IDEAS home Printed from https://ideas.repec.org/a/spr/minecn/v32y2019i3d10.1007_s13563-019-00169-4.html
   My bibliography  Save this article

Estimating the economics of a mining project on seafloor manganese nodules

Author

Listed:
  • Sebastian Ernst Volkmann

    (RWTH Aachen University)

  • Felix Lehnen

    (RWTH Aachen University)

  • Peter A. Kukla

    (RWTH Aachen University)

Abstract

The recent and renewed interest in deep-sea mining relates to the decrease of ore grades of known land-based deposits, the increasing costs in land-based mining, as well as rising metal prices, and an increased demand for strategic metals. This study examines the economic requirements for future commercial mining projects focusing on manganese nodules. Beside the common measures of profitability, the net present value (NPV), and the internal rate of return (IRR), an additional measure, the net profit (NP), is presented to indicate the profitability by considering past and future cost and price trends. Furthermore, the approach may be applied to determine the areas of commercial interest. The Blue Mining project in the 7th Framework Programme of the European Commission serves as a reference case study. Having applied the developed methodology to a set of assumptions and estimates, results indicate that nodule mining projects would—at the time being and the foreseeable future—be launched at the verge of financial profitability.

Suggested Citation

  • Sebastian Ernst Volkmann & Felix Lehnen & Peter A. Kukla, 2019. "Estimating the economics of a mining project on seafloor manganese nodules," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 32(3), pages 287-306, November.
    • Handle: RePEc:spr:minecn:v:32:y:2019:i:3:d:10.1007_s13563-019-00169-4
    DOI: 10.1007/s13563-019-00169-4
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13563-019-00169-4
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s13563-019-00169-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alexandre Tisserant & Stefan Pauliuk, 2016. "Matching global cobalt demand under different scenarios for co-production and mining attractiveness," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 5(1), pages 1-19, December.
    2. Alexandre Tisserant & Stefan Pauliuk, 2016. "Matching global cobalt demand under different scenarios for co-production and mining attractiveness," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 5(1), pages 1-19, December.
    3. Ousman Gajigo & Emelly Mutambatsere & Elvis Adjei, 2011. "Working Paper 132 - Manganese Industry Analysis: Implications for Project Finance," Working Paper Series 316, African Development Bank.
    4. Nalin Kulatilaka & Alan J. Marcus, 1992. "Project Valuation Under Uncertainty: When Does Dcf Fail?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 5(3), pages 92-100, September.
    5. Jean-Thomas Bernard & Lynda Khalaf & Maral Kichian & Sebastien Mcmahon, 2008. "Forecasting commodity prices: GARCH, jumps, and mean reversion," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 27(4), pages 279-291.
    6. A. Marvasti, 2000. "Resource Characteristics, Extraction Costs, and Optimal Exploitation of Mineral Resources," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 17(4), pages 395-408, December.
    7. Hoagland, Porter & Beaulieu, Stace & Tivey, Maurice A. & Eggert, Roderick G. & German, Christopher & Glowka, Lyle & Lin, Jian, 2010. "Deep-sea mining of seafloor massive sulfides," Marine Policy, Elsevier, vol. 34(3), pages 728-732, May.
    8. Sebastian Ernst Volkmann & Thomas Kuhn & Felix Lehnen, 2018. "A comprehensive approach for a techno-economic assessment of nodule mining in the deep sea," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(3), pages 319-336, October.
    9. Costa Lima, Gabriel A. & Suslick, Saul B., 2006. "Estimating the volatility of mining projects considering price and operating cost uncertainties," Resources Policy, Elsevier, vol. 31(2), pages 86-94, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Luca Ciacci & Cristina T. de Matos & Barbara K. Reck & Dominic Wittmer & Elena Bernardi & Fabrice Mathieux & Fabrizio Passarini, 2022. "Material system analysis: Characterization of flows, stocks, and performance indicators of manganese, nickel, and natural graphite in the EU, 2012–2016," Journal of Industrial Ecology, Yale University, vol. 26(4), pages 1247-1260, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alexander Cunningham, 2024. "Assessing the feasibility of deep-seabed mining of polymetallic nodules in the Area of seabed and ocean floor beyond the limits of national jurisdiction, as a method of alleviating supply-side issues ," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 37(2), pages 207-226, June.
    2. Becker, Jonathon M., 2021. "General equilibrium impacts on the U.S. economy of a disruption to Chinese cobalt supply," Resources Policy, Elsevier, vol. 71(C).
    3. Zhu-Jun Wang & Zhen-Song Chen & Qin Su & Kwai-Sang Chin & Witold Pedrycz & Mirosław J. Skibniewski, 2024. "Enhancing the sustainability and robustness of critical material supply in electrical vehicle market: an AI-powered supplier selection approach," Annals of Operations Research, Springer, vol. 342(1), pages 921-958, November.
    4. Liu, Wei & Li, Xin & Liu, Chunyan & Wang, Minxi & Liu, Litao, 2023. "Resilience assessment of the cobalt supply chain in China under the impact of electric vehicles and geopolitical supply risks," Resources Policy, Elsevier, vol. 80(C).
    5. Seck, Gondia Sokhna & Hache, Emmanuel & Barnet, Charlène, 2022. "Potential bottleneck in the energy transition: The case of cobalt in an accelerating electro-mobility world," Resources Policy, Elsevier, vol. 75(C).
    6. Benjamin Jones & Viet Nguyen‐Tien & Robert J. R. Elliott, 2023. "The electric vehicle revolution: Critical material supply chains, trade and development," The World Economy, Wiley Blackwell, vol. 46(1), pages 2-26, January.
    7. Sören Lars Nungesser & Stefan Pauliuk, 2022. "Modelling Hazard for Tailings Dam Failures at Copper Mines in Global Supply Chains," Resources, MDPI, vol. 11(10), pages 1-27, October.
    8. Piçarra, Alexandre & Annesley, Irvine R. & Otsuki, Akira & de Waard, Robbert, 2021. "Market assessment of cobalt: Identification and evaluation of supply risk patterns," Resources Policy, Elsevier, vol. 73(C).
    9. Chen, Jinyu & Luo, Qian & Tu, Yan & Ren, Xiaohang & Naderi, Niki, 2023. "Renewable energy transition and metal consumption: Dynamic evolution analysis based on transnational data," Resources Policy, Elsevier, vol. 85(PB).
    10. Sprecher, Benjamin & Reemeyer, Laurie & Alonso, Elisa & Kuipers, Koen & Graedel, Thomas E., 2017. "How “black swan” disruptions impact minor metals," Resources Policy, Elsevier, vol. 54(C), pages 88-96.
    11. Savolainen, Jyrki, 2016. "Real options in metal mining project valuation: Review of literature," Resources Policy, Elsevier, vol. 50(C), pages 49-65.
    12. Liu, Sen & Dong, Zhiliang & Ding, Chao & Wang, Tian & Zhang, Yichi, 2020. "Do you need cobalt ore? Estimating potential trade relations through link prediction," Resources Policy, Elsevier, vol. 66(C).
    13. Pizarro Barraza, Felipe & Thiyagarajan, Dhandayuthapani & Ramadoss, Ananthakumar & Manikandan, V.S. & Dhanabalan, Shanmuga Sundar & Abarzúa, Carolina Venegas & Sotomayor Soloaga, Pedro & Campos Nazer,, 2024. "Unlocking the potential: Mining tailings as a source of sustainable nanomaterials," Renewable and Sustainable Energy Reviews, Elsevier, vol. 202(C).
    14. Song, Huiling & Wang, Chang & Sun, Kun & Geng, Hongjun & Zuo, Lyushui, 2023. "Material efficiency strategies across the industrial chain to secure indium availability for global carbon neutrality," Resources Policy, Elsevier, vol. 85(PB).
    15. Jordan, Brett, 2018. "Economics literature on joint production of minerals: A survey," Resources Policy, Elsevier, vol. 55(C), pages 20-28.
    16. Restrepo, Natalia & Ceballos, Juan Camilo & Uribe, Jorge M., 2023. "Risk spillovers of critical metals firms," Resources Policy, Elsevier, vol. 86(PB).
    17. Tang, Chen & Sprecher, Benjamin & Tukker, Arnold & Mogollón, José M., 2021. "The impact of climate policy implementation on lithium, cobalt and nickel demand: The case of the Dutch automotive sector up to 2040," Resources Policy, Elsevier, vol. 74(C).
    18. Ester Van der Voet & Lauran Van Oers & Miranda Verboon & Koen Kuipers, 2019. "Environmental Implications of Future Demand Scenarios for Metals: Methodology and Application to the Case of Seven Major Metals," Journal of Industrial Ecology, Yale University, vol. 23(1), pages 141-155, February.
    19. Carina Harpprecht & Lauran van Oers & Stephen A. Northey & Yongxiang Yang & Bernhard Steubing, 2021. "Environmental impacts of key metals' supply and low‐carbon technologies are likely to decrease in the future," Journal of Industrial Ecology, Yale University, vol. 25(6), pages 1543-1559, December.
    20. Yilanci, Veli & Turkmen, N. Ceren & Shah, Muhammad Ibrahim, 2022. "An empirical investigation of resource curse hypothesis for cobalt," Resources Policy, Elsevier, vol. 78(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:minecn:v:32:y:2019:i:3:d:10.1007_s13563-019-00169-4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.