Seabed mineral resources and the economic interests of developing countries

Letter to the editor/Book reviews commission, and the maintenance of its scientific credibility, is of course its success in predicting the future trends in particularly the effects of catches, increasing the amounts of fishing. Here it is interesting to compare assessments made by IATTC in its annual reports for 1970 and 1976. These are shown in Figures 1 and 2 and refer to catches within the Commission’s regulatory area. In 1970 the Commission was predicting that an optimum level of effort was 20000 standard days, and that the stocks would decline virtually to extinction if effort increased to 40-

45 000 days.

The estimated maximum sustainable yield was 100 000 t. In 1976 the Commission estimated that 4050 000 days was the optimum level of effort, and would yield 160 000 tons. Of course, similar discrepancies could be found in the predictions of most other groups, and reasons (changes in area fished, etc) can be put forward to explain the differences - although some of these explanations can bring into question the classification of yellowfm tuna (as distinct from, say, albacore) as a highly migratory species. Still, the discrepancy, however it is explained,

does exist and must lead to the question of how much confidence can be placed in the latest assessment. JA.

Gulland

Chief,AquaticResourcesSurveyand Evaluation

Service,

Fishery Resources Environment

and

Division,

FAO, Rome, Italy

‘James Joseph, ‘The management of highly migratory species: some important concepts’, Marine Policy, Vol 1, No 4, 1977, pp 275-288.

Book reviews Economic aspects of mineral exploitation SEABED AND

THE

MINERAL ECONOMIC

OF DEVELOPING by Danny

RESOURCES INTERESTS

COUNTRIES

M. Leipziger

and James

Cambridge,

Mass,

L.

Mudge Ballinger,

19 7 7,

241 pages,fl1.00,$18.15

Although there is now a vast literature on manganese nodules, relatively little has been published about all of the economic aspects of their exploitation. The same can be said of deepwater prospects. The hydrocarbon explanation is obvious: no minerals (and hydrocarbons are minerals) have been recovered from below more than 200 m of water on even a pilot, let alone a full commercial, scale. Estimates of costs must, therefore, take account of the research results of ongoing and development programmes on the very advanced technologies that will be needed. The enterprises involved have

MARINE

POLICY

April 1978

naturally been reluctant to publish their results, but some have been made available, partly to correct the more wildly optimistic estimates of profitability that have been widely circulated.

Inevitable difficulty A new work on economic aspects is therefore most welcome, particularly as the authors are economists of considerable standing in the service of the US government with first-hand experience of the Third United Nations Conference on the Law of the Sea (UNCLOS), which has a critical bearing on the subject. Few would disagree with their belief that in a world in which the distribution of wealth is imperfect, the international community now has the opportunity to ensure that the resources of the deep seabed, declared to be the common heritage of mankind by the UN General Assembly in 1970, are exploited in a manner which allows all countries to share in the benefits. In common with any book

concerned in any way with the law of the sea, this work suffers from the inevitable difficulty that it cannot be up to date. Much has happened at UNCLOS since the fourth (called by the authors the third) session in Spring 1976, and there have been industrial developments. The major weakness of the book may well stem from this difficulty: such careless statements as that a metric ton is equivalent to 2240 lbs can surely be explained only by hasty preparation. Unfortunately, the book also contains mistakes which seem to betray misunderstanding of the minerals industry: ‘for example, such direct connection as there is between metallurgical recovery rates and assay values is considerably more complex than is implied (note 8, p 171). The unfortunate effect is to weaken confidence in all the quantitative work, a substantial part of the whole.

Basic misconceptions The reader is introduced to some of the basic assumptions, which turn out to be misconceptions, in the Introduction. The statement (unusually, with no reference) that ‘there are said to be hundreds of prime mineral sites and the Pacific Ocean alone is estimated to contain 1.6 trillion tons of nodules’

163

Book reviews gives an

economically workable at some time in the future) metals in nodules that now has little support. It is suggested that commercial-scale mining will take place below water depths as great as 20 000 ft (about 6000 m) or 4 miles (nearer 6500m), whereas most ‘mine-grade’ nodules probably occur at depths of between about 4000 and 5000 m. An additional 1000 or 1500 m would not be a mere point of detail to the miner! It is surprising to read (page xxv) that the land-based producers of nodule metals “are in most cases developing nations”. More seriously, it is misleading to suggest that in 1976 industrialized nations were ‘interested in securing free access to deep ocean resources in an free of international atmosphere constraints’. No participant at UNCLOS denies that, provided agreement can be reached on a generally acceprable Convention, there should be international machinery (an Resource International Seabed Authority) with responsibility for the orderly exploitation of these resources. Similarly, no participant denies that part of the profits should be collected by this international body. The continuing debate in UNCLOS is on the extent of authority’s international the responsibilities and, therefore, powers. In introducing the first half of the book, which deals with the hydrocarbon resources of the seabed, it is said that ‘a proportion of these substantial resources lie in areas which are now, and have been throughout history, in an international area’. On the contrary, it seems likely that a relatively small proportion of the hydrocarbons will be found beyond the areas in which coastal states enjoy sovereign rights under international law. It is inferred, surprisingly, that ‘there is a loose but statistically significant pattern in which higher income countries tend to have greater offshore hydrocarbon potential and the positive correspondence pattern is strongest in the lower income subgroup’. An isobafh ‘can be conceived of as a vertical pfane between the seabed and the ocean surface which follows the contours of the ocean floor so that its height remains constant as a patch is traced along the ocean floor’:

there are simpler definitions. There are also numerical slips: for example, Weeks’s estimate of the proportion of the ultimate hydrocarbon potential beyond the 200 m isobath is reported accurately as 32% in Table 1-4, but it is given as about 23% on page 43. The first of three chapters dealing with manganese nodules opens ‘The worid’s oceans are enormous untapped repositories for a large number of

minerals’, although minerals have been won from the continental shelf for at least 70 years. Qf nodules it is said both that they are ‘ubiquitous to the deep seabed’ and that there ‘are few places in the ocean except the continental shelves and deep ocean trenches where nodules cannot be found’, whereas there is reason to believe that they may be absent over as much as 85% of the seabed. The existence of manganese nodules is said to have been known since 1876, when HMS Challenger surveyed the Pacific: in fact they were first found in the North Atlantic in February, 1873 (and preliminary results were published at least as early as 1874). The short section describing the technology of mineral expIoitation is inaccurate in many respects. The group of Japanese companies had left the Deep Sea Ventures consortium when this book was written; the confusion about the depth of water beiow which mine-grade nod&es are found is heightened by referring to recovery from under 2 or 3 miles (about 3200 to 4800 m of water; the suggestion that the Kennecott consortium may use a’flexible pipeline’ is confusing in that all pipe strings are flexible and there is no evidence that it has been tested at depths of 15 000 ft (about 4500 m); it is something of an oversimplification to suggest that pyrometallurgical and hydrometallurgical processing of nodules involve heating or the use of chemicals, respectively, to ‘break them UP’. The canard about the proportion produced by developing countries is elaborated in a section dealing with ‘LDC producers of seabed - competing minerals’. They are said to be preeminent in copper irruption, although Table 5-2 shows that in 1974 they accounted for less than 40%; they accounted for 3 1% of world production of manganese ore in 1973 (page 135: or

26.5% in 1974, Table 54), and although in 1974 developing countries produced about 75% of the world’s cobalt, they accounted for only 12% of the nickel (Table S-8). In the same section, the fall in the price of copper from 1974 to 19 75 is attributed in part to the increase in copper production, but world mine, smetter and refinery production all fell in 1975. All concerned with the pubIicat~on of tabulated statistics are well aware of the difficulty of eliminating errors. Nevertheless, such gross mistakes (due to a transposition) as that US copper production was 815 100 tonnes in 1973 but I 510300 and 1448 800 tonnes in 1972. and 1974 (Table 5%2),should have been corrected. The subject of ‘Revenue Projections’, dealt with in the next chapter, is clearly fraught with difficulties. Although also used by the US Department of the Interior* there is no evidence to support the assumption that any areas large enough to be considered mine sites will have nodules with an average content of 1.5% nickel and 1.2% copper. Seabed miners are said to have an advantage over land-based nickel producers in that they will be able to produce at least copper and cobalt as joint products, overlooking the fact that other metals (for example, cobalt, copper and the platinium group) are produced in assocjation with nickel on land. The pretax return on capitaf is estimated to lie between 45 and 85% for an operation recovering 3 metals (copper, nickel and cobalt) and between 82 and 112% if seven metals (manganese, vanadium, zinc and mofybdenum in addition) are recovered. Published data do not support the authors’ conclusion that ‘a consensus of the estimates available mining manganese nodule shows averaging twice’ the pretax rate of return of 27% earned by US mining companies in 1974-75.

Out of date The chapter on the nature of a deep suffers mining seabed regime particularly from the difficulty that since it was written there have been many weeks of discussion on this issue at WNCLOS. At the risk of seeming overcritical, the following examples illustrate the shortcomings. It is not true that ‘the developing world sees’ (the

MARINE

POLICY April 1938;

concept of the common heritage) ‘applying to other ocean resources which may become significant’: the allimportant word ‘seabed’ has been omitted. The idea of an Intemation~ Seabed Resource Authority lang predates the Caracas session of 1974: it figured UNCLOS in prominently, for example, in the draft treaty tabled by the USA in 1970. Although the ideological principles involved in a new international economic order clearly influence the attitude of developing nations to the deep seabed mining regime, the authors exphcitly decided not to examine its relevance. The discussion of different taxation systems is marred, for example, by the statement that because in the earfy years few companies will engage in nodule mining, they can be expected to earn abnormal profits. In the nontechnical sense this must be reconciled with the recognition a few pages later

that ‘manganese nodule mining is a highly risky venture’! The continuing existence of large numbers of mines on land will ensure that competition will not be so limited that it will be possible to earn technically abnormal profits. There is some confusion about what is meant by ‘direct benefit’ from deep seabed mining: on Rage 18 f this seems to mean benefiting by participating in mining operations, whereas on page 192 it is suggested that some sort of international taxation (another idea that goes back at least to 1970) is likely to be the only way of directly including the developing countries in the benefits. The grossly exaggerated impression conveyed of the extent of the resources is perhaps best exemplified by the statement that ‘the quantity of available nodutes is virtually unlimited’. Although not so optimistic as the earlier statement (page 84) that the Third Law of the Sea Conference closed

in August 1974, the final chapter, written after the fourth session in spring 1976, is headed ‘The Law of the Sea Negotiations: the Closing Phase’. A seventh session is scheduled for spring 1978. Alan Archer, Assistant fnstitute

of Geologica!

Director, Scknces,

London, UK ’ G.P. and G.L. Hubred, Glasby Comprehensive BibCography of Marina Menganese Nodules, &moire 7 1 1 New Zealand Oceanoaraohic Institute. 1976. M.A. Meylan. KK.‘ Dugolinsky and L. Forcif, Bibliography end Index to

Literature an Manganese Nodules 1 B741975, Key to -Geophysical Records Document No 6, National Oceanic and Atmospheric Administration. Boulder. CO, 1976. z Rebecca L. Wright, Ocean Mining - an Economic Evaluation, Professional Staff Studies, Department of the Interior, Washjngton, bC, 1976.

Economic factors in policy formulation ECONOMIC

IMPACTS FISHERIES

EXTENDED DICTION

OF JURIS-

edited by Lee G. Anderson Ann

Arbor

Michigan,

Science,

f 9 77, 426

Ann

Arbor,

pages, f 16.90,

$22‘60

This book is the outgrowth of a conference, held in April 1976 at the Wniversity of Delaware, to discuss the economic impacts of extended fisheries jurisdiction, with particular emphasis on the US extension of jurisdiction. The editor is quite right when he states in the Forward that mere extension will be of limited usefulness unIess it is combined with an effective fishery management programme. The 1976 US Fishery Conservation and Management Act extended US fisheries jurisdiction to 200 miIes while establishing a fishery management programme, placing responsibility for the implementation of the law in the hands of regional councils and various government agencies.

MARINE

POLICY April 1978

The book is divided into six major sections, which deal respectively with international aspects, optimum economic yield, industrial aspects, practical management problems, control optimal and fisheries management. A final section contains a of the very effective discussion conference by fames C~tc~eId~ Dayton Alverson, and others.

Dissatisfaction A theme which runs through many of the articles is the dismay expressed by economists at the failure of policy makers to take into consideration economic factors in policy formation. For this reason, many of the authors expressed misgivings about the 1976 Act. Francis T. Christy (“Limited access systems under the Fishery Conservation and Management Act of 1976’) is dissatisfied with the provision in the Act which prohibits the collection of economic rents from domestic fishermen. The collection of fees, according to the Iaw, is based on

administrative costs involved in the issuance of permits. Christy reasons that domestic fishermen, who derive the prime benefits from extension of jurisdiction, shoutd pay some form of economic rent for the use of the resource. The passage of the 1976 Act, in Christy’s view, is detrimental to society and to the American taxpayer, the taxpayer will be saddled with the costs of research, regulation, and enforcement since the domestic fishermen will not have to pay any economic rent. The OfEce of Man~eme~t and Budget might limit expenditures for fisheries research and management. The consumer’s interests will also be damaged in that foreigners, who havre provided tow-priced imports, will be excluded, whiie domestic fishermen, whose products are generally higher priced, will be encouraged. Frederick 3elI (“World-wide economic aspects of extended fishery jurisdiction management’) is of the opinion that ‘international forces of population expansion coupled with the amount of distant-water fishing by developed countries have overcome the

165