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After the loss of a ship, deep sea mining plans for PNG founder

  • In 2011, Nautilus Minerals was granted a license to mine precious minerals from the seabed off the coast of Papua New Guinea, the first project in the world to gain deep-sea mining rights.
  • Nautilus said the project would be less destructive than land-based mining, but met with protests due to the potential impact on the complex deep-sea ecosystems as well as coastal communities.
  • A year ago, Nautilus failed to make a payment on a specialized ship being built for the project. Now the ship has been sold to another company, making it unlikely Nautilus will be able to fulfill its mining ambitions.

An ambitious plan to mine precious minerals from the ocean floor off the coast of Papua New Guinea looks to have run aground due to the developer’s financial problems.

In 2011, the government of Papua New Guinea granted Canada-based Nautilus Minerals a 20-year mining license covering roughly 500,000 square kilometers (193,000 square miles) of the Bismarck Sea, off the country’s eastern coast. The Solwara 1 project was the first in the world to be granted rights for deep-sea mining, whereby enormous machines would dig into the ocean floor, harvesting zinc, copper and gold, and other commodities essential to building electrical equipment.

The Papua New Guinea government took on a 15 percent equity stake in the venture with Nautilus, but repeatedly delayed payments as its politicians and citizens protested against the environmental impact of the project, as well as the substantial cost to taxpayers.

In the meantime, Nautilus suffered numerous additional setbacks, including a shortage of investors, a declining credit line, and the decision by multinational mining firm Anglo American to divest from the company.

Barnacles attached to hydrothermal vent spires feeding at Kawio Barat. Critics of the Solwara 1 project raised concerns about its potential impact on the ecosystems that center on hydrothermal vents. Image courtesy of NOAA Okeanos Explorer Program, INDEX-SATAL 2010

Now, the company has lost a ship essential to its deep-sea mining plans.

Nautilus chartered Emirati shipping operator MAC Goliath (MAC) to oversee construction of a production support vessel (PSV) designed to collect the extracted materials via pumps from the seabed. This vessel is essential to the entire operation.

The ship was being built at the shipyard of Fujian Mawei Shipbuilding in southern China. In December 2017, MAC missed a payment to the Chinese builder, which Nautilus was also unable to cover. At that point, the vessel was about 70 percent complete.

Late last month, news broke that because of financial woes and missed payments, the shipbuilding company had found a new company to take over the vessel’s construction contract: an Indian firm that is also planning to engage in deep-sea mining explorations on behalf of the Indian government.

Fujian Mawei Shipbuilding announced that the vessel had indeed been sold to the Indian firm, MDL Energy, although Nautilus reportedly thought negotiations were still ongoing. There are reports that Nautilus is attempting to seek new investment so it can reclaim the vessel, but the Chinese shipbuilder maintains that the ship has already been sold.

Mongabay attempted to contact representatives of Nautilus, but emails and telephone calls went unanswered. Nautilus’s interim CEO, John McCoach, told the Economist recently that specifics of the story, as mentioned above, were “not accurate from our perspective.”

Map shows New Ireland province in Papua New Guinea. Image courtesy of Google Maps.
Residents of New Ireland province, which lies in the northeast of Papua New Guinea, feared Nautilus’ deep sea mining project could have impacts on coastal marine life. Image courtesy of Google Maps.

It’s not clear how Nautilus will proceed from here, though it appears almost impossible that it will be able to build another tailor-made vessel from scratch, given the firm’s current financial situation. On Dec. 14, the company announced it had received a new loan worth $455,000; the unpaid installment on the PSV exceeded $18 million.

“Given Nautilus’ dire financial circumstances, it is fair to say the game is over,” Helen Rosenbaum, of the Deep Sea Mining Campaign, the author of a major report critical of the project, recently told local media. “The people of the Bismarck Sea of Papua New Guinea have hopefully been spared an environmental disaster.”

“It will be good news for my people if Nautilus goes bankrupt, instead of bankrupting our sea. We will fight this project to the very end,” Jonathan Mesulam, from the Alliance of Solwara Warriors, a community-based organization that opposes the project, said in a press release.

The Solwara 1 project planned to harvest mineral deposits found near seabed hot springs, or hydrothermal vents. Doing so, opponents said, could have had grave effects on rare deep-sea ecosystems.

Nautilus commissioned several environmental impact studies before it was granted the mining license in 2011. “The overall conclusion is that Solwara 1 has the potential for far fewer social and environmental impacts than the existing terrestrial mines examined,” reads one report it commissioned, written by U.S.-based consultancy Earth Economics.

Active “smoker” chimneys precipitating iron, copper and zinc sulfides. The Solwara 1 project aimed to extract the minerals that accrete around hydrothermal vents. Photo courtesy of Pacific Ring of Fire 2004 Expedition. NOAA Office of Ocean Exploration; Dr. Bob Embley, NOAA PMEL, Chief Scientist.

Opponents of the project dismissed these studies as unsatisfactory and misleading, warning that since the Solwara 1 project was the first of its kind and would rely on as-yet-untested technology, it was too soon to say that it would definitely be safer than onshore mining. Moreover, they said the project would almost certainly destroy thousands of hydrothermal vents, each of which is host to complex ecosystems — and possibly species not yet identified by scientists.

Others critics warned that because the proposed extraction site lies only about 30 kilometers (18 miles) from the mainland, it could affect coastal ecosystems and, by extension, the livelihoods of fishing communities on Papua New Guinea.

While the likely demise of Solwara 1 is considered a victory by environmentalists and some residents of Papua New Guinea, the financial problems facing Nautilus are far from advantageous for the poor Pacific nation.

Arnold Amet, a former attorney general, said in a recent press release that because his country had purchased a 15 percent stake in the venture, it would also be responsible for 15 percent of payments to creditors if Nautilus went bankrupt. “I have been warning our Government publicly and privately about the financial mess they will find themselves in when this experimental company fails,” he said.

Marine life in Papua New Guinea. Image by martinnemo via Flickr (CC BY 2.0).
Marine life in Papua New Guinea. Image by martinnemo via Flickr (CC BY 2.0).

It’s not clear whether Papua New Guinea will manage to escape this financial burden. Opponents of the project say the government should now annul the concession and cancel all of Nautilus’s permits. But this may not be the end of the region’s underwater mining saga.

DeepGreen, a new deep-sea mining venture founded by Gerard Barron, an Australian entrepreneur who was also the first financial backer of Nautilus (he sold his shares in 2007), is reportedly exploring mining possibilities off the shores of Nauru, a nearby Pacific island. Unlike Nautilus, DeepGreen aims to mine materials from the ocean shore by simply hoovering it up, rather than digging into volcanic rock, ostensibly a less environmentally harmful method of extraction. If Nautilus is unable to fulfill its concession in PNG, then it is possible DeepGreen will fill Nautilus’ shoes as the pioneer of deep sea mining in the South Pacific.

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