There are billions of tons and billions of dollars
worth of critical minerals at the bottom of the sea
floor. Nickel, copper, cobalt and manganese,
minerals vital to electric vehicle batteries and the
clean energy transition as a whole are found in
abundance in a patch of the Pacific Ocean known as the
Clarion-Clipperton Zone.
But extracting these minerals via deep-sea mining
is a divisive idea.
International regulations for this type of mining have
yet to be finalized, and many fear the potential
ecological disruption it could cause in a part of our
planet that still, in many ways, remains a mystery.
We know so very, very little about how the deep sea
functions. But we know it's fragile.
It's very sensitive to disturbance.
But one organization, The Metals Company, is forging
ahead, looking to become the first to do deep-sea
mining on a commercial scale, as a number of other
companies continue to explore the emerging
industry's potential. The Metals Company, which went
public via a disappointing SPAC in 2021, recently set
forth a controversial timeline that would have it
extracting metals from the seafloor by the end of 2025.
We're not suggesting that this is a zero-impact
activity, but what we are suggesting is that the
impacts are a fraction compared to the land-based
alternatives.
There is no doubt that land-based mining is fraught
as well.
Nickel is often mined for in Indonesia in, rainforests.
That causes deforestation.
It's a huge loss of biodiversity.
And mining for cobalt in the Congo is really
associated with tremendous human rights violations.
So the question really becomes, could deep-sea
mining be a less bad option?
Major corporations like Google and Samsung,
alongside automakers like BMW, Volkswagen, Volvo and
Rivian, have lined up against it, promising not to
source minerals from the deep sea until the
scientific uncertainties are addressed and
regulations are in place.
But as The Metals Company prepares to submit its
mining application and regulators scramble to
assemble rules, the debate could determine the future
of our minerals supply chains.
Underlying the whole deep-sea mining debate is
the stark reality that the world needs to rapidly ramp
up production of critical minerals in order to build
batteries for electric vehicles and energy storage,
as well as other green energy technologies like
electricity networks and wind and solar farms.
Nickel, copper, cobalt and manganese are found in
abundance on the seafloor, in the form of so-called
polymetallic nodules - globular concentrations of
minerals that cover up to 70% of the seafloor in
certain areas.
These nodules form by precipitating the metals
that are in the seawater and the sediment upon which
they sit. So think of it as a big ion exchange on the
bottom of the sea, cleaning the ocean of these metal
compounds.
Interest in extracting these mineral-rich nodules has
existed for decades, but the focus has increased in
the past few years as supply chain constraints
threaten to push back ambitious EV adoption
timelines set by both automakers and states like
California.
We need to, if we are going to scale, if you are going
to remain competitive from a supply chain perspective,
you need to look at everything that's on the
table today for some of these critical minerals and
metals, because fundamentally, the way we've
done things in the past isn't bringing material to
the market quick enough.
Battery demand for nickel is set to increase by a factor
of about 20 this decade.
Manganese demand is expected to increase about
eightfold, and cobalt battery demand is expected
to grow over 300% all by 2030.
The Clarion-Clipperton Zone, they estimate there's more
than 20 billion tonnes of nodules in the area.
And when it comes to nickel, they estimate
there's around 270 million tonnes.
For comparison, the world produced about 3.3 million
metric tons of nickel last year.
The Metals Company thinks the nickel market could
benefit most from deep-sea mining, both because the
mineral is integral to energy dense lithium-ion
batteries and because the ramp up of nickel mining in
Indonesia is causing massive deforestation in the
country's rainforests, which are vital carbon
sinks.
What I am absolutely convinced of is that we can
slow down or maybe even stop the growth in
rainforest nickel.
Mining in the deep sea is completely different than
mining on land. Here's what it looks like for The Metals
Company, which is based in Vancouver.
After setting out to sea on its production vessel, the
Hidden Gem, the company sets up shop about 1,000
miles off the coast of Mexico in the
Clarion-Clipperton Zone, or CCZ.
And then we put down what's known as an air riser, which
is basically a tube, which is the transport mechanism.
We also put down an umbilical cord which
provides the power to our electric robot, and the
robot basically crawls along the seafloor and we
fire a jet of water at the nodules.
And essentially it creates an inverse pressure, and as
the collector head moves, we lift the nodules, thereby
minimizing the impact we make on any of the seafloor.
And then we separate the sediment and then we put the
nodules into our vertical transport system that pumps
them up to our production vessel.
And then once we're in production, they will be
offloaded to a transport vessel that will then move
them to shore for further processing.
The company says that the polymetallic nodules that it
collects can be processed and refined using existing
technologies and that it expects its costs to be in
the bottom quartile compared to other suppliers.
The project area where The Metals Company hopes to
begin extraction, called the NORI-D, is ranked as
having the largest undeveloped nickel reserve
in the world and encompasses nearly 29,000mi²
of seafloor. Though that's only about 0.02% of the
entire seabed, the company says that this resource,
combined with another area where it has an exploration
contract, contains enough nickel, copper, cobalt and
manganese to power about 280 million EVs, the entire
U.S. vehicle fleet.
The net present value of NORI-D is well north of $10
billion. And so it's valuable.
And we have a defined resource of about 1.6
billion tonnes of polymetallic nodules.
Last year The Metals Company commissioned Benchmark
Mineral Intelligence to conduct a lifecycle analysis
that modeled the environmental impact of
collecting nickel, cobalt and copper from the seafloor
and then processing these minerals on land in Texas.
I think there been a common narrative that's emerged,
rightly or wrongly, around this industry that the
footprint was far more negative compared to
land-based mining. And what was actually showed was if
these projects go ahead in the way that is being
described and targeted today, it could actually
show some significant benefit.
Benchmark's analysis showed that The Metals Company's
proposed project performed better than land-based
mining and processing in the majority of impact
categories measured, including global warming
potential, which was generally 54 to 70% lower.
Deep-sea mining avoids the emissions associated with
blasting and avoids sulfidic tailings, a waste
material that can contaminate groundwater.
And when it comes to a mineral like cobalt, the
majority of which is sourced from the Democratic
Republic of the Congo, deep-sea mining avoids the
dismal working conditions and child labor that's found
in Congolese mines.
But there are lots of potential impacts that the
lifecycle analysis did not measure, including potential
damage to deep-sea ecosystems and biodiversity,
issues of great concern to the many advocacy
organizations and companies alike that have lined up
against deep-sea mining.
A few years ago, the World Wildlife Fund released a
business statement calling for a moratorium on deep-sea
mining, which major companies like Google, as
well as BMW, Volkswagen, Volvo, Renault and Rivian
have since signed on to.
Because the deep sea is so fragile, we would like to
see this not happening there, at least until
science has been able to do its part.
And scientists are projecting it will take
decades before we know enough about the deep sea to
make those informed decisions, to not jeopardize
and destroy some things before we actually really
know what it will do for us.
Barron contends that the Clarion-Clipperton Zone,
were The Metals Company plans to mine, is much
better understood than other areas of the deep sea
though.
There's been a heavy investment in this area by
the industry since the 1970s and by our company
since 2011.
We know a lot about the CCZ and reports suggest that
there may be between 5 and 8,000 species that have been
yet to identified or that are still being discovered.
And that's true.
Some of these organisms rely on polymetallic nodules for
shelter or as an important part of their habitat.
They would inevitably suffer where these nodules
to be sucked off the ocean floor. Barron says, however,
that we need to compare the thousands of species in the
CCZ with the hundreds of thousands of species found
in an environment like Indonesia's rainforests.
Battle counters that at least with terrestrial
mining, the dangers are understood.
What is clear is that it's easier to monitor land
mining than deep-sea mining and also easier to restore a
land mine than a deep-sea mine could be in the future.
The main governing body grappling with these
tensions is the International Seabed
Authority, a UN-affiliated agency based in Kingston,
Jamaica, tasked with developing international
regulations for deep-sea mining.
They do not have a specific set of regulations
determined for how deep-sea mining would go forward.
Those conversations are ongoing and they're hotly
debated. But right now there is not an agreed upon
set of regulations.
But with The Metals Company trying to push forward its
aggressive timeline for exploitation, the ISA is
under pressure to finalize regulations, and in July, it
missed a key deadline. Here's how it all works.
In order to explore or eventually mine metals from
the deep sea, private companies must be sponsored
by an ISA member country, which can be held legally
accountable under international law.
The Metals Company's exploratory contracts have
been sponsored by the tiny island nations of Nauru,
Tonga and Kiribati, and it's looking to undertake
its first exploitation mission in partnership with
Nauru, which stands to receive royalties from
mining operations.
In June of 2021, Nauru submitted a letter to the
ISA notifying the agency of its plans to start mining.
According to preexisting rules, this gave the ISA a
two-year timeframe to finalize regulations before
it would have to start accepting mining
applications.
But now that the deadline has passed, the Council is
obliged to receive any applications and to consider
applications that are submitted in the absence of
regulation.
Whether or not applications must be provisionally
approved, and what this really means, is a legal
gray area. The Metals Company says it plans to
submit its application in July of 2024, and Barron is
optimistic that the ISA's Legal and Technical Council
will recommend its approval to the 36 member Executive
Council, even if regulations remain
unfinalized.
The LTC would need to consider our application
against where regulations are at the time.
And the good news is those regulations are very
advanced. And so we think that it would be sufficient
to be measured against those regulations that are
nearly finalized.
But Singh, who attends meetings of the ISA and is a
participant in the negotiations, is not nearly
as confident that the regulations are close.
The ISA has not even developed thresholds on what
levels of harm would be deemed acceptable and what
levels of harm would not be acceptable.
And so it would take, I think, quite a long time
before we get to a point where all 36 states are
happy to sign off on the regulations.
However, The Metals Company, which was founded in 2011,
is under serious pressure to prove its value.
Its SPAC merger in 2021 proved disastrous, as a
major investor failed to deliver $200 million in
promised funding, and 90% of the SPAC shareholders
decided not to invest in The Metals Company, taking
back their initial investments. Today, the
company's stock price has plummeted almost 90%, and
shipping giant Maersk, which once held over 9% of
the company's shares, divested in May.
They have to show a business case pretty soon.
And money is not infinite for these types of projects.
So they have to be effective and move as
quickly as they can and start generating revenue
effectively.
Now all eyes are on The Metals Company as it
prepares to submit its mining application next year
and begin production by the end of 2025.
While there are other companies in this space like
Norway's Loke Marine Minerals and China's
state-owned company Minmetals, The Metals
Company could be alone in its efforts for awhile.
Apart from The Metals Company, I don't see any
other company willing to test the council and submit
an application before the end of 2025.
And even if regulations are promptly finalized and
production begins soon, Miller predicts that we
won't see minerals from deep-sea mining having a
significant impact on supply chains this decade.
We're talking, you know, I would say well into the
2030s, I would imagine if, like you say, if everything
was sort of settled and sorted today, until you're
seeing really meaningful volumes.
Barron thinks that once deep-sea mining gets
underway, though, we'll see a rapid ramp up.
One of the analogies is the offshore oil and gas
industry that once upon a time did not exist.
And then in the flick of a switch, 30% of oil and gas
came from offshore.
I think the same will happen when it comes to
these battery metals.
While Barron and other deep-sea mining proponents
are optimistic that sourcing minerals from the
deep sea means that we'll source less from the land,
Singh and others point out that this isn't a given.
I'm firmly of the view that deep seabed mining is not in
any way going to alleviate or reduce terrestrial
mining. In fact, from my point of view, we would end
up seeing more terrestrial mining in order to compete
with deep seabed mining.
Of course, finding alternatives to mining,
whether on land or at sea, is always the ideal
scenario.
Reduction of primary demand, recycling, of course.
But at the end of the day, some land mining is
necessary for a while until there's enough minerals in
the system to go fully circular.
Battle says that extracting metals from the tailings of
old mines is a good place to start.
But to massively scale up the production of battery
minerals to meet our clean energy goals, most agree
that new mines are inevitable, hard tradeoffs
will need to be made and ecosystem impacts of some
kind will be unavoidable.
At some point it becomes a question of, what's the
least bad situation?
What's the least bad way to get access to these metals?
It's a painful question to ask of ourselves, but it's
also representative in many ways of where we are in
addressing climate change right now.