International Law and Non-Renewable Natural Resources

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The international laws governing the non-renewable natural resources of the continental shelf and the deep seabed Introduction In an age of growing mineral scarcity, we are now turning to the non-renewable resources of the seabed as an alternative to land-based reserves. At present the global consumption of fossil fuels exceeds 80 million barrels of crude oil a day (Lamb 2008), and given that the ocean covers 71% of Earth’s surface, most of these reserves are underwater. Consequently, with the depletion of land-based reserves and economic vulnerability arising from a dependency on foreign oil (Groves 2011), the petroleum industry has set out to exploit the untold, vast resources of the deep seabed (Wilson 1982). In response to a growing interest in deep-sea resources, the question of who has a right to exploit these resources and to what extent can these rights be enjoyed was raised in the Third United Nations Conference of the Law of the Sea convened in 1973 (Murton, Parson et al. 2001). With over 160 nations, the conference finally came to an end in 1982 and the resulting convention was enforced in 1994. The convention introduced a number of new provisions, the most significant being the delimitation of maritime zones. However, UNCLOS also established a legal regime to control the exploitation of mineral resources of the deep sea-bed outside of national jurisdiction, where the convention expressly conferred the International Seabed Authority (ISA) power to regulate all activities therein (Ribeiro 2013). In the space of just a few years, the deep-sea has emerged as a key source of new reserves, such that offshore production of petroleum and gas now account for 6 percent of global production as of 2013.Yet, the exploitation of deep-sea non-renewable resources is not solely limited to oil and gas. With growing exploration of the deep seafloor, many types of non-renewable mineral-rich resources have been discovered, and their formation, occurrence, and economic viability will be discussed in greater detail. This report describes the economically valuable non-renewable resources of the deep seabed, the laws governing their exploitation, and a historical perspective on the United States’ objection to Part XI of UNCLOS. Classification of natural resources In maritime law, the term ‘resource’ describes the potential for materials to occur, while ‘reserves’ are proven deposits of known abundance and volume (Murton, Parson et al. 2001). Thus, offshore resource estimates described in this study are not a definitive assessment of total reserves available for exploitation (Murton, Parson et al. 2001). Nevertheless, it is important to distinguish resource type because they can differ significantly in their conservation and exploitation regimes; UNCLOS operates specifically within the context of renewable and non-renewable natural resources. A renewable resource is that which can be naturally replaced or replenished, either through biological reproduction or naturally occurring processes. However, these resources are susceptible to depletion through overexploitation. Another type consists of renewable energy resources; these sources are continuously available and not noticeably affected by human consumption and include solar, geothermal, and wind power. A non-renewable resource is that which exists in a limited supply and its rate of replenishment is insufficient to offset economic extraction in a meaningful time-frame. One example is carbon-based fossil fuel, as their rate of formation through geological and biological processes is extremely slow, occurring over millions of years. Consequently, resources from an exploitation perspective are classified as renewable when their rate of recovery exceeds that of consumption, while the opposite holds true for non-renewable resources. Classification of mineral resources of the deep seabed Offshore exploitation has become increasingly feasible through technological advances and the main types of mineral deposits with economic value occurring on or beneath the deep seafloor include: placer deposits, polymetallic sulphides (PMS), manganese nodules and crusts, and hydrocarbon (petroleum and gas) deposits (Murton, Parson et al. 2001). These non-renewable resources have a long term formation period and occur mainly through natural geological, chemical, and hydrological processes. Marine placer deposits Placer deposits are accumulations of heavy metallic minerals and gemstones that form as a result of gravity separation during sedimentary processes and form mostly in high-energy environments, including wave, river, and tidal motion (Murton 2000, Unies and marins 2004). These minerals can contain economically important elements including: tin, titanium, zirconium, chromium, iron, barium, and gold. The principle gemstone is diamond (Unies and marins 2004). During the last glacial period, (18,000 ya), the sea level dropped by almost 120 meters and fluvial (river) placers extended to the present-day continental shelf(Murton 2000). But with subsequent sea level rises, most of these deposits became buried with sediment and now make up the marine placer deposits of commercial interest. However, given that placer minerals are generally confined to locations near their fluvial source, most of these deposits typically fall within the Exclusive Economic Zone of coastal states and are under national jurisdiction (Murton 2000). Polymetallic sulphides (PMS) These deposits are large bodies of ore containing high concentrations of base and precious metals, including: copper, zinc, lead, gold, and silver. With seafloor spreading at mid-ocean ridges, PMS formation is associated with the increased hydrothermal and volcanic activity at these regions (Murton 2000). Consequently, PMS deposits are found along most major tectonic plate boundaries(Murton 2000). Hydrothermal fluid seeps into chambers under the earth’s crust and are heated by the molten rock. The metal-laden water is discharged from the black smokers into the water column at high temperatures (400°C). As the plume mixes with cold seawater, the metal sulphides precipitate on to the chimneys and surrounding seafloor, where they form large deposits ranging from thousands to 100 million tonnes (ISA 2008). Despite their great depth (in excess of 2,500m) and remote offshore locations (Murton, Parson et al. 2001), these deposits have attracted the interest of the mining industry and exploration has begun. As of 2013, Nautilus Minerals is the first commercial operator granted a mining lease for PMS deposits, and is currently exploring high grade copper-gold deposits in the territorial waters and EEZ of Papua New Guinea (ISA 2008). Manganese nodules and crusts During the expeditions of the British Oceanographic Ship HSM Challenger (1872-1876), manganese nodules were discovered on the deep seabed in most oceans of the world (King 1981, Murton, Parson et al. 2001). These nodules can range in diameter from millimetres to tens of centimetres and are formed of concentric layers of iron and manganese around a core (Murton 2000). They contain economically valuable concentrations of manganese, copper, nickel, and cobalt (Murton, Parson et al. 2001). Several processes are involved in the formation of nodules, the most prevalent being: the hydrogenous and biogenic precipitation of metals, the diagenetic transformation of sedimentary rock, and the deposition of metal-rich sediment from continental erosion (Murton, Parson et al. 2001). Although these processes can occur concurrently during the formation of a single nodule, they grow at a rate of one molecular layer every three months, making it one of the slowest geological processes known to man - occurring over millions of years (ISA 2008 cob). Manganese crusts are formed through the precipitation of minerals on to the flanks and summits of seamounts, ridges, and plateaus and can form layers up to 25 centimetres thick (ISA 2008). Overall, manganese nodules and crusts cover an estimated 2 % of the seafloor (6.35 million km2) and can achieve high densities, with an average of 10kg/m2 in areas of the Central Pacific (Murton 2000, ISA 2008). Manganese nodules and crusts are a significant source in cobalt, an economically important metal used in super-alloys, solar cells, conductors, laser systems, and fuel cells (ISA 2008). Their abundance, composition, and occurrence as loose material on the seafloor, make nodules and crusts an attractive incentive for mining (Murton 2000). The global resource of manganese nodules may contain upwards of 150 billion tonnes (King 1981), with an estimated cobalt value of 12,000 trillion US dollars, using 2001 raw commodity prices (Murton 2000). Deep seabed resources: a historical perspective Before World War II, coastal states had national sovereignty and jurisdiction over territorial waters, which extended three nautical miles[1] from the shore as a form of customary law (Carter et al. 2007). Yet, no consensus had been reached regarding national jurisdiction over resources of the seabed beyond territorial seas. When the Challenger discovered manganese nodules in the late 19th century, the doctrine of res nullius applied; such that the resources of the seabed belonged to no one and could be subject to state appropriation (King, 1981). However, with the potential for commercial activity and offshore resource development in subsequent years, the process to claim greater seabed territory had begun. In 1945, President Truman issued Proclamation 2667, which asserted U.S. rights to explore and exploit resources of the seabed outside of the three nautical mile limit. This proclamation essentially stated that the resources of the seabed and subsoil of the continental shelf were exclusively US property. Other nations followed suit, which resulted in a customary law of the continental shelf later codified with UNCLOS I in 1958 (Shackelford, 2009). At this time, developing countries had a monopoly over land based mineral suppliers, where the biggest sources of cobalt were coming out of the mines in Zaire and Zambia (Wilson, 1982). The United States on the other hand relied heavily on foreign sources and had to import cobalt, manganese, and nickel to meet their industrial needs. Consequently, with the growing realization that mineral resources were finite, the seabed beyond the continual shelf gartered newfound attention by developed nations – particularly the cobalt-rich manganese nodules of the deep seabed. Nevertheless, competing with the United States’ desire to reduce its dangerous dependence on foreign and politically unstable mineral sources, were the desire of developing countries to assure equitable access to the resources of the deep seabed as a method of alleviating their perceived economic imbalances (Wilson, 1982). A consensus began to develop among the international community that the deep seabed and its resources should be subject to the doctrine of res communis: belonging to all (King, 1981). As the US began to claim areas of the seabed for exploitation, newly independent developing countries were becoming a powerful force influencing international relations. As their numbers increased, so did their demands for an equitable approach to global natural resources, and in light of the technological advances possessed by the United States, they sought to keep industrialized countries from monopolizing the deep seabed (Guntrip, 2003; Shackelford, 2009). Nevertheless, the controversy as to which policy should control the exploration and exploitation of the deep seabed essentially remained unresolved (King, 1981). Under the doctrine res communis, the Maltese ambassador Arvid Pardo believed an effective international regime was necessary to govern the deep seabed; one which would take into account the needs and interests of developing nations and also that of future generations (Guntrip, 2003; Shackelford, 2009). As a result, Pardo proposed that the deep seabed should be declared a “Common Heritage of Mankind” during the twenty-second General Assembly of the United Nations (1967). Reaction to the proposal was mixed; developing nations endorsed the CHM principle, while developed nations like the United States rejected it (Guntrip, 2003). While deliberating, the General Assembly drafted a number of resolutions regarding the resources of the deep seabed - including the Moratorium Resolution[2] and the Declaration of Principles[3]. Adopted in 1969, the Moratorium Resolution banned all activities pertaining to the deep seabed until an international regime was established. However, developed nations -particularly the United States, Germany, and the United Kingdom - opposed the moratorium provisions, believing it would jeopardize their many offshore mining investments (Guntrip, 2003). Being neither a member of UNCLOS I (1958) or UNCLOS II (1960), the United States viewed the resolution as a recommendation, not an obligation, and did not consider itself legally bound by the moratorium (Guntrip, 2003; King, 1981). The Declaration of Principles, adopted in 1970, attempted to outline the rules governing the use of the deep seabed and was met with little opposition. It acknowledged that the existing laws of the sea treaties did not provide adequate legal regimes for the exploration and exploitation of the seabed (citation). In addition, the resolution declared the deep seabed a common heritage of mankind and beyond state appropriation (citation). Laws of the Seas Treaty The debate over offshore mining served as an impetus for the third United Nations Convention on the Law of the Sea treaty (1982) and the establishment of the International Seabed Authority (1994) under Part XI of the convention. The primary purpose of UNCLOS III was to establish legal regimes that would regulate the exploration and exploitation of all renewable and non-renewable resources of the high seas and the seabed “Area” beyond national jurisdiction. Held from 1973 to 1982, the convention ultimately resulted in the adoption of 320 articles, with the overall participation of 160 nations. UNCLOS is considered by some to be the “constitution of the ocean” (Groves, 2011) and it effectively defines the rights and responsibilities of all member nations and covers all ocean-related activities. Under the convention, all coastal states are entitled to maritime zones over which they have some form of jurisdiction and rights, including: a territorial sea (12 nm); a contiguous zone; an exclusive economic zone (200nm); and a continental shelf that may extend past the 200 nautical mile delimitation. These zones must be measured from a baseline, which could be derived from the natural low water mark along a coast or through the use of straight-lines when the coast is deeply indented, has fringing islands or is highly unstable. The continental shelf and its extensions Nevertheless, UNCLOS gave birth to a key provision that established the concept of the ‘Continental Shelf’ in international law; here defined as the natural prolongation of the seabed and subsoil to the outer edge of the continental margin. The legal continental shelf extends out to a distance of 200 nautical miles from its coast or further if the shelf naturally extends beyond that limit. When the continental shelf exceeds 200 nautical miles, the coastal state must make a submission to the Commission on the Limits of the Continental Shelf (CLCS). The Commission assesses the proposed outer limits of the shelf and the technical and scientific data provided before making a final recommendation. The continental shelf delimitations established by a coastal State based on these recommendations are legally binding. Nevertheless, the Convention does include certain criteria governing the establishment of the extended continental shelf and its outer limits. The extension’s outer limits cannot exceed 350 nautical miles from the state’s baseline, nor exceed 100 nautical miles from the 2,500 meter isobath, which is a line connecting points of equal underwater depth. UNCLOS provisions draw distinctions between the submerged lands of the continental shelf based on its relation to the exclusive economic zone delimitation. Under UNCLOS, the seabed and subsoil inside the 200 nautical mile limit falls within the nation’s exclusive economic zone. Therefore coastal states have exclusive sovereign[4] rights over the exploration, exploitation, and management of its continental shelf and the mineral resources therein. Their rights are exclusive in the sense that if the coastal state chooses not to explore or exploit their continental shelf, foreign states or organizations cannot undertake these activities without the express permission of the coastal state. Furthermore, it is within their right for a coastal state to deplete their mineral resources; they are under no obligation to adopt conservation regimes[5] governing their exploitation. But unlike the full sovereignty a state has over its territorial seas, sovereign rights over the continental shelf are not absolute. As an example, coastal states cannot prevent foreign states from laying submerged installations (like pipes and cables) within this zone. Furthermore, a coastal state cannot impede the conduct of organizations or foreign states that wish to explore the continental shelf for peaceful and scientific purposes. They may, however, withhold consent if the research is for the purpose of exploration and exploitation of mineral resources, involves drilling into the continental shelf, or the use of explosives. In addition, coastal states must adopt laws and regulations to prevent, reduce and control pollution of the marine environment that arise from seabed activities. These regulations must, at a minimum, meet the established international standards set out by UNCLOS Part XII and MARPOL[6]. In addition to the rights and restrictions previously described, Article 82 introduces a provision specific to the extended ‘legal’ continental shelf (ELCS). Once having claimed an ELCS, the coastal state must make payments and contributions to the International Seabed Authority on all extracted mineral resources. However, if a developing state is a net importer of a mineral resource produced from its ELCS, the developing country may be exempt from making payments in respect to this resource. Annual payments begin after the first five years of production at a given site on the ELCS. Starting with the sixth year of production, the payment rate is set to one percent of the extracted resource value. This rate increases by one percent with each successive year until the twelfth year, after which payment is set to seven percent for all subsequent years.
[1] 1635 Mare John Selden proved that the sea was capable of appropriation as State territory, restricting maritime jurisdiction to the distance within which cannon range could protect it. [2] Resolution 2574D [3] Resolution 2749 [4] Coastal state has the full right and power to govern itself without interference from outside sources. [5] Coastal states must adopt conservation regimes to protect living resources from over-exploitation and depletion. [6] The International Convention for the Prevention of Pollution from Ships (MARPOL) covers the prevention of pollution by ships from operational or accidental causes
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