Nautilus Minerals seabed venture hits the rocksPublished by MAC on 2012-07-03
Source: Mining.com, statement
It was to be - literally - the world's "flagship" seabed mining venture.
Nautilus Minerals would open the way to the exploitation of huge copper and gold riches, through its Solwara-1 project off the coast of Papua New Guinea.
The go-ahead for this was given in early 2011. See: Independent scientific review slams Nautilus's environmental plan
In Nautilus' wake, other companies and countries have been quick to launch their own deep-sea enterprises. See:
However, Nautilus' arrangement with the Papua New Guinea government has now hit the rocks.
The South Pacific state accuses the Toronto-listed company of breaking its joint venture agreement, amid speculation that Papua New Guinea simply doesn't have the cash to honour it.
Indigenous groups and environmentalists are netting growing support for their efforts to halt such highly dubious schemes in their tracks.
According to a 20th June 2012 statement by some of these groups, a New Zealand community is campaigning against seabed mining of their black sands.
And Namibian fisherfolk are fighting against phosphate mining off their coast.
We also learn that Australia's Northern Territory government has halted all seabed mining exploration for three years, while it investigates the potential environmental impacts.
Nautilus sinks to fresh lows as PNG elections descend into shambles
By Frik Els
28 June 2012
Nautilus Minerals dropped 9.7% to $0.93 in late-afternoon trade on Thursday, hurt by news of violence, kidnapping, vote rigging, delays and incomplete electoral rolls after the first week of general elections in Papua New Guinea.
The Canadian mine developer has been locked in a dispute with the government of the South East Asian nation since the start of June over ownership of a seabed mining project located in its territorial waters in the Bismarck Sea.
Radio Australia reports, among many other incidents, "in one province, police arrested a group dressed as policemen, one of who was armed with a gun, after they tried to remove ballot boxes from a polling station," while The Australia News Network reports of villages being torched and roads being blocked with heavy machinery and logs.
A leading copper producer before both BHP Billiton and Rio Tinto were forced to abandon two massive mines over land and environmental disputes, PNG is one of the poorest countries in the world. It is the impoverished country's eighth poll since it gained independence from Australia in 1975 and most observers now expect the balloting to continue beyond the initial deadline of July 6.
Shareholders in Nautilus have seen the value of their investments plummet by more than half since the company initiated the legal battle on June 1 over the copper-gold-silver project.
A week ago Nautilus CEO Stephen Rogers told Reuters that he expects to settle things with PNG's nominee Petromin PNG Holdings within "months" once the election is over, but that now seems a more remote possibility.
Nautilus says PNG undertook to help fund the Solwara 1 project - almost half built - as part of an agreement signed last year that gave the country 30% ownership, but the government appears to be digging in its heals over the issue. In a response last week it alleges that Nautilus is the party that breached the terms of the deal and that the state is "therefore entitled to terminate the agreement".
Petromin, about which little information is publicly available, may simply not have the cash to bring to the table.
Not long ago, the future looked promising for Nautilus, the first company to explore the ocean floor for polymetallic seafloor massive sulphide deposits.
In late April, the company announced it had signed China's Tongling Non-ferrous Metals Group as the first customer for its pioneering Papua New Guinean sea-floor mine.
The undersea mine was slated to begin production in the fourth quarter of 2013, but Nautilus is also facing funding problems concerning its German partner building the $160 million surface vessel which is the base for the entire underwater operation. Nautilus still has some $100 million cash in the bank.
Nautilus seabed mining experiment falters
Dispute with PNG government, opposition by Pacific and Canadian citizens, financing woes
Media Release *
20 June 2012
TORONTO. Today Canadians are standing in solidarity with civil society in the Pacific against deep sea mining. Canadian company, Nautilus Inc, is leading the rush to mine the sea floor in the Pacific. If it goes ahead, its Solwara 1 project in the Bismark Sea of Papua New Guinea will be the world's first commercial deep sea mine.
However, a growing call from Pacific communities to stop seabed mining, the PNG Government's refusal to contribute to development costs and the breakdown of a financing agreement with an European ship builder questions the viability of an already uncertain venture. Not a good look as Nautilus faces its AGM in Toronto today. Nautilus stocks have already dropped dramatically over the past couple of weeks.
Dr. Catherine Coumans, Mining Watch Canada said, "Canadian mining companies operate around the world and dominate the sector in number. But Canada does not regulate their activities to prevent them profiting from weak protection for the environment, workers, and human rights in some host countries."
"Now, in spite of very serious concerns that have been raised by scientists and local citizens, we have Nautilus proposing to mine environmentally, socially and culturally significant seabeds in the Pacific, an activity that would not be allowed in Canadian waters."
Wences Magun, national coordinator for Mas Kagin Tapani in Papua New Guinea said, "At this point local communities have NOT sanctioned this project. We can't rely on our governments or companies like Nautilus to tell us that seabed mining is good, is safe."
"No one knows what the impacts of this form of mining will be. We are being used us as guinea pigs in a sea bed mining experiment."
Sharon Diave-Nerius from the East New Britain Social Action Committee said, "The recent blows to Nautilus are welcome news for communities in Papua New Guinea. But there are plenty of other companies and governments pushing for this experimental industry in the Pacific to get started."
"The speed with which the PNG Government approved the EIS and granted the licence to Nautilus did not pay respect to the customary norms and cultural heritage of the indigenous people of the Bismarck Archipelago.
"Experimental mining of our seabeds is not going to provide any direct services or benefits for local communities."
Dr. Helen Rosenbaum, campaign coordinator for the Deep Sea Mining campaign in Australia and author of "Out of Our Depth: Mining the Ocean Floor in Papua New Guinea" said, "The Nautilus EIS is deeply flawed. Even the company admits to moderate environmental risk. Independent analysis of the EIS indicates far higher risks."
"Investors should be aware that contiguous nature of the ocean means that impacts will not be isolated to the 11 ha area of the Solwara 1 site. They will spread far and wide with liabilities to match. For example, stocks of tuna and other migratory species are likely to be contaminated by heavy metals and health of communities and ecosystems across the Pacific could be affected."
Groups across the Pacific have a petition calling for Pacific governments to stop experimental seabed mining.
Pacific women are currently promoting the 'stop experimental seabed mining' message at the international Rio+20 conference in Brazil.
* For more information contact:
Wences Magun (Papua New Guinea), +675 7195 9665
Sharon Diave-Nerius (Papua New Guinea), + 675 658 7893
Dr. Catherine Coumans (Canada), +613 569 3439
Dr. Helen Rosenbaum (Australia), +61 413 201 793
Papua New Guinea won't budge over Nautilus seabed mine. Shareholders abandon ship
By Frik Els
20 June 2012
Canada's Nautilus Minerals dropped 11.5% on Wednesday after the company announced that Papua New Guinea has responded to its claims concerning a deal that is now the subject of arbitration proceedings.
The PNG government is refusing to pay its share of the development costs of Nautilus' Solwara 1 project, located in its territorial waters in the Bismarck Sea.
Nautilus says PNG undertook to help fund the sea-floor mine as part of an agreement signed last year that gave the country 30% ownership of the project, but the government of the South East Asian nation appears to be digging in its heal over the issue. In its response on Wednesday it alleges that Nautilus is the party that breached the terms of the deal and that the state is "therefore entitled to terminate the agreement".
The company, the first to explore the ocean floor for polymetallic seafloor massive sulphide deposits, initiated the legal battle on June 1, when it warned that the copper-gold-silver project could be delayed or cancelled because of the dispute.
The news prompted a massive sell-off with Nautilus shares listed in Toronto halving over two days of torrid trading. It has since recovered some of the losses but at $247 million today it is still worth 38% less than before the dispute.
Not long ago, the future looked promising for Nautilus. In late April, the company announced it had signed China's Tongling Non-ferrous Metals Group as the first customer for its pioneering Papua New Guinean sea-floor mine. The undersea mine was slated to begin production in the fourth quarter of 2013.
Nautilus Minerals Inc. announces further update on dispute process with state of PNG
Nautilus Minerals press release
21 June 2012
Nautilus Minerals Inc. ("Company" or "Nautilus") announces that the Independent State of Papua New Guinea (the "State") has issued a Notice of Arbitration in relation to the dispute which has arisen under the Agreement between the parties dated 29 March 2011.
Following the initiation of the dispute resolution process by the Company on June 1, 2012 and subsequent meetings between the parties... the Company had understood the State wanted to resolve the dispute, particularly in light of a letter to the Company from the Honourable Peter O'Neill CMG MP, the Prime Minister of the State, dated June 6, 2012.
In that letter the Prime Minister outlined a number of key principles to be reflected in relation to the joint venture for the Solwara 1 Project (the "Project"). Nautilus considered this to be a suitable basis for continuation of the discussions in an attempt to resolve the dispute.
The State has now issued a Notice of Arbitration to the Company which asserts that Nautilus has not met certain obligations on which completion of the transactions contemplated by the Agreement is dependent, that Nautilus has breached the Agreement and that the State is entitled to terminate the Agreement. Nautilus has and continues to refute these assertions and maintains that it is the State who has breached the Agreement, not Nautilus.
As previously disclosed, under the Agreement the State's nominee (a subsidiary of Petromin PNG Holdings Limited) must pay (among other amounts) its share of costs incurred in the development of the Project up to completion to acquire its Project interest (see links section for full press release).
Unless and until the dispute is resolved, completion will be delayed or may not occur and Nautilus must continue to carry these costs. This may lead to Nautilus needing to slow or defer the build program for Project equipment, which would have consequential impacts on the scheduled commencement of operations and overall Project costs.
Nautilus will continue to attempt to resolve the dispute with the State in an effort to avoid a costly arbitration process. On completion of its review of the Notice and further meetings in PNG, Nautilus will provide further details of its plans by Friday, June 29, 2012.