An impressive 140,000 square miles of Atlantic Ocean and sea-floor was ceded to Bermuda by proclamation of His Excellency the Governor of Bermuda on June 6, 1996. This relatively unknown development makes Bermuda the only British Overseas Territory to have ownership of its surrounding waters, an area called the Economic Empowerment Zone (the "EEZ").
Under international maritime law, coastal states have control over both the surrounding territorial waters, and the state's contiguous zone. Territorial waters stretch 12 miles from the low-water mark of the state's recognised coast. The contiguous zone stretches for an additional 12 nautical miles. Bermuda's EEZ expands this control an additional 176 nautical miles to the 200 nautical mile mark.
With the responsibility of protecting this area (roughly the size of California and larger than Germany), comes tremendous opportunity. The relevant legislation (Article V of the United Nations Convention of the Law of the Sea) provides that Bermuda may exercise sovereign rights for the purposes of exploring and exploiting the natural resources both living and non-living of the EEZ's waters, seabed and its subsoil.
Within the scope of this legislation Bermuda's EEZ can be used in a variety of economically advantageous ways. Possibilities include energy resources such as tidal or wind generated electricity, fresh water extraction, biological resources such as bioprospecting where organic marine organisms are used to develop pharmaceutical drugs (the Bermuda Institute of Ocean Sciences just received $3m to research sea urchins in Bermuda for their cancer fighting abilities), non-extractive resources such as dive tourism, and finally the extraction of minerals.
This article will examine more closely the opportunities that exist in sub-sea mineral deposits in our EEZ and the potential that Bermuda has as a jurisdiction of choice for the emerging sub-sea mining industry.
Ocean Projects Limited, a pioneer in Bermudian sub-sea mineral prospecting, has already begun to study a relatively small portion of the seabed (the size of Staten Island) within Bermuda's EEZ. The preliminary results of this work have been encouraging, and suggest that there exist two main types of mineral deposits within Bermuda's EEZ:
- Ferromanganese crusts are platinum rich metallic crusts that form on submerged volcanic rock. The crusts are created as metals dissolve in seawater over time and are more prevalent in seawater with low oxygen content, generally between depths of 400 to 4,000 metres. The platinum and other minerals derived from these crusts are used in thousands of applications from wedding bands to computers; and
- Phosphate deposits that are found in a rare form of lava (carbonatites) are also thought to exist off Bermuda's shores. This important mineral is used internationally as an agricultural fertilizer, in animal feed supplements, food preservatives, anticorrosion agents, cosmetics, fungicides, and water treatment. The price of this mineral per tonne on international markets is now making extraction and shipment a much more attractive prospect.
The area investigated thus far represents less than half of one per cent of Bermuda's EEZ. The possibilities that exist for finding gold, platinum and valuable minerals remain very exciting.
It may be some time before profitability and regulatory approval intersect to make sub-sea mining a reality in Bermuda. Fortunately, the island is perfectly equipped to welcome international sub-sea mining companies to (re)domicile in Bermuda due to its highly skilled professional service providers, the existence of the Bermuda Stock Exchange (and particularly its Mezzanine Market), our globally recognised Shipping Registry – and our status as a low-tax jurisdiction.
While there is no guarantee that Bermuda's sub-sea minerals exist in economically viable proportions, further prospecting within Bermuda's EEZ should be encouraged. Environmental best practices are still developing, and should be monitored closely. As in other areas where sub-sea mining takes place, no extraction should be permitted until full environmental studies have been carried out, and approval granted on a project by project basis.
Aside from the use of its own EEZ, Bermuda has a variety of attractive features to present itself as a domicile of choice for the international sub-sea mining industry. The potential stimulation to local employment and net benefit to the balance of trade may provide a catalyst for growth that Bermuda's economy would welcome.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
