Nautilus Minerals Inc., a Canadian company planning an underwater mine for copper and gold off the Papua New Guinea coast, said countries will try to stake out the seabed as mineral deposits on land become harder to mine.
“Like anything where there’s a geopolitical uncertainty, people will look to maximize their position,” Tony O’Sullivan, chief operating officer of Toronto-based Nautilus, said in an interview in Kalgoorlie, Western Australia. “If you look at the area below the North Pole, there’s still an element of geopolitical uncertainty, so people are trying to get the maximum boundaries.”
Russia placed its flag below the North Pole in 2007 as melting polar ice led to competing claims over access to Arctic resources. The International Seabed Authority granted China, the world’s biggest metals consumer, and Russia licenses last month to search for minerals on the Pacific Ocean seabed after gaining approval from an international regulatory body.
“New copper projects are becoming more remote, are becoming deeper and are becoming metallurgically more challenging,” O’Sullivan said. “I don’t think there’s a view that we’re running out of copper or there’s a scarcity but I think there’s a view that it’s becoming increasingly difficult to develop on land.”
The current average grade of copper deposits is 0.6 percent, according forecaster Wood MacKenzie Ltd., dropping from about 1 percent in 1990, compared with a 6.5 percent copper grade for Nautilus’ $407 million Solwara project, located at a depth of 1.6 kilometers (1 mile) in the Bismarck Sea in Papua New Guinea.
The project, 30 percent owned by the Papua New Guinea government, is expected to produce 1.2 million metric tons of ore a year starting at the end of 2013. Much of the technology Nautilus plans to use is already deployed in the oil and gas industry, O’Sullivan said.
De Beers SA, producer of more than a third of the world’s rough diamonds, gets gem stones from an underwater mine in Namibia.
Prices of copper and gold are trading close to records as demand from China grows. Ocean miners will have to overcome concern that excavation will harm the environment and prove too expensive to make the ventures profitable.