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Scancem's use of aid funds in Bangladesh: Environmental degradation and hazardous work environment

Scancem, a former Aker RGI company, are initiating activities in Bangladesh. They are helped along by Norad (Norwegian Agency for Development Co-operation) and Norfund (Norwegian Investment Fund for Developing Countries), who own a 25% share in the company. The cement is sourced from the island paradise of Langkawi in Malaysia. Scancem are optimistic regarding their future in Bangladesh. Still, the question remains whether this is an appropriate allocation of Norwegian aid funds?

Artikkelen er mer enn to år gammel. Ting kan ha endret seg.

Scancem, a former Aker RGI company, are initiating activities in Bangladesh. They are helped along by Norad (Norwegian Agency for Development Co-operation) and Norfund (Norwegian Investment Fund for Developing Countries), who own a 25% share in the company. The cement is sourced from the island paradise of Langkawi in Malaysia. Scancem are optimistic regarding their future in Bangladesh. Still, the question remains whether this is an appropriate allocation of Norwegian aid funds?


Morten Rønning
Norwatch

The rental ship Mary Nour loads raw material every 25th day at the Kedah Cement plant on Langkawi in Malaysia. It takes the ship three days to reach Chittagong, the largest port in Bangladesh. Awaiting the completion of a new cement grinding plant in 2001, the cement is bagged onboard the vessel in Chittagong. It is subsequently loaded unto smaller coasters in order to be shipped on, mainly to the capital of Dhaka.

Working conditions
From a Norwegian perspective, the working conditions of the Scancem employees in Bangladesh are primitive. In this country cranes, pallets, and forklifts are foreign concepts. At the same time there is a pressing need for jobs. Consequently, the handling of the goods is mostly done by manual labour.

As the ship is not operated by Scancem, NorWatch were unable to visit the production vessel Mary Nour when visiting the country. Scancem are responsible for the procurement of raw material and bags in Malaysia. The bagged cement is subsequently bought from the shipowners in Chittagong.

About 50 men, including the crew, work at Mary Nour. Divided into three eight-men shifts, the bagging of the cement is an around the clock activity. According to Scancem, the workers are all Filipino. Their home is underneath a canvas spanned across the front deck of the ship. This is where they sleep and prepare their meals. The supervisor is the only person employed by Scancem.

The monthly production capacity on Mary Nour is currently 25.000 tonnes. The onwards freight, mainly to Dhaka, is undertaken by 25-30 smaller rental coasters. Using a conveyor belt, the cement is loaded onto the smaller boats. A work team hired by Scancem is stationed at the end of the conveyor belt, stacking the bags in the ships hold. The 50 kilo bags are picked up and carried on the head into the hold.

The hazards involved in this part of the process, NorWatch observed, were severe. Being transported down the conveyor belt, the paper bags are sometimes ripped. Workers in the hold are consequently  showered with dust when picking the bags up. Scancem claim that the workers have been offered masks, but the equipment is not used. Still, some of the workers cover their mouths with cotton cloths.

Cement workers are, according to Statens Arbeidsmiljøinstitutt (the Norwegian Institute of Work Environment), at risk of developing chrome allergy and chrome asthma. Two different surveys carried out in 1994 concluded that chrome (one component of cement) may cause asthma in cement workers. Both surveys reveal that the workers suffer from chest pains. Chrome allergy is a well known phenomenon within the cement industry, and is often simply referred to as cement allergy (see NW 16/97). Furthermore, NorWatch have previously revealed that Scancem employees have gone blind after being exposed to cement dust (see NW 7/96). The health risks caused by cement dust is not yet fully mapped. Consequently, an extensive survey among the workers at Norcem in Brevik, Norway, has been launched. The survey is yet to be completed.

Like the bagging of the cement, the loading is also covered by three shifts a day. When the ship is moored, the Scancem workers are paid 150-200 Taka a shift. According to Scancem, the salary is nearly doubled if all mooring spaces are occupied and the loading must take place offshore. If need be, the workers work up to 15 days consecutively. This is consistent with the information obtained by NorWatch from the dockers' union in Chittagong. Still, according to the union's Jahangir Alam Chowdury, 150 Taka a day does not provide for more than an existence resembling life in the slums. The union maintains that in order to ensure a decent life in the country, a monthly salary of 10.000 - 15.000 Taka is required. The dockers' union has demanded that the management of the docks must provide its members with respiratory protective equipment, gloves and raincoats. The demands have been accepted, but the measures have yet to be implemented. The cement companies in Chittagong loose 1-2 workers every month, says Chowdury, due to fatal accidents during loading and unloading of the cement. In such cases, the family of the deceased receives up to 150.000 Taka from the management of the docks.

At present Scancem employ a storage facility in Pagla, just outside Dhaka. The cement is stored here after being loaded off the coasters, awaiting transport to the customers. 5.000 bags are transported daily out of the warehouse. A supervisor, responsible for 15-20 workers, has been put in charge of the loading and unloading. Scancem pay the supervisor per bag, and the supervisor in turn pays his men. During the day the company pay 1,5 Taka a bag. At night the price is doubled. The warehouse workers are organised, and the prices have been negotiated by the union. Unloading from the boats and loading onto the trucks is done at a highly irregular basis. The daily salary may amount to 150 Taka. As mentioned above, this is not enough to ensure a decent standard of living. Furthermore, many of the workers from out of town have families in the northern parts of the country. If anything remains of their salary, this is sent to their families. Narrow boards connect the boat and the dock during the unloading from the coasters in Dhaka. Due to a fall that often measures several meters, the work can be dangerous. The workers receive no payment for bags that fall in the river or torn bags. The workers unloading the boats are mainly between 25 and 40 years of age. Harun, the supervisor, is renting part of a house nearby for "his" workers. 15-20 men sleep in two rooms. In addition to the toilet, there is a small room used for cooking.

Langkawi
The Scancem cement business source raw materials from Malaysia. Kedah Cement started its business on Langkawi, an island paradise off the Malaysian north-west coast, ten years ago. The plant includes a limestone and clay quarry, a cement plant and a shipment pier. British Blue Circle recently bought Kedah Cement. Kampung Telokyo, a fishing village of 200-300 people, is next-door neighbour to the cement plant. Due to the establishment of the plant and port facilities, the village was displaced. 70% of the population is Malay, the remainder is Thai. Only a few miles away lies the border between the two countries. The stories that NorWatch picked up in the village, resemble stories of conflict between traditional ways of life and industrial developments from other parts of the world.

Currently, 20-30 boats from the village are actively involved in fishing. Previously, when each family owned at least one boat, the number was higher. Today, many have sought more secure employment in the tourism industry or at the cement plant. The last few years have seen a reduction in the size of the catch. However, there are different theories as to the cause as well as the extent of the reductions. Some claim that the factory is to blame, others claim that the fishing was poor already before the arrival of the factory. Still, it seems that the fishing has been negatively affected by the activities around the plant and at the pier where the loading takes place. Shrimps are the main catch, and the customers are shops and hotels on the island.

Wanting to discuss the development of the fishing in the area and how life in the village has been affected by the neighbouring cement plant, NorWatch gathered some of the fishermen in the local inn. The fishermen had mainly three objections. First of all, considerable amounts of cement end up in the waters around the pier. This muds the water and scares off the shrimp, the village's main catch. Secondly, being able to fish in the desired location is made difficult by all the ships trafficking the area. When NorWatch visited the village, three large ships were moored off the pier. According to Senior Works manager Michael J. Watson at Kedah Cement, the ships are moored there waiting to be sold. Thirdly, the fishermen claim that considerable quantities of ferrous scrap and other waste originating from the ships, end up in the sea. As the nets keep getting stuck in the scrap, ferrous scrap in particular complicates net fishing.

Revealing his resignation, a fisherman in his forties tells about his one kilo catch of shrimp, the result of nearly 24 hours of fishing.

- We got 30 Ringgit (7,8 USD) for the shrimps. This is to make a living for two people, he sighs. He has a wife and five children. In addition, the money must cover fuel and equipment. Hearing this triggers considerable laughter; it is impossible to live off such an income. Acquiring a new 6 meter long boat, costs between 2.000 and 3.000 Ringgit. Given the size of today's catches, this kind of investment is out of reach. Ten years ago it was possible to catch 50-100 kilos of shrimp a day. To match this today, they must venture to other parts of Langkawi. This, however, necessitates larger boats. One fisherman says he joined a larger boat going further south along the island. The catch was sold for 100 Ringgit. Nevertheless, they emphasise that they will continue fishing for as long as possible.

- Being a fisherman, they maintain, does after all allow for more freedom than other jobs.

Furthermore, the villagers in Kampung Telokyo say that the dust problem has been considerable since the starting up of the plant and that little improvement has been made.

- People around here are forced to clean their houses and household effects daily, says Rokachay, the daughter of the village inn owner.

An ISO 14.001 certification of the plant has been prepared, Watson informs NorWatch, subsequent to the British Blue Circle take-over in the summer of 1999. As a result, says Watson, dust emissions have been reduced dramatically and further reductions are under way. At the same time, he says, the company is about to improve the pier so as to reduce the amount of cement falling in the water.

The villagers in Kampung Telokyo have experienced few benefits from the factory.  They have lost parts of their original land area and they do not approve of the company's employment policy. For instance, non-local workers are paid more than local workers. Michael J. Watson at the factory, however, informs NorWatch that all employees are paid according to the same rates. He also claims that the local population is not discriminated by the company in terms of salary. NorWatch is told that non-local workers are paid a monthly salary of about 2.000 RM. This wage level is confirmed by the workers at the plant. Local people from the village, on the other hand, are not paid more than 600-800 RM a month when they are hired at the factory.

The Kedah Cement quarry is located south of the factory, on the opposite side of the plant from Kampung Telokyo.

In the quarry, located in the hilly forest, area rock material is blast off. The rock material is loaded onto large dump trucks and transported to a conveyor belt leading down to the factory. The quarry, stretching as far as the eye can reach, is about to turn the steep characteristic hills into a large stone desert.

The quarry is visibly eating its way into the area's rain forest. The company has, according to Watson, concession to extract limestone from an area of 695 acres and a concession to extract clay from an area of 250 acres. The company is licensed to run the quarry for 40 years. As opposed to the plant, says the local population, the establishing of the quarry did not displace local settlements. However, the explosive charges at the quarry used be so powerful that cracks formed in the walls of the houses in Kampung Telokyo. Following repeated complaints from the villagers, the company reduced the amount of explosives used in each blast.

The original plan for the plant
Originally, Chittagong was the planned location of Scancem's new cement grinding plant. The south side of the Karnaphuli river, flowing into the Bay of Bengal by the city, had been selected for the site. A couple of inorganic fertiliser plants are already located in the area,  but the Scancem plan was eventually rejected by the authorities.

Consequently, the company chose to relocate the project to the capital of Dhaka, where a site directly south of the city has been purchased. Scancem wishes to build its own dock on the nearly 14 acres site, formerly used as a boat yard for smaller boats, where the raw material may be unloaded and transported directly into the factory. A Korean construction firm is responsible for the building. At the time of NorWatch' visit to the area in December 1999, the construction had barely started. Production is scheduled to commence in March 2001 and the company has been granted a preliminary tax holiday until 01.01.2001.

Scancem's dock manager in Chittagong, Petter Wiik, says that the company's new owners, the German Heidelberg, wanted to buy a second-hand Czech grinding mill for use in Bangladesh. Demanding new and better equipment, the Scancem management in Bangladesh turned the plan down. The total price of the plant is currently estimated at USD 47 million. According to Scancem, this is the largest foreign investment in Bangladesh in five years. Norad has provided a loan of 2,8 million USD. Norfund have issued just under 5 million USD worth of share capital. The World Bank institution International Finance Corporation (IFC), responsible for the financing of private enterprises / initiatives, is the principal lender and has provided the project with a USD 11 million loan.

The IFC, being the principal lender, also sets the standards in terms of environmental and social issues. Being a small actor, Norad have not exceeded the demands of the IFC. The 7-8 families living on the site at the time when it was bought have, according to Scancems general manager Martin Schjoldberg, been compensated by the company. As squatters they had no entitlement to the areas, but nevertheless received compensation.

The new factory will be run with three shifts a day and each shift will employ 30-40 people. The packing section is the most labour intensive section of the factory and the demand for labour at the plant will be considerable, says Schjoldberg.

The organising of workers in unions is welcomed by the company. In parts of the production, wearing helmet, ear protection and safety boots will be mandatory. According to Scancem "the factory is the same, regardless of where in the world the operation is located".

For the construction of the cement grinding plant, the Korean entrepreneur intends to employ mostly local sub-contractors. In order to establish the location of gas pipes in the area, NorWatch talked to an on-site work team. They received a daily salary of 80 Taka. In other words, far below what is considered a decent wage in Bangladesh.
 
Scancem in Bangladesh
Scancem International was formerly owned by Aker RGI. The company is now owned by the German Heidelberger Zement, and was established in Bangladesh in 1997. The company has started construction of a cement grinding plant outside the capital of Dhaka, backed by aid funds from Norad and Norfund. The project will cost a total of  47 million USD. The company has received a 2,8 million USD loan from Norad, of which 30% constitutes a gift. Norfund has invested 5 million USD  in the company.

Ownership structure: Scancem 63.4%, Norfund 24.6%, two local owners 6% each. 

The new cement grinding plant is expected to start up during the first half of 2001. For the time being, the bagging of the cement is done on a rental ship in Chittagong. 

Norwatch Newsletter 4/00