Deep-Sea Connections: Identifying Future Demand for Seabed Minerals
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25 Deep-sea Connections: Identifying future demand for seabed minerals by Brandon Gertz Dr. Pat Halpin, Adviser 4/29/2021 Masters project submitted in partial fulfillment of the requirements for the Master of Environmental Management degree in the Nicholas School of the Environment of Duke University 1 Table of Contents Executive Summary………………………………………………………………….……..2 Abstract…………………………………………………………………………….…..…....4 Limitations………………………………………………………………………….…....….4 Introduction…………………………………………………………………………..……..5 Research Design…………………………………………………………………….…..…..7 Background……………………………………………………………………….………...7 Who Watches the Watchers?…………………………………………………………….10 Results: Literature Review…………………………………………………………....….14 Research Methods…………………………………………………………………..…….24 Results: Contractors and Beneficial Owners……………………...……………..……...28 Discussion……………………………………………………………………………..…...45 Conclusion……………………………………………………………………………..…..50 Acknowledgements………………………………………………………………..……....52 Bibliography………………………………………………………………………..….…..53 2 Executive Summary Deep-sea mining (DSM) is expected to begin at commercial scale on the international seabed within the next decade. This has provoked concern among some scientists and environmentalists, who worry that DSM may have negative consequences for the marine environment. The International Seabed Authority (ISA) is responsible for managing contracts to explore and exploit the international seabed and is given a dual mandate by the United Nations Convention on the Law of the Sea: it must enable the exploitation of the seabed while also protecting the marine environment, all while treating the international seabed as “the common heritage of mankind.” Given the gravity of the situation, some marine scientists have expressed concern that public engagement with deep-sea mining issues is low. In this paper, I identify the beneficial owners of exploration contractors with the ISA and explore the industries and companies that these contractors plan to sell seabed resources to. In doing so, I hope to encourage future research and public engagement strategies that focus on companies that are closely tied to consumers. These companies can be influenced by public input to ensure that the actions of miners in their deep-sea mineral supply chains are responsive to public interests. The limitations section emphasizes that the results of this paper are constrained by several factors, including the fact that DSM has not begun at commercial scale. The introduction outlines the importance of the deep seabed to humanity, clarifies the role of the ISA in its management, and emphasizes the need to find new ways to promote public engagement with DSM issues. The research design sets out my strategy of beginning with a report of the history behind deep-sea mining, followed by a literature review of deep-sea mineral supply, an examination of the beneficial ownership and business ties of each exploration contractor, and key points for future attention. The background section discusses the history of DSM, including its initial rise to prominence as a possible use of the ocean, the collapse in interest in the late 20th century, and the recent resurgence in enthusiasm among mining contractors. The next section, titled “who watches the watchers?” discusses concerns about ISA processes and participation in support of the idea that greater public engagement would have benefits for managing the international seabed as “the common heritage of mankind.” The results section begins with a literature review, exploring projections of future demand for seabed minerals and the products in which they might be used. 3 The second part of the results section begins with a summary of findings before examining the beneficial ownership and business ties of each ISA exploration contractor individually. The discussion section covers the implications of the results and offers ways in which these may be used to improve public engagement with DSM issues. Overall, I argue that a focus on the consumer-connected companies that may buy deep-sea resources in the future can be effective for promoting public engagement with the questions DSM raises. Identifying companies that may have DSM contractors in their supply chains could encourage these companies to influence their suppliers toward actions or resources that match with public interests. I suggest that this strategy may work best for companies that sell cars to consumers due to the incentive for automotive companies to appeal to the public and the possibility that significant demand for seabed minerals may come from electric vehicle (EV) batteries. The key points and recommendations of this paper are: • The future of DSM is highly uncertain, requiring future research attention as markets develop or disappear. • 31 ISA contracts are controlled by just 15 beneficial owners, 5 of which are private companies and 10 of which are states. • Polymetallic nodules (PMN) are the most likely resource type to be mined at commercial scale first in light of ISA legal preparations and the fact that private beneficial owners are only involved in PMN exploration. • The only beneficial owner currently contracted to sell seabed minerals is Canadian company Deepgreen Metals, Inc., which has an agreement to sell half the nickel collected from one of its exploration sites to Belgian metals trader Glencore. • Battery metals companies may be a significant source of demand for seabed minerals in the future and are connected with some beneficial owners through other deals. • A significant portion of this battery demand may come from the development of electric vehicles (EVs) in the automotive industry. • Possible future use of seabed minerals in EVs and the importance of brand reputation to car companies suggest that car companies could be an effective avenue through which people can be connected to DSM issues, improving public engagement. 4 Abstract Mining on the international seabed is predicted to begin at commercial scale within the next decade. Despite this, many researchers have lamented that the deep sea remains “out of sight and out of mind” to the public, leading to little engagement with the substantial questions that deep-sea mining possibilities raise. New methods are needed to enable the public to take ownership of their own stake in the use of the international seabed. In this paper, I identify ISA deep-sea mining contractors’ beneficial ownership, explore their likely industry customers, and highlight which of their products can be used to drive public engagement in the global conversation about deep-sea mining. I find that 68% of contracts are beneficially owned by state governments, while 29% are beneficially owned by non-state corporations and one contract is beneficially owned by an intergovernmental organization. While no sale agreements have been formed between deep-sea miners and companies that sell products to the public yet, ties do exist between some beneficial owners and numerous technology and automotive companies. I suggest that the automotive sector may be the most important deep-sea mining industry connection to focus on for enabling public engagement in the future. This is due to the expected use of deep-sea minerals in vehicle batteries and the ability of consumer decisions and brand reputation to impact the behavior of car companies. Limitations The greatest limitation to this research is that no large-scale deep-sea mining has occurred yet,1 making predictions about buyers and sellers uncertain. Future battery chemistries are also unclear and are influenced by material prices, which could shift or decrease demand for DSM.2 All research on contractors and buyers also had to be conducted from “outside” the companies involved and using only 1 Kung et al. “Governing deep sea mining in the face of uncertainty.” Journal of Environmental Management 279. (2021) 1. https://doi.org/10.1016/j.jenvman.2020.111593 2 Hund, Kirsten, Daniele La Porta, Thao P Fabregas, Tim Laing, and John Drexhage. “Minerals for Climate Action: The Mineral Intensity of the Clean Energy Transition” The World Bank. (2020) 5 open-source resources, meaning any non-public business deals or plans remain unknown. The impact that public pressure can have on companies may differ depending on how interchangeable products like cars are in terms of quality and price.3 While a focus on the automotive sector may involve more people in DSM decision-making, it does not necessarily involve those who do not want or cannot afford a vehicle of their own. Introduction When asked to picture the marine environment, lush coral reefs or dolphins splashing offshore fit the pristine narrative in our minds. There are very few who would instantly picture the deep seabed, miles beneath the surface of the waves. Marine scientists have lamented that the deep ocean is often “out of sight, out of mind” to most people due to its distance, depth, and apparent disconnect from the everyday lives of humans.4 In reality, the deep ocean is far more newsworthy than it receives credit for being. The deep seabed covers over half the surface of the Earth, and the waters above it provide most of the planet’s living space for wildlife.56 Biotic and abiotic processes that occur in the deep ocean provide many services to humans including supporting fisheries, cycling carbon, and enabling bioprospecting for useful new chemicals.7 Interest in mining the deep ocean has also increased among companies and countries in recent years due to the potential to harvest metals such as