Hi, John and Hans. Thanks for taking the time to chat with us today. To start off, it would be great if you could give us a little bit of background on Ocean Minerals (Click here to view Ocean Minerals Full Profile).
1. What resources are you most focused on and why?
Our main project in the Cook Islands is focused on polymetallic nodules with cobalt as the primary metal. We will also be producing nickel, copper, and manganese. This is the largest undeveloped primary cobalt resource, and one of the largest known cobalt deposits – primary or secondary – on the whole planet. We also believe this provides a solution to the projected cobalt shortage and does so in an ethical manner.
2. Obviously, ocean exploration is a different process than land exploration. Would you be able to take us through the process, e.g. from how you determine what areas to explore, to bringing a resource to the surface once it has been located?
Nodules form at the surface of the seafloor, and there are specific factors that support their formation (e.g. low sedimentation rates and good oxygen supply). Much work has been done to identify these areas where conditions are favourable for nodule formation, hence areas of good potential for their formation are relatively easy to identify. However, the challenge is the large aerial extent of the deposits and the specialized equipment capable of working at the very deep depths, typically 5,000 metres. We are fortunate that there are readily available systems that are able to map the seafloor and photograph the nodule deposits on the seafloor and coring systems that are easily deployed from vessels to recover physical mineral samples.
As for bringing the resource to the surface, we use a system based on similar systems tested and proven in the 1970s by various consortia, including some of the world’s biggest mining and oil and gas companies. The process is straightforward: we guide a machine across the seafloor, sucking up nodules that are then pumped, via a steel pipe, to the surface vessel. Here the nodules are separated from the seawater and temporarily stored before being shipped to a processing plant on land.
3. Are most of the resources at the surface of the ocean floor, or do you have to drill down further, once on the ocean floor?
All of the resources are made up of a single layer of nodules that are found within the top 10cm of the seafloor. They lie uncovered (zero overburden) and are plainly visible, although there is no natural light at these depths. There is no need to side cast material or move overburden. This makes it possible to collect these nodules with minimal disturbance to the seafloor.
4. With the increasing scarcity of large-scale, viable projects on land, why do you think more companies aren’t looking to the ocean floor?
The major mining companies invested hundreds of millions of dollars in ocean mining R&D and open ocean trials in the 1970s and concluded that nodules could be a competitive source of nickel with laterites. They were prepared to advance projects to large-scale pilot tests and commercialization in the 1980s; however, the U.N. Convention for the Law of the Sea (UNCLOS) declared that the seabed resources were the “common heritage of mankind.” This new legislation also came at a time when metals prices were weakening. The UNCLOS agreement, which was reached in 1982, had such onerous conditions on prospective miners that all investment was shut down and, to this day, the major mining companies have continued to stay away. Many of the worst of the conditions were dropped when a new “enabling” agreement was signed in 1994, but the UN’s seabed administrative body, the International Seabed Authority (ISA), has yet to implement mining regulations. Without clear certainty of access and a proven jurisdiction, deep sea mining fails to meet most large companies’ sustainability requirements and metrics for capital allocation. I also believe that most companies, wrongly in my opinion, perceive the risks and costs associated with underwater mining to be excessively high. However, as companies involved in underwater mining progress their projects and start publishing PFS and DFS reports, these perceptions will continue to dissipate and there will be a shift with more companies entering the space. We have been discussing our project with numerous potential strategic partners on the mining side and the processing side and are seeing increasing interest from a variety of different types of partners. The grade and scale of the minerals we intend to produce are certainly getting more and more attention.
5. What are the environmental impacts of ocean exploration?
There is very little impact from exploration specifically, as nearly all of the effort is focused on geophysical exploration using sonar, cameras, and instruments for measuring parameters such as current, sedimentation, temperature, salinity, and turbidity. Where samples are necessary, these are mostly small and directed such that impacts are kept well below the thresholds that trigger environmental impact studies. These thresholds were established by the ISA in conjunction with the scientific and environmental communities.
6. Are there any examples of other companies that have successfully brought ocean exploration to successful production?
There is a well-established underwater diamond mining industry off the coast of South Africa and Namibia with approximately six mining ships in production and another one under construction. In fact, these mining operations have been operational since the mid-1980s and today produce a sizable portion of the gem diamonds produced annually, nearly 20 percent. Aside from diamond mining, aggregates are currently the most mined materials offshore and it is a growing industry, albeit in shallow waters close to the markets. Offshore mining of tin placers is the largest marine metal mining operation in the world. The largest of these operations are in Indonesia, in about 70-metre water depths. Also, off-shore oil and gas production has grown into a large industry with great success in several areas around the world, now responsible for nearly 20 percent of world hydrocarbon potential. While these minerals are quite different from what Ocean Minerals produce, a lot of the underlying technologies, processes, and items of equipment are quite similar.
7. Does Ocean Minerals own any patents for the 8 technology used. If so, how is it unique? Does the equipment and systems used in the project development and commercial production require testing of any new or unproven technology?
Ocean Minerals does not maintain a patent portfolio; however, our team has unique legacy experience and “lessons learned” from early deep-sea mining development. Our Founder, Dr. John Halkyard, was responsible for developing the mining system for a consortium led by Kennecott (now part of Rio Tinto) in the 1970s. They did on-land and at-sea testing of most of the mining components. Dr. Halkyard also founded a consulting company, Deep Reach Technology Inc., which developed the method for extracting rare earth elements from REE-enriched sediments that lie directly underneath the nodules in the Cook Islands. This specific method is patent-protected. Our processing advisor, Dr. Jay Agarwal, was responsible for development of the metallurgical processing solution for Kennecott. Ocean Minerals holds a lot of direct experience across the nodules value chain. Nodules are a unique ore formation containing several different minerals, and for various reasons, most commonly used processing methods for terrestrial ore are not economic for nodules. Dr. Agarwal’s team developed a unique low temperature ammoniacal reduction leach method called the Cuprion process, which we still believe is the most economic method for processing nodules. The process was utilized on a half-ton per day pilot plant, which operated continuously for nearly a month with favourable and consistent recoveries. The process was patented at the time, and while the term has long expired, we continue to benefit from Dr. Agarwal and his team’s knowledge and experience.
Hans Smit, President and CEO of Ocean Minerals, spent his career designing, building, and implementing the crawler-based technology, still used by De Beers Marine to mine alluvial diamonds off the west coast of Africa. His knowledge of what is needed to design and implement a production-sized mining system, and what support and logistic systems are needed to ensure ongoing and economic operations are invaluable when developing the deep-water systems required for the company’s nodules project.
8. Your projects are located in the Cook Islands, remote and off-shore. Does this pose any transportation challenges once the nodules are brought to surface?
Being this remote in the ocean, although logistically challenging, does have advantages when compared to some remote landbased mines. Unlike the remote land mines that need to create accommodation facilities, roads, rail links, utilities, and all manner of infrastructure, we have a ship. Ships come built-in with all these features; accommodation, sanitary systems, water, etc., and we’re not in need of roads or rail links. Also, ships can be moved to new or higher grade deposits without any cost for mine development or infrastructure. Once we have the mined ore stored in our temporary storage holds, it can be loaded into a standard ore carrier which sails off to a land based processor where all the required infrastructure already exists. We anticipate multiple mining ships supplying multiple land based processing plants in the future.
9. Finally, as a company with a focus on cobalt, what is your outlook on the cobalt market for the medium-long term?
The earliest we would be in production is 2026, so we are focused on the long-term outlook for cobalt and do not spend too much time focused on the near-term price movements. The long-term outlook is very bullish based upon the projected growth in EVs and other battery storage applications, in addition to high strength steel alloys. Even with the emphasis on reducing cobalt in the battery chemistry, we still believe the cobalt demand will be two to three times the current demand in ten years or so, and seabed mining is the only solution with scale large enough to make a difference. The growth in demand is forecast by most prognosticators, including most recently Citi, who published an in-depth look at the impact of EVs on metals markets in September.