Two weeks ago we covered the deepsea mining sector (here) and focused on the efforts of DeepGreen to obtain a New York stock exchange listing through a merger. We noted that environmental groups were extremely concerned by the potential impact of efforts to extract minerals from the abyssal plain of the Pacific Ocean, and that four major potential customers, including Google, had signed a statement backed by the World Wide Fund for Nature (WWF) confirming that they would not purchase metals mined from the seabed until the environment impact was better understood.
DEME kicks off its trials
We went to print moments before Belgian player DEME announced it was restarting its trials of its deep-water manganese nodule gathering equipment for a month in the Clarion Clipperton Zone of the Pacific (press release here). DEME’s subsidiary Global Sea Mineral Resources (GSR) is one of the licence-holders of a vast tract of seabed under a permit issued by the International Seabed Authority (ISA), the UN body responsible for the promotion and regulation of seabed mining in international waters.
The method of commercial extraction of the manganese rich nodules in waters of over 4,000 metres depth has always been one of the major unknowns that need to be addressed by the subsea mining industry. In particular, how much will it cost to bring the ore-bearing rocks to the surface, and how much damage will be inflicted on the environment in so doing.
Now DEME’s subsidiary is deploying a test collection robot to begin to find out.
GSR is testing a subsea polymetallic nodule collector prototype, named Patania II after the world’s fastest caterpillar. Patania II has been built on one-quarter scale, and is currently attempting to gather nodules in the Clarion Clipperton Zone as proof of concept. The 12- by four- by five-metre collection machine consists of a landing gear and a hydraulic pick-up system, which will suck in the nodules in the surrounding seabed. Then, the collector moves the nodules from the test collection site area, which is a rectangle of around 200 by 500 metres, and places them again at the edge of the site to demonstrate its effectiveness as a collection unit.
A third stage of the trials is planned in 2023 with collection and actual transport to the surface.
Maersk Supply, Solstad Offshore and Ocean Infinity in Pacific
GSR has assembled a dream team of subsea companies to assist in the trial, with Solstad providing its subsea vessel Normand Energy (VS 4220 design, 2007 built, more information here), and Ocean Infinity contributing the subsea spread on Island Pride, which it has on a long-term contract from Island Offshore of Norway.
Maersk Supply Services’s Maersk Launcher, an anchor handler which is under long-term contract to DeepGreen, was reported to be heading to San Diego at the time of going to press, but it is not clear whether this is connected with DEME’s operation (here).
German Federal Institute investigating
GSR has partnered with the German Federal Institute for Geosciences and Natural Resources (BGR) and other research institutions to investigate the environmental impact of a device test in the manganese nodule belt between Hawaii and Mexico in the Pacific. Full details of the German programme can be found here. A total of 23 scientists from BGR and the Mining Impact consortium are on board Island Pride to carry out an independent scientific environmental monitoring of the equipment test.
As befits a country that is home to three of the world’s largest car makers, BGR has been exploring the German manganese nodule license area in the Pacific since 2006 on behalf of the German government. The International Seabed Authority has granted Germany the exclusive right to survey the polymetallic nodules over a period of 15 years in a marine area of 75,000 square kilometres.
Sediment disturbance and sea cucumbers
The main focus of the environmental scientists on Island Pride is to study the sediment plume stirred up by the collector. The researchers are investigating how far the suspension plume drifts in the water column and what effects the redeposition of sediment has on the organisms living on the deep abyssal plain.
“Such a test is necessary to assess the effects of possible industrial degradation on the marine environment and the biodiversity of the deep sea under realistic conditions,” explained BGR chief scientist Dr. Annemiek Vink.
Two ROVs from the research vessel and around 40 different sensors for measuring the ground flow and the turbidity of the water column will be deployed. In addition, another AUV will be deployed to monitor the impact of Patania II itself on the seabed and to photograph the extent of the area covered by the disturbed sediment. In addition, the organisms living on the sea floor, such as soft corals, worms, and sea cucumbers, are being observed with cameras, or sampled. BGR has said that on previous expeditions, its scientists have already carried out an inventory of the soil organisms in the GSR test area and in a reference area eight kilometres away.
Researchers cited in Nature magazine here have already established that the “physical removal of nodules, and their burial by sediment plumes, will remove hard-substrate habitats, destroying the nodule-obligate fauna without possible re-establishment over ecological time scales.”
Conflict of interest – corals versus metals
Despite these warnings, BGR’s public statements have also focused on the economic potential of the seabed licences it holds. The research institute stands to gain a significant economic benefit if it can prove the environmental impact is limited and that the mining can go ahead – a conflict of interest it shares with the ISA. The German research institute has proved it is sitting on a metaphorical gold mine, albeit of non-precious metals:
“During the exploration of the German license area, which has been carried out since 2006, BGR discovered a number of promising manganese nodule fields, some of which have a high nodule density on the sea floor with a large raw material potential. In addition to the valuable metals nickel, copper and cobalt, which make up around three per cent of the module mass and are important raw materials for renewable energy technologies, an economic use of manganese as the main component of the tubers (around 31 per cent) is also conceivable in the course of mining.”
New standards for mining
The ISA is currently working on the so-called Mining Code, which will form the legal framework for future deep-sea mining. Part of this international agreement are regulations on environmental monitoring and the definition of environmental standards for the sector.
BGR considers it has an important role to play in shaping these, even though it stands to gain from the economic exploitation of the resources it is tasked with protecting.
“By monitoring the collector test, the researchers at BGR and the Mining Impact consortium will develop important scientific principles for these environmental standards,” said the head of the marine geology department at BGR, Dr. Carsten Rühlemann.
Greenpeace not happy
Greenpeace deployed its vessel Rainbow Warrior to the Pacific ahead of the mission by GSR. It believes that seabed mining is environmentally damaging and should be banned. Its press release on the GSR test is here.
“Machines weighing more than a humpback whale are already being lined up for tests on the bottom of the Pacific Ocean,” said Dr Sandra Schoettner, deep-sea biologist and oceans campaigner with Greenpeace. “Scientists have repeatedly warned that deep sea mining would have terrible consequences for ocean ecosystems we barely understand. With the worsening climate and biodiversity crises facing us, deep sea mining is a scandalous threat to the health of our oceans. The deep sea must stay off-limits to mining.”
DEME’s chequered history
DEME is no stranger to controversy. In 2017, the company’s subsidiary, Dredging International Services (Cyprus), was sentenced in Switzerland to a fine of CHF1 million (US$ 1.09 million) and asked to repay a further CHF36 million (US$39 million) of illegal profit after “Swiss prosecutors proved that the company wired huge bribes to offshore companies whose real beneficial owners were Nigerian officials,” in the words of a damning report from the Organised Crime and Corruption Reporting Project, available here.
US$20 million paid in historic bribes in Nigeria
The report describes how Dredging International, “wired more than US$20 million in bribes to nine offshore companies. Three top former Nigerian Ports Authority (NPA) officials, Adebayo Sarumi, Felix Ovbude and Abba Murtala Mohammed, collectively received US$2.6 million in kickbacks from Dredging International. Each year, the NPA awarded dredging contracts worth US$70 million to Dredging International without any open or competitive bidding, as required by Nigerian law.”
When Swiss investigators asked Nigeria’s then Minister of Justice, Mohammed Bello Adoke, to assist in their efforts to track the officials who received DEME’s bribes, he replied that there was no case for criminal investigation. Adoke himself is under investigation by the national Economic and Financial Crimes Commission, according to Nigeria’s Guardian newspaper (here), in connection to the notorious award of offshore oil production licence OPL 245, which we covered here. In 2020 he was charged with allegedly receiving bribes from the OPL deal himself, according to Reuters (here).
Also under investigation over Russian bribes
DEME also faces a corruption investigation over payments that the Belgian authorities regard as suspicious.
“Since 2018 we are fully cooperating in a judicial investigation related to the award of a contract in Russia, which has been executed in the meantime,” the company stated in its 2019 annual report (here). “In the present circumstances, it is still not possible to assess the financial consequences.”
Shell companies and American emails to Russians
The American law firm Wilkie provided further insight on the investigation in late 2019 when it reported (here) that, “according to Belgian authorities, DEME, acting through its agent, Sofia Mirtcheva-Neirynck, allegedly paid bribes beginning in 2013 to win a lucrative dredging contract for Sabetta and used a series of shell companies to launder the bribe money. In connection with this investigation, Belgian authorities uncovered evidence that email accounts hosted with Oath Holdings, a US electronic service provider, were used by DEME, Mirtcheva-Neirynck, and related parties to communicate regarding the dredging project and subsequent payments to Mirtcheva-Neirynck and a Russian government official.”
As we saw at SBM (here, here and here), once a culture of corruption develops within an organisation, bribe-paying can become a norm. Let’s hope that this is not the case within DEME, which is a major player in the windfarm installation industry, as well as dredging and seabed mining.
Maersk Supply also paying fines for bad behaviour
DeepGreen shareholder and marine partner Maersk Supply Services has also faced legal woes in recent weeks. Following the catastrophic sinking of two of its anchor handlers whilst under tow by a third Maersk vessel in the Bay of Biscay in stormy weather in December 2016, the company has paid a fine of DKK150,000 (US$25,000) imposed by the Danish Police for grossly negligent conduct. In a press release (here) which the company hilariously titled “Conclusion of 2016 Incident Investigation,” rather than “Company found guilty of gross negligence for sinking its own ships, and fined,” Maersk’s CEO Steen S. Karstensen commented that, “this is a regrettable case that we have taken very seriously from the beginning.”
Indeed, he should know, as he was CEO of the company at the time the sinkings happened.
Let’s hope that the company doesn’t also have cause to regret its participation in the seabed mining project. As Greenpeace protesters pose in front of banners reading “Stop Deep Sea Mining” close to Maersk Launcher, Mr Karstensen might be having second thoughts.
No “fit person” criteria
Interestingly, the International Seabed Authority appears to have no definition of a “fit person” to hold a seabed mining licence, so these corruption investigations should have no impact on DEME’s ability to licence acreage from the UN. Indeed, former Nigerian oil minister Dan Etete could also have a punt, given his success in turning the OPL 245 licence in his home country into a billion-dollar pay out for himself and his friends.
It is highly likely that we will see early licence holders sell their acreage to others for large profits, as we have seen in offshore wind, once the nodule recovery technology is established and the environmental objections overcome.
Is a history of bribe paying necessary to obtain an ISA licence?
Other Clarion Clipperton Zone licence holders include a subsidiary of Keppel of Singapore, and defence giant Lockheed Martin. Keppel’s licence award was announced in the Straits Times here in 2014. We have here covered how the company has paid out over US$400 million to settle corruption charges in Brazil and the US.
Lockheed Martin was so corrupt in the 1970s that there is an entire Wikipedia page devoted to its historic malfeasance here, and the company’s corruption overseas was one of the drivers for the landmark Foreign Corruption Practices Act, which outlawed American companies and citizens paying backhanders to overseas officials. It has subsequently cleaned up its act by focusing mainly on the United States Department of Defense as its main client. The US government was responsible for almost 70 per cent of the company’s revenue in 2018, according to Forbes.
China at the fore
Whilst DEME and BGR have been commendably transparent in the reporting of their operations, DeepGreen’s public listing as The Metals Company will also expose it to disclosure requirements, and Greenpeace has been able to protest against them publicly in San Diego.
However, no such transparency exists from another major Clarion Clipperton Zone nodule licence holder: China.
China has also acquired a large stake in polymetallic licences issued by the ISA. One licence is held by Minmetals, China’s largest diversified mining company. Its ecological record has been criticised, even in China itself, which is highly unusual for a large state-owned concern.
China Minmetals rapped for pollution in China
Less than a year ago it was reported that China’s Ministry of Ecology and Environment labelled a unit of the company a “repeat offender” with regard to environmental breaches (here).
“Public rebukes against metal producers by the ministry and its predecessor, the Ministry of Environmental Protection, date back to at least 2013 when rice in China’s Hunan province, a key production base for Minmetals, were contaminated with the toxic heavy metal cadmium,” a report on the Nasdaq confirmed.
Yet in 2017 China Minmetals dispatched the Chinese-flagged survey vessel Xiang Yang Hong 06 for a 90-day survey of its mineral claims (here). No public protests are allowed in China, so its departure went unnoticed.
Interestingly, Tesla is one of China Minmetals’ major partners (here).
The second Chinese licence holder is the China Ocean Mineral Resources R&D Association (COMRA).
In an interview with state media, COMRA’s Secretary General Lui Feng (here) stated China’s desire for primacy in the subsea mining sphere.
“We have five contracts, the most of any country, and these cover the largest geographical area,” said Mr Lui Feng. “From the technological perspective, we have developed almost all the state-of-the-art technology needed, from resource exploration to processing.”
China’s often hidden but growing ocean capabilities, including in subsea sea mining and research, and in polar studies too, are set out here.
“China wants its share of the world’s resources – but it also wants its share of global governance responsibilities,” the Chinese government media said.
Greenpeace need not worry, it’s perfectly natural
COMRA has already stated that it finds no evidence of environmental damage from its subsea mining activities, not unsurprisingly.
Lui Feng said that COMRA “found natural climate situations, such as the occurrence of El Niño or La Niña, may exert an even greater impact on the survival and living environment of marine life than human exploration impact and even the impact of pilot mining test.”
The ISA need not worry, China has the data
So, don’t be surprised if China claims that the impact of its subsea mining is minimal and don’t be surprised if it uses its own evidence to back its case.
“We are planning to trial our mining system of 1,000 metres below the surface next year or so in the South China Sea to prepare for the setting up of an environmental impact evaluation system for seabed-mining activities,” Lui Feng stated in the Chinese press. “We aim to set up our own environmentally friendly seabed mining system, also providing a reference for the ISA’s decision-making on related issues.”
Will the ISA have the willingness of desire to disagree with China? Beijing has already launched a charm campaign on many of the vulnerable small island states in the Pacific by providing them with twenty or more training places at COMRA facilities.
For the benefit of mankind as a whole?
The ISA claims in its mission statement (here) that its mandates include “ensuring that activities in the area are carried out for the benefit of mankind as a whole… ensuring effective protection for the marine environment… promoting and encouraging the conduct of marine scientific research in the area.”
It is not clear how China Minmetals and COMRA’s participation fulfill any of these objectives in the slightest. DeepGreen’s own financial estimates show that it intends to take more than twice as much in free cash flow from operations as it intends to pay in taxes. The accounts of Chinese state companies are notoriously opaque and corruption-riddled.
Greenpeace may be targeting DEME and DeepGreen today, but a far bigger risk comes from state owned Chinese companies whose track record in environmental protection, transparency and disclosure, and human rights is appalling.
The fight has just begun
The ethics of seabed mining just got a whole lot more interesting. But remember, the ISA exists to ensure “that activities in the area are carried out for the benefit of mankind as a whole.”
Does anyone really believe that a Chinese state mining company with a record of polluting its home country will support those criteria in a pristine, deep-ocean environment?
The WWF’s campaign against subsea mining can be found here.
Greenpeace’s photo album of its protests against DEME in San Diego is here.
Greenpeace’s paper “Deep Trouble: the murky world of the deep sea mining industry” is here – interestingly this is so busy attacking DEME and DeepGreen that it ignores the environmental threat posed by the Chinese state companies, which are considerably more opaque and accountable only to Beijing.
A summary of the full Danish official report into the loss of Maersk Searcher and Maersk Shipper can be downloaded here.
In-depth photos of the marine life threatened by the seabed mining in the CCZ can be seen in a Nature paper here.
Some outline drawings of the nodule harvesting techniques can be found in DeepGreen’s Smart Mining presentation of December, here.
The award of the licence to China Minmetals is celebrated here.
More information on the ISA’s royalty mechanisms is here.
Finally, do revisit our earlier piece from April 6, here.
This anonymous commentator is our insider in the world of offshore oil and gas operations. With decades in the business and a raft of contacts, this is the go-to column for the behind-the-scenes wheelings and dealings of the volatile offshore market.