MAC: Mines and Communities

Ocean exploration reaches perilous new depths

Published by MAC on 2010-09-20
Source: Reuters, Mining Weekly, RNZI (2010-09-14)

But waves of protest are also rising

Plans to mine the deep sea bed aren't anything new.

Indeed, they have been around for at least as long as members of the United Nations have been tussling over who should "control" it.

But now, as many terrestrial mineral deposits prove more problematic and costly to exploit than before, companies are advancing onto the ocean floor.

The term "marine mining" covers a wide variety of current and prospective projects.

These range from the dredging of offshore construction materials (aggregates); to sooping-up diamonds at relatively shallow depths (150m in the case of Namdeb's operations in southern Africa); to the exploitation of "massive sulphides" located up to 2 kilometres or more under the surface.

A growing number of mining companies have their sights on (and several major sites beneath) the waves, and they are viewing a huge potential.

According to the September 2010 issue of Mining Magazine, this comprises "everything from phosphorite [rock phosphate] to iron sands, manganese nodules, gold, diamonds, various ocean-ridge seafloor massive sulphides (SMS) and others".

Leading the hungry pack is Nautilus Minerals, in which Anglo American is a leading shareholder. The Toronto-listed outfit has recently revived its previously-suspended Solwara project in the Papua New Guinea's Bismarck Sea. See: Nautilus Minerals stock rises after subsea miner awarded Papua New Guinea permit

Closely behind Nautilus comes London's Neptune Minerals, with 25 prospecting licenses in the territorial waters of Aotearoa/New Zealand, Micronesia and Vanuatu, as well as Papua New Guinea.

A third company, Minnesota-based Dorado Ocean Resources, wants to extract from gold, silver, and copper-rich depths surrounding the Solomons, Fiji and Tonga, at a rate of 200,000 tons a year. Earlier this year, Dorado launched what it claims as the world's most advanced vessel to search for these minerals.

Whatever may eventually be lifted from such fishy forays, the very act of searching for and sampling the minerals will almost inevitably create considerable environmental damage.

Into the unknown regions

And the extent of seabed territory, currently ceded to miners for exploration purposes, is staggering.

Just two linked junior New Zealand companies - Widespread Energy and Widespread Portfolios - recently secured mining rights to an area off New Zealand which approaches 5,000 square kilometres.

Dorado, through its subsidiary Bluewater Metals of Australia, has exploration licences covering no fewer than 150,000 square km of the deep seabed.

As noted before on the MAC website, concerns about the impacts of the gathering "oceanic minerals rush" has been somewhat late in arriving.

But the counter-attack is growing, due partly to the outcry following BP's recent drilling rig disaster on the floor of the Gulf of Mexico. See: Deep-sea mining adds to fears of marine pollution

Earlier this month an environmental group in the Cook Islands added its own voice to warnings earlier issued by similar organisations in Papua New Guinea. See: Seabed mining threat recedes - for the moment

For many years, there's been a rhetoric asserting that the seabed should be protected as "the heritage of human kind". 

Translating that into practice has so far defied any true consensus, although the International Seabed Authority (ISA), set up following the 1982 UN Convention on the Law of the Sea, has expressed concerns about the potential environmental impacts of deep sea mining.

Meanwhile, substantial funds are flowing towards "upstart" companies, embarking on massive enterprises for which there are few, if any, benchmarks by which to assess their exploits.

In a real sense "privatising" the oceanic floor is already well underway.

[Comment by Nostromo Research, 19 September 2010].

Cooks environmentalists warn about seabed mining

Radio New Zealand International

9 September 2010

A Cook Islands environmental organisation has issued a warning against deep sea mining in the country's exclusive economic zone which is an internationally recognised whale sanctuary.

The Cook Islands passed deep sea mining legislation last year and the government has set up framework to apply for licenses to explore mining.

The Manager of Te Ipukarea Society, Jacquie Evans, says the mining industry will consider the environment as an afterthought because it is driven by the desire to make money.

She says the organisation is worried about the threat that sea bed mining poses on marine life.

"There are no effective ways of preventing sediment flumes resulting from mining activity, either through the actual picking up of the nodules from the deep sea bed, or through the disposal of deep sea tailings after they've been brought to the surface. And those sediment flumes can have an effect on marine plankton."

Jacquie Evans says the organisation is working on raising awareness of the issue.


UN court starts hearings into seabed mining liability

By Michael Hogan

Reuters

14 September 2010

HAMBURG - The United Nations' top maritime court on Tuesday started hearings into who has liability to pay the potentially enormous costs of environmental damage caused by seabed mining.

The Hamburg-based International Tribunal for the Law of the Sea is examining whether governments must face wider liability for seabed mining undertaken by companies based in their countries, judge Tullio Treves, president of the court's seabed disputes chamber, told Reuters.

Nine countries including Russia, Germany, the UK, Mexico, Argentina and the Netherlands are set to make presentations to the court along with other organisations about state financial liability for mining under the International Convention for the Law of the Sea.

Seabed mining is viewed by many as a rich source of minerals ranging from copper, gold, zinc and silver in a commodity-hungry world but has provoked heated protests about environmental damage in regions it has been proposed from the Pacific to African oceans.

"It is clear in the (law of the sea) convention that the contractor is liable to pay such damage," said Treves. "The question is: is there some liability of the sponsoring state, maybe if the contractor does not have much money or goes bankrupt or the damages are such an incredible amount that no company could envisage paying damages."

The sponsoring state is a country where mining companies are based or owned, he said.

Marine Life

"We all understand that the Gulf of Mexico (oilspill) situation has raised the level of attention of media and public opinion about pollution of the sea and about disasters that can be the consequence of man-made industrial activities," he added.

"The convention does not say that whatever damage is invoked by the contractor that the sponsoring state has to pay. It says that the sponsoring state has the responsibility to ensure compliance with the rules of the convention by the contractor."

"If it has taken the appropriate legislative and administrative measures within its domestic system it will not be liable."

The main focus is likely to be on liability to damage to fish and marine life caused by mining, which under some plans may be similar to dredging, he said.

The court is likely to publish its opinion by early 2011 for consideration by the United Nation's International Seabed Authority, he said.

It is hoped the court would give more clarity to states about likely if seabed mining does expand in coming decades.

"There seems to be some states who believe that someone should pay in the end and that there should be no gap, while others say the rules are the rules and if there is a gap then there is a gap," Treves said. (Editing by James Jukwey)


Nautilus says could start undersea mining in 2013

By Matthew Hill

Mining Weekly

7 September 2010

BARRIE, Ontario - Construction for the world's first deep-sea mining project, off the Papua New Guinea (PNG) coast could begin by year end with first production in early 2013, an executive at TSX- and Aim-listed Nautilus Minerals said on Tuesday.

The company first aims to sign an agreement with a strategic funding partner, and will begin development on the $383-million Solwara 1 "almost immediately" thereafter, business development vice-president Scott Trebilcock said.

"Our executives based in Australia are actively flying around that part of the world pursuing partner discussions," he noted.

"We continue to be in agreement development stage."

The company had been trying to secure a strategic partner for the Solwara 1 copper gold massive-sulphide project since late 2009, and the complexity and pioneering nature of project had meant that finding the partner with the right fit was a long process.

"Several potential partners have been right to the wedding chapel," said Trebilcock, adding that they had opted out.

Still, interest was strong, including from Chinese companies, and Nautilus was in "agreement development stage" with several potential partners.

Nautilus was looking at two deal structures with potential partners. The first was a traditional mining joint venture, where both companies would jointly own the operator of Solwara 1.

The second, less traditional, route would be to partner witha ship owner or operator to build and put on the vessel all the mining equipment and then that company would contract Nautilus to do the extraction.

"That type of agreement would bring down our capital cost," Trebilcock said.

Nautilus was talking to "several" mining companies and service providers to the offshore oil and gas industry.

Mining major Anglo American, an 11% Nautilus shareholder, may be interested in further partnership, Trebilcock said: "I wouldn't totally rule them out."

Nautilus has a technological collaboration agreement with Anglo American.

TSX-listed Teck Resources is a 6% shareholder, with which Nautilus shared a "far more advanced relationship", said Trebilcock.

Russian firm Gazmetall owns 21% of the company, though is "purely an equity holder".

According to an independent SRK study into the Solwara 1 project released in June, the operation could produce 80 000 to 100 000 t/y of copper and 150 000 oz to 200 000 oz/y of gold. Trebilcock noted it would take about six months to reach full production from when the first ore was mined.

Solwara 1's deepest point is 1,600 m below sea level.

Nautilus would "absolutely" be looking to build its own mill in PNG, Trebilcock asserted.

"The PNG government would also like that," he said.

The company has already bought the land - an old palm oil plantation with potential for a deep-water port nearby.

It would aim to build its own a mill soon after Solwara 1 was in production, once the viability of mining the sea bed at depth had been proved.

In June, Nautilus signed a contract with TSMarine to provide drilling services to further explore the sea bed around PNG's coast.

Nuatilus had effectively halted work on the Solwara 1 project when global equity markets hit the wall at the end of 2008, but activity began again towards the end of last year.

The company was trading up 1% on the TSX at C$1,89 a share on Tuesday afternoon, giving the company a market value of C$294-million.

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