Annual return on initial investment is estimated 

 at 5.4 per cent for the Norton Sound operation 

 and 11.7 per cent on the sheltered coast. Both 

 operations would pay off within the 20-year life of 

 the dredge. However, it is unlikely that either 

 would be considered an attractive investment 

 commensurate with the high risk involved. Higher 

 ore values would of course greatly improve the 

 attractiveness of the operation. 



b. Hypothetical Deep Sea Manganese Operation 



An economic evaluation of a hypothetical manga- 

 nese nodule operation (see Appendix 3 for de- 

 tailed evaluation) made the following assumptions 

 that: 



—The deposit is located in the East Pacific 1200 

 miles south of Los Angeles and 2500 miles east of 

 Hawaii in water 15,000 feet deep. 



-The ore analyses Mn, 24.0 per cent; Ni, 1.4 per 

 cent; Cu, 1.2 per cent; Co, 0.25 per cent; SiOj, 16 

 per cent; and CaCOs ,3.5 per cent. 



—Lime content is low compared to the silica 

 content, a factor that reduces the cost of metal- 

 lurgical processes. 



—The production rate is 5000 tons per 24 hour 

 day. 



—Nodule density is two pounds per square foot. 



—Reserves are equal to a 20 year assumed life for 

 the mining system (30 million tons extending over 

 1100 square miles). 



—The seafloor in the deposit area is flat and of 

 sufficient strength to support a mining operation. 



—The mining system will involve eight com- 

 ponents, the deposit, a scraper-type mining ve- 

 hicle, a central control habitat, a hydraulic hoist or 

 pumping system, a floating surface station, a deep 

 submerged personnel transport and work vehicle, a 

 surface transportation fleet, and an offloading and 

 reduction plant onshore. Development costs of 

 these items are not included here but are estimated 

 in the range of $50 to $ 1 00 million. 



Profitability analysis is made in two cases, with 

 and without manganese included in the sales of the 

 product. Returns on initial investment of 9.8 per 



cent and 5.2 per cent are indicated, using standard 

 percentage rates for administrative and selling 

 expense, royalties, taxes, depletion allowance, and 

 working capital, although it is not clear just how 

 domestic taxation and allowances would apply to 

 an operation of this nature. 



For the amount of capital involved even the 9.8 

 per cent return is considered marginal, but con- 

 sidering the conceptual nature of the estimates the 

 possibility of improving on the economics of such 

 an operation should not be dismissed. 



2. Consolidated Deposits 



With modern-day shaft and tunnel boring tech- 

 niques, access to the sea floor from land can be 

 carried out at depths beneath the sea of several 

 thousand feet and at distances offshore up to 

 hundreds of miles. ^* However, the cost of boring 

 an opening ranges from $1 to $1.5 million a mile. 

 The possibility of economically developing a hard 

 rock deposit by this method is probably restricted 

 to a distance of about five miles from shore. 



Sea bed entry at distances of more than a few 

 miles from shore would be better accomplished by 

 vertical shaft or tube, using a lock system to seat 

 the exposed part of the tube, after which the mine 

 would be open to the atmosphere and operated at 

 normal atmospheric pressures. It is estimated that 

 the cost of the shaft might be twice that of 

 comparable installations on land but there are 

 otherwise no special costs or techniques. Land 

 underground mining techniques could thus be 

 fully transferred to the sub-shelf envirorunent at 

 depths of at least a few hundred feet, at distances 

 several hundred miles from shore. Any mineral 

 that occurs in large thick deposits beneath a cover 

 of impervious rock (lending itself to low-cost 

 underground mining) and that sells for more than, 

 say, $10-15 a ton would therefore be recoverable 

 from much of the sub-shelf under present eco- 

 nomic and technologic conditions. ^^ 



Deposits that are amenable to in situ mining, 

 for example sulphur and potash, may be economi- 

 cally exploited at the present time in water depths 

 where large stationary platforms may be located. 



Austin. 



32, 



'V. E. McKelvey et al., "Potential Mineral Resources 

 of the United States Outer Continental Shelves," unpub- 

 lished report of the Geological Survey to the PubUc Land 

 Law Review Commission, March 1968. 



VIM 11 



