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Future of PNG deep sea mining uncertain

Dec. 19, 2012 at 1:56 PM   |   Comments

PORT MORESBY, Papua New Guinea, Dec. 19 (UPI) -- The future of deep-sea mineral mining off the coast of Papua New Guinea faces uncertainty.

Canadian company Nautilus Minerals' Solwara 1 Project in the Bismarck Sea off PNG, embroiled in disputes over funding as well as questions over environmental and social effects, has come to a halt after two years of development, Inter Press Service reports.

Nautilus Minerals has referred to Solwara 1 as the world's first commercial seafloor copper-gold project and launch of the deep-water seafloor resource production industry, while "maintaining an environmentally and socially responsible approach."

Last month, Nautilus announced it was terminating construction of its $407 million seafloor production system.

Nautilus said the PNG government has a contractual obligation to pay approximately $75 million associated with a 30 percent investment in the project.

"The state disputes this interpretation and Nautilus cannot continue to (exclusively) fund the build of the Solwara 1 equipment," Nautilus told IPS.

The PNG government, in issuing a license to Nautilus in 2011 to mine Solwara 1, had agreed to take a 30 percent stake in the project and co-finance it. But in June 2012 the PNG government carried out a legal process to determine if it was obligated to contribute to funding Solwara 1.

"We were paying for it all ourselves and it was becoming too costly," Michael Johnston, Nautilus' chief executive officer told SciDev.Net. "We were at an expensive stage of the build. We were spending US$3 million or US$4 million a week. For a company of our size, we couldn't continue to pay for that ourselves."

PNG's previous government had preferred to take equity in most resource projects, says Colin Filer, an associate professor at the Australian National University. But the new government which came to power in August 2011 -- after Nautilus was issued a license for the project -- has taken a more strategic approach, Filer said.

Meanwhile, environmentalists have called for more careful consideration of deep-sea mining.

"Another 10 to 15 years of marine research really needs to be done so that we better understand the deep marine ecosystem before we embark on deep-sea mining," Chalapan Kaluwin, professor of environmental science at the University of Papua New Guinea, told IPS.

"We don't understand enough about the potential impacts of this deep-sea mining project on marine biodiversity, fisheries and coral reefs, as well as people and communities," Kaluwin said.

Nautilus says it holds more than 193,051 square miles of "highly prospective exploration acreage" in the western Pacific including the Solomon Islands, Fiji, Vanuatu and Tonga, as well as in international waters in the eastern Pacific.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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