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Developing a Subsea Mineral Licence Regime

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Introduction

Subsea minerals are found in a wide range of locations throughout the world's oceans and seas. Many deposits are located in The Area, under the jurisdication of the International Seabed Authority, but many others are located in Exclusive Economic Zones of the seas surrounding nations. Examples here include polymetallic nodules in the Cook Islands EEZ, and seabed massive sulphides in the Norwegian EEZ.

As international interest in subsea minerals increases, we want to provide an overview of how nation states that are interested in developing a subsea minerals industry can successfully develop licence regimes. Our learnings are mainly taken from the Cook Islands, having observed the development of their industry and licence round.

Initial Observations

We have observed that successful subsea mineral licence regimes develop over decades. This is because a number of factors must converge in order to align public opinion, government interest, economic drivers and business activity.

We identified 5 factors that we believe are crucial in the development of regime:

  1. Broad subsea surveys that indicate that valuable and voluminous minerals exist in the EEZ
  2. In addition, dense, focused subsea surveys in specific areas to support the existence of potentially lucrative licence areas
  3. Long-term positive political support for subsea minerals
  4. Long-term government stability and administrative capacity is required in order to develop the institutions and legislation necessary
  5. Government must be actively driving economic diversification into other industries

These 5 factors are all required in order to successfully develop a subsea mineral licence regime effectively.

A perfect example of how to successfully develop a licence regime is the Pacific Island nation of the Cook Islands, where interest in subsea minerals began developing in the 1970's, and resulted in the issuing of three exploration licences in 2022. This history is briefly outlined below:

Developing a Subsea Minerals Licence Regime in the Cook Islands

Introduction

The Cook Islands was the world's first country to approve a Seabed Minerals Act, and one of the first nations (after Papua New Guinea) to issue exploration licences for subsea minerals in their EEZ. Their governance regime and regulatory body (the Cook Islands Seabed Minerals Authority) are world-leading, and they have been successful in attracting investment from a variety of different deep-sea mining companies.

This success did not occur overnight, and we observe that their subsea mineral industry developed as a result of over 40 years of work, support, government interest and careful development. A brief history of this development is given below:

Timeline of Events

1972 - Committee for Co-ordination of Joint Prospecting for Mineral Resources in South Pacific Offshore Areas (CCOP/SOPAC) was formed to promote offshore mineral and petroleum prospecting

1976 - RV Ravakai performed free-fall grab surveys of the Cook Islands EEZ, discovering high abundances of polymetallic nodules

1977, 1978, 1980, 1983 - Further research cruises indicated that nodules were present in other parts of the Cook Islands EEZ

1982 - UNCLOS was ratified, spurring the formation of the Internal Seabed Authority (ISA) and work on issuing subsea mineral exploration licenses in international waters

1985 - SOPAC negotiates use of the Japanese Hakurei Maru No.2. Impactful surveying begins:

  • First survey - 1985 covered the North Penrhyn Basin (JICA/MMAJ, 1986) - 38 samples
  • Second survey - 1986 surveyed the South Penrhyn Basin - 60 samples
  • Additional survey - 1987, Thomas Washington surveyed the North Penrhyn Basin
  • Third survey - 1990, a survey of 1,000,000 square kilometres in the southern part of the EEZ (JICA & MMAJ, 1991) - 48 samples
Survey tracks in the Cook Islands EEZ as of 1995

1995 - Study conducted by Dr Allen Clark using the SOPAC data collected to date (Clark & others, 1995) estimated 7,474,000,000 tons of nodules, including 32,541,000 tons of cobalt, 24,422,000 tons of nickel and 14,057,000 tons of copper in the Cook Islands EEZ.

2000 - fourth SOPAC survey - 42 sample points

Summary of four SOPAC surveys Summary of four SOPAC surveys

2001 - The International Seabed Authority (ISA) issues the first 15-year exploration contracts for subsea minerals located in international waters

2001 & 2003 - Okamoto at SOPAC publishes summary reports on mineral resources in the Cook Islands EEZ

Map of four SOPAC surveys, per Okamoto

2009 - Cook Islands government approves the world's first Seabed Minerals Act

2011 - Papua New Guinea issues the first seabed mining licence within an EEZ, to Nautilus Minerals

2012 - Cook Islands Seabed Minerals Authority (CISMA) was established, which is the world's first governance body specifically focussing on seabed minerals and mining

2014-15 - CISMA produces a range of governance and scientific docs, including:

  • Cook Islands Seabed Policy (2014)
  • Cook Islands Prospecting and Exploration Regulations (2015)
  • Seabed Minerals Amendment Act (2015)

2017 - Cook Islands government establishes Marae Moana - a multi-use marine park that is responsible for protecting and conserving the ecological, biodiversity and heritage values of the Cook Islands marine environment.

2019 - the first subsea exploration cruise in almost 20 years - MV Grinna performs 2 research cruises to survey specific areas of interest for a potential licence round

Cook Islands subsea survey tracks as of 2019 Cook Islands subsea survey tracks as of 2019

October 2020 - the Prime Minister and Minister for Seabed Minerals Hon. Mark Brown announced the opening of a competitive tender for the exploration of seabed minerals in the Cook Islands

January 2022 - tenders for exploration licences were submitted to SBMA by various prospectors

Cook Islands SBMA licence stages Cook Islands SBMA licence stages, from Exploration Licencing 20-22

February 2022 - exploration licences were issued to Moana Minerals, Cobalt Seabed Resources, and CIC Ltd.

July 2022 - exploration commences

The Cook Islands has been successful in issuing subsea mineral exploration licences, but the timeline above clearly indicates the amount of time, work, surveys and political coordination that were required to make this happen.

Key Insights and Takeaways

  • Gathering sufficient subsea data is a slow, expensive and laborious endeavour
  • Furthermore, the size of the oceans mean that datapoints are sparse and it is unclear to what degree luck is involved
  • Japanese involvement in SOPAC was critical in providing sufficient surveying resources
  • 5 years worth of subsea survey cruises provided enough information for a rough resource indication
  • Licence holders submitted licence applications based primarily upon SOPAC data, with some additional more detailed surveys in specific areas

Steps to Develop a Licence Regime

Based upon research into the Cook Islands, Kiribati, Vanuatu and license prospects in other Pacific Islands, it appears as if there are 5 main steps that an island nation must pass through in order to generate a stable licensing regime in which subsea minerals can be mined or harvested:

1. Resources are Identified
Typically this occurs via research cruises from international organizations (e.g. SOPAC, Scripps, NOAA etc.), during which >10 sample points in a given region show meaningful abundances of nodules.

2. Resource Density is Confirmed
Subsequent research cruise(s) are required to add to the dataset and to prove that subsea mineral resources exist in sufficient density to support potential economic produciton.
In the Cook Islands, a total of 4 cruises over nearly 10 years collected 180+ datapoints. Of these cruises, some focused on specific areas and collected data with significant density (e.g. in block 16-159).
This data is required in order give prospectors enough conviction to raise capital and proceed with their own research cruises.

3. Government Institutions are Established
Licensing cannot take place without meaningful, stable and well-resourced government institutions. In the case of the Cook Islands, it took around 3 years to develop, publish and amend government regulations.

4. Exploration Licensing is Initiated
Public opinion and support must be strong enough to allow the government to successfully initiate a licensing round. Strong public support is required to ensure that licensing occurs without issues or legal challenges, and to reduce the business risk for any potential prospectors.

5. Exploration Licences Granted
Exploration Licences must be granted to prospectors in order for them to start exploring. This process must be free of legal delays or other issues, as these will hamper the ability of prospectors to raise financing or to begin the process of exploration.

Progress in Various Jurisdictions

With these 5 main steps in mind, we identified various jurisdictions and estimated their progress towards possibly establishing licencing regimes:

Jurisdiction Resources Identified Density Confirmed Institutions Established Licencing Initiated Licences Granted
American Samoa 1 0 0 0 0
Kiribati 1 0 0 0 0
Belau 0 0 0 0 0
Mauritius 1 0 0 0 0
Cook Islands 1 1 1 1 1
Norway 1 1 1 1 0
French Polynesia 1 0 0 0 0
Marshall Islands 1 0 0 0 0
Peru 1 0 0 0 0
Niue 0 0 0 0 0
Tokelau 0 0 0 0 0
Tonga 0 0 0 0 0
Tuvalu 0 0 0 0 0
Vanuatu 0 0 0 0 0
Western Samoa 1 0 0 0 0

Based upon this analysis, we believe that significant work needs to be performed before subsea mineral licences can be issued in more jurisdictions. In particular, there is a need for more detailed seabed surveying, and significant work must be done to establish the required institutions, laws and regulations.

Summary

Subsea mineral resources can be found around the world in various locations in the world's oceans - both in international waters, and in the Exclusive Economic Zones of various countries. There is growing interest in these resources as a source of critical minerals required for the green energy transition, and governments are interested in pursuing these mineral opportunities.

Research and analysis of various licencing regimes in different countries reveals that the path to successfully issuing subsea mineral exploration licences is relatively long, and various components are required in order for it to be successful.

Significant volumes of subsea surveying and research are required in order to establish the presence of subsea minerals, and to indicate significantly dense mienral resources that may be worth producing. The licensing country must be stable, supportive, and able to establish and develop the relevant regulations and government bodies over many years. Public support for subsea mineral extraction must be present, and often this is linked to a long-term need to diversify the country's economy. Finally, a successful licensing round requires participants that have confidence in the country's government and institutions, that have built a strong conviction around the value of the opportunity, and have been able to raise significant financing based upon these various aspects.

This process may take many years, and we encourage any governments that are interested in exploring their subsea mineral resources to reach out to us so that we can help with these processes.

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Phillip Gales is a serial entrepreneur who has built tech companies in various heavy industries including Oil & Gas, Construction, Real Estate and Supply Chain Logistics. Originally from the UK, he now lives in Toronto, Canada, with his wife and young family.

Phillip holds an MBA from Harvard Business School, and an MEng in Electrical Engineering from the University of Cambridge, specialising in Machine Intelligence.