A deep-sea mining may generate more losses than gains for investing countries, concludes a study released today that warns of multi-million-dollar losses rather than profits.
The conclusions result from an analysis that subjects the industry’s own economic projections to a kind of stress test.
Taking the economic projections of mining projects, the study concluded that in more than eight in ten realistic scenarios (83%), deep-sea mining destroys value, even before considering environmental costs and other social impacts.
It also points to a 61% probability that investors will not recover the capital invested.
The analysis, which points to a “high probability of destroying more economic value than that which it generates,” has the title “Case Not Proven: The Economics of Deep-Sea Mining” and was promoted by the organizations “Deep Sea Conservation Coalition” (DSCC), “Oceans North,” “International Union for Conservation of Nature” (IUCN), “Dona Bertarelli Philanthropy” and “Blue Ocean Foundation,” all focused on biodiversity and ocean preservation.
Unlike the projections of the company “The Metals Company” (TMC), “which suggested that deep-sea mining could generate gains in the order of billions of dollars, the test conducted by this analysis yields a median loss of five billion dollars,” states a press release about the analysis from the Blue Ocean Foundation and the DSCC.
Johnny West, author of the study and director of Koinon Consulting, a German firm specialized in financial analysis, stated, as cited in the press release: “Deep-sea mining does not present itself as an attractive investment. Returns are too low for the technical, operational, environmental, price, demand and social-acceptance risks involved.”
The press release also warns that economic risks are not limited to the companies seeking to explore the seabed, noting that deep-sea mining could reduce public revenues from terrestrial mining, “due to the depressing effect on global metal prices with the entry of new supply into the market.”
At peak production, governments could lose between 1.1 and 1.19 billion dollars per year, the press release states, adding that sponsoring States would face “significant legal and environmental risks.”
Pradeep Singh, ocean governance specialist at the Blue Ocean Foundation, also cited in the press release, stated: “This independent report confirms what many experts and academics suspected: the narrative about the economic benefits promised by deep-sea mining is a myth.”
The analysis, the authors note, does not account for potentially significant costs caused by environmental damage, nor the broader impacts on fishing, livelihoods and marine ecosystems, factors that would tend to further worsen the economic balance.
