WP 4: Socio-economic trends and EU policy in offshore...

WP 4: Socio-economic trends and EU policy in offshore

economy

D4.1-3

Chapter 3 – Seabed mining

Status: Final

09/07/2016

This project has received funding from the European Union’s Horizon 2020 research and innovation

programme under grant agreement No 652629

About MARIBE MARIBE is a Horizon 2020 project that aims to unlock the potential of multi-use of space in the

offshore economy (also referred to as Blue Economy). This forms part of the long-term Blue

Growth (BG) strategy to support sustainable growth in the marine and maritime sectors as a

whole; something which is at the heart of the Integrated Maritime Policy, the EU Innovation

Union, and the Europe 2020 strategy for smart, sustainable growth.

Within the Blue Economy, there are new and emerging sectors comprising technologies that are

early stage and novel. These are referred to as Blue Growth sectors and they have developed

independently for the most part without pursuing cooperation opportunities with other sectors.

MARIBE investigates cooperation opportunities (partnerships, joint ventures etc.) for companies

within the four key BG sectors in order to develop these companies and their sectors and to

promote the multi-use of space in the offshore economy. The sectors are Marine Renewable

Energy, Aquaculture, Marine Biotechnology and Seabed Mining. MARIBE links and cross-cuts with

the Transatlantic Ocean Research Alliance and the Galway Statement by reviewing the three

European basins (Atlantic, Mediterranean, and Baltic) as well as the Caribbean Basin.



Acknowledgement The work described in this publication has received funding from the European Union’s Horizon

2020 research and innovation programme under grant agreement No 652629

Legal Disclaimer The views expressed, and responsibility for the content of this publication, lie solely with the

authors. The European Commission is not liable for any use that may be made of the information

contained herein. This work may rely on data from sources external to the MARIBE project

Consortium. Members of the Consortium do not accept liability for loss or damage suffered by any

third party as a result of errors or inaccuracies in such data. The information in this document is

provided “as is” and no guarantee or warranty is given that the information is fit for any particular

purpose. The user thereof uses the information at its sole risk and neither the European

Commission nor any member of the MARIBE Consortium is liable for any use that may be made of

the information.

Chapter 3 – Sea mining M.J.C. Rozemeijer, R.G. Jak, L.E. Lallier, K. van Craenenbroeck, S.W.K. van den Burg

Executive summary The surface of the planet consists of approximately 71% water and contains five oceans: the Arctic,

Atlantic, Indian, Pacific and Southern ocean. Under this enormous water surface hides a seafloor

with an enormous potential of resources such as biodiversity and ores (diamonds, metals etc.). In

this sector report, the prospects of offshore mining of the following five resources are discussed:

1. polymetallic (manganese) nodules,

2. polymetallic sulphides (SMS deposits),

3. cobalt crusts (crusts),

4. phosphorites and

5. gas hydrates.

Research into the exploitation of these marine resources has a longer history but after being ‘on

hold’ for decades, there is a recently renewed interest in the potential for commercial exploitation

of marine minerals from the private sector and governments alike.

For offshore (seabed) mining is valid that all sectors and subsectors etc. have more or less similar

technical demands. The general questions for a viable offshore industry are:

Can products be delivered at competitive prices for the global market?

Can limited investment in small scale innovations by adapting existing vessels and gear be sufficient in order for new SME companies to start in this sector?

Offshore mining can be costly in terms of energy. Companies need to consider whether to harvest

at lower yields and higher costs versus high investments in major innovations leading to a higher

yield and lower costs in the long run. The high investments to innovate intensively in this new Blue

Growth sector will only be justified when there is a:

clear outlook on stability of the market price developments (and even better, a price

increase for commodities),



for easily accessible concessions with very high grade ores,

geopolitical concern when landbased ores of cobalt and rare earth elements have

restricted availability due to geopolitical developments.

For most metals and concessions, extraction prices for seabed mining are still too unstable and

land based resources can serve the demand. The development of offshore mining therefore must

follows a strategy based on small scale innovations, higher expenses and low profits.

Contrary to other sectors discussed in the MARIBE project, the target resources for offshore

mining are very scarce in the basins of interest. The sector is of importance, though, on a European

scale since the EU has some major operators that typically act on a global scale where the

resources are also for a global market. Knowledge and insight in this important sector (how to

successfully manage and develop offshore activities and deal with uncertainties, in a global playing

field) is an important catalyst for other sectors. In addition given the urge for technological

development in this sector, the decisions (and supporting arguments) by individual companies to

invest in R&D or not are important and instructive guidelines which other sectors can use for their

own considerations in determining a strategic of investments and exploitations.

The comparison of the different subsectors reveals a complete overview on the different stages of

development. Gas hydrates represent the very starting point: the basic techniques need and

receive government support in order to get started. Phosphorites on the other end: techniques

and business cases are well enough developed to start the exploitation. The metal ore subsectors

are in between: on the one hand , companies like Nautilus have started and on the other hand

companies are very hesitant to start.

Phosphorites seem a case where market prices are much higher than exploitation costs on a long

term base (Figure 3.20). Phosphorites occur less deep and are therefore more readily exploitable

resulting in profits. The main drivers are (1) geopolitics (2) stable high pricing on the world market

and (3) low exploitation costs. The land based stocks are only encountered in a limited amount of

countries - 75% of the worldwide available land based stocks are encountered in only one country

(Morocco), while there is a global demand. This results in high transport costs (in €s and CO2) to

export it to the target countries. This is a large driver for offshore exploitation and makes it more

easily profitable. These three reasons result in three regions with very specific initiatives which are

only hampered by (4) environmental and socio economic discussions. This subsector is ready to

take off.

The metal type ores (nodules, SMS deposits, crusts) are in a state of evaluation. These ores are

encountered at much larger depth making it (1) an enormous technical challenge and (2) therefore

highly costly whereas (3) global market prices for metals are low; (4) most metals have ample land

based supply (with only a few metals having real geopolitical constraints) and (5) ecological

concerns are large, partly due to a lack of knowledge and data. Only limited concessions could be

profitable due to high grades of gold, silver, cobalt or nickel (and copper to a lesser extent).

Gas Hydrates represent an enormous potential. There is more energy in methane hydrates than in

all the world's oil, coal and gas put together. Countries that have no own energy sources like Japan

and Korea (and others) are very interested in exploiting gas hydrates. However, the technology is

not yet developed enough to exploit it efficiently. The main issue is the extraction from the soil.



With gas hydrates it is still uncertain if it can be exploited at commercially interesting amounts.

Major governmental involvement is necessary to make progress in this subsector.

3.1 Introduction The surface of the planet is approximately 71% water and contains five oceans: the Arctic, Atlantic,

Indian, Pacific and Southern ocean. In fact, it represents the largest habitat for life on Earth1. The

deep ocean beyond the continental shelf is the most difficult to access but also very promising in

available resources, like biodiversity and ores (Scott et al., 2008; EPRS, 2015; Rogers et al., 2015).

This includes minerals like:

polymetallic manganese nodules (nodules),

polymetallic seafloor massive sulphide (SMS) deposits,

polymetallic cobalt crusts (cobalt crusts),

metal ore sands, sand and gravel,

precious stones.

Sand and gravel are already in exploitation e.g. for use in coastal defence and use on land for e.g.

infrastructural works like roads and the production of concrete.

Due to the nature of the deep ocean (the immense pressure, the hard to reach bottom, the lack of

data and the offshore character), the exploration and especially the production of the resources

on the seabed pose immense technical and environmental challenges. The initial euphoria of the

1970s was generated by high prices combined with relatively easy access to minerals available at

that time (e.g. Figure 3.1, Figure 3.11, Figure 3.17). Then a collapse in world metal prices and new

land based mines dampened interest in offshore mining. However, after decades ‘on hold’, there is

renewed interest in the potential for commercial exploitation of marine minerals from the private

sector and governments alike (Global Ocean Commission, 2013). Offshore mining must therefore

be considered a significant new and emerging use of the global ocean. It is therefore included in

the project of MARIBE as a form of Blue Growth. Exploiting of these resources represents a real

challenge. The development of offshore mining as a fully commercial maritime sector requires a

good knowledge of the industry. Thus, in order to completely understand its functioning and

promote the development of sea mining, this report aims to provide a complete overview of the

social and economic drivers that influence the performance of the industry (including industry

lifecycle and structure, socio-economic impact and regulatory framework, among others).

1 This diverse habitat is largely unknown, like how deep-ocean ecosystems change in space and time due to natural

variations and in response to specific human activities and the consequences of these changes.



Figure 3.1. Long term development of silver. Silver price in USD" by Realterm - Own work. Licensed under CC BY-SA 3.0 via Wikimedia Commons: https://commons.wikimedia.org/wiki/File:Silver_price_in_USD.png#/media/File:Silver_price_in_USD.png –d.d. 12-10-15.

3.2 Definitions and relevant context

3.2.1 Definitions: nearshore mining and offshore mining For seabed mining, a definition needs to be further extended in order to describe the sector. A

distinction can be made between nearshore mining and offshore mining. Mayor issues for marine

mining are depth and distance. The general rule of thumb is: the further away the deeper. And the

deeper one has to mine, the more complex the techniques. The words offshore mining and

nearshore mining represent that distance component and are thereby more explaining the

differences and business cases we want to describe (see also Annex 3.1).

Some geological and practical definitions are introduced here as a general setting and to support

the definitions used.

Limits of conventional dredging: the depth of -150 m is the theoretical limit where the

conventional dredging equipment can still be used (business as usual). In practice this

depth appears to be -80m. Below that -80m, a degree of innovation of the equipment is

needed or excessive amounts of energy need to be applied making the deeper dredging a

new business case (take e.g. the diamond mining near Namibia from -80 to -140m2; Scott

et al., 2008);

An important limit is that of the continental shelf towards approx. -200 m depth (SPC,

2013d; Rogers et al., 2015). Beyond that the depth strongly increases at the continental

slope and continental rise to the abyssal plains at approx. 4000 m and deeper; the deep

sea (Figure 3.9);

2 https://www.debeersgroup.com/en/explore-de-beers/mining.html d.d. 03-11-2015.

https://www.debeersgroup.com/en/explore-de-beers/mining.html



Potential of river deposits: The sea-level fluctuations due to ice ages are normally till -130

m (±10 m; Liu et al., 2004; Cronan, 2000). In general riverine deposits are measured and

exploited till that depth (Cronan, 2000). However, in southern Africa beach planes and

riverine deposits (like sand, diamonds and ore sands) can be found till at least -500 m due

to tectonic movements, lowering erosion ridges and resulting beach planes to deeper

regions, Possibly similar tectonic movements can also be valid for Australia, (Siesser &

Dingle 1981; Gurney et al., 1991; Cronan, 2000).

Taking these limits and the aspects of depth and distance we define (see also Annex 3.1):

Nearshore mining, ranging from -0 till -200 m still on the continental shell as a measure for

both distance and a markedly chance in geology (from plane to abyss). It is divided in:

o Regular nearshore mining: till -80m: achievable with regular exploitation vessels

like trailing suction hopper dredgers (TSHDs);

o Adapted nearshore mining: from -80m till -200m: also achievable with adapted

regular exploitation vessels. NB: taking e.g. diamond mining industry the type of

underground determines whether conventional techniques are used or Remotely

Operated Vehicles (ROVs) (see also Annex 3.5);

Offshore mining is divided in two types:

o Un-deep offshore mining is defined from -200m till -500 m. This is based on both

the potential of mining resources from a land origin as well as that it has been

estimated that till -500m exploitations are still profitable possible with adaptation

of existing ships and technologies which implies low investment costs and high

exploitation costs with lower yields (Schulte; 2013, and 3);

o Offshore mining is defined from -500 m and deeper.

3.2.2 Demarcation Nearshore and offshore mining encompass an elaborate scale of potential resources which differ

from location to location. Some demarcation is necessary to limit the scope of this study, given in

the following sections. The following rational is applied to come to a demarcation.

The business needs to be a new developing business, and not an established business;

All extractions need to be deeper than -80 m including both nearshore and offshore (the

limit where the exploiting vessel needs to be adapted to minor or larger extent depending

on depth (see also section 3.2.1 and Annex 3.5)).

The following offshore mining metallurgic deposits are studied: nodules, SMS deposits and cobalt

crusts because of their potential and the fact that they are part of a developing economy (Blue

Growth) (SPC, 2013a,b,c,d; Ecorys 2014; Lange et al., 2014). Phosphorites and phosphate sands are

also an upcoming mineral and a developing economy (Blue Growth). Gas hydrates are considered

interesting because the reserves are estimated to exceed known petroleum reserves and

governments are highly interested (Lange et al., 2014). In Annex 3.1 a longlist is given with most

ores and their distribution over depths and a division in nearshore and offshore mining.

3 http://www.rockphosphate.co.nz/

http://www.rockphosphate.co.nz/



Excluded are established industries, including precious stones (diamonds), riverine originated ore

sands, oil & gas and sand and gravel. And offshore originated ore sands are excluded due to the

lack of information.

3.2.3 Current status of offshore mining Currently, there are a range of nearshore and offshore mining operations at relatively shallow

water depths (down to -140 m4), including diamond mining in Namibia, tin mining in Indonesia and

other ore sands at shallow depths (Cronan, 2000; Allsopp et al., 2013). Several private and public

contractors have exploration licenses with the International Seabed Authority (ISA) for exploration

in the Area (i.e., the part of the seafloor that falls outside Coastal State’s jurisdictions), notably in

the Pacific Ocean. There are also increasing numbers of exploration activities taking place within

national jurisdictions (Petersen et al., 2016). Nautilus Minerals of Canada, for example, currently

holds more than 100 active prospecting licenses in Tonga, Fiji, Solomon Islands and Vanuatu as

well as a seafloor mining concession in Papua New Guinea. Exploration is also taking place in the

Red Sea (Atlantis II Deep basin), Japan (Okinawa Trough, Izu-Bonin volcanic arc), New Zealand (iron

sands off the North Island, Kermadec Trench, Chatham Rise), Namibia (phosphorite/phosphates),

Italy (Ionian Sea), and Western Australia.

Exploitation licenses have been granted for only two cases. Nautilus Minerals Inc. was granted a

mining license by the government of Papua New Guinea in 2011 for the Solwara-1 project (SMS

deposits) in the Bismarck Sea. The governments of Saudi Arabia and Sudan in 2010 granted a 30-

year mining license to a consortium of Diamondfields International Ltd. (Canada) and Manafa

International Trade Company (Saudi Arabia) for the Atlantis II project (metalliferous muds) in the

Red Sea. Mining has not yet started in either project, but “ground-breaking” at Solwara-1 is

currently projected to start in early 2018 (Thiel et al., 2013; Petersen et al., 2016).

Offshore mining is not undisputed because of its effects on the seabed and on the ecosystem at

large. Namibia has recently declared a moratorium on marine phosphate mining out of concerns at

effects on the fishing industry (Global Ocean Commission, 2013; Ecorys,. 2014).

3.2.4 Mineral resources of the deep seabed: a division in subsectors Commercial interest is currently focused on five types of marine mineral deposits, which are

located in distinct environments. Each type of marine mineral deposits represents a subsector.

3.2.4.1 Polymetallic (manganese) nodules

Nodules occur throughout the ocean and are found lying on the seafloor in the abyssal plains,

often partially buried in fine grain sediments. Nodules are potato-sized and smaller objects formed

over millions of years by the accumulation of metallic particles from seawater and sediment pore

water; these metals are ultimately supplied to seawater from continental run-off and volcanic,

hydrothermal and atmospheric sources (Cronan, 2000; Hein et al., 2013; SPC, 2013b). Nodules

contain a wide variety of metals, including manganese, iron, copper, nickel, cobalt, lead and zinc,

with important but minor concentrations of molybdenum, lithium, titanium, and niobium, among

others (see e.g. Table 3.1). As compared to the terrestrial reserves, nodules represent a substantial

portion and in some cases even exceed the terrestrial reserves by far (Table 3.1). The commercially

most important metals are assumed to be copper, cobalt and nickel (Table 3.2; Ecorys, 2014). See

section 3.4.2 and Figure 3.3 for the worldwide distribution and the zones of interest for MARIBE.

4 https://www.debeersgroup.com/en/explore-de-beers/mining.html

https://www.debeersgroup.com/en/explore-de-beers/mining.html



Manganese nodules occur widely on the vast, sediment-covered, plains of the abyssal ocean at

depths of about 4,000 to 6,500 m (Hein et al., 2013, 2015; Hein & Koschinsky, 2013; SPC 2013b).

The greatest concentrations of metal-rich nodules occur in the Clarion-Clipperton Zone (CCZ),

which extends from off the west coast of Mexico to as far west as Hawaii (below) and the Cook

islands. Nodules are also concentrated in the Peru Basin and at abyssal depths in the Indian and

Atlantic oceans. In the CCZ, the manganese nodules lie on abyssal sediments covering an area of at

least 9 million square kilometres (Figure 3.3).

No relevant concentrations have been found in a MARIBE basins (Atlantic, Baltic/North Sea,

Mediterranean, and Caribbean). Although recently, some spots with substantial amounts of

nodules were discovered in the tropical Atlantic (north of French Guyana and west of Africa

(Devey, 2015; and 5). These findings await publications or reports that put the findings into

perspective. In addition in the Galicia Bank region (northwest Iberian margin, NE Atlantic) a

complete suite of mineral deposit types was encountered. Think of (1) phosphorite slabs and

nodules, (2) Fe-Mn crusts and stratabound deposits, (3) Co-rich Mn nodules, and (4) Fe-rich

nodules (Gonzalez et al., 2016). The Galicia Bank nodules are exceptionally rich in cobalt (Gonzalez

et al., 2016). Cobalt is a major contributor in the potential profitability of offshore mining (section

3.7.2). Quantitation for commercial exploitation needs to be assessed.

Figure 3.2. Manganese nodules occur in all oceans. But only in 4 regions the density of nodules is high enough for industrial exploitation: Clarion Clipperton zone (CCZ), Peru Basin, Indian Ocean and Penrhyn Basin (Cook Islands) (data and fig from Hein et al., 2013; figure from SPC 2013b).

3.2.4.2 Polymetallic sulphides SMS deposits are rich in copper, iron, zinc, silver and gold. The total accumulation of sulphides is

estimated to be on the order of 600 milliones of tonnes (Hannington et al., 2010, 2011). As

compared to nodules and terrestrial reserves the amounts deposited in SMS are far less (Table

3.1). The amounts of precious metals is substantially though. Gold and silver, together with

copper, appear to be the commercially most interesting metals (Table 3.2; Ecorys, 2014).

5 http://www.geomar.de/en/news/article/tiefseetiere-gesucht-manganknollen-gefunden/

http://www.geomar.de/en/news/article/tiefseetiere-gesucht-manganknollen-gefunden/



Deposits are found at tectonic plate boundaries along the mid-ocean ridges, back-arc ridges and

active volcanic arcs, typically at water depths of around 2,000m for mid-ocean ridges. These

deposits formed over thousands of years through hydrothermal activity, which is when metals

precipitate from water discharged from the Earth’s crust through hot springs at temperatures of

up to 400°C. Because of the black plumes formed by the activity, these hydrothermal vents are

often referred to as ‘black smokers’.

Hydrothermal vents are associated ecosystems composed of an extraordinary array of animal life.

Chemosynthetic bacteria, which use hydrogen sulphide as their energy source, form the basis of

the vent food web, which is comprised of a variety of giant tubeworms, crustaceans, molluscs and

other species, with composition depending on the location of the vent sites. Many vent species are

considered endemic to vent sites and hydrothermal vent habitats are thus considered to hold

intrinsic scientific value. Over 500 vent species have been described so far, although fewer than

100 sites have been investigated to any degree. So called dead vents, with inactive chimneys, and

their surroundings are inhabited by non-vent species, which are not distinctive from other deep

sea habitats. These areas are of special interest form mining. See section 3.4.2 and Figure 3.4 or

the worldwide distribution and the zones of interest for MARIBE.

Most SMS occurrences, 65%, have been found along mid-ocean ridges, with another 22 per cent

occurring in back-arc basins and 12 per cent along submarine volcanic arcs and other types of

volcanoes (Figure 3.4). They occur between the -400 m and -4100 m (Boschen et al., 2013). The

SMS deposits that will likely be amongst the first to be mined occur in the Manus Basin, north of

Papua New Guinea (Solwara 1, a concession of Nautilus) consisting of a mound 2 km in diameter

rising 200 m above the seafloor. This specific ore is very rich in copper (~7%) and gold (4-7 g t-1).

Other deposits currently being explored for mining potential include those in the New Zealand EEZ

along the Kermadec arceback-arcsystem where deposits exist at exploitable depths of -150 to -200

m in the Bay of Plenty, -870 to -930 m at Clark Seamount and as deep as -1150 to -1800 m at

Brothers Seamount. Deposits at Brothers Seamount are also rich in base and precious metals with

high concentrations of copper, zinc, iron and gold (Boschen et al., 2013). It is expected that a lot

more SMS occurrences will be encountered (based on plain geologic mechanisms and calculations;

Lange et al., 2014).

In the MARIBE Basins, SMS deposits can potentially be found in the Mediterranean, near the

Azores (Figure 3.4; Marques & Scott 2011; Lange et al., 2014; Ortega, 2014) and in Norwegian

waters at the Mid Atlantic Ridge. Future results of e.g. a project like MIDAS (http://www.eu-

midas.net/) need to be awaited to get more indication of their values.



Figure 3.4. Global distribution of SMS deposits. Red circles: active deposits; yellow triangles: inactive deposits. More deposits are known but their positions are not available to complete this figure. Figure from Boschen et al., 2013).

3.2.4.3 Cobalt crusts Cobalt crusts accumulate at water depths of between 400 and 7,000m on the flanks and tops of

seamounts. They are formed through precipitation of minerals from seawater. Cold oxygen rich

water mixes with warmer oxygen poor water due to upwelling against the ridges. Once the first

molecular layer forms, the precipitation of Fe and Mn oxides and accretion of their colloids

becomes autocatalytic and will continue unless O2 concentrations become low sub-oxic to anoxic

or nearly so. What causes precipitation of the first molecular can result from many processes such

as alteration (weathering) of the substrate rock, precipitation in micro environments, and others.

The crusts contain iron, manganese, nickel, cobalt, copper and various rare metals, including rare

earth elements (Table 3.1). They vary in thickness from <1 to260 mm and are generally thicker on

older seamounts. Because the cobalt crusts are firmly attached to the rocky substrate, they cannot

simply be picked up from the bottom like manganese nodules. They will have to be laboriously

separated and removed from the underlying rocks. (Hein et al., 2013; Lange et al., 2014; Petersen

et al., 2016).

Globally, it is estimated that there may be as many as 100,000 seamounts higher than 1,000m,

although relatively few of these will be prospective for cobalt crust extraction. See section 3.4.2

and Figure 3.5 for the worldwide distribution and the zones of interest for MARIBE. As compared

to the terrestrial reserves, cobalt crusts represent a substantial portion. For some metals the

amounts in crusts exceed the terrestrial reserves (Table 3.1). The commercially most important

metals seem Copper, Cobalt and Nickel (Table 3.2; Ecorys, 2014).

The area of the crusts could host rich habitats. Water currents are enhanced around seamounts,

delivering nutrients that promote primary productivity in surface waters, which in turn may

promote the growth of fish and animals such as corals, anemones, stars and sponges, but also

creates an oxygen-minimum zone that inhibits the growth of some organisms. At this point, little is

known about the potential impact of removing cobalt crusts from seamounts or the factors that

influence community structure and ecosystem functioning around seamounts.



The western Pacific contains the world’s oldest seamounts were formed here. Accordingly, many

metallic compounds were deposited here over a long period of time to form comparatively thick

crusts. This area, around 3000 kilometres southwest of Japan, is called the Prime Crust Zone (PCZ)

(Figure 3.5) (Hein et al., 2013; SPC, 2013b; Petersen et al., 2016).

For the MARIBE basins some potentially commercially exploitable crusts can be found near

seamounts near Madeira, the Canary and Azores islands, the Galicia Bank, Iberian margin and one

sample from the western Mediterranean Sea (between -750 to -4,600m). The resource potential of

Fe-Mn crusts within and adjacent to the Portuguese Exclusive Economic Zone (EEZ) is evaluated to

be comparable to that of crusts in the central Pacific, indicating that these Atlantic deposits may

be an important future resource (Muiños et al., 2013; Conceição et al., 2014; Gonzalez et al.,

2016). The resources at the Galicia Bank, Iberian margin need to be evaluated in a commercial

perspective. They are not as enriched in cobalt as the nodules from the Galicia Bank (Gonzalez et

al., 2016; Hein et al., 2013).

Figure 3.5. Cobalt crusts occur in different ocean regions than manganese nodules. Each of these resources has its own especially abundant regions. The most important cobalt crust area is the Prime Crust Zone (PCZ) in the western Pacific (top figure: data from Hein et al., 2013; fig. from Lange et al., 2014;).

3.2.4.4 Phosphorite Phosphorite (or phosphates) are accumulations of calcium phosphates, a commodity that is used

as fertiliser in agriculture throughout the world. Marine sedimentary phosphorite deposits are

naturally occurring compounds containing phosphate in the form of cement binding sediment.

They are mainly found as nodule rock in a sandy deposit or as soft sediments. The phosphates lie

in the top layer in a large surface area. Marine phosphates deposits are found at various water

depths that range between 0 and 2,000 metres (Annex 3.1, Annex 3.4). They are usually found off

the west coast of continents on the continental shelf as a results of processes associated upwelling

(Figure 3.6).

The terrestrial reserves are estimated at 67,000,000 tonnes and the total world resources

including very large marine deposits 300,000,000,000 tonnes (USGS, 2015). The majority of global

terrestrial phosphate rock reserves are located in Morocco, including Western Sahara (~70%).



Growing demand and temporarily limited supply caused phosphate rock prices to soar in 2008.

The world demand on phosphate is expected to grow due to increasing population and potentially

also because of a growing demand for biofuels. (de Ridder et al., 2012). Pricing, transport

distances, the large deposits and geopolitical reasons make marine mining a very interesting

option.

The marine environment represent an enormous surplus. E.g. the project Don Diego (west coast of

Mexico, Baja Carlifornia)6 is estimated to have 114.9 million ore tonnes of measured phosphate

sands, 243.6 million tonnes of indicated phosphorite and 229.9 million tonnes of inferred

Phosphorite7. According to the companies involved in development in Namibia, current reserves

are close to 30 million tons (USGS, 2015, and e-mail exchanges). Chatham Rock Phosphate Limited

estimates an inferred resource of 23.4 Mt of phosphorite offshore of New Zealand8.

Currently, areas of oceanic upwelling cause the formation of phosphates. They are most common

off the western margin of continents and on plateaus (zones of upwelling). In this sense they are

the result of marine and oceanographic processes and not (direct) land run off and deposits

(Figure 3.6A) Europe has some deposits at the continental shelf of Portugal (measured ~-400m till

~-2000 m Gaspar, 1982) and Spain (Galicia Bank, measured ~-750m till ~-1900 m, Gonzalez et al.,

2016) (Figure 3.6B).

6 http://www.dondiego.mx/ 7 (http://ir.odysseymarine.com/releasedetail.cfm?ReleaseID=932048 d.d. 17-09-15). 8 (http://static1.squarespace.com/static/51d24098e4b0d519d0c065f5/t/557427e3e4b0573e6348d7ad/1433675747065/CRP+June+Factsheet.pdf)

http://www.dondiego.mx/

http://ir.odysseymarine.com/releasedetail.cfm?ReleaseID=932048

http://static1.squarespace.com/static/51d24098e4b0d519d0c065f5/t/557427e3e4b0573e6348d7ad/1433675747065/CRP+June+Factsheet.pdf

http://static1.squarespace.com/static/51d24098e4b0d519d0c065f5/t/557427e3e4b0573e6348d7ad/1433675747065/CRP+June+Factsheet.pdf



B

Figure 3.6. Phosphorites. A: The presence of Phosphorites according to the status in 2008 (source: United Nations, 2004, Scott et al. 2008). B: Phosphorites near Europe (United Nations, 2004).

3.2.4.5 Gas hydrates Methane is formed by the metabolisation and decomposition of dead biological material by

anaerobic bacteria or by chemical decomposition by earth heat starting from -300m to -3000m.

When gas molecules are trapped in a lattice of water molecules at temperatures above 0°C and

pressures above one atmosphere, they can form a stable solid. These solids are gas hydrates. Most

gas hydrates are formed from methane (CH4). Hydrates store large amounts of gas in a relatively

small area; one cubic meter of hydrate can hold around 160 cubic meters of methane and 0.8

cubic meters of water. (Boswell & Collett, 2011; Lange et al., 2014). The gas hydrates are trapped

in the pore of the sediments. In muddy, claylike sediments with few pores this results in low

percentages, dispersed over larger stretches. Sands and sandstones have relatively large pore

spaces, therefor contain higher extractable amounts, from which the methane can easily be

retrieved. But there are only a few such sand bodies in the world that contain any methane

hydrates at all (Boswell & Collett, 2011; Lange et al., 2014).

The real technical challenge is the extraction of the gas hydrates or methanes out of the pores. It is

also necessary to manage the expansion from the hydrate to the gas while extracting from the

deeper sea to the surface. Until now, gas hydrates are only produced from a test well. They are



estimated to exceed known petroleum reserves by about a factor of five to 150 (Lange et al.,

2014).

Methane hydrates develop in permafrost regions on land or beneath the sea floor. They are

usually covered by a layer of sediments. Their formation under the sea floor requires an

environment of sufficiently high pressure and low temperature. Thus, in the Arctic, methane

hydrates can be found below water depths of around 300 metres, while in the tropics they can

only occur below 600 metres. Most methane hydrate occurrences worldwide lie at water depths

between 500 and 3000 metres at the continental margins. According to current estimates the

largest deposits are located off Peru and the Arabian Peninsula. (Lange et al., 2014; Figure 3.7).

Figure 3.7. The occurrence of biogenic gas hydrates. Gas hydrate forms when methane and water combine at pressure and temperature conditions that are common in the marine sediments of continental margins and below about -200 m. The figure only shows the biogenic gas hydrates. The amounts of thermogenic methane are not taken into account (Fig. from Lange et al., 2014).

3.3 Market – Investigating market trends In this section market trends are described for the different subsectors.

3.3.1 Market trends, product demand prices, supply, demand In Annex 3.2 an overview is given of the price developments of the selected resources (based on

Table 3.5). This section and its subsections give the general trends and interpretation.

In general land based mining is an inflexible economy. The investments in and cost structure of the

mining infrastructure is so huge that they cannot flexibly react to market developments. This

results in typical fluctuations between a state of oversupply and supply shortage. For the recent



past, three trends are distinguished: (1) an increase in demand of metals since the 2000’s due to

economic development raising prices (Ecorys, 2014); (2) the financial 2008 crises which started

with the bursting of the United States housing bubble in 2004 - 2006 (Tully, 2006; Worldbank,

2012) leading both raising and lowering of prices and (3) a decrease in the quality of ores leading

to higher prices (Figure 3.2; Worldbank, 2012; Mudd et al., 2013; SPC, 2013d).

Figure 3.3. Declining average ore grades (Mudd et al., 2013, figure with courtesy from SPC, 2013d).

3.3.1.1 Analysing the drivers more into depth Analysing the drivers more in depth with their interdependency; around 2000, the economy

started to pick up leading to an increased demand. Economic development of Brazil, Russia, India

and China (the BRIC countries) has led to a higher demand. Especially China was consuming more

and more metals. In addition technological development (smartphones etc.) has increased the

demand for special metals like cobalt and rare earth elements (REEs) (Worldbank, 2012; SPC,

2013d; Ecorys, 2014). For most resources production was insufficient, causing greater demand for

the resource in 2000.

Meanwhile, supply tightened, with production and transport costs going up. Some attribute the

restricted supply also to speculation and heightened awareness among producer countries that

they could ‘set the price’. This resulted in higher prices. Eventually, higher prices made more

exploration and recycling activities economically feasible. It therefore became possible to restore

supply. As demand remained stronger than before, new prices reached a slightly higher level than

originally set.

Meanwhile, the economic crises started. In 2004-2006 the house market started to collapse (Tully,

2006) and in 2007 started the total collapse, giving rise to using resources (metal ores) as a means

to invest in safeguarding capital, raising prices (Worldbank, 2012) and at the same time a

collapsing economy reduced demand and thereby reducing prices. From 2009 onward the global

economy started to recover, letting prices rise again because of demand and shortage and higher

productions costs (for less grade ores). See also the analysis per metal in Annex 3.2.



3.3.1.2 A view of future supply and demand The previous section described the drivers on supply and demand. It emphasis the demand by

economic developments and the influence of price. Despite steadily increasing demand, the

onshore deposits will in most cases continue to satisfy our growing appetite for metals and

minerals (SPC, 2013d, Lange et al., 2014, Ecorys, 2014). In section 3.7 we perform a sensitivity

analysis for global prices and revenues. The analysis concludes that global metal prices are low

currently, making offshore mining on metal ores unlikely on the short term. Metal prices will need

to raise substantially before making offshore mining commercially viable.

On the long run the combination of increased absolute and relative demand combined with geo-

political issues can limit the availability of some metal resources. New technological developments

demand more and more of special metals and REEs. A lot of these resources for new technology

are situated in only a few countries with often a political instable climate making it a geopolitical

issue of availability. Examples of components of geopolitical concern are the supply of cobalt

(dominated by supply by DR Congo), REEs (China the main supplier), phosphorites (Morocco) and

also gas hydrates (Hein et al., 2013.; de Ridder et al. 2012; Lange et al., 2014; USGS, 2015)).

Geopolitical issues can make offshore mining an interesting option despite the high costs (see e.g.

Table 3.2 for the potential contribution of offshore mining for cobalt on the global market).

Table 3.2. The exploitation volumes of the most important metals estimated by Ecorys (2014) what they consider first exploitation volumes of the different offshore mining sources in relation worldwide yearly production (in tonnes per annum). The worldwide yearly productions are taken from USGS (2015).

Ore

Worldwide yearly

production Polymetallic Sulphides Polymetallic Nodules

Cobalt-rich

Crusts

Copper (Cu) 18,700,000 93,600 22,230 990

Gold (Au) 2,860 6.5

Silver (Ag) 26,100 29.9

Cobalt (Co) 112,000

2,720 4,350

Nickel (Ni) 2,400,000

25,840 3,800

3.3.2 Global markets and competition Offshore mining and adapted nearshore mining represent a global market. Firstly the resources

are spread all over the world in both the deeper national waters and the Area. Countries and the

ISA have the ability to sell concessions to investors of any international origin. Most ores are not

located in MARIBE areas: Atlantic, Baltic/North Sea, Mediterranean, and Caribbean.

Because offshore mining is located in open seas, it is by definition a capital intensive sector. All

commercial activities on seas and oceans require high-end knowledge, extensive experience and

large investments. Offshore and adapted nearshore mining represent an extremely demanding

environment, which has to deal with both the very harsh conditions and remoteness of the open

ocean and the extreme environment of the deep sea. Only established companies can operate

here with a long history of operation (thereby having evolved a balanced view on investment,

revenues, logistics, innovation etc.) (Ecorys, 2014; Lange et al., 2014; EPRS, 2015). These

companies operate in an international, global setting. Europe has some major players in the fields:



renowned international dredgers and offshore-installation producers. The operators are typically

dredging companies , such as:

Boskalis9,

DEME10,

Jan de Nul11,

van Oord12

offshore exploration companies like Odyssey Marine Exploration13.

These companies can be accompanied by offshore equipment specialists like IHC14 and SMD15. IHC

and DEME e.g. combine to the operator OceanflORE16. They operate internationally taking the

revenues to the home countries (in Europe). It can also been seen that they extend their

operations to other sectors (more typical offshore activities like installing offshore wind energy,

offshore maintenance and service, see footnotes below).

It seems like all types of offshore activities could be an activity supported by the large dredging

group companies. In addition to operators, other supply chain opportunities for offshore mining

are for vessels and equipment. Since these are highly specialised, it is likely that European

industries will be an important player.

3.3.2.1 Potential influence of offshore mining ores on global market prices Ecorys (2014) made some assumptions and calculations (Table 3.2). As mentioned, only a limited

number of metals seem interesting and from those copper, gold and silver are the targets for SMS

deposits and copper, cobalt and nickel for the crusts and nodules. The impact on the world market

can only be estimated with assumptions since there is no production at this moment.

Taking the target metals: for gold and silver a production by offshore mining was estimated at

~3% and ~1% of the yearly terrestrial production respectively (USGS, 2015; Ecorys, 2014). These

volumes are very small. In addition, Metals like gold and silver are characterised by low production

concentration and existing market exchanges, which however are only marginally influenced by

physical demand and supply. Therefore offshore mining is not expected to have an influence on

the price.

Currently, global annual production of copper is 18.7 million tonnes from different sources (USGS,

2015). Looking into an initial reachable estimated annual volume of 0.1 million tonnes of copper

(~0.5%) from a typical offshore mining operation (Ecorys, 2014) it is unlikely to have a substantial

impact on global prices. The same is valid for nickel.

In the case of cobalt (8 thousand tonnes, as estimated by Ecorys, 2014) the impact on price may

be more substantial as global annual production is around 112 thousand tonnes (USGS, 2015). An

estimated annual output of ~ 8% could have an impact on market prices and price fluctuation,

9 http://www.boskalis.com/ 10 www.deme-group.com 11 http://www.jandenul.com/ 12 http://www.vanoord.com/ 13 http://www.odysseymarine.com/ 14 http://www.ihcmerwede.com/ 15 https://smd.co.uk/n 16 http://www.oceanflore.com/

http://www.boskalis.com/

http://www.deme-group.com/

http://www.jandenul.com/

http://www.vanoord.com/

http://www.odysseymarine.com/

http://www.ihcmerwede.com/

https://smd.co.uk/n

http://www.oceanflore.com/



particularly in view of cobalt’s supply risk due to geopolitical reasons. Congo (Kinshasa), a

potentially unstable country, has ~50% of the world production. Any substantial new source will

influence the market (see also Table 3.2).

3.4 Offshore mining sector industry structure

3.4.1 Sector industry structure The subsectors are distinguished on the basis of the resources targeted: polymetallic (manganese)

nodules; cobalt crusts, SMS deposits, phosphorites, gas hydrates. Each resource type has different

distributions over the world and in depth. Also different techniques are required to harvest them

based on depth and origin. Depth and thereby the implications for technique, costs and revenues

is the basis for subdivision in segments (Annex 3.1).

3.4.2 Present centres of activities

3.4.2.1 International areas In total, 22 contracts signed with the International Seabed Authority for the exploration for

mineral deposits are currently into force: 14 for polymetallic nodules, 4 for polymetallic sulphides,

3 for cobalt-rich crusts (see Annex 3.3). Five plans of work have been approved while the contracts

remain to be signed. Three States have notified the Authority of their prospecting activities (Fiji,

Tuvalu, Samoa). There is no application or contract for exploitation of minerals as of yet in

international areas. There is no phosphorite nor gas hydrates exploration going on in international

areas.

3.4.2.2 National areas Metallurgic deposits

About the metallurgic deposits, Nautilus Minerals Inc. holds a license for exploration and

exploitation of SMS deposits at the Solwara site in Papua New Guinea. For mining the Atlantis II

Deep in the central Red Sea, positioned in the common economic zone of the Kingdom of Saudi

Arabia and the Democratic Republic of the Sudan, the Diamond Fields Ltd. of Canada and Manafa

of Saudi Arabia consortium has received a 30-year license for exploration and exploitation (Thiel et

al., 2013; Petersen et al., 2016 and 17)

And there is Neptune Minerals, a company registered in the USA

(http://www.neptuneminerals.com/), which is conducting exploration for SMS since 2005. They

hold (or have hold) prospecting and exploration licenses in Japan, Papua New Guinea, Solomon

Islands, Vanuatu, Fiji, Tonga and New Zealand.

Phosphorites

Currently three regions are in various stages of exploitation: phosphate rich sands in Namibia (-

180m to -300m, two companies), nodules in Chatham Rise (New Zealand, -250 to -450 m) and the

Don Diego deposit (phosphate rich sands at -50m to -90 m, offshore Baja California, Mexico) which

are currently temporarily all put on hold due to environmental considerations. Environmental

impact estimates are questioned by stakeholders fearing the impacts of large scale exploitation.

17 http://www.diamondfields.com/s/AtlantisII.asp

http://www.diamondfields.com/s/AtlantisII.asp



Offshore deposits located off Florida and Georgia in the southeastern U.S. have been drilled and

fairly well characterized and seem promising for exploitation (Scott et al., 2008).

Gas hydrates

Japan and South Korea are at the cutting edge. In the coming years these two countries will carry

out additional production tests on the sea floor. Significant efforts are also being undertaken in

Taiwan, China, India, Vietnam and New Zealand to develop domestic gas hydrate reserves in the

sea floor. A major technical barrier is the development of methods best suited for production. For

this reason large amounts of money continue to be spent on research. To date, close to 1 billion

US dollars have been invested in gas hydrate research worldwide. The first resource-grade gas

hydrates in marine sands were discovered in the Nankai Trough area off Japan in 1999. Methane

was produced for the first time from a test well in the sea here in 2013 (Lange et al., 2014).

3.4.3 Company structures Most of the exploitation of offshore metallurgic resources is in the hands of governmental related

companies. Some private enterprises can be found as well for high grade concessions and for

commercially exploitable phosphorites.

3.4.3.1 Private companies The value chain of mining operations includes exploration and resource assessment, mining and

extraction as well as processing (smelters) and distribution. In land based mining there is a

tendency for aggregations. The major mining companies represent about 83% of the total value of

all non-fuel minerals production, whilst the remaining 17% is accounted for by about 1000

medium sized and small companies, that often specialise in exploration (Ecorys, 2014). In offshore

mining also smaller companies (as compared to mining industry, larger when considered in an

offshore context) are doing the exploration like e.g. Nautilus, Odyssey Marine Explorations and

GSR.

The companies can be owned or are supported by investments of three groups of investors:

1. The large mining firms acting as investors like e.g. those investing in Nautilus: Mawarid

Mining LLC (28.14%, a subsidiary of MB Holdings Company LLC, an oil and gas, mineral

mining and processing group based in Muscat, Oman,); Metalloinvest Holding (Cyprus)

Limited (20.89%, the largest commercial iron ore producer in Europe) Anglo American plc.

(5.95%, one of the world's largest mining and natural resource groups).

Namibian Marine Phosphate (NMP) was formed as a joint venture between Australian

mining house UCL Resources Limited, Oman based Mawarid Mining LLC, and Namibian

company Havana Investments (PTY) Ltd;

2. Large generalist investors like the Lev Leviev Group of Companies in Phosphorites in

Namibia;

3. Dredging companies and offshore construction companies like DEME and IHC act as

investors in OceanflORE (operations and harvesting only) and DEME in the exploitation

oriented company GSR. GSR and OceanflORE are working together towards making

offshore harvesting possible, profitable and sustainable.



One could say that the mother company is protecting itself for financial risks by investing in or

buying a different (new) company. This construction also renders some legal protection.

Buying in knowledge

Often is seen that major companies buy in extra technology or local market knowledge on

procedures with the local government and local stakeholders. For Don Diego, Boskalis is investing

in Odyssey Marine Explorations18 and in a second Mexican company Dragamex (thereby having

knowledge on the local governance procedures and stakeholders). Odyssey currently owns 54% of

the outstanding shares of subsidiary, Oceanica Resources S. de. R.L. (Oceanica). Oceanica owns

Exploraciones Oceanicos, S. R.L. de CV, the Mexican operating company with the mining

concession containing the Don Diego phosphate deposit. Next to buying in knowledge, it means

protection of the mother company and minimal investments for maximum influence (54% majority

shareholding).

Also other similar combinations (networks) of expertise are found, like e.g. around Chatham rise

Phosphorites projects. Odyssey Marine Exploration has minority ownership stakes in Chatham

Rock Phosphate Limited. Boskalis again is the operator for the Chatham rise concession. Odyssey

Marine Exploration also has minority ownership stakes in Neptune Minerals, all companies

controlling exclusive mineral licenses for areas believed to contain high-value ocean floor mineral

deposits.

A network of interdependent investors and operators ensures the conservation of investment and

essential knowledge.

3.4.3.2 Governmental companies In most of the projects in international waters the main contractors are governments (Korea,

Russian Federation, India) or companies sponsored and funded directly or indirectly by

Governments through public funding, for example KIOST (Korea), COMRA (China), JOGMEC102 and

DORD (both Japan) and the Federal Institute for Geosciences and Natural Resources (BGR,

Germany). Some examples:

KIOST

The Korea Institute of Ocean Science and Technology (KIOST) plays a crucial role in researching and

developing ocean science and technology as the need arises from government policy to keep up

with developing ocean industry trends. It is Korea’s only government-run research institute in the

ocean science field (part of The Ministry of Land, Transport and Maritime Affairs). The mission of

KIOST is to perform basic and applied research in order to promote the efficient use of coastal and

ocean resources. It has a Deepsea Resources Research Center which is used by e.g. the Ministry of

Oceans and Fisheries to explore concessions and obtain exploration rights for the development of

polymetallic sulphides and nodules19. The focus is on marine mineral exploration and utilization of

marine mineral resources; deep-sea environment and environmental impact assessments; geology

and geotectonics. The contract with ISA is managed by a ministry (Ministry of Oceans and

Fisheries) not by KIOST.

18 Odyssey Marine Exploration, Inc. is engaged in deep-ocean exploration using innovative methods and state of-the-art technology for shipwreck projects and mineral exploration. 19 http://eng.kiost.ac/kordi_eng/?sub_num=321

http://eng.kiost.ac/kordi_eng/?sub_num=321



COMRA

COMRA stands for China Ocean Mineral Resources Research and Development Association

(COMRA). It is an organization undertaking activities of exploration and exploitation in the seabed,

ocean floor and subsoil thereof beyond the limits of national jurisdiction. COMRA came into

existence in 1990 and registered as one of seven pioneer investors for the Preparatory Committee

for the International Seabed Authority and the International Tribunal for the Law of the Sea in

1991. It has exploration contracts with the ISA20. COMRA is an external organ affiliated with the

SOA, and it is headed by a deputy director of the SOA. It is subordinate to the State Ocean

Administration. The State Oceanic Administration is an administrative agency subordinate to the

Ministry of Land and Resources, responsible for the supervision and management of sea area in

the People's Republic of China and coastal environmental protection, protecting national maritime

rights and organizing scientific and technical research of its territorial waters21.

German Federal Institute for Geosciences and Natural Resources

The Federal Institute for Geosciences and Natural Resources is the central geoscientific authority

providing advice to the German Federal Government in all geo-relevant questions. It is

subordinate to the Federal Ministry for Economic Affairs and Energy. The BGR carries out

exploration research for manganese nodules in the equatorial NE Pacific, after signing a 15 years

exploration contract with the ISA in July 2006 (Manganese nodule exploration in the German

license area). Furthermore, a preparatory project for the application for an exploration contract

for polymetallic sulphides is currently underway. BGR actively participates in ISA committees and

supports the work of ISA, by assisting in workshops and advisory services.

Concluding, depending on the country, the governmental institute performs task for a ministry

(the final contract holder with ISA) or it manages the contracts with ISA itself. The additional

variable is the distance towards the department and the degree of (in)dependency.

3.4.3.3 Integration Vertical integration or horizontal integration 22 in the value chain takes place in offshore mining.

Vertical integration

A clear case of vertical integration is that of the Phosphorites mining companies in Namibia and

Mexico. NMB and the Leviev group want to have their own refinery factory to increase the ore

grades to commercially interesting grades (downstream) (Benkenstein, 2014). Also the Mexican

Don Diego project foresees a form of local, on site, processing of the ore to a more refined ore

reduced in volume (in order to reduce transport costs): e.g. a factory ship that refines the raw ores

working next to a TSHD.

DEME dredging has incorporated Global Sea Mineral Resources NV (GSR), a specialist in offshore

exploration.

Horizontal integration

20 http://www.comra.org/en/index.htm 21 http://islandstudies.oprf-info.org/research/a00011/ 22 Vertical integration: several parts of the value chain within a single company. Horizontal integration: the same

company has multiple applications for the same link in the value chain, for example mining different types of material.

http://www.comra.org/en/index.htm

http://islandstudies.oprf-info.org/research/a00011/



Horizontal integration is shown in the fact that dredgers offer their service to all kinds of marine

resources: sand and gravel; phosphorites, metal ore sands etc. Exploration companies like Odyssey

explores the oceans of the world locating valuable treasures and resources, archaeological sites

and shipwrecks. Bosch Rexroth designs materials for both offshore mining and offshore oil and gas

industry. Offshore knowledge, capacity and capability is highly valuable and adapted for new

purposes. The dredgers have only recently entered the offshore wind energy installation market.

3.4.3.4 State influence Offshore mining is appealing to many countries, including Small Island Developing States, as a

means of economic development and revenue generation. National states can have three roles: as

legal authority and license provider; as investor; as a catalyst.

Legal authority and license provider

The state can act as legal authority responsible for issuing the necessary licenses. As such it can

have marked influence on the exploitation and profits (Resource nationalism) by:

Increasing resource taxes (such as in Australia, Canada, India, Brazil, the USA, Ghana,

Zambia);

The attempt to control and profit from activities downstream the value chain by direct

laws or by export restrictions of unrefined products (such as in India, Indonesia, Brazil,

South Africa, the DR Congo);

Implementing local ownership requirements, requiring a certain percentage of the mine

being locally owned (such as in Indonesia, Russia, Mongolia, Zimbabwe).

From the perspective of offshore mining, some conclusions on state control and resource

nationalism are relevant:

State control brings a level of supply risk for certain minerals, especially those which are

currently produced by mainly one country – such as rare earths or cobalt. For such

materials, offshore mining can be a game changer by diversifying supply (see also section

3.3.2.1);

Resource nationalism may be an important issue to consider for deep-sea miners entering

contracts with states: they need to keep in mind that the taxes and royalties to pay may

increase, or that engaging in downstream activities may not always be easily possible

without granting the state some control over it.

Investor and initiators

National states can be investors and initiators. In most of the manganese nodules projects in

international waters the main contractors are governments (like Korea, Russian Federation, India,

Germany) or companies sponsored and funded directly or indirectly by Governments through

public funding. Only a small part of the project licenses are held by private companies (Scott et al.,

2008; Ecorys, 2014).

For Phosphorites, governments are neither investors nor contractors. Private companies are e.g.

Lev Leviev, Namibia Phosphates Ltd.



Governmental investment is clearly needed for the case for gas hydrates. States invest large sums

in gas hydrate exploitation (Lange et al., 2014). Since significant innovations are still needed in

order to achieve any exploitation, the situation is different from e.g. Phosphorites where can be

chosen for conventional techniques instead of innovation. Private investors can hardly be

expected to invest in such an uncertain field. The states have a leading role rather that a

supporting role as catalyst.

Catalyst

The role of catalyst can be that of being a sponsoring state of the ISA by which it enables their

national companies to obtain exploration and exploitation licenses from the ISA (see also section

3.5.3).

In addition innovation can be stimulated (catalysed) by funding. Offshore mining could use a boost

in order to exploit at less energy costs (cheaper) and with less impact in order to make it

economically viable. National and EU publicly funded research projects are being carried out

related to deep-sea mining and deep-sea exploration technologies. Research is often supported by

engineering firms and technology providers themselves who work closely together with research

institutes and universities.

Ecorys (2014) gives a comprehensive oversight on ongoing projects. The two most important

projects are Blue Mining and MIDAS (aiming at deep-sea resource extraction). Blue Mining

explores the needs for developing the technologies required for nodule and seafloor massive

sulphides mining, while MIDAS focuses on environmental impacts from deep-sea activities. Other

research efforts are linked with deep-sea mining, but have a wider scope.

An important programme is the European Innovation Partnerships (EIP). The EIP aims to reduce

the possibility that a shortage of raw materials may undermine EU industry's capacity to produce

strategic products for EU society. The EIP on Raw Materials is not a new funding instrument. It

aims to bring stakeholders together to exchange ideas, create and partner in projects which

produce concrete deliverables. In 2014 80 commitments were recognized as ‘Raw Material

Commitments, out of which, six are related to deep-sea mining (Ecorys, 2014).

Other numerous organisations within the EU are presently engaged in seabed mining activities,

both as technology providers and as mine operators. The sector, though small, has been identified

as having the potential to generate sustainable growth and jobs for future generations. The

European Commission is thus engaged in a variety of studies and projects aimed at shedding light

on the benefits, drawbacks and knowledge gaps associated with this type of mining.

In a lot of cases governments have a major role in the enterprises are as such are not ranked as a

catalyst but as initiator/investor.

3.4.3.5 Summary Concluding, offshore mining is a very complex sector in which high level knowledge from diverse

fields is obligatory. So companies form networks by having economic interests in each other

(shares) thereby securing the necessary knowledge of offshore logistics, deep sea exploration and

exploitation techniques, dredging, local governance, procedures and stakeholders etc. Horizontal

and vertical integration and alliances seem the way to secure that required complex of knowledge.



The main force in making offshore mining metal ores and phosphorites successful is the selling

price on the international market. The technology for exploitation is available. It only costs large

investments in money and energy and environmental impact. The revenues should be high enough

to overcome this hindrance and assure enough profits.

Gas hydrates are still in a situation where the technology for exploitation needs to be developed.

3.4.4 Transformational technologies Since all current activities are related to exploration rather than exploitation, no technologies have

been proven for efficient operation in real life environments. Therefore, developments are needed

for all steps in the mining process, i.e. excavation (cutters or collectors), and rising system (Ecorys,

2014).

Excavation techniques depend on ore type. For SMS deposits techniques are being developed

adapted from those developed for other deep sea operation, such as pipe trenching operations, or

land based activities such as coal mining. Although technology readiness levels are low, the

concepts of cutter-drum and rotating cutter heads seem most promising. Basically, their

applicability in deep sea situations needs to be validated. For polymetallic nodules mechanical and

hydraulically driven collectors are being developed, but have only been tested at shallow depth.

Options to excavate ferromanganese crusts are far from application.

For vertical transportation of ore, hydraulic pump systems are likely to be deployed, but the

behaviour of these systems at greater depths needs to be tested.

Innovative transformational technologies are probably under development, but unknown possibly

because of competitive considerations. As quoted from Ecorys (2014) “ it can be expected that the

technologies being developed at the moment are technologies that mitigate environmental impact

as much as possible. Acting not environmentally friendly is per se non-economically attractive, as

the risk is too high that the projects will be cancelled or licenses will be retracted”.

The EU funded Blue mining project aims a.o. to develop all key technologies for exploitation of

manganese nodules and seafloor massive sulphides up to a Technology Readiness Level (TRL) of 6,

i.e. the (sub)system model or prototype is demonstrated in a relevant environment.

3.4.4.1 Game changer The real game changer is not so much in technology rather than the willingness to invest in

innovation. It seems that coming decade there will be no real shortage on land based metal ores

(section 3.3.1). So prices will remain too low to really stimulate the necessary R&D to make

offshore mining substantially cheaper. Long term investments can do so and it seems that only

governments can stimulate substantial long term innovation from a non-competitive position.

3.5 Working environment In this section attention is given to the interactions and impacts like the economic climate for

operations; employment and skills and the juridical and societal implications (including ecology).



As mentioned in section 3.4.2 offshore mining will be far offshore (logistically difficult in remote

areas and countries). This activity is capital intensive, depending on where ore-processing would

take place, processing facilities might consider relocating their facilities to the vicinity of the

extraction area, which would consequently include relocation or employment of engineers, sailors

and highly technical skilled people, resulting in internationalization and cooperation of people of

different background and culture. This is already the case in the international maritime

environment (production vessels).

3.5.1 Economic climate for operations The availability of the operational gear is a crucial aspect. At time of study, the most advanced

(and applied) technique to raise crude ore from the seabed, appears to be the technique as

developed by the diamond industry to recover eroded diamonds, deposited on the (nearshore)

ocean floor by land runoff and fluvial systems. The maximum reported removal depth reported so

far is limited to – 140 m. This basic technology – as developed for this given mining environment –

might (besides others) also be applicable to the environments under consideration in the present

report. In addition, for the Phosphorite concessions of Don Diego and Chatham Rise, an adapted

TSHD is foreseen to be developed to remove ores till depths of -400m23.

Unlike for land mining, where investment can be made gradually, offshore mining requires a very

high initial investment to start the operations. The initial capital expenditure (CAPEX) is easily

$1,000,000,000 (Ecorys, 2014; EPRS, 2015).

3.5.1.1 Economic viability Doubts can be raised on the economic viability of offshore mining of metal ores. The Ecorys (2014)

study examined the estimated capital expenditure CAPEX, operational expenditure (OPEX) and

market price for metals of seabed mining and concluded that SMS deposits are likely to have the

highest commercial viability (to be treated with caution as no actual operations have taken place

yet). Nodules and crust are only marginally commercially feasible. This is due to the fact that in

SMS deposits copper can be extracted in large amounts from these resources at a moderate

market price. Furthermore, it is possible to extract gold from these reserves (Boschen et al., 2013).

On the other hand, this finding is not consistent with the answers given by some interviewees

(EPRS, 2015), who mentioned nodules as the most attractive deposits commercially. This is due to

the fact that mining companies assume an operation of 15 years (20 years for nodules and cobalt

crusts) to generate returns on investment while key uncertainties exists in case of SMS deposits

about the resources and reserves which seem to point to smaller sizes (SRK Consulting, 2010;

Ecorys 2014). This has been confirmed by the industry stakeholders, mentioning that it is

challenging to find and extract SMS deposits as they are more difficult to spot and are relatively

smaller deposits, while the operations are usually calculated with a proven resource for 20 years.

For example, Nautilus spent about $600M and identified only 0.8 – 1.3 million tons resources (SRK

Consulting, 2010).

Another aspect of economic viability is market strategy. The decision to extract some deposits can

be strategic rather than a profitable business case, since many projects are not commercially

viable. The calculations of a potential rate of return rely on the assumptions of the abundance of

the deposit, grade, mining rate, duration and price. That is difficult (see the discussion in section

23 http://www.rockphosphate.co.nz/the-project/

http://www.rockphosphate.co.nz/the-project/



3.7). Developing techniques and earning a reputation in this uncertain field can be of strategic

importance when the developments do enable offshore mining (EPRS, 2015).

3.5.2 Employment and skills Although the typical ores related to offshore mining are in general not present within the borders

of the European Community, European interest in the sector is of primary importance. The

relevant experience in specific vessel design, construction and operations of extracting seafloor

material are of European origin and Europe-based until today. After all, it is the European dredging

and offshore marine construction industry – mainly concentrated in the Netherlands and Belgium

who are especially involved in applying their knowledge (including R&D) and experience in the

processes of nearshore offshore mining on a global scale and of a global importance.

Being active in the entire world, this industry relies on an internationally recruited, multicultural

staff and personnel force. Within their home-base, these groups of skilled people are active in the

concept, design, development, building, testing and operational phases, of not only of the

extraction technology, but they are also occupied with finding solutions for the vertical transport,

vessel construction, ore (pre) processing and shipping, including all logistic support. Included are

engineers (all disciplines), scientists (chemistry, physics, environment, geology, (e.g. hydrography,

seismology), mechatronics etc.

In terms of the number of long-term employment possibilities arising from offshore mining, it is

expected that each deep sea project in the EU offers only a few hundreds of job opportunities of

high skilled workers (directly related to crew and directly involved staff). This is a relatively very

low number of jobs created in the EU compared to land mining or recycling. Hence the EU deep

sea industry can be seen as marginal in terms of job creation (SRK Consulting, 2010; EPRS, 2015).

Despite the low direct job opportunity impact, this type of activities can be important as a driver

for technological development and innovation (EPRS, 2015). Universities, Public-Private

partnerships in R&D, and EU stimulation programs like H202024 have an important role in pushing

and pulling this leading position in technology and adjacent fields like ecological optimization,

impacts, governance and MUS. Maintaining and fortifying the leading R&D position is essential and

supported and supports the current constructions as now encountered in the Netherlands and in

the EU. The enormous technical challenge of offshore mining offers such a challenge to R&D

(comparable to space technology and exploitation).

3.5.3 Rules and regulations The deep seabed spreads over both areas within national jurisdiction (Exclusive Economic Zone,

Continental shelf) and beyond national jurisdiction. There are thus two different levels of

regulatory framework depending on the specific location of mining activities:

1. Part XI of the United Nations Convention on the Law of the Sea25 (LOSC), applicable to the

seabed beyond national jurisdiction where the regulator is the International Seabed Authority.

2. The legislation of the coastal State applicable to the seabed within national jurisdiction.

24 https://ec.europa.eu/programmes/horizon2020/en/draft-work-programmes-2016-17 25 http://www.un.org/depts/los/convention_agreements/convention_overview_convention.htm

https://ec.europa.eu/programmes/horizon2020/en/draft-work-programmes-2016-17

http://www.un.org/depts/los/convention_agreements/convention_overview_convention.htm



The international area of the deep seabed (the Area) and its mineral resources are reserved for the

Common Heritage of Mankind, so provides Part XI of the Law of the Sea Convention of 1982. As a

result of this principle, the mineral resources of the Area can only be exploited for the benefit of

mankind as a whole, in accordance with Part XI and the rules, regulations and procedures of the

International Seabed Authority26 (ISA), which is the organisation set up to regulate and administer

seabed mining. The ISA is mandated by the LOSC to adopt rules and regulations to ensure that

prospecting, exploration for and exploitation of minerals in the Area is conducted in accordance

with Part XI and in respect of the environment. To this aim, the ISA has started drafting a Mining

Code in the early 2000s. Components of the Mining Code have since then been adopted and

implemented, but the exploitation phase remains to be regulated. The current regime under which

these resources are administered may be described briefly as follows:

While scientific research is largely free of restrictions, prospecting may be conducted only

after the ISA has received notification, accompanied with a written undertaking that the

proposed prospector will comply with the LOSC and the ISA rules, regulations and

procedures, and will accept verification of compliance by the ISA;

Exploration and exploitation may only be carried out under a contract with the ISA and are

subject to its rules, regulations and procedures. Contracts may be issued to both public

and private mining enterprises provided they are sponsored by a State Party to the Law of

the Sea Convention (the Sponsoring State) and meet certain standards of technological

and financial capacity.

The ISA has developed regulations, including provisions relating to environmental protection, to

govern exploration, but the regulatory framework for exploitation is still under draft.

The role of the Sponsoring State is to guarantee that the contracting entity will respect the ISA

rules, regulations and procedures. In other words, the sponsoring State ensures that the relevant

rules of international law apply to public and private entities that are not States. To achieve this,

the Sponsoring State has the obligation to adopt national measures, in the form of legally binding

instruments. The current state of legislation is summed up in Annex 3.6.

In national jurisdiction, Coastal States are sovereign and can regulate seabed mining occurring on

their continental shelf. However, in doing so, they also have to respect the international

obligations deriving from global and regional treaty law. There are thus a variety of different

legislations already in place. An overview of existing EU legal landscape is given in the table

provided in Annex 3.6.

3.5.4 Societal impacts/Civil society concerns Exploration and exploitation of offshore resources could also have serious societal and ecological

impacts, such as for example consequences for the livelihoods and well-being of coastal

communities. For offshore mining, the situation is different. So far no exploitation activities have

taken place which poses uncertainty with respect to the real impacts of offshore mining. Hence

reference to land mining acting and offshore oil and gas industry as a proxy is crucial. Moreover,

predicting the impacts of mining on society is a complicated task that will differ from site to site

and will depend upon a range of factors.

26 https://www.isa.org.jm/

https://www.isa.org.jm/



3.5.4.1 Overview of possible societal impacts There is a tension between potential environmental degradation and likely economic gain, and

between social harm and economic development. When it comes to offshore mining, the most

relevant social impacts will likely be associated with several key changes during mining life cycle,

which is potentially a long one (20 - 30 years) and may apply to different stakeholder groups at

household, local, regional, national, and international level. Exploration is already occurring in

different regions in the absence of regulatory regimes or conservation areas to protect the unique

and little known ecosystems of the deep-sea. It is also often lacking sufficient participation by the

communities in the decision-making (Franks, 2011; SPC, 2013d; EPRS, 2015).

Following EPRS (2015), the table 3.3 below presents the potential societal impacts due to offshore

mining based on examples for terrestrial mining as a proxy. It is important to stress that some

impacts of terrestrial mining are less applicable to offshore mining, while other impacts absent on

land are more likely to happen in the sea. It is also important to read this table along with the

ecological impacts that these activities could create to the environment since the two impacts are

closely related. Therefore the table below lists the societal impacts applicable to offshore mining

only which are at the moment considered to have a significant impact.

Table 3.3. Overview of potential societal impacts (EPRS, 2015, adapted text based on SPC, 2013d).

Type of change Examples of impact

Political, social and

cultural

Labor practices: health and

safety,

working conditions,

remuneration,

right to assemble,

representations

in unions, women labour

force

Political: opportunity costs

for other development

options

Human rights and security:

states overriding community

self-determination,

suppression of opposition

and

demonstrations, targeting of

activists, rights awareness

programs

Economic Distribution of benefits:

employment, flow of money,

training, local business

spending,

community development

and social

programs, compensation,

managing expectation,

equitable

distribution, cash economy

Industry: change in

composition, dominance of

foreign entities

Socio-environmental Resources

access/competition:

marine resources,

subsistence

fishing, cultural practices,

scarce

infrastructure, damage to

sites

Gender and vulnerable

groups: disproportionate

experience of impact,

marginalization of

vulnerable

groups, equity in

participation and

employment

Social impacts related to

environmental concerns,

such

as noise, dust, chemical use,

and water pollution



3.5.4.2 Economic concerns in a national context Offshore mining brings socio economic tension but also offers potential of income. In the case of

land mining, economic benefits usually flow to governments in the form of taxes and royalties paid

at a local and national level. The funds created have effects especially in developing nations, on

local and national infrastructure, and services (Franks, 2011).

This is especially valid for the Pacific states: most of these states have fairly no national income

(SPC 2013d). Offshore mining could mean a serious source of income but at what moment to

mobilize it? A major concern should be how to prevent a socioeconomic disaster like Nauru Island,

which at one time had the highest per capita income in the world as the result of the phosphate

industry. Now it is depleted of income. When the phosphate reserves were exhausted, and the

island's environment had been seriously harmed by mining, the trust that had been established to

manage the island's wealth, diminished in value.

Also an offshore concession can only be exploited until it is exhausted. Then the state has lost his

only source for substantial income. Before granting concessions, ideas should be developed on

mineral funds. Countries like Alaska, East Timor, Norway and São Tomé et Príncipe offer examples

on how it can be organized (SPC, 2013d).

3.5.4.3 Societal impact relevant for the EU Due to the increasing importance of the topic in the immediate future and, the necessity for the

EU to start to define a clear policy on the topic, the European Commission launched a Stakeholder

Consultation on offshore mining. The responses received were from civil society organization, EU

Member States and non EU-countries (Australia, Switzerland and the US), as well as from

environmental NGOs, and also companies and consultancies (e.g. Nautilus, G-Tec). The main

outcomes from the consultation showed that according to civil society, NGOs, Member States and

some consultancies, commercial mining should not take place unless regulations are in place.

Furthermore the consultation showed that the drafting and adoption of regulations must be

transparent and participatory and any benefits widely shared. Also the Consultation from July

2014 showed that some European Organizations, NGOs and stakeholders want a robust regulation

(based on precautionary approach, EIAs). In addition, they require more emphasis on reuse and

recycling of materials rather than on offshore mining.

On the other hand, the interviews with industry stakeholders point out the fact that before making

any conclusions, the opponents of offshore mining, scientists and governments should look at the

overall risk and impact of offshore mining vis-à-vis terrestrial mining, and allow things to go

forward. As stated before, the land and nearshore and offshore mining impacts can be compared

and they also slightly diverge for clear reasons. They point to the fact that real risk is already taking

place on land and the increasing need for mineral resources will not be satisfied through recycling

and reuse only. Hence, it is important to take the risk to see the benefits, as it has been the case of

offshore oil and gas (EPRS, 2015).

3.5.4.4 Guidelines derived from land mining Lessons learned from terrestrial mining are provided below together with past relationships

between mining companies and Pacific Island communities that have been characterized by

complexities, tensions and contradictions (Franks, 2010; SKR Consulting, 2010; EPRS, 2015):



Use ecological (systematic) approach;

Be aware that legal limits and scientific data may not be aligned with community

expectations;

Societal changes can be indirect, often economic/political in nature;

Socio-environmental concerns are very important (use of coastlines, deep-water pollution

and disturbance);

Land use, ownership and access are also important (e.g. issues of fishing or cultural

practices);

Government institutions are crucial to balance environmental preservation against

economic gain;

Corporate governance, corporate social responsibility and transparent procedures need to

be established before mining takes place;

Social scientific research needed to understand communities' positions.

3.5.4.5 International approach As far as international offshore mining (beyond EEZ) is concerned, the LOSC (ISA, 2015) provides

that all mining activities (whether at the exploration or the exploitation phase) shall be carried out

for the benefit of mankind as a whole. There are thus articles in Part XI of the LOSC that ensure

benefit-sharing in several forms, particularly in favour of developing States. The sharing of financial

and other economic benefits is one of them, although it has not been implemented yet since

exploitation has not started. The LOSC does not give much details as to how this benefit-sharing

should be operationalized, but it does precise that a contractor’s payment to the ISA shall not be

higher than the rates in land-based mining. Major discussions are currently talking about rates of

4-6 % of the potential revenues.

Other than financial benefits, the LOSC also provides for the dissemination of marine scientific

research results, cooperation with developing states in research programmes and training,

technology transfer, access to reserved areas of exploration for developing States at lesser costs.

These provisions are already implemented by the ISA through, inter alia:

The obligation for contractors to relinquish 50% of their exploration area to the ISA, which

will become a reserved area for developing states;

The obligation for contractors to include training programmes in their plan of work;

The organisation of scientific workshops;

The funding of research projects and of the participation of developing states’ scientists

via the ISA Endowment Fund.

So the social aspects are being regulated but not really effective yet.

3.5.5 Ecological concerns The ecology aspects are of major concern. An important aspect is the general lack of data to make

thorough environmental impact assessments (SPC 2013a,b,c,d; Lange et al., 2014; Ecorys, 2014;

Rogers et al., 2015). The phosphorite mining examples show how uncertainties in the available

information can lead to major delay of the exploitation. Societal protest is understandable given



the fact that phosphorite mining can be nearshore and within range of fisheries and rich

biodiversity (see e.g. Benkenstein, 2014; EPRS, 2015).

The excavation process may result in major impacts on the seafloor (anticipation of large areas

destroyed), affecting the sediment inhabiting fauna. In addition, sediment material may get

suspended in the water column, as is also the case for tailings release. Settlement of these

particles on the seafloor may result in effects from smothering. Other impacts may include

disturbances caused by sound of equipment and sub-activities in the whole mining process. There

is a fear for too much impacts on fisheries and ecosystem in general (SPC, 2013a,b,c,d; Lange, et

al., 2014; Rogers, 2015).

In addition to its intrinsic value (being part of global biodiversity), deep sea fauna could represent

a genetic and chemical treasure for the pharmaceutical and possibly other chemical industry.

There are indications that deep sea life indeed holds interesting life traits, for instance used to

cope with the extreme conditions or in fending off predation, that can be transformed into

compounds valuable for human use (EPRS, 2015; Rogers et al., 2015).

Integrated governance based on the ecosystem approach will be necessary in developing deep sea

mineral policies. Ecosystem-based oceans management strategies, laws, and regulation for deep

sea mining would include provisions for (SPC, 2013d):

Collecting adequate baseline information on the marine environment where mining could

potentially occur;

Establishing protected areas where there are vulnerable marine ecosystems, ecologically

or biologically significant areas, depleted, threatened, or endangered species, and

representative examples of deep sea ecosystems;

Adopting a precautionary approach that, in the absence of compelling evidence to the

contrary, assumes deep sea mining will have adverse ecological impact and that

proportionate precautions should be taken to minimize the risks.

3.5.6 Other environmental concerns At first sight, one could state that offshore mining hampers the evolution towards a circular

economy (recycling, eco-design, sharing, repairing, etc.). On the other hand, the Ecorys (2014)-

report, indicates that recycled contents remain rather low, not fulfilling the needs. Additional new

ores will have to be brought on the market (Ecorys, 2014) and offshore mining can provide a part.

Gas hydrates are thought to influence ocean carbon cycling, global climate change, and coastal

sediment stability (under serious debate, e.g. Bosswell & Collett, 2011.; Lange et al., 2014 and 27).

In addition the mobilisation of gas hydrates as a new, potentially cheap energy source will

contribute to additional CO2 in the atmosphere. A cheap new source can also hamper the

development of renewable techniques.

3.6 Innovation The value chain for offshore mining is considered to include six main stages (Figure 3.8; Ecorys,

2014):

27 http://oceanexplorer.noaa.gov/facts/hydrates.html

http://oceanexplorer.noaa.gov/facts/hydrates.html



1. Exploration;

2. Resource assessment, evaluation and mine planning;

3. Extraction, lifting and surface operations;

4. Offshore and onshore logistics;

5. Processing stage;

6. Distribution and sales (this stage is not included in this study’s analysis).

Figure 3.8. Value chain phases and activities of offshore mining (with courtesy from Ecorys, 2014)

During the last decade, stage 1 and 2 have been developed up to a reasonable level to proceed

with the actual exploitation phase. Therefore, the technology for mining operations, stage 3, will

be considered here.

The state of technology can be assessed on the basis of Technology Readiness Levels (TRL) (Annex

3.4 Table 3.4). The TRL levels for offshore mining value chain has recently been assessed and

reported (Ecorys, 2014), and results from this study are summarized here.

No commercial offshore mining operations have been taken place yet, and especially the

techniques required on the sea bed and vertical transport are not operational yet (Ecorys, 2014).

The technology to be used depends mainly on the type of deposit. The extraction process for deep

sea minerals starts with the excavation. For nodules the proposed technique for excavation is by

making use of collectors, while for SMS deposits and crusts cutters are being developed. Some

processing may also take place on the sea bed. The TRL for proposed extraction technologies is

scored low, ranging from formulated concept (TRL 2) until TRL 5 (technology validated in relevant

environment). Hence, more development should take place before exploitation from the deep sea

bed can take place.

Also the vertical lifting is a critical part of the mining process. Air lift systems and especially

hydraulic systems seem most applicable for use in deep sea mining operations. However, TRL

levels for proposed lifting systems are scored 5 at the highest, and therefore further development

is required. Possibly, techniques being used in the offshore oil and gas sector (transport of drill

cuttings and mud) could be adjusted for use in ore transport.



Once raw material is transported to the surface, a working platform is required for further

handling. Support vessels or platforms are proposed as dispatching system, storage facility,

dewatering and on-board processing facility. Simple dewatering systems can easily be applied on

board of vessels and platforms, but further processing like concentrating ore and application of

metallurgical processing requires further development. Fixed platforms offer better opportunities

for processing than ships because comminution, the grinding to smaller particles, is performed by

large and heavy equipment.

For efficient use of ships and equipment, use of a platform in a central place with respect to the

mining locations should be envisaged. Platforms are very stable, and instability issues like on ships

are not important. The technology for such platforms in deep sea is well established in the oil-

industry.

A central platform where most of the processing is carried out is much more efficient, than

carrying-out processing on a ship. The ship transports the mined ore to the platform, and then

returns to the mining site taking back rock waste to be discarded. On the platform the ore is

processed, and concentrates can be shipped to on-shore locations.

Processes at the deep sea floor require lots of energy, e.g. for transport of raw material to the

surface and for processing and transport on board of vessels and platforms. Therefore, the use of

on-site renewable energy sources may be considered to reduce the supply and costs of fuels, and

emissions of CO2. Especially when combined with floating or fixed platforms, wave energy and

windfarms could possibly be used.

However, most developments are currently taking place on making available techniques applicable

in deep sea environments, rather than developing real new techniques and processes specifically

suitable for deep sea deployment. It seems therefore that higher OPEX is accepted to avoid higher

CAPEX.

3.7 Investment Annex 3.7 contains lists of tables detailing Capex, and Opex figures for the various ores discussed

in this report. Table 3.10 is copied below as a example and Table 3.11- 3.16 are listed in the

Annex3.7

Definite seabed material removal for commercial purposes at depths beyond -140 m of water

depth is still in a very embryonic stage and little or nothing is officially available on investment and

operational costs for offshore mining activities. In addition, having interviewed several companies,

it appears they are unwilling to share information. This is similar to other findings (EPRS, 2015). In

these sections general aspects influencing investment and return will be described.

3.7.1 Costs of offshore mining Looking at the economic viability of offshore mining in this context, Ecorys (2014) finds that:

SMS deposits are expected to show the highest commercial viability;

Nodules and cobalt crust are only marginally or not commercially feasible;

Key uncertainty regarding SMS deposits is that it assumes an operation of 15 years to

generate returns on investment, whereas most resources and proven reserves seem to



point to smaller sizes and a strain of operations on different locations needs to be

established. (SRK Consulting, 2010; Ecorys, 2014; EPRS, 2015).

Cost categories relate to the phases of the mining process: exploration, extraction, transportation

and processing and the related investment costs (Figure 3.8). It should be noted that in most cases

costs for exploration are not included in the cost calculations.

3.7.1.1 Costs for SMS deposits CAPEX would be estimated at some 300-400 M$ for a typical seafloor SMS deposits operation.

However based on actual costs developments for the Nautilus Solwara 1 operation are expected to

be significantly underestimated. In practice total CAPEX including exploration costs is estimated to

be closer to $ 1,000,000,000 (Table 3.10) (Ecorys, 2014), Demonstrating the difficulty of calculating

the business case the estimates of EPRS (2015) are given as well (Table 3.11). The CAPEX

(excluding processing is estimated at ~$ 400,000,000.

OPEX (including transport to shore) are assumed to range between 70-140 $/tonne crude ore

based on the above sources. By adding processing costs are expected to rise to 150-260 $/tonne

crude ore. Per tonne CAPEX costs are in the lower range of the OPEX (Table 3.10, Table 3.11).

For SMS deposits investments to improve revenues can be directed at both CAPEX and OPEX costs.

Table 3.10. CAPEX and OPEX costs according to Ecorys (2014), additionally recalculated to costs per tonne crude ore. 1: recalculated on other data from Ecorys.

SMS deposits Polymetallic Nodules Cobalt Crust

CAPEX ($) 1,000,000,000 1,200,000,000 600,000,000

Years of operation: 15 20 20

Linear depreciation $/yr: 66,666,667 60,000,000 30,000,000

Yearly production (tonnes crude ore): 1,300,000 2,000,000 450,0001

CAPEX per tonne crude ore($): 51 30 37

OPEX Cost including processing

$/tonne crude ore:

70 – 100 85 – 300 95 – 310

3.7.1.2 Costs for nodules CAPEX for nodules is estimated ~ 1,200 m$ (Ecorys, 2014; EPRS, 2015). Exploration costs are not

included in these figures. In interviews it was remarked that nodules mining is expected to be

more capital intensive than SMS deposit mining due to the larger depths. As a result an estimate

of $ 1,200,000,000 seems to be plausible. A more detailed estimate – recalculating the figures as

described in EPRS (2015) indicates a CAPEX cost of almost $ 1.800.000.000.

According to ERPS (2015) almost half of these capital investments are made up of investments in a

processing facility. Also for operational costs a wide range of estimates exists ranging from $ 85-



500/tonne). Again (operational) costs related to processing form an important cost component

(Table 3.10, Table 3.11).

3.7.1.3 Costs for cobalt crusts Only a single source has been assessed by Ecorys (2014). The same author has also estimated the

CAPEX and OPEX for nodule mining. CAPEX are expected to be some 50% of manganese nodule

mining and operational cost stand at 45%. However assumed production volumes (dry) in the

estimates for cobalt crusts stands at some 40% of manganese nodules which makes the CAPEX and

OPEX per tonne some 25% resp. 12.5% higher than for manganese nodules (Table 3.10).

For nodules and crusts, the best improvements of the costs seem to be in the OPEX.

3.7.1.4 Costs for phosphorites Namibian Marine Phosphate (NMP)28 estimates the further CAPEX for the whole project will

amount to approximately 326 million$. In addition there will be 50$ million OPEX that will be

spent on the project. Leviev's private company LL Namibia Phosphate (LLNP) plans investing $800

million in building a mining facility to produce about two million tons annually from an estimated

two billion tons at a depth of 300 meters.

3.7.1.5 Cost breakdown Despite a lot of documents are available on the subject, today, it’s hard to dig into the details of

the costs involved in offshore mining in order to pinpoint a target for innovation on the basis of

CAPEX or OPEX. This is due to the lack of uniformity in the data provided by different authors

concerning the CAPEX costs. In addition, for those data provided, there seems hardly any

differentiation highlighting a specific aspect that calls for prioritization in costs reduction.

The OPEX costs, determined by a.o. insurances, daily production, staff and crew costs, fuel-type

and fuel consumption, maintenance and repair costs, etc. also have only been reported within a

very wide cost-frame, (Ecorys, 2014). For OPEX, the doubtful estimates available seem to indicate

that there is no real aspect prevailing for innovation and costs reduction.

3.7.2 Revenue and gross profit estimates

3.7.2.1 SMS deposits and nodules Ecorys (2014) estimates that SMS deposits will be profitable at this moment due to the high

content in highly priced copper, gold and silver (and nodules only slightly profitable). EPRS (2015)

state that nodules are profitable. Some calculations are made on nodules and cobalt crusts in

order to get more insight how costs and revenues are allocated over the different metals. In our

approach we have attributed costs and revenues to the percentage contribution of copper, cobalt

and nickel in the ores (and the resulting amount of tonnes of processed metal per year) (see Table

3.12 till Table 3.16). Off course the sellers experience the total income of the three metals

together. In addition REEs and other metals could contribute also to the revenues. The calculations

are to be used as a sensitivity analysis in order to get a feeling what each metal contributes to the

gross profit.

The basic figures for these tables have been derived and calculated from different sources:

28 http://namphos.com/

http://namphos.com/



CAPEX costs for polymetallic nodules have been calculated on the basis of EPRS (2015 –

table 4.2): average CAPEX for mining system nodules (467 mn $) increased with average

capex for ore transfer (548 mn $) and processing (750 mn $) multiplied by a factor 1,175

for contingencies;

OPEX costs for polymetallic nodules have been obtained from Ecorys (2014 – Table 7.16)

and EPRS (2015 – table 4-2);

CAPEX costs for cobalt crust have been calculated on the basis of Ecorys (2014 – Table

7.16): increased with average capex processing (750 mn $). Contingencies were not

considered since it is not clear whether or not they have already been included in the

available figures;

OPEX costs for cobalt crust have been obtained from Ecorys (2014 – Table 7.16);

Concentration figures were taken from Hein et al. (2013 – Table 3), while unit rates for Cu,

Co and Ni were taken from infomine.com (current and historical rates).

Taking the calculations with current market prices, it becomes clear from Table 3.12 till Table 3.16

that copper and nickel have a major contribution to the costs and cobalt a minor contribution. For

the revenues, nickel has the largest contribution. Copper and cobalt each have less than half of the

contribution of nickel to the revenues. Only cobalt makes a gross profit in these calculations and

nickel is close (when calculating with a high OPEX of $ 290 per tonne nodules). With a high OPEX

($290 per tonne) offshore mining of CCZ nodules is not profitable according to these calculations.

Cobalt (clearly) and nickel (possibly) are two metals of interest. Copper impacts on the revenues in

a negative way. The actual selling price of the metal was compared to selling price for a break-

even situation for the offshore mining operations of nodules. The selling price should increase by

some 250 % for Cu and 20 % for Ni. A structural raise in Ni or more seems achievable given the

dynamics in price (Figure 3.14).

Cobalt influences significantly the revenues. Given the profitability of Co and it’s geopolitical

importance (just as the geopolitical importance of REE’s), the offshore mining of nodules could

become interesting in the future. Nickel could be an important co-factor to make the total

business case profitable.

3.7.2.2 Cobalt crust For cobalt crusts the same exercise was performed using the data of Ecorys (Table 3.16). Here

similar results were obtained that cobalt crusts cannot be exploited profitably. The major metal for

revenues is cobalt, with nickel at some distance. The gross profit is most influenced by copper

followed by cobalt. The calculations suggest that cobalt crust can hardly achieve a profitable

business case.

3.7.2.3 Phosphorites The mining licence of Namphos has been granted for an initial period of 20 years. Approximately 3

million tonnes of dry product for export are expected to be processed starting from year threat a

price of $125 per tonne this comes near a 7 to 7.5 billion$ for 20 years. It is claimed to be very

profitable. The internal rate of return (IRR) for Namibian Marine Phosphate project Sandpiper is



estimated at 26%29. Leviev's private company LL Namibia Phosphate (LLNP) plans investing $800

million in building a mining facility to produce about two million tons annually from an estimated

two billion tons at a depth of 300 meters. At a selling price of an estimated $125 /tonne, the

revenues are 250 m$ a year.

Chatham Rock Phosphate expects yearly revenues of 280m$ and a yearly profit of 60 m$ (Schilling

et al., 2013).

3.7.2.4 Gross value added The gross value added (GVA) is hard to determine for metallurgic ores since there is no

exploitation. But given a yearly turnover of 2.2 to 3.3 billion$ for some major global dredgers and

investments up to 2 bilion$ CAPEX for a 20-year concession and the yearly OPEX, offshore mining

can imply a substantial part of yearly investments (446 m$ on a yearly basis, ~14 to 20% of the

revenues on yearly basis). Global dredgers have net profits of 6-9%. One can imagine that for

highly risk bearing offshore mining profit percentages should be much higher. The GVA will be

higher than this 14-20% investment on the revenues, but how much higher? Starting from this

~14-20% yearly costs for one concession, offshore mining seems substantial for a globally

operating dredger. For just one concession, investment and associated risks and chances could be

judged as substantial.

3.7.3 Aspects that hamper investment Here some aspects hampering investments are discussed.

3.7.3.1 Processing of all ores As mentioned before, copper, gold and silver are the main metals of interest for SMS deposits,

cobalt, and nickel (and copper to a very limited extend) for nodules. Crusts seem too costly at this

moment. Apart from the overall uncertainty within the assumptions, a specific uncertainty exists

regarding potential revenue streams for manganese, which is abundantly present in these latter

two types of deposits, but for which the commercial viability of the additional processing costs are

highly uncertain. This directly points to the importance of further efficiency increases not only in

mining itself but in particular in processing as this would allow additional revenue streams (also

potentially including REEs). Finally obviously, scarcity and increasing prices will have a direct

impact on the commercial viability of offshore mining operations, although this will obviously also

trigger further terrestrial (including recycling) developments. Offshore mining operations in itself

are not expected to directly influence global prices of most metals, except for cobalt. This will limit

the number of operations that can be exploited in parallel in crust and nodules to avoid boom and

bust developments.

3.7.3.2 Environmental issues Pioneering in this field involve major investments to make, not without financial risk. Given the

attention the offshore mining industry receives from stakeholders, none of the companies would

be willing to add risks to their investment by developing environmentally harming techniques.

Before licenses are issued, environmental impact assessments need to be approved, including the

techniques and mitigating actions concerning the environment. Therefore, it can be expected that

the technologies being developed at the moment are technologies that will mitigate

environmental impact as much as possible. Acting not environmentally friendly is per se non-

29 http://uk.reuters.com/article/idUS232072+12-Nov-2010+MW20101112

http://uk.reuters.com/article/idUS232072+12-Nov-2010+MW20101112



economically attractive, as the risk is too high that the projects will be cancelled or licenses will be

retracted. This is illustrated with the phosphorite cases.

3.7.4 Concluding on investment Currently, there is this vicious circle of capital intensive investments and operations in challenging

and still unknown environments resulting in a whole spectrum of financial models which has to be

broken. In view of high investment, technological challenges and economic considerations,

private-public cooperation could be an effective means to make offshore mining a success.

Market driven technological development is hampered by the large uncertainties and ample

availability of land based ores and recycling. Only when governments invest seriously in certain

technological developments in order to make offshore mining cheaper and with less impact, this

sector can grow to a more stable resource rather than an event driven market.

The major incentive will be the ore price. When especially nickel and cobalt prices will rise

structurally, offshore mining on nodules can be achievable.

Of minor importance is the operational side (both CAPEX and OPEX). But when aspiring to optimize

here, the most gain can be attained in reducing operational costs like the amount of energy

required for the actual mining, the transport from site to shore. Reducing volume by on site

processing of ores could aid giving at the same time a potential environmental problem. In

addition one could expect that these expensive wastes can become valuable in the future when

processing techniques are improved. Does one dump the current worthless tailings or does one

secure them at high transport costs for an uncertain future.

3.8 Lifecycle analysis The lifecycle analysis (LCA) of each sector within WP4 should give an account of historical barriers

to development; how they were overcome, or how they prevented the sector from developing.

This section gives the conclusions of a more elaborate analysis which is given in Annex 3.8.

The general value chain of nearshore and offshore mining is given in Figure 3.8. For each sector

and segment information for the LCA is given in throughout the document. Table 3.17, Table 3.18

and Table 3.19 combine and summarise all that information. Per subsector more information on

the most conspicuous features is given in the next sections.

3.8.1 LCA of manganese nodules, seafloor massive sulphides and cobalt crusts The LCAs of nodules, SMS deposits and cobalt crusts are discussed in combination since they

experience the same driving forces (Table 3.17).

The main driver of the interest in offshore mining of metals seems the high market prices of the

resources at stake at a certain moment in combination with the high exploitation costs. Innovation

is expected to reduce the exploitation costs. Since these prices are highly dynamic and innovation

costs are high and time consuming, major developments in activities are not expected at the

moment (except for a few exceptions with high concentrations of resources).



3.8.2 LCA of phosphorites A first remark is that extensive reviews are scarce on marine phosphorite mining. Only limited

information is available. Most informative are websites (see Table 3.18). Given the high potential

of this resource a more elaborate study is welcome.

Contrary to the metals, phosphorites can have valid business cases in the three projects in Namibia

(two companies), Don Diego, Mexico and Chatham rise New Zealand. Several aspects make these

business cases alive i) the large local demand for phosphates (Don Diego, 2015) ii) high global

market prices iii) reasonable exploitation costs iv) potential export and a share in the global

market (Benkenstein, 2014). Whereas they are imported now, rich relative shallow concessions

are available and investors are willing to make the necessary high start-up investments. This is

different form 2004 when marine phosphorite mining was not considered viable yet (United

Nations, 2004). Amongst other reasons, problems with land based ore qualities, increased

demands, geopolitical concerns, (de Ridder et al., 2012), a more stabilized higher price (Figure

3.20) and presumably technological developments will have altered the business case.

For phosphorites the business case seems more viable: large concessions can be found in the

easily reachable nearshore and the shallow offshore. This enables the use of standard equipment

what only has to be adapted to a minor extend. As a result preparations have been made to

exploit the resources with substantial interest expectations (like being able to deliver 10% of the

global market for phosphates). Environmental considerations have blocked the actual exploitation

until further evaluations.

3.8.3 LCA of gas hydrates Table 3.19 gives the overview of the LCA. According to current estimates, global hydrate deposits

contain about 10 times more methane gas than conventional natural gas deposits.

There is a strong urge to make the exploitation of gas hydrates viable. Especially highly developed

countries without own sources of energy are investing. The technology needs to be developed

since it is a whole new substance type for exploitation. There are some doubts whether it can be

exploited in a profitable approach. It remains to be seen whether hydrate extraction at great

depths is economically viable at all.

3.9 Discussion

3.9.1 Literature availability For metallurgic ores a lot of literature and a broad range of information is available on the actual

general distributions in regions and observations as well as synthesizing overviewing publications

also scientific analysis.

Studies on economic viability are scarce. In addition the actual exploitation has not been done on a

structural scale. Different authors use different starting points and assumptions which makes it

difficult to compare the different calculations. See e.g. also the comments in Ecorys (2014) and

EPRS (2015).

For gas hydrates and phosphorites information is less available. Here more in depth analysis of

these subsectors would be advisable.



3.9.2 Precision in geographic distribution There is a lack of data on the precise distribution of the ores: where would one precisely start to

exploit. That is a necessary step from regions to a defined area of exploitation with strict

boundaries to enhance profitability. The exploration concessions are intended to resolve this issue

for a limited, most promising number of areas.

3.9.3 Difficult to calculate profitability For the subsectors of metallurgic mining and gas hydrates it is difficult to calculate profitability

using available data. Firstly we are discussing a hypothetical situation; no long term offshore

mining has been done. Different authors give different figures based on different approaches,

although a similar trend is observed each time. These estimates are hampered due to the fact that

the enterprises are not willing to share details (our interview results and EPRS, 2015). Take also

Schulte (2013) where the crucial details are in an unavailable company publication.

In this sense, the sensitivity analysis we have performed on costs and revenues (Table 3.12 to

Table 3.16) are indicative on the absolute amounts. They are to be used for information of the

ratios between the metals. For that purpose they are accurate enough because the ratios are

determined by weight% and market prices (hard enough numbers).

Most technology for exploration and exploitation of nodules seems ready to be deployed although

it could be improved. The mobilisation of crusts is a topic of debate. On site processing to upgrade

ores seems essential for open ocean concessions to reduce costs (platforms or large processing

ships like proposed for Don Diego). The business model is not yet ready for this. The logistics and

costs can be enormous.

3.9.4 Legislation, EIAs and social acceptance The complex of legislation, EIAs, economic impact and social acceptance is still unresolved. The

phosphorites-initiatives in national waters that are ready to start, are blocked by major discussion

on the EIAs, the potential economic impacts and the social acceptance.

For the Area, there currently is no exploitation legislation. In addition there is an enormous lack on

ecological data and science in order to estimate the impacts.

3.9.5 Technology Most technology for exploration and exploitation for nodules seems ready to be used although the

OPEX could be very high. As mentioned risks for further development seem too high. The

mobilisation of crusts is under debate.

The most critical need for technological development is for gas hydrates. There is a major need for

the development of mobilisation (extraction) from the sands, the very starting point for

exploitation. Can sufficient gas hydrates be mobilised form the matrix in order to have acceptable

and exploitable amounts.

3.9.6 Division in sectors A point of discussion could be the division of the sector in the two sectors nearshore mining and

offshore mining (based on distance, depth and differences in technology) and then into the

subsectors based on type of ore. An alternative could be starting directly with sectors based on ore

type. However, ores can have different depths for a given ore and thereby different business

models. By starting with the distinction based on geology and techniques it is made directly clear



what is the basis of the feasibility of a potential exploitation. Therefor the current division prevails

rather than starting with the ores as principle of division.

A division based on metals is difficult since the metallurgic ores consist of different metals which

also differ per region (Hein & Koschinsky, 2013; Hein et al., 2013).

3.10 Conclusion Most studies focus on just metallurgic ores. This studies overviews metal ores (the most studied

subsectors) and polyphosphorites and gas hydrates. The comparison of the different subsectors

reveals a complete overview on the different stages of development. Gas hydrates represent the

very starting point: the basic techniques need and receive government support in order to get

started. Polyphosphorites are at the other end of the spectrum: however techniques and business

cases are well enough developed to start the exploitation. The metal ore subsectors are in

between: on the one hand it could start (Nautilus) and on the other hand companies are very

hesitant to start.

3.10.1 MARIBE relevance Contrary to other sectors discussed in the MARIBE the resources for the subsectors can hardly be

found in one of the basins. At some locations potentially commercially exploitable sources can be

found but the actual exploitation is not mentioned. The sector is of importance though on a

European scale since the EU has some major operators that typically act on a global scale where

the resources are also for a global market. Knowledge and insight in this important sector (how to

successfully manage and develop offshore activities and uncertainties, in a global playing field) is

an important /catalyst for other sectors. That is not an objection. It is rather a stimulus because of

the potential contribution offshore mining can make to strengthening the European economy.

3.10.2 Market trends Nearshore and offshore mining is in renewed interest. The principal drivers of this renewed

interest are largely the result of a combination of (1) technological advances in marine mining and

processing, (2) a dramatic increase in demand for metals primarily fuelled by emerging economies,

(3) leading to a rise in metal prices, (4) a decline in the grade of land-based nickel, copper and

cobalt sulphide deposits being mined and developed. Also (5) an increased demand and reduced

supply of special metals and REEs that, which are used in modern technical applications such as

renewable energy and hybrid motor vehicles. REEs are mined in countries with an unstable

political regime and are therefore of geopolitical concern.

The two main drivers on viability of offshore mining are:

1. The potential to sell extracted ores at market prices or;

2. To reduce the dependency on import of essential drivers of the economy (for reasons of

economics (the national GDP) or geopolitical reasons.

3.10.2.1 Metallurgic ores Currently investments (CAPEX) and operational costs (OPEX) are too high and market prices are

too low to make offshore mining profitable in most cases (Schutte, 2013; Ecorys, 2014; EPRS,

2015; section 3.7.2). The impact of market prices is illustrated by the fact that each time land



based metal prices rice, there is an interest for offshore mining, some actual mining on easy

exploitable concessions takes place (the 70’s, the mid 2000, take e.g. Figure 3.1, Figure 3.11, Figure

3.17) and the moment world prices drop e.g. end 2000’s, interest in exploitation is diminished.

In addition land based ores are produced cheaper and there is still ample reserves, despite

diminishing grades (Table 3.1, Figure 3.2). Only some SMS concessions seem worthwhile (due to

high gold cgrades although there is serious doubt if these are large enough (SRK consulting, 2010;

Ecorys, 2014; EPRS, 2015).

Meanwhile technological development and innovation will advance. When both this innovation

will have reduced exploitation costs and ore prices have risen sufficiently to make offshore mining

profitable, is uncertain. Also recycling can become a source hampering the potential.

Although offshore reserves are enormous, it seems that metallurgic ores will only be exploited to

large extends if land based ores are almost depleted or for serious geopolitical reasons or if

significant innovations have reduced the exploitation costs. Only when there is a clear vision and

outlook on stability (and increase) of the market price developments as e.g. for Phosphorites and

diamonds or for easily accessible concessions with very high grade ores), it seems worth the high

investments to innovate intensively. In summary, with metallurgic ores one can state: “the ores

are extractable, it is only waiting for better technology to make it cheaper”.

3.10.2.2 Phosphorites In this sense phosphorites seem a case where exploitation costs and market prices do have met on

a long term base (Figure 3.20). In 2004 phosphorites were not expected to be profitable

exploitable (given the low prices, United Nations, 2004; Scott et al., 2008). At this moment we see

substantial higher ore prices and also three regions with very specific initiatives which are only

hampered by environmental and socio economic discussions. NB: note that the concessions are at

lower depths so implying lower exploitations costs. This subsector is ready to take off.

3.10.2.3 Gas hydrates Gas hydrates are a major interest especially for countries that import most of their energy. This is

a field in development where most of the technology is not ready yet. With gas hydrates it is still

uncertain if it can be exploited at commercially interesting amounts.

3.10.3 Offshore mining sector industry structure

3.10.3.1 Centres of activity Offshore mining and adapted nearshore mining represent a global market. Firstly the resources

are spread all over the world in both the deeper national waters and the international seas and

oceans. Because it is open seas and oceans it is inherently also a high capital sector. As mentioned

the most interesting sites for exploration are not yet in European waters or MARIBE basins. Some

sites with crust might be interesting on the long run. The maps in Figure 3.3 until Figure 3.7 show

the wide distributions of the ores considered.

3.10.3.2 Degree of integration and company structure All commercial activities on seas and oceans demand high-end knowledge, extensive experience

and large investments. In the setting adapted nearshore and offshore mining represent an

extremely demanding situation with not only dealing with the very harsh conditions and



remoteness of the open ocean but also the extreme environment of the offshore. Only established

companies can operate here with a long history of operation. These companies operate in an

international, global setting. Europe has some major players in the fields: renowned international

dredgers and offshore-installation producers.

Given the complexity sector high levels of specialised knowledge from diverse fields are obligatory.

So companies form networks by having economic interests in each other (shares) thereby securing

the necessary knowledge of offshore logistics, offshore exploration and exploitation techniques,

dredging, local governance, procedures and stakeholders etc. Horizontal and vertical integration

and alliances seem the way to secure that required complex of knowledge. Often consortia

establish new firms as a means to delimit investments and let these initiatives prove their own

viability. It is also a form of juridical protection (IHC and DEME). Another form encountered is to

have shares and investments in each other (see e.g. Boskalis).

Governmental institutes play an important role since a large part of the concessions is issued to

governments.

For Phosphorites, exploitation is hampered by environmental concerns. Due to the fact that

investments and operational costs are lower (due to the more shallow concessions) and global

market prices are higher.

The subsector of gas hydrates is still in the stage of developing the essential techniques. Especially

the extraction of the gas hydrates out of the soil is difficult with current techniques.

3.10.3.3 TTR, transformational technologies and innovation In the value chain only exploration is at TTR level 7 – 9 whereas other phases of the value chain are

still at TTR 1-5 (Ecorys, 2014). Innovation is needed on mobilising the substrates and the lifting. For

mobilising there is a need for techniques with less impact. In terms of operational time especially

improvement in the lifting seems important.

Since there is no stimulus for innovation from exploitation itself, long term innovation had rather

be stimulated by governmental non-competitive investments.

3.10.3.4 Rules and regulations For international waters the ISA has been established to regulate and administer seabed mining.

The ISA is mandated by the LOSC to adopt rules and regulations to ensure that prospecting,

exploration for and exploitation of minerals in the Area is conducted in accordance with Part XI

and in respect of the environment. The ISA has developed regulations, including provisions relating

to environmental protection, to govern exploration, but the regulatory framework for exploitation

is still under draft. In its regulations it also provides protection of the exploitation rights of

underdeveloped countries which do not have the capability yet to exploit the offshore.

For national waters the nations are sovereign and can regulate seabed mining occurring on their

continental shelf. However, in doing so, they also have to respect the international obligations

deriving from global and regional treaty law. Any initiator needs to orient himself to that extent. A

strategy used is to buy in that local knowledge through a local firm.

3.10.3.5 The social and environmental aspects As mentioned the ISA safeguards the rights for developing countries (sharing in the profits).



For coastal nations offshore mining could mean a serious source of income. Some considerations

need to be addressed. Important questions about the social and environmental impacts and

perceived risks of offshore mining remain to be solved. Also an offshore concession can only be

exploited until it is exhausted. Then the state has lost an important source for substantial income.

Before granting concessions, ideas should be developed on mineral funds in order to safeguard

prolonged income for state and populations.

An important aspect is the general lack of data to make thorough environmental impact

assessments (SPC 2013a,b,c,d; Lange et al., 2014; Ecorys, 2014). The Phosphorite mining examples

show how are uncertainties in the available information can lead to major delay of the

exploitation. Integrated governance based on an ecosystem approach will be necessary in

developing offshore mineral policies. Ecosystem-based oceans management strategies, laws, and

regulation for offshore mining would include provisions for monitoring, protected areas and a

precautionary approach in order to minimize risks.

3.10.3.6 Working environment Offshore mining does not represent a major contribution in a quantitative sense. The number of

expected jobs is about 120. In a qualitative sense offshore mining could be a major catalyst for

innovation and thereby stimulate the offshore industry and general economy.

3.10.3.7 Investment Taking the overviews in Table 3.12 and Annex 3.7, investments associated with offshore mining

are large. For e.g. a global operating dredger investments are estimated at an annual 14-20% of

the yearly companies revenues for one concession. This implies that offshore mining could have a

significant contribution to the profits of a company. It also suggests that the investments are that

large (and also risky given the offshore circumstances) that it is likely more partners or investors

will be involved.

3.10.3.8 LCA For the metal ores the limiting factor is the low global market prices of the metals in relation to

the investments and operational costs (CAPEX and OPEX). Only for some concessions exploitation

could doubtfully be profitable.

Phosphorites seem profitable, only they are hampered by an environmental discussion.

Gas hydrates are in the early stages of technological development. Heavy governmental

involvement is necessary in order to develop the exploitation of this resource.

3.10.4 Lessons to be learned by other MARIBE sectors The sector is characterized by continuous balancing between the complex of investments,

innovation, courage versus carefulness and caution. Offshore mining can offer chances, but it is

also risky. The price cycles of the metallurgic resources shown that only during limited periods the

revenues can outweigh the costs of exploitation. This hampers large investment in this field of

metallurgic resources and thereby full development. For Phosphorites the market seems ready for

adapted nearshore mining. And even there we see both a careful approach and an obligation to go

in full. E.g. Boskalis chooses carefully for “slightly adapted” TSHDs for exploitation (at higher

exploitation costs) rather than start high end innovations like ROVs (in which it does have some

experience; Cronan, 2000). On the other hand in Namibia companies have to go in full establishing

e.g. their own processing factories. And then again, given the perspectives of the expected



revenues US$300m a year during 30 years, a total of investments in factories etc. of US$800m

seem a good investment with very high expected revenues.

3.10.5 Potential EU stimulus for the sector To stimulate the sector further a first step would be that all European states become a sponsoring

state by installing legislation for international offshore mining. Perhaps an EU offshore mining

framework could be established. Next the EU and participating states need to elaborate on aspects

like national and international ocean governance policies, planning frameworks such as marine

spatial planning, and institutional structures that would facilitate the inter-departmental co-

operation needed to respond to the divergent and increasingly complex demands placed on the

marine environments. By being a sponsoring state, states can obtain concessions for exploration

e.g. using knowledge institutes as a license holder and then organise precompetitive collaboration

between investors operators, knowledge institutes and stakeholders. Science can serve as bonding

tool. Given the uncertainties, the sector seems unwilling to do major investments in the necessary

innovations to improve efficiency and effectiveness of the exploration techniques while ate the

same time impacts need to be reduced in an integral improvement process. In addition the

governments and EU should invest in all aspects of EIAs: monitoring and describing the ecosystem

functioning and estimating impacts. In addition attention should be paid to the genetic treasure

(biodiversity) that can be encountered and be exploited.

3.11 References Allsopp, M., Miller, C., Atkins, R., Rocliffe R., Tabor, I., Santillo D., Johnston, P., (2013). Review of

the Current State of Development and the Potential for Environmental Impacts of Seabed Mining Operations. Greenpeace Research Laboratories Technical Report (Review) 03-2013: 50pp.

Baturin, G. N., Bezrukov P. L., (1979). Phosphorites on the sea floor and their origin. Marine Geology 31: 317-332.

Benkenstein, A., (2014) Seabed Mining: Lessons from the Namibian Experience, SAIIA Policy Briefing No 87, April 2014.

Bertram C., Krätschell A., O'Brien K., Brückmann W., Proelss A., Rehdanz K. (2011). Metalliferous sediments in the Atlantis II Deep—Assessing the geological and economic resource potential and legal constraints. Resources Policy 36: 315-329.

Boschen, R. E., Rowden, A. A., Clark, M. R., Gardner, J. P. A., (2013) Mining of deep-sea seafloor massive sulfides: a review of the deposits, their benthic communities, impacts from mining, regulatory frameworks and management strategies. Ocean and Coastal Management 84: 54–67.

Boswell, R., Collett, T. S., (2011). Current perspectives on gas hydrate resources. Energy and Environmental Science 4: 1206-1215.

Callarotti, R. C., (2011). Energy Return on Energy Invested (EROI) for the Electrical Heating of Methane Hydrate Reservoirs. Sustainability 3: 2105-2114; doi:10.3390/su3112105.

Conceição, P., Mirão, J., Madureira, P., Costa, R. (2014). Fe-Mn crusts from the Central Atlantic. Technical Presentations Harvesting Seabed Mineral Resources in Harmony with Nature. UMI 2014, Portugal: pp 4.

Gonzalez, F.J., Somoza L., Hein J.R., Medialdea T., León R., Urgorri V., Reyes J., Antonio Martín-Rubí J.(2016). Phosphorites, Co-rich Mn nodules and Fe-Mn crusts from Galicia Bank, NE Atlantic: Reflections of Cenozoic tectonics and paleoceanography. Geochem. Geophys. Geosyst. 1525-2027: 1-29. DOI: 10.1002/2015HC005861.

Cronan, D. S., (Ed.) (2000). Handbook of Marine Mineral Deposits, CRC Press, London, Boca Raton.



de Ridder, M., de Jong, S., Polchar, J., Lingemann, S., (2012). Risks and Opportunities in the Global Phosphate Rock Market. The Hague Centre for Strategic Studies (HCSS) Rapport No 17 | 12 | 12. ISBN/EAN: 978-94-91040-69-6.

Devey, C. W., ed and Shipboard scientific party. (2015) RV SONNE Fahrtbericht / Cruise Report SO237 Vema-TRANSIT : bathymetry of the Vema-Fracture-Zone and Puerto Rico TRench and Abyssal AtlaNtic BiodiverSITy Study, Las Palmas (Spain) - Santo Domingo (Dom. Rep.) 14.12.14 - 26.01.15 GEOMAR Report, N.Ser. 023 . GEOMAR Helmholtz-Zentrum für Ozeanforschung Kiel, Kiel, 130 pp. DOI 10.3289/GEOMAR_REP_NS_23_2015.

Don Diego (2015). Feeding the future, Environmental impact assessment. Non technical executive summary. http://www.dondiego.mx/downloads/ (d.d 08-07-2015).

Don Diego Factsheet http://www.dondiego.mx/downloads/ (d.d 08-07-2015). ECB (2014). ECB Monthly Bulletin. October 2014. Ecorys (2014). Study to investigate the state of knowledge of deep-sea mining. Final Report under

FWC MARE/2012/06 - SC E1/2013/04. EPRS (2015). Deep-Seabed exploitation - tackling economic, environmental and societal

challenges. european parliamentary research service scientific foresight unit (Stoa) PE 547.401, 92 pags.

Franks, D. M., (2011). Management of the social impacts of mining. Society for Mining, Metallurgy and Exploration, SME Mining Engineering Handbook, 3rd ed., pp 1817-1825, Littleton, Colorado.

Gaspar, L. (1982). Fosforites da Margem Continental Portuguesa. Alguns Aspectos Geoquímicos, Bol. Soc. Geol. Portugal 23: 79-90.

Global Ocean Commission (2013). A series of papers on policy options, prepared for the third meeting of the Global Ocean Commission, November 2013: Policy Options Paper # 5: Strengthening deep seabed mining regulation. Global Ocean Commission. http://www.globaloceancommission.org/wp-content/uploads/GOC-paper05-seabed-mining.pdf

Gurney, J. J., Levinson, A. A., Stuart Smith, H., (1991). Marine Mining of Diamonds off the West Coast of Southern Africa Marine Mining of Diamonds. Gems & Gemology 27(4): 206-219.

Hannington, M. D., Jamieson, J., Monecke, T., Petersen, S., (2010). Modern sea-floor massive sulfides and base metal resources: toward an estimate of global sea-floor massive sulfide potential. Society of Economic Geologists Special Publication 15, 317-338.

Hannington, M. D., Jamieson, J., Monecke, T., Petersen, S., Beaulieu, S., (2011). The abundance of seafloor massive sulfide deposits. Geology 39, 1155-1158.

Hein, J., Mizell, K., Koschinsky, A., Conrad, T., (2013). Deep-ocean mineral deposits as a source of critical metals for high- and green-technology applications: comparison with land-based resources. Ore Geology Review 51: 1-14.

Hein, J. R., Koschinsky, A., (2013). Deep-ocean ferromanganese crusts and nodules. In: Scott S. (ed.) Treatise on Geochemistry 2nd edition, 273-291.

Hein, J.R., Spinardi F., Okamoto N., Mizell K., Thorburn D., Tawake A. (2015). Critical metals in manganese nodules from the Cook Islands EEZ, abundances and distributions, Ore Geol. Rev. 68: 97–116.

ISA (2015). Discussion Paper on the Development and Implementation of a payment mechanism in the Area for consideration by members of the Authority and all stakeholders, published in March 2015 by the ISA, available at https://www.isa.org.jm/files/documents/EN/Survey/DPaper-FinMech.pdf.

Kerr, S., Johnson, K., (2015) Maribe WP4: Identifying and Describing Business Lifecycle Stages. Version 1.1 Briefing paper MARIBE.

Lange, E., Petersen, S., Rüpke, L., Söding, E., Wallmann, K. (eds.) (2014). “World Ocean Review 3. Marine Resources: Opportunities and Risks, 165 Pages, ISBN 978-3-86648-221-0.



Laurila, T.E., Hannington M.D., Leybourne M., Petersen S., Devey C.W., Garbe-Schonberg D. (2015). New insights into the mineralogy of the Atlantis II Deep metalliferous sediments, Red Sea, Geochem. Geophys. Geosyst.: 16, 4449–4478, doi:10.1002/2015GC006010.

Liu, J. P., Milliman, J. D., Gao, S., Cheng, P., (2004). Holocene development of the Yellow River's subaqueous delta, North Yellow Sea. Marine geology 209: 45-67.

Marques A.F.A., Scott S.D. (2011). Seafloor massive sulfide (SMS) exploration in the Azores. Society of Mining Engineers Annual Meeting, Denver, Preprint 11-306, 3 pp.

Muiños, SB, Hein, JR, Frank, M, Monteiro, JH, Gaspar, L, Conrad, T, Pereira, HG, Abrantes, F (2013). Deep-sea Fe-Mn Crusts from the Northeast Atlantic Ocean: Composition and Resource Considerations. Marine Georesources & Geotechnology 31: 40-70.

Mudd, G. M., Weng, Z., Jowitt, S. M., (2013). A detailed assessment of global Cu resource trends and endowments. Economic Geology 108(5), 1163-1183.

Ortega, A. (Ed.)(2014). Towards Zero Impact of Deep Sea Offshore Projects - An assessment framework for future environmental studies of deep-sea and offshore mining projects. Report IHC Merwede.

Perez-Novoa, C., Sadzawka, A., (2014). Chile Strategy. BTGP actual. Equity Research Chile Mining & Metals SectorNote, 23 December 2014.

Petersen S., Krätschell A., Augustin N., Jamieson J., Hein J.R., Hannington M.D. (2016). News from the seabed – Geological characteristics and resource potential of deep-sea mineral resources. Marine Policy 70:175-187.

Rogers, A. D., Brierley, A., Croot, P., Cunha, M. R., Danovaro, R., Devey, C., Hoel, A. H., Ruhl, H. A., Sarradin, P-M., Trevisanut, S., van den Hove, S., Vieira, H., Visbeck, M., (2015) Delving Deeper: Critical challenges for 21st century deep-sea research. Larkin K.E., Donaldson K., McDonough N. (Eds.) Position Paper 22 of the European MarineBoard, Ostend, Belgium. 224 pp. ISBN 978-94-920431-1-5.

Schilling, C., Clough, P., Zuccollo, J., (2013). Economic assessment of Chatham Rock Phosphate. Input to the Environmental Impact Assessment. Final report to Chatham Rock Phosphate Ltd.

Schulte, S.A., (2013). Vertical transport methods for Deep Sea Mining. Delft University of Technology, Section of Dredging Engineering. Thesis version 2.0 June 19, 2013.

Scott, S., Atmanand, M. A., Batchelor, D., Finkl, C., Garnett, R., Goodden, R., Hein, J., Heydon, D., Hobbs, C., Morgan, C., Rona, P., Surawardi, N., (2008). Mineral Deposits in the sea: Second report of the ECOR (Engineering Committee on Oceanic Resources) Panel on Marine Mining, London, October 2008, 36 pp. (http://oceanicresources-ecor.amc.edu.au).

Siesser, W.G., Dingle, R.V. (1981). Tertiary sea-level movements around southern Africa. Journal of Geology 89: 83-96.

SPC (2013a). Deep Sea Minerals: Sea-Floor Massive Sulphides, a physical, biological, environmental, and technical review. Baker, E., and Beaudoin, Y. (Eds.) Vol. 1A, Secretariat of the Pacific Community.

SPC (2013b) Deep Sea Minerals: Manganese Nodules, a physical, biological, environmental, and technical review. Baker, E., and Beaudoin, Y. (Eds.) Vol. 1B, SPC Secretariat of the Pacific Community.

SPC (2013c) Deep Sea Minerals: Cobaltrich Ferromanganese Crusts, a physical, biological, environmental, and technical review. Vol. 1C, SPC Secretariat of the Pacific Community.

SPC (2013d). Deep Sea Minerals: Deep Sea Minerals and the Green Economy. Baker E., Beaudoin Y. (Eds.) Secretariat of the Pacific Community Vol. 2.

SRK Consulting (2010). Offshore Production System Definition and Cost Study. SRK Project NAT005. Document No: SL01-NSG-XSR-RPT-7105-001.

Thiel H., Karbe L., Weikert H. (2013). Environmental Risks of Mining Metalliferous Muds in the Atlantis II Deep Red Sea. Conference Paper February 2013, Springer Berlin Heidelberg, Berlin, Heidelberg http://dx.doi.org/10.1007/978-3-662-45201-1_15.

Tully, S. (2006). "Welcome to the Dead Zone". Fortune (May 5, 2006). http://money.cnn.com/2006/05/03/news/economy/realestateguide_fortune/ d.d. 09-11-15.



United Nations (2004). Marine Mineral Resources. Scientific Advances and Economic Perspectives. A Joint Publication by the United Nations Division for Ocean Affairs and the Law of the Sea, Office of Legal Affairs, and the International Seabed Authority. ISBN: 976-610-712-2.

USGS (2012). Metal Prices in the United States Through 2010. Scientific Investigations Report 2012–5188.

USGS (2015), Mineral commodity summaries 2015: U.S. Geological Survey, 196 p., http://dx.doi.org/10.3133/70140094. ISBN 978–1–4113–3877–7

World Bank (2012). Global economic prospects: Uncertainties and vulnerabilities. The International Bank for Reconstruction and Development. The World Bank, Washington, DC.

This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 652629

Annex 3.1 - Physical demarcation and zoning in nearshore and offshore mining

Sectors Physical

demarcation

Depth

zones

Subsectors Technological status LIFECYCLE STAGE Occurrence Most likely zone

to be mined

References

nearshore

mining

regular

nearshore

mining

0- -80 m sand & gravel Well diffused technical

knowhow: quest for

cost reduction

Mature from - 20 to - 300

m

from 0 to - 300 m

Ore sands Mature from -20 to -50 m from 0 to -80 m Scott et al., 2008

precious stones Mature from - 0 to - 300

m

from -15 to -80

m

Gurney et al.,

1991, Scott et al.,

2008

Phosphorite Development/

Embryonic

from - 5 to - 80 m from -50 to -80

m

Don Diego, 2015

Adapted

nearshore

mining

from -80

to -200 m

Phosphorite Standardisation of

technology, process

innovation

Embryonic from - 80 to - 200

m

from -80 to -500

m

Scott et al. 2008

precious stones Standardisation of

technology, process

innovation

Embryonic from - 80 to - 200

m

from -80 to -500

m

Scott et al., 2008

Sea level

fluctuations on

geological scale

± -130 m Liu et al., 2004

Edge

Continental

shelf: start deep

sea

± -200 m Rogers et al.,

2015


Depth of river

influence

depending

on tectonic

plate

movement

± -500 m Siesser & Dingle

1981, Gurney et

al., 1991

offshore mining Undeep

offshore

mining

from -200

m to -500

Phosphorite Possible with

adaptation of existing

ships and

technologies.

Innovation could help

in reducing costs and

impact, increasing

efficiency and

effectiveness

Development/

Embryonic

from - 200 to -

500 m

from - 200 to -

500 m

Scott et al., 2008,

Schulte, 2013

exploitation

possible with

limited

investment

calculated

till -500 m

sands, nodules, not

crusts

Posible with

adaptation of existing

ships and

technologies. Low

investment, high

exploitation costs,

lower yield

Development/

Embryonic

till -500m,

beyond?

from -80 to -500

m

Schulte, 2013

Deep

offshore

mining

from -500

m

Phosphorite Innovation could help

in reducing costs and

impact

Embryonic from - 80 to -

3700 m

Scott et al. 2008,

Baturin, &

Bezrukov, 1979

Polymetallic

(manganese) nodules

Technology in

development

Development/Embryoni

c

from -3500 to -

6500 m

from -4100 to -

4200 m

Hein et al. 2013.

Ecorys 2014

Polymetallic sulphides Technology in

development


c

from -150 to -

5000 m

from -150 to -

1800 m

Boschen et al.

2013

Cobalt crusts Technology in

development


c

from -400 to -

7000 m

from -800 to -

2500 m

Hein et al. 2013.


Gas hydrates Technology in

development


c

from -300 to -

3000 m

from -500 to -

3000 m

Lange et al., 2014

Sulphite Ore sands not considered from -2000 to -

3000 m

Schulte, 2013

REE muds not considered from -3500 to -

6000 m

Schulte, 2013

Figure 3.9. The ocean is characterized by distinct zones, the transitions of which are marked by thermal or pressure

interfaces. (http://www.deepseanews.com/2011/01/deep-sea-101-introduction-and-what-is-the-deep-sea/)



Table 3.4 Metal resources and reserves at land for crusts and nodules (millions of tonnes) and an example of sulphide type deposits (Hein et al., 2013). When marine based stocks have a ratio of ≥2 with (economically minable) land based stocks, the highest figures are highlighted in bold. Also estimated amount of SMS deposits are given without Atlantis II and the estimates from Sulphide rich sediments Atlantis II separately. 1 Estimate based on booked reserves in mining companies http://www.bullionmark.com.au/how-much-gold-is-there d.d. 09-09-2015. 2 : USGS (2015). 3 : http://www.visualcapitalist.com/global-gold-mine-and-deposit-rankings-2013/ d.d. 09-09-2015. 4: Hannington et al. (2010, 2011): estimated total 600 millions of tonnes. In Hannington et al. (2011) copper and zinc are presented summed together 30 millions of tonnes. Based on Hannington et al. (2010) a simplified 1:2 Cu: ZN ratio is presented here. These figures exclude Atlantis II. 5: Bertram et al. (2011); Lange et al. (2014); Laurila et al. (2015).

Location

Elements

Cobalt

crusts in

the

Prime

Crust

Zone

(PCZ)

Global reserves

on land

(economically

minable deposits

today)

Global reserves

and resources on

land (economically

minable as well as

sub economic

deposits)

Manganese

nodules in

the

Clarion-

Clipperton

Zone

Estimated

amount

of SMS

deposits

without

Atlantis

II4

Atlantis II

Sulphide

rich

sediments5

Manganese (Mn) 1714 630 5200 5992 3.8-4.3

Copper (Cu) 7.4 690 1000+ 226 10 0.74-0.81

Titanium (Ti) 88 414 899 67

Rare earth oxides 16 110 150 15

Nickel (Ni) 32 80 150 274

Vanadium (V) 4.8 14 38 9.4

Molybdenum (Mo) 3.5 10 19 12

Lithium (Li) 0.02 13 14 2.8

Cobalt (Co) 50 7.5 13 44 0.0053

Tungsten (W) 0.67 3.1 6.3 1.3

Niobium (Nb) 0.4 3 3 0.46

Arsenic (As) 2.9 1 1.6 1.4

Thorium (Th) 0.09 1.2 1.2 0.32

Bismuth (Bi) 0.32 0.3 0.7 0.18

Yttrium (Y) 1.7 0.5 0.5 2

Platinum group 0.004 0.07 0.08 0.003

Tellurium (Te) 0.45 0.02 0.05 0.08

Thallium (Tl) 1.2 0.0004 0.0007 4.2

Gold (Au) 0.05-0.0571,2,3 0.11573 0.000095 0.00102 0.000046

Silver (Ag) 0.532 0.0036 0.069 0.0065

Zinc (Zn) 2302 19002 13 204 3-3.8



Annex 3.2 - Price development of selected resources In order to make an economic analysis a first prioritizing of metals and minerals was suggested

being profitable resources suggested in Ecorys (2014). From this list a selection was made on

the most critical minerals (highlighted in yellow):

Zinc, Gold, Manganese, Cobalt, Nickel, Molybdenum, Lithium and Tellurium;

A Rare Earth Element (REE) needs to be selected as well as an example of REEs being critical

due to the fact that 97% of the production is in the hands of one country (China) (Ecorys,

2014): europium has been selected because of its high price (USGS, 2012) and neodymium is

also often mentioned as an important REE.

Table 3.5 A selection of most relevant minerals for deep sea mining based on criteria like commercial interest, economic importance, supply risk and essential basic compound for further production.

Deposit Most relevant

metals

Price/ton

2013186

Commercial

interest

Criticality187

Supply risk Critical raw material

Most relevant

metals

Price/ton

2013

Commercial interest Criticality7

Economic

importance for

EU industry

Supply

risk

Critical

raw

material

SMS Copper 4,686 Medium/high Medium Low no

Zinc 1,138 High High Low no

Gold 26,776,178 High (depending on

grade)

Low Low no

Silver 401,643 Medium Medium Low no

Polymetallic

nodules

Manganese 1,540 Medium (abundant

alternative supply;

market uncertainty)

High Low no

Cobalt 16,735 High Medium High yes

Copper 4,686 Medium/high Medium Low no

Nickel 10,041 High n.a n.a. no

Trace metals

(REE,

Molybdenum,

Lithium)

8,702188 Medium (traces) High High yes

Cobalt rich

crusts

Manganese 1,540 Medium (abundant

alternative supply;

market uncertainty)

High Low no

Cobalt 16,735 High Medium High yes

Nickel 10,041 High n.a. n.a. no

Platinum 30,123,200 Medium Medium Medium yes

Other trace

metals (REE,

Tellurium)

8,702189 Medium High High yes



Zinc

Zinc is predominantly used for galvanizing to protect steel from corrosion, the production of zinc

base alloys and to produce brass and bronze. The global price of zinc is taken from

http://www.infomine.com/ and shown in Figure 3.10. The price at the moment of extracting was €

2071.01 per metric tonne at 17-04-2015. In general the price seems to fluctuate between € 500

and € 2000 per metric tonne with a sharp rise and fall between 2006 and 2009 reaching almost €

3500 per metric tonne, most likely caused by the financial crises (Tully, 2006; Worldbank, 2012)

which presumably resulted in an increased interest for ores as a means of investment. The

financial crises started with bursting of the United States housing bubble, which peaked in 2006.

This force seems larger than the increasing zinc consumption in China between 2002 and 2006

(USGS, 2012).After 2008 – 2009; prices declined due to reduced economic activity as a result of

the global economic crisis. The prices tend to be slightly higher as compared to before the crises.

after that period.

Figure 3.10. A long-term overview of the price/tonne of Zinc in € per metric tonne

http://www.infomine.com/investment/metal-prices/zinc/all/ d.d. 20-04-2015).

Gold

Gold is used in jewellery and due to its high malleability, ductility, resistance to corrosion and most

other chemical reactions, and conductivity of electricity have led to its continued use in corrosion

resistant electrical connectors in all types of computerized devices. Gold is also used in infrared

shielding, coloured-glass production, and gold leafing.



The global price of gold is taken from http://www.infomine.com/ and shown in Figure 3.11. The

price at the moment of extracting was € 35.64 per gram at 20-04-2015. Since 2000 a steady

increase of the price can be seen from slightly less than € 10 per gram to ~€ 36 per gram

nowadays. The impact of the financial crises seems to be more after the peak of the crises with

other metals, probably due to a sustained increase in investment in gold stemming from political

and economic concerns (USGS, 2012).

Figure 3.11 A long-term overview of the price/tonne of gold in €/gram (http://www.infomine.com/investment/metal-prices/gold/all/ d.d. 20-04-2015). "Gold-nominal-constant-usd" by Codehydro (Alexander Zhikun He).

Manganese



Manganese is essential to iron and steel production and also for aluminium production, improving

the quality of the alloys. The global price of manganese is taken from http://www.infomine.com/

and shown in Figure 3.12. The price at the moment of extracting was € 1,955 per metric tonne at

28-02-2015. Taking 2005 and 2013 the price seems to fluctuate around € 1,000 to € 2,000. The

financial crises can be noted starting end of 2006 leading to more investments on the material

itself and reduced demand on the other hand. After the crises prices tend to be higher until a drop

in 2012. Increased steel production of steel by the BRIC countries could cause this higher levels in

price.

Figure 3.12. A long term overview of the price/tonne of manganese in €/metric tonne (http://www.infomine.com/investment/metal-prices/manganese/all/ d.d. 21-04-2015).

Cobalt

Cobalt is widely used in batteries and in electroplating. It is used in alloys for aircraft engine parts

and in alloys with corrosion/wear resistant uses. Cobalt is also used in samarium-cobalt permanent

magnets. These are used in guitar pickups and high speed motors. The global price of cobalt is

taken from http://www.infomine.com/ and shown in Figure 3.13. The price at the moment of

extracting was € 26,690 per metric tonne at 17-04-2015. In general the price seems to fluctuate

between € 18,000 and ~€ 30,000 per metric tonne with a sharp rise and fall between 2006 and

2009 reaching almost € ~78,000 per metric tonne (caused by the financial crises which resulted in

an increased interest for ores as a means of investment; Worldbank, 2012). The prices tend to be

on the lower side after that period. In general the price is determined by the dynamics of the few

suppliers and the general economy since cobalt is a typical product correlated to economy and

business cycle (high end electronics, travel)



Figure 3.13.A long term overview of the price in € per metric tonne of Cobalt

(http://www.infomine.com/investment/metal-prices/cobalt/all/ d.d. 20-04-2015).

Nickel

Nickel is used in many specific and recognizable industrial and consumer products, including

stainless steel, alnico magnets, coinage, rechargeable batteries, electric guitar strings, microphone

capsules, and special alloys. It is also used for plating and as a green tint in glass. Nickel is pre-

eminently an alloy metal, offering better corrosion resistance, better toughness, better strength at

high and low temperatures, and a range of special magnetic and electronic properties.

The global price of nickel is taken from http://www.infomine.com/ and shown in Figure 3.14. The

price at the moment of extracting was € 11,930 per metric tonne at 17-04-2015 and € 7,879 per

metric tonne at 23-02-16. In general the price seems to fluctuate between € 5,000 and ~€ 15,000

per metric tonne with a sharp rise and fall between 2006 and 2009 reaching almost ~€ 38,000 per

metric tonne (probably caused by the financial crises which presumably resulted in an increased

interest for ores as a means of investment). The prices tend to be on the somewhat higher side

after that period. On the one hand prices have risen due to the financial crises (investments on

nickel stocks) on the other hand more and more) producers rise recent years and the recession has

reduced the use of nickel.



Figure 3.14. A long term overview of the price in € per metric tonne of Nickel

(http://www.infomine.com/investment/metal-prices/nickel/all/ d.d. 25-02-2016).

Molybdenum

Most molybdenum produced is used in metallurgical applications such as alloys, with the rest of

molybdenum used as compounds in chemical applications. The ability of molybdenum to

withstand extreme temperatures without significantly expanding or softening makes it useful in

applications that involve intense heat, including the manufacture of armour, aircraft parts,

electrical contacts, industrial motors and filaments.

The global price of Molybdenum oxide is taken from http://www.infomine.com/ and shown in

Figure 3.15. The price of Molybdenum oxide at the moment of extracting was € 16,410 per metric

tonne at 17-04-2015 and € 11,076 per metric tonne at 23-02-2016. In general the price seems to

fluctuate between ~€ 5,000 and ~€ 85,000 per metric tonne Molybdenum oxide with a sharp rise

and fall between 2004 and 2009 reaching almost ~€ 38,000 per metric tonne. The sharp rise in

2004 is probably caused by the financial crises which presumably resulted in an increased interest

for ores as a means of investment. The prices tend to be on the higher side after that period. The

moment of price increase seems earlier than other metals (at the moment the rumours on the

housing bubble increased) indicating maybe a first safe heaven due to its value and specific

economic dynamics (high value and high supply risk). Starting 2002 production was increased due

to increase in demand whereas after 2007 the demand decreased due to the financial crises

(USGS, 2012).



Figure 3.15 A long term overview of the price in € per metric tonne of Molybdenum oxide (http://www.infomine.com/investment/metal-prices/molybdenum-oxide/all/ d.d. 25-02-2016).

Lithium

Being one of the most conductive metals in existence, lithium is a true heavyweight in the field of

energy storage and battery design. From 1997 the price of Lithium was relatively stable around ~

US $ 1400 to ~ $ 1900 per ton for Lithium carbonate (the most important form, Figure 3.16; USGS,

2012; Perez-Novoa & Sadzawka, 2014). Starting from 2005 Lithium prices increased owing to

expanded battery applications and temporarily constrained supply as well as the economic

recession (safeguarding investments in resources). In 2009–2010 Lithium prices decreased owing

to the worldwide economic downturn levelling at a US $ 4747,- per ton in 2013. Lithium

exploration increased worldwide in anticipation of expanded transportation use.



Figure 3.16. A long term overview of the price in $ per metric tonne of different forms of Lithium (from Perez-Novoa & Sadzawka, 2014).

Tellurium

The primary use of tellurium is in alloys, foremost in steel and copper to improve machinability.

Applications in solar panels and as a semiconductor material also consume a considerable fraction

of tellurium production. World tellurium production is still mainly a byproduct of copper

processing. Because tellurium is a byproduct, supply and demand imbalances have developed that

have had significant influences on price (USGS, 2012). Since 2005 prices have increased markedly

(Figure 3.17) due to increased demand from electronics producers in China and since 2007

increases in demand from solar cell manufacturers and widespread speculative buying. Also the

financial crises will have plaid its role.



Figure 3.17. A long term overview of the price in € per metric tonne of tellurium (USGS, 2012).

REE: Europium

Commercial applications for europium are few and rather specialized. Almost invariably, they

exploit its phosphorescence. Think of red and blue phosphors, lasers, mercury-vapor lamps,

fluorescent lamps, NMR relaxation agent.

Most REEs are now strictly produced in China. Especially since in 2002 the Mountain Pass, rare-

earth mine in California closed, leaving China as the dominant world supplier. Then in 2010 China

sharply curtailed rare-earth exports. Industrial countries such as Japan, the United States, and

countries of the European Union have continued studies and adopted policies to encourage

alternative supplies of rare earths. In the United States, Mountain Pass was expected to resume

operation in 2013, given rise to a sharp rise in price in 2010 and a great decline in the years after

(see e.g. USGS (2012) and http://institut-seltene-erden.org/en/current-and-historical-market-

prices-of-rare-earth-gangigsten/ (d.d. 21-04-2015)). REEs could be a reason for developing deep

sea mining. And given its price of ~US $ 4,000 to $ 6,000 per kilogram, europium could well be a

predominant reason to do continue with the development of offshore mining (Figure 3.18).



Figure 3.18. A long term overview of the price in $ per kg of europium (http://institut-seltene-erden.org/en/current-and-

historical-market-prices-of-rare-earth-gangigsten/ d.d. 21-04-2015).

REE 2: Neodymium

REE neodymium is used in rare-earth magnets, lasers, violet colours in glass and ceramics,

didymium glass, ceramic capacitors. Similar price patterns are seen for neodymium as for

europium (Figure 3.19). Only prices are much lower: approximately US $ 200 to $ 600 per

kilogram.



Figure 3.19. A long term overview of the price in $ per kg of neodymium (http://institut-seltene-erden.org/en/current-

and-historical-market-prices-of-rare-earth-gangigsten/ d.d. 21-04-2015).

Phosphorite

Phosphorite (phosphate rock) is an important compound for fertilizers. Global Phosphorite

(phosphate rock) demand is rising due to a growing world population and associated food

demand, increasing the demand for phosphate fertilizer.

Prices remain stable around € 30 to € 50 per metric tonne. Around the time of the financial crises

prices rise sharply to almost € 300 per metric tonne and then descend till a fluctuation plateau of €

70 to € 150 per metric tonne (Figure 3.20). In 2007‒2008, world agriculture increased, leading to a

strong rise in demand for phosphate-derived fertilizers. Fertilizer production was insufficient,

causing greater derived demand for phosphate rock. Meanwhile, supply tightened, with

production and transport costs going up. Some attribute the restricted supply of phosphate rock

also to speculation and heightened awareness among producer countries that they could ‘set the

price’. This resulted in a higher price. Eventually, higher prices made more exploration and

recycling activities economically feasible. It therefore became possible to restore supply. As

demand remained stronger than before, new prices reached a slightly higher level than originally

(de Ridder et al., 2012). Increasing concerns on both the supply market being dominated by a few

supplier which seems to become more extreme in the future and a need for phosphate rock with a

lower cadmium content (de Ridder et al., 2012), urge for new supply source where off shore

mining can offer options.



Figure 3.20. A long term overview of the price in € per metric tonne of Phosphorite

(http://www.infomine.com/investment/metal-prices/phosphate-rock/all/ d.d. 22-04-2015).

Gas hydrates

Gas hydrates consist of methane the main component of natural gas. Gas is used for heating,

motion and for generation of electricity.

The price developments of gas are depending on location (Figure 3.21). In the US prices remained

relatively stable (around $ 5 for a million British Thermal Units (mmBTU)) except for the period

during the financial crises. In Europe prices tend to be higher around $ 7 - $ 10 for a mmBTU

(probably reflecting the dependency of the import).

The prices of natural gas depend on many factors, including macroeconomic growth rates and

expected rates of resource recovery from natural gas wells. Natural gas prices, as with other

commodity prices, are mainly driven by supply and demand fundamentals. However, natural gas

prices may also be linked to the price of crude oil and/or petroleum products, especially in

continental Europe. Higher rates of economic growth lead to increased consumption of natural

gas, primarily in response to their effects on housing starts, commercial floorspace, and industrial

output. Also an event like the earth quake in Japan leading to less nuclear energy and trust in

nuclear energy can be noted in an international context. Weather conditions can have a major

impact on natural gas demand and supply. Cold temperatures in the winter increase the demand

for space heating with natural gas.



Figure 3.21. A long term overview of the price of natural gas (mostly methane) in$ per million British Thermal Units

(mmBTU) for different regions in the world (ECB, 2014).



Annex 3.3 - Contracts with International Seabed Authority

Table 3.6. Contracts for exploration for polymetallic nodules.

Contractor

Date of Entry

Into Force Sponsoring State

General location of the exploration

area

Date of

Expiry

Interoceanmetal Joint

Organization 29 March 2001

Bulgaria, Cuba,

Czech Republic,

Poland, Russian

Federation and

Slovakia

Clarion-Clipperton Fracture Zone 28 March

2016

Yuzhmorgeologiya 29 March 2001 Russian

Federation Clarion-Clipperton Fracture Zone

28 March

2016

Government of the

Republic of Korea 27 April 2001 – Clarion-Clipperton Fracture Zone 26 April 2016

China Ocean Mineral

Resources Research

and Development

Association

22 May 2001 China Clarion-Clipperton Fracture Zone 21 May 2016

Deep Ocean

Resources

Development Co. Ltd.

20 June 2001 Japan Clarion-Clipperton Fracture Zone 19 June 2016

Institut français de

recherche pour

l’exploitation de la

mer

20 June 2001 France Clarion-Clipperton Fracture Zone 19 June 2016

Government of India 25 March 2002 – Central Indian Ocean Basin 24 March

2017

Federal Institute for

Geosciences and

Natural Resources of

Germany

19 July 2006 Germany Clarion-Clipperton Fracture Zone 18 July 2021

Nauru Ocean

Resources Inc. 22 July 2011 Nauru

Clarion-Clipperton Fracture Zone

(reserved area) 21 July 2026

Tonga Offshore

Mining Limited 11 January 2012 Tonga


(reserved area)

10 January

2027

Global Sea Mineral

Resources NV 14 January 2013 Belgium Clarion-Clipperton Fracture Zone

13 January

2028

UK Seabed Resources

Ltd. 8 February 2013

United Kingdom

of Great Britain

and Northern

Ireland

Clarion-Clipperton Fracture Zone 7 February

2028



Marawa Research and

Exploration Ltd. 19 January 2015 Kiribati


(reserved area)

18 January

2030

Ocean Mineral

Singapore Pte Ltd.

Signed in

Kingston on 15

January 2015

and in Singapore

on 22 January

2015

Singapore Clarion-Clipperton Fracture Zone

(reserved area)

21 January

2030

UK Seabed Resources

Ltd. To be signed

United Kingdom

of Great Britain

and Northern

Ireland

Clarion-Clipperton Fracture Zone –

Cook Islands

Investment

Corporation

To be signed Cook Islands Clarion-Clipperton Fracture Zone

(reserved area) –

Table 3.7. Contract for exploration for polymetallic sulphides.

Contractor

Date of entry

into force Sponsoring State


area

Date of

expiry

China Ocean Mineral

Resources Research

and Development

Association

18 November

2011 China South-west Indian Ridge

17 November

2026

Government of the

Russian Federation

29 October

2012 – Mid-Atlantic Ridge

28 October

2027

Government of the

Republic of Korea 24 June 2014 – Central Indian Ocean 23 June 2029

Institut français de

recherche pour

l’exploitation de la

mer

18 November

2014 France Mid-Atlantic Ridge

17 November

2029

Government of India To be signed – Indian Ocean Ridge –

Federal Institute for

Geosciences and

Natural Resources of

Germany

6 May 2015 Germany

5 May 2030



Table 3.8. Contract for exploration for cobalt-rich ferromanganese crusts.

Contractor

Date of entry

into force Sponsoring State


area Date of expiry

Japan Oil, Gas and

Metals National

Corporation

27 January 2014 Japan Western Pacific Ocean 26 January 2029

China Ocean Mineral

Resources Research

and Development

Association

29 April 2014 China Western Pacific Ocean 28 April 2029

Ministry of Natural

Resources and

Environment of the

Russian Federation

10 March 2015 – Magellan Mountains in the Pacific

Ocean 9 March 2030

Companhia de

Pesquisa de Recursos

Minerais S.A.

To be signed Brazil Rio Grande Rise in the South

Atlantic Ocean –



Annex 3.4 – Some mechanisms of generation of the ores Nodules

Several theories have been proposed to explain the formation of different types of nodules (SPC, 2013b, Hein et al., 2015). Two of the more popular are:

1. A hydrogenous process in which concretions are formed by slow precipitation of the metallic components from seawater. This is thought to produce nodules with similar iron and manganese content and a relatively high grade of nickel, copper and cobalt.

2. A diagenetic process in which the manganese is remobilized in the sediment column and precipitates at the sediment/water interface. Such nodules are rich in manganese but poor in iron and in nickel, copper and cobalt.

In both processes abundant nuclei embedded in the oxide layers are necessary in order for the metals to precipitate upon.

Other proposed mechanisms:

A hydrothermal process, in which the metals derive from hot springs associated with volcanic activity. Volcanos are thought to deliver most of the metals (Cronan, 2000);

A halmyrolitic process, in which the metallic components come from the decomposition of basaltic debris by seawater;

A biogenic process, in which the activity of microorganisms catalyzes the precipitation of metal hydroxides.

Cobalt crusts

Cobalt crusts are rock-hard, metallic layers that form on the flanks of submarine (extinct)

volcanoes, called seamounts. Similar to manganese nodules, these crusts form over millions of

years as metal compounds in the water are precipitated. Cold oxygen rich water mixes with

warmer oxygen poor water (oxygen minimum zone (OMZ)) due to upwelling against the ridges.

Fe–Mn crusts are composed of Fe oxyhydroxide and Mn oxide that precipitate directly from cold,

ambient ocean water (hydrogenetic, also called hydrogenous) onto rock substrates. Once the first

molecular layer forms, the precipitation of Fe and Mn oxides and accretion of their colloids

becomes autocatalytic and will continue unless O2 concentrations become low suboxic to anoxic

or nearly so. What causes precipitation of the first molecular can result from many processes such

as alteration (weathering) of the substrate rock, precipitation in micro environments, and others.

The OMZ around open-ocean seamounts is not depleted in O2 enough to prohibit precipitation of

MnO2, the most oxidized form of Mn; in continental margin settings where upwelling is intense

and the OMZ is stronger, both MnO2 and the less oxidized Mn oxide todorokite form. Crusts

forming in the OMZ may form at a slower rate, which is not yet proven for open-ocean seamounts,

but is true for continental margin seamounts, such as off California margin. O2 content of

seawater increases from the base of the OMZ to the seabed (Hein Pers. Comm.).

Cobalt-rich ferromanganese crusts precipitate onto nearly all rock surfaces in the deep ocean.

Their thickness varies from less than 1 millimetre to about 260 millimetres. They cover surfaces as

pavements and coatings on rocks in areas that are kept sediment-free for millions of years. There,

they form pavements of intergrown manganese and iron oxides. Ferromanganese crusts may also

coat rock pebbles and cobbles. A wide variety of metals are adsorbed from ocean water onto

those two main mineral phases (Hein & Koschinsky, 2013; SPC, 2013c).



Phosphorites

Because of the constant stream of phosphate brought from the large, deep ocean reservoir,

phosphorites are mostly encountered near upwelling systems. They are formed by chemical

reactions in sediments promoted by strong upwelling and high biological primary productivity in

surface waters. For the Phosphorites occur in four geographic-tectonic settings in the modern

ocean basin (Hein et al., 2005; Scott et al., 2008):

1) Phosphorites (phosphates) are known to be deposited in a wide range of depositional

environments at water depths of -5 to -1.000 m. Normally phosphates are deposited in

very shallow, near shore marine or low energy environments. These include environments

such as supratidal zones, littoral or intertidal zones, and most importantly estuaries. The

best studied phosphorite occurs on continental shelves and slopes, primarily off the west

coast of continents where easterly trade winds blow offshore thereby inducing upwelling.

These deposits formed beneath zones of coastal upwelling from early diagenetic processes

very near the seawater-sediment interface in an organic matter-rich environment.

Examples are phosphorite deposits of Quaternary age at four localities: offshore Peru and

Chile; offshore Namibia and South Africa south of the trade wind belt; offshore Baja

California in Mexico; and offshore the Atlantic margin of Morocco;

2) Phosphorite occurs extensively on some submarine plateaus, ridges, and banks, the best

studied being Blake Plateau off the southeastern United States where phosphorites are

present to water depths of 1 km and Chatham Rise off New Zealand in water depths of 350

m to 450 m, with an average P2O5 content of 22 percent. Plateau phosphorites formed

from cementation and replacement of carbonates in an organic matter-rich environment;

3) Phosphorite forms on islands, atolls, and within atoll lagoons. These insular deposits

replace and cement reef carbonates within the freshwater lens, or within the seawater-

freshwater mixing zone, and may mark periods of sea-level change. The source of

phosphorus is primarily guano;

4) Phosphorite forms on mid-plate seamounts and may be the most widely distributed but

least studied of the marine phosphorites. These deposits result from the replacement of

carbonates by carbonate fluorapatite (CFA).

Of these four types of phosphorites, the subaerial insular type has been mined at many places,

mostly during WW II, but also up to today, such as on Nauru Island, which at one time had the

highest per capita income in the world as the result of the phosphate industry.

Table 3.4. Technology readiness levels (TRL), HORIZON 2020 – WORK PROGRAMME 2014-2015 General Annexes, Extract from Part 19 - Commission Decision C(2014)4995.

TRL Description

TRL 1. basic principles observed

TRL 2. technology concept formulated

TRL 3. experimental proof of concept

TRL 4. technology validated in lab

TRL 5. technology validated in relevant environment (industrially relevant environment in the case of key



enabling technologies)

TRL 6. technology demonstrated in relevant environment (industrially relevant environment in the case

of key enabling technologies)

TRL 7. system prototype demonstration in operational environment

TRL 8. system complete and qualified

TRL 9. actual system proven in operational environment (competitive manufacturing in the case of key

enabling technologies; or in space)

Annex 3.5 – Techniques of nearshore and offshore mining Depending on the type of resource and the situation (depth, hydrology, mineral of interest)

resources are easily or more difficultly extracted. For the Cobalt crusts and SMS deposits, rock

needs to be cut or scrapped. For nodules and phosphorites a form of sand/slurry needs to be

mobilised to extract the ore sands themselves or the nodules. Gas hydrates are not really mined

yet because of difficulties in extracting the solid hydrates (Lange et al., 2014). Phosphorites are the

strange duck in the bite; they can be found at depth ranges crossing the entire system. Since depth

and coupled technology demands are in general the distinguishing factors phosphorites are split

up according to this distribution resulting in being present in several segments (Annex 3.1).



A typical technique for nodules and Phosphorites (and sand, gravel and ore sands) is a trailing

suction hopper dredger (TSHD) (Figure 3.22A); a vessel with full sailing capacity and large powerful

pumps and engines able to suck sand, clay, silt gravel and other resources. During dredging the

vessels operate at reduced speed. These vessels operate theoretically till -150 m what in practice

appears till -80 m (nearshore, Schulte, 2013).

Next to an adapted TSHD also hydraulic vertical transport trawling type ships could be used (e.g.

the Namdeb case for diamonds in Namibia). An FFPV is a dedicated vessel for the accurate

installation of gravel and rock in deeper water (Schulte, 2013; Figure 3.22D). In general these ships

are larger than TSHDs extending operational up-time (Schulte, 2013). Additional technique are

necessary for the transport upwards as compared to a traditional TSHD. The FFPVs use a large-

diameter drill to bring diamond-bearing gravel to the surface.

As a third possibility a Gemonod mining system with one or more remote operated vehicles (ROVs;

Schulte, 2013) like remote underwater tractors or large underwater excavators) could be coupled

to the FFPV. The ROVs are deployed to remove overlying sediments and extract the ore-bearing

sand and gravel (Figure 3.22B,C). Processing can be done on land or shipboard on the large mining

vessels. When the sea bed becomes too rocky and uneven for the giant vacuum ROV, the switch is

made to "vertical mining".



A B

C

D

Figure 3.22. Potential methods for mining deeper than -80 m (Schulte, 2013). A: a TSHD adapted for mining Phosphorites at -500 m. Note the flexible lifting system and the fixed draghead. B: a FFPV with a Gemonod mining system with one or more remote operated vehicles. C: Example of a ROV (seabed crawler) with a flexible hose which moves along the ocean floor extracting all material, bringing it to the vessel for sorting and then returning non diamond matter: screenshots animation Discovery Channel - Mighty Ships [MV Peace In Africa] (NamDeb). D: http://travelnewsnamibia.com/wp-content/uploads/2012/06/drilling-machine.jpg



Annex 3.6 - Offshore mining legislation in state jurisdiction The ISA is maintaining an online database of national legislations, which is summed up in Table 3.9.

It would seem that a number of Sponsoring States do not have measures in place (including EU

States) to ensure that the sponsored entity respects the ISA Mining Code, which may pose

responsibility issues.

However, a number of EU states have adopted legislative measures to regulate seabed mining in

their waters. In some cases, such as Portugal, France, and the Netherlands, there are general

mining laws valid both on-land and at sea, whereas in some other cases the law specifically

addresses deep seabed mining (i.e. The United Kingdom). Although it is probably not a problem on

procedural aspects, it might make a difference when it comes to environmental requirements and

standards. Nevertheless, it should be kept in mind that very few EU countries possess

economically viable mineral deposits within their jurisdiction, except for Portugal, France and the

UK.

Table 3.9. Oversight of the national legislation for offshore mining in Europe.

State Legislation adopted – Relevant Acts Area EEZ /

CS Draft In

force

EU Sponsoring States

Belgium

Belgian Act related to prospecting, exploration and exploitation of the

resources of the deep seafloor and subsoil thereof beyond national

jurisdiction (17th August 2013)

X

Bulgaria /

Czech

Republic

Act n° 158/2000 on Prospecting, exploration for, and exploitation of mineral

resources from the seabed beyond limits of national jurisdiction (18th May

2000)

X

France Mining Code of 20th January 2011 X

Germany Seabed Mining Act (6th June 1995, amended in 2010) X

Poland /

Slovakia /

UK Deep Sea Mining Act 2014, amending Deep Sea Mining (Temporary

provisions) Act 1981 (14th May 2014)

X X

Other EU Member States – Not sponsoring

Denmark Mining Code Act of 24th September 2009 X

Malta Malta Resources Authority Act nr XXV of 2000;

Continental Shelf Act of 8th August 2014

X

Netherlands Mining Act of 2002 X

Portugal Decree-Law on research and exploitation of minerals, 15th March 1990 X X



Spain Law on Mines of 21st July 1973 (last amendment 2014) X

Other Sponsoring States – not EU members

China Mineral Resources Law of the People’s Republic of China 1986 (revised in

1996);

Marine Environmental Protection Law of the People’s Republic of China 1982

(Revised 1999)

X X

Cook Islands Seabed Minerals Act 2009 X X

Cuba /

Fiji International Seabed Mineral Management Decree, 2013 X X

India The Offshore Areas Mineral (Development and Regulation) Act 2002 X

Japan Mining Act 1950 (amended 2011)

Act on Interim Measures for Deep Seabed Mining (1982)

X X

Kiribati /

Nauru / X

Republic of

Korea

Submarine Mineral Resources Development Act 1970 (revised 2011) X X

Russia /

Singapore Deep Seabed Mining Act, 2015 X

Tonga Tonga Seabed Mining Act 2014 X X



Annex 3.7 - Calculations on costs and revenues In this Annex a sensitivity analysis is made for the costs, revenues and gross profit allocation

calculations. The results are discussed in section 3.7.2 The sensitive and changed variables are

yellow arced.

Table 3.11. CAPEX and OPEX costs according to EPRS (2015), recalculated to costs per tonne crude ore (including mining and transport; excluding and including processing). 1: Calculated from EPRS table 4-2, including a 17.5% contingency. 2Calculated from EPRS table 4-2.

SMS deposits Polymetallic nodules

CAPEX ($) excluding processing 383,000,000 1,192,000,0001

CAPEX ($) processing 750,000,000

Years of operation: 15 20

Linear depreciation excluding processing $/yr: 25,540,000 59,600,000

Linear depreciation including processing $/yr: 97,100,000

Yearly production (tonnes crude ore): 1,350,000 1,500,000

CAPEX per tonne crude ore excluding processing ($): 20 40

CAPEX per tonne crude ore including processing ($): 69

OPEX Cost excluding processing $/tonne crude ore: 70 200-300

OPEX Cost including processing $/tonne crude ore: 80-1362 400-500

NB: the numbers presented in the table are “fluid”. The only numbers presented with certainty are

the weight % contribution of the metals in the nodules (from Hein et al., 2013) and the selling

prices (daily update). The other numbers are rough estimates based on interviews, estimates and

calculations on hypothetical exploitations. In Annex 3.7 the same calculations are performed with

a weighed mean historical price and also with OPEX costs as estimated by Ecorys (2014). The

yellow arced figures are the variables in this exercise. Using more or less the same numbers as

Ecorys we get a slight gross profit comparable to the Ecorys results (Table 3.14). Using on weight

averaged metal prices and lower OPEX (Table 3.15) a reasonable profit seems achievable,

suggesting that offshore nodule mining is achievable if market prices raise and CAPEX and OPEX

are low enough (can be reduced).



Table 3.12. Cost and revenues and gross profit allocation of copper, cobalt and nickel calculated on the basis of weight contribution in polymetallic nodules of the Clarion-Clipperton Zone. CAPEX and OPEX costs for polymetallic nodules (mining, transport & processing) as compared to the current selling prices (source: EPRS 2015 and additional justification in section 3.7.2.1, weight % of the metals: Hein, et al., 2013)). Yellow arced data are the variables for the sensitivity analysis. Red numbers indicate a situation of negative contribution to the total gross profit of the business case.

Capex 2,073,287,500

years of operation: 20

Linear depreciation/yr: 103,664,375

yearly Production

(tonnes): 1,500,000

Capex Cost per tonne: 69.11

Opex 290.00

Costs Metals: weight % in 1,500,000 tonnes:

Total mining and processing cost

(USD)

Cu 1.0714 16,071 223,502,324

Co 0.2098 3,147 43,765,902

Ni 1.3002 19,503 271,231,773

Total: 38,721 538,500,000

Gross Revenue (Current

Sell)

Selling prices at study Unit rate

($/tonne): Total Revenues

Cu 5,161 82,942,752

Co 28,000 88,116,094

Ni 10,475 204,294,705

Total:

375,353,552

Gross Profit (Current Sell)

Cu -140,559,572

Co 44,350,192

Ni -66,937,068

Total: -163,146,448

Actual selling price compared to selling price at break-even:



Cu 37%

Co 201%

Ni 75%

Table 3.13. Cost and revenues and gross profit allocation of copper, cobalt and nickel calculated on the basis of weight contribution in polymetallic nodules of the Clarion-Clipperton Zone. CAPEX and OPEX costs for polymetallic nodules (mining, transport & processing) as compared to the weighed averaged selling prices and EPRS OPEX estimate (source: Ecorys, 2014; EPRS 2015).

Capex 2,073,287,500



yearly Production

(tonnes): 1,500,000


Opex 290.00



(USD)

Cu 1.0714 16,071 223,502,324

Co 0.2098 3,147 43,765,902

Ni 1.3002 19,503 271,231,773

Total: 38,721 538,500,000


Sell)



Cu 6,500 104,461,500

Co 35,000 110,145,000

Ni 15,000 292,545,000

Total: 507,151,500


Cu -119,040,824

Co 66,379,098



Ni 21,313,227

Total: -31,348,500


Cu 47%

Co 252%

Ni 108%

Table 3.14. Cost and revenues and gross profit allocation of copper, cobalt and nickel calculated on the basis of weight contribution in polymetallic nodules of the Clarion-Clipperton Zone. CAPEX and OPEX costs for polymetallic nodules (mining, transport & processing) as compared to the current selling prices and Ecorys OPEX estimate (source: Ecorys, 2014; EPRS 2015).

Capex 2,073,287,500



yearly Production

(tonnes): 1,500,000


Opex 175.00



(USD)

Cu 1.0714 16,071 151,906,872

Co 0.2098 3,147 29,746,184

Ni 1.3002 19,503 184,346,944

Total: 38,721 366,000,000


Sell)



Cu 5,161 82,942,752

Co 28,000 88,116,094

Ni 10,475 204,294,705



Total: 375,353,552


Cu -68,964,120

Co 58,369,910

Ni 19,947,762

Total: 9,353,552


Cu 55%

Co 296%

Ni 111%

Table 3.15. Cost and revenues and gross profit allocation of copper, cobalt and nickel calculated on the basis of weight contribution in polymetallic nodules of the Clarion-Clipperton Zone. CAPEX and OPEX costs for polymetallic nodules (mining, transport & processing) as compared to the weighed averaged selling prices and Ecorys OPEX estimate (source: Ecorys, 2014; EPRS 2015).

Capex 2,073,287,500



yearly Production

(tonnes): 1,500,000


Opex 175.00



(USD)

Cu 1.0714 16,071 151,906,872

Co 0.2098 3,147 29,746,184

Ni 1.3002 19,503 184,346,944

Total: 38,721 366,000,000




Sell)



Cu 6,500 104,461,500

Co 35,000 110,145,000

Ni 15,000 292,545,000

Total: 507,151,500


Cu -47,445,372

Co 80,398,816

Ni 108,198,056

Total: 141,151,500


Cu 69%

Co 370%

Ni 159%

Table 3.16. Cost and revenues and gross profit allocation of copper, cobalt and nickel calculated on the basis of weight contribution in cobalt crusts of the Atlantic Ocean. CAPEX and OPEX costs for cobalt crusts (mining, transport & processing) as compared to the current selling prices and Ecorys OPEX estimate (source: Ecorys, 2014; EPRS, 2015).

Capex 1,350,000.000



yearly Production

(tonnes): 450,000

Capex Cost per tonne: 150

Opex 200



(USD)

Cu 0.0861 1,292 49,278,511

Co 0.3608 5,412 206,500,426



Ni 0.2581 3,872 147,721,064

Total: 10,575 403,500,000


Sell)



Cu 5,161 6,665,457

Co 28,000 151,536,162

Ni 10,475 40,554,117

Total: 198,755,737


Cu -42,613,053

Co -54,964,263

Ni -107,166,946

Total: -204,744,263


Cu 14%

Co 73%

Ni 27%



Annex 3.8 - More elaborate lifecycle analysis The lifecycle analysis (LCA) of each sector within WP4 should give an account of historical barriers

to development; how they were overcome, or how they prevented the sector from developing.

The general value chain of nearshore and offshore mining is given in Figure 3.23. For each sector

and segment information for the LCA is given in throughout the document. Table 3.17, Table 3.18

and Table 3.19 combine and summarise all that information. Per subsector more information on

the most conspicuous features is given in the next sections.

Figure 3.23. Value chain phases and activities of offshore mining (with courtesy from Ecorys, 2014).

LCA of manganese nodules, seafloor massive sulphides and cobalt crusts The LCAs of nodules, SMS deposits and cobalt crusts are discussed in combination since they

experience the same driving forces (Table 3.17).

Revenues and costs

Sections 3.3.1 and 3.3.2 give detailed information on the mechanisms concerning market

development. In short rising demand; decreasing land based ore quality, fluctuating prices and

geopolitical concerns. Metal pricing seems the major force driving offshore mining. Firstly the

costs (CAPEX and OPEX) are very high dictating that revenues should also be high (section 3.7).

Analysing to historical patterns, the peaks in metal prices in the 1970s (see e.g. Figure 3.1) caused

the first deep sea mining boom. Then prices collapsed due to the opening of new terrestrial mines

on all ores worldwide. In addition the easily accessible offshore stocks were depleted (Ecorys,

2014). Nowadays offshore mining on metallurgic ores is on and off focus of interest. Most metal

prices, after an interlude of extreme increases during the financial crises and heavy demands, have

dropped again, so that offshore mining on metallurgic ores now appears less profitable (Sections

3.3.1 and 3.3.2). Also the cost prices can be very high (Annex 3.7). See also the cost benefit

analysis of Schulte (2013).



Technological development

Technological development is relative, seems not a real obstacle. In the 1970’s it was possible. As

compared to then, techniques have improved, due to innovations in dredging and also because of

the development in offshore oil and gas industry urging for deep water utilities which is made

applicable for other purposes as well (see e.g. Bosch Rexroth30). On the other hand, improvements

are expected to markedly reduce the CAPEX and OPEX. In the value chain only exploration is at TTR

level 7 – 9 whereas other phases of the value chain are still at TTR 1-5 (Section 3.6).

Case studies

Of particular interest are the EEZ of Papua New Guinea, where SMS deposits sulphides with high

gold and silver contents are found. Mining of the precious metal bearing deposits in Papua New

Guinea seems to be economically feasible today (return estimate of 68% with the assumption of

15 years continuous exploitation, Ecorys 2014). Also Schulte (2013) mentions SMS can be

profitably exploited (based on non-public internal reports thereby not traceable). The industrial

consortium Nautilus wants to begin mining there by the end of 2016.

For manganese nodules calculations differ. The International Seabed Authority (in Scott et al.,

2008) concluded that, based on the most recent economic models available, mining of these

deposits could generate an internal rate of return of between 15% and 38%. Ecorys calculates in

2014 a return of 2% per mineral. Schulte (2013) states that for manganese nodules the feasibility is

questionable. The working conditions at the seafloor are harsh and low concentrations of nodules

in sediment require larger areas to be covered to make it profitable. Technical and financial

challenges concern particularly the enormous working depth, and with that, transport distance of

minerals, return water, data, energy, etc.

Differences: manganese nodules are lose nodules on the seafloor (easily extractable) whereas SMS

deposits and cobalt crusts are precipitated and need to be cut loose form the base. Cutting rock is

a challenge since it can be very costly. For the manganese noodles the challenge is more to exploit

large surfaces without destroying the ecosystem by substrate removal and smothering.

Concluding for metal ores

The main driver of the interest in offshore mining of metals seems the high market prices of the

resources at stake at a certain moment in combination with the high exploitation costs. Innovation

is expected to reduce the exploitation costs. Since these prices are highly dynamic and innovation

costs are high and time consuming, major developments in activities are not expected at the

moment (except for a few exceptions with high concentrations of resources).

The LCA of Phosphorites A first remark is that extensive reviews are scarce on marine phosphorite mining. Only limited

information is available. Most informative are websites and company publications (see Table

3.18). Given the high potential of this resource a more elaborate study is welcome.

30 http://www.boschrexroth.com/en/xc/home/index

http://www.boschrexroth.com/en/xc/home/index



Contrary to the metals, phosphorites can have valid business cases in the three projects in Namibia

(two companies), Don Diego, Mexico and Chatham rise New Zealand. Two aspects make these

business cases alive i) the large local demand for phosphates (Don Diego, 2015) ii) potential export

and a share in the global market (Benkenstein, 2014). Whereas they are imported now, rich

relative shallow concessions are available and investors are willing to make the necessary high

start-up investments. This is different form 2004 when marine phosphorite mining was not

considered viable yet (United Nations, 2004). Amongst other reasons, problems with land based

ore qualities, increased demands, geopolitical concerns, (de Ridder et al., 2012), a more stabilized

higher price (Figure 3.20) and presumably technological developments will have altered the

business case.

Due to the fact that current concessions are relatively shallow (in the range of -50m to -450m,) the

regular fleet of dredging ships can be used which are adapted to the specific task (Schulte, 2013;

Don Diego, 2015 and 31). This reduces costs markedly. Then it is essential to have a large

investment capital. Special factories need to be built locally to upgrade the raw ores to commercial

grades. As one sees e.g. for the two Namibian companies, they are owned by large investors

bringing substantial capital. The potential is large. The concessions are considered to be able to

deliver 10% market share of the global traded phosphate market. Achievable prices are mentioned

of ± € 131/t ($ 145/t) whereas the current price is fluctuating between ± € 60/t to ± € 155/t during

the last 5 years (Figure 3.20) thus making it in reasonable ranges32. The internal rate of return (IRR)

for Namibian Marine Phosphate project Sandpiper is estimated at 26%33.

Still the concessions are not yet in production. Due to the fact that large stretches of seafloor need

to be excavated at shallow depth, it is expected to destroy the biological active layer for large

areas. Environmental and economic (fisheries) concerns have led to a halt of activities and

additional evaluations in all three cases.

Concluding on the LCA of phophorites

For phosphorites the business case seems more viable: large concessions can be found in the

easily reachable nearshore and the shallow offshore. This enables the use of standard equipment

what only has to be adapted to a minor extend. As a result preparations have been made to

exploit the resources with substantial interest expectations (e.g. IRR of 26% and being able to

deliver 10% of the global market for phosphates). Environmental considerations have blocked the

actual exploitation until further evaluations.

The LCA of gas hydrates Table 3.19 gives the overview of the LCA. According to current estimates, global hydrate deposits

contain about 10 times more methane gas than conventional natural gas deposits. Therefore they

should be taken very seriously as a potential energy resource. The governments of US, Canada and

Japan have all ploughed millions of dollars into research and have carried out a number of test

projects, while South Korea, India and China are also looking at developing their reserves. Japan

and Korea in particular, which at present are forced to import most of their energy resources,

31 http://www.rockphosphate.co.nz/ 32 (http://www.confidente.com.na/2015/05/marine-phosphate-mining-quandary/ posted 29-05-15). 33 http://uk.reuters.com/article/idUS232072+12-Nov-2010+MW20101112

http://www.rockphosphate.co.nz/

http://www.confidente.com.na/2015/05/marine-phosphate-mining-quandary/

http://uk.reuters.com/article/idUS232072+12-Nov-2010+MW20101112



hope that methane hydrates will help them reduce their dependence on expensive foreign fuel

supplies (Bosswell & Collett, 2011; Callarotti, 2011, Lange et al., 2014).

In order to be able to exploit gas hydrates substantial innovations in techniques are still needed.

Especially the drilling and production technology needed is not yet available. Test drilling has

shown that it is certainly possible to harvest methane hydrates in the ocean floor. Japan had the

first successful offshore extraction of natural gas from methane hydrate Nankai Trough off the

central coast of Japan in March in 2012. It is foreseen that the appropriate equipment will be

developed within the next few years; initial prototypes are already in hand. Feasibility studies are

also currently being carried out.

On the other hand there are serious doubts. It is not sure if all volumes can be exploited, even

numbers of only 1% potentially extractable are mentioned (reducing expectations). The extraction

of the methane from the hydrates and from the soil is not under control. All tested techniques are

too inefficient and expensive to scale up to a commercial project. Massive amounts of marine

muds with high %s of gas hydrates seem unexploitable with current techniques. The average

concentrations in sands are extremely low, about 1 to 3% (60-90% saturation) pore space in highly

porous, exploitable sediments. Only a small fraction (<1%) of the total amount will be technically

exploitable and of these a much smaller fraction economically exploitable at current levels of

technological development (Bosswell & Collett, 2011). On the other hand these amounts are also

in regions with normal petrol and gas industry making exploitation more easily using their

(inefficient) techniques. It could still be profitable for some parties. Recoverable resources may

also expand significantly if future technological advances allow access to concentrated gas

hydrates encased in fractured, fine-grained reservoirs (muds).

Concluding on the LCA of gas hydrates

There is a strong urge to make the exploitation of gas hydrates viable. Especially highly developed

countries without own sources of energy are investing. The technology needs to be developed

since it is a whole new substance type for exploitation. There are some doubts whether it can be

exploited in a profitable approach. It remains to be seen whether hydrate extraction at great

depths is economically viable at all.

This project has received funding from the European Union’s Horizon 2020 research and innovation programme

under grant agreement No 652629

Table 3.17. Lifecyle stage description for Manganese nodules, seafloor massive sulphides and crusts. 1: Own interpretation not using Kerr & Johnson (2015)

LIFECYCLE STAGE

Development Embryonic Growth Mature Decline Recovery * Literature

Demand XXX XXX

The BRIC

countries,

especially

China, have a

growing

demand to

accommodate

both

production and

internal

demand of

products.

SPC 2013d

Ecorys2014

Lange et al.

2014

Worldbank

2012

Technology XXX Exploration:

mostly mature

SPC

2013b,d

Ecorys2014

Lange et al.

2014

XXX XXX

Extraction and

offshore

actions:

development –

embryonic :

major

efficiency to be

achieved

SPC

2013b,d

Ecorys2014

Lange et al.

2014

XXX

Logistics:

mature: minor

improvements

expected

Ecorys,

2014

XXX

Processing:

mobilisation

from the matrix

needs to be

improved

Ecorys,

2014

XXX XXX

EIA: major

concerns on

impacts

SPC 2013

a,b,c,d

Ecorys,

2014

Lange et al.

2014



Products XXX XXX

Depending on

the ores:

products of

usual ores are

well developed.

Special ores,

RRE are used in

a line of

products which

are highly

innovative (ICT

technology etc)

Ecorys,

2014

Manufacturing XXX XXX XXX

Estimated from

the perspective

of refined

metals: after

the off shore

mining. The

elaboration of

ores is a

developed

technology in

which

innovation can

play a major

role. In the

same time

outdated

methods can

survive at low

costs countries

Worldbank

2012

???

Trade XXX1

Precious

metals (gold,

silver) are

characterised

by low

production

concentration

and existing

market

exchanges,

which however

are only

marginally

influenced by

physical

demand and

supply. Off

shore mining

will have no

influence.

Ecorys,

2014

Worldbank

2012

SPC, 2013d



Interpreted as

mature

XXX1

Base metals

(copper, nickel,

zinc) are

functioning

well, although

new mines had

to be opened

with lower

grade ores.

Offshore

operations

would not

produce the

quantities to

make a

difference on

the market

Ecorys,

2014

Worldbank

2012

SPC, 2013d

XXX1

Minor metals

(cobalt, RRE

etc.) deep-sea

mining could

make a

difference

because they

are traded in

relatively low

quantities and

with a low

elasticity of

supply and

geopolitical

considerations

Ecorys,

2014

Worldbank

2012

SPC, 2013d

Competition

XXX

The companies

involved are

usually

satellites of

larger (global

and senior)

players. Often

mining

companies or

specialists (like

DEME with IHC)

combine efforts

and raise a

special

company to do

exploring and

Ecorys,

2014



the first

exploitation.

Later on

eventually

technology and

concessions

can be sold

Key success

factors XX XXX X

The site specific

% of specific

metals and

their global

market prices

and scarcity

also in a

geopolitical

context

determine the

success. In the

near future

difficult except

for a few sites

/concessions.

Technological

development in

order to make

exploitation

cheaper and

even then.

Innovation is

only driven by

price and profit

expectation

The real driver

will be time

(longterm

future

developments)

Finance/

investment XX XXX

In some cases

the

governments

take

concessions in

order to

stimulate R&D.

In other cases

(Nautilus)

shareholders

invest.



Table 3.18. Lifecyle stage description for Phosphorites.

LIFECYCLE STAGE

Develop

ment

Embry

onic

Gro

wth

Mat

ure

Decli

ne

Recov

ery

* Literature

Demand XXX XXX

Global

phosphate

rock demand

is rising due to

a growing

world

population

and increasing

food demand.

Since a sharp

rise in price

due to

degrading ore

quality and an

acknowledgm

ent of

geopolitical

vulnerability

demand for

marine

phosphorites

has increased.

Exploitation

seems

thereby

profitable.

de Ridder et al., 2012

United Nations, 2004

Technolog

y XXX

Exploration:

seems alike to

that of

metals:

mostly

mature

Ecorys,2014

XXX XXX

Extraction and

offshore

actions: with

not to

expensive

measures

regular ships

can be

adapted to ex

Ecorys, 2014

Schulte, 2013

XXX Logistics:

mature: minor

improvements

Ecorys, 2014



expected

XXX

Processing:

The

phosphate is

extracted

mechanically

and remaining

material are

returned to

the seabed.

Seems not too

complicated

Don Diego, 2015

XXX XXX

EIA: major

concerns on

impacts,

blocking

initiatives

SPC 2013 a,b,c,d

Ecorys, 2014

Lange et al. 2014

Products XXX XXX

The extracted

and upgraded

phosphate

sands and

materials

need to be

manufactured

in order to be

suitable

de Ridder et al., 2012

Don Diego, 2015

http://www.confidente.com.na/2

015/05/marine-phosphate-

mining-quandary/

Posted 29-05-2015

Manufact

uring XXX XXX

Difficult to

estimate: In

Namibia a

demo plant

will be

developed

with specially

designed

technology to

process

Namibian

phosphates .

suggesting

new

manufacturin

g processes.

On the other

hand

screening and

washing are

mentioned as

techniques to

upgrade the



mining-quandary/

posted 29-05-15.

http://www.mining-

technology.com/projects/sandpip

er-marine-phosphate-project/ d.d

08-07-2015.



quality to

commercial

grade quality.

More

information is

needed.

Trade XXX 1

The

exploitation of

marine

phosphorites

is interesting

for countries

at large

distances

from

landbased

mines. Than

transportation

costs can be

saved. Trade

seems needed

to be

generated

locally and

not too far

from the

exploitation

site. On the

other hand

the Nambian

case aims at a

international

market share

of 10%. More

information is

needed

United Nations 2004; de Ridder et

al., 2012

Don Diego, 2015



mining-quandary/

posted 29-05-15.

Competiti

on XXX

The

companies

involved are

mining

companies

expanding the

scope op

operation or

dredging

specialists

making

strategic

alliances(like

Boskalis in

Odyssey



mining-quandary/

posted 29-05-15.

http://seekingalpha.com/article/2

691825-boskalis-is-a-possible-

omex-partner-in-oceanica posted

18-11-2014


d.d. 08-07-2015



Marine

Exploration).

Key

success

factors

XX XXX XXX

Viable

business cases

can be found

here. Success

factors seem

to be

Undeep rich

concessions

Extensive

knowledge on

dredging in

order to make

a profitable

exploitation

either as an

investor or as

an

operator/cont

ractor.

When being a

foreign lead of

a consortium,

involve local

partners

Enough

capital to do

the necessary

large scale

investments

High prices of

landbased

ores



mining-quandary/

posted 29-05-15.




18-11-2014


d.d. 08-07-2015

Benkenstein, 2014

Finance/

investme

nt

XXX XXX

Major

investors like

the Lev

Leviev group

have

recognised

the potential



mining-quandary/

posted 29-05-15.



Table 3.19. Lifecyle stage description for gas hydrates.

LIFECYCLE STAGE

Develop

ment

Embry

onic

Gro

wth

Mat

ure

Decli

ne

Recov

ery

* Literature

Demand XXX XXX

Due to the

economic

development

of BRIC

countries and

other third

world

countries the

demand is

rising. Also

geopolitical

and national

economic

concerns

increase

demand.

ECB, 2014,

Lange et al., 2014

Technolog

y XXX XXX XXX

Prospecting

and

exploration:

conventional

(inefficient)

techniques

are used as

well as new

developments

. Specific

sensors like

hydro-

acoustic and

chemical

sensors for

the detection

of methane

and CO2 are

in

development

to detect

gashydrates

more

efficiently

Lange et al., 2014

http://www.geomar.de/en/resear

ch/fb2/fb2-mg/projects/sugar-2-

phase/

XXX XXX

Extraction and

offshore

actions: the

exploitation is

still under

Lange et al., 2014

http://www.geomar.de/en/resear

ch/fb2/fb2-mg/projects/sugar-2-

phase/



serious

research. Key

questions are

how to

mobilise the

gas out of the

hydrates and

how to

efficiently

harvest the

gas that is

spread in very

low

concentration

s in a

complex, soft

matrix over

large surfaces.

drilling and

production

technology

needed is not

yet available.

It is expected

that the

appropriate

equipment

will be

developed

within the

next few

years; initial

prototypes

are already in

hand.

XXX XXX XXX

Logistics:

Need to be

developed for

on board

handling after

arrival on

board (seems

straight

forward)

Lange et al., 2014

XXX

Processing:

Methane can

be readily

used. No

alternative

handling

Lange et al., 2014



XXX

EIA: the

technique

seems to have

limited

impact: only

small boring

holes. There is

no real

concern for

massive

seafloor

disruption and

major

impacts. (but

the basis

information

need on deep

sea ecology

remains)

Lange et al. 2014

Products XXX

The product

methane is a

normal

product which

does not need

any

elaboration

Manufact

uring XXX XXX

Trade XXX 1

The

exploitation of

marine

phosphorites

is interesting

for countries

at large

distances

from

landbased

mines. Than

transportation

costs can be

saved. Trade

seems needed

to be

generated

locally and

not too far

from the

exploitation

site. On the

United Nations 2004; de Ridder et

al., 2012

Don Diego, 2015



mining-quandary/

posted 29-05-15.



other hand

the Namibian

case aims at

an

international

market share

of 10%. More

information is

needed

Competiti

on XXX

The

companies

involved are

mining

companies

expanding the

scope of

operation or

dredging

specialists

making

strategic

alliances(like

Boskalis in

Odyssey

Marine

Exploration).



mining-quandary/

posted 29-05-15.




18-11-2014


d.d. 08-07-2015

Key

success

factors

XX XXX XXX

Viable

business cases

can be found

here. Success

factors seem

to be

Undeep rich

concessions

Extensive

knowledge on

dredging in

order to make

a profitable

exploitation

either as an

investor or as

an

operator/cont

ractor.

When being a

foreign lead of

a consortium,

involve local



mining-quandary/

posted 29-05-15.




18-11-2014


d.d. 08-07-2015

Benkenstein, 2014



partners

Enough

capital to do

the necessary

large scale

investments

High prices of

land based

ores

Finance/

investme

nt

XXX XXX

Major

investors like

the Lev

Leviev group

have

recognised

the potential



mining-quandary/

posted 29-05-15.

WP 4: Socio-economic trends and EU policy in offshore...

Documents

Transcript of WP 4: Socio-economic trends and EU policy in offshore...