Treasure of the Sea
A rich gold deposit in coastal waters off Papua New Guinea is poised
to become the site of an ocean-mining effort of historical proportion
With gold prices down, news that an Australian-run company gained approval
last year to mine exceptionally rich underwater deposits of the precious
metal may sound insignificant. In fact, if Nautilus Minerals Corp. succeeds
in efficiently mining two 987-square-mile sites in Papua New Guinea's Bismarck
Sea, it will make history.
While ocean mining is a routinely discussed alternative to mining on
land, it's generally considered costly and inefficient. The last large-scale
ocean-mining attempt a 1970s project to extract manganese, cobalt
and nickel produced a precedent-setting document (the Law of the Sea
Treaty), but no minerals. Mining companies lost interest after lengthy legal
wrangling, coupled with the discovery of greater quantities of minerals
Nautilus Minerals Corp. a Papua New Guinea group of Australian
business interests working with Australian government scientists thinks
it has now found enough gold and other precious metals under the sea to
make ocean mining profitable. Concentrations at the Papua New Guinea sites
represent "bonanza figures," according to Ray Binns, the Australian
scientist who discovered the sites five years ago. They include one ounce
of gold and seven ounces of silver per ton, and high concentrations of zinc
(26%), copper (15%) and other precious metals.
Such concentrations "make the prospect of undersea mining look economic,"
Binns said in a release from the Australian government's Commonwealth Scientific
and Industrial Research Organization, an expedition sponsor. Nautilus Corp.
estimates the long-term value of the deposits in the billions of dollars.
The two sites are located about a mile below the surface in Papua New
Guinea's eastern territorial waters, clustered near underwater volcanic
vents called "black smokers." The vents spew a super-hot, mineral-rich
liquid which, when contacted by cool ocean water, coalesces into stories-high
mineral-laden towers. Towers like these have been known to exist under the
earth's oceans since the 1980s, but were never mined.
Nautilus Corp. told the New York Times last year it plans to take
preliminary hauls of 10,000 tons each from the two sites in the next two
years and larger commercial loads in the next five years.
Before it names a start date, however, the company must show it has a
plan in place to curb environmental damage at the sites. It also faces the
formidable task of obtaining investment capital for what many industry observers
still feel is risky business.
"Ocean mining has never proven economically viable, and I think
that's still the case," says Jeffrey Christian, managing director of
CPM Group, New York City, a commodities and precious metals market analyst.
"There are about 200 years of gold reserves left in terrestrial mines.
They are not running out. Also the cost of production in new (land-based)
mines is much lower than existing mines, so the average cost of producing
gold is falling. Ocean mining wouldn't be competitive."
At the Washington, DC-based Gold Institute, Executive Vice President
Paul Bateman also questions the efficacy of ocean mining. "Gold can
be found in a lot of places," he says, "but at current prices,
is mining the ocean cost-effective? It strikes me there are a lot of hurdles
there. I'd shy away from anyone saying this will be the next motherlode."
Such concerns don't seem to bother Nautilus CEO Julian Malnic. He says
the samples he saw from the bottom of the Bismarck Sea are "utterly
compelling, and the fact that we now have title to the deposits has galvanized
the scientists and mining industry into seeing the possibilities."
If the world's investors also see those possibilities, the precious-metals
mining industry might be in for a sea change.
by Richard L. Carter
Copyright © 1998 by Bond Communications.