Under pressure: pessimism ahead of session of Seabed Authority

The International Seabed Authority continues the 30^th session meetings at the end of this month, meeting in various sessions almost every day until a full Assembly in Kingston, Jamaica,  from 21 to 25 July.

The provisional agenda of the Assembly reveals that apart from administrative processes the Assembly will consider item number 16: “Need for a general policy of the Authority for the protection and preservation of the marine environment: scope and parameters.”

With the USA threatening to allow its miners to go it alone on seabed mining even though many member states want a moratorium on mining, the session comes at an important and difficult time.

Cosmos asked Law of the Sea and Maritime Law and policy expert Dr Claudio Bozzi of Deakin University in Victoria, to explain the dozen or so extremely complex and far-reaching issues the ISA members are trying to come to grips with.

Making a code

The first part of the 30^th session of the International Seabed Authority (ISA) opened earlier this year with new Secretary-General, Leticia Reis de Carvalho, reminding delegates that the mandate of the ISA as required by the United Nations Convention on the Law of the Sea (UNCLOS) was to “promulgate rules, regulations and procedures (RRPs) for the mining of the seabed and ocean floor beyond the limits of national jurisdiction (the Area).”

The ISA has been under increasing pressure since 2014 to develop a mining code which must, in accordance with UNCLOS, manage the Area in such a way that protects the environment from serious harm, and reflects the status of seabed resources as “the common heritage of mankind”.

Working groups were established in 2020 but only began working in earnest in 2022 because of the Covid-19 pandemic.

In 2021 the Republic of Nauru triggered the clause known as the ‘two-year rule’ by informing the ISA of its intention to apply for an exploitation license within 2 years. The rule required the ISA to adopt RRPs within 2 years in anticipation of Nauru’s intended activities, or risk Nauru conducting its activities without RRPs in place.

Nauru’s actions gave the ISA until July 2023 to draft the necessary regulations, which they were unable to do. The ISA Council determined that in order to provide regulatory certainty to member states and other stakeholders it would continue working on the RRPs, and intended to have a Mining Code ready for adoption by the Authority at its 30^th session in 2025, the second part of which is scheduled for July.

The triggering of the 2 year rule by Nauru in 2021 achieved two contradictory things.

It hastened the ISA’s activities in formulating RRPs for seabed mining fearing that mining may commence without an appropriate regulatory framework in place.

And it motivated member states to join environmental NGOs in calling for a moratorium (Canada, Mexico, New Zealand, Peru, Switzerland, United Kingdom), a conditional (or precautionary) pause (Austria, Brazil, Costa Rica, Chile, Kingdom of Denmark, Dominican Republic, Ecuador, Federated States of Micronesia, Fiji, Finland, Germany, Greece, Guatemala, Honduras, Ireland, Malta, Monaco, Palau, Panama, Portugal, Spain, Samoa, Sweden, Tuvalu, Vanuatu), or an outright ban (France) on seabed mining. Other member states (India, China, Japan and Nauru) are however advocating for the completion of a Mining Code to enable extraction.

Australia has not made a statement one way or the other but at the 49^th ALP National Conference in 2023, the Labor Party unanimously passed the resolution that Labor will ensure the Australian Government “leads ambitious international efforts for global agreements on a moratorium on deep sea mining in international waters.”

The science of the seabed

The principal reason states give to justify a ban or pause on seabed mining is a lack of coherent and comprehensive scientific understanding of deep sea ecosystems.

The imperative under UNCLOS is to develop regulations which avoid serious harmful impacts on the deep sea environment. A further requirement of any regulation is that it is responsive to evolving knowledge about the deep sea environment, and emerging information about the impact of mining.

The ISA still lacks an overarching environmental management framework and policy. It has not developed RRPs to protect the marine environment from serious harm, nor has it managed to draft environmental goals, objectives and principles or proposals for discussion. It has not been able to settle the criteria for measuring and taking action, or discuss other proposals such as ‘effective protection’.

At the March session the Kingdom of Tonga proposed that the risk standard for environmental harm in the Area should be ‘as low as reasonably practicable’ (ALARP) as a way of retaining flexibility and allowing for revision as data becomes available. Tonga Offshore Mining Ltd is a wholly owned subsidiary of Canadian firm The Metals Company (TMC) which has filed an application under US law to obtain a US government licence  to mine in the Pacific Ocean off American Samoa.

This fundamental issue which must be addressed to determine the risks of deep sea mining is probably the most divisive both amongst member states, and between the ISA and the external scientific, environmental and political communities.

Under pressure

During the first part of the 30^th session in March as delegates were meeting to draft RRPs, de Carvalho announced that TMC had filed an application under US law to obtain a US Government licence to mine in the Pacific Ocean off American Samoa. This ‘unilateral action’ by TMC was denounced by de Carvalho as defying the authority of the ISA, and violating international law and the principles of multilateralism. TMC accused the ISA of ‘repeatedly breaching UNCLOS’ by failing to enact regulations and frustrating the transition from exploration to exploitation.

Some member states of the ISA criticised TMC’s actions as a breach of its good faith obligations. They also confirmed that only the ISA has the authority to issue mining licenses under international law. Some member states also feared that the ISA’s rule making would be conducted under pressure from the actions of Nauru and TMC, and expressed concerns that it was irresponsible to commit to any timeline without sufficient data and debate.  TMC responded that it intended to apply for an ISA mining license in June 2025 regardless of whether the ISA had finalised a Mining Code, including environmental safeguards.

The renewables’ revolution

It is frequently argued that any pause on seabed mining will interrupt important processes such as the transition to renewable energy, because those technologies depend on metals from seabed sources. Economic considerations are more likely to determine the viability of seabed mining than a moratorium.

US President Donald Trump recently signed the Executive Order: “Unleashing America’s Offshore Critical Minerals and Resources” on the basis that it could potentially add $300 billion to GDP while creating 100,000 jobs.

China now has the vast majority (20%) of registered seabed mining claims through the China Ocean Mineral Resources Research and Development Association, China Minmetals Corporation and Beijing Pioneer Hi-Tech Development Corporation, while the US has none. It is however relying on the economics of seabed mining becoming favourable over time.

Further, a moratorium would not affect supply in the sense that seabed sources do not contain minerals that are not available from land based mining. Even where, as in the case of cobalt, either the seabed represents a rich source or an alternative to sources tainted by human rights abuses (the Democratic Republic of Congo), alternatives to cobalt based battery technology are available, and its previously indispensable role in the energy transition can be sidestepped.

Test seabed mining

Contractors are able to undertake test mining operations prior to submitting a mining application under draft RRPs. A working group formed to advance the regulation of test mining experienced division amongst member states on a number of core issues. There is a broad consensus that the regulations governing test mining require strengthening, but different views as to whether new regulations are required.

Reference zones

Before a contractor can exploit a seabed field it must establish reference zones to assess environmental impact on a ‘before and after’ basis, and to ensure mining is conducted within authorised limits. However there is currently little guidance on design and operation of these reference zones. The Council has only discussed what position the reference zone regulations should occupy in the RRPs.

Regional Environment Management Plans

Most member states have supported the incorporation of Regional Environmental Management Plans (REMPs) into the RRPs. REMPs must be in place before mining can commence in any area.  Only one REMP has thus far been adopted by the ISA – for the Clarion-Clipperton Zone in the northern Pacific Ocean.

It has been suggested that not finalising REMPs for all exploitable areas prior to allowing mining in any of them unfairly affects the regulatory requirements which some contractors are required to assume, compared to others.

The regulatory status of REMPs and the nature of their provisions is unclear because of inconsistent treatment. In one notorious instance Germany had objected that TMC’s environmental management plan had included insufficient environmental data. The plan was revised and then Secretary-General Lodge informed TMC that it could proceed.

The obligatory nature of REMPs will need to be determined, or the particular provisions to be made mandatory will need to be identified. If they are non-binding as a whole it may be inconsistent for RRPs to require contractors to comply with them, but not inconsistent to require contractors to adhere to certain provisions in them.

Payment regime

The payment regime for the right to extract minerals from the seabed has proven contentious. Two models have been proposed: a low fixed royalty based on the value of the extracted metal which provided investors and miners with certainty, an incentive for investment and strong profitability (about which no formal agreement was ever reached), has given way to a preference for revenue raising for the ISA, and a mechanism for offsetting any competitive advantage enjoyed by seabed mining over land-based mining (the Equalisation Measure).

Not surprisingly the mechanisms have proven divisive between private contractors and member states of the ISA, who have argued that the payment regime should not favour miners and investors when the regulations have been designed under the authority of UNCLOS, which designates seabed wealth as “the common heritage of mankind”. The right to extract those minerals should ensure sufficient benefit to the peoples of the member states.

An Equalisation Measure which ensures that the effective tax rates imposed on miners are comparable given the differences between the agreements they had with sponsoring states has been agreed to in principle, but no form of implementation has received substantial support.

Further, neither the payment regime nor the Equalisation Measure has taken the environmental costs of extraction into account. An independent study commissioned by the Council concluded that a lack of research and data made valuation of the deep-sea ecosystem impossible, and it was therefore not feasible to factor it into policies such as payment regimes.

How environmental costs of this nature and scale are to be factored into the payment regime and RRPs generally is a crucial matter for future determination. However, the report has been open to only limited discussion, and Council members have requested more time to examine and debate its findings and implications.

Compensation

The long term consequences of seabed mining are poorly understood and therefore unable to be factored into the modelling that would support or proscribe extraction. These include the destruction of habitat, the loss of known and unknown species, the depletion of mineral resources, and alterations to the ecosystem. The principle of “the common heritage of mankind” is not limited. It incorporates long term assessments, and inter-generational responsibility.

A lack of baseline data about the environment hampers the development of standards, guidelines and impact assessment. An incomplete understanding or a lack of data enabling an economic evaluation of the costs and benefits of seabed mining, and its likely effect on developing economies currently reliant on competing terrestrial mines, is also missing. There is currently insufficient understanding of the technological challenges of the seabed to ensure that operations could be conducted safely, and that contingencies and accidents could be managed.

UNCLOS mandates that developing countries are to be compensated by means of an economic assistance fund for the serious economic harm they suffer as a result of the reduction in the value of their export minerals caused by the entry of seabed minerals into the market. The establishment of the fund is likely to be a complex task undertaken amidst fierce debate.

The ISA has established neither the fund nor the distribution mechanism despite member states requesting, and the Legal and Technical Committee’s recommendation, that it be given priority. To date no timeline for the initiation or completion of the establishment of the fund has been provided.

The fund is not required to be finalised prior to exploitation RRPs. However, its centrality to the mining process and the seabed minerals industry, and its effect on developing countries whose territorial mining industries are impacted, makes it critical to the development of adoption of RRPs.

The draft RRPs include a provision for an environmental compensation fund to cover shortfalls in liability compensation resulting from defaulting miners. The proposal was first discussed in a 2011 Advisory Opinion, however none of its fundamental features such as its purpose, rules and procedures have been determined.

Equitable sharing

RRPs are required for the “equitable sharing of financial and other economic benefits” from the Area enabling their distribution for the benefit of humanity, taking into particular account the interests and needs of developing states.

The ISA has considered both a direct distribution model and a pooled fund approach. The former distributes funds held by the ISA to member states. In the latter funds are held collectively by the ISA and member states. A hybrid approach has also been suggested but not considered.

Equitable distribution requires accurate and detailed economic modelling. Direct distribution models require criteria for distribution which avoid distorted results, such as the concentration of funds in a small number of states, or a universal distribution that provides little if any financial benefit to each state. If only modest benefits will be developed that are either meaningfully shared only amongst a few nations, or distributed so thinly as to be insignificant, the very viability of seabed mining is put into question.

The use of pooled funds is open to debate. The contradiction of using the proceeds of mining to develop knowledge about and remediate the damage to the deep sea environment caused by mining has not escaped attention. Research and remediation should be paid by miners as a precondition to exploration and exploitation, rather than diverted from funds intended to benefit developing states. The finance committee of the ISA has recommended establishing a ‘Common Heritage Fund’, but its purpose, scope and governance model have not been clarified.

Technology transfer

The transfer of technologies and scientific knowledge from developed to developing countries is central to the proper functioning of the seabed mining regime under Part XI of UNCLOS. Despite consistent reference to and emphasis on these principles in UNCLOS, the RRPs barely mention them. Where they are referred to it is confined to the very specific circumstances of joint ventures, and sharing information and technical capacity is made discretionary rather than obligatory.

The ISA is also required to take measures to acquire technology and know-how (article 144 UNCLOS). This is seen as essential to the operation of the Enterprise – the ISA’s own mining operator. The Enterprise is seen by developing states as the only means by which they can meaningfully participate in mining activities in the Area. However, despite the requirement in the 1994 implementing agreement the Enterprise has not been established to date. Clearly transitioning from exploration to extraction without the Enterprise risks leaving developing countries behind.

Confidentiality

One of the new Secretary-General’s primary concerns is the transparency and accountability of the ISA and the need to realise those objectives through institutional reform. Decision making in the ISA has been criticised for its obscurity. Consistent with the desire to promote transparency in decision making the ISA should make non-confidential information publicly available.

However, contractors have been permitted to decide the information they will share during the exploration process. The ISA has recently considered a suggestion that contractors should disclose all environmental data and non-environmental data that is not confidential in nature. However, the RRPs remain unclear about what defines confidential information and disclosure criteria are still the subject of debate within the ISA.

Public participation

Given the public interest in and the public consequences of deep sea mining, and the designation of the Area as “the common heritage of mankind”, there is a concerning lack of public consultation in its decision making.

Although ISA members identified stakeholder engagement as a priority in 2019 the ISA still lacks a policy or strategy for consulting the public in decision making. Stakeholder engagement makes a positive contribution to environmental decision making. Seabed resources form “the common heritage of mankind”. Consistent with an internationally recognised human right to information, to participation, and to compensation, the public should be informed and consulted about the potential adverse environmental effects of seabed mining.

Consultation is currently inconsistent and confined to member states and observers who are not representative of affected communities. The RRPs covering the review process for a mining application have not been fully considered by the ISA Council, leading to considerable uncertainty about whether consultation is mandatory, when they should be undertaken, or how regulated the process should be.

Public consultation is currently restricted to the application for exploitation mining. Clearly, there should be considerable stakeholder consultation on the RRPs for assessing exploitation applications. The rights of people to a remedy are also restricted by the lack of administrative review processes, and procedures for making complaints, or reporting infringements.

The need for policy making and the development of regulation in this area has been repeatedly underlined. However no signal has been given as to the delivery of that policy or the incorporation of public consultation in the RRPs. No review of the consultation process and evaluation criteria for approval has been conducted since the Legal and Technical Committee recommended doing so in 2019.

Nothing is agreed until everything is agreed

If the 30th session is to yield tangible results core issues must resolved and the regulations they require finalised. The principal RRPs for discussion are those regarding the prerequisites for exploitation (environmental protection guidelines, Regional Environmental Management Plans), and the equitable sharing of financial and other economic benefits (‘benefit sharing’).

Given that at the ISA a single Council member vote can block the adoption of a resolution,  “nothing is agreed until everything is agreed”. The number of outstanding and unresolved issues about which parties have divergent views or which require further information to advance suggests reason for pessimism.