Rising demand for metals used in batteries for electric vehicles has launched an international race to mine the deep sea. And there are no rules.
On Sunday, the International Seabed Authority missed a major deadline to establish a regulatory framework, meaning companies can now apply for permits before the rules are final. Representatives from the agency, made up of 167 member states and the European Union, met in Jamaica for two weeks to discuss what to do next.
Canada, France, Germany and others want to end deep-sea mining because of the largely unknown environmental impacts. But countries like China, Norway and Russia continue to build a framework, arguing that it is less destructive than land mining.
Seabed exploitation companies, meanwhile, are eager to get started.
“We are preparing our application,” said Gerard Barron, the CEO of Metals Company, a Canadian company that has an agreement with the Pacific island of Nauru to sponsor its deep-sea mining operations.
The company preferred there to be final rules before trading, Mr Barron told DealBook, “but we reserve the right to move forward.”
Regulators are under pressure to act. A United Nations treaty establishes waters beyond 12 nautical miles from a territorial coast as common property, meaning that the profits from minerals discovered there must be shared to some extent. The ISA is responsible for setting up the structure for profit sharing and taxation of mining efforts, as well as for the legal and environmental guidelines. Or it could ban large-scale commercial mining altogether — though it’s not clear there’s a legal way to pause.
Mining can damage ecosystems scientists don’t yet understand, said Jessica Battle, an ocean policy expert at the World Wildlife Fund. For example, a study published Tuesday in the journal Nature argued that seafloor mining could disrupt tuna migration patterns as climate change pushes fish into new waters. Ms. Battle has led an effort to get companies to pledge not to fund seabed mining or include seabed materials in their supply chains. More than 30 companies, including BMW, Google, Samsung, Volvo and Volkswagen, have signed up. Similarly, prominent banks in Britain such as Lloyds and Standard Chartered refuse to do business with deep sea mining entities. And fishing industry groups have demanded a moratorium.
Some also question the economic opportunities. Electric vehicles are expected to make up about 35 percent of global car sales by 2030, up from 14 percent in 2022, according to projections from the International Energy Agency. That growth will increase demand for metals such as cobalt, copper and nickel used in batteries. But critics say the costs and logistics of mining in the remote ocean — and transporting metals back to land — cast doubts on whether deep-sea mining can be profitable. Ms Battle argued that other solutions in the works – such as alternative materials and battery reuse and recycling programs – could adequately meet the demand for critical metals. “This industry could start without needing it,” she said of deep-sea mining.
But supporters of mining on the seabed participation 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 suffering the worst impacts of climate change.
“Don’t tell me to ignore the potential for advancing the green transition by not exploring these much-needed minerals for the green revolution in my ocean,” Cook Islands Prime Minister Mark Brown said at a UN climate conference last week. year. He referred to claims of environmental concerns from countries that have destroyed the planet “through decades of profit-driven development” as “patronising”.
Mr Barron of the Metals Company, who was in Jamaica this week for the ISA meetings, pointed out that even some countries that are asking for a moratorium have exploration permits, which allow them to experiment with mining on a small scale for research purposes. He believes representatives don’t decide if deep sea mining can start, but when. “That horse has bolted,” he said. — Efrat Livni
HERE’S WHAT HAPPENING
Lina Khan’s Bumpy Week. The head of the FTC lost a bid to block Microsoft’s $70 billion acquisition of Activision Blizzard, opened OpenAI’s first major investigation into ChatGPT’s privacy and security practices, and was charged by a Republican-led congressional committee to the tooth felt about her approach at the agency. The FTC lost its appeal against Microsoft’s ruling.
Hollywood closed. Actors voted to strike for the first time in 43 years, along with screenwriters who had already taken industrial action. Unions say they want better wages, higher streaming service fees and protections to deal with new technology 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 on a possible deal between the rival golf leagues revealed new details about the talks: the deal was announced before it was made; the PGA Tour lacked the resources to fight the Saudi-backed LIV indefinitely; and governance becomes a critical part of any final deal.
Appointment at Shopify. The Canadian e-commerce company has built a calculator into employees’ calendar apps that measures the financial cost of meetings with three or more people. It’s the company’s latest attempt to stop pointless gatherings. It had previously canceled all recurring gatherings of more than two people.
Dominance of tech stocks, by the numbers
The major tech stock rally shows no signs of slowing down, 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 force the Federal Reserve to shift to a more accommodative rate policy, which tends to boost tech stocks.
How big has Big Tech become? Bank of America researchers checked the numbers this week. Here are three takeaways:
This year’s stock gains are mainly concentrated in seven companies: Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta.
The combined market capitalization of the so-called Magnificent Seven is about $11 trillion, a figure that exceeds the GDP of every country except the United States and China.
This group has seen its combined market cap grow by $4 trillion this year.
The companies are cash rich. Six of the seven (all except Amazon) have a combined net cash-to-debt balance of $200 billion.
What to watch: Large institutional investors have bought into these stocks, which could support the near-term rally. And the interest rate risk for these companies is declining. But the bigger they get, the more attention they can get from politicians.
“Political campaign rhetoric is likely to encompass key risks surrounding megacap Tech regulation,” Savita Subramanian, Bank of America’s head of U.S. equity and quantitative strategy, writes in the report.
Paris tackles ‘car ownership’
Health authorities have been waging war against obesity for years. Now, in an effort to curb the rise of large cars like SUVs and reduce pollution, Paris has declared war on “car ownership.” The first step is to make drivers pay more for parking the car vehicles – a move that could eventually hit car companies.
SUV use has increased by more than 60 percent in Paris over the past four yearscity officials said. That reflects a broader trend across the European Union, with SUVs 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’s bad for the planet. “We would like to see the City of Paris change the price of paid parking to make it progressive based on the weight and size of the vehicles,” Frédéric Badina-Serpette, the city councilor behind the increased rates, told The Guardian. He added that the goal was “to focus on an absurdity: car ownership … the inexorable growth in the weight and size of vehicles circulating in our cities.”
The new rules will cause even more concern for automakers. Details have not been disclosed, but electric vehicles and large families requiring larger vehicles are expected to be exempt. The higher rates will come into effect on January 1 and could inspire similar moves in other major cities.
“France has traditionally been one of the most aggressive countries in fighting the growth of big cars,” Matthias Schmidt, an independent auto analyst, told DealBook. Carlos Tavares, the CEO of Stellantis, has already pushed the French government to do more to support the industry, which is beginning to feel the effects of Tesla’s price cuts and facing the growing threat of Chinese automakers looking to push into Europe . French brands, Mr Schmidt added, “are in the middle of an uncomfortable sandwich, squeezed from above and below.”
On our radar: AI as a villain
“Mission: Impossible – Dead Reckoning Part One,” the latest installment in Tom Cruise’s effort to transcend physics for the sake of entertainment, is expected to gross $90 million in its first five days, a franchise record. (Mild spoilers ahead.)
But the film also shows how the hype around artificial intelligence is seeping into pop culture: the big villain in the film is the Entity, a rogue artificial intelligence program that poses a threat to humanity.
For decades, humans’ relationship with artificial intelligence has been explored in movies like “2001: A Space Odyssey,” “Ex Machina,” and, yes, “AI.” But ChatGPT’s public debut last year, which gave many people their first chance to talk to an AI, has made visions of sentient technology seem less like science fiction and sparked existential dread for some.
Remember how more than 350 AI experts called in May to “reduce the risk of AI extinction”? The Entity is capable of “crashing the world’s economic systems, circumventing national security protocols, and diverting nuclear weapons on a whim.” In the movies, an almost superhuman secret agent can at least beat cutthroat technology. (We assume; this is a Cruise movie, after all.) Real life may require coordination from lawmakers around the world — and time will tell if that mission… well, you know.
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