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Natural Capital Accounting – a Sea Floor Mining Application

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Author R Grogan
ID P201607001

Description

Nautilus Minerals Inc is a sea floor resource exploration and development company focused on developing the Solwara 1 Project, a copper-gold sea floor massive sulfide deposit in the territorial waters of Papua New Guinea, for which it holds a mining lease and associated environment permit.

Economies depend upon four key types of capital: built, natural, financial and human. Natural capital consists of the ‘minerals, energy, plants, animals, ecosystems (climatic processes, nutrient cycles and other natural structures and systems) found on Earth that provide a flow of natural goods and services’ (Daly and Farley, 2004). Many ecosystem goods such as fish, fruit and water are already valued and sold in markets; however, some ecosystem services are not amenable to markets and have remained unvalued in traditional accounting methods, even though they provide significant value (such as flood protection, climate stability etc; Batker and Schmidt, 2015).

There are now economic methods available to quantify and value natural capital and many non-market ecosystem services. When valued in dollars, these services can be incorporated into a number of economic tools, including benefit-cost analysis, accounting, environmental impact statements, asset management plans and rate of return on investment calculations. Their inclusion ultimately strengthens decision-making. When natural capital assets and ecosystem services are not considered in economic analysis, they are effectively valued at zero. This omission can lead to poor decisions, inefficient capital investments, higher incurred costs and losses due to unexpected events (Batker and Schmidt, 2015).

In 2015 Earth Economics was commissioned by Nautilus Minerals Inc to conduct an independent, objective environmental and social benchmarking analysis of the proposed deep seabed Solwara 1 mine with terrestrial copper mines (referred to as ‘the report’). The report represents the first ever natural capital accounting and ecosystem goods and services framework for seabed mining.

The report compares the proposed Solwara 1 mine with three terrestrial mines: Bingham Canyon (Utah, USA), Prominent Hill (South Australia, Australia), and Intag (a proposed mine in Intag Province, Ecuador), and provides a natural capital accounting assessment for all four operations.

CITATION:

Grogan, R, 2016. Natural capital accounting – a sea floor mining application, in Proceedings Life-of-Mine 2016 Conference, pp 2–4 (The Australasian Institute of Mining and Metallurgy: Melbourne).