A recently released study concluded that exploiting resources in deep waters could result in substantial financial losses for the nations investing in this sector, rather than generating profits. The findings were obtained after subjecting the economic projections of the mining industry itself to a rigorous stress test.
The analysis demonstrated that in more than eight out of ten considered realistic scenarios (83%), deep-sea mining ends up destroying value, even without considering environmental costs or other social effects. Furthermore, there is a 61% probability that investors will not be able to recover the capital they invested.
The work, titled 'Case Not Proven: The Economics of Deep-Sea Mining', was supported by several organizations focused on biodiversity and ocean conservation, including the Deep Sea Conservation Coalition (DSCC), Oceans North, the International Union for Conservation of Nature (IUCN), Dona Bertarelli Philanthropy, and the Blue Ocean Foundation.
In contrast to estimates from The Metals Company (TMC), which suggest gains in the billions of dollars, the test conducted by this analysis resulted in an average loss of $5 billion, as indicated in a joint statement by the Blue Ocean Foundation and the DSCC.
Johnny West, author of the study and director of Koinon Consulting, a German consultancy specializing in finance, stated in the release that 'deep-sea mining does not present itself as an attractive investment. The returns are too low for the technical, operational, environmental, price, demand, and social acceptance risks involved.'
The warning issued in the statement extends beyond exploration companies, indicating that the activity could decrease public revenues from terrestrial mining due to the 'effect of depressing global metal prices with the entry of new supply into the market.'
Governments could face annual losses between $1.1 and $1.19 billion at peak production, and sponsoring states would be subject to 'significant legal and environmental risks,' according to the statement.
Pradeep Singh, an oceanic governance expert at the Blue Ocean Foundation, reinforced the conclusion, stating that '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 authors of the analysis emphasize that the study does not include potential costs resulting from environmental damage, nor the broader impacts on fishing, livelihoods, and marine ecosystems, factors that would further worsen the economic balance.