The Financing of New Resource-based Projects in the Next Decade

Depending upon the probability one assigns to project go-ahead, up to $10 billion (1978 figures) could be required for resource based projects in Australia in the next decade. In the past major resource projects were readily financeable against sales contracts. In the future the complexities imposed by such matters as political risk, inflation, currency movements and environmental and other socio- economic considerations on project development costs and returns may require a different approach. This paper addresses itself to the ramifications of providing development finance for resource based projects in the future - and in particular examines such factors as project completion guarantees, sales contracts, protection against exchange rate fluctuations, interest rate structures and debt/equity ratios as each relates to the provision of finance. TABLE OF CONTENTS SECTION 1 : Introduction SECTION 2 Factors Affecting Project Financing in the Next Decade SECTION 3 Some Aspects of Financing New Projects in Australia in the 1980's Conclusion