Offshore minerals policy workshop, 22-26 February 1999 ...

THE MADANG GUIDEUNES

ApPENDIX

Offshore Minerals Policy Workshop Report

SO PAC Miscellaneous Report 323

SOPACMisceilaneoHs Report 362 35

OFFSHORE MINERALS POLICY WORKSHOP

22-26 February 1999

Madang, Papua New Guinea

SOPAC Miscellaneous Report 323Revised Edition

December 1999

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ACKNOWLEDGEMENT

The Offshore Mineral Policy Madang Guidelines became a reality owing to the invaluablecontributions of several committed organisations and individuals. We wish to acknowledgethe Department of Mineral Resources, PNG for hosting the workshop; the Metal MiningAgency of Japan and the Forum Secretariat for sponsorship. Our gratitude goes to theauthors of the papers who set the tone and developed the eclectic framework for thediscussions. A special word of mention to Dr. Allen Clark, East West Center, Hawaii forplaying a key role during the conference and helping compile and edit the papers. SOPAC isproud to have co-ordinated the workshop and to present the Offshore Mineral Policy MadangGuidelines.

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TABLE OF CONTENTS

Introduction 5

Workshop Recommendations 6

Addresses and Presentations

Welcome Address 8Kuma Aua

Opening Address 9

Toyo Miyauchi

CHAPTER ONE: MARINE MINERAL RESOURCES

Offshore Mineral Resources Potential of Pacific Nations 11Allen Clark

Marine Hydrothermal Mineralisation in the Lau and North Fiji Basins 20Bhaskar Aao

Overview of Papua New Guinea Offshore Resources 31Paul Kia and Joseph Lasark

The Mineral Wealth of the Bismarck Sea 37Raymond Binns and David Dekker

The Offshore Mineral Resources of the Cook Islands 41Ben Ponia

CHAPTER TWO: MARINE MINERAL POLICY, LEGISLATION AND GOVERNANCE

The International Seabed Authority and the Development of the Seabed Mining Code 44Michael Lodge

Marine Mineral Policy Considerations for the Pacific Island Nations'Exclusive Economic Zone 50Allen Clark

Introduction to the Papua New Guinea Green Paper on Offshore Mining Policy 57James Wanjik

Fiscal Policy and Regime for the Economic Development of OffshoreMineral Resources 61Allen Clark

[SO PAC Miscellaneous Report 323 -Revised Edition]

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CHAPTER THREE: MARINE MINERAL DEVELOPMENT

Industry, Research and Government 68Julian Malnic

Licensing Regime in Papua New Guinea 74Nellie James

Stakeholder Issues in Papua New Guinea 78Francis Lola

Papua New Guinea Fisheries and Marine Mineral Development 82Ursula Kolkolo

CHAPTER FOUR: MARINE ENVIRONMENTAL ISSUES

Environmental Impact Assessment for Deepsea Mining 90Charles Morgan

Review of Japanese Activities on Manganese Nodule Developmentand Marine Environmental Preservation 96

Yuji Kajitani

Summary of the Japanese Environmental Study for ManganeseNodules Development 104Hirohiko Tesishima

Environmental Regime: Papua New Guinea Case Study 115Katrina Solien

END SESSION

Closing Address 119Hon. Masket Langalio CPE

APPENDICES

Appendix 1: Revised PNG Offshore Mining Policy Green .Paper 121

Appendix 2: Participants 132


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INTRODUCTION

The Offshore Mineral Policy Workshop (hereinafter "the Workshop") was held between 22-26February 1999 in Madang, Papua New Guinea. The Workshop was hosted by the Papua New Guinea(PNG) Department of Mineral Resources, coordinated by the South Pacific Applied GeoscienceCommission (SO PAC) and sponsored by the Metal Mining Agency of Japan (MMAJ) and the SouthPacific Forum Secretariat.

The need for this Workshop to discuss issues surrounding offshore mineral development wasinitially discussed between the Papua New Guinea Department of Mineral Resources (DMR), SOPAC,MMAJ and other experts in July 1997. In addition, the discussions surrounding the need for moreunderstanding of offshore mineral development issues resulted from two applications to PNG formarine exploration licences in the Manus Basin area of the Bismarck Sea by Nautilus MineralsCorporation limited (hereinafter "Nautilus"). The Papua New Guinea Government granted Nautilus theexploration licences in November 1997.

As part of the background work on building institutional competency to regulate offshore mineraldevelopment, the PNG Government determined that the Mining Act of 1992, which is the currentmining legislation governing onshore mineral development, was inadequate to deal with offshoremineral development. In March 1998, an inter-agency committee within PNG was convened toformulate a policy framework for offshore mineral development. This policy framework for PNG wasdeveloped in an Internal Workshop on Seabed Mining from 31 August -02 September 1998 in PortMoresby and resulted in a draft PNG Green Paper on Offshore Mining Policy (hereinafter "Green

Paper").

This Workshop combined national, regional and international expert presentations with workinggroup sessions and plenary discussion.

One primary goal of the Workshop was to solicit comments and obtain input from internationalexperts on the draft PNG Green Paper. The ensuing week's discussion points and proposals werediscussed within working groups and used to revise the Green Paper. These revisions were thendebated in the concluding session and agreed upon by the Workshop participants. The revised PapuaNew Guinea Green Paper is attached hereto as Appendix 1. This revised Green Paper is intended toundergo further development and refinement by the PNG inter-agency committee on offshore mineralpolicy and ultimately is to be forwarded to the PNG Cabinet of Ministers.

Another important goal of the Workshop was to develop a list of recommendations for proposedfurther work concerning offshore mining policy. To this end, each working group compiledrecommendations in written and oral form and each was discussed and critiqued. A final list of'Workshop Recommendations" was unanimously agreed upon by the participants. These WorkshopRecommendations have been used as the basis for the Madang Guidelines for future work concerningnational and international offshore mineral policy.

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OFFSHORE MINERAL POLICY WORKSHOP RECOMMENDATIONS

The following Recommendations are not listed in any order of priority. However, recommendationsthat are generally applicable for international offshore mineral development and the Asia-Pacific regionoverall are listed first. They are followed by those that would be more applicable to individual coastalstates.

1. As appropriate, nations should take relevant measures to ensure the provisions of the 1982Convention become fully implemented within their jurisdictions.

2. Nations should move forward rapidly to delineate the baselines from which the variousjurisdictional zones under the United Nations Convention on the Law of the Sea (UNCLOS)("1982 Convention") are measured and to deposit the appropriate charts and list of co-ordinates with the United Nations.

3. In the case of potential extensions of the continental shelf beyond 200 nautical miles, thesedata should also be gathered as soon as possible and the appropriate claims filed (bearing inmind the 10-year limit from the date of ratification by the coastal state).

4. Measures should be taken to designate archipelagic and other sealanes for the purpose ofnavigation in accordance with the 1982 Convention and other international conventions.

5. Nations should proceed to select their preferred dispute resolution mechanism as requiredunder the 1982 Convention.

6. Nations should develop and promote a consent regime for Marine Scientific Research (MSR)in accordance with the provisions of the 1982 Convention and recommended internationalstandards (e.g. the UN model guidelines on MSR) to ensure that research data andinformation may be obtained while protecting the confidentiality of investors' data regardingexploration of resources.

7. Recognising the appropriate instruments within the 1982 Convention regarding theconservation and management of the living resources within coastal states' EEls, measuresshould be taken to minimise adverse impacts to the marine environment and to traditional andnon-traditional uses of the sea that may be caused by offshore mining.

8. Where appropriate, coastal states should consider making a declaration that the non-livingresources beyond the 3-mile limit from the Provincia! coastlines are a "Common Heritage ofthe Nation".

9. In the interests of consistency and simplicity of administration, the unique nature of offshoremineral development activities and the diverse nature of stakeholder interests, coastal statesshould develop a comprehensive 'Offshore Mining Act,' where appropriate, as a distinctcountry-specific regime which is separate from their existing onland mining acts.

10. To ensure the long term capability of the coastal states to effectively monitor offshore mineralresources activities, relevant government representatives should participate in all at-seaphases of MSR, exploration and evaluation and that provision be made, either throughappropriation or the creation of special use funds within the responsible agency(ies), toprovide adequate human and fiscal resources required for needed data collection andcollation, monitoring and enforcement activities.

11. Coastal states should adopt a proactive approach in all significant decision making activitiesrelated to environmental concerns associated with offshore mineral exploration and

exploitation.

12. Recognising the unique nature of the biota associated with active hydrothermal zones,activities that ensure an adequate understanding of the biota communities and the impacts ofany associated mineral exploration and exploitation should be undertaken by MSR and

Industry.

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13. The collection of baseline environmental data should be a condition of any marine explorationlicence. Collection of baseline data should begin as early as possible followed by systematicdata collection throughout the term of the exploration licence.

14. The "risk" components associated with the exploration and exploitation of offshore mineralresources should be assessed and considered in the development of an appropriate licencingand fiscal regime.

15. Coastal states should adopt a policy that all commercia! operators in the offshore must carryappropriate insurance.


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WELCOME ADDRESS

Toyo MiyauchiDirector Metal Mining Resources Information Centre,

Metal Mining Agency of Japan

On behalf of the Metal Mining Agency of Japan (MMAJ), I would like to extend my sincere thanks toeach of you for coming to Madang to participate in what I believe to be a very important and well-timedWorkshop. With your expert contributions, I believe that this Workshop can achieve the results it hasset out to achieve. I would also like to thank the other sponsors, the Papua New Guinea Government,the South Pacific Forum Secretariat and the members of SO PAC, for making the organisation of theWorkshop possible. So, let us all work together to achieve some concrete results on the issue ofoffshore mineral policy, before we all find ourselves in "deep water".

But before focusing on the reason why we are here today, I would like to briefly discuss theMMAJ's experience with offshore mineral activities, and its history of offshore exploration in the SouthPacific region. The MMAJ first began prospecting activities for mineral resources in the deepsea in1975, and after the completion of the specialised research vessel "Hakurei Maru No.2" in 1980, carriedout a large-scale survey for manganese nodules southeast of Hawaii. The MMAJ has also conductedexploration targeting seafloor hydrothermal deposits on the Eastern Pacific Rise (EPR) off the coast ofMexico between 1985 and 1994 and the Okinawan area from 1995. Exploration for cobalt-richmanganese crust deposits is also underway in the international waters between Marcus Island and theMarshall Islands. In short, the MMAJ has accumulated over 20 years of experience in deep-sea floorexploration for mineral resources.

Now I wish to turn briefly to the MMAJ's relationship with exploration in the South Pacific. TheMMAJ has been closely involved with SOPAC since 1985, when in cooperation with the JapanInternational Cooperation Agency (JICA) it began a cooperative study project with SOPAC as part ofthe Japanese Government's Official Development Assistance (ODA) program. Phase I covered over1.85 million km2 in countries including Western Samoa, the Solomon Islands, Vanuatu, Kiribati, theCook Islands and PNG. Currently Phase III of this project is in operation in Tonga, the MarshallIslands, Micronesia and Fiji, and is scheduled to be completed later this year. The data gained fromthese basic exploration activities can be used as a base for mineral resources development by thesecountries in the future.

Which brings me to the purpose of this Workshop. As you are aware, we are here to helpgovernment policy-makers in the region understand the various issues involved in granting offshoremineral prospecting licences. Although the specific objective is to provide expert input to the PNGGovernment's Green Paper, the discussion will also provide an excellent basis for the development ofsimilar regulatory regimes in other countries in the region. In this way, the importance of contributing tothis Workshop cannot be underestimated.

In drafting offshore mineral policy, one aspect that needs to be emphasized is that seabedresources cannot be regulated in the same fashion as onshore minerals. Pre-existing mineralsregulation cannot simply be transplanted, without proper consideration of the environmental risks andcomplex technology involved. Personally, I also believe that care must be exercised over the form ofprospecting licences granted over offshore mineral deposits. As has happened on land, governmentsneed to create a licencing system that promotes greater overall exploration, and not create a systemthat excludes either private or regional exploration.

In closing, I would like to remind you of the movie "Jaws", which had everyone getting out of thewater. Over the next five days, let us cooperate to assist in the creation of an offshore minerals policythat allows everyone back in. Thank you.

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OPENING ADDRESS

Kuma AuaSecretary, Department of Mineral Resources,

Papua New Guinea

Introduction

Let me first of all extend a warm welcome to representatives from overseas, in particular, DirectorAlf Simpson from SOPAG and his staff, representatives from the Metal Mining Agency of Japan(MMAJ) and of course, each one of you Workshop participants, invited guests from Manus Province,New Ireland, East and West New Britain Provinces and other observers, ladies and gentlemen.

It gives me great pleasure to have been invited to give a brief opening address as Secretary forDepartment of Mineral Resources to this important gathering of professionals. This Workshop hasbeen staged at an opportune time for Papua New Guinea as we recently granted the first offshoremining exploration tenements in the world with respect to massive sulphide mineral deposits. Inaddition, our Green Policy Paper on this very subject of offshore mining which this Workshop will bereviewing, has been in circulation both internally in Papua New Guinea and externally as part of theconsultation process. This Workshop will assist officers of my department and relevant agencies of thePNG government and institutions to finalise this Green Paper and provide an opportunity for otherisland states in the region to focus on the formulation of their own offshore mining policies and laws.

Your task this week will be to develop an appropriate and workable policy framework for seabedexploration and mining activities for an island state. Such a policy framework should result in addingwealth to the nation when the mining industry extends its activities from terrestrial-based explorationand development to the offshore. For Papua New Guinea, most of you already know that the mineralsector is a major contributor to the national economy in terms of foreign exchange earnings, internalrevenue generation and gross national product. Of course we still have a few challenges to overcomeand/or strengthen, such as community involvement in decision making and environmental issuesresulting from mining operations.

Offshore mining is a relatively new activity in ocean affairs. I am sure that you participants at thisWorkshop will not only assist Papua New Guinea to finalise its offshore mining policy, but also thisregion of the world, consisting of many island nations, in developing an overall appropriate policyframework for this significant economic activity. No doubt, you will also gain for yourselves, relevantknowledge and skills and thus broaden your perspectives in this rather frontier and pioneering field.

As you know, PNG, like other nations in the region, is one of the archipelagic states that has beenaccorded special status under the United Nations Convention on the Law of the Sea 1982 (UNCLOS).PNG completed its ratification of this convention in January 1997; hence, it is incumbent on ourcountry to realise our inherent benefits while still fulfilling our obligations.

Resources

Papua New Guinea like other island nations, is blessed with abundant natural resources. Ourcurrent mining projects attest to the mineral resources onshore and it is logical for these riches toextend to the offshore. Later today Dr. Binns and his local counterpart geologists will present paperswhich reflect this fact. Similarly after that presentation, the Fijian case study will follow which willoutline the existing and the possible mineral resources prospects in that country.

The current interest in regional waters comprise a number of offshore resources such as sand andgravel, placer deposits, polymetallic sulphides, cobalt-rich manganese crusts, gas hydrates andmanganese nodules. In addition to these non-living resources, we must consider the living resourcessuch as biogenic materials, fisheries, fauna and flora and most importantly the unique environment

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which harbours them. The discussions throughout this week should enable an appreciation of thecomplexities involved when dealing with exploitation of mineral resources whilst conserving our marineenvironment for the benefit of other stakeholder interests and intergenerational equity. The UNCLOSprovides an ideal framework from which to develop our management and coordination systems both atthe national and consistently and importantly with our regional organisations.

Oceanographic and Environmental Conditions

Oceanographic and environmental conditions in the offshore also offer new challenges indeveloping or adapting technically feasible and environmentally acceptable exploration and miningtechnology. Examples of some new challenges will be highlighted today during some of thepresentations on the unique aspects of our natural environment.

The costs of the development of such technological modifications and/or innovations will inevitablybear on the economics of an offshore mining project. Thus any fiscal regime and a regulatoryframework that is designed must consider these issues.

Stakeholder Interests

The various stakeholders and their interests present a challenging perspective. Whilst encouragingexploration and exploitation of offshore mineral resources, we ought to be mindful of thesestakeholders and their interests. Freedom of navigation and marine scientific research are just two ofthe interests which come to mind. The international seabed authority has interests in the deep seabedand resources therein outside national jurisdiction under the principle of "common heritage ofmankind".

I believe its interest as well as others will be best addressed upon clear delimitation of nationaljurisdiction boundaries. This is a priority issue that another interdepartmental committee in PNG is

currently handling.

In this context, this Workshop will give some insight into various international, regional anddomestic regimes. Only then can we be fully conversant and appreciative of the inter-relatedness ofvarious issues and interests relating to ocean affairs as embodied under the UNCLOS.

At each respective national level the domestic legal regime will be assisted by the establishment ofdemarcated boundaries as part of the delimitation exercise that is part of the UNCLOS implementation

phase.

Challenge

I note that the program is very comprehensive. Your goal is to deliver an offshore mineral policy bythe end of the Workshop this coming Friday. I challenge you to work hard to achieve this objective.The rewards are an awareness and appreciation of the complexities of issues in the offshore mineralexploration and mining and most importantly at the regional level, an ongoing commitment to regionalcooperation. Consistency at the national and regional levels will enable effective coordination forimportant issues related to mining such as technology transfer, human resource development, marinescientific research and environmental monitoring and management.

Of course your tasks will not end here. The document outcome from this Workshop should promptother regional representatives here to develop an offshore regime for their domestic requirements.Consequently, it is expected that ongoing consultations and coordination with SOPAC must continue.

With these few remarks it is my pleasure to declare the Offshore Mineral Policy Workshop open.


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Offshore Mineral Resources Potential of Pacific Nations

Based upon a paper presented byAllen L. Clark

East-West Center, Honolulu, Hawaii, USA

Abstract

Because the world's oceans are largely unexplored, the potential for new discoveries of mineraldeposits is very high, in both the near shore and deep-sea areas. New discoveries include newoccurrences of known deposits, new deposits that have been postulated to occur but to date areunknown, and new deposits not yet imagined.

It has been postulated that large offshore gold placers associated with onshore epithermal gold andcopper/gold porphyry systems may occur among the near shore deposits as typical beach placers andas offshore placers in basin areas reworked by ocean currents; entrapped in concentratingenvironments near reefs and bioherms; in near shore and offshore areas with high organic content;and far offshore in deep water sediments. Additionally, diamond placers are being discovered andexploited in offshore southern Africa, Brazil and Indonesia and are postulated to occur in offshoreAustralia and Antarctica.

(

Deep sea areas outside the Clarion-Clipperton zone, such as the southeast Pacific, central IndianOcean, offshore south Australia and the South Pacific (Cook Islands), may contain deposits ofsufficient size and nodule grade that they may be considered alternative sites for possible mining.Manganese crust exploration in the future should consider alternative crust occurrences of possiblybetter economic potential in (a) areas below 2400 metres (m) with a more diverse but higher averagemetal content; (b) areas long associated with the Antarctic bottom water current (ABWC); (c)peripherally to ridge areas with hydrothermal activity; (d) on seamounts with a long history of activity;(e) crusts that occur in "collection basins"; and (f) tectonically displaced areas with prior crust

deposition.

Polymetallic sulfide deposits of possible commercial value occur on ocean ridges and in areaswhere there are seamounts and calderas on young oceanic crust; in areas associated with fault scarpsnear spreading centers; and in areas of sediment-buried spreading centers. The last type, with aresource potential of 50 -250 million tonnes (t), based on modern corollaries, may occur in the Manus,Lau, Fiji, and Mariana Basins of the western Pacific.

Other deposit types that may occur in specialized marine environments, both near shore andoffshore, are gas hydrates, uranium and rare-earth-rich phosphorites, deep-sea rare-earth-richnodules, and slope/shelf silver deposits.

Introduction

Less money has been expended, a smaller area studied, fewer samples taken, and fewer analysesperformed in the study of all the world's deep-sea mineral resources than has been dedicated to theresearch, exploration and development of the world's on-land nickel deposits. Yet, with this limitedeffort, one area of the world's oceans, the Clarion-Clipperton zone, was shown to contain more nickelresources than have ever been discovered on land. More importantly, active on-land exploration hasbeen under way for over 200 years and new types of deposits are being discovered every decade.Active deep-sea mineral exploration has only been under way for approximately 40 years. Thefundamental question therefore is "what would/will be the true mineral potential of the deep oceangiven the same duration and intensity of on-land exploration?" Manganese nodules were the depositsof the 1950s and 1960s, cobalt-rich manganese crusts the deposits of the 1980s. and polymetallic


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sulfide deposits, particularly those high in gold, are now the deposits of the 1990s: In addition to theabove, what will be the ocean mineral deposits of the twenty-first century?

Each research and/or exploration cruise significantly adds to the knowledge of the deep ocean andits mineral resources. In July 1989, an article in Science News (1989) reported that recent drilling on anewly discovered type of seamount showed that it was composed of serpentinite, rather thantraditional volcanic material, and was being actively formed by cold intrusion. Similarly, in 1995 newinformation emerged of life forms, associated with polymetallic sulfide areas of venting, which did notexist by photosynthesis. A new type of seamount, a new type of life and all within the last decade--howmuch is really known of the deep ocean, its processes, and its mineral resources? Surely the answermust be that we know very few of the ocean's secrets. If this is the case, the resource potential of thedeep ocean and near shore will be the source of new discoveries of both known deposit types and ofnew types of deposits.

This paper attempts to provide a brief overview of existing offshore mineral development activitiesand to present some basic concepts for new types of deposits. For the latter, the postulations arebased on incomplete knowledge and many deposits discussed may never be of commercial value.

Near Shore Mineral Deposits

Near shore deposits of black sands, chromite, gemstones, gold, diamonds, metalliferous muds, oiland gas, phosphate, platinum, sand and gravel, salts, silica, sulphur and tin have been recognized andexploited for centuries and they continue to be explored for and developed worldwide. However, forpurposes of this paper, the discussion of near shore mineral deposits focuses on new areas forconventional placer deposits and new types of near shore mineral occurrences that have not beenrecognized or previously described.

Near Shore Gold Occurrences

New occurrences of traditional placer gold deposits are an exciting new possibility for marinemining. In particular, placer gold deposits that are associated with epithermal gold deposits of thePacific Island nations, Papua New Guinea, Indonesia, and the Philippines may represent a greatuntapped potential. At present, no fewer than 1000 epithermal gold occurrences are known in thePacific Island nations, Papua New Guinea, Indonesia, and the Philippines, and many of them occurnear shore or in small island areas. Such deposits have undoubtedly contributed large quantities ofgold, through erosion, to the adjacent rivers and shoreline areas. Similarly, gold has been contributedto the near shore areas by occurrences not yet recognized or previously eroded.

To a large extent, based on the simple principles of hydraulics and placer concentration, it isanticipated that near shore and offshore placer deposits are primarily composed of fine-grained goldbecause (a) the onshore deposits are predominantly of fine-grained gold and (b) any coarse goldpresent would be concentrated either onshore or very near the shoreline.

A portion, and quite possibly a large portion, of offshore and near shore gold may be less than 50IJm (270 mesh) or colloidal in form and consequently may not follow simple hydraulic concentrationprinciples. In particular, it may move long distances prior to its deposition. As a result, placer golddeposits of fine gold may occur near shore in conventional placer deposits but far removed from theonshore general source, entrapped in concentrating environments of reefs and other living organisms,or as placer concentrations in reworked deep sediment units far offshore in deep-water sediments.

In particular, with respect to the above types of occurrences, several small to large gold/copperporphyries occur in Fiji, Papua New Guinea, Indonesia, and the Philippines. The largest of these is thegiant Bougainville Mine in Papua New Guinea, which has reserves of 530 million tons of ore averaging0.4% copper and 0.46 grams/t gold. The Bougainville Mine on Bougainville Island has deeply erodedand this author has estimated that erosion has yielded over 200 tons of gold into the surroundingstreams and offshore areas, an amount equal to that estimated for all epithermal deposits.

An additional type of near shore occurrence of fine-grained or colloidal gold that may exist which islargely unexplored is that associated with reducing environments in areas with high carbon content(Clark and Lum, 1990). Among the most common high-carbon areas are coastal wetlands and


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mangrove swamps and shallow estuaries. Although such areas are environmentally sensitive andwould require extensive environmental study and detailed rehabilitation programs, such high-carbonareas would be very favorable concentrating sites if they occurred in association with onshore andnearby epithermal gold deposits. Given the large areas of such high-carbon environments, it wouldseem that they deserve serious consideration as possible occurrences of coarse, fine, or colloidal

gold.

Near Shore Diamond Occurrences

Equally interesting to speculate on, in terms of known deposit types, are the possible areas wherediamondiferous placer deposits may occur. Diamondiferous placer deposits are of considerableinterest because they are noted for producing large diamonds of gem quality. The work of Sutherland(1982) has shown that the size of diamonds occurring in placers decreases with the distance oftransport, but with a corresponding increase in quality, and many diamonds may be transportedseveral hundred kilometres (km) from their primary source. These observations indicate thatdiamondiferous placer deposits may occur over areas larger than previously postulated and maycontain small but high-quality stones. As a result, the known offshore diamondiferous placer areas ofthe world, primarily in southern Africa and Brazil, should be reevaluated for additional placer deposits.

In addition to reevaluation of the above-mentioned areas of diamondiferous placers, several otherareas should be evaluated based on geologic considerations. Based on a Gondwanalandreconstruction, diamondiferous placer deposits may occur in the offshore areas of Australia, Antarcticaand, as have already been found, Indonesia. The presence of diamondiferous placers in Indonesia ispermissive evidence that diamondiferous placers may occur offshore Australia and Antarctica.

The above discussion in no way intends to limit the spectrum of new placer occurrences that mayexist in near shore environments. Rather, it is intended to draw attention to the vast potential of nearshore mineral occurrences and the need to develop new concepts, exploration methods, and newtechnologies to evaluate and develop these deposits and new policies, legislation and fiscal regimes topromote their development.

Offshore Analogues of Onshore Deposits

McKelvey (1986) pointed out that "theoretically any mineral resource mined on the continents canoccur on the continental margin". Indeed, more than 100 subsea underground mines, having shaftentry from the land, islands or artificial islands, are known. Beyond this specialized extension of on-land mining activities is a second distinct group of deposits: offshore analogs, and their associatedsecondary deposits, of deposits known on land.

Although the occurrence of near shore and undersea deposits has been casually considered bymany geologists and mining companies, there has not been any systematic or concerted effort toidentify such deposits. However, in the context of marine mining in the twenty-first century, it wouldseem that such deposits may well represent a prime exploration target. Philippine-type gold/copperporphyry deposits and their associated secondary deposits could be considered an excellent exampleof offshore analogues of onshore deposits. The proposed development of exploration and miningtechnologies applicable to deep-sea polymetallics will be equally applicable to more conventional nearshore deposits and vice-versa.

Unique to the postulated occurrence of conventional mineral deposits under the sea will be anassociated set of secondary deposits derived from the aerial erosion of a deposit near sea level andsubsequent subaerial erosion, the subaerial erosion of the deposit after emplacement at sea level, orthe subaerial erosion of a deposit formed under the sea. This differentiation is required in that themode of occurrence and the erosional history results in the production of different types of depositsand different erosional products. It should be reemphasized that the primary deposit represents aviable exploration target and potential economic deposit.

Using a Philippine-type gold/copper porphyry deposit as a model, it can be seen that, as thedistance from the primary source increases, subaerial erosion of the deposit may produce the

following sequence of metalliferous sediments:


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1. Residual gold cap on deposit (coarse-grained);2. Adjacent gold placer deposits with abundant quartz continuously reworked with

deepening erosion;3. Peripheral gold placers with copper sulfides;4. Strataform copper deposits (detrital) in high-energy sediments (minor gold);5. Fine-grained gold placers;6. Stratabound copper/gold-bearing sediments in adjacent deep areas (with other

base metals).

Obviously the distribution and thickness of these units, some of which may not exist because ofphysical factors, will vary considerably, but overall the types of postulated secondary deposits can beexpected to exist. As such, the secondary deposits associated with the erosion/emplacement ofconventional deposits offshore represent a new and largely, if not totally, unexplored set ofoccurrences.

Although this discussion uses a gold/copper porphyry as the example, it should be emphasized thatthere is no sound geological reason why the majority of conventional mineral deposits that occur onland would not occur in near shore or deeper offshore areas. In particular, Kuroko-type deposits, whichhave a strong ocean-floor association in their genesis, should be considered as prime targets for nearshore exploration.

Intermediate and Deep-Sea Mineral Resources

Manganese nodules

Manganese nodules were first discovered in the deep sea during the 1873-1876 expedition of theChallenger but remained little more than a scientific curiosity until the 1950s when large nodule fieldswere discovered in the Pacific Ocean. During the 1960s and until the late 1970s, manganese noduleswere the subject of intense scientific research and exploration by private industry. Althoughmanganese nodules occur in all of the world's oceans, the most famous area is the Clarion-Clipperton

nodule field, which is an area of roughly 2.25 million square kilometres (km2).

McKelvey (1986) has estimated that within this area there are 2.1 billion dry t of potentiallyrecoverable nodules. The mineable area would be 1.25 million km2, with a nodule concentration of11.9 kilograms per square metre (kg/m1 of nodules containing 1.3% nickel, 1% copper, 25%manganese, 0.22% cobalt, and 0.05% molybdenum.

Recently, Clark, et al. (1995) estimated that the cobalt rich manganese nodule resources occurringwithin the EEl of the Cook Islands was approximately 7.5 billion tonnes of nodules containing 32.5million tonnes of cobalt, 24.5 million tonnes of nickel and 14 million tonnes of copper (assuming a cut-off grade of greater than 5kg/m2 in an area of 652,223 km1. For the entire Pacific, Halbach andFellerer (1980) have estimated there to be 8.1 billion t of recoverable nodules.

For the present discussion it is sufficient to point out that in the South Pacific only the manganesenodule potential of the Cook Islands is known with any degree of geologic certainty, in terms of overallresource potential, and reserve estimates are lacking worldwide. However, manganese nodules areknown to occur within the EEl's of most Island nations and the long term potential of these resourcesis yet to be adequately investigated.

Polymetallic massive sulfides

Since the discovery of polymetallic sulfide deposits (PMS) in 1978, many authors have noted thesimilarity of PMS occurrences to deposits now being mined on the continents. In particular, theophiolite-hosted massive sulfide deposits of Cyprus (Adamides 1979), Kuroko deposits of Japan(Halbach et al. 1989b) and the numerous massive sulfide deposits of Canada and Australia are allconsidered corollaries with specific types of PMS occurrences in the intermediate to deep ocean.


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The various types and occurrences of PMS deposits and their associated geological environmentscan be summarized as follows:

.Seamounts and associated calderas on young oceanic crust. Recent seamounts andassociated calderas provide a complex area of volcanic extrusions, faulting, brecciationand alteration, thereby providing an ideal environment for sulfide entrapment andconcentration. Extensive sulfide deposits have been found associated with calderas andsummit slopes (Lonsdale et al. 1982; Hekinian et al. 1983a, 1983b; Kappel and Franklin1989; Halbach et al. 1989b).

.Fault scarps bordering axial valleys associated with spreading centers. Major tectonicfeatures such as fault zones provide opportunity for extensive convection andmineralisation of faulted and brecciated host rock and associated detrital material (Backeret al. 1985; Malahoff 1982; Kappel and Franklin 1989).

.Sediment-buried spreading centers. Deposits may form where the spreading axis isadjacent to a source of sediments either from the continents (as in the Gulf of California)or near island arcs (as in young back-arc basins of the west Pacific). In the GuaymasBasin of California, over 120 discrete sulfide mounds have been observed (Scott et al.1983). Mounds of probable hydrothermal origin have been found associated with theMarianas Basin (Leinen and Anderson 1981), the Manus Basin (Both et al. 1986, Binns, etal. 1997), the Lau Back-arc Basin (Stackelberg et al. 1989) and the Okinawa TroughBack-arc Basin (Halbach et al. 1989b).

Based on the above, it was this author's belief (Clark, 1985) that the most prospective areas for theoccurrence of large PMS were the basins of the west Pacific, particularly, the Manus, Fiji, Woodlark,Marianas, and Lau Basins. Indeed, the present areas of primary interest, because the favorable areashave been leased to private industry, are those discovered in the Manus Basin of Papua New Guinea(Binns, et al. 1997).

According to Binns, et al. 1997, the eastern Manus Basin contains three known active hydrothermalzones (PASCMUS, DESMOS and Susu Knolls) which are rapidly becoming recognized as regional-scale modern analogues of volcanic hosted mineral fields on land. In the PACMUS field, Binns, et al.(1997), reports that ".. .Chimneys dominated by chalcopyrite and sphalerite, with barite and somebornite, have average compositions of 11 wt% Cu, 27% Zn, 230ppm Ag, and 18 ppm Au " And inthe Susu field " analyses of three Suzette chimneys average 19% Cu, 22% Zn, 125 ppm Ag and 23ppm Au "

What is particularly interesting about the Manus Basin deposits and perhaps the deposits of theOkinawa Trough as well, is their high gold content. If the value of the known mineralisation in theeastern Manus is calculated on a per tonne basis it would be worth approximately US$500 toUS$600/tonne in contained metal (gold, copper, zinc). It is doubtful that with further testing a deposit ofsufficient size, which averaged this high a contained metal value, will be discovered. However, theevidence to date based on limited sampling clearly indicates that the known mineralisation iscomparable to, or exceeds in value, that of many massive sulfide deposits on land.

Although the PMS are mineralogically and elementally similar to known mineral deposits, theyappear to vary in one major aspect--size. To date, the majority of all known PMS occurrences areconsiderably smaller than that of deposits that have been, or are being, mined elsewhere in the world.To a large extent, however, this may be due to the lack of adequate three-dimensional data on theseoccurrences or, more likely, the answer to the question, "Where are the big ones, or at least theaverage-sized deposits?", may lie in Converse, et al.'s (1984), observation that only a very smallproportion of the mass flux of any vented system is localized in the chimney of the "smoker" itself; theoverwhelming proportion is lost to the water column as the hot solutions disperse.

Regardless of the above, the ridge-associated PMS are considered to be analogous with depositsin Cyprus and to some extent with the Kuroko deposits of Japan, whereas, deposits in the sediment-buried spreading zones may be considerably different from the above types and may more closelyresemble deposits of the Iberian pyrite belt of southern Portugal, southwestern Spain or deposits inCanada. In the Iberian deposits, Strauss, et al. (1977), has estimated the reserves of the area to be in


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excess of 1 billion t. Individual deposits in the belt commonly exceed 25 million t and deposits of 100million t are common. Alternately, the proposed deposits may be similar to those mined in the Bathurstdistrict of Canada, where over 30 massive sulfide deposits, containing a total of 250 million t of ore,occur (Sangster 1980). Deposits in this area range from 1 million t to over 120 million t and over 15%of all deposits are 10 million t or larger.

Based on the above analogies, it can be postulated, perhaps optimistically, that if the Manus, Lau,Woodlark, Fiji, and Marianas Basins are similar to the Iberian pyrite belt, over 500 million t of ore mayoccur. Alternately, if they are similar to the Bathurst area, the potential reserves could be as high as250 million t. Although this author does not believe the above basins will yield the quantities of orefound in the Iberian pyrite belt, it should be emphasized that if even one basin had a reserve potentialequal to the Bathurst area of Canada, it would qualify as a world-class mineral district.

It would be inappropriate to conclude this discussion of PMS without a short discussion of the goldcontent of present and future polymetallic sulfide deposits. Harrington, et al. (1986), have provided anexcellent overview of gold in marine PMS, which is of importance to this paper. In summary,Harrington, et al., made the following observations:

1. High gold content (up to 6.7 parts per million [ppm]) in PMS in the eastern Pacific areassociated with late-stage, sinterlike, low-temperature sulfosalts of lead, arsenic,antimony, silver, and sulfur in a matrix of amorphous silica;

2. Gold at concentrations of about 0.2 ppm is associated with high copper (>1%) andmolybdenum (up to 470 ppm); at concentrations >0.8 ppm with high zinc (>100 ppm),arsenic (>300 ppm) and antimony (50-100 ppm); and,

3. Hydrothermal areas in the Guaymas Basin are underlain by sediments enriched with goldrelative to mid-ocean basalts but sulfide samples normally contain >0.2 ppm gold.

The western Pacific margin, from New Zealand to Alaska, is an area typified by a large number ofepithermal gold deposits and gold/copper porphyry deposits--as such, it represents a major goldmetallogenic province. This known association of high-gold deposits on-land, with high-gold-bearingdeposits within the region's ocean basins (Halbach et al. 1989b), indicates that the western Pacificgold province (WPGP) may prove to be the area with the world's richest PMS with respect to gold andsilver.

Manganese Crusts

Although the existence of manganese crusts has been known for over a century, interest in cobalt-rich manganese crusts (hereinafter "crusts") increased rapidly in the early 1980s as a result of studiesin the Hawaiian Archipelago (Craig et al. 1982) and Line Islands (Halbach et al. 1982). These studiesdemonstrated that crusts occurred over large areas of seamounts and guyots, and that such depositshad cobalt contents of more than 1%. Subsequently, a resource assessment of the HawaiianArchipelago (Clark et al. 1984) demonstrated that the crust has resources of roughly 10 million t ofcobalt, 6 million t of nickel, 1 million t of copper, and 300 million t of manganese. Additionally, based ona geologic occurrence model, it was estimated that the Exclusive Economic Zone (EEZ) areas of theMarshall Islands, Johnston Island, and Kingman-Palmyra Island had an equal or greater resourcepotential than that estimated for the Hawaiian Archipelago (Clark and Johnson 1986).

More interest in crusts was generated by the discovery of platinum concentration of up to 1 ppm inmany crusts (Halbach et al. 1984, Halbach et al. 1989a), by the discovery of crust thicknesses inexcess of 10 cm in the Marshall Islands and by the discovery of crusts on broad, gently slopingsurfaces, possibly of sufficient extent to support a proposed mining operation. All of these factors, inaddition to new discoveries, have served to maintain a strong public and private interest in possiblemanganese crust mining.

In addition to the crusts that occur in the above-mentioned environments, other occurrences ofcrusts, which vary in thickness, metal content, and potential recoverability, would include the following:

1. Manganese crusts occurring below the 2400-metre zone proposed as a base forconventional crust deposits. These deeper crusts have a higher content of copper andnickel and a lower content of cobalt, and may lack the medial phosphate unit. Because ofa more diverse, but equal distribution of metals, such crust deposits may be of higher

[SOPAC Miscellaneous Report 323 -Revised Edition]

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economic value depending on future metal prices. Additionally, they are largely unstudiedand future research may show heretofore unknown thickness and metal values ofeconomic interest;

2. Crust deposits that have developed in unique geologic settings may ultimately be of thegreatest interest from an economic perspective. In particular, crusts that have formed onseamounts that have been exposed to the influences of the Antarctic bottom water current(ABWC) may be found to have very thick and rich crusts. Alternatively, crusts that occuron seamounts peripheral to ridge areas may be found to be thicker and of a higher grade,and they may contain a wider spectrum of metals than normal crust deposits, primarilybecause of contributions of material from the ridge hydrothermal activity. These depositswould be somewhat similar to crust deposits that may occur in an associated environment,that is, on the seamounts that have undergone prolonged hydrothermal activity associatedwith calderas. Such environments would produce crusts derived both from normal crustformation processes and from those associated with volcanism and hydrothermal activity;

3. Unique geologic environments will be found in which a combination of normal geologicfactors that produce crusts are amplified. In particular, small ocean basin areas ("collectorbasins"), such as those formed by guyots in the Marshall Islands where currents areamplified, waters recirculated and recharged, and abundant deposition surfaces occur, areideal sites for crust formation. These collector basin environments, which would alsoinclude calderas on seamounts, occur throughout the Pacific and should be explorationtargets for commercial crust occurrences; and,

4. Previously formed crust deposits may be tectonically elevated or depressed and thereforeexploration for crust occurrences cannot be constrained to the aforementioned 800-2400-metre zone. Exploration should be undertaken below 2400 m in some areas, and, in theextreme, on land for crust occurrences that have been tectonically displaced.

In addition to the above-described known deposits and those postulated to occur, there is oneadditional type of deposit that should be considered for its geologic, economic, and mineable potential.These are the composite crust/nodule occurrences that have been observed throughout the Pacific buthave not been actively considered as potentially mineable deposits. Specifically, many seamountplateaus, intervalley areas, and gently sloping areas demonstrate areas of both nodule and crustdevelopment that may be adjacent or overlapping. A better understanding of these types ofoccurrences may lead to the discovery of deposits that can be mined for both nodules and crusts; suchcomposite deposits may contain more metal and have larger tonnages than conventional crustoccurrences. Because composite crust and nodule areas are common throughout the Pacific, theirpotential should be evaluated.

Energy Resources

As a concluding comment on the potential of the deep ocean for producing heretofore unknownmineral deposits, some mention should be made of the potential for energy resources. Chief amongthese may be deep-ocean oil and gas deposits formed by ocean hot spots. These types of depositshave recently been postulated by Simoneit and Bidyk (1989) who noted the presence of oil on theocean floor in the areas of hydrothermal activity and as discrete free-floating globules. It is postulatedthat hot spot areas elevate the temperature of organic sediments to over 350°C, a temperature atwhich hydrocarbons form rapidly. This is in contrast to the normal concept of oil and gas forming instable basins over long periods and at temperatures determined by depth of burial. The new conceptof oil formation over hot spots and in areas of rapid tectonic movement would, by necessity, requirethat the oil form rapidly--as it does. Second, it would require that the oil be formed in sediments thatcould trap and retain the oil (in the Guaymas Basin, for example, it escapes to the surface). Suchareas may well occur in association with the basin-covered spreading ridges described elsewhere inthis paper. Similarly, consideration should be given to oil exploration in near shore and onshore areasthat fall on line with extensions of deep-sea hot spot areas. It should also be noted that oil and gasseeps have been reported offshore Antarctica and in several other areas. Such occurrences mayindicate that "hot spot oil" may be much more common than postulated in this paper. Finally,consideration should be given to the possibility that the same processes that are forming "hot spot oil"


[18]

at present most certainly existed throughout much of geologic time. As a result, Paleo-hot spot oiloccurrences may occur on land and are yet to be discovered.

Summary and Conclusions

Centuries of on-land exploration for mineral deposits have shown that many areas of the continentscontain commercial deposits of minerals. More importantly, modern exploration continues to find newdeposits and deposit types. When this is compared to the world's oceans, where exploration has beenactive for less than 50 years and only a tiny fraction of on-land exploration research money has beenallocated to ocean minerals, it can only be concluded that, although largely untested, the potential ofthe oceans to yield mineral resources is enormous -even if these resources are only one-tenth ofthose found on land.

For the future, the marine mineral deposits that will be discussed include new occurrences ofknown deposit types, new deposits that are postulated to occur but to date have not been discovered,and new deposits that are not yet imagined. The majority of the future discoveries probably belong inthe last category. However, for the near term, based on economic, technological, and practicalconsiderations, the major part of exploration and development planning will undoubtedly focus onexpanding present knowledge of known deposit types.

Many factors, including world metal demand, metal prices, technology, legal regimes,government/industry activities, etc., will determine when and if deep-sea mining, or, indeed, shallowercontinental shelf mining, takes place. What is more certain, however, is that, as pointed out in thispaper, the potential for new discoveries is enormous, and, more importantly, man's desire to exploreand discover new deposits is perhaps even larger.

References

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Backer, H., Lange, J. and Marchig, V. 1985. Hydrothermal Activity and Sulphide Formation in Axial Alleys of the

East Pacific Rise Crest between 18 and 220S. Earth Planet. Sci. Lett. 72: 9-22.

Binns, R.A., Scott, S.D., and Gemmell, J.B. 1997. Modern Analogue of a Mineral Field: Seafloor HydrothermalActivity Hosted by Felsic Volcanic Rocks in the Eastern Manus Basin, Papua New Guinea. In Society ofEconomic Geologists Neves Corvo Field Conference, Lisbon, Portugal.

Both, R., Crook, K., Taylor, B., Brogan, S., Chappell, B., Frankel, E., Liu, L., Stinton, J., and Tiffin, D. 1986.Hydrothermal Chimneys and Associated Fauna on the Manus Back-arc Basin, Papua New Guinea. Eos67{21): 489-490.

Clark, A.L., Johnson, C.J., and Chinn, P. 1984. Assessment of Cobalt-rich Manganese Crusts in the Hawaiian,Johnston and Palmyra Islands' Exclusive Economic Zones. Natural Resources Forum 8{2): 163-174.

Clark, A.L., and Johnson, C.J. 1986. Cobalt-rich Manganese Crust Potential of the U.S. Trust and AffiliatedTerritories. In Proceedings of the Offshore Technology Conference, Houston, Texas. OTC-5233: 111-118.

Clark, A.L., and Lum, J. 1990. Gold Potential in Mangrove Swamp Environments of the Southwest Pacific. East-West Center Occasional Paper 4-90.

Clark, A.L., Lum, J.A., Li, C., Icay, W., Morgan, C., and Igarashi, Y. 1995. Economic Development Potential ofManganese Nodules within the Cook Islands Exclusive Economic Zone. East-West Center, Honolulu,Hawaii.

Converse, D.R., Holland, H.D., and Edmond, J.M. 1984. Flow Rates in the Axial Hot Springs of the East Pacific

Rise (210N): Implications for the Heat Budget and the Formation of Massive Sulphide Deposits. EarthPlanet. Sci. Lett. 69: 159-175.

Craig, J.D., Andrews, J.E., and Meylan, M.A. 1982. Ferromanganese Deposits in the Hawaiian Archipelago.Marine Geology 45: 127-157.

Halbach. P., and Fellerer, R. 1980. The Metallic Minerals of the Pacific Seafloor. GeoJournaI4{5): 407-422.

Halbach, P., Marchig, V., and Scherhag, C. 1980. Regional Variations in Manganese, Nickel, Copper and Cobaltof Ferromanganese Nodules from a Basin in the Southeast Pacific. Marine Geol. 38: 111-119.


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Halbach, P., Manheim, F.T., and Otten, P. 1982. Cobalt-rich Ferromanganese Deposits in the Marginal SeamountRegions of the Central Pacific Basin--Results of the Midpac '81. Zeitschrift fur Erzbergbau undMetallhuttenwesen 35: 447-453.

Halbach, P., Puteanus, D., and Manheim, F.T. 1984. Platinum Concentrations in Ferromanganese SeamountCrusts from the Central Pacific. Naturwissenschaften 71: 577-579.

Halbach, P., Nakamura, K., Wahsner, M., Lange, J., Sakai, H., Kaselitz, L., Hansen, R.D., Yamano, M., Post, J.,Prause, B., Seifert, R., Michaelis, W., Teichmann, F., Kinoshita, M., Marten, A., Ishibashi, J., Czerwinski, S.,and Blum, N. 1989a. Possible Modern Analogue of Kuroko-type Massive Sulphide Deposits in the OkinawaTrough Back-arc Basin. Nature 338(6215): 496-499.

Halbach, P., Kriete, C., Prause, B., and Puteanus, D. 1989b. Mechanisms to Explain the Platinum Concentrationin Ferromanganese Seamount Crusts. Chemical Geol. 76: 95-196.

Harrington, M.D., Peter, J.M., and Scott, S.D. 1986. Gold in Seafloor Polymetallic Sulphide Deposits. EconomicGeol. 81(8): 1867-1883.

Hein, J.R., Morrison, M.S., and Gein, L.M. 1991. Central Pacific Cobalt-rich Ferromanganese Crusts: HistoricalPerspective and Regional Variability. Circum-Pacific Council for Energy and Minerals, Earth SciencesSeries.

Hekinian, R., Fevrier, M., Avedik, F., Cambon, P., Charlou, J.L., Needham, H.D., Raillard, J., Boulegue, J.,

Merlivat, L., Moinet, A., Manganini, S., and Lange, J. 1983a. East Pacific Rise near 130N: Geology of NewHydrothermal Fields. Science 219: 1321-1324.

Hekinian, R., Francheteau, J., Renard, V., Ballard, D., Choukrone, P., Cheminee, J.L., Albarede, F., Minster, J.F.,Charlou, J.L., Marty, J.C., and Boulegue, J. 1983b. Intense Hydrothermal Activity of the Axis of the East

Pacific Rise near 130N: Submersible Witnesses the Growth of Sulfide Chimney. Marine Geophys. Res. 6: 1-14.

Kappel, E.S., and Franklin, J.M. 1989. Relationships Between Geologic Development on Ridge Crests andSulphide Deposits in the Northeast Pacific Ocean. Economic Geol. 84(3): 485-505.

Leinen, M., and Anderson. R.N., 1981. Hydrothermal Sediment from the Marianas Trough. Eos 62: 914.

Lonsdale, P.F., Batiza, R., and Simkin, T. 1982. Metallogenesis at Seamounts on the East Pacific Rise. Mar.Tech. Soc. J. 16(3): 54-61.

Malahoff, A. 1982. A Comparison of the Massive Submarine Polymetallic Sulfides of the Galapagos Rift withSome Continental Deposits. Mar. Tech. Soc. J. 16(3): 39-45.

McKelvey, V.E., Wright, N.A., and Bowen, R.W. 1983. Analysis of the World Distribution of Metal-rich SubseaManganese Nodules. U.S. Geological Survey Circular 886.

McKelvey, V.E. 1986. Subsea Mineral Resources. U.S. Geological Survey Bulletin 1689-A.

Rona, P .A. 1984. Hydrothermal Mineralizations at Seafloor Spreading Centers. Earth Sci. Rev. 20: 1-104.

Sangster, D.F. 1980. A Review of Appalachian Stratabound Sulphide Deposits in Canada. Ireland Geol. SurveySpec. Paper 5: 7-18.

Science News. 1989. Vol. 136(1): 15.

Scott, S.D., Londsale, P.F., Edmond, J.M., and Simoneit, B.R.T. 1983. Guaymas Basin, Gulf of California:Example of a Ridge Crest Hydrothermal System in a Sedimentary Environment. Geol. Assoc. of CanadaProgram with Abstracts 8: A61.

Simoneit, B.R.T., and Bidyk, B.M. 1989. The Quick Recipe for a Soup of Black Gold. Science News 135(19): 295.

Stackelberg, U.V., and Shipboard Party 1989. Active Hydrothermalism in the Lau Back-arc Basin (S.W. Pacific):First Results from the SONNE 48 Cruise (1987). Marine Mining 7: 431-442.

Strauss, G.K., Madel, J., and Alonzo, F.F. 1977. Exploration Practice for Stratabound Volcanogenic SulphideDeposits in the Spanish-Portuguese Pyrite Belt, Geology, Geophysics and Geochemistry. In Klemm, D.D.,and Schneider, H. J. (eds), Time and Stratabound Ore Deposits. Springer-Verlag, New York. pp 55-93.

Sutherland, D.G. 1982. The Transport and Sorting of Diamonds by Fluvial and Marine Processes. Economic Geol.7: 1613-1620.


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;, ;:i3!'::.CHAPTER ONE: MARINE MINERAL RESOURCES

,Co':,,"'}"'." ";;

',:,': iA Marine Hydrothermal Mineralisation; :!"'"'""~":'( in the Lau and North Fiji Basins

:,,':,C "':.' oj'; ;

Based on a paper submitted byBhaskar Rao

Director, Department of Mineral Resources, Fiji

Introduction

Polymetallic Sulfide Deposits (PSD) on the ocean floor are a relatively recent discovery (1978) andhave often been referred to as modern-day analogues or corollaries of onshore deposits. Initiallydiscovered on the East Pacific Rise, these sulfide deposits are thought to be hydrothermal precipitatesfrom seawater enriched in metals by circulation through hot oceanic crust. Extensive literature nowdocuments the widespread occurrence of these deposits along the East Pacific Rise, the Galapagosspreading center, and the Mid-Atlantic Ridge implying that such deposits are widespread perhaps overmost these ridge systems. Within the western Pacific, smaller centers of spreading exist behind theactive arcs within the so-called back-arc basins. PSD's were first discovered in the South Lau Basin in1984 (Stackelberg et al. 1985) and subsequently in the northern Lau Basin, Okinawa Trough, theNorth Fiji and the Manus Basins. Halbach, et,al. (1989), drew attention to similarities between PSD ofthe Okinawa Trough and the Kuroko deposits of Japan.

This paper summarises information on marine PSD's from the Lau and North Fiji Basins based ona survey of existing literature.

Geological Setting

Back-arc or marginal basins (Karig 1970) are thought to have formed as a result of crustalextension behind presently active island arcs. Present day volcanic activity is concentrated alongnarrow elongate spreading centers roughly central within the basins. Often spreading is offset by setsof transform faults and spreading itself may be discontinuous. Spreading involves extrusion of newoceanic crust and is symmetrical about the main axis. Due to this symmetry, basins are elongatefeatures, parallel to spreading and generally to the arc. The rate of spreading varies between andwithin a given basin from moderate (7-9 centimetres/year (cm/yr)) to slow (3-5 cm/yr). Spreading ratesdetermine topography and to a lesser extent the depth of the axial graben (slower rates mean ruggedtopography and greater depths of the axial neovolcanic zones). An example of this is seen in the NorthFiji Basin where moderate spreading (7-9 cm/yr) in the central and southern parts of the basin arecoupled with smooth and even topography while slower rates in the north (4-5 cm/yr) mean a morerugged and well de-fined axial rift valley.

Sinton and Fryer (1987) and Hawkins and Melchior (1985) have postulated the existence of variedmagma-types within back-arc basins ranging from types similar to normal Mid-oceanic Ridge Basalts(MORB) to enriched-MORB (called Back-arc Basin Basalt or BABB). Enrichment is principally withinthe larger ion-lithophile elements (K, Rb, Ba, Sr and LREE), and volatiles (CI, S, H2O). The most likelysource of these elements is thought to be the subducting slab. Mapping of basalt types within Back-arcbasins suggest that there is a temporal change in rock type from enriched or BABB-like within theearly-rifting period through into more MORB-like rocks during advanced or mature stage of basindevelopment. Another feature likely to affect chemistry of erupted rock-types is the rate of spreading(slower rates mean slower magma supply, more pronounced magma chambers and hence moredifferentiated rock suites).


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Submarine Hydrothermal Deposits

Several discoveries of hydrothermal fluid emissions, hydrothermal Fe-Mn crusts, and massivesulfide deposits within the Western Pacific Back-arc basins (the Manus, North Fiji, Mariana, and LauBasins, and the Okinawa Trough) have now been reported. Approximate locations are shown onFigure 1. Many of these were discovered in the mid to late 1980's and extensions to these fields arebeing reported to the present day. The studies for the most part are in their infancy, and several havebeen rather accidental discoveries as an aside to marine geophysical studies on the evolution of back-arc basin systems. Little detailed geological information about the deposits themselves have beenpublished, although published literature on the petrology of arc volcanic suites and their structureabound, highlighting the fact perhaps that they were not the initial targets for exploration. Informationmost lacking is data on background contents of precious elements within arc suites, size, extent offields, and the bulk tonnage and grade of ore deposits: the latter two are important if any seriousdiscussion of a resource can be made.

The discovery, occurrence and major features of the western Pacific back-arc submarinepolymetallic sulfide deposits are summarized in Table 1 with averaged compositions listed in Table 2.The deposits can be grouped into five types: (a) chimneys and broken chimney deposits; (b) massivepolymetallic sulfide layered or stratiform deposits; (c) sulphide mounds with chimney overgrowths (d)stockwork and vein sulfide deposits; and (e) Fe-Mn precipitates and native sulfur deposits. In generaldeposits (a)-(d) are localized close to vent fields, while Fe-Mn hydrothermal deposits are moreextensive aerially but restricted in thickness.

Known deposits within the Lau and North Fiji Basin are briefly described below.

North Fiji Basin

The North Fiji Basin (Figure 1) is a marginal basin, with the active zone restricted to the central parthalfway between Fiji and Vanuatu. It owes its creation to the switch in subduction from southerlydipping and along the Vitiaz arc, to northerly dipping along the Vanuatu arc. A triple junction is presentin the northern part of the basin, although bathymetric features are complicated by tectonism along theNorth Fiji Fracture Zone. Activity commenced somewhat earlier than in the Lau Basin, around 5 Ma.(Magnetic data in Malahoff et al. 1982) with the triple junction migrating eastwards to its presentposition (approximately 173° 45'E, 16° 40'S) with time. Interpretation is complicated however by thepresence of the Fiji Fracture Zone, and more recent spreading activity close to the Fiji Platform (westof the Yasawa Island chain, Fiji). The ridge and triple junction is thought to have been quite unstablewith frequent adjustments (Lafoy et al. 1989). Extensive surveys within the Basin have centered on theaxial rift zone and involved detailed multi-beam bathymetry, dredging, fluid sampling and submersibledives. Basalt types sampled have varied from N-MORB to E-MORB and material with Ocean Islandbasalt characteristics.

Hydrothermal activity. Major current hydrothermal activity appears limited to the axial graben thatcuts through a dome-like structure at the northern tip of the north-trending spreading axis between 16°58' Sand 17°S and its immediate vicinity with the main identified hydrothermal fields lying immediatelyto the south of the triple junction. Historical data on investigations are summarised below and locationsof the various fields are located in Figure 1.

Cruise/s [Date] Discoveries/Activities/Area8EAP80 and 8T ARMER cruises Location of White Lady Hydrothermal Field (WL) -

[1985-1989] 160 59'8Location of Pere Lachaise Field (PL) -160 58'8Nautile and Shinkai 6000 Dives -1989

HYFIFLUX 1&11 [1995-1998] Location of 8099 field (16° 58'8-160 57'8)

Restudy of the 8099 field -Cruise 80134MMAJ [1999] Planned cruise in the WL, PL, S099 areas

Data on the geochemistry and mineralogy of hydrothermal mineralisation from within the WhiteLady and the Pere Lachaise hydrothermal fields is available in Bendel, et al. (1993), with substantialmore detail in Bendel (1993) whilst Halbach, et al. (1995), summarise data on the S099 field.


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Deposits along the Central Lau Spreading Center occur within a large caldera on the centralvolcanic high of the axial graben. Volcanics sampled range in composition from MORB like basalts toandesites (SiO2 range from 50-69%) and both pillow lava and sheet flows are reported.

Chemistry and mineralogy of North Fiji Basin and Lau Basin deposits

Bulk chemistry and related data for marine PSD's from the Pacific back-arc areas together withcomparative data from other areas are listed in Tables 4-5.

Regional comparisons and generalisations

Hydrothermal mineralisation is now noted from within all western Pacific back-arc basins althoughextensive development of polymetallic massive sulfide deposits is restricted to the North Fiji, Mariana,Okinawa, Manus and Lau back-arc Basins. The similarity in rock types and tectonic setting betweenthese regions and the other back-arcs suggests that such deposits are probably more widespreadthan presently thought: their absence in some locations is therefore probably more a reflection of gapsin exploration.

The better developed occurrences appear related to regions characterised by bimodal volcanismalong spreading centers (Okinawa Trough, Mariana Trough, Valu Fa Ridge, Manus Basin) andcompositionally this volcanism is either Large Ion Lithophile (LIL) element enriched MORB (enriched inelements like Ba, K, Sr as compared to MORB from the Mid-Atlantic Ridge) or part of the island arctholeiite series (Gill 1970). Both have in general higher volatile contents compared to normal MORB.This LlL and volatile enrichment can be linked to the presence of a larger amount of the slabcomponent within these lavas (Jenner et al. 1987). The lavas of the North Fiji Basin triple junctionregion are further removed from subduction influence (more distant from slabs of the Vanuatu and Lauarcs), and should have therefore lesser of the slab component (Ba, Sr, etc.) with consequently less-extensive mineralisation.

Many, if not most, occurrences appear intimately related to fracture zones and normal faults and toareas of extensively brecciated and vesiculated lavas (including pumice, e.g., Valu Fa Ridge, ManusBasin) bounding the active spreading centers or along the axial grabens. Collapse structures withinthe lavas are common. The relation of these structures to mineralisation suggests that they play animportant part in the mineralisation process through the facilitation of fluid flow. Some mineralisation isassociated with caldera or caldera-like structures.

Exploration potential

Exploration techniques for hydrothermal deposits at present involve identification of activespreading ridges, neovolcanic zones and sites of hydrothermal venting through geophysical,geochemical and geological means. Prominent amongst these is the recognition of helium andmethane plumes in the water column as well as anomalies in water chemistry (dissolved manganese).Venting sites are further evaluated by TV camera, TV grab-sampling and dredging. Submersibleevaluations follow in areas of greater promise.

Study techniques outlined above have several disadvantages in that: (a) they concentrate on theneovolcanic zone and areas adjacent which have the youngest and therefore the most immaturedeposits; (b) only surficial expressions of the deposits (chimneys and mounds) and at best thicknessesof up to 30m (along faults) are sampled; and (c) large scale hydrothermal "plumes" or anomalies usedas locators are only observed for actively venting sites, rarely do they accompany fossil sites ofmineralisation. In short, what one sees are deposits being formed, not formed, preserved deposits likethose of a major mineral province.

Much is made in exploration circles about the high gold content of PSD's, particularly those of theSW Pacific back-arc basins. There is some reason to believe that this may be so (e.g., data inHannington et al. 1989 and others). It is important to realise however the material that one is samplingand relative volumes involved. Chimneys and mounds are "living" or rather continuously evolvingstructures and materials may undergo several stages based upon fluid chemistry, temperature andflow (Haymon 1983). Gold may concentrate within the late stage phases within chimneys. Chimneys


[24]

are the most readily apparent feature in new or recently dead hydrothermal fields and the most easilysampled and therefore provide a biased view. Therefore, bulk sampling of more massive units isneeded before an accurate assessment of their Au potential is possible.

Exploration should therefore consider the possible location of relatively large deposits, and asspreading and triple junctions like those of the S099 and Valu Fa Ridge are not static but move withtime, it must be that these are now under the cover of some centimetres if not metres of sediment andother debris. Structural studies to determine the most long-lived of volcanic systems on the oceanfloors associated with hydrothermal activity and their demise would no doubt help. Seafloor sedimentgeochemical sampling would be yet another useful technique.

Kappel and Franklin (1989) and Clark (1990) suggest that structural traps and/or sediment cover(as in the Guyamas Basin) are requirements for generation and preservation of the big sized deposits.The Okinawa Trough, parts of the Mariana Trough and the Manus Basin could therefore have the bestpotential with regard to sediment input from nearby large landmasses.

Exploration versus marine scientific research

An examination of existing published information on back-arc basins in the North Fiji and Lau back-arc basins indicates a lack of adequate exploration data upon which reasonable resource andeconomic analyses can be made. In particular, there is a general lack of information on the threedimensional structure of the deposits. Given water depths, the relatively small size of the deposits(based on current size descriptors given), and the lack of existing technology it may be some time yetbefore economic possibilities can be realized.

With consideration of the above, and given the prevailing commodity prices, it is apparent thatMarine Scientific Research will continue be the predominant information source. Research andexploration are not mutually exclusive and in some minds are the same things. Existing policy regimesmust be adaptable and allow that the owners of these curious deposits and the peoples of the Pacificrealize results and benefits from both.

References

Auzende, J.M., Urabe, T., Delpuc, C., Eissen, J.P., Grimand, P., Huchon, P., Ishibashi, J., Joshima, M.,Lagabrielle, Y., Mevel, C., Naka, J., Ruellan, E., Tanaka, T., Manabu, T. 1989. Le Cadre Geologique dunSite Hydrothermal Actif: la Campaigne STARMER 1 du Submersible NAUTILE dans Ie Bassin Nord-Fidjien.C.R. Acad. Sci. Paris 309: 1787-1795 (in French).

Bendel, V., Fouquet, Y, Auzende, J.M., Lagabrielle, Y., Grimaud, D., Urabe, T. 1993. The White LadyHydrothermal Field, North Fiji Back-arc Basin, Southwest Pacific. Economic Geol. 88: 2237-2249.

Bendel, V. 1993. Cadre Geologique et Composition des Mineralisations Hydrothermale on Contexte Arriere-Arc.Exemple de la Dorsale de Bassin Nord Fidjien (Sud-Ouest Pacifique). Doctoral Thesis L'universite deBretagne Occidentale, France (in French).

Clark, A.L., 1990. Marine Mineral Resources for the Twenty-first Century. Materials and Society 14(3/4): 253-280.

Fouquet, Y., Stackelberg, U.Von, Charlou, J.L., Donval, J.P., Erzinger, J., Foucher, J.P., Herzig, P.,

Muhel, R., Soakai, S., Wiedickie, M., Whitechurch, H. 1991. Hydrothermal Activity and

Metallogenesis in the Lau Back-arc Basin. Nature 349: 778-781.

Fouquet, Y., Stackelberg, U.Von, Charlou, J.L., Donval, J.P., Erzinger, J., Foucher, J.P., Herzig, P., Muhel, R.,Soakai, S., Wiedickie, M., Whitechurch, H., 1990. Hydrothermal Activity in the Lau Basin, First results of theNAUTILAU cruise. Inter Ridge Newsletter71: 678-679.

Halbach, P., Nakamura, K., Wahsner, M., Lange, J., Sakai, H., Kaselitz, L., Seifret, R., Michaelis, W.,Telechmann, F., Kinoshita, M., Marten, A., Ishibashi, J., Blum, N. 1989. Probable modern analogue ofKuroko-type massive sulphide deposits in the Okinawa Trough back-arc basin. Nature 338: 496-499.

Haymon, R.M. (1983). Growth history of hydrothermal black smoker chimneys. Nature 301: 695-698. Hannington,M.D., Peter, J.M. and Scott, S.D. 1986. Gold in Seafloor Polymetallic Sulfide Deposits. Economic Geol.81(8): 1867-1883.

Hawkins, J.W., Melchoir, J., Lonsdale, P. 1987. Petrology of the axial region of the Mariana Trough. (abstract).Eos 68: 1530-1531.


[25]

Herzig, P.M., Fouquet, Y., Petersen, S. 1990. Hydrothermal mineralization from the Valu Fa Ridge, Lau Back-arcBasin (SW Pacific). Marine Mining 9: 271-301.

Karig, D.E. 1970. Ridges and basins of the Tonga-Kermadec island arc system. Journ. Geophys. Res. 75: 237-254.

Kappel, E.S. and Franklin, J.M. 1989. Relationships between geologic development on ridge crests and sulfidedeposits in the northeast Pacific Ocean. Economic Geol. 84(3):485-505.

Lafoy, Y., Auzende, J.M., Ruellan, E., Huchon, P., Honza, E. 1990. The 16°40'S Triple Junction in the North FijiBasin (SW Pacific). Marine Geophys. Res. 12: 285-296.

Malahoff, A. and Falloon, T. 1991. Preliminary report of the Akademik Mstislav Keldysh/MIR Cruise 1990 (LauBasin Leg). SOPAC Cruise Repolt 137.

Malahoff, A., Feden, R.H., and Fleming, H. 1982. Magnetic anomalies and tectonic fabric of marginal basins northof New Zealand. Journ. of Geophys. Res., 87: 4109-4125.

Morton, J.L and Sleep, N.H. 1995. Seismic reflections from a Lau Basin magma chamber. In Scholl, D.W. andVallier, T.L. (eds) Geology and Offshore Resources of Pacific Island Arcs. Circum-pacific Council for Energyand Mineral Resources Ealth Science Series 5: 441-453.

171 E 175 E 175 W

15S

21

Figure 1. Main tectonic, structural and mineral resource features of offshore Fiji and surrounding areas


[27]

Table 2. Averaged compositions for some Western Pacific, submarine polymetallic sulphide deposits

Hydrothermal PACMANUS North Fiji Basin Mariana Trough Valu Fa Ridge, Jade Field,Field East Manus 18" Lau Basin Okinawa Trough

BasinNo of Samples 26 24 II ~7 17

Host Dacite Basalt Andesite .Basalt, Andesite, Dacite, RhyoliteDacite

Wt%

Cu 10.9 7.5 1.2 4.6 3.1Zn 26.9 6.6 10.0 1~.1 24.5Pb 1.7 0.06 7.4 0.3 12.1Fe 14.9 30.1 2.4 17.~' 4.8

SiO, 0.8 16.2 1.2 12.5 10.2Ca 0.3 0.2 3.7 0.6' naBa 7.3 0.8 33.3 11.6 3.4

ppm

Cd 1155 260 465 482 620HI! 17 na 22 >1 naAs 11000 na 126 2213 31000Sb 1130 na 190 ' 51 naAI! 230 151 184 256 ! 1160Au 15 1.0 0.8 1.4. 3.3

From Scot & Binns (1995)


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[31]


Overview of Papua New Guinea Offshore Resources

Based on a presentation byPaul Kia, Geologist and Joseph Lasark, Senior Geologist

Department of Mineral Resources, Papua New Guinea

Introduction

Papua New Guinea's (PNG) natural resources offshore include both finite and renewableresources. The sea flora and fauna, near shore beach heavy mineral sands, hydrocarbon (gas/oil)deposits, base metal massive sulfide seabed deposits, subsurface geomorphological structures,seabed sediments, wreck-sites, spawning grounds, the physio-chemical properties of the sea waterand air are resources that require careful utilisation and proper management.

PNG is one of the last frontier countries in the world where onshore there remain vast tracts ofvirgin tropical rainforest stretching from coastal plains to the mountainous hinterland and offshorepristine coral reefs and a rich and varied biota occurs. Although Papua New Guinea's population isrelatively small, the economy is developing and is largely dependent on the exploitation of natural

resources.

Infrastructure developments and the exploitation of PNG's natural resources inevitably leads topressures on the onshore and offshore environment. An understanding of the natural processescontrolling the often pristine environment may help policy and decision makers to mitigate these

pressures.

Almost all the known offshore resources of viable economic value have been discovered withinPNG's territorial waters making PNG one of the best, if not arguably the best, region in the world forresource development because of terrestrial and offshore resources of equal magnitude.

Regional Tectonic and Structural Features

Plate tectonics is a unifying concept that draws seafloor spreading, continental drift, crustalstructures and the world patterns of seismic and volcanic activity together as aspects of one coherentpicture. The main tectonic and structures features of PNG (Figure 1) play an important role in theplacements of the offshore hydrocarbon (oil/gas) and massive sulphide deposits in this region. The

major features are:

.The Indo-Australasian plate subducting beneath the PNG mainland is very deep seated

.The westward moving Pacific Plate is propagating into continental crust (mainland PNG)at a rate of 2-3 cm/yr, triggering the opening of Woodlark Basin. The Woodlark Basin,which began opening 6 million years ago, is itself opening at a rate of 6-7 cm/y.

.The inactive Manus-Kilinailau (Caroline) Trench that divides the New Ireland Basin fromthe Ontong Java Plateau

.The Bismarck microplate that opens obliquely as a transform suture in the Manus Basin

Offshore Area

Papua New Guinea's major offshore areas (Figure 1) consist of the Gulf of Papua, including theCoral Sea in the southwestern portion; the Solomon Sea Region consisting of the Huon-Gulf andWoodlark Basin enclosed by New Britain to the northeast and the Pocklington Rise in the south andthe Bismarck Sea in the north-northeast comprised of the New Ireland, Manus and New GuineaBasins. A large broad subsurface submarine plateau called the Ontong Java Plateau, northeast ofNew Ireland, constitutes an important part of PNG's subsurface landmass.


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Gulf of Papua

The Gulf of Papua region is an area of great economic importance as the structures within thePapuan Fold Belt, which make up the region and serve as traps for hydrocarbon reserves onshore,extend offshore and form a huge landmass with high petroleum potential.

The Pandora Basin occupies an area of 500 km2 while the Eastern Fields Fold and the PattockTrough have an area of 50,000 km2 (Phillips 1970). The size of this area offshore is huge compared tothe area for similar prospects onshore. The waters of the Gulf are very warm, receive a great deal ofsunlight and support a large amount of sea biota. The Gulf is famous for its prawn resources, freshwater crocodiles, barramundi, turtles and boast a fertile coastline. Like all mangrove communities, itplays a major role in the coastline ecosystem.

Huon Gulf

To the northern margin, along the Huon Gulf there is no continental shelf development owing to thestrong and continuing uplift of the Huon Peninsula. The absence of continental shelf developmentposes a major natural hazard for the coastal population of the region.

Woodlark Basin

Woodlark Basin situated in the southern part of the Solomon Sea within a small region, 90S, 151°E-156.5°E is arguably a unique area with a continuum of active extensional seafloor spreadingprocesses that propagate into the continental landmass.

Seafloor spreading is presently active within this area and associated heat flow is currently thetarget of geophysical research to (a) further characterise the heat flow characteristics of the region and(b) to map extent of hydrothermal fields in the area.

Bismarck Sea

The Bismarck Sea (Figure 1) is possibly the best known of the small ocean basins that surroundNew Guinea and consists of two distinct sub-basins, the Manus and New Guinea Basins, separated bythe NW-trending Willaumez Rise. The Bismarck Archipelago, New Ireland Basin and the Solomon Searegions are referred to as part of the "Pacific Rim of Fire". Volcanic and seismic activity is a norm of lifefor the New Guinea Islands inhabitants. Such natural geologic phenomena has resulted in thedevelopment of the PACMANUS (Figure 1) hydrothermal fields in the Manus Basin which ventrelatively high grade base metal assemblage of Zn-Pb-Cu-Ag and native gold onto the seafloor.Recent studies in the New Ireland Basin have discovered similar subsurface mineral deposits that mayprove to have economic potential for development.

Manus Basin

The Manus Basin is a typical Back-arc basin, transected by an oblique spreading axis broken byseveral large transform faults (Brooks 1998). Since the discovery of hydrothermal activity in the ManusBasin in 1986 it has attracted worldwide attention and in recent years has been the focus considerableinternational research directed toward increasing scientific understanding in the relatively new fields ofgeodynamics, seafloor hydrothermal activities and mid-oceanic ridge environments.

The above research lead to commercial interest in a part of PNG's seabed which resulted in anoverseas based consortium, Nautilus Corporation (Nautilus), being awarded two exploration licences(EL-1196 and EL-1205). These exploration licences encompass more than 5000 km2 of seafloor withinthe territorial waters of PNG.

Analyses of samples from the hydrothermal fields of the Manus Basin have yielded relatively highvalues. Samples from PACMANUS and SuSu fields yield values of 10% and 15% Copper, 26% and3% zinc respectively. Additionally, PACMANUS has 15 grams of gold and 200 grams of silver to thetonne, while the figures at SuSu are 21 gft and 130gft (PNG Resources First Quarter 1998).


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The awarding of EL-1196 and EL-1205 in PNG's territorial waters prompted the Department ofMineral Resources, which did not have a proper offshore mining policy in place, to liaise with otherdepartments to formulate a comprehensive offshore seabed policy to safeguard PNG's offshoreresources while utilising the available resources in an ecologically sustainable manner.

New Guinea Basin

The topography of the eastern part of New Guinea Basin is complicated. It consists of a submarineridge, with a spreading centre, that is composed of a series of seamounts (Milsom 1986, Crook 1990).Further exploration in the New Guinea Basin will in time reveal its deep sea secrets and riches.

New Ireland Basin

The New Ireland Basin (Figure 1) occupies a fore-arc position with respect to the once activeManus-Kilinalau arc-trench system and hosts a series of Pliocene to Recent alkaline volcanoes(Tabar-Lihir- Tanga-Feni Island chain) which are built on rifted Miocene sedimentary basement (Herziget al. 1994).

The New Ireland Basin and the Bismarck Archipelago are known for several high-level porphyrystocks epithermal systems, both subsurface and on land, including the world-class Ladollam golddeposit on Lihir Island.

During the cruise SO-133/1 (1994) by the German Research Vessel FS Sonne twelve newsubsurface volcanoes were discovered within the Tabar-Lihir- Tanga-Feni Island Chain. A follow-oncruise by the FS Sonne (cruise SO-133/2, July 10-August 10, 1998) focused on four volcanic zonesdiscovered in 1994 at water depths from 1000m-1500m on the southern flank of Lihir Island. Thediscovery of high grade gold contents (much higher than PACMANUS samples) associated withamorphous silica and alunite in hydrothermal precipitate at one of the seamounts, the Conicalseamount (1,050m), is located only 25 km south of the Ladolam gold deposit on Lihir. The closeproximity to the Ladolam gold deposit may indicate that the Conical seamount is the first example of ashallow marine seafloor epithermal system, analogous to similar gold-producing systems on land.

The biological vent fauna community recovered at Edison seamount hosts a unique biologicalcommunity which consists of bivalves, clams, white shrimps, crabs, barnacles, tube worms and soft-bodied tube-like creatures and a red skeletal coral which are endermic species never discoveredanywhere else. The vent fauna survives in reducing dysaerobic (low oxygen) conditions. Theorganisms culture bacteria in their gills and guts that break down hydrogen sulphide (H2S) andmethane (CH4) to derive their food (Turkay, personal comm. 1998).

Ontong Java Plateau

The Ontong Java Plateau (OJP) is a broad mid-oceanic submarine plateau striking northwest andtrending parallel to the Solomon Islands to the south. The OJP is extensive being over 1600 km longand 80 km wide and rises to an unusually shallow depth of less than an average of 2000m over thecentral region (Krienke 1972, Coleman and Kroenke 1982, Kroenke et al. 1991).

The OJP has long been a focal point for palaeoceanographic studies for several reasons, e.g., itsremarkable combination of geographic location (close to the equator) and bathometry, its unusuallyvigorous production of biogenic sediments over a long time and the fact that it rises above the carboncompensation depth (CCD). The latter issue is of particular interest in that the OJP contains clues tothe saturation history of the deep Pacific and hence to the global ocean carbon cycle andconsequently contains global and regional signals of ocean productivity (Kroenke et al. 1991).

The OJP is also of interest in that PNG citizens live on the Morlock and Pompei Islands and onsome of the exposed atolls.


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Discussion

Papua New Guinea is one of numerous countries that are confronted with the conflict of economicdevelopment and ethnic values concerning the environment. In particular, there is a need to ensurethat the economic development and use of the ocean and its offshore resources must be ecologicallysustainable to minimise adverse effect. The need to fully develop and implement policy and legislationfor offshore resource development resources is particularly pressing with the increasing focus on

offshore prospecting for hydrocarbon and mineral exploration. The urgency is further increased in thatsuch exploration is being conducted with modern innovations in technology which make it possible toexplore one of the last frontiers of the earth, for its deep sea secrets and riches.

The need to formulate a comprehensive legal policy document, to enable Papua New Guinea toface its new challenges in drafting offshore policy guidelines, is imperative as PNG is geologically aunique and special region in the world. Sustainable use of the environment and its offshore resources

will only be attained when a comprehensive legal policy is drafted and the utilisation of the resourcesavailable is monitored and managed properly by this generation.

ReferenceS

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Berkmanda, D.A. 1972. Report on Mineral Exploration in PA 155 (P) for the Quarter ended 31st December, 1972.Unpublished report submitted to the Government of Papua New Guinea.

Binns, R.A., Scott, S.D., Burne, R.V., Chase, R.A., Cousens, D.R., Denton, A.W.S., Edwards, R.S., Finlayson,E.J., Gorton, M.P., McConachy, T.F., Poole, A.W. and Witford, D.J. 1986. Ridge Propagation into continentalcrust: The April 1 986 PACLARK Cruise to Western Woodlark Basin. Eos 67(44).

Both R.; Crook K., Taylor B., Chappel B., Brogan S., Frankel, E., Lu, L., Sinton, J., Tiffin, D. 1986. HydrothermalChimneys and Associated Fauna in the Manus Back-arc Basin, Papua New Guinea. Eos 67(21): 489-490.

Brooks K. 1998. Overview of the Geology of Papua New Guinea. Unpublished paper presented to ODP Leg 180Cruise Participants in Woodlark Basin, Papua New Guinea, Dansk Lithosfaerecenter, (DLC). pp 5-9.

Buka Rabac Explorations N.L. 1973. Report on the base metals and beach sands potential of Ferguson Island.Unpublished report submitted to the Government of Papua New Guinea.

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Boyd, B.R. 1971. Exploration progress in P.A. 78 (PAPUA) April to June, 1971. A.O.G. Minerals pty Limited File# 2/9/5. Unpublished report submitted to the Government of Papua New Guinea.

Carman, J.G., and Carman, Z., et al. 1993. Petroleum Exploration and Development in Papua New Guinea. InMiller, G. and McCovern (eds), Proceedings of the 2nd PNG Petroleum Convention: The Kubutu Project.Construction of the marine pipeline and terminal. pp 643-649.

Chappel, B. and Shipboard Party MW 8517/181986. Petrology, magmatic budget and tectonic setting of ManusBack-arc Basin Lavas. Eos 67(16): 377-378.

Clare, R.C. 1973. Prospecting Authority Application No. 168 (P) "Popondetta", Northern District, Papua NewGuinea Beach Sand Investigation--Final Report. Unpublished report submitted to the Government of PapuaNew Guinea.

Cook, J.P. 1974. Prospects for finding offshore phosphate deposits in the southwest Pacific. Bureau of MineralResources, Geology and Geophysics, Canberra Australia.

Construction Materials for Port Moresby (Project 7110). Progress of Investigations German-PNG Technical Co-operation Project. Unpublished report submitted to the Government of Papua New Guinea.

Coulson, I.F. 1985. Solomon Islands: The Pacific Ocean; Ocean Basins and Margins, Vol. 7A. British GeologicalSurvey, Keyworth, Nottingham NG125GG, England. pp 607-675.

Crook, A.W.K. 1990. CRUISE REPORT Manus Basin Leg 21st Cruise of RN "Akademitt" Mstisha Keldysh.Department of Geology, Australian National University, Canberra.

Cruise Report No. 53 Guise PN-81(2) 1981. Papua New Guinea Offshore Hydrocarbon and Phosphate Survey.Unpublished report submitted to the Government of Papua New Guinea.


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Exon, T.,. Taylor, B. and Shipboard Party 1983. Young Volcanic Crust of the eastern Woodlark Basin, and itssubduction and associated Volcanism (Abstract). In Proceedings of the Sixth Australian GeologicalConvention, Canberra.

Grainger, J.D. 1971. The Oceanological Cruise of the Soviet Research Vessel "Viti 92" December 1970(Investigations No. 71201). PNG Geological Survey Investigation 71-001.

Gregory, R.M. 1982. Ross Sea Hydrocarbon Prospects and the IXTOC 1 Oil blowout, New Zealand. D.S.I.RAntarctic Division Antarctic Record 4(2).

Herzig, M.P., et al. Jan 1994-July 1996. Tectonics, petrology and hydrothermal processes in areas of alkalineisland-arc volcanoes in the southwest Pacific. The Tabar-Lihir- Tanga-Feni Island Chain, Papua New Guinea.Unpublished report submitted to the Government of Papua New Guinea.

Johnson, R.W., Arculus, R.J. 1978. Subaerial Volcanic Rocks of Willaumez-Manus Rise, Papua New Guinea: Akey to the origin of the Rise? Bulletin Australarian Society of Exploration Geophysics 9(3):98.

Jongsma, D. 1972. Marine Geology of Milne Bay -Eastern Papuan Extract # 6. In BMR, Canberra, Bulletin # 125.

Kroenke, W.L., Berger, H.W., Janecek, J.T. et al. 1991. Ontong Java Plateau. In Proceedings of the OceanDrilling Program, Initial Reports 130:5-12.

Lock, J. Solomon Sea Structure from seismic reflection data. Bureau of Mineral Resources, Canberra GeologicalSurvey Australia (AGSO) Abstracts No. 12: 336.

Lowenstein, P.L. 1974. Mineral Sands. In DME, GSPNG Report # 7/114.

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Montgomery, W.C., 1988. Physical Geology. Northern Illinois Univ., W.C. Brown Publisher. pp 170- 180.

Nairn, E., Alan, G., Francis, S., and Uyeda, S., et al. 1986. Milsom John, New Guinea and Western MelanesianArcs. The Pacific Ocean; Ocean Basin and Margins 7 A: 552-553.

Parr, J.M. and Binns, R.A, et al. 1997. Report on the PACMANUS -III Cruise, RV "FRANKLIN", Eastern ManusBasin, Papua New Guinea. CSIRO Division of Exploration and Mining, North Ryde, NSW, Australia. Anunpublished report submitted to the Government of Papua New Guinea.

Pipeline Policy Paper 1998. Papua New Guinea, Department of Petroleum and Energy.

Sakai, H. 1990. CRUISE Report KH90-3 Aquarius Expedition, Leg II November 24 -December 14, 1990. OceanResearch Institute, University of Tokyo.

Taylor B. 1979. Bismarck Sea; Evolution of a back-arc basin. Geology Vol. 7:171-174. Lamont-Doherty GeologicalObservatory of Columbia University, Palisades, New York.

Taylor, B., Sinton, J. and Shipboard Party MW 8517/10, Crook, K. 1986. Extensional Transform Zone, SulphideChimneys and Gastropod Vent Fauna in the Manus Back-Arc Basin. Eos 16(4/22): 377-378.

Tiffin, D.L. 1981. New Ireland Basin Hydrocarbon potential: Submarine phosphate deposits in northern PapuaNew Guinea. Cruise Report PNG Offshore Hydrocarbon and Phosphate Survey, 9-22/3/81 Cruise PN-81 (2).Unpublished report submitted to the Government of Papua New Guinea.

Von Der Borch, L.C. 1972. Marine Geology of the Huon Gulf Region New Guinea. Department NationalDevelopment Bureau of Mineral Resources Geology and Geophysics Bulletin # 127.

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The Mineral Wealth of the Bismarck Sea

Based upon a paper presented byRaymond A. Binns, Chief Research Scientist, and David L. Dekker

CSIRO Exploration and Mining, Australia

In November 1998 the Government of Papua New Guinea granted a private company permissionto prospect for minerals on the floor of the adjacent Bismarck Sea. Other mineral deposits on thebottom of the ocean had drawn attention during the 1960s and 1970s, when people talked aboutmining zinc-rich oozes two kilometres (1.2 miles) down on the bed of the Red Sea or of harvestingnodules with nickel and copper from five-kilometre-deep abyssal plains in various parts of the world. Inmore recent years, some have considered mining volcanic seamounts encrusted with oxides thoughtto contain cobalt and platinum. Yet none of those submarine deposits proved sufficiently valuable tomake their extraction worthwhile. So why have the deposits under the Bismarck Sea sparkedcommercial interest now?

The difference is that the newly found sources of ore on the seabed are massive sulfides, denseminerals rich in copper, zinc, silver and gold. To prospectors, massive sulfides are a familiar prize,because these minerals are often mined on land for their metals. Unlike other deep-sea depositspreviously considered for mining, the massive sulfides of the Bismarck Sea occur at relatively shallowdepths (less than two kilometres). They also lie in calm waters within an archipelago of Papua NewGuinea, which thus owns the right to mine them under international law. These attributes, along withthe richness of the deposits, make them much more attractive than any deep-sea mineral prospectever before contemplated.

Scientists first discovered massive sulfides on the seafloor two decades ago in the eastern Pacificusing the research submersible Alvin. Marine geologists have since found more than 100 similar sitesin the Pacific, Atlantic and Indian Oceans, all located on ridges where hot magma rises and tectonicplates spread apart. But the massive sulfides of the Bismarck Sea are found in a completely differentgeologic setting. There metal-rich minerals occur at a subduction zone, where one plate thrusts belowits neighbour. The descending slab heats up and gives rise to magma that may erupt onto the oceanbed. Although geologists have only just begun to examine the seafloor for its mineral wealth, theybelieve that ores in subduction zones may be much richer in valuable metals than those found at mid-ocean spreading centers. Curiously, until about a dozen years ago no one knew that the seafloor nearsubduction zones contained economically interesting deposits at all.

A Lucky Find

In 1985 marine researchers from the U.S. set sail to the southwest Pacific to study plate tectonicmovements. In the course of their expedition, they towed an underwater camera close to the seafloorand were lucky enough to photograph a patch of massive sulfides in the middle of the Bismarck Sea,well away from the major oceanic spreading ridges. Their serendipitous discovery was later dubbedthe Vienna Woods because the deposits form a dense forest of narrow chimneys called blacksmokers, which exude hot water and clouds of black particles superficially resembling smoke. The hotwater leaches metals from deep in the crust and deposits them in the walls of the chimneys as it cools.

The Vienna Woods site has since been visited by a German research vessel, which collected largepieces of the massive sulfide chimneys, by Russia's two Mir submersibles (now famous for their role inthe movie Titanic) and by Japan's Shinkai-6500 submersible. Scientists do not yet know the full extentof these "woods". However, this locus of hydrothermal activity must hold an appreciable amount ofmetal, with its countless towering smokestacks--many 10 to 20 metres high--set on massive sulfidemounds that are 20 to 30 metres across. And this site is not the only metalliferous zone in the region.

In 1991 one of authors (Binns) set off with a group of scientific colleagues on an expedition to adepression on the bottom of the Bismarck Sea called the eastern Manus Basin. We were not seekingto discover exploitable mineral deposits but rather to find a natural laboratory where we could examine


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how this type of massive sulfide ore forms. Our ultimate goal was to facilitate the search on land forsuch deposits, which can be found buried within slices of former seafloor that had long ago thrust ontothe continents.

At the beginning of this expedition, our strategy was to dredge pieces from various submarinevolcanoes and pick out those samples that best matched the rocks hosting such ores on land. We alsotowed an underwater video camera over the sea bottom at many sites and lowered specialinstruments in hopes of detecting the plumes of cloudy water emitted from black smokers. Wescrutinized hours and hours of video recordings, searching for the characteristic shape of hot springchimneys or for concentrations of sea life known to form biological halos around deep-sea vents.

The first video sighting of volcanic chimneys in the eastern Manus Basin occurred about 170kilometres east of the Vienna Woods. The view lasted only a few seconds, but it was unmistakable.People mumbled words like "EI Dorado" as excitement spread through the ship, galvanizing bothscientists and crew for the four days of dredging and deep-sea photography remaining in our tightschedule.

In the time allowed us, we mapped deposits scattered over several kilometres and named the sitePACMANUS, after the nations involved in the expedition (Papua New Guinea, Australia and Canada)and the Manus Basin. Our attempts at dredging failed, but we managed to recover a gram of thesemassive sulfides before our expedition came to an end. The results of that initial foray prompted us togo back. In the course of six more research cruises, including two that employed piloted submersibles,we--along with an expanded group of colleagues from France, Germany and Japan--have been ableto inspect these remarkably rich deposits at close range and to collect numerous samples containinghigh concentrations of copper, zinc, silver and gold.

After mapping the area in detail with the help of many other investigators, we now know that theseaccumulations of metallic minerals extend for 13 kilometres along the top of a volcanic ridge made ofdacite, a type of lava that is rare on the ocean floor. The greatest concentration occurs within a two-kilometre part of the ridge, where several fields of active chimneys dot the bottom. The people involvedin their discovery have given them playful nicknames such as "Roman Ruins" (where fallen chimneysare especially common), "Satanic Mills" (where the chimneys belch out particularly thick clouds ofblack particles) and "Snowcap" (where a white bacterial mat coats a small hill). To those fortunateenough to see them, the diversity of sights in the Manus Basin is indeed tremendous.

In 1996 we participated in the discovery of yet another accumulation of massive sulfides, 50kilometres east of our previous find and not far from the port of Rabaul, Papua New Guinea. Havingimproved our techniques for finding black smokers, we rapidly homed in on the site by tracking a largeplume of sulfide particles emanating from the twin peaks of an undersea volcano named Su-Su. (Thisis apt if unoriginal moniker means "breasts" in Melanesian Pidgin). Densely packed chimneys cover a200-metre-long strip of seafloor on the flanks of one summit. These massive sulfides proved to bemore richly endowed with previous metals than any we had sampled before at PACMANUS.

Money Matters

Current evaluations suggest that each cubic metre of rock in these deposits is worth about $2,000,which almost certainly means that ore could be extracted, raised to the surface and processed at a tidyprofit. But Nautilus Minerals Corporation (Nautilus) (based in Port Moresby, Papua New Guinea, andSydney, Australia), which obtained the licences to explore for minerals on the floor of the BismarckSea, has much work to do before it can begin deep-sea mining operations. We and our co-workers atthe Commonwealth Scientific and Industrial Research Organization in Australia are now doing studiesunder contract from Nautilus to help the company face the many challenges ahead.

First, Nautilus must carry out a thorough examination of the area to determine the extent of themassive sulfides and to estimate the amount and grade of ore available at each deposit. This work willinitially involve dredging samples from the bottom with high precision in many places and perhapsdrilling into the seafloor at selected spots. Geologists hired by the company will have to study the orecarefully to evaluate the density, porosity, abrasiveness and mechanical properties of this sulfide-richrock. Mining engineers can then begin the task of developing special methods for excavating, hoistingand processing the ore.


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Remotely operated equipment like that used to dig trenches or shovel ore in an open pit minepresumably offers the most straightforward means for scooping up the minerals. Hoisting ore to thesurface by cable would work but might be prohibitively time-consuming and expensive, given the 1,000tons or so of rock the company would probably want to raise each day. Perhaps the engineers willfavour a scheme similar to the one used in 1978 on board the Glomar Explorer, which successfullydeployed a series of buckets on huge conveyors to retrieve metal-rich nodules from the floor of thePacific. Lifting a slurry of crushed ore with pumps might also be a workable tactic.

Siemag Transplan, a German firm, has in fact developed just such a system. It can lift particles ofrock or coal from deep in a mine using a U-shaped tube, with water pumped down one leg and a wetslurry of ore rising up the other. Similar devices might perform even better under the sea, because thepressure at the bottom of the pipe could be adjusted to match that of the seafloor. If the velocity ofwater in the pipe is maintained at several metres per second, the upward force would be sufficient tolift small chunks of rock that are a few centimetres across. But whatever methods proves best, beforeseeking approval from the government of Papua New Guinea, Nautilus must first show that the miningit plans to do will not harm the biota living in this unusual seafloor environment.

Some Like it Hot

The active chimneys on the floor of the Bismarck Sea are teeming with marine life of extraordinaryand stunning variety. At these depths, no sunlight penetrates, so photosynthesis of the kind thatsustains life near the surface is impossible. The energy source for the communities living around thechimneys is chemical.

These and most other deep-sea hydrothermal vents emit hydrogen sulfide, which nourishesspecialized bacteria living around them. The microbes form the bottom link of a strange food chaincoupling them to bacterial-mat grazers, symbiotic organisms, carnivores and scavengers. Such deep-sea vent communities were first recognized in 1977 and 1979, when Alvin descended to hot springswest of Ecuador on the Galapagos Ridge and the nearby East Pacific Rise. The scientists found heat-resistant microbes, such as Pyrolobus fumarii and other so-called hyperthermophiles, growing in thewalls of these vents and thriving at searing temperatures of about 105 degrees Celsius (221 degrees

Fahrenheit).

Of the more than 300 species of organisms since recognized at such sites, the vast majority provedto be new to science. Although tube works and clams predominate at the hydrothermal vents of theeast Pacific and mid-Atlantic, the dominant animals around the active chimneys of the Bismarck Seaare gastropods (snails). On the outside of some chimneys, a square metre of surface can be coveredby as many as 400 gastropods, accompanied by bresiliid shrimp, carnivorous bythograeid crabs,scavenging zoarcid fish and galatheid crabs. On the cooler fringes of the hot springs, there aremussels, several newly recognized kinds of anemones and long-necked barnacles, which until recentlywere thought to have died out with the dinosaurs at the end of the Mesozoic era, 65 million years ago.At Vienna Woods, Russian biologists have measured as many as 5,000 animals packed onto a singlesquare metre of chimney wall.

Clearly, mining these sites would be unacceptable if it threatened this unique biologicalassemblage. The diversity of these organisms and their potential value to biomedical research or as asource of pharmaceuticals remain largely unknown. But a number of observations suggest that theenvironmental effects of mining this habitat may not be especially worrisome.

The fauna in question normally tolerate highly acidic waters containing sulfur, thalium, arsenic andmercury. So the release of these substances from mining into the surrounding water should not harmthe local biota. Indeed, when the venting of hot water carrying these seemingly toxic elements ceases,the colonies either die or migrate to a more active site. What is more, these vent creatures live quitehappily on conditions in which the seawater is thick with particulate smoke as well as clouds of deadand partly mineralized bacteria. And, they are perfectly capable of surviving the strong earthquakesthat repeatedly disrupt these volcanic fields, snapping tall chimneys like matchsticks and raising tonsof sediment into suspension.

Although the vent communities appear quite resilient, great care is still warranted. One cautiousstrategy would be to mine progressively up-current, selecting sites where the flow would carry cloudsof fine particles and other mining debris away from the intact deposit. In this way. if only part of the


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area is mined, the rest of the deposit and its fauna will remain undisturbed. The creatures living therecould then recolonize nearby mined-out areas that were still actively venting.

Hidden Treasures

Even if it were deemed desirable to preserve the vent communities in their entirety, it may still bepossible to extract valuable minerals from formerly active chimneys that are now largely devoid of life.The challenge is finding such sites. We have learned how to come in on active hot springs quitereadily by following their plumes with special detectors. Yet this method will not lead us to dormantvents. Nor will detailed photographic surveys of the seafloor necessarily reveal older deposits: many ofthese extinct chimneys are completely covered by the ooze that is forever settling on the bottom.

Fortunately, a variety of geophysical techniques routinely employed to hunt for concealed oredeposits on land can be adapted for use on the seafloor. Gravimetric mapping should detect the largerdeposits, and magnetic or electromagnetic techniques could pinpoint smaller accumulations ofmassive sulfides. Measurements of the resistivity of crust might also delineate buried sulfides(assuming that engineers can find a way to inject electric currents into the seafloor for such surveys).And the natural radioactivity of potassium, uranium and thorium in exposed but inactive chimneysmight be sufficient to signal their presence to prospectors towing sophisticated sensors over theseafloor. This technique could provide an easy way to find dormant chimneys without having toconduct laborious video or photographic surveys of the bottom.

Although we are optimistic that the necessary procedures can be worked out so that the ventcommunities of the Bismarck Sea will not be endangered, we believe mining should not proceed onthe basis of what some might call hopeful speculation. Instead, a rigorous program of research andtesting should precede any decision to move forward with mining, even in a limited way.

At this early stage, as with most ambitious new endeavors, the proposition of mining deep-seahydrothermal vents is fraught with questions. Yet plucking valuable metals from the bed of the ocean isa tantalizing concept, one that intrigues us immensely. Sizing up the threat to the biota and the trueeconomic potential of these deposits will require an immense effort -but it may ultimately yieldimmense rewards.


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The Offshore Mineral Resource of the Cook Islands

Based upon a presentation byBen Ponia

Director of Research, Ministry of Marine Resources, Cook Islands

The Cook Islands

The Cook Islands are 15 islands located in the Southwest Pacific (between 8-23°S latitude and156-167°W longitude). The Cooks are often divided geographically into the northern and southerngroup. The former are mostly atolls and the latter are younger islands with "high island" characteristics.The total land area is about 200 km2. However, because its islands are widely scattered, the EEZ ofthe Cooks encompass an area about 2 million km2.

The population of the Cook Islands is 19,000 with an annual growth rate of 0.4% (1998demography). Half the residents are located in the capital of Rarotonga. The Cook Islands is a self-governing nation, in close association with New Zealand. Tourism is the main industry and the mostvalued export product is the cultured black pearl. Other important economic sectors include agricultureand offshore banking. Gross domestic product per capita was estimated (in 1995) at AUS$7,000.

Exploration

Manganese nodules, valued for their cobalt content and for lesser amounts of nickel and copper,are the basis of the Cook Islands' offshore mineral resource potential. Cobalt is mainly used as asuperalloy in the aerospace industry.

The Cook Islands' nodule resource is high in abundance and cobalt content. This is possibly due tothe unique tectonic setting and ocean circulation environment within which they formed. Specifically,the deep Antarctic current (concentrated in cobalt, nickel and copper) flowing north is channeledthrough the Aitutaki passage into the broad expanse of the Penrhyn Basin. In the southern to centralregions of the Basin, the strong current encourages nodule formation and the oxygen rich watersfavour cobalt deposition. In this area an abundance of up to 60 kg/m2 of nodules has been reported,whereas >5 kg/m2 is considered minimum cutoff point for mining purposes. Cobalt levels of 0.8%,twice that found in the Clarion-Clipperton nodule reserve area (north of the equator) have also beenmeasured. The estimates of the quantity of nodule resources are staggering. For example, in the areawhere nodules exceed 5 kg.m2 (about 1 million km2 of the Cook Islands' EEZ), there are 7 trilliontonnes of mineable nodules. This represents 32 million tonnes of cobalt, the equivalent of 520 years ofthe current world demand.

Exploitation

A major physical constraint to mining the Cook Islands' nodules resource is that it occurs in depthsof approximately 5,000 metres. A feasibility study for the Cook Islands Government has examinedexploiting the nodule resource. The scenario has an output of about three thousand tonnes of cobalt,the equivalent of around ten percent of the world cobalt consumption. Mining need only take place in asmall area north of Aitutaki, chosen for high nodule abundance, cobalt composition and relatively flatterrain (for harvesting). Nodules will be gathered using small beam trawlers. Large transport vesselswill ship the nodules to a processing plant, assumed to be in New Zealand. The nodules will be storedand reclaimed for smelting and refining at the plant. Alternative systems of nodule mining andprocessing have been developed in countries elsewhere.


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Economic Returns

The average price of cobalt has ranged between US$4-$30/lb over the past twenty years, mainlydue to supply disruptions from major producers. Some price stability has occurred with improvementsin supply and demand being fueled by the aerospace and an emerging rechargeable battery industry.Financial sensitivity analysis of the earlier feasibility study suggests modest economic returns at thecurrent prices.

The Cook Islands Government does not have a fiscal regime dealing with offshore mining. A reportprepared for the Government has outlined possible mechanisms (comparable to other internationalfiscal arrangements) to derive revenue. The elements of the package discussed include payment ofroyalty, income tax (and variable income tax), a bonus payment and area rentals. Careful taxationconsideration must also be made in view of the fact that processing and marketing will take placeoutside the Cooks' EEZ.

Investment considerations in offshore mining involve untried technology, a volatile cobalt marketand difficulties in forecasting project economics. The goal of the Cooks fiscal package is to attractinvestment and produce a return to Government that is fair and progressive.

Legislation

Under the Law of the Sea Convention (UNCLOS) 1982, the Cooks, as a coastal state, may passlaws relating to the exploration and exploitation of seabed minerals within its EEZ. The Cook Islandshave an overlapping EEZ with American Samoa, the Tokelaus, French Polynesia, Kiribati and Niue,(the boundaries have only been resolved for French Polynesia and American Samoa).

Other international maritime conventions that have force of law in the Cook Islands include,MARPOL (1973/78); London Dumping Convention (1972); SPREP Convention (1986); Intervention onthe High Seas in cases of Oil Pollution Casualties (1969); CLD and protocols (1969); FUNDConvention and protocols (1971) and; SaLAS Convention and protocols (1974) and the STCWandamendments (1995).

The present legislative regime of the Cook Islands relating to its EEZ is incomplete. TheContinental Shelf Act (1964), an act of the NZ Parliament, implies that the Cook Islands' laws extendto its EEZ. It appears inconsistent with the Territorial Sea and EEZZone Act (1977) that implies that itis the Queen's Representative that determines its application. This is being addressed through a draftbill, the Territorial Sea and EEZ Zone Act, 1999.

There is a Marine Resources Act (1989) which is mainly to provide for regulation and managementof fisheries within the EEZ and A Prevention of Marine Pollution Act (1998) to deal with marinepollution, dumping and transportation of wastes in Cook Islands' waters, and to give effect to variousinternational conventions. Lacking is specific legislation to cover exploration and exploitation ofoffshore minerals. A draft bill is under preparation, the Deep Sea Mining Act, 1999.

Environmental Concerns

In an age of environmental concern, the weighting assigned to environmental values cannot beunderestimated. As a result, there is an inherent need for scientific baseline studies to be conducted inthe Cooks' EEZ.

The environmental issues may be related but not necessarily restricted to the following: (1) miningactivities--extent of impacted substrate, extent of the sedimentation plume generated and wastewaterdischarge; (2) impacts on the abyssal ecosystem--changes to the biodiversity of the benthic fauna,rates of recolonisation by the pre-mined benthic community; (3) impacts to the epipelagic zone--effectson phytoplankton, disturbances to commercial fish stocks (tuna, billfish) and migrating species (e.g.,whales, turtles) and (4) onshore processing--gas emissions and slag disposal.


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Nodule Research and Development

Over the past twenty years various information has been generated with respect to the nodulepotential of the Cook Islands. Prominent institutions include the Fiji-based South Pacific AppliedGeoscience Commission (SOPAC), the Metal Mining Agency of Japan, the East-West Center,(Hawaii), the U.S. Trade and Development Agency (Washington, D.C.) and the CommonwealthSecretariat (London).

The present policy with regards to research is that a full discussion must first take place prior toresearch being undertaken and that the Cook Islands may appoint a person(s) to actively participate inany activities. Following any research, preliminary findings must be made available to the Ministrywithin three months and a prearranged copy of the final report as soon as possible.

References

Clark, A.L., Lum, J.A., Li, C., Icay, W., Igarashi, Y., Morgan, C. 1995. Economic and Development Potential ofManganese Nodules within the Cook Islands Exclusive Economic Zone (EEZ). East-West Center, Honolulu,Hawaii.

Kingman, S. G. 1998. Manganese Nodules of the Cook Islands. South Pacific Applied Geoscience Commission(SOPAC), Fiji.


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CHAPTER TWO: MARINE MINING POLICY AND LEGISLATION

The International Seabed Authorityand the Development of the Seabed Mining Code

Based upon a presentation byMichael Lodge

Chief, Office of Legal Affairs, International Seabed Authority,Kingston, Jamaica

The International Seabed Authority is an autonomous international organization established underthe 1982 United Nations Convention on the Law of the Sea (UNCLOS), hereinafter referred to as the"Convention") and the 1994 Agreement relating to the Implementation of Part XI of the United NationsConvention on the Law of the Sea (A/AES/48/263 (17 August 1994), Annex, 48 GAOA, agenda item36). In accordance with the Convention and the Agreement, the Authority is the organization throughwhich States Parties to the Convention organize and control activities in the seabed and ocean floorand subsoil thereof beyond the limits of national jurisdiction ("the Area"), particularly with a view toadministering the resources of the Area. The Area and its mineral resources are the common heritageof mankind (Convention, Arts. 133, 136). All rights in the resources of the Area are vested in mankindas a whole on whose behalf the Authority shall act. These resources are not subject to alienation. Theminerals recovered from the Area, however, may only be alienated in accordance with Part XI of theConvention, as modified by the 1994 Agreement, and the rules and regulations and procedures of theAuthority (Convention, Art. 137).

The Authority also has other responsibilities under the Convention such as those concerning thepromotion and encouragement of conduct of marine scientific research in the Area and coordinationand dissemination of the results of such research and analysis when available (Convention, Art. 143).The Authority, with the cooperation of States Parties, may take measures in accordance with theConvention to acquire technology and scientific knowledge relating to activities in the Area andpromote and encourage availability of such technology and scientific knowledge so that all StatesParties may benefit therefrom (Convention, Art. 144). The Authority is to ensure effective protection ofthe marine environment from harmful effects that can arise from activities in the Area. To this end itmust adopt appropriate rules, regulations and procedures for the prevention, reduction and control ofpollution and other hazards to the marine environment (Convention, Art. 145). Under article 82 of theConvention, it has the responsibility to receive certain payments and contributions from the exploitationof non-living resources of the continental shelf beyond 200 nautical miles from the baseline from whichthe breadth of the territorial sea is measured and to distribute them to State Parties to the Convention.

The Authority came into existence on 16 November 1994, upon the entry into force of theConvention. The Agreement relating to the Implementation of Part XI of the Convention was adoptedby the General Assembly of the United Nations on 28 July 1994 and entered into force on 28 July1996. The Agreement fundamentally changes the deep seabed mining regime of Part XI of theConvention. In so doing it met the principal objections of industrialized countries to Part XI and wasinstrumental in achieving near-universal participation in the Convention.

The Authority has 130 members at this time; its membership being the same as the number ofStates Parties to the Convention. The Authority consists of three main organs: the Assembly, whichcomprises all member States of the Authority, a 36-member Council and the Secretariat. In addition,the Convention and the Agreement provide for a Legal and Technical Commission, which providestechnical advice, and a Finance Committee, which deals with financial and budgetary matters. Themembers of these subsidiary bodies are experts in their respective fields and are elected in theirpersonal capacities. It should be noted that the election of the Economic Planning Commission whichwas to be established under the Convention has been deferred in accordance with the Agreementand, in keeping with the evolutionary approach required by the Agreement, its task has been assignedto the Legal and Technical Commission. The powers and functions of the various organs andsubsidiary bodies are defined in the Convention and the Agreement.


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The Assembly, as the sole organ of the Authority consisting of all members, is considered thesupreme organ of the Authority to which the other principal organs are accountable as specificallyprovided in the Convention. It has the power, in collaboration with the Council, to establish the generalpolicies of the Authority in conformity with the provisions of the Convention on any question or matterwithin the competence of the Authority (Convention, Art. 160/1; Agreement, Annex, Sec. 3, para. 1).There are a number of specific powers and functions that are defined in article 160 of the Convention.In particular, it has the responsibility to consider and approve upon the recommendation of the Councilthe rules, regulations and procedures relating to a variety of functions of the Authority. These includethe consideration and approval of the rules, regulations and procedures of the Authority relating toprospecting, exploration and exploitation in the Area (i.e. the Mining Code) the financial managementand internal administration of the Authority, and the operations of the Enterprise (Convention, Art. 162,para. (o)(ii)). The Assembly has a number of executive functions such as the election of the Secretary-General, the members of the Council, the members of the Finance Committee, the governing Board ofthe Enterprise and the Director-General of the Enterprise (when the Enterprise becomes operational).It has to consider and approve the annual budget of the Authority recommended to it by the Council,and determine the assessed contributions of members to that budget. Decisions of the Assembly onany matter for which the Council also has competence and on any administrative, budgetary orfinancial matters shall be based on the recommendations of the Council. If the Assembly does notaccept the recommendation of the Council on any matter, it shall return the matter to the Council forfurther consideration. The Council shall reconsider the matter in the light of the views expressed by theAssembly (Agreement, Annex, Sec. 3, para. 4).

The Council is the executive organ of the Authority and has the power to establish, in conformitywith the Convention and the Agreement, and the general policies established by the Assembly, thespecific policies to be pursued by the Authority on any question or matter within the competence of theAuthority (Convention, Art. 162). It has a number of specific powers and functions that are prescribedin the Convention and the Agreement. These include responsibility to supervise and coordinate theimplementations of the provisions of the Convention and the Agreement on all questions and matterswithin the competence of the Authority, and to invite the attention of the Assembly to the cases of non-compliance (Convention, Art. 162, para. 2(a)). In particular, it is to recommend to the Assembly rules,regulations and procedures on the equitable sharing of financial and other economic benefits derivedfrom the activities in the Area, and the payments and contributions made pursuant to article 82, takinginto particular consideration inter alia the interests of developing states (Convention, Art. 162, para.2(0)(i)). It is to adopt provisionally, pending approval by the Assembly, the rules, regulations andprocedures of the Authority, taking into account the recommendations of the Legal and TechnicalCommission. These rules, regulations and procedures shall relate in the first instance to prospecting,exploration and exploitation of polymetallic nodules in the Area and the financial management andinternal administration of the Authority. Rules, regulations and procedures for other resources are tobe adopted by the Council within three years from the date of request by any member of the Authority.All rules, regulations and procedures adopted by the Council shall remain in effect on a provisionalbasis until approved by the Assembly and or amended by the Council in the light of any viewsexpressed by the Assembly (Convention, Art. 162, para. 2(0)(ii)). An important function of the Councilis to approve plans of work for exploration submitted to it by prospective operators and upon approvalto issue a contract, i.e. a licence to the applicant in respect of the plan of work (Convention, Arts. 153,162(2)0); Agreement, Annex, Sec. 1, para. 6).

The 15-member Finance Committee makes recommendations to the Assembly and the Council onall matters having financial implications for the Authority and the decisions of the Assembly and theCouncil shall take into account the recommendations of the Committee (Agreement, Annex, Sec. 9,paras. 1, 7). The Finance Committee is to make recommendations to the Council and the Assembly onthe financial rules, regulations and procedures of the Authority, financial management and internalfinancial administration, the administrative budget of the Authority and assessed contributions ofmembers to the administrative budget.

The Secretariat is the administrative arm of the Authority. It is headed by a Secretary-General whois the chief administrative officer of the Authority and acts in that capacity for all the component bodiesof the Authority (Convention, Art. 166). In addition to the normal administrative functions, theSecretary-General is entrusted with a number of specific responsibilities of a substantive nature andacts on behalf of the Authority in accordance with its rules, regulations and procedures. The Secretary-General is required to make annual reports to the Assembly on the work of the Authority. Two suchreports have already been issued (ISBA/3/A/4 and ISBA/4/A/11).


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The Legal and Technical Commission is the technical arm of the Council comprised of 15 members(currently expanded to 22) who have legal and technical expertise relevant to ocean mining. TheCommission makes recommendations to the Council on technical matters and generally assists theCouncil in the supervision of activities in the Area. A number of such matters are specified in Article165 of the Convention. They include the protection of the marine environment, the formulation of rules,regulations and procedures relating to exploration and exploitation of resources of the Area taking intoaccount all relevant factors including the assessment of environmental implications, the review ofwritten plans of work for activities in the Area submitted to the Council and a review of the annualreports on activities under the approved plans of work (Convention, Art. 162, para. 2(e), (f)).

The major legislative task before the Authority is the adoption of the rules, regulations andprocedures relating to prospecting and exploration of polymetallic nodules. Article 162, paragraph2(o)(ii) of the Convention and paragraph 15 of Section 1 of the annex to the Agreement require theAuthority to elaborate and adopt the rules, regulations and procedures required for the conduct ofactivities in the Area as they progress, as well as rules, regulations and procedures incorporatingapplicable standards for the protection and preservation of the marine environment. Priority shall begiven to the adoption of rules, regulations and procedures for the exploration for and exploitation ofpolymetallic nodules. These are commonly referred to as the Mining Code. One consequence of theapproach taken in the 1994 Agreement is that the draft regulations prepared over a number of yearsby the Preparatory Commission were overtaken by the Agreement, which specifies an incrementalapproach to the development of regulations.

The Legal and Technical Commission began the task of drafting a Mining Code at the beginning ofthe second session in f\,1arch 1997 and completed its work in March 1998. The draft proposed by theLegal and Technical Commission was submitted for the consideration of the Council at the end of theMarch 1998 session of the Authority and the Council is currently undertaking a first reading of the draft(ISBA/4/C/4/Rev.1, hereinafter referred to as the "draft Code"). Once adopted, the draft Code will applyprovisionally pending its approval by the Assembly in accordance with article 162, paragraph 2(0), ofthe Convention.

The draft Code addresses prospecting and exploration for manganese nodules and includes astandard form contract. The goal of the Legal and Technical Commission was to produce a coherentdocument which gives effect to the provisions of the Convention, particularly Annex III, and the 1994Agreement. The draft Code also reflects the priority given to environmental considerations in the 1994Agreement, including the new requirement that applications for mine sites include an environmentalimpact assessment and a programme for baseline environmental studies. It does not, however, dealwith the exploitation of manganese nodules, nor with other types of minerals.

In its present form, the draft Code consists of 33 regulations which set out the framework for theexploration regime, while annexes contain a model contract and standard clauses. Its terms are basedon provisions in the two basic instruments governing the Authority's work, particularly Annex III of theConvention. The draft text prescribes the manner in which interested parties can become contractorsby obtaining the Authority's approval of their plans of work for exploration in specific geographicalareas of their choice. Applicants must be sponsored by States, and must possess certain financial andtechnical capabilities. They would have to provide certain required information in support of their plansand pay a fee of US$250,OOO for obtaining the contract. Plans of work will require the recommendationof the Legal and Technical Commission and the approval of the Council.

Once a plan of work is approved, the Authority will issue a 15-year contract granting recognizedsecurity of tenure to the contractor. This contract will incorporate schedules giving the geographicalcoordinates and an illustrative chart of the exploration area, as well as a work programme that wouldbe reviewed every five years jointly by the Authority and the contractor. Each contract would providefor a training programme for personnel of the Authority and developing countries.

Parts I, II and III of the draft Code, and annexes 1 and 2, deal with prospecting and the process ofapplication for and approval of a plan of work for exploration. These provisions are based substantiallyon the work done between 1984 and 1993 by the Preparatory Commission, particularly SpecialCommission 3, albeit with a certain amount of streamlining to avoid repetition and to give effect to theprinciple of cost-effectiveness embodied in the Agreement. Thus certain prescribed periods forprocessing applications, acknowledgements, notifications etc. have been removed and the draft nowprovides for such processing to be done at the next meeting of the Legal and Technical Commissionand the Council, without the need for special meetings of these bodies. In addition, to prepare a text


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that is coherent and understandable, several provisions found in earlier drafts have been merged tosimplify the text and eliminate areas of overlap. Similarly, matters that relate exclusively to the internalprocedures of the Secretariat have been deleted.

The draft Code also sets out more precisely the information that must be provided by applicants.Recognizing the uncertainty associated with exploration, the applicant is required only to submit ageneral description of the proposed exploration programme with a more detailed programme of workcovering the first five-year period. This flexible approach may be contrasted with the approach found inmany jurisdictions that require not only a detailed exploration plan, with associated financialobligations, but also that the applicant demonstrate that there is a reasonable likelihood that, by thetime the exploration contract comes to an end, he will be in a position to proceed to commercial

recovery.

Parts IV to VII of the draft Code deal with the form and content of the contract for exploration. Inaccordance with the scheme set out in the Convention and the Agreement, Part IV of the draft Codeprovides that after a plan of work for exploration has been approved by the Council, it shall beprepared in the form of a contract between the Authority and the applicant. In accordance with theConvention and the Agreement, such a contract shall be valid, in the first instance, for a period of 15years. It will confer upon the contractor the exclusive right to explore for polymetallic nodules in theexploration area in accordance with the terms of the contract.

The structure of the draft Regulations is very simple and practical. It provides that certain standardterms and conditions shall be incorporated in every contract. These standard clauses are set out inannex 4 to the Regulations. The contract itself consists of a short, approximately two page document,containing certain basic elements establishing the contractual relationship and incorporating thestandard terms and conditions by reference. The coordinates of the exploration area, the programmeof work and the training programme, required pursuant to article 15 of Annex III to the Convention,would be attached as schedules to the contract. This approach helps to clarify the relationshipbetween the contract and the Regulations and ensures that contract terms are uniform amongcontractors. It also ensures that the provisions of the Convention, the Agreement and the relevantregulations are incorporated as terms and conditions of the contract and at the same time it minimizesduplication and possible omissions. The differences in the circumstances between the differentcontractors will be reflected in the schedules to the contract that will include their respective plans ofwork in which will be indicated, inter alia, the level and pace of their activities.

One of the most difficult matters the Legal and Technical Commission had to deal with was thequestion of how to give effect in the draft Code to the provisions of the Convention and the Agreementrelating to the protection and preservation of the marine environment. These provisions form the basisfor the regulations that the Authority, as regulator, is obliged to implement. The Commission viewedthese provisions as being of fundamental importance to the work of the Authority.

Part V of the draft Code deals with the protection and preservation of the marine environment. TheAuthority is required to establish and keep under review environmental guidelines or standards inorder to ensure the protection and preservation of the marine environment. However, in view of thecurrent lack of detailed knowledge of the deep sea environment, the draft Code recognizes that suchguidelines and standards must be progressively developed. As activities in the Area progress, andmore knowledge and experience is gained, it is envisaged that the principles and procedurescontained in the draft Code will provide a framework for the development of further environmentalguidelines or standards by the Authority.

To enable the Authority to progressively develop environmental guidelines, it is essential to build areliable database of the results of oceanographic studies and monitoring programmes. The regulationswill require contractors to avoid serious harm to the marine environment and provide for the monitoringof any effects on the marine environment from activities in the Area. It will require that the contractorsestablish environmental monitoring programmes for this purpose and report on the results of suchprogrammes. It is on the basis of these data and information that environmental baselines can beestablished as exploration proceeds and becomes more intense. These baselines, developed inconjunction with the Authority, will later be used as the basis for further environmental monitoringprogrammes to be undertaken by the contractor at the stage when it is ready to conduct "pilot miningand processing operations".


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The Commission on the elaboration of the respective responsibilities of the contractor and theAuthority as regards the establishment of environmental baselines spent much time. The draft Codestates that every contract shall require the contractor, in cooperation with the Authority and thesponsoring State or States, to establish such environmental baselines and a programme to monitorand report on the effects on the marine environment of its activities. In this regard, it should be notedthat, consistent with the requirements of paragraph 7 of section 1 of the annex to the Agreement, thedraft Code would require every contractor to include in its plan of work a "description of a programmefor oceanographic and environmental baseline studies that would enable an assessment of thepotential environmental impact of the proposed activities".

The standard clauses of contract also require the contractor to prepare a contingency plan torespond effectively to incidents that are likely to cause serious harm to the marine environment and toreport to the Authority any incident arising from its activities which is likely to cause such serious harm.Regulation 30 of the draft Code deals with emergency orders and establishes a procedure for theexercise by the Council of the powers set out in the Convention. In the event that the Secretary-General is notified of an incident causing serious harm to the marine environment arising from acontractor's activities in the Area, he shall report immediately to the Council and the Legal andTechnical Commission. In accordance with article 162(2)(w) of the Convention, the Council may, onthe basis of such reports, issue emergency orders, including orders for the suspension or adjustmentof operations, to prevent serious harm to the marine environment arising out of activities in the Area.While it is not anticipated that such emergencies will arise during the exploration phase, theConvention is nonetheless explicit in requiring the Authority to put in place procedures to deal with

emergencies.

Part VI of the draft Code deals with one of the major concerns of any mining interest; that is,confidentiality. The draft Code distinguishes between proprietary data and information, commerciallysensitive data and information and data which are not confidential, i.e. that which are generally knownor publicly available from other sources or has been previously made available by the owner to otherswithout an obligation concerning its confidentiality. Proprietary data and information remainconfidential at all times. Commercially sensitive data and information are kept confidential for a periodof at least 10 years from the date of submission to the Authority or until an area is relinquished by thecontractor. In addition, the Secretary-General is placed under an obligation to maintain theconfidentiality of all data and information submitted or transferred to the Authority pursuant to contractand to develop appropriate procedures to ensure such confidentiality. The provisions of the draft Codecomplement the provisions of articles 163 and 168 of the Convention by imposing strict obligationsregarding non-disclosure of industrial secrets and proprietary data on the staff of the Authority and themembers of the Legal and Technical Commission.

In its present form, the draft Code is comprehensive and seeks to strike an appropriate balancebetween the interests of the Authority, as regulator, and custodian of the common heritage of mankind,and the interests of contractors, who are faced with the practical and commercial realities of investingsubstantial sums of money in an extremely high-risk venture. Nevertheless, problem areas remainand, in spite of the fact that much of the ideology and mistrust that characterized the days of thePreparatory Commission has dissipated, it is likely that the draft Code will endure a difficult passagethrough the Council.

One of the critical problem areas is environmental regulation. There is general consensus thatfurther research needs to be undertaken before the Authority is in a position to establish definitivestandards for the protection of the marine environment, but there remain significant differences ofapproach to the nature and extent of the environmental standards and guidelines which should beapplied to the contractor by the Authority. On the one hand, there are those who favour stringentenvironmental regulation from the outset, based on the application of the precautionary principle.Under this approach, it is argued that action must be taken to control or abate environmentalinterference even though there may still be scientific uncertainty as to the effects of the activities. Onthe other hand it is argued that the Code should recognize the fact that previous environmental studieshave determined that there is limited potential for significant environmental harm from seabed miningactivities up to the point of large-scale prototype equipment tests. While much progress has beenmade, there remain significantly different views on key issues, such as the question of what constitutesserious harm to the marine environment and the precise stage at which the contractor shouldimplement environmental monitoring programmes.


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The fact that so little is known about the potential for adverse impacts on the marine environmenthas also created a dilemma for the framers of the draft Code. It is universally accepted that it isimpossible, at this stage, to foresee all future developments and to establish firm guidelines for theprotection of the marine environment up to 15 years ahead. Accordingly, it was foreseen by the Legaland Technical Commission that it would be necessary to supplement from time to time the terms of thecontract through the issue of additional environmental guidelines. The contract would requirecontractors to observe such guidelines. Although such an approach is by no means uncommon innational legislation, it is strenuously opposed by some potential contractors, who wish to see the termsof the contract fixed once and for all at the date of signature.

To overcome this dilemma, the Legal and Technical Commission suggested that it should have thepower to issue guidelines of a technical nature for the implementation of the regulations. Suchguidelines would not be binding upon the contractor, but would create a de facto standard to whichcontractors should adhere. In addition, the draft Code expressly foresees the subsequent introductionof environmental regulations, universally applicable to all contractors and having binding force, whichwould be incorporated into the contract in due course. It remains to be seen whether this approach willbe acceptable to the Council.

The precise relationship between the various activities in the Area, including prospecting,exploration and exploitation, and marine scientific research also needs to be further elaborated. Thedraft Code makes it clear that its provisions do not in any way affect the freedom of scientific research,pursuant to article 87 of the Convention, or the conduct of marine scientific research in the Areapursuant to articles 143 and 256 of the Convention. However, the question of when marine scientificresearch ends and prospecting begins, and the distinctions between prospecting and explorationremain problematic.


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CHAPTER TWO: MARINE MINERAL POLICY AND LEGISLA TION

Marine Mineral Policy Considerations forthe Pacific Island Nation's Exclusive Economic Zones

Based upon a presentation byAllen L. Clark


Abstract

Few if any nations in the Asia-Pacific region have a national marine mineral resource policy thatdeals with all aspects of marine resource research, exploration, development or exploitation. Becauseof the pioneering nature of marine mineral resource activities, it is imperative that nations put in placethe basic structure of a national marine mineral resource policy that will ensure that all activities areconducted in such a way so as to maintain national sovereignty, self-sufficiency, andself-determination while promoting the development of the valuable resources of their EEZ's. Thekeystone of any national policy will be to optimize the economic returns from a marine mineral miningenterprise--both for the nation and the investor--within the constraints of such a pioneering activity. Acritical consideration in many countries will also be how to balance national and international deepocean research in the EEZ with the interests of economic development by the private sector.

Introduction

Marine mineral occurrences include a large number of metallic, nonmetallic and energy mineralswhich occur throughout the ocean, ranging from shallow (sea level) beach deposits to deep ocean(5,000 metres) manganese nodules. Although many of the marine minerals have been and continue tobe commercially exploited, many others require changes in economics and/or technology before theycan be commercially developed. Hereinafter in this paper the term resource, defined by McKelvey(1972) as "a concentration of naturally occurring solid, liquid or gaseous material, in or on the Earth'scrust in such form that economic extraction of a commodity is currently or potentially feasible" will beu$ed to denote both present and potential economic concentrations of marine minerals. When bothpresent and future resource developments are considered, the role of marine minerals in theinternational mineral supply may increase significantly in the next two decades and beyond. Toexpedite, encourage, monitor, and control these developments, a coherent marine mineral policy willbe required by those nations with territorial regimes extending into the oceans of the world.

Coincident with the recognition of the economic potential of marine mineral resources, in particularoil and gas, there came a national and international recognition of the need to establish legaljurisdiction over these resources. As a result, a series of legally defined regimes has evolved, withinwhich exploration and development rights are or can be allocated. The recognition of a national needfor exclusive jurisdiction of the near shore environments for marine mineral resources was a majorfactor (among several) that led national governments to define a territorial sea (mean high tide to 3miles offshore) with a larger contiguous zone (9 miles offshore). Following discovery offshore of oil andgas in the United States, the 1945 Truman Declaration asserted U.S. sovereignty over mineralresources on the continental shelf. Similarly, the recognition of the resource potential of deep-oceanmanganese nodules led to serious questions concerning the ownership of all deep-ocean resources.In 1967 Ambassador Arvid Pardo of Malta, in a speech to the General Assembly of the United Nations,proposed that such resources were the "Common Heritage of Mankind'. As a result, the UnitedNations established an Ad Hoc Committee on the Peaceful Uses of the Seabed and the Ocean FloorBeyond the Limits of National Jurisdiction, from which nearly a decade and a half later was to evolvethe United Nations Convention on the Law of the Sea (UNCLOS) which in turn provided for theformation of the International Seabed Authority.

A particularly significant outcome of the UNCLOS convention was the designation of the ExclusiveEconomic Zone (EEZ) as "a zone normally extending not more than 200 nautical miles from thebaselines from which the breadth of the territorial sea is measured" (United Nations 1981). This is ofcritical importance from a resource perspective in that within the EEZ a coastal state has sovereign

[SCrAG Miscellaneous Report 323 -Revised Edition]

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rights over the natural resources of the seabed, subsoil, and superjacent waters. The present paperemphasizes the development of a national mineral resource policy for the marine mineral resourcesoccurring within the expanded zone of national jurisdiction, the EEZ, in general and a nation'sterritorial sea specifically.

The rapid expansion of interest in ocean resources both on a scientific and a political level, coupledwith new scientific concepts such as plate tectonics and the origin of ocean basins, has resulted in amajor expansion of knowledge regarding marine minerals. Historically, exploration and development ofmarine mineral resources have shown the commercial viability of several types of resources. Futureactivities may lead to increased exploitation of conventional deposits and, ultimately, to the exploitationof new types of deposits. Although no commercial deposits of deep-ocean marine minerals have beenexploited, nodules and metalliferous muds (which have been mined experimentally), cobalt-richmanganese crusts, and polymetallic massive sulfides all represent mineral resources for possiblefuture economic exploitation.

In the near term, it is to be expected that mineral resource exploitation will take place principallywithin the territorial seas of most nations, and in certain circumstances within the EEZ, and be basedon already known reserves of marine mineral resources. Oil and gas are presently being producedfrom the continental shelves of over 60 nations. Several placer minerals, in particular, titanium, tin,magnetite, chromite, zircon, monazite and staurolite are recovered by dredging. Similarly, gold,platinum group metals, and diamonds are being recovered from offshore beach deposits and largelow-grade concentrations still exist that may be mined in the future. More common resources such assand, gravel, lime, aragonite, and phosphorite are recovered from the near shore areas of manynations. Recent advances have led to the quarrying of barite and underground mining of iron ore fromthe subsea utilizing on-land entry or artificial islands.

Regardless of the actual sequencing of exploration and exploitation, it is imperative that individualnations now address the establishment of a rational mineral resource policy and move to develop andimplement appropriate legislation to monitor and profit from such activities. The remainder of thispaper is directed toward (a) defining the basic concepts upon which a mineral policy might beformulated and (b) discussing some of the major problem areas associated with such a policy.

Elements of a Rational Marine Mineral Policy

The primary element in defining a rational marine mineral resources policy is to first establish theterritorial boundaries to which the policy will be applied. The recently proclaimed EEZs of many, if notmost, nations are not presently legally surveyed or defined to the point that exact territorial boundariesare known and accepted for individual countries. Nowhere is this more apparent than with respect tomany of the island nations of the Pacific and within the South China Sea where 14 of total 17boundaries are presently disputed. Regardless of the difficulties involved, legally defined and acceptedterritorial boundaries are the first element of establishing a rational marine mineral resource policy forthe EEZs of nations. In particular, as will be discussed later, a stable and assured area for explorationand development is a deciding factor in an industry's decision to explore and develop alternativeareas.

Once the issue of territorial boundaries has been clarified, a nation can begin to establish its marinemineral resource policy for which the basis for formulation and implementation depends on three keyelements, i.e. sovereignty, self- sufficiency and self-determination.

The extent to which the development of marine mineral resources contributes to nationalself-sufficiency and long-term self-determination depends in large part on the magnitude of theresource development and on the acquisition and utilization of appropriate resource rents fromexploitation. Nevertheless, with the concepts of sovereignty, self-sufficiency and self-determination inmarine mineral resource development, it is possible to address many of the individual issues that willface a nation in the development of its overall offshore mineral policy.

Basic Objectives of a Marine Mineral Policy

Once the territorial boundaries of a nation have been established it can begin to define the basic


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objectives to be achieved with an offshore mineral policy. Although the specific desires and individualendowment of a nation are important, there are certain objectives that are universal. These are asfollows:

.Promote efficient and timely exploration, development, and production

.Encourage diversification in resource development

.Ensure conservation in exploitation of the resources

.Maximize economic return on resource exploitation.Protect the environment.Contribute to overall national development in multiple sectors

In essence, it must be remembered that the exploitable marine mineral resources are anonrenewable national asset. As such, the major objectives of a marine mineral resource policy are alldirected toward the common goal of optimizing the economic, social, and technical benefits for presentand future generations while simultaneously preserving the environment and traditional values of thenation.

Characteristics of a Marine Mineral Policy

In achieving the objectives of a national marine mineral resource policy it is necessary to addressthe characteristics of the marine minerals industry with respect to exploration, development andexploitation of the resources. In particular, there are five major attributes of the industry and itsactivities that are critical to understand:

.High-risk and costly means of exploration

.Highly advanced technology or research for the development of needed technology

.Capital intensive in development and exploitation.Subject to market instabilities.Requirement or desire for national support

Because of these attributes there are virtually no developing nations, and only a few developednations, that could undertake the total development of their marine mineral resources without technicalcollaboration and outside funding. As a result of these unique attributes of the marine mining industry,it is imperative that a national marine mineral resource policy recognize and be responsive to thesefactors if it is to attract foreign investment. At the same time, the nation cannot modify its overallmarine mineral resource policy to such an extent that it does not achieve its major objectives.Therefore, it is imperative that industry and government understand each other's respective resource

development objectives.

Achieving Government and Investor Objectives in Marine Mineral Resources Development

In large part both the government and the investor have a common objective to develop the marinemineral resource base of the nation at a profit. The means and regulations under which suchexploitation may take place, however, are usually the source of both difficult and protractednegotiation. Nevertheless, agreement can be reached and is normally facilitated by recognizing thatthe government's objectives are primarily achieved by maximizing the following:

.Economic benefit through control over contractual terms that ensure the capture ofoptimum economic rents at a level commensurate with the risk inherent in the industry

.Efficient resource development and exploitation through control over production andmarketing activities

.Human resource development through control over recruitment, training, and staffing of

projects

Similarly, the investor's objectives are somewhat parallel to those of government in that the investorwishes to achieve the following:

.An adequate return on investment that is proportional to the risk incurred in explorationand development


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.Access to production, downstream utilization and marketing of production

.Minimizing economic exposure by diversification of sources of production

.Utilization of home-country goods and services to the extent possible

.Utilization of exploitation facilities as training grounds for international staff

.Expansion of existing operations into other sectors of the national economy.

Recognizing both common and competing objectives of the government and the investor is (a) animportant first step in the implementation of a mineral resource development program and (b) critical todeveloping a rational marine mineral resource policy within which development can occur.

Within the basic policy framework described--which attempts to meet the objectives of both thenation and the investor--there must be the necessary and sufficient data upon which an investor canmake a decision as to whether or not to pursue implementation of an exploration program. Thereremains, however, one additional and often overlooked factor that has a strong effect on investors'decision-making, i.e. the perceived government-investor relationship within the nation.

Factors Influencing the Government-Investor Relationship

An investor's overall perception of the investment climate of a nation is in large part dependent onthe following:

.Political/economic stability of the nation

.Consistency in decision-making

.Ability to maintain reasonable control of project

.Compatible tax systems (no double taxation) with the investor's nation

.Ability to negotiate and resolve disputes

.Historical perspective regarding mining and development.

Although there are a number of additional factors that influence investors and enhancegovernment-investor relationships, those mentioned above are considered among the most important.Obviously, critical elements not specified above include the actual marine mineral resource policy andattendant legislation of a nation. The previously discussed broad concepts of a marine mineralresource policy would require considerable expansion and specification before actual exploration (andperhaps subsequent development) would take place.

Exploration Policy for Crusts, Nodules And Sulfides within Territorial Seas and the EEZ

Key elements of the policies and licencing procedures under which exploration and developmentcan take place within a nation's EEl have been largely established on the basis of policies andprocedures that govern exploration and development of the better-known commodities (oil, gas,placers, and phosphorite). Few, if any, nations have developed similar procedures for deep-oceanmarine mineral resources. The following discussion is directed specifically toward defining some of theelements of exploration policy and licencing that should be considered in developing explorationagreements with respect to nodules, crusts, and polymetallic sulfides within territorial seas and EEls.Because no development is presently underway or planned for the near future, the present discussionwill concentrate on the exploration phase that is presently underway, with development agreements tobe discussed later in this paper.

In the following, seven basic parameters are briefly discussed with respect to formulating anexploration policy. Normally, these would be included in an exploration licence/lease given by anindividual nation. These parameters include: commodities sought, exploration area, exploration areashape, duration of exploration licence, revenues, performance control, and retention and

relinquishment.

Commodities Sought

A clear statement is necessary with respect to the individual commodities sought (and eventuallydeveloped and marketed) within an exploration area. Because ores derived from any of the three


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occurrences (crusts, nodules, and polymetallic sulfides) will be mineralogically complex, a definition ofindividual commodities upon which a royalty (or other payment) is made is essential to ensure anoptimum economic return to the nation. Additionally, by defining a broader spectrum of individualcommodities, the investor has a greater potential for developing a profitable mining enterprise. Thenumber of commodities should be bounded, however, to prevent exploration for all commodities whichwill pose problems of ownership and tenure of leases.

Exploration Area

The exploration area allocated within a nation's territorial sea or EEZ is normally dependent on twofactors: (1) geologic spatial distribution of the resource and (2) total exploration area (normallyexpressed in km1 available. Geologic spatial distribution controls on the occurrence of the mineralresource strongly influence the area of an exploration licence. As an example, crust and noduledeposits tend to occur as thin veneers covering seamounts or abyssal plateaus. As a result,exploration areas most normally encompass several thousand km2 in order to have sufficient area fordiscovery of a viable mine site. Polymetallic sulfides on the other hand, tend to be much morerestricted in size and have higher ore grades and lower tonnage. Therefore, exploration areas couldconceivably be considerably smaller than that of crust and nodules. However, because of the limitedknowledge concerning the occurrence and distribution of all three occurrences, it is probable that initialexploration will require much larger areas than might normally be considered.

The total exploration area is a secondary control on the size of any individual exploration area. Themain factor with respect to the size of the exploration area is the decision whether to grant the entirearea as a single licence or to divide the area into several smaller exploration areas. If the area issufficiently large to provide several exploration areas that are attractive to industry based on geologicalspatial distribution data, then it is in the interest of the licencing nation to proceed with severalexploration areas rather than one large area. Such a procedure encourages competition amonginvestors and provides a broader base of data upon which the nation can make developmentdecisions. In very large areas the licencing nation can grant licences in a checkerboard or alternatethe licence pattern-thereby reserving some areas for future licencing when more detailed knowledge isavailable with respect to the resource. In cases when the total exploration area is quite small, a nationmay need to grant the entire area as a single licence in order to attract investor interests.

Exploration Area Shape

Normal licencing procedures are designed to offer exploration areas that are essentiallyequidimensional. This practice is more or less appropriate for both crust and nodule occurrences.Polymetallic sulfide occurrences, however, tend to be associated with linear underwater mountainranges or rifts. Therefore, exploration areas for polymetallic occurrences would perhaps best bedefined by long narrow tracts either parallel (providing maximum area of similar geology) orperpendicular to the axis (providing maximum variation in the geologic setting) of the ridge or rift.

A possible alternative to either the equidimensional or the elongate shape is to issue licences tocover whatever areas the investor may wish to define (within the lease size limitations previously set).Such a procedure has both benefits and drawbacks to the licencing nation and is generally notrecommended without strict controls and relinquishment regulations.

Duration of Exploration licence

The duration of an exploration licence is highly variable and is determined by a number of factors.Normally, however, the duration is set to provide sufficient time to explore the area to the point ofdefining specific economic targets for development. Licences can be extended based on performancecriteria defined by the nation issuing the licence. Such extensions are usually tied to a sequentialrelinquishment of a portion of the total exploration area. In all cases the time frame should be set andclearly stated so that both the government and the investor can fulfill their obligations without dispute.As a general rule, exploration licences would be considered short term (5 years) or long term (20years) but would not exceed these limits without exceptional reasons.


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Revenues

Exploration licences are normally granted with the provision that if an economic deposit is found theinvestor has the right to develop and exploit the deposit under the nation's marine mineral resourcepolicy and legislation. As a result, several methods are used to secure the appropriate revenues(economic rents) to the government. Among the most common methods are the following:

Bonuses -Normally a payment made to the government to secure explorationrights to a given area.

Royalties -A specified share of the value of the minerals produced that accruesto the government; normally based on current market value or as afixed amount of the value produced.

Rentals Fees -Normally annual fees assessed by the government for the investor'suse of the exploration area

After Profits Tax (APT) -An escalating tax, imposed on profits, which increases incrementallywith increasing profits from the resource produced

Performance Control

Regulations are added to exploration licences to ensure that the investor will proceed with theproposed work plan in a timely and professional manner. Such regulations are enforced by (a)requiring that the investor post a performance bond that is forfeited if work is not done or (b) bysuspension of the exploration licence(s) if work does not proceed. Normally performance criteria areset in terms of money spent, area explored, work completed, or various combinations of the above.Performance controls are essential to ensure that a nation's resource endowment is not tied up byinvestors for long periods of time without exploration taking place.

Retention and Relinquishment

Exploration licences should provide a set schedule for both the amount of area that can be retainedand the portion that must be relinquished on a yearly basis. In standard practice the relinquishment ofan area proceeds to a specified level at which time the investor is allowed to retain rights if (a) ayearly-and normally escalating-rent is paid per unit area, (b) a specified area is transferred to either adevelopment or mining licence (the remaining portion of the exploration area reverts back to thegovernment), or (c) exploration continues as long as it continues to meet performance criteria.

Specified retention and relinquishment procedures are essential from the government's perspectiveto ensure that large areas of the national domain will continuously be available for exploration andpossible development. Additionally, it ensures that exploration will proceed in a timely and professionalmanner.

The brief discussion above of the seven basic parameters that should be considered in anexploration policy/licence is neither comprehensive nor sufficiently detailed to develop a national policyand should be considered as general guidelines only.

Development Agreements

The previously described framework for the development of exploration policy/licencing procedurediscussed the necessary elements in fostering the potential development of marine mineral resources.Nevertheless, once a policy or exploration is in place and exploration proceeds to the point ofidentifying a potentially economic occurrence, there is a need to have in place a defined developmentpolicy agreement. In particular, the development agreement will address the specific aspects of:

.Terms and conditions for investment

.Fiscal regime for development and exploitation


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.Ownership and control over data and assets

.Accounting and monitoring procedures

.Repatriation o~ profits

.National participation.

Because no deposits have received serious consideration for development within the last 3 decadethe discussion of development agreements has not been of major concern to most nations. However,the licencing of two exploration areas by the Government of Papua New Guinea has necessitated thatthe issue of development agreements receive high priority and that such agreements will need to bedeveloped in detail.


The rapidly evolving and expanding concepts of national sovereignty with respect to large areas ofthe oceans and recent discoveries of new mineral resources necessitates that most nations developand implement a rational marine mineral resource policy. The development of such a policy mustaccommodate the multiple desires of both potential investors and individual nations. From a nationalperspective, marine mineral resource policy should assure a nation's sovereignty, self-sufficiency, andself-determination. As a critical first step, the legal definition of a nation's EEl boundary and theresolution of conflicts is essential.

In general terms, both the nation's and the investor's objectives are met by a marine mineralresource policy that (a) maximizes economic benefits, (b) promotes efficient exploitation, (c) provides astable and known investment climate, and (d) allows for resolution of disputes in an amicableenvironment. A fundamental need in virtually all nations is for the development of an explorationpolicy/ licencing procedure that defines the commodities sought, exploration area, exploration areashape, duration of exploration licence, revenues, performance control, and retention and

relinquishment.

Although development of crusts, nodules and polymetallic sulfides is still perhaps a decade or moreaway, marine mineral resources such as oil, gas, placer minerals, and phosphorite are presently beingdeveloped and exploited. Therefore, there is both a present and a future need to develop nationalmarine mineral resource policies to ensure the orderly development of these resources for all mankind.

References

McKelvey. V.E. 1972. Mineral resource estimates and public policy. American Scientist60{1): pp 32-40.

Ostreng. W. 1985. Joint development of hydrocarbons in the South China Sea: Opportunities and Constraints. InProceedings of the Workshop on Joint Exploration and Development of Offshore Hydrocarbon Resources inSouth East Asia, Bangkok, Thailand, CCOP Proceedings 55. pp 46-58.

United Nations 1981. United Nations Convention on the Law of the Sea, DOC.A/CONF.62/L.28.


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Introduction to the Papua New GuineaGreen Paper on Offshore Mining Policy

Based on a presentation given byJames Y. Wanjik

Principal Policy/Legal Officer, Department of Mineral Resources, andChairman of the Papua New Guinea Offshore Mining Policy Committee

Introduction

The aim of this paper is to give an overview of the draft policy and the processes that theGovernment of Papua New Guinea (PNG) went through in drafting its draft Green Policy Paper("Green Paper"). Our ultimate objective in formulating the "Green Paper" was to ensure that the finalpolicy safeguarded our national interest while at the same time encouraged investment in explorationand eventually mining in the offshore. In the end, PNG's policy must be consistent with PNG's rightsand obligations as an archipelagic state under the United Nations Convention on the Law of the Sea1982 (UNCLOS) which PNG ratified in January 1997.

In the following, the rationale for the policy is outlined and the steps taken by PNG to develop itsGreen Paper is reviewed. This is followed by a review of the circulation of the draft policy with adiscussion of the comments and/or responses that were received. In conclusion, future needs to moreclearly define the "Green Paper" is discussed.

Rationale for the Policy

The present Mining Act of 1992 is the principal policy and regulatory document governing theregulation and management of the mining industry in Papua New Guinea. However, this legislation isheavily biased towards onshore exploration and exploitation of mineral resources. As to the offshore,the legislation seems to extend only to the outer edge of PNG's territorial sea. For instance "land" isdefined under this Act to include "the offshore area being the seabed underlying the territorial sea fromthe mean low water springs level of the sea to such depth as admits of exploration for or mining ofminerals". One interpretation was that the exploitability criterion in this definition was restricted to theterritorial sea while the other was that land included at least the continental shelf as the exploitabilitycriterion was codified in the United Nations Convention on the Continental Shelf of 1958. There is noclear cut interpretation, thus in this sense, PNG does have a policy and regulatory vacuum so far asexploration and exploitation of mineral resources in the offshore is concerned.

Notwithstanding this, two exploration licences were granted to Nautilus Minerals Corporation inNovember 1997 pursuant to the current Mining Act 1992. It should be noted that these licences wereissued with respect to mineral resources within PNG's internal waters. The granting of these licencesgenerated worldwide attention that continues today. Although the interest within the investmentcommunities has been limited the interest in the marine research community and by BBC in London(which is in the process of making a documentary on the subject) has been very high. This high levelof interest has provided the impetus for the development of an offshore mineral policy for PNG beforefurther exploration and/or mining is licenced, if we come to that stage.

The other compelling reason is that PNG ratified the UNCLOS in January 1997. This meant thatPNG's domestic laws were to be construed subject to the UNCLOS. Thus it is an opportunity todevelop a specific offshore minerals policy in order to gain the benefits provided under UNCLOS andalso to effectively discharge its obligations therein.


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Development of Draft Policy

The following steps were taken to develop the draft policy. First, a decision was made that such apolicy was needed. Secondly, such a policy required a multidisciplinary approach given the complexmultitude of interests covered under the UNCLOS. The next step was to organize such a group andformally establish an inter-agency committee. When the inter-agency committee was formed a set ofrelevant issues were identified at a brainstorming meeting early in the process. These issues weresubsequently divided and meetings held on each issue. For each issue a member of the Committeewas required to take a lead role in the discussions. This meant preparation of short papers on thesubject to ensure discussions were focused. After all the core issues were covered, an internalworkshop was held in August 1998, the outcome of which is the draft policy.

The issues were divided into three core areas: licencing regime; fiscal regime; environmentalregime and three other issues. These other issues included offshore legal regime under the UNCLOS,offshore resources and exploration, and mining technology. Also, in order to provide the basis forsuch a policy, benefits distribution mechanism and other relevant issues of national importance wereincluded.

Without going into the details of the draft policy, it is important to outline some of the key issues thathave impacted on the draft policy. First, the implication of UNCLOS was, and is, not well understood.Of particular significance are the issues of sovereignty, sovereign rights and jurisdiction. What dothese terms mean and signify and which maritime zones are affected by these different levels ofauthority? Secondly, the draft policy needed to accommodate different resources that may be found inthe offshore, although the search for polymetallic sulfides was probably the main driving force. Thirdly,given the unknown variables, e.g., extent of offshore mineral resources, available offshore explorationand mining technology and the cost of such technology, the fiscal regime is not definitive. However,the current regime as a minimum is designed to guide an investor in offshore exploration to make aninvestment decision to invest.

Fourthly, exploration costs in the offshore may be high, if cost data for scientific cruises is anyindication and add to this a lack of offshore exploration and mining technology and the result may bethat the usual terrestrial licencing arrangement may not be applicable. However, the question is, whatis the appropriate balance to be drawn so that investors' interests are taken account of while, at thesame time, safeguarding the sovereignty of PNG? Fifthly, although the environmental aspect mayseem open-ended it is intended that a specific offshore environmental policy or regulation would besubsequently promulgated after the enabling Environmental Bill is enacted by Parliament. Sixthly, thedraft policy recognises potential conflicts between Marine Scientific Research (MSR) and privatesector exploration. In this regard, two critical questions are "What is MSR?" and "What is offshoreexploration?". Our understanding is that MSR is undertaken under a consent regime while explorationis undertaken pursuant to a licence. However, regardless of the definitions, the bottom line is to ensurethat the exploration licencee is undertaking its approved work program. Further, the privilege of MSRshould not be used as a conduit to undertake work programs pursuant to the exploration licence.Perhaps there would be no difficulty if the licencee actually contracts a research organisation toundertake its work program under the licence.

Finally, mention must be made of the landowner issue. Although it is believed by some that thisissue may be of limited importance in the offshore, it is doubtful that the issue will be as simple assome assume. In PNG, the Fisheries Act recognises traditional fishing rights and reef claims of coastaland island communities. That obviously will be an issue. Their position and that of the relevantProvincial Governments is further reinforced under the Organic Law on Provincial Governments andLocal level Governments. The extent and nature of any such claims by these entities are yet to beaddressed by government.

Consultation and Feedback

This draft policy was circulated widely both within and outside PNG. In PNG, the draft policy wascirculated to various national departments, statutory authorities, provincial governments and theprivate sector. Similarly outside PNG the draft paper was circulated to a broad range of individuals andorganisations. In the following some of the shorter representative comments (without attribution) aresummarised.


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Summary of Views and Comments Received

UNCLOS aspects

1. "With regard to its UNCLOS aspects, the paper [should] be reviewed formally, soon, andin its entirety by a UNCLOS expert who is both legally and scientifically qualified";

2. "The State has jurisdiction over the [Exclusive] Economic lone, under... UNCLOS, whichextends for 200 nautical miles to seaward";

3. "Since PNG has ratified the above Convention, ...the State must provide relevant lawsand regulations that are compatible to the extent of the EEl. This had been sufficientlyestablished for it to form the basis for Fishing Licences. This can now be used for mineralexploration licences";

4. "Under E.3B, Continental Shelf and the EEl, it is worth [considering] that while theGovernment of PNG may not claim 'ownership' of seabed resources within the EEl, itnevertheless has jurisdiction over them under the UNCLOS, and can regulate, licence andtax all activities in the EEl Oust as it does in the waters of EEl)";

5. "I have noticed that the paper is uncertain of PNG rights to economic resources within 200mile and the continental shelf. Under the 1982 Law of the Sea Convention, PNG hassovereignty over resources in those areas. Another area of importance to PNG is theArchipelagic waters and its seabed subsoil and mineral resources found therein";

International Seabed Authority

6. "The Green Paper is far too open-ended with respect to the relationship between PNGand the International Seabed Authority. It gives, or offers, too much to the ISB,

unnecessarily";

Environment

7. "The Green Paper makes no mention of the London Convention on Dumping of Waste,the environmental provisions of the UNCLOS..., or The MAR POL 73- 78 Conventions ondumping of waste from ships. All these are applicable to nations that have signed theUNCLOS.. .";

8. "Under H. Offshore Environmental Regime, it is extremely important to define and excludeareas of high biological values from potential seabed exploration activities of oil drillingand mining, which are not always compatible with marine conservation";

Stakeholders

9. "There will be various stakeholders. We leave the National Government and others asdetermined by our Constitution, existing mining laws and the UN Convention on the Lawof Sea to you. We are, however, interested more on the stakeholders in the Province.These are the Provincial [Governments] and LLGs as per the Organic Law [on ProvincialGovernments and Local level Governments], the owners of the pelagic waters, the userights of various fishes and sedentary resources within waters to be affected and onshoreowners of land where certain mining activities may necessarily take place. For thesestakeholders, we feel adequate time is required to study environmental, social, culturaland tenure systems in order that flexible and uniform approaches can be designed into thepolicy prior to legal framework and regulations to be finalised";

1 O. "Although there is no "physical presence" of any landowner in the area, it is most [certain]that the local population will claim fishing and other traditional rights over the area. Thismust be anticipated and possible measures to approach this scenario must be in place";

11. "Regarding the rights of navigation and regulation of navigational lanes or routes,especially in the Bismark Sea, relevant articles under ...UNCLOS may apply, should


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possible restrictions [be] imposed on off-shore Seabed Mining Zone/Area, during the

mining phase;

12. "The following should be taken into account: Merchant Shipping Act, 1975; Prevention ofPollution from Ships; National Policy on Wrecks and Salvage; and National Oil Spill

Contingency Plan";

13. 'When the policy is finalised and legislated there may be need to have amendments madeto the OLPGLLG to accommodate benefits sharing interests of relevant Maritimeprovinces within whose waters mining may take place";

Marine scientific research

14. "I was pleased to have the opportunity of reading the [draft policy] document and seeingthe initiatives you have taken and are planning. The only section I was wondering about isSection 54 under J.4 Marine Scientific Research. I take it the wording of this is notintended to preclude a research organisation like CSIRO accepting contracts fromcommercial tenement holder to carry out research in aid of the latter's operations. As youknow, CSIRO Exploration and Mining is at present contracted by Nautilus MineralsCorporation to undertake research and provide advice on the technologies of seafloormineral exploration and mining, and we are expecting this activity to expand";

15. "The term "strategic arrangement" is occasionally used by companies to describe suchrelationships with research organisations, but I expect they do not represent the kind ofactivities the final sentence of Section 54 is designed to discourage";

Dispute settlement mechanisms

16. 'What is missing is ...that PNG has to make a declaration as to which options under thedispute settlement mechanism it will resort to under UNCL OS ".

These comments and those arising from the Madang workshop on "Offshore Mineral Policy" will beincluded, where appropriate, in a revised "Green Paper" to be prepared by the PNG government.

Conclusion

In the further refinement of PNG's policy, we welcome constructive comments while attempting toavoid any colloquialism. It is only through direct and frank discussions with regard to all issues andwith the recognition that offshore mineral exploration and/or mining is new, complex andmultidisciplinary in nature that an effective policy be developed.


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Fiscal Policy and Regime for the EconomicDevelopment of Offshore Mineral Resources

Based upon a presentation byAllen L. Clark


Introduction

Casey Stengle, the long-time coach of the New York Yankee baseball team who was noted formixing metaphors and logic, was once asked what it was like to have appeared in so many WorldSeries Games and his response was "It is like deja vu allover again". In many ways I had the samefeeling when I began to undertake the writing of the present paper in that I was asked to prepare asimilar paper for discussion over 25 years ago. At that time, however, the topic under discussion wasthe economics of mining the nodule resources of the Clarion-Clipperton zone (Clark, 1973). In 1986(Clark and Johnson, 1986) my colleagues and I at the East-West Center undertook perhaps the firstcomparative analysis of the economics of deep-ocean mineral resources (manganese nodules,manganese crusts and polymetallic massive sulfides). Again in 1991 (Clark, 1991 a) a further analysisof the economics of manganese crusts, the popular resource at that time, was undertaken. At aboutthe same time (Clark, 1991b) I also prepared an analysis of the possible economics of the most recentof the deep-ocean resources to be discovered and considered for development--deep-sea polymetallicmineral resources. Perhaps the present paper will, at least in part be "deja vu all over again", however,it is hoped that it may also cover some new ground.

In any discussion of deep-ocean mineral resources there are three key factors that arise and mustbe addressed, i.e. (1) is mining practical and does existing technology allow for the economic recoveryof the resource to be exploited? (2) is the proposed exploitation of the resource in keeping with thebasic principles of (a) resource conservation and (b) environmentally responsible? and (3) will itprovide a sufficient return on investment to be profitable for the company and provide the governmentwith an acceptable return to the treasury? All of the key issues are inter-related in the context ofdefining a fiscal regime for the development of deep-ocean resources.

The "bottom line" of deep-ocean mineral resource development has been, and for the foreseeablefuture will continue to be, whether or not the deposit is economically viable. Economic viability will, to agreater or larger extent be determined by the fiscal regime within which exploration, development andexploitation will take place. It is to this issue, with respect to deep ocean mineral resources in generaland polymetallic massive sulfide deposits specifically within the Manus Basin, that I will now direct myattention.

Mineral Sector Fiscal Regime

In general, the fiscal regime of any nation can be viewed as the totality of that nation's economicpolicy and the economic instruments for implementing that policy, which impact on a mining enterprise.Normally, these instruments are in the form of direct and indirect taxes and tax incentives thatdetermine the profitability of the enterprise and the return to the government from resource utilization.In the following a brief overview of the major fiscal instruments of a fiscal regime are briefly reviewed. Itshould be noted, as pointed out by Fortin (1992) the fiscal policy and regime of one nation cannot beeasily "borrowed" from another nation since fiscal regimes, in particular, are the product of specificcircumstances--which will undoubtedly be the case with respect to the development of deep oceanmineral resources.

Components of a Mineral Sector Fiscal Regime

Mineral taxation methods vary in form and application within individual Governments, however, inthe final analysis the taxation structure of a nation often determines (a) whether or not a given project


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is economically viable and (b) the Government's share from the exploitation and utilization of thenations resources. For the majority of nations the taxes levied on a mineral development are eitherdirect or indirect. Among the most common direct taxes, taxes paid directly by the company to anotherentity (normally the Government) are the following:

Direct taxes

Income tax. Often called a profit tax, an income tax is normally a percentage of the profits of an

enterprise.

Royalty tax. Often called a production tax the royalty tax is normally a percentage levied against theamount of a commodity produced or the sale price of the commodity produced. There are, however,many variations used in the calculation of the royalty tax.

Import duty. A tax levied against the value of imported equipment and materials used in a miningenterprise. Normally, not all imports are taxed and this tax is often highly discretionary.

Export tax. A tax normally levied against the value of the commodity exported. If the commodity issold domestically it is normally subject to a sales tax in lieu of an export tax.

Withholding tax. A tax levied on the remittance of profits or dividends abroad. This tax is normallylevied on nonresidents but may also apply within certain corporate structures.

Local taxes. In many nations the provincial and or local levels of government often have vestedrights to tax mining activities--these taxes are often called use taxes as they include taxes foreducation, roads and property.

Fly In -Fly Out tax. A tax levied by the government on the value of the travel and related costsassociated with flying personnel from their home base to their duty station (mine) in a country.

Other taxes. In addition to the above there are normally a large number of other direct taxes thatare levied against a mining activity. These include, but are not limited to the following: rental fees,registration fees, transportation, water, environment (compensation fees) and in special circumstancesa value added tax (VAT).

Indirect Taxes

Landowner compensation. Normally a fee paid directly to the owner of the land upon which themining activity will take place or, in rare instances, paid directly to the national government.

Local component rules. In many nations there are strict rules with respect to the use of domesticgoods and/or labor, normally a percentage of the total, which may result in increased costs.Additionally, many nations have a requirement for the company to participate in overall developmentthat is an additional cost.

Foreign exchange rules and regulations. Normally imposed in such a way that the companyexperience foreign exchange losses or encounters increased transaction costs when exchanging ortransferring foreign exchange. In specific cases of borrowing within the country, additional taxes mayalso be imposed.

Equity participation. Normally takes the form of free equity participation in a project in extremecases but usually is a carried equity interest, also known as deferred equity, which allows thegovernment to put up its equity share from future earnings.

Transfer of technology and know-how. Most commonly applies to the cost of acquiring andtransferring patents or other proprietary property to the host country as a condition of undertaking themining activity. This was a particularly contentious issue in negotiations under UNCLOS.


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Tax Incentives

Tax holiday. An initial period of time in which a mining enterprise is not subject, or only partiallysubject, to all types of tax liabilities. Normally this period is approximately five years and, in specialcases, ten years or more.

Deductions against income tax. Covers a range of issues such as depreciation, amortization anddepletion allowances which can be deducted as costs, thereby, reducing taxable income. Deductionsare commonly only allowed for certain types of equipment or for specific expenditures. Specialapproaches have been developed in many countries to either speed up (accelerated depreciation) orslow down (defined number of years) individual deductions.

Interest deduction. As mining enterprises are capital intensive, the common practice to finance theventures is through loans. Therefore, most nations have provisions for allowing the deduction of all orpart of the interest on borrowed money.

Loss carry forward. Largely because of the cyclical nature of the mining industry companies enjoyprofitable years and endure years of loss. In the years of loss the amount of the loss can be "carriedforward" as a cost and deducted from taxable income in subsequent profitable years. The terms of losscarry forward, particularly with respect to the applicable time, is often specified. The converse of losscarry forward is "loss carry back" which requires an amended tax return.

Tax credits. A deduction from taxable income allowed by the government specifically for investmentof profits in the country. The amount of deduction is normally a percentage of the amount invested

domestically.

The preceding brief overview of the components of a fiscal regime is intended to emphasize twokey points. First, the number of direct and indirect taxes that face a mining enterprise are bothnumerous and, in the aggregate, dramatically impact the profitability of a mining enterprise. Second,as the taxes are set by the government they can also be changed by the government in order toencourage or discourage investment in the mining sector.

Although the number of direct and indirect taxes is large, it is encouraging to note that the numberof potential tax incentives, which can also dramatically impact the profitability of a mining enterprise,are also quite numerous and are very important. Overall, the fiscal regime of any nation must havesufficient flexibility to be able to accommodate the national policy with respect to mineral developmentwhile, at the same time, assure the government of a reasonable "take" from the exploitation of thenation's resources.

Components of the Proposed PNG Fiscal Regime for Offshore Minerals

As noted previously, the offshore areas of Papua New Guinea range from near shore occurrencesof sand, gravel and placer deposits to deeper ocean occurrences of manganese nodules, gashydrates and polymetallic massive sulfides. The polymetallic massive sulfide (PMS) occurrences, twoareas of which have recently been licenced to private industry, are currently of the most interest to theGovernment, industry and the international community. At present a major effort is being made by theGovernment of Papua New Guinea to establish a proper fiscal regime under which exploration,development and possibly mining of PMS's could take place.

Deep ocean mineral occurrences of PMS deposits on the deep ocean floor have not been mined,indeed, it can be argued have not even been successfully explored. As a result, the actual economicviability of such deposits is untested. However, it must be emphasized that similar types of deposits,which occur onland, have been successfully exploited in many countries worldwide. Therefore, certainaspects of the PMS occurrences (processing, metal recovery, waste disposal) are reasonably wellknown. Overall, the size of the potential deposits (tonnage, grade) and mining method remain twomajor and critical uncertainties with respect to determining the economic viability of the PMSs. Withoutthese critical data, however, the development and implementation of an appropriate fiscal regime forthe exploration, development and mining of such deposits remains problematic at best. Nevertheless,there is a need to define at least a general fiscal regime in order to provide a basis for furtherinvestment in exploration and development to take place. This fiscal regime will, however, have to


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accommodate a number of issues, some of which have on land analogues and others that appearunique to PMS deposits.

As previously noted, the PMS deposits of primary interest today, in terms of possible commercialdevelopment, are those in the Manus Basin of Papua New Guinea which lie in water depths ofapproximately 1,500 metres (about 1 mile). The future exploration, development and mining of thesedeposits, or others in similar conditions, will require considerable innovation, technologicaldevelopment and investment at each stage before a commercial mining venture can take place. Ifcompared to an on land situation, the present occurrences would be considered as interestingexploration targets requiring considerable additional exploration before an economic decision forfurther investment could be made. Indeed, one of the greatest uncertainties with respect to the futuredevelopment of PMS deposits is the time frame within which such an activity might have to take place.

Many of the problems associated with the future exploration, development and possible mining ofthe Manus Basin PMS deposits, and their impact on the existing on land mining law and fiscal regimeof the Government of Papua New Guinea have been outlined in the Government's "A Green Paper onOffshore Mining Policy" (Department of Mineral Resources, 1998) and are abstracted in the following:

1. (Page 1) ".. .As to the offshore, the legislation seems to extend only to the outer edge ofPNG's territorial sea. In this sense there is a policy and regulatory vacuum so far asexploration and exploitation of mineral resources in the offshore is concerned " ;

2. (Page 2) "... The type of technology available, the cost of acquiring them and miningmethods employed may be similar or different from those employed onshore. Relevantlicencing regime, fiscal terms, environmental regulations and so forth would be devised totake account of the similarities or differences as the case may be.. ..";

3. (Page 4) "...It is proposed that in the offshore at least three types of licences be issued.These licences include exploration licence, production licence and lease for miningpurposes. The objective is to ensure security of tenure in light of many factors includinglong lead time and high cost of technology involved to mine offshore mineralresources ";

4. (Page 6) "...A basket of fiscal measures will comprise (the) offshore fiscal regime. Somemeasures will have limited application whilst others may be generic. In the final analysisthe appropriate mix will be dependent on inter alia cost of exploration and mining in theoffshore. And this cost will in turn be functions of available mining technology and methodof mining employed in the offshore ";

5. (Page 6) "...Mineral royalty in respect of the offshore it is dependent on the extent towhich the Mining Act of 1992 applies particularly in terms of compliance with the relevantarticles of the UNCLOS " (Page7) "...The current rate of 2% of the f.o.b. value of mine

products may apply. However, this regime will be amended to take account of thecomplexities involved in offshore mining ";

6. (Page 7) "...Production bonus of 2% of the f.O.b. value will apply to offshore miningprojects. Like royalties where appropriate a sliding scale may be devised to take accountof the depth involved and the ease with which mineral resources may be exploited ";

7. (Page 7) "...In principle the current rate of income tax may apply. However, the keyconsideration here is the use of fiscal tool(s) to encourage mineral exploration andexploitation in the offshore. As to the effective rate of tax this may be dependent on thecost of mining which again entails consideration of available technology, acquisition costs,and mining methods employed. Amortization and depreciation provisions of the IncomeTax Act of 1959 as amended may be reviewed on needs basis to accommodate anypotential or actual difficulties encountered by the taxpayer... .";

8. (Page 7) ".. .Currently, dividend withholding tax is payable by foreign shareholders inmining companies operating in PNG. However, in order to encourage foreign investment,dividends withholding tax if applicable may be removed ";

9. (Page 8) "...Generally, no duty exemption is available to mining companies ";

10. (Page 8) "...Additional Profits Tax is applicable only to major mining projects...in principlethe current tax base and rate will apply ";


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11. (Page 8) " The current State equity participation policy is that the State has an option to

take up 30% at cost in a major mining project. The state may continue to retain this optionfor mineral resource project development in the offshore irrespective of the size of the

deposit.. .";

12. (Page 8) "...Mineral exploration and mining companies will be required to make theiractivities consistent with the requirements of the environment related laws and regulationsoperating in PNG ";

13. (Page 9) ".Benefit distribution is important in light of PNG enacting the new provincial andlocal governments reform law the State is not only required to consult with affectedprovinces and local communities but also is required to share some of the benefits derivedfrom mineral projects;

14. (Page 9) "... Where mining takes place within the territorial sea *** appropriate benefit

packages will be designed to assist relevant provinces and local coastal or islandcommunities. In general, the packages will reflect impact of mining activities. In the case oflocal coastal or island communities, benefits to be derived by them will be dependent onmining being undertaken on seabed underlying traditional fishing grounds or otherrecognized activities within those areas ";

15. (Page 9) "... The State will encourage mineral companies, which demonstrate the bestavailable technology with a willingness to transfer it to PNG. Such technology must betested and proven...and environmentally friendly ";

16. (Page 10) "...the State will encourage developments that demonstrate the willingness tosource materials and other necessities from a PNG port ";

17. (Page 11) ".. .Offshore mining may also affect other stakeholders in the offshore. Thesestakeholders include fishermen, navigators, divers Any exploration or mining activity thatis proposed or undertaken ought to take account of these stakeholder interests. Wherenecessary appropriate compensation may be paid to these stakeholders who may not beable to have access to the previously accessible offshore areas "; and,

18. (Page 11) ".. .Offshore mineral exploration and mining are frontier and pioneeringactivities. These activities will be encouraged consistent with this policy. Whereappropriate legislative amendments or new legislation will be enacted to give effect to therelevant aspects of the policy".

A comparison of the issues addressed in the "Green Paper" by the Government of Papua NewGuinea, above, with the basic components of a fiscal regime presented previously, clearly shows (a)the intention of the Government of Papua New Guinea to be flexible with respect to several key issuesrelated to direct taxation (income tax, dividends withholding tax, royalty), however, less flexible withrespect to others (production bonus, duties, and the additional profits tax). However, when one viewsthe "Green Paper" in the context of indirect tax issues, the Government's position appears to be (a)quite flexible with respect to several key areas (technology transfer, onshore sourcing), (b) less flexibleon others (benefits, stakeholder interests, scientific research, research data) and (c) for a wide rangeof others (local component, foreign exchange regulations) there is no comment.

Equally important, the "Green Paper" is silent on many of the key economic issues affectingexploration, development and mining. In particular, the core issues of depreciation, amortization,depletion, tax holidays, loss carry forward and interest deduction are not discussed. This, however, islargely because the Papua New Guinea Government has already developed a very mature system ofdealing with such issues based on its experience with other mineral developments within the country(OK Tedi, Porgera, Misima, Lihir) and to a large extent the existing rules and regulations would beexpected to apply.

Additional Considerations in Establishing a Fiscal Regime

In addition to the above issues which have been discussed in the "Green Paper" and elsewhere inthis overview, there are a number of other issues which will directly impact the fiscal regime to bedeveloped by Papua New Guinea for offshore mining and they are briefly discussed in the following:


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Net Present Value. It is to be anticipated, and indeed is accommodated in the licencing proceduresproposed by Papua New Guinea, that the exploration and development of PMS deposits will be a longprocess. According to DMR (1998) " Exploration licences will be granted by the Minister responsible

for mineral resources (and) will be for five years initially. The term can be extended in additionaltranches of five years thus according the licencee a good number of years to undertake mineralexploration " It should be noted that to date over 30 years has passed since the first pilot mining

activities on manganese nodules were conducted and to date there is still no commercial developmentof this rich resource.

As a result of the long time-frame involved in exploration and development there arises afundamental problem of constructing, in the early phases of the program, an accurate financialanalysis of the project. Indeed, any estimation of an Internal Rate of Return (IRR) based on presenteconomics would be of little value either to the Government or to industry. Obviously, such an analysiscan be done, and probably would be done and updated periodically, but should be viewed primarily asan indicator of future profitability. More detailed factors required for an accurate financial analysis,such as markets, price, demand and uses, would be largely unavailable.

Ring Fencing. In many countries, expenses incurred in the exploration of one area, which exceedthe expenses called for in a work program can be credited as expenses on an adjacent property,owned by the same company, in order to fulfill the work program on the second area. In essence, acompany can expend all of its effort on one property while holding a second property without doingany work on that property.

Alternatively, a company may be able to mine on one property at a profit yet transfer expenditureson other properties in order to reduce their taxable income on the profitable property. In the case ofPMS exploration, where one company holds two licences, the problems associated with ring fencingcould become acute.

Resource Conservation. A major problem associated with most deep-ocean mineral resources isthat of resource conservation. Because of the inherent difficulties with location, when mining remotely,it is to be expected that (a) it will be very difficult to accurately mine a given deposit and (b) that dilutionof the ore will be a problem in marginal areas of any deposit.

Another major problem that may occur in the mining of PMS deposits, is that of necessary high-grading of the deposit. This will be particularly true if the operational costs of mining are very high andthus necessitates mining only the highest grade portions of the deposit. Economically, this can beviewed simply as mining a deposit with a high cut-off grade, however, because of the particularcircumstances which surround the mining of deep ocean resources it may not be feasible, as it often ison land, to assume that you can go back later and remine the area.

Environmental Costs. A great uncertainty with respect to the development of PMS deposits lies inthe associated environmental costs and liabilities that a company may have to assume in order tomine a deposit. Although this is a distinct possibility, studies associated with the proposeddevelopment of manganese nodules and crusts indicate that environmental costs are not prohibitivelyhigh nor is the amount of disruption caused by mining overly significant.

Polymetallic massive sulfide areas, in particular those associated with active "smokers" tend tohave a high concentration of unique biota (clams, worms, micro-organisms) which contribute to aunique biodiversity of such areas. The definition of this unique biodiversity, and the implementation ofappropriate procedures to protect it, may well become one of the major costs to a proposed PMS

development.


As with many nations worldwide, Papua New Guinea has a well developed mining industry whichfunctions within the confines of established mineral policy and legislation and within a known fiscalregime. Additionally, as with many other nations, Papua New Guinea also has significant potential formineral development in the offshore areas of its territorial seas and beyond; in particular, with respectto manganese nodules, gas hydrates and polymetallic massive sulfides. Unlike many other nations,however, Papua New Guinea is the first nation in the world to issue exploration licences in the deepocean for polymetallic massive sulfide deposit exploration. In taking this action the Government of


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Papua New Guinea has recognized that although certain aspects of it's mineral legislation and fiscalpolicy for onshore mineral exploration and development is applicable to the deep ocean resourcesthere are certain unique aspects of deep ocean resources, and in particular polymetallic sulfidedeposits, that require modification of the legislation and fiscal regime presently utilized onshore.

In particular, the anticipated long period of time required for exploration and technologydevelopment, the unique environment under which mining must take place, high risks associated witha pioneering endeavor and the uncertainty which surrounds the economic viability of the deposits allmust be factored into the fiscal regime under which PMS deposits would be developed.

The majority of these issues have to a large degree been considered in the recently releasedpublication entitled "Green Paper on Offshore Mining Policy" (DGM, 1998) which clearly shows theintention of the Government of Papua New Guinea to be flexible with respect to several key issuesrelated to direct taxation (income tax, dividends withholding tax, royalty), however, less flexible withrespect to others (production bonus, duties, and the additional profits tax). In the context of indirect taxissues, the Government's position appears to be quite flexible with respect to several key areas(technology transfer, onshore sourcing) and yet less flexible on others (benefits, stakeholder interests,scientific research, research data) and for a wide range of others (local component, foreign exchangeregulations) there is no comment.

Future discussions concerning an appropriate fiscal regime for PNG in the exploration anddevelopment of PMS deposits in its offshore areas should further address issues such as (a) thevalidity of net present value determinations as applied to such long exploration and developmentperiods as proposed for PMS deposits; (b) ring fencing of industry activities; (c) environmental costs, inparticular, those associated with the unique biodiversity of active PMS areas; and (d) resourceconservation.

Papua New Guinea stands on the frontier of deep ocean mining, particularly with respect to PMSdeposits, and the fiscal regime that it develops to govern exploration, development and mining will bethe "first of its kind" and undoubtedly a model for all other nations.

References

Clark, A.L. and Clark, J.C. 1986. Marine Metallic Mineral Resources of the Pacific Basin. Marine ResourceEconomics 3(1): 45-62.

Clark, A.L. 1991 a. Worldwide Trends, Needs and Prospects for Deep-Sea Mining. In Marine Policies Toward the21st Century: World Trends and Korean Perspectives. Korea Ocean Research and Development Institute(KORDI), Ocean Industry and Policy Division, Occasional PaperNo. 1/1991. pp 58-81.

Clark, A.L. 1991b. Economic and Technological Variables in Deep-Sea Mining. In Marine Minerals and theEnvironment. Technical University of Clausthal, Germany. pp 104-126.

Clark, A.L. 1973. Some probable impacts of deep ocean mineral resource development. In Proceedings MarineTechnology Society, 9th Annual Conference. pp 253-258.

Department of Mineral Resources 1998. A Green Paper on Offshore Mining Policy. Unpublished report of theGovernment of Papua New Guinea, Port Moresby, Papua New Guinea.

Fortin, P. 1992. Recent Trends in Mineral Development Law. In Mineral Industry Taxation Policies for Asia andthe Pacific. Economic and Social Commission of Asia and the Pacific (ESCAP), Bangkok, Thailand. pp 22-31.


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CHAPTER THREE: MARINE MINERAL DEVELOPMENT ANDGOVERNANCE

Industry, Research & Government

Based on a paper presented byJulian Malnic

Chief ExecutiveNautilus Corporation Ltd, New South Wales, Australia

A World First for Nautilus Corporation

The Nautilus Corporation ("Nautilus") achieved a world first in offshore mineral exploration inNovember of 1997 when it was announced (Nautilus 1998):

".. .Nautilus Minerals Corporation became the first in the world to be grantedexploration titles over the newly-discovered, high-grade seafloor massive sulphide(SMS) type deposits "

Our announcement attracted widespread media attention including a large article on the front page ofthe New York Times, reports on the BBC World Service and various international news programs. Wealso think it changed the "rules of the waves" as shall be discussed in this paper.

Nautilus' two exploration licences are in PNG's Bismarck Sea and cover more than 5000 squarekilometres of the Manus Basin, a tectonically active and well-mineralised geological province. Over thelast decade, this province became a Mecca for researchers who found it a "living laboratory" ofanalogies to the volcanogenic massive sulphide deposits which onland have supplied much of themetal consumed by man over the last millennia.

Many nations are expected to follow PNG's lead in developing a seafloor resources policy. Ourmessage to any nation considering the development of a seafloor resources policy is "Pleaseunderstand the explorer's position". As we build our first "terrestrial mines in the sea" many of ourfamiliar terrestrial principles will apply although, as we have noted, there is a tendency for people toregard the sea as an alien environment and, therefore, to imagine that the normal developmentprinciples of mining on land will not apply.

Mention "mining in the ocean" and people are immediately at sea. Most seem to lose their bearingsregarding the normal resource development sequence of exploration, resource identification, toreserve proving and finally to a feasibility study. The first question inevitably asked is "How is it to bemined?" I should say that while we are very impressed with the wide range of technologies and theirevident ability to do our mining task, we do not have a mythical "Titan CX2000 Deep Sea Miner" readyto go. Regardless, we believe that the first question that ought to ask is "How big is the resource?" andonce this is established the how-to-mine question can be addressed during the course of mining andeconomic feasibility studies.

As our experience grows, we see more and more that the development methods and principlesused on land will transplant directly to help create the world's first profitable 'deep water' marine mine.

Emerging Issues and New Policy

In the currently unfolding scenario, the overlap in the interests of marine mineral explorers andinternational marine researchers has potentially set these two groups on a collision course. As a resultof Nautilus' plans for commercial mining, PNG's Department of Mineral Resources ("DMR") has begunthe first serious attempt to codify its seafloor resources policy. While this policy is being drafted in PNGit is timely for Nautilus Corporation to present its views on how government, the explorer and theresearchers can and should work together.


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Mineral resources, whether on land or in the territorial waters, belong to the nation and to thepeople. Therefore, as governments frame laws that encourage companies to explore and developmineral deposits in both places our basic message is "do what you would do on land". Indeed,Nautilus' exploration licences are in PNG territorial waters and are instruments of the PNG Mining Act1992.

However, Philemon Embil, PNG's Minister for Mineral Resources, announced in July 1998 that aspecial policy regarding seafloor resources is being developed by DMR and it is reported that that thedraft seafloor resources policy may well be implemented as an entirely new "Seafloor Resources Act"perhaps as early as next year. As a result, Nautilus' consultation in this policy forming process hasrequired us to carefully think through our position, particularly as a new wave of international"research" cruises prepares to enter PNG waters. In light of this, I would like to outline thefundamentals that Nautilus, or any exploration company, would like to see satisfied if we are to fulfillour vital role as a primary force in seafloor exploration and mining.

The Roles of the Explorer, the Researcher and the Government

For successful minerals exploration and development, we see the most critical relationship as theone between the explorer and the host nation's government. In the brand-new business of marinemineral exploration and development, this partnership must be an especially workable one for thecompany and the nation to ensure that both get the profits they seek, particularly when it comes tojointly harvesting the benefits of marine research. In about three years I think you'll see industryexpenditures exceeding those of the research community, however, for the time being research iswhere the big spending is and where most of the useful exploration data is generated.

But first let me say something about ships: unique logistical constraints apply at sea. In theterrestrial environment many parties can access an exploration area on foot, in vehicles or withaircraft. In relative terms these are low cost. As a result, access is relatively free and does not carrymassive cost penalties. But at sea, a suitable exploration or research ship can cost at least US$20,OOOa day and if you add in mobilisation costs and assume a couple of weeks work you require a halfmillion dollar budget.

For the scientist onboard, ships do two things: they transport them to the site and then act as thehighly specialised work platform that is needed to do even very basic tasks, e.g., sampling. However,great value, great economic value, can come from the research cruise simply by havingrepresentatives of the explorer and the government on board scientifically participating in the researchactivities.

Having these guests onboard and participating requires relatively little incremental cost anddiscomfort to the researcher. Also, research is meant to benefit the broader community and by havingmultiple specialists onboard it can achieve this objective. One of the primary justifications for the largequantities of money governments put into research, and the access that researchers seek in foreignwaters, is the expected economic benefit of the research to industry and ultimately to the broadercommunity. In the case of research within the waters of PNG, the participation of Nautilus and theDMR representatives onboard would assure that the economic value of the research efforts inNautilus' licence area will be captured along with the benefits of scientific research.

The Importance of Research

All discoveries of potentially economic "deep sea" marine mineral deposits so far have been theresult of research. We are, therefore, in debt to the important business of the scientists who researchthe oceans and their floors.

Before the arrival of marine mineral explorers, researchers cooperated according to a rathercomplex and, to the industry observer, obscure set of protocols. These protocols were driven bypolitical factors, such as international acts of friendship and the host nations need to enhance itsinternational profile through scientific research. Equally important was the need to share resources,such as ships and cameras, and a shared academic interests in common research topics.


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As an example, and in chronological order, the Manus Basin has been visited by geophysical andgeological parties from Australia, USA, Japan, Canada, USSR, Germany and France. I think that on allbut one cruise an observer from PNG participated onboard the research vessel. Explorers will see theobservers' main job as the capture of scientific data in the national interest. It also tends to allay anygeneral security concerns that go along with having a foreign ship working in the nations' territorialwaters.

PNG ratified the 1982 United Nations Convention of the Law of the Sea (UNCLOS) on January 14,1997. Therefore, PNG's territorial waters now include the 200 nautical mile "Exclusive Economic Zone"(EEZ), which is protected under international law. However, under UNCLOS, PNG has certainresponsibilities with respect to governing and maintaining their claim. With PNG having a strongnational dependence on mineral production, it is likely that mineral exploration and development willbe major activities within the EEZ of the nation. From the very beginning, the DMR must keep the keyrecords for future explorers and to help assess mining proposals in the offshore.

Nautilus is learning very quickly in this virgin field, as we are sure the DMR is as well. For example,even the basic principles of exploration present an ever-changing field of learning to us. In particular,we are conscious that we must share what we learn with the DMR and other relevant agencies. As aresult of this increasing data bank, in the future it is hoped that the DMR will be better able to help usand, we hope, to better fulfill its national commitments.

The Data Chase

Although the UNCLOS guidelines stipulate that the originals of all data be deposited with the hostnation, a major issue immediately arises, i.e., even if the host nation can afford to store it all, what usewill it be? The same question applies to Nautilus who soon noticed that the data, information andknowledge that research generates is voluminous, and not all of it relevant to exploration. Physicalsamples alone vary from tonnes of sulphides, buckets of mud, water samples, crates of deep seaclams, and hydrothermal fluid samples. Although the samples are highly diverse, it must beremembered that even biological samples can be of direct value to the mineral developer seekingbaseline data for environmental studies. There are clearly some complex matters to be resolvedregarding data. Learning who needs what and where the data copies should most efficiently go willtake time and collaboration.

Open or Closed File?

For the mineral explorer, the system of publicly accessible 'Open File' and confidential 'Closed File'material, used by many nations' respective departments of mineral resources, will need to be refinedto cope with the status of research materials gathered within licence areas. Currently, researchmaterial goes straight to Open File in the DMR. The scientific conclusions from the research may bepublished a year or two later. Nautilus believes this practice should be altered so that researchinformation, of potential commercial importance from within a licence area, is released only when thelicence is relinquished or when the title holder agrees to its release.

Nautilus is keen to see the term of marine exploration licences extended beyond the current twoyears, at least during the "pioneering years" of exploration because of the need to develop and applynew exploration techniques, equipment and methodologies. It will initially take longer to exploreoffshore than it does on land, due to the unique logistical constraints, although in the long run marineexploration may become faster.

Nautilus' technical relationship with the DMR will largely revolve around the access and release ofgeological data, information, reports and samples--choosing it, storing it and working with it. As aresult, the only conclusion can be that the relationship between the government and the explorer is ofcritical concern, and the work of researchers should be transparent to each of them.


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Guaranteed Berths

Representatives of exploration licence holders and the DMR should continue to receive the offerberths on every research cruise that comes to our licence areas. Nautilus is pleased that the 1998SOPAC protocol for collaboration between licence holders and researchers is now in place.Previously, the cruise plans of researchers wanting to work in PNG waters have been approved,sometimes through diplomatic channels, by the DMR. In the relatively low tempo environment of thepast, this has worked well. However, assuming a more intense future for mineral exploration, Nautilusbelieves that the conditions regarding collaboration applicable to researchers and industry shouldideally be stated in regulations and law and in a way that does not discourage researchers or burythem in paperwork.

The Rights of the Explorer

I think any future marine mineral explorer would agree with Nautilus' sentiment that 'We mustcontinue to have access to data, information or conclusions generated from research work on depositsin our licence areas and access to all research cruises". Like commercial organisations, researcherscovet their discoveries, and so they should. But should a researcher have priority for conductingsubsequent research on his discovery?

Recently, Nautilus was asked to comment on a situation where an independent researchconsortium wished to exploit another researcher's discovery without consultation. Whatever theresearchers' conventions might be in such matters, our response was basically technical andcommercial. In particular, we could foresee problems if there was no continuity in a researchers'activity. As examples, experience would go unused and/or new data might not mesh with what we, oranother leaseholder, might have. To resolve this issue, perhaps the development of a protocol orguideline, that bestows some privilege or priority to the researcher of discovery, might help to maintainan orderly flow of information.

Win-Win-Win

At Nautilus, we have tried to befriend and collaborate with researchers because we support whatthey do and have already benefited from them considerably. Additionally, we want to collaborate withresearchers so that we can give them as much freedom to release information as possible as werecognise that scientific publications are the lifeblood of their businesses and that these mean therelease of data.

However, we are also mindful that as explorers we must comply with our statutory obligations to"report to and to ensure a well informed stock exchange". Here, the implication is plain: where theresearcher and explorer collaborate in a licence area, commercially sensitive information should onlybe released to the public domain within a framework and timing determined primarily by the explorer.

The mutual rewards of an industry/research collaboration are sure to grow. As funding flows in fromindustry, more research will be affordable and paid for by industry. Industry will benefit, as we have,from the keen minds in research and we in turn will provide to the researchers our studies andinformation on our discoveries to advance their efforts. In our experience, it takes very little more thana face-to-face meeting and genuine exchange of ideas to ignite a collaborative effort. The expectedwave of exploration funding over the coming years that I have mentioned earlier will acceleratecollaboration of this sort.

At sea, on a shared vessel, it will be more important to cooperate with others than it has been inconventional terrestrial exploration and mining and there will be a growing need for negotiatedapproaches and pooled results. Access to data and results can be a continuous process in a well-founded and well-intentioned collaborative effort between industry and research.


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Researchers with 'Other' Commercial Connections

Inevitably researchers and explorers together will have to find ways to work through commercialmatters such as protecting intellectual property and preventing conflicts of interest. Declaring interests,and possible conflicts of interest, will be most important to the building of good relations and will clearthe way for more sophisticated arrangements.

Perhaps a good illustration of such collaboration is our own case. After consolidating our leaseposition, Nautilus approached the CSIRO with the offer of a 'research partnership' to support futureexploration and mining. But the CSIRO already had a prior commitment to a consortium of companiesto research in Nautilus' Manus Basin areas. Negotiations between all parties resolved the issues andallowed us to work side-by-side with different purposes. The caution exercised by the CSIRO, first indeclaring its position and then in arranging with Nautilus and the other consortium to maintainconfidentiality of information, has made this double arrangement conflict-free.

The difference between a researcher "consulting to" and researcher "working for" a companycomes down to the details of the arrangement, and to whether that researcher has beneficialownership in the commercial project. However, researchers cannot expect to work in this newenvironment of competing interests by simply announcing which hat they are wearing today.

Trespass

In industry circles, trespass is not usually tolerated. Any situation where a competitor company triedto work on another company's exploration tenements, without a formal agreement or joint venture,would never be tolerated in a terrestrial environment. On land, no explorer allows another company todrop in on a drill rig and take away some of its core for assay--an issue of straight trespass.

Intellectual Property

In exploring its licence areas, Nautilus will be learning lessons about their geology as well as moregeneral lessons regarding seafloor exploration and mining that will benefit its future activities. One ofthe main purposes of the exploration licence is to keep the exploration lessons the explorer learns forits own benefit. Such knowledge is "intellectual property" which has real commercial value. Nautiluswill energetically defend this belief if it is put at risk by parties who imagine that the same rules thatapply on land do not apply at sea.

Even before the introduction of new policy or legislation, we believe sufficient precedent exists inthe law to uphold our stance on this matter. It is useful here to consider precedents such as the 1993case involving Western Mining Corporation (WMC) and Savage Resources in the Supreme Court ofNew South Wales. WMC's alleged failure to observe the rights to data and information of the titleholder, Savage Resources, led to WMC's forfeit of its stake in the Ernest Henry copper-gold deposit,now a major mine, and facing adverse public opinion.

So when does 'research' become 'commercial'? It is a question that bears close scrutiny,particularly when the individual or institutional researcher or its employees also has other commercialinterests.

Nautilus believes that researchers should have conditional access to carry on their important workin its licence areas and we believe each research cruise plan filed should carry with it full disclosure ofsuch commercial interests. The disclosure should state explicitly that representatives of competingcompanies are not on board and that information will not be given to competing interests without thelicence holder's approval. Where the research organisation also has commercial aspirations, it shoulddeclare these and state its full intentions for its proposed work. The explorer needs to know it is notcompeting against researchers. As such, the cruise plan should be filed with the licence holder forcomment at the same time as with the government.


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Releasing Research Information

Researchers need to be aware of the commercially sensitive nature of their results in a grantedexploration licence area. We believe the licence holder should have the final say concerning thepublication of certain data and information about its tenements. For example, the CSIRO plans ashallow drilling expedition within our EL 1196 for the purpose of testing deep-seated alteration patternsand mineralising fluid pathways, its aim being to better understand mineralising processes and tofurther test the new PROD drill rig. There is also a proposal under consideration for deeper drillingunder the Ocean Drilling Program.

Clearly the release of drill core assays, which can be extremely commercially sensitive, will needour approval. On land, companies often need to exercise discretion in announcing drilling results inorder to generate additional supporting results that better qualify or quantify the initial results. But I amsure we will be keen to give it.

Why this must be so is more understandable if we consider the case of the public company(Nautilus is still a privately owned company but is expected to list in the medium term). Stockexchanges have very clear expectations regarding the timely release of information, and are one ofseveral regulatory bodies that are interested in directors seeing that information does not leak onto themarket from other sources, thereby disadvantaging shareholders who are not 'in the know'. Ultimately,this ensures confidence and credibility in the financing of high risk exploration, which would be put atrisk to everyone's disadvantage if the system is compromised.

We hope that future seafloor resources policy creates both the onus and the opportunity for theresolution of release of information issues between researchers and licence holders. But, in anyconflict, we believe those policies, laws and regulations should give the explorer priority in theeconomic and national interests. With the rapid advance of marine and mining technologies we thinkmarine mines will have many more parallels with the terrestrial environment than people currentlyimagine. The matters of access and information will be no exception.

Environmental Issues

Understanding environmental issues in the marine mining medium is of paramount importance toboth the PNG Government and to Nautilus. Already, cruises specifically dedicated to studying themarine life around the Vienna Woods, PACMANUS and DESMOS deposits have been conducted. The1995 ManusFlux Cruise has already collected biological data that will be valuable for mining feasibilitystudies. This and other biological information also has commercial value to mineral developers andshould fall under the same access arrangements as mineral-related data.


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CHAPTER THREE: MARINE MINERAL DEVELOPMENT AND GOVERNANCE

Licencing Regime in Papua New Guinea

Based on a presentation byNellie James

Registrar, Mining TenementsDepartment of Mineral Resources, Papua New Guinea

The law and regulations governing licencing for mining in Papua New Guinea (PNG) are found inone piece of legislation, the Mining Act of 1992 (hereinafter referred to as the Mining Act 1992). TheMining Act 1992, designed to suit land-based mining activities, simplified many processes and thetypes of licences and leases governing mining activities. Outlined below are the types of leases andlicences that are available under the Mining Act 1992 to carry out mining activities.

Types Of Tenements

ACTIVITY LEASE! LICENCE MAXIMUM TERM

Exploration Exploration Licence 2 year term (can beextended/renewed for furtherterms)

Production '. Special Mining Lease 30 year term (can be extendedfor further terms)

Mining Lease 20 year term (can be extendedfor further terms)

Alluvial Mining Lease 5 year term (can be extended)Ancillary Special Mining Easement Term identical to term of principal

tenementLease for Mining Purposes Term identical to term of principal

tenement

Requirements

The legislation in the Mining Act 1992 sets out the requirements for applying for leases andlicences. The requirements are clearly set out in the body of the legislation. As an example, anyonewishing to undertake a particular form of mining activity has to fill out a prescribed application formwhich is the same for all types of tenements. As the form is the same for all tenements, the applicantneeds to indicate in the application form the type of tenement required. In filling out the prescribedapplication form, the applicant must provide the following information.

Onshore

New application

.Application form correctly filled out

.Proposed w9rk program is adequate

.Proposed expenditure meets the minimum requirement

.Demonstrate adequate technical resources for the proposed work program

.Demonstrate adequate financial resources to fund the proposed work program

.Proper survey of the area of the licence application


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Application for extension of term

.Application form for extension of term of licence correctly filled out

.Application lodged ninety (90) days or more before the expiry date

.Proposed work program for next term is adequate

.Proposed expenditure meets the minimum requirement

.Area of land reduced by 50% from the area of land held in the last term

Onshore, an exploration licence grants an exclusive right to search for minerals within theboundaries of the licence. The licence is granted for an initial term of two years and can be renewedfurther. The provisions for an extension of term for an exploration licence are in favor of the licenceesuch that the licencee can be sure that he will get an extension of the term of the licence if he hascomplied with his work program and expenditure commitment in the last term. The maximum area fora new exploration licence application is 750 sub-blocks. Upon extension of the term of a licence, thelicencee is required to relinquish 50% of the area of the licence in the last term. This relinquishmentrequirement upon extension of the term of the licence remains until the area is reduced to 30 sub-blocks. The licencee may, however, ask for a waiver from reducing the area further, when it hasreduced down to 75 sub-blocks but more than 30 sub-blocks.

For the offshore regime, the sea is divided into various segments and it appears that theGovernment can issue licences giving the licencees the exclusive right to search for minerals, withinspecified areas, in PNG's archipelagic waters, the Exclusive Economic Zone and the continental shelf.

Offshore

In the case of the Regulations on Prospecting and Exploration in The Area, now before the Councilof the International Seabed Authority for its deliberation, they provide for a prospecting licence thatgives the prospector general rights to prospect and for an exploration licence that gives the licenceethe exclusive rights to explore.

For PNG it has been proposed that the offshore mineral regime have only one licence which wouldgive exclusive rights to the licencee to explore for minerals in a given area, subject to the operation ofUNCLOS provisions, especially as they apply to marine scientific research. The proposed size of thearea for an exploration licence is 1000 sub-blocks for a term of 5 years and can be renewed for further5 year terms. It is also proposed that the exploration licence area mayor may not be reduceddepending on the work program.

Discussions around the types of licences for the offshore regime originally included consideration ofa retention licence, however, idea of a separate retention licence was dropped to reduce themonitoring and administrative costs involved in having an additional licence. Instead of having aseparate licence, in the form of a retention licence, it was proposed that relinquishment requirementsbe made flexible to accommodate the concerns that necessitate a retention licence.

Another type of activity proposed in the "Green Paper", which is related to exploration, is that of thePilot Mining Test. The Pilot Mine Test, as proposed, does not require a separate licence as it is viewedas an activity that would be undertaken as an extension of exploration activity. Therefore, theexploration licencee can undertake pilot mine tests by way of a variation to the work program of theexploration licence. Again, this activity will require clearly definition and monitoring.

Production Lease

Onshore

Special Mining Lease

.Application form correctly filled out.Applicant holds the exploration licence on which production is proposed.The area is clearly demarcated and has been properly surveyed.Applicant must provide a proposal for development


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Mining Lease

.Application form correctly filled out.Applicant holds the exploration licence on which production is proposed.The area is clearly demarcated and has been properly surveyed.Proposal for development

Special Mining Lease versus Mining Lease. The distinction between a special mining lease and amining lease is that a special mining lease is granted after a Mining Development Contract has beensigned between the developers and the Government. The Minister makes the decision that a specialmining lease is granted after he considers, on reasonable grounds, and concludes that the size ordistribution of a mineral deposit, the method of mining and treatment, the infrastructure requirements,the financial and economic considerations make a mining development contract necessary.

Alluvial Mining Lease

.Application form correctly filled out

.The area of land is clearly demarcated and properly surveyed

.Applicants proposal

.Statutory declaration that applicant owns the land the subject of the application

The alluvial class of lease is available to a landowner that wishes to undertake mining on their ownland using very simple alluvial mining methods to mine.

Offshore

The production tenements available for mining activities on land will not be the same as those forthe offshore regime. It has been proposed in the PNG "Green Paper" that only one productiontenement is issued for production, that is the Offshore Mining Lease. The Proposal for Developmentwill identify the mineral resources to be mined, the technology to be used and other considerationsthat are relevant to the development of a mine.

In the approval process for granting offshore mineral production rights, issues such asenvironmental concerns, fisheries concerns and concerns for other uses of the sea will have to beconsidered.

The different stakeholders will have to be identified and their concerns addressed before any typeof offshore production rights can be issued.

Ancillary Lease Requirements

The Special Mining Easement and Special Mining Leases are tenements issued on land for theconstruction of facilities to support mining activities. The application requirements include:

.Application form

.Survey of the land

.Development Proposal

One type of ancillary tenement, a Lease for Mining Purposes, has been proposed for the offshoreregime to provide for the construction and installation of facilities relevant to the mining.

Application Fees

Onshore

There are application fees that have to be paid at the time of lodgment of an application for thevarious tenements. There is a schedule of fees that also contains the other fees charged under thelegislation which are rental charges for all tenements, fees for the registration of documents and


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security deposits, which is a type of bond paid to ensure the compliance of the conditions imposed onthe licencee or lessee.

Offshore

There are no fees presently proposed for the offshore, however, it is assumed that the presentonshore fee structure, with some modifications to account for the special circumstances that exist, willform the basis of the offshore fee structure.

Procedure to Grant a Tenement

Onshore

.Application to be lodged at the Registrar's Office

.Registration of the application

.Setting a date for the Warden's Hearing.Advertisement.30 day objection period.Conduct of Warden hearing.Warden presents report to the Mining Advisory Board (MAB).MAB considers application and makes a recommendation to the Minister.Minister makes a decision based on the recommendation of the MAB.The grant or refusal is noted in the Register.Annual rental payment and security document must be paid before the Lease or

Licence is given to the holder.

Offshore

There are no administrative procedures proposed at this point in time for the offshore regime butagain it is to be expected that the procedure for the granting of offshore licences will follow those foronshore tenements. It would be in the interest of the regulators, the industry and the variousstakeholders that procedures be as transparent for the offshore as they are for the onshore regime.For the onshore regime, the relevant procedures are contained in the body of existing legislation thatprovides the advantage that the procedures cannot be abused by anyone including the administratorsof the licencing system.


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Stakeholder Issues in Papua New Guinea

Based on a presentation byFrancis M. Lola

Legal Advisor to the Department of Petroleum and EnergyPapua New Guinea

Introduction

This paper will provide a brief overview of the different stakeholders that one would encounterwhen dealing with any resource development in the offshore area and the various issues that suchstakeholders may raise when they stake their claims in relation to such development. In Papua NewGuinea (PNG or State), as would be the case in many other places, these stakeholders and the issuesthat such stakeholders would raise, may basically be the same as those relating to onshore miningdevelopment. However, considering the fact that the offshore area is a "new" developmentenvironment, there may be new stakeholders and new stakeholder interests. It is, therefore, of greatimportance that the stakeholders and their interests, more particularly, the "new" stakeholders and theissues that are associated with them, are identified and addressed, at the outset in any regulatoryregime. The responsibility of government agencies and their employees, as those entrusted with theonerous task of formulating an offshore mining policy for PNG, is therefore to ensure that allstakeholders involved in the offshore are identified and that their interests are properly catered for inthe policies that are developed.

The following is a brief discussion of the forums and the mechanisms that PNG currently uses toaddress stakeholder issues that relate to onshore mining, which may be considered for use in relationto developments in the offshore area.

The Stakeholders

Who are the stakeholders? The two obvious stakeholders that quickly come to mind, whenconsidering offshore mining development, would be the State and the developer. Their sharedinterests are to develop the resources and make money for their country and citizens or shareholders,respectively, from such development. Although both of these two particular stakeholders may have ashared interest, they may use completely different, and at times conflicting, methods to realise theirbasic objectives. In PNG, the following individuals or entities can be identified as possible stakeholdersin any mining development or any other resource development in the offshore area:

.Mineral Resources Development Company Limited (MRDC)

.Orogen Minerals Limited

.Provincial Governments.Local level governments.Coastal communities.Marine scientific researchers and researchers undertaking other research activities.Commercial fishing industry participants, including traditional fishermen.Shipping operators, including other marine navigators and users.Interest groups, including environmental groups, conservation groups.International Seabed Authority.Landowners

Basis for Staking Claims

In staking their varied claims, these stake holders will, of course, base such claims on ownershipand user rights, perceived or otherwise, that they claim to exercise over the offshore area. The State's


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assertion of ownership rights over mineral resource in the offshore area, more particularly thearchipelagic waters, the territorial seas and the exclusive economic zone, stems from the ownershiprights vested in the State over such resources under both the Mining Act 1992 and the NationalConstitution and its inherent right of ownership over natural resources within its territories. Someactivities relating to offshore mining operations may, however, take place onshore so customarylandowners may assert their ownership rights over such customary land.

Other stakeholders may not assert ownership rights but they can still assert some form of userrights in the offshore areas and, therefore, their interests, or the issues that they represent, will have tobe considered. For example, stakeholders, such as traditional fishermen and local coastalcommunities, may assert user rights over certain reefs or traditional fishing grounds.

Some stakeholders, such as commercial fishing industry participants, may assert rights that areinherently theirs by virtue of the terms of bilateral and multilateral agreements that are in place, thataccord them the right to fish in the territorial waters and PNG's EEZ. In relation to the offshore, thecommercial fishing industry participants are an important group of stakeholders primarily because ofthe fact that they are already operating in the offshore areas that are considered for mining activities.The fishing industry already plays a vital role in the PNG economy and the role that they will playas astakeholder in the offshore will be quite important.

A researcher may assert certain rights, including the right to be in a particular place to conductMarine Science Research (MSR) or other forms of research, on the basis of any agreement or otherforms of approval that they may have received from the State or its relevant agencies. A stakeholder,such a petroleum company may assert a right, to be in the offshore, pursuant to the terms of apetroleum agreement that it has with the State, which permits it to carry on petroleum activities in theoffshore area.

A mining company may assert that it has the right to be present offshore because it has been givena statutory right, through the exploration licence that it has been granted under the Mining Act 1992, tobe there. Likewise, a shipping operator may also assert a right because it has been licenced under therelevant shipping laws to operate a particular route.

Provincial governments and local level governments may assert rights in relation to the sharing ofbenefits emanating from the development of a natural resource. In fact, the State is obligated underthe Organic Law on Provincial and Local level Governments 1995 (Organic Law) to share suchbenefits with these second and third tier governments.

The Mineral Resource Development Corporation (MRDC) may assert that, pursuant to its enablinglegislation which accorded it the right to be an entity, that as the State nominee, it has a right toparticipate as the State nominee in any mining project. Likewise, Orogen Minerals can assert thatpursuant to the Option Agreement that it has with the State, it has the right to take up the State's 30per cent interest in a mining project.

Stakeholder Issues

Issues of interest to these various stakeholders are varied and would very much depend on therights that they are asserting in relation to the offshore areas. The common issue of interest to moststakeholders would be for some form of compensation for the loss of certain rights due to miningdevelopment activities. Some stakeholders, like commercial fishing industry participants, may find thatmining activities may curtail their fishing activities and, hence, they ought to be properly compensatedfor any loss that arises as a result of their forced curtailment of fishing activities.

Customary landowners whose land may be taken over under lease for mining purposes may seekcompensation and annual rental payments for the use of their land. Coastal communities andtraditional fishermen may also seek compensation for the loss of their traditional fishing ground andreefs, which may be restricted as a result of mining activities.

The issues of interest to the State would primarily relate to its right to participate in the developmentof a mining project. This interest is, of course, shared by both MRDC and Orogen Minerals, as a resultof the current arrangements under which MRDC acts as the State nominee and Orogen is given thefirst right to the 30% that the State is entitled to take up in a mining project.


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Other important issues of interest to the State relate to the various taxes and other imposts that theState adopts as part of its fiscal regime for offshore mining projects. The State may also be interestedin seeing infrastructure being developed by developers in areas they operate in, and nationals beingtrained for more skilled jobs within the operations of a mining company. The State is also interested inseeing that the development of a mining project is carried out in a manner that has minimalenvironmental impact.

The developers on the other hand will be interested in getting a good return for their investment.They, therefore, would very much want to see a fiscal regime that is not so rigid and onerous on them.Because, as much as they do not want to publicly admit it, they invest, not only to spread their risk, butalso to make a profit and keep their shareholders happy by declaring dividends more often. Makingmoney places them in good stead against any possible competitors. The will also want security oftenure and would want to see a more flexible and transparent regulatory regime.

Non-government organisations (NGOs) have, in recent years in PNG, become the self-proclaimedvoice of the so-called voiceless majority, on issues relating to development of natural resources andthe distribution of benefits arising from such developments. They may also be interested in theprotection of the environment and the conservation of the pristine environment that one finds offshore.

Provincial governments and local level governments would want to see the provisions of theOrganic Law followed to the letter so that they can also receive benefits, including royalties, that arisefrom development of mining project in their areas. Most provincial governments are now keen to havedirect participation in the development of projects. For example, the Madang Provincial Governmenthas been reported in the press to be considering direct equity participation in the Ramu nickel/cobaltproject. Provincial governments and local level government will also want infrastructure to bedeveloped by developers operating in their areas.

Forum for Address of Stakeholder Issues

The stakeholder issues in relation to a new mining project that involve the State, the landowners,the provincial governments, and local level government will usually be considered at a meeting, or aseries of meetings, specifically convened to deal with those issues. These meetings comprise theforum and consultation process that the Organic Law requires the State to initiate in relation to thedevelopment of a resource project. In fact, the provisions of the Organic Law, merely repeat what hasbeen in the Mining Act since 1992. The process has been used on many of PNG's current mining

projects.

Decisions and agreements reached at the forum on issues relating to royalty distributions, equityparticipation (basically the sharing of the portion of project equity available to the State), additionalgrants from the national government, and commitments from the national government on infrastructuredevelopment are recorded in specific memoranda of agreements that are executed between the Stateand the provincial governments and the landowners. The issue of landowners' involvement in theoffshore is yet to be fully considered so at this stage their involvement is also not fully settled.

Stakeholder issues that involve the State and a developer are usually considered in meetings heldbetween the parties, either in specific meetings to consider specific issues such as financing plans, orthrough a negotiation process. The State normally establishes an inter-department negotiation teamwith the Department of Mineral Resources (DMR) playing the lead role. This team is the government'srepresentative body that can enter into negotiations with a developer on stakeholder issues mutual toboth and other related issues, with a view to concluding a mining development contract (MDC) for theproject being considered.

The concept of having a MDC for a project is not only advantageous to a developer for purposes ofsecuring financing for a project but also to the State in that it may impose certain additional conditionsthat it can not impose as conditions of the production licence. The MDC is the document that stipulatesthe binding obligations and commitments of both parties in relation to the development of a project.The developer's approved proposals for the development of the project forms part of the MDC.

The State, through its instrumentalities, is also required to give separate approvals relating to thedevelopers' proposals for development, its financing plan and the environmental plan, among others.


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A developer can have one-on-one meetings with the agencies responsible for these approvals,including DMR, for purposes of seeking clarifications on issues relating to these approvals.

Conclusion

The number of stakeholders and the issues that one associates with them in a mineral resourcedevelopment project are numerous and diverse. These stakeholder issues, like the fisheries issues,are quite complex and, at times conflicting, and require some delicate consideration from the initialstages. Therefore, it is vitally important that all possible stakeholders who may have some involvementor dealings in the offshore area are identified and for all issues associated with such stakeholders areconsidered and dealt with at the outset.


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Papua New Guinea Fisheries and Marine Mineral Development

Based upon a presentation byUrsula Kolkolo

National Fisheries AdministrationPort Moresby, Papua New Guinea

Introduction

Papua New Guinea is comprised of the eastern half of the world's largest tropical island plus anarchipelago consisting of an additional three large islands and a further 600-odd islands and atolls:lying between approximately 2°-12°S and 141 0-163°E in the western Pacific Ocean. The country PNGhas a total land area of 462,243 sq. km and an Exclusive Economic Zone (EEZ) estimated to cover2,437,480 sq. km making it one of the largest in the region. PNG shares it borders with Australia, theFederated States of Micronesia, Indonesia and the Solomon Islands.

The coastline and offshore archipelagos present a great diversity of coastal types and marineenvironments. The Gulf of Papua is characterized by large delta areas, mud flats and mangroveswamps, while the north coast and high island coasts are typified by fringing coral reefs and narrowlagoons. Some of the smaller island clusters lie adjacent to extensive submerged reef systems orbroad shallows. Papua New Guinea's total coastline length of approximately 17,100 km includes about4,250 km (25%) of deltaic flood plain/lagoon systems, while some 4,180 km (24%) of the coastlineoccurs around islands and atolls. PNG also has fast- and slow-flowing rivers, over 5,000 lakes, and anextensive system of marshes.

In addition to its National Government, PNG has a decentralized system of semi-autonomousGovernments in each of its 19 Provinces. Five of the Provinces are landlocked, while the remainderare coastal or maritime in nature, although some of the coastal Provinces also have extensive freshwater systems. Provincial Governments have considerable autonomy in regard to fisheriesdevelopment/management and share in the revenues generated from fishery activities within theextended jurisdictional boundary of the individual provinces seaward into the territorial sea.

The GDP of Papua New Guinea in 1998 was US$4.655 billion that results in a per capita income ofUS$1,034. The economy is largely resource based with the agriculture, minerals and energy sectorscomprising approximately 30% each of the nations GDP, with minerals and energy providingapproximately 75% of export earnings. The fisheries industries contribute approximately K90 million tothe nations GDP «1%) and employ approximately 2,000 individuals in the formal fisheries sector.However, an additional 250-500,00 (out of a population of 4.5 million) individuals, or approximately10% of the population, are estimated to be involved in subsistence fishing. Therefore, although theeconomic value of fisheries in the GDP is small, the importance of fisheries to the overall population,and in particular to those existing at a subsistence level, is significant.

The proposed development of offshore marine mineral resources in the Exclusive Economic Zoneof Papua New Guinea and the potential impact of such developments on the nation's fisheries is amajor new consideration for the fisheries industry as a whole and for government bodies, at a national,regional, provincial and local level specifically.

Because the scope, location and specific impacts of offshore mineral development activities arelargely unknown at this time, there is little that can be said with respect to specific impacts and orpolicies vis a vis such developments and Papua New Guinea fisheries. However a number of concernscan be identified which will need to be addressed by government and industry should suchdevelopments take place. Among the most significant are the following:

1. Virtually any foreseeable mining venture will require extensive disruption of the seafloorwith varying impacts on biota;


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2. Waste disposal: The mining operations will produce waste materials both at the mine siteand, if different, at the site of processing. The former will normally be in the deep oceanand the latter near shore thereby impacting a number of habitats;

3. Restrictions on access: The mining activity will necessitate that the areas of primaryoperation be (a) declared off limits for other activities or (b) that other uses be restricted inscope and area of operations;

4. Fishery impacts: The mining operation will have multiple impacts (both good and bad andmany of which cannot now be predicted) on fisheries in the areas of activities; and,

5. Economic, social, cultural and environmental impacts: The mining activity will, in mostcases and to varying degrees, have national, provincial and local impacts on the economy,environment, social institutions and culture.

In the following, a brief overview of the fisheries industry of Papua New Guinea is presented and atthe end of each section the specific concerns of the fisheries industries with respect to the aboveimpacts are attempted to be defined. It is hoped that this analysis will provide some preliminaryguidance, with respect to research and policy which may need to be developed by government andindustry, to ensure that marine mineral resource development does not impact unduly on theresponsible and sustainable development of Papua New Guinea's fisheries.

Marine Fisheries

The fisheries resources of Papua New Guinea are generally divided into four major geographicalareas based on the types of fisheries which predominate: the inland fisheries (including aquaculture),sedentary resources (on the reefs), coastal fisheries (including reef fishes, coastal pelagics, such astrevally, mackerel and marine prawns) and offshore tuna fisheries. Similarly, the fisheries industry ofPapua New Guinea can be divided into four general types: coastal subsistent, inland subsistent,artisanal fisheries (classified as small-scale) and the commercial/industrial fisheries (classified as

large-scale).

Small scale fisheries

Papua New Guinea's small-scale fisheries reflect the diversity of the country's coastalenvironments. Along the mainland and high island coasts and in the smaller island communities,fishing activities include the harvesting of the reef flats, spear fishing, shallow-water hand-lining fromdugout canoes, netting, and trapping in the freshwater reaches of the larger rivers. In the swampylowland areas net fisheries for barramundi, catfish, and sharks occur, while in the Gulf of Papua thereis also a village-based lobster fishery. Collection of invertebrates, both commercially (beche-de-mer aswell as trochus and other shells) and for subsistence purposes is extensive, and may exceed finfish

harvesting.

Overall, subsistence harvesting is the most important component of Papua New Guinea's domesticfishery in terms of both volume and value, but is poorly known. Some of the subsistence catch is sold,traded, bartered or forms the subject of customary exchange. An estimate of subsistence/artisanalproduction ranges from 40 to 75 mtlyr (Table 1).

Table 1. Annual Domestic Fisheries Production

Fisheries E ..

Coastal Subsistent AInland Subsistent AArtisanal Domestic Markets A

A large number of people, estimated at somewhere between 250,000 and 500,000 (FAa 1999)participate in coastal subsistence fishery, although the number is thought to have decreased at anannual rate of 1.5% between 1980 and 1990. It is estimated that 30% of the marine subsistence catch


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comprises coastal bay, lagoon and reef fish, 10% pelagic fish, and the rest invertebrates andseaweeds. Subsistence fishery production has been valued at about US$26 million based on a typicalprice to consumers of about US$1.00/kg. This is probably an underestimation of the fishery's truevalue.

Commercial/industrial fisheries

Papua New Guinea's commercial/industrial fisheries are primarily for export (Table 2) and consistprimarily of rapidly developing seining and long-line fishery which focus primarily on harvesting tuna, inparticular, sashimi-grade tuna.

Table 2. Total volume and value of fishery exports: 1995-1997

1995 1996 1997Fishery Vol. mt Value (K'OOO) Vol. mt Value (K'OOO) Vol. mt Value (K'OOO)Canned Tuna 0 0 0 0 659Tuna PIS 0 0 18,000 25,000 25,000 33,000Tuna Sashimi 132 494 252 4,675 800 24,000Prawn 695 9,568 658 7,107 573 5,675Lobster 122 3,038 75 2,141 103 3,173Sedentary 764 8,000 972 10,582 1,009 12,303Finfish 155 580 292 549 3,733 5,693Others 7 79 3 34 22 5,967Total 1,875 21,760 20,252 49,788 31,899 92,292

In addition, sedentary fisheries and prawn-trawling operations take place in the Papuan Gulf and otherparts of southern Papua New Guinea. A substantial fishery for barramundi, producing 200- 400 tlyr,operated for several years until it collapsed in the early 1990s. As can be seen from Table 2, the totalvalue of Papua New Guinea's fisheries exports were over 92 million Kina in 1997.

There are two fish canneries in PNG. One cannery is based in Lae, and packs imported frozenmackerel, mainly for the domestic market although there is some export of this product. The major fishcannery for Papua New Guinea is in Madang, and primarily packs tuna for export. This cannery issupplied by its own fleet of catcher boats, as well as by purchasing fish from other tuna-fishingvessels.

Foreign commercial fishing

By far the largest fishing enterprises in Papua New Guinea are those conducted by foreign fishingfleets, primarily for tuna, in the EEZ (outside Papua New Guinea's archipelagic waters). Foreignfishing in the EEZ of Papua New Guinea is carried out under a number of bilateral and multi-lateralfisheries agreements. Under bilateral agreements with Taiwan and the Philippines, the countriesoperate four and six purse seining vessels, respectively, in the EEZ of Papua New Guinea. Supportfacilities consisting of carriers, mothers hips and lightboats also operate within the EEZ. Similarly,under multi-lateral agreements with the United States and the Federated States of Micronesia 35 and6 purse seiners, respectively, operate in the EEZ of Papua New Guinea. In 1997, the value of theforeign catch within the EEZ of Papua New Guinea was approximately US$380 million.

Domestic commercial fishing

After many years of foreign commercial fishing, Papua New Guinea is attempting to promote moredirect participation in the tuna fishery by local companies and individuals. In line with this policy, theGovernment ceased issuing foreign longlining licences in mid-1995 in an attempt to promotedevelopment of a domestic tuna long line industry. Subsequently, after a number of longliners beganoperating under local charter arrangements, this too was regulated against so that the fishery wasclosed to all but bona fide domestic entrants. At present, 27 domestic longline vessels are licenced to


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operate in the EEZ of Papua New Guinea. These operations are primarily for "yellowfin" and "big eye"tuna. The prime-quality part of the catch is exported in fresh chilled form to Japan by air while lower-quality fish may be canned, air freighted to Australia or sold on the domestic market.

A locally-based purse-seine fishery has also begun to develop and at present eleven vessels arelicenced to operate within the EEZ of Papua New Guinea. A large amount of the domestic purseseining activity is conducted around "Fish Aggregation Devices" or FAD's which have been placed bythe Government of Papua New Guinea. Despite its gradual start, the domestic tuna fishery appears tohave the potential to grow substantially as can be seen from the growth in tuna exports from 1995-1997 (Table 2).

Research and policy considerations

The above overview of Papua New Guineas Marine Fisheries demonstrates the fisheries are (a)biologically diverse, (b) wide-spread throughout many marine environments and (c) are comprised of awide range of fishing operations from local subsistence fishing to large-scale purse seining. Given thepotential impacts of offshore mineral resource development outlined previously, it is believed that thefollowing research and policy issues will need to be addressed in the formulation of a comprehensivemarine mineral resource development policy which is sensitive to fisheries development.

1. Diversity of fishery resources: The diversity of fisheries and their associated ecosystemswithin the EEZ of Papua New Guinea necessitates that a comprehensive program beinitiated to protect biodiversity and to ensure the preservation of marine fishery habitatsboth near shore and in the deep ocean;

2. Zoning of the sea areas: Because of the above mentioned need to protect the biodiversitywithin the fisheries, the scope of fisheries-related activities throughout the EEZ and therequirements of individual treaties and agreements, it will be necessary to consider azoning of sea areas for specific uses; and,

3. Impact assessment and compensation: Appropriate programs will need to be developedfor the assessment of and compensation for impacts of marine mineral resourcedevelopment activities on traditional and commercial fishery activities.

Maximum Sustainable Yield of Papua New Guinea's Commercial Fishing

The extent to which the domestic and foreign fishing activities can increase and/or be maintainedwithin the EEZ of Papua New Guinea is dependent on being able to maintain a stable stock within theindividual fisheries. Therefore, a major concern of the Government of Papua New Guinea, as it is forthe majority of the island nations in the Pacific, is to prevent overfishing of the region's resources inorder to have sustainable development of its fishery resources. As a result, the Government of PapuaNew Guinea has estimated the "Maximum Sustainable yields" for the most important of its domesticcommercial fisheries (Table 4).

Table 4. Potentia! Yields for Domestic Commercial Fisheries

Species Est. Maximum Sustainable Yields % of TotalTuna 300,000 mVyr 49%Coastal PelaQic 130,000 mVyr 21%Finfish 151,000 mVyr 24Prawns and Lobsters 2,000 mVyr <2%Estuarine Fishes 20,000 mVyr 3%Others <10,000 mVyr <1 %


As it is anticipated that marine mineral resource development projects in the EEZ may be of longduration (a decade or longer), there is a legitimate concern as to the possible long term effects of such


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activities on the sustainability of various fisheries. As a result, there is a need for government andindustry to address the following issues:

1. Value of renewable fisheries resources: The marine fisheries of Papua New Guinea havea high economic and social value to the people of Papua New Guinea as well as to theregion as a whole. Therefore, it is imperative that the sustainable yield of Papua NewGuinea's fisheries be preserved through a comprehensive program of monitoring fisheriesstocks and

2. Environmental Impacts: A primary focus of government and industry should be thedevelopment of a continuing program of monitoring and study to ensure that there are noadverse environmental effects from offshore mineral development which would negativelyimpact on the various fisheries.

Administration of Papua New Guinea's Fishery Resources

Fisheries governance

The main fisheries law in Papua New Guinea is the Fisheries Act of 1994 ("Fisheries Act 1994'}which amalgamated and superseded the earlier Fisheries Act of 1974 and the Continental Shelf(Living Natural Resources) Act of 1984. The Act governs most fisheries in the country except those inthe Torres Strait, an area jointly managed by Australia and PNG, which are administered separatelyunder the Fisheries (Torres Strait Protected Zone) Act of 1983.

Apart from the Fisheries Act 1994 there are at least 28 other legislative instruments currently inforce and relevant to the fisheries sector. Most important of these is the Organic Law on Provincial andLocal-level Governments of July 1995 ("Organic Law'?, which gives provincial governments theresponsibility for fisheries and other development activities and the provision of basic services. TheOrganic Law requires that national bodies devolve as many of their functions as possible to theProvincial authorities, or carry them out at Provincial level.

The Fisheries Act provides for the establishment of the National Fisheries Authority (NFA) toreplace the former Department of Fisheries and Marine Resources (DFMR). The NFA, which has amore commercial orientation than its predecessor, began operating in 1995 as a non-commercialstatutory authority, but is expected to undergo further transformation to a fully commercial statutoryauthority in the future. The primary goals of the National Fisheries Authority are:

1. To manage Papua New Guinea's fisheries resources in a manner that ensures their long-term sustainability;

2. To promote the growth and development of the fisheries sector;3. To maximize the participation of Papua New Guineans in the fisheries sector; and,4. To administer its resources in an efficient and responsive manner.

The NFA's activities are under the overall control of the nine-member National Fisheries Board,also established by the Fisheries Act 1994. The NFA acts as Secretariat for the Board, which meetsquarterly in order to review NFA's proposed activities prior to their being implemented, as well as toconsider other issues related to fisheries.

The other main body involved in PNG fisheries is the Fishing Industry Association (FIA), which wasformed in January 1991 to provide a formal channel through which fishing-related businesses couldvoice their ideas, opinions and concerns relating to the development of the sector. The Associationnow groups together some 53 fishing companies. It has been quite outspoken since its formation andhas become both respected and influential in the development of fisheries policy in PNG. TheAssociation has successfully lobbied Government for the removal of a range of taxes and levies andthe granting of other concessions to the industry. A representative of the FIA sits on the NationalFisheries Board, as well as on the Governing Council of the National Fisheries College. It seems likelythat now the FIA is well established, it will continue to provide a voice for the interests of the fishing

industry.


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As noted previously, the issues surrounding offshore mineral resource development and PapuaNew Guinea's fisheries are new and not well understood. This presents a special challenge to theGovernment of Papua New Guinea in that, although a new Fisheries Management law is beingdeveloped, it (as is the case of the existing law) does not address the various issues which will arisewith respect to the impact of offshore mineral development on fisheries activities.

As a result, there is a need for a policy and legislative review of existing (and proposed) fisheriesrelated legislation and agreements (bilateral, multi-lateral) to ascertain what existing issues may existthat require resolution/coordination with the mineral sector legislation and policy (freedom of access,jurisdiction, revenue sharing, compensation).

Future Development of Papua New Guinea Fisheries

There is scope for expansion of both offshore and coastal fisheries in PNG, as well as for thedevelopment of local markets through improved distribution, better use of by-catch (especially fromtuna fishing) and value-added processing. It may also be possible to develop more 'exotic' resources,such as aquarium fish, specimen shells and game fishing. Overall, however, the Government of PapuaNew Guinea has placed a priority on the future development of the tuna fisheries of its EEl andspecifically through domestication of the industry. To this end, the Government is presentlyconsidering the implementation of a new Fisheries Management Act (expected to be passed in late1998). Central to the act would be the implementation of a Tuna Fisheries Plan (TFC) which, ingeneral, would provide for the following:

1. Longline Tuna Fisheries -Under the TFC the PNG Government would provide (a) 80licences for Papua New Guinea registered and flagged "fresh chill vessels, (b) 10 licencesfor locally based foreign vessels, (c) ten licences for freezer vessels in support of theabove licences and (d) would limit the total annual catch to 10,000 mt for all longlinevessels, and

2. Purse Seining Fisheries -Under the TFC, the PNG Government would provide (a) 30licences for Papua New Guinea registered and flagged vessels and limit the total annualcatch from these vessels to 132,000 mt., (2) 40 licences (in total) for the Federated Statesof Micronesia and the U.S. Treaty countries and limit the total annual catch to 40,000 mt.and (c) issue 30 licences to countries with bilateral treaties with Papua New Guinea andlimit the total annual catch to 128,000 mt..

The above licences and total annual catches are in accordance with the estimated maximumsustainable yields for tuna that have been determined by the government (Table 4).

The constraints to coastal fishery development mainly relate to the absence of a fish handling,distribution and marketing infrastructure. Costly and protracted experience has shown that the valueand volume of production from coastal fisheries is insufficient to cover the high cost of establishing andrunning such an infrastructure. Future commercialization of coastal fisheries will depend largely on thedevelopment of facilities such as longline bases or fish canneries to service the needs of the industrialtuna fishery, whose production levels can justify the high cost of such plants.


The overall planning for the expansion of the domestic fishing industry, and limiting of foreignfishing, particularly for the tuna fishery, which is critical both to the Papua New Guinea and throughoutthe Pacific, necessitates that special consideration be given to ensuring the sustainability of theseresources. Similarly, there is a growing concern over the development and sustainability of the abovementioned coastal and inland fisheries. To facilitate such developments it is important that governmentand industry consider joint development activities: The government and industry (fisheries andminerals) should consider the possibility of joint development of industrial support facilities that couldservice both industries and allow for additional development (mineral processing, fish canning).


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International issues

The National Fisheries Authority maintains direct contact on technical issues with regional andinternational organizations dealing in fisheries. Policy and other matters are managed in the firstinstance through designated contact points, most often the Department of Foreign Affairs. Papua NewGuinea is a member of the South Pacific Commission (SPC), the South Pacific Forum FisheriesAgency (FFA) and the South Pacific Regional Environmental Programme (SPREP). Papua NewGuinea is party to a number of treaties and agreements relating to the management of regionalfisheries, including:

.Treaty on Fisheries Between the Governments of Certain Pacific Island States and theGovernment of the United States of America

.Convention for the Prohibition of Fishing with Long Driftnets in the South Pacific

.Niue Treaty on Cooperation in Fisheries Surveillance and Law Enforcement in the SouthPacific Region

.Nauru Agreement Concerning Cooperation in the Management of Fisheries of CommonConcern

.Palau Arrangement for the Management of the Western Pacific Purse Seine Fishery

.FSM Arrangement for Regional Fisheries Access

Papua New Guinea is also a signatory to the United Nations Convention on the Law of the Sea(UNCLOS) and the Agreement for the Implementation of the Provisions of the United NationsConvention of the Law of the Sea of 10 December 1982 Relating to the Conservation andManagement of Straddling Fish Stocks and Highly Migratory Fish Stocks. Papua New Guinea is alsoparty to the Washington Convention on International Trade in Endangered Species of Wild Fauna andFlora (CITES).


As a signatory to numerous regional and international agreements, many of which are specific tothe fisheries and EEZ of Papua new Guinea, there is a need to ensure that national policy andlegislation facilitates the joint development needs of offshore mineral resources and fisheries and arein compliance with regional and international agreements. Therefore, there is a need to address toconduct a policy and legislative review of existing (and proposed) fisheries and minerals relatedlegislation, agreements (bilateral, multi-lateral) and relevant contracts to ascertain what issues existthat may require resolution/coordination with regional and international bodies.


The existing fisheries industries of Papua New Guinea and the proposed new development ofoffshore mineral resources have in common the goal of fostering sustainable development for thebenefit of the peoples of Papua New Guinea. They also have in common the need to occupy andutilize the same area, the EEZ of Papua New Guinea, in order to carry out their activities. However,the fisheries industry of Papua New Guinea is well established, both at a subsistence and commerciallevel; whereas, the development of offshore mineral resources is only now beginning to be activelyconsidered by the industry and the government of Papua New Guinea.

The possible development of marine mineral resources within the EEZ of Papua New Guinearaises a number of issues directly and/or indirectly related to present and future marine fisheriesactivities. These issues can be generally classified in terms of anticipated impacts and needed actionswith respect to research and policy in order to mitigate the impacts on fisheries and ensure theresponsible and sustainable development of both marine fisheries and offshore mineral resources.


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Potential impacts

As there are presently no specific marine mineral resource developments in the EEZ of Papua NewGuinea, it is impossible to point to specific problems that need to be addressed. However, there are anumber of issues associated with mining activities in general that will need to be considered becauseof their possible impact on the nation's fisheries. Among the most significant are the following:

1 .Sea floor disruption;

2. Waste disposal;

3. Restrictions on access;

4. Fishery impacts; and,

5. Economic, social, cultural and environmental impacts.

Policy considerations

Based on the above anticipated impacts from marine mineral resource development there are anumber of issues which will need to be addressed, from the perspective of marine fisheries, in theformulation of a comprehensive marine mineral resource development policy. Among the most criticalare the following:

1. Diversity of fishery resources;

2. Zoning of the sea areas;

3. Value of renewable fisheries resources;

4. Impact assessment and compensation; and,

5. Policy and legislative review.


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Environmental Impact Assessment for Deepsea Mining

Based upon a presentation byCharles L. Morgan

Honolulu, Hawaii, USA

Introduction

Currently, a number of commercial interests are developing new programs of exploration in theSouthwest Pacific region and other areas worldwide for seabed mineral deposits of copper, zinc, lead,gold, and other metals. These deposits are found at and near active sites of hydrothermal venting,where hot-water mineral springs flow from the earth and deposit their mineral contents to form seafloormetal accumulations with economic potential. Of primary concern for commercial development ofthese deposits are the assessment and minimization of the potential environmental impacts which mayaccompany such development. Presented here is a brief discussion of the key factors related to suchimpact assessment, a description of the unique hydrothermal vent ecosystems which are expected tobe the objects of the most serious concerns, and a strategy for addressing these and other concernsin an effective and efficient manner.

Key Factors

Three key factors must be addressed in any environmental assessment program; in many waysthese dictate the strategy for implementation of such a program. Each is discussed below.

Multiple jurisdictions, few rules

Many of the primary exploration targets for massive sulfide mining are located in the territorialwaters or exclusive economic zones (EEl's) of small island nations with few or no establishedprocedures for offshore mineral development. Others are located in areas subject only to internationallaw. Even the prospects located in the jurisdictions of countries with well-developed regulatoryframeworks present unique problems because of their offshore locations and because theirdevelopment would not be covered by existing rules. Each site will present different problems and callfor the interfacing with different authorities and individuals.

Undefined technologies & ecosystems

The history of environmental controversy is full of critical decisions based on inadequateinformation. Deep seabed mining will consist of unprecedented commercial-scale mineral recoveryoperations in seabed areas populated by biological communities which were completely unknown toscience before 1979 and which remain only very poorly characterized to date.

Since before 1969, when the U.S. enacted the National Environmental Policy Act (NEPA), thepeople and institutions of the United States have been profoundly affected in many ways by therecognition of natural environments as resources worth defending. Through taxes, restrictive laws andregulations, and individual sacrifices, much progress has been made in the attempt to preserve andenhance the air, water, land and living resources that are essential to our survival. In addition to thebureaucratic chaos and quasi-religious rhetoric that unfortunately abound in the general field ofenvironmental protection, some genuinely useful ideas have also evolved. Some of these ideas wereassembled in 1979 by the Council on Environmental Quality (CEQ) into a set of Guidelines, codified inTitle 40 of the U.S. Code of Federal Regulations, which provide basic guidance for environmentalimpact assessment. These are particularly relevant to the regulation of new industries in poorly definedenvironments.


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As we contemplate the development of deep seabed mining operations, it is appropriate to reviewthis good advice by the CEO and thereby hopefully avoid some portion of the long and tortuous pathwe have already traveled toward adequate environmental protection. The original purpose of theseGuidelines was to implement the NEPA by telling "...federal agencies what they must do to complywith the procedures and achieve the goals of the Act". The ultimate objectives are to produce NEPAdocuments that "...concentrate on the issues that are truly significant to the action in questions, ratherthan amassing needless detail" and generally "...not to generate paperwork-even excellentpaperwork-but to foster excellent action". After declaring these laudable goals, the Guidelines proceedto describe when the NEPA process should be structured and how the CEO, federal agencies, and thepublic are to interact in the process.

Drafters of proposed regulations and legislation for deep seabed mining activities would be wise toreview in detail these Guidelines before attempting to impose new and arbitrary procedures forenvironmental compliance. Two concepts from the Guidelines are particularly relevant: "scoping" and"tiering". These are central to the objectives and many of the procedures described in the Guidelines,and particularly relevant to environmental analysis of new activities in frontier areas.

Scoping is defined in the Guidelines as follows: "[t]here shall be an early and open process fordetermining the scope of issues to be addressed and for identifying the significant issues related to aproposed action. This process shall be termed scoping". Scoping begins when the subject of anenvironmental analysis, the proposed action, is sufficiently defined to permit its reasoned evaluation byall interested parties. It consists of public hearings, private interviews, and literature surveys. Itculminates in a scoping report that describes the concerns raised in the process and the meanschosen to address these concerns. It continues throughout the duration of the environmental analysis.It serves as the principal device for establishing the relative priorities of analysis tasks in theenvironmental assessment. Scoping compels the environmental assessment to include the followingrules:

1. A definition of the proposed action which is detailed enough to permit meaningfulenvironmental impact analysis and

2. An iterative and open project review procedure that can identify and set priorities for theissues considered in the analysis.

Tiering is defined as "...the coverage of general matters in broader environmental impactstatements with subsequent richer statements or environmental analyses...incorporating by referencethe general discussion and concentrating solely on the issues specific to the statement subsequentlyprepared". Tiering allows preparers of EIS's to "...focus on the issues which are ripe for decision andexclude from consideration issues already decided or not yet ripe". Tiering involves the application ofjurisdictional and time-phasing considerations in the selection of issues to be analyzed. It implies thefollowing additional rules for efficient and timely impact analysis:

3. Phasing of the resolution of environmental issues to be compatible with the schedule ofactivities contemplated in the proposed action.

4. Whenever possible, separate environmental issues from governance issues and generalissues from specific issues and deal with each as appropriate.

One may not agree that these four rules of environmental impact assessment are direct corollariesof the CEO definitions of scoping and tiering. However, they are certainly consistent with thedefinitions and with the overall content of the Guidelines. Moreover, their responsible implementationcan do much to serve both the objectives of industrial development and environmental protection. Inpractical environmental analysis the author has found three mechanisms to be very useful in theapplication of these rules, and they are recommended as basic precepts for a deep seabed miningenvironmental program. They are summarized as follows:

Bootstrapping. When activities cannot be adequately defined, phase their regulation to cover thefront-end, well-defined portion of the activity. Through monitoring and disclosure requirements,structure each phase of regulation to include definition of the next phase.

Consolidated Procedures. When the activities are well-defined, organize the permitting proceduresas much as possible into a single process with specified time limits for each step. However, do notattempt to over-structure activities which are not well-defined.


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Representative Committees. Whenever possible, channel the identification and resolution ofenvironmental issues through an independent group composed of representatives of all interestedparties rather than through hired staff. This permits identification of the key issues in time for theirresolution and also provides an objective guidance of the assessment process.

Strong public concern, difficult stereotypes

In 1969, oil from Union Oil's offshore wells fouled beaches in Southern California and arousedpublic anger against pollution. This, termed the "Santa Barbara Oil Spill" was one of the key eventsthat precipitated the passage of NEPA and has been a rallying cry for environmental lobbies eversince. The sentiment is well expressed by the introduction provided by the Oceanic ResourceFoundation in their web site (URL: http://www.orf.orq):

'Without question, the survival of the oceans and the biodiversity that sustains themarine ecosystems are at risk. We are the cause; there are too many people whoconsume too much, who have limited knowledge of the fragile marine biosphere andwe do not recognize the value of the earth's natural resources. We are the solution;we must reduce our consumption, we must increase our knowledge of the complexmarine ecosystems, and we must re-evaluate the earth's biological resources."

Deep seabed mining will undoubtedly flame the fires of opposition from this and otherenvironmental groups a priori. To many, the oceans are characterized by their fragility, as epitomizedby coral reefs and other coastal ecosystems that have clearly suffered from human settlement anddevelopments on the shoreline. In fact, of course, the oceans represent the Earth's ultimate dump site,which consume volcanic exhalations, mountains, and other natural inputs with very little effect, alongwith the relatively pitiful amounts of toxic wastes and surface run-off caused by human activities.

This existing perception of the "fragile marine biosphere" must be very carefully handled by deepseabed miners to avoid unnecessary opposition and political headaches. The hydrothermal ventcommunities which form around active vents have been a particular focus for popular sentiment,thanks in part to the high visibility of Robert Ballard's JASON program, but certainly also for therelatively recent discovery of these communities and their radical differences from other ecologiesknown to man (discussed in the next section). Deep seabed miners must take a strong, pro-activestand with regard to environmental issues; they must be prepared to document carefully the existingenvironmental conditions at potential mine sites and to monitor exhaustively the mining activities thattake place. Only through an open process of monitoring, research, and public education will it bepossible to avoid strong negative lobbying from environmental groups.

General Implications

In summary, deep seabed miners are faced with a variety of potential environmental regimes intheir development efforts, many of which are not yet in place. Miners face particular challenges relatedto environmental impact issues because of: (1) the relatively undefined nature of the deposits to bemined and the systems to mine them; (2) the popular mystique of anything related to the oceans andthe political forces which thrive on them; and (3) the genuine issues associated with hydrothermal ventcommunities. The next section outlines the important aspects of the hydrothermal vent communities ofconcern.

Hydrothermal Vent Communities

Discovered in 1979 by Robert Ballard on the East Pacific Rise, deep seabed hydrothermal ventcommunities have been a very active topic for research ever since. These ecologies apparently derivetheir sustenance primarily from the oxidation of the reduced sulfur species that are produced duringthe venting along with the sulfide minerals of interest for commercial recovery. They are populated byhigh densities of organisms that are found nowhere else. These hydrothermal ecosystems are of greatinterest to scientists, but they are also of great interest to the modern biotechnology industry becauseof the economic potential of enzymes and biochemical processes that occur in these extreme


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environments. The following passages outline the key factors of these ecologies which will beimportant to environmental impact assessment.

The base of the food web for hydrothermal vent communities is populated by a group of bacteria,named A rchaea , which are genetically quite distinct from any other life on Earth. Scientists nowbelieve that Archaea may have preceded all other life forms on the planet. Hydrothermal vents arefound at certain locations between the tectonic plates that make up the earth surface. Lava is known toerupt at these places, and seawater enters the newly formed channels, becomes heated and ischemically changed. The heated seawater is ejected through hydrothermal vents, and containshydrogen sulfide. This hydrogen sulfide is the basis of the hydrothermal vent community, providingessential nutrients for chemosynthetic bacteria that use the hydrogen sulfide as a source of energy.These bacteria do not need sunlight to produce energy, which is how they are able to live and grow inthe ocean depths. The bacteria themselves are a food source for a variety of creatures, mainly giantclams, mussels, polychaete worms and other invertebrates. These creatures are often quite abundant.They don't exist right next to the vent due to the high temperature there, instead existing on the fringeswhere the water is cooler. Other creatures living near these vents include crabs, octopuses, limpetsand sponges.

Environmental issues related to the uniqueness of these communities, their robustness and stabilitywill undoubtedly have to be addressed at some level by deep seabed miners in efforts to assessenvironmental impacts. To date, the most in depth research into these questions has been done onthe Juan de Fuca Ridge off Oregon, Washington, and Canada. One of the research programs active inthis area is the VENTS program, which is managed by the U.S. National Oceanic and AtmosphericAdministration from its facilities in Newport, Oregon and which includes many researchers from aroundthe world.

The VENTS Program, established in 1984, conducts research on the oceanic impacts andconsequences of submarine volcanoes and hydrothermal venting. The program focuses onunderstanding the chemical and thermal effects of venting along the northeast Pacific Ocean seafloorspreading centers, which provides the foundation for predicting the global-scale impact of seafloorhydrothermal systems on the ocean. VENTS research in recent years has concentrated on thefollowing objectives (abstracted from their web site, URL: http://www.pmel.noaa.qov/):

1. determining patterns and pathways for the regional transport of hydrothermal emissions,as well as source strengths of the emissions, and their relationships to the geology andtectonics of spreading centres and

2. further developing capabilities for monitoring hydrothermal activity at a wide range oftemporal and spatial scales.

To date the program has shown clearly that ridge-axis volcanic eruptions are common and thattheir effects can be studied in a systematic way. At least on the Juan de Fuca Ridge, it is clear thatvolcanic eruptions are accompanied by singular or multiple releases of event plumes that vary in sizeby over an order of magnitude. The chronic venting following an eruption may last for years or formonths. The connections between eruption size, event plume size, and chronic plume intensity andduration are uncertain and a continuing focus of VENTS research.

Another major research program in this area is the RIDGE (Ridge Inter-Disciplinary GlobalExperiment) Program (URL: http://ridge.unh.edu/). It is a major National Science Foundation (NSF)initiative that was established "to understand the geophysical, geochemical, and geo-biological causesand consequences of the energy transfer within the global rift system through time". This program hasbeen working on seabed geological spreading centres worldwide for almost a decade. It has beencollaborating closely with the VENTS program to look at the hydrothermal systems on the Juan deFuca Ridge.

Another component of the RIDGE program is particularly relevant here. This is the Larvae At RidgeVents (LARVAE) Project (URL: http://ridge.unh.edu/larve/larve.html). It is an interdisciplinary programaimed at understanding the geology, physics, chemistry and biology of processes occurring along theglobal mid-ocean ridge system. The goal of the LARVAE Project is to investigate larval dispersal andgene flow in vent environments and to evaluate the potential role of these processes in generating andmaintaining biogeographic patterns along mid-ocean ridges and across ocean basins. Theseexperiments are coordinated within RIDGE to foster interdisciplinary studies of reproduction, larval


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ecology and physiology, physical transport processes, recruitment and population genetics indeep-sea hydrothermal vent habitats. The LARVAE project is focused at the East Pacific Rise 100 Nsite that has received intensive attention by researchers for many years. Active studies addressingthese topics are currently underway at Rutgers University, the University of Southern California,Woods Hole Oceanographic Institution, Harbor Branch Oceanographic Institute, the University ofDelaware, the University of North Carolina, and Pennsylvania State University. Particular organismsthat are being examined in detail include those listed in the following:

Riftia pachyptila (vestimentiferan tube worm)

eogastropod)

producing turri

These biological communities respond apparently quite rapidly to changes in the venting rates andare effectively destroyed when venting ceases for some period of time. The model for thesecommunities, emerging from the VENTS, RIDGE, LARVAE, and other programs, is based onpopulations of these chemosynthetic bacteria that permeate the seabed to significant depths near theactive spreading centers. Spores and vegetative bacteria are entrained in the venting fluids anddistributed to some distance away from the active vent sites. It is likely that these bacterial colonies arewidely dispersed from active vent sites and are then available to provide the basis for future coloniesat new vent sites. Because of these active programs in place, we can expect in the next few years tolearn a great deal about the dispersal mechanisms, life spans, sensitivity to changing conditions,ranges and other parameters crucial for the survival of these organisms.

Outline for Impact Assessment Efforts

Based on the considerations provided in the preceding sections, the following approach may be "appropriate. All steps would be included for each jurisdiction, but the levels of effort would vary I

significantly in response to the specific needs and priorities of the host nation. Overall, scheduleswould be driven completely by the exploration and development schedules. The effort should beinitiated concurrently with the permit acquisition process. Discussion of environmental issues shouldbe included during the initial contacts between commercial interests and host countries to demonstratethe unanimous commitment to environmental protection.

Scoping and tiering

As discussed above, this is probably the most important part of an assessment program. The keyitems that must be accomplished in this component are:

1. Identify and analyze the legal and regulatory regimes which will control the exploration,mining, and other activities, including the lines of authority, participating organizations, andpertinent rules (if any);

2. Identify and examine the chains of authority to elucidate, if possible, any potential conflictsof interest among agencies with regulatory responsibilities;

3. Complete a development scenario which describes, in as much detail as practical at thetime, the planned activities of exploration, mining, transportation, processing, and waste

management;

4. Establish an advisory board for each assessment program, to include representatives ofindustry and the organizations with authority, technical experts (e.g., scientists from theVENTS, LARVAE or RIDGE programs, local fisheries biologists), and representatives ofpotentially interested parties (e.g., from tourist bureaus, fisheries organizations,environmental groups);


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5. Hold public hearings and information exchange meetings within the appropriatejurisdictions to present the development scenario and to provide an open forum for theexpression and documentation of environmental issues; and,

6. Complete a scoping report which: (a) identifies the primary issues that will requireassessment and those that do not; and (b) provides a specific plan for the assessmenteffort.

Environmental programs include tasks in the following categories.

Compliance tasks

These are the assessment tasks that are specifically required by the appropriate regulatory regime.They include such things as the acquisition of permits for land-based activities, vessel inspectioncertificates, and completion of environmental assessment reports, if required. In a jurisdiction with well-developed environmental regulations, these tasks form the bulk and heart of the assessment effort. Injurisdictions with few and unstable regulatory regimes, they will constitute a variable part of the job. Itis important to distinguish such tasks from the primarily technical task of environmental assessmentand from the primarily public relations task of public education, described below.

Assessment tasks

These tasks include the formal assessment work that must be done to address the environmentalissues raised by advisory committees and at public hearings. The result is an environmentalassessment report or statement that covers the following topics:

.A description of the laws, regulations. or formal agreements under which mining activitieswill be carried out

.A detailed summary or complete presentation of the development scenario

.A description of the potentially affected environment, focusing particularly on thoseresources which have been raised as issues of concern in the scoping process

.An analysis of environmental effects and necessary plans for mitigation, if necessary

.Documentation of the process by which issues were identified for analysis

Research and data gathering activities

It may be advisable to sponsor limited research and/or data gathering activities in the explorationareas to address critical issues of concern. However, such work should be undertaken only after it isdeemed necessary during the scoping process and after its objectives and methods are clearlydefined. When possible, research and data gathering activities should be carried out in conjunctionwith exploration field activities. Collection of baseline data and execution of field experiments can oftenbe tied very efficiently to exploration activities with minimal interference and relatively little expense.

Public education tasks

It may also be advisable to sponsor efforts to distribute research or assessment results in publicforums and using attractive presentation methods. Such tasks should also be identified specifically inthe scoping analysis as particularly controversial or subject to widespread misunderstanding. In suchwork it is very important not to replace substance with format; presentations should be clear, welldocumented and supported by independent experts. Public workshops can provide visibility andcredibility to the program efforts and can enlist the help of acknowledged world experts to assist in thedesign of the program plan.


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Review of Japanese Activities on Manganese NoduleDevelopment and Marine Environmental Preservation

Based upon a presentation by

Yuji KajitaniDirector, Metal Mining Agency of Japan (MMAJ)

Introduction

With the demand for mineral resources growing worldwide, manganese nodules, cobalt-rich crusts,seafloor hydrothermal deposits and other deep-sea mineral resources are becoming increasinglyimportant as one of humankind's last untouched resources. In particular, manganese nodules areimportant because they contain nickel, copper, cobalt and other important non-ferrous metals, andbecause they have been the subject of particularly active exploration and technological developmentrelating to mining and processing techniques.

At the same time, increased global interest in environmental preservation has led to calls for activeefforts to prevent the environmental destruction associated with deep-sea mineral resourcedevelopment. In fact, the Legal and Technical Commission of the International Seabed Authority,established under the United Nations Convention on the Law of the Sea (UNCLOS), has decided todraft its own environmental guidelines. In response, pioneer investor nations having manganesenodule mining claims are rushing to carry out marine environmental impact studies.

In Japan, the Metal Mining Agency of Japan (MMAJ) has been entrusted by the Ministry ofInternational Trade and Industry to undertake investigations on the effect of manganese nodule miningin the marine environment. The project, titled "Environmental Impact Research for Manganese NoduleMining", is an eight-year study that began in 1989.

This paper will discuss Japan's past and current activities of manganese nodule development andmarine environmental preservation.

Exploration

Manganese nodules are spherical or egg-shaped globules of metallic oxides measuring from 2 to15 centimetres (cm) in diameter, and are spread on flat seabed surfaces at depths of 4,000 to 6,000metres (m). They contain mainly iron and manganese oxides, but also contain nickel, copper andcobalt, amongst others. The more promising reserves exist in the Clarion-Clipperton fracture zone(known as the C-C zone), a section of deep seabed located in the equatorial part of the northeastPacific Ocean between the Hawaiian Islands and the North American Continent, and in the IndianOcean. Manganese nodules were first discovered in the nineteenth century by the English marineresearch vessel H.M.S. Challenger, but it was not until the early 1950s that interest in the nodules'economic value began to heighten.

Cobalt and nickel, the rare metals found in manganese nodules, are essential for the production ofmany high-tech materials on which Japanese industry depends. Although the demand for these raremetals is expected to grow, Japan currently depends on imports for almost its entire supply. This,along with the fact that cobalt and nickel production is limited to a small number of countries, placesJapan in an extremely weak position with respect to its supply structure.

From the viewpoint of ensuring a stable supply of these mineral resources, it is a national task topromote the exploration and exploitation of manganese nodules. In 1975, MMAJ, entrusted by theMinistry of International Trade and Industry, began manganese nodule exploration in internationalwaters south-east of Hawaii in the Pacific Ocean and also started construction of the Hakurei-MaruNo.2, a research vessel designed to explore for deep seabed mineral resources. Full-scaleexploration began in 1980.


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"The Tentative Measures Act for Deep Seabed Mining" aimed at laying the domestic foundationsfor deep seabed mining, was enacted in July 1982. Two months later, in September, the Deep OceanResources Development Co., Ltd. (DORD) was founded to take a leadership position in Japan'sexploration and development of manganese nodules.

As a result of the joint prospecting efforts of the government and the private sector, Japanregistered 75,000 km2 of mining claims for manganese nodules off the south-east of Hawaii (Figure 1)in December 1987 under the United Nations Convention on the Law of the Sea. Japan therebyacquired exclusive rights to explore those areas for manganese nodules.

Meanwhile, as part of several cooperative mineral resources development projects, basic researchhas been underway supported as ODA projects in developing countries. In addition, the Metal MiningAgency of Japan has been carrying out basic exploration activities for deep-sea seafloor mineralresources at the request of the South Pacific Applied Geoscience Committee (SO PAC) in theexclusive economic zones of its member countries. These research operations, which began in 1985,have yielded a host of results and large amounts of useful data about deep-see mineral resourcessuch as hydrothermal deposits. These operations are still in progress and the third, five-year researchprogram began in 1995.

Research and Development of Mining Technology

Research and development of manganese nodule mining technology was begun first by an U.S.-led consortia with experimental mining being undertaken in the 1970s. In Japan, the research anddevelopment of manganese nodule mining technology has been carried out since 1981, with overUS$100 million being expended over the 17 years to 1997. The technology for manganese nodulemining systems has almost been established. However, there are still a number of obstacles, such asadditional scale-up research and development, before mining of nodules can be deemed economicallyfeasible.

The manganese nodule mining system that Japan has established using original technology is afluid dredging process in which deep seabed manganese nodules are mined by towing a collector andthen raised to the towing vessel using either a pump lift or an air lift. This technology ranks alongsideAmerica's as the world's most advanced.

Research and Development of Processing Technology

Efforts by the MMAJ to research and develop the technology for processing manganese nodulesbegan in 1989 and culminated seven years later in 1995, with a processing method considered ideal:a smelting and chlorine leaching process. Although this processing is technically possible, there arestill a number of obstacles to overcome before the smelting of mined nodules is economically feasible.In particular, we need to reduce energy costs and develop a lower-cost processing technology.

Marine Environmental Preservation

Environmental impacts associated with manganese nodules mining

A number of environmental impacts may result from mining manganese nodules. When themanganese nodule collector is dragged or travels across the seabed, it consolidates the seabedsurface, creating grooves and ridges. When this occurs, it is possible that benthos and their habitatmay be crushed or buried.

To avoid collecting sediment with the manganese nodules, the collector separates fine particlesand discharges them in a plume together with seawater from the rear of the collector. These plumesmay also have an effect on both bottom and surface waters.

As the plumes of sediment are carried by bottom currents at very slow speeds, the particles blanketthe seabed as resedimentation occurs. This blanketing effect may impact on the benthos.


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Manganese nodules, mixed with a large quantity of seawater in a slurry, are brought up from theseabed at a depth of approximately 5,000 m via lifting pipes (fluid dredging system) to the miningvessel. The slurry is then subjected to sorting and separation onboard. During this process, sedimentother than manganese nodules are mixed with seawater (bottom water) and then discharged back intothe sea at surface level.

Bottom water has a lower temperature than surface waters and is rich in nutrient salts. As such, it isconsidered capable of bringing about a variety of different environmental impacts together withdischarged sludge particles. One possible negative impact is the reduction of primary production byreducing phytoplankton biomass from increasing turbidity that decreases sunlight penetration. On theother hand, the addition of nutrients to surface waters may increase plankton biomass.

Initiatives for Manganese Nodule Mining Environmental Impact Studies Across the World

Since the early 1960s, the economic value of manganese nodules started attracting attention,particularly in the United States. In the following years, attempts at exploration and development wereundertaken for seafloor hydrothermal deposits and cobalt-rich crust deposits. At the time, however,much importance was placed on resource development, while almost no consideration was given toprotecting the deep-sea environment.

The United States government, responding to the National Science Academy, was the first to tackleenvironmental impact problems associated with exploitation of deep-sea mineral resources. Around1970. the National Oceanic and Atmospheric Administration (NOAA) started the Deep OceanEnvironmental Study (DOMES) that has involved many universities and research institutes within theUnited States, including research institutes under the direct control of NOAA. With the support of aninternational consortium, NOAA selected three representative locations (sites A, B and C) in the west,centre and east of the area of the Equatorial North Pacific Ocean rich in manganese nodules (CCFZ).It then subjected these sites to research (Fig. 1). These areas were explored by the consortium itself,and although the seabed conditions were undisclosed as trade secrets, NOAA obtained the right touse this data for research under a confidentiality agreement. The DOMES program through its first andsecond phases extended over almost 10 years, during which time it researched the possibleenvironmental impacts from the fluid dredge mining system. Speculated impacts included turbulencecaused by the collector on the seabed and the impact caused by discharge of mined bottom water onthe surface (increase or decrease of biological productivity caused by diffusion of sediment particlesand nutrient rich low-temperature water). Naturally this was not the ultimate objective, which insteadwas to obtain data to formulate a mining code for commercial mining, and to forecast the impact onecosystems which may occur.

NOAA promoted research in research laboratories, and when the U.S.-led consortium undertooktest mining in the late 1970s, it dispatched a research vessel to the area, and its research staff onboard monitored environmental impacts. The result of this research has been disclosed as a hugequantity of data, and although the impacts near the surface have been almost completely clarified,analysis of the impacts near the seabed cannot be described as adequate.

In order to resolve these remaining issues, the Benthic Impact Experiment (BIE) was planned in theearly 1990s in the United States. This experiment used a disturber that was dragged along the seabed to throw up sediment, thereby excavating while the soil particle groups were pumped upwards.The state of diffusion by bottom currents was measured and the amount of subsequent long-termresedimentation and the behavior of benthos were observed. This method, using a disturber, was alsoadopted by Japan, an East-European international group (10M: Interoceanmetal), and India in theirenvironmental impact studies (Table 1).

Japan's Environmental Impact Research for Manganese Nodule Mining project commenced in1989 as a joint project with NOAA of the USA. Japan undertook a series of research projectscomprising a baseline survey within Japan's manganese nodule mining area, measuring suchparameters as bottom material disturbance, diffusion, and resedimentation using a disturber (BenthicImpact Experiments), and observation and analysis of meiobenthos.

Meanwhile, Germany developed a type of disturber called a plough-harrow, and started researchoffshore from Peru in the South Pacific Ocean in 1989 that intensively dragged this plough-harrowover a fixed area of seabed and analyzed the results. Since then Germany has continued to monitor,


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over the long-term, the changes in the state of benthos, the state of turbidity and diffusion,resedimentation of particles, and the seafloor state after dragging the plough-harrow, and is currentlyevaluating the impact on the environment.

Japanese Environmental Impact Research for Manganese Nodule Mining

As noted above, Japan, in conjunction with NOAA, started the Environmental Impact Research forManganese Nodule Mining project in 1989. Part of this project was the Japan Deep-sea ImpactExperiment (JET) carried out again using the Deepsea Sediment Resuspension System (DSSRS) in1994 in the area of Japan's mining claim. So far, follow-up monitoring has been performed both oneand two years after the initial disturbance experiment.

The MMAJ's Manganese Nodule Mining Environmental Impact Study was comprised of three parts:1) the baseline survey, 2) the mining impact experiment, and 3) the development of an environmentalimpact estimation model. The survey research was performed at both the surface and bottom layers.

The baseline survey was conducted to clarify the characteristics of the Japanese mining area in theequatorial part of the northeast Pacific Ocean. From the results, most of the area can be regarded as alow latitude sea area. However, to evaluate the potential mining impacts in detail, individual datashould be examined carefully due to the complicated water mass structure.

As there were very few comparable data available for meiobenthos, characterization of distributionin the survey area was left to future studies.

The mining impact experiment was undertaken to estimate and evaluate the affect of manganesenodule mining on the environment. At the surface layer, enrichment experiments were conducted toassess the impact of high nutrient salt concentrations from deep water on phytoplankton. Benthicimpact experiments were carried out with an artificial sediment disturber to emulate the impact of amining collector.

The results of the enrichment experiments made it clear that phytoplankton rapidly increased dueto the upsurge of deep water. However, the experiments were not sufficiently detailed to demonstratethe influence on other biotic communities from variations in surface water temperature, light and otherenvironmental factors. Thus these effects should be examined in future studies.

The results of the benthic impact experiments (JET) showed that the disturbance of the seabedcaused a decrease in the abundance of meiobenthos and that it takes one-to-two years to recover(Fig. 2). However, as this study focused roughly on animal communities, it has not yet clarified whetheror not the meiobenthos that now exists is in the same balance as before the disturbance. The imageanalysis technique of FOG photographs was developed to study the range and thickness ofresedimentation. However, this method may not be applicable in heavily resedimented areas.

The simulation models to estimate the environmental impacts were completed for both surface andbottom layers. For the bottom layer model, good results were obtained in the simulation of the BIE siteof the USA. For the surface layer, however, since there were few quantitative data which showedchanges in the ecosystem when deep sea water was discharged, further experiments on miningimpacts are needed to complete the final model.

Conclusions

After having firmly established its position in both name and deed over the past eight years as oneof the world's leading nations in marine environmental impact studies, Japan now faces the importantissue of how it will contribute to international society in the field of marine environmental preservation.Nations that will be engaging in survey research in this field must be provided with advancedenvironmental technology and related information along with suitable advice. In addition, Japan'sactive contribution to the drafting of the International Seabed Authority's environmental guidelines isalso extremely important.


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Internationally, the promotion of sustainable, environmentally safe mine development is expected tobecome a dominant theme in the field of resource exploitation. This also includes exploitation ofmanganese nodules and other deepsea mineral resources. A key issue will be what types of marineenvironmental measures must be implemented in order to realize sustainable resource development.


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Summary of the Japanese EnvironmentalStudy for Manganese Nodules Development

Based upon a presentation given byHirohiko Tesishima

Metal Mining Agency of Japan (MMAJ)

Introduction

In Japan, the Metal Mining Agency of Japan (MMAJ) has been entrusted by the Ministry ofInternational Trade and Industry (MITI) to undertake investigations on the effect of manganese nodulemining in the marine environment. The Project entitled "Environmental Impact Research forManganese Nodule Mining" is an eight-year study that began in 1989. It has been undertaken in closecollaboration with the U.S. National Atmospheric and Oceanic Administration (NOAA) since 1990.

The survey area covered a Japanese mining claim in the equatorial part of the northeast PacificOcean (Fig. 1). The project surveys were focused on the surface and bottom water layers. Theresearch included baseline surveys, a mining impact experiment, data analyses, and development ofsimulation models to estimate environmental impacts. In order to evaluate the impacts of the miningoperations, an artificial benthic disturbance was carried out in the survey area in 1994, known as JET:Japan Deep-Sea Impact Experiment. Subsequent monitoring surveys were conducted in 1994, 1995and 1996 after the disturbance.

The purpose of the research was to establish methods to assess the environmental impactsexpected from real mining. Since the research was almost completed by March 1997, this paperreports the results of the "Environmental Impact Research for Manganese Nodule Mining" project andsuggests further research areas for the future. Details of the each survey and experiment aredescribed in previous papers.

Methods and Results

Surface survey

For the surface survey, environmental research was undertaken in Japan's future mining area inthe equatorial part of the northeast Pacific Ocean. The research was undertaken after equipment forthe baseline survey had been developed and basic tests, needed to develop the simulation modelsthat estimate environmental impacts, had been conducted in seas around Japan.

The baseline survey

For the baseline survey of the surface layer, eleven sampling stations were set in the survey areato monitor the distribution of temperature, salinity, plankton and nutrients.

Water temperature and salinity. The vertical distributions of water temperature and salinity wereobserved in the depth range from 0 to 200 m (Figure 2) using a CTD meter. Thermoclines wererecognized in most stations at depths between 50 to 100 m except for measurements taken betweenlatitudes of 130 to 150 North. Thermoclines were particularly obvious at the lower latitude stations. Thevertical distribution of salinity differed greatly at every sampling station and no trends of definitechange in a latitudinal direction or a vertical direction were recognized. Thermoclines detected in thisarea are typical of those in low latitude areas.

Plankton. Phytoplankton samples were collected between 0-200 m and zooplankton were collectedbetween 0 to 2300 m to study each constituent community. PROCHLOROPHYTA, CYANOBACTERIAand nanoflagellates dominated the phytoplankton and SARCOMASTIGOPHORA dominated the


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zooplankton. These dominant genera were classified by size down to pico or nano plankton. Ingeneral, the abundance of small plankton tends to be greater offshore and at low latitudes rather thanalong the coast and at high latitudes. It was therefore judged that the plankton results of this surveyare characteristic of low latitude sea areas.

Nutrients. The water at depths of between 0 and 200 m was sampled to study the verticaldistribution of NO2-N NO3-N, PO4-P, and SiO2-Si (Fig.3). At all sampling stations the nutrients showeda tendency to increase with depth from the thermocline zone around 50 to 150 m to the bottom. Thistendency coincides with the general tendency that can be observed mid-ocean at middle and lowlatitudes. The depth distribution of clines of nutrients was almost the same for each nutrient.

The significant annual changes on the high and low latitude borders of the ocean current indicatedthe movement of water masses, again typical of a low latitude sea area. The physical parameters alsoshow tendencies peculiar to the type of area as evidenced in the development of thermoclines and thedistribution of nutrients. However, at the sampling stations to the north of latitude 11 oN, a complicatedregion of converging currents was detected. For example, where no thermocline development wasobserved, this was characteristic of the Temperate Zone and showed accompanying annual deviationsin nutrient concentrations.

It is possible to regard the greater part of the survey area as characteristic of a low latitude seaarea, but in order to assess mining impacts in the area, it is necessary to focus on more specific data.

Mining impact experiment (Nutrients Enrichment Experiment)

In mining operations, it is to be expected that deep water will be discharged at or near the surface.Unlike the surface water, deep-sea water contains a great amount of nutrients and it is anticipated thatthe deep water would greatly influence breeding and growth of microorganisms includingphytoplankton in the surface layer. Of particular concern are phytoplankton which are the primaryproducers: if their community loses balance, other biotic communities will be affected. However, as itwas impossible to discharge a great amount of deep water to the surface layer, insufficient data wereavailable to assess and evaluate the impacts of a proposed mining operation on the surface layer.Consequently, we decided to focus on a survey of phytoplankton, which, as noted above, areconsidered to be the organisms most likely affected, and in particular on the effects of deep water onthe growth and reproduction response of phytoplankton in a nutrients enrichment experiment.Specifically, phytoplankton were cultured using different amounts of the deep water under theconditions shown in Table 1 to assess the changes in nutrients concentrations, communitycomposition and changes in abundance.

The results of the enrichment experiment showed that the reproduction response of phytoplanktondiffered depending on how much deep water was added. When a small amount of deep water wasadded, the number of cells reached a small peak quickly. As the amount added increased, it took moretime to reach the peak and the amount of chlorophyll was larger (Fig.4-1, -2). In addition to the changeof chlorophyll, changes in nutrients concentrations were also observed, Judging from these results, itis possible to say that if deep-sea water was discharged into the surface area during miningoperations, the concentration of nutrients would become high and phytoplankton could multiply rapidly.However, the enrichment experiment was run under artificial conditions and, therefore, did not exactlyreflect the conditions of the survey area and as a result it was not possible to determine how otherbiotic communities would be affected by an unbalanced community of phytoplankton arising from thistype of impact. During real mining, there would be added affects from low temperature water andbottom mud that would be drawn up with the deep water. Future studies should consider more realisticmethods which will approximate the actual situation and to investigate more specific environmentalinfluences.

Development of a model to estimate environmental impacts

Outline of the model

It is assumed that most biological production activity occurs in the surface layer of the ocean.Therefore, at the time of manganese nodule mining, the ecosystem will be affected by the surface


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discharge of deep water of low temperature, high nutrients content, and high turbidity. To address thisissue a model was developed to estimate environmental impacts in the surface layer and, in addition,a numerical model was developed to estimate diffusion behaviour of cold water masses. However,when the model was developed there was insufficient knowledge about the survey area and,therefore, the model was validated using simulation data from a cold water discharge test in theToyama Bay of the Japan Sea. At the same time, application of a simple carbon circulation model tothe surface layer was studied and this circulation model was incorporated in the estimation model.

Outline of the simulation

It was very difficult to accurately reproduce the environment of the survey area by simulationbecause of the complicated flow structure of the survey area. Accordingly, the physical mechanismscould not be reproduced in detail, however, the flow field, to qualitatively reproduce the distribution ofexisting amounts of ecological elements in the survey area, was set. The boundary conditions of thearea were determined using the simulation results of the general marine circulation of the NorthPacific, the flow of the survey area and the initial existing amount of ecological elements. Thesimulation, with a subdivided mesh system, was then run again to reproduce the ecological system.

Although this study is now completed, for proper estimation of the ecological impacts from miningoperations, quantitative data of ecological changes when deep water is discharged into surface watermust be obtained. In other words, to prepare a complete model, new experiments of mining impactsmust be conducted.

Bottom Survey

Baseline survey

Fundamentally, like the baseline survey for the surface layer, the goal was to investigate the naturalconditions of the bottom layer. In fact, the aim of the survey was to collect basic data for the deep-seaimpact experiment described below. Consequently, the surface zone of seabed (mainly 0 to 5 cm),where a mining collector will operate was sampled and the chemical properties of the sediments andthe status of benthos living there were studied.

Chemical properties of sediments

To understand the chemical properties of sediments, the major components, such as organiccarbon, total nitrogen, calcium carbonate and opal, were studied. The results showed that amounts ofthese components decreased gradually with depth (Fig.5) and they did not differ significantly withlocation in the survey area.

Benthos

The abundance of bacteria and benthos in sediments were also studied. The benthos wereclassified by size (e.g. macrobenthos and meiobenthos). Mainly their abundance and communitycomposition were studied. It was found that the number of bacteria in the sediments was within therange of 2.3 x 107 and 6.4 x 1 OB cells/g (dry weight) in the whole survey area. In general, it has beenreported that the number of bacteria in sediments in the depth range of 2000 to 5000 m was 107 to1010 cells/g (dry weight), thus, the results of the survey were within the same range. The abundance ofmacrobenthos was 235 individuals/m2 while that of meiobenthos was 105 individuals/10cm2, In total,18 animal divisions and 27 animal groups were confirmed (Fig. 6). In all cases, about 80% of the totalindividuals existed in the top 3 cm of the sediment layer. Reports of other sea areas surveyed showedalso that benthos existed mainly in the surface layer of the sediments.

The community composition of the sea area of this survey was typical of the deep-sea area of thecentral part of the Pacific. The abundance of macrobenthos was the same as that reported by DOMESof the United States. On the other hand, characterization of meiobenthos was not possible, due to thelack of comparable data available at present, and will be left as a subject of future study.


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Mining Impact Experiment (JET: Japan Deep Sea Impact Experiment)

The Japan Deep-Sea Impact Experiment (JET) was fundamentally the same as the BIE conductedby the United States. It was an experiment to estimate the mining impacts on the environment byactual discharge and resedimentation of the deep-sea sediments.

The purpose of JET was to evaluate influences of the deep-sea impacts from mining in terms ofthree items, i.e., "items of impacts", "range of impacts" and "recovery process". Monitoring researchsurveys were carried out one and two years after the deep-sea impacts.

To select an appropriate site, a submarine topographic survey was conducted by acoustic methodsand photographic observation of the seabed. On the basis of these results, a flat valley topographywith simple direction bottom currents and a low nodule density was selected (Figure 1) as it providedfor ease of model simulation and for working efficiency. The purpose of the experiment was to createimpacts on the selected site by discharging sediments and allowing them to redeposit. In thisexperiment, a benthic disturber that creates impacts, similar to those expected in a mining operation,was used. The benthic disturber was designed to loosen and recover sediments on the seabed by a jetpump and to discharge them from a chimney which was 4 m high using a lift pump. To estimate theamount of sediments actually discharged, a slurry sampler was installed on the top of the chimney.

In addition, around the towing zone of the benthic disturber, mooring systems equipped with currentmeters and sediment traps were installed so that the sediment diffusion range could be estimated. Toobtain comparable data, these surveys were conducted both before (JET 1) and just after (JET 2) thedisturbance. The monitoring survey after one year was named JET3 and that after two years wasJET4.

In the monitoring surveys, sampling of sediments, monitoring of currents and sedimentation bymooring systems and seabed observation by FDC (Finder TV Camera Mounted Deep-sea CameraSystem) were conducted.

Survey of benthos

Among the benthos which are expected to be directly influenced, the number of those which belongto meiobenthos is comparatively large according to the their size classification. Comparing theabundance of meiobenthos of JET1 with that of JET2, it was apparent that the abundance just afterthe experiment was less. In other words, the number of meiobenthos decreased due to theresedimentation. JET3 showed that the abundance of meiobenthos was recovering. JET4 furthersubstantiated that the abundance of meiobenthos had returned to the situation before the experiment(Fig.7). However, these analyses of benthos were conducted roughly by animal community, so it hasnot been clarified by genera or species, whether the same balance of meiobenthos community hasbeen attained or not.

In regards to species composition, at present it is impossible to judge whether the status hasrecovered to that before the experiment. Therefore, as a future study through detailed analysis of thesamples, a reevaluation should be performed after clarifying "a recovery process" in species level.

Range of Resedimentation

As a method to clarify the "extent of influence", image analysis (or color intensity analysis) of thepictures taken by FDC (Finder TV Camera Mounted Deep-sea Camera System) was used. Thismethod estimates the thickness and extent of resedimentaion by measuring the color intensity ofmanganese nodules covered by resedimentation with reference to the color of sediments. For theestimation of the thickness of resedimentation, manganese nodules and sediments were taken back toan on-land laboratory and resedimentation experiments were repeatedly conducted in a tank to studythe quantitative relation between color intensity and the thickness of resedimentation. From the colorintensity distribution, it was estimated that the range of resedimentation impacts reached 300 msoutheast and 1000 m northwest in the direction perpendicular to the benthic disturber towing linesand 2.5 km in the towing direction. This result reflects the northwest current direction when the deep-sea impact experiment took place (Fig.8). The tank test results showed that manganese nodules were


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completely covered with bottom sediment when the thickness of resedimentation reached 0.26 mm sothat the color intensity ratio became 1.0 (Fig.9) (Yamazaki et al. 1997).

As resedimentation increases above 0.26mm no further change in the color intensity ratio can beobserved. Within and near the towing zone of the benthic disturber, the color intensity became 1.0,indicating resedimentation in excess of 0.26 mm.

In this experiment, the extent and thickness of resedimentation were estimated by image analysisof photographs of the seabed and the amount of discharged slurry. However, the method is onlyaccurate for resedimentation of less than 0.26 mm, and could not be applied over large areas of thesite where resedimentation exceeded this limit. Therefore, in the future, it is necessary to develop asimpler methodology that can be applied to areas of heavy resedimentation.

Development of an environmental impact estimation model

An environmental impact estimation model in the deep-sea area was developed with the aim toestimate the diffusion process of the sediments that are raised by a mining collector during miningoperations. In order to calibrate the model to be consistent with the sediment trap data, simulationexperiments were carried out several times with adjustments to components such as topographicfeatures of the seabed, flow directions and velocities of bottom currents and size compositions ofsediments. Finally, a reasonably consistent model was completed. The model was further verified bysimulation of the BIE test results obtained by the NOAA. In the future, it will be necessary to verifywhether this method can be applied to a large-scale seabed disturbance caused by real mining.

Conclusions and future subjects

The baseline survey was conducted to clarify the characteristics of the Japanese mining area in theequatorial part of the northeast Pacific Ocean. From the results, most of the area can be regarded as alow latitude sea area. However, to evaluate the potential mining impacts in detail, individual datashould be examined carefully because of the complicated water mass structure. As there were veryfew comparable data available for meiobenthos, characterization of distribution in the survey area wasleft to future studies.

The mining impact experiment was undertaken to estimate and evaluate the influence ofmanganese nodule mining on the environment. At the surface layer, nutrients enrichment experimentswere conducted to assess the influence of high nutrient concentrations from deep water on

phytoplankton.

Benthic impact experiments were carried out with an artificial sediment disturber to simulate theimpact of a mining collector. The results of the nutrient enrichment experiments made it clear thatphytoplankton rapidly increase due to the upsurge of deep water. However the experiments were notsufficiently detailed to demonstrate the influence on other biotic communities, surface watertemperatures, light and other environmental factors. Thus these effects should be examined in futurestudies. The results of the benthic impact experiments showed that the disturbance of the seabedcaused a decrease of the abundance of meiobenthos and that it takes one-to-two years to recover.However, as this study focused roughly on animal communities, it is yet to clarify whether or not themeiobenthos now exist in the same balance as that before the disturbance. The image analysistechnique of FOG photographs was developed to study the range and thickness of resedimentation.But this method may not be applicable in heavily resedimented areas.

The simulation models to estimate the environmental impacts were completed for both surface andbottom layers. For the bottom layer model, good results were obtained by the verification simulation ofthe BIE site of the NOAA. For the surface layer, however, since there were few quantitative data whichshowed changes in the ecosystem when deep-sea water was discharged, further experiments onmining impacts are needed to complete the final model.

The project surveys were almost completed in March 1997, but there are many subjects that shouldbe dealt with in detail for further discussion. In the future, how Japan contributes to the internationalsociety from the viewpoint of marine environmental conservation, based on the results of the survey,will be one of the primary concerns. In addition, Japan is obliged to supply future accurate data and


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appropriate advice to countries which will carry out environmental research; therefore, as an advanced

country Japan must be responsible and conduct environmental research.

This project was supported by the MITI and conducted under a cooperative relationship with theU.S. NOAA. A lot of cooperative efforts were supplied from the staff of the NOAA. Valuablesuggestions were given by the members of the project advisory committee and working group. I would

like to express my appreciation to everybody concerned with this work.

References

Fukushima, T. 1995. Overview: Japan Deep-Sea Impact Experiment = JET. In Proceedings of the First (1995)ISOPE Ocean Mining Symposium, International Society of Offshore and Polar Engineers, Tsukuba City,Japan. pp 47-53.

Harada, K., Shibamoto, Y., and Kokubun, H. 1995. Chemical and Radio-chemical Studies of Sediment SamplesFrom JET Site. In Proceedings of the First (1995) ISOPE Ocean Mining Symposium, International Society ofOffshore and Polar Engineers, Tsukuba City, Japan. pp 187- 192.

Kaneko, T., Ogawa, K., and Fukushima, T. 1995. Preliminary Results of Meiofauna and Bacteria Abundance in anEnvironmental Impact Experiment. In Proceedings of the First (1995) ISOPE Ocean Mining Symposium,International Society of Offshore and Polar Engineers, Tsukuba City, Japan. pp 181-186.

Barnett, B., and Yamauchi, H. 1995. Deep Sea sediment Resuspension System Used for the Japan Deep SeaImpact Experiment. In Proceedings of the First (1995) ISOPE Ocean Mining Symposium, InternationalSociety of Offshore and Polar Engineers, Tsukuba City, Japan. pp 175-179.

Taguchi, K., Nakata, K., Aoki, S., and Kubota, M. 1995. Environmental Study on the Deep-Sea Mining ofManganese Nodules in the Northeastern Tropical. In Proceedings of the First (1995) ISOPE Ocean MiningSymposium, International Society of Offshore and Polar Engineers, Tsukuba City, Japan. pp167-174.

Horibe, S., ed. 1972. Material Cycling. Marine Chemistry. Tokai University Publishing, Toyko. pp141-175 (in

Japanese).

Taniguchi, A. 1975. In Motoda, S. (ed) Marine Plankton. Tokai University Publishing, Toyko. p. 223 (in Japanese).

Nakata, K., Aoki, S., Ishida, A., Taguchi, K. 1995. Development of Ocean Carbon Cycle Model: Application to theNorth Pacific Ocean. Environmental Resources 4-1: 63-86 (in Japanese).

Deming, J.W., and Yager, P.L. 1992. Natural Bacterial Assemblages in Deep-Sea Sediment. In Row, G.T., andPariente, V. (eds) Deep-Sea Food Chains and the Global Carboncycle, Kluwer Academic Publishers,Dordrect, Netherlands. pp 11-27.

Hecker, B., and Paul, A.Z. 1979. Abyssal Community Structure of the Benthic Infauna of the Eastern EquatorialPacific; DOMES Site A, Band C. In Bischoff, J.L., and Piper, D.Z. (eds) Marine Geology and Oceanographyof the Pacific Manganese Nodule Province, Plenum Press, New York. pp 83-112.

National Oceanic and Atmospheric Administration 1993. US Cruise Report for BIE CRUISE 1 July 3D-September9, 1993, RN YUZHMORGEOLOGIY A, NOAA Technical Memorandum NOS OCRM 4.

Yamazaki, T., Kajitani, Y., Barnett, B., and Suzuki, T. (In press). Development of Image Analytical Technique forResedimentation Induced by Nodule Mining. In Proceedings of ISOPE-Ocean Mining Symposium, Seoul.


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Environment Regime: Papua New Guinea Case Study

Based upon a presentation byKatrina Solien

Senior Environmental Protection OfficerDepartment of Environment and Conservation, Papua New Guinea

Introduction

Papua New Guinea is blessed with many natural resources, both renewable and nonrenewable,and there are already a number of licenced development projects for the exploitation of many of theseresources, e.g., agriculture, forestry, mining and the petroleum sectors.

The PNG Department of Mineral Resources (DMR) has recently granted an Exploration Licence forthe exploration of the seabed in the PACMANUS Basin close to the province of New Ireland. This areaof proposed offshore mining is a new frontier of resource development and will need specialconsideration, in particular, because existing legislation developed so far in the country is for land-based developments.

There are two possible environmental regimes that may apply to this proposed new industry. First,the environmental aspects of offshore mining may be accommodated within the framework of currentlegislation that consists of three Acts. Alternatively, Papua New Guinea's environmental regime wasreviewed in 1995 and this review resulted in the development of a new proposed Environment Bill.This new proposed Environment Bill is now pending parliamentary debate and pending approval,hopefully, in the July 1999 session. If passed, offshore mining activities may be controlled or regulatedunder this legislation.

This paper outlines Papua New Guinea's existing and proposed environmental regime, and how itmay relate to seabed/offshore activities. The discussion is with respect to terms of current legislation,the proposed environmental regulatory framework and a proposed regulation of an offshore miningscenario.

Background

The Department of Environment and Conservation (DEC) is the body mandated to administer thefourth Goal of the National Constitution which states:

"We the people of Papua New Guinea declare our fourth goal to be for Papua NewGuinea's natural resources and environment to be conserved and used for thecollective benefit of all, and be replenished for the future generations."

The DEC is comprised of two (2) major Divisions namely Environment and Conservation. TheEnvironment Division is responsible for environmental approval, monitoring and management ofproject operations while the Conservation Division administers a number of Acts, such as the Floraand Fauna Protection Act and the Wetlands Act, as well as being responsible for export licences. TheConservation Division will also be responsible for implementing the Bio-diversity and Climate ChangeConventions. Presently, the Conservation Division is in the process of setting up the PNG BiodiversityInstitute which is intended to address all biodiversity issues and will coordinate all biodiversity relatedscientific research in the country.

During project planning and in the granting of environmental approvals and permits, socio-economic aspects (such as stakeholder interests and other uses of an area) and conservation issuesare also considered and addressed together with biophysical aspects. Though the biophysical aspectswere traditionally the main focus of the Environmental Impact Assessment (EIA) process, SocialImpact Assessment (SIA) will now form an important component of the EIA overall process.


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.Operation Procedures

.Industry Codes of Practice

Under this regime, clean technology and waste minimization initiatives are encouraged.

The Proposed Regulatory Process

The regulatory process under the proposed 3-tiered regime is determined by the nature of theproject. Under this process an initial notification is submitted by the proponent giving a brief outline ofthe proposed operations. The project is then classified into the appropriate level.

Most small projects, which are not expected to cause any environmental harm, will be regulatedunder Level 1 activities. Under this level, Regulations, Policies, Codes of Practice and Standards willcontrol activities. Projects with medium impact will fall under Level 2 and will undergo anenvironmental permitting process. The activities of projects under this level will be regulated by thepermit conditions together with the above mentioned tools. Very few projects are expected to gothrough the very detailed Environment Impact Assessment (EIA) process required for a Level 3project. The size of operation, sensitivity of the environment, potential for adverse environmentalimpacts and whether the project is of national significance, will be factors in determining whether aproject warrants classification as a Level 3 project.

The decision making body here is the Environment Council chaired by the Director (Head ofDepartment) and has multi-disciplinary representation. Note that under this regime, the Minister'sapproval of the Environment Impact Study is "in principle" where the Minister writes a letter of approvalbut indicates that environmental permits (with conditions) will follow after application for anenvironment permit and assessment. Most approvals will be done at the administrative level ratherthan at the political level (powers vested in the Director of Environment to approve environment

permits).

Offshore Mining and the Environment Regime

The way in which offshore mining may be dealt with under the Environmental RegulatoryFramework (ERF) is that, under current legislation, the project would undergo the existing environmentplan approval process and the water use licencing processes. Alternatively, under the proposedlegislation, assuming the Bill is passed through Parliament in its present form, offshore mining projectswould be considered "prescribed activities". Such projects will fall either under Level 2 (environmentalpermitting), if environmental impacts from their activities do not significantly impact on theenvironment, or Level 3 (Environment Approval and environmental permitting) if the projects have thepotential to significantly impact on the environment. The Level 3 classification will depend on the sizeof operations, environmental sensitivity of operation/discharge area, discharge type, and whether theprojects are of national significance and different levels of classification may be applicable to differingphases of activity. The Level 3 classification may also be based on the fact there will be differentstages of seabed mining proposals, including exploration, pilot testing and full-scale mining, each ofwhich are expected to have some degree of environment impact. In addition, little is known about theenvironment of the proposed offshore mining areas, there is limited understanding of the ecologicalsystems and processes in the areas and the resources in these areas may have potential for futurecontribution to science as well as future commercial uses. All of which may need to be defined.

The Bill provides for the adoption of any environmental protection policy (including those formulatedby other government bodies).

Summary

In summary, the offshore mining projects may be dealt with under the existing environment regimethrough the submission and approval of environmental plans and controlled by licence conditions and

regulations.


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If the proposed Bill is passed in parliament, however, offshore mining activities may fall under Level2 or Level 3 classification and will undergo environmental permitting or a full EIA process. Theactivities of projects under these levels will be controlled and regulated by licence conditions, and thevarious tools developed under the proposed new Environment Bill, with the aim of minimizingenvironmental pollution.

Finally, the proposed Bill is still undergoing parliamentary process. It is an enabling Bill and hasprovisions allowing DEC to adopt any environment protection requirements provided for in the offshore

mining policy.


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END SESSION:

Closing Address

Honourable Masket Langalio CBEMP Minister For Mining, Papua New Guinea

Mr Alf Simpson, the Director for SOPAC, our distinguished guests from the Metal Mining Agency OfJapan, Mr Yuji Kajitani, Mr Hirohoko Tesishima, Mr Tetsuro Yamazaki Of National Institute ForResources And Environment, Japan, distinguished members of the delegation from South Korea, DrAllen Clark Of East-West Centre, Hawaii, Dr Ray Binns Of CSIRO, Mr Charles Morgan Of MarineMinerals Technology Center, University Of Hawaii, Mr Mike Lodge Of International Seabed Authority,Jamaica, Mr Kuma Aua Secretary of The Department Of Mineral Resources, ministerial colleagues,the Acting Governor For Madang, participants of the Workshop, particularly our visitors from islandstates, friends, ladies and gentlemen.

I am honoured to give the closing address to this distinguished audience in picturesque MadangResort Hotel. You all have worked so hard in the last few days on what would be a Blueprint for ourOffshore Minerals Policy. The mix of representation at this Workshop is very good and yourcontributions at the various levels of expertise is highly commended. The depths of the offshore isprobably the last frontier awaiting economic exploitation by mining enthusiasts although our friendsfrom the oil industry have been quite successful in areas such as the North Sea, Gulf Of Mexico, andmany other places.

When the process for developing an offshore mining policy started we did not know what shape orform the proposed policy will take. It was like sailing into the unknown. Our only navigational aids werethe United Nations Convention on the Law Of The Sea which itself was a nightmare to grasp, theMining Act 1992 which was quite deficient for offshore purposes, and most importantly, the enthusiasmof interagency representatives to not only get in there and learn about the new challenge offered butalso to contribute in a multi-disciplinary sense to develop a Green Paper or draft policy which you allhave visited and revisited in the course of your Workshop. The outcome of this Workshop will no doubtassist PNG to finalise its policy and to realise the potentials presented to us by mineral occurances inour territorial sea in particular and possibly in the outer continental shelf. Our government is in theprocess of having its maritime boundaries clearly delimited so that appropriate policies and regulationscan be developed reflecting differing legal rights and obligations attached to these maritime zones.

Papua New Guinea ratified the United Nations Convention on the Law of the Sea in 1997. I amadvised this convention establishes the international legal basis and system for governing all oceanuses. As a result, it is incumbent on us to develop ocean use policies and regulations that areconsistent with this Convention. Offshore mineral exploration and mining are no exceptions. The stepstaken by my department is only one of the many steps other government agencies have and are takingto give practical effect to our commitments and to realise the benefits under the Convention.

The draft proposed policy has been widely circulated for views and comments. Valuable commentswere received and this Workshop has brought all these views together in the form of a blueprint thatwill be finalised and presented to Cabinet and eventually to our national Parliament for its approval asa white paper. The next phase after that will be to develop an appropriate legal framework based onthe policy. This will take some time to accomplish and I am sure those of you who are here with ustoday and are experts in the field will offer us your kind assistance when requested.

In the short to the medium term the benefits may not be clearly visible but as a principle of goodgovernance it is vital to have a long-term view.

You would have realised in the course of your deliberations that current mineral policy andlegislation is intended mainly for terrestrial exploration and mining. There is no comprehensive policyand legislation regulating exploration and mining in all the maritime zones where PNG hassovereignty, sovereign rights or jurisdiction as recognised under the United Nations Convention on theLaw of The Sea. The work of the seabed mining policy committee chaired by my department was

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intended to fill this gap and this Workshop has taken that step further to realising a comprehensiveoffshore minerals policy for PNG.

Despite some of the deficiencies I mentioned and which you would have discussed, two explorationlicences (EL-1196 and EL-1205) were granted in November 1997 to Nautilus Minerals Corporation, aPNG-registered Australian company, to explore for minerals in the Manus Basin, New IrelandProvince. The licences, which are the first of their kind for seafloor massive sulfide deposits, havegenerated a tremendous amount of interest by the media, mining companies, foreign governments andinternational organisations.

The particular type of mineral deposit that is being explored for by the licencee is known as theseafloor massive sulphide (sms). These types of mineral deposits are formed in deep waters as aresult of sub-marine volcanic activity under high pressure and at very high temperatures. The gradesof minerals contained in the sms type deposits are relatively high compared to land based sources.

Currently offshore mining technology is still in its infant stages. We are optimistic that whenseabed-mining technology is perfected offshore mining will be possible in the future. Hopefully thatfutu re is not too far off.

Man with the assistance of technology has managed to conquer the frontiers of land and space.Right now we are in session to plot our strategy to conquer the other frontier left -our ocean depths.Therein may also lie some of the answers to the numerous phenomena we face on the surface likedroughts, flash flooding, tornadoes and the like. Offshore mineral exploration and mining will alsoassist us to learn more about our marine environment and its interface with the atmosphere and life in

general.

I am advised there is life even in the depths of the ocean where no sunlight penetrates. Some ofthe biogenic species that occupy these habitats may hold clues to human needs in terms of medicinesand drugs and industrial applications. In 1996 it was estimated that trade in these biogenic materialswere worth US$800 million. This could outstrip returns from actual minerals being mined and sold.

This is an exciting time for PNG and the rest of the world. If we develop the right kind of policy andlegal framework that encourages exploration and mining in the offshore areas while at the same timeprotecting our interests as well as those of our neighbours and the international community,particularly in terms of marine environmental protection and management, PNG's policy could becomea mode! for other countries to emulate and follow.

Once again, thank you all for your tremendous efforts. With these remarks I now declare thisWorkshop closed.

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A: INTRODUCTION

1. The present Mining Act 1992 is the principal policy and regulatory document governing theregulation and management of the mining industry in Papua New Guinea. However, this legislationis heavily biased towards onshore exploration and exploitation of mineral resources. As to theoffshore, the legislation seems to extend only to the outer edge of PNG's territorial sea. In thissense there is a policy and regulatory vacuum so far as exploration and exploitation of mineralresources in the offshore is concerned.

2. It is the intention of government to develop a policy for the promotion of exploration andexploitation of offshore mineral resources.

3. Therefore, there is a need for the development of a comprehensive offshore mining policy. Thispolicy is also intended to accommodate relevant interests of varying stakeholders in the offshore.

B: CONSULTATION

4. Offshore mineral exploration and mining are relatively new areas of interest. There are numerousstakeholders with varying interests that ought to be recognised and accommodated wherefeasible. As there are different government agencies responsible for managing such stakeholderinterests and issues it was essential that a team approach be taken on the development of acomprehensive and workable offshore mining policy.

5. An inter-agency committee was initiated by the Department of Mineral Resources in March 1998to recommend an offshore mining policy frame for consideration and approval by the government.Prior to this approval, it is anticipated that a green paper would be ready for circulation to relevantagencies and industry participants for their input before the policy is finalised and submitted forapproval as a white paper.

6. Membership of the committee comprises representatives from relevant government agencies suchas the Departments of, Prime Minister & National Executive Council, Attorney General, ForeignAffairs, Provincial Affairs, Treasury & Corporate Affairs, Petroleum & Energy, and Transport.Statutory bodies and others include National Fisheries Authority, PNG Harbours Board, Office ofNational Planning & Implementation, Office of Environment & Conservation, Internal RevenueCommission and University of Papua New Guinea Law Faculty.

7. Apart from the many meetings the committee had, it also convened an Internal Workshop onSeabed Mining from August 31- 02 September 1998 in Port Moresby. A few ProvincialAdministrations were invited to participate at this Workshop but none actually attended theWorkshop. The intention of the Workshop was to develop this draft policy on offshore mining thatwould be circulated to both the government agencies and the mining industry for their inputs orcomments. The "green paper" was also reviewed by independent experts.

8. Subsequently, during the period February 22-26, 1999 an international Workshop, sponsored bySOPAC, MMAJ, the Forum Secretariat and the Department of Mining of Papua New Guinea, washeld in Madang, Papua New Guinea. This Workshop reviewed the draft "green paper" prepared bythe government and, as a result of deliberations, prepared an expanded and revised "green

paper".

C: ISSUES AND PERSPECTIVES

9. The mining sector is an important contributor to the national economy. At present all miningactivities are undertaken onshore. There are a number of large mines and several medium andsmall-scale mines. At least three major prospects are in their advanced stages for development.

10. PNG has an even larger offshore area. The Offshore Seas Proclamation under the National SeasAct 1977 establishes an interim baseline for determining the outer limits of the territorial sea,exclusive economic zone, and the continental shelf. The final outer limits of its national jurisdictionis yet to be delimited in accordance with the relevant provisions of the United Nations Convention


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on the Law of the Sea 1982. Nevertheless, PNG is an archipelagic State that has a very largeocean space including the seabed underlying such ocean space within its national jurisdiction. Asa result, mineral occurrences in the seabed may even exceed those found onshore. Theseresources must be found and developed so that their economic potential can be unleashed for thecollective benefit of all citizens and in a manner that safeguards the environment for the enjoymentby future generations.

D: OFFSHORE RESOURCES

11. The developed and potential mineral deposits of the offshore are:

1. diverse, including sand, gravel, diamonds, black sands, oil, gas, gas hydrates, manganesenodules, manganese crusts and polymetallic massive sulfides;

2. are poorly explored; and

3. have a wide range of associated issues which impact on their development including:

.inadequate governing policy and legislation

.a need for new and improved technology for exploitation

.a lack of assured economic potential

.numerous environmental impacts

.and other, as yet unquantified, stakeholder interests.

12. Within the broader subset of offshore mineral resources the deep ocean manganese nodules areby far the most studied by researchers and the private sector while the polymetallic massivesulfides, which occur within several nation's Exclusive Economic Zone (EEZ), are rapidlyassuming equal importance in terms of research and private sector interest. Polymetallic massivesulfides are characterised by being:

1. Widely distributed

2. Highly variable in mode of occurrence and in mineralogy

3. Often high in copper, zinc, gold and silver content

4. Often high in deleterious metals such as cadmium, thalium, lead and arsenic.

13. Overall, it is the high gold content of the polymetallic massive sulfides which has made them thefocus of recent research and to the private sector as possible economic mineral deposits.

14. Past and recent studies have shown that both the manganese nodules of the deep ocean and thepolymetallic massive sulfides of intermediate depth have associated with them a relatively diversebiota which is of primary concern in terms of areas of environmental impact. The environmentalimpact of manganese nodule mining has been reasonably well evaluated, most recently in thework of the Japanese, whereas, that of possible exploitation of polymetallic sulfide deposits islargely unknown. As such assessing the environmental impact of possible mining on theassociated biota of polymetallic massive sulfides remains an area requiring extensive research.

15. The present interest in PNG is in pollymetallic sulphides is exemplified by the two explorationlicences that were issued by the government in November 1997. Literature review and recentstudies reveal substantial hydrocarbon and mineral deposit in the offshore region all found withinPNG territorial waters that may be commercially extracted.

16. Aggressive research within the Bismarck Sea lead to the discovery of PACMANUS Hydrothermalfields. Base and precious metal massive sulphide deposit in the Manus and New Ireland Basinsare at relatively shallow depth. For instance manganese nodules occur in water depths of between4 000 -6 000 metres. Current available information shows that the grades of minerals containedin the seafloor massive sulphide deposit are comparatively high. For instance, the samplesanalysed show an average of 26% zinc, 10% copper, 200g of silver per tonne, and 15g of gold.


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17. Some of the offshore resources may be located on or under the seabed underlying shallow waterswhilst others may be in deep waters. The type of technology available, the cost of acquiring them,and mining methods employed may be similar or different to those employed onshore. Certainly,different oceanographic and environmental conditions in the offshore provide challenges for thedevelopment and adaptation of technically feasible and environmentally acceptable explorationand mining technology and techniques. Relevant licencing regime, fiscal terms, environmentalregulation and so forth would be devised to take account of the similarities or differences as thecase may be.

18. It is recognised that the biodiversity and genetic resources associated with certain areas of marineminerals may have significant economic value. Therefore, means must be sought to ensure thatthe state receives adequate compensation from any utilisation of these resources.

19. Whilst the policy is aimed at encouraging exploration and exploitation of minerals in the offshore,the State will also ensure that it also benefits from the exploitation of these resources. And theState will also ensure that environmental damage to the marine ecosystems is minimised. Ofcourse the risk taker (project developer) will be allowed appropriate return on investmentcommensurate with the risks taken.

E: OFFSHORE LEGAL REGIME

20. Under the 1982 Convention (UNCLOS), every coastal State is entitled to claim a 200 nautical milecontinental shelf, regardless of its geographical configuration. The coastal State has sovereignrights over the continental shelf for the purpose of exploiting the non-living resources, includingminerals. Coastal States may charge fees, royalties and taxes at their discretion and there is noobligation to allow any other State to make use of the non-living resources.

21. A coastal state may extend its continental shelf beyond 200 nautical miles in certaincircumstances depending on the geomorphological configuration of the continental shelf. Claimsfor such extension must be submitted to the Commission for the Limits of the Continental Shelfwithin 10 years of the entry into force of the Convention for that state. In the case of thecontinental shelf beyond the 200 nautical mile limit, Article 82 of the Convention containsprovisions for the sharing of revenues through the International Seabed Authority.

22. In Papua New Guinea the Mining Act of 1992 applies to internal waters, archipelagic waters andthe territorial sea, however, within the Exclusive Economic lone (EEl) and continental shelf,additional legislation will be required to give effect to the sovereign rights provided for under theconvention.

E.1 Constitutional Mandate

23. The Constitution of PNG is the source law or groundnorm. It not only provides for the system ofgovernment but also it sets out the development vision for the country. Whilst the constitutionrecognises the importance of developing its natural resources for the collective benefit of allcitizens, it also obligates the State to ensure that its natural environment is protected for thebenefit of future generations.

E.2 UNCLOS and its Implications

24. The UNCLOS is an important international law instrument governing all ocean uses and PapuaNew Guinea having ratified the Convention should ensure that it complies as required by way ofdomestic legislation.

E.3 Ownership of Mineral Resources

25. Under the Mining Act 1992 the State owns all mineral resources in, on or under any land in PNG.Under the Mining Act of 1992 the State's ownership rights to mineral resources in any land in PNGalso extend to such minerals in or on the seabed under the archipelagic waters and territorial sea


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(territorial sea in this context is used in the wider context but excludes the Exclusive EconomicZone and the Continental Shelf).

26. The application of the Mining Act 1992 may only extend to the edge of the territorial sea. However,the State of PNG has the right to regulate any mineral exploration and mining activities in the legalcontinental shelf pursuant to the United Nations Convention on the Law of Sea 1982.

F: LICENCES AND LICENCING

27. The current licences and licencing regime under the Mining Act 1992 comprise ExplorationLicence, Special Mining Lease, Mining Lease, Alluvial Mining Lease, Mining Easement and Leasefor Mining purposes. Requirements for application include boundary description, work proposal/programme, evidence of technical expertise, evidence of financial resources, and fees. For theoffshore, licencing regime will be modified to take account of different oceanographic andenvironmental conditions.

28. Based on the application of known terrestrial licencing procedures and their effectiveness, it isproposed that there be 5 different types of tentements to be issued for offshore mining. These are:Prospector Licence, Exploration Licence, Mining Lease, Lease for Mining Purpose (LMP) andMining Easement. In addition, it is proposed that a prospectors right licence be granted underspecial circumstances of offshore mining.

F.1 Prospector's Right

29. In addition to the above, the state may issue a Prospector's Right, which allows a prospector toenter areas for prospecting purposes that are not covered by either an Exploration Licence, MiningLease, Lease for Mining Purpose or Mining Easement, and to proceed in identifying such areas forthe application of an Exploration Licence. A key justification of the use of Prospector's Rights iswith regards to Marine Scientific Researchers working in prospective areas that have beenidentified by mineral exploration/development companies, or when such researchers form astrategic alliance with mineral exploration and/or development companies. The Prospector's rightthen allows the state to demarcate MSR activities from prospecting/exploration activities and whoshould perform them under licence. Marine scientific researchers who have a strategic alliancewith private companies may be required to obtain a prospectors right to carry out their activities.Those under subcontract to companies will be covered under the contractors licence.

30. The duration of a prospectors licence shall be for a period of three years and shall be renewablefor 3 years.

F.2 Exploration Licence

31. Exploration licence will be granted by the Minister responsible for mineral resources will be for fiveyears initially. In the terrestrial environment, the area covered is not more than 750 sub-blocks andis subject to acreage reduction upon renewal or extension.

32. Exploration licences for the offshore will cover a maximum area of 1,000 sub-blocks, whichequates to 3410 square kilometres, with a renewal period of 5 years. The term may be extended inadditional tranches of five years each thus according the licencee a good number of years toundertake mineral exploration. The Minister may place additional conditions that relate tosafeguarding national interest, the environment and other relevant issues under the UNCLOS.

33. Twenty percent (20%) of the area covered by the licence will be automatically relinquished on theanniversary of each renewal. The licencee may request a waiver to the reduction in size based onrelevant information.

34. A key requirement of an Exploration Licencee is to ensure that it carries out its agreed or approvedwork programme. This entails a clear demonstration by the applicant of technical skills andfinancial resources available to effectively undertake exploration in accordance with the approvedwork programme. For offshore exploration licence, such information may include demonstration of


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available vessel to carry out exploration or the financial ability available to hire such services andso forth.

35. At this juncture it is essential to note that some of the conventional exploration methods employedonshore may not be applicable in the offshore. As a result, it is necessary to define exploration inthe offshore to include some aspects of the marine scientific research where applicable and only ifrelated to the fulfillment of approved work obligations under the Exploration Licence. In particularseabed survey could be categorised as exploration if undertaken by the Exploration Licencee.

F.3 Pilot Mining Test

36. The licencing procedure recognises that Pilot or Trial mining is an important element in thedevelopment of offshore minerals: given the unknown factors involved and the impact of rapidtechnological changes. Thus, with special permitting requirements under the Exploration Licence,a company may apply to undertake Trial or Pilot Mining. Trial or Pilot Mining approvals may begranted, dependent on the type of mineral deposit to be mined, the technology to be used, and thesensitivity of the marine environment concerned, when deemed necessary to allow the companyto firm up a viable and full scale mining project. In this regard, the state may grant several Trial orPilot Mining approvals prior to the granting of a Mining Lease. The other added advantage is thatregulators can regulate on pertinent issues that have been highlighted during the Pilot or Trial

mining stage.

37. A Pilot Mining Test may be undertaken by an EL holder upon approval by the State prior to actualmining phase and will be effected through variation of approved work programme for the

exploration phase.

F.4 Offshore Mining Lease

38. In the offshore there will be only one production licence for all mineral resources known as theOffshore Mining Lease.

39. Development contracts will be negotiated and will distinguish resources to be mined, miningtechnology and methods to be used, period such a licence is granted for, methods to be employedto decommission property and rehabilitate the sites and how costs for same will be met etc.

40. Further or alternatively regulations may be made for specific resources to be mined taking intoaccount all relevant issues and stakeholder interests under the UNCLOS. Any variations to theapproved proposals for development will be considered on a case by case basis.

F.5 Lease for Mining Purposes

At the mining phase the project proponent may require other areas to install facilities. These facilitiesmay be onshore or offshore. In such situations the project proponent may apply for leases for miningpurposes for such period as is required. In appropriate cases compensation will be payable to ownersor occupiers of land that would be taken up for such purposes.

F.G Mining Easement

42. Since offshore mining may entail the use of structures above or below the water line such as pipesand other similar devices, or even special accessways, this provides justification for the use ofeasements in conjunction with the Mining Lease.

43. Activities undertaken under a mining easement will be coordinated with other responsibleagencies and undertaken with regard to other government instruments such as notification ofroutes and issues related to marine safety.


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G: OFFSHORE FISCAL REGIME

44. A basket of fiscal measures will comprise the offshore fiscal regime. Some measures will havelimited application whilst others may be generic. In the final analysis the appropriate mix will bedependent on inter alia cost of exploration and mining in the offshore. And this cost will in turn befunctions of available mining technology and method of mining employed in the offshore.

45. As a general principle the fiscal package attempts to be flexible, simple, transparent andapplicable to the issues involved in offshore mining. It is accepted that certain unique aspects ofdeep ocean resources warrant a deviation from the onshore fiscal package. These include theanticipated long period of time required for exploration and technology development, the uniqueenvironment under which mining takes place, high risks associated with a pioneering endeavourand the uncertainty surrounding the economic viability of deposits. With this in mind flexibility maymean that overall lower front end rates with respect to royalty and income tax may be balanced byan Additional Profits Tax that comes into place at a lower profit threshold rate than onshore.

G.1 Mineral Royalty

46. The state owns all minerals within its territorial waters and will charge a royalty as an economicrent for the exploitation of these resources. Due to the complexity and unknown costs and benefitsto the exploiter of an offshore resource the state may consider a reduced royalty figure, less thanthe 2% Ad Valorem rate charged onshore.

G.2 Mining Income Tax

47. The current rate of income tax may apply although due to the high risks involved in offshoremining the government may grant concessions that would initially reduce the amount of incometax paid. A key consideration here is the use of the fiscal tool to encourage mineral explorationand exploitation in the offshore. Amortisation and depreciation provisions under the Income TaxAct 1959 as amended may be reviewed on needs basis to accommodate any potential or actualdifficulties encountered by the taxpayer.

G.3 Dividends Withholding Tax

48. Currently, dividend withholding tax is payable by foreign shareholders in mining companiesoperating in PNG. However, in order to encourage foreign investment, dividends withholding tax ifapplicable may be removed. If there are double taxation treaties with relevant countries theirprovisions will be given effect with view to maximising the nation's tax position.

G.4 Duties

49. If it is found that import and export duties contradict the stipulations of the WTO for membercountries, in terms of the liberalisation of trade and the removal of barriers, they may be removedwhere possible.

G.5 Additional Profits Tax

50. The fiscal package reduces the tax burden at the front end of a mining project as a response tothe risks involved in offshore mining. However, an Additional Profits Tax will be introduced at alower threshold rate than onshore to capture the windfall gains should the deposit mined result inbonanza profit.


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G.6 Equity Participation

51. The current State equity participation policy is that the State has an option to take up 30% at costin a major mining project. This excludes mineral projects undertaken under Mining Leases andother tenements. As a result, the State has taken up interest in all projects that are developedpursuant to Special Mining Leases except Mt Kare. The State may continue to retain this option formineral resource project development in the offshore irrespective of the size of the project.

52. It is recognised that the private sector regards such participation as a disincentive and an indirecttax on a venture. A particular concern with respect to offshore mining is that in this high riskenvironment the State does not bear a proportional share of the risk.

53. In the offshore areas beyond 3 nautical miles from the coastline, the current state equity policywith respect to landholder participation will not apply as the offshore waters are a national heritageand benefits should derive to the State.

G.7 Other Taxes

54. The mining levy and interest withholding tax provisions recently implemented should not apply tooffshore mineral resource developments.

H: OFFSHORE ENVIRONMENTAL REGIME

55. Mining projects including offshore mineral resource developments will have environment impactsthat are physically unavoidable. In addition, the offshore areas do contain living organisms uniqueto the marine environments that may be of industrial and medicinal significance. Consequently,proponents of such ventures will need to obtain and show evidence of necessary environmentalapprovals prior to granting of exploration or mining tenements. Furthermore, mineral explorationand mining companies will be required to undertake their activities consistent with therequirements of the environment related laws and regulations operating in PNG.

56. Environmental impacts will need to be assessed within the context of complete industrial systemsand should consider the implication of the proposed activities as well as the activities themselves.In general, exploration licence holders (Iicencees) should be fully committed to environmentalprotection and clearly accountable for their activities related to the development of their licenceand to any significant pollution caused by their activities.

57. Cost/benefit considerations should include environmental costs for every major developmentdecision, including actions related to mine-site rehabilitation and facility decommissioning.Licencees should maintain adequate environmental and quality management systems to ensurecompliance with environmental requirements. Because of the unprecedented nature of the deepseabed mining activities contemplated, the State will adopt a precautionary approach in allsignificant decision-making activities.

58. There should be an early and open process, including public hearings, information exchanges,and fact-finding efforts, to identify the environmental impact issues of concern. Priority ranking forimpact assessment efforts should be related directly to the relative importance of the issues raisedand to the time frame within which the issues must be addressed to accommodate the decision-making schedule.

59. Licencees should be prepared to collect relevant baseline data during their exploration activities.These data will be necessary to address identified and likely impact issues related to commercialmining. For any particular exploration area, the level of effort for such collection activities shouldbe approximately proportional to the level of effort of the exploration activities in the area. At theconclusion of the exploration phase these collection activities should be sufficient to support thecompletion of an adequate environmental assessment for commercial mining.


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60. Testing of pilot mining systems will be allowed under the permitted activities of the explorationlicence. Prior to such testing activities, the licencee will submit to the State an environmentalassessment report for the planned activities and monitoring plan designed to obtain data tofacilitate completion of an environmental assessment for commercial mining. Testing will bepermitted only after the State has accepted as adequate the assessment report and monitoring

plan.

61. The activities associated with the marine mineral resource exploration and exploitation should beundertaken within the context of broader Coastal Zone Management and Ocean Policy activities ofthe government; in particular, with respect to such issues as fisheries and coastal zonestakeholders.

I: BENEFITS DISTRIBUTION MECHANISMS

62. Benefits distribution is important in the light of PNG enacting the new provincial and localgovernments reform law and the ratification of the UNCLOS. Under the former the State is not onlyrequired to consult with affected provinces and local communities but also it is required to sharesome of the benefits derived from mineral projects. As to the latter, the International SeabedAuthority established under the UNCLOS it will be entitled to share with a coastal state revenuesderived from resource exploitation within the additional continental shelf area, i.e., additional 150nautical miles from the usual 200 nautical miles limit.

63. This responsibility is specific to the 3 nautical mile zone from the coastline and responsive to theprovisions of the organic act.

1.1 Provinces and local Communities

64. Where mining takes place within the territorial sea including the archipelagic waters, appropriatebenefits packages will be designed to assist relevant provinces and local coastal or islandcommunities. In general, the packages will reflect impact of mining activities. In the case of localcoastal or island communities, benefits to be derived by them will be dependent on mining beingundertaken on seabed underlying traditional fishing "grounds" or other recognised activity withinthose areas.

65. Benefits derived from exploitation of minerals on or under land underlying exclusive economiczone and the continental shelf should be reserved to the State for the collective benefit of all itscitizens.

1.2 International Seabed Authority

66. As noted above International Seabed Authority has exclusive jurisdiction to regulate theexploration and mining of minerals in the area outside the national jurisdiction of a coastal state.However, the international community, through the ISA, also has the right to benefit from revenuesderived from minerals exploited within the area beyond the exclusive economic zone but that iswithin the maximum legal continental shelf.

J: OTHER ISSUES (MISCEllANEOUS)

J.1 Technology! Technology Transfer

67. Offshore mineral exploration and mining is relatively new compared to fisheries and petroleumexploration and development. New technologies as well as innovations to existing technologywould be required to explore and develop mineral resources on or under the seabed.

68. The State will encourage mineral companies, which demonstrate the best available technologywith a willingness to transfer it to PNG. Such technology must have been tested and proven towithstand some of the unique oceanographic and marine environmental conditions. In other wordssuch technology ought to be technically feasible and environmentally friendly.


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J.2 Onshore Sourcing

69. Offshore mineral activities would be undertaken away from the shores. Specialised equipment andinfrastructure may enable companies to undertake these activities without the need to visit ports.However, in principle, the State will encourage developments that demonstrate the willingness tosource materials and other necessities from a PNG port.

J.3 Decommissioning and Rehabilitation

70. Under the UNCLOS, offshore structures are to be removed completely though there is provisionfor partial removal in certain cases. The State will encourage companies to submit adecommissioning and rehabilitation plan at an early stage preferably together with thedevelopment proposals. As a general rule investors in mineral exploration and developmentprojects will be responsible and liable for decommissioning and rehabilitation. A time frame forpurposes of residual liability of companies may be agreed to with the State on a case by casebasis. In addition, fiscal relief for decommissioning costs may be considered by the State as anincentive for companies that plan and implement a decommissioning and rehabilitationprogramme. Further or alternatively regulation may be drawn up to obligate proponents of theproject to establish and maintain a mine decommissioning and rehabilitation fund.

J.4 Marine Scientific Research

71. Marine Scientific Research (MSR) is a key component of the development of offshore minerals,and this has also been recognised under the stipulations of UNCLOS (Articles 246-257). This isalso based on the fact that terrestrial licencing procedures do not deal with this issue in a way thatis cognisant of MSR's impact on offshore licencing procedures, and especially with regards toexclusive rights of access to these offshore mineral occurrences.

72. Marine Scientific Research (MSR) is an important component of maritime activities. Under PartXIII of the Convention coastal States are obliged to allow other States and internationalorganisations to conduct marine scientific research (MSR) in the EEl and continental shelf underreasonable terms and conditions. The coastal state may withhold consent to MSR where theproject is of direct significance to exploration for or exploitation of natural resources. Within itsinternal waters, archipelagic waters and territorial sea, the State has absolute discretion over theconduct of MSR. The State may impose such conditions on MSR as it sees fit, including provisionsrelating to the disclosure and publication of data.

73. The country should be mindful of the needs of a tenement holder under the Mining Act or suchother legislation that may be developed to regulate offshore mineral exploration and development.

74. The State will require all information derived from MSR within its sovereignty and maritimejurisdiction be provided by the MSR group. This data or information received after the granting ofexploration licence may be made available to the EL holder upon payment of appropriate fees tothe State as owner of such data and information.

J.5 Other Stakeholder Interests

75. Offshore mining may also affect other stakeholders in the offshore. Major stakeholders in theoffshore include the coastal subsistent, artisanal and commercial/industrial fisheries as well asnavigators, the tourist industry and so on. Any exploration or mining activity that is proposed orundertaken in the offshore ought to take account of these stakeholder interests. Where necessaryappropriate compensation may be paid to these stakeholders who may not be able to have accessto the previously accessible offshore areas.


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J.6 Dispute Settlement Mechanisms

76. Any dispute regarding offshore activity may be referred to arbitration. In respect of activity withinPNG's territorial sea such dispute shall be dealt with under the Arbitration Act. However, the Stateand holder of a mineral exploration/exploitation licence or other relevant tenement may agree on adispute settlement mechanism that is independent of the Arbitration Act.

77. Should the State or the International Seabed Authority dispute any aspect of the offshore activitywhere their respective interests are affected such dispute may be referred to the disputesettlement mechanism established under the UNCLOS.

I: CONCLUSION

78. The Government of Papua New Guinea recognises that there is a tremendous potential for thedevelopment of its offshore mineral resources. The development of these resources will requirethe reconciliation of key policy issues within a dynamic framework that requires the collaboration ofall stakeholders. The policy being developed has attempted to be as flexible as possible, given theunique characteristics of offshore mineral exploration and development and the relative unknownfactors involved. Given time, and with the collaboration of all stakeholders, it is envisaged that thisdocument will develop into a succinct and pragmatic policy document for the optimal developmentof PNG's offshore mineral resources.

79. This Policy document recognises the conventions of UNCLOS with regards to the development ofa legislative framework for the development of its offshore minerals, and also the key aspects ofoffshore mineral exploration and development. These include the impact of technological progressand technology transfer; the possible impact of offshore mining on the nation's fishing industry; thepossible impacts of offshore mining to the community and the environment; the impact of MarineScientific Research in offshore mining; and its impact on the biota that exist on the seafloor around

mineralised areas.

It is the belief of the PNG Government that this document demonstrates the need for comprehensiveand integrated legislation that is specific to the responsible management and development of offshoremineral resources. These objectives would appear to be best met by the development of an OffshoreMining Law under which these resources can be explored and exploited for the benefit of the peoples

of Papua New Guinea.


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APPENDIX 2

Workshop Participants

Julian Malnic Linda SlaterChief Executive Resource Policy AdvisorNautilus Minerals Corp lId UNDP379 Liverpool Street Private Mail BagDarlinghurst, NSW 2010 SuvaAustralia Fiji IslandsTel: [612J93602941 Tel: [679J313411Fax:[612J 9380 5593 Fax: [679J 304809Email: [email protected] Email: [email protected]

Ray Binns Michael W. LodgeChief Research Scientist Chief, Office of Legal AffairsCSIRO Exploration and Mining International Seabed AuthorityPOBox 136 14-20 Port Royal StNorth Ryde, NSW 1670 KingstonAustralia JamaicaTel: [612J 9490 8741 Tel: [1J 876 9672200Fax: [612J 9490 8921 Fax: [1J 876 922 0195Email: [email protected] Email: [email protected]

Benedict Southworth Yuji Kajitani

Campaign Manager DirectorGreenpeace Metal Mining Agency of Japan (MMAJ)Sydney, NSW 2001 Tokiwa BuildingAustralia 1-24-14, ToranomonTel: [612J 92614666 Minato-ku, TokyoFax: [612J 92614588 JapanEmail: [email protected] Tel: [81J 3 55121397

Fax: [81J 3 55121428Ben Ponia Email: [email protected] of ResearchMinistry of Marine Resources Hirohiko TesishimaPOBox 85 Metal Mining Agency of Japan (MMAJ)Avarua, Rarotonga Tokiwa BuildingCook Islands 1-24-14, ToranomonTel: [682J 28730 Minato-ku, TokyoFax: [682J 29721 JapanEmail: [email protected] Tel: [81J 3 5512 1399

Fax: [81J 3 55121428George Niumaitaiwalu Email: [email protected] DirectorMineral Resources Department Toyo MiyauchiPrivate Mail Bag DirectorSuva Metal Mining Agency of Japan (MMAJ)Fiji Islands 1-25-5, ToranomonTel: [679J 381611 Minato-ku, TokyoFax: [679J 370039 JapanEmail: oeorae [email protected] Tel: [81J 3 5512 1420

Fax: [81J 3 35939410Andie Fong Toy Email: [email protected] Legal AdviserForum Secretariat Tetsuo YamazakiPrivate Mail Bag Senior ResearcherSuva National Institute for Resources & EnvironmentFiji Islands Onogawa 16-3Tel: [679J312600/220259 Tsukuba, IbarakiFax: [679J 305554 JapanEmail: [email protected] Tel: [81J 298588521

Fax: [81J 298588509Email: [email protected]

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Shunji Sukizaki Papua New GuineaResearcher Tel: [675] 3224224Marine Biological Research Institute of Fax: [675] 3213701

Japan Co Ltd1-7-7 Nishi-Shimagawai Patricia PepenaShinagawa-ku, Tokyo Senior Resource ScientistJapan Department of Mineral ResourcesTel: {81]33779 1630 Private Mail BagFax: {81]33779 1629 Port MoresbyEmail: [email protected] Papua New Guinea

Tel: [675] 3227695Dr Jai-Woon Moon Fax: [675] 3213701Head of Deepsea Mineral Resources LtdKorea Ocean Research & Development Nelly James

Institute (KORDI) Registrar -Mining Tenements1270 Sadong, Ansan Department of Mineral ResourcesKyunggido Private Mail BagKorea Port MoresbyTel: [82] 345 400 6360 Papua New GuineaFax: [82} 345 4188772 Tel: [675] 3212891Emai/: [email protected] Fax: [675] 3213701

Kyeong-Yong Lee Lasark JosephHead of Deepsea Resources Environmental Lab Senior GeologistKorea Ocean Research & Development Department of Mineral Resources

Institute (KORDI) Private Mail Bag1270 Sadong, Ansan Port MoresbyKyunggido 425-170 Papua New GuineaKorea Tel: {675]3214011Tel: [82} 345 400 6370 Fax: [675] 3213701Fax: [82] 345 418 8772Email: [email protected] Pomat G. Manuai

Senior Mining EngineerKuma Aua Department of Mineral ResourcesSecretary Private Mail BagDepartment of Mineral Resources Port MoresbyPrivate Mail Bag Papua New GuineaPort Moresby Tel: [675]3227654Papua New Guinea Fax: [675] 321 4637Tel: [675] 3211961 Email: [email protected]: {675]3217958Email: [email protected] Phillip Samar

Mining EngineerGraeme Hancock Department of Mineral ResourcesDirector-Mining Division Private Mail BagDepartment of Mineral Resources Port MoresbyPrivate Mail Bag Papua New GuineaPort Moresby Tel: [675]Papua New Guinea Fax: [675} 3213701Tel: [675] 3227624 Email: DhiliD osamar@minera/.oov.DOFax: [675] 3213701Email: oraeme [email protected] Paul Kia

GeologistJames Wanjik Department of Mineral ResourcesPrincipal Policy & Legal Officer Private Mail BagDepartment of Mineral Resources Port MoresbyPrivate Mail Bag Papua New GuineaPort Moresby Tel: [675] 3224259Papua New Guinea Fax: {675]3211360Tel: [675] 3227603Fax: [675] 3213701 Dennis BebegoEmail: iames [email protected] Director -Multilaterial Economic Affairs Branch

Department of Foreign Affairs & TradeJoe Buleka POBox 422Assistant Director WaiganiGeotechnical & Hydrogeological Survey Branch Port MoresbyDepartment of Mineral Resources Papua New GuineaPrivate Mail Bag Tel: [675] 3014203Port Moresby Fax: {675]3231011

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William Powi Ambrose KebaiPrincipal Advisor (Policy) Advising OfficerDepartment of the Prime Minister & NEC International Revenue Commission of PNGBox 639 POBox 777Waigani, NCD Port MoresbyPort Moresby Papua New GuineaPapua New Guinea Tel: [675J3216546Tel: [675J 3276747 Fax: [675J 3214002Fax: [675J 3276755

Juliana KubakMasio Nidung Principal Advisor -Policy Development &A/Director International Law Branch Research DivisionDepartment of Attorney General Department of Treasury & PlanningPOBox 591 (Office of National Planning)Waigani, NCD POBox 631Port Moresby Waigani, NCDPapua New Guinea Port MoresbyTel: [675J 3252067 Papua New GuineaFax: [675J 3230241 Tel: [675J 3288320

Fax: [675J 3288375Francis LolaAdviser-Legal Williiam BoasDepartment of Petroleum & Energy Assistant Secretary-General Investments BranchPOBox 1993 Department of Treasury PlanningPort Moresby, NCD POBox 710Papua New Guinea Waigani, NCDTel: [675J 3224232/3224200 Port MoresbyFax: [675J 3211872 Papua New GuineaEmail: francis [email protected] Tel: [675J 3288405

Fax: [675J 3288425David Tau-Loi Email: william [email protected]:ov.ogAssistant Manager-TechnicalMineral Resources Group of Companies Zebby MararePOBox 1076 Senior Policy OfficerPort Moresby Department of Provincial & LocalPapua New Guinea Government AffairsTel: [6753217131 PO Box 1287Fax: [675J 3217603 Boroko, NCDEmail: [email protected] Papua New Guinea

Tel: [675J3011082/3011015Damien Ase Fax: [675J 3231438/3250553

Corporate LawyerMineral Resources Development Company Ltd Gabi HaodaPOBox 1076 Senior Policy OfficerPort Moresby Department of TransportPapua New Guinea POBox 1489Tel: [675J 3217133 Port MoresbyFax: [675J 3217603 Papua New GuineaEmail: [email protected] Tel: [675J3222595

Fax: [675J 3201205Katrina SolienSenior Environment Protection Officer Ursula KolkoloDepartment of Environment & Conservation ManagerPOBox 6601 Research & Management BranchBoroko, Port Moresl?Y National Fisheries AuthorityPapua New Guinea POBox 2016Tel: [675J 3250194 Port Moresby, NCDFax: [675J 3250182 Papua New GuineaEmail: [email protected] Tel: [675J3212643

Fax: [675J 320 2074Roddy Wada Email: [email protected] OfficerDepartment of Treasury & Planning Donn ToliaVulupindi Haus Director of GeologyBox 710 Mines and Mineral Resources DivisionWaigani, Port Moresby Department of Energy, Mines & Water ResourcesPapua New Guinea Ministry of Natural ResourcesTel: [675J 3288402/3288540 POBox G37Fax: [675J 3288425 Honiara

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Solomon Islands Stanley TemakonTel: [677J 21521 Director-GeneralFax: [677J 25811 Ministry of Lands, Energy, Mines and Water

ResourcesDavid M. Natogga Private Mail Bag 001Principal Economic Geologist Port VilaDepartment of Energy, Mines & Water Resources VanuatuMinistry of Natural Resources Tel: [678J 22423POBox G37 Fax: [678J 22213HoniaraSolomon IslandsTel: [677J 21521 SOPAC SECRETARIATFax: [677J 25811

Alfred SimpsonUilou Samani DirectorGovernment Geologist & Environment Scientist SOPAC SecretariatMinistry of Lands, Survey & Natural Resources Private Mail Bag, GPOPOBox 5 SuvaNuku'alofa Fiji IslandsKingdom of Tonga Tel: [679J381377Tel: [676J 23611 Fax: [679J 370040Fax: [676J 23216 Email: alf@so{)ac.orQ.fi

Allen Clark Jackson LumEast-West Centre Marine Geologist1777 East-West Road Email: iack@so{)ac.orQ.fiHonoluluHawaii 96848 Helena McLeodUSA Resource EconomistTel: [808J 9447509 Email: helena@so{)ac.orQ.fiFax: [808J 944 7559Email: [email protected] Kazuhiro Kojima

Offshore Minerals GeologistCharles Morgan Email: kazuhiro@so{)ac.orQ.fi94-452 Mulehu StreetMililani Laisa Baravilala-BaoaHawaii 96789 Program AssistantUSA Email: [email protected]: [808J 956 6036Fax: [808J 956 5308Email: [email protected]

William H. Wilkinson

Phelps Dodge Exploration Corporation2600 N. Central AvePhoenix, AZ 85004USATel: [602J 2346080Fax: [602J 234 4847Email: wwilkinson@{)hel{)sdodQe.com

Offshore minerals policy workshop, 22-26 February 1999 ...

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Transcript of Offshore minerals policy workshop, 22-26 February 1999 ...