Jez Abbott | Environmental Data Services | 16 August, 2016
Long-awaited regulations on seabed exploitation will not throw enough incentives to mining companies to coax them into investing in deep-sea drilling, legal experts warm.
Law firm Pinsent Masons’ energy and natural resources expert Steve Potter said a recent draft from the International Seabed Authority (ISA) needed more work.
“A huge amount of work still needs to be done to finalise the regulations if they are to provide a sensible regulatory framework,” Potter said.
“It needs to incentivise mining companies to commit significant investment into deep seabed mining in international waters.”
The working draft represents the first phase in the development of regulations including rules, regulations and procedures on environmental assessment and management of mining.
ISA is the international organisation set up by the United Nations to control activities on seabeds beyond national jurisdiction, with a focus on mineral resources.
New rules are due in two years’ time and ISA, which wants feedback on changes by November, has yet to publish details on environmental rules or the fee levels and royalties contractors must pay.
The ISA signed 15-year exploration contracts with 24 contractors, which must have a sponsoring state but can be privately owned companies.
Several of these early exploration contracts were extended recently involving countries including the UK, China, Japan Russia, France, Germany and India.
Contracts include exploration for polymetallic nodules in the Indian Ocean basin and cobalt-rich crusts in the Western Pacific Ocean.
However, Potter said:
“Much will depend on the level of royalty that contractors will have to pay to the ISA on minerals recovered and this has yet to be proposed.
“Current exploration contractors are also concerned by proposals to hold regulatory reviews after the first five years.
“These contractors have campaigned for regulatory stability to avoid more onerous regulation and cost increases that would threaten the economic viability of their projects.”
ISA is also proposing fees, payable for processing an exploitation application, which is expected to be significantly higher than the current exploration application fee.
Fees are also planned for the renewal of exploitation contracts, and for material changes to mining plans.