How The Federal Government Can Help Foster a Seafloor Metals Economy

Despite seemingly ever-growing discussion in Washington D.C., overconcentration of global critical mineral supply chains still leaves many American advanced technology sectors exposed to commodity market volatility and trade disruptions.

Whether the United States can meaningfully scale its domestic minerals sector fast enough remains unclear. The domestic supply chain is limited by unduly inefficient permitting processes overseen by understaffed agencies and constrained by consistent environmental opposition to mining. In light of this confluence of factors, deep sea mining (DSM) is gaining attention as an innovative solution for responsibly sourcing energy transition minerals.

The words “deep sea mining” may conjure up images of submersible mining excavators carving up undersea mountains, but the seafloor mineral collection approach closest to commercialization—and that most likely to gain societal acceptance—looks more like harvesting seabed rocks the way a tomato harvester plucks tomatoes. Using robots to collect naturally-occurring metals-rich nodules from the seafloor could be a more preferable form of mining, reducing reliance on mining in countries that lack strong safety, environmental, and labor safeguards.

Nodules found in the international seabed area contain high concentrations of manganese, nickel, copper, and cobalt simultaneously. These valuable energy transition metals enable the manufacturing of modern nickel-manganese-cobalt lithium-ion batteries used in many electric vehicles, while nickel, manganese, and copper are broadly used in many clean technology applications like structural steel, solar farm cabling, heat pumps, and hydrogen electrolyzers. In particular, current nickel and cobalt supply chains are increasingly concentrated within a Chinese-owned industry landscape that leverages cheap, carbon-intensive energy, irresponsible practices, and monopolistic strategies to push more highly-regulated, unionized nickel operations in Australia and Canada to lay workers off or even close.

Nodule collection operations offer an opportunity for the United States and allied countries to help break this cycle of unfair competition and dependence, using skilled maritime fair labor and mechanization while avoiding community impacts. At the same time, the high grade of metals within these nodules may reduce the energy requirements, cost, waste footprint, and industrial capacity needed for processing, in turn, conveying economic and sustainability advantages.

While the U.S. has deliberated from a distance, other nations have been proactive in shaping regulations governing the burgeoning DSM industry. The UN Convention on the Law of the Sea (UNCLOS), established in 1982, created a comprehensive framework for governance of international waters and seabed areas. Despite repeated attempts, the Senate's failure to ratify UNCLOS has left the United States sidelined, only able to participate in the development of mining code regulations at the International Seabed Authority (ISA) as an Observer. With the ISA working towards finalizing its mining code within the next year, Washington is likely too late to help directly shape initial regulations, even if the U.S. were to rush to become a Member State.

At this stage, the U.S. is also too late to begin pursuing new nodule collection claims of its own in the near term — 16 contractors have already secured exploration permits with the ISA to explore deep sea resources to date, with China and Russia holding 4 of them.

The good news however is that the United States still possesses ample opportunity to not only support early sefloor nodule collection efforts but participate in and benefit from them. The United States can also play an important role in developing better knowledge, understanding, and acceptance of seafloor nodules by expanding research efforts to study nodule resource areas and improve collection technologies. Most of all, the U.S. can aim to become a key player in the downstream processing of harvested nodules through supportive domestic policies and mineral supply chain agreements.

Supporting nodule collection

Without ratifying UNCLOS, the United States has no direct route to pursuing nodule collection in international waters and cannot sponsor American firms for exploration or mining activities. Still, the federal government has other means available to support nodule collection.

Strategic partnerships with other sovereign states like the Cook Islands, Nauru, Tonga, Japan, South Korea, Singapore, and Belgium could open up U.S. access to polymetallic nodule resources. Some countries such as the Cook Islands are pursuing nodule collection in their exclusive economic zone (EEZ), presenting opportunities to support nodule collection outside the scope of UNCLOS. Dense nodule fields in the Cook Islands EEZ may contain cobalt equivalent to triple the sum of all known terrestrial reserves, for instance.

The U.S. should consider support mechanisms for these potential partnerships, such as the extension of existing friendshoring programs, Minerals Security Partnership support, or establishing trade understandings that could make seafloor minerals sourced by partners eligible for Inflation Reduction Act tax credits. In particular, designating nodules collected in international waters as domestic material if they are brought directly to the United States following collection is both a common-sense clarification and could lend important market momentum to this sector.

With an eye towards the very distant future, the exploration of domestic deep sea mineral reserves in the Outer Continental Shelf (OCS) may hold some promise. Portions of the U.S. OCS off the coast of Hawaii and U.S. Pacific territories may contain polymetallic nodule resources of their own. Together, the Bureau of Ocean Energy Management (BOEM) and USGS are currently developing a National Offshore Critical Mineral Inventory. Still, this project represents only a small initial step forward. The USGS suggests that more high-tech mapping and sampling efforts could help improve our understanding of the scale and viability of OCS mineral resources. Partnerships with allied nations and companies with deep expertise defining and prioritizing marine minerals may also prove helpful.

Ultimately, if the U.S. wants to extract critical minerals from the OCS, Congress will also need to revise regulatory structures. BOEM’s leasing system was not crafted to accommodate deep sea nodule collection. While BOEM has not issued leases for nodule collection to date and is unlikely to anytime soon, this regulatory framework would need to be updated and broadened to more effectively and appropriately manage this new emerging industry. Congress may also need to reassess BOEM’s relatively low budget for direct offshore activities.[1] [2]

Supporting research and knowledge-sharing

Meanwhile, Congress could help promote better public understanding of nodule collection by encouraging and synthesizing additional research on environmental and economic considerations.

Misperceptions about deep sea nodule harvesting are pervasive even within policy and downstream industry circles, encouraged in large part by highly exaggerated claims from environmental opponents. At the same time, the scientists conducting much of the recent research on the environmental impacts of nodule collection are typically (though not always) participating in corporate expeditions intended to perform pilot and small-scale testing of collector vehicle systems. Though these scientists are often collecting data and publishing independently in the peer-reviewed literature, such arrangements have nevertheless created perceptions and accusations of bias.

Scientists at federal agencies could help ground discussions more objectively by independently reviewing the body of up-to-date published research on seafloor nodule collection, coalescing existing private sector, academic, governmental, and other research findings into one or several topical reports that can better inform policy and regulatory conversations. Such a synthesis of existing research would in turn identify key areas for future analysis, which agency science efforts could then directly target for investigation.

Several existing Federal programs would be well-suited to perform such important research with further direction and funding from Congress. BOEM’s Marine Minerals program, NOAA’s Ocean Exploration program and USGS’s Global Marine Mineral Resources project would all serve as strong foundations for expanded research. Past legislation also proposed directing NOAA to work with the National Academies to study seabed mining. More recently, legislation proposed during the 118th Congress would direct the Office of Science and Technology Policy to report to Congress on economic, environmental and diplomatic impacts of seabed mining.

Supporting nodule processing

Lastly, even if the U.S. remains entirely uninvolved in nodule collection at sea, the United States can still aim to establish a lead in processing these nodules on shore. Early efforts to develop the advanced facilities needed to turn nodules into refined metals could produce significant benefits for the U.S. economy and technological leadership in addition to national supply chain strategy.

To compete in this sector, the United States will need to foster a strong market environment for domestic processing, ready for business as soon as deep sea nodules are harvested. Congress has already recognized this need, with the recently-passed NDAA requiring the Pentagon to submit a report to Congress by March 1, 2024 assessing the potential for the United States to host domestic processing facilities for deep sea minerals. As of the end of April 2024, this report has not yet been released, but the publication will play an important role in setting the tone for the domestic DSM processing market.

It is not difficult to speculate about the domestic challenges that this report is likely to identify. Metal commodity markets are currently confronting a daunting price slump, driven by expanding Chinese-led production as the post-COVID Chinese economy has shifted to prioritize heavy industry and manufacturing in a bid to stimulate economic growth. Facing fierce competition from highly-polluting and extensively state-subsidized industrial metals production, mines and smelters in countries like Australia and Canada have halted or downsized operations.

Congress could help alleviate obstacles facing new processing operations through regulatory innovation, finding opportunities to improve the efficiency of the regulatory process for industrial facilities while maintaining strong social and environmental protections. The current environment for the industrial metals sector in the United States is difficult. New projects face high costs and long lead times including a difficult permitting process, making them highly vulnerable to price-dumping and market volatility. Targeted optimizations to such processes, such as facility-wide air permits instead of multiple permits for specific sets of equipment, could significantly reduce permitting costs and regulatory agency workload while maintaining rigorous environmental outcomes.

At the same time, given the strong national interest in securing mineral supply chains that are key to bolstering national security and developing new energy technologies, the federal government can support feasibility studies, invest in demonstration projects via grants or public-private partnerships, or even incentivize critical minerals processing with production tax credits. Legislative proposals like the Responsible Use of Seafloor Resources Act could further bolster a domestic market, by tasking the Department of Defense with supporting domestic processing capacity.

Finally, policymakers can help level the playing field by subjecting overseas critical mineral imports to higher environmental and labor standards, imposing fees on products with substandard environmental footprints and denying market access entirely to unethically-produced metals. Given the inherent potential economic advantages of nodule processing compared to smelting of conventionally-mined ores, such measures could help make the United States a focal point of a future seafloor nodule industry.

Conclusion

Efforts to establish secure supply chains for critical minerals ultimately demand a strategic and concerted effort from Congress that is not limited to just a couple projects, policy levers, or technological approaches. While these challenges will continue to loom large with or without deep sea minerals, policymakers should nevertheless weigh the considerable potential for seafloor nodules to bolster the nation’s nickel, cobalt, copper, and manganese supply chains.

It is rare for the coming-of-age of a new mineral production technology to coincide with vast resources that could remake global trade in four different critical mineral commodities. The United States thus possesses not only a strategic national interest in seafloor polymetallic nodules from a critical mineral supply chain perspective, but also a valuable economic interest from helping to develop an advanced technology sector with considerable potential to drive yet further breakthroughs in robotics, AI, and clean energy technologies. This window of opportunity, however, will not remain open forever.

In summary, possible federal government priorities for supporting nodule exploration efforts in the near term could include:

• Forging partnerships with other nations pursuing seafloor nodule collection

• Designating nodules harvested from the international seabed as domestic content if they arrive in the United States as their first port of call.

• Expanding research efforts to collect ecosystem data in potential nodule resource areas and further improve nodule collection technology.

• Improving the efficiency of permitting processes for U.S. metal processing projects.

• Leveling the playing field for domestic and allied industries through strong environmental and labor standards, such as forced labor import bans and carbon border adjustment fees, for imported critical minerals.

• Supporting feasibility assessments and early demonstration projects through federal agency tasking, grants, and incentives.