Jan 20, 2023 | News
Report on the GCM Resources AGM 18 January 2023
by Richard Solly, Co-ordinator, London Mining Network, assisted by Sam Brown
This year’s GCM Resources AGM – which the company rather confusingly refers to as its 2022 AGM – was held in the Queen Elizabeth II Conference Centre in Westminster. Although the meeting room was one of the smaller ones, it must have set the company back a bit – perhaps an odd choice for a company that has been trying and failing to get its only mining project up and running for twenty years or so.
While colleagues from Christian Climate Action and London Mining Network demonstrated outside the building, I attended the AGM with activist Sam Brown.
Two of the GCM Resources directors were in the room – Finance Director Keith Fulton and Chief Operating Officer Gary Lye, who chaired the meeting. The other three directors joined online: Datuk Michael Tang, the Executive Chairman, Mohammad Majib Abdul Aziz, the Non-Executive Chairman (I am not aware of other mining companies having this arrangement of Chairs) and Non-Executive Director Christian Taylor-Wilkinson, who greeted his colleagues with “Cool!” when the Zoom link was established and was reminded that everyone in the room could hear the conversation. He briefly appeared on camera, looking even more casually dressed than I did, but swiftly turned his camera off again. From his attire, he could easily have just returned from an early morning trip rock climbing or surfing. Michael Tang was apparently in transit and was clearly not actually participating at all times, though he did respond to questioning at one point.
Gary Lye wanted to get through all the formal business before accepting questions on the Annual Report. GCM always does this. All the resolutions were carried, partly because Gary Lye held 81.3 million proxies. Once the formal business was concluded, he addressed the room to declare the first section of the meeting closed, adding: “Thank you, gentlemen.” At this point, I looked around and realised that every one of the ten people in attendance was male, in addition to the five directors. It was like something from a bygone age – though I admit to being in the age category of bygone. (We were later joined by one woman, from the company’s registrars.) Sam Brown’s attendance may have helped reduce the average age to somewhere close to the new statutory UK retirement age.
Shareholders were asked to state their name before asking questions. When I introduced myself, one of the shareholders demanded to know how many shares I had. This request has been made at GCM’s AGMs in the past, and it has been pointed out by other shareholders – not by us – that the question is completely out of order and that there is no obligation for any shareholder to reveal how many shares they have. Nonetheless, since the shareholder seemed to be getting unnecessarily exercised about the matter, and since I have nothing to hide, I said that I have ten shares. The shareholder said he had 750,000. I am not sure whether this makes him a more fitting spokesperson for the Bangladeshi colleagues on whose behalf we had been asked to speak, nor of the wisdom of owning so many shares in such a flimsy enterprise, but at least he seemed mollified to know that I was clearly not about to launch a bid to control the company.
I pointed out that it is poor practice to conduct the whole business of the meeting, including adoption of the Annual Report, before dealing with questions about the Annual Report. The point was noted without comment.
I noted that the 2022 Annual Report (available on the company’s website) says that GCM’s Resettlement Action Plan “was prepared as part of the coal mine’s comprehensive Environmental and Social Impact Assessment and involved several rounds of surveys covering families within and immediately adjacent to the Project Area. GCM is committed to lift the amenity of its local community and will ensure the RAP will deliver:
Full and fair compensation
Full compensation prior to displacement
Fairness, transparency and choice
Higher living standards (town/village sites improved amenities)
Financial grants to enhance livelihoods
Training and preferential employment
Support of farmers to enhance agricultural production.”
I said I had been working with mining-affected communities for over thirty years, and particularly with communities affected by the Cerrejon Coal mine in Colombia, and that at LMN we are unaware of any mining project that has fulfilled all these kinds of promises. The Cerrejon mine was run for twenty years by three of the biggest mining multinationals in the world – Anglo American, BHP and Glencore – and had caused enormous problems with the poor quality of resettlement. What makes GCM confident that it can deliver all this despite its small size and lack of experience?
Gary Lye said that he had been involved with resettlement before and that it had worked. He did not offer any examples. He said that GCM has put in place a plan that does deliver what it says it will deliver, and a body of international experts will monitor the process. [It is unwise, in my view, to say the plan is delivering what it says it will deliver when neither the mining nor the resettlements have begun.]
I suggested that, if GCM were able to fulfil all its promises, it should launch a related business advising the world’s major mining companies about how it had succeeded where they had failed.
I noted that our own contacts in Bangladesh challenge the statement in the Annual Report that “A demographic survey was also carried out in 2019 to update the population and household trends.”
Gary Lye said that the survey was carried out in co-operation with the community and shows support from the community. Community responses emphasised the need for training and getting a job. Choice and transparency are very important to GCM. Of the people surveyed in the area of the Phulbari project, one third said they wanted money so they could leave. Another third said they want to move into town and start businesses, and another third want to carry on farming. GCM wants to give people choice.
I asked about the Annual Report’s statement that the Phulbari project would create 17,000 direct and indirect jobs. Indian coal mines of a similar size to the planned size of GCM’s project (producing around 16 million tons a year) include Dudhichua, Rajmahal and Banhardih. Dudhichua employs 3,018 workers, Rajmahal 2,963 and Banhardih, according to estimates by Coal India, 1,306. How did GCM calculate the figure of 17,000 jobs at Phulbari?
Gary Lye explained that the figure of 17,000 was calculated by independent consultants and includes jobs in coal transportation and other work created by the value added by mining to the local economy.
Sam Brown asked more about the 2019 survey. Who had been surveyed? Gary Lye said that it involved all the homes in the area to be directly affected by the project. Sam asked how many people that was. Gary Lye said that the population had dropped by about 2,000 in recent years and now stood at around 39,000. People have been moving away over time.
Sam said that at the company’s AGMs shareholders often ask about the details of the company’s plans but are not usually given much detail. Shareholders may remain unaware of how wafer thin GCM’s commitments are.
Gary Lye replied that more than 60 local people had been involved in surveying the local population, along with consultants. They visited every village in the area and spoke to families. They monitored trends – which villages have got smaller, which bigger.
Shareholder Brian Mooney added that he had spent two years working on the project and could confirm that the work is well done and that consultations were conducted carefully. But he said that he had been attending the company’s AGMs for 20 years now, and each year it is “jam next year” that is, that success would be around the corner, yet it never came. Prime Minister Hasina is central to this, and her position on opencast coal mining is negative. She will probably stand for re-election in 2023-24 and so the company will continue to have to deal with her. Has anyone from the upper echelons of GCM met Hasina to discuss this?
Gary Lye said that nobody has had the chance to meet Hasina but that it is not normal for a company to get an audience with the Prime Minister. She has her own ‘vetters’ to go through, and there had been engagement with them. Nothing is static. In the political framework of Bangladesh, many good projects get embroiled in politics. The GCM project has gone through the process but all oil, gas and coal projects get embroiled in politics. However, the pandemic and the Ukraine war have sent fossil fuel prices up. Bangladesh is competing with Europe for gas, and coal took off during the pandemic and its price has quadrupled. The Bangladesh government has gone for austerity and the fear is that it will go the same way as the Sri Lankan government [i.e. collapse in the midst of social turmoil]. It has been unable to afford the import costs of coal. It has built two state of the art coal power plants but cannot pay for the coal for them, so they stand idle. People are beginning to take to the streets. They are upset that power is being rationed. When Gary Lye was briefly in Bangladesh shortly before the AGM, there had been load shedding for three hours a day even in the city. Civil society is crying out for the development of Bangladesh’s own resources.
He noted that the local MP representing half the Phulbari project area had asked in Parliament in November why the Phulbari coal deposit was not being developed. The State Minister replied that the government had looked at various mining possibilities and that Phulbari is the only project worth pursuing as an opencast project. It could get at 90% of the coal in the deposit, compared to 30% or 40% in other possible mining areas. The nearby underground coal mine at Barapukuria had caused serious problems of land subsidence and subsequent flooding. But the Minister had also said that the government needs to balance mining with the needs of agriculture. Gary Lye said that GCM’s Agricultural Improvement Plan will double agricultural yields. The government is under huge pressure, trying to get away from the effects of the international market place, and it must turn to local resources, which is where GCM is positioned.
Shareholder K Healey asked about GCM’s proposed solar park. Would getting approval for this delay negotiations with the government?
Gary Lye replied that if you want a gigawatt of solar power you need 1000 hectares (ten square kilometres) of land. Bangladesh has not got much space and the Bangladesh government does not want to displace agriculture. It goes for small scale projects in marginal areas such as along river banks, where there is a risk of flooding. At Phulbari, solar power would be used to cover some of the power requirements of mining. GCM has a lease area which can be used for solar power for 20 years and has given the government the option that a solar park could be established on backfilled land after mining, rather than restoring the land to agriculture. The government wants to achieve 40% renewables by 2050. The solar park will be within the mine lease so it counts as linked activity, powering the mine and producing a surplus to sell to the grid.
K Healey asked if there is a plan to use electric vehicles in the mine.
Gary Lye said that the mining industry is experimenting with this and it is an intention for GCM, along with the use of other electric equipment in the mine.
K Healey noted that a lot of finance in Bangladesh comes from China. In the recent renewal of the co-operation agreement with Chinese companies, who is arranging funding? Is the solar project funded by the same people funding other aspects of the project?
Gary Lye said that these discussions had involved GCM’s Chinese development partners and that they are in a position to help with funding of both solar and coal projects. But with the approval of the Phulbari project, GCM’s share price will rise and the company itself will be better able to fund the project. He said there is much pressure on banks over fossil fuels, but renewable projects are not capable of providing baseload support. That situation is exacerbated in Bangladesh because its 50 gigawat grid cannot cope with the fluctuations in power supply associated with reliance on renewables. It is clear that Bangladesh needs to develop its own fossil fuel resources but companies will not invest if there are no policies in place to support the industry.
Sam Brown said that he had been coming to GCM AGMs for the last ten years, that good corporate practice involves answering difficult questions, and that during the last few years shareholders had been prevented from attending. Was this for fear of difficult questions?
Sam was informed by various board members and shareholders that shareholders had only been prevented from attending in 2021, and that was because of the COVID pandemic. [In fact, our own inability to attend last year’s AGM was that it clashed with an Extraordinary General Meeting of BHP Group plc, which we needed to attend. However, the AGM in early 2021 was an online meeting and shareholders were prevented from attending it despite the fact that nobody could possibly contract COVID-19 over the internet – so it was clearly an attempt to avoid proper scrutiny.]
Sam then asked a question to board member Christian Taylor-Wilkinson. The Annual Report describes Mr Taylor-Wilkinson as a specialist in financial public relations. Is there any company whose morals are so bad that he would not work for them, given that he was willing to work for GCM?
Christian Taylor-Wilkinson side-stepped the question by stating that he was not working for GCM but was a board member [though presumably he still contributed his expertise to the company] and that he had been asked to join the board because of his 30 years of advising AIM-listed companies in the City of London [presumably advising them on public relations, but this was not stated].
The friendly shareholder who had asked how many shares I had spoke up in support of Mr Taylor-Wilkinson, stating that Sam’s question was as ill-informed as the material on the LMN website. While he was about it, he accused us of preventing shareholders from attending one GCM AGM by glueing ourselves to the entrance barriers of the building in which it was being held. He really seemed quite out of sorts. Perhaps he was feeling under the weather.
I pointed out that we had not glued ourselves to any entrance way, that another organisation had taken that particular action [in fact it was our friends from Christian Climate Action], and that I myself had been prevented from entering that year’s AGM as a result of it. The friendly shareholder retorted that nonetheless we encouraged this kind of behaviour, and I felt unable to deny the accusation.
Christian Taylor-Wilkinson added that the information in the Annual Report is biographical. He had studied geography at school but is not advising GCM on geography. [The implication of this remark is that he is not advising GCM on financial public relations either, so the reason for him being asked to join the board was unclear.]
Another shareholder asked how long it would take to get the mine up and running once permission had been granted by the Bangladesh government.
Gary Lye replied that two years of solid effort would be needed and that it may be nearer to three years because you have to expand your initial box cut to get all the necessary equipment into the mine. Backfilling of the pit and re-establishment of agricultural land would begin around six years after full-scale mining has begun, and that then improves the economics of the mine.
Another shareholder said that he also holds shares in Polo Resources, the major shareholder in GCM. He asked whether Polo would ask for its loan to GCM to be repaid. Is GCM totally dependent on Polo? Finance Director Keith Fulton replied that the repayment terms had recently been amended and were in the Annual Report in Note 12 to the Accounts. GCM is not fully dependent on Polo and continues to raise money in the market. Gary Lye drew shareholders’ attention to page 48 of the Annual Report.
The Polo shareholder said he was concerned about Polo’s own business. He urged Michael Tang, executive chairman of GCM and also a director of Polo, to get something on the Polo website to show that Polo is investing in a viable company. He asked if Polo and GCM would merge. Keith Fulton replied that there are no current plans to do so.
And so the annual farce ended. Perhaps Brian Mooney’s less-than-optimistic feeling that it seemed that at every AGM over the last 20 years, investors had always always been promised “jam next year” had struck a chord with the Directors, because Gary Lye let out a small laugh after closing the AGM with the words: “I hope to see you next year with our champagne!” Brian Mooney was quick to reply: “Bangladeshi champagne”, to which Gary Lye answered: “You never know!”
Sam Brown spoke to Gary Lye after the meeting, asking him if he still denied climate change (caused by human activity), as a few years had passed since Gary Lye told him in 2015 that “the planet is in a state a thaw; it is only a question of the speed of thaw.” Somehow, Gary Lye’s views have not yet moved with the times, and today he still downplayed climate change, confidently stating that humans only have a “small” impact on climate change, as the climate is always transforming. Sam Brown replied that he hoped that Gary Lye’s views would change over the next couple of decades, and that he could devote his talents to renewables.
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