COLUMN | Mining the seabed: DeepGreen, Allseas, Maersk and the Vitoria 10000 (plus Equinor and Bill Gates for good measure) [Offshore Accounts]

Vitoria 10000

Well, that came out of left field. When we last looked (here), the warm-stacked, deep-water drillship Vitoria 10000 had been reduced to clear by Petrobras in a second auction in October, following the failure of the first process to sell the rig, when nobody offered the reserve price.

We speculated that maybe the 2010-built unit would be cannibalised for spare parts. In the end, bidding started at just US$5 million, and a Hong Kong-based company associated with the scrap trade called Best Oasis paid just US$15.05 million to snap up the unit; a 97.5 per cent discount on the new build price. It seemed that the drillship would end up in Aliaga in Turkey being turned into razor blades, joining the ill-fated Ocean Paros, or on the beaches of Alang.

How did we miss this?

Instead, Vitoria 10000 will now be the mothership for a giant deepwater vacuuming operation, operated by an offshore construction company in the Pacific, which has co-opted the government of Nauru as its state sponsor for an ambitious mining – depicted in computer graphics here

How? What? On March 2, came this surprising press release from Allseas, the Swiss-resident offshore construction powerhouse, controlled by Edward Heerema, famous for building and owning the massive construction vessel Pioneer Spirit, and, latterly, for falling foul of American sanctions on Russia, over its construction of the Nord Stream 2 gas pipeline in the Baltic for Gazprom (see here).

Allseas announced it had acquired the Brazilian rig and would be converting it to collect metallic nodules from water depths of 4,500 metres for DeepGreen, a company with subsea mining licences in the Clarion Clipperton Zone in the Pacific Ocean, between Hawaii and Mexico. Allseas had previously announced in June last year (here) that it was investing in DeepGreen in a US$150 million round of funding launched by Fearnley Securities and Macquarie, the Australian investment house.

Interestingly, and again, completely under the radar for most offshore industry participants, Maersk Supply Service had also previously disclosed that it was an early stage investor in the company, using the services of its vessels to earn shares in DeepGreen (announced here), along with controversial Swiss mining company Glencore (see this account of its founder and white collar fugitive Marc Rich here).

Maersk Launcher

Maersk has the anchor handler Maersk Launcher on term charter with DeepGreen, and you can see an inspiring video (here) of life on the ship, as its multinational crew take samples from the abyssal plain of the Pacific, scooping up the manganese-rich nodules, which potentially hold the future of renewable energy and solve the challenge of the resources needed for batteries for electric vehicles, DeepGreen would have us believe. It’s a high quality, well-made advert for life offshore: diverse, friendly and open.

Powering the Cars of Tomorrow with the Drillships of Today

Getting buy-in for the project is critical. Both Maersk and Allseas attended a multi-lateral conference in San Diego, California last month, where DeepGreen presented to governments and scientists on the last month as part of a “stakeholder consultation”.

A consultation surprisingly devoid of any presence from environmental action groups, like Friends of the Earth, or the Worldwide Fund for Nature, who one might have thought would have had an interest in a plan which involves trawling the seabed for millions of tons of metallic rocks, potentially destroying the habitat of whatever deep-water creatures live there, over thousands of square miles. Instead of Greenpeace or Sea Shepherd, the gathering (attendance list can be found here, and agenda is here), was rather strong on Pacific Island governments, and university lecturers.

Nauru as cheerleader

The environmental angle is critical to the success of DeepGreen. DeepGreen claims that it is acting in the interests of all of humanity by mining these deep-sea nodules, and that it is acting responsibly under the aegis of the International Seabed Authority, which handed out the licences to mine.

It describes the regulatory regime which the authority has set up as, “one of the most inclusive and participatory regulatory regimes for a natural resource in history.” The company says that it will not operate near shallow coral reefs or volcanic ocean vents, nor require digging, drilling or the use of explosives in its recovery techniques.

It has successfully co-opted the president of Nauru as its spokesman, a small island state formerly famous for guano (bird dung fertiliser), investment scams and massive money laundering (potted history here), which is now trying to put its embarrassing history behind it, and become a leader, through DeepGreen, in minerals needed for the carbon free economy.

No Congolese kids working here

DeepGreen has been at pains to emphasise the downside of onshore mining, as its CEO, Gerard Barron, has stressed: “We believe these future metals can be produced responsibly, protecting ocean health, while avoiding the deforestation, pollution and child labour that too often are part of traditional mining.”

The company’s comparison study (here) of land based mining against subsea mining describes how, “tens of thousands of square kilometres of forests are cleared every year to access metal ore bodies, leading to habitat destruction and biodiversity loss.”

And Mr Barron has a point – 60 per cent of the world’s cobalt, critical metal for the batteries for both electric vehicles and smart phones, comes from the Democratic Republic of Congo, one of the world’s most corrupt, violent and impoverished countries. In December, Apple, Google, Microsoft, Dell and Tesla were sued by a human rights group on behalf of families of children killed or injured while mining the cobalt in the Democratic Republic of Congo that is used in their products. In the class-action lawsuit, International Rights Advocates claimed that the companies “aided and abetted” a supply chain for cobalt that forces children to work in dangerous conditions in Congo.

The failure of Nautilus

The reason for DeepGreen’s reticence is clear: the disastrous case of Nautilus and the ill-fated Solowara 1 project off Papua New Guinea.

Nautilus’ plan was a charter a large DP3 construction vessel purpose built in China and build some rock cutting deepwater ROVs to crush mineral rich fumeroles in deepwater, then to pump the copper and gold rich slurry to the surface for processing and shipment to Chinese smelters.

The mining methodology would have resulted in the destruction of the vibrant and fragile ecosystem of rare fish, crustaceans and coral which lived on the fumeroles. Activists were up in arms at the pillage of the seabed, with Greenpeace spearheading a supposedly grassroots campaign amongst locals in the Bismarck Sea area. Greenpeace has warned that deep-sea mining risks “severe and potentially irreversible” environmental harm and opposes the practice.

“Scientists warn that deep sea mining risks inflicting severe and potentially irreversible harm to ocean ecosystems that we know so little about,” Greenpeace said. “Profit is being placed before protection and we urgently need a strong ‘Global Oceans Treaty’ that safeguards the deep ocean from reckless exploitation by companies such as DeepGreen.”

They needn’t have worried about Nautilus. The owners of the mining vessel (MAC of the UAE) defaulted on the payments to the Chinese shipyard, and Nautilus itself went spectacularly bust late last year. The Guardian gave an in-depth account of the failure of the company here, which includes some great photos of the massive ROVs Nautilus built in the UK for the fumerole hacking, and shots of the coral that would be destroyed. The government of Papua New Guinea claimed to be significantly out of pocket, having initially hoped, like Nauru, that subsea mining would be a good revenue earner.

Not all seabed mining is the same

DeepGreen is correct that its methodologies are most unlike Nautilus’. The nodules it seeks to recover sit unattached on the ocean floor, so can be gathered without resorting to the destructive rock cutting needed to crush subsea vents and cobalt crusts.

Photo: DeepGreen Metals

The polymetallic nodules in the Clarion Clipperton Zone are high grade, and DeepGreen’s studies show that they do not contain toxic levels of heavy elements. In fact, DeepGreen claims that, “the metal contents of the nodules is uniquely aligned with the base metal needs of electric vehicle battery manufacturers.”

Even so, the technical challenges of operating in 4,500 metres of water and recovering thousands tons of mineral nodules onto a dynamically positioned platform operating in the middle of nowhere, are immense. But so is the prize. Studies show that the Clarion Clipperton Zone contains enough metals to electrify the global vehicle fleet several times over.

Equinor also in on the game

Unsurprisingly then, subsea cobalt is the trend of 2020. In January, Equinor, the Norwegian state oil and gas company, announced it was joining Maersk and Glencore and Allseas in investing in a subsea mining company looking for cobalt, taking a 10 per cent shareholding in another player (Norwegian press report here).

That company is KoBold Metals, funded by Bill Gates’ Breakthrough Energy Ventures. Looks like cobalt is the new oil of the twenty-first century. Perhaps all those deepwater drillships sitting waiting for work in the downturn will find a new home in the Clarion Clipperton Zone as motherships. Let Vitoria 10000 lead the way….

Further Information

DeepGreen has gone out of the way to avoid the public relations disasters that surrounded Nautilus with a very open Twitter feed here: https://twitter.com/deepgreenmetals?lang=en (kudos to its PR people).

More on Lockheed Martin’s polymetallic nodule mining company can be viewed here: https://www.lockheedmartin.com/en-gb/products/uk-seabed-resources.html

A good summary of the different strands of the subsea mining industry is here:

http://researchbriefings.files.parliament.uk/documents/POST-PN-0508/POST-PN-0508.pdf


Hieronymus Bosch

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.