BUCKING conventional wisdom, a New York businessman is quietly testing the waters for a $500 million deep-ocean mining project in the Marshall Islands. Experts figure it will be a decade or more before seabed mining becomes commercially viable.
But Ronald Winston, chief executive officer of Harry Winston Inc., a major international jewelry firm with mining experience, has a one-year agreement with the Marshall Islands to put together a mining consortium.
The primary focus is cobalt - a mineral prized by aerospace and defense manufacturers to create durable metal alloys for jet engines and tank armor. It is also used in robotics and medicine.
Mr. Winston is talking with the United States and ``several key nations,'' including Japan, about a government-endorsed private industry venture.
``We're in the very early stages,'' he says. ``But it's in the free world's interest to have an unencumbered supply of strategic minerals coming from a stable government. US government approval would be extremely helpful.''
Preliminary surveys show that the Marshall Islands is one of the top three spots in the Pacific for deposits of the strategic minerals. In particular, there are 89 known deposits of cobalt-rich manganese in the Marshalls' 200-mile exclusive economic zone (EEZ).
``The crust deposits on the ocean floor in that area will be among the best places in the world to explore,'' says Charles Johnson of the East-West Center in Hawaii, author of a recent seabed mining study.
Attracting mining corporations to this project may prove difficult. Cobalt demand is fairly stable, and prices aren't expected to increase anytime soon. Zaire and Zambia produce nearly 75 percent of all cobalt. Mr. Johnson estimates that one crust-mining operation would add 15 to 20 percent to the world's cobalt supplies. That one new mine could significantly depress cobalt prices. So Pacific seabed crust-mining is a ``first-in, last-in'' situation, he says.
``The Marshall Islands wants to be in the forefront of taking advantage of the mineral resources we have within our EEZ. We've tried to provide an operating regime which will encourage exploration and prospecting,'' says Gregory Danz, the Marshall Islands attorney general and a negotiator of the agreement signed in February.
The Marshall Islands is offering tax breaks and a lenient royalty negotiation process, according to Mr. Danz. If a consortium is formed quickly, exploration and prospecting could begin within a couple of years. Mining may be five to 10 years away.
Since the late 1970s, international mining firms have been scared off seabed mining, in part, by increasing environmental red tape and what are perceived as onerous financial terms (including turning over new technology to competing firms) dictated by the Law of the Sea Convention.
The establishment of the 200-mile EEZs meant that vast mineral resources shifted from international to national hands. And, as yet, no commercially viable technology has been developed to scoop up metals 6,000 feet below the ocean's surface. So seabed mining research has swung from corporations to governments with longer planning horizons.
Japan, France, and West Germany are the leaders in deep-sea mining research, according to a recently published Ocean Yearbook article by Johnson and Allen Clark of the East-West Center. France, it noted, ``perceives an economic advantage in pioneering mining and processing technology,'' because it now imports all of the metals that could be obtained from the seabed.
Similarly, resource-scarce Japan has a $160 million deep-sea mineral program. Under the direction of Japan's Ministry of Trade and Industry, a government mining agency and 48 companies have funded a corporation that has been doing deep seabed mineral prospecting since 1983.
Another Japanese public/private consortium plans a pilot manganese nodule mining project in the Pacific in early 1990s.
``The US isn't very active on the technology side,'' Johnson says.