The Impact of Seabed Mining: A Qualitative Analysis

Tilton, J.E. (1983). The Impact of Seabed Mining: A Qualitative Analysis. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-83-045

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Abstract

This paper considers the future effects of seabed mining on the cobalt, copper, manganese, and nickel industries, and the implications for producing and consuming states. The analysis is qualitative, or conceptual, in nature. While no effort is made to actually measure or quantify the impacts of seabed mining, important variables that one would have to consider in making such measurements are identified.

While deep-sea mining holds the promise of potentially less expensive sources of minerals, it also raises the specter of dislocation and decline for land-based producers, many of whom are located in the developing countries. There is widespread concern that unless seabed mining is regulated, most of the benefits flowing from this "common heritage of mankind" will go to the developed countries that have both the technology to exploit these minerals and the capacity to consume the output.

Despite the study's fairly narrow scope, two general conclusions emerge. First, measuring the future impacts of seabed mining is an extremely complicated and difficult endeavor. There is much disagreement about the relative costs of seabed and land-based production. How scientific breakthroughs and other technological developments will alter future costs is simply unknown, and to some extent unknowable. Moreover, relative costs alone will not be the only determinant of the future level of seabed mining. Some countries may support such production to lessen their dependence on foreign producers. Distressed land-based producers may receive assistance from their own governments and protection in the form of constraints on seabed production, negotiated through international agreements. Thus production may be influenced as much by political decisions as by economic considerations. Even if the future level of seabed mining could be ascertained, its impact would be difficult to assess ex ante. Such assessments require knowledge of long-run supply and demand curves that goes beyond observed historical price and output equilibria. Nor is it clear how these curves will shift over time in response to resource depletion, technological progress, the introduction of new materials, changes in mineral policies, and other factors.

Second, the potential impacts of seabed mining appear to vary and to be less bounded than is often presumed. For example, the first commercial mining of seabed nodules is widely anticipated during the 1990s and several consortia are expected to be in operation by the end of the century. Yet the necessary technology, particularly on the scale required, has not yet been proven. Further, it is not clear whether the requisite policies to protect investments are in place. These uncertainties raise the possibility that seabed mining could suffer a fate similar to that of oil shale, where for years commercial production appeared imminent but the goal remains elusive. Moreover, the impacts of seabed mining are not fully appreciated as is evident by the argument that seabed mining could not force existing land-based mines to close. The rationale for this position overlooks the potential influence of new technology on relative costs of both seabed and land-based mining and ignores the coproduct nature of seabed operations and the substantial effect of even limited production on the cobalt market and perhaps on the manganese market.

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