Surging demand for metals used in electric vehicle batteries has kicked off an international race to mine the deep seas. And there are no rules.
On Sunday, the International Seabed Authority missed an important deadline to establish a regulatory framework, which means that companies can now apply for licenses before rules are final. Representatives from the agency, which is made up of 167 member states and the European Union, have gathered in Jamaica for two weeks to debate what should happen next.
Canada, France, Germany and others want to pause deep-sea mining because of its largely unknown environmental consequences. But countries including China, Norway and Russia are pushing ahead on establishing a framework, arguing that it is less destructive than land mining.
Seabed exploitation ventures, meanwhile, are eager to get started.
“We’re preparing our application,” said Gerard Barron, the chief executive of the Metals Company, a Canadian business that has an agreement with the Pacific island country of Nauru to sponsor its deep-sea mining endeavors.
The company preferred that there were final rules before acting, Mr. Barron told DealBook, “but we reserve the right to move forward.”
Regulators are under pressure to act. A United Nations convention establishes waters beyond 12 nautical miles from a territorial coast as communal property, which means that profits from minerals discovered there should be shared to some extent. The I.S.A. is responsible for setting up the structure for profit-sharing and taxing of mining efforts, as well as the legal and ecological guidelines. Or it could ban large-scale commercial mining altogether — though it’s not clear there is a legal path for a pause.
Mining could damage ecosystems that scientists don’t yet understand, said Jessica Battle, an ocean policy expert at the World Wildlife Fund. A study published in the journal Nature on Tuesday, for example, argued that seabed mining could interfere with tuna migration patterns as climate change drives fish into new waters. Ms. Battle has been leading an effort to have businesses pledge not to finance seabed mining or source seafloor materials in their supply chains. More than 30 companies, including BMW, Google, Samsung, Volvo and Volkswagen, have signed on. Similarly, prominent banks in Britain, such as Lloyds and Standard Chartered, are refusing to do business with deep-sea mining entities. And seafood industry groups have demanded a moratorium.
Some also doubt the economic opportunity. Electric vehicles are expected to make up about 35 percent of cars sold globally by 2030, up from 14 percent in 2022, according to projections from the International Energy Agency. That growth will increase demand for metals like cobalt, copper and nickel that are used in batteries. But critics say that the expense and logistics of mining in the remote ocean — and transporting metals back to land — raise doubts about whether deep-sea mining can be profitable. Ms. Battle argued other solutions in the works — like alternative materials and programs for reusing and recycling batteries — could sufficiently satisfy demand for critical metals. “This industry could start without being needed,” she said of deep-sea mining.
But seabed mining supporters say that existing mining is worse for the environment, and deep-sea mining could help wrestle control of critical metals from China and Russia. Some also see it as an economic lifeline for small island nations that are suffering the worst effects of climate change.
“Do not tell me to ignore the potential for promoting the green transition by not exploring these much-needed minerals for the green revolution that sit in my ocean,” Mark Brown, the prime minister of the Cook Islands, said at a U.N. climate conference last year. He referred to claims of environmental concern from countries that destroyed the planet “through decades of profit-driven development” as “patronizing.”
Mr. Barron of the Metals Company, who was in Jamaica for the I.S.A. meetings this week, pointed out that even some of the countries calling for a moratorium have exploration licenses, which allow them to experiment with mining on a small scale for research purposes. He believes representatives are deciding not whether deep-sea mining can begin, but when. “That horse has bolted,” he said. — Ephrat Livni
HERE’S WHAT’S HAPPENING
Lina Khan’s bumpy week. The head of the F.T.C. lost a bid to block Microsoft’s $70 billion acquisition of Activision Blizzard, opened the first big investigation into OpenAI over ChatGPT’s privacy and security practices, and was grilled by a Republican-led congressional committee over her approach at the agency. The F.T.C. lost its appeal of the Microsoft ruling.
Hollywood shut down. Actors voted to go on strike for the first time in 43 years, joining screenwriters who had already taken industrial action. Unions say they want better wages, higher fees from streaming services and protections to deal with new technological threats, such as artificial intelligence. Studio bosses say the demands are unrealistic at a time when the entire industry is being disrupted.
The details behind the PGA Tour-LIV Golf talks. A Senate hearing into a potential deal between the rival golf competitions revealed new details about the talks: the agreement was announced before it was done; the PGA Tour didn’t have the resources to fight off the Saudi-backed LIV indefinitely; and governance is going to be a crucial part of any final deal.
Meeting over at Shopify. The Canadian e-commerce company embedded a calculator in employees’ calendar apps that measures the financial cost of meetings with three or more people. It’s the company’s latest effort to stop pointless gatherings. It had previously canceled all recurring meetings of more than two people.
Tech stock dominance, by the numbers
The great tech stock rally shows no signs of slowing, with the Nasdaq composite hitting a 15-month high this week. One reason: Wall Street is betting that an improving inflation outlook, underscored by Wednesday’s Consumer Price Index, will compel the Federal Reserve to pivot to a more dovish rates policy, which tends to lift tech stocks.
How big has Big Tech gotten? Bank of America researchers ran the numbers this week. Here are three takeaways:
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The stock gains this year have been especially concentrated among seven firms: Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta.
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The combined market capitalization of the so-called magnificent seven is roughly $11 trillion, a figure that exceeds the G.D.P. of every country but the United States and China.
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This group has seen its combined market cap grow by $4 trillion this year.
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The companies are cash rich. Six of the seven (all but Amazon) have a combined $200 billion net cash-to-debt balance.
What to watch: Big institutional investors have bought in on these stocks, which could sustain the rally in the short run. And the interest-rate risk for these companies is waning. But the bigger they grow, the more attention they could get from politicians.
The “political campaign rhetoric will likely include headline risk around regulation of megacap Tech,” Savita Subramanian, Bank of America’s head of U.S. equity and quantitative strategy, writes in the report.
Paris takes on ‘auto-besity’
Health authorities have waged a war on obesity for years. Now, in an effort to curtail the rise of big cars such as S.U.V.s and cut down on pollution, Paris has declared a war on “auto-besity.” Its first step is to charge drivers more to park the vehicles — a move that could eventually hit car companies.
S.U.V. use has surged more than 60 percent in Paris over the past four years, according to city officials. That mirrors a broader trend across the European Union, with S.U.V.s accounting for about half of all car sales in the bloc, up from about 14 percent in 2011, according to the European Automobile Manufacturers’ Association, an auto industry group.
Critics say that is bad for the planet. “We would like the City of Paris to change the pricing of paid parking to make it progressive according to the weight and size of vehicles,” Frédéric Badina-Serpette, the city councilor behind the increased charges, told The Guardian. He added that the aim was “to focus on an absurdity: auto-besity … the inexorable growth in the weight and size of vehicles circulating in our cities.”
The new rules will add to carmakers’ worries. Details haven’t been revealed, but electric vehicles and big families that require bigger vehicles are expected to be exempt. The higher tariffs will go into effect on Jan. 1, and could inspire similar moves in other big cities.
“France has traditionally been one of the most aggressive nations in combating the growth of large cars,” Matthias Schmidt, an independent auto analyst, told DealBook. Carlos Tavares, the chief executive of Stellantis, was already pressuring the French government to do more to support the industry, which is starting to feel the effect of Tesla’s price cuts and facing the growing threat of Chinese carmakers set to enter Europe. French brands, Mr. Schmidt added, are “in the middle of an uncomfortable sandwich, pressed from above and below.”
On our radar: A.I. as a villain
“Mission: Impossible — Dead Reckoning Part One,” the latest installment in Tom Cruise’s efforts to transcend physics for the sake of entertainment, is forecast to earn $90 million in its first five days, a franchise record. (Mild spoilers ahead.)
But the movie also represents how the hype around artificial intelligence is seeping into pop culture: The big bad guy in the movie is the Entity, a rogue artificial intelligence program that poses a threat to humanity.
Over decades, humans’ relationship with artificial intelligence has been explored by movies like “2001: A Space Odyssey,” “Ex Machina” and, yes, “A.I.” But the public debut of ChatGPT last year, which gave many people their first chance to converse with an A.I., has made visions of sentient technology feel less like science fiction and, for some, stirred up existential dread.
Remember how over 350 A.I. experts called in May for “mitigating the risk of extinction from A.I.”? The Entity is capable of “collapsing the world’s economic systems, evading national-security protocols and rerouting nuclear weapons on a whim.” At least in the movies, a nearly superhuman secret agent can beat back killer technology. (We presume; this is a Cruise movie, after all.) In real life, it may take coordination by lawmakers worldwide — and time will tell if that mission is … well, you know.
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