Denghua Zhang* | East Asia Forum | 30 June 2018
China has hunted globally for land-based mineral deposits to fuel its economic development since the 1990s. Now, Beijing is devoting growing attention to seabed mining. As China’s Five-Year Plan on Mineral Resources (2016–2020) states, ‘China will actively participate in international surveys on deep sea mining and accelerate the exploration and development of ocean minerals’.
In the Pacific islands region, most countries are small in land area but have huge maritime exclusive economic zones (EEZs). Chinese enterprises have invested in seven land-based mining projects in Papua New Guinea (PNG), Fiji, New Caledonia and the Solomon Islands and have been interested in mining the Pacific’s seabed minerals since 2001.
China’s engagement with the Pacific on seabed mining started with research activities that have mainly been carried out by the China Ocean Mineral Resources Research and Development Association (COMRA). COMRA is affiliated with the former State Oceanic Administration, which was absorbed into the new Ministry of Natural Resources in March 2018.
The Qingdao Institute of Marine Geology has conducted many of COMRA’s research projects in the Pacific. Between 2001 and 2010, the Institute completed two research projects on China’s bilateral cooperation in ocean resources exploration and on seabed mineral resources in the South Pacific. Their research categorised marine areas as prospective sources of polymetallic nodules, cobalt nodules and hydrothermal sulphide deposits, and also compiled a seabed mining resources map of the Pacific. The research team suggested that China should incorporate seabed mining into its aid plans for Pacific states and use concessional loans to support exploration projects.
Based on these research activities, Chinese government agencies have directly reached out to their Pacific counterparts. In April 2013, a joint delegation comprised of officials from COMRA and Chinese mining institutions visited the Cook Islands, Fiji and Samoa and expressed their strong interest in exploring seabed mining in the three countries. In August 2014, Chen Lianzeng, Deputy Director of the China State Oceanic Administration, visited Vanuatu and Fiji and proposed that China and the two countries should strengthen cooperation on maritime resources exploration and development. Vanuatu’s then-prime minister Joe Natuman and Naipote Katonitabua, the acting permanent secretary of Fiji’s Office of the Prime Minister, responded positively to China’s suggestions.
China’s state-owned enterprises (SOEs) are also involved in seabed mining. Mawei Shipbuilding Limited, a Chinese SOE located in Fujian Province, is building a US$18 million seafloor production support vessel for Toronto-based Nautilus Minerals. The vessel was launched in March 2018, with approximately 75 per cent of it completed. It will be used for the Solwara 1 project — the world’s first seabed mining project, located in the Bismarck Sea off PNG.
The three seafloor production tools to be used in the Solwara 1 project were designed and built by the UK-based Soil Machine Dynamics Ltd. In April 2015, Soil Machine Dynamics Ltd was sold to Zhuzhou CRRC Times Electric Co, Ltd, which is an SOE ultimately owned by the State Council of China. The products from Solwara 1 will be processed by Tongling Nonferrous Metals Group — another Chinese SOE. In May 2017, China Minmetals Corporation and the International Seabed Authority (ISA) signed a 15-year contract that allows China to search for polymetallic nodules in the 72,745 square kilometres of the Clarion–Clipperton Fracture Zone in the Pacific Ocean.
Seabed mining in the Pacific is attracting interest from other foreign players. For example, Japan and Russia have brokered ISA contracts to explore cobalt-rich crust resources in sites close to the EEZs of the Marshall Islands and the Federated States of Micronesia.
Seabed mining is both an emerging field and one that is in a considerable state of flux. As shown by the proposed Solwara 1 Project, this new industry faces unprecedented financial, environmental and social challenges. There are also notable gaps in the international and national laws that govern seabed mining. The International Seabed Authority is still in the process of developing a ‘Mining Code’ to regulate the prospecting, exploration and exploitation of seabed minerals. As of late 2015, only four of the 14 Pacific states (Palau, Tonga, Tuvalu and Nauru) have legislation that covers seabed mining issues. The PNG government is still developing a draft offshore mining policy.
Greater China–Pacific engagement on seabed mining has upsides and downsides. Pacific states have flagged seabed mining as a new potential driving force of economic growth. PNG, Fiji, Tonga and the Solomon Islands are among the first countries in the world to issue exploration licenses for seabed mining in their EEZs, and Pacific states might be able to seek more financial and technical assistance from China to develop this new industry. But any such project needs to consider the environmental and social impacts of seabed mining and must fully comply with international and national laws.
Looking into the future, China is expected to engage actively with Pacific states on seabed mining and focus on exploration and establishing official contacts. But China is unlikely to commit substantial resources to seabed mining projects before the industry becomes more commercially and environmentally viable.
*Denghua Zhang is a Research Fellow at the Department of Pacific Affairs, The Australian National University.