U.S. ratification of UNCLOS key to development of deep seabed mining industry
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.
Moreover, to mine deep seabed minerals requires security of tenure for the billion dollar plus costs of such an operation. Our industry has emphatically reminded us that they cannot mine under a fishing approach in which mining is a free-for-all concept, as the critics seem to suggest. Rather, they must have both the exclusive rights to mine sites and international recognition of titles to the minerals recovered. These requirements led to the formation of a limited international agency to provide security of tenure and title for mineral resources of the seabed beyond national jurisdiction, which was otherwise owned by no one. The ISA was a necessary specialized agency of strictly limited jurisdiction to deal with security of tenure and stable property rights so that investors can amortize their debt. Quite contrary to the recent testimony of one critic before the Senate Committee on Environment and Public Works, the ISA would not have "the exclusive right to regulate what is done, by whom, when and under what circumstances in subsurface international waters and on the sea-floor." (12) Rather, the ISA is a small, narrowly mandated international agency that has emphatically no ability to control the water column and only functional authority over the mining of the minerals of the deep seabed beyond national jurisdiction. Again, this is a necessary requirement for seabed mining, an area beyond which any nation has sovereignty, to provide security of tenure to mine sites, without which mining will not occur. By not adhering to the treaty, the United States will simply lose its deep seabed mine sites--the best in the world--and our seabed mining industry will be permanently deep-sixed.
"The Senate should give immediate advice and consent to the UN Convention on the Law of the Sea: why the critics are wrong.
." Journal of International Affairs
. Vol. 59, No. 1 (Fall/Winter 2005) [ More (18 quotes) ]
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A third reason arguing for United States accession to the convention is the changing situation in the deep seabed mining industry. In the early 1980s many were predicting a major boom in the mining of deep seabed nodules of cobalt, manganese, nickel, copper, and other minerals. New research indicates that these predictions were early by decades.11 The likelihood of economically feasible deep seabed mining of nodules occurring soon appears increasingly remote, due primarily to the discovery of substitutes for many prod- ucts and applications and the availability of land-based supplies.12 Should seabed mining of nodules ever become of genuine strategic importance to the United States, plentiful quantities are expected to be available within national 200-mile exclusive economic zones as an alternative supply when market prices improve.13
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Lockheed Martin, the only U.S. company with active claims to deep seabed sites under a U.S. law predating the Law of the Sea Convention, recently wrote to this Committee urging the Senate to approve the Convention. Lockheed has invested hundreds of millions of dollars on research and development related to deep seabed mining over the past 40 years. The company’s letter made clear that the multibillion dollar investments now required to launch an ocean-based resource development business will only occur if it can obtain the security of tenure and clear legal rights offered under the Convention. With Lockheed and potentially other U.S. companies poised to expand their operations and create new jobs, Senate accession to this treaty would allow investor dollars to stay here.
Equally important to U.S. companies contemplating deep seabed mining activities is U.S. leadership in the ISA. The next several years will be formative for the nascent deep seabed mining industry. As I mentioned earlier, the Convention’s deep seabed mining regime was overhauled in 1994, resulting in a system that is uniquely favorable to American interests. Those reforms included a permanent U.S. seat on the Council of the ISA. But the U.S. has not assumed that seat, and cannot guide the development of new rules pertinent to deep seabed mining activities while outside the Convention.
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Lockheed Martin, a U.S. based company, has been a large proponent of recognizing the need for the ISA.120 In June 2012, the chairman of Lockheed Martin sent a letter to the U.S. Senate stating, “[Lockheed Martin] wanted to join the race for undersea riches, but could not assume investment risks until it was clear that it would have a clear legal title to its findings.”121 Lockheed Martin stated it is unwilling to do so absent U.S. ratification of UNCLOS.122
Lockheed Martin also participated in a 2012 movement known as The American Sovereignty Campaign, which was comprised of members from the government and private sector.123 The campaign’s goal was to send Congress a message: that U.S. accession to UNCLOS would “invite economic opportunity, create U.S. jobs, and protect business and commercial interests at home and abroad.”124 Lockheed Martin is the only U.S. based holder of exploration licenses granted by the ISA.125 Jennifer Warren, Vice President of Lockheed Martin stated, “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,” referring to the legal structure created by the ISA and UNCLOS.126
Moreover, mining companies much prefer the known difficulties of operating on land to those of operating on the seabed. The risks of working in a place where volcanic activity seems to have stopped but may suddenly resume are uncertain. So indeed are the possible obligations to repair the underwater environment: no legal codes are yet in place for deep-sea mining. That helps to explain why the only places in which companies have dipped more than a toe in the water are in exclusive economic zones, which are not just shallower than many parts of the distant ocean but also within the legal ambit of a national authority.
Seafloor mining beyond countries' territorial waters is regulated by the International Seabed Authority, set up under the United Nations Convention on the Law of the Sea. So far it has issued only eight licences, all for exploration, not production, all for nodules, not massive-sulphide deposits, and all to governmental or quasi-governmental agencies (of China, France, Germany, India, Japan, Russia, South Korea and an east European consortium). No wonder. Commercial miners want both a clear title to their holding and exclusive rights to exploit it. They also have to answer to shareholders.
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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."
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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.
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The work of formal international organizations, as well as interstate treaty negotiating conferences, may shape U.S. attitudes and actions. This is true not only of organizations in which the United States actively participates as a member, but also of organizations in which the United States is not a member. For example, the International Seabed Authority, headquartered in Kingston, Jamaica, is fully operational. It has received plans of work for deep seabed exploration from registered investors, has developed deep-seabed-mining regulations, and is currently considering an application for mining operations.64 These develop- ments, as well as the negotiating histories and texts of the Convention and the Part XI Agreement, limit the United States' ability credibly to assert that seabed mining beyond the limits of national jurisdiction is a high seas freedom, akin to the freedom of navigation. Legally and practically, opponents of the post- 1994 international seabed mining regime have simply lost the debate. The rest of the world-developed and developing states, market-oriented and non-market-oriented states-has accepted the revised mining regime. Any unilateral effort by a U.S. company to mine the seabed beyond the limits of national jurisdiction would almost certainly face opposition from the rest of the world, and the U.S. company's mining claims would be insecure.
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But the DSHMRA does not grant that authority, coun- tered Caitlyn Antrim, executive director of the Rule of Law Committee for the Oceans, a nonpartisan educa- tional group whose purpose is to inform public discourse regarding U.S. interests in accession to the Convention. She said the DSHMRA was a framework and never was considered, in and of itself, sufficient.
“It was intended to be a transition to the Law of the Sea Convention and, in fact, it has those provisions in there saying that when a Law of the Sea Convention is in force for the United States, those provisions of the law that are not appropriate to it will be inactive,” Antrim told Seapower. “If only U.S. companies were mining the deep ocean floor or, as in the 1980s, only non-parties to the Convention had such capability, then operating under domestic legislation outside the Convention might be an option for business investors.
“But now, with 12 sites being explored under the Convention, and five more applications up for review this summer, customary behavior has already established the Convention as the only legal regime for seabed min- ing beyond national jurisdiction that has international legitimacy,” she said. “And with the International Seabed Authority preparing to develop regulations for commer- cial exploration of seabed minerals, the domestic U.S. regime is falling even further behind.”
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.