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MEDIA RELEASE

Former Attorney General of Papua New Guinea:
The writing is on the wall for Solwara 1 – PNG should withdraw its investment before it’s too late.

Wednesday 17 December 2018

PAPUA NEW GUINEA | Amid financial strife and looming litigation, Sir Arnold Amet, former Papua New Guinean Attorney General and Minister for Justice advises the PNG Government to terminate its joint partnership agreement with Nautilus, recoup its 15% stake in the Solwara 1 deep sea mining project and decline to renew the licences for Solwara 1.

For Nautilus Minerals a miserable Christmas has just flowed into an unhappy new year. A series of gloomy end of year investor updates confirmed Nautilus is unable to raise the funds necessary to complete equipment for its Solwara 1 deep sea mining project [1].

Then came the final blow for 2017 – affected communities launched legal proceedings in a bid to obtain key documents that will reveal to them and all Papua New Guineans whether Solwara 1 was approved lawfully and what the true environmental, health and economic impacts of the project will be [2].

Shortly after, Company Chair Russell Debney resigned [3]. This is in spite of his long association as a board member since the company listed on the stock exchange in 2006 and the chair of the company’s predecessors, Nautilus Minerals Niugini Limited and Nautilus Minerals Oceania Limited.

Due to the high risk nature of the project, financiers have declined to bail the company out [4], suggesting the efforts of Nautilus’s two largest shareholders have been in vain [5].  The best they have been able to come up with are bridging loans of USD 7 million to meet immediate needs whilst desperately hunting for another USD 350 million [6].

Sir Amet stated,

“Investors, financial institutions and even the former chair of Nautilus can see the writing on the wall for Solwara 1.  By the company’s own admission the project is an experiment with unknown environmental and social consequences and uncertain profits.  The past few months have really shown the extent to which financiers and our own communities in PNG reject this project.”

“This high risk project is a foolhardy investment when our country has so many pressing needs. In order to acquire our 15% equity the National Government obtained a loan in 2014 from the Bank of the South Pacific of almost PNG K400 million.   It’s also likely that the Government has provided Nautilus with generous incentives, which would further limit the potential to raise revenue from this project.”

“This is irresponsible in the context of our country’s ever increasing debt bill”, continued Sir Amet.  There is little likelihood of a positive return from this project to the balance sheet of the economy. The recent bridging loans for the project are a drop in the ocean – only 1/50th of the total funds required.  With an interest rate of at least 8% and a lucrative 5% cash commission going to a previous director of Nautilus, this loan represents yet another expensive debt burden for PNG – especially as the loan is secured against PNG’s equity.”

“These bridging loans are from existing Board directors through a new private investment company incorporated in the British Virgin Islands. Such financial structures are commonly known as ways for minimising tax. And because the loan is from a related party, there was no need to even consult the PNG Government as the minority equity holder. If we stay in this deal, it will be the people of PNG who will have to pay.”

“The best course of action now is for the PNG Government to terminate its joint venture agreement with Nautilus before our investment ends up sinking to the bottom of the ocean along with the companyIn addition, Nautilus’s licences are renewed every 2 years.  The environmental uncertainties surrounding this project call for the Government to decline renewal. Indeed, given the poor financial record of the company, the government should consider suing Nautilus for the recovery of the full K400 million investment as its 15% equity stake is now virtually worthless.”

 

For further information:
Sir Arnold Karibone Amet ametarnold@gmail.com; + 675 72539353

 

NOTES

[1] If it proceeds the Solwara 1 mine will be located in the Bismarck Sea of Papua New Guinea, approximately 25 km from the coastline of New Ireland Province, about 35 km from Duke of York Islands and 60 km from Kokopo township in East New Britain.

[2] Legal action launched over the Nautilus Solwara 1 Experimental Seabed Mine, Centre for Environmental Law and Community Rights (CELCoR) and Alliance of Solwara Warriors media release, 8 December 2017, http://www.deepseaminingoutofourdepth.org/legal-action-launched-over-nautilus-solwara-1/

[3] See, http://www.nautilusminerals.com/irm/PDF/1946_0/NautilusChairmanResigns

[4] In their Annual information forms lodged with Canadian Securities for financial years 2015 and 2016, Nautilus describes Solwara 1 as an experiment – both the environmental impacts and profits are completely unknown.   See sections on Risk factors, For example:

“Our operations are speculative due to the high-risk nature of business related to the exploration and acquisition of rights to potential mineable deposits of metals. These risk factors could materially affect the Company’s future results and could cause actual events to differ materially from those described in forward-looking statements relating to our Company.” (FY 2016, p 52)

“… Performance, availability, reliability, maintenance, wear and life of equipment are unknown. There can be no guarantee that sub-sea engineering and recovery systems can be developed or if developed, will be employable in a commercially-viable manner.” (FY 2015, p54)

“… while Company studies have indicated a low likelihood of risk to the aquatic environment from mining activities, the actual impact of any SMS [seafloor massive sulphide] mining operations on the environment has yet to be determined.” (FY 2015, p61)

“Nautilus has not completed and does not intend to complete a preliminary economic assessment, pre-feasibility study or feasibility study before completing the construction and first deployment of the Seafloor Production System at the Solwara 1 Project.”

“No independent Qualified Person has confirmed the amount of these costs or recommended that these costs be incurred. There is significant risk with this approach and no assurance can be given that the Seafloor Production System, if fully funded and completed for deployment at the Solwara 1 Project, will successfully demonstrate that seafloor resource development is commercially viable.”

(FY 15, p52)

[5] Nautilus announced on 11 October the formation of Deep Sea Mining Finance Ltd. (“DSMF“) which will seek to leverage the international expertise and financial relationships of Nautilus’ two major shareholders to assist in advancing the development of the Company’s Solwara 1 Project.

[6]http://www.nautilusminerals.com/irm/PDF/1950_0/Nautilusarrangesbridgeloansandsignsnewfundingmandate

 

 

 

Submission to the consultation on the International Seabed Authority Draft Regulations on Exploitation of Mineral Resources in the Area

20th December 2017

To: consultation@isa.org.jm

The following is submitted by Seas At Risk (SAR), an umbrella organisation of environmental NGOs from across Europe that promotes ambitious policies for marine protection at European and international level.

Contact: Ann Dom, deputy director (adom@seas-at-risk.org), Monica Verbeek (mverbeek@seas-at-risk.org)

We consent to publication of our details.

This is a comment on the draft regulations ISBA/23/LTC/CRP.3 and responds to the Secretariat Note ISBA/23/C/12 of 10 August, 2017.

[Download submission here]

Abstract

Rather than addressing the questions posed by the Secretariat we believe more fundamental questions need to be addressed first and foremost. We see in particular the need to have a fundamental and democratic reflection about the application of the precautionary principle, the need for deep seabed mining and its long term sustainability implications, the governance flaws within the International Seabed Authority and the process under which the current regulation is being developed. The need for deep seabed mining needs to be furthermore framed in the ongoing discussions about the need for a new global mechanism to more effectively plan resource supply.

It is questionable whether there is any need to commercialise the deep sea. A report by the Institute for Sustainable Futures at the University of Sydney concluded that a 100% transition towards renewable energy by 2050 can take place without having to source metals from the deep sea for renewable technology[1]. Recent reports by the European Commission[2] and the World Bank[3] on critical metals do not even mention deep seabed mining as an avenue to explore. Furthermore, there is no evidence that deep seabed mining will reduce our dependency on land based mining – it will merely add another source and thus divest from practices that would lead to much more efficient use of resources.

Applying the precautionary principle = considering more sustainable alternatives

Scientists have urged caution against deep seabed mining in the face of uncertainties about its impact on marine ecosystems. Potential adverse effects on the environment of deep seabed mining are likely to outweigh any potential benefit from increased metal supply. In accordance with the precautionary principle in international law, full-scale commercial extraction of deep sea minerals must therefore be avoided until the long-term pros and cons of deep seabed mining are scientifically scrutinised, and more sustainable avenues explored and democratically deliberated[4][5].

With the risk for large scale irreversible and significant environmental harm, deep sea mining imposes a serious threat to sustainability. The scientific warnings are becoming more and more urgent. The MIDAS project6 for instance conducted an extensive scientific investigation into the potential consequences of deep seabed mining. Among the greatest concerns: the impact of sediment plumes on species and habitat; the exposure of seabed life to toxic metals released during mining operations; and whether mining will reduce or sever genetic links between different populations of deep-sea animals.

Recently 15 leading deep-sea scientists, legal experts and economists wrote in a letter published in the journal Nature Geoscience ‘Most mining-induced loss of biodiversity in the deep sea is likely to last forever on human timescales, given the very slow natural rates of recovery in affected ecosystems. It is incumbent on the International Seabed Authority to communicate to the public the potentially serious implications of this loss of biodiversity and ask for a response.'[7]

The Law of the Sea (UNCLOS), which regulates marine activities beyond national jurisdiction, declared the sea floor to be “the common heritage of mankind, the exploration and exploitation of which shall be carried out for the benefit of mankind as a whole.” It also mandated “effective protection for the marine environment from harmful effects which may arise from such activities” and the “prevention of damage to the flora and fauna of the marine environment.”

The environmental risks posed by deep sea mining, as well as the fundamental paucity of data on deep-sea marine life and thus an understanding of the functioning of seabed communities and their role in the larger ocean ecosystem, call for a strong application of the precautionary principle, in line with UNCLOS.

The most worrying indication that the ISA is not living up to its mandate to protect the deep sea in a precautionary manner is the recent approval by the ISA of a Polish exploration contract in an area designated under the Convention for Biological Diversity as an Ecologically or Biologically Significant Marine Area. This is in blatant conflict with the precautionary principle (which is at the heart of the CBD and UNCLOS) and other UNCLOS requirements for the protection of the deep sea. Also the fact that the ISA never investigated the actual need for deep seabed mining and available alternatives, and failed to initiate a public debate about this, runs counter the precautionary principle.

The precautionary principle advises to prioritise sustainable alternatives to avoid our economy to become locked-into this high risk technology. Alternatives to deep seabed mining are available indeed, and can be found in a transition of economies towards more sustainable models. Fundamental societal transformation should be sought after to cope with the foreseeable shortage of metals and guard them against future exhaustion. There are at several avenues to explore in parallel[8]:

  • Improve global resource governance: no international body is currently mandated to plan and oversee the conservation and sustainable use of geologically scarce mineral resources for the long-term future. New links are needed between existing institutional frameworks to oversee responsible sourcing of minerals, trajectories for mineral exploration, environmental practices, and consumer awareness of the effects of consumption. Some limited advisory roles are played by, for example, the International Resource Panel and the Intergovernmental Forum on Mining, Minerals, Metals and Sustainable Development. It might be helpful or even necessary to adopt a new international agreement on mineral resources to decrease the currently unsustainable extraction rates to a sustainable rate[9][10]. Furthermore, we urge the ISA to take into account relevant multilateral environmental agreements, in particular the forthcoming high seas biodiversity agreement under UNCLOS.
  • Make ‘eco-sufficiency’ the new paradigm for the use and supply of metals: till date the materials flow have not been shared equitably between the rich and the poor and between current and future generations[11]. By opening up yet another source of minerals, deep seabed mining will reinforce unsustainable patterns of production and consumption, divert interest and investment from recycling, reduction and more efficient resource utilisation, and will further exacerbate inequality in both spatial and temporal dimensions. We should stop moving on to new mineral deposits when old ones run out, and shift our paradigm toward dematerialization to do more with less.
  • Fully implement the 2030 Sustainable Development Goal 12 on sustainable consumption and production to ensure efficient use of minerals through better product design, sharing, re-use, repairing and recycling and development of new materials is key to the solution. Future changes in economic systems, such as the sharing economy (e.g. shared car systems), societal changes and changes in lifestyle also have an as yet little explored potential to enhance resource efficiency significantly, by 2030 and beyond. Every year in the EU, 100 million mobile phones go unused, less than 10% are recycled. This represents an enormous quantity of gold and other precious metals gone to waste. These figures indicate the huge potential of policies to increase resource efficiency world-wide.
  • Improve recycling globally, while acknowledging it is only part of the solution. According to the United Nations Environment Programme, globally, metals relevant to deep seabed mining, such as cobalt, copper, gold, iron, lead, manganese, nickel, silver, and zinc, already have relatively high end-of-life recycling rates the share of end-of-life metal that is recycled above or close to 50%[12]. However, recycled contents the fraction of scrap metal in the total metal input of metal production remain rather low. For example, copper in all old and new, refined or remelted scrap contributes 32% of the United States copper supply[13]. In many cases, the recycling rates of metals are far lower than their potential for reuse. The recycling potential is especially great for rare earth metals, whose current recycling rates and recycled contents are below 1%. Investment can increase efficiencies in the collection and processing of metal-bearing discarded products, and improve recycling technologies. have relatively high end-of-life recycling rates the share of end-of-life metal that is recycled above or close to 50%[12]. However, recycled contents the fraction of scrap metal in the total metal input of metal production remain rather low. For example, copper in all old and new, refined or remelted scrap contributes 32% of the United States copper supply[13]. In many cases, the recycling rates of metals are far lower than their potential for reuse. The recycling potential is especially great for rare earth metals, whose current recycling rates and recycled contents are below 1%. Investment can increase efficiencies in the collection and processing of metal-bearing discarded products, and improve recycling technologies.

Till date, however, these avenues have hardly been explored. A comprehensive and informed public debate about the need for deep sea mining has not been held either. It is high time we have this debate in a democratic and participatory way. We call on the Assembly in 2018 to establish a process to establish a much needed public debate about the need for deep seabed mining, and to ensure that more sustainable alternatives are fully assessed and feed into the debate in an open and transparent manner.

Better governance including stakeholder and public participation and public access to information

Open and transparent governance is the key to ensuring the protection of the deep sea. The recent review of the functioning of the International Seabed Authority has brought to light various governance flaws, including lack of transparency, lack of environmental capacity and lack in public access to data and information. It indicates that the International Seabed Authority at this point in time does not have an effective governance framework in place nor has the capacity to ensure the protection of the deep sea. The ISA’s mandate to protect the deep sea makes it imperative that it does so in an ecosystem based holistic way.

We therefore encourage the International Seabed Authority to act on civil societies’ requests for fundamental reforms of the ISA operations, including among others the establishment of an Environment Committee, the opening up of the Legal and Technical Committee for observers, and public access to data and information[14].

Process for development of the exploitation regulations

In light of the ISA’s fundamental capacity problems, the process through which the current draft exploitation regulations are being developed, and the currently stated aim of the ISA Secretariat to finalise these by 2020 also calls for concern. We note that the recommendations of the ISA workshop of March 2017, where 100 stakeholders and scientists gathered to provide their input, have been largely ignored. We understand that the draft that is currently under consultation has not been reviewed by the Legal and Technical Committee either. Given this and the governance problems outlined above, the 2020 target date for adopting the exploitation regulations is clearly unrealistic.

Instead of rushing the development of the exploitation regulation, we call on the ISA Assembly to agree on a longer term process to investigate comprehensively and in a participatory and science-based manner the fundamental questions about the need for deep seabed mining and its long term consequences for the planet and humankind.

It should be reminded that according to UNCLOS, the ISA is not mandated to simply promote deep seabed mining, but more broadly to organize and control activities in the Area” (Article 157). Disallowing any extractive mining activities should be available as an option. Notably the ISA has power under UNCLOS to disapprove areas of exploitation in cases where substantial evidence indicates the risk of serious harm of the marine environment (Article 162(2)(x)). The protection of the biotic and abiotic environment against unnecessary degradation would make a significant contribution to the betterment of humankind.

 

______

[1] Institute for Sustainable Futures at the University of Sydney (2016), Renewable energy and deep sea mining: supply, demand and scenarios

[2] European Commission (2017) Communication on the 2017 list of critical raw materials for the EU

[3] World Bank (2017) “The Growing Role of Minerals and Metals for a Low-Carbon Future

[4] See, e.g., A.L. Jaeckel, The International Seabed Authority and the Precautionary, Principle, Brill Nijhoff, Boston, 2017.

[5] Kim, Rakhyun E. (2017) Should deep seabed mining be allowed? Elsevier, Marine Policy 82 (2017) 134–137

[6] Managing Impacts of Deep-seA resource exploitation http://www.eu-midas.net/

[7] Van Dover C. L. et al (2017) Biodiversity loss from deep-sea mining, Nature Geoscience

[8] Kim, Rakhyun E. (2017) Should deep seabed mining be allowed? Elsevier, Marine Policy 82 (2017) 134–137

[9] Time for a global agreement on minerals to fuel the clean energy transition” https://theconversation.com/time-for-a-global-agreement-on-minerals-to-fuel-the-clean-energy-transition-87186

[10] Saleem H. Ali et al (2017) Mineral supply for sustainable development requires resource governance, Nature, Vol 547, 13 July 2017

[11] R.B. Gordon, M. Bertram, T.E. Graedel, Metal stocks and sustainability, Proc. Natl. Acad. Sci. 103 (2006) 1209–1214

[12] http://www.resourcepanel.org/reports/recycling-rates-metals

[13] United States Geological Survey (USGS), Mineral Commodity Summaries 2014, USGS, Reston, 2014.

[14] http://www.savethehighseas.org/2017/08/18/dscc-calls-international-seabed-authority-transparent-race-explore-deep-sea-accelerates/

 

 

[Download submission here]

 

Sir David Attenborough backs campaign to ban seabed mining

BBC TV
15 December 2017

Science Editor, David Shukman

Plans for the world’s first deep sea mine are taking shape in the waters off Papua New Guinea. The ocean floor is rich in gold, copper and other minerals in big demand around the world. But some scientists warn that digging up the seabed will destroy marine life, and Sir David Attenborough is among those objecting. BBC News science editor David Shukman reports.

 

 

World-first mining case launched in PNG

Lawyers Weekly
14 December

Tom Lodewyke

Citizens of Papua New Guinea have launched landmark legal proceedings against the country’s government over a deep seabed mining project.

Coastal communities in Papua New Guinea (PNG) recently commenced proceedings against the PNG government over the Solwara 1 project, the world’s first deep seabed mine.

The Centre for Environmental Law and Community Rights (CELCOR) in Port Moresby is representing four community plaintiffs. They are seeking information on the legality of the mine’s approval, as well as the likely environmental, social, cultural and economic impacts.

The Environmental Defenders Office (EDO) NSW, a partner of CELCOR, said in a statement that these are “landmark proceedings”. It is the first case relating to the world’s first commercial deep seabed mine, and one of the first public interest access to information cases brought under the PNG constitution, as PNG does not have freedom of information laws.

The EDO said community representatives in PNG have been requesting information on the mine, including the environmental permit, for years without success.

“[T]his is a historic case, not just for Papua New Guinea but globally, as communities try to understand the legality and potential impacts of theworld’s first commercial deep seabed mine,” said BJ Kim, international program manager at EDO NSW.

“It’s so important that the international legal community steps up and supports lawyers in PNG who seek to use the law to protect the environment.

Fewer legal environmental protections, and less well-resourced environmental regulators, see worse environmental impacts from mining and logging operations in the Pacific than in countries like Australia where greater checks and balances exist.

“EDO NSW knows that like-minded organisations in the Pacific can learn a great deal from our experience and expertise, and that’s why we’ve been supporting partners in the Pacific for over 25 years.”

EDO NSW CEO David Morris said the case is a “coming of age” moment for public interest environmental law in PNG, which his organisation is proud to be part of.

CELCOR executive director Peter Bosip said the relationship between the two organisations is crucial in supporting environmental law in PNG.

“This case is a result of the hard work of many partners,” Mr Bosip said.

“We are exceptionally grateful to EDO NSW for the dedication they have shown in support of our fledgling public interest environmental law practice.

“We have learnt a great deal from EDO NSW about running a successful public interest environmental law practice and their support has allowed us to build a strong CELCOR which is of crucial importance to PNG.

“But we can’t do it alone. Without international donor support, landmark cases like this could simply not be run.

“Communities cannot afford to pay the rates PNG lawyers charge and without organisations like CELCOR, PNG will be left entirely at the whim of the government and maverick resource companies.”

 

Mr Smashing makes a comeback with a deep sea mining disco love song produced by Deep Sea mining campaign partner Seas at Risk

Deep sea mining!? Leave my down below alone!

Destroying the deep sea to get metals for our throw-away mobile phones and other e-devices? Seas At Risk thinks it is better to step up efforts on the circular economy – make devices repairable, re-usable, recyclable. Use mineral resources more efficiently and keep them in the economy loop instead of wasting them.

In the Seas at Risk leaflet ‘Deep sea mining? Stop and think!’ you can read why we think deep sea mining has no place in the world’s Agenda 2030 for sustainable development. Let’s focus on creating a circular economy instead!

 
 
 
 
 
 
 
 
 

MEDIA RELEASE

Thursday 14 December 2017

 

Risky deep sea mining project just got a whole lot riskier!

 
On the back of gloomy investor updates from deep sea mining wannabe, Nautilus Minerals Inc. communities in Papua New Guinea just gave the company a surprise Christmas present.

Affected communities have launched legal proceedings in a bid to obtain key documents that would reveal to them and all Papua New Guineans whether the controversial “Solwara 1” deep sea mining project was approved lawfully.[1]

Furthermore, due to deficiencies in the Solwara 1 Environmental Impact Statement, they are seeking information that would help them to clearly understand the potential environmental, health and economic impacts of the project.

In a last-ditch bid to rescue the project, the two largest shareholders of Nautilus Minerals, Russian mining company Metalloinvest and Omani conglomerate MB Holdings, formed a new company in October whose sole job is to secure funding for the project by October 31st.[2]

Dr. Helen Rosenbaum of the Deep Sea Mining campaign stated that “Nautilus’ financing strategy for Solwara 1 has been spectacularly unsuccessful. Commercial operation has been delayed year after year since it received its licence to mine the floor of Papua New Guinea’s Bismarck Sea in 2011.

Questions are now being raised on the floor of Papua New Guinean Parliament about the Government’s 15% stake in the project statement with the shadow treasurer describing this as a foolhardy investment for a country facing its worst foreign exchange crisis since 1994.”

“The information uncovered through the legal proceedings will no doubt raise further questions about the processes by which the project received its operating licence.”

“The fact that Nautilus has been not been able to meet its funding requirements suggests that financial institutions are rightly cautious of this speculative venture[3] and have not been willing to give Nautilus the funds it so desperately needs.”, continued Dr. Rosenbaum.

“Local communities in PNG have demonstrated their strong opposition to Solwara 1 since the project was proposed.  The current legal action adds further risk for potential investors and financiers to what is already a risky project.”

For further information:
Helen Rosenbaum, Deep Sea Mining Campaign (AUSTRALIA)
hrose[at]vic.chariot.net.au,  +61 413201793

Notes

[1] If it proceeds the Solwara 1 mine will be located in the Bismarck Sea of Papua New Guinea, approximately 25 km from the coastline of New Ireland Province, about 35 km from Duke of York Islands and 60 km from Kokopo township in East New Britain.

[2] Nautilus announced on 11 October the formation of Deep Sea Mining Finance Ltd. (“DSMF“) which will seek to leverage the international expertise and financial relationships of Nautilus’ two major shareholders to assist in advancing the development of the Company’s Solwara 1 Project.

[3] See sections on Risk factors in Annual information forms for financial years 2015 and 2016. For example:

“Our operations are speculative due to the high-risk nature of business related to the exploration and acquisition of rights to potential mineable deposits of metals. These risk factors could materially affect the Company’s future results and could cause actual events to differ materially from those described in forward-looking statements relating to our Company.” (FY 2016, p 52)

“… Performance, availability, reliability, maintenance, wear and life of equipment are unknown. There can be no guarantee that sub-sea engineering and recovery systems can be developed or if developed, will be employable in a commercially-viable manner.”  (FY 2015, p54)

“… while Company studies have indicated a low likelihood of risk to the aquatic environment from mining activities, the actual impact of any SMS [seafloor massive sulphide] mining operations on the environment has yet to be determined.” (FY 2015, p61)

“Nautilus has not completed and does not intend to complete a preliminary economic assessment, pre-feasibility study or feasibility study before completing the construction and first deployment of the Seafloor Production System at the Solwara 1 Project.”

“No independent Qualified Person has confirmed the amount of these costs or recommended that these costs be incurred. There is significant risk with this approach and no assurance can be given that the Seafloor Production System, if fully funded and completed for deployment at the Solwara 1 Project, will successfully demonstrate that seafloor resource development is commercially viable.” (FY 15, p52)