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Wednesday, Sep 28, 2022

Secret data, tiny islands and a quest for treasure on the ocean floor

The Metals Co., based in Vancouver, British Columbia, has secured exclusive access to tons of seabed rocks packed with cobalt, copper and nickel — enough, it says, to power 280 million electric vehicles.

A view of downtown Kingston, Jamaica, on Dec. 9, 2021. (Ashley Gilbertson/The New York Times)A view of downtown Kingston, Jamaica, on Dec. 9, 2021. Few in Kingston know the International Seabed Authority is based there, though it has jurisdiction over half the surface of the world. (Ashley Gilbertson/The New York Times)

Written by Eric Lipton

As demand grows globally for metals needed to make batteries for electric vehicles, one of the richest untapped sources of the raw materials lies 2 1/2 miles beneath the surface of the Pacific Ocean.

This remote section of the seabed, about 1,500 miles southwest of San Diego, could soon become the world’s first industrial-scale mining site in international waters.

The Metals Co., based in Vancouver, British Columbia, has secured exclusive access to tons of seabed rocks packed with cobalt, copper and nickel — enough, it says, to power 280 million electric vehicles.

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“No mining has ever been done on a scale like this on the planet,” said James A.R. McFarlane, former head of environmental monitoring at the International Seabed Authority, an agency affiliated with the United Nations that will regulate mining by the Metals Co.

An examination by The New York Times of how the Metals Co. is prepared to exploit this new frontier in the green energy revolution — the firm calculates it will clear $31 billion in earnings over the 25-year life of the project — tells the story of a 15-year-long courtship of the small Jamaica-based seabed agency that holds the keys to the world’s underwater treasures.

Gerard Barron, the Metals Company’s chief executive, rings the Nasdaq bell for his company’s first day of public trading, in New York on Sept. 17, 2021. (Ashley Gilbertson/The New York Times)

Interviews and hundreds of internal documents show that the firm’s executives received key information from the Seabed Authority beginning in 2007, giving an edge to their mining ambitions. The agency provided data identifying some of the most valuable seabed tracts, and then set aside the prized sites for the company’s future use, according to the materials.

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The sharing of that information has angered employees at the agency, who said some of the data was meant for developing countries trying to compete with richer countries, something the agency is mandated under international law to assist. “You are violating the legal concept behind the Seabed Authority,” said Sandor Mulsow, who held top positions at the agency before leaving in 2019. “It’s scandalous.”

The Metals Co. is one of nearly two dozen contractors that have exploration deals with the agency; most of them are held by nations. But the firm has been especially aggressive in pushing the Seabed Authority to allow it to start mining, and is racing to begin in late 2024.

The undertaking has raised concerns among environmentalists about the agency’s commitment to protecting life on the ocean floor, and has renewed broader questions about who gets to profit from the riches of the sea.

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Mining in parts of the Pacific Ocean was meant to benefit poor countries, but an international agency gave a Canadian company access to prized seabed sites with metals crucial to the green energy revolution. 

The Seabed Authority was established under the auspices of the United Nations well before climate change set off a surge in demand for the metals. Although it has never gotten off the ground, a unit of the agency was charged with levelling the playing field for developing countries, in part by reserving metal-rich tracts of the ocean floor and helping to mine them.

With jurisdiction over half the planet, the agency’s 50 employees work out of offices here in Jamaica’s capital on a small annual appropriation of $10 million.

At a meeting of the agency’s governing body last year, a Metals Co. contractor was among a group of businesspeople who roamed freely among the international delegates as they debated agenda items, including the firm’s request for the authority to sign off on a plan to test mining equipment. One of the top rule-making bodies at the Seabed Authority, its legal and technical commission, is secretive, meeting behind closed doors, and some of its members also work for mining contractors, the Times found.

The agency’s relationship with the Metals Co. has turned the system on its head in other ways. Developing nations working with the Seabed Authority are supposed to get access to data in certain mining areas before companies do. But the reverse happened: A top executive at the firm got the vital data first, then secured two tiny island nations as sponsors.

Even with those partners — the Pacific islands of Nauru and Tonga — the firm has maintained nearly complete financial control over the project, including rights to all but a fraction of the anticipated profits.

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“This company set out to game the system and use a poor, developing Pacific nation as the conduit to exploit these resources,” said Lord Fusitu’a, a former member of the Tonga parliament. He said he was given less than an hour in 2014 to review regulations the country adopted to join the effort.

The governments of Nauru and Tonga, which declined requests for comment, have lobbied the agency on behalf of the Metals Co. In a letter, Nauru’s president, Lionel Aingimea, told the agency that the mining would help secure a carbon-neutral future and financially benefit his country.

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“Nauru is no one’s puppet, I can assure you,” said Gerard Barron, the Metals Co.’s CEO.

A law firm retained by the Seabed Authority, often referred to as the ISA, rejected the notion that anyone at the agency had acted inappropriately in sharing data or engaging with contractors. The legal and technical commission, the firm said, “meets entirely properly” with its members and exercises independence in its decisions.

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“The ISA has not, at any time, improperly or unlawfully shared confidential data,” the firm, Withers Bergman, said in a statement.

Michael Lodge, the British lawyer who has served as secretary-general for nearly six years and was its legal counsel when the data was shared beginning in 2007, also defended the agency’s actions. Around that time, he said in December, it publicly released summaries of some data in an effort to draw attention to the seabed’s riches and generate interest in mining.

Michael Lodge, the International Seabed Authority’s secretary general, in his office near the United Nations in New York on Aug. 10, 2021, which established his agency as part of the Convention on the Law of the Sea. (Ashley Gilbertson/The New York Times)

Barron said he was unaware that Nautilus Minerals had gotten access to some mining data before forming partnerships with Nauru and Tonga. (He was an investor in Nautilus, the forerunner company that received the information, and later became CEO of what is now the Metals Co. in 2017, which purchased certain Nautilus assets.) Nonetheless, he acknowledged, the company had rights to what is “generally regarded as some of the best areas out there.” In a filing last year with the Securities and Exchange Commission, the company confirmed it had relied on data twice provided by the agency.

As it seeks approval to begin operations, the firm has teamed up with Allseas, an offshore oil industry contractor; Glencore, a mining giant; and Maersk, one of the world’s largest shipping companies. The metals are found in potato-size rocks known as polymetallic nodules, and the firm would suck them up from the ocean floor with a giant underwater vacuum cleaner and transport them to shore.

The plans to begin mining by the Metals Co. and other contractors have generated opposition from some environmental groups, which along with government leaders like President Emmanuel Macron of France have called for a moratorium on mining until scientists can study the seabed and better understand the consequences of an industrial-scale operation.

“We have no clue what is going to happen,” said Stefan Bräger, a former Seabed Authority marine biologist who now serves as an adviser to the German government.

Both Barron and Lodge said the criticism was unfounded. They said the mining would be for the “benefit of mankind,” as required under the UN Convention on the Law of the Sea, which established the Seabed Authority, and they predicted that it would cause less ecological damage than open-pit mining.

Core samples collected in the Clarion-Clipperton Zone, in San Diego, Calif., on June 8, 2021. (Tamir Kalifa/The New York Times)

Under the UN rules, any nation can seek permission to conduct surveys to identify mining sites, and China, France, India and South Korea, among other richer nations, have done just that. When they find worthy locations, they must hand over half of them to the Seabed Authority, which sets them aside as “reserved areas” where less developed countries can initiate projects.

The authority has allocated roughly 200,000 square miles of seabed to developing nations to do exploratory work, with nearly half of that space now under the control of the Metals Co.

As the agency clarified in a public statement in 2000, detailed sample station data was not to be shared outside the organisation. “Data and information ‘of commercial value’ given to the authority by a seabed contractor shall be considered confidential,” it said.

Around the same time, executives at Nautilus Minerals were interested in the reserved areas and turned to the Seabed Authority for help in deciding where to focus their attention, the documents show.

Agency officials held meetings in New York and Jamaica with David Heydon, a geologist who became Nautilus’ CEO, and his son Robert, who also worked there, to discuss mining.

Neither Heydon nor his son, who is now an executive at the Metals Co., responded to requests for comment.

In one meeting in 2007, emails and other documents show, the agency’s secretary-general at the time, Satya N. Nandan, shared agency records about the reserved areas with the company.

“Thank you for hosting Scott Trebilcock and Robert Heydon in Kingston last month, and providing Nautilus Minerals Inc. (‘Nautilus’) with the opportunity to review data pertaining to the I S A’s Reserved Areas,” David Heydon wrote in a 2007 letter to Nandan. Nandan died in 2020.

Heydon went on to ask that three of the four most promising locations in the reserved areas be set aside for Nautilus while it sought a nation to sponsor its mining ambitions.

A polymetallic nodule on Michael Lodge’s desk, who is the International Seabed Authority’s secretary general, in Kingston, Jamaica, on Dec. 9, 2021. (Ashley Gilbertson/The New York Times)

Nauru emerged as a leading candidate for the Heydons. The country, with just 11,000 people, did not demand much in exchange for sponsorship, having no ability to pursue such an undertaking.

Barron would not say how much money Nauru was on tap to receive. A community leader in Tonga said the company had agreed to pay it $2 per ton as a “mining production fee.” That payment would amount to less than half of 1% of the firm’s total estimated value of the mined material. The Metals Co. would not confirm this fee.

Separately, the Metals Co. would pay an undetermined royalty fee to the Seabed Authority once commercial mining began.

The information given to Nautilus, according to an email written by Robert Heydon, included an “Excel spreadsheet supplied by the authority that shows the grade and abundance recorded at specific sample stations.”

Correspondence in 2011 from Lodge, then the agency’s legal counsel, noted that the Seabed Authority was subject to “certain restrictions on the disclosure of such data to anyone external to the authority.” But in a separate email to colleagues, he suggested there was a path that would allow them to provide Heydon with more information: the public release of summaries of survey data.

Since it had made the summaries public, he reasoned, the agency could share some additional data that Heydon was requesting.

The Metals Co. has pushed ahead with its plans even as the company has shown signs of financial challenges, with its stock price falling from a high of $15.39 last year to a low of 81 cents Friday.

The company’s request is under review, having elicited criticism around the world, including from the governments of Britain and Germany.

These questions echo larger concerns about the harm some scientists fear large-scale seabed mining may cause. The most prominent opponent may be Craig Smith, an oceanographer and former mining industry contractor now at the University of Hawaii at Manoa. His research has singled out the Clarion-Clipperton Zone as something worth preserving.

“It’s just not possible to do this without essentially destroying one of the largest wilderness areas left,” said Smith, citing the potential impact of 17 mining projects in the area. Smith was hired to evaluate the environmental effects of seabed mining by the South Korean government and Lockheed Martin, the US contractor, which are considering projects.

Barron said such criticism was off base and that his project was important to the future health of the planet: “This could be one of those projects that could really make a difference.”

First published on: 30-08-2022 at 02:06:17 pm
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