Pacific Money | Economy

Scramble for the Indo-Pacific Seabed

China is poised to dominate seabed mining – if it ever becomes feasible, that is.

By Drake Long for
Scramble for the Indo-Pacific Seabed

International Seabed Authority General-Secretary Michael Lodge in front of the Jiaolong submersible, at a workshop in Qingdao, China.

Credit: International Seabed Authority

Recently, the secretary-general of the International Seabed Authority (ISA) said China would likely be the first country in the world to start mining the seabed. This statement isn’t shocking to anyone following China’s progress over the last few years toward deep seabed exploration and exploitation. China has invested heavily in deep-sea submersibles and unmanned underwater vehicles (UUVs), both of which are necessary to map out mineral and rare earth deposits on the seafloor, as well as potentially guide the activities of harvesters scraping those deposits up. But Chinese state-owned enterprises have also pursued and received more mining contracts than any other state-sponsored entities with the ISA, the only UN body empowered to approve them.

Domestically, China adopted a law standardizing and incentivizing Chinese contractors’ activities concerning the exploration and extraction of deep seabed resources back in 2016. And before that, China established its China Ocean Mineral Resource R&D Association (COMRA), an institution testing the resource potential of the deep seas that itself has many contracts with the ISA, including one to train personnel from other countries on how to explore for mineral deposits. In short, China has been ahead of the curve for a while.

What makes the ISA’s comments more newsworthy is that they comes within the context of increased competition between states and companies eager to start their own seabed mining projects. India just last month announced plans to prospect and eventually mine mineral deposits in the Indian Ocean Basin, investing considerable funds toward a pilot project. New Zealand is currently deliberating over a mining project off its Taranaki coast, and Japan’s Oil Gas & Metals National Corporation conducted a trial on seabed mining in 2017.

The seabed zones that the ISA is handing out contracts for (the Clarion-Clipperton Fracture Zone in the Pacific and the Indian Ocean Basin) have potentially rich deposits of cobalt and manganese, among other minerals. The ISA is on course to publish the mining code necessary to permit actual mining in 2020. Therefore, those Indo-Pacific countries interested in the seabed have to invest in the institutions and capacity to do so now.

However, all of these countries may be wasting their time. Seabed mining is not commercially viable, nor is it likely to be anytime soon.

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Inherent Vice

For many countries, it makes sense on a superficial level to consider seabed mining a bold new way to gain critical resources. A dominant concern for the United States and India is their overdependence on China for rare earth metals like cobalt, which China has a virtual monopoly on. This is a disadvantage for any country wanting to make sure their economies keep pace with emerging technologies, as China isn’t shy about using its resource monopoly as a tool of coercion. Therefore, the possibility of Chinese state-owned enterprises (SOEs) getting first-mover advantage and dominating yet another source of rare earth metals is unpalatable.

But there is little proof that any country, let alone China, will actually get to extract resources from the ocean floor, or at least extract deposits substantial enough to matter. One pilot project that came close to large-scale extraction was Solwara 1, which would have had Canadian-owned Nautilus Minerals harvesting resources off Papua New Guinea’s seabed. Solwara 1 has been summarily canceled due to a moratorium the PNG government put in place after domestic opposition. This is but one instance of a growing pattern wherein countries cancel seabed mining operations within their continental shelf limits.

The Clarion-Clipperton Fracture Zone, where the vast majority of ISA contracts cover, is spread out over the maritime territories of mostly Pacific Island countries, some of which (like the Cook Islands and Kiribati) have some of the largest exclusive economic zones (EEZs) in the world. Enthusiasm for deep-sea mining among these countries has waned considerably due to suspicion over what the actual benefits for their citizens will be, and in August member-states of the Pacific Islands Forum, including Fiji, called for a 10-year moratorium on seabed mining entirely.

The idea of a blanket 10-year moratorium is increasingly popular among Pacific Island countries, and it is creating pressure within their domestic political systems against approving any more costly and ultimately untested extraction projects. Advocacy from organizations like the Deep Sea Mining Campaign has absolutely made an impact on this. The steep cost and failure to reap economic benefits from any existing seabed mining projects has as well.

This is relevant for potential deep sea miners because it essentially means anyone considering the funding of a deep sea mining project will have to consider the possibility that the project will be canceled or hamstrung at some point by the host state. The sources of funding under consideration can also only be state coffers or venture capital because of this dynamic. India and China’s seabed mining plans are only possible with state subsidies. Solwara 1, for one small example, involved the use of support vessels built by China’s state-owned Fujian Mawei Shipbuilding Limited. The vanguard Canadian and Australian companies working on seabed mining such as DeepGreen are essentially start-ups with little capacity, powered by private investors who have yet to see any commercial activity from them.

The lack of return on these investments due to host-state ire will eventually kill enthusiasm for future funding and subsidies in general. Why back any of these projects when there’s so much inherent risk?

The Environmental Cost: What We Know, What We Don’t

This dynamic is not dissimilar to the one oil and gas companies operate with, and yet no one doubts the profitability of that sector. But seabed mining in the Indo-Pacific, and the opposition to it, is unique because of the sheer environmental cost. A 1989 trial (dubbed DISCOL) on the impacts from seabed mining on the deep sea environment revealed irrevocable environmental damage in the same area 30 years later, and that test was nowhere near the scale of what a commercial operation would be. If seabed mining were carried out in the unicorn-like conditions necessary to make a profit, it would involve scraping slopes and deposits on the ocean floor, spreading sediment clouds over some of the most fragile ecosystems on the planet.

In 2018, a deep sea exploration project by Poland threatened to destroy a UNESCO World Heritage Site under the Atlantic Ocean, called the Lost City. The vast majority of the ocean floor is unmapped, and the biodiversity of deep-sea environments are still mostly unknown. There is no question that there are more unique environments like the Lost City out there, and the organisms that live in them exist in very specific, undisturbed conditions. Seabed mining will undoubtedly destroy these environments and potentially push some creatures to extinction before those areas are even well-documented. The debate over the ISA’s mining code is thus colored by the plain reality that there is no actual way to “sustainably” mine the seabed. No governance measures will be able to mitigate the environmental cost, aside from a moratorium.

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For that reason, those companies investing in mining contracts and equipment now are likely to never get to the commercial exploitation phase. Those Pacific Island states already acutely endangered by environmental destruction will push for enormous fees, stringent regulations, or outright moratoriums, and thus mining companies will never turn a profit unless propped up by those countries like China and India most willing to dole out subsidies in pursuit of dubious benefit. And even that arrangement will have a shelf-life as both countries realize rare earth metals are still cheaper elsewhere.

Seabed Mining: Winners and Losers

This is not to say the craze around seabed mining will lead nowhere. There is a dearth of information about the seabed: a byproduct of countries’ interest in it will be a renaissance in mapping the world’s most unreachable places. There are profound implications for modern medicine in the potential biodiversity of the ocean floor, previously inaccessible until recently. If the equipment to map and understand these areas has to be dual-hatted as tools for state-backed mining companies, then so be it. It is completely reasonable to be suspicious of China’s motives for investing in submersibles like the Jiaolong. However, the knock-on effects of the race for this technology could eventually lead to developing littoral states better understanding everything under their vast EEZs.

A more mixed bag result will be the effects of seabed mining on the continental shelf disputes lingering in the Indo-Pacific. Many UNCLOS member-states have not settled their continental shelf limits with their neighbors, and if there’s to be a scramble for resources the urgency to solve those disputes could lead to either good or bad outcomes. A possible scenario is one where the survey equipment originally designed for seabed prospecting ends up being repurposed to bolster the legal arguments and territorial claims of Pacific Island countries.

The true loser in all of this is the United States. As the United States has not ratified UNCLOS, American companies cannot receive contracts from the ISA, and the U.S. is the only permanent member of the UN Security Council not able to file a claim for an extended continental shelf. The race for the seabed will require a presence in the ISA before anything else, and currently the United States cannot stop China from continuing to dominate discussions around seabed mining and seabed exploration. Even if the U.S. can sit back and watch as seabed mining ventures falter, the drive for technology those ventures require and the creation of global governance to guide states’ actions around it will completely cut out the U.S. government and its companies. That’s not desirable at all.

If there is one takeaway from the current discussions on the seabed, it is that the seabed is a frontier. Frontiers offer incredible promises that almost never live up to expectations, but it is still better to learn about the frontier than ignore it. Pacific states are well on their way to better understanding their seabeds — and it may take the failure of the seabed mining sector to get there.

Drake Long (@DRM_Long) is a second-year Master’s student in Georgetown University’s Conflict Resolution program. He focuses on territorial conflicts and disputes.