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Explorer Victor Vescovo Says Deep Sea Mining Numbers Don’t Add Up

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Thought Leader: Victor Vescovo
July 18, 2023
Source: Bloomberg

As the International Seabed Authority (ISA) meets in Jamaica this week, deep sea explorer and private equity investor Victor Vescovo flew to Kingston on Monday to make the business case against mining the ocean for valuable metals.

“I didn’t come here because I’m a raving ocean environmentalist. I’m not,” Vescovo told Bloomberg Green at a side event hosted by environmental group WWF. “I’m first and foremost an industrial private equity guy. I did the math and deep sea mining just doesn’t work, as the risks are extraordinarily high.”

Vescovo in 2019 became the first person to venture to the deepest trenches in the world’s five oceans, including piloting a submersible nearly 7 miles down to the Challenger Deep. He is also the co-founder of Texas private equity firm Insight Equity Holdings.

The policymaking Council of the United Nations-affiliated ISA, the organization charged with regulating the nascent industry, has been meeting in Kingston for the past two weeks. It comes at a pivotal moment for seabed mining, which proponents say has the potential to become a trillion-dollar industry as the shift to electric vehicles raises demand for metals found in the deep ocean, like nickel and cobalt. But a growing number of ISA member nations are calling for a moratorium or pause due to a lack of scientific data on the ecosystems targeted for exploitation.

In a talk at the WWF event, Vescovo, sporting a gray ponytail and a black suit, said the technological and financial uncertainties of mining metals thousands of miles from shore and miles below the surface of the ocean have been grossly underestimated.

“It’s an article of faith among these mining companies that they’re going to make tons of money, that it’s ‘just picking rocks up off the seafloor,’” he said. “There’s no ‘just’ anything when you’re at 4,000 meters in the ocean. It is an act of God to do anything at 4,000 meters.”

Vescovo said he was surprised the logistical challenges had not received more attention. “Everything breaks. Everything is difficult,” he told the gathering, which included ISA member state delegates. “You’re talking about sustained heavy mining operations in depths that exceed the depth of the Titanic.”

Mining has not yet commenced, but the ISA’s 168 member nations (plus the European Union) are under pressure to complete regulations to allow it to proceed. On July 9, a deadline to enact regulations passed. That means the ISA is now obligated to accept license applications from companies that want to begin mining, but left unresolved is whether it has to act on any submissions before regulations are in place. The tiny Pacific island of Nauru had triggered the deadline on behalf of The Metals Company (TMC), a Canadian-registered venture it sponsors, so it could obtain an ISA license to mine polymetallic nodules — potato-sized rocks rich in cobalt and nickel that cover the Pacific seafloor by the billions.

The Metals Company went public in a SPAC in 2021. At the time, it estimated capital costs of a single deep sea mining operation and an onshore processing plant at $10.6 billion, with annual operating costs of $1.8 billion after 2030. The company’s shares closed at $1.98 on Monday, giving it a market cap of $556 million.

Vescovo said that inflation will only add to mining’s high costs. “In the last few years, we’ve had the highest inflation rate since the 1970s so the cost structure of The Metals Company or anyone else doing deep sea mining has gone up by at least 15%, if not more for offshore services,” he said. “The capital cost of the equipment that’s going to be needed to go down there and operate has also, if you just look at the Producer Price Index, gone up by 15 to 20%, as well.”

Salesforce Chief Executive Officer Marc Benioff on Tuesday called on corporations to join WWF’s campaign for a moratorium on deep sea mining. BMW, Volvo, Volkswagen and Google previously pledged not to use seabed minerals.

TMC Chief Executive Officer Gerard Barron said in a statement that the abundance and high grade of metals in polymetallic nodules creates “very attractive economics.”

“We will happily rely on our engineering partner Allseas for subject matter expertise, as they’ve been operating in the deep sea for 37 years, laying pipe in extreme, 24-7 production environments for the offshore oil and gas industry,” he said. “WWF are obviously out of arguments if the best they can do at their sponsored ISA event is put Mr. Vescovo in front of the assembled crowd as their expert.”

Mexico’s delegate to the ISA Council, Marcelino Miranda, was at the WWF event and told Vescovo, “Nobody in the Council is in favor of destroying the ocean.” Miranda added, “I wonder whether we are fighting the wrong enemy because actually the enemy right now of the ocean is global warming. Fossil fuel fuels are the real danger, not an industry that doesn’t exist yet.”

Vescovo acknowledged that electric vehicles are important. “But do you need to destroy thousands or tens of thousands of square kilometers of the deep sea floor to do it, just as an experiment to figure out if it’s going to work?” he said. “I’ve been down there. I’ve seen the polymetallic fields and there is no way to extract polymetallic nodules from the seafloor without utterly annihilating the bottom of the seafloor. It cannot be done.”

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