CYIL vol. 8 (2017)

JAN ONDŘEJ CYIL 8 ȍ2017Ȏ that it will increase. According to Draft Regulation 23 which refers to mining, a contractor shall calculate and pay to the Authority a royalty in respect of all minerals recovered under an Exploitation Contract and sold or removed without sale from the mining Area. It is expected that the complete Mining Code would comprise the whole of the comprehensive set of rules, regulations and procedures and will be issued by the Authority to regulate prospecting, exploration and exploitation of marine minerals in the Area in the years 2017–2018. 31 It can be said that activity on the sea-bed is really demanding. In the sense of the UN Convention on the Law of the Sea this activity can be conducted by states, state enterprises, natural or juridical persons of the Convention parties. The International Seabed Authority can conduct such activities through its Enterprise. Apart from the abovementioned fee, the applicant should, according to Section 1 of the Annex of the Agreement of 1994, expend an amount equivalent to at least US$ 30 million in research and exploration activities and has expended no less than 10 per cent of that amount in the location, survey and evaluation of the area referred to in the plan of work. This represents high initial costs. Further, high amounts are related to proper prospecting. Even higher costs are expected while conducting the exploitation itself. The report 32 of the Secretary General of the International Seabed Authority took into consideration a polymetallic nodule processing plant with an annual capacity of 1.5 million tons of wet nodules, producing nickel, copper, cobalt and manganese. The working group estimated the capital cost per kg of nickel equivalent at $10 to $15. For a 1.5 million-ton capacity polymetallic nodule processing plant, the group estimated capital cost at $ 750 million. On the other hand, Article 1 of Annex III of the Convention says that the title to minerals shall pass upon recovery in accordance with the Convention. The relevant rules, regulations and procedures will be set in the future. Critical remarks to the Convention voiced especially by US experts 33 (the USA is not a state party to the Convention) point out that neither the UN Convention on the Law of the Sea of 1982 nor the 1994 Agreement on the Implementation of Part XI of the Convention set the height of the mining royalties. According to the original proposal of the Convention, the mining enterprises were supposed to pay between 5 and 12 per cent of the value of the processed metals. The idea is that each enterprise should pay a minimum of $1 million to the International Seabed Authority annually since the start of commercial production. This also pointed to the rising administrative fee for the approval of the prospection plan of work. It is questionable if the high production costs, whether the necessary production costs themselves, the costs for administrative fees or the other contributions, will be discouraging for juridical persons or not. The fact is that the resources on dry land are being exhausted, so the exploitation of the seabed will be necessary in spite of the higher costs and will be profitable in the future. It is evident that sea-bed mining will 31 REPORT of the SECRETARY-GENERAL of the INTERNATIONAL SEABED AUTHORITY under Article 166, paragraph 4, of the United Nations Convention on the Law of the Sea. International Seabed Authority, Assembly ISBA/22/A/2, Twenty-second session, 22 July 2016, p. 16. 32 REPORT of the SECRETARY-GENERAL of the INTERNATIONAL SEABED AUTHORITY. Workplan for the formulation of regulations for exploitation of polymetallic nodules in the Area. Council ISBA/18/C/4. Eighteenth Session. 16-27 July 2012. 33 GROVES, S., The U. S. Can Mine the Deep Seabed Without Joining the U.N. Convention on the Law of the Sea. In: Backgrounder [online]. 4. 12. 2012 [3. 10. 2016]. Accessible at:

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