236 



One important characteristic is the size of the initial investment. Estimates 

 range from the tens of millions to $300 million for the initial capital investment 

 including the ship and its equipment and the design and construction of a process- 

 ing plant. In addition, the operation will require a high degree of technological 

 competence in many areas. The high costs plus the technological requirements 

 will operate as impediments to entry and will mean that initial development 

 is likely to be limited to the developed and technologically advanced nations. 



A more interesting characteristic is that the most reasonable scale of oper- 

 ation appears to be so large that great quantities of minerals could be pro- 

 duced by a single enterprise. These quantities are likely to be large enough 

 to have a significant effect on the market. David Brooks has guessed that at 

 medium levels of output, the amount of manganese thrown on the market by 

 a single firm would be so large that the price might drop from 90^ per unit 

 (1963 estimated price) to 50^ per unit." The price of cobalt might drop from 

 $1.50 per pound to $1.00; and that of nickel from 70^f to 05*^ a pound. These 

 figures are not to be taken as gospel, but as illustrations of the magnitude of 

 the scale of output. 



While this points up the dramatic possibilities for providing vast new sources 

 of supply of manganese, cobalt, nickel, and copper, it also points up the problems 

 that would be associated with multiple ventures. It is a situation where, in the 

 short run, the marginal producer could so significantly affect the market that all 

 prices — and revenues — would be depressed to the point where all operation might 

 become uneconomical. Undoubtedly, through one means or another, the producers 

 would seek to control output in order to protect themselves from this result and 

 to allow for an orderly expansion of the market. But .such controls may be difii- 

 cult in view of the international character of the resource. 



A third characteristic important to the discu.ssion of alternative regimes is 

 that the value of different nodule-bearing lands is not likely to be uniform. Dif- 

 ferent areas produce nodules with different metallic content: .some richer as a 

 whole and some richer in certain metals. The density of the nodules on the sea 

 floor varies, as does the depth in which the nodules lie. There are also differences 

 in the character of the bottom which will affect the ease of dredging. And in 

 addition, there are differences in storm hazard and in distance from land. Each 

 of these factors will have some effect on the value of a specific location for nodule 

 mining, just as similar factors affect the value of mineral property rights on 

 land. On land, these differences in value are reflected in price paid for exclu.'^ive 

 rights, whether the price is paid directly or indirectly through lease, fee, bid, or 

 other means. 



The size of area that a single operation would cover in a year would depend 

 upon a large number of factors, but some rough guess might ]>e made on the basis 

 of John Mero's estimates of the quantity of nodules that could be handled by a 

 single ves.sel.* Assuming a throughput of 4,000 tons of nodules per day; the 

 density of nodules on the bottom of two pounds per square foot ; and a sweep 

 efficiency of 70% ; the operation would cover GO square miles in a year. While the 

 density of nodules might be higher than two pounds per square foot, the overall 

 sweep efficiency might be much lower in view of the difficulty in maintaining con- 

 trols precise enough to prevent overlap of sweeps. If this estimate is within a 

 reasonable order of magnitude and if twenty years of tenure is a reasonable 

 requirement, the exploiter should be assured of exclusive rights to an area in 

 excess of a thousand square miles. While these are very rough speculations, they 

 do indicate that competition might become severe for those areas that have high 

 potential value, particularly if tho,se areas are located on the tops of relatively 

 small seamounts. 



CRITERIA 



In considering the alternative regimes, the basic objective is to arrive at that 

 regime that will be viable over the long-run and that will encourage the eco- 

 nomically efficient, peaceful, and orderly exploitation of the minerals of the sea 

 floor. Its success will be measured against three criteria. First, it must permit 

 economically efficient operations. Second, it must be acceptable to a sufficient 

 number of nations both in the long and the short run. And third, it must be 

 feasible. 



-Brooks, op. cit., p. 105. 

 3 Mero, op. cit, p. 267. 



