Deep-Sea Salvage Firm Uses NAFTA to Fight Mexican Environmental Rules

Odyssey employees inspect silver bars recovered from the WWII shipwreck SS Gairsoppa. Odyssey, known for hunting wrecks for silver and gold, is suing Mexico for blocking a seabed mining proposal (File image courtesy Gairsoppa Project)

Published Aug 8, 2021 5:33 PM by Dialogue Earth

[By Emilio Godoy]

A lawsuit filed against the Mexican government for denying a permit for seabed mining has put a spotlight on the lack of international rules for such practices. Without a clear international framework, the practice could lead to biodiversity loss and other environmental harms.

One of the major three kinds of seabed mining is for stones known as polymetallic nodules. To collect the nodules, which are rich in cobalt, copper, manganese and nickel, fearsome-looking machines would be used to scrape the seabed. The collected material would then be pumped to the surface through giant tubes. Once processed, unwanted sediment would be returned to the sea via another conduit.

However, deep-seabed mining risks disrupting fisheries by disturbing habitats, polluting the water column and interfering with the ocean food chain, according to recent reports by Greenpeace and WWF Europe.

Mexico was initially hesitant about this type of mining, but now an international agreement could open the door for extraction in an area inhabited by vulnerable marine species.

Mining “Don Diego”

In 2018, Mexico’s Secretariat of Environment and Natural Resources (Semarnat) denied an environmental licence for the “Don Diego” mine on the grounds that it could damage the habitats of loggerhead turtles, gray and humpback whales as well as fishing areas. That mine was promoted by Exploraciones Oceánica S. de RL de CV, a subsidiary of the American Odyssey Marine Explorations. Semarnat also noted the lack of a public consultation on the proposed operation.

The project, which covers an area of 91,267 hectares in the Bay of Ulloa, planned to extract seven million tonnes of phosphate sand annually over 50 years. This would yield some 3.5 million tonnes of phosphorus.

Faced with this denial, in 2019 the corporation sued Mexico for $3.54 billion of lost investment before an arbitration panel under the then North American Free Trade Agreement (which was replaced that same year by a new trade agreement between Mexico, the United States and Canada).

If Mexico fails to win this lawsuit, it could lose its ability to veto extractive projects based on the precautionary principle, which safeguards against innovations that could have terrible human or environmental consequences, even though evidence for those consequences may be lacking.

Several other exploration ventures are underway in the Clarion-Clipperton Zone, an area of the high seas outside Mexico’s national waters that extends over 4.5 million square kilometers – more than twice the size of Mexico’s land area. The zone is thought to contain almost 6,000 million tonnes of manganese, 270 million tonnes of nickel, 234 million tonnes of copper and 46 million tonnes of cobalt.

Mexico did not object to the granting of these permits, according to requests for information made to Semarnat and the Ministry of Foreign Relations, despite environmental activists and academics warning of possible damage to the seabed and fisheries. They urge a moratorium on permits for exploration and extraction.

Meanwhile, there is still no binding agreement on the environmental protection of the high seas.

Lack of clarity in legislation

For Gladys Martínez, a lawyer for non-governmental organisation the Inter-American Association for the Defense of the Environment, it is “worrying” that the International Seabed Authority (ISA), an intergovernmental body, has been providing exploration concessions without scientific rigor.

“There is no governance framework for the high seas. That means that marine protected areas cannot be established and there are no security measures. There are a lot of activities that are carried out without being organized,” Martínez said.

Created in 1994 under the United Nations Convention on the Law of the Sea (UNCLOS), the ISA, headquartered in Jamaica, controls activities carried out on the seabed of waters outside national jurisdictions. It has declared nine areas of environmental interest where permits cannot be granted – one of them the Clarion-Clipperton Zone. The UNCLOS stipulated that the zone and its mineral resources are “the common heritage of humanity." However, in a contradictory move, the ISA wants to use the revenues from mining exploitation, when there are any, for environmental protection.

The intergovernmental body signed 31 contracts for the exploration of polymetallic nodules, sulphides and cobalt crusts with 22 companies in areas adjacent to those protected. The total area granted for exploration covers one million square kilometers.

Contracts have been awarded to companies from the United Kingdom, China, South Korea, Belgium, Germany, France and Japan. Of these, the Beijing-based China Ocean Mineral Resources Research and Development Association (COMRA) owns three, as does the South Korean government. The Beijing-based China Minmetals Corporation has one, as does the Beijing Pioneer Hi-Tech Development Corporation.

The ISA’s annual meeting was due to take place on July 26-30 but it has been postponed.

Uncertain future

Promoters of seabed mining say that the energy transition, which depends upon the manufacture of wind turbines, solar panels and electric batteries, requires cobalt, copper, lithium, nickel and so-called “rare earths," a set of 17 metals of which China and the US are the world’s largest producers.

Violeta Núñez, an academic at Mexico’s Metropolitan Autonomous University and author of Capital Towards the Sea, says: “There is interest from companies to move towards the sea, because the world is going to require it. This is crucial for the clean energy industry. The interest is to advance on those spaces where the world’s greatest mining wealth is.”

While the ISA must approve environmental standards for eventual exploitation permits, the pandemic has stalled progress on a high seas treaty, which would mandate the protection and sustainable use of biodiversity in areas outside of national laws, under UNCLOS.

The fourth meeting of the UNCLOS Intergovernmental Conference is due to be held in New York later this month, following talks that began in 2019. One of the issues that generates friction among countries is environmental impact assessments and the role of a scientific and technical body within the treaty.

The treaty will create a global framework, which is what is needed, according to Martínez. “You cannot talk about marine mining without a global standard. You have to talk about areas outside of national jurisdictions. In Latin America there are several key areas for marine protection, but they require a global standard,” she said.

Emilio Godoy is an environmental journalist based in Mexico.

This article appears courtesy of China Dialogue Ocean and is reproduced here in an abbreviated form. The original may be found here.

The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.