Is deep seabed mining worth the cost?
- Andreia
- Feb 18
- 6 min read
Is it economically viable to mine the ocean? Deep seabed mining has received more attention from the media, environmental organizations, and various industries in recent years. The reason for this growing interest is simple: it comes from the fact that the proponents of deep sea mining argue it is needed to meet future demand for energy transition minerals. As governments and companies progressively electrify everything around us, we, indeed, rely more and more on specific minerals such as cobalt, nickel, copper, and manganese. But is it true? Do we really need to mine the ocean to keep up with the demand? And at what cost?
I wrote an article on the controversies surrounding deep seabed mining, namely the ongoing battle between environmental activists and advocates for deep sea mining. While the International Seabed Authority (ISA) – the organization that regulates mining in most of the world’s oceans – is still debating whether to authorize deep sea mining in international waters, some countries such as Norway and Japan are pushing for this practice in their national waters.
Therefore, the discussions on the benefits and costs of deep sea mining for the planet can be extremely heated. However, the question of its economic viability is rarely discussed. The Planet Tracker, a non-profit think tank focused on sustainable finance, published two reports on this topic last year in November and a policy guide this January.
But before exploring the financial benefits – or the lack thereof – of deep sea mining, it is important to understand why advocates argue that the ocean needs to be mined for a future without emissions. So far, the minerals used for batteries and other technologies that enable countries to reduce their emissions are mined on land. However, as the International Energy Agency (IEA) explains, demand for critical minerals will rise significantly as the net zero transition accelerates. In a report published in May 2021, the IEA states: “Supplies of critical minerals essential for key clean energy technologies like electric vehicles and wind turbines need to pick up sharply over the coming decades to meet the world’s climate goals, creating potential energy security hazards that governments must act now to address.” In other words, to reach the goals of the Paris Agreement, the IEA estimates that it would mean “a quadrupling of mineral requirements for clean energy technologies by 2040”. But to hit net-zero globally by 2050, it would require “six times more mineral inputs in 2040 than today”.
But what exactly is meant by “energy security hazards”?
According to the IEA, several factors make the rapid increase in global demand a potential risk to energy security. One of the most important to keep in mind is the fact that the quality of minerals is declining. “In recent years, ore quality has continued to fall across a range of commodities. For example, the average copper ore grade in Chile declined by 30% over the past 15 years. Extracting metal content from lower-grade ores requires more energy, exerting upward pressure on production costs, greenhouse gas emissions, and waste volumes”, states the IEA in its report.
Moreover, there is increasing scrutiny regarding environmental and social performance from both consumers and investors. The extraction and processing of mineral resources lead to various environmental and social issues that often harm local communities and disrupt supply chains. As a result, consumers and investors are demanding that companies source minerals that are produced sustainably and responsibly. For the IEA, these factors (and others) show that the current mineral supply and investment plans fall short of what is needed to transform the energy sector and keep up with the rising demand.
Companies like The Metals Company in Canada usually invoke these two main reasons for pushing for deep sea mining. For them, “the biggest threat to the oceans is climate change,” and deep seabed mining is safe compared to land mining because research suggests that “sourcing the metals needed for the transition to clean energy from high-grade polymetallic nodules can reduce the associated climate impacts by between 70 – 80% compared to land-based ores.”
While the safety of the ocean’s ecosystem regarding deep sea mining is debated, I want to examine The Planet Tracker’s reports on its economic viability. The ISA estimates between 480 million and 13,500 million tonnes of polymetallic nodules. These nodules contain a blend of different minerals such as nickel, cobalt, copper, and manganese. While nodules can be found in all the oceans and even in lakes, those of economic interest are more localized. According to the ISA, these nodules are more abundant in areas such as the Clarion-Clipperton Fracture Zone off the west coast of Mexico in the Pacific, the Central Indian Ocean Basin, and the Peru Basin.
When looking at these estimates, the economic potential of deep seabed mining seems immense. However, mining the ocean presents several financial challenges. One of the reports demonstrates that “if deep sea metals were to enter the market, global prices of copper, cobalt, nickel and manganese could decline.” These four minerals contribute, on average, over 560 billion dollars (USD) in export earnings per year for the 12 countries most economically dependent on mining these metals. For example, the Democratic Republic of Congo (DRC) and Zambia get 34.2% and 37.5% respectively of their annual GDP from mining exports. To the authors of the report, “even a small reduction in the price of these commodities could trigger significant reductions in government revenues as well as other negative economic and social impacts, such as increases in unemployment and economic slowdown.”
Moreover, five of these 12 countries were categorized by the World Bank as “lower middle income” in 2023 (Congo, Georgia, Mongolia, Papua New Guinea, and Zambia), and one (DRC) was categorized as “low income”. Consequently, these countries may be less prepared to handle the negative economic effects that price shocks from deep sea mining could cause.
But could mining the ocean benefit countries in other ways?
According to the UN Convention on the Law of the Sea (UNCLOS), companies can only apply for deep sea mining in international waters if they are sponsored by a State. Essentially, deep sea mining companies could face corporate income tax due to these sponsorship agreements. The Planet Tracker’s report demonstrates that countries could theoretically earn up to 6.25 million dollars (USD) per year each in corporate income tax (at a 25% rate), which is considered by the authors as “an insignificant contribution to government revenues.” Furthermore, sponsoring States may not receive any taxes from deep sea mining companies due to existing sponsorship agreements that exempt corporate income tax.
On the other hand, mining companies are unlikely to generate significant profits, which means there will be little to no tax revenue for the sponsoring states, according to the report. “Currently any company engaged in deep sea mining in international waters would be required to pay the ISA, which must share these benefits with Member States. The ISA is supposed to develop rules for the ‘equitable sharing of financial and other economic benefits’ from deep sea mining in international waters”, states the ISA convention.
For the IEA, the financial, technical, and ecological hurdles of deep sea mining cannot be ignored.
In practice, The Planet Tracker’s analysis estimates that each ISA Member State, on average, could receive 42,000 to 1.1 million dollars (USD) per year from deep sea mining royalties – an “insignificant contribution to government coffers”, according to the experts. The International Seabed Authority (ISA) could receive up to 270 million dollars annually from royalties, but typically 80 million would be deducted for administrative costs and support for developing states affected by deep sea mining, which represents 25% of the total funds. “However, the ISA is entitled to make unlimited further deductions before royalties are distributed which could significantly reduce the amount of money available for countries”, add the authors.
Going back to the very beginning of my article, can deep sea mining be a viable economic option for the increasing demand for minerals?
While mining on land presents numerous challenges, deep seabed mining would only exacerbate the existing environmental and economic impacts. For the IEA, the financial, technical, and ecological hurdles of deep sea mining cannot be ignored. In their 2021 report, the agency highlights the fact that “the technologies required are different from onshore mining or deepwater oil and gas extraction. Cutting machines and collecting vehicles need to work remotely under high water pressure, and pumping a mixture of ore and slurry requires different skills from the extraction of oil and gas. While a pilot ore lifting for massive sulfide succeeded in Japan in 2017, further technology development is needed to make the process commercially viable.”
Industries and governments should probably look at the present challenges and solve them instead of creating new ones. Some of the solutions presented by the IEA include: recycling minerals, reducing material intensity, encouraging material substitution, and strengthening international collaboration between producers and consumers.
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