March 14 (Bloomberg) -- Lockheed Martin Corp., the world’s biggest defense contractor, is preparing to scour the Pacific Ocean seabed in a search for metals using data obtained in a cold-war hunt for a sunken Soviet submarine.
Lockheed has set up a unit, U.K. Seabed Resources, to explore for so-called polymetallic nodules that can contain copper, nickel, cobalt, manganese and rare earths, it said in London today. The company, supported by the U.K. government, has been granted the first commercial exploration rights for a 58,000 square-kilometer (22,000 square mile) area of the Pacific between Hawaii and Mexico.
“This is about giving the U.K. access to strategically important minerals and it’s about growing a nascent industry, those are the primary motivators for us,” Stephen Ball, chief executive officer of Lockheed Martin’s U.K. unit and of Seabed Resources, said in an interview.
Rare earths comprise 17 elements used in magnets, oil refining and smartphone batteries. They became a political and legislative flashpoint in July 2010 when China moved to limit domestic output and slash export quotas by 40 percent, souring ties with the U.S. and Japan.
“The U.K. is leading the way in this exciting new industry,” Prime Minister David Cameron said at the event to announce the new venture. The exploration “is expected to be worth up to 40 billion pounds to the U.K. economy over the next 30 years,” the equivalent of $60 billion.
Seabed Resources was granted the license by the International Seabed Authority under the sponsorship of the British government at a cost of about $500,000, Ball said. The company is meeting with potential U.K. suppliers, he said. Seabed mining outside a nation’s territorial waters is governed by the ISA, established under the United Nations Convention on the Law of the Sea.
Exploration will start late in the U.K. summer this year and the company expects to be ready to seek an exploitation license in about three years and to start extraction in five to six, Ball said.
Seabed Resources has applied for a second exploration license, with a decision due mid-year, he said.
Bethesda, Maryland-based Lockheed Martin surveyed the area targeted for exploration in the 1970s and 1980s after being subcontracted to search for a lost Soviet submarine by billionaire industrialist, aviator and filmmaker Howard Hughes.
“We had survey data as part of the heritage of our company,” said Ball. “We have conducted surveys in the past of that part of the ocean, so we understood what was there.”
The polymetallic nodules Seabed Resources will look for are found at a depth of about 4 kilometers (2.5 miles), are 3 centimeters to 5 centimeters in size and lie on top of the seabed, the company said. Rare earths, along with materials such as tungsten and niobium, are on a British Geological Survey supply-risk list of materials needed to maintain the U.K.’s economy and lifestyle.
“Rare-earth metals are vital to many new innovations such as mobile phones and low carbon technologies,” Universities and Science Minister David Willetts said in a statement. “The U.K. is well placed to lead this first exploration step which could pave the way for us to be at the forefront of significant new commercial, engineering and economic opportunities.”
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