Pivotal Year for Deep-sea Mining

Sixty years after the discovery of polymetallic nodules and thirty years after the establishment of the International Seabed Authority (“ISA”), deep-sea mining could be licensed as early as July 2023. The ISA is expected to present its regulatory framework for deep-sea mining exploitation at a meeting in March with its member nations (“Member States”).¹

Due to ever-increasing strains on critical raw materials supply chains and the urgent, growing pressure to transition to clean energy and electric vehicles, the extraction of polymetallic nodules from the seabed has been gaining momentum as a possible source of critical raw materials. Polymetallic nodules (also known as manganese nodules) are mineral concretions on the seabed formed of concentric layers of iron and manganese hydroxides around a core of organic or basaltic debris.² The polymetallic nodules contain four essential battery metals — cobalt, nickel, copper and manganese — in a single ore. It is estimated there is an enormous quantity of nodules on the seabed, with around 21 billion tonnes of nodules in the Clarion-Clipperton Zone (“CCZ”) alone.³

The ISA has been working for the past two decades on the development of the Mining Code, a set of rules, regulations and procedures covering the prospecting, exploration and exploitation of minerals in the deep seabed. From 2002 to 2012, the ISA developed regulations on the prospecting and exploration of deep-sea minerals.⁴ As part of these exploration regulations, the ISA published its first Environmental Management Plan for the CCZ, defining nine areas of particular environmental interests and twelve areas of exploration.⁵ The ISA has now granted 31 contracts for the exploration for polymetallic nodules, polymetallic sulphides, and cobalt-rich ferromanganese crusts.⁶

In 2011, the ISA then started to work on developing a regulatory framework for exploitation activities. The latest version of the draft exploitation regulations is dated March 2019. The exploitation regulations are yet to be finalized and adopted by the Member States.⁷

In parallel to the ISA’s slow regulatory progress, a number of contractors, sponsored by Member States (such as The Metals Company (“TMC”) with the Republic of Nauru, and the Kingdom of Tonga) have been working on studies on the extraction of the nodules and developing technology to vacuum the nodules up from the deep seabed. In September 2022, the ISA approved TMC to start a mining test. In October 2022, TMC collected its first batch of polymetallic nodules from the seafloor. 2022 saw other developments for the industry: Global Sea Mineral Resources tested a robot to collect deep-sea polymetallic nodules, and TMC also signed a memorandum of understanding to develop a nodule processing plant in India.⁸ However, the lack of regulatory clarity has been an obstacle for mining companies trying to obtain investment.

News of the impending issue of the ISA’s final regulatory framework for deep-sea mining exploitation will not come as much of a surprise to those closely monitoring developments in the field. On 25 June 2021, Nauru requested that the ISA complete the regulations necessary to approve plans of work on deep seabed exploitation. Nauru made this request pursuant to paragraph 15 of section 1 of the Annex to the Agreement relating to the implementation of Part XI (“Part XI Agreement”) of the UN Convention on the Law of the Sea (UNCLOS);⁹ which stipulates that if a State party, which is ready to submit a plan of work for approval, requests the ISA to complete the elaboration of all relevant regulations for exploitation, the ISA must do so within two years of the request. If the regulations have not been elaborated within two years, the ISA shall provisionally approve the plan of work on the basis of whatever (draft) regulations are in place at the time. Therefore, by triggering this provision, known as “the 2-year rule”, Nauru forced the ISA to accelerate its discussions to finalise the exploitation regulations by June 2023 and potentially risk a rush to resources either based on the draft exploitation regulations if unanimous consensus is not reached, or on hastily finalized and agreed to exploitation regulations.

Against this regulatory backdrop, environmental concerns remain. Although environmental research has been ongoing for several years, there is a consensus in the scientific community that the precise impacts of seabed mining and how long they would last are still unclear. The lack of understanding of the deep seabed and the creatures inhabiting it drove more than 650 marine experts to sign a statement calling for a pause to deep-sea mining.¹⁰

Another issue which is still disputed among Member States is the profit-sharing mechanism. The exploitation regulations record a commitment to ensure that deep-sea mining in international waters benefits all humankind; therefore, the profits earned must be shared among all Member States. The Massachusetts Institute of Technology prepared a cost-benefit analysis which estimated that deep-sea mining would generate USD 2.93 million over a 30-year period for each Member State.¹¹ However, some Member States, such as the African Group,¹² argue that the current payment regime does not account for the environmental costs of deep-sea mining nor does it result in fair compensation to humankind. The same group of Member States argues that the triggering of the 2-year rule weakens the development of a ‘common benefit for all humankind’ regime.¹³

Notwithstanding these environmental uncertainties, Member States face a deadline to agree on the exploitation regulations — or risk mining companies starting work on the seabed on the basis of the current draft regulations. The ISA must deliver regulatory certainty to enable mining companies to raise funds and develop environmentally safe processes to extract polymetallic nodules and other minerals from the deep seabed.