DSM challenges

Profitability

The profitability of deep-sea mining remains uncertain, although DSM companies are firm advocates for the profitability of their nascent industry. A leading mining company, for example, has stated that even with potential setbacks, such as drops in metal prices and slower-than-expected electric vehicle demand, it still anticipates being profitable and cash flow positive when full production is underway. On the other hand, some contend that DSM companies are underestimating the cost of inevitable technological issues and other challenges arising from the unpredictable, high-pressure environment of the deep sea. Even assuming the accuracy of DSM companies’ financial models of profitability, significant legal issues and environmental concerns remain.

International legal implications

States generally control their territorial waters up to 12 nautical miles from shore, but they may claim an exclusive economic zone (EEZ) that extends up to 200 nautical miles from the coast. A state has full jurisdiction within its territorial waters, while an EEZ only applies to the natural resources therein. Within their EEZ, states possess sovereign rights for the purpose of exploring, exploiting, conserving, and managing natural resources of the seabed, subsoil, and waters above it. Thus, deep-sea mining in EEZs would occur under the corresponding domestic purview. Beyond these national jurisdictions and EEZs, the International Seabed Authority (ISA) is responsible for regulating the waters. The ISA was established in 1994 under the UN Convention on the Law of the Sea (UNCLOS), with a primary mandate to “organize and control activities” on the seabed and ocean floor in international waters.

The ISA has been working to develop regulations for DSM since 2011. As of 2024, there is still no consensus on exploitation regulations, but at a 2024 ISA meeting, the ISA noted that it made “significant progress” in the negotiations of regulations for exploitation. When these regulations are finalized, they will provide a non-binding framework that serves to guide states in DSM activity.

While the ISA has yet to finalize a mineral removal framework, regulations have existed for over 30 years that allow for exploration under certain circumstances. In such circumstances, private entities must be sponsored by a UNCLOS party to receive permission to explore. Since 2001, 31 contractors have been granted exploration contracts. Under these contracts, the removal of mineral deposits from the seabed is permitted, provided that the entity “recover[s] a reasonable quantity of minerals, being the quantity necessary for testing and not commercial use.”

Testing described earlier by a leading mining company, occurred in the context of an exploration contract. Sponsored by the UNCLOS State of Nauru, the testing company submitted an environmental impact statement and a separate environmental management and monitoring plan to the ISA. After suggesting numerous edits to these plans, the ISA approved the tests, which occurred in the area delineated by the exploration contract. The testing claims that environmental impact data generated by the test will inform its application for an exploitation contract.

Another international legal implication for states to consider is the High Seas Treaty, particularly regarding environmental impact assessments (EIAs). The text defines an EIA as “a process to identify and evaluate the potential impacts of an activity to inform decision-making.” The treaty recommends EIAs for activities in both the high seas and national waters: “Parties shall ensure that the potential impacts on the marine environment of planned activities under their jurisdiction or control that take place in areas beyond national jurisdiction are assessed as set out in [this treaty] before they are authorized.” Furthermore, if a state planning an activity “within national jurisdiction determines that the activity may cause substantial pollution of or significant and harmful changes to the marine environment in areas beyond national jurisdiction, that Party shall ensure that an environmental impact assessment of such activity is conducted.” Thus, the High Seas Treaty and its delineation of EIAs, which generally require states to conduct an evaluation of environmental impacts under certain circumstances, would very likely be applicable to any DSM activity.

It is important to briefly consider concerns about the effects of DSM. Many species in the deep sea remain undiscovered, and some scientists contend that DSM could disturb the marine environment and eradicate unique biodiversity. The deep sea is little understood by science, and disturbances to the seabed ecosystems and the marine environment caused by DSM could be harmful and have unpredictable effects. While there are some unknowns, an emerging concept known as the Blue Economy suggests that the extraction of resources and the preservation of the ocean are compatible. According to the World Bank, the Blue Economy is the “sustainable use of ocean resources for economic growth, improved livelihoods and jobs, and ocean ecosystem health.” If carried out with due consideration for the marine environment, DSM might well become a pillar of this developing economy.

Conclusion

DSM is a promising industry that could provide a rich source of CRMs, which are ever-growing in demand as key components of renewable energy technologies. Critical raw minerals derived from DSM may be less susceptible to constraints, such as natural disasters and trade relationships, and thus might render the CRM supply chain more dependable. The international legal framework that will guide DSM remains in progress as the ISA works to finalize its recommended exploitation regulations. The best practice for states to ensure their DSM actions comply with international standards may be to adopt the ISA’s framework into domestic legislation, as well as seek ISA approval during DSM testing or exploitation. A leading expert in assurance, risk management and sustainability and a recognized advisor to the maritime industry, has already developed a recommended practice for seabed mining. Its risk-based guidelines help entities engaging in deep-sea mining protect the environment while doing so. Their recommended practice provides guidance on the “identification, assessment, control and mitigation of environmental impacts/risks caused by seabed mining activities,” envisioning DSM taking place under a risk-based framework. While the scientific impacts of this form of mineral extraction are not yet fully understood, it may provide the shipping industry with the opportunity to alleviate critical minerals supply-chain challenges and increase the scope of profitable endeavors.