Danny Leipziger, the managing director of The Growth Dialogue, explores the growing interest in manganese nodules—a potential source of critical minerals like nickel, copper, and cobalt—as the U.S. signals intentions to harvest them from international seabeds, despite persistent regulatory and economic challenges.
Manganese nodules are in the news because they are a potential new source for some critical minerals, including nickel, copper, and cobalt. They are also in the news because the U.S. administration is voicing its intentions to harvest them.
These baseball-sized deposits sit on the Pacific Ocean floor at depths of 3 to 4 miles, outside of any national jurisdictions. Although the technology has long existed to mine these deposits, the international regulatory framework to manage such exploitation has been elusive. Even creation of the International Seabed Authority in 1994 failed to move the dial on actually extracting them.
The availability of these mineral resources is well known. They have long been associated with the United Nations’ Convention on the Law of the Sea (UNCLOS). For decades, manganese nodules have also been the subject of policy research. As evidence, let me note the book Seabed Mineral Resources and the Economic Interests of Developing Countries, which I co-authored with James Mudge five decades ago.
The interest in mining has been dependent on its economic viability. That, in turn, has fluctuated depending on the prices of the key minerals that make up the nodules. What the book with Mudge addressed was an arrangement allowing the resources to be exploited with some revenue-sharing since they are part of the “global commons,” meaning they don’t belong to any one country.
The nodules are ubiquitous on much of the Pacific Ocean floor, but there are areas, such as the Clarion-Clipperton Zone (CCZ) stretching east of Hawaii toward Mexico and encompassing about 1.7 million square miles, where deposits are more abundant, both in their density and in the richness of their mineral content. So far, no mining has begun, although some rights have been issued by the International Seabed Authority (ISA), an agency long associated with bureaucratic and governance problems.
In fact, being placed under the UNCLOS umbrella has hindered the exploitation of nodules inasmuch as the United States has refused to sign the UN treaty or be bound by ISA rules.
The ISA started issuing licenses to small island states in the Pacific, in keeping with the notion that the benefits of exploitation should be directed at the world’s poorest countries. However, many of these ventures have silent partners, such as Chinese firms.
In total, the ISA is said to have issued 31 preliminary licenses to actors from many countries. Officially there are five contracts for Chinese companies, although there may be more behind-the-scenes involvement by Chinese firms. The process for granting licenses is steeped in mystery and intrigue. Given this, the U.S. government’s assertions that it may well sanction mining by U.S. companies is no surprise.
At present, the Metals Company appears to be the leading investor in manganese nodule mining, and this Canadian deep-sea venture is said to be open to collaboration with the United States.
The salient question is how to move the process forward. A major new impediment is opposition from groups legitimately worried about destruction of the ocean floor and marine life, such as it is, at such depths. Potential exploiters of the resources claim that vacuuming the nodules will not destroy deep-sea life, but the verdict is still out on the effects of deep seabed mining. The issue is now in the hands of new ISA Director Leticia Carvalho, a Brazilian scientist.
The United States, as a non-signatory to the ISA, will have to decide whether it will abide by ISA rules for mining or not.
Apart from the bravado and posturing, the real issue is the economics. The cost for existing vessels to mine at the depth where the nodules are found may be $5 per ton, and the cost of a plant to extract the critical minerals by crushing the nodules involves a one-time high, but manageable, cost. So, the question is how valuable will these minerals be? Estimates vary widely from $100 to $500 per ton, and there are economies of scale, but assured access to prime CCZ locations is important.
The U.S. government avoided the UNCLOS as early as the 1970s for two reasons: The U.S. was in the lead technologically, and the UN structure gave too much political weight to the Group of 77 as beneficiaries and too little weight to potential miners.
Mudge and I were economists at USAID when we became interested in and wrote about sensible rules for mining and fair revenue-sharing. We realized it would be very difficult to balance the efficiency objectives of exploitation with the equity concerns of the global commons. That has not changed.
Challenges around who benefits still dominate the conversation, making actual exploitation, while more likely than before, a long-term proposition. That said, if land-based deposits of critical minerals become more scarce, seabed resources become more attractive and they will eventually be harvested.