Underwater Mining, Polymetallic Nodules

Underwater mining is a topic that often flies under the radar compared to more futuristic concepts like asteroid mining. Space mining, notably promoted by influential figures like the Winklevoss twins, is seen as a potential game-changer that could make nearly all mineral resources on Earth obsolete, given the abundance of gold, silicon, and other valuable elements in space. However, there is a far more achievable solution to the impending shortages of earthbound resources—underwater mining.

Timeline and Feasibility

Asteroid mining might still be more than a century away from being feasible, but underwater mining is an undertaking that could bear fruit in the next 15 to 30 years. This timeline places it within a much more accessible range to address resource shortages that impact essential industries today, such as electric vehicles and technology. Since as early as 2013, companies have been seeking approvals to mine a massive underwater field of polymetallic nodules, a field about the size of California. These nodules, lying on the ocean floor, are rich in cobalt, nickel, and manganese—the key ingredients for Electric Vehicle (EV) batteries. Ironically, this field was discovered off the coast of California, a state known for its environmental advocacy, which has created challenges for obtaining near-term approval for underwater mining activities.

The real conundrum here is that deep-sea mining, in many respects, poses less of an environmental threat compared to terrestrial mining. Despite this, there remains an unwillingness among environmental proponents to tolerate anything short of a perfect solution. ESG-focused investors and policy advocates have prioritized minimizing human impact on the environment, often disregarding practical alternatives that still bring about significant benefits. While underwater mining is not without its environmental implications, it could represent a far more balanced solution compared to land-based mining operations.

Although my perspective as a long-term investor leans toward solutions that will benefit generations to come, relying on a solution that is more than a century away, like space mining, creates a critical burden on both our current and future generations. In the face of escalating global competition and resource scarcity, waiting for deep-space technologies to mature is not a viable strategy for immediate economic needs.

Challenges and Regulatory Landscape

The geopolitical landscape also adds a layer of complexity. While new underwater resource-rich nodule fields may indeed be discovered in the future, the question of which nation will claim these resources is significant. BRICS nations, for instance, are largely focused on countering the American dominance over the global economy rather than addressing global warming. Meanwhile, the United States tends to prefer virtue signaling around environmental issues, and even that support is becoming increasingly inconsistent. However, one thing remains constant—America's reluctance to lose a global race. When resource shortages become an undeniable challenge for key industries like space exploration, EV production, and computing, underwater mining will likely gain federal backing as a practical response to safeguard these sectors.

Currently, there is some level of underwater mining activity being conducted under the supervision of the International Seabed Authority (ISA), which oversees deep-sea mining efforts in international waters. This regulatory body is tasked with issuing licenses and ensuring sustainable practices in mining operations—a key step in enabling responsible underwater resource extraction.

Industry Players and Future Prospects

Several companies are already advancing underwater mining technologies and operations:

• DeepGreen Metals (formerly The Metals Company): This company focuses on harvesting polymetallic nodules from the Clarion Clipperton Zone (CCZ) in the Pacific Ocean, while also considering environmental impacts and sustainable practices.
• Royal IHC: Based in the Netherlands, Royal IHC is a major developer of specialized equipment for deep-sea mining, including subsea vehicles and mining tools that are critical to the success of the underwater mining industry.
• China Minmetals Corporation: A state-owned enterprise actively investing in underwater mining initiatives, particularly in the Indian Ocean. Their efforts aim to secure crucial mineral resources that are integral to future growth.
• Allseas Group: Known for their expertise in pipelay and subsea construction, this Dutch company has also extended its capabilities into underwater mining, providing necessary support and equipment for extraction.

The exploration of underwater mining not only presents an opportunity to secure valuable resources but also aligns with future technological developments, such as Tokenized Real World Assets (TWRA). These assets could revolutionize the trade of commodities, but that’s a topic best left for another time.