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An economic analysis of a pioneer deep ocean mining venture
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    A 3 million ton per year, three metal, vertically integrated, ocean exploration, mining, transportation and ore-processing and metal-marketing system is defined and the capital and operating costs estimated in 1980 U.S . dollars . A basic return-on-investment 11pay-out11 analysis model is presented with several alternate cases investigated. A series of tests is performed to determine the system's sensitivity to realistic variations of key costs and schedule. For a gross investment of almost $1.5 billion, or a fixed capital investment of about $1 billion, an ocean mining system producing nickel, copper and cobalt will yield approximately $415 million in annual revenues, a before-tax profit of about $180 million and an after-tax profit of less than $100 million, providing an unsatisfactory low internal rate of return of approximately seven percent. It is unlikely that ocean mining will be undertaken using the system defined herein at this level of return unless a critical feedstock for a company's major product is produced or a national need for a strategic metal develops . This conclusion is entirely consistent with today's low level of commitment to long-term, capital-intensive natural resource development projects.
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