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On the Verge

On the Verge. Prospects for Deep Seabed Mining within a Decade. U.S. Geological Survey January 17, 2013. Caitlyn Antrim Rule of Law Committee for the Oceans. Focus: Outlook for Nodule Development. Ocean- Based Resource Minerals of Interest Nickel Copper Cobalt Manganese

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On the Verge

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  1. On the Verge • Prospects for Deep Seabed Mining within a Decade U.S. Geological SurveyJanuary 17, 2013 Caitlyn Antrim Rule of Law Committee for the Oceans

  2. Focus: Outlook for Nodule Development • Ocean- Based Resource • Minerals of Interest • Nickel • Copper • Cobalt • Manganese • Rare Earth Elements • Beyond National Jurisdiction

  3. 110ºW-160ºW, 0º-20ºN Metal Content Ni: 1.2-1.4% Cu: 1.0-1.2% Co: 0.25% Mn: 29% REE: 0.08-0.1% Depth: 4000-5500 Meters East Pacific Nodule Field

  4. ISA3 ISA4 ISA2 ISA1 CCZ Inferred Resources

  5. Economics of Deep Sea Nodule Development • At-Sea Capital and Operating Technology Based on Off-Shore Development and Maritime Shipping Industry • On-Land technology based on Nickel Laterite Processing Systems and Ferroalloy Production • Market Prices and Revenues Determined by Land-Based Mineral Sources

  6. Sea System Design • Nodule Harvester • Lift System • Base Vessel • Tailings Return • Sea Transport • Alternative Designs

  7. Unique Marine Systems

  8. Major Land-Based Sourcesof Nodule Minerals

  9. Critical Mineral Security

  10. Combined value of nickel, copper, cobalt and manganese in 2012 $. REE value is not included. Price History: 1982 - 2012

  11. Costs and Revenues • Capital Costs: $2.1 to $3.5 Billion • Operating Costs: $470 million to $600 million • Contained Metal Value, not including REE values (normalized to millions of 2012 US $)

  12. Rare Earths and Deep Seabed Nodules • Nodule assay shows .08% REE Content • Heavy REEs account for 21% of total REE • By Separating Individual REEs, total REE market value is $247/ton • REE Content Could Increase Annual Revenues by $375 to $750 million

  13. Benefits to US of Seabed Nodule Development • Technology leadership in first of three new high seas sources of critical metals • Capital Investment of about $3 billion • Annual Sales about $1.4 to $2.2 billion • 780 direct jobs; 2727 or more total per operation • Significant contribution to critical materials security • Significant improvement in import-export balance • Downstream employment and business benefits will be felt in the Gulf Coast and Ohio River Valley

  14. International Regime:US Objectives in 1982 • Not Deter Development • Assure National Access • Assure and Define a U.S. Decision-Making Role • Allow United States to Block Amendments • Not Set Undesirable Precedents • Resolve Issues Identified as Raising Significant Objections in the Senate

  15. Today’s Investment Climate for Deep Seabed Minerals • Assured Access, Tenure and Title • Rule-based International Regulatory Regime • Dispute Resolution for Investors • Issue: Lack of Recognition of Claims Outside UNCLOS

  16. Isolation of the US fromDeep Seabed Mining • The LOS Convention establishes that: • Claimants must be sponsored by a State Party of their own nationality • Parties to the Convention cannot recognize title to minerals recovered outside the Convention (precluding sale of minerals in international commodity markets) • Exclusive access can only be recognized through the Convention (no “Reciprocating States Agreement” or international legal protection of US claims)

  17. Current Nodule Claims in the Clarion Clipperton Zone

  18. Conclusions • Deep Seabed Nodules are a World-Class Resource of Critical Minerals • Long Term Demand will be driven by industrial development in China, India, Brazil, South Africa and Russia • Future seabed mining will compete against nickel laterite and porphyry copper deposits of declining grade and accessibility • Additional development of hundreds of millions of dollars are needed before full investment • Miners will require international capital and access to commodity markets • US Industry Needs the LOS Convention’s Seabed Regime

  19. Thank you

  20. SupplementalInformation

  21. Cost Estimates (Million US $)Updated to 2012, Scaled to 3 Million Dry Metric Tons per Year

  22. Employment

  23. International Partners • US Companies Can’t “Go It Alone”; Private US Consortia with International Partners in 1989: • Ocean Mining Associates (50% by Belgium and Italy) • Ocean Management Inc. (50.22% by Canada and Japan; Germany takes share in 1990s) • Kennecott Consortium (48% by Canada Japan, UK; Kennecott itself was owned by Rio Tinto Zinc and later by British Petroleum) • Lockheed/Ocean Minerals Co. (Dutch partners in early 1980s)

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