Nautilus Minerals

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With the commercial extraction of deep sea mineral resources soon to be a reality, CEO of Nautilus Minerals, Mike Johnston talked to Jonathan Dyson about how the company he heads is leading from the front, in partnership with government, industry, environmental groups, the scientific fraternity and local communities.

For the global mining industry, 2018 is set to be a momentous year, as the world’s first deep sea mine, in the waters off Papua New Guinea (PNG) at a prospect known as Solwara 1, begins production. Nautilus Minerals, an underwater mineral exploration company headquartered in Toronto, Canada and with offices in Australia, PNG and Tonga, is successfully driving the Solwara 1 project forward. In the process it is delivering economic, social and environmental solutions through a range of partnerships with government agencies, technology companies and environmental groups, opening up a vast array of valuable opportunities for a diverse range of investors.

Nautilus is the first public company to commercially explore the ocean floor for polymetallic seafloor massive sulphide deposits.

Nautilus is the first public company to commercially explore the ocean floor for polymetallic seafloor massive sulphide deposits and has been granted the first mining lease for such deposits at Solwara 1, where it is aiming to produce copper, gold and silver.

A key partner in the Solwara 1 project is the PNG government. In December 2014 it fully funded its 15% interest in the project, releasing a sum of US$113 million to Nautilus, and a joint venture was formed between Nautilus Minerals and the PNG state’s nominee, Eda Kopa (Solwara) Limited, a wholly owned subsidiary of Petromin PNG Holdings Limited.

Nautilus had first submitted its mining lease application after completing its environmental impact statement (EIS) in September 2008. The environmental permit was granted by the PNG government in 2009, followed by the mining lease in 2011. After a change of government in PNG in 2012, a commercial dispute emerged with Nautilus about certain elements of the joint venture, in particular the ownership of the intellectual property.

However, Mike Johnston, CEO at Nautilus, stresses that the “situation with the PNG government has now been completely resolved. I’m 100% sure that the government will remain committed to the project.” He adds that the final part of the process is the building of the production support vessel, which is now set to get underway, and is expected to take three years, with production at Solwara 1 scheduled to commence in the first half of 2018.

Johnston explains that the PNG government is keen for the Solwara 1 project to go ahead due to the potential of deep-sea mining to bring significant economic benefits to the country, as well as Nautilus’ deep engagement with local communities and its meticulous approach to its environmental commitments.

Observing that 70% of the planet is covered by water, Johnston says: “It only stands to reason that the 30% of the planet covered by land that we keep trying to extract resources from is eventually going to be overly stressed as demand keeps rising. The mining industry is in the same sort of situation that the oil and gas industry was in 40 or 50 years ago when it started to first go offshore.”

Johnston explains that deep sea mining offers enormous potential in meeting the world’s growing demand for metals and minerals, with elements including copper, as well as nickel, cobalt and zinc, already found in large abundances. Aside from Solwara 1, Nautilus holds 450,000 sq km of exploration territory, or tenement applications, in PNG, Tonga, Fiji, Vanuatu, the Solomon Islands, New Zealand and the Central Pacific, with 19 mineralised seafloor systems identified in the Bismarck Sea, and 19 in Tonga.

Solwara 1’s area of impact is around 0.1 sq km, whereas for a comparable mine on land, the impacted area is just under 8 sq km.

Johnston says that there are a number of myths surrounding deep sea mining which he describes as being “borne largely out of ignorance.” He explains that the environmental impact of deep sea mining is actually significantly less than mining on land, noting that Solwara 1’s area of impact is around 0.1 sq km, whereas for a comparable mine on land, the impacted area is just under 8 sq km.

He explains that the footprint of land-based mines includes additional facilities such as waste dumps and tailing dams, and adds: “the beauty of sea floor mining is that we’re not having to strip large areas of overburden [waste rock or materials overlying an ore or mineral body that are displaced during mining without being processed] and we don’t produce tailings [the materials left over after the process of separating the valuable fraction from the uneconomic fraction of an ore] in PNG.”

“So the whole process is an order of magnitude better than mining on land,” says Johnston. “Overall, in a holistic sense, it gives a better outcome for the whole planet.”

In addition, while Nautilus is not directly involved in the processing, distribution and sale aspects of the supply chain, it has established a partnership with Tongling Nonferrous Metals Group, one of the largest copper smelting companies in China, and which according to Johnston has one of the most eco-friendly smelters in the world.

Johnston stresses that Nautilus has taken a pro-active approach to each aspect of its environmental commitments. Nautilus’ EIS has been reviewed externally for the PNG government and is being used as the standard for the proper execution of a deep ocean EIS by the International Seabed Authority (ISA) and the Secretariat of the Pacific Community (SPC)’s Applied Geoscience and Technology Division (SOPAC), which provides technical advice to the majority of the Pacific Islands. According to Johnston, every sq cm of the ore body at Solwara 1 has been photographed and recorded.

Nautilus is also working closely with the provincial governments in the area around Solwara 1, and has signed memoranda of understanding (MoUs) with the New Ireland and East New Britain governments to implement programmes designed to help local communities. These include recently completed sanitation projects in two schools on the west coast of New Ireland – one of the most remote and poorest parts of PNG; the sponsoring of books and other school resources; and an annual Marine Science Short Course in Kavieng, New Ireland, in partnership with the University of Papua New Guinea and the North Carolina, USA-based Duke University.

Nautilus has also given mini remotely operated vehicles (ROVs) to the National Fisheries Authority on Nago Island, with a view to monitoring the potential impact of the human activities on the local environment. “Our dream going forward is that people from local villages will use these mini ROVs to collect data about the potential impacts or otherwise of human activity in relation to their reef systems,” says Johnston.

He adds that Nautilus is working closely with the National Fisheries Authority to ensure the fishing industry is not negatively affected. He explains that large tuna stocks are not found in the area around Solwara 1, and that tuna are unlikely to be affected as they generally don’t swim deeper than 200 or 300 metres below sea level, while the small plume from the Solwara 1 mining will not rise above 1,300 metres.

He adds that Solwara 1 can also benefit the tourism industry due to the increased flight frequency and shipping in these relatively remote areas.

Another myth surrounding deep sea mining is the extent of the technical challenges which, says Johnston, are minimal compared with extracting ore bodies from many mines on land.
“Deep underground mines are enormously complicated, it’s a dangerous occupation, and the mines are incredibly expensive,” he says. “A shaft of 1,500 metres costs tens of millions of dollars and the thing is fixed – you can’t move it. In deep sea mining, we don’t have those challenges. The ore bodies we access sit proud on the sea floor. We don’t have people down at the faces. The extraction process is all done robotically and brought up to the surface.”

Johnston observes that while the oil and gas industry is routinely working at 2,500-3,000 metres below sea level, Solwara 1 will involve mining at around 1,500 metres below sea level. “When you talk to the oil and gas guys, 1,500 metres is just a piece of cake for them,” he says.

For Solwara 1, Nautilus is partnering with an extensive range of engineering and technology companies from the offshore oil and gas and metals and minerals sectors, and is adapting technology already in use in those sectors.

The Solwara 1 offshore production system will have three main components – seafloor production tools (SPTs), a riser and lifting system (RALS), and a production support vessel. For the seafloor production tools, the power units are based on large trenching units used in the oil and gas industry for laying pipelines and cables, while the cutting technology is used in underground coal mining technology. The SPTs are being built by Soil Machine Dynamics (SMD), one of the world’s leading builders of seabed trenching systems.

Johnston explains that the RALS is “straight out of the oil and gas industry – Chevron is using essentially the same system in the Gulf of Mexico.” The RALS for Solwara 1 is being built by GMC, which specialises in advanced innovative tubular solutions from seabed to surface, while GE Oil & Gas, a world leader in advanced technology equipment and services for all segments of the oil and gas industry, is building the subsea slurry pump for the RALS, using its Hydril Pressure Control subsea pumping technology.

The production support vessel, meanwhile, will be similar to offshore production support vessels used in the oil and gas industry, with Marine Assets Corporation (MAC), a marine solutions company based in Dubai which specialises in the delivery of new build support vessels for the offshore industry, owning and providing the marine management of the vessel.

Through its technical partnerships, expertise and continuous innovation, Nautilus has become the “go-to” company for sea floor mining.

Through its technical partnerships, expertise and continuous innovation, Nautilus has become the “go-to” company for sea floor mining, according to Johnston. “We’ve got some really good technical people, really bright guys,” he says. “We’ve created new drilling systems, new geophysical techniques, new ways of logging ore, and new ways of sampling.”

He adds that with regard to security of tenure, the system for deep sea mining is largely similar to land-based mining, explaining that in most countries the state has rights to all resources out to the edge of its exclusive economic zone (EEZ), and that in international waters the area outside of national jurisdiction is administered by the International Seabed Authority, tasked by the United Nations to administer the development of the open ocean for the benefit of mankind.

Johnston says that with deep sea mining set to be a major game-changer in the international mining industry, the return on investment for interested parties is set to be extremely high, and that aside from Solwara 1, while its additional projects on its other tenement holdings across the Western Pacific region had been on hold pending the resolution of the dispute with the PNG government, it is also now set to continue pursuing its other exploration projects in 2015.

“Now that we have resolved the dispute with the state, the PNG government is very keen to see us get reinvigorated in exploration,” he says. “They are eager to partner with us and a lot of other countries in the Pacific have also expressed an interest in seeing seafloor mining happen in their countries.”

For more information please visit www.nautilusminerals.com.