Public Disclosure Authorized Precautionary Management of Deep Sea Minerals PACIFIC POSSIBLE BACKGROUND PAPER NO.2. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Pacific Island countries face unique development challenges. They are far away from major markets, often with small populations spread across many islands and vast distances, and are at the forefront of climate change and its impacts. Because of this, much research has focused on the challenges and constraints faced by Pacific Island countries, and finding ways to respond to these. This paper is one part of the Pacific Possible series, which takes a positive focus, looking at genuinely transformative opportunities that exist for Pacific Island countries over the next 25 years and identifies the region’s biggest challenges that require urgent action. Realizing these opportunities will often require collaboration not only between Pacific Island Governments, but also with neighbouring countries on the Pacific Rim. The findings presented in Pacific Possible will provide governments and policy-makers with specific insights into what each area could mean for the economy, for employment, for government income and spending. To learn more, visit www.worldbank.org/PacificPossible, or join the conversation online with the hashtag #PacificPossible. © 2017 International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 Telephone: +1 202-473-1000 Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in the work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. 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Pacific Possible Precautionary Management of Deep Sea Minerals June 30, 2017 Contents Pacific Possible ..........................................................................................................................................1 Abbreviations / Glossary.......................................................................................................................4 Acknowledgements .................................................................................................................................6 Executive Summary .................................................................................................................................7 Introduction............................................................................................................................................. 15 Background .............................................................................................................................................. 18 What is Deep Sea Mining? ......................................................................................................... 18 Maritime Zones and the Jurisdictional Limits of DSM Activities ............................... 18 Deep Sea Mineral Deposits in the Pacific Island EEZs ................................................... 21 DSM Mining Technology ............................................................................................................ 24 Drivers of Deep Sea Mining ...................................................................................................... 25 Ongoing and Proposed DSM Projects in the Pacific Islands ........................................ 26 Chapter 1. Some Knowns but Many Unknowns about DSM ................................................. 28 Deep Seabed Resource Potential at a Glance .................................................................... 28 Seafloor Massive Sulphide Resources ................................................................................. 28 Manganese Nodule Resources ................................................................................................ 29 Cobalt Rich Crust Resources ................................................................................................... 30 The Importance of Industry Learning and Cost .............................................................. 30 Environmental Impacts and Risks ......................................................................................... 33 Social Impacts and Risks ........................................................................................................... 34 Chapter 2. Given the Risks: Apply the Precautionary Approach ........................................ 38 Definition of the Precautionary Approach ......................................................................... 38 The Process of Applying the Precautionary Approach and Key Supporting Elements .......................................................................................................................................... 38 Stakeholder Participation......................................................................................................... 38 Step 1. Are precautionary measures needed? .................................................................. 41 Step 2. Degree of precaution needed ................................................................................... 41 Trade-offs: Need for sound cost - benefit analysis ......................................................... 42 Step 3. What precautionary measures can be applied?................................................ 48 Step 4. What precautionary measure should be taken? ............................................... 49 Step 5. Implementation and Monitoring ............................................................................ 51 Chapter 3. The Case of the Solwara 1 Project ........................................................................... 53 Cost Benefit Analysis .................................................................................................................. 54 2 Environmental Impact Assessment...................................................................................... 56 Chapter 4. Establishing DSM Sector Governance ..................................................................... 60 Need for Long-range DSM Sector Planning........................................................................ 60 Need for Quantitative Resource Assessment .................................................................... 61 Need for DSM -Driven Local Content.................................................................................... 62 Need to Grow Industry ............................................................................................................... 64 Fiscal Considerations .................................................................................................................. 65 Chapter 5. Regulatory and Institutional Gap Analysis............................................................ 68 Chapter 6. Some Concluding Thoughts on Where Regional Cooperation needs to be strengthened ........................................................................................................................................... 78 Possible Cooperation Arrangements ................................................................................... 79 References ................................................................................................................................................ 83 Annex 1. Offshore Impacts by Mineral Deposit Type.............................................................. 87 Annex 2. Elements of Stakeholder Engagement (Adapted from IFC Performance Standard 1) .............................................................................................................................................. 90 Annex 3. Key Issues in Solwara 1 EIS, Supporting Studies, and Independent Publications ............................................................................................................................................. 93 Annex 4. Cook Islands Manganese Nodules ............................................................................. 103 Annex 5. The SPC-EU Deep Sea Minerals Project. Objectives and Outputs ................. 106 Tables Table ES1. State of definition and earliest commerciality of DSM........................................9 Table 1. DSM Engagement by Country (Status as of June 2016) ........................................ 26 Table 2. Seafloor Massive Sulphide Resources .......................................................................... 29 Table 3. Manganese Nodule Resources ........................................................................................ 29 Table 4. Cobalt Rich