A New Zealand company is celebrating its biggest milestone on its road towards extracting rock phosphate from a seabed off the South Island.
Chatham Rock Phosphate, which is listed on NZX Alternative Market (NZAX), holds a prospecting licence for an offshore area 450 km east of Christchurch.
The 4,276 square kilometre area is thought to hold large deposits of rock phosphate, an essential ingredient in manufactured fertiliser.
Chatham Rock Phosphate (CRP) had just received what it calls a "stunning endorsement", with the major global dredging company Boskalis taking a 20 per cent shareholding in the company.
CRP managing director Chris Castle said Boskalis was an industry leader in dredging, maritime infrastructure and maritime services, and was effectively staking its reputation on the project.
"It's the biggest milestone this company and this project have had so far," Castle said.
"It's a third party saying 'this can be done' and 'we want to invest in it'."
Boskalis had already been involved in the project for 18 months and had intimate knowledge of the details, Castle said.
"Some people have said we're crazy for trying to extract in 400 metres of water.
"But the people who are closest to the technological challenges are saying 'it can be done'."
This was a significant step in term of the company's ability to raise further funds, Castle said.
The agreement allowed for Boskalis to subscribe for up to 20 per cent of CRP's issued capital, and to appoint a nominee to the CRP board.
Castle said CRP hoped to begin extraction sometime in 2014 but was waiting on the final outcome of the Government's proposed Exclusive Economic Zone and Continental Shelf (Environmental Effects) Bill. The bill passed its second reading on July 18.
Establishing a rock phosphate industry in New Zealand territorial waters would have a number of economic, environmental and market benefits, Castle said.
Rock phosphate had less environmental damage than super-phosphate, he said.
New Zealand used about 1 million tonnes of rock phosphate each year, but this was primarily imported from Morocco.
Being able to extract rock phosphate locally would reduce the industry's carbon footprint, plus high transport and foreign exchange costs, he said.
Peter Berdowski, Boskalis chief executive, said CRP offered a unique opportunity for his company to get involved in the deep-sea mining industry.
"This is a very interesting growth opportunity allowing us to draw on our wealth of expertise and to contribute this to the successful development of this unique project, together with our partner Chatham."
Boskalis had been operating up to now as the project's technical partner to design a process to extract phosphate nodules from the seabed. It operated in over 75 countries across six continents.