Seabed mining – Preparing for survey licenses
Norway is preparing for a new multibillion dollar industry. Interested parties could benefit from starting preparations to apply for survey licenses in 2022.
The history of seabed mining dates back to 1873, when the HMS Challenger discovered phosphorite noodles during what was the world’s first large-scale oceanographic expedition. In Norway, exploration of marine minerals has been going on since the 1990’s. The commercial viability for seabed mining has dramatically improved over the last years due to increased demand combined with increasing scarcity of accessible land-based minerals. Investment in and development of improved mining technology and machinery is also contributing to the possibility of making seabed mining a potential new multi-billion-dollar industry.
Research activity on the deeper parts of the Norwegian continental shelf have identified deposits of massive sulphides containing copper, zinc, lead, gold and silver, as well as ferromanganese crusts containing manganese, iron, cobalt, nickel and possible other rare metals. Analysts suggest that the annual revenue in Norway may reach 20BUSD by 2050, in addition to a potential 2BUSD service industry revenue. Last year, the Norwegian Minister of Petroleum and Energy stated that “seabed minerals have the potential to become a new and important industry for Norway, the resources are present and accessible”.
The Government initiated an opening process for mineral activities on the Norwegian Continental Shelf in January 2021. The consultation process regarding how an assessment study should be developed was closed on 12 April last year. The assessment is currently ongoing and is scheduled to result in a published impact assessment study in Q4 2022. Following a further consultation process a final decision on whether to open up certain areas for commercial survey will most likely be made in 2023. Hence, interested parties could benefit from starting preparations to apply for survey licenses in 2022.
A snapshot of the legal picture
Surveying and mining of seabed minerals are governed by the Seabed Minerals Act (“SMA”), which entered into force on 1 July 2019. The law makers clearly stood “on the shoulders of giants” as the SMA is based on and resembles the Petroleum Act, a well proven and established act for fair and well-structured natural resource management.
Section 1-6 demonstrates the clear kinship with the oil and gas industry as it makes a public licensing system the cornerstone of any activity relating to seabed minerals, both for surveying and extraction.
Further and final details relating to the application procedure for a survey license may still be issued, but the basics are given in Section 3-1 of the SMA. The license may only be given for all or parts of a precisely designated area, for an approved survey program and for designated mineral deposits. Due to the fact that survey activities are geographically limited and relatively short term it is assumed that an impact assessment is not required. This will save time and resources in the preparation of an application. The license will not be exclusive, it will not give preferential treatment for later extraction licenses and it may be given for up to a period of five years. As opposed to the requirements related to extraction licenses, there are no nationality requirements related to survey licenses. Hence, the application procedure is open to both Norwegian and international companies.
Finally, it is worth noting that strict safety and liability regulations apply to all seabed mining activities, including survey activities. Section 6-1 sets a high threshold relating to the required level of safety and it is expected that further detailed requirements will be issued as a result of the ongoing opening up process. According to Section 8-3 strict liability applies on the part of the licensee for damages related to pollution and waste stemming from their activity. In line with the liability regime developed for the oil and gas industry, the licensee will also be jointly and severable liable for the acts of any party performing assignments on behalf of the licensee.
There is a clear global need to explore and extract minerals from the seabed going forward. However, seabed mining has been and remains a controversial activity. The environmental and geological impact of potential large-scale mining on the seabed is uncertain and will surely be a hot topic in the ongoing assessment and later specific impact assessments. Norway is, however, well suited and capable to make these assessments based on experience from five decades of sound and safe exploration and production of offshore oil and gas. In our opinion, it is at least safe to assume that the survey phase will commence as scheduled and that preparations for applications should be started in 2022.