· 10 min read
Critical minerals are a subset of minerals that are essential to the economic and national security of a country, but face a risk of supply chain disruption. These minerals play a crucial role in the production of high-tech electronics, renewable energy systems, defence and military technologies, aerospace applications, medical equipment and electric vehicles. Hence their availability is important to maintain the competitiveness of economies and to avoid overdependence on foreign countries. The list of critical minerals depends on the selection criteria but all countries include lithium, cobalt, graphite, neodymium, copper, rare earth elements, and platinum group metals. Many of these minerals are mined and processed in limited countries, making their supply chains vulnerable to geopolitical risks. Ensuring a robust supply of critical minerals has therefore become an important strategic concern for countries, especially in light of the increased emphasis on the clean energy transition.
Challenging times
The demand for critical minerals has increased significantly in recent years due to the adoption of new technologies. Forecasts predict that the increasing deployment of clean energy technologies including EVs and battery storage is set to supercharge demand for critical minerals. The demand for lithium, graphite, cobalt, nickel, and manganese rare earth elements, could increase by 42, 25, 21, 9, 8 and 7 times respectively by 2040 compared to 2020, as clean energy technologies are developed. Positive impacts of mining include jobs, local value creation, tax revenues, and infrastructure development, and countries are making elaborate plans for prospecting and developing mineral resources. Despite these efforts, there are several challenges including high geopolitical competition, increased prices and volatility, decreasing ore quality, and environmental, social, and governance (ESG) concerns about mining which are expected to lead to a tight supply of critical minerals in the near to medium term. To overcome some of these issues, the mining industry is now eyeing the maritime domain to meet the burgeoning demand for critical minerals.
Diving deep
Deep sea mining (DSM) refers to the process of extracting minerals from the ocean floor in depths beyond 200 mts and reaching upto 7,000 mts. The potential of DSM is significant as minerals are available in many different forms:
Manganese nodules: These potato-sized rounded lumps (also called polymetallic nodules) are found on the ocean floor and are rich in manganese, cobalt, copper and nickel.
Seafloor massive sulfides: These are mineral-laden mounds of sulphur which have a high concentration of copper, zinc, iron, gold and silver and are found in places with high tectonic activity.
Ferromanganese crusts: These are crusts lining the sides of mid-ocean ridges and underwater mountains and are rich in iron, manganese, cobalt, rare earth elements, vanadium, molybdenum, platinum and tellurium. Marine phosphorites, which are deposits of phosphate rock and are also found alongside ferromanganese and are a source of phosphate, concentrated fluorine, and heavy rare earth elements.
The mining of these minerals is shown in a stylised manner in Figure 1.
Governance of DSM
Activities in the ‘Area’, which comprises the seabed and ocean floor and subsoil thereof, beyond the limits of national jurisdiction, are governed by the United Nations Convention on the Law of the Sea, 1984 (UNCLOS). The International Seabed Authority (ISA), controls all mineral-resources-related activities in the Area and is developing a ‘mining code’ which is a comprehensive set of rules, regulations and procedures to regulate prospecting, exploration and exploitation of marine minerals. Although countries can undertake mining in their exclusive economic zones (EEZ) under domestic laws, these activities must also conform to the mining standards promulgated by the ISA. The Area, is open to mining for all countries, subject to ISA’s approval, and there are several regions such as the Clarion-Clipperton Zone (1.7 million square miles between Hawaii and Mexico), where critical minerals are expected to be found. Therefore DSM is of immense interest for commercial mining companies as well as countries.
Developing regulations for marine minerals
Regulations for ‘prospecting’ and ‘exploration’ for marine minerals were developed and adopted over the last two decades. As on 31 Jan 2023, ISA has issued 31 exploration contracts for DSM to different contractors in the Clarion-Clipperton Zone (CCZ), Indian Ocean, Western Pacific Ocean, and the South West Atlantic. These contracts are dominated by state-owned companies and research agencies in China, France, Germany, India, Japan, Russia and South Korea. Following the exploration activities, the Legal and the Technical Commission (LTC) of the ISA prepared the draft regulations on exploitation of mineral resources in the Area (Phase 1), conducted two stakeholder consultations and the revised standards and guidelines for ‘exploitation’ have been presented to 36 member of the council for approval in the ongoing 27th session (16th – 31st March 2023). The regulations include environmental impact assessment process, management and monitoring plans, development and application of environmental management systems, establishment of baseline environmental data, tools and techniques for risk assessment and hazard identification, safety issues related to mining, emergency response and contingency plans, amongst others. The standards will be legally binding on contractors, but the guidelines will be recommendatory in nature. Phase 2 and 3 which are also required to be in place before commencement of commercial mining activities are yet to be developed.
Support for commercial DSM
Some private companies including The Metals Company (Canada) have been preparing to commence commercial DSM and undertook several exploratory missions in October 2022 extracting close to 3,000 tons of polymetallic nodules using the former ultra-deepwater drillship, renamed as Hidden Gem and submitted extensive baseline environmental data to the ISA. UK Seabed Resources (a subsidiary of US-based Lockheed Martin) which holds two seabed exploration licences in the CCZ was sold to Norwegian company Loke Marine Minerals in March 2023. It plans to invest around $ 100 million in DSM activities to capitalize on the discovery of critical minerals in its EEZ. Mining in the Norwegian continental shelf is on the verge of getting approval building on the Norwegian Seabed Minerals Act adopted on 1 July 2019 which provides the legal framework for the surveying and extraction of minerals. Japan and China are active supporters and want to commence commercial mining at the earliest.
Promoters of these companies argue that land-based mining, has similar environmental impacts such as toxic wastewater discharges, deforestation, and soil contamination, apart from socio-economic impacts. Supporters claim that if DSM is undertaken according to the approved regulations and guidelines, it can have lower environmental impacts on humans and can bridge the growing supply-demand gap of minerals due to higher mining productivity.
Growing concerns
On the other hand, DSM has been flagged for having several negative environmental effects from the impact of light, noise, vibration, loss of substrate, sea floor compaction, habitat removal, plumes from mining and operational discharges of water and sediment clouds. The long-term effect of DSM on habitat and biodiversity loss, food chains and marine ecosystems is also unknown. Environmental experts are unanimous that there is a lack of scientific knowledge about deep-sea ecosystems and it is premature to start commercial mining as there is no experience of operating DSM for a long-term basis, making the ecological impacts unobservable. Further, the impact of DSM is likely to be long lasting, irreversible and could present significant risks to ocean ecosystems. Lastly, they also highlight ineffective control over commercial mining companies in case of poor compliance.
These concerns are also voiced by many global organizations, with WWF, IUCN, indigenous leaders and several marine experts calling for a ban on DSM. Several countries including Canada, Germany, Palau, Samoa and Fiji, Costa Rica, Spain, France, Costa Rica, New Zealand, Chile, Palau and Panama have demanded a moratorium on DSM. Other countries like Brazil, Belgium, the Netherlands, Portugal, Singapore, and Switzerland have asked for adequate environmental protections before commencing commercial DSM.
Way ahead
Time is running out for the ISA and as the Government of Nauru, which is also a sponsor of Nauru Ocean Resources Inc. (a subsidiary of The Metals Company), has triggered a clause which requires the ISA to accept a commercial mining licence application by July 2023. According to its interpretation of rule, the ISA will have to "provisionally" grant mining licenses under the existing regulations even if the regulations for DSM have not been finalized. Some possible options which have been suggested, which include: meeting the timeline (highly improbable due to the short time left); proceeding ahead with the process disregarding the deadline (could work if no applications are submitted for mining in July 23); adopting key regulations on a provisional basis (while continuing to develop a robust set of regulations); delaying the adoption of regulations; adopting a ‘Precautionary Pause’ or moratorium on exploitation (by informal means); or exploring legal options. It remains to be seen how the ISA, which is mandated to frame rules for DSM while protecting the global ocean, walks the tight rope of balancing commercial exploitation with environmental conservation.
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