Amid resistance to its proposed open pit mining project at Phulbari, Asia Energy Corporation, Bangladesh subsidiary of the UK-based GCM Resources, may wrap up its business within two or three years, company sources said.
The company has reduced its capitalised project-related expenditure this year to £0.8 million from £1.9 million in the last financial year and minimised its Dhaka office, the company’s 2014 annual general meeting (AGM) will be told tomorrow in London.
But Gary Lye, chief executive officer of Asia Energy Bangladesh and chief operating officer of GCM Resources, sound a positive note, saying: “There is considerable support from local people for the project and it is growing. People are now well convinced that the project will bring significant positive changes in their life and livelihoods including jobs, business opportunities and higher living standards.”
Two weeks ago, protesters against the open pit mining proposal attacked and vandalised the mine site offices and imposed a day-long road and rail blockade of the area during a visit to the area by CEO Gary Lye and his wife Nana Lye.
According to Asia Energy, about 40,000 people will be relocated and 5,933 hectares of land will be directly affected, of which around 4,000 hectares is agricultural land.
The National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports, an activist organisation, has joined local protesters for the last few years against Asia Energy’s bid to conduct open pit mining at Phulbari coal mine.
“We are yet to take decision on whether Asia Energy will stay or not,” Secretary of Energy and Mineral Resources Division Md Abu Bakar Siddique said.
The Phulbari coal project has been on hold since 2006 due to intense local opposition. Three people were killed and many more injured when paramilitary officers opened fire on a protest against the mine in 2006.
On November 12, 2014 Michael Tang, executive chairman of GCM, stated: “We have restructured operations from a cost perspective and I am pleased to advise that the loss for the year ended 30 June 2014 was £1.3 million, compared to £3.2 million in the previous financial year.”
“Capitalised project-related expenditure during the year was £0.8 million compared to £1.9 million in the last financial year. Whilst reducing costs has been a key focus for the company, we have also ensured that the necessary expertise and resources are in place to continue pursuing project approval,” he said.
GCM has identified a coal resource of 572 million tonnes at the Phulbari coal project in North-West Bangladesh. They are awaiting approval from the Bangladesh government to develop the project.
“The ruling Awami League-led alliance government did not implement the Phulbari deal because there is public opposition to open pit mining. If they allow extraction of coal by the open pit method there will be massive environmental destruction,” Anu Mohammad, member secretary of the National Committee to Protect Oil, Gas, Mineral Resources, Power and Ports said.
Lye, explaining the expenditures to date told the Dhaka Tribune: “It is common for a project which is still in developing stage and not generating any revenues. For Phulbari coal mine, it will require significant capital investment of about US$1 billion to get the first coal on the ground.”
“In total, we have expended about US$68 million as of June 30, 2014. Most of these expenses were incurred for resource definition and social and environmental studies associated with mine development,” he said.
“We are still awaiting project approval and we have an obligation to keep the local community fully informed on the project,” he said.