Canada isn’t sold on mining the world’s oceans. A Canadian company is diving in anyways

On Aug. 1, 2023, Vancouver-based The Metals Company announced to investors it plans to submit an application to mine an area of the Pacific Ocean, even though regulations are not ready. The company aims to start production by the end of 2025 and estimates it will need up to $70 million to submit an application.

At the most recent meetings of the International Seabed Authority, delegates tasked with coming up with rules agreed to not allow commercial deep-sea mining of the ocean floor until international regulations are in place. The authority committed to working on mining regulations over the next two years. 

While a Canadian company is pushing for deep-sea mining, the federal government is joining calls for a moratorium on extracting minerals from the world’s ocean floor. 

Eighteen countries, as well as financial institutions and companies, are taking positions against deep-sea mining in international waters. Canada’s July 10 statement confirms it will not support commercial extraction of minerals from the seafloor until more is known about the environmental impacts and there is a “robust regulatory regime” in place. 

“Seabed mining should take place only if effective protection of the marine environment is provided through a rigorous regulatory structure, applying precautionary and ecosystem-based approaches, using science-based and transparent management and ensuring effective compliance with a robust inspection mechanism,” the government of Canada said in a joint statement from the ministries of Foreign Affairs, Natural Resources, Fisheries and Oceans and the Canadian Coast Guard.

The support for a moratorium comes as delegates and observers, including from Canada, negotiate next steps at the International Seabed Authority meetings this month in Kingston, Jamaica. The International Seabed Authority is an autonomous, intergovernmental body established by the United Nations Convention on the Law of the Sea. It is made up of 168 members and regulates the ocean floor beyond national jurisdiction. These waters are beyond national jurisdiction. As it stands now, there are no clear and agreed-upon extraction regulations for the industry.

“The pressure is on to protect the deep sea, and Canada’s support for a moratorium comes at a critical moment,” Nicole Zanesco, Oceans North’s International Policy Advisor, said in a statement. Oceans North, a marine conservation group, is the only Canadian observer at the meetings in Kingston. 

There is still a lot to negotiate at the International Seabed Authority meetings over the next three short weeks including environmental protections, clean-up responsibilities should disaster strike, financial payment regimes for permits and how to structure contracts and enforcement mechanisms. For regulations to take effect, they must be adopted by consensus of the authority’s council, made up of 36 states. 

For the first time, the international regulator is also being asked to discuss a general policy on what a pause to deep-sea mining would look like, rather than solely focus on how to allow mining. A coalition of five states — Chile, Costa Rica, France, Palau and Vanuatu — have put forward a request to discuss how to implement a “precautionary recess” of deep-sea mining. 

There is a lack of scientific knowledge around extracting minerals from the ocean floor and without proper regulations, rules and procedures, “it is impossible to assess the extent of the harmful effects on the marine environment that may eventually arise from exploitation activities,” the request says.

The international moratorium Canada is calling for is an important commitment to protecting biodiversity and taking a precautionary approach, Nikki Skuce, director of the Northern Confluence Initiative and co-chair of the BC Mining Law Reform network, told The Narwhal. Canada said it would not support deep-sea mining within national boundaries in February. “There are so many unknowns of what the impacts could be,” Skuce said. On land, mining has huge impacts to waterways and there is still so much uncertainty about how mining below the surface will affect ocean ecosystems, Skuce said.

Deep-sea mining deadline rule meant to break filibusters, not expedite the process 

The current round of meetings comes after the International Seabed Authority failed to meet a rarely imposed deadline set by one of the world’s smallest countries. 

The provision, known as “the two-year rule,” which expired on July 9, was triggered when the Republic of Nauru said it wants regulations in place so it can start deep-sea mining in international waters. The island state, northeast of Australia, has a population of just over 12,500, with one in four people living below the basic-needs poverty line. Coral reef surrounds the tiny island which is now developing its first port. 

The International Seabed Authority, which has been working on regulations for years, created the two-year rule in anticipation of one or two members blocking a consensus for geopolitical reasons or to frustrate the process, explained ocean governance expert Pradeep Singh. 

The two-year rule compels members to complete regulations within two years or consider provisionally approving applications for mining before regulations are fully in place. The deadline has passed and the regulations are not complete. What happens next has legal experts, ocean scientists, environmentalists and deep-sea mining companies holding their breath as states decide on the future of the ocean floor.

“It was never anticipated that this provision would be used if one actor wanted to go ahead and could basically accelerate the whole process,” Singh told The Narwhal. “There's still a long way to go in negotiations. It would be really unrealistic to expect them to be prepared to adopt the regulations anytime soon.”

Right now companies can apply for exploration permits if they are sponsored by an International Seabed Authority member state — like Nauru. Canadian miner The Metals Company has been exploring parts of the Pacific Ocean floor for mineral-rich deposits known as polymetallic nodules — potato-sized rocks that sit on the sea bottom. It’s “a battery in a rock,” that can be collected “without any digging or drilling” according to The Metals Company. 

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Nauru triggered the two-year rule and is sponsoring mining contractor, Nauru Ocean Resources Inc., a subsidiary of The Metals Company.

Investors and businesses argue the valuable minerals on the ocean floor are needed to shift society to a battery-powered future. There are more than two dozen projects already exploring more than 1.5 million square kilometres of seabed around the world — an area bigger than British Columbia and the Yukon combined. 

Critical questions facing the International Seabed Authority are what the two-year rule expiration means for the regulation process, and what to do if a company submits an application to mine before regulations are in place.

Could a Canadian company be first to mine the ocean floor?

Mining companies want to get started as soon as possible. “The exciting thing about this very moment in time — the final piece of the regulatory regime is about to fall into place which means that this resource is about to be open to business,” Gerard Barron, CEO and Chairman of The Metals Company, said in a YouTube interview for investors. “I can’t see anything stopping us,” Barron said as he described the company's shift from exploration to exploitation in the video, recorded in April.

The Narwhal asked The Metals Company if it would submit an application to mine if regulations are not adopted after the meetings end this month. “Our preference is to submit an application with exploitation regulations in place but we retain the legal right to submit an application in their absence and to have this considered by the council,” Dan Porras, company spokesperson said in an email after declining an interview request. 

Porras also said an application for a commercial contract to mine would only come after the company completes “a high quality comprehensive, science-driven environmental and social impact assessment.”

The Metals Company is registered in Vancouver, B.C., and has multiple subsidiaries including six mineral exploration companies and eight holding companies. 

It has three exploration contracts through its subsidiaries Nauru Ocean Resources, Tonga Offshore Mining Limited and through an arrangement with its Singaporian subsidiary DeepGreen Engineering and Marawa Research and Exploration. These contracts are respectively sponsored by Nauru, The Kingdom of Tonga and The Republic of Kiribati.

While Canada has called for a moratorium, it can’t stop an application to mine on its own. Generally, if an application to explore or mine is submitted to the International Seabed Authority, it would first go to the legal and technical commission. If the commission recommends the application, shutting it down could be challenging. It would require at least two-thirds majority from the 36-member council to vote against approving the application, as well as a majority within each of the five chambers that make up the council to vote in favour of shutting it down. 

It’s unclear if this general procedure would still apply now after the two-year rule deadline passed and in the absence of regulations, Singh said. It’s an important procedure to clarify at this precarious stage because it favours going forward with mining. “It’s an incredibly difficult threshold to meet and it makes it almost impossible for states to vote no on a plan of work,” Zanesco said

Compliance and enforcement top of mind as the International Seabed Authority looks to regulate deep-sea mining

Even if The Metals Company does submit an application to mine the sea floor, with sponsorship from Nauru or another member nation, Singh has doubts that extraction would happen anytime soon. 

Conversations among members are moving towards not approving applications before regulations are in place, Singh said. “I think there are significant chances that an application would be rejected,” Singh said. “In the off chance that an application is approved, it doesn't mean that mining will start because the contract can only be negotiated once the regulations are there. And that could take a long number of years before we get anywhere close to that.” 

When exploration applications came into the authority in the 1990s, contracts were not signed until regulations were adopted years later, Singh said. “I think that puts a dent in the plans that The Metals Company has.” The “primary reason why there is no exploitation is because the regulations are not ready yet,” Singh said. But Nauru's nudge, using the filibuster rule, is urging that process forward.

Another question that looms over the council is how compliance and enforcement will work as companies with international operations are sponsored by countries to get approvals and permits from the seabed authority. 

The International Seabed Authority is a unique and peculiar organization, Singh said, because in contrast to other international bodies it’s capable of deciding who gets to mine and where. It sets standards and practices and is also responsible for enforcement. That’s unlike the United Nations General Assembly or World Health Organization, which leave it up to member states to create and enforce regulations in their own territory. 

Right now, states have control over a company’s activities up until the International Seabed Authority approves an application, Singh said. Once an application is approved, that control mostly shifts over to the authority. 

The corporate structure of The Metals Company shows the complexities of regulating this burgeoning industry. The Metals Company is registered in Vancouver, B.C., but also operates multiple subsidiaries including six mineral exploration companies and eight holding companies based out of Singapore, the United States, Australia, Tonga, Nauru, the British Virgin Islands and the United Kingdom, according to financial filings. 

Regulations are crucial to set out what states are liable for should they decide to sponsor any mining activities, Singh said. Without clear regulations, it’s unclear who could be held liable if disaster strikes. “Why would you expose yourself to such risks?” he asked.

Future of the world’s oceans rests with International Seabed Authority

The impact of the decisions before the International Seabed Authority cannot be understated.

“We're forgetting how absolutely massive this could be,” said Nicole Zanesco of Oceans North. “This would be the largest mining industry on the planet,” with projects in the Pacific Ocean, Atlantic Ocean, the Indian Ocean and across the entire international seabed. 

While there are many legal and policy unknowns, there are also thousands of unknown creatures and lifeforms in the areas flagged for possible mining.

New studies continue to uncover the mysteries of the ocean floor echoing concerns of scientists and policy experts. A study published in May found there were more than 5,000 unnamed species in the Clarion Clipperton Zone, an area in the central and eastern Pacific Ocean where exploration is happening. More than 700 marine scientists and policy experts have signed a petition warning deep-sea mining would contribute to a “loss of biodiversity and ecosystem functioning that would be irreversible on multi-generational timescales.”

“If countries are serious about changing how we are on this planet, a decision to mine flies in the face of all of that,” Susanna Fuller, vice-president of conservation and projects with Oceans North, told The Narwhal. For Fuller, these July meetings are a test to see if countries are serious about changing the status quo and how we deal with the climate crisis.

The International Seabed Authority meetings will continue until the end of July. While there might be some more clarity on procedures for decision-making, a clear path for the future of deep-sea mining and any regulations that could guide it will likely take much longer.

Canada's support for an international moratorium was a welcome announcement as the world meets to discuss next steps, Zanesco said in an email from Kingston, Jamaica after the first two days of meetings. But with so much to discuss it is impossible to pinpoint a timeline for what could follow, she said. “What is becoming even clearer, is that the [International Seabed Authority] is not prepared to oversee a mining operation — especially what will potentially be the largest on Earth.”

Updated on August 3, 2023, 12:25 p.m. PT: This article was updated to include the outcome of the International Seabed Authority meetings and an announcement that followed from The Metals Company. The list of countries calling for a pause to deep-sea mining was also updated to include Brazil, Finland and Portugal.