Growing demand for metals used in electric vehicle batteries has sparked an international race to mine the deep seas. 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 licenses before the rules are final. Representatives of the agency, which consists of 167 member states and the European Union, met in Jamaica for two weeks to debate what should happen next.
Canada, France, Germany and others want to pause deep-sea mining because of its largely unknown environmental consequences. But countries including China, Norway and Russia are pushing to establish a framework, arguing that it is less destructive than termination.
Seabed exploitation projects, meanwhile, are eager to get started.
“We are preparing our application,” said Gerard Barron, the chief executive of the Metals Company, a Canadian company that has an agreement with the Pacific island nation of Nauru to sponsor its deep mining efforts.
The company preferred that there be final rules before acting, Mr. Barron told DealBook, “but we reserve the right to move forward.”
Regulators are under pressure to act. A United Nations convention establishes waters beyond 12 nautical miles from a territorial coast as community property, meaning that profits from minerals discovered there should be shared to some extent. The ISA is responsible for establishing the structure for profit sharing and taxation of mining efforts, as well as the legal and environmental guidelines. Or it could ban large-scale commercial mining altogether – although it is it is not clear that there is a legal way for a break.
Mining could damage ecosystems that scientists don’t yet understand, said Jessica Battle, an ocean policy expert at the World Wide Fund for Nature. A study published Tuesday in the journal Nature, for example, argued that seabed mining could interfere with tuna migration patterns such as climate change is driving fish into new waters. Ms Battle led an effort to get businesses to pledge not to fund seabed mining or source seabed materials in their supply chains. More than 30 companies, including BMW, Google, Samsung, Volvo and Volkswagen, signed. Similarly, prominent banks in the United Kingdomsuch as Lloyds and Standard Chartered, refuses to do business with deep mining entities. And seafood industry groups have called for a moratorium.
Some also doubt the economic opportunity. Electric cars are expected to account for around 35 percent of cars sold worldwide 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, which are used in batteries. But critics say the expense and logistics of mining in the remote ocean — and transporting metals back to land — raise doubts about whether deep-sea mining can. be profitable. Mrs. Battle argued other solutions in the works – like alternative materials and battery reuse and recycling programs — could sufficiently satisfy demand for critical metals. “This industry could start out of necessity,” she said of deep-sea mining.
But supporters of seabed mining say 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 effects of climate change.
“Don’t tell me to ignore the opportunity to advance the green transition by not exploring these much-needed minerals for the green revolution that are sitting in my ocean,” Mark Brown, the prime minister of the Cook Islands, told a climate conference of the UN. last year He called claims of ecological concern by countries that destroyed the planet “through decades of profit-driven development” as “patronage”.
Mr. Barron of the Metals Company, who was in Jamaica for the ISA meetings this week, pointed out that even some of the countries calling for a moratorium have exploration licenses that allow them to experiment with mining on a small scale for research purposes. He believes that representatives decide not whether deep sea mining may begin, but when. “That horse bolted,” he said. — Efrat Livni
THIS IS WHAT IS HAPPENING
Lina Khan’s empty week. The head of the FTC lost a bid to block Microsoft’s $70 billion acquisition of Activision Blizzard, opened the first major investigation into OpenAI into ChatGPT’s privacy and security practices, and was grilled by a Republican-led congressional committee over her access to the agency. . The FTC lost its appeal of the Microsoft ruling.
Hollywood shut down. Actors have voted to strike for the first time in 43 years, joining screenwriters who have already taken industrial action. Unions say they want better wages, higher fees from streaming services and protections to deal with new technological 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 competitions revealed new details about the talks: the deal was announced before it was done; the PGA Tour did not have the resources to fight the Saudi-backed LIV indefinitely; and governance will be a crucial part of any final agreement.
Dating at Shopify. The Canadian e-commerce company embedded a calculator in employee calendar applications that measure the financial cost of meetings with three or more people. It’s the company’s latest effort to end pointless meetings. It previously canceled all recurring meetings of more than two people.
Tech stocks rule, by the numbers
The big tech stock rally shows no signs of slowing, 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 pivot to a more accommodative rate policy, which tends to lift tech stocks.
How big has Big Tech become? Bank of America researchers ran the numbers this week. Here are three prescriptions:
The stock gains this year were especially concentrated among seven companies: Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta.
The combined market capitalization of the so-called magnificent seven is approximately $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 but Amazon) have a combined $200 billion net cash-to-debt balance sheet.
What to watch: Large institutional investors have been buying these stocks, which could continue the rally in the near term. And the interest rate risk for these companies is decreasing. But the more they grow, the more attention they could get from politicians.
The “political campaign rhetoric is likely to include headline risk around megacap Tech regulation,” Savita Subramanian, head of U.S. equity and quantitative strategy at Bank of America, writes in the report.
Paris embraces ‘automaticity’
Health authorities have waged a war on obesity for years. Now, to curb the growth of large cars such as SUVs and reduce pollution, Paris has declared war on “auto-beness”. Its first step is to charge drivers more to park the vehicles – a move that could eventually hit car companies.
SUV use has grown more than 60 percent in Paris over the past four years, according to city officials. This mirrors a wider trend across the European Union, with SUVs accounting for approx 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 this is bad for the planet. “We would like the City of Paris to change the price of paid parking to increase it according to the weight and size of vehicles,” Frédéric Badina-Serpette, the city councilor behind the increased charges, told The Guardian. He added that the goal was to “focus on an absurdity: car-ness … the inevitable increase in the weight and size of vehicles circulating in our cities.”
The new rules will add to carmakers’ concerns. Details were not revealed, but electric vehicles and large families that require larger vehicles are expected to be exempt. The higher rates will will go into effect on January 1, and could inspire similar moves in other big cities.
“France has traditionally been one of the most aggressive nations in combating the growth of large cars,” Matthias Schmidt, an independent auto analyst, told DealBook. Carlos Tavares, the head of Stellantis, has already pressed the French government to do more to support the industry, which is beginning to feel the impact of Tesla’s prices and faces the growing threat of Chinese carmakers entering 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 efforts to transcend physics for the sake of entertainment, is expected. earn $90 million in its first five days, a franchise record. (Mild spoilers ahead.)
But the film also represents how the hype surrounding artificial intelligence seeps into pop culture: The big bad guy in the film is the Entity, a rogue artificial intelligence program that poses a threat to humanity.
For decades, the relationship of people with artificial intelligence has been explored by films like “2001: A Space Odyssey”, “Ex Machina” and, yes, “AI” But it was the public debut of ChatGPT last year that gave many people their first chance. conversing with AI has made visions of sentient technology feel less like science fiction and, for some, has sparked existential dread.
Remember how over 350 AI experts called in May to “mitigate the risk of AI extinction”? The Entity is capable of “collapsing the world’s economic systems, circumventing national security protocols and redirecting nuclear weapons at will.” At least in the movies, a near-superhuman secret agent can counter murderous technology. (We’re guessing; this is a Cruise movie after all.) In real life, it can take coordination of legislators worldwide — and time will tell if that mission is… well, you know.
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