Deep Sea Mining Bill

David Nuttall Excerpts

Friday 24th January 2014 Commons Chamber

My hon. Friend the Member for Brent North (Barry Gardiner) put forward the need for the section to be improved. The right hon. Gentleman made a commitment that the Foreign and Commonwealth Office would take a “hard look” at whether section 5 needed to be strengthened. The Minister did not elaborate further in Committee. I am not sure whether the Minister present today can respond to my amendment by giving further evidence of the findings of any investigation that the FCO carried out after Second Reading. I got the impression in that debate, as did others, that the Government might be open to improvements along those lines.

[Mr David Nuttall (Bury North) (Con)]

It was made clear on Second Reading that companies wishing to exploit minerals on the sea bed had the opportunity of essentially shopping around the world and that they could apply for a licence wherever they wanted to. Is the hon. Lady concerned that if we have provisions in our legislation that are more onerous and demanding than those of other countries, we might be doing the sea bed a disservice, because those companies might obtain a licence elsewhere in order to avoid our legislation?

[Kerry McCarthy]

The hon. Gentleman makes a valid point. Indeed, my understanding is that at the moment a company does not even need a licence to explore. Ideally, we would want everyone to go through the ISA regime, and a respectable and reputable company would want to do that and follow the correct procedures, but I understand that there is nothing stopping them doing that. It is an ideological debate that we could have at great length in relation to many different areas of policy. We could look at labour terms and conditions, for example, or health and safety rules. I do not think that we should be involved in a race to the bottom—actually, perhaps that is exactly what we are talking about. We want to ensure that the UK sets an example by requiring companies to act responsibly. Our natural resources are incredibly precious, and I think that we should be taking the lead in trying to ensure that we protect the environment.

The timing of the Bill is slightly strange, as was the timing of the 1981 Act. The Act was introduced a year before the United Nations convention on the law of the sea was finalised, although it then took about eight years to come into effect. The ISA will look at its regulations, which will obviously apply on a wider basis, next year, so in some ways the Bill pre-empts that. Perhaps there could have been better co-ordination. It is also slightly strange that we have been talking about updating the 1981 Act since 1982, so it has taken an awfully long time to reach this point. I think we need to drive the agenda forward. I accept that we do not want to disadvantage British companies, but we want to ensure that there is a reputable and reasonable regime in place.

The Government have said that

“the environmental protections in section 5 of the 1981 legislation have proved entirely sufficient, as have the inspections”,

but only two licences have been issued so far, both for exploration. Exploitation of resources is an entirely different matter, and the very purpose of the Bill is forward thinking, to cover licences for exploitation that is at least five years away. In the case of oil and gas, which it will also open the doors to, it is still further away in the future.

If the amendment is made, I do not think that it would make the regime overly burdensome. As I have said, the proposal is moderate and consistent with other international designations. However, it would boost one of the Government’s reasons for introducing the Bill, which is to help to increase the UK’s influence in current negotiations and in determining standards, as I said to the hon. Member for Bury North (Mr Nuttall). I appreciate that the ISA regulatory framework is of greater importance because it applies to all deep sea mining, not just those activities that get sponsorship from the UK. In which case, let us apply the environmental standards that we would like to see agreed in the negotiations, rather than keep the 1981 version. They are workable standards that we hope will be applied at ISA level to enable sea bed mining to go ahead without causing irreparable damage. As I mentioned, I did not get a direct response from the Minister in Committee on the level of environmental safeguards that the Government are seeking to get common agreement on during the ISA negotiations, although I was pleased that he made it clear that the international framework can and should be improved, as can section 5.

--- Later in debate ---

[Mr David Nuttall (Bury North) (Con)]

It is a pleasure to follow the hon. Member for Bristol East (Kerry McCarthy), who speaks from the Opposition Front Bench. She raised an interesting point about what would happen to the proceeds of mineral exploitation, and it deserves further consideration because the situation is not as straightforward as it was with North sea oil. We should examine exactly how this country will be able to benefit. Are we going to benefit directly, or jointly with other countries across the globe?

I rise to support the Bill. I supported it on Second Reading, and I thank my hon. Friend the Member for South East Cornwall (Sheryll Murray) for piloting it through to Third Reading. To do that once is quite an achievement, but to do it twice is particularly remarkable, and she should be congratulated on that, and on succeeding in the ballot twice.

[Sheryll Murray]

My hon. Friend may be interested to know that the reason I believe I was selected twice was because I used the same number twice: 336. Our first fishing boat which we had brand-new was FY 336. I do not want anybody to steal that number in future ballots.

[Mr Nuttall]

When I enter the ballot next year, if I get into the Lobby before my hon. Friend, I will specifically not choose 336, and I will urge all Members on both sides of the House to try to avoid that number because it has obviously brought my hon. Friend great success. I know it is particularly poignant for her.

The deep sea bed is one of the last unexplored areas of our world. In previous centuries mankind has gone off exploring the world in pretty much an unregulated and uncontrolled manner, but that is not the way the modern world operates. It is right that in the 21st century before mankind goes digging around on the deep sea bed causing who knows what sort of damage, a framework needs to be put in place to ensure that the exploration is carried out in a carefully controlled manner and causes as little damage as possible to the delicate ecosystems of the deep sea bed. The plethora of international agreements and our own domestic legislation seek to do that.

There is a danger, however, that in putting together our own domestic legislation, we put in place licence conditions that companies see as too onerous, too complicated and too prescriptive, and consequently those companies will not come to the UK to obtain their licence approval; they will go to countries whose legislation is, perhaps, less prescriptive than ours.

[Sheryll Murray]

My hon. Friend makes a good point. Does he also agree that there is the potential of companies moving their whole operations from the UK to other countries?

[Mr Nuttall]

There is that risk if exploration companies decide and form the opinion that our legislative framework is too onerous, prescriptive and complicated. I hope that that is not the case. Certainly, it would not have my support or the support of the Government or anyone in the House if we felt that it was the case. There is a delicate balance to be struck between trying to protect the environment, maximising revenues and encouraging exploration for the benefit of mankind. They are all worthy things to do, and the Bill in its own way seeks to strike that careful balance. It is not an easy task to pull off, because if we go too far in one direction, we will upset something else. There is a balance to be struck between mankind exploiting for the benefit of us all the resources that are in the deep sea in the other parts of the world and protecting the environment that is down there. I sincerely hope that this Bill will receive its Third Reading and that when it reaches the other place, it will have a speedy passage. I wish it well.

--- Later in debate ---

[Mr Swire]

I am making as much haste as I possibly can, Madam Deputy Speaker, given the complexities of some parts of the Bill. I was alluding back to the ’80s because of the commercial side of the issue. The commercial companies that showed an interest in deep sea mining at that time ceased to do so and although the idea lived on, it did not seem likely to become a reality any time soon.

[Mr Nuttall]

Does the Minister know why, over the intervening three decades, cross-party agreement has arisen on these matters? If we look back to the debates on the 1981 Act, we can see that it was pretty contentious, with Divisions on Second and Third Readings.

[Mr Swire]

I think that is for two reasons. First, such ideas are becoming a reality, whereas in the 1980s they were a distant prospect, and, secondly, our understanding of the management of the environment, not least the marine environment, has improved in leaps and bounds. Marine conservation zones and ecological balancing mean that we are way ahead of where we were then. No doubt you would rightly stop me going down memory lane to the 1980s, Madam Deputy Speaker, so I shall not continue along that line, but I hope that I have answered my hon. Friend’s questions as best I can.

The other part of the prediction also turned out to be incorrect. We were able to achieve an internationally agreed regime for deep sea mining. However, the road to achieving that was not straightforward. When the United Nations convention on the law of the sea was first adopted, the United Kingdom, in common with other industrialised countries, could not accept the provisions on deep sea mining. Those were included in part XI of the convention and were not attractive to commercial companies. The industrialised countries stood aloof from the convention, even though—apart from part XI—the provisions were satisfactory. Indeed, they were of great advantage to industrialised countries.

As the date for the convention’s coming into force grew closer, the developing countries appreciated that a convention with no participation from industrialised countries would not be to their advantage. Negotiations began to revise part XI or, in the diplomatic speak of the time, to set out how it would be implemented. I am pleased to note that United Kingdom representatives played a prominent role in those negotiations. The result was the so-called part XI agreement, which met the concerns of the industrialised countries and paved the way for the United Kingdom and other industrialised countries to ratify the convention.

Let me say now that the British Government consider that the convention, read with the part XI agreement, represents an excellent platform for the future development of deep sea mining. There is a need to ensure that the commercial terms encourage commercial companies, which are rightly hard-headed about the process, to invest the large sums necessary to make deep sea mining a reality. My hon. Friend the Member for Bury North (Mr Nuttall) elegantly made the point, in a well-balanced argument, that there is a balance to be struck. We want to encourage deep sea mining and ensure that companies come here to register for the licences, but we do not want to give them false expectations; they can spend huge amounts of money before they mine anything. That is one reason why we were unable to accept the amendment.

Ultimately, the deep sea is, as the convention says and as the hon. Member for Bristol East said, the common heritage of mankind; that is the phrase that has been universally used. It is a ringing phrase, which means a great deal to many people around the world, particularly those who are nervous about the concept of touching the sea bed. Ultimately, the benefits of deep sea mining should be shared with all members of the international community. That is recognised by the convention, and we are happy to endorse it.

The hon. Lady and my hon. Friend talked about profits and which country should benefit from any money made, which is perhaps slightly putting the cart before the horse. Apart from the licence fees, the issue of what direct benefits will accrue to sponsoring states is one of the many that will need to be considered during the development of the exploitation regulations. However, the indirect benefits are likely to be substantial. Deep sea mining is a significant opportunity for UK industry, especially in the light of the technological advances made during the development of the oil and gas industry in the North sea. We look forward to UK industry making full use of that opportunity.

As for the International Seabed Authority, its council will have to produce in due course rules about the

“equitable sharing of financial and other economic benefits deriving from activities in the Area”,

taking into particular consideration the interests and needs of the developing states. In other words, the ultimate intention, although we are probably a long way away from this, is that the economic benefits of deep sea mining should, rightly, be shared with developing countries. Talk of the precise nature of how the money will be held and disbursed, and of where sovereign wealth funds should be located and who should be involved with them, is somewhat premature.

Nevertheless, a balance is needed between the requirements of the commercial companies and those of the beneficiaries in the international community as a whole. It would be counter-productive to fix payments to the international community at a level that would deter the commercial companies. In other words, we must ensure that the international community secures a reasonable rate of return without putting off the commercial companies without which there would be no mining at all—ergo no revenue, no sovereign wealth fund and no ability to share any profits with developing countries because, by definition, there would be no profits to share.

I am perhaps getting a little ahead of myself because, at present, there is no mining on the deep sea bed—that is a statement of fact. There have been only applications to explore for minerals. So far the International Seabed Authority has approved 19 such applications. Four more were held over from its 2013 session, and at least three new applications will be considered during the coming year.

The pace of applications has increased markedly in the last few years, as we might expect. There may well be many reasons why, but there is no doubt that there are two in particular: first, the development of technology, much of it by British companies that have been working in the North sea for many years, as their unrivalled expertise in deep sea drilling has a knock-on effect for their understanding of deep sea mining; and, secondly, the exponential economic growth in certain countries, which I need not name, that has fuelled a significant increase in their demand for metals and precious minerals. It follows that deep sea mining for mineral deposits on the sea bed is close to becoming technically and economically viable. It is also a truism that, with an increasing world population and finite resources, we will need to look to the oceans to provide additional sources of support for our growing needs and demands. We need to be acutely aware of changes in our ability to produce energy and extract minerals. I refer the House to the need for a serious look, from an environmental perspective, at the exploitation of shale gas, which has had hugely beneficial effects, especially regarding the cost of energy, in countries such as the United States that are well ahead of us on that practice.

Perhaps I should explain to the House how the system set out in the United Nations convention on the law of the sea works. Any application to explore for mineral resources on the deep sea bed requires sponsorship by a state party, which must be able to exercise sufficient jurisdiction over the company it is sponsoring. It is worth saying that an advisory opinion in 2011 by the International Tribunal for the Law of the Sea helpfully elucidated the duties cast on a sponsoring state by the convention, which include a requirement to adopt a precautionary approach to environmental issues.

Once a company has secured the sponsorship of a state, its application goes to the International Seabed Authority. I am pleased to note that the authority’s headquarters are in Kingston in Jamaica, a fellow Commonwealth country. I am the Minister for the Commonwealth, so I have a further excuse to go and inspect the headquarters personally—if the cold weather continues, I shall be going sooner rather than later.

The application will then be considered by the legal and technical commission of the International Seabed Authority, which is composed of experts from across the world and gives technical advice to the ISA’s council. Once approved by the commission, the application is forwarded to the council, which is composed of a number of member states that have a particular interest in deep sea mining. It is then for the council to approve the application.

The final step is that the contractor and the International Seabed Authority enter into a contract that has a number of standard provisions, including on the reports that the contractor must make to the authority. Effective regulation of the contractor will be secured through a combination of those provisions and the domestic law of the state sponsoring the application. The authority is at present concerned only with the exploration of the deep sea bed.

[Mr Nuttall]

The Minister may be aware that the original convention on the law of the sea established a body called the Enterprise, the purpose of which was to serve as the authority’s mining operator. As far as I am aware, no steps are being taken to bring the Enterprise into operation. Is he aware of any moves in that direction? Will the ISA take control of this itself?

[Mr Swire]

I am not aware of any such rules, but I commit to writing to my hon. Friend once I have clarified that point. I am pleased that the ISA’s secretariat is thinking about the regulations that will be necessary once exploitation begins. The United Kingdom delegation at the authority’s most recent session made clear the importance that we attach to the development of those regulations, which will be an important step for the authority and one in which the United Kingdom is determined to play its full part. There are important environmental issues to be resolved, but there is also a financial issue relating to the amount of any payment to the ISA, to which I have already alluded.

What of British involvement in deep sea mining, which is really what the Bill is about? I am pleased to say that the United Kingdom has now sponsored two applications. The first was approved by the ISA’s council in 2012, and consequently a British company will cover an area of sea bed twice the size of Wales and 4,000 metres deep. Disappointingly, the legal and technical commission did not have time to consider the second application at its sessions last year, but we hope it will approve the application at its session beginning in February, and that the council will approve the application when it meets in July.

Deep sea mining is a very exciting and pioneering industry, and the Government are pleased that the United Kingdom is at the forefront of its development. Last year, my right hon. Friend the Prime Minister spoke at an event in London to celebrate the signing of the contract between the United Kingdom’s sponsored contractor, UK Seabed Resources Ltd, and the ISA. Our colleagues in the Department for Business, Innovation and Skills organised an industry day at which more than 80 British companies participated. British companies have developed expertise and technology through their activities in the North sea, much of which is transferable to deep sea mining. We hope that significant benefits to the British economy will be forthcoming over the next 30 years. We have heard figures of anything up to £40 billion bandied around this morning. In the Government’s view, it is essential that the United Kingdom does not ignore these potential benefits. As I have said—it is also the assessment of the International Seabed Authority—we are at the threshold of a new era of deep sea mining. This new frontier presents a valuable opportunity to contribute to the prosperity of the British people, of British companies, and of the United Kingdom as a whole.

Polymetallic nodules, as I am sure we are all now fully aware, contain a higher concentration of valuable metals—up to 28% more, or 10 times the proportion usually found on land. Many of the metals contained in these sea bed deposits are considered to be valuable “technology metals”, which are increasingly important in high-technology industries that benefit us all, including electronics, clean technologies such as hybrid cars and wind turbines, and the construction and aerospace industries. The strategic importance of this source of minerals and metals should not be underestimated, not least as they contain trace metals such as rare earth elements used in electronics, where it is important that land-based sources should face competition from potential sources on the deep sea bed. Such an amount of previously untapped wealth can create vital jobs for the British economy, not only in deep sea mining but in the supply chain supporting the industry, such as the engineers developing machines to harvest polymetallic nodules in an environmentally sensitive way.

As my right hon. Friend the Minister for Universities and Science has pointed out, this new industry plays to the UK’s strengths as a world leader in maritime engineering and innovation—which, incidentally, is of increasing importance to us in the south-west, as my hon. Friend the Member for South East Cornwall will be well aware. As I mentioned, last year my right hon. Friend the Prime Minister attended and spoke at an event to welcome the award of an exploration licence to British company UK Seabed Resources, secured with the support of the Foreign and Commonwealth Office and the Department for Business, Innovation and Skills. There can be no greater demonstration of the Government’s commitment to this rapidly developing industry.

Turning to the Bill, I would first like to emphasise—