Project Management Institute

Under the sea

As valuable mineral deposits become scarce on land, mining companies are looking to a vast new frontier for valuable projects: the planet’s oceans. The estimated value of underwater deposits for just one mineral—gold—exceeds US$150 trillion. Some of those deposits are off the coast of Papua New Guinea. After years of negotiations, Nautilus Minerals reached an agreement in April with the country’s government to launch the first-ever deep-sea mining project. The Canadian mining company plans to extract gold and other valuable metals at a depth of 1,500 meters (4,921 feet) just north of Papua New Guinea within five years.

But without careful management of stakeholders during the permitting process, project plans for pulling minerals from below the ocean may have to stay on land. Complicating schedules and budgets further, these projects require expensive environmental-impact and feasibility studies.

img

PHOTO COURTESY OF NAUTILUS MINERALS

As CEO of Chatham Rock Phosphate Ltd., Chris Castle has learned this firsthand. Mr. Castle founded the Wellington, New Zealand-based company in 2007 to extract phosphate from a reserve estimated at 23.4 million metric tons and valued at approximately NZ$4.2 billion, about 450 kilometers (280 miles) east of Christchurch, New Zealand, near the Chatham Islands. In December 2013, Chatham Rock received a 20-year mining permit from New Zealand’s Ministry of Business, Innovation and Employment for 820 square kilometers (317 square miles)—but Mr. Castle doesn’t expect mining to begin until mid-2017. That’s because the project must achieve a critical milestone in 2014: receipt of marine consent from New Zealand’s Environmental Protection Authority (EPA). It’s the only remaining license the company needs to begin mining. The EPA accepted Chatham Rock’s application in May, but before a license can be granted, a six-month review process allows the public to comment on the project.

As part of the project, the company plans to invest NZ$12 million during 2015 and 2016 on further exploration and mine optimization, Mr. Castle says.

Persuading the Public

To ensure that investment pays off, Mr. Castle made sure the company’s 400-page EPA application included the scientific research it commissioned to address the questions of community members. “We’ve consulted extensively with concerned stakeholders for nearly four years and have taken their concerns into account,” says Mr. Castle.

For example, after fishermen voiced concerns about the project’s possible negative effects on the migration paths of lobsters and longfin eels, the project team commissioned research to determine the exact migratory patterns of those two species. “The reality was that our proposed area of operation was nowhere near the two migration paths,” Mr. Castle says. (Some fishing industry groups remain concerned that mining could harm fisheries.)

When residents of the Chatham Islands worried about the proximity of the project to the island, representatives from the company visited the remote island several times to brief a wide range of groups, including farmers, local government and business officials, and the indigenous Maori and Moriori communities. They also held public meetings to describe the project for the general population.

“Significant weather downtime is already factored into production estimates, but underwater conditions are unlikely to change. At 400 meters [1,312 feet] below, life just goes on.”

—Chris Castle, Chatham Rock Phosphate Ltd., Wellington, New Zealand

If the EPA grants the license, the project will spring into action. For the extraction process, a flexible pipe will be attached to conventional dredging equipment to suck up the top 30 centimeters (12 inches) of seabed sediment, about 400 meters (1,312 feet) under water.

While the project faces risks common to all mining efforts—the price of phosphate could drop precipitously and upend the project’s business case, for example—Mr. Castle has tried to anticipate problems unique to the deep-sea project environment. “We may face extreme weather conditions on the ocean surface, so significant weather downtime is already factored into production estimates,” he says. “But underwater conditions are unlikely to change. At 400 meters [1,312 feet] below, life just goes on.”

In-Depth Evaluations

Many environmental groups, however, do not believe life will just go on during and after deep-sea mining projects. “The deep ocean is not yet mapped or explored and so the potential loss of fauna and biospheres from mining is not yet understood,” Richard Page of Greenpeace told the BBC in April.

While scouting for deep-sea project sites, Odyssey Marine Exploration Inc., based in Tampa, Florida, USA, tries to gauge the environmental impact of mining. That means a variety of experts from beyond the mining field end up supporting project teams trying to understand the environmental impact—and therefore potential feasibility—of a deep-sea project. Odyssey studies how plumes of particulates generated by mining operations might travel and impact underwater ecosystems, for example. “Marine biologists and chemists now play an integral role on our science team,” says Tom Dettweiler, Odyssey’s director of mineral exploration.

Rather than addressing environmental concerns after problems arise, the offshore mining companies are building concerns into how they identify projects. That should allow them to avoid the retrofitting solutions other industries have required, Mr. Dettweiler says. “We have the engineering challenge to design extraction systems that minimize the environmental impact while maintaining recovery efficiency.” —Sandra Swanson

SUBMERGED TREASURE

img

img Up to 100,000 metric tons of copper and 200,000 ounces (5.7 million grams) of gold lie 1,500 meters (4,921 feet) beneath the Bismarck Sea off the coast of Papua New Guinea. Canadian company Nautilus Minerals received a 20-year lease in April to mine the deposit.

img About 1.8 million metric tons of zinc, along with copper and silver, are estimated to lie below the Red Sea in the Atlantis II Deep deposit. Diamond Fields International Ltd. of Canada and Manafa International Trade Co. of Saudi Arabia have partnered on a project to mine it.

img The Pacific Ocean’s vast floor is full of rare-earth minerals needed for electronics. One estimate put its total deposits at 80 billion to 100 billion metric tons.

img Waters surrounding the Cook Islands in the South Pacific Ocean are estimated to cover 10 billion metric tons of manganese nodules. The nodules also contain copper, nickel and rare earth minerals.

img Israel’s Leviev Group estimates there are 2 billion metric tons of phosphate at a depth of 300 meters off the coast of Namibia. The company has projects underway that will help it mine about 2 million metric tons of phosphate rock annually by 2018.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

OCTOBER 2014 PM NETWORK
PM NETWORK OCTOBER 2014 WWW.PMI.ORG

Advertisement

Advertisement

Related Content

Advertisement