Norway has taken a break

Norway has decided to postpone its plans to allow large-scale deep-sea drilling in its waters, a significant shift from January when the government initially approved the controversial project. The proposal would have opened up nearly 300,000 km2 of the seabed to the mining of polymetallic concretions, which contain critical materials used in electric car batteries or solar panels. Norway's interest in deep-sea mining stems from a desire to reduce its dependence on China for precious metals. But the environmental risks associated with mining have provoked intense opposition. Norway's Socialist Left Party has played a key role in this case, threatening to withdraw support for the government's budget if the first licensing round scheduled for 2025 is not cancelled. Prime Minister Jonas Gahr Støre, according to the BBC, clarified that the suspension is temporary and regulatory preparations and environmental assessments will continue. The Norwegian Environmental Organisation described the suspension as a huge victory. However, the move has left Norwegian companies involved in subsea drilling in limbo. They had expected to apply for the first round of licences.

The problem of subsea mining

The paradox is that Norway, which is regarded as a self-proclaimed leader in ocean protection, also wants to continue potentially damaging deep-sea mining. As the BBC reports, the government's ecological impact studies have been criticised by the Norwegian Institute of Marine Research, which believes that at least five more years of research are needed to fully understand the risks. Both scientists and states have warned of the ecological impacts of mining, advocating a moratorium or a complete ban. They stress the vulnerability and biodiversity of the seabed, noting that any mining activity could destroy unique and unexplored marine species. Professor Franz Geiger of Northwestern University in Illinois gave the example of mining sites in the Clarion-Clipperton Zone (CCZ) between Hawaii and Mexico, where bacterial recovery has not occurred even decades after mining. Those areas are in stark contrast to pristine underwater sites, where animal diversity is even more extensive than in the rainforest. According to the British Museum of Natural History, concretions are necessary for many forms of life and sending in machines would affect not only them but also marine mammals, could damage ecosystems in the middle layers of the ocean and, not least, disrupt the way carbon is stored, which would have a negative impact on the world's climate.

Dark oxygen

In the context of underwater concretions, scientists have made an important discovery. A study published in July 2024 in the journal Nature Geoscience reveals that millions of years old metal nodules deep in the dark places of the Pacific Ocean produce so-called dark oxygen. Scientists made this groundbreaking discovery during research in the Clarion-Clipperton zone at a depth of about 4,000 metres. The original purpose of the 2013 expedition was to calculate the oxygen consumed by organisms on the ocean floor. What the researchers noticed, however, was the exact opposite. They attributed the unexpected oxygen readings to a sensor malfunction, but repeat expeditions in 2021 and 2022 confirmed elevated concentrations that were surprisingly higher than those in the algae-laden waters of the sun. Scientists don't yet know exactly how the whole mechanism works, but they attribute the formation of dark oxygen to these rock nodules, which were not found in any of the areas studied. Upon further examination, a voltage of about 1 volt was measured on the surface of the concretions, leading the scientists to conclude that electrolysis occurs when multiple nodules are possibly grouped together, splitting water into oxygen and hydrogen.

Sulphates derived from metals

Concretions are formed by iron oxide, manganese, cobalt, nickel, lithium and other elements important in the transition to green energy. In doing so, there are approximately 21.1 billion tons of concretions in the CCZ alone, according to the U.S. Geological Survey, which contain more metals than all of the world's land-based reserves. This composition has been used to their advantage by TMC the metals company (TMC) and SGS Canada, who have succeeded in producing high-purity cobalt sulphate as of June 2024. This was preceded by advances in the production of nickel sulphate, which also took advantage of the polymetallic concretions mined at the Clarion-Clipperton site. These achievements are part of TMC's strategy to meet the growing demand for these metals. In addition, waste-free, fertilizer by-products were also recovered during production.

Launch and stock slump

The controversy surrounding TMC's underground mining operations is legion. Environmental groups Deep Sea Mining Campaign (DSMC), The Ocean Foundation (TOF) and Blue Climate Initiative (BCI) filed a complaint against TMC with the Securities and Exchange Commission in July 2024. Based on the annual report, the Canadian company was accused of providing false and misleading information regarding its qualifications, financials, the demand for the metals it plans to mine and their connection to the demand for batteries, and the impact on Indigenous communities. In addition, the groups allege that TMC downplayed the regulatory and environmental problems associated with mining. In addition, it is facing a lawsuit and other issues that have impacted its stock performance. These have been in a downtrend since TMC's listing, with short-term increases of no more than $3. As of December 19, 2024, their value was $0.76.*

Evolution of the share price of TMC over the last 5 years. (Source: Yahoo Finance) *

Olívia Lacenova, principal analyst at Wonderinterest Trading Ltd.

* Past performance is no guarantee of future results.