Abstract
The international seabed area (i.e., the “Area”) is rich in mineral resources. According to the United Nations Convention on the Law of the Sea (UNCLOS) and the relevant implemented agreements, in 2012, the International Seabed Authority (ISA) began to develop the regulations for the exploitation of mineral resources in the Area. The most important part of the regulations involves determining the distribution of benefits from the exploitation of mineral resources in the Area between the ISA and the contractors. The establishment of a financial model to evaluate the economic benefits and compare the distribution scheme was the basic method relied on in the current study of payment mechanism. According to the characteristics of the exploitation project of mineral resources in the Area, the discounted cash flow method was selected to construct the financial model. Taking China’s deep-sea mineral resources development project in the Area as the background, the main parameters of the model were determined. A comparative study of similar financial models with Massachusetts Institute of Technology (MIT) and other foreign countries was carried out, in addition to a sensitivity analysis of parameters. On the basis of the assurance that the contractor’s internal rate of return was not lower than the level of the land mining enterprise, the financial model was used to calculate the internal rate of return and the revenue of royalty under different payment mechanisms and rates. The advantages and disadvantages of different payment mechanisms in the exploitation of mineral resources in the area were analyzed. Lastly, the possible impacts of deep-sea polymetallic nodule mining on Terrestrial metal markets were highlighted.
Highlights
The ocean accounts for about 70% of the Earth’s surface area, and the international seabed outside of national jurisdiction accounts for about 54% of the seabed area [1]
Roth to compare and synthesize the reports and studies, including the economic study by Germany on the Economic Benefits of Commercial Deep-Sea Mining Operations of 30 September 2016, the African Group on the Payment Mechanism and other Financial Matters submitted on 9 July 2018, and the economic model of COMRA presented on 17 July 2018 during the side-event”
Note 1: The average prices of Cu/Ni/Co are from London Metal Exchange (LME)
Summary
The ocean accounts for about 70% of the Earth’s surface area, and the international seabed outside of national jurisdiction accounts for about 54% of the seabed area [1]. In April 2017, the third seminar on payment mechanisms for deep-sea mining was held in Singapore to study the impact of royalties according to the proposed financial model and hypothetical data [7]. The research team of Central South University introduced a financial analysis model (CSU2018), as well as the results of economic evaluation and risk assessment, at the side event jointly held by the Authority and China Ocean Mineral Resources Research and Development (R&D). Roth to compare and synthesize the reports and studies, including the economic study by Germany on the Economic Benefits of Commercial Deep-Sea Mining Operations of 30 September 2016, the African Group on the Payment Mechanism and other Financial Matters submitted on 9 July 2018, and the economic model of COMRA presented on 17 July 2018 during the side-event”. After half a year of research [10]
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
