On the Verge
Prospects for Deep Seabed Mining within a Decade
Caitlyn AntrimRule of Law Committee
for the Oceans
U.S. Geological SurveyJanuary 17, 2013
Focus: Outlook for Nodule Development
• Ocean- Based Resource
• Minerals of Interest
• Nickel
• Copper
• Cobalt
• Manganese
• Rare Earth Elements
• Beyond National Jurisdiction
East Pacific Nodule Field
•110ºW-160ºW, 0º-20ºN
•Metal Content
•Ni: 1.2-1.4%
•Cu: 1.0-1.2%
•Co: 0.25%
•Mn: 29%
•REE: 0.08-0.1%
•Depth: 4000-5500 Meters
CCZ Inferred Resources
ISA1ISA2
ISA3
ISA4
Included Area
(km2X106)
Estimated Tonnage (metric tons X 106)
NodulesManganese
(Mn)Cobalt (Co)
Nickel (Ni)
Copper (Cu)
Study Area 4.19 30,700 8,657 67.5 383 341
Reduced Area
3.83 21,100 5,950 46.4 270 234
The Study Area represents the total area of the four ISA rectangles. The Reduced Area eliminates blocks along the inner margins of the four rectangles where data was not available for analysis.
Economics of Deep Sea Nodule Development
• At-Sea Capital and Operating Technology Based on Off-Shore Development and Maritime Shipping Industry
• On-Land technology based on Nickel Laterite Processing Systems and Ferroalloy Production
• Market Prices and Revenues Determined by Land-Based Mineral Sources
Sea System Design
• Nodule Harvester
• Lift System
• Base Vessel
• Tailings Return
• Sea Transport
• Alternative Designs
Unique Marine
Systems
Major Land-Based Sourcesof Nodule Minerals
Critical Mineral SecurityNet Import Reliance*
Major World Ore Producers
US Import Sources
Fraction of US Consumption in 1
million tons of nodules
Nickel 47% Russia, CanadaRussia, Canada, Australia, Norway
10.1%
Copper 35% Chile, United States Chile, Canada, Peru 0.6%
Cobalt 75% D.R. Congo, ZambiaChina, Norway, Russia, Canada
36.9%
Manganese 100% Gabon, AustraliaGabon, South
Africa, Australia, China
35.8%
Rare Earths 100% China China 10.0%
* Import reliance counts secondary recovery (recycling) as domestic production
Price History: 1982 - 2012
Combined value of nickel, copper, cobalt and manganese in 2012 $. REE value is not included.
Costs and Revenues
• Capital Costs: $2.1 to $3.5 Billion
• Operating Costs: $470 million to $600 million
• Contained Metal Value, not including REE values (normalized to millions of 2012 US $)
Annual Recovery Rate(Dry Metric Tons)
2007 2011
3 Metal System: 3 million $2,295 $1,491
4 Metal System: 1.5 million$1,718 $1,415
Rare Earths and Deep Seabed Nodules
• Nodule assay shows .08% REE Content
• Heavy REEs account for 21% of total REE
• By Separating Individual REEs, total REE market value is $247/ton
• REE Content Could Increase Annual Revenues by $375 to $750 million
Benefits to US of Seabed Nodule Development
• Technology leadership in first of three new high seas sources of critical metals
• Capital Investment of about $3 billion
• Annual Sales about $1.4 to $2.2 billion
• 780 direct jobs; 2727 or more total per operation
• Significant contribution to critical materials security
• Significant improvement in import-export balance
• Downstream employment and business benefits will be felt in the Gulf Coast and Ohio River Valley
International Regime:US Objectives in 1982
• Not Deter Development
• Assure National Access
• Assure and Define a U.S. Decision-Making Role
• Allow United States to Block Amendments
• Not Set Undesirable Precedents
• Resolve Issues Identified as Raising Significant
Objections in the Senate
Today’s Investment Climate for Deep Seabed Minerals
• Assured Access, Tenure and Title
• Rule-based International Regulatory Regime
• Dispute Resolution for Investors
• Issue: Lack of Recognition of Claims Outside UNCLOS
Isolation of the US fromDeep Seabed Mining
The LOS Convention establishes that:
•Claimants must be sponsored by a State Party of their own nationality
•Parties to the Convention cannot recognize title to minerals recovered outside the Convention (precluding sale of minerals in international commodity markets)
•Exclusive access can only be recognized through the Convention (no “Reciprocating States Agreement” or international legal protection of US claims)
Current Nodule Claims in the Clarion Clipperton Zone
Conclusions• Deep Seabed Nodules are a World-Class Resource of
Critical Minerals
• Long Term Demand will be driven by industrial development in China, India, Brazil, South Africa and Russia
• Future seabed mining will compete against nickel laterite and porphyry copper deposits of declining grade and accessibility
• Additional development of hundreds of millions of dollars are needed before full investment
• Miners will require international capital and access to commodity markets
• US Industry Needs the LOS Convention’s Seabed Regime
Thank you
SupplementalInformation
Cost Estimates (Million US $)Updated to 2012, Scaled to 3 Million Dry Metric Tons per Year
MIT 1984 Updated MITCapital Operating Capital Operating
Mining 306.2 65.6 857.0 183.5Sea Transport 200.9 22.2 562.1 62.1Marine Support 1.8 4.9 5.0 13.7Ore Discharge Terminal
22.9 3.2 64.0 8.9
On-Land Transport 36.7 7.7 102.6 21.5Processing 449.1 99.6 1256.8 278.7Waste Disposal 15.3 3.9 42.8 10.9General & Administrative
88.2 4.0 246.8 11.2
Continuing Preparations
0.0 6.0 0.0 16.8
Total 1,121.0 217.0 3,137.1 607.3
EmploymentAt-Sea Mining Systems:
Two alternate 40 person teams of ship crew and mine system operators for each of two mine ships
160
Ore Transport Ships:
28 to 32 crew members for each of four ore vessels
112-128
Ore Processing Plant:
24/7 operations with 300 operators, 50 each of supervisors, managers, administrative staff, and support
500
Net JobsPer Operation, not including construction
780
Labor costs in ship construction
Labor costs in construction of mine and transport ships. $2012
$324 million
International PartnersUS Companies Can’t “Go It Alone”; Private US Consortia with International Partners in 1989:
• Ocean Mining Associates (50% by Belgium and Italy)
• Ocean Management Inc. (50.22% by Canada and Japan; Germany takes share in 1990s)
• Kennecott Consortium (48% by Canada Japan, UK; Kennecott itself was owned by Rio Tinto Zinc and later by British Petroleum)
• Lockheed/Ocean Minerals Co. (Dutch partners in early 1980s)