Why Chevron, Adani, Fortescue show commodity mega-projects era is over – by Clyde Russell (Reuters U.S. – August 6, 2015)

http://www.reuters.com/

LAUNCESTON, Australia, Aug 6 (Reuters) – Want a snapshot of the problems facing natural resource companies and why the era of big projects is over? Consider the recent dilemmas of Chevron, Adani and Fortescue Metals in Australia.

The first is battling cost overruns and combative unions in trying to get a multi-billion dollar project ready.

The second is facing yet another delay to the world’s biggest coal-mining development, with a court victory by environmentalists adding to financing challenges amid deteriorating economics.

The third is playing coy about a possible rescue by a Chinese white knight, which could help it survive a severe downturn in the price of its product, largely self-inflicted by overly ambitious expansions within the industry.

The three companies have little in common other than they all operate in Australia and face the challenge of trying to successfully run major projects at a time of unrelenting commodity price weakness.

But each in their own way highlights why companies are going to be increasingly reluctant to take on significant commodity projects, a trend likely to last for some time, possibly well into the next up cycle in prices.

While the three examples are all based in Australia, the issues are common to most resource projects in other developed countries, such as Canada, and even in developing nations like Mozambique and Indonesia.

NO NEW PROJECTS WITHOUT LABOUR CHANGES

Chevron is facing a strike by workers at its Gorgon liquefied natural gas (LNG) project, just as the $54 billion development nears completion.

For the rest of this column, click here: http://www.reuters.com/article/2015/08/06/column-russell-commodities-companies-idUSL3N10H1EU20150806

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