China Aims to Corner the Undersea Mineral Market, Too

Hungry for more critical minerals to power the energy transition, a slew of countries and companies are desperate to start mining the seafloor for a potential cache of metals—including cobalt, nickel, copper, and manganese—that will be critical to the scramble to build ever more batteries.

Lying thousands of feet underwater are an estimated billions of dry tons of polymetallic nodules, which are potato-shaped formations packed with critical minerals. The appeal in those little chunks of rock is just how rich they seem to be, with ore concentrations potentially much, much higher than many mainstream veins on land. But tapping those resources in the high seas, the waters that lie beyond nations’ exclusive economic zones, has long been off limits—until now, potentially.

International negotiations are now underway to craft a mining rulebook for the high seas, and China doesn’t want to be left out of the race. Eager to maintain its command of the world’s critical mineral supply chains, experts say that Beijing is positioning itself for success in the prospective industry by ramping up investment and shaping negotiations, even though it doesn’t appear to be in a rush to begin mining.

“If the train leaves the station, they want to be in the front of the train, helping to drive the train,” said Duncan Currie, an advisor at the High Seas Alliance, a conservation group. “They don’t necessarily want the train to leave the station anytime soon, but they’re aware that regulations are being negotiated. Who knows what the future will bring.”

At the center of the debate is the International Seabed Authority (ISA), the body charged with drawing up a mining code that includes a long list of regulatory, environmental, and financial provisions. Those pressures have only intensified since July, when the ISA missed a key deadline that one country, Nauru, triggered in order to expedite the regulatory process. Past that deadline, countries can now submit applications for mining licenses even without an official rulebook in place.

The United States, which never ratified the U.N. Convention on the Law of the Sea and is not a member of the ISA, can’t take part in the high-seas land grab. But Washington isn’t entirely out of the game. Thanks to its extensive Pacific territories, it has ample exclusive economic zones that it can tap however it chooses.

As ISA negotiations continue, Beijing wants to prevent potential deep-sea mining operations—and the resulting influx of critical minerals—from weakening its hold on the sector. After decades of targeted investment and research, Chinese companies dominate the production, processing, and refining of most critical minerals, including the rare earths that power F-35 fighter jets and wind turbines. China currently controls 71 percent of the world’s graphite production, for example, and 90 percent of global rare earth ore processing. In recent months, Beijing has harnessed this advantage in its tech trade war with Washington, unleashing export curbs on graphite as well as gallium and germanium, two chipmaking inputs.

“China wants to make sure that their current grip over the commodities market is not threatened in any way, so that actors are then still dependent on China to get the metals that they need,” said Pradeep Singh, a fellow at the Institute for Advanced Sustainability Studies. “As things currently stand, they’re quite comfortable with their influence in the commodities market.”

The deep sea has long been an area of interest for Chinese authorities, with Beijing adopting a law focused on deep-sea exploration in 2016; more recently, the topic even made it into China’s national security law. The 2016 law will “protect the rightful interests of Chinese citizens and organizations in their search for resources and in deep sea surveys,” state media said at the time.

Despite the regulatory, environmental, and economic challenges to deep-sea mining, there are at least two reasons it could be very attractive: rich ores that far outstrip the concentrations of most of what is left on the surface, and no rival powers or messy insurgencies to muddy those deep waters.

Out of the more than 30 exploration licenses that the ISA has issued, China has secured more than any other country: five. At ISA negotiations in July, delegates from China, South Korea, and Norway reportedly butted heads with other countries that backed a moratorium on deep-sea mining, with the Chinese negotiators pushing for the ISA to set a hard deadline for regulations.

“China wants to be sure that it has a significant role to play in the governance of any seabed mining, if it does start,” said Currie. “They want to be sure that the governance arrangements are acceptable to China.”

But resistance is high. The race to unlock the deep sea’s potential treasures has sparked fierce pushback from more than 20 countries, which have called for a moratorium or precautionary pause, joined by major automakers and hundreds of scientists, who warn of irreversible harm to an environment that has yet to be explored. Last month, the United Kingdom, which has two exploration licenses, became the latest country to back a moratorium, following in the footsteps of Sweden and Ireland.

“The deep sea is mostly unmapped and unexplored,” said Lisa Levin, a professor at the Scripps Institution of Oceanography and a founder of the Deep-Ocean Stewardship Initiative. Many scientists say that mining will be inherently destructive, with hulking underwater machines that effectively vacuum up the nodules, sweeping up sediment plumes (which could disrupt animal migrations) and disturbing marine life on the seafloor. “Most of the areas that people are targeting for mining have yet to have the ecosystems and species described in a way that would allow us to manage any kind of destructive activity like mining effectively,” she said.

Beyond the environmental impact, Victor Vescovo, a private equity investor and deep-sea explorer, has questioned the economic and technical viability of commercial deep-sea mining operations, particularly given the extreme underwater conditions. “It’s extremely challenging to operate in 4,000-plus meters of water,” he told Foreign Policy in August, describing it as an “unforgiving” environment.

Proponents are undeterred. The most aggressive player is the Metals Company (TMC), a Canadian firm that is sponsored by Nauru—the country behind the July regulatory trigger—and which has poured at least $100 million into environmental impact assessments. TMC currently plans to apply for a mining license after the ISA’s July 2024 session, said Gerard Barron, the company’s CEO, a timeline that it aims to stick to even if the ISA has not adopted a mining code by then. “We don’t see a situation in front of us at the moment where we would not launch that application along that timeline,” he said.

While TMC remains in front of the pack, Barron said, China is becoming a more active player. In an op-ed published in March, Chinese state media warned that “China lags behind in terms of knowledge, technology and hardware, which highlights the importance of government attention and investment” in deep-sea mining.

“When it comes to [the] deep ocean, [China is] not leading the race; certainly when it comes to polymetallic nodules, everyone acknowledges that The Metals Company are a long way out in front,” Barron said. “But what we are noticing is that those contractors are mobilizing resources, you know, they’re getting budgets that they’ve not seen before, and there’s no doubt they’re putting a bigger focus on it.”

As China intensifies its research efforts and investments, Singh, the expert from the Institute for Advanced Sustainability Studies, said that it looks as if Beijing is focusing on securing a “future pathway.”

“If deep-seabed mining is going to be a thing in the near future and it’s going to in some way threaten China’s control over the commodities market, they want to be able to step in really quickly,” he said. “I think they want to be ready.”

The post China Aims to Corner the Undersea Mineral Market, Too appeared first on Foreign Policy.

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