The Agreement between the Government of the People‘s Republic of Bangladesh and Asia Energy Corporation (Bangladesh) Pty. Limited-AEC was termed as Anti-state by Hon‘ble Energy Advisor on March 16, 2006, which got wide media coverage in the national dailies and television channels on March 17, 2006. The sensational news, in particular pointed at 1998 Government, in the Daily Jugantor and the Daily Star on March17, 2006, created a hue and cry at national level. But the news published on the same day in other dailies like the Prothom Alo indicated that the “anti-state Agreement” was made in 1994 and 1998, thus trials against both 1998 and 1994 Governments were solicited.

Being a geologist of the National Geological Survey (GSB), a citizen and the former Director of Bureau of Mineral Development (BMD), the author protested, through media particularly The Daily Star on March 17, 2006, assuming some information gap by the Hon‘ble Energy Advisor or misinterpretation of any provision or lack of proper knowledge on the applicable laws of the land to the stakeholders-the mineral sector. The gale attempt on the agreement humiliated the nation – our present knowledge resource in mineral sector, and may carry a negative impact on the future mineral directions of Bangladesh—exploration and exploitation of metallic and non-metallic minerals including solid-fuels (coal peat etc). However, the author feels that the Act and that of the Mines and Mineral Rules as well as the agreement itself protect the interest of the Government. And the huge direct and indirect benefit, and generation of internal resources, which will be derived from this Phulbari coal will help the Government to smoothly implement the Annual Development Plans (ADP) with its own fund for sustainable socio-economic growth of Bangladesh.

With this view in mind the author would like to furnish below some information to mitigate the present crisis – knowledge resources in mineral sector and also to avoid the gala attempts on such delicate matter. Hopefully the author‘s such minor efforts will be able to avoid vile visions – the corruption. The author also endorses the present efforts of the people to root-out corruption and to make a safe and healthy environment that are expected through enforcement of the Criminal Law Amendment Act, 1958, the Wetland Conservation Act, 1995, the Environment Conservation Act, 1995 (Building Code not in force in Bangladesh) and that of rule 1997 by through Task-forces - ward-wise and union-wise, for the greater interest of 150 million people of the country.

Introduction

“The Act and that of the Mines and Mineral Rules” is a detailed document providing the Mineral Policy of Bangladesh. In early nineties, the Government of the People’s Republic of Bangladesh (GOB) formed an Inter-ministerial Committee to amend, revise and prepare the Mines and Mineral Rules to up-date so that it attracts foreign investment and technology to explore and mining of mineral resources. The minerals include all minerals including clay for ceramics and refractory, silica sand, sand, pebbles or rocks, all types of limestone, solid fuels (coal, peat etc.), oil-shale and coal-bed oil or gas (coal-bed methane), but except petroleum and natural gas as per The Petroleum Act, 1974; and also excluding water and salt produced from sea-water.

Background
The 11-member Inter-ministerial Committee worked and evaluated the Mines and Minerals Rules, 1968 and that of other countries to prepare the Mines and Mineral Rules. The GOB enacted The Mines and Minerals (Regulation and Development) Act, 1992 (Act No. 39 of 1992) as it felt the need to enact a new law to accelerate the exploration and exploitation of minerals of the country.

The new Act, 1992 (Gazette Notification Sunday November 01,1992) was enacted to consolidate the law relating to mines and minerals, and to make rules for regulating the grant of exploration license or mining lease or quarry lease for conservation and development of minerals. Such rule may provide for all or any of following matters, as-
(a) the manner in which, and the authority to whom, application for the grant or renewal or transfer/ assign of an exploration license or mining lease or quarry lease shall be made, the prescribing fees to be paid on such application;
(b) the conditions in accordance with which the grant or renewal or transfer /assign of exploration license of mining lease or quarry lease;
(c) the circumstances under which renewal of a license or lease as aforesaid may be refused, or any such license or lease that granted or renewed may be revoked;
(d) the determination of rates at which, and the conditions subject to which, royalties, rents and taxes shall be paid by licensees or lessee;
(e) the refinement of ores;
(f) the control of production, storage and right of the Government to elect to purchase mineral or part thereof, and for distribution of minerals;
(g) the fixation of royalty for underground mining, open-pit mining and quarry lease;
(h) the development of mineral resources in any area by prescribing or regulating or addressing all issues for conservation of Natural Resource Management of Bangladesh.

In order to keep continuity at national and also for communication at international level for exploration and development of minerals, the Inter-ministerial committee revised, amended and finalized the preparation of the rules, “The Mines and Mineral Rules, 1968 (gazette 31 December, 1995)”.

The Joint Secretary (Natural Resources), the Ministry of Energy and Mineral Resources, acted as a Chairman, and the Director, Bureau of Mineral Development (BMD) performed as a Member-Secretary of the Committee. The Director General of the Geological Survey of Bangladesh (GSB) represented by the Director - geologist AKM Shahidul Hasan, the Chairman, Petrobangla geologist SKM Abdullah and the Director (mines and minerals) represented by a mining engineer of Petrobangla were also the members amongst others of the said 11-member committee.

History of Development
“The Regulation of Mines and Oil-fields And Mineral Development (Government Control) Act, 1948” [Act No. XXIV of 1948] was enacted to make provision for certain matters connected with regulation of mines and oilfields and mineral development under Government Control. It was thereby declared that the “appropriate Government” shall have the power to make rules. In this Act, “appropriate Government” means, in relation to mines of nuclear substances, oilfields and gas fields, and development of such substances, mineral oil and gas, the Central Government and, in relation to other mines and mineral development, the Provincial Government.

Then, the Mines and Minerals (Regulation and Development) Act, 1957 was enacted. In this Act the “minerals” has been defined as minerals other than those of 17 specified as 1.Beryllium ores, 2.Cadmium ores, 3.Boron ores, 4.Cobalt ores, 5.Graphite, 6.Lithium ores, 7.Tantalum ores, 8.Titanium ores, 9.Thorium minerals, 10.Uranium minerals, 11.Zirconium, 12.Mineral oil, 13.Natural Gas, 14.Iron ores, such as, Hematite and Magnetite, but excluding yellow oxides, 15.Maganese, 16.Tungsten, and 17.Vanadium. In this Act the Provincial Government has been empowered, by notification in the Official Gazette, to make rules for regulating grant of mining lease and for conservation and development of minerals.

Later, the Mines and Minerals (Regulation and Development) Act, 1967 was enacted and passed by the Provincial Assembly on 1st February, 1968 to consolidate and amend the Law relating to mines and minerals. In this Act the “minerals” has been defined as “minerals” that include all minerals other than mineral resources necessary for the generation of nuclear energy, mineral oil and natural gas. It was also decided that “No exploration or prospecting license, mining lease or mining concession shall be granted after the commencement of this Act otherwise than in accordance with the rules made under this Act”. The Provincial Government shall within six months from the date of commencement of this Act, by notification in the Official Gazette, make rules for regulating the grant of exploration or prospecting license, mining lease or mining concession and for conservation and development of minerals. In exercise of power conferred by section 4 of the Mines and Minerals (Regulation and Development) Act, 1967 (Act No. II of 1968). The Mines and Mineral Rules, 1968 was made and came into force through a Gazette Notification on August 10, 1968.

Salient Features of Provisions
The Mines and Mineral Rules, 1968 (Gazette notification 31 December 1995) have been revised, amended and prepared following the clauses/provisions of the Act, 1992 and also to address all issues in favor of Natural Resources Management of Bangladesh. Salient features of some provisions have been furnished below cited as examples:

Power to assess and claim compensation for damage of mineral property – Any damage caused to mineral property due to unscientific working, lack of supervision, negligence or any other else, the Director (GOB) shall, as the sole judge, assess the extent of the damage, and the licensee or the lessee shall be liable to pay the compensation so assessed.

Operations within reserved or protected forest – All operations within such forest shall be conducted subject to such conditions regarding the use of explosive or fire as the Divisional Forest Officer may prescribe.

Distance to be maintained during operation etc. – A licensee or lessee shall not work or carryout any operation within the distance reasonable mentioned from the airport, radio and TV stations; rail lines, industrial set up and dams and barrages; highways, buildings, bridges, educational set up, market and graveyards; electricity line pillar, and gas line.

Compensation for damage, etc., land or land owners – A licensee or lessee shall be liable for all damage, injury or disturbance which be done by him in exercise of the powers granted by the license or the lease.

Use of explosive – No person shall import, prepare, store, or use any explosive in the licensed or the leased area without the permission of the Chief Inspector of Explosives. Before blasting, every body working or present in the mine or the area granted, shall be kept in safe distance, and without ensuring the safety of all persons or animals, no explosive shall be blasted. Persons with adequate experience and qualification are to be employed in using or blasting the explosive and unused explosive shall be removed and kept in a magazine without any delay. Before starting operation after blasting the explosive, it is to be ensured that there is no explosive or any dangerous gas, or substances in the blasted area and for 30 minutes after blasting, all operations or works shall be kept suspended in the blasting area. If blasting has done by using electricity, no one shall be allowed to enter into the area before disconnecting the electricity and putting out the fire completely.

Pollution control of environment – In order to control environmental pollution following the provisions of the applicable laws and direction of the concerned authority, a licensee or a lessee shall take appropriate measures to make sure that the emissions from the machines used in the mine, waste products and harmful gases do not pollute environment; and shall plant trees in possible areas in the area granted.

Water purification – If polluted water erupts or if water is polluted in any way, measures shall be taken by the licensee or the lessee to purify it or to separate the harmful elements from the water so that no harm is done to the animals, fisheries, plants or agriculture or environment.

Disposal of minerals – The lessee shall not dispose of any mineral produced without measuring it in presence of an officer authorized by the Director, BMD.

Right of the Government – The Government shall have the right to the licensee or the lessee (a) the First Option to purchase to meet the internal requirements of Bangladesh to the satisfaction of the Government before exporting any mineral or its products to other countries; (b) subject to any law for the time being in force, to require to associate Bangladesh capital to the extent of all classes of capital and debentures issued by him from time to time; (c) to require to Employ Nationals of Bangladesh in his organization in all grades and all branches including technical and administrative units and to arrange for the training in Bangladesh or abroad of the nationals of Bangladesh to fill up these aforesaid appointments; and (d) to require at the end of each year to submit to the Director (GOB) the yearly statements of accounts audited by an approved auditor.

Observations on Coal Resource
Beginning of Coal Exploration
(1) In 1959 Standard Vacuum Oil company while drilling for oil at Kuchma, Bogra penetrated bituminous coal seams having a composite thickness of 170 feet at depth from 7811 to 9433 feet, led to initiation of UN-PAK Mineral Survey Project in 1961—Coal Exploration in Bangladesh.

Jamalganj Coal Resource
(2) The UN-PAK Mineral Survey Project in collaboration with Geological Survey carried out geophysical and geological study to locate coal at shallower depth. The UN-PAK Project drilled 10 holes in Jamalganj area at depths ranging from 2200 to 3800 feet between period 1962 and 1964.

(3) The UN-PAK Mineral Survey was followed by feasibility study carried out by EPIDC (predecessor of BMEDC) through foreign consultants. M/s Fried Krupp of West Germany. Krupp calculated the total reserves at 1053.9 million ton of coal within area for six coal seams – Seam II 39.5 m.t.; seam III – 526.8 m.t.; seam IV- 32.4 m.t.; seam V- 30.0 M.T.; seam VI – 50.8 m.t.; and seam VI – 374.4 million ton of coal.

Barapukuria coal and Khalaspir Resource
(4) Geological Survey of Bangladesh (GSB) implemented the Asian Development Bank (ADB) financed project entitled “Accelerated Exploration of Mineral Resources and Modernization of Geological Survey of Bangladesh, 1980-90”. In 1985, GSB discovered the coal occurrence at shallow depth of 423 feet (129 meter) at Barapukuria, Dinajpur district. GSB completed drilling of 7 (seven) geological drill holes in 1985-86 and calculated the reserves as about 303 million ton. In 1989, GSB discovered another coal occurrence at a depth of 843 feet (257 meter) at Khalaspir, Rangpur district, and calculated a reserves of 143 million ton of coal and a probable reserves of 685 million ton of coal based on completion of 3 (three) geological drill holes No. GDH-45, GDH-46 and GDH-47 (1989-91).

Barapukuria Coal Project
(5) Petrobangla carried out feasibility study of Barapukuria based on about 40 geological drill holes and came up with a reserve of 390 million ton of coal. The Barapukuria underground coal mining –is an on-going project of Petrobangla since 1994 with a targeted extraction of one (1) million ton of coal per year over lifetime 65 years of mine (out of total 390 million ton of coal), and already installed 250 MW coal-based power plants.

Attempt for Detailed Coal Exploration
(6) Geological Survey of Bangladesh (GSB) prepared a Preliminary Project Pro-forma (PPP) and a Project Concept Paper (PCP) for ADB-financed project entitled “Detailed Geological Mapping for Coal and Other Minerals Exploration” under Fourth Five Year Plan (FFYP), 1991-95. The PPP (approved in November 1989), PCP (approved in 1991) and later a Technical Assistance Project Pro-forma (TAPP) entitled “Technical Study For Assessing The Financial Requirements For The Project “Detailed Geological Mapping For Coal And Other Mineral Exploration” were prepared in September 1991 under the direct supervision of the then Director General SKM Abdullah (January 1989- mid 1992).

National Energy Policy on Coal Resource
(7) National Energy Policy (February 1995) considered to carry out exploration and development of coal in unexplored areas in West Zone – northwestern Bangladesh on priority basis, and appraisal of coal basins in Rangpur-Dinajpur belt is to be completed and depending on the findings, techno-economic feasibility of their exploitation are to be taken up. Foreign and local entrepreneurs are also to be encouraged to invest in exploration of solid fuels in the country. National Energy Policy initiated formulation of a national Energy Regulatory Commission to play an important role to mitigate energy crisis.

Khalaspir Coal Exploitation
(8) GSB published a detailed report on composition of coal, probable and proved reserves in areas of coal in Khalaspir Basin – “Geology of the Khalaspir Coal Basin, Pirganj, Rangpur district”. Records of the Geological Survey of Bangladesh, Volume 6, Part 5 – 1992. The feasibility study is being done by a private company for exploitation of Khalaspir coal.

Coal Occurrence at Dighipara
(9) In 1995 GSB discovered the occurrence of coal at Dighipara, Dinajpur district at a depth of 1076 feet (328 meter) below the surface; since then till 2002 i.e. even within 7 (seven) years of its discovery, no geological drill hole was done in order to determine the number of coal seams and its composite thickness, size of the basin, the extension of coal and the reserves of Dighipara coal as per National Energy Policy 1995.

Phulbari Coal Project
(10) A Contract 11/C-94, was awarded on August 20, 1994 to BHP Minerals International Inc., for exploration and mining of coal in northern Bangladesh under the mandate of the Constitution. The GOB formally endorsed the Contract through an Assignment Agreement to Asia Energy Corporation (Bangladesh) Pty. Ltd.--AEC on the 11th February 1998.

Asia Energy (AEC) carried out feasibility study of Phulbari coal- that encountered at a depth of 495 feet (151 meter) in January 1997, and AEC proved the reserves of 572 million ton of coal based on 123 geological drill holes. Asia Energy (AEC) has to pay royalty 6 percent, corporate tax 45 percent after 9 (nine) years‘ tax holiday, import duty 2.5 percent etc.

Based on an average price of US $50 per ton of coal, the Government shall earn an estimated US$7 billion in taxes, royalties, duties, rail and port charges over the life of mine 30 plus years.

The Government will thus earn the benefit from payments of rent, tax and royalty, which amounts to 50 percent of the total profits of Phulbari mine. The Government has no financial involvement in such project and will not bear for its debts, but the Government will thus share equally form the profits of mine.

Asia Energy will invest a sum of about US$2 billion in capital cost and has to spend US$10 billion in operating cost during the life of mine. Besides, AEC also plans to invest US$ 500million for 500 MW coal-based fired power plants at mouth-mine. The mine will thereby help create infrastructures of Bangladesh to accelerate its industrial growth.

In addition to coal, the Phulbari mine will also yield substantial amount of co-products from overburden – kaolin, silica sand, aggregates etc. AEC has also to pay royalty on such co-products – 7 percent for kaolin, 5 percent for silica sand, 6 percent for aggregates, 8 percent for sand as per provision- Eleventh Schedule of the Mines and Mineral Rules.

Available of Phulbari coal, targeted 2008, will cause to stop the total import of coal and generation of electricity will minimize the import of petroleum products, which will save huge foreign currencies.

In addition, GOB thus can go for installation of coal-based thermal plants or can sponsor to install power plants to overcome energy crisis as outlined in the National Energy Policy and to attain self-reliance on electricity for sustainable economic growth of Bangladesh

Recommendation and conclusion

(1) Up-gradation and strengthening of the Bureau of Mineral Development (BMD)—the licensing or the leasing authority, is a must to regulate and to carry out the national responsibility; and to deploy officials/geologists strictly following the existing Recruitment Rules, 1984; and Government policy -vide Implementation Division, Ministry of Finance, 07 July 1978.

(2) Further to note that Geological Survey of Bangladesh (GSB) should make a plan in view of conversion of GSB into a full-fledged National Institution/Organization. GSB will thus impede the detailed exploration for coal and other minerals leading to their probable discovery to pre-feasibility study, which are absolutely needed for the socio-economic development and self-reliance of the country.


Muhammad Muminullah: Geologist; former Director of Bureau of Mineral Development (BMD) and retired Director of Geological Survey of Bangladesh (GSB).