Bangladesh, one of the world's poorest and most conflict-torn nations, isn't immediately identifiab

Published by MAC on 2004-10-09

Bangladesh, one of the world's poorest and most conflict-torn nations, isn't immediately identifiable as a state rich in hardrock minerals. However, the eastern part of the country has been a source of coal for decades. Now a London-listed company plans to expand the biggest deposit to world-class proportions.

Bangladesh's soil and water is also "rich" in one of the world's deadliest metals. Arsenic is found in groundwater, used for drinking purposes, and has already poisoned thousands, if not millions, of Bangladeshis as a result. Other research has painted a highly alarming picture in neighbouring West Bengal - which also has a large number of coal mines. It is well known that coal burning and smelting can result in arsenic poisoning, while research has been carried out in the USA on the association between coal mining and arsenic uptake in rivers and soil. However little such investigation seems to have been undertaken elsewhere.

Reasons to be the mining sector's 'darling'

By Rebecca Bream, Financial Times

October 9 2004

Asia Energy has become the surprise darling of the mining sector over the past two weeks after good news from the company increased its shares almost fourfold. The group, which owns the Phulbari coal mine and power plant project in Bangladesh, listed on AIM in April at 75p a share. At the end of September, it jumped sharply after Asia said it could start coal production in 2007 compared with an original target of 2009 and that independent consultants had valued assets at $2.3bn (£1.4bn). Investors started to believe in Asia's ambitious plans and there are several good reasons why. As well as an earlier start date, Asia now thinks the Phulbari project could produce 15m tonnes of coal a year rather than initial estimates of 9m tonnes. Also, Barclays Capital has been hired as Asia's financial adviser, lending further credibility. Analysts suggest, however, that the rally could be unsustainable and the current price does not reflect the risks. The company will need to raise large amounts of debt and equity - $530m at the last count - to bring the Phulbari project into production and this could require a deal with a larger partner.