This is an example of a 15-minute speech on a technical subject that was previously unknown to me.
It was delivered in the House of Commons on 20 Feb 2019 in Westminster Hall (Hansard).
If you would like me to write a speech for you, please email me: [email protected].
The UK Deep Sea Mining Industry
I beg to move that this House has considered the UK Deep Sea Mining Industry.
I am grateful to the Minister for coming here to answer this debate today, because just a little political push – from her personally – over the next few weeks – might be all that our fledgling deep sea mining industry needs to succeed and catch up with our international competitors.
This is a timely and important debate.
This year, we have reached a critical point in the development of the UK’s Deep Sea Mining exploration and exploitation capability.
A small push from her Department this year could mean that the UK leads the world in environmentally-responsible exploitation of vital and valuable seabed minerals. We could secure supplies of the raw materials we need for a host of new technologies including rechargeable batteries, as well as large tax revenues.
On the other hand, neglect or bureaucratic inertia could mean that we squander a once-in-a-generation opportunity and lose out to more agile and forward-thinking countries, such as China and Belgium.
I want to briefly outline
- Why Parliament legislated for deep seabed mining in 2014
- What has changed since then – and the progress that other nations have made
- The enormous benefits that this industry could bring to the UK
- And finally some things the Government could do to help the deep sea mining industry to move forward.
Changes since 2014 Bill
Firstly then, Deep Sea Mining has come a long way since I took the Deep Sea Mining Bill through Parliament.
Back then, we were concerned with making our law technically consistent with the UN Convention on the Law of the Sea, or UNCLOS. Actual exploration of the deep Pacific seabed – let alone exploitation – was uneconomic.
Yet Parliament recognised even then the enormous economic and strategic potential of deep-sea minerals, as well as the environmental risks. We recognised that the UK must be at the forefront of setting global standards in operating in these untouched and sensitive marine environments.
In the last 5 years, technology has moved on apace. Every year, seabed minerals such as cobalt grow in importance. Demand for uses such as wind turbines, solar panels and rechargeable batteries mean that the economics of mining have totally changed.
The commercial opportunity and the environmental risks are there right now. Other countries are well aware of this. They have made good progress in building their industrial base to seize the opportunity.
The International Seabed Authority, the ISA, has said it wants to complete its regulations for mineral exploitation “by 2020”.
So, we are no longer concerned with legal technicalities and theoretical licences. This is happening right now and the UK is falling behind.
Other nations have made strong progress
China, South Korea, Japan and the European Union – via Belgium – all have well-developed deep seabed mining industries.
China was just a side-player five years ago, but since then, she has made great strides.
China now sponsors four deep seabed mining contractors and has just applied for its fifth exploration contract.
That’s more than any other country.
During those same five years, we here in the UK have sacrificed what was an enviably strong position.
UK was in a strong position
When I brought the Bill through Parliament in 2014, Lockheed Martin told me that the UK was in a superb position to lead this industry, economically and environmentally, for the following reasons:
- Firstly, our regulatory and legislative processes are transparent and predictable. That is crucial for industry because it reduces their regulatory risk and allows them to plan large, long-term, investments.
- Next, we have high environmental standards and diplomatic leadership on maritime issues.
- Thirdly, we have a leading and central position in the offshore oil, gas and mining industries
- Fourth, we have a world-leading financial services industry
- And last but not least, we have an international reputation for innovation and engineering and a track record of solving complex engineering challenges.
Raw materials supply
This really matters, because there are now strong concerns about the security of our national supplies of cobalt and rare earth minerals. China currently has a stranglehold on the supply of these minerals.
The UK is totally dependent on imports for our supply of cobalt.
Cobalt is required for rechargeable batteries for electric cars. As we all know, this is going to become incredibly important very soon.
Both cobalt and rare earth minerals are present in polymetallic nodules. The ISA has granted two licences sponsored by the UK. The area covered by these licences is 133,00 square kilometres, roughly the size of England. The current best estimate is that this area of seabed contains almost one billion tonnes of minerals.
Nickel and manganese are vital for the so-called “decarbonisation” agenda – for electric vehicle batteries and wind farms. Unless we secure supply of these minerals we will have no hope of meeting the terms of the Paris Agreement.
After just one deep-sea mining operation, we would go from being a 100% net importer to a net exporter of cobalt, nickel, manganese and rare earth elements.
Deep Sea Mining would allow the UK to secure its own supply of all of these important minerals. Yet through inaction we are letting China and other countries beat us to it.
Battery Science leadership
The frustrating thing is that the UK has incredible, world-class expertise in battery science. Two years ago, this Conservative Government launched the Faraday battery Challenge.
Yet we have apparently not yet made the connection that, if we want to be world leaders in rechargeable battery technology, we will need raw materials such as cobalt.
We simply do not have our own supply of the required raw materials in place.
I want to turn now to the importance of high environmental standards in this new and international industry.
It’s very important that the UK becomes a leader in this field so that we can make sure that high environmental standards are followed.
This is especially true, since the USA has not ratified UNCLOS and therefore cannot participate.
We can lead not just technologically but also in ensuring high environmental standards.
Other nations might not have the same commitment to the environment that we do in this country.
There is a kind of gold rush underway, and just like other gold rushes, proper environmental scrutiny could easily be neglected.
The ISA has issued 26 different permits for mineral prospecting of which two are British-sponsored. The total area of seabed licensed by the ISA is now a massive 1.2 million square kilometres. The seabed is a largely unknown world and new species are being discovered that exist nowhere else. It is one of the last untouched ecosystems in the world. It is vitally important that the UK leads the world in setting the standards for exploration and exploitation without ruining yet another ecosystem.
The two UK-sponsored licences were both granted to UK Seabed Resources Limited, a wholly-owned subsidiary of Lockheed Martin. Lockheed Martin drew up charts of the Pacific seabed nodules in the 1970s, when exploitation was completely impossible. You might think of them as almost literal treasure maps. These charts now form the basis of exploration and eventual exploitation.
Needless to say, both of these phases require significant investment.
Belgium benefited from EU funding. Unfortunately the UK chose not to apply for that funding.
Up until now, Lockheed Martin has self-funded, but in view of ongoing regulatory uncertainty has been obliged to slow the rate of investment. It is worth noting that the other projects in the Clarion-Clipperton belt have received financial investment from their respective Governments which is a major reason why these projects are well-advanced.
Exploitation of these licences needs to reach the pre-feasibility stage by 2022 and this will require fairly significant funding. If we are not to fall behind further, Government funding would be highly desirable so that at the very least the UK is not disadvantaged compared to competing nations.
It’s worth noting that this funding will not go to UK Seabed Resources itself but to the universities and other regional partners who will conduct the research once funded.
Total investment for a seabed mining project is very significant indeed – perhaps as much as £3 billion pounds. This is about the same amount as for a similarly-sized onshore mine, but the level of technical risk is higher, which is why some element of Government involvement is normally required. The funding would not be all at once, but in several smaller chunks.
Furthermore, only about £400m pounds is required to reach the so-called “bankable feasibility phase”. At this point traditional debt finance becomes readily available.
Commercial and tax revenue opportunity
So this is an energy security issue, and it’s an environmental issue and it requires large investment. Next, I want to address the huge commercial and tax revenue opportunity it presents.
David Cameron, when he was Prime Minister, called Deep Sea Mining “a £40 billion pounds opportunity”. This was almost certainly an over-cautious estimate.
Of course, if we invest in this industry and make it a commercial success, there will be a benefit to the Exchequer. This will be in the form of both tax and royalties.
The current estimate is that the Treasury will take £5.7 billion pounds in tax plus £360 million pounds in royalties over 25 years. That is about £2.8 billion pounds at net present value, given the Treasury’s 3.5 percent discount rate.
What we need to do now
I have tried to show that a new UK Deep Sea Mining Industry would create huge commercial, environmental and tax revenue benefits for this country.
Now I would like to address some simple things that I believe the Government could do that would have a huge impact on the prospects for this fledgling industry.
So I would like to ask the Minister, firstly, in general what steps the Government has taken or plans to take to pioneer this new and essential industry.
Specifically, how does she plan that we will we catch up with competitor nations – and get back to where we should be – in front – leading the way with engineering and environmental standards.
Secondly, what assessment has the Government made of the risk of the UK’s and our allies’ economic reliance on imports for minerals such as cobalt, nickel, and manganese.
Thirdly, what is our strategy to reduce or mitigate these risks.
Fourthly does deep seabed mining forms a part of that strategy? It’s now more than 4 years since we passed this Bill into law but we don’t have a strategy or regulatory framework.
Turning to academia and business: how could the Government support a research programme? Can we put together a research programme, for example through the Industrial Strategy Challenge Fund, to make UK academia and SMEs world leaders in seabed mining? If so, how?
As I have tried to stress already, the benefits would be rapid and large, in the form of minerals supply autonomy and environmental leadership.
Finally, can we explore avenues for international cooperation, for example with the USA?
Other nations are looking to us to show leadership in this field, and as we look outwards beyond Brexit, it is my sincere hope that we will rise to this challenge.
In conclusion then, I have tried to show how the world has changed since the Deep Sea Mining Bill passed into law.
I have explained what an enormous opportunity we have before us. We can ensure our minerals security, our environmental leadership in this new industry, and gain massive benefits for our industry and the exchequer.
But we are falling behind, and for want of a tiny push by Government, we are in danger of squandering a once-in-a-lifetime opportunity.
I would like to end therefore by urging my RHF the Minister to look for ways that she can drive this fledgling industry forward.
This is a new, challenging, difficult task: the kind of task that the UK is uniquely capable of delivering. But our capable officials need political will, determination and leadership if they are to make progress.
I urge the Minister therefore to work across Government to ensure that the UK does not miss this generational opportunity to pioneer a new and essential industry with potential huge benefits to the environment, to our energy security and to the Exchequer.
If you would like me to write a speech for you, please email me: [email protected].