The exploration and extraction of deep-sea minerals is currently focused on polymetallic manganese nodules, cobalt-rich ferromanganese crusts, and polymetallic sulphides.
🌱 What exploration is ongoing?
The International Seabed Authority (ISA) has issued a total of 31 licenses for the exploration of the deep-sea and its resources for mining purposes. The licenses allow for the testing of technologies used to produce raw materials from the deep-sea. The licenses also grant their holder’s preferential rights to possible subsequent mining. Each of these licenses is valid for 15 years, with the possibility for several 5-year extensions in case of unforeseen delays. All together, these licenses cover a sea-floor area of around 1.5 million km2. 19 of the licenses issued by the ISA are for the exploration of manganese nodules. Each of these licenses encompasses an area of approximately 75000 km2. 7 of the licenses are for the exploration of massive sulphides. Each of these licenses are for an area of 10000 km2. 5 of the licenses are for the exploration of ferromanganese crusts. Each of these licenses entail an area of 3000 km2.
🌱 Why is the mining on hold?
The recent decision of the ISA to take more time to finalize its mining rules has put a temporary halt on the start of industrial-scale seabed mining in international waters. Over 20 member countries of the ISA had called for a pause or ban on deep-sea mining. Moreover, “the UN high commissioner for human rights, 37 global financial institutions, seafood groups, scientists and Indigenous groups ha[d] called for a halt to deep-sea mining”. Now, France, Chile, and Costa Rica are urging other members states of the ISA “to agree that no permit authorizing mining in international waters should be granted until regulations are finalized”.
🌱 Who is seeking licenses?
Several companies and countries have applied for licenses to explore metals in the deep seabed from the ISA. Yet, the decision to postpone mining is likely to impact a Canadian-based mining start-up called “The Metals Company” the most. Sponsored by Nauru, the Metals Company holds several licenses to explore metals in the deep seabed. The company plans make deep-sea mining its core business. It wants to harvest polymetallic nodules from the Clarion Clipperton Zone. On 1 August 2023 – following the recent meetings of the ISA, The Metals Company announced an aggressive timeline “for moving forward to collect metal nodules off the deep seafloor”. The company stated that it anticipated a one-year review process – and that it could start its production in the fourth quarter of 2025.
🌱 What are the plans of the Metals Company?
The Metals Company is “convinced it can generate $30 billion in post-tax net cash flow over the 25-year life of the initial project”. The company was founded in 2011 and went public as a special purpose acquisition company (or SPAC) in 2021. It has raised $400 million from a variety of investors, including venture funds, financial institutions, family offices, as well as the Allseas Group and Glencore. The Metals Company has never produced a profit. Yet, if it were to be granted its pending licenses, it could “become one of the largest global suppliers of key metals needed for electric vehicle batteries”.
🌱 Why is the stock price of the Metals Company plummeting?
As standards and regulations are yet to be established, experts are saying that “The Metals Company is overly optimistic and is underestimating the time it will take to get international governance rules for mining agreed upon”. Investors are also skeptical, and this is currently being reflected in the stock price. The Metals Company had $20 million in cash at the end of Q2 of 2023, and it has now said that “anticipates requiring an additional $60 million to $70 million in advance of submitting its application next year”, due to the delayed timeline of its deep-sea mining plans. To raise this capital, investors are reasoning that the company’s management may choose to issue equity, which would mean a dilution of shareholder value.
Read more about the outcomes of the ISA talks here: