204 • Marine Minerals: Exploring Our New Ocean Frontier 



price of tin) is on the order of $5 million. Also as- 

 sumed is that other capital costs, including ancil- 

 lary facilities onshore; pilot-plant mining tests in 

 1985 and trials in 1986; auxiliary vessels for 

 prospecting and for tending anchors; shipyard 

 modifications and alterations to the processing 

 plant; and the cost of shipment of the Bima from 

 Indonesia to Nome and to and from the shipyard 

 near Seattle will amount to another $10 million to 

 $15 million. Total capital costs are thus assumed 

 to be between $15 million and $20 million. 



Annual operating costs for fuel, maintenance, in- 

 surance and administration, and personnel and 

 overhead are estimated (to an accuracy of 25 per- 

 cent) to be $7 million. At a production rate of 

 48,000 ounces per year, a cash operating cost on 

 the order of $150 to $175 per ounce is implied. At 

 a mining rate of approximately 4.5 million cubic 

 yards per year, direct costs would amount to $1 .55 

 per cubic yard. 



Assuming the price of gold to be $400 per troy 

 ounce, the projected pre-tax cash flow on a pro- 

 duction of 48,000 troy ounces per year would be 

 approximately $12 million (after subtracting oper- 

 ating costs) on an investment of $17 million. Al- 

 though this figure does not include debt service, 

 it nevertheless indicates that the Bima offshore gold 

 mining project at Nome shows good promise of 

 profitability if the operators are able to maintain 

 production. This scenario illustrates that offshore 

 gold mining is economically viable and technically 

 feasible using a bucketline dredge under the con- 

 ditions assumed. 



Offshore Phosphorite Mining Scenarios: 



Tybee Island, Georgia and Onslow Bay, 



North Carolina 



Two different phosphorite mining scenarios were 

 considered by OTA. The first, located off Tybee 

 Island, Georgia, was developed by Zellars- 

 Williams, Inc., in 1979 for the U.S. Geological Sur- 

 vey. The second was developed by OTA in the 

 course of this study. Although the two scenarios dif- 

 fer in location and in the assumptions concerning 

 onboard and onshore processing of the phosphorite 

 minerals, breakeven price estimates of the two cases 

 are well within overlapping margins of error. 



Both scenarios should be considered little more 

 than rough estimates of costs based on hypotheti- 

 cal mining conditions and technology. In some 

 cases — particularly with the OTA scenario — 

 assumptions are made about the adaptability of on- 

 shore flotation and separation techniques to at-sea 

 conditions. Not only would additional technologi- 

 cal development and testing be needed to adapt ex- 

 isting technology for onboard use, but even the fea- 

 sibility of secondary separation and flotation 

 processing at sea would also probably need further 

 assessment and testing. 



The actual costs of capitalizing and operating an 

 offshore mining operation can vary significantly 

 from OTA's estimates. However, in both scenarios, 

 the results suggest that further evaluation — par- 

 ticularly to better define the potential resources 

 and to consider processing technology — might be 

 worthwhile. 



While further assessment of the potential for min- 

 ing phosphorite minerals offshore may be war- 

 ranted, the overall condition of the domestic on- 

 shore phosphate industry cannot be ignored when 

 evaluating the feasibility of offshore operations. The 

 future of the U.S. phosphate mining industry seems 

 bleak in the face of increased low-cost foreign pro- 

 duction. Some fully depreciated mines are currently 

 finding it difficult to meet foreign competition. New 

 phosphate mines, either onshore or offshore, will 

 likely find it difficult to compete with foreign oper- 

 ations. 



If exceptionally rich phosphate resources are dis- 

 covered offshore, or if offshore mining and proc- 

 essing systems can reduce costs through increased 

 productivity or offsetting land use and environ- 

 mental costs, the commercial prospects for offshore 

 development might improve. However, higher 

 phosphate prices would also be needed to make the 

 economic picture viable, and most commodity 

 analysts do not think higher prices are likely. Ta- 

 ble 5-12 compares Tybee Island and Onslow Bay 

 scenarios. 



Tybee Island, Georgia 



Location. — Onshore and offshore phosphorite 

 deposits are known to occur from North Carolina 

 to Florida. The potential for offshore mining of 

 phosphorite in EEZ waters adjacent to the north- 



