When an industry continues to change its narrative, there is something noteworthy. The only practical source of the cobalt and manganese nodules required to construct the batteries that would power the future was deep-sea mining, which was marketed a few years ago as the key driver of the green energy transition. Then the argument began to falter. With the Trump administration actively promoting seabed extraction in international waters, completely eschewing the established procedures of the International Seabed Authority, the discussion has now subtly shifted to national security and vital mineral supply chains. The goalposts have not simply shifted. They have been swapped out.
It’s not only the politics that warrant careful consideration. It’s the money, or more accurately, the increasing lack of it. Long-term prospects for minerals like cobalt are being actively weakened by changing demand patterns, especially in relation to the development of battery technology, according to a recent report from Benchmark Mineral Intelligence. Deep-sea mining is currently not commercially feasible at scale, according to the report’s direct conclusion. That’s not what an environmental advocacy group would say. Market tracking is the responsibility of that mineral intelligence company.
In rapid succession, three new reports have surfaced, each delving into a distinct aspect of the financial argument. The first, written for Greenpeace by scholars Harvey Mpoto Bombaka and Ben Tippe, looked at the benefit-sharing plans under discussion at the International Seabed Authority. These plans are intended to pay developing countries for the extraction of minerals from what international law refers to as the global commons, which belong to all people. In the worst way possible, the numbers are striking. The average African country would get less than $350,000 annually, even with the most optimistic estimates from the industry. That isn’t payment. It’s a footnote.
Because it targets a particular company’s financial results, the second report is more difficult to discount. The Metals Company’s prefeasibility study, which TMC created to present its case to investors, had 19 distinct flaws, according to mining expert Steve Emerman’s analysis. Emerman came to the conclusion that the study makes unsupported claims about “zero waste” and overestimates potential benefits while underestimating costs. He came to the straightforward conclusion that TMC would not make a significant profit if it were held to appropriate financial disclosure standards. According to the report, the only responsible course of action is to abandon the project.
It is difficult to ignore the fact that these are not fringe criticisms. According to the third report, “Red Lines in the Abyss,” 82 financial organizations, including banks, insurers, asset managers, and public financial bodies, have implemented regulations that prohibit, limit, or formally voice concerns regarding deep-sea mining. They collectively account for assets under management of about $27.5 trillion. The year the report was released saw the adoption of nearly half of those exclusionary policies. In the world of finance, momentum like that usually has a purpose.
During a recent webinar, Storebrand Asset Management’s head of climate and environment, Emine Isciel, stated clearly that this is not just an environmental risk but also a financial risk for portfolios and ultimately a systemic risk. That framing is important. Fund managers typically indicate that an industry’s presumptions are being seriously reexamined when they begin to use terms like “systemic risk.”
According to international law, the seabed is a shared human legacy and does not belong to any one country. That language isn’t poetic. It is a legal designation that was created specifically to avoid an extraction scenario in which there is a race to the bottom. It’s genuinely unclear if that idea will endure in the current political environment in the United States. However, the financial institutions‘ withdrawal is not motivated by sentiment. After analyzing the data and reading the reports, they have come to a conclusion that the industry has been trying to avoid: the economic case for deep-sea mining is not as strong as those who support it would like to acknowledge.
