Deep sea mining: a blessing or a curse?

Now at last, an international regime for sea-bed mining acceptable to both industrialised countries and developing nations has been approved by the United Nations. Roger Murray assesses what impact this will have on Africa's leading mineral producers.

Almost two decades after negotiations over an International Law of the Sea were launched, agreement has finally been reached on an internationally recognised framework for exploiting seabed nodules containing potentially huge concentrations of manganese, cobalt, copper, and nickel - located at the bottom of the worlds oceans.

In July the UN General Assembly formally adopted a code of conduct for sea-bed mining. This will enable the establishment of a new UN agency, the International Sea-bed Authority (ISA), to administer the treaty and to oversee mining and exploration by its commercial arm, Enterprise.

This long delayed accomplishment opens the door to the formation of mining consortia joint ventures between transnational mining firms and, where appropriate, government partners, to carry out exploration to establish the commercial feasibility of recovering ocean floor minerals.

The Enterprise is structured so as to ensure that profits generated by sea-bed mining are fairly shared with land-locked and/or developing countries. Payments will be secured so that private sector technology can made available to the project partners.

This has overcome the concern that private mining companies would be put at a competitive disadvantage, one of the main objections to the original Enterprise concept by a group of industrialised countries, including the USA, UK, West Germany, France and Japan. The initial proposals have been modified to provide for private sector participation in Enterprise which will no longer be a solely governmental organisation funded by subscriptions from UN member states.

Investment will be provided by the joint venture partners for an initial project, with subsequent developments funded on a purely commercial basis. In return, industrialised countries have undertaken to cooperate with the ISA to ensure access to the appropriate technology where it cannot be acquired at a reasonable market price.

Space-age technology available

Technological progress since the 1970s - including offshore oil industry expertise and the spin-off from the US outer-space programme - have made deep sea-bed resources increasingly accessible. Advances in robotics and computer controlled systems in particular mean that the use of sea-floor crawler excavators, operating autonomously from any "mother ship", is no longer in the realm of science fiction. Although a draft Law of the Sea Treaty was adopted in 1982, it was not ratified by sufficient UN member states to come into force. Some developing countries however, incorporated provisions into their national laws. For example, coastal states concerned to protect their marine fishing grounds from foreign fishing fleets opted to extend the 12 nautical mile territorial limits by proclaiming a 200 nautical mile Exclusive Economic Zone (EEZ) and invested ownership of marine resources - including minerals below and above the sea-bed - in the state.

In Africa, these provisions have been most comprehensively applied by Namibia, which enacted an EEZ immediately on independence in 1990.

However, the 1982 treaty did establish the concept that mineral resources on and below the sea-bed in international waters beyond the continental shelf were the common heritage of humanity. This was a major demand of African and other "geographically disadvantaged" states - those land-locked or with short coastlines - concerned to ensure a share in the benefits accruing from the exploitation of deep sea mineral resources.

But it took 11 more years of negotiations before disagreements over the structure and operating modalities of the ISA and the Enterprise were resolved.

While several leading transnational mining firms - including the USA's Kennecott and the UK's RTZ Corporation - had formed sea-bed mining consortia in the early 1970's, the lack of an agreed international regime could have led to disputes in regard to overlapping sea-bed mineral claims. As a result, while a number of technical feasibility studies were conducted, no commercial scale mining operations have been started.

Of key importance to African onshore mineral producers is that while no output ceilings on sea-bed mining are proposed, General Agreement on Tariffs and Trade (GATT) "unfair competition" rules will apply. These will be based on yearly production estimates furnished by the ISA. A compensation fund is to be established for the benefit of land based producers adversely affected by sea-bed production, which would operate in a similar fashion to the European Union's Sysmin mechanism.

How far sea-bed mining will in practice impact on the export revenues of major African producers remains to be seen, given that the extent of recoverable sea-bed reserves has not been proven. Cost comparisons with land based mining of the same minerals will also need to be made - offshore diamond mining by purpose built vessels has already proved to be more efficient than comparable onshore operations, and the same factors are likely to apply to ocean bed mining.

This would appear to be potentially bad news for Africa's major onshore producers of the four sea-bed minerals, although non-mining countries and land-locked states should derive additional income from their share of Enterprise revenues from licensed mining operations.

Zaire and Zambia are the first and second largest global producers of cobalt while South Africa and Gabon account for almost a quarter of the worlds supply of manganese. Zambia in particular stands to lose a great deal, especially given the inefficiency of many of its older cobalt mines. But the commercial impetus to exploit new sources of these minerals has significantly lessened with the profound changes to the global political system and protracted international recession during the past decade.

The importance of "strategic minerals" - metals deemed essential to western industrialised economies - has been devalued with the end of the Cold War, the lifting of international sanctions against South Africa, and the emergence of China as a major exporter of the most used minerals. Previous concerns that high population growth and expanding consumption would produce a global shortage of key minerals by the end of the 20th century have also proved largely unfounded. Most African mineral producers have in addition substantially revised their mining laws to provide more attractive investment conditions, reducing the incentive for operators to go offshore for tax purposes.

A lead-time of some five to ten years is therefore likely before deep sea mining becomes a commercial reality and provides serious competition to African land based mineral producers.