poverty of the people who lack sewerage and reliable clean water supplies. Human waste is left on the surface in such a way as it can pollute ground water. GCM is offering a proper water and sewerage system, enhancing water quality and availability. (It also intends to leave a toxic lake (the former pit) that is likely to be contaminated by known carcinogens and toxic heavy metals including mercury, lead, and arsenic.)
Kirsty Wright, of World Development Movement, asked: “Are the investors aware of the OECD complaint that World Development Movement and International Accountability Project jointly submitted to the UK National Contact Point prior to this AGM? Are they aware of the concerns raised by John McDonnell MP in Parliament on 28 November, when he condemned GCM Resources and the Phulbari project as particularly egregious examples of “destructive,” “outrageous” and “shocking” mining company practices, and noted that they are damaging the UK’s reputation abroad? He called upon the UK Government to hold the company to account. Together with the concerns raised by the UN panel of experts on 28 February, investors must surely be aware that the reputation of this company is in serious danger. Could you comment?”
Gerard Holden was dismissive. The company was aware of the criticisms of various groups but these groups refused to engage with the company to discuss these concerns. John McDonnell MP had not bothered to get the company’s side of the story.
Rose Collins, an independent shareholder who said that she was from Guyana, said that water is a problem in all tropical areas and asked whether the mine would create problems of arsenic contamination.
Gary Lye replied that water in the area had been tested by the company’s experts and that there is no arsenic in the water in that part of Bangladesh. He suggested that the potential for the mine creating an arsenic contamination problem was low.
Gerard Holden added that the company had done a “massive suite of tests” on air and water quality and that one of their plans was to distribute water if the monsoon fails. Of course, monsoon failure may become ever more likely as climate change deepens – climate change for which the burning of coal bears a disproportionate responsibility.
Ruth London asked about food security for displaced families. The Phulbari area is very fertile and not subject to flooding. At least 40,000 people will be removed from their land and will not receive land in compensation. She asked about the impacts on nutrition and health, on carers – mostly women – for those who became sick, and about funeral costs and compensation for grieving families. Given the concerns expressed by the UN Rapporteurs and by local people, and given the wider ranging impacts on food stocks in Bangladesh and on climate change, which particularly affects Bangladesh’s low lying flooded areas, how could the company persist with its plans?
Gerard Holden replied that a certain amount of land would indeed be permanently removed from use as a result of the project but that other land would be rehabilitated. The waste dump would be rehabilitated and forested. The plan is to have a continuous process of rehabilitation. The German mining company in Cologne has allowed the quality of the land to be improved, leading to better crop yields. Local people around Phulbari do not have decent fertiliser or seed quality, so GCM will improve them and thus enable an extra crop-growing season. This would allow local people to produce more food in a more refined way, partly by giving them much more water.
Ruth said that the directors of GCM might feel unhappy if their own homes were to be continually rehabilitated and they themselves were forcibly removed. She said that local people do not necessarily have the same view of what is good for them and their land as the company has.
Rose Collins intervened at this point. She said she hoped the company would be considerate. US companies had dug out bauxite in Guyana, destroyed forests and left people with nothing but great holes in the ground.
Gerard Holden replied that companies could not behave that way any longer. GCM was not looking to destroy Phulbari but would invest hundreds of millions of dollars to build mosques, community centres and other facilities. He did not mention the fact that GCM intends to destroy or move 138 mosques, temples and churches, 692 graveyards, and 2 ancient archaeological sites.
Ruth expressed doubt that this would actually occur, given the record of other such mining projects.
Gerard Holden replied that the company knows what it is doing. Roger Moody, who in 2008 made a study of the mine’s potential impacts, and the Government of Bangladesh’s Expert Committee, disagree – both expressed concerns about the company’s complete lack of prior experience with mining as a company (individual board members have experience but GCM does not). Among other things, said Mr Holden, the company would create forest land by planting hard wood, soft wood and fruit trees. Gary Lye added that the company’s resettlement plan is not their own. He said that the IFC guidelines include consultation. He said that you build consultation from the ground up. The details of people’s choices are built into the plan Page 4 of the Annual Report talks about the Resettlement Plan, which is dynamic and based on people’s wishes. He said that about one third of the people in the town live in the eastern part of the town and want compensation so that they can leave – although, he added, international standards mean that the company is supposed to monitor their wellbeing. Two thirds of the current town’s inhabitants want to move to the new town. Of the rural families, one quarter want to give up farming and go, because production costs mean they cannot make a reasonable living any more. Most of the farmers are sharecroppers and have to give part of their income to the landowner. GCM will have income generating programmes and will train people and offer preferential employment.
Jake Colman asked about Indigenous Peoples’ rights. He said: “Those likely to be affected include entire villages of Santal, Munda, Mahili and Pahan Indigenous Peoples. UN Special Rapporteurs Raquel Rolnik (who deals with housing) and James Anaya (who deals with Indigenous Peoples) said in February that “Displacement on this scale, particularly of indigenous peoples, is unacceptable without the indigenous peoples’ free, prior and informed consent, and poses an immediate threat to safety and standards of living.” Indigenous communities have been protesting against the mine, so GCM clearly does not have their consent. How can you justify pressing ahead with this project in the light of this?”
Gerard Holden said that a number of villages in the area are inhabited by “’Indigenous Peoples’ in inverted commas.” He said that the people in these villages are visibly different from the majority of the population but that they are not indigenous to the area, having been pushed into it from elsewhere, and they are very poor. The Government of Bangladesh denies that there are Indigenous Peoples in the country. The Bangladesh Supreme Court has issued a ‘Show Cause’ notice to the Government to explain how it reached such a conclusion. By using the term ‘in inverted commas’, the Chairman associated himself with the Government view – a view strenuously challenged by Indigenous Peoples’ organisations in Bangladesh. The consultant who did the anthropological research for the Indigenous Peoples’ Development Plan said that they trace their ancestry in the region back 5,000 years.
Mr Holden said that GCM had done a lot in its Environmental and Social Impact Assessment to find out what the people want and to protect their livelihoods. He said that the company comes from the industry perspective of accepting Free Prior Informed Consultation but does not believe in the need for Free Prior Informed Consent, as this could mean that one individual could hold everyone else to ransom. This shows both a complete misunderstanding of the varied ways in which different Indigenous Peoples discuss and decide on matters of concern, and a rejection of the United Nations Declaration on the Rights of Indigenous Peoples, which explicitly recognises Indigenous Peoples right to Free, Prior Informed Consent, rather than consultation. The right to consent does recognise Indigenous Peoples’ right, as Peoples, to say no to development projects on their land. It does not give such a right to individual members of an Indigenous People.
Mr Holden said that the company knew all about the conflicts in communities – who does not like whom, about family disputes back at least a hundred years. I found this comment rather sinister: why does the company have such detailed knowledge of Indigenous communities’ internal dynamics, and what does it intend to use it for?
Gary Lye added that the company believes that there are 2300 indigenous peoples in the project area, mostly in the south eastern part of it, so they will not be affected for many years. These people want to move closer to the Roman Catholic mission to the south east of them. He said that GCM takes the plight of less advantaged people very seriously. The company’s Indigenous Peoples Development Plan has been given to activist groups in Bangladesh. The company is on top of looking after these people through consultation.
Gary Lye went on to say that there are landless people in the area and that the company will look after them as if they had land title (meaning that both those with and without title will become landless. The company’s Draft Resettlement Plan baldly states that “Large tracts of cultivation land will be acquired and most households will become landless.”) Mr Lye said that there is a lot of scaremongering. Landless people work mostly in the timber industry. A lot of propaganda has been spread to cause these people fear. The company recognises that landless people live there, that many are indigenous people, and that they therefore feel twice threatened. But the company, he said, will improve their lives.
Gerard Holden said that people will be compensated with money, housing and new crop allocations. Nobody will be worse off as a result of the company’s plans.
Jake said that the company was judging by its own standards. Communities would be broken up and the ecology affected. Local people may not agree that this is an improvement.
Gerard Holden said that the company had gone to a great deal of trouble to find out what each family wants and to fulfil it. The mine is a long-term project and the company does not want people being significantly unhappy. He asked why the company would wish to do that.
Jake said that the company’s bottom line was profit. Gerard Holden responded that this was not the company’s only goal, as it had other obligations as well.
The Chairman then brought questions on the Annual report to a close and moved to the resolutions, all of which were passed. Nobody asked any questions or offered any comments. The Chairman then closed the formal part of the meeting. He then read out the following statement.
“As detailed in the Company’s 2012 Annual Report, we have been pursuing approval of the Phulbari Coal Project by engaging directly with the Government of Bangladesh as well as developing and enhancing relations with the local community.
“Over the last nine months we have met with all the appropriate Government officials and potential coal customers in Bangladesh and are currently seeking an audience with Prime Minister Sheikh Hasina, in her capacity as Minister for Power, Energy and Natural Resources.
“In the Dinajpur region, where Phulbari is located, the Company continues to open up new channels of communication with the local community. Focus group discussions and agriculture improvement workshops with farmers have taken place across the Project area, and surveys are nearing completion with the support of both the local administration and the Home Ministry. We are committed to carrying out meaningful, culturally appropriate consultation with potentially affected people prior to development of the Project.
“We are also committed to developing the Project to the highest international and national environmental and social standards. To that end we engaged international consultants Environmental Resource Management to review the Project’s Environmental and Social Impact Assessment in light of the new performance standards released by the International Finance Corporation. Those “gaps” identified will be addressed in the coming months.
“We understand from press reports today that complaints have been made about the development of the Phulbari Project to the OECD. We have not received any OECD complaint and this is the first we have heard of it. It is therefore hard to comment on the substance of this allegation. We stated at our AGM last year that we were available to meet with any group interested in a constructive dialogue and to discuss their concern but no group has taken us up on this offer. We would therefore welcome the opportunity this process would provide to discuss the project and respond to the allegations and incorrect information being circulated.
“We are committed to developing the project and managing its social and environmental impacts to the highest international standards. Not only will the project address Bangladesh’s energy needs, it will also deliver significant benefits for the local community. These include an estimated 17,000 new jobs, improved living conditions and livelihoods for project affected people with approximately 40,000 progressively resettled as the mine develops (as opposed to the figure of 222,000 suggested); abundant high quality water for irrigation and drinking, and expected increased agricultural production from the excavated land which will be progressively rehabilitated.
“Over the last 12 months the Company’s financial resources have been significantly impacted by the fall in share prices of the investments held, in line with other junior mining companies. However we continue to have sufficient resources for the foreseeable future. GCM is in discussions to obtain further equity funding while management are undertaking a thorough review of operating costs.
“The share price of GCM has fallen substantially since the last Annual General Meeting and we are aware of the frustration felt by shareholders. We believe the fall in share price can mainly be attributed to the sale of shares by a large investor who are rebalancing their portfolio, and certainly does not reflect the progress we feel has been made in pursuing approval.
“A developed Phulbari Coal Project in a responsible and sustainable way will generate the most benefit for shareholders, for the local Phulbari community and for the country. Accordingly, our aim is to receive Project approval and then to commence mine development and the associated community programmes as soon as possible.”
He then invited general questions.
One shareholder asked him if the company would get project approval before the next election in Bangladesh. Gerard Holden said it would. The shareholder asked what had changed in Bangladesh to give him this confidence. Gerard Holden said that communication with members of the Government of Bangladesh had improved significantly over the past two months.
The shareholder said that the press in Bangladesh is controlled by Anu Muhammad’s group. The company kept inviting them to come to them to enter into dialogue, but would it not be better to go to the group and dialogue with them?
Gerard Holden replied that the media in Bangladesh is controlled by a number of different factions. Gary Lye and his team have spent a huge amount of time talking to the media but some editors would never change their views. Gary has often been on local television talking about how the Phulbari project will impact positively on Bangladesh. The Home Minister and others have been very supportive of the project.
The shareholder asked if there had been an open commitment from the Prime Minister or other ministers that the project would go forward.
Gerard Holden answered that the Prime Minister and other ministers had not stopped the project. He said that the Energy Advisor has his own agenda and that GCM “would not play his game.” He had brought the country to its knees. GCM is working around the Energy Advisor in many ways. He is an advisor, not a minister. He is under huge pressure for what he has done with rental power stations. He may be forced to resign because people do not have electricity.
A shareholder said that the Chairman seemed very confident that the company would get project approval before the election. In an election year, something which has a lot of political opposition would be a risk for the party in government to approve prior to an election. He asked how much cash the company had, and how long it could continue without raising more cash.
Gerard Holden said that the company had cash up to June 2014, six months after the next election. The company is in discussion with people who may bring new cash to the project. He said he could not go into further detail.
The shareholder asked again whether the company could be confident that it would get approval before the election. Gerard Holden said that the company was working flat out to get approval but that it relies on the Prime Minister. He said that he could not give specific reasons why he was confident.
The shareholder said that shareholders need more information than this. He said there had been a void in communication with shareholders over the past year.
Gerard Holden said that he could not put out rumours until the scheme of development had been signed off.
The shareholder said, “So you are confident that there will be approval before the election?”
Gerard Holden replied that the company is working very hard to get project approval before the election and that the shareholders would be the first to know once it had been achieved.
Another shareholder said that there was a lot of material in the press about the Government’s coal policy. The Government wanted further studies on the water table and had apparently hired the same company that had done the original study for GCM.
Gary Lye said that the Government’s Technical Committee had released its report to the media. The Committee works within the Energy Ministry and the report has not been handed over. Underground mining is not appropriate at Phulbari. Barapukuria is struggling and unsafe. It produces less than one million tonnes of coal a year and there is ground subsidence. The management at Barapukuria would love to do open pit mining. They know that they have to do studies. They have engaged technical experts to undertake a water modelling study, but the experts employed are good on flooding issues and not on ground water studies. The Government is doing what it must do. Under Bangladeshi law, the project proponent must do studies, produce a report and wait for a decision. That is what GCM has done.
The shareholder said that press reports had spoken of the Chinese company managing Barapukuria wanting to mine at Phulbari.
Gary Lye said that there was a lot of media hype about this. One part of the Energy Ministry would like to get into mining and would like Phulbari, but nobody had approached GCM about this.
Rose Collins asked if the company had any thoughts about renewables. She had travelled through Germany and was amazed at their use of renewables.
Gerard Holden said that the German Government had brought in new laws which increased everybody’s electricity bills to pay for the rollout of solar energy. This caused chaos for people in the cloudy parts of Germany. It was funded by consumers.
Rose asked if the Board had any plans to use renewables.
Gerard Holden said that some mining companies have put solar in place to power their operations but that this would take up even more land if they were to do it at Phulbari. GCM had thought about using both wind and solar for electricity generation for the mine.
Another shareholder stood up and congratulated the company for all that it was doing and said that the company was about to receive a reward from someone who needed no introduction. At this point, a man dressed up as Father Christmas burst in to the room through a door behind the table at which the Board was sitting and asked the Board whether or not they had been naughty. Suggesting that in fact they had been, because of the potential impact of their plans at Phulbari, he emptied a small sack of coal over the table at which they were sitting.
The room then became quite active and it became difficult to note all that was being said. Security personnel moved swiftly to expel Father Christmas. Several shareholders stood up and confronted the shareholder who had introduced the award, accusing him of not listening to the company and not knowing what he was talking about. He responded by saying that the company’s plans at Phulbari were outrageous. The Board stood up and some began to leave the room. The meeting ended in chaos.
21 December 2012