The US may be having some regrets after not ratifying an international treaty governing deep-sea mining, now that China has become active in the arena.

The International Seabed Authority (ISA), a UN-delegated intergovernmental body, is in charge of regulating deep-sea mining and has been debating how and whether to allow extraction to begin. The US, which did not ratify the UN Convention on the Law of the Sea (UNCLOS), only has observer status that limits its ability to shape the rules. China, which did ratify UNCLOS after rejecting certain provisions, has permitted three state-owned companies to undertake deep-sea mineral exploration, the most of any country.

The deep sea offers vast new sources of nickel, manganese and cobalt, all key metals for the energy transition, but the environmental damage that would be created in the process has been a topic of international debate. Without full membership, the US has not sponsored any companies to explore for critical minerals in the ocean.

The US Congress observed China's activity and has started to show signs of interest in deep-sea mining, sending letters and requesting new analysis from the Pentagon. While the Senate has no plans to ratify the treaty any time soon, the attention from the House of Representatives has caught the eye of some observers.

"It's becoming quite concerning for US national security policymakers that what perhaps are the most 'ready for exploration and research' minerals is a frontier China might dominate," Jocelyn Trainer, a research assistant for the energy, economics, and security program at the Center for a New American Security, said in an interview. "It's one less opportunity for the US to become less dependent on China for critical mineral resources."

Push for action

Members of Congress from both sides of the aisle see challenges in not being a member of UNCLOS.

"The fact that we are not a party to the Law of the Sea treaty and that we basically get to sit in these international meetings, but have no voice or vote, is really limiting," Rep. Jared Huffman (D-Calif.), a member of the House Oceans Caucus, told S&P Global Commodity Insights.

In a letter dated Dec. 7, 2023, 31 Republican members of Congress asked Secretary of Defense Lloyd Austin to strengthen critical mineral supply chains, emphasizing "the importance of evaluating and planning for seabed mining as a new vector of competition."

"We cannot afford to allow China to capture and exploit seabed resources," the letter said.

China has secured five of the 31 active deep-sea exploration permits, or 17% of the total area under the ISA's control. The country has been vocal on moving the industry forward, despite pushback from the environmental and scientific communities flagging a lack of scientific data on the potential impacts.

Under the international spotlight, US policymakers are taking notice of China's expansion efforts in the critical minerals space, analysts told Commodity Insights.

A bipartisan coalition led by Sen. Lisa Murkowski (R-Alaska) introduced a resolution Nov. 15, 2023, urging the Senate to ratify the UNCLOS, which would make the US an active member of the ISA.

And in June 2023, the House Armed Services Committee asked the Pentagon to deliver a report by March to assess the domestic processing of polymetallic nodules found at sea, as part of its own report on the 2024 National Defense Authorization Act.

"China is investing heavily in deep-sea mining technology including remotely operated vehicles, vessels, and sonar scanning systems," the report said. "To counter China's growing hold on the global supply chain, it is essential that the United States secures its own innovative supply of critical and strategic minerals and materials, including polymetallic nodules, to decrease reliance on sources from foreign adversaries."

China dives deep

China is the world's largest processor of lithium, cobalt, copper, graphite and rare earths, according to the International Energy Agency. China's current five-year economic and social development plan includes the development of deep-sea mining capacities and the country's scientific community is already showing interest in the endeavor, according to a research paper in the Frontiers in Marine Science journal.

"China recognizes that its technological advances and investment, specifically in seabed extraction, give it a potential first-mover advantage," Carla Freeman, senior expert for the China program at the United States Institute of Peace, told Commodity Insights. "The bigger the footprint China has in deep-sea mining, the more influence it can have on what gets to market."

Alternatives to mining

The Metals Company Inc., a Canadian company acting under the auspices of UNCLOS member states Nauru, Tonga and Kiribati, does not expect the US to join the ISA anytime soon, but it does see strong potential in the US becoming a processing and refining hub for the deep-sea minerals the company would gather from international waters.

The Metals Co. has submitted an application for a grant from the Department of Defense to fund a feasibility study for a processing facility along the Texas Gulf Coast.

"The feasibility study would show 'can the US be ready to accept this new feedstock of material to take them from total import dependence on nickel, manganese and cobalt to independent on all three', that's how big our resource would be," Craig Shesky, CFO of The Metals Co., said in an interview.

Analysts are skeptical that the current spotlight on critical minerals will be enough to create the sustained interest needed to gain a bipartisan vote in the Senate.

"I think it's a little difficult to see big policy passing within Congress just because of the highly partisan nature of politics in DC right now," Center for a New American Security's Trainer said.