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| Borrower/Equity Investment Name | Asia Energy Corporation (Bangladesh) Pty Ltd. | |||||
| Country | Bangladesh | |||||
| Location | Phulbari, Birampur, Nawabganj and Upazilas of Dinajpur district. | |||||
| Project Number | 39933-01 | |||||
| Type of ADB Assistance |
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| Sector/Subsector | Industry and Tr /Industry | |||||
| Thematic Classification | Economic growth Private Sector Development |
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| Responsible ADB Department | Private Sector Operations Department | |||||
| Responsible ADB Division | Infrastructure Finance Division 1 | |||||
| Responsible ADB Officer | Mats Elerud | |||||
| Project Sponsor(s) |
Asia Energy PLC
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| Description | Global Coal Management Resources PLC, operating through its wholly owned subsidiary Asia Energy Corporation (Bangladesh) Pty Ltd (¿Asia Energy¿) is developing the Phulbari Coal Project located in northwest Bangladesh. Situated in the Phulbari, Birampur, Parbatipur and Nawabganj Upazilas of the Dinajpur district, to date the Project has involved the delineation of a very large resource of bituminous coal, environmental and social impact studies and a Project feasibility study. Asia Energy is now poised to take the Project to the mine development and coal extraction stage. The Phulbari coal deposit contains some 572 million tones that will be mined at a rate of 15 million tones per annum (Mtpa) over 30 plus year period.
The Phulbari coal basin has been identified via a drilling program conducted by the Company. Although there have been 5 seams identified in the exploration program 90% of the coal resource is contained in two close proximity seams (Upper and Main) which are overlain by between 140m (in the west) and 300m (in the east and south) of overburden. The average composite seam thickness across basin is 35m and ranges from 15m to 70m. The coal will be extracted using a conventional open pit operation utilizing a fleet of trucks and shovels. Starting most likely in the north of the basin, the mining operation will remove the overburden material to expose the coal seams for extraction. Initial coal production will be approximately 1.5 Mtpa, increasing to a maximum production of 15 Mtpa after about 6 years ¿ production will remain at this steady state until the end of the mine life. Overburden material will initially be placed in predetermined dump areas, with coal sent to stockpiles. Once the open pit has been sufficiently developed, the overburden material being removed ahead of coal extraction will be hauled back and placed within the void behind the mining operations. Once the natural surface has been restored the land will be fully rehabilitated and returned to agriculture. Raw coal from the pit will be treated at the Coal Preparation Plant for the processing into different saleable products: (i) semi-soft coking coal for use in the steel industry; (ii) thermal export coal for sale into the international markets; and (iii) domestic thermal coal for local use. ADB has been invited to participate in this Project and is currently undergoing its due diligence for its possible participation. |
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| Objectives and Scope | The Project provides an important new energy source which will boost both regional and National economies, and establishes a new Import/Export corridor of National strategic importance. Phulbari coal is high in energy and meets international coal quality standards. Domestic consumption of Phulbari coal has the potential to both stabilise and significantly expand much needed electrical power for Bangladesh through mine mouth power plants to be implemented in 500MW stages up to 2,000MW. The project will also provide an internationally traded commodity for export and a stimulus for both domestic and foreign investment particularly in west Bangladesh, thereby increasing government income through royalties and taxation, adding significant indirect income via the economic multiplier effect leading to poverty alleviation and sustainable development. | |||||
| Linkage to Country/Regional Strategy | Bangladesh has limited known quantities of coal and other energy resources which are critical to its long-term economic improvement and growth. Overall, Bangladesh operates at a low level of commercial energy consumption, which is a bottleneck to the country's economy. Through developing possibly the most significant coal reserve in Bangladesh, the Project and associated infrastructure has the potential to develop the northwest into a major industrial region. The project is compatible with the government's political objectives and meets the aspirations of the population which collectively seek poverty reduction through employment, a growing private sector and improved social and human development.
The project is a major resource and infrastructure development, with significant local, regional and national economic and social benefits. It is also an important strategic development project especially for the northwest area of the country. In essence this is not just a proposed mining development; it is also an economic improvement and social enhancement project. Specifically, the project will make a positive contribution by way of (i) direct royalty and tax income to Bangladesh; (ii) substitute indirect income generated thru the economic multiplier effect; (iii) major improvement in balance of payments thru import replacement for domestic coal and exports; (iv) substantial new and upgraded infrastructure for a new export corridor in the least developed western part of Bangladesh including an improved rail network and new port facilities; (v) significant improvements in social infrastructure including health, education and housing; (vi) provision of round the year clean, potable water from mine dewatering in an area annually impacted by drought; (vii) improved air quality and environmental conditions in vicinity of brick works due to the replacement of currently imported high sulphur, high ash coals from India; (viii) significant industrial growth based on co-products like kaolin, sand, clay, water and aggregates; and (viii) major supply of much needed construction materials will be a valuable co-product for Bangladesh from the Mining Operation. |
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Safeguard Categories
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| Environment | A | |||||
| Resettlement | A | |||||
| Indigenous People | A | |||||
| Summary of Environmental and Social Issues | Asia Energy has been undertaking a Definitive Feasibility Study (DFS) of the coal resource at Phulbari since April 2004. As part of the DFS, SMEC International Pty Ltd has been engaged by the company to conduct a comprehensive Environment Impact Assessment (EIA) and a Social Impact Assessment (SIA) for the project. The EIA/SIA report was submitted to the Government of Bangladesh on the 30 July 2005. As part of the EIA/SIA process an earlier study, the Initial Environmental Examination (IEE), was also prepared and submitted to the Department of Environment (DOE). The IEE provided a preliminary assessment of the potential environmental, social and economic impacts of the Project and outlines measures to mitigate impacts that may occur. The IEE essentially defined the scope for the EIA/SIA studies and also resulted the Environmental Site Clearance in March 2005. Further, the EIA/SIA studies have resulted in a DoE approval of the EIA/SIA and Project Environmental Clearance on 11 September 2005. The EIA and SIA documents were revised in accordance with the requirements of ADB and the International Finance Corporation's (IFC) Safe Guard Policies and thus will satisfy both the local Bangladesh requirements and those of the international finance community as defined by the Equator Principles. This resulted the Environmental and Social Impact Assessment (ESIA) which among others contain the Resettlement Plan, Indigenous People's Development Plan, Public Consultation and Disclosure Plan and variety of Environmental Management Plans. Besides there is an ESIA prepared for the coal transportation. The primary method of reporting and action is the Environmental Management Plan (EMP). The overarching principles of the Project's EMP will include that: (i) environmental management and rehabilitation should be integral parts of the mining process; and (ii) the concerns and interests of the community potentially affected by mining are recognized in the planning, operation and rehabilitation phases of the Project. The EMP will incorporate environmental commitments identified in the EIA and conditions of approval imposed by the GoB. It will be a fully integrated document which details how any potential impacts will be managed and reduced and forms a practical guide to the ongoing management of all aspects of the Project, including (i) biophysical monitoring and performance; (ii) social impact management; (iii) mining operations; and (iv) mine closure and rehabilitation.
A copy of the Summary Environmental Impact Assessment on the proposed Project was posted on the ADB web on 16 August 2006. |
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| Consultations Planned or Carried Out | The mining of coal at Phulbari accords with the Government's social and economic objectives and the aspirations of its people, who collectively seek poverty reduction, more reliable and alternate source of energy and power and overall sustainable development. To ascertain the specific views of the community and interested stakeholders about the Project, the EIA has been undertaken in an environment of open consultation. The entire process has been underpinned by free, prior, and informed consultations with stakeholders, including local communities, NGOs, various levels of government, inter-ministerial committees, and outside stakeholders. Public consultation has been and remains a continuous process. Public consultation carried out at levels of village, local administration and district administration. Among many, two noteworthy consultations with full public disclosure with the Phulbari Municipality including prominent members of the local civil society at Phulbari were held on 22 March 2005, and with the Deputy Commissioner and all District level Government officials on 7 September 2005 at the district capital, Dinajpur. | |||||
| Timetable for assistance design, processing and implementation | ||||||
| Concept Clearance | 14 Oct 2005 | |||||
| Due Diligence Mission | 21 Feb 2006 to IV Apr 2008 | |||||
| Private Sector Credit Committee Meeting | IV May 2008 | |||||
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