The robot is ready - so when will deep sea mining start ?

* Most potential subsea minerals in international waters

* U.N. body expects mining code in 2-3 years

* Canadian company ready to mine off Papua New Guinea

By Stephen Eisenhammer and Silvia Antonioli

NEWCASTLE, England/LONDON, April 18 (Reuters) - The world's first deep sea mining robot sits idle on a British factory floor, waiting to claw up high grade copper and gold from the seabed off Papua New Guinea (PNG) - when a wrangle over terms is solved.

Beyond PNG, in international waters, regulation and royalty terms for mining the planet's subsea wealth have also yet to be finalised. The world waits for the judgement of a United Nations agency based in Jamaica.

"If we can take care of the environment we have a brand new day ahead of us. The marine area beyond national jurisdiction is 50 percent of the Ocean," said Nii Odunton, secretary general of the U.N.'s International Seabed Authority (ISA).

"I believe the grades look good, the abundance looks good, I believe that money will be made," Odunton said from the ISA offices in Kingston.

High-tech advances, depleted easy-to-reach minerals onshore and historically high prices have boosted the idea of mining offshore, where metals can be fifteen times the quality of land deposits.

In Newcastle, the "beasty", as engineer Keith Franklin calls his machine, lies in wait, resembling a submersible tank with four metre wide cutting blades.

Built by Soil Machine Dynamics (SMD), it will put Canadian listed Nautilus Minerals on course to become the first company to commercially mine in deep water.

Nautilus' primary resource, Solwara 1, about 1,500 metres underwater, is a Seafloor Massive Sulphide (SMS) deposit, which forms along hydrothermal vents where mineral-rich fluids spurt from cracks in the ocean crust.

Equipped with cameras and 3D sonar sensors the robot is driven by two pilots from a control room on the vessel above, attached via a giant power cable.

"The cameras aren't enough by themselves because the machine will be working by vents where black soot spurts from the ocean crust and it will sometimes be near impossible to see anything," said Stef Kapusniak, business development manager for mining at SMD. "The 3D sonar will allow it to make images and send it back to the control room."

The machine then cuts up the sea floor and sucks the rocks through a pipe to deposit it in mounds behind - "like icing a cake," Kapusniak said. Another machine, yet to be built, will then help suck the ore to the surface.

Nautilus aims to produce 80,000-100,000 tonnes of copper and 100,000-200,000 ounces of gold - equivalent to a modest onshore mine. It was supposed to be producing by now, but disagreements with the PNG government over financial terms have set it back.

Chief Executive Mike Johnston told Reuters he was confident a resolution would be sorted out and the company would be mining within two to three years.

Most of the world's best deposits lie even deeper than Nautilus' Solwara 1, at around 6,000 metres in an area known as the Clarion Clipperton Zone.

Large numbers of manganese nodules - potato sized rocks rich in copper, cobalt and nickel - lie across this 4.5 million square kilometre abyssal plain between Hawaii and Mexico.

LICENSES ALREADY AWARDED

The U.N.'s ISA is drawing up a code to deal with some environmental concerns and the commercial terms for deep-sea mining. It predicts it will be finished in around two or three years, with mining still 5-10 years away.

"It's only after the code is in place and people are happy with it that the huge investments needed to start deep-sea mining will occur," ISA's Odunton, a Ghanaian, said.

ISA is, however, already doling out exploration licenses - 19 have been approved. Odunton said interest in them had "catapulted" in the past five years.

In order to get a licence through ISA an applicant must be sponsored or partnered with a country. For nations like Japan which lack their own resource wealth, deep-sea mining is a potential way to secure mineral supply for the future.

China, the world's largest metals consumers, is also one of the most active in exploring the area.

Britain has an exploration licence in partnership with UK Seabed Resources, a subsidiary of defence firm Lockheed Martin .

"These are the days you have to take a position, especially as a government," said Martijn Schouten, managing director at IHC's mining division - an equipment maker which targets seabed mining as its next growth driver.

IHC is the leading partner in an European Union funded project called Blue Mining, begun in February, and will look at the business case and technology for deep-sea mining over the next four years.

This new frontier is an exciting prospect for developing island nations like Tonga and Nauru, which both have exploration licences. For Tonga, where Nautilus says it has been collecting encouraging exploration results, it could be a game changer.

"The revenue stream and taxes from a medium sized mine would have an enormous benefit to the country," Nautilus' Johnston said.

The main companies looking to mine the seabed, like Nautilus and UK Seabed Resources, are not, however, traditional mining firms, although Anglo American does have a 5 percent stake in the former.

IHC said most of its contracts were with technology-based companies that were not in the mining industry, although it would not specify further due to confidentiality clauses.

IHC said it has had discussions with oil majors who are beginning to show an interest in deep sea mining.

But, with little of the deep ocean mapped or explored, environmentalists worry about the potential loss of fauna and biospheres whose existence is not yet understood.

"Only 3 percent of the oceans are protected and less than 1 percent of the high seas, making them some of the least protected places on earth. The emerging threat of seabed mining is an urgent wake-up call," Greenpeace said in a report last year.

"I think we really have to be careful about what happens to the environment," said ISA's Odunton. "We don't know enough to take some of the risks we've taken on land."