Some five kilometres down, on the floor of the Pacific, lie potato-shaped nodules that contain nickel, copper and cobalt. In 1970 the UN General Assembly declared the resources of the seabed beyond national jurisdiction “the common heritage of mankind.” That left the delegates at the Third UN Conference on the Law of the Sea to decide who could mine them, and what a miner should pay.
Then there was the fee. In Roger Fisher and William Ury’s account in Getting to Yes, at one point India, “representing the Third World bloc,” proposed an initial fee of $60 million per site for companies mining the deep seabed. The United States rejected it and suggested no initial fee at all. “Both sides dug in,” they wrote; “the matter became a contest of will.”
Meanwhile a group in Cambridge, Massachusetts, had been doing arithmetic. In 1976 a team led by J. D. Nyhart, a professor in MIT’s Sloan School and its Department of Ocean Engineering, began work on the technology and costs of deep seabed mining. Its members later attended the conference, MIT says, as “friends of the Conference.” James Sebenius, who served on the informal staff of Singapore’s ambassador Tommy Koh, chair of the financial negotiations, describes delegates “of all political persuasions” packing an MIT seminar that Koh visibly supported. The EEC Secretariat licensed the model for its own analyses.
In Fisher and Ury’s telling, the model, “gradually accepted by the parties as objective,” gave everyone the same way to test what any fee proposal would do to the economics of mining. When the Indian representative asked about his own proposal, he was shown that a fee “payable five years before the mine would generate any revenue” would make it “virtually impossible for a company to mine.” He said he would reconsider.
The model worked on the other side too. The American representatives’ information had come mostly from the mining companies. The model indicated that some initial fee was economically feasible, and the United States changed its position. “No one backed down,” Fisher and Ury wrote; “no one appeared weak.”
The model did not settle everything. Sebenius later wrote that delegates came to regard the uncertainty around seabed economics as inherent, and that the model “offered less assurance about seabed economic outcomes than had seemed the case” soon after it arrived.
The Convention adopted in 1982 set an application fee of $500,000 and an annual fixed fee of $1 million, payable from the date a contract took effect. Harvard University Press describes Sebenius’s book as an analysis of how these financial terms were negotiated, “along with the abrupt U.S. rejection of their results.”
In 1994 a new agreement on the seabed chapter rewrote them. The paragraphs setting the $1 million annual fee, and the production charges and profit shares that followed it, “shall not apply.” An annual fee would start only with commercial production, at an amount set by the seabed Authority’s Council, and processing an application for one phase of work would cost $250,000. The UN’s own history of the Convention adds that the economic forecast on which the seabed regime was built “has not been realized.”