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Published online by Cambridge University Press: 22 May 2009
Regulation of the exploitation of seabed minerals has to be considered in terms both of the technical nature of the operations and of the requirements of the supervisory body. The major issue, however, has been “Who May Exploit the Area?”. Different approaches to this question have been taken by the leading industrialized powers and by the Group of 77. Particular difficulties have arisen over: 1) the extent of the discretion to be exercised by the International Seabed Authority and the security of access of individual operators; 2) the way in which the Authority might itself engage in direct operations through an “Enterprise”; 3) the protection to be given to land-based producers against adverse consequences of seabed exploitation; and 4), the decision-making procedures of the Authority. Future events are hard to predict; but failure to produce a generally acceptable treaty could lead to significant conflict over the international seabed in the years ahead.
1 Resolution 2749 (XXV), 17 December 1970.
2 In the order of submission, by the United States, the United Kingdom, France, Tanzania, the USSR, Poland, 13 Latin American and Caribbean countries, Malta, 7 landlocked and shelflocked countries, Canada and Japan respectively. These proposals which, with the exception of that put forward by Japan, are reproduced in the Annexes to the 1970 and 1971 reports of the Seabed Committee, are set out in a comparative table in Document A/AC. 138/L.10.
3 1973 Report of the Seabed Committee, Vol. II.
4 Document A/CONF.62/WP.8/Part I, Third United Nations Conference on the Law of the Sea, Official Records, Vol. IV, p. 137. P.B. Engo (Cameroon) is the Chairman of the First Committee, the Committee concerned. Discussions also took place in 1974 and 1975 in informal working groups under the chairmanship of Ambassador C. Pinto (Sri Lanka). More detailed accounts of the history of the seabed negotiations are to be found in various works, in particular in Piquemal, A., Le fond des mers, Patrimoine commun de l'humanité, CNEXO, Rapport économique et juridique no. 2, (up to 1970)Google Scholar; Luard, E., The Control of the Seabed, (up to 1973)Google Scholar; and, as regards the Conference, Miles, E., “An interpretation of the Caracas Proceedings,” Law of the Sea: Caracas and Beyond, Christy, et al., eds., p. 39Google Scholar, and “An interpretation of the Geneva Proceedings,” published in two parts in Ocean Development and International Law Journal, Vol. 3, No. 3 (1976): 187CrossRefGoogle Scholar, and Vol. 3, No. 4 (1976): 303.
5 Document A/CONF.62/WP.8/Rev.1/Part I, Third United Nations Conference on the Law of the Sea, Official Records, Vol. V, p. 125.
6 The area, as defined in the Revised Single Negotiating Text (RSNT), consists of the seabed and subsoil beyond the outer limit of the continental margin or 200 nautical miles from the baselines from which the territorial sea is measured, whichever is further from the coast (Part I, Article 2, and Part II, Articles 45 and 64).
The presence in the area of other mineral deposits (brines, hydrocarbons, phosphates etc.), although potentially important in some cases, may be ignored for present purposes, as may be the existence of traces of other minerals in the nodules. For the definition of the mineral resources of the area, see Article I (iv), Part I, RSNT.
7 The band containing the richest deposits so far located is about 200 kilometers wide by 1500 kilometers long and runs roughly East-West between latitudes 6° N. and 20° N. and longitudes 110° W. and 180° W. See Ocean Manganese Nodules (second edition) prepared by the Congressional Research Service for the United States Senate Committee on Interior and Insular Affairs, February 1976, pp. 7–12 at p. 11, and Manganese Nodule Resources and Mine Site Availability, Ocean Mining Administration, Department of the Interior, August 1976. Areas of comparable size are believed to exist in the South Pacific and considerable areas are probably to be found elsewhere, notably in the Indian Ocean.
The extent of minable resources is not precisely known, but these are certainly very large, with nickel potential substantially exceeding the 45 million metric tons of land-based nickel reserves.
8 In view of the number of factors involved in calculating further world demand for the four metals, the technical problems that may arise and the large sums of capital required, it is difficult to quantify the amount of production by a given date. While earlier studies suggested that by 1985 seabed production might provide up to 26 percent of the net import nickel requirements of Western industrialized countries, 13 percent in the case of manganese, 5.5 percent of copper imports, and nearly all cobalt requirements (Document A/CONF.62/25 p. 42), it is now thought that production of nickel will probably not exceed 100,000 tons by 1985, and may be as little as half as that. The Ocean Mining Administration study (note 7 above) estimated that between 10 and 20 projects only would actually come into operation between 1985 and 2010. The scale of potential development by the end of “first generation” operations would nevertheless remain considerable.
9 The initial capital requirements would be between $350 and $650 million and operating expenses would be between $100 and $200 million a year. See generally “Ocean Mining: An Economic Evaluation” by Wright, Rebecca L., Ocean Mining Administration, Department of the Interior, 05 1976. The greater part of the costs would be for processing and not for operations at seaGoogle Scholar.
10 Some preliminary crushing operations might however be feasible at sea using an intermediate station or a large surface container; Manganese Nodules-Metals from the Sea, Metallgesellschaft A.G., Review of activities, Edition 18, 1975, pp. 30–31. Means of carrying out processing operations offshore might however be developed in order to reduce transport costs and environmental problems. It is generally agreed, however, that such developments are not likely in the immediate future.
11 Flipse, J., “Dean Ocean Mining Technology and Its Impact on the Law of the Sea,” in Law of the Sea: Caracas and Beyond, Christy et al., eds., p. 329Google Scholar.
12 See, however, note 10 above.
13 Thus paragraph 19, Annex I, RSNT, provides that: “Except as otherwise specified, the procedural and substantive provisions of this Annex relating to contracts shall apply mutatis mutandis to the Enterprise.”
14 Article 16, RSNT.
15 Paragraph 3, Annex I, ibid.
16 Paragraphs 6 and 7, ibid.
17 Paragraph 11. Contracts will normally cover all stages of operations. If the operator enters into a contract only for a separate stage of operations, however, he is given a preference among applicants for a contract for subsequent stages with respect to the same area and resources; paragraphs 5 and 8 (c).
18 Paragraph 12 (b). Other operational matters on which the Authority is empowered to adopt rules and regulations are: the submission of progress reports; inspection and supervision of operators; the passing of title to minerals, upon recovery of minerals pursuant to the contract; prevention of interference with other uses of the sea; the transfer of rights by a contractor; procedures for the transfer of technology to developing countries and their direct participation; and mining standards and practices.
19 Paragraph 10.
20 Paragraphs 9 (d) and 12 (a) 3. See also the Special Appendix to the RSNT where two detailed proposals are set out.
21 Or if the contractor has failed to comply with a final binding decision of the dispute settlement body applicable to him; paragraph 14. Monetary penalties may be imposed in lieu of suspension or termination.
22 Paragraph 15.
23 For the summary of the situation up to the Caracas session, see the works cited in note 4 and Stevenson, J. and Oxman, B., “The Preparations for the Law of the Sea Conference,” American Journal of International Law Vol. 68, No. 1 (1974): 1CrossRefGoogle Scholar.
24 1973 Report of the Seabed Committee, Vol. II, Annex I, Appendix III, Article 9, p. 57.
25 Article 9, Document A/CONF.62/C.1/L.3, Third United Nations Conference on the Law of the Sea, Official Records, Vol. III, p. 159.
26 Article 22, RSNT.
27 See the speech by the United States Secretary of State, delivered to the American Bar Association in Montreal on 11 August 1975.
28 Version B of Article 9 referred to in note 24, and Document A/CONF.62/C.1/L.7, paragraph 5, Third United Nations Conference on the Law of the Sea, Official Records, Vol. III, p. 173.
29 Article 9, RSNT. See section III below.
30 Article 22, quoted above. It should also be noted that under the RSNT the developing countries would have a right of access, together with the Enterprise, to the Authority's areas.
31 The history of efforts to find a way out of the impasse regarding the choice of operators by giving the Authority (and/or the Enterprise) greater discretion in part of the area, the remainder being subject to a “statutory” regime largely laid down in the Convention through the ‘banking system’ is somewhat complicated. The broad lines, however, were as follows:
(1) the idea was mentioned as a possible approach by the US representative during the 1974 session, without, however, his endorsing it;
(2) a variant of the proposal was contained in the USSR Basic Conditions in March 1975 (A/CONF.62/C.1/L.12, Article 5, Official Records, Vol. IV, p. 184);
(3) the Group of 77 were generally unfavorable to the idea and it was not incorporated in the 1975 Informal Single Negotiating Text;
(4) a variant of the idea was put forward by a member of the Group of 77 during the first 1976 session and it was also referred to in the public speech made by the United States Secretary of State in New York on 8 April 1976;
(5) the proposal was then included in the RSNT, paragraph 8(d), Annex I.
32 Furthermore, when considering applications from associations which include developing countries in respect to such areas, the Authority is to ensure that the developing states concerned will obtain significant benefits from the association, e.g., by the location of a processing plant in one of the developing countries involved. Paragraph 8 (d) (iii).
33 See section IV below with respect to the latter issue.
34 Article 35. The Statute contained in Annex II of the RSNT has not so far been discussed in depth.
35 Consisting of 36 members elected by the Assembly according to the same criteria as those used for the Council of the Authority; paragraph 5 (b) ((ii), Annex II.
36 There is thus a marked contrast with the system for individual operators; under the “statutory” basic conditions the award of a contract on a competitive basis is made only in the event that the Authority receives more than one application at the same time in respect to substantially the same area and category of minerals; paragraph 8 (b), Annex I. For details of the Enterprise procedures for the award of contracts, see paragraph 7 (d), Annex II. The Governing Board may, however, decide to adopt rules determining the circumstances in which bidding may be dispensed with.
37 Thus as a further point of differentiation, whereas the Authority would not have powers over the sale of minerals or processed substances produced by individual operators (other than those which might arise out of the financial arrangements with the contractor or which might possibly be derived from future overall commodity arrangements), the Enterprise would be able to engage in transport, processing, and marketing, subject to guidelines laid down by the Council.
38 The Enterprise would accordingly have a commercial advantage over other operators to the extent these were required to pay national taxes.
39 On the discussions at the second 1976 session, see the final report of the Co-chairman of the Workshop, Document A/CONF.62/C.1/WR.5 and Addendum 1, and the report of the Chairman of the First Committee, Document A/CONF.62/L.16.
40 Annex II, Article 6, RSNT.
41 For details of Mr. Kissinger's statements, see press releases, United States Mission to the United Nations, USUN, 96 to 100(76), of 1 and 2 September 1976.
42 See the statement by the United States representative, 35 th meeting of the First Committee, A/CONF.62/C.1/SR 35.
43 For the argument along these lines see Eckert, R., “Exploitation of Deep Ocean Minerals: Regulation Mechanisms and United States Policy,” Journal of Law and Economics Vol. 17, No. 1, (04 1974): 143CrossRefGoogle Scholar, and Logue, D. and Sweeney, R., “Issues in the Regulation of Deep Sea Mining: Will Rationality Prevail;” Marine Technology Society Journal (04 1976): 35Google Scholar, and works there cited.
44 Amacher, R. and Sweeney, R., “International Commodity Cartels and the Threat of New Entry: Implications of Ocean Marine Resources,” Kyklos Vol. 29, (1976), fascimile 2, p. 292CrossRefGoogle Scholar.
45 For the list see Table 1 of the United States working paper on the economic effects of deep seabed exploitation, Document A/CONF.62/C.1/L.5, Official Records, Vol. III, p. 167.
46 The principal documentation which has been issued consists of the following: a series of reports made by the United Nations Secretariat, in particular Document A/CONF.62/25 (Official Records, Vol. III, p. 4) and Document A/CONF.62/37 (Official Records, Vol. IV, p. 121); various UNCTAD studies listed in Document A/CONF.62/26 (Official Records, Vol. III, p. 40); and the United States paper referred to in note 45 above and a paper by Chile, Document A/CONF.62/C.1/L.11 (ibid, p. 177).
47 Table 2, A. Archer, “The prospects for the exploitation of manganese nodules: the main technical, economic and legal problems,” presented at CCOP-SOPAC-IOC/IDOE, International Scientific Workshop on the Ecology, Mineral Resources and Ecophysics of the South Pacific, September 1975.
48 Document A/CONF.62/25, note 46 above, in particular Table 6 thereof. See also Ocean Manganese Nodules (Second Edition), p. 41 and following.
49 US Bureau of Mines, Commodity Data Summaries 1976, p. 112. so Article 9, RSNT.
50 Article 9, RSNT.
51 Paragraph 21 of Annex I provides:
“The rate of increase in world nickel demand projected for the interim period referred to in article 9 shall be the average annual rate of increase in world demand during the 20-year period prior to the entry into force of this part of the Convention, provided that the computed rate of increase shall be at least 6 percent per annum. The cumulative growth segment of the world nickel market referred to in article 9 shall be computed on the basis of this annual rate of increase from a base amount, which shall be the highest annual world demand during the three-year period immediately preceding the year in which the interim period commences.”
52 Document A/CONF.62/C.1/L.8, Article IV; Document A/CONF.62/C.1/L.9, Article 8 (iii) (a), Official Records, Vol. III, at pp. 174 and 176.
53 Document A/CONF. 62/C.1/L.12, Article 9, Official Records, Vol. IV. p. 185.
54 Speech by United States Secretary of State, 8 April 1976, and the Ocean Mining Administration study, note 7 above.
55 Paragraph 8 (e), Annex I.
56 See the report of the United States Senate Committee on Interior and Insular Affairs, No. 94–754,14 April 1976, p. 9.
57 See the UN Secretariat study “Examples of precedents of provisional application, pending their entry into force, of multilateral treaties, especially treaties which have established international organizations and/or regimes: report of the Secretary-General,” Document A/AC.138/88.
58 Articles 28 and 26. The Assembly is, however, described as the “supreme organ of the Authority” in Article 26.
59 Article 25, paragraph 9.
60 Article 27. Unchanged from the 1975 text. There was no detailed discussion of this issue at the second 1976 session.
61 Article 30.
62 Article 31.
63 Article 32.
64 Articles 42 to 45.
65 Annex III.
66 See the notice of discovery and claim by Deepsea Ventures Inc., and the United States Department of State statement on claim of exclusive mining rights by Deepsea Ventures Inc., Ocean Manganese Nodules (Second Edition), Appendices E and F at pp. 147 and 161.
67 Under the bill before the Senate (S.713) the Secretary of the Interior would be authorized to license US operators and to set operational conditions as regards such matters as minimum annual expenses, density limitations, environment standards and relinquishment. Licence holders would have security of tenure vis-a-vis other US firms and also those of other countries adopting similar legislation on a reciprocal basis. The enactment would cease when the US ratified an international treaty relating to seabed exploitation. It is also proposed that the Federal Government would provide an investment guarantee and insurance fund to cover the risk of losses brought about as a result of the international agreement or caused by persons against whom no legal remedy was available. US exports laws, merchant marine law, tax and customs law would apply; the minerals would be deemed for the purposes of such legislation to have been recovered in the US.
The US administration has so far opposed such proposals on the grounds that they would be detrimental to US interests at the Conference.
For a summary of US legislative proposals, see Ocean Manganese Nodules (Second Edition), p. 61 and following; the report of the Senate Committee on Interior and Insular Affairs, No. 94–754, 14 April 1976; and the Joint Report of the Committees on Commerce, Armed Services and Foreign Relations, No. 94–935, 8 June 1976.
68 And irrespective of their views concerning Resolution 2524 (XXIV), adopted in 1969, whereby the General Assembly declared a moratorium on all exploitation of seabed resources pending the establishment of an international seabed regime. The resolution was adopted, however, by a vote of 62 to 28 with 28 abstentions, the industrialized countries voting against.
69 Insofar as developing land producers could only secure protection through a multilateral settlement, they would have a considerable economic interest in seeking to avert unilateral action and to achieve a general acceptable solution.
