Ocean | Norway becomes one of the first countries in the world to move forward with commercial deep-sea mining
The relevant area consists of approximately 281,000 square kilometres, and Government-sponsored surveys undertaken by the Norwegian Offshore Directorate have reported that sulphide deposits within this area may contain as much as 38 million tonnes of copper and 45 million tonnes of zinc. The manganese crusts are furthermore expected to contain a variety of metals such as manganese, lithium, and cobalt.1 These metals may be used in the production of wind turbines, solar panels and batteries, which are important for reducing greenhouse emissions. In addition, such metals are used in high-tech products such as mobile phones and computers. Extraction of seabed minerals can help ensure the required supply of metals, and thus be an important industry for Norway in near future.
The exploration and extraction process
The exploration and extraction process consist of three main phases: (i) Opening of areas for surveys and extraction, (ii) Granting of survey and/or extraction licenses and (iii) Cessation of activity. The three phases are described in the Norwegian Act (the Seabed Minerals Act or the Act), relating to mineral activities on the Continental Shelf which became effective on 1 July 2019. The Seabed Minerals Act shall facilitate for exploration and extraction of minerals on the Norwegian continental shelf and is mainly based on principles and regulations from the Norwegian Petroleum Act.
Opening the Norwegian continental shelf for mineral activities
The process of opening the Norwegian continental shelf for mineral activities is set out in chapter 2 of the Seabed Minerals Act. The Act states that the minerals on the Norwegian continental shelf are owned by the state. Extraction of minerals is therefore as a general starting point forbidden. Thus, a license is required to conduct mineral activities.
Before a license to conduct mineral activities in a specific area can be granted to a commercial player, the Act stipulates that the area must – as main rule – be subject to an opening decision by the Government, which shall be based on an impact assessment. A similar process is well-known from the petroleum industry. The impact assessment shall highlight which effects a potential opening could have for the environment, as well as the expected impact on business, economic and social factors. Such impact assessment was finalised in October 2022 followed by the receipt of consultation inputs.
Granting survey and extraction licenses
Following the formal opening, private players may apply for a survey license and an extraction license. The regulations governing the survey and extraction license process and requirements are set out in Chapters 3 and 4 of the Act. The license regime is based on the same main features that are found in the Norwegian Petroleum Act. The main features encompass a non-exclusive survey license and an exclusive extraction license with an associated work obligation.
A non-exclusive survey license is granted for a specific area and with a duration of up to five years and applies to exploration for and mapping of minerals for commercial purposes. The license may be granted to both Norwegian and non-Norwegian entities. In the preparatory works to the Act, it is proposed that the licensee acquires a time-limited exclusivity to the data collected. The licensee may thus sell the data or use it in a subsequent competition for the award of an extraction license. However, the survey license does not give the licensee priority in the award of a subsequent extraction license.
An extraction license gives the licensee the exclusive right to conduct survey for and extract all minerals for commercial purposes in the area covered by the license. This is inspired by the petroleum production license, where the exclusive extraction right also provides the licensee with incentives to invest in exploration (although subject to the approval of a separate plan for extraction). An extraction license can be granted for an initial period of up to ten years, with the possibility of applying for a further extension. The exclusivity and term of the license shall facilitate for long-term investments in exploration and extraction of seabed minerals.
If an extraction license is shared among multiple licensees, one of the license holders will be appointed as an operator. The authorities may – as is the case for petroleum extraction licenses – make the license conditional upon the licenses entering into an agreement for with a specific content that regulate the cooperation.
The allocation of the extraction license will, as a general rule, be made on the basis of applications following a public invitation by the government to apply for licensees on certain criteria. Unlike the survey license, the extraction license may only be granted to Norwegian entities.
If a licensee in an extraction license decides to extract minerals, the licensee shall submit a plan for extraction of the mineral deposit to the authorities for approval.
Cessation of activity
Chapter 5 of the Act contains regulations on cessation of activity. The chapter is largely based on the corresponding chapter in the Norwegian Petroleum Act. The Act stipulates inter alia that the licensee is obliged to ensure prudent clean-up after the activities have ended, and that the licensee shall present a decommissioning plan to the MPE no later than two years before a license expires or is surrendered.
We expect to see an increased focus on the potential in mining of seabed minerals the coming years – in parallel with technological developments and the impact assessment being carried out.
Activities in relation to mining of seabed minerals are expected to be highly relevant for several players currently being engaged in other ocean activities, including companies being involved in petroleum activities and related industries, such as shipping, offshore and service industries – as well as new companies positioning themselves for this new adventure. We also expect to see various forms of collaborations between companies within this field – as we see i.a. in both the petroleum and offshore wind industries. The seabed mining business will be asset heavy, and both the assets and the exploration and extraction activities will require financing.
BAHR is following the process of opening the Norwegian continental shelf for mineral activities closely, including the regulatory framework governing these activities. As the exploration and extraction process is moving forward, we expect an increased need for legal assistance in this area. We have extensive experience from advising also on the corresponding framework regulating petroleum activities. We further have extensive experience providing advice to petroleum related industries such as shipping, offshore and the service industry, which are expected to play a key role in the development of the seabed mining business, as well as related financing.
Please contact a member of our team if you have questions relating to the developments concerning deep-sea mining activities in Norway.
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