Deep sea mining hopes hit by New Zealand decision

Jamie Smyth | Financial Times

A decision to block a deep sea mining venture off the New Zealand coast has cast a shadow over an emerging global industry that proponents say could revolutionise how minerals are extracted.

The sea floor is rich in copper, nickel, manganese, cobalt, zinc and a host of other minerals used in technology products. Improvements in undersea extraction technology have now put these within reach of miners.

New Zealand has lead the way in developing sea floor mining. But progress has now stalled following this month’s rejection by environmental regulators of a proposed project by Chatham Rock Phosphate off the coast of Canterbury, the second mine application refused within a year.

The decisions were welcomed by green groups, who fret that mining would damage vulnerable undersea ecosystems, which are relatively underexplored. But their delight is not shared by companies eyeing deep sea prospects.

“To say we are bitterly disappointed is an understatement,” said Chris Castle, Chatham Rock Phosphate’s managing director. “This will make it even harder, if not impossible for companies to attract capital for new projects in New Zealand.”

For almost 20 years deep sea mining has been flagged as a commercial opportunity. David Cameron, UK prime minister, claims it could be worth £40bn to the UK over a 30-year period.

The International Seabed Authority, a UN agency, has so far issued 26 exploration licences to governments and companies enabling them to operate in international waters. New Zealand, Namibia and Papua New Guinea have awarded national licences for seabed mining exploration. De Beers uses ships to recover diamonds off the coast of Namibia at depths of up to 140 metres.

But scant deep sea mining has taken place. The world’s largest mining groups are sidelined, apparently deterred by the uncertainty of both economics and the environmental impact of the activity, which has prompted authorities to order moratoriums on mining in Namibia and the Australian state of Northern Territory.

Richard Page, contributor to a Greenpeace report on sea floor mining, says:

“It is difficult to contain mining waste on land. Imagine the problems of stopping the spread of pollution in an ocean environment. The local communities have every right to be, and indeed should be, concerned.”

Campaigners say cutting into the ocean floor or dredging to recover minerals that will be pumped on to a floating processing vessel will kill marine life and smother neighbouring areas with sediment or plumes.

New Zealand’s Environmental Protection Agency concluded that Chatham Rock’s proposed phosphate mining project near Canterbury would cause “significant and permanent adverse effects on the existing benthic [sea floor] environment”.

The decision has alarmed proponents of sea floor mining and prompted the New Zealand government to consider amending legislation to ensure it is not a barrier to economic development.

“The act is flawed,” says Alan Eggers, chairman of Trans-Tasman Resources, a company proposing to mine iron sands off the New Zealand coast.

Last year the EPA blocked it from mining the sea floor — the first time the regulator had ruled on a seabed mining application.

The setback to seabed mining in New Zealand comes as a plan to begin mining copper and gold off the coast of Papua New Guinea moves a step forward. This month Nautilus Minerals, the first company to be awarded a deep sea mining lease anywhere in the world, signed an engines contract for a mining support vessel, which will process minerals off the coast of PNG.

The Canadian company, which counts Anglo American among its shareholders, has partnered the PNG government and is on schedule to begin mining at a depth of 1,600m by 2018.

Mike Johnston, chief executive of Nautilus Minerals, says: “I believe 30 per cent of the world’s mineral production could in the future be mined from the sea floor.”

Nautilus Minerals has also been awarded exploration licences in international waters by the ISA. The UN agency is working on a legal framework to begin issuing sea floor mining leases — a process that could start by 2016. Mining royalties under these licences would be paid to developing countries.

Michael Lodge, ISA legal counsel, says:

“We have issued exploration licences for areas that cover 1.2m sq km of ocean — about the size of Mexico. In the past, state organisations were the main applicants but in the last three years private companies have become more active.”

US defence group Lockheed Martin and G-TEC Sea Mineral Resources, a Belgian company, have both received licences.

But companies hoping the ISA is likely to favour commercial exploitation above environmental protection may be disappointed.

“We are legally bound to protect the environment, which must take precedence,” Mr Lodge says. “We can only allow commercial exploitation to take place provided there are safeguards.”

1 Comment

Filed under Environmental impact, Financial returns, Human rights, Papua New Guinea

One response to “Deep sea mining hopes hit by New Zealand decision

  1. Ana's Outlook

    It will be harder to stop Nautilus, as PNG politicians and regulators will have their hands out and real estate lined up in Cairns.

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