LIBB^ n^GBAI)i]ATE SCHOOL ^ULlf5- 9394° United States aval Postgraduate Schoo LIBRARY NAVAL POSTGRADUATE SCHC MONTEREY, CALIF. 93940 nn t rHF, RI8 ECONOMIC EFFECTS CF DEEP OC EAN MINERALS EXPLO I TAT 10 N by George Edward Bollow N. Boston Th esi s Advisor: R. von Pagenhardt September 1971 Approved &oa. puhtlc talcciid; dij>tnJLb'dtlon uaitimctdd. Economic Effects of Deep Ocean Minerals Exploitation by George Edward follow Lieutenant, United States Navy B.S., University of Wisconsin, 1964 Submitted in partial fulfillment of the requirements for the degree of MASTER OF SCIENCE IN OCEANOGRAPHY from the NAVAL POSTGRADUATE SCHOOL September 1971 BU ABSTRACT Any international regime established to regulate the exploitation of deep ocean mineral resources will be shaped greatly by the effect this exploitation may have on the world economy. Many deep ocean mineral deposits are potentially available, but manganese nodules will probably be the first to be exploited. This study of the economics of manganese nodules con- cludes that realistic production rates will severely effect the world's market price of cobalt; have significant effect on manganese and nickel prices; and cause little or no changes in the world copper market. It also snows that the royalties to be gained from an international tax or leasing system for exploitation of these nodules will not be great enough to augment significantly the economic assistance to developing nations. However, the exploita- tion of manganese nodules could be detrimental to the economies of specific developing countries with manganese, nickel or cobalt mining industries. TABLE OF CONTENTS I. INTRODUCTION 9 II. PROSPECTIVE WORLD AGGREGATE MINERAL DEMAND 12 A. POPULATION TRENDS 1 B. GROSS NATIONAL PRODUCT 12 III. MINERAL RESOURCES 15 IV. PROSPECTIVE DEEP OCEAN MINERAL RESERVES 17 A. PETROLEUM 17 1. Semi-enclosed Seas 17 2. Continental Rises and Slopes — 18 3. Deep Ocean Basins 18 B. PHOSPHORITE 18 C. CALCAREOUS OOZES ■ — - 20 D. DIATOM OOZE 20 E. RED CLAY DEPOSITS 22 F. RED SEA METALIFERROUS MUDS 22 G. MID-OCEAN RIDGES 28 H. MANGANESE NODULES — 28 1. Formation 30 2. Grade Variations 30 3. Exploitation Requirements 31 V. EFFECTS OF MANGANESE NODULE EXPLOITATION 34 A. VALUE OF METALS IN NODULE GRADES 34 B. EFFECTS ON CURRENT METAL MARKETS 4 3 C. EFFECTS ON 1985 METALS MARKET ■ 48 D. EFFECTS ON METALS MARKET IN THE YEAR 2000 53 E. EFFECTS ON DEVELOPING NATIONS WITH MINING INDUSTRIES 58 1. Manganese 58 2. Nickel 59 3. Copper 60 4. Cobalt 60 VI. CONCLUSIONS 65 APPENDIX A: METAL YIELD COMPARISON TABLES 69 REFERENCES 85 INITIAL DISTRIBUTION LIST 88 FORM DD 1473 92 LIST OF FIGURES 1. Potential Offshore Petroleum Regions 19 2. Ocean Sediment Types 21 3. Bathymetric Map of the Brine Area 25 4. Bathymetry of Brine Deeps and Location of Analyzed Cores 26 5. Generalized Cross Section Through Atlantis II and Discovery Deeps 27 6. Mid-ocean Ridge System 29 7. Pacific Nodule Types 36 8. Projected Manganese Demand 39 9. Projected Nickel Demand 40 10. Projected Copper Demand — . 41 11. Projected Cobalt Demand 42 12. Manganese Yield as a Percent of 1969 Production 44 13. Nickel Yield as a Percent of 1969 Production 45 14. Copper yield as a Percent of 1969 Production 46 15. Cobalt Yield as a Percent of 1969 Production 47 16. Manganese Yield as a Percent of Projected 1985 Demand 49 17. Nickel Yield as a Percent of Projected 1985 Demand 50 18. Copper Yield as a Percent of Projected 1985 Demand 51 19. Cobalt Yield as a Percent of Projected 1985 Demand 52 20. Manganese Yield as a Percent of Projected 2000 Demand 54 21. Nickel Yield as a Percent of Projected 2000 Demand 55 22. Copper Yield as a Percent of Projected 2000 Demand 56 23. Cobalt Yield as a Percent of Projected 2000 Demand 57 LIST OF TABLES I. Per Capita GNP Predictions 13 II. Gross Value of Metals in Upper 10m of the Atlantis Deep ■ 24 III. Metal Content and Value of Nodule Types 37 IV. Projected Constituent Metal Demand — 38 V. 1969 Production of Manganese Ore from Developing Countries 59 VI. 1969 Production of Nickel from Developing Countries 61 VII. 1969 Production of Copper from Developing Countries 62 VIII. 1969 Production of Cobalt from Developing Countries ■ 64 IX. Projected Worth of Manganese Nodule Exploitation 66 A-I. Metal Yield for High Manganese Content Nodules 69 A-II. Metal Yield for High Nickel Content Nodules 70 A-III. Metal Yield for High Copper Content Nodules 71 A-IV. Metal Yield for High Cobalt Content Nodules 72 A-V. Metal Yield from High Manganese Content Nodules as a Percent of 1969 Production 73 A-VI . Metal Yield from High Nickel Content Nodules as a Percent of 1969 Production 74 A-VII . Metal Yield from High Copper Content Nodules as a Percent of 1969 Production 75 A-VII I. Metal Yield from High Cobalt Content Nodules as a Percent of 1969 Production 76 A-IX. Metal Yield from High Manganese Content Nodules as a Percent of 1985 Projected Demands 77 A-X. Metal Yield from High Nickel Content Nodules as a Percent of 19 85 Projected Demands 78 A-XI . Metal Yield from High Copper Content Nodules as a Percent of 1985 Projected Demands ■ 79 A-XII. Metal Yield from High Cobalt Content Nodules as a Percent of 1985 Projected Demands 80 A-XIII. Metal Yield from High Manganese Content Nodules as a Percent of 2000 Projected Demands 81 A-XIV. Metal Yield from High Nickel Content Nodules as a Percent of 2000 Projected Demands 82 A-XV. Metal Yield from High Copper Content Nodules as a Percent of 2000 Projected Demands — — 83 A-XVI. Metal Yield from High Cobalt Content Nodules as a Percent of 2000 Projected Demands 84 I. INTRODUCTION Much has been written recently about: the vast potential of the oceans for supplying the increasing population of the world with vital mineral requirements demanded by our modern technological society. One effect of this publicity on the nations and governments of the world is a concensus that the mineral resources of the deep oceans should be viewed as a "common heritage of mankind" and that their exploitation should benefit all peoples rather than only those nationals of states which have the advanced technology and capital necessary to glean the wealth from these here- tofore untouched deposits. This notion gained notoriety through a Maltese proposal submitted to the United Nations in the fall of 1967. As a result, the United Nations General Assembly decided to undertake an "Examination of the question of the reservation exclusively for peaceful purposes of the seabed and the ocean floor, and the subsoil thereof, under- lying the high seas beyond the limit of national jurisdic- tion, and the use of their resources in the interests of mankind" (Ref . 1) . Subsequent study and decisions by United Nations bodies established the desirability of monitoring and regulating on an international level, any future exploitation of the deep ocean seabed under a new law of the sea. A general conference on the law of the sea is now scheduled for 19 73. Meanwhile, the General Assembly is "Calling for moratorium on exploitation of seabed resources pending establishment of an international regime/' and declares that "no claim to any part of that area or its resources shall be recognized" until such a regime is established (Ref. 2). United States seabed policy accepts the principle of common heritage as evidenced by President Nixon on May 23, 1970. The President called for renouncement of all national claims over natural resources of the seabed beyond a depth of 200 meters and the establishment of an international regime to control the exploitation of seabed resources beyond this limit. He called fur "the collection or sub- stantial mineral royalties to be used for international community purposes, particularly economic assistance to developing countries," rules to prevent conflict over ocean uses, protection against pollution, assuring the integrity of investments necessary to mineral exploitation, and pro- visions governing the settlement of disputes (Ref. 3). In order to create, and gain international acceptance of, a world regime for governing the use of the seabed and avoiding many potential sources of conflict, it will be necessary to determine what resources are in the deep oceans and which ones can be exploited, technologically and economically. Even when the technical exploitability of a particular mineral is ascertained, one must attempt to 10 predict the effects of its exploitation on the world market, based on projected demands and production rates. With this information in hand, an equitable scheme for establishing rules and controls over exploitation and for distributing mineral royalties within the international community may be designed. 11 II. PROSPECTIVE WORLD AGGREGATE MINERAL DEMAND A. POPULATION TRENDS In 1968, the world population was estimated to be 3,509,100,000. Over 2.5 billion or about 72.5% of this population resided in developing countries, defined as: all the states in Latin America, East Asia and the Pacific less Japan and Australia, South Asia and the Indian Ocean, the Near East, Africa less the Republic of South Africa, Albania, Bulgaria, Greece, Portugal, Spain, Turkey and Yugoslavia (Ref. 4). Population projections for the year 2000 are 6,389,000,000 for the world, with 4,777,000,000 or about 74.8% belonging to the ies? developed countries. By the year 2020, the world's population is expected to increase to 9,025,000,000 while the share of developing countries will be an even greater percentage (Ref. 5). On the basis of these population statistics alone, one could expect the world demand for minerals to increase 174% by the year 2000 and 257% by 2020. It is also reasonable to assume that changes in the values and tastes of the world's people will require higher standards of living, causing greater demands for raw materials. B. GROSS NATIONAL PRODUCT Predictions of the world aggregate of gross national product (GNP) are another indication of future demands. 12 in 1968, the total GNP for the world was $2,685,006,000,000. Developing countries accounted for $450,066,000,000 of this or only 16.8% of the world total (Ref. 4). Gross national product predictions for the world of 2000 total $10,848, 000,000,000 with the developing nations producing $1,589,000,000,000 or 14.6% of the total. By the year 2020 the world's GNP figures are expected to reach the neighbor- hood of $28,711,000,000,000 (Ref. 5). With these figures, future per capita GNP can be estimated and used as an indi- cation of mineral demands: TABLE I PER CAPITA GNP PREDICTION % Increase % Increase 1968 2000 X968-2000 1968-2000 Wor Id Total $ 865 $1,690 195 $3,182 368 Developed 2,312 5,770 249 Nations Developing 177 321 182 Nations If future mineral demands were assumed to increase proportionally to the world's GNP, they would be 407% greater than the 1968 demand by the year 2000 and 1069% higher in 2020. A substantial reduction in the above pro- jections, however, must be calculated because of the disparity in per capita GNP between people in developed and developing nations and the de-escalating rate 13 of industrialization in developed countries owing to a larger portion of income being directed towards education , services and leisure. Other considerations, such as the substitution for current mineral uses by synthetics, increased dependence on recycling scrap materials as a source of mineral supply, and the possibilities of war or famine would greatly effect future demands for raw materials. These conditions are impossible to predict with any precision. Ignoring them and assuming that demand will increase at about 75% of the GNP rate, a reasonable projection for the year 2000 would be 300% of 1968 's demand and by 2020 some 700% more than 1968. 14 III. MINERAL RESOURCES World mineral resources are defined as both known and undiscovered minerals of prospective value. Resources encompass the total world supply of minerals. Mineral reserves are those deposits that are economically recover- able using today's technology and at today's prices (Ref. 6), Resources can become reserves with an increase in geologic knowledge or discovery of new deposits. Reserves will increase as a result of better technological abilities , enabling lower grade or more remote deposits to enter into that catagory. Also, either an increase in market price of a mineral or a decrease in mining or production cosrs will have the effect of increasing reserves. Reserves may also be broken down into (1) proven reserves; (2) indicated reserves for which locations are known but sizes are not; (3) inferred reserves for which neither size nor exact location have been determined; (4) latent reserves which are not yet commercial and (5) alternative-resource reserves from which usable substitute substances may be obtained, if aniwhen necessary (Ref. 7). The adequacy of the earth's mineral supply varies for different commodities. Iron and aluminum supplies, for example, appear to be sufficient for several centuries. Silver and mercury, on the other hand, are already scarce. Their prices are rising and substitutes are being sought 15 (Ref . 8) . Most other mineral commodities lie between these two extremes. Vast new reserves must become available if the greater part of mineral supplies are to keep abreast of the anticipated increases in world demand. Need is especially critical for new reserves of fossil fuels. Historically, the aggregate of mineral supplies has kept up with increased demand. Mineral prices over the long term have not shown marked increase relative to other economic indicators. This stability has resulted from successive improvements in technology, which have decreased need for capital and labor per unit of mineral output. We cannot count on this phenomena to continue indefinitely into the future, when the amount of mineral consumption will be many times greater than it has been in the past. One shortcoming of any analysis on this subject is that data on world mineral reserves are poor. Estimates are conservative and tend to be understated. Data on resources are worse. Because of a lack of definitions, estimates are misleading and, for some underdeveloped nations, information may be entirely absent. Under such conditions, it is inap- propriate to attempt estimating world mineral supplies. We can only obtain broad indications as to further possibil- ities (Ref. 9) . It is unargued that deep ocean mineral resources will help to satisfy future world demand. These minerals will increase the world's stock of capital, but they are only one potential addition to mineral reserves and will compete with terrestrial reserves, both present and future (Ref. 6). 16 IV. PROSPECTIVE DEEP OCEAN MINERAL RESERVES A. PETROLEUM Although offshore oilwells have been operational only since 1948, the technology for both offshore exploration and production is now well developed with offshore petroleum accounting for 18% of total world production in 1970 (Ref . 10) . Plans for new wells in water as deep as 1,000 feet have been announced (Ref. 11). Movement into even deeper water is inevitable, with only minor increases in production costs. Regions of thick sediments with structural and stratigraphic traps will provide the best prospecting conditions in the deep oceans as they do on land and the continental shelves. 1. Semi-Enclosed Seas Semi-enclosed seas are strong prospects for deep ocean petroleum reserves. Admittedly, many of these seas are shallow and belong to the continental shelf of coastal states, but others are of great depth while having a crustal structure similar to that of the continents. For example, the Gulf of Mexico has sediment thicknesses of 5 to 20 kilo- meters; numerous salt diapirs have been located in this region, indicative of petroleum reserves (Ref. 12). The JOIDES deep sea drilling project recovered oil in cores from cap rock in a water depth of 11,720 feet in the Sigsbee Deep (Ref. 13) . Continued exploration in semi-enclc :ed seas is needed in order to better assess their full potential. 17 2. Continental Rises and Slopes Continental rises and slopes sometimes have sediment thicknesses of 10 kilometers or more. Although these thicknesses are not everywhere present, they can normally be found off the deltas of major rivers. Seismic sections in these areas indicate that both structural and strati- graphic traps are present (Ref. 14). The volume of sediment on continental rises and slopes is probably larger than that on the continental shelves and could, therefore, be a sub- stantial source of petroleum in the future. 3. Deep Ocean Basins The deep ocean basins themselves are a relatively poor prospect for petroleum deposits as their sediment thickness is usually on the order or 0.5 to 2.0 kilometers and little evidence of tectonic folding or distortion is present (Ref. 14) . The potential significance of the deep ocean as a source for petroleum deposits will be established within the next two decades when rising demands make these less accessible petroleum deposits competitive with existing reserves under the land and continental shelves. Meanwhile, lack of geologic knowledge and higher drilling costs in deeper water make continued exploitation of land and conti- nental shelf petroleum more profitable. B. PHOSPHORITE Phosphorite nodules have been dredged at depths up to 11,400 feet at the base of the continental slope. However, 18 19 the nodules were probably carried to these depths by slump- ing or turbidity currents from larger deposits resting under shallower water on the continental shelves (Ref . 16) . Since any propensity for mining these nodules would be directed toward the continental shelves, phosphorite deposits can be eliminated as prospective deep ocean mineral reserves. C. CALCAREOUS OOZES Calcareous ooze, particularly globogerina ooze, has been mentioned as an alternative source of cement rock because it has the required chemical content and necessary physical characteristics; fine grained and unconsolidated with a large surface area (Ref. 17) . Globogerina ooze covers approximately 35% of the ocean floor with an average thick- ness of 400 meters (Ref. 17). It is a substantial resource, but cement rock in various forms is plentiful on land except for shortages in certain local areas. In any event, the low commercial value of calcareous ooze precludes its eco- nomic exploitation from the deep ocean. D. DIATOM OOZE Diatom ooze, covering almost 9% of the ocean floor with an average thickness of 200 meters, could be used as a substitute for diatomite. The assay of diatom ooze is favorable for this purpose as are its physical properties (Ref. 17) . It is not likely, however, that diatom ooze will become economically competitive with diatomite, becau = the current 20 H . o o - c D h -«A 0 0» o - •— -o o Of 21 value of diatomite is less than $3.00 per ton at the mine site. Diatomite also has other substitutes, such as perlite and vermiculite, which are already replacing it for some uses (Ref . 19) . E. RED CLAY DEPOSITS Red clay, covering about 2 8% of the ocean floor with an average thickness of 200 meters, is basically composed of hydrated aluminum silicates. Assays of up to 25% alum- inum oxide make it comparable to some land deposits of aluminum ores (Ref. 17) . However, land deposits are exten- sive and generally more valuable. Using red clay as a construction material is also a possibility, but available terrestrial clay deposits are far more economic. Red clay is usually contaminated with an average of one to two percent manganese grains. These grains are also associated with minute quantities of copper, nickel and cobalt. Because of the low concentration of these grains in red clay, their exploitation would not be economically desirable (Ref. 17) . F. RED SEA METALIFERROUS MUDS Heavy metal deposits were recently found in the Red Sea in conjunction with the mid-ocean ridge system extending into that area. Deposit depths are from 2000 to 2170 meters and cover a total area of approximately 75 square kilo- meters (Ref. 20) . 22 Exploration to date is not extensive. Only eighty cores have been taken in the deposit region to a maximum depth of 10 meters. Six facies have been identified with varying metal assays. A metaliferrous sulfide facie, penetrated by only four cores thus far, appears to have the richest assay (Ref . 21) . Typical average assay values for the top 10 meters of the largest deposit, Atlantis II Deep, are depicted in Table II. Figures 3 through 5 show the loca- tion, bathymetry and cross section description of the deposits. A considerable amount of new technology is needed before exploitation of these metaliferrous muds becomes feasible. Mining technologies would have to be achieved for selective dredging of the best facies, de-watcring the extracted muds and disposing of waste material. Even when mined material can be taken to a processing site, new techniques must be found to extract the metals from this unusual ore (Ref. 22) . As a result of intensive exploration efforts and con- tinued technological research, the Red Sea metaliferrous muds will undoubtedly become a new reserve for metals of world-wide importance. The economic value of these deposits cannot be determined with any accuracy until mining and pro- cessing techniques are further researched and the costs and benefits evaluated with more certainty. Progress will take time. Although mining rights have been applied for by several groups, and others have indicated an interest, pro- duction should not be expected in the near future (Ref. 24) . 23 II Q)r- 3 O VD r- CN CO in CO rH iH 1 CO CN CN "^r 03 X rH CN > -CO- -P • O 13 IT) in m in Cvl G Eh CO o> O o in in U (D CN r^ II CO r-H CN CN rH "tf ^ -p • \D rd •H c m CTi 4-> -p o in a a 2 rd co Cm O U i o u rd W e q) u fd •^ CO rH o m CU £ w (1) CO QJ CO £t Q > CO < < CTi CN co rH O o o H Q 0 CU u H rd (L)r- rH 3 Xi rH CO rH a 3 o r^ CO C\ rH co co -H rH H rd 1 rH rH 1 tp fd Eh C c - rd x o in O CO CN CN •H -P a M •H CU > V> in 00 rH u0 rH CU rt 3 u rH tn e 3 o ■o •H CU Eh t-> e UH in m in m CJ £ CU < rH O O O O O £ tr> Sh 3 co rH rH rH rH rH CU -P W C O CO c X X X X X A ffi •H a O r^ o rH rH -P -H H p4 S o ■<* rH CN CN ^ o co 13 ^ M 13 co- CU 3 £ c CU- v. -J ffl o fti II = 3 o CN V£> vc ■^ *? 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Figure 4 (Ref. 21) 26 -rO TION TION 70 (N :?*o 5<1> «fct 4) 'o o «♦- 4) •*> c o o £ 01 o o m o x: a. o m 0) u o u o a> V o o 8 5 0) ■o ■C c o s o £ b o 3 4 1 0) ■o □ E TT i i i l 1 o. « x> B a> l_ o o 0) ;o a> n k. > o o ■D c <0 DO 3 s c o ti s u « N 2 O c o O in v b 3 27 G. MID-OCEAN RIDGES Since the conditions under which the Red Sea metal deposits were formed are associated with the mid-ocean ridge system (Ref. 25), it is reasonable to assume that similar conditions may exist along the approximately 40,000 2 miles of mid-ocean ridges throughout the world. As yet, no similar deposits have been located, but the possibility of their existance cannot be ruled out until an extensive exploration of the mid-ocean ridge system is undertaken. Additionally, there are potentialities for copper, concentrated by metamorphism, to exist along the mid-ocean ridge system, while similar deposits of chromite or platinum may be found in peridotite (Ref. 26). Such possibilities are speculative; no evidence confirms their existence. H. MANGANESE NODULES The presence of manganese nodules on the deep ocean floor is known since the "Challanger Expedition" of 1873- 1876. The nodules vary in size from small grains to one of 1,770 pounds recovered east of the Philippine Islands. They can be found almost anywhere in the deep oceans (Ref. 27). Tonnage estimates, for the Pacific Ocean alone reach 1.66 trillion tons (Ref. 28). Nodule density varies over the ocean bottom. Reported ranges on the Pacific Ocean floor are from less than 0.1 pounds per square foot to over 7 pounds per square foot, and standard deviations 2 See Figure 6. 28 29 of 1 pound per square foot are common within a locality (Ref. 28). Concentrations of nickel, manganese, copper, cobalt and possibly other metals having commercial exploit- ability are locked into complicated hydrated oxides within the nodules. While the existence of this treasure has been known since the late 1800' s, the feasibility of its exploi- tation has only recently been realized. 1. Formation Manganese nodules are formed by the precipitation of metallic compounds from solution and the process of particle agglomeration. The mechanism is believed to be one of precipitation of electrically charged, hydrated iron and manganese oxide particles from saturated sea water. These charged particles then attract other metal ions from the water and attach themselves to objects such as sharks' teeth or rock fragments on the ocean floor to form manganese nodule nuclei. A continuous supply of charged colloidal particles allows the nuclei to grow, layer by layer, until they are burried in sediment at which time growth ceases. Deep ocean currents play an important role in nodule development as they are responsible for bringing colloidal materials into the areas of deposition and sweeping sedi- ment from or over the nodule surfaces, enhancing or retard- ing accretion (Ref. 17) . 2. Grade Variations Metal assays for manganese nodules vary from loca- tion to location, making deposits in certain areas more favorable than others. In order to determine thoroughly the distribution of nodule types, extensive sampling will be required. With the recent efforts to exploit deposits of manganese nodules, faster and less expensive sampling techniques are being developed (Ref . 28) . Better knowledge of nodule formation will also help in predicting nodule grades, as variations are believed to result from differ- ences in initial formation processes, subsequent physical and chemical erosion, sea water element concentrations, hydrostatic pressures, temperatures and, possibly, bacter- iological activity (Ref. 17). With respect to economic exploitability , nodules in the Pacific Ocean are generally of higher grade than those of the Atlantic or Indian Oceans. Atlantic nodules contain less manganese, copper, cobalt, molybdenum and titanium, but are usually less variable in composition than Pacific nodules. In the Indian Ocean, the nodules show smaller average assays of manganese, nickel, copper and cobalt — the four primary exploitable constituents. 3 . Exploitation Requirements Exploitation of manganese nodules will require identification of mine sites that provide the best commer- cial nodules in adequate abundance. The proximity of a mine site to prospective markets will also be a consider- ation in any sites' selection. Each specific mine site will require intensive quantitative and qualitative sampling, exploration of bottom characteristics and sear .ies for bottom obstructions. Currents, salinities, temperatures, sea conditions and other meteorological or oceanographic information must also be known (Ref . 29) . Numerous mining techniques have been proposed (Refs. 30 and 31) and at least two have been successfully tested. One of these, a hydrolic suction dredging system, was tested in 2,500 feet of water on the Blake Plateau off the coast of Florida and Georgia in July, 1970, by an American firm (Ref. 32). The other system, drastically different, was tested in September, 1970, near Tahiti in 3,760 meters of water from a Japanese ship; it consisted of a mechanical "continuous line bucket" dredge (Ref. 33). Other systems are being built, but information on these has not been published (Ref. 34). Once raised to the sea surface, transportation of mined manganese nodules to shore can be accomplished by the mining vessel itself, by ore carriers onto which the ore is trans- ferred at sea (Ref. 29), or by ocean-going tugs pulling barges. Transport via the mining vessel would require the smallest capital investment, but would cause a loss in mining time and involve raising or disconnecting the mining rig each time the vessel is filled to capacity. Several methods have been proposed for processing nodules, once they have been taken ashore (Refs. 35 and 36). The constituent metals are in the form of oxides instead of sulfides, as normally found in terrestrial ores. This circumstance requires a completely new chemical engineering approach at refining plants. Deepsea Ventures, one of the companies doing research in this area, has a pilot plant in operation which is capable of processing one ton of nodules per day. Tentative plans are to enlarge this model until a plant capacity of 3,000 tons-per-day will be reached by 1975 or 1976 (Ref. 37). This plant will eventually be capable of processing the 1,000,000 tons-per-year that Deepsea Ventures envisages mining (Ref. 31) . V. EFFECTS OF MANGANESE NODULE EXPLOITATION Manganese nodules, it appears, will be the first deep ocean mineral resource to be exploited commercially. This event will provide the initial test for any international regime formed to regulate the exploitation of deep ocean minerals. The structure of such a regime must necessarily be geared, in the first instance, to the exploitation of these nodules. Conflicts of interest among those concerned with mining and those advancing other commercial, military, or broader public interests will certainly come before the international regime for anticipatory regulations or con- tentious settlement. Bases for the settlement of disputes among mining companies and public authorities over rights to sea floor deposits will need to be established. Thus, the exploitation of manganese nodules can be expected to shape a new law of the sea. A. VALUE OF METALS IN NODULE GRADES Concern has been expressed over the effect large scale mining of manganese nodules will have on the prices of con- stituent metals. Because of the disparity between the ratio of constituent metals in the nodules and the ratio of their world demands, this concern is warranted. With many differ- ent grades of nodules available, the extent of the disparity will be dependent on the type of nodule mined. The Pacific Ocean/ having the best overall commercial grades of nodules, can be divided into areas of high manganese, high nickel and copper, and high cobalt content, 3 as depicted by Figure 7. Table III shows constituent metal contents for average-assays of these nodule types, plus the composition of nodules from the proposed Deepsea Ventures ' mine site. Values of metal yield per ton of nodules at 1971 prices are also shown in Table III, using a 9 8% pro- cessing yield figure claimed by Deepsea Ventures (Ref . 38) . It can be seen that nodules with high copper and nickel or high cobalt content are the most lucrative commercially at current market prices. High manganese content nodules, on the other hand, are typically poor in the other metals and have the iowest commercial value or the types shown. Metal yields for various grades of nodule deposits are shown in Tables I-IV, Appendix A, using increments of 1,000,000 tons of mined nodules per year as proposed by Deepsea Ventures and assuming a 9 8% processing yield. Figures for the world production of constituent metals in 1969 and projected low and high estimates of world demand in 19 85 and the year 2000 are depicted by Table IV and Figures 8-11. These projected figures estimate an approxi- mate 300% increase in world mineral demand by the year 2000 and are consistent with the demands noted earlier in this paper. 3 Of geological interest is the high cobalt content area which follows the shallower regions of the Paci 7ic rise sys- tem, including the Emperor Seamount Chain, the Hawaiian Ridge and the Line, Society and Cook Islands. Figure 7 Pacific Nodule Types (Ref. 17) H H H fa- it: CO w CM >n fa ^ D Q O 53 fa O w D Q S3 Eh S3 W Eh O U Eh W g CD * CO CD rH 3 O C •H g id CD - CO CO ft CD S3 CD M CD 3 CD Q -P +J C -H CD W > C u -p c CD tn C •H O T3 C id •H 53 x: tn •H 3 W U 3 +> g c CD x: +» CT> C •H O W U * CO CD rH 3 o S3 * CO CD rH 3 O S3 * * CO CD rH 3 O S3 id -p CD g OP o o • CD CN CD CN O o o\P o IT) 00 CM CD CD CM O O ro • en CN co iH rH o\° O CO • cy» CD CN ^J* n LI in o & ,Q ,Q X! +J ■H rH rH rH CD r* * J-l U 5-1 U U CD CD CD CD CD ^ ft 10 3 U ft ja fO •H 0 0 g S3 u u ro vo •to- co CO CO- CM CD CO ■CO- CM • CO •co- TJ CD CO •H CD >H H 3 -H 1 V) a 0 CD 4-> S3 0 CD •H g iw u 0 fa m 0 3 r- 0 r- CD E- ca D rH i— I U fd o +J > fa rci CD Sh O OV • CD • * — » «tf • ^-^ r» ^~* r^ co 3 c\ rH O en • • <4H •a • 4H CD CD MH CD fa CO CD fa — fd fa — * PQ — * * in * * * < EH W S~ to H C £ o W Eh EH +> H 5h EH O CO jG 2 CO O — U Q W Eh U W h> a * m oo iH O -P tn g •H -H ffi p w w (Tl o o O o 0) o o o m -P o o o 00 Xi rd *» *, *. * tn g o in o CO •H •H o VD o •«T as -P CTi vo KD W V ■* ^ w ro ■H o + CN (N * o o o CN o O O o CD o O O in -P o O o in ctf •*, «. «. ». £ g LT) «=}< o o o -H • 11 81 SI IL suo| HoiJS J° s u ° ! I I ! W 41 u > op oe suol lJOMS f° spUDSnoMi 42 B. EFFECTS ON CURRENT METAL MARKETS In order to determine the effect that extensive exploi- tation of manganese nodules may have on future prices of the constituent metals, one must compare expected metal yields with actual world production. Tables V-VTII, Appen- dix A, and Figures 12-15 show anticipated yields from increments of 1,000,000 tons of mined nodules as a percent of reported 1969 world metal production. It is obvious from this comparison that the mining of 1,000,000 tons per year commencing in the near future would not overly flood the world market with manganese, nickel or copper. A single operator of such size could, however, have a detri- mental effect on the cobalt market, especially if a deposit of high cobalt content were mined and 52% ol the world de- mand for cobalt was produced. This could reduce the current price of cobalt by as much as one third, or from $2.20 to $1.49 per pound. Three such mining operations by 1980 would not only flood the v/orld market with cobalt, but begin an inundation of manganese equal to 9-18% (depending on nodule grade) of the world's manganese production in 19 69. The mining of manganese nodules at the rate of three million tons per year would also begin to be felt by the nickel market, especially if high nickel content nodules were A yield of cobalt equal to 15 8% of world demand would clearly be disastrous and such would be possib. \ from three million tons of nodules with high cobalt contei t. 43 e 2 OSl Oil 06 09 UOI|3npOJd 696l JO |U33J3d 0£ 44 -o c Ofr 01 uo!P"POJd 6961 1° |»33J3d 45 -o c o 46 0051 0001 00S uoipnpoJd 696! |° » u a 3 j a d 47 processed. The copper market appears to be safe from detri- mental effect. C. EFFECTS ON 19 85 METALS MARKET A nodule production of over 3,000,000 tons per year probably won't occur before 19 80. However, by 19 85 the world nodule mining capacity could possibly reach as high as 10,000,000 tons. A comparison of possible mining yields or capacity with projected high and low demands for metal by 19 85 is given in Tables IX-XII, Appendix A. Figures 16- 19 show the relationships of these mining capacities to low estimates of future demand. Cobalt clearly will suffer the most. Five million tons of nodules with high cobalt content would meet over 200% of the 19 85 demand, and ten million tons would push supply to 458% of the world need, causing the value shown in Table III of cobalt — and the high bearing nodules--to plunge downward. This grade of nodule would then become economi- cally less desirable to exploit, making the high nickel and copper content nodules the optimum type to mine. The Deepsea Ventures' mine site nodules may be relatively valuable. Because their manganese, nickel, and cobalt assays are generally less than the high nickel and copper content nodules, increasing production rates would not have as great a depressing effect on the price of those constituent metals. Of course, if the capacities of the terrestrial mining industry do not increase as fast as world demar 1 , exploi- tation of manganese nodules will not have as great an effect 48 c -Q V C u k O V E a. V 0 VI in o O 03 V 0> 4) T) »~ -c 3 4> 0) W > •■ (J u- 0) M V 0 o l_ c a. 0 Ol „ c o o C 06 09 oe p u d uj a q 5861 |° j u a d j a d 49 V c 50 V c 51 0021 0001 008 009 OOfr p u o uj a q 5961 }° | u a d J o j 0G% 52 on metal prices. It will serve only to satisfy a portion of the world's greater needs. Such could indeed be the case for all the constituent metals , except cobalt, by 1985. Copper from manganese nodules will certainly fall into this category, as a ten million ton mining capacity could only satisfy a maximum of 1% of the 19 85 demand. D. EFFECTS ON THE METALS MARKET IN THE YEAR 20 0 0 Anticipated increases in demand of about 50% from 19 85 to the year 2000 render mining capacities of 15,000,000 tons nearly the same in percentile figures as a 10,000,000 ton capacity in 19 85. Mining capacities of twenty million and twenty-five million tons give proportionately higher projections as can be seen in Tables XIII-XVI, Appendix A, and Figures 20-23. It is evident from the above that the future world market for cobalt will be the only metal industry seriously effected by the exploitation of manganese nodules. The other three metals - manganese, nickel and copper - found in nodules will not have their world markets so much effected, but individual mines, localities or countries may feel stronger consequences. The copper market should not suffer any harm whatsoever, while sectors of the manganese and nickel markets will probably be effected to some extent, depending on the quantity and grade of nodules mined and the future terrestrial mining capacities for these two metals. 53 A A \ * L \ 0> \ \ ' \ v-^ \ \ * \ V o\ \°» \ \ \ °- \ \ \ w s \ A -^ \w >\ A A \ 1 \ % \ \ c t) -o w c »■ o 01 0 Q o * o \ \ V ■o o u _ CN \ \ \\ 3 01 .- -o \ \ \\ 01 >- »» \ i\ \\ IX. anganese o 1 Pro j e c 1 * -o 0) c in 09 Ofr OC puouiaQ 000C 1° \ u '-* 3 J 3 d 54 c "O V c u 0 L. F Q. Q 0 O CM tt O 0 O V CM L. -o 3 "- -o W V u u- >- — , V o -X L. u Q. c oe 02 oi pu d uj aQ 0002 j ° » u 3 3 J u d 55 56 c 2 008 009 00t> " 002 puDiueQ 000£ J° lu"JSd 57 E. EFFECT ON DEVELOPING NATIONS WITH MINING INTERESTS 1. Manganese Table V gives 1969 manganese production statistics for developing countries, the economies of which may be adversely effected by future manganese nodule exploitation. Gross national product (GNP) per capita is given for each country as an indicator of the extent that country is "developing." Other economic or sociological indicators could also be used, but GNP per capita was chosen by this author as the most effective for his purposes. The economies of Brazil, Indonesia, Gabon, India, and Mainland China would stand to loose the most, in terms of 7 monetary value, from a reduced manganese price. Of these, Gabon will feel the strongest effect with respect to value per capita. The total value of manganese produced in Gabon in 1969 was 18.5% of its GNP in that year. Other countries with production values amounting to a significant part of their GNP ■ s are: the Congo Republic, 0.67%; Ghana, 0.50%; Indonesia, 0.42%; and Brazil, 0.22%. If a maximum manganese price reduction of 30% is assumed, the economy of Gabon is the only one which would be severely hurt, based on 1969 statistics. Virtually all the Gabonese manganese is exported, while a large percentage of its mining industry is owned by foreign companies. Compagnie Miniere de l'Ogooue, Gabon's largest manganese producer, 7 See Table V. 58 CO W w to H w « 55 Eh < g a O > S U — o w p4 2: -1 f— ( cj H • « CLj IW < £ O 0) Eh o J « H w *■" Eh > U w P Q Q O 2 « O PM en V£> d) P H fd > .* T3 C rH C U -H O -P £ 0 P iW T3 O 0 M eA° Pn p: w o c •H 0 P Eh U P P 73 h 0 O H jC Pn CO >i M P c p o u o in r- (N CM 00 00 r^ rH n rH CO rH m r- in en ■^r rH CM in CT\ ■CO- CD o CM in o o 00 CN m o o o o o o o o o o o o o o o o o o o m in 00 00 CO in ■*■ en CM CM •co- cr> c o rH CTi CO CO in LI m •a1 in in -31 cr> CM o o o o o o o O o o o o o o CM <* o in in CTi CM r^ *£> in \D CM CM CO CO o CO ■^ en o CO o O o\ o O VD rH y& O ■d1 o O r-> en CM O ** o O 'cr CM *£> C\ CM o O in en VD ^D O o o CO *!• rH r^ m rH iH CO en CM in CM CO in rH id TJ ■H c u W fd •H rH 0) ■H rH O •H fl c fd fd c fd 0 X! U N o o •H C -H c tn P •H fd tj XI ■n •h fd fd C & X U c fd c £ s XJ 0 fd C o •H P u p TJ o u Q* (Ti VD CA fd P o 59 has 49% of its ownership held by United States Steel Corporation (Ref. 42). Such extent of foreign ownership perhaps permits one to give less emphasis to the $77.20 value per capita for manganese shown in Table V. 2. Nickel Nickel production in 1969 by developing countries is shown at Table VI. The extremely high value per capita for the French territory of New Caledonia may be misleading, because almost the entire nickel industry on New Caledonia is owned by companies in France, Canada and the United States. Nickel production accounted for about 0.21% of the GNP's of both Cuba and Southern Rhodesia. A maximum reduc- tion of 30% in the assumed price for nickel would have only minor effects on the economies of other high nickel produc- ing, developing nations. 3. Copper Since copper from manganese nodules will constitute a very small percentage of world production, it was con- cluded earlier that the world copper market would not be severely effected by nodule exploitation. None of the major copper producing, developing countries listed in Table VII should be adversely effected. Even Zambia and Chile, with very large capacities for copper mining, would appear to face no harmful competition. Consequently, the apprehension expressed by the Chilean Ambassador to the United Nations over the effect of manganese nodule 60 s o « P-. ^ U) K W « H CJ « H Eh H S3 5 o > fo o ■** o u rvi . i-h* S3 Q U-t CQ o £ 0) < H h ps H Eh CU ^ U o D J P w O t tf w PM Q o\ KD 0\ M 0 03 P4 -p •H a, a z, fd o u >h a; ft tfl •p a) •H 3 a iH fd (0 u > * ra c ■-I 0 ^H •H 0 -p £ u p in t 0 o n 0V> ft c to o c -H 0 -p Eh o p -p TJ u o o Sh JZ cu CO >1 >H ■p c p o u {/> o o o fd c o CD CD as 2, U 00 c IT) ro m ro C?> VD «x> CM 00 ro o o 00 o 00 o *X> r- rH o ro o ro ^ CM 00 iH o *. ■^ ■co- o o o o o o o o o o o o o o o o O o o o o o O ** o c\ in fN eg «!* in in F> in rn ro O <& o CM CM CN iH to- f» m id u c fd CD W .C CD -P ^ P o CO K as •H CO CD CD iH C O •H 0 0) N T3 CD (d C >H M H O M to c o -p o 0) in o ro in CO fd C 0 •H -p CJ p •a o u a, a\ VD fd -P 0 Eh 61 sj o « r^ CO « W w H CM « CM Eh O 55 — H U D o H O "* > Fn O O i W U M— : M g S O CQ o H Cd < H CM -— H Eh O U tl D w Q > O w « Q Cm CTi VD CT> rH U CD rd CD u CD CM rd -P Q) -H rH rd rd u > CD rH > o •H -P U 4-1 03 0 0 o\o CM H3 iH 0 5 CM CO o o o O O ^P CD CTi o CN oo CN 00 O 00 H rH o CO CN in o o o o o o o o o o o o o o o o o o o o o o o o o o o in 00 -co- co o 00 in iH CO CO CN o in LO ro ro CO -31 CN CO O en CD CD CN CD CO CN CD in o o o CN o o 00 CO o o o CN CN CN o o o o o o o o o o o o o o o o o o o o o o o o o o o CN o o CN CD ro CO r» r^ in 00 Is- CN CN •^< CD O CO ro CD ■^ «tf CO CO C CO 0 c ■H 0 H CD ^p in CO O CD o o O 00 m -P i^ rH rH r* CO r~ o CO o in in CD CN o l> r- CN CN 00 o cy> o «^« "* CT> 00 p -p '0 u •^ 00 cn r» "* o CN CN o CD H rH 0 0 CN CD CTi CN •^r H l> •^ ro CN CN CN u Si CO r- CO CN H H to CD ,— » -P C 'd to & u •H c rd CD C fd •H 04 rd •H £ U -H -P td rH CM H o Sh 1 rd Q) to to rd C •H CD 0 & •H rd C u rd s: o ^ CD 3 'd P O H tj> 3 3 H a •H -H tJ> •P -H -P T3 H c o g •H C CM h •H •H rd X H 3 n 3 C Cm rd u rd s: 0 Q) i tr> CS] u U « CM CM u s CQ to < to w U D to o ■p u o w CD CN CN H CD CD to rd o •H •P U o u Cm CTi CD H rd ■P O Eh exploitation on his country's recently nationalized industry is unwarranted (Ref . 43) . 4. Cobalt The world market for cobalt; which should suffer the greatest reduction in price as a result of manganese nodule exploitation, is especially significant for a number of developing nations shown in Table VIII. The Congo Republic, Cuba, Morocco and Zambia would feel the pinch of cobalt price reductions on their economies. The 1969 cobalt pro- duction values as a percent of GNP for these countries was: Congo Republic, 3.64%; Zambia, 0.50%; Morocco, 0.25%; and Cuba, 0.15%. With a drastic drop in the price of cobalt, a certainty if production were several hundred percent greater than world demand, the cobalt capacities of these nations would have little value. O « Cm H C/) <; H CQ PS O Eh H U S — H D o H h O"^ > o u W 20*w tl O S OJ PQ H H PS < EH PM — H u o D ^\ P w o > ps w Cm Q cr> «£> en >H 0 fd Pm -P CO •H r- fU -tt S fd U U u Ph fd 0) P -P •H Ch rH fd fd U > o o o o o o o o o o o o d) %fc %» »• V. p o o o o ■H • o o o o fd "^ ID in co > V, «. %» - CO r- r^ r- ^r * ^ P. rH 0 U -H 0 -P in 5 o co p • UH ^ o> 0 0 m- u o\° Pm P. W 0 P. •H O O •P En o O o 3 4-> «. TJ >H iH O 0 rH 5H^ P4 en •p c p o u CO *r VD in o CM KD CM co CO CM CTi CTi in CO co O r^ o o o o o in r- r-> *x> u •H 0 rH u 0 JQ u C7> P rd o p a, % Sh O 0) O u p; u s ■H fd to p o -p rH o in o\ CM CM CM CO fd P o •H -P CJ P o H cr> <£> fd ■P o Eh 64 VI. CONCLUSION In a policy statement on the seabed, President Nixon declared in his U.S. Foreign Policy for the 1970's; "We are seeking a system which fully protects the interests of the less-developed countries in the ocean resources, as well as the interests of those nations which now possess the technological capacity to exploit them. Such an arrangement is both fair and practical. For these resources are a common heritage of mankind, and their benefits should be shared by all. And the world is unlikely to give its sanction to arrangements which do not ensure a wide sharing of these benefits. The mineral royalties involved will eventually be very large. Earmarking them for international purposes - particularly the development of poorer nations - could be a tremendous step forward toward a solution to one of the world's most grievous problems" (Ref. 44). If the interests of less-developed nations are to be pro- tected, one would expect that the first call upon collected royalties from exploitation of the seabed would be for compensation to those developing countries whose economies are detrimentally effected by the competition. Obviously, such just disbursements will shrink the monies available for economic assistance to all developing countries and other international purposes. From facts presently known, it can be shown that man- ganese nodule exploitation alone will not produce the vast wealth necessary to provide affluence for all of mankind. Based on 1971 metal prices and the Deepsea Ventures' nodule grade shown in Table III, anticipated gross values of future nodule exploitation are given below in Table IX: TABLE IX PROJECTED WORTH OF MANGANESE NODULE EXPLOITATION Year Mining Capacity Gross Value 1976 1,000,000 tons $ 67,430,000 1985 10,000,000 674,300,000 2000 25,000,000 1,685,750,000 A royalty amounting to 10% of these gross values would provide $6,743,000 in 1976; $67,430,000 in 1985; and $168,575,000 in the year 2000 for the benefit of the world community, including needs of developing countries. Such sums are not monumental when compared with current expendi- tures of the United Nations system, which are in the neigh- borhood of $1 billion annually. However, they would be marginally significant with' respect to 1970 authorized expenditures of the United Nations Educational, Scientific and Cultural Organization (UNESCO) at $44.3 million or the World Health Organization (WHO) at $75.8 million (Ref. 45), By the year 2000, other deep ocean resources will have joined manganese nodules as new world mineral reserves. Nevertheless, the future exploitation of sedimentary materials such as calcareous and diatom oozes or red clay deposits is in doubt. Even if the economic structure of the world minerals market changes to allow profitable gathering of these materials, their low value ould not 66 likely provide large royalties. With extensive exploration and research, Red Sea metaliferrous muds, however, should prove profitable, perhaps by the year 2000. But, royalties to be gained from these minerals would be insignificant compared to the needs of developing countries, because 10% of the total value of sediments in the top ten meters of 3 these deposits will likely amount to only $250 million. Deep seabed petroleum will eventually prove to be the most lucrative deep ocean resource of all from the view- point of the international community. Semi-enclosed seas with potential oil bearing crustal structures, continental rises and continental slopes have a combined sediment volume far exceeding that of the continental shelves. Therefore, it is reasonable to assume that petroleum production Irom the deep seabed at some future date will at least equal current offshore production. A portion of this wealth will surely be realized by the year 2000. An international regime for the regulation of deep ocean mineral resources should be established promptly and its first subject is certain to be the exploitation of manganese nodules and the equitable allocation of royalties. It will also have to cope with the detrimental effects of exploita- tion of these minerals on national economies. Thus, when additional resources from the ocean deep become available, there will already be in operation a practical scheme for 8See Table II. 67 sharing the wealth of the oceans. If the community of nations at the 1973 conference on the law of the sea act wisely, the seabeds and the resources they hold will benefit all of mankind rather than become yet another source of conflict. 68 APPENDIX A METAL YIELD COMPARISON TABLES TABLE A- I METAL YIELD FOR HIGH MANGANESE CONTENT NODULES (Tons -Per- Year) Mining Capacity Manganese Nickel Copper Cobalt 1,000,000 488,000 2,550 1,370 540 2,000,000 976,000 5,100 2,740 1,080 3,000,000 1,464,000 7,650 4,110 1,620 4,000,000 1,952,000 10,200 5,480 2,160 5,000 ,000 2 ,440 ,000 JL^ ( /JU b,b50 2,700 6,000,000 2,928,000 15,300 8,220 3,240 7,000,000 3,416,000 17,850 9,590 3,870 8,000,000 3,904,000 20,400 10,960 4,320 9,000,000 4,392,000 22,950 12,330 4,860 10,000,000 4,880,000 25,500 13,700 5,400 15,000,000 7,320,000 38,250 20,550 8,100 20,000,000 9,760,000 51,000 27,400 10,800 25,000,000 12,200,000 63,750 34,250 13,500 69 TABLE A- I I METAL YIELD FROM HIGH NICKEL AND COPPER CONTENT NODULES (Tons -Per- Year) Mining Capacity Manganese Nickel Copper Cobalt 1,000,000 326,300 14,900 11,080 3,820 2,000,000 652,600 29,800 22,160 7,640 3,000,000 978,900 44,700 33,240 11,460 4,000,000 1,305,200 59,600 44,320 15,280 5,000,000 1,631,500 74 ,500 o 5 , 4 0 u 17 , -i-O , U U U , U i U U U f U 0 u 29. S ^.4 0 . 10 12.1 6,000,000 35.9 2.9 0.13 14.5 7,000,000 41.8 3.4 0.15 17.3 8,000,000 47. 8 3.8 0.17 19.4 9,000,000 53.8 4.3 0.19 21.8 10,000,000 59.8 4.8 0.21 24.2 15,000,000 89.8 7.2 0.31 36.3 20,000,000 119.7 9.6 0.41 48.4 25,000,000 149.6 12.0 0.52 60.6 TABLE A-VI METAL YIELD FROM HIGH NICKEL AND COPPER CONTENT NODULES AS A PERCENT OF 19 69 PRODUCTION Mining Capacity Manganese Nickel Copper Cobalt 1,000,000 4.0 2.8 0.2 17.1 2,000,000 8.0 5.6 0.3 34.2 3,000,000 12.0 8.4 0.5 51.4 4,000,000 16.0 11.2 0.7 68.5 5,000,000 20. 0 14.0 u . O 85.7 6,000,000 24.0 16.8 1.0 102.8 7,000,000 28.0 19.7 1.2 119.9 8,000,000 32.0 22.5 1.3 137.0 9,000,000 36.0 25.3 1.5 154.1 10,000,000 40.0 28.1 1.7 171.2 15,000,000 60.0 42.1 2.5 256.9 20,000,000 80.0 56.2 3.3 342.5 25,000,000 100.0 70.2 4.2 428.0 TABLE A-VII METAL YIELD FROM HIGH COBALT CONTENT NODULES AS A PERCENT OF 19 6 9 PRODUCTION Mining Capacity Manganese Nickel Copper Cobalt 1,000,000 3.4 1.2 0.03 52.7 2,000,000 6.8 2.4 0.08 105.4 3,000,000 10.3 3.7 0.12 158.1 4,000,000 13.7 4.9 0.16 211.0 5,000,000 17. 1 6.1 ii on 26 3. 3 6,000,000 20.5 7.3 0.2 3 316.3 7,000,000 24.0 8.5 0.27 369.2 8,000,000 2 7.4' 9.8 0. 31 421.8 9,000,000 30. 8 11.0 0.34 475.0 10,000,000 34.2 12.2 0.39 527.3 15,000,000 51.4 17.7 0.59 791.4 20,000,000 68.5 24.4 0.7 8 1053.8 25,000,000 85.6 30.1 0.98 1318.5 TABLE A-VIII METAL YIELD FROM DEEPSEA VENTURES1 MINE SITE AS A PERCENT OF 19 69 PRODUCTION Mining Capacity Manganese Nickel Copper Cobalt 1,000,000 3.1 2.3 0.1 10.5 2,000,000 6.2 4.6 0.3 21.1 3,000,000 9.4 6.9 0.4 31.6 4,000,000 12.5 9.3 0.6 42.2 5,000,000 15.6 11.5 0.7 52,7 6,000,000 18.7 13.9 0.9 63.3 7,000,000 21. 8 16.1 1.0 73.9 8,000,000 24.9 18.5 1.2 84.4 9,000,000 28.1 20.9 1.3 94.9 10,000,000 31.2 23.2 1.5 105.3 15,000,000 46.8 34.9 2.2 158.1 20,000,000 62.4 46.6 3.0 211.2 25,000,000 77.9 58.8 3.7 263.7 TABLE A- IX METAL YIELD FROM HIGH MANGANESE CONTENT NODULES AS A PERCENT OF 19 85 PROJECTED DEMANDS Mining Mang Low anese High Nick :el Copper Low High Cob alt Capacity Low High Low High 1,000,000 3.6 2.7 0.3 0.3 0.01 0.01 2.1 1.9 2,000,000 7.1 5.4 0.5 0.5 0.02 0.02 4.2 3.8 3,000,000 10.6 8.2 0.8 0.8 0.04 0.03 0.3 5.7 4,000,000 14.2 10.9 1 . 1 1.0 0.05 0.04 8.4 7.6 5,000,000 17.8 13.6 1.3 1.3 0.06 0.05 10.5 9.6 6,000,000 21.4 16.3 1.6 1.5 0.07 0.06 12.6 11.5 7,000,000 24.9 19.0 1.9 1.8 0.09 0.07 15.1 13.7 8,000,000 28.5 21.7 2.1 2.0 0.10 0.08 16.8 15.3 9,000,000 32.0 24.3 2.4 2.3 0.11 0.09 19.0 17.2 10,000,000 35.6 27.2 2.7 2.5 0.12 0.10 21.1 19.1 15,000,000 53.4 40.7 4.0 3.8 0.18 0.15 31.6 28.6 20,000,000 71.2 54.4 5.3 5.0 0.24 0.20 42.1 38.6 25,000,000 89.0 68.0 6.6 6.3 0.31 0.25 52.7 47.8 TABLE A-X METAL YIELD FROM HIGH NICKEL AND COPPER CONTENT NODULES AS A PERCENT OF 19 85 PROJECTED DEMAND Mining Manganese Low High Nickel Copper Cob alt Capacity Low High Low High Low High 1,000,000 2.4 1.8 1.6 1.5 0.1 0.1 14.9 13.5 2,000,000 4.8 3.6 3.1 2.9 0.2 0.2 29.8 27.0 3,000,000 7.1 5.4 4.7 4.4 0. 3 0.2 44.6 40.5 4,000,000 9.5 7.3 6, 2 5.9 0.4 0. 3 59.6 54.1 5,000,000 11.8 9.1 7.3 7.3 0.5 0.4 74.5 67.7 6,000,000 14.3 10.9 9.3 8. 8 0.6 0.5 89.4 81.1 7,000,000 16.7 12.7 10.9 10. 3 0.7 0.6 104.1 94.7 8,000,000 19.1 14.5 12.4 11.7 0.8 0.7 119.0 108.1 9,000,000 21.4 16.3 14.0 13.2 0.9 0.7 133.9 121.5 10,000,000 24. 8 18.2 15.5 14.6 1.0 0.8 148.9 135.1 15,000,000 35.7 27.3 23.3 21.9 1.5 1.2 223.3 202.5 20,000,000 47.6 36.4 31.1 29.3 2.0 1.6 297.9 270.1 25,000,000 59.5 45.5 38.8 36.6 2.5 2.1 372.0 338.0 TABLE A-XI METAL YIELD FROM HIGH COBALT CONTENT NODULES AS A PERCENT OF 19 85 PROJECTED DEMAND Mining Manganese Nickel Copper Cobalt Capacity Low High Low High Low High Low High 1,000,000 2.0 1.6 0.7 0.6 0.02 0.02 45.8 41.6 2,000,000 4.1 3.1 1.3 1.3 0.05 0.04 91.7 83.2 3,000,000 6.1 4.7 2.0 1.9 0.07 0.06 137.6 124.9 4,000,000 8.1 6.2 2.7 2,5 0.09 0.08 188.3 166.5 5,000,000 10.2 7.8 3.4 3.1 0.12 0.10 229.2 208.0 6,000,000 12.2 9.3 4.0 3.8 0.14 0.11 275.0 249.8 7,000,000 14.3 10.9 4.7 4.5 0.16 0.13 321.0 291.4 8,000,000 16.3 12.4 5.4 5.1 0.18 0.15 366.7 333.0 9,000,000 18.3 14.0 6.1 5.7 0.21 0.17 412.2 374.4 10,000,000 20.4 15.5 6.7 6.4 0.23 0.19 458.1 416.0 15,000,000 30.6 23.4 9.8 9.3 0.35 0.29 727.0 659.0 20,000,000 40.7 31.1 13.5 12.7 0.46 0.38 917.2 832.2 25,000,000 50.9 38.9 16.9 15.9 0.58 0.48 1145.8 1040.0 TABLE A-XII METAL YIELD FROM DEEPSEA VENTURES* MINE SITE AS A PERCENT OF 19 85 PROJECTED DEMANDS Mining Mang. Low anese High Nickel Copp Low >er High Cob alt Capacity Low High Low High 1,000,000 1.9 1.4 1.3 1.2 0.1 0.1 9.2 8.3 2,000,000 3.7 2.8 2.6 2.4 0.2 0.1 18.3 16.7 3,000,000 5.6 4.2 3.9 3.6 0.3 0.2 27.5 25.0 4,000,000 7.4 5.7 5.1 4.8 0. 3 0.3 36.6 jJi j 5,000,000 9.3 7.1 6.4 6.0 0.4 0.4 45. 8 41.6 6,000,000 11.1 8.5 7.7 7.3 0.5 0.4 55.0 50.0 7,000,000 13.0 9.9 9.0 8.5 0.6 0.5 64.2 58.3 8,000,000 14.9 11.3 10.3 9.7 0.7 0.6 73.4 66.6 9,000,000 16.7 12.8 11.6 10.9 0.8 0.7 82.4 74.9 10,000,000 18.6 14.2 12.9 12.1 0.9 0.7 91.6 83.2 15,000,000 27.8 21.4 19.3 18.2 1.3 1.0 137.6 124.9 20,000,000 37.1 28.4 25.7 24.2 1.8 1.5 183.4 166.6 25,000,000 46.5 35.5 32.4 30.3 2.2 1.8 229.2 208.0 TABLE A-XIII METAL YIELD FROM HIGH MANGANESE CONTENT NODULES AS A PERCENT OF 20 0 0 PROJECTED DEMAND Mining Manganese Nickel Copper Cobalt Capacity Low High Low High Low High Low High 1,000,000 2.7 2.0 0.2 0.2 0.01 0.01 1.3 1.1 2,000,000 5.3 4.1 0.4 0.3 0.02 0.01 2.7 2.2 3,000,000 8.0 6.1 0.5 0.5 0.03 0.02 4.0 3.3 4,000,000 10.7 8.2 0.7 0.6 0.03 0.03 5.3 4.4 5,000,000 13.4 10.2 0.9 0.8 0.04 0.03 6.7 5.5 6,000,000 16.0 12.2 1.1 0.9 0.05 0.04 8.0 6.6 7,000,000 18.7 14.3 1.2 1.1 0.06 0.05 9.5 7.9 8,000,000 21.4 16.3 1.4 1.2 0.07 0.05 10.6 8.9 9,000,000 24.0 18.4 1.6 1.4 0.08 0.06 12.0 9.9 10,000,000 26.7 20.4 1.7 1.5 0.09 0.07 13.3 11.1 15,000,000 40.1 30.6 2.6 2.3 0.13 0.10 20.0 16.6 20,000,000 53.5 40.8 3.5 3.1 0.17 0.13 26.9 22.1 25,000,000 66.9 51.0 4.4 3.8 0.22 0.17 33.3 27.6 TABLE A-XIV METAL YIELD FROM HIGH NICKEL AND COPPER CONTENT NODULES AS A PERCENT OF 200 0 PROJECTED DEMAND Mining Mang Low anese High Nickel Copper Low High Cob alt Capacity Low High Low High 1,000,000 1.8 1.4 1.0 0.9 0.1 0.05 9.4 7.8 2,000,000 3.6 2.7 2.0 1.8 0.1 0.11 18.8 15.6 3,000,000 5.4 4.1 3.1 2.7 0.2 0.16 28.2 23.4 4,000,000 7.2 5.5 4.1 3.6 0. 3 0.22 37.6 31.3 5,000,000 8.9 6.8 5.1 4.5 0.4 0.27 47.0 39.2 6,000,000 10.7 8.2 6.1 5.4 0.4 0. 32 56.4 46.9 7,000,000 12.5 9.6 7.1 6.3 0.5 0.38 65.8 54.8 8,000,000 14.3 10.9 8.1 7.2 0.6 0.42 75.2 62.5 9,000,000 16.1 12.3 9.2 8.1 0.6 0.48 84.6 70.4 10,000,000 17.9 14.7 10.2 9.0 0.7 0.54 94.0 78.2 15,000,000 26.8 20.4 15.3 13.4 1.1 0.81 141.0 117.1 20,000,000 35.7 27.3 19.7 18.7 1.4 1.07 187.9 156.3 25,000,000 44.7 34.1 25.4 22.4 1.8 1.34 234.9 195.4 TABLE A- XV METAL YIELD FROM HIGH COBALT CONTENT NODULES AS A PERCENT OF PROJECTED 20 00 DEMAND Mining Manganese Low High Nick :el Copper Low High Cob alt Capacity Low High Low High 1,000,000 1.5 1.2 0.4 0.4 0.02 0.01 28.9 24.1 2,000,000 3.1 2. 3 0.9 0.8 0.03 0.03 57.8 48.1 3,000,000 4.6 3.5 1.3 1.2 0.05 0.04 86.8 72.2 4,000,000 6.1 4.7 1.8 1.6 0.07 0.05 115.8 96.4 5,000,000 7.6 5.8 2.2 1.9 0.08 0.06 144.7 118.7 6,000,000 9.2 7.0 2.7 2.3 0.10 0.08 173.4 144.3 7,000,000 10.7 8.2 3.1 2.7 0.12 0.09 202.2 168.5 8,000,000 12.2 9.4 3.5 3.1 0.13 0.10 231.4 192.5 9,000,000 13.8 10.5 4.0 3.5 0.15 0.11 260.1 216.4 10,000,000 15.3 11.7 4.4 3.9 0.16 0.13 288.4 240.5 15,000,000 23.0 17.5 6.4 5.7 0.25 0.19 458.2 382.0 20,000,000 30.6 23.4 8.8 7.8 0.33 0.25 578.2 481.4 25,000,000 38.4 29.2 11.0 9.7 0.41 0.31 723.8 602.0 TABLE A-XVI METAL YIELD FROM DEEPSEA VENTURES1 MINE SITE AS A PERCENT OF 2000 PROJECTED DEMAND Mining Mang. Low anese High Nickel Copper Coba It Capacity Low High Low High Low High 1,000,000 1.4 1.1 0.8 0.7 0.1 0.05 5.7 4.8 2,000,000 2.8 2.1 1.7 1.5 0.1 0.10 11.6 9.6 3,000,000 4.2 3.2 2.5 2.2 0.2 0.14 17.4 14.4 •1,000,000 5.6 4. 3 3.4 3.0 0.3 0.19 23.2 19.2 5,000,000 7.0 5.3 4.2 3.7 0.3 0.24 29.0 24.1 6,000,000 8.4 6.4 5.1 4.5 0.4 0.29 34.8 28.9 7,000,000 9.8 7.5 5.9 5.2 0.4 0.33 40.6 33.7 8,000,000 11.1 8.5 6.7 5.9 0.5 0.38 46.4 38.6 9,000,000 12.5 9,6 7.6 6.7 0.5 0.43 5 2.2 43.3 10,000,000 13.9 10.7 8.4 7.4 0.6 0.48 57.9 48.1 15,000,000 20.9 16.0 12.7 11.1 0.9 0.71 87.0 72.2 20,000,000 27.8 21.3 16.9 14.8 1.3 0.95 116.1 96.4 25,000,000 34.9 26.6 21.1 18.5 1.6 1.19 145.0 120.2 REFERENCES 1. U.N. General Assembly Resolution 2340 (XXII) of 18 December 196 7. 2. U.N. General Assembly Resolution 2574D(XXIV) of 15 December 1969. 3. Nixon, R. M. "United States Policy for the Seabed," Department of State Bulletin, v. LXII, p. 735-738, 15 June 1970. 4. 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L . , An Engineering Approach to Ocean Mining, paper OTC 1035 presented at 1st Annual Offshore Technology Conference, Huston, 18-21 May, 1969. 30. Siewiorek, D. P., Stanford Engineering Analysis of Marine Resources and Technology, ch. II, Stanford University, 1969. 31. Kaufman, R. and Rothstein, A. J., Recent Developments in Deep Ocean Mining, paper presented at Marine Technology Society Conference, Washington, D. C. , 29 June - 1 July, 1970. 32. La Mutte, C. , "Deepsea Venfurr.s ' Pilot Run is Successful," Ocean Industry, p. 7-13, October, 1970. 33. Mero, J. L. , "Will Ocean Mining Prove Commercial?," Offshore, p. 110-134, April , "l971 . 34. Me r o , J . L . , Ocean Mining is Alive and Well and Living at Sea, paper OTC 136 2 presented at 3rd Annual Off- shore Technology Conference, Huston, 19-21 April, 1971. 35. Mero, J. L. , The Mining and Processing of Deep-Sea Manganese Nodules, p. 16-2 7, University of Cali- fornia, Berkeley, 1959. 36. Fuerstenau, D. W. , Metal Recovery from Marcanese Nodules , University of California, Berkeley , 1966. 37. "Process Makes Pure Metals from Ocean Nodules," Chemical and Engineering News , p. 56-57, 10 May 19 71. 38. Taylor, D. M. , "Worthless Nodules Become Valuable," Ocean Industry, p. 27-28, June 1971. 39. Engineering and Mining Journal, p. 14, 16 0, April 19 71 86 40. Minerals Yearbook, Vol. I-II# United States Department of the Interior, Bureau of Mines, 1969. 4 1 . Marine Resources and Legal-Political Arrangements for Their Development, U.S. Commission on Marine Science, Engineering, and Resources, Washington, 1969. 42. Minerals Yearbook, Vol. IV, United States Department of the Interior, Bureau of Mines, 196 8. 43. Zegers , F. , Address made by the United Nations Delegate of Chile on the session of 16 March 1971 in the extended Committee of the Sea-Bed. 44. Nixon, R. M. , U.S. Foreign Policy for the 1970's, A Report to the Congress by the President of the United States, 25 February 1971. 4 5 . United States Contributions to International Organiza- tions , House of Representatives, 91st Congress, 2nd Session, Document No. 91-432, Washington, 1970. 87 INITIAL DISTRIBUTION LIST No. Copies 1. Defense Documentation Center 2 Cameron Station Alexandria, Virginia 22314 2. Library, Code 0212 2 Naval Postgraduate School Monterey, California 93940 3. Professor Robert von Pagenhardt 3 Navy Management Systems Center Naval Postgraduate School Monterey, California 93940 4. Asst. Professor N. E. Boston, Code 58 1 Department of Oceanography Naval Postgraduate School Monterey, California 93940 5. Asst. Professor R. S. Andrews, Code 58 1 Department of Oceanography Naval Postgraduate School Monterey, California 93940 6. Department of Oceanography, Code 58 3 Naval Postgraduate School Monterey, California 93940 7. Mr. Leonard L. Fischman 1 President, Economic Associates, Inc. 1150 Connecticut Avenue N. W. Washington, D. C. 20036 8. Miss. Paula Quinterno 1 U.S. Department of the Interior Geological Survey Office of Marine Geology 345 Middlefield Road Menlo Park, California 94025 9. Mr. Michael J. Cruickshank 1 U.S. Department of Commerce National Oceanic and Atmospheric Adm. Marine Minerals Technology Center 3150 Paradise Drive Tiburon, California 94920 88 10. Dr. Ned A. Ostenso Office of Naval Research Code 480D Arlington, Virginia 22217 11. Mr. Bayless Manning President Council on Foreign Relations, Inc. 58 East 68 Street New York, New York 10021 12. Mrs. Elizabeth Mann Borgese Center for the Study of Democratic Institutions 2056 Eucalyptus Hill Road Santa Barbara, California 93103 13. Professor Boyd Huff, Code 56 Chairman, Department of Government & Humanities Naval Postgraduate School Monterey, California 93940 14. Dr. C. H. Cheek Head, Chemistry Branch Ocean Sciences Division Naval Research Laboratory 4 55 5 Overlook Avenue, S. W. Washington, D. C. 20390 15. Mr. Bernard H. Oxman Ocean Affairs Advisor Office of the Legal Advisor U.S. Department of State Washington, D. C. 205'20 16. Mr. Stuart Mclntyre Deputy Director for Oceans, Outer Space and Disarmament Bureau of International Organization Affairs U.S. Department of State Washington, D. C. 20520 17. Mr. Herman Pollack Director, Bureau of International Scientific and Technological Affairs U.S. Department of State Washington, D. C. 20520 18. Mr. Howard M. Wiedemann Assistant Deputy Director for Science Affairs Bureau of Intelligence and Research U.S. Department of State Washington, D. C. 20520 89 19. Mr. Ray Cline Director, Bureau of Intelligence and Research U.S. Department of State Washington, D. C. 20520 20. Mr. H. Donald Gelber Political Advisor Chief of Naval Operations, Executive Panel SNA Building 1400 Wilson Boulevard Washington, D. C. 20390 21. Mr. F. D. Elfers and Mr. Virgil Randolph Office of Ocean Affairs Department of the Navy 4D560 Pentagon Washington, D. C. 20301 22. Mr. J. A. Mattson Office of Strategic Affairs Department of the Navy 4D560 Pentagon Washington, D. C. 20301 23. Honorable Claiborne Pell Senate Office Building Washington, D. C. 20510 24. Ambassador Christopher Phillips U.S. Mission to the United Nations New York, New York 10017 25. Mr. Harlan Cleveland President University of Hawaii Honolulu, Hawaii 96814 26. Capt. Will am O. Miller, USN Deputy Asst. Judge Advocate General Office of the Judge Advocate General of the Navy Washington, D. C. 20350 27. LCDR William Lounsbery, USN Navy Test and Evaluation Detachment, Key West, Florida, 33040 28. Mr. James J. Victory, Director of Marketing Deepsea Ventures, Inc. Gloucester Point, Virginia 23062 29. Professor William T. Burke School of Law University of Washington Seattle, Washington 9 8105 90 30. LT George E. Bollow Staff, Commander Amphibious Group ONE FPO San Francisco, California 96601 91 UNCLASSIFIED DOCUMENT CONTROL DATA -R&D (Security elmssificmlion of title, body of abstract and indexing annotation must be entered when <;,« overall report is classified) originating activity (Corporate author) Naval Postgraduate School Monterey, California 93940 Za. REPORT SECURITY CLASSIFICATION Unclassified 2b. GROUP 3 REPORT TITLE ECONOMIC EFFECTS OF DEEP OCEAN MINERALS EXPLOITATION 4 DESCRIPTIVE NOTES (Type of report and, inclusive dates) Master's Thesis; September 1971 5 «uTMORiSi (firsl rume, middle initial, last name) George Edward Bollow; Lieutenant, United States Navy 6 REPOR T D A TE September 1971 »a. CONTRACT OR GRANT NO. b. PROJEC T NO 7a. TOTAL NO. OF PAGES 93 7b. NO. OF REFS 45 9a. ORIGINATOR'S REPORT NUMSER(S) Ob. OTHER REPORT NO(S) (Any other numbera that may be aaslgned this report) 10 DISTRIBUTION STATEMENT Approved for public release; distribution unlimited. II. SUPPLEMENTARY NOTES 12. SPONSORING MILITARY ACTIVITY Naval Postgraduate School Monterey, California 93940 13. ABSTRACT Any international regime established to regulate the exploitation of deep ocean mineral resources will be shaped greatly by the effect this exploitation may have on the world economy. Many deep ocean mineral deposits are potentially available, but manganese nodules will probably be the first to be exploited. This study of the economics of manganese nodules con- cludes that realistic production rates will severely effect the world's market price of cobalt; have significant effect on manganese and nickel prices; and cause little or no changes in the world copper market. It also shows that the royalties to be gained from an international tax or leasing system for exploitation of these nodules will not be great enough to augment significantly the economic ^ assistance to developing nations. However, the exploita- tion of manganese nodules could be detrimental to the economies of specific developing countries with manganese, nickel or cobalt mining industries. DD FORM i no v es S/N 0101 -807-681 1 1473 (PAGE 1 ) 92 UN( l-ASSIFIED Security ClassificBtion 31408 UNCLASSIFIED Security Classification KEY WORDS DEEP OCEAN MINERALS MANGANESE NODULES MINERAL ROYALTIES D,?oRvM691473 (BACK) 0101-8O7-6S2! 93 UNCLASS ^IED Security Chi fication A - i I - 9 7? ERY 2 2 2 deeVoUat,oo- 1? Of Thesis B66 c.l Bo 1 low 130714 Economic effects of deep ocean minerals exploitation.