Mining companies have incentive to over develop resource in inefficient manner to avoid paying higher royalty share
While Moore’s view is also that Article 82 is a “small quid pro quo”,11 the Article may nonetheless have undesirable consequences. For example, Rainer Lagoni observed in New Delhi in 2002 that in providing for five years where the revenue share is nil per cent before slowly climbing by one per cent a year there is an incentive of the mining industry to extract resource at a far faster rate than they might otherwise do.12 This may lead to an inefficient, even wasteful use of resource, particularly when taking into account the gearing of refinery resources to the raw resource available.
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If the U.S. accedes to UNCLOS, it will be required pursuant to Article 82 to transfer royalties generated on the U.S. continental shelf beyond 200 nautical miles (nm)—an area known as the “extended continental shelf” (ECS)—to the International Seabed Authority.
Keywords:Related Quotes:- UNCLOS requires mineral extraction companies pay royalties to ISA to be redistributed
- US accession to UNCLOS would obligate to transfer hundreds of billions of dollars of royalties to ISA
- US offshore oil development could generate $92 billion in royalty payments for US treasury over next 50 year
- UNCLOS obligates member nations to pay upwards of 7% in royalties for development of mineral and energy resources
- Under UNCLOS billions of dollars in royalties for offshore oil development would shift to ISA instead of to US revenue
- U.S. currently collects billions of dollars in royalties on outer continental shelf resource development which would go ISA under UNCLOS
- Mining companies have incentive to over develop resource in inefficient manner to avoid paying higher royalty share
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