1340-(214)

Il SÉRIE-A — NUMERO 69

b) To attract investments and technology to the exploration and exploitation of the Area;

c) To ensure equality of financial treatment and comparable financial obligations for contractors;

d) To provide incentives on a uniform and nondiscriminatory basis for contractors to undertake joint arrangements with the Enterprise and developing States or their nationals, to stimulate the transfer of technology thereto, and to train the personnel of the Authority and of developing States;

e) To enable the Enterprise to engage in sea-bed mining effectively at the same time as the entities referred to in article 153, paragraph 2, b); and

f) To ensure that, as a result of the financial incentives provided to contractors under paragraph 14, under the terms of contractors reviewed in accordance with article 19 of this annex or under the provisions of article 11 of this annex with respect to joint ventures, contractors are not subsidized so as to be given an artificial competitive advantage with respect to land-based miners.

2 — A fee shall be levied for the administrative cost of processing an application for approval of a plan of work in the form of a contract and shall be fixed at an amount of USS 500,000 per application. The amount of the fee shall be reviewed from time to time by the Council in order to ensure that it covers the administrative cost incurred. If such administrative cost incurred by the Authority in processing an application is less than the fixed amount, the Authority shall refund the difference to the applicant.

3 — A contractor shall pay an annual fixed fee of US$ 1 million from the date of entry into force of the contract. If the approved date of commencement of commercial production is postponed because of a delay in issuing the production authorization, in accordance with article 151, the annual fixed fee shall be waived for the period of postponement. From the date of commencement of commercial production, the contractor shall pay either the production charge or the annual fixed fee, whichever is greater.

4 — Within a year of the date of commencement of commercial production, in conformity with paragraph 3, a contractor shall choose to make his financial contribution to the Authority by either:

d) Paying a production charge only; or b) Paying a combination of a production charge and a share of net proceeds.

5 — a) If a contractor chooses to make his financial contribution to the Authority by paying a production charge only, it shall be fixed at a percentage of the market value of the processed metals produced from the polymetallic nodules recovered from the area covered by the contract. This percentage shall be fixed as follows:

i) Years 1-10 of commercial production — 5 per cent;

it) Years 11 to the end of commercial production — 12 per cent.

b) The said market value shall be the product Of the quantity of the processed metals produced from the polymetallic nodules extracted from the area covered by the contract and the average price for those metals during the relevant accounting year, as defined in paragraphs 7 and 8.

6 — If a contractor chooses to make his financial contribution to the Authority by paying a combination of a production charge and a share of net proceeds, such payments shall be determined as follows:

a) The production charge shall be fixed at a percentage of the market value, determined in accordance with subparagraph b), of the processed metals produced from the polymetallic nodules recovered from the area covered by the contract. This percentage shall be fixed as follows:

i) First period of commercial production — 2 per cent;

ii) Second period of commercial production — 4 per cent.

If, in the second period of commercial production, as defined in subparagraph d), the return on investment in any accounting year as defined in subparagraph m) falls below 15 per cent as a result of the payment of the production charge at 4 per cent, the production charge shall be 2 per cent instead of 4 per cent in that accounting year;

b) The said market value shall be the product of the quantity of the processed metals produced from the polymetallic nodules recovered from the area covered by the contract and the average price for those metals during the relevant accounting year as defined in paragraphs 7 and 8;

c) :

. i) The Authority's share of the net proceeds shall be taken out of that portion of the contractor's net proceeds which is attributable to the mining of the resources of the area convered by the contract, referred to hereinafter as attributable net proceeds;

it) The Authority's share of attributable net proceeds shall be determined in accordance with the following incremental schedule: