Scalability, high-grade resources key to competitiveness of BRM deep sea mining

Deep-sea mining is likely to be a competitive source for the extraction of key battery raw materials (BRMs) including nickel, manganese, cobalt and copper, two deep-sea miners told Fastmarkets late in January 2024

This will come with the transition to net-zero carbon emissions ramping-up and supplies of these materials being strained, and even despite the resulting licensing requirements and lower prices, they added.

In particular, deep-sea mining projects will benefit from their scalability and the grade of the ores they extract, the companies said.

Fledgling deep-sea critical mineral extraction companies, which are currently in an exploration and development phase, are positioning themselves for the expected 2025 launch of a regulatory framework that will govern the mining of the seabed on a commercial scale.

They viewed deep-sea-mined critical minerals as a complement to, not a replacement for, materials extracted by ground-based mining.

One prominent deep-sea miner, The Metals Company (TMC), acknowledged that there may technically be enough metal-bearing deposits on land to meet future demand, but it believed that deep-sea resources could contribute to supplying metal resources and could alleviate some of the pressures on what it describes as “fragile terrestrial ecosystems.”

“Producing these metals from polymetallic nodules,” it said, “could reduce most of the environmental, social and corporate governance [ESG] costs of conventional metal production.”

Polymetallic nodules, also called manganese nodules, contain four vital battery raw materials – cobalt, nickel, copper and manganese – in a single ore.

TMC was founded in 2011 under the name DeepGreen Metals. It has been exploring nodules on the seafloor of the Clarion-Clipperton Zone in the Pacific Ocean for more than a decade.

Meanwhile, Norway-based Loke Marine Minerals, another deep-sea miner, holds two licenses to explore for nodules in the Pacific, and is pursuing licenses in the Norwegian Exclusive Economic Zone.

How does it work?

Deep-sea mining involves the extraction of mineral resources from the sea floor. This includes mineral resources that are unique to the deep ocean, such as ferromanganese crusts and polymetallic nodules.

The collection of metals found in polymetallic nodules is particularly notable for lithium-ion electric vehicle (EV) batteries, because it provides all three of the metals used in the West’s prevailing cathode chemistry, nickel manganese cobalt (NMC). Copper is also an important component in lithium-ion batteries.

Deep-sea mining is regulated differently depending on its location, with nation-states responsible for their own maritime territories and exclusive economic zones, while the United Nations governs the international deep sea.

A regulatory framework for deep-sea mining in international waters is still being drafted, and in July 2023 the International Seabed Authority (ISA) – a UN-affiliated regulatory body responsible for deep-sea mining – made a non-binding agreement to finalize regulations by July 2025.

In the meantime, earlier in January 2024, Norway moved closer to becoming the first country in the world to open its seabed for commercial deep-sea mining, despite opposition from environmental groups.

Other countries were also assessing the viability of deep-sea mining. Under the US National Defense Authorization Act, the Pentagon (the country’s military headquarters) was scheduled to deliver a report on domestic processing of seafloor nodules by March 1 this year.

And in January, India’s government submitted two applications to explore the international seabed area of the Indian Ocean, the ISA announced.

But despite the progress that has been made, deep-sea mining continued to face concerted opposition from some environmental and industry groups.

Financial viability

In terms of financial viability, both TMC and Loke believed that they would be able to extract metals on a basis that was cost-competitive with traditional mining.

“Nodules benefit from high grades of four metals in a single rock,” TMC chief executive officer Gerard Barron said, “and their remote locations mean that we require none of the capex-intensive infrastructure such as ports or roads or rail networks that must be built to support land-based operations.”

TMC believed that this would allow it to produce nickel in the bottom quartile of the cost curve once it achieved full, steady-state production, he said.

Recent volatility in prices for some BRMs, particularly lithium and nickel, has raised questions about the viability of certain projects and has shaken some investors.

The price assessment for LME Nickel Cash (Feb 24) Official ticked down to $16,100-16,150 per tonne on Tuesday January 30, from $16,280-16,285 per tonne the day before. This was a dramatic decrease from $29,350-29,400 per tonne recorded on January 31, 2023.

Fastmarkets expected that the oversupply that contributed to that price fall would continue in the short term.

“The global nickel market was significantly oversupplied in 2023 and, barring cuts to production, this is set to continue in the short term,” Olivier Masson, Fastmarkets’ principal analyst for battery raw materials, said.

“Our current forecasts indicate that it will be 2028 before the global nickel market returns to balance, with additional refined capacity not required until 2030,” he added.

Similarly, prices for battery-grade manganese and cobalt have also slipped in the past year.

Fastmarkets’ most recent price assessment for manganese sulfate, 32% Mn min, battery grade, exw mainland China, narrowed upward slightly to 4,400-4,800 yuan ($612-668) per tonne on January 25, from 4,300-4,800 yuan per tonne on January 18.

But this was less than half of the price of 9,000-10,000 yuan per tonne assessed in Fastmarkets’ inaugural manganese sulfate pricing session, on March 17, 2023.

The assessed price for cobalt, standard grade, in-whs Rotterdam, was stable at $12.50-14.20 per lb on January 31, compared with the previous session. But this was markedly down from $17.00-18.00 per lb assessed on January 30, 2023.

Price softness has threatened the viability of some projects, including a number of nickel projects.

Loke’s chief executive officer, Walter Sognnes, acknowledged that prices would influence deep-sea mining projects but believed that they would have an advantage over their terrestrial peers.

“A deep-sea mining project is much more scalable and flexible when it comes to development,” he said.

Barron emphasized the importance of the efficiency of mineral resources extracted by deep-sea mining.

“Unlike many terrestrial mines facing historic ore-grade declines alongside higher costs,” he said, “we can be profitable at current market prices or even lower, simply because we have four high-quality products in one resource. It’s all about the grade.”

Processing

For the processing of minerals extracted from the sea floor, Sognnes said that Loke would not directly take part in processing and would not start any production before it had an offtake agreement with an onshore processor.

But asked whether Loke’s minerals would be processed by traditional facilities, he said that his first choice would be to have a new processing plant powered by renewable energy.

In the case of TMC, Barron said that, for its first project, it intended to process nodules initially through partnership with third parties such as Pacific Metals Co of Japan (PAMCO). This would see PAMCO’s existing processing facilities re-used with “little to no modification.”

First production expected to begin in 2025/26

TMC’s plans would see it begin commercial extraction shortly after a regulatory framework came into place. Barron said that the company intended to submit its commercial exploitation application following the July 2024 meeting of the ISA.

“Assuming a one-year review process, we expect to begin the first commercial production at the end of 2025 or the beginning of 2026,” he said.

“Member states have made, and are continuing to make, tremendous progress on the Mining Code and, with 12 intercessional working groups and two months of in-person meetings scheduled this year, we remain confident that negotiations over the Mining Code are fast drawing to a close,” Barron added.

Sognnes said that Loke was targeting first production in 2031.

In the meantime, both companies were positive about their prospects for 2024.

“The coming year is set to be a momentous year in the development of this emerging industry, the most significant milestone of which we expect will be our submission of the world’s first application for seabed mineral exploitation in international waters,” Barron said.

“I hope that the ISA will be on track with the roadmap agreed in 2023, and in Norway I hope for the first licensing round to be announced,” Sognnes said.

He also hoped that a more positive message could be shared about the opportunities of deep-sea mining for BRMs, saying: “I hope we can have a more fact-based and balanced discussion on what role deep-sea minerals can play in the green transition.”

Keep up to date with market insights and predictions for 2024 and beyond with our Fastmarkets battery material forecasts.

What to read next
The company will be growing its battery-grade lithium carbonate or hydroxide production from its new direct-lithium extraction (DLE) project
Swiss trader Glencore’s profits halved in 2023 due to weaker energy and metals prices and production, according to the company’s full-year results released on Wednesday February 21
Volatile BRM prices can generate uneven profits and highlight the need for risk management
Manganese, chrome, tungsten and vanadium will be key topics of discussion at Fastmarkets' upcoming Asia Ferroalloys Conference 2024 in Hong Kong on February 26-28, after appearing on China's latest list of critical minerals
Lepidolite producers in China have been a major wildcard in the lithium industry of late, with production surging despite its higher cost, energy-intensive nature.
Financial incentives for companies developing silicon-based anodes in Europe are helping to support the sector, but the focus on innovation, not scale, risks them falling behind North America, experts told Fastmarkets.