With China lodging an application to extract ore from deep beneath the Indian Ocean, and Canada pioneering a sulphide mining project in the Bismarck Sea, the search for raw materials is heading for the sea, says Simon Wilson
What's happened?
Back in May, while the world watched the Deepwater Horizon disaster in the Gulf of Mexico unfold, China quietly filed a historic application. It was submitted to a body called the International Seabed Authority, a Jamaican-based institution created under the 1982 United Nations Convention on the Law of the Sea.
The Chinese want to extract ore from a ridge 1,700 metres below the surface of the Indian Ocean, outside the legal jurisdiction of any state. This has never been done before. The application won't be considered until next April. By then other nations, including Britain, Russia and America, may have filed similar applications. Nonetheless, this is a significant moment: deep-sea mining finally looks like becoming a reality.
Try 6 free issues of MoneyWeek today
Get unparalleled financial insight, analysis and expert opinion you can profit from.
Start your trial
Sign up for MoneyWeek’s free twice-daily newsletter.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Join more than 165,000 subscribers and keep yourself informed with latest financial news, insights and expert analysis to help you understand what really matters when it comes to your finances.
Is the idea a new one?
Not at all. In the 1960s international interest in deep-sea mining flourished following the publication of a highly influential book called The Mineral Resources of the Sea. The author, JL Mero, an academic geoscientist, argued that there was a near-limitless supply of certain valuable metals (including cobalt and nickel) contained in manganese nodules. These are potato-sized lumps of compressed sediment to be found on the ocean floor at extreme depths of 5,000 metres or more. Over the next 20 years the United States, as well as France and Germany, sent out research vessels to conduct feasibility studies, but without success. Indeed, from the 1960s to 1984, an estimated $650m was wasted on the venture (according to an academic paper from 2000).
Latest Videos FromMoneyWeek
How are things different now?
Metals prices have surged, for one thing. China and other Asian nations, including Japan, South Korea and India, are hungry for precious metals to fuel their high-tech economies. They also want supplies that are not located within the borders of politically high-risk states in Africa and elsewhere. The sky-high prices for nickel, cobalt and tellurium, used in computers, batteries, mobile phones and various military applications, suggest the economics of high-cost underwater exploration now stack up. The other thing that has shifted is the geological focus: from manganese nodules to hydrothermal vents.
What are those?
Essentially, hydrothermal vents are hot underwater geysers driven by volcanic activity below the ocean floor. American scientists first discovered them in the Galapagos Rift in the Pacific seafloor in 1977. But since then they have been found in many parts of the world. They frequently astonish scientists with their teeming communities of previously unknown species of sealife flourishing in total darkness and at temperatures well over 100C. Some of the vents, "black smokers", are chimney-like structures that emit a cloud of hot, black material with high levels of sulphur-bearing compounds, or sulphides.
What does this mean for mining?
From the point of view of mineral formation, these hydrothermal vents have proved a revelation. Exploration by remote controlled vehicles has shown that polymetallic sulphide deposits located around the vents can contain ores of metals ten times more concentrated than any left on land. In turn, that has changed the way geoscientists view mineral formation: the deposits of copper that give the island of Cyprus its name, for example, are now thought to have developed around hydrothermal vents on a part of the ocean floor that ended up above sea level.
China is particularly interested in an area of supposedly inactive hydrothermal vents in the south-west Indian Ocean. It is known to contain sulphide deposits that include copper, nickel, cobalt, silver and gold. That's a pretty strong incentive reflected in the fact that they lodged their application on the first day it was possible to do so. That followed seven years of negotiations to set up the global compliance regime for mining sulphides. But the firm closest to making deep-sea mining a reality is Canadian.
What's Canada up to?
Nautilus (LSE: NUS), a Toronto-based exploration firm, is working on the engineering phase of a sulphide-mining project in the Bismarck Sea, to the north of Papua New Guinea (and within its territorial waters) in the western Pacific. This area has been recognised as a potentially excellent mining site for more than a decade.
It has a relatively shallow water depth of about 1,050m and its sulphide deposits are known to contain gold (an average of 26 parts per million, according to a Science article). If Nautilus succeeds in extracting that gold, the scramble for the seas will be well and truly on.
Is there an environmental risk?
No one really knows exactly how much damage a deep-sea mine could do to the marine eco-system. But experts agree that the potential harm is significant. First, removing part of the sea is certain to disturb the habitat of "benthic" organisms at the lowest level of the ocean. Just as serious are the plumes of sediment caused when the 'tailings' (fine particles) from the mining process are pumped back into the water. That blocks light, which hits plankton, and so the whole food chain.
According to Canadian academic Michael Byers, Nautilus is leading the way. It has agreed an environmental impact assessment with the Papua government, committing it to minimising plumes and disturbance to the eco-system. That includes leaving some of the area round the vent undisturbed so endemic organisms can recolonise the site.
