China Carefully Assembling a Deep-sea Mining Strategy

So-called polymetallic nodules like those seen in this 2016 photograph from Japan are at the heart of the race to mine ocean floors for valuable minerals and metals. HO / JAMSTEC/AFP
So-called polymetallic nodules like those seen in this 2016 photograph from Japan are at the heart of the race to mine ocean floors for valuable minerals and metals. HO / JAMSTEC/AFP
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China Carefully Assembling a Deep-sea Mining Strategy

So-called polymetallic nodules like those seen in this 2016 photograph from Japan are at the heart of the race to mine ocean floors for valuable minerals and metals. HO / JAMSTEC/AFP
So-called polymetallic nodules like those seen in this 2016 photograph from Japan are at the heart of the race to mine ocean floors for valuable minerals and metals. HO / JAMSTEC/AFP

In a world hungry for crucial resources, China may not be poised to start deep-sea mining but it is planting seeds for such operations in a meticulously planned economic and geopolitical strategy.

The world's oceans, both international waters and those under national jurisdiction, are rich in minerals and metals, like cobalt, nickel and copper.

These are important for building electric car batteries, for instance, and other technologies as countries try to transition away from fossil fuels.

China "is an energy-thirsty country. It will look for resources everywhere," including the deep sea, said Julia Xue of Shanghai Jiao Tong University.

But she said China is not particularly anxious over the issue, although recent developments -- one company is itching to be the first to start mining the sea bed -- may put more pressure on Beijing.

A Canadian firm, The Metals Company, has filed an application with the United States to begin undersea mining in international waters.

Using its American subsidiary, it acted after President Donald Trump, bypassing international negotiations, signed an executive order in April to speed up the permit-issuing process for such mining in US and international waters.

Trump cited an obscure 1980 US law that says American citizens can explore for and recover deep sea minerals in areas beyond the country's jurisdiction.

Environmental groups are outraged by Trump's order, arguing that a wild hunt for the potato-sized, metal-containing nodules could harm fragile undersea ecosystems.

The Canadian company initially said it would submit its request to the International Seabed Authority (ISA), a body which has jurisdiction over the ocean floor in international waters.

The Metals Company says it ignored this authority because of its slow pace in talks on adopting a mining code that establishes rules for exploiting seabed resources. The United States is not an ISA member.

A long-time observer of those talks who spoke on condition of anonymity said China is not particularly worried about who starts mining first.

"For them it's more about dominance, staying competitive in the game, and giving the impression that you can't mess with us," the observer said.

With that goal in mind "they're definitely developing the technology and putting the strategic agreements in place," Alex Gilbert, a researcher at the Payne Institute for Public Policy at Colorado School of Mines, told AFP.

For instance, China has reached an agreement with the Cook Islands to explore for minerals in that Pacific country's waters.

Another tiny Pacific nation, Kiribati, also says it is exploring a deep-sea mining partnership with China.

This approach is "more geopolitical than economic," said Emmanuel Hache of the French Institute for International and Strategic Affairs, noting Beijing is using undersea mining as a lure to cement greater diplomatic support as it exerts power.

China holds five contracts handed out by the ISA to look for resources in the Pacific and Indian Ocean sea beds and these contracts cover all types of undersea mineral resources. China's is the largest number of the 22 contracts the organization has granted.

Years behind

"From a research perspective, we have been continuously getting closer. And from a technical perspective, we have been continuously improving," said Chen Xuguang, a researcher at Ocean University of China.

In 2024 a Chinese prototype deep-sea mining vehicle called Pioneer II, developed by Shanghai Jiao Tong University, set a national record by operating at a depth of more than 4,000 meters (13,100 feet).

State-owned Beijing Pioneer Hi-Tech Development Corporation told AFP that later this year it plans a seabed nodule collection test.

Still, China is not as advanced technologically as The Metals Company, experts say.

"I would characterize China as being two to four years behind them in terms of their technology," said Gilbert in Colorado.

Hache, the French expert, put the gap at five years.

But China has an advantage over firms like the Canadian one in recovering and processing nodules: its companies are supported by the state and China has infrastructure for processing metals.

The observer of the international seabed talks said China does not need seabed mining for metal supply, "but maybe geopolitically, in the context of maintaining their control over the commodities market."

China wants to keep its options open, this person said.

And while it supports an international mining code, China does not need one now and "they're not going to put pressure until they've decided strategically that they're ready," said Gilbert.



Oil Slips as Iran-Israel Conflict Enters Sixth Day

FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
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Oil Slips as Iran-Israel Conflict Enters Sixth Day

FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: A view shows an oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia, June 4, 2023. REUTERS/Alexander Manzyuk/File Photo

Oil prices fell on Wednesday, after a gain of 4% in the previous session, as markets weighed up the chance of supply disruptions from the Iran-Israel conflict and as they ponder a direct US involvement.

Brent crude futures fell 93 cents, or 1.2%, to $75.52 a barrel by 0918 GMT. US West Texas Intermediate crude futures fell 88 cents, also 1.2%, to $73.96 per barrel.

US President Trump warned on social media on Tuesday that US patience was wearing thin, and called for an "unconditional surrender" from Iran.

While he said there was no intention to kill Iran's leader Ali Khamenei "for now," his comments suggested a tougher stance toward Iran as he weighs whether to deepen US involvement.

A source familiar with internal discussions said one of the options Trump and his team are considering included joining Israel on strikes against Iranian nuclear sites.

A direct US involvement threatens to widen the confrontation further, putting energy infrastructure in the region at higher risk of attack, analysts say.

"The biggest fear for the oil market is the shutdown of the Strait of Hormuz," ING analysts said in a note.

"Almost a third of global seaborne oil trade moves through this chokepoint. A significant disruption to these flows would be enough to push prices to $120 [a barrel]," the bank added.

Iran is OPEC's third-largest producer, extracting about 3.3 million barrels per day (bpd) of crude oil.

Meanwhile, Iranian ambassador to the United Nations in Geneva Ali Bahreini said on Wednesday that Tehran has conveyed to Washington that it will respond firmly to the United States if it becomes directly involved in Israel's military campaign.

Markets are also looking ahead to a second day of US Federal Reserve discussions on Wednesday, in which the central bank is expected to leave its benchmark overnight interest rate in the range of 4.25% to 4.50%.

However, the conflict in the Middle East and the risk of slowing global growth could potentially push the Fed to cut rates by 25 basis points in July, sooner than the market's current expectation of September, said Tony Sycamore, market analyst with IG.

Lower interest rates generally boost economic growth and demand for oil.

Confounding the decision for the Fed, however, is the Middle East conflict's potential creation of a new source of inflation via surging oil prices.

US crude stocks fell by 10.1 million barrels in the week ended June 13, market sources told Reuters, citing American Petroleum Institute figures on Tuesday. Official Energy Information Administration data is due later on Wednesday.