Deep Sea Mining: A New Frontier for Critical Minerals

Strategic Insights -

Deep sea mining is gaining momentum as companies navigate the energy transition and advanced manufacturing or technology supply chains. The ocean floor holds high concentrations of critical minerals, including copper, cobalt, nickel, manganese, and rare earth elements, essential for batteries, renewable infrastructure, and defence applications. With demand for terrestrial supply on the rise and geopolitical risks affecting traditional sources, deep sea exploration is attracting increasing investment and policy attention. The regulatory landscape, however, is complex, with international waters governed by the United Nations Convention on the Law of the Sea (UNCLOS) and the International Seabed Authority (ISA).

Key Takeaways:

  • Deep sea mining within a country's exclusive economic zone (EEZ) is covered by domestic laws, with some countries issuing domestic licences for exploration and creating first-mover opportunities for investors.
  • In international waters, companies must navigate a highly specialised regulatory environment governed by UNCLOS and administered through the ISA, with over 30 exploration contracts issued to Chinese, Russian, and Indian companies.
  • The US President's executive order, "Unleashing America's Offshore Critical Minerals and Resources," aims to expedite permitting processes for deep sea mineral exploration and recovery in both domestic and international waters.
  • The shift in US policy presents considerations for critical minerals investors, including new opportunities for domestic investment channels, US-aligned partnerships, strategic support and incentives, and geopolitical signalling.
  • Key considerations for investors in this sector include licensing and project structuring, bankability and risk allocation, ESG and stakeholder engagement, and strategic alignment.
  • Investors should actively assess jurisdictional risks, engage with regulatory developments, and optimise ways to monitor opportunities, including through early-stage participation or small stake investing in direct investment, joint ventures, or offtake arrangements.

Statistics:

  • The estimated amount of copper found in nodules on the Pacific seabed is equal to all known land-based copper deposits.
  • The energy transition's forward-looking need for copper exceeds the aggregate of global copper consumption to date.
  • The US has already issued two exploration licenses and one commercial recovery permit for deep sea mining operations in international waters.
  • The ISA has issued over 30 exploration contracts, many of which have gone to Chinese, Russian, and Indian companies.

Sources:

  • "Unleashing America's Offshore Critical Minerals and Resources" (Executive Order by the US President)
  • United Nations Convention on the Law of the Sea (UNCLOS)
  • International Seabed Authority (ISA)
  • Corrs Chambers Westgarth (article by Mr. Jo Feldman)
  • Mondaq Ltd (article)
  • Original Equipment Manufacturers (OEMs) that have foresworn using critical minerals obtained from deep sea mining
  • Geopolitical organisations, including the US, China, Russia, India, and Japan