Report to the International Seabed Authority Study of the Potential

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Report to the International Seabed Authority Study of the Potential Advance Unedited Version English Only 12 May 2020 Report to the International Seabed Authority Study of the Potential Impact of Polymetallic Nodules Production from the Area on the Economies of Developing Land-based Producers of those Metals which are Likely to be Most Seriously Affected The opinions expressed in this study, the designations employed, as well as the content and presentations of material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the International Seabed Authority, including, inter alia, concerning the legal status of any body, country or territory or of its authorities; or concerning the delimitation of its frontiers or maritime boundaries. Authors: Lapteva Anna, Chernova Alexandra, Khodina Marina, Mustafa Tatiana, Mustafina Farida, and Smolnikova Anastasiya from All-Russian Scientfic-Research Institute of Mineral Resources Named after N.M. Fedorovsky (FSBI “VIMS”). Content Abbreviations ................................................................................................................................................ 5 Executive summary ....................................................................................................................................... 6 Introduction ............................................................................................................................................. 12 Objectives and methodology ............................................................................................................... 13 Overview of work done by the Preparatory Commission ....................................................................... 16 A. Analysis of work in connection with potential impacts .............................................................. 17 B. Criteria for or background to concept of serious adverse effects ................................................ 18 C. In-depth investigation of potential effects of seabed mineral production for DLBPS ................ 21 Overview of mineral production from activities in the Area .................................................................. 23 A. Types of mineral resources and affected metals for study purposes ........................................... 23 B. Assumptions for future mineral resource production in the Area ............................................... 24 World market conditions for the affected metals .................................................................................... 32 A. Overview of the value chain for the affected metals ................................................................... 32 B. Overview of the value chain of developing land-based producers of the affected metals .......... 37 C. Analysis of trends and developments in the affected metals, including future supply and demand prospects, and potential effects of transfer pricing ................................................................ 38 D. Primary sector products of the affected metals ........................................................................... 79 E. Semi-finished products sector of the affected metals .................................................................. 93 F. End products sector of the affected metals .................................................................................. 99 Study data and methodology ................................................................................................................. 119 A. Type of methods of analysis ...................................................................................................... 119 B. Presentation of the approach and assumptions adopted for the potential impact analysis ........ 122 C. Overview of affected metals tariffs on exports and earnings of developing state producers .... 126 Impact on the affected metals tariffs for developing State producers ................................................... 142 A. Effects of the affected metals tariffs on overall economic performance ................................... 142 B. Sectoral effects of the affected metals tariffs ............................................................................ 161 C. Potential effects of a targeted tariff on semi-finished products ................................................. 162 D. Potential effects of targeted tariff on end products ................................................................... 167 Potential impact analysis and discussion............................................................................................... 176 A. Identification of relevant developing land-based producers ..................................................... 176 B. Assessment of potential impact on relevant developing land-based producers ........................ 178 C. Discussion of uncertainties in impact analysis, including future supply and demand prospects ............................................................................................................................................ 181 Summary and conclusions ..................................................................................................................... 191 Recommendations for further studies ................................................................................................... 194 Appendices .......................................................................................................................................... 195 Terms and Definition ........................................................................................................................ 195 Data and information tables .............................................................................................................. 199 A. Copper production ..................................................................................................................... 199 B. Copper export ............................................................................................................................ 202 C. Nickel production ...................................................................................................................... 208 D. Nickel export ............................................................................................................................. 210 E. Cobalt production ...................................................................................................................... 214 F. Cobalt export ............................................................................................................................. 216 G. Manganese production .............................................................................................................. 219 H. Manganese export ..................................................................................................................... 221 References ........................................................................................................................................... 229 ABBREVIATIONS BGS British Geological Survey DLBPS Developing Land-Based Producer States EIA U.S. Energy Information Administration EMD electrolytic manganese dioxide EMM electrolytic manganese metal ES energy storage EU European Union EV electric vehicle GDP gross domestic product GNI gross national income GNP gross national product GVC global value chain HHI Herfindahl-Hirschman Index ICA International Copper Association ICSG International Copper Study Group IEA International Energy Agency IMF International Monetary Fund IMnI International Manganese Institute INSG International Nickel Study Group IPCC Intergovernmental Panel on Climate Change ISA International Seabed Authority ITC International Trade Centre LME London metal exchange MIT Massachusetts Institute of Technology NA not available NPI nickel pig iron OECD Organisation for Economic Co-operation and Development ROW Rest Of World SHFE Shanghai Futures Exchange UN United Nations UNEP United Nations Environment Programme UNCTAD United Nations Conference on Trade and Development USGS United States Geological Survey WB World Bank Group WBMS World Bureau of Metal Statistics 5 EXECUTIVE SUMMARY 1. The Secretariat of the International Seabed Authority commissioned the preparation of this report to study the potential impact of mineral production from the Area on the economies of developing land-based producers of those minerals, which are likely to be most seriously affected, with a view to minimizing their difficulties and assisting them in their economic adjustment, taking into account the work done in this regard by the Preparatory Commission. 2. The purpose of the study is to provide a preliminary assessment of the impact of activities in the Area on developing land-based producers States (DLBPS). Activities in the Area may lead to serious adverse effects on the export earnings or economies of DLBPS resulting from the decline in price or supply volumes of the affected metals. The need for such a study is determined by the provision of the United Nations Convention on the Law of the Sea that developing States must be protected “from adverse effects on their economies or on their export earnings resulting from a reduction in price of an affected mineral, or in the volume of exports of that mineral, to the extent that such reduction is caused by activities in the Area…” (Convention, articles 150 (h) and 1 (3)). The Agreement relating to the Implementation of
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