Mining the deep blue frontier

Peter Huck | NZ Herald

Photo / Thinkstock

Photo / Thinkstock

Even by Howard Hughes’ eccentric standards, the great manganese nodule hunt was a bizarre episode. News that the reclusive billionaire was intent on recovering metallic nodules – potato-sized rocks rich in manganese, copper, nickel, cobalt and rare earths – from the ocean floor northwest of Hawaii stoked hopes of a mining bonanza. Private companies launched probes to see if mining at the limits of technology was commercially feasible.

In fact, the quest was an elaborate Cold War ruse, concocted by the CIA with Hughes’ help, as a cover for US efforts to salvage a Soviet submarine, K-129, which sank in 1968. The wreck was salvaged in 1974. As for the deep-sea metals rush, it ended when nickel prices imploded.

Four decades later deep-sea minerals are back in the news, following a sensational claim in July 2011 by a scientific team from the University of Tokyo.

Writing in the journal Nature Geoscience, the scientists, backed by the Japan Agency for Marine-Earth Science and Technology, said rare earth minerals had been found in mud on the ocean floor. Between 80 and 100 billion tonnes of rare earths – used in magnets, batteries and electronic components for smartphones, wind turbines, fuel cells, hybrid cars, catalytic converters and other high-tech gadgetry – were found at depths of 3500m to 6000m, east and west of Hawaii and east of Tahiti.

“The deposits have a heavy concentration of rare earths,” team leader Yasuhiro Kato told Reuters.

“Just one square kilometre of deposits will be able to provide one-fifth of the current global annual consumption.”

Given that the US Geological Survey estimates world reserves of rare earths at 110 million tonnes, the amount found deep beneath the ocean seemed a game-changer. The Industrial Mineral Corporation of Australia (IMCA) says total world production of rare earths was 100,000 tonnes last year. Consumption was 115,000 tonnes. The shortfall was filled from stockpiles or by illegal exports from China, which produces over 95 per cent of the global supply.

By 2020 IMCA predicts global demand will be 220,000 tonnes.

The Japanese paper is being treated cautiously by scientists. “It might not be possible [to extract rare earths]. You’d need a high concentration,” says Dr Richard Wysoczanski, a marine geophysicist with the National Institute of Water and Atmospheric Research (Niwa). “But having said that, the mud is easy to process. It’s about getting it all to the surface.”

Nonetheless, the Japanese announcement – and Kato’s claim that nodules rich in heavy rare earths could be “readily recovered” – has fuelled business and government interest. And much of that interest is focused on the Pacific Ocean.

Deep-sea technology has made big strides since the 1970s. Submersibles can dive to extraordinary depths and robots can retrieve material. Scientists have mapped wondrous subterranean landscapes and located deep hydrothermal vents, where mineral-rich water, superheated by magma in the earth’s core, bubbles up into the sea. Such vents are found in the Kermadec Arc, a chain of active subterranean volcanoes northeast of the North Island.

The Kermadec vents may harbour rare earths. And Wysoczanski says rare earths could also be found in mud around manganese deposits known to exist in the Great South Basin south of the South Island, albeit at depths of 4000m in an ocean renowned for extreme weather.

Last November Niwa announced a joint venture with the US National Oceanic and Atmospheric Administration, with New Zealand piggybacking on US budgets and equipment to investigate marine areas such as the Kermadec seamounts.

Could the Pacific be on the verge of a rare earths boom?

Maybe. But the risks are high and the odds are long. A key question is whether deep-sea mining for rare earths is profitable, compared to open-pit mines in China, the US and Australia, or the prospect of more in Canada, Greenland, Russia, Sweden, Brazil and Vietnam.

Rare earths are not, in fact, particularly rare. However, they are not often found in high concentrations and can be difficult to mine and refine. The average percentage of rare earths taken from China’s Bayan Obo iron ore mine – the rare earths are a by-product – is 6 to 7 per cent, explains Gareth Hatch, co-founder of Illinois-based Technology Metal Research. Rare earths separated from clay in southern China have an even lower yield, just a few hundred grams per tonne.

“Light” rare earths, such as cerium, used in glass manufacture, are more concentrated and worth less. “Heavy” rare earths, like dysprosium, used in magnets and a vital component in hybrid cars such as Toyota’s Prius, are less concentrated and worth more. Kato reported that some deep-sea deposits had twice the levels of dysprosium as found in China’s clay mines.

Price and availability are everything for minerals with increasing strategic value. Back in 1992 Communist Party leader Deng Xiaoping declared: “The Middle East has oil. China has rare earths.” According to Forbes magazine, China increased rare earth production 40 per cent annually from 1978 to 1989, undercutting the US. As rare earths are crucial to missile, laser and radar systems, the US is pushing to develop its own supplies, following a dispute over China’s quota system. The US, Japan and the EU accused Beijing of reducing exports to favour domestic industries, and filed a World Trade Organisation complaint in March last year.

Despite slumps in 2009, as the global recession kicked in, and in 2011, rare earths are a hot commodity. Last year usage in China alone was estimated at 80,000 tonnes, leaving Molycorp’s Mountain Pass mine in California – recently reopened – and Lynas Corporation’s Mt Weld mine in Western Australia (with final processing in Malaysia) to pick up the slack.

Will the Japanese discovery precipitate deep-sea mining for rare earths (Japan also claims to have found deposits in its own Exclusive Economic Zone)? No one is sure.

The International Seabed Authority – the body established to regulate mining beyond Exclusive Economic Zones – says interest in deep-sea mining “has increased rapidly and significantly after decades of being ‘on hold”‘. The IPA has issued 13 licences to private companies, state-owned organisations and Governments, including India, China, Russia and Japan. Six are pending.

There are two ways to recover marine rare earths. Slurry can be pumped through pipes from the seabed to a stationary platform or ship and “dewatered”. Further processing would then be done on land. Or robot bulldozers can scoop material into skips, which are then hauled to the surface. “They’re very doable,” says Wysoczanski. “It’s just a matter of cost.”

Speaking in Auckland last December at a meeting of Pacific Island states from the Pacific Economic Co-operation Council, Kato said marine rare earth concentrations were up to 10 times those on land. He estimated a single mining ship could extract 15,000 tonnes of mud each day, making US$150 million plus in a year ($182 million).

On the surface it is a beguiling vision. But probe deeper, perhaps in stormy waters remote from help, such as parts of New Zealand’s EEZ, and it is fraught with technical, environmental and financial risks.

Vital as they are, demand for rare earths is expected to be only $2 billion to $3 billion by 2014, just 1 per cent of the present market for iron ore.

“There’s just no way those projects are economic, first at current rare earth prices, and second, when you have so many other projects, literally hundreds, on land that are so much easier to exploit,” says Hatch.

The mining majors, BHP Billiton, Rio Tinto and Vale, appear uninterested in rare earths. Why would they sink their money into high-risk seafloor ventures? “Rare earths would have to be astronomically high in price. And that would probably kill demand anyway. I just don’t see it. I really don’t.”

Nonetheless, interest is growing. “I don’t think there is a boom. There’s no deep-sea mining. It’s more a process,” says Robert Makgill, environmental law director with Auckland-based North South Environmental Law. “It’s certainly an industry in which a lot of interest has been shown.”

Makgill has been involved with an EU-funded effort to help Sopac, or the Secretariat of the Pacific Community (Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Timor Leste, Tonga, Tuvalu and Vanuatu) develop “a legal framework to allow for deep-sea mineral exploration and mining”.

Given the tiny economies of most Sopac members, this is potentially huge. “It’s a big carrot for some of these Pacific Island states,” says Makgill. “They don’t have industry. They don’t have a lot of primary resources. And this is one way for them to obtain some wealth so they can provide some decent infrastructure for their country. It really is a question of how effectively they can regulate those activities.”

It is a prospect that needs big outside players: investors with capital, mining companies with expertise and technology, and legal experts who can write guidelines. The move to establish a regulatory authority, licensing regime, environmental safeguards and more is led by British lawyer Hannah Lily.

Certainly, deep-sea mining would have significant impacts, not least the interest they would attract from powerful states.

First cab off the rank is Canada-based Nautilus Minerals, which has a project – Solwara 1 – at 1500m in the Bismarck Archipelago in PNG waters. Tonga and Nauru have applied to the ISA for exploration licences.

Neptune Minerals, a US company, holds licences for Vanuatu, the Federated States of Micronesia and New Zealand, and since 2005 has been exploring massive seafloor sulphide deposits which may yield lead, zinc, copper and rare earths along the Kermadec Arc. Belgium’s G-TEC Sea Mineral Resources, backed by their government, has also signed an exploration licence with the ISA for the central Pacific.

And there is renewed interest in the Clarion Clipperton Zone, where the US salvaged K-129. In March the Guardian reported that British Prime Minister David Cameron wanted to “put Britain at the forefront of a new international seabed mining industry that could be worth £40 billion ($74 billion) to Britain’s economy over the next 30 years.” Lockheed Martin would lead the charge, said Cameron, allowing Britain to compete with China and Russia “in the global race”.

The Prime Minister told a business group that a government-private consortium involving UK Seabed Resources – a Lockheed Martin subsidiary – has an exploration licence for 58,000sq km of the Clarion Clipperton Zone. The US has never ratified the UN Convention on the Law of the Sea, but Britain has, so a British-based company can apply for an ISA licence to explore international waters.

Seaboard Resources will use data generated by the sub hunt in a venture that Lockheed Martin acknowledged as “a complex engineering challenge”.

In March, Foreign Policy in Focus, published by the Institute for Policy Studies, a US think tank, reported that Lockheed was negotiating with Fiji’s military regime “to fast-track and sponsor deep seabed mining”. The report claimed the giant company was consulted well before other stakeholders and that a draft decree of the agreement “criminalised protest of the Fiji International Seabed Sponsorship Authority, which could be read as providing a blanket of coverage for Lockheed Martin to pursue experimental deep seabed mining without public protest”.

A robust regulatory framework allows for transparency. “That’s probably the big question,” says Makgill. “What kind of regulatory framework will you put in place?” And once adopted, law must be administered. “There are some big questions surrounding this. And it does need to be watched carefully.”

Take the environmental price. The rare earths industry produces heavy metals and radioactive waste. Processing deposits from mud, using acid leaching, is easier. But big pitfalls remain. Critically, life in the ocean deep is sulphur-, not oxygen-based, provoking concerns about damage to fish stocks if sulphite particles enter food chains, driving acidification. For Pacific states that depend on fishing and tourism, this is a serious threat.

There are also fears that mining could trigger ocean floor landslides, damage hydrothermal vents or release radiation. Then there’s waste. Where do small states store waste? How do they manage the process?

Wysoczanski says “more than half” of Niwa research on mining hydrothermal vents is focused on the potential impacts on biodiversity of toxic chemicals or of particulates – fine rock particles – in the water. “They can effectively clog up organisms. Especially those that don’t move. So it can wipe out vast areas. We just don’t know yet.”

Wysoczanski is sceptical of Kato’s claim that 1sq km of seabed could furnish a fifth of annual global rare earth demand. “I suspect it would be larger. And that’s the problem.”

As arguments over oil exploration in New Zealand suggest, finding best practice rules for inherently risky deep-sea mining is not easy. “It’s a hugely unknown environment,” says Makgill. “Scientifically, any activities we undertake in those environments really are dependent on a precautionary approach and effective management.”

In the meantime, any deep-sea rare earth bonanza remains at the exploratory stage. Its future might depend as much on how China handles quotas, as on the technical, legal and financial challenges of mining the deep blue.


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Filed under Environmental impact, Exploration, Financial returns

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