Deep Sea Mining Bill

Jacob Rees-Mogg Excerpts

Friday 6th September 2013 Commons Chamber

[Sheryll Murray]

Absolutely. That is another point that I will address.

[Jacob Rees-Mogg (North East Somerset) (Con)]

Following up on the intervention by my hon. Friend the Member for Shipley (Philip Davies), is a company in a country that is not a signatory, such as the United States, prohibited from undertaking any deep-sea mining, or is it able to go ahead without applying for a licence because it is allowed to do so under its own domestic law? Might we therefore be disadvantaging British companies against American companies?

[Sheryll Murray]

Companies in countries that are not signatories to UNCLOS would have to find a host that was a signatory to make an application for them.

There are large quantities of these metals. Whether it is because of increased demand, shrinking supply or both, metal prices have increased notably in recent years. As was mentioned by my hon. Friend the Member for Dover (Charlie Elphicke), rare earth elements, which have a particularly limited number of land-based sources, are attracting great interest. Those factors led to the emergence of the first serious commercial interest in deep-sea mining only a couple of years ago. A UK-registered company is now following up that interest.

An event to celebrate the granting of an exploration contract by the ISA to the UK was held at the Excel centre on 11 March this year. I was very pleased that my right hon. Friend the Prime Minister was able to attend. At that event, he spoke of the potential benefits to the UK and of the supply chain jobs that would probably be created in areas such as Portsmouth, Southampton, Plymouth, Bristol, Liverpool, Newcastle, Aberdeen and—I hope this is the case—Cornwall. Jobs are likely to be created in areas such as engineering, high-tech remote underwater vehicles and ship stabilisation. He said that that activity was estimated to be worth up to £40 billion to our economy over the next 30 years.

Many people from my constituency work in Plymouth. I want to ensure that we have the necessary legislation in place to make the most of these new opportunities. I am grateful to my hon. Friend the Member for Plymouth, Sutton and Devonport (Oliver Colvile), who cannot be here today, for sponsoring the Bill.

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[Mr Nuttall]

I am extremely grateful to my hon. Friend for bringing up the matter of the European Union. I was wondering whether we might be able to touch on that. She is absolutely right to suggest that the EU plays an important role in this matter. I understand that it has taken it upon itself to become a signatory to the convention, which demonstrates just how it can behave as though it were a single European state. It is clearly positioning itself so that, one day, it will be able to take over the organisation of and responsibility for passing legislation such as this. She might think that that is of little consequence, but she has highlighted a real fear. There is a danger that, if the European Union continues on the path that it appears to be taking, this will be yet another area over which this House will have no competence whatever.

As I was saying, the Government of the day considered the 1981 Bill necessary, because of all the uncertainty, in order to allow British companies to proceed with some certainty, notwithstanding the involvement of the European Community at that time.

I should point out that the 1981 Bill was by no means uncontroversial. Indeed, it divided the House on Second Reading and Third Reading. One concern that was raised at the time was that people wondered why it was necessary to introduce legislation at all, given the progress that was being made on securing an international agreement. Concern was expressed that, if the United Kingdom passed unilateral legislation, it could jeopardise the wider international treaty negotiations.

The answer was that that Government were keen to pass an interim measure because the text of the draft convention available at the time contained a provision for the convention not to become effective until 60 states had ratified it. That was the threshold set in the draft agreement. It was therefore clear that, even if agreement were reached fairly soon after the Bill had reached the statute book, it was likely that several years would pass before 60 states had ratified the treaty.

The Government of the day were absolutely right to predict that it would take several years to bring together that number of signatories. Indeed, although international agreement was reached the year after the Bill became law and the convention was signed on 10 December 1982 at Montego Bay in Jamaica, it was not until some 12 years later on 16 November 1994—one year after Guyana had become the 60th nation to ratify the convention—that it actually came into force. Members might wonder why it was signed at Montego Bay. The answer is that that is where the headquarters of what is now the International Seabed Authority are situated.

Another concern expressed at the time was that the delays and uncertainties in the international arrangements left the developing deep-sea mining industry in a difficult and uncertain position. The industry was in its infancy and had to carry out costly development work before being ready to embark on commercial operations. Understandably, mining companies were not prepared to invest the huge sums required to undertake this development work without a reasonably stable legal framework in which to operate. If the 1981 Act had never been passed, the Government feared that mining companies would allow their development programmes to run down, and if they did run down, there was no guarantee that they would ever be built up again.

A further reason why legislation was required was that the companies that had pioneered the development of sea-bed mining had already expended considerable efforts on prospecting large areas of the ocean floor. They wanted to secure their claims to potential areas of exploration and exploitation—the areas that they had identified as worthy of further investigation, particularly when other countries were already pressing ahead with their own national legislation.

The key concern was, of course, ensuring that the exploitation of the valuable mineral resources did not result in damage being caused to the marine environment. As already mentioned this morning, section 5 of the 1981 Act provided for protection of the marine environment, which was a central part of the legislation at that time, and it is the one section, incidentally, of the Act that is hardly altered at all by my hon. Friend’s Bill.

Of course, the whole purpose of the present Bill is to amend the 1981 Act. Although on the face of it, this Bill is very short, I venture to suggest that it is deceptively short. There are only two clauses, but the real meat lies in the schedule, which extends to no fewer than 12 paragraphs containing 11 separate sets of amendments over six pages.

The first of the amendments to the 1981 Act is designed to substitute proposed new subsections (1) and (2) in section 1 of the 1981 Act. That Act presently prohibits anyone covered by the section from undertaking mining activities in the deep sea without a licence. There are essentially two types of licence: exploration licences and exploitation licences. The provisions apply to UK nationals, Scottish firms or anybody incorporated under UK law and resident in any part of the UK. That is the 1981 definition, and I shall deal later with how the Bill proposes to extend it.

The crucial change is made to the description of what might be mined. The 1981 Act referred to “hard mineral resources”, but it is now proposed to change that to “mineral resource”, which is defined in amended subsection (6) as

“a solid, liquid or gaseous…resource”.

That definition is obviously much wider than the previous one, which was very specifically defined as meaning

“deposits of nodules containing…quantities”

of

“at least one of the following elements…manganese, nickel, cobalt, copper, phosphorous and molybdenum”

in “quantities greater than trace”. The new definition will allow several different explorers to start prospecting for different minerals at the same time in the same area.

In view of the much wider definition, I wonder what will be the likely increase in the number of explorers who will now need to seek a licence. I am sure that, when we hear from him, the Minister will want to reassure us that the Government have in place sufficient resources to enable them to deal with what I hope will be sudden rush of applicants wanting to take advantage of the opportunities provided once the Bill has passed through here and the other place.

The crucial definitions in amended section 2 introduce references to the International Seabed Authority and to what the provisions refer to as a “corresponding contract”, defined as

“a contract…granted by the Authority to the licensee”

either to explore or exploit mineral resources in a given licensed area. As has been said, this is very much a twin-track approach. It is no good a company only obtaining a licence from the UK, as it must at the same time ensure that it has a contract from the International Seabed Authority.

There is also a requirement to pay a fee to the Government, so we need not think that there will necessarily be a cost to the UK Government, although I express the hope that any fee does not put off potential applicants. As I said earlier, there is a real danger that if we do not establish a friendly regime for exploration companies, they will simply go elsewhere. Nevertheless, the requirement to pay a fee is retained. Proposed new subsection (3) of section 2 makes it clear to applicants that double authorisation is required by specifying that a licence granted by the Secretary of State under the UK legislation shall

“not come into force before the date on which a corresponding contract comes into force.”

It will thus not be sufficient for any individual or company to obtain just a licence.

Proposed new subsection (3A) sets out a minimum list of terms and conditions that a licence may include. I add, although the hon. Member for Brent North is no longer in his place, that this subsection could provide the means and the mechanism by which any further environmental protection that the Government felt necessary in any particular case could be dealt with—without any necessity to amend the Bill in Committee or on Report.

Proposed new subsection (5) provides that where a person has been

“granted an exploration licence, the Secretary of State may not grant an exploitation licence which relates to any part of the licensed area”

or to

“any of the mineral resources to which that licence relates”

to anyone other than

“the holder of the exploration licence”

without their “written consent”.

Of course, that immediately poses the question why, when an exploitation licence can be granted only to someone who has an exploration licence, anyone would want to go prospecting on the patch of someone else. I thought that that could happen only if they had in mind a joint venture agreement with the holder of the exploration licence and cut a deal with them.

The amended section 8 adds two new subsections to reflect the fact that under the terms of the 1994 agreement, there is a requirement for judicial and arbitration decisions to be recognised. This area was not covered at all in the 1981 Act. Sections 9 and 10 of the 1981 Act are then removed. Perhaps worthy of note is just how much debate and discussion took place around the two clauses when the Bill was debated back in 1981. Hours and hours were spent considering them, and we now discover, 32 years later, that neither the deep-sea mining levy nor the deep-sea mining fund have, in fact, ever operated at all.

The schedule then makes provision for the list of definitions to be extended to take into account the new structures and terms introduced by the 1994 agreement. Finally, it removes the reference to the 1981 Act as a temporary measure and it removes the provisions that allowed the Secretary of State to repeal it. I assume that it is the intention of my hon. Friend the Member for South East Cornwall for this legislation to become permanent.

[Jacob Rees-Mogg]

Does my hon. Friend share my view that it is a pity so to tidy up the statute book as to remove the word “temporary”, which always serves as a useful reminder? Even income tax was introduced on a temporary basis. We are very bad at ensuring that the word “temporary” means what it says.

[Mr Nuttall]

My hon. Friend is absolutely right, and this is a case in point. The House was given all sorts of assurances in 1981, when the original Bill was debated, that it would be a temporary measure, extending even—as I said earlier—to the inclusion of the word in its title. Section 18 of the Act sets out the mechanism enabling the Secretary of State to repeal it, but of course that never came to pass, although, as we have heard this morning, the expected flurry of applications did not materialise. It was expected that once an agreement had been reached there would be no need for national legislation, but, notwithstanding that, the Act remains on the statute book to this day.

I want to make two brief points about clause 2. First, I am pleased that it retains the provision in the Act for the legislation to be extended to the British overseas territories by Order of Her Majesty in Council. Secondly, I note that, unlike the Act, the Bill does not extend to Scotland. I can only assume that deep-sea mining is a reserved matter for the Scottish Parliament, and that the House of Commons no longer has power to legislate in that area. If there is no corresponding legislation in Scotland, I wonder what would be the position of a company that chose to incorporate north of the border. Would it be able to bypass this legislation?

I believe that the Bill presents the United Kingdom with an enormous opportunity to become a world leader in this emerging industry. I believe that, if we adopt a sympathetic and light-touch approach, we shall be able to attract exploration companies from all over the world which will choose to set themselves up in the UK to take advantage of both the licensing regime established by the Bill and the fact that, thanks to the actions of the Chancellor of the Exchequer, they will benefit from one of the most competitive corporation tax regimes and lowest corporation tax rates anywhere in the G20. Conversely, I believe that, if we make our regime too onerous, it will not encourage applications, and other countries throughout the world will profit from this new area of human activity.

I do not wish to be in any way critical of the Bill, but I wonder whether it would not have been simpler to repeal the 1981 Act and introduce a new Bill, which might have made it easier for people to understand what the legislation was all about. Notwithstanding that small point, however, I wish the Bill well. I trust that it will receive an unopposed Second Reading today—time will tell—but, regardless of whether it is opposed or not, I hope that it will be given a Second Reading, that it will then enjoy a smooth and speedy passage through both Houses, and that, in the fullness of time, this country will be able to benefit from the enormous opportunities that it affords and we shall be world leaders in an emerging industrial activity.

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[Philip Davies]

I am very grateful to you for highlighting my pitch for me, in a far more eloquent way than I was, Mr Speaker, so that nobody could be in any doubt that I would, obviously, be delighted to serve on the Committee.

[Jacob Rees-Mogg]

I am concerned that my hon. Friend might have been tempted down a dangerously internationalist path by my hon. Friend the Member for Bury North (Mr Nuttall). It is always important in these matters to preserve British sovereignty.

[Philip Davies]

I certainly agree with that. I am not sure that what my two hon. Friends are saying is necessarily incompatible, but I am sure they will be able to discuss that in the Tea Room at a later date. I am certainly one for upholding British sovereignty, however, as most people will appreciate.

Let me now deal with some of the points that I would like the Minister to cover. I am interested in the licences that the UK Government offer and give to people who apply for them. My hon. Friend the Member for Bury North referred to the resources that the Government provide to ensure that the licences are dealt with properly and in a timely manner. I am not entirely sure what the fees are for these licences and how our fees compare with those in other countries. As he said, we want the UK to be an international leader in this field. If companies can, in effect, apply to any signatory country for a licence, in order to take that to the International Seabed Authority, we want a commitment from our Government that the fees they charge for these licences will be competitive—more competitive than those charged by other countries. I would be interested to hear whether or not they are.

This is not just about the fee; it is also about the timeliness of how a licence application is determined and a licence issued. I hope that the Government also make a commitment to ensure that licences are processed more quickly here than in competitor countries, because, again, that might be a factor in which country a company chooses to go through. I would be interested to know how many licences have been applied for and how many applications have been rejected. That would allow me to see whether the process was strenuous or whether licences were just given out on the nod.

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[Jacob Rees-Mogg (North East Somerset) (Con)]

It is a great pleasure to follow my hon. Friends the Members for Shipley (Philip Davies) and for Bury North (Mr Nuttall), who have been, for a Friday, most amazingly reticent and brief in their remarks. I am worried that this Bill may not therefore get the scrutiny that it deserves, given that people who normally go into every detail have skated over some of the more important points—perhaps that will come at a later stage, however.

The great thing that we should bear in mind as a nation is that our companies and our businesses should never be disadvantaged against foreign businesses and foreign companies. Any regime we have of licensing and of regulation should be as light-touch as possible, particularly when this enormous and exciting resource is available for us. We have heard of the metals that there may be—of molybdenum, of rare earth metals. It occurs to me that at the depths of the ocean there may even be gold, and it might be possible for us, through the ingenuity of British companies, to go down fathom after fathom to explore and find the gold that could be used to replace that which was sold by a former Chancellor of the Exchequer at an extraordinarily low price and against the advice of the Father of the House, my right hon. Friend the Member for Louth and Horncastle (Sir Peter Tapsell), who thought it was very unwise to sell that gold at a rock-bottom price. That is what it is really about: exploring these resources that could add to the wealth not only of the nation but of the globe at large. As we have seen the emergence of the new economies—of China, India, Brazil and Russia—so we have seen demand for resources grow extraordinarily. The demand has been for steel, obviously, and all that goes into manufacturing it: the components and the other metals that make steel of a particular strength to ensure that the skyscrapers that have gone up across Asia can be built safely.

As demand increases we will find that the traditional sources of metals and minerals can be exhausted. We will then find that economic growth across the globe slows down because the prices of commodities will rise. As you know, Mr Speaker, the laws of supply and demand would come into effect and if the supply is limited in relation to the demand, the price rises. If the price rises, the burden of higher prices will ultimately fall on the consumer and standards of living in the country at large and, indeed, in the world at large would be reduced. There could be an exciting resource in the depths of the ocean in an area where mankind has hardly dared go before—there have been limited efforts, and cables have been laid, but we have otherwise been able to do very little in terms of exploration. If we find on the base of the ocean little things the size of golf balls, or possibly even cricket balls, that could add to our wealth, that would be exciting, but we want British companies to be at the forefront. We do not want to allow the Americans, who are not following this regulatory path, to get ahead of us as they have on other occasions.

I hope that the Minister will focus on international law. I am always very suspicious of internationalism. I think that the nation state is the right way of dealing with problems. It is the right way of legislating, of representing a democratic mandate and of ensuring a fair and better economic outlook for the country. If there are international agreements to which major countries are not signed up, in what position are those countries and their companies left? International law is only enforceable by the acceptance of the people on whom it is enforced. There is no equivalent to this Parliament that can pass a law for the whole world nor is there a court that can lead a judgment against a country that refuses to accept what international law proposes.

Indeed, we discussed how, by the 17th century, the oceans were viewed as owned by everybody and as free, but we did not go on to develop how that freedom was protected. It was protected by the might of one great nation and one great navy, the Royal Navy, which went across the world ensuring the freedom of the seas. Although the argument was that the seas were global, they were global by the fiat of the British empire, which enforced internationalism and the security and safety of those travelling on the high seas. Indeed, it was a deliberate change of British policy. In the reign of Elizabeth I, letters of marque were issued to allow piracy on the high seas as a means of getting at the Spanish wealth. We changed our policy to internationalise and that is the situation that we are now in, but sadly our Navy is not what it was.

Do we have the hundreds of capital ships that we used to have? Do we have the dreadnoughts that we used to have ready to save the high seas from dangers? No, we do not. So, we must think about who will enforce the freedom of the seas. Which great navy is left today that can patrol those open spaces? The US navy, of course. Which state is not a party to the agreements that will regulate mining at the depth of the ocean? The United States, of course. So we must consider who will act against an American company that has not come along dutifully to get a licence from the Secretary of State and applied to an international body for confirmation of that licence. What if an American company goes out? Who will say no? Perhaps the Russian navy might go out, but I doubt it. The British Navy would certainly be unwise to take on the United States in such circumstances. We must consider what we are imposing on our companies and our fellow subjects that is not necessarily being applied internationally.

[Philip Davies]

Is my hon. Friend saying that, given the lack of support for internationalism, so to speak, we should not have the International Seabed Authority, and that we should have a free-for-all whereby, if our companies want to go out there and explore or exploit somewhere, they should just get on with it irrespective of what any international body might say?

[Jacob Rees-Mogg]

That is an exciting way of looking at it—to adopt a real free-market approach, which allows companies to go out to prospect, as they did in California in the 19th century, and as Cecil Rhodes did when he went to South Africa. He found great acres of space and he made a claim and he dug and he dug and he dug, and he found gold, diamonds and platinum, and he put them into a great company, and he made millions—in modern money, billions—of pounds by doing that. That was not through state regulation, not through international bodies, not through the United Nations reaching an agreement to say, “You may do this,” or “You may do that,” but by enterprise, hard work and energy—by all those great British virtues of which we should be so proud. Why not say that of the oceans? Why not mount expeditions? We could launch one together, Mr Speaker, to try and find the lost city of Atlantis, which we would expect to have all sorts of valuables—metals, gold, excitements—in it.

We could have other companies, perhaps, doing more careful geological surveys to locate those metals—the rare earth metals. An interesting fact about rare earth metals is that they are not particularly rare. The Chinese sold them very cheaply to start with, but they became a monopolist and then they raised the price. In doing so, they showed absolutely classic monopolistic behaviour. Those metals are not particularly rare, although they are quite expensive to gather together. People could go off as a free-enterprise endeavour, without having to pay for licences and regulations.

Every pound that is spent on a licence is a pound that cannot be spent on exploration, or on exploitation of the asset once it is found. How relieved I was to hear from Mining Weekly about the speed with which the sea bed—the mighty sea bed—restores itself to pristine condition after someone has been down and done a little digging. That conjures up wonderful images. I was delighted to hear my hon. Friend the Member for South East Cornwall (Sheryll Murray) say that there is always a Cornish miner involved, and that they go down and dig, even at the depths of the ocean, to find valuable assets that we may be able to exploit for the benefit of the British people. That is a free-enterprise endeavour.

Interestingly, those who spoke in the debates in the early ’80s thought there would be a great expansion of activity at the depths of the ocean. Why did that not happen? Is it not obvious, Mr Speaker? The dead hand of legislation and bureaucracy came crushing down on those who wanted to be enterprising in their prospecting activities. So there was no equivalent of the Californian gold rush. There was no shout of, “There’s gold in them there hills,” or anything of that kind, of the undersea hills.

As we are talking about geology, it is worth mentioning that the great father of geology, a Mr Smith, started all his work in North East Somerset, in the village of High Littleton. Going down in a mineshaft, he saw the different layers of the earth and worked out—

[Mr Speaker]

Order. I am all agog at the racy and intoxicating oration that the hon. Gentleman is delivering to the House, but I have two concerns. First, if the hon. Gentleman leads a lengthy sojourn, either accompanied or unaccompanied, in the terms that he describes, he may be sorely missed in North East Somerset. Secondly, I feel sure that, ere long, notwithstanding the quite legendary eloquence that the hon. Gentleman has thus far deployed, he will turn his attention to the contents of the Deep Sea Mining Bill itself.

[Jacob Rees-Mogg]

Because so many other Members are keen to speak in the debate, I shall keep my remarks short. I know the Benches are not currently filled, but people are waiting in their offices to come racing down into the Chamber the minute the Minister has said a few words, such is their excitement to talk about the details of the Bill.

The details of the Bill are of course crucial. Its worst aspect is that it removes the Secretary of State’s ability to repeal legislation. If there is one thing that I take particular exception to, it is the idea that legislation that was temporary and could be removed is now to become a permanent burden on our statute book. When we look, in the No Lobby, at the statutes of this great nation, we see one volume covering the first few hundred years of the existence of Parliament, and now we see a volume barely doing a Session of Parliament. How glorious it would be if more Bills gave Secretaries of State power to take them off the statute book—to deregulate. I would urge that the Bill should have a more deregulatory ambition, and therefore in the early stages of its consideration we should delete the conversion of the 1981 Act from temporary to permanent, because the temporary nature of legislation is one of the pious hopes that all legislators should have. We should wish our legislation to deal with a temporary problem and then restore the liberties of the British subject as soon as possible. That would be my first concern over the Bill and the regulations within it.

[Philip Davies]

My hon. Friend knows that I agree with him about this, and in my time I have unsuccessfully tried to introduce sunset clauses or expiry dates into Bills. But will he concede that, in essence, every Bill is temporary in the sense that it can be repealed at any time?

[Jacob Rees-Mogg]

If only that were true. I would hope that Bills would be repealed at any time, but sadly the House is much keener to pass new Bills than it is to repeal old and defunct ones. Every so often a Session will pass 20 repeals of ancient Bills. I think we had one earlier in this Session or at the end of the last Session, which repealed some Bill relating to the purchase of the Isle of Man from whoever previously owned it to make it part of the Crown territory. That does happen, but not often enough.

A sunset clause in this Bill would be particularly attractive, especially if the Americans are not part of this. I rather like the American approach to internationalism; that is to treat it with the deepest caution, and not to sign up to every international body that comes along. My hon. Friend mentioned what Sir Teddy Taylor said about the Foreign Office. It is interesting that in the United States the State Department almost always wants to sign up to any bit of internationalism that is going. But the sensible people in the Senate who have to ratify treaties almost never do, because they do not think it is in the interests of the American people. Because of our system, we seem to be rather too keen to sign up to international agreements, when, as I was saying earlier, we should do things by free enterprise, which will often ensure more success, riches and wealth for the nation at large.

It is a pleasure to see you in the Chair, Mr Deputy Speaker. Mr. Speaker has done a long stint and we are glad to have you standing in for him.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

This will be an even longer stint.

[Jacob Rees-Mogg]

Then Mr Deputy Speaker will no doubt be pleased that I will try to entertain him for at least part of his stint in the Chair.

Following that preamble and my concerns about the nature of the Bill and internationalism, including the risks that that has for democracy and the problem of it being a dead hand on enterprise, if we are to have this type of regulation, the Bill is obviously sensible. It is obviously wise to extend it from purely metals to include gas and liquids, because there may be all sorts of exciting things at the depths of the sea. There may be endless supplies of gas. There may be oil spurting out as if Saudi Arabia was on the sea bed rather than in Arabia where it is more normally located, and therefore one would find that there is this enormous wealth that could reduce the price of oil to the enormous benefit of our constituents, particularly those in rural seats where the price of petrol is a serious problem. These resources, liquid and gas, could be sucked out of the earth and used to the benefit of our constituents.

To that extent, I am happy to support the Bill. I do not think that there will be much opposition to it. It is a sensible level of amendment to what already exists, bearing in mind my overarching concern that we are being too internationalist and that, in principle, we are not encouraging enough enterprise.

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[Alistair Burt]

No. The sort of work we are talking about is immensely expensive. If a company is to get down and explore the resources in deep sea, that will mean a very expensive financial commitment. Companies have not come forward because it has not been worth their while to do so, but the world is moving on. There is no evidence to suggest that anything in UK regulation has been in any way off-putting; indeed, quite the contrary. The most recent company to go through the process made reference to the helpfulness of the British Government as it pursued its licence. I hope I can set my hon. Friend’s mind at rest: regulation does not seem to be an issue.

Let me make a little more progress. When one thinks of the offshore, what inevitably springs to mind first is the search for oil and gas. However, industry has yet to express an interest in possible supplies of hydrocarbons in the deep sea, which is why no international regulations have been developed for their exploration. That is not to say that it will not happen. It may sound odd to suggest that international regulations for the exploration of hydrocarbons would be needed when exploration for hydrocarbons is not new. Multinational corporations are exploiting hydrocarbons all around the world, often in very deep water, but the point is that when we talk of the deep sea and “the area”, we talk of the role of the International Seabed Authority in managing the resources. So any exploration or exploitation would need to be under those ISA regulations, not national ones.

Let me deal now with some of the questions raised about the Bill, as it would be pertinent to do so now that I have set out the background, before providing some comment on the history of the Bill and why we are where we are with it. If I may, I shall discuss the issues in relation to the hon. Members who raised them.

I thank the hon. Member for Dumfries and Galloway for setting out the position of the Opposition and for indicating that the Opposition will support the Bill for the reasons that he set out. He rightly emphasised that policing needed to be done in respect of those who had applied for, and been successful in gaining, licences. The need to get on with the job has to be balanced with concern for the environment. Our intention is closely to scrutinise the activities of contractors. The current contractor is a highly reputable company, and we are satisfied that it will act appropriately.

The ISA has responsibilities, too, in respect of those who apply for licences from it. Reports have to be made to the ISA, whose legal and technical commission scrutinises them. We are pressing for improvements in the quality of the licences, which will become part of the negotiation; we anticipate greater exploitation of these resources. I shall say a little more about that in a few moments.

My hon. Friend the Member for Bury North raised a series of points. He mentioned the involvement of the European Union, but I am conscious that this is a track down which it would probably be inadvisable to go or spend any time; there might be some differences between him and me on certain elements of the EU. I would like to give him an absolute assurance, however, that there is no question of the UK ceding any powers to the EU, which is represented on the ISA for two reasons. First, a number of states without maritime interests want the EU to represent them, and secondly, a number of areas in the convention on the law of the sea fall within Community competence. They are listed in a declaration and include issues such as the marine environment, trade in minerals and fishing, and there is no intention to go any further.



Questions were raised about a company from a country outside the parties that had committed to the convention—and the United States came up as an obvious example. How would it go about things if it was prevented from participating? As my hon. Friend the Member for South East Cornwall suggested, it would need to seek a sponsorship from a party in a participating state. Such a sponsorship is not lightly handled; the regulations are covered by the ISA, which has set out in regulation 11 details of a certificate of sponsorship and the exact connection between a state and company wishing to apply for registration by using either its own state or another.

As for the position of the United Kingdom, we have a contractor that is largely based in the United States but has a subsidiary in the UK which allows it to apply through the UK to the ISA. Companies are not prevented from being sponsored by the fact that their nation states have not signed the convention, but they will be sponsored in a way that is properly controlled.

Members have asked what penalty would be imposed on a company that operated outside that sphere, and just went rogue and mined. I understand that there would then be a question mark over the title to the minerals, as a result of which the company would be at risk in selling on those minerals or anything else. As far as we are aware, however, the issue does not arise at present. The legislation has encouraged companies to operate in accordance with the rules because it is in their interests to do so. The costs of exploitation of resources in the deep sea are such that a company would not wish to be involved unless it was absolutely sure that it would be able to sell on what it had, and that it was protected. The legal ramifications of not going through international regulation would be enormous.

[Jacob Rees-Mogg]

Is that also the view of the United States Government, or might they be willing to protect an American company that had mined and was not party to the convention?

[Alistair Burt]

Obviously I cannot speak for the United States Government. I am not sure whether they would be able to protect a company based in the United States under their laws if that company was in breach of the international regulation and convention that apply here. However, as I have said, that does not arise at present, and there are ways of handling the accession of companies whose nation states are not party to the convention.

My hon. Friend the Member for Bury North asked why the 1981 Act was being changed now, and why it was passed at the time. I dealt with that question a moment ago. The atmosphere surrounding the exploration of deep-sea minerals was very different in 1981. Things have moved on since then, and we need to upgrade the legislation. The Act was passed at a time when early and rapid exploration was anticipated, but it did not happen, so there has been no need to replace that temporary provisions legislation during the intervening years. However, market and technological developments now suggest that the time is right to amend it, and the Government will therefore support the Bill.

My hon. Friend the Member for Shipley raised questions about the prosperity agenda. He asked how we could ensure that our determination to enforce environmental controls and licensing did not get in the way of those wishing to become involved in business. Fees are prescribed with the consent of the Treasury. I must admit that I do not have the fees in front of me, but I can assure my hon. Friend that I will have them in time for the Committee stage. I can tell him that only two licences have been applied for over the years, and I have no reason to believe that the fees have posed any difficulty. Indeed, as I said earlier, the company that was most recently involved in the process thanked the Government and congratulated them on their help and support. What I do know is that the fee for application to the ISA for a licence is some US$500,000. We are not talking about applications by companies operating on a small scale. We are talking about big business and serious sums, which is understandable if the authority is to be allowed to do its work and ensure that no one makes a frivolous application.

As I said, only two licences have been issued in the United Kingdom under the 1981 Act. We monitor carefully the compliance by the contractor with the terms of the licence, and we are not aware that any company has applied for a licence and been refused, or had its licence revoked. I can reassure Members who are worried that there is no evidence that the regime is in any way putting anyone off.

[Alistair Burt]

I doubt it very much. Speaking off the top of my head, I imagine there would be a passing-on provision that would assume that those who had complied with the terms of the 1981 Act will be, as it were, automatically passported under new legislation. The new legislation will expand the scope of the minerals being sought and cover associated issues. I am sure I can assure my hon. Friend that nothing in relation to the practical operation of the new legislation would require what he asks about.

My hon. Friend the Member for Shipley asked how the licensing regime in the UK compares with those in other countries. Because of the scale of the issues involved here, very few states have any legislation on deep-sea mining. We are confident that UK legislation balances the need to ensure proper control over contractors with the need to avoid having an over-burdensome regulatory regime.

My hon. Friend also asked how long it takes to issue licences. We act very quickly. We have worked with contractors to ensure that licenses are issued promptly. The most recent licensee expresses happiness with its relationship with the Government.

On the ISA, my hon. Friend asked how overlaps are avoided. That question reminds me of the situation in the Klondike, as represented in the 1950s black-and-white B-movies we remember so fondly, when people would go out and stake the land. Occasionally, I believe, fisticuffs might have been involved if there were disputes. We have moved on from that, although it is still a first-come, first-served business as the licenses are processed. The ISA is the stakeholder and once it has granted a licence for a particular piece of the sea bed, that is it. That prevents any overlap. The system ensures there is no problem in terms of competing claims.

The hon. Member for Brent North raised some environmental concerns. We have made it clear that the ISA should consult relevant NGOs in developing mining regulations. That goes to the heart of the issue of where we go from here. As has been made clear, the expectation is that the licences being sought will be for exploration. There is a distinction between exploration and exploitation. Exploitation under the wider scope of the legislation is not expected in the next four or five years. At present the ISA is consulting member states about what their regulations should be for that mining and exploitation. The UK has a crucial role to play in that, given our history of, and engagement in, environmental protection. We are engaged with the ISA in working through the new regulations that will govern mining.

As far as UK-based NGOs are concerned, there is an understanding that this is going to happen and it will not be stopped. Accordingly, it is a good thing for the UK to be involved and NGOs are very supportive of our engagement. There has been a meeting between officials and the WWF in relation to this Bill. I understand it is content with the way we are going about things. A further meeting is promised and we will keep in close touch. Bearing in mind the record of some other states, the fact that a British Government—of any party—should be involved in dealing with these issues should be of comfort to international NGOs. We will be fully engaged.

Let me again deal with the point about section 5 of the 1981 Act to which we may return in Committee. My note from my colleague says that nobody has suggested before that section 5 is inadequate, and that although the Act can change the duties imposed on the Secretary of State, it is for the ISA to establish environmental standards for applications from other countries. We have our own standards, but a double lock and a double check are in place. I am happy to go into that in further detail in Committee, making sure that I have got absolutely up-to-date information on how this has been handled. I am very content with the general reassurance I can give that it is not complacency but experience to date that leads me to believe that there has not been a challenge. However, we will double check and then see whether there is any need for any increased provision. If there is, I am sure that my hon. Friend the Member for South East Cornwall will be the first person to introduce it.

My hon. Friend the Member for Dover (Charlie Elphicke) raised the issue of fracking. As I said at the beginning of my remarks, we are hundreds of miles away from that; it is not an issue in relation to this Bill and there is no connection with this activity. My hon. Friend the Member for North East Somerset raised issues relating to our companies being disadvantaged compared with US companies, and I believed we have covered that. I do not think there is any evidence of that happening, and I hope that we have the balance right between that problem of international regulation and the prosperity agenda and the like.

I have answered a number of specific questions, but I have not dealt with some key parts of the Bill that I would like to address. Of course, if hon. Members have further questions, I am happy to take interventions. The 1981 Act was passed at a time when the prospects for a United Nations agreement on deep-sea mining were uncertain. The United Kingdom, along with a number of other countries, therefore decided to enact its own legislation to enable the Government to license British companies to undertake deep-sea mining. That was coupled with a system under which the various other countries that had enacted legislation would reciprocally recognise each other’s licences.

The 1981 Act provides for the Secretary of State to issue exploration and exploitation licences, and for licences issued by reciprocating countries to be recognised. It also made provision for the revocation of licences where, for example, there was a threat to safety or the welfare of persons, or there was a need to protect the fauna and flora of the deep-sea bed—even then, such issues were a matter of concern to this House. As we have discussed, the Act also included provision in section 5 to place a strong obligation on the Secretary of State, in exercising his or her powers, to have regard to the protection of the marine environment. That is likely to be unchanged by the new Bill, but I have given a commitment to the House that we will take a hard look at whether there is genuinely any need to consider that further, and we will do so. The Government expect any company that we sponsor, as well as those sponsored by other states, to comply with the highest environmental standards.

Although certain UK companies were interested in deep-sea mining, in fact no mining was conducted in accordance with the licences issued under the 1981 Act. The UN convention on the law of the sea was adopted in 1982, with part XI dealing with deep-sea mining. However, the United Kingdom, again in the company of a number of our allies, did not find those provisions acceptable. We did not believe that they were conducive to encouraging commercial companies to engage in deep-sea mining. We therefore did not become a party to the convention at that time, even though most of the other provisions were acceptable and, indeed, welcome, to us.

I should add that I very much endorse what my hon. Friend the Member for South East Cornwall said about the importance of the convention; it has rightly been called the “constitution of the oceans”. The United Kingdom is a strong supporter of the convention, which we believe, overall, provides an appropriate balance between the rights of the various users of the seas. As a maritime nation, it is especially important to the United Kingdom that the international rules on the law of the sea should be clear and fair. A number of colleagues have mentioned that our good friend—and our closest or oldest ally, whichever is the current term—the United States has not yet ratified the convention. I know that the Administration in Washington have expressed an eager desire to do so, and we wish them well with the endeavour. We look forward to their participation in the convention and, in particular, to their playing a full role in the ISA.

[Jacob Rees-Mogg]

I am grateful to the Minister for giving way. Under the treaty of Windsor of 1386, our oldest ally is Portugal.

[Alistair Burt]

This is a fact never lost on the Foreign and Commonwealth Office. I also have in my room at the FCO a copy of a treaty with Algeria that dates back many centuries; we have such treaties scattered around the place. There are many claims to be our oldest ally and we can be quite sure that the facts would prevent the United States from claiming that. For the avoidance of any doubt, however, let me make it clear how close and warm our relationship is with the United States across the board. Environmental protection and the law of the sea is another area where the House can expect the warmest and closest engagement between us and the US. We look forward to the US’s playing a full role in the International Seabed Authority.

As I have said, the UK, in common with other industrialised countries, did not feel able to participate in the original convention because of the terms of part XI. There was a general recognition that it was unsatisfactory for the industrialised countries to remain outside the convention. So in 1990 the then Secretary-General of the United Nations, Mr Perez de Cuellar, convened informal consultations, which continued for several years. The UK played a key role and the result was the adoption by the United Nations General Assembly of an agreement on the implementation of part XI of the convention in July 1994. Such agreements assisted the UK’s joining the convention.

The part XI agreement is particularly pertinent to the Bill. It remedied the major defects of the original convention and, in particular, it addressed the costs to states parties and ensured that they were kept to a reasonable level. It clarified and streamlined the procedures for the approval of applications to explore for or exploit the mineral resources of the deep-sea bed. The agreement reduced the possibility for the so-called Enterprise, an international organisation composed of states parties, to participate in exploitation or exploration. It emphasised that decision making in the authority should normally be by consensus. It resolved satisfactorily the problem of how to ensure equitable representation of all states in the council, including the industrialised and developing states, as well as the consumers of metals and land-based producers.

The agreement ensured that any transfer of technology to developing countries should be by agreement. It also stated that the development of the resources of the area should take place in accordance with sound commercial principles. It emphasised that the system of payments to the authority should be fair to both the contractors and to the authority and established a finance committee, on which the United Kingdom has a member, which has a key role in scrutinising the finances of the authority.

The adoption of the part XI agreement paved the way for the United Kingdom to become a party to the convention in July 1997. When the UK became a party to the convention, we considered whether the 1981 Act was sufficient to enable us to comply with our obligations under the convention. At the time it was concluded that it did—although, as I think it is fair to say, only just. Obviously the intention behind the 1981 Act was not to implement the convention, which had not even been adopted when the Act was enacted, but the essential elements were thought to be sufficient. In particular, as we have seen, the Act provided for the issue of licences to prospective contractors and we are satisfied that that gives the United Kingdom sufficient powers in relation to such contractors to comply with the requirements of the convention, particularly that the sponsoring state should have effective control over its contractors.

The International Seabed Authority is the body that under the convention is responsible for regulating deep-sea mining. It has its seat in Kingston, Jamaica. The House will be aware of the extent of my portfolio in the FCO—Iraq, Iran and various countries throughout the middle east—so I hope it will not mind if I apply to the Foreign Secretary to suggest that it might be necessary for me to visit the ISA in Kingston, Jamaica at some point, with, of course, an appropriate delegation including Members of the Opposition, to ascertain that the proposals made by my hon. Friend the Member for South East Cornwall in her Bill will be accepted by the authority. With the permission of the House, I will make that request to the Foreign Secretary. However, that is a digression.

--- Later in debate ---

[Alistair Burt]

I do not know yet, because these are applications relating to commercial companies. I will check. My understanding is that when the application is made to the ISA, there is a nomination process which is led by a speech or a recommendation by the representative of the sponsoring state, to explain that it backs the application. So the document relates to a specific company. I genuinely do not know whether these are public documents. If they are, I do not think there would be any problem, but I must check.

However, I do not think there would be any problem in my reading out the appropriate section in one of the applications. It states:

“As was made plain last year—and indeed the United Kingdom has said on a number of occasions in the Assembly and the Council—the United Kingdom is committed to ensuring the highest environmental standards for companies which it sponsors under Part XI.”

Again, our experts have looked at the application by this particular company and are entirely satisfied that the company will be applying the highest environmental standards. I know from my personal contacts with the company that they feel equally strongly about the need to do so.

So not only is there a pledge on behalf of the United Kingdom Government, and accordingly we can be held to that, but there is a recognition, because it is a narrow field and people know one another, of the importance of it personally to those involved. I say that simply to give a sense of how seriously environmental protection is taken; the House need not be worried that it is glossed over in any way.

The standard clauses for exploration contracts granted by the ISA are also covered by published documents, which set out what environmental monitoring is necessary. Those documents are available. We might talk to the Library about making any of these documents available before the Committee, so that Members will see what the ISA says, what we say, and so on. I hope that that will help.

Having made the sponsored application, the applicant makes a presentation to the legal and technical commission of the authority. As I have said, in the case of applications sponsored by the United Kingdom, the Government send representatives to speak during the presentations in the legal and technical commission, to demonstrate not only our support for the applications but the responsibility that we take as a Government for them. I hope that is reassuring. After approval by the legal and technical commission, the applications are forwarded to the council.

We were very pleased that the first application sponsored by the UK was successfully approved by the International Seabed Authority in 2012, and that the contract between the British company and the authority was signed earlier this year. The second application was put to the legal and technical commission this year, although, disappointingly, it was not approved by the commission because of lack of time. We hope, however, that the application will be approved by the commission next year. We are convinced that it is a first-class application.

I would like to pay tribute to the staff of the International Seabed Authority, particularly its Secretary General, Mr Odunton of Ghana, and his deputy, Michael Lodge, who is British. We have found them knowledgeable and helpful, and we have enjoyed a fruitful working relationship with them over many years.

My hon. Friend the Member for South East Cornwall rightly referred to an event in March this year to mark the signing of an exploration contract granted by the International Seabed Authority to a UK-registered company. That licence, for the exploration of polymetallic nodules, is in an area of the mid-Pacific ocean at depths of around 4 km below sea level. The Minister for Universities and Science, my right hon. Friend the Member for Havant (Mr Willetts), who spoke at the event, called the new venture a

“huge vote of confidence in the UK”,

and declared that we have the skills and technology to make it a success. As a number of colleagues have said, we want the United Kingdom to be a world leader in this regard. He talked of how the decision to grant a licence reflected British technological strengths in areas such as marine engineering and marine science, and how it would give British companies and British scientists the opportunity to undertake groundbreaking work in fields such as deep sea biology.

The 1981 Act was sufficient to do the job—to ensure the UK Government had sufficient jurisdiction and control over the UK company in order for it to sponsor its first application in 2012. Now we want to ensure that British companies are able to take up the opportunities available to explore for different mineral types—the point made by the hon. Member for Brent North—namely polymetallic sulphides and cobalt-rich crusts, and we want to ensure that we are fully compliant with UNCLOS.

The Bill is really about the balance between commercial companies’ need to find the resources that the world seeks and environmental protection. It is also about saying, “The United Kingdom is open for business in this sphere.” We can say to any company that seeks the United Kingdom’s sponsorship of an application for polymetallic sulphides or cobalt-rich crusts, “Yes, we can sponsor your application.” But at present, without this Bill, because of the changes in technology, if they were applying for minerals outside the scope of the legislation, we would have to turn such companies away. That is why the change is necessary. The Government simply do not believe that that would be the correct position for our country to be in. At its heart, the Bill is designed to enable the United Kingdom to take advantage of the opportunities that this new, emerging and very exciting technology offers us.

As we have discussed this morning, the Bill is quite a technical measure, with all the substantive amendments to the 1981 Act being set out in a schedule to the Bill. I could say a good deal about each of the amendments, but that might stretch the patience of the House, so I will not go through them in any great detail. We have covered a lot in the interventions and discussions that we have had. The point to make is that the Act is being brought up to date in relation to the sort of minerals that are now available for exploitation and in relation to changes in the law. It deals with some of the technical aspects relating to Scotland and other jurisdictions, but it keeps at its heart the need to balance commercial opportunity with environmental protection, which has already proved to be successful. But none of us is naive, and none of us can forget that there are states that operate differently. Without being absolutely certain that international regulation will follow the sort of intentions that we in this House would have, the Government will not be happy. In our dealings with the ISA, we will look to ensure that that works its way through.

The amendments in the schedule refer to changing definitions of the minerals to be exploited, appropriate dates for corresponding contracts with the ISA, the tightening up of the licences, and ensuring that reciprocal recognition is brought up to date. They provide for important work to be done to arbitrate disputes and deal with the international tribunal for the law of the sea and to ensure that it is relevant in relation to this work. They remove redundant terms and bodies and ensure that the terms used in the Act are up to date.

As we have heard, despite the Bill’s title and the 1981 Act, no mining or exploitation has been conducted in the deep sea by a UK company or any other company. Even with the most optimistic outlook, this is probably five years off for polymetallic nodules and longer for other mineral types.

The International Seabed Authority developed regulations for the exploration of polymetallic nodules some 10 years ago. To date it has issued 13 contracts and is in the process of issuing more. They are all for areas in the Clarion-Clipperton fracture zone in the equatorial north Pacific ocean, except for one in the central Indian basin of the Indian ocean. Exploration regulations for polymetallic sulphides were agreed in the past few years, with the authority issuing contracts to China, Russia, Korea and France, and cobalt-rich crust regulations were only agreed in 2012, since when there have been only a couple of applications.

Of the total of 23 contracts awarded or pending, over half were submitted in the past few years. That gives an indication of how the pace of interest and demand has changed, which is another reason why my hon. Friend the Member for South East Cornwall has proposed this Bill at this stage and why it is important to support it and make progress.

At this year’s annual meeting, the ISA’s council discussed a paper on the process towards development of a regulatory framework for the exploitation of polymetallic nodules. As I have said, so far the activity in relation to deep-sea mining has been confined to exploration, but the time for exploitation—that is, mining—is coming. I know that the secretariat to the authority is acutely aware of the challenges that will be posed by the development of regulations for the exploitation of polymetallic nodules. It has, therefore, sensibly engaged a well-respected team of consultants to look at the issues. I have here a copy of the consultants’ report, which is on the authority’s website. It sets out clearly and carefully the issues with which the authority will have to grapple. It is entitled, “Towards the Development of a Regulatory Framework for Polymetallic Nodule Exploitation in the Area”, and I commend it to the House and to colleagues who have expressed their interest in the affair today.

It is worth reiterating two points that the UK made clear in our statement. First, we emphasised that polymetallic nodule exploitation must be conducted in accordance with the highest environmental standards. Secondly—I believe we were alone in the states that spoke to make this point—we called for full engagement with all stakeholders, including contractors, technology providers and non-governmental organisations, in the development of a regulatory regime. I hope that that is of interest to the House and its needs.

I repeat those points because they are essential and lie at the heart of our approach. It is only by working together to develop a regime that we will be able to strike the right balance between protecting the environment and encouraging commercial enterprises. Stakeholders need to pool their knowledge and expertise, including that in the economics of deep-sea mining, the technology available and the biology of the environment involved, in order to begin to understand the full picture and reach the best solutions. We see environmental NGOs as important contributors in that process. Officials already engage with NGOs at authority meetings. I had a meeting with officials in advance of this Second Reading debate and have promised more consultations in advance of future meetings. We see this as an ongoing collaboration.

The Government believe that, given the advances in technology, a likely increase in future demand for mineral resources and a steady if not increasing cost for those resources, deep sea-bed mining is inevitable. It is a question of when, not if. In other words, deep-sea mining is going to happen and we could not stop it even if we wanted to. The fact that companies have started to take up exploration licences from the ISA when previously they were the domain of research institutes is a sign of a new phase in development. A UK-registered company is one of those that have taken up a licence and it is our clear intention to be at the forefront of this emerging industry. It is important that the UK should be in that position. This is an opportunity for us to ensure that our values, particularly in the protection of the environment, should be taken into account.

We believe that this Bill, modest though it is in some ways, is a crucial stepping stone in ensuring that the United Kingdom can be in the right place to influence developments. We believe that, as a responsible sponsoring and licensing state, we will be able to fulfil our obligations to ensure that the highest environmental standards are adopted and applied by our licensees in the work that they carry out. I can also assure the House that we will make use of our leadership role as a sponsoring state to try to ensure that the best possible practices are adopted when the ISA develops a regulatory regime for mining.

In conclusion, the Government believe that the Bill will signal our support for and readiness to uphold UNCLOS, provide leadership in calling for and upholding the highest possible environmental standards, and ensure that the UK aims to make the most of the opportunities offered by this increasingly important industry. I cannot commend the House enough for the attention it has paid to my hon. Friend the Member for South East Cornwall’s Bill and I cannot commend her enough for proposing it. I look forward to taking it further with the consent of the House, with the intention of maintaining the balance we have all strived to achieve in the past few years.

[Jacob Rees-Mogg]

On a point of order, Mr Deputy Speaker. The Minister referred to placing papers that contain confidential information in the Library. You will be aware that Mr Speaker ruled in 2006 that any confidential papers that are referred to ought to be placed in the Library with the confidential information removed. Will that practice be followed today?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

That is obviously a matter for the Minister, but as the hon. Gentleman is going off a previous ruling, I am sure the Minister will take it on board.