SEABED COUNCIL ADOPTS REGULATIONS FOR NODULE EXPLORATION

Press Release
SEA/1692

SEABED COUNCIL ADOPTS REGULATIONS FOR NODULE EXPLORATION

(Received from International Seabed Authority)

KINGSTON, 14 July -- The Council of the International Seabed Authority, meeting this afternoon in Kingston, adopted by consensus a set of regulations on prospecting and exploration for polymetallic nodules in the international seabed area -– the first code ever elaborated to cover mineral resources on the ocean bottom beyond the jurisdiction of any nation.

Delegates and observers at the Jamaica Conference Centre applauded the action, echoing the applause that sounded 18 years ago at Montego Bay, Jamaica, when the United Nations adopted the 1982 United Nations Convention on the Law of the Sea. The new regulations build on the legal framework devised in that treaty to protect deep seabed resources as “the common heritage of mankind”.

Approval of the regulations became possible when a final compromise was reached in private negotiations on the one remaining issue -– what sort of financial and technical guarantee seabed contractors should provide to ensure that the Authority can cope with future environmental harm arising from accidents associated with seabed exploration. The regulations call for such a guarantee, backed by sponsoring States, with details to be set after further study by the Authority’s secretariat and Council.

Before the Council acted today, its President, Sakiusa A. Rabuka (Fiji), told delegates that they were at a critical moment in deciding the fate of the Authority. “We are at a crossroad, in my view, in deciding whether we want to empower or cripple the Authority”, he told the representatives as he urged them to consider the important duty of the Authority in promoting the common interest of mankind. He noted that the text of the mining code had been the subject of negotiations for the last three years. He described the documents presented for adoption as “ a compromise text which attempts to take on board the views of all delegations which took part in formal and informal consultations since 1998”.

The President mentioned the informal consultations during the past two weeks in which he had played an integral role in talking with delegations to broker a consensus text. Mr. Rabuka described the regulations and associated decision as “a win-win situation” for all members of the Council and States parties to the Convention.

- 2 - Press Release SEA/1692 14 July 2000

Secretary-General Satya N. Nandan described the Council’s adoption of the mining code as “a seminal event in the life of this organization”. He said it would be the basis for harmonious relationships between contractors and the Authority, and “will provide us with the software to make the platform, which is the Convention, work”.

The Authority could now issue contracts to the seven pioneer investors that had presented their plans of work to the Council in 1997, Mr. Nandan stated. He had met with the group of pioneer investors today and had assured them that the contracts would be issued and signed before the next session.

The only comments prior to adoption of the regulations today came from Chile, China and France, which pointed to inconsistencies in the translations of the text in their respective languages. The Secretary- General asked delegates to examine the text in all six official languages and point out discrepancies so that translators could make adjustments.

On another matter, the Council decided to adopt provisionally the Staff Regulations of the Authority, pending approval by the Assembly, and to recommend such approval. The Council had provisionally agreed to the text (document ISBA/6/C/L.6) on Tuesday, 11 July.

The Council has now completed its work for the current session.

By today’s action, the Council met a deadline that it and the Assembly of the Authority set last August -– adoption of the regulations by the end of 2000. The Authority has spent the last four years working out the details of the text, first in the Legal and Technical Commission and, since 1998, by the Council. The Council decided to apply the regulations provisionally, pending approval by the Assembly.

The 40 regulations and 4 annexes approved today spell out the rules that States, corporations and other entities must follow when looking for and evaluating polymetallic nodule deposits in an area encompassing most of the world’s oceans. The nodules are rich in valuable metals such as nickel, manganese, copper and cobalt, though they lie so deep that the cost of bringing them up currently exceeds that of land-based mining.

The regulations are the first element of a mining code that will one day cover both exploration and exploitation of all types of deep seabed minerals. The Authority has already begun looking into other classes of minerals -– seafloor massive sulphides, concentrated around volcanic hot springs deep below the surface, and cobalt-bearing ferromanganese crusts, precipitated from seawater and lying on ocean ridges in many ocean areas. A workshop held last month in Kingston was

- 3 - Press Release SEA/1692 14 July 2000

told that some of these deposits might hold greater promise for mining than polymetallic nodules.

Addition to Exploration Regulations

Two compromise texts approved today broke the impasse that had impeded Council approval of the regulations for polymetallic nodule exploration: a new paragraph in the regulations calling for a guarantee by contractors (document ISBA/6/C/8/Corr.1) and a decision to consider the matter further (ISBA/6/C/L.7).

The new paragraph was added following regulation 32, paragraph six, which authorizes Council action “to prevent, contain and minimize any … serious harm to the marine environment” resulting from seabed exploration activities if the contractor responsible does not promptly comply with an emergency order by the Council to deal with the matter. The additional paragraph reads:

“In order to enable the Council, when necessary, to take immediately the practical measures to prevent, contain and minimize serious harm to the marine environment referred to in paragraph 6, the contractor, prior to the commencement of testing of collecting systems and processing operations, will provide the Council with a guarantee of its financial and technical capability to comply promptly with emergency orders or to assure that the Council can take such emergency measures. If the contractor does not provide the Council with such a guarantee, the sponsoring State of States shall, in response to a request by the Secretary- General and pursuant to articles 139 and 235 of the Convention, take necessary measures to ensure that the contractor provides such a guarantee or shall take measures to ensure that assistance is provided to the Authority in the discharge of its responsibilities under paragraph six.”

The Council’s decision recalls in its preamble the concern that motivated this addition: “the need for appropriate forms of guarantee to enable the Council to take immediately the necessary measures to implement an emergency order in the event of failure or inability on the part of a contractor to comply with such orders”.

Accordingly, the Council decided to consider the matter of such a guarantee prior to the phase of testing nodule collecting systems and processing operations “with a view to adopting appropriate forms of guarantee to ensure compliance with emergency orders and the effective protection of the marine environment”. It requested the secretariat to study what instruments or arrangements might be available for this purpose and to report to the Council prior to its consideration of the matter.

Summary of Regulations

- 4 - Press Release SEA/1692 14 July 2000

The Regulations on Prospecting and Exploration for Polymetallic Nodules (ISBA/6/C/8 & Corr.1) begin with a preamble recalling basic provisions of the Law of the Sea Convention: that the seabed beyond national jurisdiction and its resources are the common heritage of mankind, and that all rights in such resources are vested in mankind as a whole, on whose behalf the Authority acts.

An introduction defines terms used in the regulations, including polymetallic nodules: a resource “consisting of any deposit or accretion of nodules, on or just below the surface of the deep seabed, which contain manganese, nickel, cobalt and copper”.

Prospecting for nodules, which can take place in any area not assigned for exploration or otherwise reserved or prohibited by the Authority, will not confer any rights to resources, though prospectors may recover “a reasonable quantity” for testing rather than commercial use. Prospectors, following a prescribed form (annexed to the regulations), must notify the Authority of their intention to engage in prospecting, informing it of the area where they will work, providing a general description and timing of their programme and undertaking to comply with the Authority’s regulations. The Secretary-General must act on the notification within 45 days and record it in a register if it meets requirements.

Each prospector must report annually on the status of prospecting and on compliance with its undertakings. The Secretary-General must ensure the confidentiality of data and information in these reports, releasing information only with the prospector’s consent. Prospectors must immediately notify him of any incident arising from prospecting that “causes serious harm to the marine environment”. They must also notify him of any archaeological or historical find.

States, State enterprises, natural or juridical persons sponsored by their States, or the Authority’s Enterprise, may make applications for approval of plans of work for exploration in the form of contracts with the Authority. (The Enterprise, not yet established, will be the Authority’s own mining arm.)

As to the content of these applications, they must follow a prescribed form (annexed to the regulations) identifying the applicant by nationality and place of business or domicile. A certificate of sponsorship must accompany them, issued by the State or States of which the applicant is a national. They must include information enabling the Council to determine whether the applicant is financially and technically capable of carrying out the proposed plan of work and of fulfilling its financial obligations. Information on any previous contracts with the Authority must be included. Applicants must provide written undertakings to comply with the Convention, the Authority’s regulations and decisions, and the terms of its contracts, as well as to accept the Authority’s control of seabed activities and fulfil contractual obligations in good faith.

- 5 - Press Release SEA/1692 14 July 2000

Each application must define the boundaries of the total area being applied for, which must be large and rich enough to allow mining in each of two parts of equal estimated commercial value. Sufficient information must be included to enable the Council, on the recommendation of the Legal and Technical Commission, to designate one of those parts as a reserved area for use by the Enterprise or developing countries. The reserved area will retain this status for 15 years, after which it will revert to the original applicant if neither the Enterprise nor a developing country applies for an exploration contract.

To secure approval of the plan of work, the applicant must submit specified data and information, including a general description and five-year programme of exploration; plans for oceanographic and environmental studies; a preliminary environmental impact assessment; a description of measures to prevent, reduce and control pollution and other hazards, and a schedule of annual expenditures for the first five years.

A $250,000 fee for processing will be required from each applicant.

When processing applications, the Secretary-General will acknowledge their receipt, ensure that confidential material remains confidential, notify Authority members and circulate non-confidential information about the applications. Applications will then be considered by the Legal and Technical Commission, which must recommend their approval so long as they meet all requirements and do not overlap other areas previously approved. The Commission’s recommendations then go to the Council for consideration and approval of plans of work for exploration.

After Council approval of a plan of work, the Secretary-General is to sign a contract for exploration between the Authority and the applicant, in accordance with a specified model contract and incorporating specified standard clauses (both annexed to the regulations).

The rights of the contractor include the exclusive right to explore the designated area for polymetallic nodules, and priority treatment in regard to future exploitation so long as requirements under the exploration contract have been met. The size of the contract area must not exceed 150,000 square kilometres, of which 50 per cent must be relinquished in three installments over an eight-year period. Plans of work would cover 15 years, after which the contractor must either apply for an exploitation contract or renounce its rights, unless the Council agrees to an extension of up to five years. Each contract must include a training programme for personnel of the Authority and developing States, focusing on the conduct of exploration.

- 6 - Press Release SEA/1692 14 July 2000

Every five years the contractor and the Secretary-General are to conduct a periodic review of the implementation of the plan of work, after which the contractor is to make any necessary adjustments and indicate its programme of activities for the next five years. If a State terminates its sponsorship of a contractor, the contractor must either find another sponsor or have its contract terminated. Even after completion of exploration, contractors would continue to bear responsibility for any damage arising from wrongful acts in the conduct of their operations, including damage to the marine environment.

To protect and preserve the marine environment, the Authority is obliged to establish environmental rules, regulations and procedures, while each contractor must “take necessary measures to prevent, reduce and control pollution and other hazards to the marine environment arising from its activities in the Area as far as reasonably possible using the best technology available to it”.

In the event of serious harm to the marine environment caused by a contractor’s activities, the Secretary-General may take immediate temporary measures to prevent, contain and minimize the harm; the Council may follow up with emergency orders, including orders to suspend or adjust operations and may act on its own or through others if the contractor does not comply immediately. Coastal States that have grounds for perceiving a threat to their own marine environment may notify the Secretary-General, who must give the contractor a chance to examine the evidence and submit observations. Contractors must notify the Secretary-General if they find objects of an archaeological or historical nature and must take all reasonable measures to avoid disturbing such objects.

The confidentiality of proprietary data and information transferred to the Authority by contractors is to be maintained for limited use by the Secretary-General, his staff and the Commission only in connection with their functions, subject to a review by the Secretary-General and the contractor after 10 years or contract expiration. Procedures to ensure confidentiality include requiring a written non-disclosure declaration by all persons having access to the information -- extending beyond the termination of their functions with the Authority -- and action against anyone who breaches those obligations.

The regulations incorporate general procedures for dealings between the Authority and prospectors, applicants or contractors, such as the requirement that all official communications between them must be in writing. The Commission is authorized to issue technical or administrative regulations to assist contractors in implementing the Authority’s rules, regulations and procedures.

The settlement of disputes over the interpretation or application of the regulations is to follow provisions of the Law of the Sea Convention for seabed dispute settlement.

- 7 - Press Release SEA/1692 14 July 2000

Finally, any finds of resources other than polymetallic nodules are to be subject to the Authority’s rules, regulations and procedures for such resources.

* *** *