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Why deep-sea mining remains a contentious issue for investors and policymakers

Ocean floor_seabed
Negotiations on a mining code are set to continue and will include a motion on how the marine environment would be protected if mining of the seabed does go ahead (Photo: Addictive_Stock/Envato)

The International Seabed Authority’s failure to agree on a mining code highlights the divisions over the prospects of scraping minerals off oceans’ floors in a bid to fund the green transition.

The quest for minerals needed to reduce economies’ reliance on fossil fuels has intensified the debate on a topic until recently largely overlooked: deep-sea mining.

Established under the 1994 enforced UN Convention on the Law of the Sea, known as Unclos, the International Seabed Authority is tasked with creating rules, regulations and procedures regarding the exploration and exploitation of the ocean floor beyond the scope of national jurisdictions.

The intergovernmental body consists of 168 member states, plus the EU, and its mandate guards approximately 54 per cent of the world’s oceans.

In July, the ISA missed a deadline to reach an agreement on a mining code, resulting in legal uncertainty, up to the point that companies could start sending applications for exploitation licences, despite a missing rulebook.

If an exploitation application is received, the authority is required under the 1994 agreement to assess it “in good faith”, even if it missed its own deadline to adopt a mining code, says Nathan Eastwood, a Sydney-based partner at law firm Watson Farley & Williams, which advises contractors, sponsoring states and prospective investors on deep-sea mining.

“Under these processes, it would not be legally permissible for the authority to simply reject an application outright, solely on the basis that the mining code has not yet been adopted,” he adds.

In its latest statement, the ISA has said it intends “to continue the work on the exploitation regulations with a view to adopting them … in 2025”.

Next year, negotiations on a mining code will continue, including a motion to discuss how the marine environment would be protected if mining of the seabed does go ahead.

Areas for mining

Although no exploitation licences have yet been granted, the ISA has over the years issued approximately 30 exploration licences.

A notable absent in the UN body is the US, which never ratified Unclos, resulting in no US company being allowed to apply for an exploration licence. China, on the other hand, has co-sponsored five licences, according to the ISA’s list.

Companies that have received an exploration licence are sponsored by specific states and allowed to examine, sample and trial the seabed for so-called polymetallic nodules. These nodules contain minerals such as nickel, copper and cobalt, which are key materials in many renewable energy and green technologies.

Despite an acknowledgment by policymakers that supply chains and distribution channels need to be reassessed given that mining and production often takes place in few mineral-rich countries — the EU notably introduced its Critical Raw Materials Act to stimulate more recycling and new trade routes — prices of these sought-after minerals have spiked.

A report last month by the International Energy Agency calculated that from 2017 to 2022, cobalt saw a 70 per cent jump in demand, while nickel rose by 40 per cent, further indicating the need to satisfy markets’ appetite for clean energy resources.

Most of the exploration activities have taken place in the Clarion-Clipperton Zone, which is a vast area located in the Pacific Ocean between Hawaii and Mexico. However, Norway recently also stated it is willing to allow deep-sea mining in its own waters, in a shift to move away from fossil fuel exports.

The big unknowns

Proponents of deep-sea mining argue that the energy transition and climate crisis combined require a steep increase in accessibility of minerals, which land-based mining on its own cannot fulfil.

The downside, however, of considering an acceleration in deep-sea mining is that many of the risks are not properly mapped or even known.

Marine ecologists who spoke to Sustainable Views point out that the scale of ocean mining would be much larger than present land-based operations and that scientific knowledge on the functioning of oceans is still limited since most areas are yet unexplored.

“It is expensive and technologically difficult to monitor the effects of [deep-sea mining] activity, as the areas to be exploited are remote and very deep,” says Eva Ramirez-Llodra, science co-ordinator at non-profit REV Ocean. “We know there will be significant impact, but in some cases we do not even know what we will lose, as we do not know many of the animals that live in these regions, let alone how the ecosystem functions and what services it provides to us humans,” she adds.

Lisa Levin, emeritus professor at San Diego’s Scripps Institute of Oceanography, agrees that the scientific community has not been able to fully characterise the ecosystem that needs to be mined and, consequently, how the broader ocean system could ultimately be affected. She also notes that ocean-based mining is unlikely to stop land-based mining, and should be seen as an addition instead.

Both ecologists also emphasised that, as opposed to land-based mining, restoration or rehabilitation are not possible in the deep sea.

Despite these big unknowns, the current ongoing corporate and state-sponsored exploration trials have been able to gather some evidence.

Watson Farley & Williams’ Eastwood says the data being collected by current exploration contractors has been informative for the authority’s mining code, and that it will probably also be useful in next year’s negotiations — especially when it comes to setting environmental standard indicators and thresholds.

Still, a recent study by the British Natural History Museum has found discrepancies in the way in which wildlife data has been collected by the ISA, potentially impacting previously asserted diversity estimates.

Levin says there is a need for the authority to harmonise its activities with other international treaties — such as the recent adoptions of the High Seas Treaty and the COP15 Global Biodiversity Framework — to better integrate policies and increase transparency. Funding deep-sea research independently from mining companies should also get more international backing, she says.

Outstanding issues

The prospect of mining the seabed for precious metals has the international community divided, also pushing companies and investors to take a stance. In 2021, multinationals such as Google, Volvo and Samsung signed a pledge supporting a pause on deep-sea mining operations. Last month, a group of global investors signed a joint statement urging governments to prohibit deep-sea mining until its risks are fully understood.

The contrast between agreeing on a mining code and the request of some member states to introduce a precautionary pause on deep-sea mining lays bare the tensions among policymakers.

France has even said it wants to go further than a moratorium and instead introduce a complete ban on the practice. While a moratorium or pause would be possible, if it receives enough backing, some say an outright ban would breach the obligations upon which the ISA is founded.

“Given the legal obligations, member state positions, decision-making requirements and the potential for dispute settlement to enforce contractors’ and sponsoring states’ rights, we do not see a ban on deep seabed mining as a feasible option at this stage,” says Eastwood.

We know there will be significant impact, but in some cases we do not even know what we will lose, as we do not know many of the animals that live in these regions, let alone how the ecosystem functions and what services it provides to us humans

Eva Ramirez-Llodra, REV Ocean

 

Others, however, also point at litigation as an option to clarify the ISA’s obligations to both regulate deep-sea mining and to also protect the marine environment.

One way to overcome this obstacle could be to ask the International Tribunal for the Law of the Sea for an advisory opinion on how to tackle the two obligations at once, according to Monica Feria–Tinta, barrister at commercial chamber Twenty Essex.

Precise questions to be asked could include clarifying the concept of serious harm in a mining context, agree on the factors that contribute to that, and how to establish effective protection.

A recent report by the Grantham Research Institute on Climate Change and the Environment has also flagged the potential for ocean-focused litigation to increase in the coming years, possibly with the goal to enforce domestic laws that promote the oceans’ role as a carbon sink.

Given the current legal framework is inadequate to address the issues around deep-sea mining, Feria-Tinta does not believe one year will be enough to agree on a mining code: “How can you come up with a legal framework if the science that underlines it is not clear?”

Still, legal uncertainty remains. While Eastwood argues that the ISA would breach its obligations if it does not assess an application for exploitation purposes, even in the absence of a mining code, Feria-Tinta argues that if the authority issues exploitation licences without proper rules in place, it would also breach its obligations with regards to protecting the marine environment, and hence could also be sued.

Eastwood admits that it is difficult to predict how many companies would consider applying for an exploitation licence in the absence of a code, with contractors preferring rules to be in place first. However, Canada-based The Metals Company has already indicated that it intends to apply for an exploitation licence after next year’s meeting. Its subsidiary, Nauru Ocean Resources, has had an exploration licence since 2011, sponsored by Nauru.

The island nation is one of the biggest proponents of deep-sea mining, having previously enforced the mining code deadline. Eastwood explains that Nauru has few viable options left for economic development, since it generates little revenue from tourism and is highly vulnerable to the impacts of climate change. As such, sponsorship of deep-sea mining activities provides a potential lifeline for the country, he says.

The way in which revenues of any successful deep-sea mining operations should be distributed is another aspect of the mining code, upon which agreement has not yet been reached. According to the 1994 agreement, the area beyond national jurisdiction is common heritage of mankind, with resources to be shared equally. The future contracts between the ISA and mining companies should reflect that.

As countries need more minerals to fund their green transition, the ISA is walking a fine line of balancing scientific knowledge gaps with a need for a robust regulatory framework to commence deep-sea mining. It might have bought itself some time over the next year, but opposing views among member states and legal experts are a signal that divisions on a future rulebook clearly persist.

A service from the Financial Times