A controversial energy company, forced to wind down most of its operations and exposure in Bangladesh following a popular opposition from the local population, is now claiming Phulbari's coal deposits as their resources. On October 15, the company, GCM Resources PLC, announced that it signed a framework agreement with China Nonferrous Metal Industry's Foreign Engineering and Construction Co., Ltd (otherwise known as NFC) and Power Construction Corporation of China, Ltd (PowerChina) in relation to its world-class 572 million tonnes (JORC 2004 compliant) of high-grade coal resources at the Phulbari Coal and Power Project in northwest Bangladesh. GCM in the past used to say it had "identified a high-quality coal resource of 572 million tonnes at the Phulbari Coal and Power Project in Bangladesh".
The JORC Code provides minimum standards for public reporting to ensure that investors have all the information they would reasonably require for forming a reliable opinion on the results and estimates being reported. As GCM Resources PLC is an AIM-quoted mining and energy company, these announcements are regulatory requirements. AIM is the Alternative Investment Market of London Stock Exchange (LSE) where listings of companies give them opportunities to raise funds. In the two weeks since the announcement, there has been increased trading activities involving GCM shares and at least thrice they had to announce Price Monitoring Extension to extend the auction call period. Auction call extensions give electronic order book users a further opportunity to review the prices and sizes of orders before the execution occurs.
Surprisingly, the latest GCM announcement and claim of Bangladeshi coal as their resource comes despite recent deputations to the LSE and the Financial Conduct Authority (FCA) by Bangladeshi activists in the UK calling for investigations into alleged fraud by the company. Representatives of the UK branch of the National Committee to Protect Natural Resources of Bangladesh (NCBD) have pointed out that the Bangladesh government had refused to renew the company's licence in 2010 and therefore it is wholly inappropriate and "illegal" to trade in shares relating to that project.
The LSE, in its response, said that it takes allegations relating to companies listed on their markets—which could impact "the integrity and reputation" of those markets—"very seriously". It can, therefore, be reasonably assumed that some sort of investigation is underway or may be nearing conclusion. Although, under the strict privacy law, confidentiality of any such investigation is quite natural, thereby prolonging our wait to know about the fate of those complaints.
Companies inflating their worth and potentials are nothing new, and there are innumerable examples of such exaggerations crossing the thresholds of deception. And regulators are there to curb such deceptions. But claiming ownership of a nation's asset by a foreign company is a rarest-of-rare kind of fraud. GCM has committed exactly that. My query to the Bangladesh High Commission in London about this fraudulent claim, however, remains unanswered for over a week.
Since the refusal of the government to renew its licence for its exploration work, GCM has been maintaining low-level exposure within Bangladesh, thereby avoiding media scrutiny. Instead, the current management of the company is seeking intervention of the Chinese government. To obtain official Chinese backing, it has entered into several partnership agreements with state-owned entities of China. Among those, the most crucial is a joint venture with PowerChina, owned by the central government of the People's Republic of China. PowerChina is one of the most influential foreign companies in Bangladesh as it completed 10 infrastructure projects including five power plants totalling USD 750 million, and has 12 current projects amounting to USD 4.6 billion including two coal-fired power plants of 1,670MW. Their joint venture is proposing a 2,000MW coal-fired power plant at Phulbari with an approximate investment of USD 4 billion.
The latest deal with the China Nonferrous Metal Industry's Foreign Engineering and Construction Co., Ltd—which triggered the unusual trading activities on AIM—says they will focus on works "including, but not limited to, the definitive feasibility study and financing". However, chattering on the stock traders' online networks suggests the company is in a dire financial situation, and the majority shareholder, Polo Resources, is thought to be considering selling it off to the Chinese partners. Speculations are rife that if the Chinese partners buy them out, then they might get as high as ten to twelve times the current share price. Otherwise, those stocks are worthless.
When GCM first roped in Chinese interests in the project in January 2019 in Dhaka, it happily announced that their bid to seek necessary approvals from the government would be "greatly assisted by having appropriate consultants and lobbyists in both China and Bangladesh". Whether these rumours have any substance or not, one thing is clear: GCM has resorted to a daring fraud involving Bangladesh's mineral resources which demands serious attention from our government and civil society. The government should immediately blacklist GCM, stop all its operations in the country, and take legal actions at the appropriate forum for its attempted sale of our coal resources.
Kamal Ahmed is a freelance journalist based in London.