TORONTO (miningweekly.com) – Nautilus Minerals has faced some tough times over the past 12 months, its difficulties mainly related to a commercial dispute between the company and the government of Papua New Guinea (PNG) that arose in June 2012.

The disagreement’s knock-on effects weighed on the development of Nautilus’ flagship Solwara 1 deep sea mining project in PNG territorial waters, although the company believes it is now back on track as it seeks an amicable resolution or a favourable ruling through an arbitration hearing set to convene on August 26.

“I think we’ve turned the corner,” Nautilus Minerals interim president and CEO Michael Johnston told Mining Weekly Online. “We’ve been in discussions with the government, aiming to address the commercial issues that form the dispute’s basis … there’s a desire on both sides to get this wrapped up.”

“I’ve consistently told people that the dispute was always about commercial issues, the biggest one concerning background intellectual property. I believe we now have that resolved,” he added.

The Solwara 1 project seeks to exploit seafloor massive sulphides (SMS) that form an ore body close to vents at depths of 1 600 m. The high-grade mineralisation has been brought up by site’s hydrothermal plumes and then deposited on the nearby seabed. 

Mining will entail the use of underwater vehicles to cut and crush ore that is then fed as slurry into a pump and lifted to a surface vessel. Here the ore will be disaggregated from the deep-sea water, with output then transferred onto a neighbouring vessel for transport to PNG and further processing.

Solwara 1’s resource offers an inkling into the wider potential of SMS deposits. Effective November 25, 2011, and at a cut-off grade of 2.6% copper, the project had 1.03-million tonnes grading 7.2% copper and 5 g/t gold for 74 160 t copper and 165 600 oz gold indicated. Inferred material contained 124 740 t copper and 316 900 oz gold.

DEEPER THINKING

As Nautilus progresses Solwara 1 and several other projects, concern in some quarters has been raised about deep-sea mining and its potential effect on the environment. Some of the most vocal opposition has come from nongovernment organisations (NGOs), although Johnston argued that much of the information published is often misinformed or simply wrong.

“There’s a lot of stuff put in the press by NGOs and anti-mining bodies with a lot of erroneous facts. Some of it is very poorly done,” he said.

Environmental considerations were of the utmost importance for the company, he stressed. “Solwara 1 is probably one of the most studied pieces of planet’s deep ocean. It’s had something like 36 scientific papers written on it,” he added.

Deep-sea ecosystems are important because they are unique; they have evolved at great depths and use the sulphur carried within the hydrothermal water as an energy source.

“We also know there are species able to survive at 100°C that live near the vents. They are important for those seeking to understand the limits of life at high temperature,” senior scientist geology and geophysics at the Woods Hole Oceanographic Institute Maurice Tivey told Mining Weekly Online.

Tivey then emphasised the importance of disposing any water disaggregated from the ore back to its original source. Further, water in the immediate proximity of vent sites must be treated with utmost caution due to its acidic qualities.

Johnston concurred, adding that Nautilus not only models countless variables but also seeks advice from the world’s most qualified people. “We’ll also have researchers present at every stage of operation,” he said.

Disaggregated water will be returned using the project’s pumping system. “[And] we won’t be engaging with water that comes directly out of the vent,” he said. “It’s important to note that deep sea water is uniform at 2.6°C with a pH value of 8.2. This is the case to within half a metre of a vent site.”

GETTING IT RIGHT

Nautilus is following best practice. However, there are fears that other companies might not be as diligent. “It’s always a concern and that’s where NGO consultation, public policy and government policy is required,” Johnston said.

There is also a worry that developing nations will be unable to afford effective monitoring of deep-sea mining operations. One solution might be to pool resources between nations.

“The grouping of sovereign nations to monitor deep-sea mining may be the way forward. For example, there’s a group called Sopac that represents about 15 southern Pacific countries that is pulling together,” Norton Rose Fulbright QC Wylie Spicer told Mining Weekly Online. Spicer has over 35 years’ experience in the shipping and offshore oil and gas industry. He also specialises in deep-sea mining law.

“Sopac has already released proposals regarding the regulation of contractors and the group’s constituent nations,” he added.

One key player in constructing a framework for environmental best practice will be the International Seabed Authority (ISA), a supranational body established by the Law of the Sea Convention. The ISA has the authority to award exploration and exploitation leases for deep-sea mining in international waters.

“They are adamant about best environmental practices with respect to all kinds of activities and they are backed by various international agreements and binding conventions,” Spicer said. “At the start of 2013, the ISA released a study providing recommendations for exploitation. One of the study’s central platforms related to environmental regulation.”

But Tivey is uncertain how the ISA will successfully monitor compliance and reclamation work. “On land, one can simply visit a site to make sure reclamation is being done. Checking the deep sea sites is another matter entirely,” he said.

“[And] while they can put rules in place, there’ still debate about who will do the monitoring,” he added. “Most likely the companies will be required to so, although it would be best practice to have an independent body or an independent contractor that has no conflict of interest and is able to assess the situation. Hopefully something like that will be put in place instead.”

Deep-sea mining may also lead to an international royalties or a revenue-raising system. “At some stage there will be a functioning deep-sea mining industry with some of the profit, whether you call it a royalty or a tax, going to the ISA. The authority will then be responsible for the distribution of this sum to other countries in the world,” Spicer said.

“This fits in with the notion that all mankind should share in the wealth accrued by exploiting minerals from the ocean floor in international waters. But how they set up an equitable mechanism for payment to all countries will be an immense challenge,” he added.

When considering the benefits to mankind, proponents of deep-sea mining argue it also affords a partial solution to offsetting the interruption and impact caused by surface operations. Questions about how, where and to what extent traditional mining should take place will undoubtedly intensify as the global population continues to climb.

“It’s getting harder to develop mines on land and there are fewer places left on the planet where you can establish a mine without affecting people,” Johnston said.

Nonetheless, it is critical that marine ecosystems are afforded equal respect to those on land. In this regard, binding frameworks for deep-sea mining, environmental best practice and monitoring should be formally codified sooner rather than later. By striking the right balance now, future mineral rewards from the deep will be both great and good.