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FixO3 - Deliverable D5.2.1: Deep Sea Mining

Project 312463 - Fixed Point Open Ocean Observatories Network

Work Package number WP5

Work Package title Innovation Through Industry

Deliverable number D5.2.1

Deliverable title Deep Sea Mining

Description An investigation into the current status of deep sea mineral exploitation

Lead beneficiary SLR

Lead authors Ciara Bannon (SLR), Nick O’Neill (SLR),

Contributors Shane Lavery (SLR)

Submitted by Shane Lavery

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I. Introduction ........................................................................................................................................... 3

II. Operators in the Industry ...................................................................................................................... 4

i. Nautilus Minerals Ltd, Solwara 1 ....................................................................................................... 4

ii. Diamond Fields International Ltd., Atlantis II Deep........................................................................... 6

iii. Other Explorers .................................................................................................................................. 7

iv. Neptune Minerals – Massive Sulphides ............................................................................................ 8

v. Tonga Offshore Mining Limited (TOML) – Manganese Nodules ....................................................... 8

III. Fix O3 Companies within the industry............................................................................................... 8

i. Consulting Companies in the Deep Sea Mining Industry .................................................................. 8

IV. Industry Suppliers .............................................................................................................................. 9

V. Environmental Concerns ................................................................................................................. 10

VI. Environmental Opportunities .......................................................................................................... 10

VII. Industry Outlook .............................................................................................................................. 11

VIII. Strategy Suggestion ......................................................................................................................... 11

IX. References ....................................................................................................................................... 12

Table of Contents

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I. Introduction The concept of Deep Sea Mining (DSM) originally came to light in the 1960s and with advances in

technology and average land-based mineral deposit grades decreasing, DSM is now becoming an

increasingly attractive source of minerals. Shallow underwater deposits (<600m), such as diamonds, iron

sands and phosphate, have been exploited by resource companies for years. This short study focuses on

the area of deep sea mining (>400m). The main targets for exploitation within this sector are polymetallic

(Mn) nodules, cobalt crusts and massive sulphide deposits, which can wield high concentrations and

varying amounts of iron, lead, copper, zinc, nickel and manganese, as well as precious metals such as gold.

A summary of these resources is presented in the table below.

The International Seabed Authority (ISA), established in 1994, is responsible for issuing and governing

exploration and mining licences (contracts) in international waters, with contracts currently only held by

government sponsored companies. The ISA is expected to release a framework governing the exploration

and mining of seabed deposits in 2016 and the current ‘Mining Code’ consists of a set of rules, regulations

and procedures issued by the ISA to regulate prospecting, exploration and marine minerals in the

international seabed area.

Mineral deposits occur at depths from 400m - >2500m and the main areas for current exploration activities

are the Clarion-Clipperton Fracture Zone (Eastern Pacific Ocean), the Western Pacific Ocean, the South

West Indian Ridge, Mid Atlantic Ridges and the Indian Ocean. Currently, there are 26 approved projects by

the ISA with a total covered area of around 1.2 million km². Only exploration contracts have been issued by

the ISA to date. Up until May 2014, 19 applications have been approved out of which:

13 concern the exploration of polymetallic nodules, 4 for polymetallic sulphides and 2 the

exploration of cobalt-rich polymetallic crusts.

12 of the exploration projects are located in the CCZ. This area is located in international waters of

the Pacific Ocean. The remaining projects are located in the Indian Ocean (3), the Atlantic Ocean

(2) and the north-western Pacific Ocean (2).

Target Metals Location and Formation

Polymetallic Massive Sulphides

Cu, Pb, Zn and precious + trace metals

Formed by precipitation of metals leached from hydrothermal fluids (black smokers / white smokers). Mainly occur along major tectonic belts, back-arc basins, volcanic ridges, at very deep – shallower depths

Manganese (Polymetallic) Nodules

Mn, iron hydroxides, Ni, Cu, Co, Mo, Zr, REEs

<1mm - >100’s mm diameter ‘potato sized’ lumps, precipitated on deep seafloor

Cobalt Crusts Co, Ni, Mn, etc <250mm thick crusts occurring on flanks of seamounts, ridges, plateaus and abyssal hills, in depths 400 – 4000m, formed by the precipitation of metals from black smokers

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These 19 approved projects cover an area of 1 million km². Exploration contracts are issued for 15 years

and 6 of the current contracts will expire in 2016. A summary of the main exploration areas and their

respective current contract holders is provided in the below table.

Area Operators/Licence Holders Target

Clarion-Clipperton Fracture Zone

Ocean Mineral Singapore Pte Ltd, UK Seabed Resources Ltd., G-Tec Sea Mineral Resources NV, Marawa research and Exploration Ltd., Tonga Offshore Mining Ltd., Nauru Ocean resources Inc., Federal Institute for Geosciences and Natural Resources of Germany, Institut français de recherche pour l'exploitation de la mer, Deep Ocean Resources Development Co. Ltd., China Ocean Mineral Resources Research and Development Association, Government of the Republic of Korea, Yuzhmorgeologiya, Interoceanmetal Joint Organization

Polymetallic Nodules

Western Pacific Ocean

Ministry of Natural Resources and Environment of the Russian Federation, Magellan Mountains, Pacific Ocean. Japan Oil, Gas and Metals National Corporation (JOGMEC), China Ocean Mineral Resources Research and Development Association (COMRA)

Cobalt-Rich Ferromanganese Crusts

Mid Ocean Ridges

Institut français de recherche pour l'exploitation de la mer, Government of the Russian Federation

Polymetallic Sulphides

Indian Ocean Government of India Polymetallic Nodules

South West Indian Ridge

Government of the Republic of Korea, Central Indian ridge. China Ocean Mineral Resources Research and Development Association

Polymetallic Sulphides

II. Operators in the Industry Currently, only 2 projects have published Code-compliant resources; Solwara 1 and Atlantis II Deep.

Solwara 1, discovered by Nautilus Minerals, is located in the Bismark Sea, within the Exclusive Economic

Zone of Papua New Guinea and Atlantis II is located in the central Red Sea.

i. Nautilus Minerals Ltd, Solwara 1

Nautilus Minerals, a publically listed Canadian company jointly owned by Barrick Gold Corporation, Anglo-

American, Teck Cominco, and Epion Holdings, is currently working towards developing the world’s first

seafloor mine, with the first mining lease granted in 2011 for the Solwara 1 deposit, in the territorial waters

of Papua New Guinea. Solwara 1 is the world’s first publically reported deep sea resource.

In 2008, Golder Associates prepared a resource report, stating 870kt of indicated massive sulphide and

1300kt of inferred massive sulphide, with a 4% Cu cut off, based on 111 diamond drill holes, EM sections

and chimney sampling. The deposit occurs at depths between 1500 – 2500m, in the Manus Basin, located

approximately 30km off the coast of New Ireland. When in operation, Nautilus Minerals expects to produce

approximately $564million worth of copper and $294million worth of gold per year.

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Fig 1: Bathymetric map taken

from Golder Associates 2008,

Resource Report 0661025-039,

showing deposit, chimney and

drill hole locations.

In 2014, Nautilus Minerals solved a dispute with the PNG government, allowing the project to proceed,

with the government of PNG taking a 15% stake in the project until first production. In April 2015, Nautilus

Minerals commenced exploration activities in the Solomon Islands, with survey services provided by

Gardline CGG Pte.

Since then, the company has been working towards operation, with the delivery of their production ship

expected by mid-2016 and of the seafloor production tool (SPTs), construction on the bulk cutter has been

completed and work on both the collecting machine and the auxiliary cutter began in 2014, with delivery

expected Q2 2015. The riser system is due to be completed Q2 2015 and the pump by 2016. Various

companies have been involved with the production ship construction, with the vessel cargo handling

equipment contract awarded to Bedeschi SPA in March 2015 and both the vessel electrical installation

contract, awarded to Siemens and the vessel cranes contract, awarded to MacGregor, in April 2015.

Fig 2: Nautilus

Minerals bulk cutter.

(http://www.nautilus

minerals.com/i/pdf/F

actsheetQ22014.pdf)

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ii. Diamond Fields International Ltd., Atlantis II Deep

The Atlantis II Deep deposit is joint owned by Diamond Fields International and Manafa International and is

located 155km west of Jeddah, in the Red Sea, within Saudi Arabian and Sudanese jurisdiction, at depths of

approximately 2000m. It is the ‘largest marine sulphide deposit known’, with the deposit estimated at 90

million tonnes. The high grade zinc, copper, silver and gold mineralisation extends over an area of 57km²

and although an estimated $28million has been spent on exploration, mineralisation remains open at depth

(>8.5m). The project was awarded a 30 year licence to develop Atlantis II Deep however; is currently on

hold pending a dispute between Diamond Fields International and Manafa.

Fig 3: Image showing

location of Atlantis II

Deep

In 2010, the ISA published a list of potential mining sites of Massive Sulphides at ‘Inactive Hydrothermal

Vents’, placing Atlantis II Deep first. The top 5 deposit sites are displayed in the table below.

Potential Deposit Sites (ISA 2010) Water Depth Jurisdiction Country

Atlantis II Deep 2,000-2,200 m EEZ Saudi Arabia, Sudan

Middle Valley Northeast Pacific 2,400-2,500 m EEZ Canada

Explorer Ridge Northeast Pacific 1,750-2,600 m EEZ Canada

Lau Basin Southwest Pacific 1,700-2,000 m EEZ Tonga

North Fiji Basin Southwest Pacific 1,900-2,000 m EEZ Fiji

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iii. Other Explorers

Public, non-code compliant statements have been released by a number of other explorers, mainly based in

the Clarion-Clipperton Zone and the Western Pacific Ocean, targeting polymetallic nodules. A brief

summary of these statements, including two for phosphorite deposits, are noted in the table below

(sourced from Sterk & Stein, RSC Global Report, 2015).

Company Exploration Area Deposit Publically Announced

BGR CCZ Manganese Nodules

>30Mt nodules over ~2000km² with average abundance of 22.4kg/m²

COMRA CCZ Manganese Nodules

Abundance >5kg/m² of Cu+Co+Ni of >1.8% average

DORD CCZ Manganese Nodules

12.31kg/m² average abundance ‘with cut off abundance of 7.5kg/m²’

Government of Republic Of Korea

CCZ Manganese Nodules

“Measured” resource of 188.4 Mt averaging 10.4 kg/m², and a “mineable” resource of 113.8 Mt

IFREMER CCZ Manganese Nodules

Currently defining an inferred resource

IOM CCZ Manganese Nodules

‘Estimated resource of 48.1Mt of 11Mt Mn, 0.44Mt Ni, ).43Mt Cu and 0.05Mt Co

MOES Indian Ocean Manganese Nodules

Identified a ‘test mine’

NORI CCZ Polymetallic Nodules

Geophysical mapping and seafloor sampling

Yuzhmorgeologia CCZ Polymetallic Nodules

Possible ‘448 Mt (dry) at an average grade of 1.39% Ni, 1.1% Cu, 0.23% Co and 9.3% Mn

JOMEC Western Pacific Ocean

Polymetallic Crusts

Exploration and sampling commenced

COMRA Western Pacific Ocean

Polymetallic Crusts

Exploration and sampling commenced

Chatham Rock Phosphate Ltd.

Chatham Rise, New Zealand

Phosphorite Nodules

80Mt with average of 290kg/m² for a contained 23.4Mt of phosphorite. The NZ EPA refused an application to mine by CPR in February 2015

Minemakers Ltd. Namibia Phosphorite Nodules

200-330m water depth, 60km off coast of Namibia. 98.8Mt of phosphorite at average of 20.57% P2O5 indicated. Progress halted due to moratorium pending an Environmental Impact Assessment

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iv. Neptune Minerals – Massive Sulphides

Neptune Minerals has undertaken a number of major exploration campaigns. These began in 2005 with a

scout drilling campaign in New Zealand waters and subsequent campaigns were undertaken in 2007, 2010,

2011 and 2012. In 2011, Neptune Minerals commissioned an environmental audit by Coffey Environments.

They hold licenses in Japan, Papua New Guinea, Solomon Islands, Vanuatu, Fiji, Tonga and New Zealand.

v. Tonga Offshore Mining Limited (TOML) – Manganese Nodules

TOML is 100% subsidiary of Nautilus Minerals and sponsored by the Kingdom of Tonga. In 2012 they were

awarded a 15 year exploration contract, in the Clarion-Clipperton Zone by the ISA and in September 2012

they announced an inferred resource of 440 Mt of 1.2% Ni, 0.24% Co, 1.1% Cu and 26.9% Mn, at a cut off

nodule abundance of 4kg/m2. TOML now plan to upgrade this to indicated category.

III. Fix O3 Companies within the industry FIXO3 partners are ideally positioned to provide a range of services required by the DSM sector, including

large scale marine environmental monitoring in the deep ocean.

i. Consulting Companies in the Deep Sea Mining Industry

Below is a list of the main consultancy companies actively offering geological and environmental services in

the DSM sector.

Geological

Company Overview DSM related services

RCS Global International Consultancy Research and advise to DSM industry

Coffeys International Consultancy Provided Nautilus Minerals with an EIA for Solwara 1, 2008 and Neptune Minerals with an environmental audit in 2011.

SRK Consulting International Consultancy Provided Nautilus Minerals with an ‘Offshore Production System Definition and Cost Study’ in 2010

Golder Associates International Consultancy Provided Nautilus Minerals with the ‘Mineral Resource Estimate, Solwara 1 Project’, 2008

Environmental

Company Overview DSM related services

Marine Space Environmental Consultants Consultants with experience in sea dredging

MESL Marine Ecological Surveys

Marine Consultants Scientific advice on the impacts of major industrial and construction developments in the marine environment.

Blue Planet Marine

Marine Consultants Marine consultants to oil, gas and mining industries

SRSL Marine Consultants Specialising in Renewable Energy, Aquaculture and Mineral Mining

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IV. Industry Suppliers Numerous opportunities exist for companies supplying services and products to the DSM sector, from

direct construction of vessels and operating systems, to the provision of entire offshore exploration

services. An example of some industry suppliers are listed in the table below.

Company Products and Services Offered Company Supplied / Comments Website

Hydro-Lek Hydraulic fittings to fully integrated telemetry-controlled robotic manipulator systems for integration onto ROVs and remote access platforms

http://www.hydro-lek.com/

MacGregor Cargo flow solutions for maritime transportation and offshore industries

Nautilus Minerals with cranes for processing ship

http://www.cargotec.com/en-global/macgregor/pages/default.aspx

DeepGreen Resources

Vessel for production of polymetallic nodules

Secured investment for Glencore and Glencore Xstrata contracted to purchase Ni and Cu

http://www.deepgreenresources.com/

Bauer Drill rigs for offshore foundations (wind farms, oil&gas) and marine exploration (SMS deposits, gas hydrates).

https://www.bauer.de/en/bma/maritime_technologies/

Rexroth Bausch

Drive and control solutions for offshore industry

http://www.boschrexroth.com/en/xc/industries/machinery-applications-and-engineering/offshore/offshore

Marum Sea floor drilling rigs https://www.marum.de/en/Marine_Technology.html

Siemens Vessel electrics Supply Nautilus with the entire electrical installation for the production support vessel

http://www.siemens.com/entry/cc/en/

GE Oil and Gas

Equipment and services’ providers in the oil and gas space

Supplying Nautilus with the Subsea Slurry and Lift Pump (SSLP) for their production support vessel

https://www.geoilandgas.com/

OceanflORE Integrated contact mining solutions for mine owners

http://www.oceanflore.com/7

Gardline CGG Multidisciplinary marine site survey and 2D exploration seismic survey

Currently supplying Nautilus Minerals with exploration services

http://www.gardline-cgg.com/

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V. Environmental Concerns The main concern for the DSM industry, as an emerging and untested operating sector, is environmental,

with largely unknown and potentially wide spreading environmental impacts. Although the impacts would

differ depending on deposit type, the main overall effects are;

Loss of substrate;

Effects of mining on the seabed,

The operational plume and re-sedimentation and;

Discharge plume from dewatering and its effects on pelagic and/or benthic fauna.

The three deposits types are expected to return different environmental results based on the duration of

the impact, the size and area affected, the nature of the impact and the potential for recovery. The

extraction processes expected to have the greatest effects are; disaggregation, lifting and dewatering.

Aside from the direct effect of the loss of substrate and the impact of mining activities in the immediate

locality, sediment plumes generated from activities can stretch for kilometres, potentially smothering

ecosystems located well beyond the deposit site.

DSM would also have a number of socio-economic and socio-cultural impacts, such as;

Impacts on fisheries

Marine traffic

Other (e.g. Telecommunications)

Impacts on cultural/historical resources (e.g. Shipwrecks etc.)

As a result of some of the information gaps surrounding the potential environmental, social and economic

impacts of DSM, a number of anti DSM organisations have formed, such as ‘Deep Sea Mining Campaign’,

which is particularly focused on the Solwara 1 project. Nautilus Minerals has set up a ‘Community

Accountable, Responsible Environmentally and Safe’ (CARES) program to highlight their efforts to operate

in a socially and environmentally responsible way. ‘The Solwara 1 project will involve depositing 245,000

tonnes of waste rock onto the seabed and releasing 10 million tonnes of contaminated water into the

ocean per year’ (Mining.com, 2013).

In 2013, the ‘SPC-EU Deep Sea Minerals Project’ was initiated with the aim on improving the governance

and management of the deep sea mineral resources of the Pacific Community (SPC), with ‘particular

attention to the protection of the marine environment and securing equitable financial arrangements for

Pacific Island countries and their people (http://www.sopac.org/dsm/).

VI. Environmental Opportunities A significant opportunity exists for companies operating in the marine environmental monitoring sector.

The ISA has issued a series of environmental recommendations and guidelines for contract holders. A

number of suggestions were proposed at an ISA held workshop in 2011. Resulting from this, it was

proposed that operators will be required to submit a full EIS as part of a mining application and will be

required to provide a detailed account of;

The regional overview of the offshore environment

Studies Completed

Special considerations for the site

Meteorology and air quality

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Geological setting

Physical oceanographic setting

Water quality

Sediment characteristics

Biological environment (pelagic, mid water and benthic)

Noise

Applicants will be required to submit details of plans surrounding the organisational structure and

responsibilities of the proposed environmental team, the environmental management system and plan,

including the monitoring plan and closure plan. Chapters outlining the environmental impacts, mitigation

and management measures, description of potential impact categories, results of mining operations and

detailed descriptions of the proposed environmental management measures, will also be required. It is

clear that large scale marine environmental monitoring will be a necessary component of any DSM

operation in the future.

VII. Industry Outlook The world’s undersea reserves are estimated to include 10 billion tonnes of polymetallic nodules, with an

average grade of ~30% manganese, 1.5% nickel, 1.5% copper, and 0.3% cobalt and a variety of minor REE’s.

$150 trillion+ worth of gold are estimated to be in the seabed, (Pros and Cons of Deep Sea Mining, 2013).

As such, the prospectively of the seafloor is very high and the potential economic returns substantial.

‘Japanese geologists estimate that a single 2.3 km2 patch of seafloor might contain enough rare earth

materials to sustain global demand for a year’ (Michael Lodge via World Economic Forum).

However, in its infancy, the industry faces a number of significant challenges including technological

challenges of extraction and operation, environmental, legislative and socio-economic issues. The current

aim of the ISA, which governs exploration and mining in international waters, is the have a financial, fiscal

framework for exploitation in place by 2016. It is expected that once a framework is in place, seabed

exploration activities will be opened up to private companies and as such, activity in this sector is

expected to increase. If the Nautilus Minerals Solwara 1 project goes into operation (potentially as

early as 2016 – 2017) and the operational and environmental management issues surrounding such a

project prove both achievable and economic, the DSM sector could expect to see significant expansion

as a viable source of, to date, wholly untapped mineral deposits and it is clear that large scale marine

environmental monitoring will be a critical part of any DSM operation in the future.

VIII. Strategy Suggestion FIXO3 partners should target the DSM sector, to provide deep sea environmental monitoring

services.

FIXO3 representatives should the 2016 Deep Sea Mining Summit (2015 Summit held in Scotland in

February)

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IX. References Sterk, R. & Stein, J.K. (2015), ‘Seabed Mineral Resources: A Review of Current Mineral Resources

and Future Developments’. Paper presented to: Deep Sea Mining Summit. Aberdeen, Scotland, 9-

10 February 2015

Lipton, I (2008), ‘Mineral Resource Estimate, Solwara 1 Project, Bismark Sea, Papua New Guinea’. Canadian NI43-101 form F1. Golder Associates Report ECORYS. ‘Study to investigate state of knowledge of deep sea mining’, Final report Annex 6 Environmental Analysis, FWC MARE/2012/06 – SC E1/2013/04. The International Seabed Authority in collaboration with the Government of Fiji and the SOPAC Division of the Secretariat of the Pacific Community (SPC) in Nadi, Fiji, ISA Technical Study: No. 10. ‘Environmental Management Needs for Exploration and Exploitation of Deep Sea Minerals’, Report of a workshop held by from 29 November to 2 December 2011,

‘Deep Sea Mining: The new resource frontier?’ Michael Lodge, World Economic Forum, http://reports.weforum.org/outlook-global-agenda-2015/future-agenda/emerging-issues-deep-sea-mining/

UNEP Global Environmental Alert Service (GEAS), ‘Wealth in the Oceans: Deep sea mining on the horizon?’ http://www.unep.org/pdf/GEAS_May2014_DeepSeaMining.pdf ‘Pros and cons of Deep Sea Mining, Infographic, 2013, www.miningaustralia.com.au/features/the-pros-and-cons-of-deep-sea-mining http://deepsea-mining-summit.com/access/index http://reports.weforum.org/outlook-global-agenda-2015/future-agenda/emerging-issues-deep-sea-mining/

www.sopac.org/dsm/ www.mining.com www.nautiliusminerals.com www.diamondfields.com

www.whoi.edu/main/topic/seafloor-mining