Revision of U.S. ratification of UNCLOS key to development of deep seabed mining industry from Mon, 07/29/2013 - 22:46
Quicktabs: Arguments
The taxation objection made by opponents is often coupled with an argument that US companies that had invested millions of dollars in exploration costs would lose their existing claims under US law. This argument ignores the fact that the 1994 Agreement grandfathers these holders into the treaty regime based on arrangements no less favorable than those granted to holders of claims already registered with the Authority upon certification by the US government and the payment of a $250,000 application fee (a fee that is half of the fee established in the 1982 Convention). As Ambassador Colson pointed out in the 1994 hearings, "If the U.S. does not become Party to the Convention, international recognition of the rights of the U.S. licensed consortia could be jeopardized."
There are many misconceptions as to what the signing of UNCLOS would mean for the United States and deep seabed mining. It is argued that by ratifying UNCLOS, including the Agreement, states will inevitably have to discontinue their unilateral attempts at deep seabed mining.133 However, this is unfounded as the law of the deep seabed was intentionally not settled in order to produce solid negotiations of the sort that resulted in UNCLOS.134 Most, if not all, of the potential deep seabed mining nations are dedicated to the adoption of UNCLOS and the Agreement.135 The potential deep seabed mining countries understand that there is a lack of economic viability in the present deep seabed mining industry, and "it is inconceivable that the necessary financial markets would support unilateral mining if it is contrary to the principles" of UNCLOS.
And it’s not just about oil and gas. Rare-earth metals are compounds integral to the production of modern devices including cell phones, hybrid cars, and even precision-guided missile systems. Currently more than 95 percent of rare-earth metals are produced in China, which has begun restricting its export.
But nodules found on the deep seabed—well outside even extended continental shelves—have “economically significant” amounts of rare-earth metals, and Lockheed Martin and other companies would like to begin exploration to determine the viability of tapping this source. Access to these areas that are beyond any national claim of jurisdiction will have to be regulated by an international body—in this case, the ISA—which explains Lockheed Martin’s support for U.S. ratification of the Law of the Sea.
The United States has a clear choice: Agree to limited revenue sharing under the treaty and bankroll more than 93 percent of total revenue from extended continental shelf and high seas activities, or get nothing at all and lose the ability to challenge claims made by other nations.
Until a decade ago, the United States was 100 percent self-reliant for rare earth production, with domestic companies producing enough to supply U.S. manufacturers. Over time, however, U.S. production was halted as it became economically and environmentally cost prohibitive.
Companies in various countries – including the United States – are looking at reopening closed mines and developing new deposits, but these efforts could take a number of years to fully come on line.
The deep seabed offers a new opportunity for the United States to gain steady access to these vital rare earth minerals. Polymetallic nodules are located on the deep ocean floor. These nodules typically contain manganese, nickel, copper, cobalt and rare earth minerals. However, U.S. companies cannot actively pursue claims in the areas where these nodules are dense unless the U.S. ratifies the Law of the Sea Treaty.
The Law of the Sea Convention provides the only internationally recognized legal regime for extracting mineral resources from the ocean floor in the deep seabed, an area over which no country has sovereign rights. The International Seabed Authority (ISA) develops the rules, regulations and procedures relating to the deep seabed. The Convention guarantees the United States, and only the United States, a permanent seat on the decision-making Council of the ISA – with an effective veto over decisions impacting U.S. interests.
The development of deep seabed claims is incredibly expensive. Companies in the U.S. are reluctant to invest heavily in deep seabed mining because of the risk that their activities would not withstand a legal challenge since the U.S. is not a party to the Convention. Conversely, foreign companies, because their governments have joined the Convention, have access to the international bodies that grant the legal claims to operate in the deep seabed area. The U.S. cannot represent the interests of its companies in those bodies.
Lockheed Martin, for example, has two deep seabed claims that pre-date the Law of the Sea Convention. It has continued to extend its licenses through the National Oceanic and Atmospheric Administration (NOAA). These claims will be instantly recognized by the International Seabed Authority (ISA) if the U.S. joins the Convention. However, without the U.S. becoming a party to the Convention, Lockheed Martin is unable to secure U.S. sponsorship of these claims at the ISA.
At the same time, the Chinese are accelerating their own deep seabed mining efforts. They have increased government funding for seabed mining, and the government announced a $75 million national deep sea technology base in 2010. China is also expanding its engagement with the ISA, where it secured one of the four ISA exploration licenses issued in 2011. The Chinese can boast more than 20 years of sustained technical and political efforts to develop the deep seabed, funded by the government.
A close look at the map of claims in the Clarion Clipperton Zone (CCZ), a location in the Pacific Ocean that is rich with rare earths, shows active claims by China, Japan and Russia “planting their flags,” so to speak. Recently published reports have indicated that the Chinese are actively surveying other claim areas in the CCZ, including those of the U.S. Russia, Tonga and Nauru were also granted deep seabed mining licenses by the ISA last year. At last count, the ISA has 17 pending or completed applications for exploration – up from just eight in 2010.
Only ratification of the Law of the Sea Convention and engagement with the ISA will provide a sufficient mechanism to secure international recognition of U.S.-based claims and rights. Manufacturers and consumers will benefit from a more diverse and competitive market for rare earths, and deep seabed mining is an opportunity for the U.S. to quickly diversify its rare earth sources.
As it stands in the seabed resource market, there are approximately 12 mining claims involving 14 countries under the International Seabed Authority, an intergovernmental body established by the Law of the Sea Convention to have oversight of mineral-related activities in the international seabed. Lockheed Martin for years has had claims to explore and extract rare earth elements, which produce valuable metals used the world over in flat-screen televisions, electric hybrid batteries, tank armor, night-vision goggles and every mobile communications device.
“When you see an international, huge company like Lockheed who has got these claims, who has for years been trying to get access to them, that now may end up going to Lockheed Martin U.K. to get a site and operate through their U.K. operating unit, you have to ask why are American companies having to go to foreign governments to access deep seabed minerals when we as a country desperately need [this business]?”Pike said.
Jennifer Warren, vice president, technology policy and regulation at Lockheed Martin, discussed the com- pany’s history and interest in deep seabed exploration, which dates back more than 40 years. She said it has generated more than 80 patents and invested more than $500 million in exploration largely in the Clarion-Clipperton Zone that extends from Baja California to Hawaii.
“Recent developments in deep seabed resources have really sharpened our interest in seeing Law of the Sea ratified as soon as possible,” Warren said.
Lockheed, she said, has maintained its licenses to to explore and extract rare earth minerals, even as the market for minerals lagged. However, today, the demand has risen sharply for “rare earths,” as they are known, which produce valuable metals for flat-screen televisions, electric hybrid batteries, tank armor, night-vision goggles and cell phones.
Furthermore, Warren said, Lockheed’s claims now are the only current active U.S.-based claims. Last July, the first four licenses for deep seabed exploration were granted by the International Seabed Authority (ISA), the organization created by the Convention to recognize mining claims beyond the continental margin, and two of them are held by China and Russia, she said.
"The importance of these resources is well understood internationally,” Warren said, describing the need to be a party to the Law of the Sea Convention in order to be an active participant and have authorities in, for example, the rule-making process within the ISA. “Other countries are moving forward quickly and aggressively to access them. As the only U.S.-based claimant, our view is pretty straightforward. Business initiatives to exploit deep seabed mineral resources will only be able to secure the necessary financial investments if done pursuant to the existing international framework.”
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After a lengthy pandemic pause, the International Seabed Authority is set to debate mining regulations but the U.S. is sidelined in the discussions as a non-party to UNCLOS.
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