LOST Washing Up To Our Shores Once Again

by Riley Walters on October 1, 2012 · 1 comment

in Environment, International, Natural Resources

The United National Convention of the Law of the Sea (UNCLOS) celebrated its 30th anniversary this year. Simultaneously, there has been a push for the U.S. to ratify the Law of the Sea Treaty (LOST). Though signed, the treaty was never ratified by the U.S.; and for good reason. LOST redistributes wealth away from developed states, such as the U.S., and discourages innovation and investment.

LOST replaces hundred-year-old sea boundaries for member states, regardless of being a coastal or land-locked state. This can potentially reduce the extent of sovereign territory of the U.S. For example, Niger, a predominately desert country in Sub-Saharan Africa, at least 400 miles away from the nearest ocean coast-line, is allowed the same relative amount of ocean territory as Greenland, the world’s largest island.

LOST also creates a governing board for the ocean, the self-declared Authority. The area outside of states’ sea-boundaries, known as the Area, is to be mined by the Authority-created Enterprise. The Enterprise is a business organ which excavates for the Authority.

At the Authority’s discretion, developed states are to pay dues, and state and private deep-seabed mining companies are to pay “royalties” towards the creation of the Enterprise.

An application must be submitted for a company to mine in the Area. Each application costs $500,000 regardless of whether a company is already in contract with the Authority. Applications must contain detailed information on two potential sites. The Authority decides which site may be mined and which site may be mined by the Enterprise. The quantity expected to be excavated, any tools and methods, and all other technological knowledge which may be used at both sites must also be included in the application. This lessens incentives to innovate new technologies for mining; new technologies made fair-use for all competing mining companies.

Institutions to teach companies’ technology to both Enterprise employees and developing states are also to be established.

In addition, five years after excavating minerals from a site, a 1 percent “royalty” fee will be imposed. This will increase 1 percent annually up to a maximum of 12 percent. That, or as prescribed in LOST, a USD$1 million annual fee, whichever is greater.

This money helps fund the Authority. The Authority also distributes these royalties to developing states, as well as the Enterprise, based on their “needs.” The Authority can determine whether a developing state is exempt from application and royalty fees. The Authority is mainly composed of members from developing states, thus putting developed states on the hook while developing states are void of all fees.

The outcome to ratifying LOST is the end to private companies’ investment in the Area. Technological advances which may have been used for such mining projects will be stopped. Minerals which could have been excavated will be left untouched and the jobs and wealth created to excavate these materials will never come to exist. Not only has LOST created a governing board for the largest surface area of the world, it drives away from the largest area to which investment looks promising. It’s time for LOST to be buried at sea.

Caitlyn Antrim October 1, 2012 at 5:34 pm

There are many errors or misrepresentations in this article, but the key point is in the concluding paragraph. Contrary to the claim that joining the LOS Convention will put an end to private investment in the Area, the Convention is fostering major investment for its members. There is no US private investment in the Area now – and the one remaining US company with seabed mining technology says it won’t go to sea until it had the legal and political certainty provided by the Convention. In contrast, there are 17 mining claims approved under the Convention, with a UK firm and a Belgian company being the most recently approved operations (the Belgian claim took over a claim abandoned by one of the original US miners when they gave up in the 1990s). Germany, France, Japan and South Korea are there too. And it is no surprise that Russia, China and India have sites as well. And both China and Japan have submitted applications for exclusive rights to tracts of cobalt-bearing crusts on the slopes of seamounts in the Area. There are even three developing country island states with approved sites – and they are creating operations that raise their own investment capital and purchase their own technology.

This is a case where ideology and reality show different outcomes. The Convention has evolved into the system sought by President Reagan in 1982. It is working for members and only the US is losing by our absence.

Let me repeat that key point: there are 17 seabed mineral exploration activities now working under the LOS Convention and none are working outside of it. The sole US seabed mining company left says only the Convention provides the legal certainty needed to operate. That may not fit one view of how the world should work, but it exactly how the world is working.

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