The Metals Co. says it may defy UN

The Metals Company (NASDAQ: TMC) is threatening to bypass United Nations deep-sea mining regulations unless the UN’s International Seabed Authority (ISA) speeds up its rule-modernization process.

TMC has invested more than $500 million in studying the Clarion Clipperton Zone off Nauru and Tonga during the past decade. Now, it’s losing patience with the regulatory body, which has been working on finalizing a set of international seabed mining rules in a process dragging on for years.

“The ISA’s timeline drift and failure to deliver its legal obligation of adopting a mining code does not change one key fact and that is that we are ready,” chairman and CEO Gerard Barron said late Thursday on an investor call. “What we need is a fair hearing and a regulator willing to engage. Thankfully, we have another path forward.”

TMC, in partnership with the Republic of Nauru, plans to submit its first application to mine the seafloor on June 27, ahead of the ISA’s second annual meeting in July. Opponents have been calling for more study before large-scale extraction begins because they say deep-sea mining’s long-term effects remain unknown. Supporters say the industry is needed to meet projected mineral demand.

TMC shares have risen since the start of the year as support grows for deep-sea mining under the Trump administration. In December, the House of Representatives approved a defense funding bill and asked the Secretary of Defense to study how to process deep-sea minerals in the U.S.

TMC shares rose 1.2% to $1.72 in New York trading Friday, boosting their gain since the start of the year to about 54%. That gave the company a market capitalization of about $592 million.

1980s loophole

The company is to use the Deep Seabed Hard Mineral Resources Act of 1980 to launch an application before the end of June. That law, which came after tests and environmental impact assessments in the 1970s, provides a U.S. path for exploring and commercially recovering polymetallic deep-sea nodules, avoiding delays at the ISA. This authority has not yet fulfilled its mandate to set exploitation rules under the UN Convention on the Law of the Sea, which applies to its members.

The U.S. hasn’t ratified the UN convention and isn’t a member, which has led groups like Greenpeace to say that U.S. deep-sea mining would break international law. Most countries see the convention as customary law.

TMC has asked for a pre-application consultation with the National Oceanic and Atmospheric Administration, which is part of the U.S. Department of Commerce. Company executives have also met with officials from the White House and Congress.

Abundant resource

The ocean floor is believed to hold vast reserves of metals such as nickel, manganese and cobalt, with an estimated value ranging from $8 trillion to over $16 trillion. Scientists warn that we still don’t know much about the deep ocean, and that environmental impacts could hurt ecosystems already at risk from pollution, trawling and climate change.

Demand for copper and rare earth metal demand could rise by 40% by 2040, according to the International Energy Agency. Also, demand for nickel, cobalt, and lithium from clean energy technologies will increase by 60%, 70% and 90%, respectively.