The Metals Company Thwarted In Its Rush To Mine The Deep Sea

After three weeks of negotiations at the International Seabed Authority (ISA) no regulations on deep sea mining were adopted despite wannabe-miner The Metals Company (TMC) and its sponsoring state Nauru attempting to rush the process.

This session was billed as crucial due to Nauru and TMC announcing their intention to mine under a legal loophole called the “two-year rule,” which could allow them to submit a plan of work for exploitation even if regulations are not in place.[i] That two-year deadline expired on 9th July 2023.

Andy Whitmore, Deep Sea Mining Campaign’s (DSMC) Finance Advocacy Officer stated, “There has been clear push back from ISA members in response to TMC’s brazen attempt to rush regulations. There is no likelihood of a mining code being adopted anytime soon. ISA members agreed to continue negotiations, assess in 2024 the feasibility of adopting exploitation regulations in 2025, but to develop yet another road map if they are not ready by then."[ii]

"The fact that Nauru spoke out against the decision,[iii] and there was a 20% drop in TMC’s share price after the ISA Council meeting, demonstrates that this is bad news for TMC.”

Despite the clear concerns of ISA member states, TMC announced yesterday that they intend to submit an application for commercial mining to the ISA following the July 2024 meeting regardless of progress on regulations.[iv]

Mr Whitmore responded “By not applying this year as threatened, TMC has acknowledged the opposition of ISA members to commercial mining being carried out in the absence of the mining code.[v] This stance was repeatedly emphasised by ISA members throughout the meeting with an ISA participant noting that it ‘now seems deeply rooted’ in delegates’ minds.”[vi]

TMC is again downplaying the likelihood that regulations will not be completed by their self proclaimed deadline of next July. They are also downplaying the chances an application will fail due to: the lack of clarity surrounding the process for making a decision; problems in how certain provisions would work if the mining code is not completed;[vii] and if a licence is approved it will most likely face a legal challenge.[viii]

“They are also rapidly running out of cash. TMC notes their new deadline requires an additional US$60 to 70 million to submit an application in a year’s time. They have only US$20 million in the bank, and even with a credit facility from partner Allseas of US$25 million they will be short of cash without issuing shares and diluting their stock."

"The situation is likely worse, given rising inflation and interest rates, as recently pointed out by entrepreneur Victor Vescoe.”[ix] concluded Mr. Whitmore.

[i] The Metals Company, Q1 2023 Corporate Update, 11 May 2023, https://investors.metals.co/static-files/8980b714-e682-4167-8e66-c2c7f47956ca

[ii] International Seabed Authority, Decision of the Council, 21 July 2023 https://www.isa.org.jm/wp-content/uploads/2023/07/ISBA_28_C_24-1.pdf

[iii] IISD, ISA Summary report, 10–28 July 2023, https://enb.iisd.org/international-seabed-authority-isa-council-28-2-summary

[iv] TMC Announces Corporate Update on Expected Timeline, Application Costs and Production Capacity Following Part II of the 28th Session of the International Seabed Authority, https://investors.metals.co/news-releases/news-release-details/tmc-announces-corporate-update-expected-timeline-application/

[v] International Seabed Authority, Decision of the Council relating to the application of section 1, paragraph 15, 21 July 2023, https://www.isa.org.jm/wp-content/uploads/2023/07/ISBA_28_C_25.pdf

[vi] IISD, ISA Summary report, 10–28 July 2023, https://enb.iisd.org/international-seabed-authority-isa-council-28-2-summary

[vii] For instance, ISA member states have only just started to negotiate how there will be equitable sharing of benefits and the arrangement of compensation for developing countries that is required for mining in international waters. It seems unlikely they will be completed within a year, and without this there is no clarity on what payments TMC will have to make, and how they will make them, if they commence mining.

[viii] Pradeep A Singh, a Fellow at the Research Institute for Sustainability noted, “The risk of exposure to litigation is certainly much higher if the Authority decides to approve an application in the absence of regulations, as opposed to rejecting one.” Down to Earth, UN body can face litigation if seabed mining is approved before developing regulations: Paper, 21 July 2023, https://www.downtoearth.org.in/news/world/un-body-can-face-litigation-if-seabed-mining-is-approved-before-developing-regulations-paper-90770

[ix] Bloomberg, Explorer Victor Vescovo Says Deep Sea Mining Numbers Don’t Add Up, 18 July 2023, https://www.bloomberg.com/news/articles/2023-07-18/explorer-victor-vescovo-says-deep-sea-mining-numbers-don-t-add-up

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