In April, the Trump administration issued an executive order to accelerate the development of deep-sea minerals — part of its broader push for “energy dominance.” The world’s oceans hold vast, untapped deposits of critical minerals like nickel, copper, manganese, and rare earth elements — all essential to batteries and clean energy technologies.
Despite decades of interest, no commercial deep-sea mining project has begun production. The reasons? Regulatory uncertainty, environmental concerns, and the complexity of processing polymetallic nodules.
So what does this new executive order actually do?
In this episode, Shayle talks to Hans Smit, president and CEO of Ocean Minerals, a company participating in exploration of the Cook Islands. Shayle and Hans cover topics like:
- What the Trump executive order mandates — and its legal limits
- The bottleneck of U.S. deep-sea exploration
- The controversy about U.S. legal authority over international waters
- The economics and geopolitics of deep-sea mining hotspots like the Clarion-Clipperton Zone, Japan, and the Cook Islands
- The technical challenges of refining polymetallic nodules
- CapEx, OpEx, and barriers to commercial deployment
Resources
- Catalyst: Mining the deep sea
- World Resources Institute: What We Know About Deep-Sea Mining — and What We Don’t
- Reuters: Trump signs executive order boosting deep-sea mining industry
Credits: Hosted by Shayle Kann. Produced and edited by Daniel Woldorff. Original music and engineering by Sean Marquand. Stephen Lacey is our executive editor.
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Transcript
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Shayle Kann: I’m Shayle Kann and this is Catalyst.
Hans Smit: There’s this perception that the EO has been signed, and this is, it’s like flipping a light switch. All of a sudden it’s going to go from nothing to everything. What this action has done is that it’s taken DSM and put it into the spotlight.
Shayle Kann: Coming up going deep underwater for energy dominance.
I’m Shayle Kann. I lead the frontier strategy at Energy Impact Partners. Welcome. Alright, so it’s been a couple of years I think since we talked about deep sea mining here. So here’s a quick reminder of why it’s interesting. At the bottom of the ocean in certain places, there appears to be an enormous volume of these golf ball sized rocks. They’re polymetallic nodules and they appear to be basically a rock full of battery minerals essentially. Think: nickel, cobalt, a lot of manganese and copper and in some cases rare earths as well. And there are literally trillions of dollars worth of these rocks just waiting to be hoovered up and used to displace terrestrial mining. But for at least four things, one is a regulatory regime that doesn’t fully exist yet for exploitation of deep sea mining, at least in some locations.
Second is a heated battle over the environmental impacts of extraction. Third is the actual CapEx technology and resources it’s going to take to do it. This is mining, it’s not cheap. And fourth is what you do with it once you get it, i.e. refining. Anyway, one thing that wasn’t on my bingo card when we talked about this a couple of years ago was that President Trump in his second term focus on energy dominance would find his way to deep sea mining and issue an executive order intended to speed up the market at least for the United States. So for this one I brought on Hans Smit, who is the president and CEO of Ocean Minerals, one of the companies that is exploring for deep sea minerals in the Cook Islands currently. Here’s Hans.
Hans, welcome.
Hans Smit: Thank you.
Shayle Kann: Let’s start by talking about this Trump executive order on deep sea mining that came out a few weeks ago. Now maybe start by just explaining what’s in it.
Hans Smit: Well, I think the key important thing about the EO is the fact that the U.S. has now publicly come out and said that it supports looking into deep sea mining and has directed the U.S. government to take positive and proactive action to help get this off the ground. I think that’s the big thing that that executive order has done. And I think the other important thing about the executive order is that it has stipulated that it’s not just US territorial waters, this is international waters as well as other exclusive zones. So what Trump has come out and said is let’s look at deep sea mining as part of the solution, but let’s not just focus on US areas, let’s look at all projects and see how we can use them to solve this problem we have with critical metals,
Shayle Kann: Which has become a bit of a point of contention, the part about operating outside of US exclusive economic zones. Maybe that’s a good opportunity to step back for a second. Can you walk through the different regions where there is deep sea mining exploration or potential production to be had and where the authority and control over them sets?
Hans Smit: Yeah, essentially there are two areas. You have the exclusive economic zone, which is the territorial waters of any country. So it’s that country’s sovereign waters and the country’s sovereign right to do whatever they decide to do within that region. And then we have what is known as beyond national boundaries, which is international water. So those are all the areas outside of the exclusive economic zones and the key difference between the two is in an exclusive economic zone, the work that anybody does is subject to the rules and the law of that country. When you go into international waters, back in 1984, UNCLOS, which is the United Nations Law of the Sea was ratified and that is now under the auspices of the United Nation and I think there are about 136 countries that have signed up to it. However, the U.S. has not signed up, they have not ratified that and in the international waters it has been deemed since the signing of UNCLOS that would be regulated by the United Nations and specifically the ISA, which is the International Seabed Authority.
Shayle Kann: And so that’s where, I mean a lot of the, you could tell me if I’m wrong on this, but a lot of the early activity in deep sea mining world has been in international waters, particularly in this area called the Clarion Clipper Zone. Is that because the understanding is that the resource is especially attractive there or is that just because international waters ISA regulation has been attractive to go after?
Hans Smit: Yeah, look, I think it’s been done there because countries wanted to be sure that they did not miss out. So in a sense there was a fear of missing out. So when that got ratified, all the major nations throughout the world made sure that they stake their claim and they were participating in what was being released under the ISA. What happens when you stake your claim and you now take responsibility for that area, the onus is on you to execute a certain amount of work on that area. You cannot just sit and squat on the land. You need to show that you’re making progress. So I think that was why there was a lot of work done in the Clarion Clipperton Zone. Also, a lot of that work was funded by governments, so there was a source of funding that was available to make sure that that work happened. And that work has been invaluable since 1984. There’s been a lot of exploration work there. There’s been a lot of money spent there. The European Union has spent a lot of money developing technology and equipment, so have the Chinese. So I think in general it has been incredibly positive and incredibly useful for underwater mining specifically in that region and giving us a good understanding and serving as a great foundation for developing guidelines and procedures and methods for doing this type of thing.
Shayle Kann: Okay, so back to the EO. The EO pertains both to the U.S. exclusive economic zone where there had been very little activity prior to this. As I understand it, I’m curious what you think this might actually result in, but then is it essentially saying beyond US exclusive economic zone, this is the Trump administration saying we are interested in deep sea mining exploration and production and we have not signed on to the treaty that would make us a part of the International Seabed Authority and so we are sort of competing with the rest of the world for those resources? Is that the right way to think about it?
Hans Smit: I think there are two parts to that question. Firstly, the EO says exclusive economic zones of the, not only of the U.S. but in any country. There are other countries, Japan, Cook Islands, Papua New Guinea, who currently are actively working in the exclusive economic zones developing these resources. In the U.S. there hasn’t been very much, if any work in the exclusive economic zone of the U.S. but that is due to a regulatory issue rather than anything else. And then what the EO saying in international waters as well, this is where things start becoming a little more vague and a little more challenging. As you would note in the press, since that has been announced and the metals company have indicated that they want to use the EO and apply for licenses through the U.S. laws to mining international waters, there’s been some surprise and there’s also been some resistance to that and I think this is something for the lawyers to get into and figure out how the metals company and the U.S. with the EO are going to go and work in international waters without taking into consideration the precedent and the regulatory authority of the international seabird authority.
So I think there’s still a lot of stuff to be worked through and a lot of issues to be resolved in international waters, but in exclusive economic zones it’s pretty clear there are laws in the U.S. that allow companies to go and apply for explorational mining licenses. However, the current structure of the legal framework in the U.S. is not very encouraging. So we as a company for example, are not inclined to explore in U.S. territorial waters because our investors are not given the kind of assurances and rights that we would get in other areas that would allow us to get a return on our investment if we were to spend tens of millions of dollars.
Shayle Kann: So that raises this obvious question, which is this EO and we don’t have to talk exclusively about the U.S. it is where the minority of activity is going, but just because there is this recent EO, is it going to do anything right? Are there other factors that are stopping the U.S. from doing serious exploration for deep sea mining that this doesn’t change and so as a result it’s just going to be sort of a piece of paper?
Hans Smit: I don’t think it’s going to be a piece of paper. I think the EO has got incredible value and has got incredible merit, but I don’t think it’s necessarily going to be the silver bullet that certain people think it’s going to be. There’s this perception that the EO is being signed and this is a, it’s like flipping a light switch. All of a sudden it’s going to go from nothing to everything. It’s very rare that that is the occurrence of this type of action. What this action has done is that it’s taken DSM and put it into the spotlight. It has brought the world’s attention to a nascent industry that up until the EO has been in existence, but it’s kind of been on the sidelines, been in the shadow so to say, and this has really brought it into focus and that has been very clear from my side.
For example, over the past three weeks, once the EO had been published and people had time to work through it, I’d been getting a lot of people phoning wanting to speak about DSM, wanting to better understand what’s going on, wanting to see what the prospects are wanting to understand what is the real story because everything that they’ve seen prior to this has been predominantly dominated by the anti contingent to have been out trying to get moratorium in place. And what this has done has brought this sort of mainstream media and the mainstream interest into DSM and that for me is a big, big step in the right direction and it’s also a great opportunity to create visibility because the issue we’ve had has been a lack of visibility, a lack of understanding, and a lack of context. And the EO certainly does address that. So I think it’s valuable in that perspective.
Shayle Kann: Okay. So before we move on from the U.S. to talking about what’s going on in the rest of the world apart from sort of a less than ideal regulatory environment, are there other things that are going to be bottlenecks in the evolution of deep sea mining within the United States? I mean, are we going to see significant exploration activity during the Trump administration before a new administration takes hold and could make a bunch of changes if they so desired?
Hans Smit: Well, I think the key bottleneck with the U.S. exclusive economic zone is the manner in which the U.S. approaches mineral resource development. They’ve modeled the deep sea mining of minerals and minerals in the ocean on the oil and gas model where the exploration work and a lot of the geophysical work that underpins this is done by the U.S. government and then based on that interpretation, they determine areas of interest that they put out on public lease for companies to bid and tender on. Now the issue is with the deep sea mineral space means the likes of BOEM and NOAA have to go and do all of this work throughout this massive body of water and they need to determine where exactly these mineral deposits are, pull all the information together that would make it attractive for a company like us to bid on a lease.
And the issue that you have is that this is going to take multiple years of just exploration sending ships out there and covering tens of thousands of square kilometers of the ocean, and I think this is going to be the problem. Noah’s boats are already booked out for the next two to three years, possibly even the next four years. So before you can repurpose those vessels to specifically go and address this task, you have these jobs that they need to do or you have to go and sacrifice those jobs and refocus them on this. I think neither one of those is a great idea. What I would suggest is that the U.S. take a leaf out of what everybody else is doing, where what they do is they put the onus on the person wanting to develop the resource. So if I use the example of the Cook Islands, for example, the government there has said to exploration companies, we will give you an exploration license that will give you exclusivity over that area for you to do your exploration.
If you find resources within that area, you then have first right of refusal to apply for a mining license over it. So now I have done a couple of things. One is I’ve put the onus on companies that specialize in finding minerals to go and do the research and the expiration work in order to find them. And in return for that, what they are going to get is the right of first refusal to commercialize that. So the money that they invest, they get paid back through the project becoming commercial. And the benefit of that is you have people that specialize in this driving the process of doing it. So I think there’s an interesting challenge that the U.S. faces at the moment if they want to follow through and deliver on the EO, I think there is a need for some significant changes that need to be done with regards to how they’re doing it at the moment. And if that is too bigger of a challenge, just change the contracting model. Don’t rely on NOAA and BOEM to do it in addition to that, look at some way of privatizing that exploration and getting people that specialize in it to help those agencies get to the point where commercialization of the U.S. territorial waters becomes a reality.
Shayle Kann: Okay. You mentioned the Cook Islands, so moving on from the U.S. my sense is that the Cook Islands is sort of furthest along here. Is that in terms of general exploration and sort of moving toward actual deep sea mining, do you agree with that? Is there anywhere else that you would put on the same levels as the Cook Islands?
Hans Smit: No, I think that would be a reasonably accurate statement. I think the country that is coming up close second to that would be Japan. Japan last year announced a fairly significant nodule field in their territorial waters and they’re now moving forward with that development and that program under the guidance of the University of Tokyo. I think the Cook Islands are ahead of Japan in the fact that the Cook Islands have the regulatory frameworks in place to go from prospecting, exploration and exploitation with a great environmental requirement and plan in place to make sure that there’s no significant harm as a result of that, the Japanese still need to play some catch up there. So I would say between Japanese territorial waters, Cook Islands, they certainly are, as far as polymetallic nodules are concerned, certainly leading the way as far as deep sea minerals are concerned.
Shayle Kann: Okay. So what is the latest in the Cook Islands? Who has got licenses to do what? How far along are they? Just orient me in terms of given the Cook Islands as the leader, where are we?
Hans Smit: Yeah, so the Cook Islands back in 2022 awarded three exploration licenses to three different companies. So the first company is a company called Mohana Minerals, which is owned and operated by a US-based company called Ocean Minerals. You have CIC is the second license holder and then the third license holder is a joint venture between a Belgian company and the Cook Islands Investment Corporation, which is a government company that is focused on developing businesses within the Cook Islands. So those three companies have been awarded exploration licenses. Those licenses are five years in duration and the companies are currently in year four. And the intention and the plan of these organizations and Mohana Minerals is the company that I work for. The intention is in the next two years or so to apply for our mining licenses. So we are currently all embarked on the environmental data campaigns, collecting all the information so we can make the case for minimal environmental impact, but we also have our mining systems developed in our case and as well as the processing of the nodules. So putting it a different way, we probably are two to four years away from first production is where we are in the Cooks.
Shayle Kann: You mentioned environmental data collection and trying to minimize environmental impact. Obviously that’s been an area of contention historically, as you mentioned with activists pushing for moratoria and so on. From your perspective, is there a technical, is there a technological challenge in how do we actually extract resources while minimizing environmental footprint or is the technology known and proven already today and it’s just a matter of implementing it?
Hans Smit: The technology is known and proven and it has been proven and incidentally, the first time it was proven was back in the 1970s. So the tech for this has been around for multiple decades as far as the environmental side is concerned, that’s where the ISA comes into the picture. The work that the ISA has done over the past 20, 30, 40 years has been massive because it’s really helped us focus on the specific areas where the impact would be and the technologies have obviously been modernized and updated to further reduce those impacts. So I think as a whole, the technology is there, how we apply it is well understood. What we are doing is establishing all the baseline data. To give you an idea, when you build a home, one of the things you have to do is look at the environmental impact of building your home, but the benefit you have is all the environmental data that exists.
So you are very easily and quickly able to look at what the impacts of building your home would have in the deep ocean where we are operating, we don’t have that baseline data and that is why we spend three, four years collecting that baseline data so that when we make the statements in our environmental impact statement talking about what the impacts would look like, we are doing it from a known data source and a known reference. And this is a process that will continue going on way beyond commencing of this operation. We have this plan called adaptive management where we continually update the data we collecting and how the systems operate and we keep refining and improving.
Shayle Kann: The other technological question that I’ve heard that I think is kind of interesting is not about extraction so much as it is about refining. You mentioned you might be two to four years out and you and a couple others, two to four years out from production. So I understand that the challenge here is, okay, you get these polymetallic nodules, you extract them from the ocean floor, they contain a mixture of valuable minerals, they contain nickel and cobalt and copper and manganese. And our existing mineral refining, which we do from terrestrial mining is not really set up for that because we don’t have these polymetallic nodules in the same way on the ground or under the ground rather. And so what we have right now is a big refining industry set up to basically extract a single mineral generally speaking. So does this mean that you are going to end up having to or having to find somebody set up some new refining infrastructure? Is that new technology? What does that look like downstream of extraction?
Hans Smit: So I think there are a couple of things to unpack there. I think the first one is that we’ve recently started hearing a lot of noise about that the processing technology doesn’t exist, and that’s an interesting shift in the arguments against why DSM should not go ahead because the reality is quite different. Yes, we have a polymetallic resource, so we have, as you mentioned, nickel, copper, cobalt, manganese, and in the case of the Cook Islands nodules, rare earths as well, which is another thing everybody’s hot about. But the only part that we’ve had to crack and unlock is not the separation or the refining because the separation or refining that exists with all these other mining industries is exactly the same technology that we are going to use to pull out those specific metals out of the nodules. So it’s actually a benefit for us that all this knowledge and technology exists for selecting all those different metals.
What is different for us is two things. The first one is the nodule is in the form of a golf ball size rock. And what we have to do is we have to get all those metals, we refer to it as inter solution. Best way to explain it is if you take table salt and you pour it into water and you dissolve it, it goes from sodium chloride, which is salt, and when you dissolve it, it becomes sodium ions and chloride ions In water, we do exactly the same thing, but instead of using water, we use acid. What we do is we crush the nodules and we use acid and we dissolve all the metals. Now all the metals are floating around in the liquid and we apply all those existing technologies to strip them out. The only difference is we need to figure out in what sequence to pull them out to get the best results
Shayle Kann: You need basically a train of existing technologies.
Hans Smit: Yes, exactly.
Shayle Kann: Right? If it’s a nickel mine or a nickel refining operation, you’re just trying to pull out the nickel, you’re going to do that, but then you also have to pull out the manganese and the copper and the cobalt, rare earths
Hans Smit: Correct. So now what that does is it starts creating some interesting possibilities for us. So nickel mines and copper mines are nickel cobalt or nickel or copper cobalt. So they bring up both those products. So one of the things we can do is create a nickel cobalt or a nickel copper cobalt hydroxide and we can send it to one of those existing facilities and they can pull them out or as you said, what we do is we build our own facility, but instead of having to invent a new process, we build an existing facility and we go to these different industries and we are just going to take that building block that they’ve used and we put it into our plant and this is all chemistry. So what you’re talking about is big tanks with pumps and circulatory circuits, and what you do is you either use electrolysis or you use chemistry to cause the metals to sink or to float, and it’s easy to separate them out or you just have them precipitate.
In other words, you dry them out. So there’s nothing unique, strange or different about what we are doing. It’s just, again, like we did with the mining system, we are using different technologies that exist and we are just putting them together in a different sequence. And yes, we’ll have to build a new processing facility, but that is no different to any mine. If you go to any mine on land, the processing facility is going to be built in order to meet the uniqueness of the chemistry of that particular mine. So every process plant that you go to is normally tied to some mine or some supply and there’s uniquenesses to it. It doesn’t make us any different
Shayle Kann: If not a technical question, it is certainly a capital question. So maybe I guess final topic for us is to talk about capital formation here and not just for refining, but also for extraction. Orient me on CapEx and OpEx, I suppose just on the extraction portion relative to a terrestrial mine, what should we be thinking about?
Hans Smit: Well, I think the first misperception that we hear often is that it can’t make money because it’s complicated and very expensive. And I think there are two parts to that. The complicated and expensive is all relative because at the end of the day, profitability of a mine is the difference between operating costs and revenue. And in our case, yes, we have got these ships that are going to see and they’re operating in the ocean and it is deemed to be expensive because we’re working at great depths. However, we don’t have all the big capital costs of infrastructure, power lines, roads, rails, dams, et cetera, which means the cost of capital for us is going to be lower. We are going to spend less money building a ship to go mining than what you’ll do —perhaps building a brand new infrastructure in some outback area. So that’s one aspect of it.
The other thing to consider is that we are bringing up one ton of material and in that one ton of material, we are producing the same amount of metal as you would need to have anywhere between three and five land-based mines. So for them to get the same amount of metal that we are getting because of our high grade and the fact that they multi metal, you could end up moving anywhere between four and eight times the tonnage of raw rock to get the same metal. So those are the aspects that people don’t understand because they haven’t looked into the specifics. So when it comes to economics, we are moving less tonnage, we’re getting more metal, the revenue we get per ton is much higher, even though our OpEx cost per ton may be higher than dump trucks running with front end loaders, but the revenue is certainly there. That’s offsetting that.
Shayle Kann: It’s like an OpEx-CapEx trade off and you get a higher value product per unit volume or per unit weight.
Hans Smit: Absolutely, yeah. At the end of the day, there are two things you need to look at. You need to look at what is the return on your investment. So if for in our case the mining system CapEx is around $500 million, the processing plant probably around $2 billion. But what for that investment do you get in return for your project? So our project is anywhere between three and 4 billion project that’s going to yield in the region of $500 million of free cashflow per year. Put that in front of any land-based miner and they’ll be falling over you to fund that project. With IRRs in the thirties, 40% this project, when you look at the economics and what it yields is a no-brainer. What we just have is the stigma around underwater in the ocean and a lot of the misinformation that has been put around it. I would really love to get into a situation where people just park their emotions and look at it purely on merit from an environmental impact perspective, from a cost perspective, from just an overall impact of this generally and just look at what we are going to get from it. I think they’ll be pleasantly surprised
Shayle Kann: When you talk about that free cashflow number, there’s obviously an assumption embedded in there as to the price you can get for the minerals that you’re extracting. I think one thing that’s interesting that here is that because you’re polymetallic rather than being subject to a single volatile commodity, you’ve at least got multiple. So you could imagine prices for manganese spiking and nickel crashing at the same time and you end up in a wash or something like that. So it’s sort of beneficial in that context. But obviously particularly with nickel, we’ve seen prices low recently relative to history. How do you think about the volatility of those commodities? Obviously copper probably being the least volatile, but also probably a small portion of the value stack I would expect for a given polymetallic nodule. So what matters? Which minerals matter the most and how do you think about price volatility?
Hans Smit: Well, interesting. One of the things we do for our investors is obviously a sensitivity analysis. And one of the interesting we are able to show is that with the recent crash of the cobalt price and nickel for all sorts of reasons, and that’s the topic for a whole different discussion, but particularly those two metals with the depression on their prices, our project remains profitable and the reason it’s profitable because of the manganese. The manganese is by far the biggest component of what we’re doing. And the manganese market is so massive that it has a certain amount of robustness just due to its sheer volume and size. The other thing we hear from people is are we going to come into production and we’re going to have a negative impact on the market because of the volumes we bring to the market? That’s not going to happen with the manganese market either. So what we have is manganese is a great stabilizer and it allows us to be able to ride through the fluctuations we see in the nickel and cobalt prices. But at the recent low prices, the project has remained profitable and at the prices we are projecting at the time that we go into production, obviously it makes it really, really interesting as to the kind of returns that this project can yield.
Shayle Kann: All right, Hans, thank you so much for the time. This is super interesting. I’ll catch you in two to four years when you’re pulling up commercial volumes.
Hans Smit: Look forward to it. Thanks very much.
Shayle Kann: Hans Smit is the president and CEO of Ocean Minerals, one of the companies that is working on an exploration license in the Cook Islands. The show is a production of Latitude Media. You can head over to latitude media.com for links to today’s topics. Latitude is supported by Prelude Ventures, prelude backs, visionaries, accelerating climate innovation that will reshape the global economy for the betterment of people and planet. Learn more@preludeventures.com. This episode is produced by Daniel Woldorff Mixing and theme song by Sean Marquand. Stephen Lacey is our executive editor. I’m Shayle Kann and this is Catalyst.
