Reflections on Phulbari Coal Project

NewAge, September 14, 2008

The Phulbari coal deposit is very likely among the largest in the world, with a capacity to produce 15 million tonnes of coal per year. Then why would the original licensee, BHP, abandon it…asks Nazrul Islam*, a former official of the mining company

In recent months there has been a lot of talk again about Phulbari coal deposit and Asia Energy Corporation's open-cut mining proposal to the government of Bangladesh. The Bangladesh Nationalist Party Government had decided not to proceed with Asia Energy's proposal after vehement protests by local people and the deaths of peaceful protesters in 2006.

Everyone including myself thought that the open-cut mining proposition had been abandoned forever. It is unfortunate for Bangladesh and its people that like Bangladeshi politics, the same old faces and ideas, resurface after lapses of some period. I have been keenly observing different points of view expressed by many individuals within and outside the country. I have also seen the AEC's video presentation depicting what would be the benign visual nature of things after of the project. It is a good piece of advertisement material for selling a product to allure unsuspecting customers. Technical and scientific nature of the project need a different approach.

BHP had an agreement with Bangladesh government for coal exploration and possible subsequent open-cut mine development. One simple question is this: Why would a world renowned international corporation like BHP that has the expertise of surface-mining equal to none in the world leave despite securing such a deal? Almost ten years of negotiations, exploration and spending millions of dollars, BHP discovered Phulbari Coal Deposit in 1997 and left soon after. There must be some overwhelming reason for abandoning such a large coal mine, possible one of the larges in the world, with a production capacity of 15 million tonnes per year, at least according to the AEC's proposal. To understand this, one needs to know the background of BHP's involvement in Bangladesh. Here, I am in a position to fill in the gap.

I was responsible to get BHP involved in Bangladesh coal project. It took 18 long years of sustained effort that started in the seventies. I got a job and immigrated to Australia in September 1970 after resigning from the Pakistan Geological Survey. In early February 1971, I joined Utah Development Company, the biggest coal miner in Australia as a project geologist for coal exploration. Utah's then exploration manager, Oliver Warin, and chief of coal exploration, Ted Milligan, were sympathetic to the Bangladeshi independence movement. During nine months of the War of Independence, and for long afterwards, both of them kept in touch with the movement that I was involved in to mobilise support of the Australian government and the people for the independence of Bangladesh and subsequent recognition.

The initial rapport and understanding cemented a long-term friendship among us and these two became friends of Bangladesh after its independence. In fact the first Utah-BHP delegation to Bangladesh, headed by its senior vice-president, Oliver Warin, had a meeting with the then secretary of energy & mineral resources, Shafiul Alam and his geological experts. Warin, in his speech, mentioned his contact and indirect involvement with Bangladesh since 1971.

Ted, a renowned coal geologist, had an office in Canberra for coal research to locate areas of possible coal deposits in different continents. We often talked about the Jamalganj coal deposit where I worked in 1961-62. I did some literature research on Bangladesh coal based on very limited data I had in my possession at the time: borehole data of Jamalganj, reports on geophysical surveys of seismic, aeromagnetic and gravity by oil companies and the Geological Surveys of Pakistan and India. Based on this study, I could infer that there was a possibility of locating coal deposits at shallow depths in the hidden Rangpur Saddle where graben or half graben structure could have been developed in northwest Bangladesh. Ted agreed with my interpretation.

In late seventies Utah was heavily involved with coal exploration in Australia and many other countries resulted with the discovery of many deposits. I was the senior project geologist at the time and was responsible for the discovery of two coalfields in Australia that earned me professional respect. I was always conscious of my obligation to Bangladesh, the newborn country to whom I owe everything, and wanted to do something tangible in economic development of Bangladesh. I asked Ted to convince Utah's management to permit coal exploration in Bangladesh. He readily agreed and others concurred.

I wrote a letter on behalf of the company in 1979, to Kazi Fazlur Rahman, energy secretary of Bangladesh, expressing coal exploration interest by Utah. This was before Barapukuria was discovered. Bangladesh did not have mining rules for coal exploration by foreign companies at the time. And the secretary's reply was that Utah might come with a proposal to discuss with the government of Bangladesh. The company did not feel enthusiastic enough at that moment to venture into uncertain territory with non-existent mining rules as well as not having enough available geological information. Moreover, the company was heavily involved in coal exploration in Indonesia.

In the meantime by acquisition, BHP became Utah-BHP. In 1983, I left Utah-BHP and started my own geological consultancy. I used to have regular contact with friends and former colleagues. After discovery of Barapukuria in 1984, I was able to get my former colleagues and friends in Utah/BHP interested in Bangladesh coal exploration again.

With my assistance as its geological consultant, BHP started negotiations with the government of Bangladesh in 1987 and continued till 1994 when an agreement was signed on August 20, 1994. I was very much aware of the environmental consequences of coal mining in Bangladesh, even before approaching my colleagues. I got the assurance from Ted Milligan and Oliver Warin that the company would adhere to strict environmental studies similar to Australian requirements if coal deposit discovered in Bangladesh.

BHP was interested in open-cut mining on consideration of several factors. Economics of development costs versus profits by extracting most of the coal, and expertise it had with so many open-cut mines. Ted Milligan took an unusual step to become the project manager of Bangladsh Coal and lived in Dhaka for three years off and on. He never really involved himself so directly in case of other countries. Both Ted and I were not hopeful of finding coal at a shallow depth of around 100 metres that was BHP's benchmark. But we were hoping that BHP's management board would change its decision if a large enough deposit could be discovered and opt for underground mining. My own thinking was that even if BHP left then Bangladesh would get a coalfield discovered free of cost without spending a taka. And the country would then be in a better position to develop, by itself, an underground coal mine in the near future with the help of international financial institutions. We knew BHP would not be able to fulfil environmental requirements similar to Australian standards for strip mining at more than 150metres below the ground.

BHP could not locate a shallow coal deposit around 100m depth; the Phulbari deposit is much deeper between 150m and 260m. BHP knew very well that an open-cut mine at such depth would need multi-dimensional long-term environmental studies besides tackling geological and engineering problems. Considering flood-prone deltaic region having numerous rivers with heavy monsoon rainfall, it is easy to understand that it would be rather impossible to pass through environmental regulations of any country, not to speak of comparable Australian standards.

Moreover, BHP did not want to create another environmental disaster like Ok-Tedi Copper Mine in Papua New Guinea where it had to quickly abandon the mine and paid hefty compensation to the surrounding inhabitants. The poisonous mine water seepages contaminated the nearby river and destroyed everything downstream. It is obvious to any professional person that open-cut coal mining in Bangladesh is far more complex and needs close scrutiny.

In fact, after taking over from BHP, AEC was considering submission of a proposal to the government of Bangladesh for underground mining as the logical option. A copy of that 'Draft Proposal' has come to my hand. It is intriguing, why and how that position has been changed dramatically. Moreover, AEC's (now Global Coal Management) surface mining proposal has a marked difference of 80 per cent export component to that of the agreement of BHP where export was considered for excess quantity after satisfying the need of Bangladesh. This is a vital argument in favour of Bangladesh's energy needs and national interest. Everyone knows Bangladesh's energy need is very acute and the future economic development is very much dependant on this. A new company like AEC that does not have any mining expertise wants to exploit this situation and ask the government and people of Bangladesh to jump on a mirage like a thirsty wonderer in a desert. In spite of global warming, underground mining is a possible and logical proposition for Bangladesh, considering that clean coal technology may be developed in the near future. Underground mine would not produce enough coal to meet Bangladesh's needs. But it would still provide some energy for the country and avoid making manmade disasters for generations to endure. Bangladesh cannot afford the luxury to take that sort of a gamble.

It will not be wise for the Bangladesh government to make a hasty decision for such a complex matter related with vital economic, geological and environmental consequences. My involvement in this project was due to a sense of gratitude to the mother country. If it brings harm instead of benefits for the people of Bangladesh, I would not be able to forgive myself. This is the reason I have taken this step to explain myself in order to solicit forgiveness from those who may have suffered in the recent past and others in the future if such eventuality arises.

*Nazrul Islam is a former geological consultant for BHP's Bangladesh Coal Project.