DEVELOPMENT OF THE HARD MINERAL RESOURCES OF THE DEEP SEABED MONDAY, APRIL 4, 1977 U.S. HOUSE OF REPRESENTATIVES, Washington, D.C. The subcommittee met at 10 a.m., pursuant to recess, in room 1324, Longworth House Office Building, Hon. Abraham Kazen, Jr. (chairman of the subcommittee) presiding. Mr. KAZEN. The subcommittee will please come to order. This is a continuation of the hearings we began last Tuesday on bills dealing with the development of the hard mineral resources of the deep seabed. The principal bills which have been referred to the subcommittee are H.R. 3350, introduced by Mr. Murphy of New York, and H.R. 3652, introduced by Mr. Fraser. Last Monday we received a briefing from an official of the Department of State on the negotiations which have taken place in the Law of the Sea Conference in an attempt to arrive at an international treaty establishing a regime for the exploitation of the mineral resources of the deep sea. An interagency review is presently being conducted in an attempt to develop an administration position on the legislation which is before us. We expect that review to be completed this month, and we will ask for testimony on the bills from the administration in May. Today, we are going to have an opportunity to hear from the distinguished Members who are the principal sponsors of the bills, H.R. 3350 and H.R. 3652. Also, we will hear testimony from persons representing industry, and the scientific and legal communities. The first witness will be the Honorable John Murphy, chairman of the Committee on Merchant Marine and Fisheries and the author of H.R. 3350. Mr. Murphy, I am glad to have you with us this morning. Mr. MURPHY. Thank you. Mr. KAZEN. I might say there are several subcommittees meeting this morning and members will be going back and forth between this and several that are marking up. So the mere fact that they are not here does not mean we cannot perfect our record. Go ahead, Mr. Murphy, we are glad to have you with us. Mr. MURPHY. Thank you. I certainly appreciate the opportunity to be here. I would like to submit for the record my statement, a copy of the bill, H.R. 3350, and a summary and analysis of it, and a comparison with H.R. 4458 and H.R. 3652. I think that it will go to the (67) very heart of the issue. I also have correspondence between Mr. Udall and myself that has already taken place concerning this legislation. Mr. KAZEN. Without objection, it will be made part of the record. [The prepared statement of Hon. John Murphy; the summary and analysis of H.R. 3350; the comparison with H.R. 4458 and H.R. 3652; and correspondence between Hon. John Murphy and Hon. Morris K. Udall, may be found in the appendix at the conclusion of these hearings.] [Editor's note. The bill H.R. 3350 has previously been accepted for printing in the hearing record and may be found on page 3.] STATEMENT OF HON. JOHN M. MURPHY, A U.S. REPRESENTATIVE FROM THE STATE OF NEW YORK AND CHAIRMAN, HOUSE COMMITTEE ON MERCHANT MARINE AND FISHERIES Mr. MURPHY. Mr. Chairman, I appreciate this opportunity to testify before your subcommittee on one of the most important issues to confront the 95th Congress. The exploitation of manganese nodules from the deep seabed has been the most divisive issue at the Third United Nations Law of the Sea Conference and it will be one of the most complex and significant policy decisions which we in the Congress will make this session. First, I would like to look at the progress which the American mining industry has made in recent years. Several U.S. companies, together with their foreign and domestic partners, have already spent well in excess of $100 million to develop ocean mining technology. The advances which they have made are impressive. The companies have identified nodule deposits which could provide satisfactory mine sites. They have largely settled the metallurgical problems of processing metals from nodules. They have developed mining systems which have progressed from the drawing board, computer, and laboratory states to large-scale at-sea experimentation. The fact is that most good nodule deposits are found in the deepest parts of the ocean-in 15,000 feet of water and well beyond the continental shelves of any country. Although ocean mining has not been tested on a full commercial scale to date, the experiments that have been conducted indicated no technological impediment to mining at depths of 15,000 to 20,000 feet. Clearly, Mr. Chairman, there is no longer any doubt about the technical and economic feasibility of ocean mining. The next issue which must be addressed, then, is whether the pursuit of these mineral nodules is in the national interest of the United States. The mineral nodules lying on the ocean floor contain quantities of nickel, copper, cobalt, and manganese. In determining whether the exploitation of these resources is important to the United States, we must look at four factors. First, we should examine whether the minerals have strategic or commercial value in our economic system. Second, we must look at the amount of such materials which we import from other nations. Third, it is important to analyze the political stability of those countries from which we import. Finally, the potential likelihood of cartels to control production and raise prices is an important feature today of international trade. Cobalt is of strategic and commercial importance and has its primary application in high-temperature alloys and tool steels. Copper is a major raw material of great commercial importance. Over half of it consumed in the United States is used in electrical applications with other uses in construction, industrial machinery, transportation, and military supplies. Nickel is important to the economic welfare and security of the United States, and is used most extensively as an alloy. Manganese is a vital commercial and strategic ore which is essential to the manufacture of steel. With respect to the second factor, last year we depended on other nations for over 50 percent of our use of 23 essential nonfuel minerals. In reference to the four minerals under discussion, we imported 71 percent of the nickel we used in 1976 with a dollar value of $500 million; 15 percent of our consumption of copper at a value of $700 million; and 98 percent each of our consumption of cobalt and manganese at a dollar value of $50 and $130 million respectively. This data should give us some clue as to our vulnerability to the whims of other nations. The sources of our foreign supplies cannot give us much comfort either. Our manganese imports come primarily from Gabon, Brazil, South Africa, Australia, and India. Cobalt comes primarily from Zaire which is virtually a monopoly producer of cobalt in the world. Three-fourths of our cobalt imports come from this African nation which, as we all know, has been in the headlines lately. Nickel is supplied mainly by Canada and the French territory of New Caledonia, although high-quality Canadian nickel deposits are on the decline. U.S. nickel imports from developing countries have been increasing, and future world supplies will be substantially derived from such Third World countries as Indonesia, the Philippines, Colombia, the Dominican Republic, and Cuba. The world's largest producers of copper are the United States, Chile, the Soviet Union, Canada, and Zambia, in that order. Over recent years, while the United States has maintained relative selfsufficiency in copper, the ore grades available domestically are declining and our import dependency has increased, reaching the 15-percent level last year. Óne need only read the daily newspapers to be aware of the uncertain stability of some of these nations-an uncertainty that cannot give us much faith in predicting future sources of supply of these essential minerals. I noted, with great interest, that U.S. prices for copper rose 3 cents per pound last week-the third price increase this year. Our copper prices have climbed nearly 14 percent this year. One of the primary reasons for this latest rise, according to business analysts, was the invasion of Zaire's copper-producing region by Angolan rebels. Copper consumers are anticipating a potentially serious interruption in production there. Consequently, demand has picked up considerably as consumers, fearing this interruption in supply, are building their inventories. This uncertainty about the future stability of Zaire must give us concern about our future cobalt imports. Zaire supplies over one-half of the world's and 75 percent of the U.S. cobalt production and few copper producers have ores which result in significant cobalt production except Zaire. In effect, then, there is no viable alternative to cobalt from Zaire at this moment. Additionally, no matter how close our relationship is with Canada, there are clear indications that economic nationalism is an emerging factor in that country's international trade. Recent restrictions on the supply of natural gas to the United States is but one example which must lead us to conclude that the pursuit of our own domestic sources of minerals is in our national interest. How long, for example, can we depend on Brazil to supply us so much of our essential requirements for manganese to manufacture steel? Brazil is bordering on the status of being a developed country. Clearly, her own needs for this important mineral will increase in the years ahead. From this evidence, then, it should be clear that the national interest of our Nation will be well served by the development and commercial recovery of deep seabed mineral nodules. Support for this position now comes to us from the prestigious National Research Council which has just published the results of a study on "Manganese Recovery Technology." The panel which worked on this effort pointed out that although manganese is indispensable in the steelmaking process, the United States has no domestic resources from which the manganese products suitable for steelmaking can be recovered economically. Additionally, no facilities exist, or are planned, for recovering manganese from the low-grade deposits that do exist. The panel went on to state that: "Serious consequences for the national economy could arise of a prolonged curtailment of overseas manganese ore and ferromanganese lead to a critical shortage of manganese materials vital to our steel industry." I will note that Japan has staked a claim south of Hawaii and they are about to begin deep ocean mining. Among its numerous recommendations, this study panel encouraged the development of commercial operations of Pacific Ocean nodules to produce manganese as well as nickel, copper, and cobalt. It noted. that the amount of manganese in the nodules processed by a significant commercial operation would meet a substantial part of the Nation's needs. In fact, even if manganese is not initially extracted from the nodules, the panel suggested that the tailings which resulted from the processing for nickel, copper, and cobalt would be considerably higher in manganese content than any significant domestic resource. It was recommended that such tailings be stored to permit easy subsequent reclamation and shipping to a manganese recovery plant. Finally, we must recognize that the likelihood of the emergency of cartels to control the supply of these resources is subject to a great variety of opinions among economic theorists. Yet, it was these same theorists who did not predict the 1973 OPEC embargo, and they continue to argue about a proper specification of the conditions under which a cartel could emerge. In the absence of a consensus, I respectfully suggest that the assumption of cartelization would be a rational and reasonable basis on which to structure future resource policy for the United States. The fact is that predicting the future stability of individual producing nations is an inexact and dubious science. In this regard it would be regrettable if this Nation did not learn a valuable lesson from the OPEC embargo. Mr. Chairman, having established the economic and technical feasibility of deep seabed mining and the national interest premise on which congressional action must be based, it is imperative that we now turn our attention to an assessment of this national interest in light of the international obligations which the United States has toward the rest of the world. First, I want to make it clear to this subcommittee that I am fully aware of the complexity of the relationship between an international agreement on the exploitation of the resources of the oceans and domestic legislation to establish a national framework within which American industry can operate. The nuances of international negotiations are extremely delicate; and I am hopeful that our new negotiating team at the Law of the Sea Conference, led by Ambassador Elliot Richardson, will be able to balance the American national interest and the interests of 160 disparate nations. But I would like to point out that it has now been 10 years since Ambassador Arvid Pardo, of Malta, introduced a resolution in the United Nations General Assembly declaring that seabed resources should be developed for the benefit of the international community. Although the United States was not a party to this resolution and did not sign it, let us look at the record. After 5 years of preparatory meetings and 3 years of formal Law of the Sea sessions, resolution of this theory into a workable reality seems to be as far away as ever. Last week, this committee was briefed by the State Department on the events which occurred in Geneva at the Evensen Intersessional Meetings held on the issue of ocean mining. Regardless of the perceptions of our American delegation in Geneva, I think it should be clear to all of us that no substantial progress was made there and that the prospects for the next session to be convened in New York must be categorized as something less than optimistic. The fact remains that, whatever the good intentions of the United States and certain other nations, the cleavages between the group of 77 nations, the land-based producers, the industrialized countries, and the landlocked nations, make the establishment of an international seabed authority extremely uncertain. We must face the fact that the Law of the Sea Conference may produce no acceptable treaty. Approximately 2 weeks ago, Senator Lee Metcalf appeared before our Oceanography Subcommittee and indicated that, in his judgment, |