solely to entrepreneurial opportunities in ocean 
mining, but many are corporations well established 
in land mining or petroleum. Offshore exploration 
and drilling companies, aerospace firms, and ship- 
building companies are among others involved. It 
is not yet clear what kinds of corporations will 
constitute the offshore mining industry of tomor- 
row, but the industry need not be restricted to the 
traditional mining companies. 
Nearshore operations, such as placer mining for 
gold, could be undertaken by small companies. 
Deep-sea mining, however, probably will be con- 
ducted by large corporations or consortia because 
of high capital requirements. It has been esti- 
mated, for instance, that recovery of manganese 
nodules on a scale large enough to be economically 
feasible will require a capital investment of about 
$100 million. The traditional mining industry has 
one of the highest capital asset-to-employee ratios 
of any industry. 
D. Problems and Recommendations 
Industry has stated, in effect, that it is willing 
to take the substantial risks required by ocean 
mining ventures if Government will provide well 
defined and reasonable laws relative to property 
rights, crew regulations, import duties, and taxes. 
In addition, Government-sponsored services, espe- 
cially surveys, and equitable treatment in many 
potential multiple use conflicts will be required if 
this new industrial potential is to be realized in the 
near future. 
1. Leasing Procedures 
In accordance with the Outer Continental Shelf 
Lands Act of 1953, the Department of Interior is 
responsible for the management of the mineral 
resources on Continental Shelf lands within Fed- 
eral jurisdiction. Rights to utilize these petroleum 
and hard mineral resources are awarded through a 
competitive bidding and leasing procedure defined 
by the Act. Many State laws for assigning the 
resources of submerged lands follow the principles 
incorporated in the Act. 
This system has worked well for oil, gas, and 
sulfur because of the great demand for utilization 
rights and the bidding system allocates public 
resources justly under such circumstances. The 
present bidding system, however, is inappropriate 
for allocation of mining rights at the current 
development stage for two reasons: so little is 
known about hard mineral resources or the tech- 
nology for exploration and exploitation that in- 
formed bidding is effectively precluded before a 
great deal of exploration; second, exploration is 
inhibited by the financial risk that is greatly 
increased when a chance exists that exploitation 
rights may not be granted to the explorer. Until 
there is sufficient knowledge of the ocean’s min- 
eral resources, the panel recommends adoption of 
a method of property allocation that encourages 
the maximum private investment in exploration; 
namely, a method that awards exploitation rights 
to the prospector who makes a discovery. 
One reason that hard minerals from the ocean 
are not more actively sought is that little is now 
known about them. This points up two major 
differences between petroleum and hard minerals— 
exploration techniques and costs. Initial explora- 
tion for oil is based on the extrapolation of known 
geological information and relatively inexpensive 
geophysical surveys. In contrast, the complexity 
and cost of exploration for hard minerals to 
establish confidence in an exploitable discovery 
are many times greater.'® Therefore, by the time 
the prospector has gained sufficient knowledge to 
arouse his desire for more detailed exploration 
(hopefully leading to exploitation), he has made a 
considerable investment. He will be reluctant to 
make this investment if, in spite of his initiative, 
exclusive rights may be awarded to another party. 
The panel feels that the highest priority should 
be given to encouraging hard mineral exploration 
through private initiative and that every considera- 
tion should be given to a system that will 
encourage this exploration by reducing investment 
risks. The prospector who has made a large 
investment leading to an exploitable discovery 
should be guaranteed the right to exploit it. 
Whatever method is finally adopted for assign- 
ing hard mineral rights on the outer continental 
shelf, the following should be considered: 
—The method should provide an atmosphere that 
will attract many searchers. Competition is desira- 
ble from the standpoints of stimulating explora- 
ean complete discussion of the differences in methods 
and cost for petroleum and hard mineral exploration is 
found in the Reports of the Marine Resources Panel and 
the Marine Engineering and Technology Panel. 
