Could Ocean Floor Mining Disrupt the Cobalt Market or Just the Marine life that live there?

As most of you will already know, the sediment-hosted deposits of the DRC continue to completely dominate the cobalt industry, accounting for more than 60% of global output despite remaining a high-risk jurisdiction. Product from the DRC is also tainted by the possibility that it could have been produced by workers under duress or using child labor. Considering the continuing momentum of the battery sector, this is not an optimal supply situation over the long term.

During the recent Prospectors and Developers Association of Canada’s (PDAC) annual convention in Toronto last month, there was a distinct buzz generated by commercial exploration and mining outfits concerning cobalt from large ocean floor deposits. They had some interesting facts to share about the potential to shift cobalt’s current production centres of the DRC and China.

In fact, several presenters argued marine mining is the only truly sustainable way of harvesting the basket of energy metals required to power the fourth industrial revolution that we find ourselves in.

It does not take much to realise the apparent advantages of marine mining, especially as it pertains to cobalt.

New data on ocean floor mineral deposits suggest an abundance of cobalt mineralisation. Importantly, the data suggests higher grades and substantially larger, more uniform deposits than any terrestrial deposit could match with simple mineralogy, comprising oxides and hydroxides.

Analysts estimate ocean floor resources of polymetallic nodules and ocean floor crusts, especially those in the Central and the South West Pacific, hold up to 120 million tonnes of contained cobalt compared against current best estimates of only about 22Mt of contained cobalt existing on land.

What’s more, ocean floor deposits show superior grades of 0.1-0.5% cobalt compared to 0.01%-0.2% for terrestrial resources, with land-based deposits comprising more complex (and thus more expensive to extract) mineralisation comprising sulphides as well as the easier oxide ores.

Ocean floor deposits tend to have continuous mineralisation over tens of kilometres with many deposits covering an area comprising hundreds of square kilometres. The mineralisation is rich in the basket of technology metals such as nickel, copper, cobalt and other critical metals such as rare earth oxides.

Whereas ocean floor crusts tend to be 800-2,500m below surface with a typical deposit thickness of 1-260mm, they entail sediment-free rocks that could potentially be mined at very low cost. Ocean floor  nodules are found at greater depths between 3,500-6,500m below surface, and are found throughout the Pacific Ocean on sediment-covered abyssal plains.

Several project proponents suggest that should even a single deep-sea mining operation be successful, it could spell a dramatic disruption for today’s fragile cobalt supply chain.

Of course, any successful commercial venture of this nature is still years, perhaps many years, in the future. The larger sources of traditional mining finance have yet to set their sights on these ocean floor projects. The main reason is the need for more data on the potential impact of deep-sea mining on the ocean floor and its ecosystems.  Much of the narrative around EVs and battery storage systems relates back to finding cleaner ways to powering our world.  It would be a mistake to rush in to mining such sensitive parts of the ecosystem without fully understanding the impact it may have on our oceans.  Time will tell, but it may ultimately be the case that the environmental impact of such mining ventures outweighs the benefits.

You may recall the adage: ‘We know more about the surface of the Moon or Mars than the ocean floor’. Well that still rings true today, however, continued study and baseline monitoring of the ocean floor is underway. Over time, the required body of data to answer eco questions will be acquired but it’s difficult to say whether the significant concerns will be allayed.

When it comes to issues of extraction – be they related to environmental impact, logistical, or other areas – the mining industry can be a powerful innovator, providing the risk/reward balance is optimal.  Considering the potential size and quality of the battery metal deposits in question, the rewards look impressive. This explains why some major new players, such as marine shipping giant Maersk, are entering into deep-sea exploration.

Admittedly its early days if you’re looking below the ocean for new battery metals but I think we’re going to see some interesting data in the coming years.

I welcome shareholders to get in touch with any questions or comments.

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about the author

Anthony Milewski

Anthony Milewski

Anthony Milewski has spent his entire career in various aspects of the investment world, including as a company CEO, board director, advisor, founder and investor, with a focus on commodities

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