Is marine mining a commercial viability for developing countries?
The green energy transition is projected to cause an increase in metal demand. Will this demand lead to the opening of deep-seabed mining? As of now, seabed mining has been limited to shallow waters, but could mineral-rich deep seabeds provide an opportunity for the developing world?
Deep-seabed mining —defined by depths of 3000–5000 meters— is highly technical. Harsh conditions including extremes of temperature, pressure, and darkness pose challenges to safe extraction. Despite decades of claims that it will be the next big source of metals, technical problems and high operating costs have so far kept deep-seabed mining back. Compounding this are serious environmental concerns —not enough is known about the flora and fauna at these depths, or the potential risks mining poses to them.
Rules and regulations on the deep seabed
Marine mining can be divided into two completely different parts: Deep-seabed mining mostly in international waters outside the Exclusive Economic Zones (EEZ), which each coastal country controls, and offshore mining in shallower waters within the EEZ of individual countries.
The oceans are governed by the United Nations Convention on the Law of the Sea (UNCLOS), which has been signed by 167 countries including all major countries except the USA. This convention came into force in 1994 and is handled by the International Seabed Authority (ISA). It defines the outer limit of costal states’ control over the seas and the seabed (EEZ), and includes provisions to protect the marine environment. The convention is unique in that it stipulates that the proceeds of deep-seabed mining are to be used for the benefit of all humankind. UNCLOS also contains a set of regulations to govern mining in what is called ‘the Area’ —i.e., all parts of the oceans outside the EEZs of all countries.
Negotiations to open the world’s first deep-seabed mine in international waters are currently ongoing. The world’s smallest island nation Nauru supports the application by an international company to start the first project. Now the clock is ticking for the ISA to agree on detailed regulations governing deep-seabed mining before this application can be approved. These regulations must clearly state the environmental precautions and operating conditions, and then the company obtaining the license to mine must demonstrate that it can operate within the set limits. To obtain a permit is not the same as being able to start mining. In the end, the operation must also be profitable after the royalty and other taxes are paid to the ISA and relevant national tax authorities.
The viability of deep-seabed mining
Deep-seabed mining will always have to compete with traditional mining on land. Land-based mines have considerable advantages in that they are operating with proven technology. Most environmental problems caused by land-based mining have proven solutions. If land-based mines cannot meet global demand for metals and minerals in the future, prices will increase and deep-seabed mining could become a profitable option. Some deep-seabed operations may theoretically start.
With demand for metals set to rise in the green transition, is it time to look towards deep-seabed mining? In the near future, even if demand for metals such as nickel for batteries and copper for cables and motors increases as predicted, the projected growth of these major metals is estimated to match what the global mining industry has been able to deliver historically. This suggests that most demand could probably be met by land-based mining. For metals such as cobalt and manganese, the projected growth is even higher than nickel and copper, but demand is at a much lower absolute level —making it easier for land-based mining industry to meet the increased level of demand. As such, it is not certain that deep-seabed resources will be needed to solve the potential supply crunch.
Economic opportunity or environmental conundrum?
Marine mining could have profound consequences for the public revenues and foreign exchange earnings of developing economies. Not only because they may derive taxes, royalties, and other revenues from marine mining, but also because their other natural resources, whether parts of the entire blue economy —the fisheries and coasts— or existing and future mines on land, may be impacted by marine mining.
Given that the challenges of deep-seabed mining appear, at least at present, to outweigh the benefits, it is likely that offshore mining in shallow waters within the EEZ of various countries will be more attractive to most low- and middle-income countries in the short term.
As discussions continue regarding potential deep-seabed mining, it is vital that the policy conversation focuses on the next steps. All the necessary regulations at the ISA level might not yet be in place, but the fact that there is an international body working on these issues is an important first step. The international calls for a moratorium of deep-seabed mining while legal, technical, and financial issues are solved impedes important research and problem-solving work. Working together with researchers on the potential environmental implications of deep-seabed mining, and how to mitigate the potential damage, must be prioritized by national and international policymakers during this time. Such knowledge is crucial to broader issues concerning the blue economy.
This blog is based on the WIDER Working Paper 'Marine mining and its potential implications for low- and middle-income countries'.
Anton Löf is a mineral economist and policy analyst for RMG Consulting.
Magnus Ericsson is a mineral economist and policy analyst for Luleå University of Technology and RMG Consulting.
Olof Löf is a mineral economist and policy analyst for RMG Consulting.
The views expressed in this piece are those of the authors, and do not necessarily reflect the views of the Institute or the United Nations University, nor the programme/project donors.