Mining Under the Sea : Subsea Mining Equipment Makers Set to Profit

The Abrasive Hoover That Sucks Profits From The Sea

Date 12/08/2008

The Right Side

Garry White

There is billions of pounds worth of resources sitting at the bottom of the ocean. Whoever digs it up is going to get very rich indeed.

The ice at the North Pole is melting, making exploration for undersea resources much, much easier.

As the global scramble for oil, gas and minerals begins I am looking at the best ways to profit from mining under the sea.

I believe that it will be a major trend in the coming years… and something that will happen this Thursday has reinforced my view… but more on that in a moment. First of all I want to talk about the best way to play this trend. Let’s talk hoovers.

Machines that resemble giant abrasive vacuum cleaners are being developed. The first is expected to be in use by 2010.

I believe that the best way to profit from undersea mining will be through equipment manufacturers. Not every explorer is going to strike gold, but every explorer is going to need equipment.

This is where big money will be made, without all the risks that exploration brings.

I am currently looking at the best opportunities in the sector.

Mining twenty thousand leagues under the sea

The so-called Northern Powers are trying to stake their claim to the Arctic region. These are Russia, Norway, Iceland, Greenland, Canada and the US.

On Thursday this week, the latest addition to the US Coast Guard Fleet sets sail from the port of Barrow in Alaska.

The Healy is the most technologically advanced polar icebreaker in the US fleet. It contains 4,200 square feet of lab space and accommodation for 50 scientists. It is perfect for polar research. The Americans want to prove that they are entitled to more Arctic territory than confirmed by international law. Thankfully, the border between Russian interests and American interests has already been agreed and defined. There is not much chance of friction there.

In fact, it’s the Canadians that the Americans have in their sights. They are the ones who need to be concerned.

Durham University published a map last week showing which boundaries had been agreed... and which have not.

You can take a look at the research here: http://www.dur.ac.uk/ibru/resources/arctic/

Extending boundaries

The Healy’s mission is to map the sea floor of the Chukchi Cap, an area at the northern edge of the Beaufort Sea. Looking at Durham’s map of boundaries, this area is in the blue striped area.

The research could boost US claims to the area as part of its extended outer continental shelf.

Under international law, countries control all natural resources within their “exclusive economic zone.” This extends 200 nautical miles offshore.

However, if a country's continental shelf extends far into the ocean, it can claim undersea land up to 350 miles offshore. This is granted under the UN Convention on the Law of the Sea. The dotted grey line on the map represents this boundary.

This makes it clear that the North Pole is still very much up for grabs.

Last month, the US Geological Survey released an estimate on polar reserves of oil and gas. It said the area north of the Arctic Circle may hold 90 billion barrels of oil and 1,669 trillion cubic feet of natural gas.

It is one year since the Russians sent one of its submarines to plant the country's flag on the sea floor beneath the North Pole. Their argument was that the Lomonosov Ridge (which is marked on the Durham map) was an extension of its own continental shelf.

The problem is that this ridge also stretches to Canada. The Canadians have argued that they have a territorial claim to this underwater mountain range as well. They say it is part of the North American continental shelf and not the Siberian shelf.

For each individual country, the stakes are very high – but this does not matter to us at all. I plan to profit whoever manages to fly their flag over the North Pole.

It is clear is that whoever manages to win blocks of the Arctic ocean floor, subsea mining equipment makers are set to profit big time. Investment risk will also be lower than for explorers.

This is exactly the type of investment I am looking for. To find out about other exciting investments in the energy and commodity sectors more click here.

Regards

Garry White
Editor
Smart Commodities UK

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