As the global race for critical minerals intensifies, public debate on deep-sea mining has remained trapped in a familiar binary: environmental preservation versus geopolitical security. These concerns are valid. Yet they obscure a more fundamental, fiduciary question: Does this industry make commercial sense at all?
For the financial sector the answer is increasingly clear. A recent assessment of 82 banks and other financial institutions with 24 trillion € in combined assets reveals a stark reality: Market confidence in deep-sea mining is not just low, but in terminal decline. It is not ethical activism, it is rigorous risk management.
Deep-sea extraction introduces unquantifiable balance sheet risk. Disturbances in the deep-sea could affect biological processes along the entire column of water, disturb the habitats of marine species, impact the marine food web, and degrade the Ocean’s carbon storage capacity. The fragile ecosystems involved mean that operators, and their backers, face exposure to irreversible environmental damage, opaque liability frameworks, and potential restoration costs that defy reliable pricing models.
Furthermore, the underlying business case is built on quicksand. Profitability models rely on highly optimistic assumptions regarding long-term commodity prices, capital expenditure and future regulatory compliance. In reality, the rapid scaling of land-based recycling, circular economy frameworks and alternative battery chemistries threaten to render deep-sea mining obsolete before it even begins. The risk of these investments becoming stranded assets is material and high.
The Mining Code is still under negotiation at the International Seabed Authority (ISA) – the UN-affiliated body tasked with controlling activities in the area beyond national jurisdiction. Some argue that the ISA needs a Mining Code fast to provide regulatory certainty. But speed will not solve the industry’s underlying problems. Rushing rules cannot eliminate unresolved environmental risks, uncertain liabilities, or a weak business case. A hastily agreed code may create the illusion of certainty, but it will not make deep-sea mining a sound investment.
Capital markets are already pricing this risk and shifting away. It is time for public policy to align with this economic reality. While 43 countries call for a moratorium on deep-sea mining and the European Union has prudently backed a precautionary pause, more countries should follow suit and take a clear stance against deep-sea mining.
We have adjusted our risk assessments to protect capital from unquantifiable liabilities. This position should now be reflected in the outcomes of the ISA this week.
Signed by:
- Pia Gisgard, Head of Sustainability & Corporate Governance, Swedbank Robur
- Emine Isciel, Head of Climate & Environment, Storebrand AM
- Daniel Sailer, Head of Sustainable Investment Office, Metzler AM
- Hans Stegeman, Chief Economist and Group Director Impact & Economics, Triodos Bank