Countries, Companies Divided over Whether to Utilize Deep-sea Resources

Growing demand for batteries is fueling competition for key minerals. In the meantime, countries and companies leading electrification are divided over whether to utilize deep-sea resources. China, which asserts that the deep sea can be an efficient source of minerals, is faced with opposition from major European countries that say it may hurt marine ecosystems in the medium to long term.

The International Seabed Authority (ISA)’s General Assembly was held last month in Kingston, Jamaica, over the issue of allowing commercial deep-sea mining, according to industry sources on Aug. 20. After nearly three weeks of meetings from Oct. 10 to 28, it came to an end with no conclusion. The ISA is a United Nations organization established in 1994 to manage the deep seabed resources that are the common property of humanity. It oversees the development and exploration of seabed minerals.

One of the strongest proponents of commercial seabed mining is China. The country has been preparing for electrification by buying up major mines in Southeast Asia and Africa while developing its electric vehicle and battery industries. Nevertheless, as mineral prices have continued to skyrocket in response to steeply rising demand, the country has turned to the deep sea for a more stable source of supply. In addition, the low recovery rate of waste battery recycling in the case of lithium iron phosphate (LFP) batteries, which are China’s main focus, is also considered a reason that has encouraged China and Chinese companies to want to explore the seabed.

The European Union (EU) and major European countries have the opposite view. Germany and France, the center of the European automotive industry, are the main proponents of preserving the deep sea. They emphasize that the purpose of a global push for electrification is to preserve the environment. Some analysts say that the EU and major European countries are afraid of losing the electrification hegemony if deep water mining rights are given to China. While the United States is not a member of the ISA, it has supported Europe while seemingly keeping China in check.

With the three major global electric vehicle markets taking different positions on deep water mining rights, companies are also watching this development closely. Among the major battery companies, only Samsung SDI and Northvolt have taken a clear stance. In March 2021, Samsung SDI became the first global battery company to join the Deep Sea Minerals Initiative. Northvolt released a statement with its opposition to deep-sea mineralization shortly after the ISA General Assembly. While CATL, BYD, and others are expected to express the same opinions as those of their governments, LG Energy Solution, SK on, and Panasonic have not made any public statements.

Companies that have shown their positions are expected to enjoy a positive impact on their ESG management. They were also praised for strengthening ties with key European customers by speaking in unison on specific issues. Other companies will have to wait and see how governments and markets develop before they speak about the issue. Some experts calculate that they may lose in price competitiveness if the market for deep-sea mineral mining opens up. The Korean government is reportedly in favor of seabed mining.