Cobalt in Cook Islands awaits exploitation
Could supply 10% of global supply
This year could be a defining year for seabed minerals in Cook Islands.
There are plans by its government to move a step closer to exploration of its massive cobalt resource, following the completion of consultation work with the International Monetary Fund (IMF) on how to maximise this potential national wealth.
In an interview with ISLANDS BUSINESS last year, Cook Islands’ Minister for Finance Mark Brown revealed his government’s intention to ensure that critical groundwork is laid before any advancement in this area, given that undersea mineral exploitation is still a new frontier globally.
“Our legislations have been in place for a number of years now and they came into force in March (last year), so we’ve been setting in place a legal framework for the exploitation of our minerals resources,” Brown told ISLANDS BUSINESS.
“We are also in the process with the IMF of working out a taxation and royalties legislation to determine how we will maximise the returns on those resources. And we also had a study done on the establishment of a sovereign wealth fund so that revenues collected from this particular resource will go into a dedicated sovereign wealth fund,” Brown added.
Cook Islands is said to be sitting on a significant field of manganese nodules, which are known to host mineralisation in the seafloor. According to a study done there in the 1990s, its manganese nodules are so rich in cobalt that they’re enough to supply global demand for the next 500 years.
Known data at the time estimated that even if a small portion of Cook Islands’ manganese nodules is mined, it would be enough to supply 10 percent of the world’s annual cobalt consumption.
Although interest in exploration work there has been expressed and carried out by a number of parties in the past, among them a U.S engineering firm, they have not translated to any progress in actual mining as economic viability was always questioned.
Globally, technological advances in undersea mining equipment have been slow while in the country, specific legislations to regulate the relatively unknown industry were also slow to take form.
Recently however, interest in seabed mining especially in the Pacific was rekindled following substantial interest and progress by Canadian-listed mining company Nautilus Inc. to launch the world’s first commercial seabed mine in Papua New Guinea waters.
It’s an interest that has continually been the subject of much criticism because of fears it will severely damage the ocean’s ecosystems but this hasn’t stopped Pacific Islands countries with seabed mineral prospects—Cook Islands among them—to revisit their opportunities in that area.
They are being assisted by the Applied Geoscience and Technology division of SPC (SOPAC), especially in the drafting of relevant national laws.
In PNG, the arrival of Nautilus became the catalyst to the drafting of national policies and legislation on seabed mining but Cook Islands had decided it will not allow exploration or mining until all relevant legal and policy work are in place.
Its Seabed Minerals Act was passed in 2009, establishing the Cook Islands Minerals Authority and a regulatory framework for seabed mining in the country.
It has also gone a step further to explore the concept of having a sovereign wealth fund for seabed minerals proceeds, a model used by many countries to manage national wealth from their mineral resources, oil predominantly.
“It’s been estimated that the value of our minerals below the sea is in the billions of dollars, which will make us one of the wealthiest countries in the world if we can get down there and exploit the value of these minerals,” said Brown.
“So by the end of (last) year, we would have completed our work on the exploratory licences regime and we will be putting out expressions of interests to companies or countries that wish to take out exploratory licences to determine whether full exploitation is actually feasible,” he added.
In its initial analysis on Cook Islands’ proposed sovereign wealth fund for its undersea minerals resources, the IMF said the Pacific region had produced cases of both successes and failures, which underscored the importance of having well structured and well managed funds.
“Kiribati, Timor-Leste, Papua New Guinea and Nauru have SWFs established for non-renewable resources. Tonga and Tuvalu have funds established from revenue windfalls and Tuvalu, Marshall Islands, Micronesia and Palau from donor contributions. An IMF study on sovereign wealth funds in the Pacific islands provides insights into the successes and failures of these funds. The failures of the funds in Kiribati and PNG provide some lessons on how important the design of the investment strategy can be. The Timor-Leste Petroleum Fund provides a model for effective design,” the IMF said.