Issue link: https://viewer.e-digitaleditions.com/i/122153
miningreview projects without a final investment decision, such as Woodside's Browse project near Broome, WA, we'll just have to wait and see. "The issues of cost and commitment and whether these projects go ahead are clearly dependent on expectations of gas prices," he says. For iron ore, buyers will be keeping an eye on developments in West Africa. Miners, however, know to tread carefully in parts of the continent, where corruption, government intervention and outright nationalisation of projects are not unknown. "The issue for Africa is sovereign risk, and it's a substantial issue," Professor Grafton says. Extreme events such as the terror attack on a gas plant in Mali in January simply wouldn't happen in Australia. Sophisticated infrastructure near key Australian resources deposits would also be the envy of exploration companies in Africa, where discoveries are only valuable to anyone if they can be transported easily to markets. Building rail lines or ports is not only expensive, it is also subject to long delays, Professor Grafton says. "Yes, labour is cheaper in Africa, but specialised labour might not be that much cheaper, given you want to get a good engineer to Mozambique. I imagine you'd have to pay a similar amount to what you'd pay to get one to the Pilbara." So Africa is cheaper in some ways but more expensive in others. "There is no question that Australia is a high-labour-cost country," Professor Grafton says. Australia has lost its competitive edge as costs have increased, the Minerals Council of Australia (MCA) said in its cost comparison report in September last year. Meanwhile, miners are happy to develop relatively cheaper projects in other countries. "Within highly competitive global markets for … coal, copper and nickel, more than half of Australia's mines now have costs above " EFIC DID MORE THAN PROVIDE A BANK GUARANTEE. THEY HELPED US SECURE MORE CONTRACTS." Ian Davey, Sales & Marketing Director, Binder Group Contact EFIC's Leela Hanson on 08 9325 7872 Overcoming financial barriers for Australian business 58