Mineral extraction activities in Norway – status – environmental impact assessment for seabed mineral extraction

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Published 04 February 2021
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Worldwide, an increased need for precious metals is expected in the future. This is not only due to increase in population and prosperity outside the OECD countries, but also the fact that access to metals is an important prerequisite for producing, e.g., batteries, wind turbines and solar panels, which in turn is important for reducing greenhouse gas emissions. It is likely that Norway will play an important role as a supplier of such minerals.

Norway is not only an oil and gas nation, but also a mining nation. Kongsberg Silver Mines (Kongsberg Sølvverk) was established as early as 1624, and the Statue of Liberty was built of copper from Karmøy. Despite a history of almost 600 hundred years of mining, the minerals have not been depleted. Norway still has a significant resource potential, not just on land. The Norwegian Petroleum Directorate has conducted systematic mapping of seabed minerals in the deep sea on the Norwegian continental shelf since 2018. What is known is that there are two types of seabed minerals, sulphide deposits and manganese crusts. Samples collected by the directorate show a high content of copper, zinc and cobalt. The Norwegian Petroleum Directorate carried out an exploration of the Mohns Ridge in the Norwegian Sea in 2018 and 2019. Two new sulphide fields (Fåvne and Gnitahei) were then discovered, and one has been verified (Mohnsskatten).

Against this background, Norwegian authorities have worked to establish clear framework conditions for possible, future mineral extraction on the shelf. Market needs and resource potential formed the background for the work on the new Seabed Minerals Act, which entered into force in 2019.

Prior to a possible opening of such an activity, environmental impact assessments must be carried out in accordance with the Seabed Minerals Act. The Ministry of Petroleum and Energy therefore sent a proposal for an impact assessment program for mineral extraction activities on the Norwegian continental shelf on 12 January 2021. The consultation period is set at three months, with deadline on 12 April 2021.

The aim of this newsletter is to provide an overall overview of the legal developments in this industry segment.

About seabed mineral extraction in norway – important and future-oriented

Seabed mineral extraction may soon become a reality. The Dutch company IHC Mining B.V already conducts diamond mining at a depth of 150 meters, while the Canadian company Deep Sea Mining Finance Limited (formerly Nautilus Minerals) has the world's first deepwater extraction license, and is scheduled to begin extraction of massive sulphide systems outside Papua New Guinea.

Mineral extraction will form an important part of the green wave, as long as the extraction takes due care of the environment and people. At the same time, it is important for a self‑sufficient Europe. The industry in Europe uses more than 20 percent of the metals in the world, but is only responsible for the production of 3 percent of these. The EU has therefore implemented various raw material initiatives to ensure stable deliveries on the continent.

It is also ethically important to develop this industry. The armed conflicts in the Congo are fought and financed in part by the rich deposits of, e.g., coltan, which is difficult to keep out of ordinary supply chains.

A Norwegian mining industry based on seabed minerals is expected to play an important role.

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Environmental impact assessment of seabed mineral extraction

As part of this initiative, the Seabed Minerals Act was prepared. The mineral deposits in our sea areas belong to the State. According to the Seabed Minerals Act, areas must be formally opened for such activities before licenses can be granted to commercial actors. The purpose is to clarify whether such activities can take place in a sustainable and responsible manner. The first part of such an opening is environmental impact assessments. The impact assessment process will ensure the involvement of all interested parties and provide more, up‑to‑date and comprehensive knowledge of what the effects, both positive and negative, of a possible seabed mineral extraction activity may be.

This type of impact assessment represents an internationally recognized tool for, inter alia, ensuring that various relevant considerations are taken into account in decisions about public plans and programs. The relationship to possible cross-border effects will, in accordance with the Espoo Convention, be assessed based on the results of the professional impact assessment work, followed by an international consultation in parallel with consultation nationally.

The impact assessment work begins with a proposal for a program. The program is subject to public consultation with a three-month deadline.

The following main topics are proposed assessed:

  • Surveys; status, development trends and opportunities
  • Extraction; status, development trends and opportunities
  • Description of natural conditions and environment and knowledge base
  • Environmental effects of extraction and possible mitigating measures
  • Impacts on other industries and possible mitigation measures
  • Societal effects

Although not specifically mentioned in the consultation letter, this business development also raises important questions in relation to the EU's new taxonomy regulations. The EU taxonomy is a classification system that determines what can be defined as sustainable activity for investment purposes throughout the EU. The purpose of the regulations is to assess whether an investment is green, based on specific screening criteria. The taxonomy is intended to contribute to increased transparency and trust in the market for sustainable financial products and to prevent greenwashing. The taxonomy regulations are therefore expected to play a major role in the financing of projects in the future.

Schjødt has the expertise

Schjødt follows this exciting development. We already have, and will maintain, expertise in all necessary focus areas. On land, Schjødt is probably the law firm that has been involved in most minerals and mining projects. We have assisted one of the largest mining players since the 1980s. We are well acquainted with current minerals legislation and the public management of the area. We have also assisted a number of foreign companies in acquiring Norwegian land-based minerals deposits. E.g., we have prepared several due diligence reports and legal opinions for presentation on foreign stock exchanges with a concrete review of rights, as well as an account of relevant Norwegian legal matters.

We assists with acquisitions, rights issues and ongoing operations (operating licences and other types of licences, municipal arrangements, environmental conditions, lease conditions, infrastructure, contracts with landowners, purchase/sale of construction equipment, offtake agreements, etc.). In addition, we assist in the restructuring of established businesses and financing of the minerals industry, whether taking place via more traditional bank loans, private equity financing or issuance of bonds.

Similarly, Schjødt has the expertise needed to assist a possible, future seabed industry. Seabed mineral extraction will in all probability be similar to extraction of oil and gas. It is expected that the industry will use different combinations of FPSOs and subsea production facilities. The Seabed Minerals Act is also based on the well-known petroleum legislation. Schjødt has for decades assisted oil and gas companies, and has the country's foremost expert environments on the entire project process, from the first rough draft, to financing, to disputes along the way and to project completion and decommission.

 

If you want more information about our work in this area or have further questions, please do not hesitate contacting one of us on the minerals team: