Industry

Investors Oppose Norway’s Deep Sea Mining Ambitions

The race for critical minerals must not result in further ecosystem degradation, experts argue.   

The Norwegian government’s proposal to open its waters to deep sea mining (DSM) has been branded “unhelpful and provocative” by investors and marine experts.  

Norway Prime Minister Jonas Gahr Støre cited the need for critical minerals to facilitate the country’s net zero transition, while simultaneously increasing domestic energy security by reducing dependence on imports from other countries.  

Should the proposal be approved, areas in the Greenland Sea, Norwegian Sea and Barents Sea – collectively covering around 108,000 square miles – will be open to DSM, meaning mining companies will be allowed to disrupt the sea floor to procure nodules of minerals like nickel, copper and zinc.  

“From a long-term financial perspective, it’s hard to understand the motivation to continue to drive capital towards activities that risk adding additional pressure to the fundamental life support system of the planet,” Arild Skedsmo, Senior Analyst of Responsible Investments at KLP Asset Management, told ESG Investor. KLP AM is the asset management arm of Norwegian pension fund KLP.  

“It’s unhelpful and provocative that the Norwegian government is announcing their recommendation [on DSM] ahead of the International Seabed Authority’s (ISA) decision,” he added, noting that this “risks setting an unfortunate precedent” for other countries.  

ISA is the body responsible for regulating explorations for, and exploitation of, seabeds beyond national jurisdictions. 

Following a 2021 request that the organisation finalise rules on DSM, ISA has been under increasing pressure to decide its position on the activity, with a final decision expected next month.  

NGO World Wide Fund for Nature (WWF) said, if Norway proceeds with its proposal, ISA would receive 7% of its profits as Norway-approved DSM would extend beyond the country’s Exclusive Economic Zone (EEZ).  

Skedsmo said a moratorium on DSM wouldn’t prevent countries like Norway from opening up its own waters, but “it might prevent an unmanageable resource race with unforeseen lasting consequences”.  

Bobbi-Jo Dobush, Legal Officer and DSM Focal Point at The Ocean Foundation, warned that DSM regulations are years away from being finalised. 

“Entire sections of the regulations are unfinished, in large part because there is no agreement on the conceptual frameworks to guide textual development,” she said.  

Norway’s proposal also goes against the recommendations of the government’s environmental agency, which warned in its impact assessment that DSM violates Norway’s Seabed Minerals Act and fails to address potential transboundary impacts to other nations due to the lack of scientific data.  

“This is a terrible decision [by Norway], plain and simple,” said Kaja Lønne Fjærtoft, Global Policy Lead for WWF’s No Deep Seabed Mining Initiative. 

Alongside Palau, Norway co-chairs the High Level Panel for a Sustainable Ocean Economy 

“Thin veneer of climate solution” 

The Norwegian government’s proposal hinges on the growing desire by governments to secure access to materials that are critical to facilitating the net zero transition, such as lithium for electric vehicle (EV) batteries. 

“There is a growing recognition that a sustainable energy transition cannot be built at the cost of destroying nature,” countered Emine Isciel, Head of Climate and Environment at Storebrand Asset Management.  

Skedsmo from KLP Asset Management added that the ability to meet the global demand for critical minerals over the next two decades will be better realised “with responsible application of existing mining technologies than by developing a new industry from scratch”.  

“Investors should turn their attention to implement and further improve responsible mining on land, where we have a century of experience and a manageable operational environment – and many eyes watching,” he said.  

Although the full extent of the negative environmental impacts of DSM has yet to be realised, current research warns that mining will cause irreversible damage to biodiversity on the sea floor and potentially disrupt food webs globally. 

“DSM is a potential climate disaster dressed in a thin veneer of climate solution,” said Dobush from The Ocean Foundation, pointing out that the deep ocean is also “a major active sink and reservoir of heat and CO2”. 

“Harming the deep ocean may make our climate worse,” she said. 

Isciel from Storebrand Asset Management said the firm has publicly committed to not investing in companies involved in DSM until there is more scientific evidence on the potential environmental impacts.  

A third of the assets owned by the UK’s largest banks – representing £2.3 trillion of capital – have also been pulled from the DSM industry over the last two years, according to analysis by the Blue Marine Foundation. 

Further, a number of global companies have signed a public statement of support for a moratorium on DSM, committing to not sourcing minerals from the deep seabed or financing DSM activities. 

Norges Bank Investment Management (NBIM), which manages Norway’s US$1.2 trillion sovereign wealth fund, declined a request for comment.  

The Norwegian Parliament is set to debate the proposal later this year, with a vote expected in October or November.  

“No investor should want to be associated with toxic sediment plumes in the ocean, large-scale habitat destruction, species extinction, or disruption of important carbon sinks – but these are the risks of DSM,” said Lønne Fjærtoft from WWF. 

“Smart investors should be looking for ways to support a circular economy aligned with the goals of the Paris Agreement and the Global Biodiversity Framework to deliver true long-term value,” she added. 

“We need to press pause and invest in understanding how the deep ocean functions and influences the rest of our planetary life support system.  

“Right now, the knowledge and science needed to effectively protect the marine environment simply doesn’t exist.”  

The practical information hub for asset owners looking to invest successfully and sustainably for the long term. As best practice evolves, we will share the news, insights and data to guide asset owners on their individual journey to ESG integration.

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