Category Archives: Mine construction

Scottish Enterprise urged to rule out ‘damaging’ deep sea mining

Joe Lo | The Ferret  July 15, 2019

Environmental campaigners have called on the Scottish Government’s economic development agency not to spend taxpayers’ money subsidising a controversial new form of underwater mining.

A report commissioned by Scottish Enterprise echoed concerns that deep sea mining could lead to “the potential extinction of unique species” – but the agency has refused to rule out investing in the industry.

Deep sea mining envisages machines sucking up the seabed so that minerals like cobalt and manganese can be extracted for use in products such as mobile phones, wind turbines and batteries.

Although no mining has begun yet, mining sites have been proposed in the Pacific Ocean, the Indian Ocean and near Peru and Japan.

The UK government, in collaboration with US arms company Lockheed Martin, has a license to mine an area larger than England off the west coast of Mexico.

An April 2017 report into deep sea mining commissioned by Scottish Enterprise was made public in July after a freedom of information request by Greenpeace’s Unearthed website.

The report was written by the research arm of Subsea UK which describes itself  “the champion” of the UK under-sea industry. “The environmental impacts of deep sea mining are not fully understood,” cautioned the report.

“The activities involved in subsea mining could have detrimental impacts on localised populations as well as an impact on world oceans through the potential extinction of unique species that form the first rung of the food chain.”

Scottish Enterprise said that it regularly undertook research into markets to understand their potential for Scotland’s businesses. “This report was commissioned to highlight the market potential in a range of sectors such as aquaculture and marine renewables, that Scotland’s subsea capability could be appropriate for in future market activity,” David Rennie, the agency’s head of oil and gas, told Unearthed.

“As yet we have not made any decisions, or progressed any activity, on how we might develop seabed mining. Other sectors such as marine renewables and aquaculture are likely to offer more immediate opportunities and any significant developments in seabed mining are likely to be some years off.”

But Friends of the Earth Scotland called for funding to be blocked now. “Scottish Enterprise should immediately rule out any support for deep sea mining,” said the environmental group’s head of campaigns, Mary Church.

“It is absurd to even be considering putting public money into such a damaging activity at a time when the life in our oceans is already under so much threat from climate change, over fishing, plastic pollution and oil extraction.”

Greenpeace UK urged politicians to be held to account for planning to spend taxpayers’ money on deep sea mining. “Scottish Enterprise is well aware of the potential environmental risks and there needs to be much more of a public conversation about whether citizens, including avid Blue Planet fans, are prepared to permit the potential extinction of species and risking making climate change worse,” said the group’s oceans campaigner, Louisa Casson.

She authored a Greenpeace report in 2019 warning that deep sea mining could make climate change worse by releasing carbon stored in sediments or by disrupting process which help scavenge carbon and deliver it to those sediments. Marine life naturally absorbs carbon, carrying some of it to the seafloor when they die.

That we should be destroying these things is so deeply tragic. David Attenborough, broadcaster

Wildlife broadcaster, David Attenborough, has pointed out that the deep sea is where life began. “That we should be destroying these things is so deeply tragic,” he told the BBC. “I mean, that humanity should just plough on with no regard for the consequences, because they don’t know what they are.”

The UK parliament’s cross-party environmental audit committee has warned that deep sea mining would have “catastrophic impacts on the seafloor site and its inhabitants”. In a report, MPs called on the UK government not to use its deep sea mining licenses and to pressure other countries and the International Seabed Authority (ISA) not to issue any more licenses.

The committee also criticised regulation of the industry.”We are concerned that the ISA, the licensing body for seabed exploration, also stands to benefit from revenues, which is a clear conflict of interest,” they said.

A Scottish Enterprise spokesperson told The Ferret: “Developments in seabed mining are closely controlled and regulated by the International Seabed Authority and the industry is very much in its infancy. Should any project be brought forward in the future it would be subject to rigorous economic and environmental due diligence.”

The Scottish Government said it supports “clean, healthy, safe, productive and biologically diverse seas, balancing sustainable development with environmental protection”.

A government spokesperson added: “Any deep sea mining would be subject to regulatory controls and thorough assessment, including conducting an environmental appraisal.‎”

Three companies mentioned in the Scottish Enterprise report as potential recipients of support are Royal IHC, 2H Offshore and Soil Machine Dynamics. They all design machinery which could be used in deep sea mining and are all ultimately foreign-owned.

Royal IHC is majority-owned by the wealthy Dutch de Bruin family. 2H Offshore is ultimately owned by two US billionaires close to Donald Trump, Henry Kravis and George Roberts. Soil Machine Dynamics is ultimately majority-owned by the Chinese government.

When asked if it subsidises foreign owned companies, Scottish Enterprise said it works with “both indigenous and international companies”. On investing in companies owned by the Chinese state, a spokesperson stressed that the agency carried out “rigorous due diligence”.

Government wildlife and environment agencies all declined to comment, including Scottish Natural Heritage, the Scottish Environment Protection Agency and the Joint Nature Conservation Committee’s chief scientist, Christine Maggs.

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Deep-sea mining risks ‘irreversible’ harm, warns Greenpeace

A subsea mining machine under construction © Reuters

Campaign group intervenes over UK exploration licences for Lockheed Martin

Henry Sanderson| Financial Times | 3 July 2019

Deep-sea mining risks “severe and potentially irreversible” environmental harm and the UK should prioritise protecting the ocean rather than extracting minerals from it, Greenpeace, the campaigning group, said.

The government has awarded deep-sea exploration licences to a subsidiary of Lockheed Martin, which could lead to deep-sea mining despite Westminster being aware of the environmental risks, said Greenpeace.

David Cameron promised as prime minister in 2013 that deep-sea mining would generate £40bn for the UK economy over the next 30 years. But Greenpeace said it is unclear what this figure includes.

It pointed out that in 2017 the government’s deep-sea mining working group was shown a report by the National Subsea Research Initiative, a research body, warning of the environmental impact on the seabed.

“The activities involved in subsea mining could have detrimental impacts on localised populations as well as an impact on world oceans through the potential extinction of unique species which form the first rung of the food chain,” said the report, which was commissioned by Scottish Enterprise and seen by Greenpeace through a Freedom of Information request.

The UN-backed International Seabed Authority, which regulates all mineral activities in international waters, has given countries, including the UK, 29 licences to explore the oceans, covering an area of 1.3m sq km, or five times the surface area of Britain. But mining cannot begin until regulations, currently being negotiated, are agreed. The ISA expects to have finished them by July 2020.

The UK government in 2013 granted Seabed Resources, a Lockheed Martin subsidiary, the rights to explore 133,000 sq km of the ocean it had received from the ISA. Seabed Resources said it was waiting for the regulations to be approved before assessing the viability of mining at the sites.

Daniel Jones, a principal researcher at the National Oceanography Center, said scientists still do not know enough about life in the deep sea compared to life on land.

“We are finding out a lot more but we can’t answer how organisms will respond to disturbance from deep-sea mining without doing experimentation on the sea floor,” he said. “We are missing quite important information.”

A spokesman for the UK government said: “The UK continues to press for the highest international environmental standards, including on deep-sea mineral extraction. We have sponsored two exploration licences, which allows scientific marine research to fully understand the effects of deep-sea mining. We will not issue a single exploitation licence without a full assessment of the environmental impact.”

Deep-sea mining has had a chequered history. The first company to try to mine the deep sea, Nautilus Minerals, was delisted from the Toronto Stock Exchange in March after financial difficulties. The company had planned to mine around Papua New Guinea.

But last month Deep Green, a deep-sea mining start-up, said it had raised the bulk of the $150m it needed to press ahead with plans to collect mineral-rich nodules from the floor of the Pacific for metals such nickel and cobalt used in electric-car batteries. The company is backed by miner Glencore as well as shipping giant Maersk.

DeepGreen said “it is built with a deep appreciation and respect for ocean health and the earth’s environment”.

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Liquidator Keen To Complete Sale Of ‘World Class’ Tolukuma Gold Mine

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Gorethy Kenneth | Post Courier | July 2, 2019

The Tolukuma Gold Mine in Central Province is now on sale.

And tenders have gone out locally and internationally this month, while the K1.2 billion outstanding claim is now under review.

Liquidator Andrew Pini of Pini Accountants and Advisors told Post-Courier late yesterday that tenders have gone out this week, specifically in Australia, Singapore and China apart from it already advertised locally in PNG.

Mr Pini said that the mine currently has two existing tenements which are active assets – the mining licence (ML) and the exploration licence and four tenement applications which would be issued to the new owner after the sale of the mine.

He is looking at completing the sale process in August with expectation of the successful bidder or investor to start operating the mine about October or November.

“All employees’ entitlements, I will pay them off, which is more than K1 million and then the creditors’ claims. I am in the process of contacting them now, soon they will get their letters, the creditors of the company, those that rendered goods and services to the company prior to liquidation, as they have lodged their claims,” he said.

“Their claims go as far as K20 million but actually it is K1 billion-plus, including the landowner claims, some chemical spills and the helicopter bill. They will all be reviewed.

“We will get the new investor to start operating the mine around September or October, even by November.”

Asked if investors were interested in the mine, Mr Pini said: “I have received a lot of interest and as soon as this goes out, I will contact them to formally lodge their applications.

“As a liquidator I will make sure I secure a bidder who will provide evidence of funds availability and technical capability requirements to operate into the future.”

Tolukuma Gold Mine is located within a highly mineralised region with mostly gold and silver deposits. The entire Tolukuma mine tenement (ML04) is situated on an area of land of 771.7 hectares.

The mine caters for a helipad, residential quarters, the catering facilities, the administration buildings, processing plant, workshops and warehouse for equipment and supplies.

The sale also includes various assets (buildings, warehouse, containers, chemicals, transit accommodation, fuel tanks, equipment including forklifts, generators, mining consumables and more, located at Veimauri, a transit location outside Port Moresby.

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Geopacific stitches up Woodlark gold project in PNG

The colonisers eye up their pot of gold

Matt Birney | Company Advertorial | The West Australian | 26 June 2019

Geopacific Resources has acquired 100% direct ownership of the flagship Woodlark gold project in Papua New Guinea, buying out fellow Australian Kula Gold’s remaining share in a cash and scrip transaction worth about $3.29m.

Kula will immediately utilise the cash component to repay a loan totalling about $0.72m to Geopacific.

The deal seems like exquisite timing for the company, with the gold price nearly 25% higher than that assumed in November’s definitive feasibility study for Woodlark, which already outlined robust economic metrics and strong margins to develop the project.

Additionally, full ownership streamlines the corporate structure with significant administrative cost reductions and importantly reduces the risk to external financiers, willing to fund the project’s start-up.

Geopacific Managing Director Ron Heeks said: “Moving to 100% ownership of the 1.6Moz Woodlark gold project is a major milestone for the company. Full ownership simplifies project financing discussions and further enhances the company’s attractiveness and general market appeal … (with) additional benefits … (including) a substantial reduction in corporate costs.”

“The timing of the transaction coincides with the near completion of project finance due diligence and a strengthening gold price that is well above the DFS pricing assumption of AUD$1,650/oz. Progression in these work streams alongside the increasing gold price is a positive step in taking advantage of the increasing margin.”

The company is now racing down the final lap with baton in hand and is currently in the closing stages of an Independent Technical Experts, or “ITE”, review of the gold project, with representatives attending a site visit to Woodlark Island this week.

Back in January, the ITE review was commissioned by a consortium of banks and non-bank lenders, after an indicative non-binding term sheet was received.

Perth-based SRK Consulting was appointed as the lead ITE to review the technical aspects of the Woodlark project on behalf of the group of potential lenders.

SRK completed an initial Fatal Flaws Review late in 2018, with none being identified for the project.

With the gold price only strengthening since, the free cash flow position of the proposed initial 13-year mine life project has ballooned with Mr Heeks saying in January: “Every AUD$10 (per ounce) increase in the gold price is an additional ~AUD$10m in revenue which is considerable upside for the +1Moz project …”

November’s DFS study optimised the project at AUD$1,650 per ounce and produced a pre-tax free cash flow of $424m.

Geopacific recently received indicative costs to build the proposed gold processing plant on Woodlark Island from three international standard contractors.

The company said that an initial review of those costs showed that the pricing is in line with the DFS parameters completed last year by Lycopodium.

Total capital establishment costs for the Woodlark gold project come in at just under $200m, with a third of those monies required to construct the processing plant, which is very respectable considering the relatively isolated overseas location.

With respect to the near completion of the ITE review of Woodlark, Mr Heeks added: “The ITE review is progressing well and Geopacific is confident with the technical aspects of the DFS completed by industry-leaders Lycopodium, Mining Plus and MPR Geological.”

“The results from the initial ITE fatals flaws review (built) confidence in the Woodlark project in addition to the conservative approach undertaken in calculating the (mineral) resource. The resource estimate uses a fully diluted resource model with a significant dilution factor.”

“This provides additional comfort that mining at the estimated grade is achievable. The Woodlark deposit is a permitted project with robust economics that are improving with the current gold price ~AUD$350/oz higher than that used in DFS.”

Last month, the company appointed Ian Clyne as its new Chairman to actively drive financing arrangements for the gold project.

Mr Clyne has been part of the company’s board since 2016 and brings with him a wealth of corporate experience including most recently as Group CEO of Bank South Pacific Limited, based in PNG’s capital Port Moresby for five years.

It was a strategic move for Geopacific, with Mr Clyne being a strong advocate for PNG’s potential and its people and holding a high level of commitment to social and community issues within the mainly rural population of the developing country.

Commenting at the time, Mr Clyne said: “As the Chairman of Geopacific, my priority is to drive the Woodlark gold project towards a successful project finance outcome that will maximise shareholder and stakeholder value and returns.”

“Woodlark Island is one of the most prospective regions of PNG and we take great pride in our positive relationships with the local community, the National & Provincial Governments, and the regulatory authorities who have also demonstrated strong levels of support for the permitted … project.”

The Woodlark project holds an ore reserve of nearly 29 million tonnes grading 1.12g/t gold for 1.04 million ounces, contained within a broader JORC-compliant mineral resource estimated at 1.57 million gold ounces.

This gold resource is also likely to build over time as the project has extensive gold and copper exploration potential, in a region where Geopacific holds the dominant land position on the 912 square kilometre area of Woodlark Island.

Once in production, the company will likely be able to self-fund and potentially sustain its mining operations at the Woodlark gold project to beyond the initial 13-year mine life.

The project area is blessed with flat terrain and soft outcropping ores with average metallurgical gold recoveries exceeding 90% during the first five years of production.

All permitting is granted and the project enjoys strong community support in the proven mining investment hub of PNG.

With full ownership of the exciting project within its grasp, the gold price behaving itself and a new Chairman at the helm, Geopacific now has clear air ahead towards the construction, development and ultimately gold production at the impressive and undervalued Woodlark project.

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DeepGreen closer to ocean mining battery metals after Swiss cash injection

[A highly misleading] computer rendition of a seabed mining operation. (Image by Phil Pauley | Twitter.) In reality the mining will be done in almost complete darkness thousands of metres below the surface!

Cecilia Jamasmie | Mining News | June 10, 2019

Canada’s DeepGreen Metals, a start-up planning to extract cobalt and other battery metals from small rocks covering the seafloor, has secured the bulk of the $150 million it needs to carry out its first feasibility studies.

The financing, provided by Switzerland-based offshore pipeline company Allseas Group, is a welcome sign of progress for the deep sea mining sector, which has been stalled due regulatory uncertainty and environmental concerns.

Unlike other seafloor mining companies, including pioneer Nautilus Minerals, the Vancouver-based explorer doesn’t want to drill, blast or dig the bottom of the ocean. DeepGreen’s main goal is to scoop up small metallic rocks located thousands of metres below the surface in the North Pacific Ocean.

Its exploration focus is the Clarion-Clipperton Zone (CCZ), a mineral-rich, 4,000-kilometre swath of the Pacific that stretches from Hawaii to Mexico, where billions of potato-sized metals-rich rocks lie in a shallow layer of mud on the seafloor.

The deep sea, more than half the world’s surface, contains more cobalt, nickel, copper, manganese and rare earth metals than all land reserves combined, according to the US Geological Survey.

Companies exploring or already developing projects to mine the seafloor argue the extraction of those deep-buried riches could help diversify the sources currently supplying metals needed for electronics and evolving green technologies, such as electric vehicles (EVs) and solar panels.

Academics and scientist, however, are concerned by the lack of research on the possible impacts of high seas mining. They fear the activity could devastate fragile ecosystems that are slow to recover in the highly pressurized darkness of the deep sea, as well as having knock-on effects on the wider ocean environment.

Not enough studies

Last year, the European Parliament called for a ban on seabed mining until the environmental impacts and risks of disturbing unique deep-sea ecosystems are understood. In the resolution, it also urged the European Commission to persuade member states to stop sponsoring and subsidizing licenses to explore and exploit the seabed in international waters as well as within their own territories.

Shortly after, an international team of researchers published a set of criteria to help the International Seabed Authority (ISA), a UN body made up of 168 countries, protect biodiversity from deep-sea mining activities.

So far, it has granted 29 licences to governments and companies, authorizing them to explore in international waters.

Nautilus, however, is the only company that has gone beyond the exploration stage and has gotten close to open the first polymetallic seabed mine off the coast of Papua New Guinea. Its Solwara 1 project, however, has been slowed by funding issues and local opposition.

Anglo American (LON:AAL) sold its 4% stake in Nautilus a year ago, as part of efforts to retain only its most profitable assets. And, in March, it had to delist from the Toronto Stock Exchange.

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Australian-based company’s PNG mine could pose big environmental risk

The Sepik river in Papua New Guinea. Serious environmental and social concerns are being raised about a mining project by Australian-based company PanAust. Photograph: Emmanuel Peni

Gold and copper project for Sepik region also has potential to cause social conflict and unrest, report says

Lisa Martin | The Guardian | 15 June 2019 

A gold and copper mine proposed for the Sepik region in Papua New Guinea by an Australian-based company threatens to destroy the health of a major river system, poison fish stocks and cause violent unrest, a report has found.

The Chinese-owned company, PanAust, says the Frieda river project could have a 45-year life span and generate A$12.45bn in tax, royalties and production levies for the PNG government and landholders.

But the report, from research centre Jubilee Australia and Project Sepik, raises serious environmental and social concerns about the mine.

“The lack of information released by the company about its environmental management plans are continuing to cause uncertainty about whether the company’s environmental management plans will be fit for purpose,” it says.

“The potential for this project to lead to damaging social conflict and unrest is real and must be taken seriously.”

Papua New Guinea has a chequered mining history, including an environmental disaster when the BHP Ok Tedi copper mine’s tailings dam failed and the decade-long civil war on Bougainville, which was triggered by the Rio Tinto majority-owned Panguna copper mine and cost an estimated 20,000 lives.

The report notes that one of the PanAust project’s biggest challenges will be building a safe storage facility for the mine’s tailings (waste material left over after separating the valuable mineral from the ore) to prevent acid rock drainage.

That occurs when mine waste is exposed to oxygen and produces sulphuric acid, which dissolves heavy metals such as mercury from nearby rocks, which can then leach into rivers.

The report says the size of the ore body, combined with the relatively low grade of copper in the deposit, means the mine will generate substantial tailings.

Locals protest against the proposed mine project at the Sepik river in Papua New Guinea. Photograph: Project Sepik

“The inaccessibility of the terrain will pose challenges when it comes to finding a large enough site or sites for storage,” it says.

“The extremely high rainfall in the area and the fact that the area is a site of seismic activity add to the risks of a dam collapse. The technical complexity of the feat facing the mining engineers, the extremely large costs involved, and the weather and seismic situation all adds up to a very expensive environmental management problem and one with considerable risks.”

Locals also have concerns about environmental damage from an increase in the number of large vessels operating on the Freida river.

PanAust promised in April it would shortly release an environmental impact statement to nearby villages, but researchers say it has not done so.

In response to to questions from Guardian Australia, the company said PanAust had not received a copy of the Jubilee report and “as such, the company is not in a position to comment on its contents”.

It did however say that PanAust had submitted its plans and an environmental impact statement to PNG regulators and was working with them on its approval.

The report also accused PanAust of a flawed consultation process with indigenous communities downstream from the mine which has created an “atmosphere of animosity and lack of trust” and resulted in acts of sabotage.

“There are reports of official (mainly police) intimidation of anti-mine activists,” the report says.

Map showing the location of the proposed Frieda River mine. Photograph: Jubilee Australia

“In 2017 a youth leader from Oum 2 village led a group of young men to attack a tugboat and pontoon with homemade wire sling shots.”

In October researchers visited 23 nearby villages, where locals repeatedly raised concerns about river and fish health as a result of increased sedimentation from increased tugboat traffic connected with the project.

The Freida river joins the 1,126km Sepik river, which flows across the provinces of West Sepik and East Sepik provinces.

The local economy is built on the sale of sago (starch from a tropical palm stem), fish, freshwater prawn, eels, turtles and crocodile eggs. Crocodiles are also harvested for their skins and teeth. Locals are worried about the mine affecting their food security, the report says.

In a company announcement in December, PanAust characterised the mine project as a “nation building development”.

It has promised 5,000 jobs in construction and 2,100 in mining, and estimates there may be 30,000 more indirect jobs.

“Host communities, especially in rural areas, will benefit from access to improved transport, telecommunications, health, education and government services that will support a higher quality of life and greater social participation,” the company said.

“More broadly, training and employment of Papua New Guineans will provide the skills and capacity to support the nation’s future development and prosperity.”

The company said a final investment decision would be linked to financing and fiscal terms agreed with the PNG government during the approvals phase.

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Deep sea mining start-up secures bulk of $150m funding round

Cut cobalt cathodes. More than 60% of the world’s cobalt comes from the Democratic Republic of Congo © Bloomberg

DeepGreen’s financing follows years of regulatory uncertainty and environmental concerns

Henry Sanderson | Financial Times | 9 June 2019

DeepGreen, a start-up that wants to suck cobalt and other battery metals from the bottom of the ocean, has secured the backing of offshore pipeline company Allseas as part of a $150m funding round.

The financing is a rare sign of progress for deep sea mining after years of regulatory uncertainty and environmental concerns.

Switzerland-based Allseas will provide the bulk of the $150m and contribute engineering expertise, DeepGreen said. The money will enable the company to carry out feasibility studies on how it can suck small metallic rocks containing cobalt, nickel and manganese from the seabed, thousands of metres below the surface.

“Our partnership with Allseas will ultimately help us open up a new, disruptive source of battery metals for the green revolution and transform the mining industry as we know it,” Gerard Barron, the chief executive of DeepGreen, said.

Supporters of deep sea mining say it offers an alternative to land-based mining and can help the world meet an expected surge in demand for metals from batteries over the next decade. More than 60 per cent of the world’s cobalt comes from the Democratic Republic of Congo, while nickel is mined in Indonesia, Russia and New Caledonia.

DeepGreen says the carbon dioxide produced from lifting nodules from the sea floor is lower than land-based mining since the process requires no blasting, drilling or digging.

But critics say mining the deep sea risks destroying sensitive and unexplored habitats at the bottom of the ocean. Environmental group Greenpeace has called for an international agreement to protect the oceans from mining.

“Scientists warn that deep sea mining risks inflicting severe and potentially irreversible harm to ocean ecosystems that we know so little about,” Greenpeace said. “Profit is being placed before protection and we urgently need a strong ‘Global Oceans Treaty’ that safeguards the deep ocean from reckless exploitation by companies such as DeepGreen.”

The first company to attempt to mine the deep sea, Nautilus Minerals, was delisted from the Toronto Stock Exchange in March after financial difficulties. The company had planned to mine the deep sea in waters surrounding Papua New Guinea.

The International Seabed Authority, a UN body that grants licences to mine in international waters, is expected to complete its first set of regulations to enable deep sea mining to go ahead by 2020, according to UK Seabed Resources, a subsidiary of Lockheed Martin.

“Uncertainty in the future regulatory regime for mineral exploitation remains the principal barrier to development of an environmentally responsible and commercially viable deep seabed mining industry,” Christopher Williams, head of UK Seabed Resources, said.

DeepGreen is looking to extract metals in a 75,000 sq km zone in the Clarion-Clipperton Zone in the Pacific, granted to the island state of Nauru.

Allseas is a private company known for having built the world’s largest construction vessel, the Pioneering Spirit, which can install and remove offshore oil rigs in a single lift.

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