Photo: Moana Minerals Limited, one of three companies awarded a five-year exploration licence in the Cook Islands, conducting research at sea. SBMA

There have been some very concerning manoeuvres involving two of the three Cook Islands deep sea mining exploration licence holders in recent months.

In May this year a merger application between CIC – Ocean Research, MML – Moana Minerals Limited and AOMC – American Ocean Minerals Corporation was filed in the USA. The merger aims to be completed by 8th October this year.  No doubt with a view to attracting stock market investors, AOMC says in their investor presentation that they have “Secured and targeted areas across the Cook Islands EEZ”.  They indicate that they might be in a position to begin mining in 2028.

With the merger of the two main companies presently exploring in our EEZ with AOMC, we are left in the dark as to who will actually have effective control of around 12% of our Marae Moana. With AOMC managing the vast majority of exploration license areas, this is a monopoly which does not work in our favour at all.

The merger contains revenue participation agreements with various external entities. For example, an unknown entity in Canada, identified only by a company number, will be receiving 1% royalties of the export value of the minerals, even if the mining makes no profit at all. With multiple companies involved, AOM may find ways to move money around and make a loss so that they don’t have to pay any taxes to the Cook Islands.

To complicate matters even further, for reasons which are not made clear, a merger amendment was filed on 5th August.  This does not make it easy for those of us concerned about the complexity and implications of this merger.

The burden of monitoring, making sure mining operations comply, and keeping an eye on environmental damage rests fully on the Cook Islands. There is no plan of how we will achieve this or what the cost will be to us. The merger brings new directors onboard, some of whom may not pass the Cook Islands’ “fit and proper persons” test.

Will the public be consulted on the final licenses before anything is issued? Will the contracts be in any way subject to foreign laws?  Remember, Odyssey Marine Exploration (linked to CIC in the Cook Islands) took the Mexican Government to court several years ago for not issuing them a mining license. Odyssey was awarded over NZ$60 million.

There are so many critical questions that we don’t have answers to. The document setting out the conditions of this merger is 1,084 pages long and incredibly complex. Our understanding of the law is that Cabinet approval is required for a change in effective control of these companies. However, at least one of the mining companies present in the Cook Islands has indicated that they don’t consider the merger to change their licence validity.  A question for Crown Law perhaps?

In NZ such a merger would be overseen by the Commerce Commission. They would check carefully what the consequences would be for the Government and for the people. We don’t even have a Commerce Commission.

It is easy to feel overwhelmed by all of this, but as scary as it is, the merger isn’t complete yet. A newly elected government can pause everything to give the Cook Islands time to seek assistance. We don’t want to end up drowning in a deal that we didn’t really understand, losing control of our resources, and ceding sovereignty over our seabed to foreign corporations.  In full transparency, the new government, whoever they may be, needs to make a public statement on this issue.

If anyone wants to try and decipher the intracicies of the merger documents, you could start with this link Odyssey Marine Exploration Form S-4/A. Also check  Koinon Consulting website where much of this information has come from.