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Deep sea mining: regulating an emerging industry

25 July 2017
By Hannah Lily, Natural Resources Legal Adviser at the Commonwealth Secretariat, and Paul Lynch, Seabed Minerals Commissioner of the Cook Islands

Deep beneath the ocean, the seabed holds rich deposits of minerals: gold, silver, cobalt, copper, nickel, zinc, as well as lesser known chemical elements like tellurium - used to make solar panels.

Such deep-sea minerals are a new frontier for the extractive sector: generating a great deal of commercial interest globally, but are yet to be mined anywhere in the world – largely due to technical and economic constraints. Concerns have also been raised over the potential for deep-sea mining to damage the marine environment, particularly if not carefully regulated.

The Commonwealth Secretariat has a long track record of advising its member countries on mining and petroleum policy, law and taxation – and now offers world-leading expertise to governments in relation to this new industry of deep-sea mining. For those countries considering engagement with deep-sea mining activities, our experts are available to provide advice to governments in relation to policy, law and economics, so they can make prudent decisions and put in place best-practice regulatory and fiscal policies and laws.

Despite the economic promise of deep-sea mining, there is nonetheless understandable concern about how regulators will manage the environmental impacts of mining these most under-explored parts of the Earth, and the extent to which proceeds from deep-sea mining will be managed sustainably and shared equitably so as to contribute meaningfully to improving the lives of ordinary people.

The Secretariat’s aim is for Commonwealth governments to take informed, consultative, science-based decisions about whether to engage with deep-sea mineral activities, and to manage any such future activities in accordance with progressive and high ‘good governance’ standards. These regimes should learn from past extractive industry experience, and should be grounded in sustainable development and Commonwealth Charter principles, which specifically recognise the importance of maintaining ocean health and the rights of citizens as resource owners.

Case study: The Cook Islands

Pacific island states have been at the forefront of this emerging deep-sea mining industry. The world’s first law to regulate the licensing of deep-sea mining within national waters was introduced by the Cook Islands, with support from the Commonwealth Secretariat.

The Seabed Minerals Act 2009 enabled the licensing of exploration and mining for manganese nodules, a resource containing cobalt, nickel and copper found in the Cook Islands’ exclusive economic zone, at depths of six kilometres.

Economic modelling provided by the Secretariat’s oceans and natural resources team was developed to inform the Cook Islands’ national fiscal regime, as well long-term advisory support to institutionalise and operationalise the new law – all provided by the Secretariat upon request by the government of the Cook Islands. This culminated in the formal establishment of a national Seabed Minerals Authority in 2012. Since then, the Secretariat’s oceans and natural resources advisers have been working with the Seabed Minerals Authority to produce comprehensive licensing regulations and operational guidance.

In complementary ocean-focussed initiatives the Secretariat, at the government’s request, has also been working in the Cook Islands with:

  • the National Environment Service on environmental regulation,
  • a cross-governmental committee on the establishment of Marae Moana (a national Marine Park),
  • the Ministry of Finance on fiscal policy for deep-sea mining,
  • the Cook Islands Investment Corporation on a state-owned joint venture for deep-sea exploration in international waters, and
  • the Ministry of Foreign Affairs to claim an area of extended continental shelf.

The Commonwealth Secretariat’s support has helped the Cook Islands government to enter into long-term agreements for exploration with two different deep-sea mineral companies in 2016. These are precursors to potential mining, which could bring significant new revenues, and also provide the Cook Islands with valuable geological and environmental data, as well as the possibility of new employment and training opportunities for Cook Islanders.

The priority for both the Cook Islands government and the Commonwealth Secretariat has been to take a ‘precautionary’ approach: ensuring that deep-sea mining regulation is in place to provide due process, to protect the marine environment, and to maximise national economic prosperity and local livelihoods.