38 
Propuems IN DeETERMINING THE Economic Impact oF NODULE 
MINING ; 
Commercial mining of manganese nodules will have a significant 
impact on the world metals market. In attempting to assess the extent 
of this impact and project long range forecasts, several problems are 
encountered. 
The economic impact of nodule mining is dependent on several 
variables including the establishment of an international authority or 
legal framework, size of operations, metal production per ton of 
nodules, and timing of commercial operations. The amount of profit 
derived by the industry will determine to a fair extent the rate of 
development and subsequent impact of nodule mining. Since a com- 
mercial nodule industry is not yet an ongoing reality and the methodol- 
ogy is not yet proven under full scale prolonged operations, there is 
some question as to how attractive the economic returns will be. Al- 
though industry spokesmen are generally optimistic about the profits 
of nodule mining, hazards and technical difficulties are numerous. 
ESTABLISHING AN INTERNATIONAL AUTHORITY 
The establishment of a favorable international regime for deep 
seabed exploitation will also influence the extent and timing of the 
economic impact of nodule mining. In the last five years, several 
proposals for a new treaty on ocean resources have been submitted 
to the United Nations, and the member nations have been actively pre- 
paring for, and finally participating in, the third U.N. Law of the Sea 
Conference. Pending conclusion of a workable system, companies have 
been hesitant to invest the amounts of money necessary to proceed to 
commercial operations without some assurance of security for their 
investment. Any projection of a time scale for future metal production 
from nodules would have to assume the establishment of an interna- 
tional regime or reasonably secure and profitable investment climate in 
order to make realistic estimates. In a recent United Nations report on 
the economic implications of deep seabed mineral development, pro- 
jections of metal production from nodules were made based on the 
assumption that an internationally agreed legal framework will come 
into force by 1976.2! However, unless there is more substantive progress 
at further sessions of the Law of the Sea Conference, many observers 
feel that such an assumption would be very optimistic. 
SIZE OF OPERATION 
Another factor that will influence the economic impact of a nodule 
mining industry is the size of the industry. As in most manufacturing 
or processing operations, there is an economy of scale. That is, there 
1s a point up to which the unit cost is reduced by scaling up the size of 
the operation. For manganese nodules the economies of scale are much 
greater for the processing stage. This means that the unit costs 
probably still decrease for plant sizes capable of processing up to 8 
to 4 million tons of dry nodules per year. On the other hand, hydraulic 
or air-lift nodule recovery systems apparently reach their optimum 
size at a capacity of 5,000 to 10,000 tons of wet nodules per day. This 
would provide a processing plant with 1 to 2 million tons of dry 
1 United Nations, A/CONF. 62/25, op. cit., p. 26. 
