We’re starting to see Deep Sea mining emerge as trend in global mining over the last few years, and this includes metals such as gold, silver and copper .
These metals are being mined from the seabed and what’s fascinating to me is that so much of the ocean floor is unmapped. Now obviously there are some areas of the sea that are just going to be too deep like the Abyss section and “hadal zone “section of the ocean. The Hadal is the deepest of the deep, over 6000 meters deep. Mining companies will want to stick with shallower sections as its logistically easier, but one thing to note is we’ve been seeing environmental groups are adamantly opposed to it as the claim is that the mining kicks up sediment and destroys the ecosystem. One important thing to think about it is the rules around international waters.
One thing that intrigues me is how Deep-Sea mining could affect stacking and the future. Deep sea mining could potentially shift the balance between metal demand and supply quite significantly (Read about reasons to stack silver here). Still, due to the expensive specialized equipment, high entry barriers and special permits and licenses, a lot of mining companies are simply going to avoid it altogether.
In terms of regulations, the UN gave authority to an organization called the International Seabed Authority, or ISA. This group decides permits, extraction and pretty much everything around underwater mining.
So, what are the advantages of mining deep?
(1) Is it the ores or nodules? I’ve heard different things on this, but I have heard that ores recovered from the seabed can have up to 99% usable metals, unlike terrestrial nodules, which usually have less than 20%. Ores are simply the natural rock or sediment that contains one or more metals or minerals. So, if ores have multiple metals in them the extraction process is going to be much more complex than say just having one metal.
(2) And this leads to the second big advantage. And sure, this could happen too on land with a new discovery, but the ocean is really completely unmapped with much potential. Right now, the most popular area for underwater mining is an area of about 1.7 million square miles between California and Mexico known as Clarion Clipperton Zone. Still, there’s lots of areas being mapped out.
(3) Mining companies are financially designed for things like this. It’s known within the industry that a certain amount of capital has to go toward exploratory efforts, and this is definitely not true with every type of industry. When you think about mining stocks, we know they’re risky and I’m not saying not to invest in one, but most of the time these are high risk stocks, with little or no dividend.
(4) Another advantage is cobalt. It’s estimated there is about 1 billion ounces in the ocean which is much more than on land. Also, almost all cobalt comes from the Democratic Republic of Congo so any turmoil there or event could devastate the supply for the world. In sum, there could be quite a bit out there in the ocean.
Let’s briefly discuss the disadvantages of deep-sea mining for metals.
Disadvantages:
(1) Regulations and Permits. These can be costly and take a lot of time. Funding can dry up too as permits can take years to get.
(2) Challenge of Getting to Deep Parts of the Ocean if metals are known to be there.
(3) Criticism from Enviromental groups.
Why do we need to go the sea?
Deep sea mining has seen a surge simultaneously with the battery metals and EV rise, as metals such as lithium, cobalt and nickel, as well as other rare earth minerals are found in huge abundance on the ocean seabed.
Lithium-ion batteries especially, have seen a massive jump lately, leading to concerns about potentially running out of terrestrial lithium supplies in the near future.
In sum, with the Green Energy push, the mining companies might need to head out to sea to gather the critical metals needed.
