The Madang guidelines; principles for the development of ...

THE MADANGGUIDELINES

PrincIples for the Development of National Offshore Mineral Policies

APPENDIX:

Report of the Offshore Mineral Policy Workshop

Madang, Papua New Guinea

22nd_26th February 1999

(SOPAC Miscellaneous Report 323)

'A"'ANEWGUI-DEPAIrrMENT OF

MINING AND PE:rROLEUM

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HE ADANG

UIDELINES

iA study based on the Recommendations and Proceedings of a Workshop on

Offshore Minerals Policy, held in Madang, Papua New Guinea in February 1999,

hosted; organised and sponsored by the Government of Papua New Guinea, the

Metal Mining Association of Japan (MMAJ), the Pacific Islands Forum

Secretariat and the South Pacific Applied Geoscience Commission (SOPAC)

SO PAC Miscellaneous Report 362

December 1999

THE MADANG GUIDEliNES

TABLE OF CONTENTS

FOREWORD 4

SUMMARY AND CONCLUSIONS 6

THE MADANG GUIDEliNES 7

MADANG GUIDI~LINES -OFFSHORE MINERAL DEVEWPMENT POLICYIntroduction .~ 9

Offshore Mineral Resources """'."'.'.""' "'.."""""" ~.. 10National Policy for the Offshore Exclusive Economic Zone 11Offshore Mineral Exploration and Development Policy 13Fiscal Regime for Offshore Mineral Development and Exploitation 16Environmental Considerations in Offshore Miner~ Development .".""""""""""""""""'" 19Key Factors in Developing an Environmental Assessment Program 19Outline for Impact Assessment Efforts """"""'.'.""""'..."'.".'."."'" 21Environment Related Considerations for Exploitation 23Associated Issues 25Associated Issues in Policy Formulation 25Fishery Considerations in Offshore Mineral Development 29Industry in Offshore Mineral Development 30

Marine Scientific Research , 32

ACKNOWLEDGEMENTS 34

SOPAC Miscellaneous Report 362 3

THE MADANG GUIDELINES

FOREWORD

The human race has long viewed the world's oceans as a final frontier for the discovery and exploitationof non-renewable mineral and energy resources and this view was at least in part responsible for AmbassadorArvid Pardo of Malta, in a speech to the General Assembly of the United Nations in 1967, proposing that lthe resources of the deep sea portion of this final frontier were the "Common Heritage of Mankind". As aresult, the United Nations established an Ad Hoc Committee on the Peaceful Uses of the Seabed and theOcean Floor Beyond the Limits of National Jurisdiction, from which nearly a decade and a half later was toevolve the 1982 United Nations Convention on the Law of the Sea (UNaGS). Under UNCLOS the ExclusiveEconomic Zones (EEZ) of individual nations were established, normally extending 200 nautical milesoffshore, over which nations have both sovereignty and de facto an obligation to its citizens for the steward-ship of the use and the exploitation of its resources.

The belief in the mineral potential of the deep ocean and the EEZs is largely based on two facts andtwo assumptions. The two facts are that (1) past and present near-shore mineral exploration and develop-ment, largely within the Territorial Sea (within 3 nautical miles of the shoreline) of most nations has definedmany different types of mineral deposits that have been, or are being, commercially exploited and (2) newtypes of mineral occurrences, that are potentially commercial, have been recently discovered in both theEEZs of individual nations and in the deep ocean. Therefore, it is assumed that (1) known commercialdeposit types will extend to deeper water depths within the EEZ, where further development will take place,and (2) new deposit types of mineral resources will continue to be discovered and, if economically viable,subsequently exploited. When the above is coupled with the fact that the world's EEZs and the deep-sea arelargely unexplored, then-.the potential for the discovery, particularly within the 200 nautical mile ExclusiveEconomic Zone (EEZ) of individual nations, of known and new types of commercial mineral deposits is

very high.

Recent discoveries (within the last 2 decades) of cobalt-rich manganese nodules within the EEZ of theCook Islands, cobalt-rich crust within the Federated States of Micronesia (FSM), Marshalls and Kiribati andTuvalu, and of high-grade, gold-bearing massive sulfide deposits on the seafloors of the EEZs of Japan, Fiji,Tonga and Papua New Guinea, have alerted the nations of the world to both the new opportunities foroffshore mineral development and to their responsibilities to ensure that such developments will be socially~nd environmentally responsible and sustainable. These issues are particularly critical to address with respectto offshore mineral development in that such developments will be taking place within a complex and inter-dependent ecosystem, particularly with respect to fisheries, where mineral development impacts may havenational, regional and international consequences. Equally important to recognize is that in many cases the

4 SOPAC Miscellaneous Report 362

THE MADANG GUIDEUNES

mineral occurrences themselves may have unique ecosystems, particularly in the case of polymetallic massivesulfide occurrences, about which we have little or no knowledge and which may themselves have significant

economic potential.

To date, however, few if any nations, have in place comprehensive policy and legislative regimes toeffectively manage offshore mineral developments beyond those that may occur within their Territorial Seas.Even in these cases the offshore mineral developments are normally governed by existing mineral policy andlegislation that has been formulated and enacted for onshore mineral developments. Such policies andlegislation are generally not applicable for the exploration and development of mineral resources within thedeep-sea portions of the EEZ. Therefore, it is imperative that individual nations begin the process, in consul-tation with industry and other stakeholders, of developing appropriate regimes and legislation to managepresent and future mineral exploration, development and exploitation within their EEZs.

To provide a basis for the future exploration and possible development of offshore mineral resources anexpert group was convened under the auspices of SOPAC in Madang, Papua New Guinea in February 1999to address the issues of new policy and legislative regimes to effectively manage issues arising from offshoremineral exploration and potential development. It is believed that the recommendations of this expert group"The Madang Guidelines" provide a useful basis to assist nations of the international community in theirformulation of effective policy and legislation for offshore mineral development. In particular the MadangGuidelines provide for the accommodation of the unique attributes and occurrences of the deposits them-selves, the "pioneering nature" of exploration and development activities and for a broad range of associatedissues including (a) environmental impacts and impact as.sessment, stakeholder interests, fisheries impacts andthe inter-relations of government, industry and marine scientific research.

As such the "Madang Guidelines" are a pioneering effort to ensure the sustainable development ofmineral resources in the EEZs of the nations of the world. I commend them to you.

fo "\ ---'Alf SimpsonDirector of .S"OPAC

SOPAC Miscellaneous Report 362 5~


SUMMARY

Recent discoveries of gold-rich polymetallic massive sulfide deposits and cobalt-rich manganese noduleswithin the EEZs of several nations has renewed corporate interest, beyond the traditional interest innearshore mineral resources, in the exploration and possible development of offshore mineral resources indeeper portions of EEZs and in the open oceans. The immediate impact of the renewed interest in offshoremineral resource development, coupled with the ratification of UNCLOS and the formal establishment ofthe International Seabed Authority, has been that most nations must begin to (a) address the requirement ofUNCLOS in terms of defining the extent of their EEZ and (b) develop appropriate policy and legislation togovern offshore mineral exploration and development.

Existing mineral policy and legislation developed for on land mineral exploration and developmentcannot be effectively applied to offshore mineral exploration and development because of the unique at-tributes of the deposits themselves and the "pioneering nature" of exploration and development activities.Equally important is the need to address a range of associated issues including (a) environmental impacts andimpact assessment, stakeholder interests, fisheries impacts and the inter-relations of government, industryand marine scientific research.

To address the above issues a set of 19 recommendations, "The Madang Guidelines", have been devel-oped and are proposed as a basis to formulate effective and enabling policy and legislation by governments togovern offshore mineral exploration and development.

6 ,~OPACMiscellaneolis Report 362



1. As appropriate, nations should take relevant measures to ensure the provisions of the 1982 Conventionbecome fully implemented within their jurisdictions.

2. Nations should move forward rapidly to delineate the baselines from which the various jurisdictionalzones under the United Nations Convention on the Law of the Sea (UNCLOS) ("1982 Convention")are measured and to deposit the appropriate charts and list of co-ordinates with the United Nations.

3. In the case of potential extensions of the continental shelf beyond 200 nautical miles, these data shouldalso be gathered as soon as possible and the appropriate claims filed (bearing in mind the 10-year limitfrom the date of ratification by the coastal state).

4. Measures should be taken to designate archipelagic and other sealanes for the purpose of navigation inaccordance with the 1982 Convention and other international conventions.

5. Nations should proceed to select their preferred dispute resolution mechanism as required under the1982 Convention

6. In the interests of consistency and simplicity of administration, the unique nature of offshore mineraldevelopment activities and the diverse nature of stakeholder interests, coastal states should develop acomprehensive 'Offshore Mining Act,' where appropriate, as a distinct country-specific regime which isseparate from their existing onland mining acts.

7. The "risk" components associated with the exploration and exploitation of offshore mineral resourcesshould be assessed and considered in the development of an appropriate licensing and fiscal regime.

8. Individual nations should develop a fiscal regime specific for offshore mineral development that ac-counts for the unique economic aspects of such exploration and development, in particular the highcosts of exploration, development and technology development.

9. Initial offshore mineral developments should be viewed as "pioneering efforts" and as such be grantedappropriate economic incentives to promote investment and development.

10. Recognising the appropriate instruments within the 1982 Convention regarding the conservation andmanagement of the living resources within coastal states' EEZs, measures should be taken to minimiseadverse impacts to the marine environment and to traditional and non-traditional uses of the sea thatmay be caused by offshore mining.

11. Where appropriate, coastal states should consider making a declaration that the non-living resourcesbeyond the 3-mile limit from the Provincial coastlines are a "Common Heritage of the Nation".

12. Coastal states should adopt a proactive approach in all significant decision making activities related toenvironmental concerns associated with offshore mineral exploration and exploitat.ion.

13. The collection of baseline environmental data should be a condition of any marine exploration licence.Collection of baseline data should begin as early as possible followed by systematic data collectionthroughout the term of the exploration licence.

SOPACMiscellaneofls Report 362 7


14. Stakeholder groups and their interest should be clearly defined during the formulation of any OffshoreMineral Development Agreement to ensure that the interests of the stakeholders are adequately consid-ered and, where appropriate, incorporated into the agreement.

15. Appropriate programs will need to be developed for the assessment of, and compensation for, impactsof marine mineral development activities on traditional and commercial fishery activities.

16. To facilitate the development and sustainability of national fisheries government and industry shouldconsider joint development of industrial support facilities that could service both industries and allowfor additional development (mineral processing, fish canning).

17. Offshore mineral policy and legislation should ensure the confidentiality of corporate research anddevelopment data within their license area/so

18. To ensure the long term capability of the coastal states to effectively monitor offshore mineral resourcesactivities, relevant government representatives should participate in all at-sea phases of MSR, explorationand evaluation and that provision be made, either through appropriation or the creation of special usefunds within the responsible agency(ies), to provide adequate human and fiscal resources required forneeded data collection and collation, monitoring and enforcement activities.

19. Recognising the unique nature of the biota associated with active hydrothermal zones, activities thatensure an adequate understanding of the biota communities and the impacts of any associated mineralexploration and exploitation should be undertaken by MSR and Industry.

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8 SOPACMiscellaneous Report362


THE MADANG GUIDELINES -OFFSHORE MINERAL POLICY

INTRODUCTION

The mineral potential of the world's oceans, both near shore and deep-sea, is largely unexplored al-though the potential for new discoveries of commercial, or potentially commercial, mineral deposits isconsidered very high. The highest mineral potential is within the 200 nautical mile Exclusive Economic Zone(EEZ) of individual nations where, to date, the vast majority of exploration and development has beenconfined to the Territorial Sea (three nautical miles from the shoreline) -only a small fraction of the totalarea of the EEZ.

Perhaps ironically, the most extensively explored area of the world's oceans is arguably the deep-seaClarion-Clipperton zone (eastern Pacific Ocean) which has been the site of extensive international explora-tion for manganese nodules by many nations for over four decades. The exploration success in the Clarion-Clipperton Zone led to extensive exploration in the southeast Pacific, central Indian Ocean, offshore southAustralia and the South Pacific (Cook Islands). Of these, only the manganese nodules of the Cook Island'sEEZ appears to have sufficient size and nodule grade to be considered an alternative site for possible mining.

Most recently the discovery of potentially economic polymetallic sulfide deposits, particularly those withhigh gold values within the EEZ's of individual nations, has sparked interest on the part of both govern-ments and industry with respect to their possible development. The gold-bearing massive sulfide occurrences,individually with a resource potential of 50-250 million tonnes (t), occur primarily in the Manus, Lau, Fiji, andMariana Basins of the western Pacific (Clark 1999, Rao 1999, Kia and Lasark 1999, Binns and Dekker 1999,Ponia 1999).

The discovery in the EEZs of many nations of potentially commercial mineral deposits, in particular theabove noted manganese nodules and gold-rich massive sulfides, poses a number of new challenges for bothgovernment and industry. Specifically, governments must develop new policy and legislative regimes toeffectively manage issues arising from offshore mineral exploration and potential development. To date,however, few if any nations, have in place comprehensive policy and legislative regimes to manage offshoremineral developments beyond those that may occur within their Territorial Seas where offshore mineraldevelopments are normally governed by existing mineral policy and legislation enacted for onshore develop-ments. Such policies and legislation are generally not applicable for the exploration and development ofmineral resources within the deep-sea portions of the EEZ. Therefore, it is imperative that individual nationsbegin the process, in consultation with industry and other stakeholders, of developing appropriate regimesand legislation to manage present and future mineral exploration, development and exploitation within theirEEZs.

In recognition of the above, an Offshore Mineral Policy Workshop was held between 22-26 February1999 in Madang, Papua New Guinea. The Workshop was hosted by the Papua New Guinea (PNG) Depart-ment of Mineral Resources, coordinated by the South Pacific Applied Geoscience Commission (SOPAC) andsponsored by the Metal Mining Agency of Japan (MMAJ) and the South Pacific Forum Secretariat. ThisWorkshop combined national, regional and international expert presentations with w>rking group sessionsand plenary discussion. The primary goals of the Workshop were, based on inputs from the assembledspecialists, to review and revise the draft PNG Green Paper on Offshore Mining Policy (Government ofPapua New Guinea 1999, Wanjik 1999, James 1999) to develop a list of recommendations for individualnations to consider in the preparation of offshore mineral policy and legislation.



In the following, based on the papers presented and subsequent discussions, a brief overview is pre-sented on the occurrence and nature of polymetallic massive sulfides and manganese nodules, presently thefocus of interest by industry for commercial development, within the EEZs of several nations of the west-ern Pacific. Based on this overview, the key issues inherent in the formulation of an appropriate marineresources development policy and enabling legislation are discussed followed by a number of specific recom-mendations. This is followed by a discussion of environmental, social, cultural and related issues that mustalso be considered and accommodated in an overall offshore minerals policy. The combined recommenda-tions that follow each section constitute the "Madang Guidelines for Offshore Mineral Policy".

OFFSHORE MINERAL RESOURCES

Within the EEZs of several nations, deposits of black sands, chromite, gemstones, gold, diamonds,metalliferous muds, phosphate, platinum, sand and gravel, salts, silica, sulphur and tin have been recognizedand exploited for centuries. In addition, serious consideration has been given to the mining of metal-rich sea-floor oozes and sediments in the Red Sea and the recovery of cobalt-rich manganese crusts from deep-seaseamounts and ridges. At present, however, the above mentioned manganese nodules and gold-richpolymetallic sulfide deposits which occur within the EEZs of many nations are the subject of increasedexploration and evaluation for commercial exploitation (Clark 1999, Rao 1999, Kia and Lasark 1999, Binnsand Dekkar 1999, Ponia 1999).

Manganese Nodules

Manganese nodules are spherical or egg-shaped globules of metallic oxides measuring from 2 to 15centimeters (cm) in diameter, and are spread on flat seabed surfaces at depths of 4000 to 6000 metres (m).They contain mainly iron and manganese oxides, but also contain nickel, copper and cobalt, amongst others.Manganese nodules were first discovered in the deep sea during the 1873-1876 expedition of the Challengerbut remained little more than a scientific curiosity until the 1950s when large nodule fields were discovered inthe Pacific Ocean. During the 1960s and until the late 1970s, manganese nodules were the subjects of intensescientific research and exploration by private industry (Kajitani 1999, Tesishima 1999).

Although manganese nodules occur in all of the wotld's oceans, the most famous area is the Clarion-Clipperton nodule field, an area of roughly 2.25 million square kilometres (km~ that is estimated to contain(McKelvey 1986) 2.1 billion dry t of potentially recoverable nodules. The mineable area would be 1.25 millionkm2, with a nodule concentration of 11.9 kilograms per square metre (kg/m~ of nodules containing 1.3%nickel, 1 % copper, 25% manganese, 0.22% cobalt, and 0.05% molybdenum.

In 1995, Clark, et al., estimated that the cobalt rich manganese nodule resources occurring within theEEZ of the Cook Islands was approximately 7.5 billion dry tonnes of nodules containing 32.5 million tonnesof cobalt, 24.5 million tonnes of nickel and 14 million tonnes of copper (cut-off grade of >5kg/m~ in anarea of 652 223 km2.

According to Ponia (1999), a feasibility study conducted for the Cook Islands Government has examinedexploiting the nodule resources occurring within the EEZ of the Cook Islands. The feasibility study pro-poses a mining scenario with an output of about 3000 tonnes of cobalt per year, the equivalent of aroundten percent of the wotld's cobalt consumption that would be mined from a small area north of Aitutaki. Theproposed mining area was chosen for its high nodule abundance, the high cobalt content of the nodules andthe presence of a relatively flat terrain that would facilitate the harvesting of the nodules. The nodules wouldbe gathered by dredging, using small beam trawlers especially modified for the recovery of nodules. Once

10 SOPACMiscel/aneoHS Report362


brought to the surface, the nodules would be loaded onto large transport vessels for shipment to a processingplant (assumed to be in New Zealand) where the nodules would be subsequently off-loaded, stockpiled andlater reclaimed for smelting and refining at the plant.

PolYmetallic massive sulfides

Polymetallic massive sulfide deposits are concentrations of copper, lead and zinc sulfide minerals, oftenwith high concentrations of gold, which occur as thick blankets, sulfide-cemented breccias, disseminationsand as the well-known "black smoker chimneys", the latter considered to be hydrothermal mineral deposits information. Since the discovery of deep-sea polymetallic sulfide deposits (PSD) in 1978, many authors havenoted the similarity of such occurrences to deposits now being mined on the continents. In particular, theyhave noted the PSDs to be similar to the deposits of Cyprus (Adamides 1979), japan (Halbach et.al. 1989b)and the numerous massive sulfide deposits of Canada and Australia. Extensive literature now documents thewidespread occurrence of these deposits along the East Pacific Rise, the Galapagos spreading center, and theMid-Atlantic Ridge implying that such deposits are widespread throughout the major oceans of the world.

The western Pacific polymetallic massive sulfide deposits, many high in gold content, were first discov-ered in the South Lau Basin in 1984 (Stackelberg et al. 1985) and subsequently in the northern Lau Basin,Okinawa Trough and the North Fiji and the Manus Basins. At the present time, the PSD occurrences ofprimary interest to industry for possible commercial development are those discovered in the Manus Basinof Papua New Guinea (Binns et al. 1997). These occurrences were leased to private industry by the Govern-ment of Papua New Guinea in November 1998.

According to Binns, et al., 1997, the eastern Manus Basincontains three known active hydrothermalzones (pASCMUS, DESMOS and Susu Knolls) which are rapidly becoming recognized as regional-scalemodern analogues of volcanic hosted mineral fields on land. In ,the PACMUS field, Binns, et al. (1997),reports that "... [c]himneys dominated by chalcopyrite and sphalerite, with barite and some bornite, haveaverage compositions of 11 wt% Cu, 27% Zn, 230ppm Ag, and 18 ppm Au.. .." And, in the Susu field" analyses of three Suzette chimneys average 19% Cu, 22% Zn, 125 ppm Ag and 23 ppm Au " If the

value of the known mineralisation in the eastern Manus is calculated on a per tonne basis it would be worthapproximately US$500 to US$600/tonne in contained metal (gold, copper, zinc).

The actual economic potential of PSD is unknown at present, as there is insufficient informationavailable, with respect to the geology, engineering and technology of possible mining and extraction, toconduct a feasibility study. As noted above, however, the gross value of selected specimens recovered fromthe deposits is sufficient to warrant further exploration.

Before industry can proceed to make the necessary investments required to fully evaluate the economicpotential of nodule and polymetallic sulfide deposits, and before governments can effectively administer andmanage such developments, it is necessary to have in place comprehensive and enabling mineral policy andlegislation which is specific to the exploration and development of these offshore mineral resources.

NATIONAL POliCY FOR THE OFFSHORE EXCLUSIVE ECONOMIC ZONE

With the recognition of the economic potential of new occurrences of marine mineral resources withinthe EEZ, there has been a national and international recognition of the need to establish legal jurisdictionover these resources. The recognition of a national need for exclusive jurisdiction of the near shore environ-ments has also been a major factor (among several) that led national governments to define a Territorial Sea


TH1\ MADANG GUIDEUN}~S

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(mean high tide to three miles offshore) with a larger contiguous zone (nine miles offshore). Similarly, therecognition of the resource potential of deep-ocean manganese nodules led to serious questions concerningthe ownership of all deep-ocean resources. In 1967 Ambassador Arvid Pardo of Malta, in a speech to theGeneral Assembly of the United Nations, proposed that such resources were the "Common Heritage ofMankind". As a result, the United Nations established an Ad Hoc Committee on the Peaceful Uses of theSeabed and the Ocean Floor Beyond the Limits of National Jurisdiction, from which nearly a decade and ahalf later was to evolve into the United Nations Convention on the Law of the Sea (UNCLOS) under which theInternational Seabed Authority (ISA) was formally established in 1994 (International Seabed Authority, 1998,

Lodge 1999).

A particularly significant result of UNCLOS was the designation of the EEZ as "a zone normallyextending not more than 200 nautical miles from the baselines from which the breadth of the territorial sea ismeasured" (United Nations 1981) within which a coastal state has sovereign rights over the natural resourcesof the seabed, subsoil, and superjacent waters. This sovereign right of the nation over the resources of theEEZ requires that individual nations establish both a national policy and appropriate legislation to governmineral resource development within their EEZs. In the following, the basic elements of the required policyand legislation are presented.

Elements of Marine Mineral Policy and Legislation

The primary element in defining a rational marine mineral resources policy is to first establish theterritorial boundaries of the EEZ, within the framework set forth by UNCLOS, to which the policy will beapplied. The recently proclaimed EEZs of many, if not most, nations have not been sufficiently surveyedand/ or defined to ensure that exact territorial boundaries are known and, more importantly, accepted byother nations. Once the issue of territorial boundaries has been clarified, a nation can begin to establish itsmarine mineral resource policy: the key elements of which are sovereignty, self- sufficiency and self-determi-nation.

Basic Objectives of a Marine Mineral Policy

Although the resources and the level of resource endowment within the EEZ of individual nations willvary greatly, there are a number of fundamental objectives that a nation should strive to achieve with itsoffshore mineral policy. Among the most important are the following:

.Promote efficient and timely exploration, development, and production

.Encourage diversification in resource development

.Ensure conservation in exploitation of the resources

.Maximize economic return on resource exploitation

.Protect the enviror1tI1ent

.Contribute to overall national development in multiple sectors

In achieving the above objectives, it must be remembered that marine mineral resources arenonrenewable national assets. As such, a nation's marine mineral resource policy, while promoting the respon-sible development of the resources, must also ensure the optimization of economic and social developmentfor present and future generations while simultaneously preserving the environment and traditional values ofthe nation.

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THJ.: MADANG GUIDELINES

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Characteristics of a Marine Mineral Policy

In achieving the objectives of a national offshore mineral resource policy it is necessary to address the

characteristics of the marine minerals industry with respect to exploration, development and exploitation of

the resources. In particular, there are five major attributes of the industry and its activities that are critical to

consider in policy formulation if a nation is to attract foreign investment for the exploration and develop-ment of the resources' (Clark 1999). These five attributes are:

.Exploration is high risk and cosdy

.Exploration, development and exploitation all require advanced technology

.Development and exploitation is capital intensive

.Project economics are subject to market and price instability

Because of these attributes, it is imperative that a national offshore mineral resources policy recognize,and be responsive to, these factors if it is to attract foreign investment. At the same time, the nation cannot

modify its overall marine mineral resource policy to such an extent that it does not achieve the major objec-

tives set forth in the above.

Madang Guideline Recommendations

1. As appropriate, nations should take relevant measures to ensure the provisions of the 1982 Convention become fullY

implemented within their jurisdictions.

2. Nations should move forward rapidlY to delineate the baselines from which the various jurisdictional zones under the

United Nations Convention on the Law of the Sea (UNa-OS) ("1982 Convention'; are measured and to deposit

the appropriate charts and list of co-ordinates with the United Nations.

3. In the case of potential extensions of the continental shelf beyond 200 nautical miles, these data should also be

gathered as soon as possible and the appropriate claims filed (bearing in mind the 10-:]ear limit from the date of

ratification by the coastal state).

4. Measures should be taken to designate archipelagic and other sealanes for the putpose of navigation in accordance with

the 1982 Convention and other international conventions.

5. Nations should proceed to select their prefetTed dispute resolution mechanism as required under the 1982 Convention.

OFFSHORE MINERAL EXPWRATION AND DEVELOPMENT POUCy

The key elements of the policies and legislation under which onshore mineral exploration and develop-

ment take place are well established in most nations. Indeed, in many countries the same policies and legisla-tion have been applied, with minor modification, to nearshore mineral development (Wanjik 1999). Few if

any nations, however, have developed policies and legislation that are specific for deep-ocean marine mineral

resource exploration and development and which recognize and accommodate the unique aspects of such

activities. The following discussion is directed specifically toward defining some of the specific factors that

should be considered in the formulation of exploration and development policy, legislation and developmentagreements. The following discussion focuses on the exploration phase and development agreements in

particular because these are the major issues presendy facing governments and industry. In the following,seven basic parameters are briefly discussed with respect to formulating policy and legislation for offshore



mineral development (Clark 1999). The majority of these issues would be included in exploration licences/leases given, and development agreements entered into, by an individual nation. These parameters include:commodities sought, exploration area, exploration area shape, duration of exploration licence, revenues,performance control, and retention and relinquishment.

Commodities Sought

A clear statement is necessary with respect to the individual commodities sought (and eventually devel-oped and marketed) within an exploration area. This is because ores derived from the majority of anticipatedoffshore mineral developments) will be mineralogically complex. As a result, a definition of individualcommodities upon which royalties (or other payment) will be made is essential to ensure an oPtImum eco-nomic return to the nation.

Exploration Area

The exploration area allocated within a nation's territorial sea or EEZ is normally dependent on twofactors: (1) the mode of occurrence and spatial distribution of the resource and (2) the total exploration area(normally expressed in km~ that is available within the EEZ. As examples, nodule deposits tend to occur asthin veneers covering seamounts or abyssal plateaus requiring exploration areas that encompass severalthousand km2 in orde~ to have sufficient area for discovery of a viable mine site, whereas, polymetallicmassive sulfide occurrences are more restricted in size, and have higher ore grades and lower tonnage, requir-ing considerably smaller exploration areas. However, because of the limited knowledge concerning mostoffshore mineral occurrences it is probable that initial exploration policy and legislation will grant muchlarger areas in the offshore than would be granted onshore.

The total available area for exploration within an EEZ is normally a secondary consideration in deter-mining a nation's policy with respect to the size of an individual exploration area. The main policy decisionthat must initially be made, assuming that the available area is sufficiently large to provide for several explora-tion areas, is whether to grant the entire area as a single licence or to divide the area into several smallerexploration areas. Normally it is in the interest of the licensing nation to proceed with several explorationareas, rather than one large area, as such a policy encourages competition among investors and will ultimatelyprovide a broader base of data upon which the nation can make development decisions. In cases when thetotal exploration area within the EEZ is either quite small or the areas of mineral occurrence are known to berestricted, a nation may need to grant the entire area as a single licence in order to attract investor interests.

Exploration Area Shape

Normal licencing procedures are designed to offer exploration areas that are essentially equidimensionaland contiguous. This practice is appropriate for most offshore mineral resources, however, in the case ofpolymetallic massive sulfides that are associated with linear zones and may be discontinuous along a zone, thelicence areas would perhaps better be defined by long narrow tracts either parallel (providing a ,naximum areaof similar geology) or perpendicular (providing maximum variation in the geologic setting) to the axis of thelinear structure.

A possible alternative to either the equidimensional or the elongate shape is to issue licences to coverwhatever areas the investor may wish to define (within the lease size limitations previously set). Such aprocedure has both ,be.n~fits and drawbacks to the licensing nation and is generally not recommended withoutstrict controls and relinquishment regulations.

14 SOPACMiscellaneofis Report 362


Duration of Exploration Licence

The duration of an exploration licence should be determined by a number of factors, however, theduration should provide sufficient time to explore the area, to the point that specific economic targets fordevelopment can be defined. Licences can be extended based on performance criteria, which would normallybe contained in the legislation of the nation issuing the licence. Such extensions are usually tied to a sequen-tial relinquishment of a portion of the total exploration area. In all cases, the time frame should be set andclearly stated so that both the government and the investor can fulfill their obligations without dispute. As ageneral rule, exploration licences would be considered short term (5 years) or long term (20 years) but wouldnot exceed these limits without exceptional reasons: this may be the case with respect to certain offshoremineral resources.

Revenues

Exploration licences are normally granted with the provision that if an economic deposit is found theinvestor has the right to develop and exploit the deposit under the fiscal regime defined by the nation foroffshore mineral resource development. As a result, several methods are used to secure the appropriaterevenues (economic rents) to the government. Among the most common methods are the following:

Performance Control

Regulations are added to exploration licences to ensure that the investor will proceed with the proposedwork plan in a timely and professional manner. Such regulations are enforced by (a) requiring that the inves-tor post a performance bond that is forfeited if work is not done or (b) by suspension of the explorationlicence(s) if work does not proceed. Normally performance criteria are set in terms of money spent, areaexplored, work completed, or various combinations of the above. Performance controls are essential toensure that a nation's resource endowment is not unduly controlled by investors for long periods of timewithout exploration activity taking place.

Retention and Relinquishment

Exploration licences should provide a set schedule for both the amount of area that can be retained andthe portion that must be relinquished on a yearly basis. In standard practice, the relinquishment of an areaproceeds to a specified minimum level at which time the investor is allowed to retain rights if (a) a yearly, andnormally escalating-rent, is paid per unit area; (b) a specified area is transferred to either development ormining; or (c) exploration continues to meet performance criteria.

Specified retention and relinquishment procedures are essential from the government's perspective toensure that large areas of the national domain will continuously be available for explor~tion and possibledevelopment. Additionally, it ensures that exploration by any single company will proceed in a timely andprofessional manner.

The above brief discussion of the basic components of offshore mineral policy and legislation, and thevarious issues that should be considered in their development, is not intended to be all-inclusive but rather toprovide a basic checklist for governments as they proceed to develop appropriate policy and legislation. Inthe development of offshore policy and legislation one of the most important issues to consider, in additionto the above, is that of the fiscal regime under which offshore mineral development and exploitation shouldtake place.



Madang Guidelines Recommendation

6. In the interests of consistency and simpliciry of administration, the unique nature of offshore mzneral development

activities and the diverse nature of stakeholder interests, coastal states should develop a comprehensive 'OffshoreMining Act, , where appropriate, as a distinct country-specific regime which is separate from their existing onland

mining acts.

7. The "risk" components associated with the exploration and exploitation of offshore mineral resources should be

assessed and considered in the development of an appropriate licencing and fiscal regime.

FISCAL REGIME FOR OFFSHORE MINERAL DEVELOPMENT AND EXPLOITATION

In general, the fiscal regime for offshore mineral development and exploitation will be developed withinthe broader framework of the nations overall economic policy and the legislative instruments that have beendeveloped for implementing that policy. Existing economic policy and legislation within most nations pro-

vides for various direct and indirect taxes and specific tax incentives which de facto determine (a) the profit-ability of any economic enterprise (such as an offshore mineral resource development and (b) the return to

the government from the exploitation of the resource. In the following a brief overview of the major

components of a fiscal regime, which would be applicable offshore mineral resource development, are briefly

reviewed. It should be noted, as pointed out by Fortin (1992) that the fiscal policy and regime of one nationcannot be easily "borrowed" from another nation since fiscal regimes are the product of the specific circum-

stances that exist in each nation. This caution should be equally applicable to the development of fiscal

regimes developed for offshore mineral resources.

Components of a mineral sector fiscal regime

Mineral taxation methods vary in form and application within individual Governments. The taxation

structure of a nation often determines whether or not a given project is economically viable and the govern-

ment's share from the exploitation and utilization of the nation's resources (resource rent). For the majority

of nations the taxes levied on a mineral development are either direct (taxes paid directly by the company to

the Government) or indirect (fees and costs paid to other government agencies or individuals and govern-ment mandated activities paid for by the company) taxes. Among the most common direct taxes are the

following:

Direct Taxes

.Income tax. Often called a profit tax, an income tax is normally a percentage of the profits of an

enterprise.

.Rf!Yolry tax. Often called a production tax the royalty tax is normally a percentage levied against the

amount of a commodity produced or the sale price of the commodity produced. There are, however,

many variations used in the calculation of the royalty tax.

.Import dury. A tax levied against the value of imported equipment and materials used in a mining

enterprise. Normally, not all imports are taxed and this tax is often highly discretionary.

.Export tax. A tax normally levied against the value of the commodity exported. If the commodity issold domestically it is normally subject to a sales tax in lieu of an export tax.



.Withholding tax. A tax levied on the remittance of profits or dividends abroad. This tax is normallylevied on nonresidents but may also apply within certain corporate structures.

.Local taxes. In many nations the provincial and or local levels of government often have vested rightsto tax mining activities-these taxes are often called use taxes as they include taxes for education,roads and property.

.Additional Profits Tax. A tax levied on profits in excess of a set amount (or level of IRR) which nor-mally increases incrementally with level of profit.

.Other taxes. In addition to the above there are normally a large number of other direct taxes that arelevied against a mining activity. These include, but are not limited to the following: rental fees, registra-tion fees, transportation, water, environment (compensation fees), and in special circumstances, a valueadded tax (VA1).

Indirect Taxes

.Landowner compensation. Normally a fee paid directly to the owner of the land upon which the miningactivity will take place or, in rare instances, paid directly to the national government.

.Local component rules. In many nations there are strict rules with respect to the use of domestic goodsand/ or labor, normally a percentage of the total, which may result in increased costs. Additionally,many nations have a requirement for the company to participate in overall development that is anadditional cost.

.Foreign exchange rules and regulations. Normally imposed in such a way that the company experienceforeign exchange losses or encounters increased transaction costs when exchanging or transferringforeign exchange. In specific cases of borrowing within the country, additional taxes may also be

imposed.

.Equi!J participation. Normally takes the form of free equity participation in a project in extreme casesbut usually is a carried equity interest, also known as deferred equity, which allows the government toput up its equity share from future earnings.

.Transfer of technology and know-ho~ Most commonly applies to the cost of acquiring and transferringpatents or other proprietary property to the host country as a condition of undertaking the miningactivity. This was a particularly contentious issue in negotiations under UNCLOS.

Tax Incentives

In recognition of the unique aspects of mineral resource developments, both onshore and offshore,existing policy and legislation normally provides for the following economic incentives:

.Tax holiday. An initial period of time in which a mining enterprise is not subject, or only partiallysubject, to all types of tax liabilities. N?rmally this period is approximately five years and, in specialcases, ten years or more.

.Deductions against income tax. Covers a range of issues such as depreciation, amortization and depletionallowances which can be deducted as costs, thereby, reducing taxable income. Deductions are com-monly only allowed for certain types of equipment or for specific expenditures. Special approacheshave been developed in many countries to either speed up (accelerated depreciation) or slow down(defined number of years) individual deductions.



.Interest deduction. As mining enterprises are capital intensive, the common practice to finance the ven-tures is through loans. Therefore, most nations have provisions for allowing the deduction of all orpart of the interest on borrowed money.

.Loss carry fonlJarel Largely because of the cyclical nature of the mining industry companies enjoyprofitable years and endure years of loss. In the years of loss the amount of the loss can be "carriedforward" as a cost and deducted from taxable income in subsequent profitable years. The terms ofloss carry forward, particularly with respect to the applicable time, is often specified. The converse ofloss carry forward is "loss carry back" which requires an amended tax return.

.Tax credits. A deduction from taxable income allowed by the government specifically for investment ofprofits in the country. The amount of deduction is normally a percentage of the amount invested

domestically.

.Research and development deductions against tax. Deduction allowed for research and development activitiesin either pioneering endeavours, such as deep-sea mineral exploration and development, or for thedevelopment of new technologies of particular interest to government and industry e.g. Improvingenvironmental or economic efficiency of a project.

Additional considerations in establishing a .fiscal regime

In addition to the above fiscal issues there are a number of other issues that may directly impact thedevelopment of fiscal regimes for the development and exploitation of offshore mineral resources within theEEZ. Among the most important are the following:

Financial AnalYsis of projects. As a result of the anticipated long time-frame for many offshore mineralresource developments (it has been 4 decades since manganese nodules in the Clarion-Clipperton Zone wereevaluated for development) it is extremely difficult, if not impossible, in the initial stages of exploration anddevelopment to construct an accurate financial analysis of a proposed project. Indeed, any estimation of anInternal Rate of Return (IRR) or the Net Present Value (NPV) based on present economics would be oflittle value either to the Government or to industry. Therefore, such analyses should be viewed primarily asindicators of future profitability and should not be used by government for the determination of the fiscal

regime.

Ring Fencing. In many countries, expenses incurred in the exploration of one area, which exceed theexpenses called for in a work program, can be credited as expenses on an adjacent property owned by thesame company in order to fulfill the work program on the second area. In essence, a company can expend allof its effort on one property, while holding a second property, without doing any work on that property.Alternatively, a company may be able to mine, at a profit, on one property yet deduct the costs accrued onother properties in order to reduce their taxable income. In the case of offshore mineral exploration anddevelopment, where one company holds two or more licences, these problems could become acute. There-fore, governments should consider "ring-fencing" of expenses, whereby, the profits and costs of explorationand development on a license or mining area are confined i.e. "ring-fenced" to only those associated with thatlicence or mining area.

High Grading. A major problem, which should be considered with many offshore mineral developments,is that of high grading. If, as it is anticipated, the mining of offshore mineral deposits is both costly andcapital intensive there will be a necessity to mine only the highest grade portions of the deposits. Economi-cally, this can be viewed simply as mining to a high cut-off grade which, onshore, is normally justified on the

18 SOPACMiscellaneous Report 362


assertion that the lower grade materials can be mined later, However, because of the particular circumstances

which surround the mining of deep ocean resources this may not be feasible, as it often is on land, to ass~me

that you can go back later and remine the area.

Environmental Costs. A great uncertainty with respect to the development of PMS deposits lies in theassociated environmental costs and the liabilities that a company may have to assume in order to mine a

deposit. Although this is a possibility, studies associated with the proposed development of manganese

nodules indicate that environmental costs are not prohibitively high nor is the amount of associated environ-

mental disruption.

Although the number of direct and indirect taxes is large, it is encouraging to note that the number of

potential tax incentives, which can also dramatically impact the profitability of a mining enterprise, are also

quite numerous and are very important. Overall, the fiscal regime of any nation must have sufficient flexibil-

ity to be able to accommodate the national policy with respect to mineral development while, at the same

time, assure the government of a reasonable "take" from the exploitation of the nation's resources.

Madang Guideline Recommendations

8. Individual nations should develop a fiscal regime specific for offshore mineral development that accounts for the unique

economic aspects of such exploration and development, in parlicular the high costs of exploration, development and

technology development.

9. Initial offshore mineral developments should be viewed as "pioneering efforts" and as such be granted appropriate

economic incentives to promote investment and development.

ENVIRONMENTAL CONSIDERATIONS IN OFFSHORE MINERAL DEVELOPMENT

As offshore mineral development increases for new deposit types (nodules and polymetallic massive

sulfides) and to deeper portions of individual nations EEZs the number and diversity of actual and possibleenvironmental impacts increases dramatically. Of primary concern for commercial development of these

deposits are the assessment and minimization of the potential environmental impacts which may accompany

such development. In the following the key factors related to assessing the impact of anticipated explorationand development activities, and a strategy for addressing them and other concerns in an effective and

efficient, manner are discussed. The discussion is specific to the exploration and development phases. Al-

though the same general procedures would be applicable to aspects of the exploitation phase the present

uncertainty as to how, when and what deposits might be exploited does not allow for a detailed discussion of

environmental impacts or required programs. Nevertheless, certain aspects of land-based mineral exploita-

tion environmental policy will undoubtedly be applicable, to a greater or lesser degree, for offshore exploita-

tion. Those aspects, should exploitation take place, are briefly discussed at the end of the section.

KEY FACTORS IN DEVELOPING AN ENVIRONMENTAL ASSESSMENT PROGRAM

According to Morgan, (1999) there are three key factors must be addressed in any environmental assess-

ment program; in many ways these dictate the strategy for implementation of such a program. These three

key factors are:



Multiple jurisdictions, few rules

As noted many of the primary exploration targets for offshore minerals are located in the territorialwaters or exclusive economic zones (EEZ's) with few or no established procedures for offshore mineraldevelopment. Others, such as the manganese nodules of the Calrion-Clipperton Zone are located in areassubject only to international law: Even the prospects located in the jurisdictions of countries with well-developed onland regulatory frameworks present unique problems because of their offshore locations andbecause their development would not be covered by existing rules. Each site will present different problemsand call for the interfacing with different authorities and individuals.

Undefined technologies & ecosystems

The history of environmental controversy is full of critical decisions based on inadequate information, afactor of critical importance when the development of offshore mineral resources is considered. Deepseabed mining will consist of unprecedented commercial-scale mineral recovery operations in seabed areaspopulated by unique biological communities, many of which, in the case of those associated withpolymetallic massive ~ulfide deposits, were completely unknown to science before 1979 and which remainonly very poorly characterized to date.

Overall, considerable progress has been made internationally in the attempt to preserve and enhance theair, water, land and living resources that are essential to our survival and despite the bureaucratic chaos andquasi-religious rhetoril:= that unfortunately abound in the general field of environmental protection, somegenuinely useful ideas have also evolved. Some of these ideas were assembled in 1979 by the US Council onEnvironmental Quality (CEQ) into a set of Guidelines that are particularly relevant to the regulation of newindustries in poorly defined environments i.e. offshore mineral resources.

Two concepts from the Guidelines, "scoping" and "tiering" are particularly to environmental analysis ofnew activities in frontier areas.

.Scoping is defined in the Guidelines as "[t)here shall be an early and open process for determining thescope of issues to be addressed and for identifying the significant issues related to a proposed action. Thisprocess shall be termed scoping". Scoping begins when the subject of an environmental analysis, the pro-posed action, is sufficiently defined to permit its reasoned evaluation by all interested parties. It consists ofpublic hearings, private interviews, and literature surveys. It culminates in a scoping report that describes theconcerns raised in the process and the means chosen to address these concerns. Scoping compels the envi-ronmental assessment to include the following rules:

1. A definition of the proposed action which is detailed enough to permit meaningful environmentalimpact analysis and

2. An iterative and open project review procedure that can identify and set priorities for the issuesconsidered in the analysis.

Tiering is defined as "...the coverage of general matters in broader environmental impact statementswith subsequent richer statements or environmental analyses...incorporating by reference the general discus-sion and concentrating solely on the issues specific to the statement subsequently prepared". Tiering allowspreparers of EIS's to "...focus on the issues which require decision and exclude from consideration issuesalready decided or not yet required". Tiering implies the following additional rules for efficient and timely

impact analysis:



3. Phasing of the resolution of environmental issues to be compatible with the schedule of activitiescontemplated in the proposed action.

4. Whenever possible, separate environmental issues from governance issues and general issues fromspecific issues and deal with each as appropriate.

The responsible implementation of the principles of scoping and tiering effectively addresses both theobjectives of industrial development and environmental protection. In addition to the above overarching -

concepts Morgan (1999) has defined three additional mechanisms that are particularly useful in environmen-tal assessments for marine mineral resources that are summarized as follows:

Bootstrapping. When activities cannot be adequately defined, phase their regulation to cover the front-end,well-defined portion of the activity. Through monitoring and disclosure requirements, structure each phaseof regulation to include definition of the next phase.

Consolidated Procedures. When the activities are well-defined, organize the permitting procedures as muchas possible into a single process with specified time limits for each step. However, do not attempt to over-structure activities which are not well-defined.

Representative Committees. Whenever possible, channel the identification and resolution of environmentalissues through an independent group composed of representatives of all interested parties rather thanthrough hired staff. This permits identification of the key issues in time for their resolution and also providesan objective guidance of the assessment process.

In summary, government and industry are faced with a variety of potential environmental regimes intheir development efforts, many of which are not yet in place. In particular industry faces particular chal-lenges related to environmental impact issues because of: (1) the relatively undefined nature of the depositsto be mined and the systems to mine them; (2) the popular mystique of anything related to the oceans andthe political forces which thrive on them; and (3) the genuine issues associated with associated unique ecosys-tems. Hydrothermal vent communities. The next section outlines the important aspect~ of the hydrothermal

vent communities of concern.

OUTLINE FOR IMPACT ASSESSMENT EFFORTS

Based on the considerations provided in the preceding sections, the following approach may be appro-priate for undertaking an environmental assessment for offshore mineral resources. Although all of thefollowing steps would be undertaken for each assessment the levels of effort would vary significantly inresponse to the specific needs and priorities of the individual nation and the resources to be developed:Overall, schedules for the various environmental assessment activities would be driven completely by theexploration and development schedules with the overall procedure initiated concurrently with the permitacquisition process. Discussion of environmental issues should be included during the initial contacts be-tween government and industry to demonstrate the unanimous commitment to environmental protection by

both sides.

5 coping and tiering

As discussed above, this is probably the most important part of an assessment program. The key itemsthat must be accomplished in this component are:

SOPAC MisceilaneoHS Report 362 21

THI~ MADANG GUIDEUNES

1. Identify and analyze the legal and regulatory regimes which will control the exploration, mining, andother activities, including the lines of authority, participating organizations, and pertinent rules (if any);

2. Identify and examine the chains of authority to elucidate, if possible, any potential conflicts of interestamong agencies with regulatory responsibilities;

3. Complete a development scenario which describes, in as much detail as practical at the time, theplanned activities of exploration, mining, transportation, processing, and waste management;

4. Establish an advisory board for each assessment program, to include representatives of industry andthe organizations with authority, technical experts (e.g., scientists, local fisheries biologists), and repre-sentatives of potentially interested parties (e.g., from tourist bureaus, fisheries organizations, environ-mental groups);

5. Hold public hearings and information exchange meetings within the appropriate jurisdictions topresent the development scenario and to provide an open forum for the expression and documenta-tion of environmental issues; and,

6. Complete a scoping report which: (a) identifies the primary issues that will require assessment andthose that do not; and CD) provides a specific plan for the assessment effort.

Environmental programs include tasks in the following categories.

Compliance tasks

These are the assessment tasks that are specifically required by the appropriate regulatory regime. Theyinclude such things as the acquisition of permits for land-based activities, vessel inspection certificates, andcompletion of environmental assessment reports, if required. In a jurisdiction with well-developed environ-mental regulations, these tasks form the bulk and heart of the assessment effort. In jurisdictions with fewand unstable regulatory regimes, they will constitute a variable part of the job. It is important to distinguishsuch tasks from the primarily technical task of environmental assessment and from the primarily publicrelations task of public education, desc,ribed below.

Assessment tasks

These tasks include the formal assessment work that must be done to address the environmental issuesraised by advisory committees and at public hearings. The result is an environmental assessment report orstatement that covers the following topics:

.A description of the laws, regulations, or formal agreements under which mining activities will becarried out

.A detailed summary or complete presentation of the development scenario

.A description of the potentially affected environment, focusing particularly on those resources whichhave been raised as issues of concern in the scoping process

.An analysis of environmental effects and necessary plans for mitigation, if necessary

.Documentation of the process by which issues were identified for analysis

22 SOPACAfiscelhneot/s Report 362


Rtsearch and data gathering activities

It may be advisable to sponsor limited research and/or data gathering activities in the exploration areasto address critical issues of concern. However, such work should be undertaken only after it is deemednecessary during the scoping process and after its objectives and methods are clearly defined. When possible,research and data gathering activities should be carried out in conjunction with exploration field activities.Collection of baseline data and execution of field experiments can often be tied very efficiendy to explora-tion activities with minimal interference and relatively litde expense.

Public education tasks

It may also be advisable to sponsor efforts to distribute research or assessment results in public forumsand using attractive presentation methods. Such tasks should also be identified specifically in the scopinganalysis as particularly controversial or subject to widespread misunderstanding. In such work it is veryimportant not to replace substance with format; presentations should be clear, well documented and sup-ported by independent experts. Public workshops can provide visibility and credibility to the program effortsand can enlist the help of acknowledged world experts to assist in the design of the program plan.

ENVIRONMENT RELATED CONSIDERATIONS FOR EXPLOITATION

As noted previously, the high level of uncertainty that is presendy associated with possible offshoreexploitation of deep sea mineral resources, in particular polymetallic massive sulfides, make it difficult toassess in detail the structure of an appropriate environmental regime for their environmentally responsibleexploitation. However, many of the basic components of the environmental regime for onland mineralexploitation will, to a greater or lesser extent, be applicable to offshore mineral developments. It is importantto note that for most nations there will be a need to either draft new environmental policies and legislationthat are specific to offshore mining or, alternatively, to extensively modify existing policy and legislation. Thekey components of an offshore mineral exploitation environmental program, based on onland practices,would include, but not be limited to, the following components.

Criteria Regulations

Because of the number of unique deposit specific project activities that are anticipated to be associatedwith offshore mineral exploration, the most obvious being mining at extreme depths on the oce~n floor,there will be a need to set criteria for categorizing individual activities as a precondition for establishingenvironmental guidelines.

Fee, Levies and Bonding Rtgulations

Similar to onland mineral exploitation activities a comparable set of fees, levies and bonding will have tobe developed for offshore mineral exploitation. Although the basic types of fee regulations will apply theywill undoubtedly vary considerably in terms of magnitude (actual amount of the fee, levy or bond) andtiming (the overall time period for which they will apply). This will present a unique challenge for botngovernment and industry to develop a fiscal regime that is not punitive, with respect to impacting the eco~nomic viability of the project, but ensure protection of the environment. Existing uncertainty with regard to

SOPACMiscellaneous Report 362 23

THE MADANG GUIDELINE5

the types and extent of environmental impacts, particularly in terms of the extent and timing of rehabilita-tion, make the development of a realistic fee regulation system highly problematic at the present time.

As with onland mineral exploitation projects, the development of a comprehensive Environment MiningPlan (EMP) will be essential for both government and industry in order to ensure environmentally andeconomically responsible exploitation. Initial plans will need to be flexible and provide for regular updatingand modification as experience is gained with the actual exploitation process. In particular, the EMP will becritical in initially defining the scope and cost of bonding and subsequently in determining any changesneeded in the bonding procedure.

Environmental bonding will represent a particular challenge initially requiring (a) the definition of thetype and impact of the mining method to be utilized, the establishment of suitable environmental guidelinesfor monitoring the exploitation activities and (c) the establishment of mitigation and rehabilitation costs for anew type of mining activity. Nevertheless, a system that includes, at a minimum, a bonding procedure forrehabilitation and reclamation will be required. Such bonding may also be for non-conventional aspects ofrehabilitation and reclamation; such as reclamation and rehabilitation to reestablish ecosystem diversity in theexploited area.

Environmental Policy on Offshore Waters

In the majority of nations there is already in place environmental policies and legislation which arespecific to onloand and nearshore water resources: normally under either a specific Water Resources Act oras a major component of Environmental Protection, Environmental Planning and/or Environmental Con-taminants acts. The Water Resources Act will normally deal with licensing of water abstraction and dischargeof wastewater into any water body; the Environmental Protection Act normally covers general pollutioncontrol and the registration of contaminants and the Environmental Planning Act covers the EnvironmentPlan (EP) Approval process. This latter activity will be extremely critical in that it will detail the specificstudies and reporting that will be required to enable governments to closely monitor offshore exploitationactivities.

Each of these acts, if they exist, will undoubtedly need to be modified to accommodate the uniqueaspects of offshore mineral exploitation and overall operations within the open ocean marine environment.Alternatively, governments may wish to develop new policies and legislation, that are specific for offshoremineral exploitation, that specifically addresses the marine environment.

Enforcement Policy

In addition to the unique aspects of environmental monitoring an equally complex, and closely related,area of concern during the exploitation of offshore mineral resources is that of enforcement. Because ofcosts, access and available data with respect to offshore mineral exploitation the enforcement policy will needto rely heavily on reporting by industry, to a lesser degree on marine researchers and, perhaps least, on actualcompliance evaluations by the State. Therefore it is necessary that the enforcement policy be closely linkedwith activities mandated in the fee regulations (particularly the bonding procedures) and the environmentalpolicy for offshore waters.

Additionally, enforcement policy should also include details of operational procedures and industrycodes of practice that can normally be more easily monitored for compliance and de facto help to ensurecompliance in associated activities less easily monitored.

24 SOPAC Miscel/aneol/S Report 362

THE MAOANG GUIDELINES-

ASSOCIATED ISSUES

In the preceding discussions emphasis has been placed on the major issues which government and

industry must consider in developing t}te policy, legislation and guidelines which are needed for socially

responsible sustainable development of offshore mineral resources. The development of offshore mineral

resources, however, must consider a number of other impacts and issues that will be associated with offshore

mineral development. Among the most important of these are issues related to stakeholder interests, fisheries

and scientific research in the areas of offshore mineral development.

Madang Guidelines Recommendations

10. Recognising the appropriate instrllments within the 1982 Convention regarding the conseroation and management ofthe living resources within coastal states' EEZs, measures should be taken to minimise adverse i"pactsto the marine

environment and to traditional and non-traditional uses of the sea that mqy be caused by offshore mining.

11. Where appropriate, coastal states should consider making a declaration that the non-living resources btyond the 3-mile

limit from the Provincial coastlines are a "Common Heritage of the Nation".

12. Coastal states should adopt a proactive approach in all significant decision making activities related to environmental

concerns associated with offshore mineral exploration and exploitation.

13. The collection of baseline environmental data should be a condition of any marine exploration licence. Collection ofbaseline data should begin as earlY as possible followed by rystematic data collection throughout the ter", of the explora-

tion licence.

ASSOCIATED ISSUES IN POLICY FORMULATION

In the preceding discussions, emphasis has been placed on the major issues which government and

industry must consider in developing the policy, legislation and guidelines that are needed for socially respon-

sible sustainable development of offshore mineral resources. The development of offshore mineral re-

sources, however, must consider a number of other impacts and issues that will be associated with offshoremineral development. Among the most important of these are issues related to stakeholder interests, fisheries

and scientific research in the areas of offshore mineral development (Lola 1999, Kolkolo 1999).

Stakeholder Interests

The number and special interests of potential stakeholders which are directly or indirectly impacted byoffshore mineral development are large and varied and beyond the scope of the present discussion to deal

with in detail. Defining the number and interests of the various stakeholders that may be impacted by off-

shore mineral development is further compounded by the fact that since offshore mineral developmentcreates a new development environment there will undoubtedly be a number of stakeholders and interests

that cannot be anticipated at the present time. Therefore, it is of great importance that the stakeholders and

their interests, in particular, the "new" stakeholders and the issues that are associated with them, are identi-

fied and addressed at the outset of the development of any policy and regulatory regime.

In the following a brief overview is given of some of the different stakeholders and their concerns that

one would expect to encounter with an offshore mineral development program within the EEZ of islandnation in the Pacific. This scenario has been chosen because of the ongoing projects for the development of

SOPACMiscel/aneous Report 362 25


--

manganese nodules in the EEZ of the Cook Islands and the recent issuance of exploration licences forpolymetallic massive sulfides in the EEZ of Papua New Guinea: two areas of ongoing exploration andpossible development in the near term (5-10 years).

The stakeholders

According to Lola (1999), the most obvious stakeholders in offshore mineral development are thegovernment and industry whose interests are relatively well-defined in government policy and industry'sobjectives in offshore mineral development. In general, the following individuals or entities can be identifiedas the principle stakeholders in any offshore mineral development:

.National government

.Industry (including stockholders)

.Provincial governments

.Local level governments

.Coastal communities

.Marine scientific researchers and researchers undertaking other research activities

.Commercial fishing industry participants, including traditional fishermen

.Shipping operators, including other marine navigators and users

.Interest groups, including environmental groups, conservation groups

.International Seabed Authority

.Landowners

It should be emphasized that although all of the above stakeholders have shared interests they may usecompletely different, and at times conflicting, methods to realize their basic objectives.

Stakeholder interests

Stakeholder interests are normally defined in terms of the claims by individuals or organizations ofownership and/or user rights, perceived or otherwise, that they exercise over the offshore area. Normally, theState's assertion of ownership rights over mineral resources in the offshore area stems from the ownershiprights vested under a national constitution that almost always grants total ownership rights to the State overthe natural resources within its territories (including the EEZ). Some activities relating to offshore miningoperations may, however, take place onshore in which customary landowners may assert their ownershiprights over their customary land.

Other stakeholders may not assert ownership rights but they can still assert some form of user rights inthe offshore areas and, therefore, their interests, or the interests that they represent, will have to be consid-ered. For example, stakeholders, such as traditional fishermen and local coastal communities may assert userrights over certain reefs or traditional fishing grounds.

26 SOPACMiscellaneoHs Report362


--

Some stakeholders, such as commercial fishing industry participants, may assert rights that ate inherentlytheirs by virtue of the terms of bilateral and multilateral agreements that are in place, that accord them theright to fish within the EEZ. The commercial fishing industry participants are an important group ofstakeholders primarily because of the fact that in most nations they are already operating in the offshoreareas that are now being considered for mining activities.

A researcher may assert certain rights, including the right to be in a particular place to conduct Marin~Science Research (MSR) or other forms of research, on the basis of existing agreements or other forms ofapproval that they may have received from the State or its relevant agencies.

In the case of industry, a stakeholder, such a petroleum company may assert a right, to be in the off-shore, pursuant to the terms of a petroleum agreement that it has with the State, which permits it to carryonpetroleum activities in the offshore area. Similarly, a mining company may assert that it has a statutory rightto be present offshore through an exploration licence that it has been granted under a nation's mining act.Likewise, a shipping operator may also assert a right because it has been licenced under the relevant shippinglaws to operate a particular route. The particular interests of the mining industry are discussed later in this

analysis.

Provincial governments and local level governments may assert rights in relation to the sharing ofbenefits emanating from the development of a natural resource. In fact, in many nations (Indonesia, PapuaNew Guinea, Philippines) the State is obligated under various "decentralization acts" to share such benefitswith these second and third tier governments.

In some nations (Indonesia and Papua New Guinea), State mineral corporations may assert that, pursu-ant to enabling legislation which accorded it the right to be an entity, it has a right to participate as the Statenominee in any mining project.

Stakeholder issues

Issues of interest to the above various stakeholders are varied and very much depend on the rights thatthey are asserting in relation to the offshore areas. The common issues of interest to most stakeholderswould be for some form of compensation for the loss of certain rights due to offshore mineral development.As an example, the commercial fishing industry may find that mining activities may curtail their activitiesand, hence, they ought to be properly compensated for any loss that arises as a result of their forced curtail-ment of fishing activities. Similarly, coastal communities and traditional fishermen may also seek compensa-tion for the loss of their traditional fishing ground and reefs: access to which may be restricted as a result ofmining activities.

Issues of stakeholder interest to the State are particularly complex in that there are a number of issuesthat are of concern to the State directly as well as a number of issues of interest to the State indirectly as therepresentative of other stakeholders (local governments in particular). Among the most important issues arethose that pertain to the State's right to participate directly in the development of an offshore mineral projectand the terms and conditions of such participation. Other important issues, of direct interest to the State,relate to the various taxes and other imposts that the State adopts as part of its fiscal regime for offshoremineral development projects, infrastructure developments by industry, job training for nationals to facilitatetheir taking more for more skilled jobs within the operations of a mining company. The State is also inter-ested in seeing that the development of a mining project is carried out in a manner that has minimal environ-mental impact.

SOPACMiscel/aneoHS Report 362 27


Provincial governments and local level governments would want to see that existing provisions of

legislation pertaining to decentralization and resource rent revenue sharing (Clark, 1999) are rigorouslyadhered to by the national government so that they can also receive benefits, including royalties, that arisefrom development of any offshore mineral development project. Both provincial governments and local level

governments will want infrastructure to be developed by developers operating in their areas.

Non-governmental organizations (NGOs) have taken a great interest in issues surrounding the develop-ment of natural resources in general and in particular with regard to the impact of mining activity and the

distribution of resource rents associated with such developments (Clark 1999). Such organizations will

undoubtedly be interested in a host of issues, in particular, those relating to the environment. and the conser-vation of the "pristine" environments that are found offshore. Equally of c.oncern will be issues related to

the unique biota that are associated with the areas of high mineral resource potential, in particular those

associated with areas of ongoing formation of polymetallic massive sulfides.

Forum to Address 5 takeho/der Issues

The stakeholder issues in relation to a new offshore mineral development will almost always involve the

State, the landowners, the provincial governments, and local level government. The specific issues of impor-tance to each of the stakeholders will usually be considered at a forum, or a series of forums, specifically

convened to deal with those issues.

Decisions and agr~ements reached at the forum on issues relating to royalty distributions, equity partici-

pation (basically the sharing of the portion of project equity available to the State), additional grants from thenational government, and commitments from the national government on infrastructure development shouldbe recorded in specific Memoranda of Agreement that are executed between the State, industry, the provin-

cial governments and the landowners.

Stakeholder issues that involve the State and industry are usually considered in meetings held betweenthe parties, either in specific meetings to consider specific issues such as financing plans, or through a nego-

tiation process. The State normally establishes an inter-departmental negotiation team with the responsiblenatural resource agency, normally a Department of Mineral Resources (DMR), playing the lead role. This

team is the government's representative body that can enter into negotiations with industry on stakeholder

issues of mutual interest to both with the objective of formulating an Offshore Mineral Development

Contract (OMDC). When concluded, the OMDC is the document that stipulates the binding obligations and

commitments of both parties in relation to the development of a project. The developer's approved propos-als for the development of the project forms part of the MDC.

The State, through its respective agencies, is also required to give separate approvals relating to industries

proposals for development, its financing plan and the environmental plan, among others.


14. Stakeholder groups and their interest should be clearlY defined during the formulatt"on of a'!) Offshore Mineral

Development Agreement to ensure that the interests of the stakeholders are adequatelY considered and; Jllhere appropri-

ate, incorporated into the agreement.

28 .fOP./1CMiscel/aneONS Report 362

THI~ MADANG GUIDELINES

FISHERY CONSIDERATIONS IN OFFSHORE MINERAL DEVELOPMENT

According to Kolkolo 1999, the coastline and offshore archipelagos of individual nations presents agreat diversity of coastal types and marine environments characterized by large delta areas, mud flats, man-grove swamps, fringing coral reefs, narrow lagoons, lakes, rivers and extensive systems of marshes. Theextensive coastal and offshore areas normally occur within the boundaries of a number of coastal provinces,many of who have considerable autonomy. Additionally, many of the provinces have considerable autonomyin regard to fisheries development/management and share in the revenues generated from fishery activitieswithin the extended jurisdictional boundary of the individual provinces seaward into the territorial sea andthe EEZ.

Potential impacts on fisheries

Because the scope, location and specific impacts of offshore mineral development activities are largelyunknown at this time, there is little that can be said with respect to specific impacts and or policies vis a vissuch developments and fisheries. A number of concerns can be identified, however, which will need to beaddressed by government and industry should such developments take place. Among the most significant arethe following:

1. Disruption of the Seafloor: Virtually any foreseeable mining venture will require extensive disruptionof the seafloor with varying impacts on biota;

2. Waste disposal: The mining operations will produce waste materials both at the mine site and, ifdifferent, at the site of processing. The former will normally be in the deep ocean and the latter nearshore thereby impacting a number of habitats;

3. Restrictions on access: The mining activity will necessitate that the areas of primary operation be (a)declared off limits for other activities or (b) that other uses be restricted in scope and area of opera-

tions;

4. Fishery impacts: The mining operation will have multiple impacts (both good and bad and many ofwhich cannot now be predicted) on fisheries in the areas of activities; and,

5. Economic, social, cultural and environmental impacts: The mining activity will, in most cases and tovarying degrees, have national, provincial and local impacts on the economy, environment, socialinstitutions and culture.

The fisheries of most nations are (a) biologically diverse; (b) wide-spread throughout many marineenvironments; and (c) are comprised of a wide range of fishing operations ranging from local subsistencefishing to large-scale purse seining.

Research and development issues

Given the above potential impacts of offshore mineral resource development oudined above the follow-ing research and development issues will need to be addressed in the formulation of a comprehensive marinemineral resource development policy which is sensitive to fisheries development.

SOPACMisceJ/aneous Report362 29

THl~ MAOANG GUIDEUNES

1. Diversity of fishery resources: The diversity of fisheries and their associated ecosystems necessitates

that a comprehensive program be initiated to protect biodiversity and to ensure the preservation of

marine fishery habitats both near shore and in the deep ocean;

2. Zoning of the sea areas: Because of the above mentioned need to protect the biodiversity within the

fisheries, the scope of fisheries-related activities throughout the EEZ and the requirements of indi-vidual treaties and agreements, it will be necessary to consider a zoning of sea areas for specific uses;

and,

3. Impact assessment and compensation: Appropriate programs will need to be developed for the

assessment of, and compensation for, impacts of marine mineral resource development activities on

traditional and commercial fishery activities.

For most countries there is a growing concern over the development and sustainability of their coastal

and inland fisheries. To facilitate such developments it is important that government and industry consider

joint development activities: in particular, the government and industry (fisheries and minerals) shouldconsider the possibility of joint development of industrial support facilities that could service both industriesand allow for additional development (mineral processing, fish canning).

Policy considerations

As a signatory to numerous regional and international agreements, many of which are specific to the

fisheries and/or offshore mineral resource development activities there is a need to ensure that offshore

mineral development activities are in compliance with regional and international agreements. Among themost significant are the United Nations Convention on the Law of the Sea (UNCLOS) and the Agreement for the

Implementation of the Provisions of the United Nations Convention of the Law of the Sea of 10 December 1982 Relating tothe Conservation and Management of Straddling Fish Stocks and H,ghfy Migratory Fish Stocks and the Washington Conven-

tion on International Trade in Endangered Species of Wild Fauna and Flora (CITES) (Kolkolo 1999). Therefore, there

is a need to conduct a policy and legislative review of existing (and proposed) fisheries and minerals related

legislation, agreements (bilateral, multi-lateral) and relevant contracts to ascertain what issues exist that mayrequire resolution/coordination with regional and international bodies.


15. Appropriate programs will need to be developed jor the assessment oj, and compensation jof; impacts of marine mineral

development activities on traditional and commercial fishery activities.

16. To facilitate the development and sustainabiliry of national fisheries government and industry should conszaer Joint

developn,ent of industrial support facilities that could service both industries and allow for additional development

(n,ineral processing,fish canning).

INDUSTRY IN OFFSHORE MINERAL DEVELOPMENT

According to Malnic, 1999, for successful minerals exploration and development to proceed in theoffshore areas of any nations EEZ, there is a need to consider the specific needs of the potential investorwho will be required to make the necessary investment for the exploration and development of any commer-cial mineral deposits. The basic issues of security of title, tenure, levels of investment, work programs and


THE MADANG GUIDEUNES-

the fiscal regime for development have been previously discussed. However there are a number of otherissues that must also be considered and may need to be specifically accommodated in national policy andlegislation. Among the most significant of these are the following:

Data Reporting and ConfidentialitY -Government legislation and UNCLOS stipulates that all data gatheredwithin a license area, or within the EEZ in the case of UNCLOS, should be deposited with the host nation.These requirements, however, immediately raise two fundamental questions that each nation will need toaddress.

1. Since the data collected from offshore mineral exploration ranges from physical samples of tonnes ofsulfides, buckets of mud, water samples, crates of deep sea clams, and hydrothermal fluid samples howwill the data be stored so that it is preserved and accessible? Currendy few countries and! or governmentagencies are capable of effectively handling such diverse samples.

2. How can the present system of publicly accessible 'Open File' and confidential 'Closed File' material thatis in use by most nations be refined to cope with the status of research materials gathered within indus-try's licence areas? Currendy, such research materials are placed in Open File reports that are almostimmediately available to the general public. The scientific conclusions from the research may be publisheda year or two later.

Guaranteed Berths -At present the normal protocol for offshore mineral exploration and research is thatrepresentatives of industry, research organizations and! or government are offered berth on the variouscruises: a system which has worked well in the past but may be the subject of concern in the future. Indeedto address this issue in the SOPAC area, the SOPAC organization developed a protocol of cooperation in a1998 collaboration between licence holders and researchers, specifically, to address this issue. However,assuming a more intense future for mineral exploration, industry believes that the conditions regardingcollaboration, applicable to researchers and industry, should ideally be stated in nationally promulgated lawand implementing regulations and in a way that does not di~courage tesearchers or bury them in pilperwork.

Trespass -In onshore mineral exploration licences access to the licence area can be closely controlled andis not allowed without a formal access or joint venture agreement. However, control of such access offshorewithin the EEZ, particularly for research purposes and by competitors, will be difficult to monitor andenforce. Ensuring the integrity of licence areas may require specific agreements between government andother users of the EEZ, which specifically preclude trespass.

Intellectual Property -Because many aspects of offshore mineral exploration and development associatedwith new offshore mineral deposits will require the development of new technologies, and result in newknowledge regarding the mineral occurrences, individual companies will acquire unique capabilities, expertiseand knowledge, i.e., intellectual property. This intellectual property will have significant economic importancefor the company that develops! acquires it and, consequendy, they will want keep the knowledge for theirown benefit. Where presendy not accommodated provision to accommodate this issue should be incorpo-rated in the policy and legislation of individual countries.

Disclosure of Affiliation -In cases where research activities are approved and condu<:=ted within licenceareas there is a need to ensure that full disclosure is made with respect to the individuals participating in theresearch and the extent, if any, of their interest in other commercial enterprises. This disclosure should stateexplicidy that representatives of competing companies are not on board and that information will not begiven to competing interests without the licence holder's approval.

Overall, the basic concerns of industry with respect to the exploration and development of offshoremineral resources do not differ gready from those concerns that industry has for exploration and develop-ment on land. However, the vastness of the ocean environment and the resulting difficulties of maintaining



the integrity of access to the license area make it imperative that government, industry and research organiza-

tions work closely and cooperatively.


17. Offthore mineral policy and legislation should ensure the confidentiality of corporate research and development data

within their license areal s.

MARINE SCIENTIFIC RESEARCH

The identification of the majority of the mineral resources which are of commercial interest to industryat the present time were originally discovered and defined on the basis of marine scientific research. Only

after considerable additional marine research did such occurrences begin to have commercial interest and to

be sought after by industry. Therefore, the scientific community has a vested interest in continuing its re-

search on the discoveries they have made, even after licences have been granted, and because of their unique

knowledge and expertise, it is also of interest of both industry and government that they continue theirresearch activities. As a result the major question that emerges is how can scientific research continue while at

the same time respecting the constraints of private industry? To accomplish this mutually beneficial coopera-

tion a number of specific issues that overlap with the concerns of industry must be addressed (Malnic 1999).

Among the most significant are those related to the following issues:

Onboard Industry Representatives -Marine mineral research is a costly endeavor with research vesselscosting as much as US$20,OOO/day (and more) to charter and with an "at sea" research project costing

approximately one half million dollars per year. Additionally, for many nations one of the primary justifica-tions for the large quantities of government funding dedicated to research, and the access that researchersseek in foreign waters, is the expected economic benefit of the research. Nevertheless, the issue of having an

industry representative onboard and participating in marine scientific research is both simple and complex. Inthe special cases that marine scientific research is taking place within the licence area of industry, it would

seem to be a simple decision to grant the industry a berth to participate in such research. Conversely, in non-

licenced areas the issue is more complex and the presence of an industry representative raises two questions.First, does the presence of an industry representative give that individual's company a comparative advantageover other companies? Second, what should be the terms and conditions for granting an industry representa-

tive access to the research data, particularly with respect to the use and release of the data?

Research Access Priorities -As noted previously the vast majority of the mineral occurrence of presentinterest to industry were initially discovered as a result of marine mineral research activities. Once discovered

and subsequently licenced by industry, however, the question arises with respect to whether the scientist who

discovered the occurrence has priority over other researchers for the study of that occurrence. To resolve thisissue it is suggested that nations (individually regionally or internationally) should develop a Set of guidelines

that would bestow some privilege of priority to the researcher of discovery.

Industry-Research Cooperation -The mutual rewards to be derived from industry-research cooperation arealready considerable and expected to increase in the future as offshore mineral exploration and developmentactivities increase. Industry-research cooperative efforts are not without problems however, particularly with

respect to the release of data and scientific findings as has been noted earlier. To a large extent industry-research cooperation can be achieved by establishing a working arrangement by which the research organiza-

tion is a "consultant to", rather than "working for", industry. In such a cooperative arrangement, the research

32 SOPACMisce/laneoHs Report362


organization can assist industry while simultaneously pursuing its own research agenda in the same area.

Although such an approach may at first appear to be more "definition" than "substance", detailed negotia-

tions can produce the required result.

Government-Research Cooperation -The cooperation between individual governments and research institu-

tions for marine mineral research within the EEZ of the individual governments has been both the norm

and fruitful for both parties for decades. This relationship has been further strengthened and codified under

UNCLOS that mandates that access be granted, except under special circumstances, to a nation's EEZ for

the purposes of marine scientific research. It must be recognized, however, that entry into the EEZ of an

individual nation must be for the purposes of marine scientific research only and may not be for commercial

purposes unless specifically approved by the government.

The above issues are critical to resolve in order to ensure the continuation of marine mineral research

within the EEZs of individual nations and a continuous flow of new scientific discoveries; many of which

will be the economic mineral deposits of the future.


18. To ensure the long term capabilitY of the coastal states to effectivelY monitor offshore mineral resources activities,

relevant government representatives should participate in all at-sea phases of MSR, exploration and evaluation and

that provision be made, either through appropriation or the creation of special use funds within the responsible

agenry(ies), to provide adequate human and fiscal resources required for needed data collection and collation, lHonitoring

and enforcement activities.

19. Recognising the unique nature of the biota associated with ach"ve hydrothermal zones, activities that ensure an adequate

understanding of the biota communities and the impacts of a'!Y associated mineral exploration and exploitation should

be undertaken by MSR and Industry.

SOPAC Miscel/aneolls Report 362 33


ACKNOWLEDGEMENTS

The Offshore Mineral Policy Madang Guidelines became a reality owing to the invaluable contributionsof several committed organisations and individuals. We wish to acknowledge the Department of MineralResources, PNG for hosting the workshop; the Metal Mining Agency of Japan and the Forum Secretariat forsponsorship. Our gratitude goes to the authors of the papers who set the tone and developed the eclecticframework for the discussions. A special word of mention to Dr. Allen Clark, East West Center, Hawaii forplaying a key role during the conference and helping compile and edit the papers for the Workshop report(SOPAC Miscellaneous Report 323). SOPAC is proud to have co-ordinated the workshop and to present herethe Madang Guidelines on offshore minerals policy (SOPAC Miscellaneous Report 362).

34 SOPACMis&ellaneous Rtport362

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