SHARES in Asia Energy were suspended after falling 59 per cent when the Bangladesh Government said that it would cancel the AIM-listed company’s $1.1 billion (£578 million) coal mining project. The cancellation came after violent protests that have left six people dead.
Tension over the Phulbari open-pit project — which, by Asia Energy’s estimate, required relocation of 40,000 people — has flared since the weekend, when a policeman and five demonstrators were killed amid rioting.
Yesterday, Asadul Habib Dulu, a junior minister, said that the Government had agreed to the protesters’ demands, cancelling all existing agreements with Asia Energy and declaring a moratorium on open-pit mining in Bangladesh. Those comments sent Asia Energy, which was the best-performing stock on AIM two years ago, down 166½p to 117½p, prompting the company to ask for trading in its shares to be suspended.
The company later said that it had not received any communication from the Government to the effect of the minister’s comments and was “seeking to clarify the reported remarks of that minister and to determine the Government’s position towards the Phulbari project”.
Asia Energy joined AIM two years ago at 75p as a spin-off from Cambrian Mining and raised $52 million last November at 450p through JPMorgan Cazenove to further the development of Phulbari. The project entailed the mining of 572 million tonnes of high- quality thermal and semi-soft coking coal from the site in northwest Bangladesh over a 30-year period. Last year, its plans for the mine were given environmental clearance by the Bangladeshi Government.
Keith Watson, a mining analyst for Evolution Securities, the company’s joint broker, described yesterday’s events as “a further example of a recent wave of national asset grabs”.
He added: “It should be remembered that such behaviour is likely to add to supply disruption for raw materials.”
The natural resources sector has been unsettled by recent actions by governments in emerging economies to regain title to flagship minerals projects amid soaring metals prices. AIM-listed Oxus Gold has seen the Kyrgyzstan Government revoke its title over the Jerooy gold project, and the Uzbekistan Government last month transferred a licence originally awarded to Marakand Minerals, Oxus’s 86 per cent-owned offshoot, to a state-owned miner.
Asia Energy is estimated to have net cash of $55 million following last year’s fundraising, or the equivalent of 58p a share.
The company’s shares peaked at 400p last year, valuing it at £440 million.
