The Easter story shows the faithful that, even during the darkest times, new beginnings and even miracles are possible, so in part one earlier in the week, we looked at what could be described as the faith-based exercise to try to rebuild American shipbuilding.
President Donald Trump has to balance the tough task of trying to revive an uncommercial and run-down industry with the practical need to actually build icebreakers for his Arctic security agenda.
But nothing short of a miracle is required in three other cases we cover this week.
Three weeks ago, we warned that the decision by The Metals Company to seek subsea mining licences in international waters from the United States government directly, rather than adhering to the process set out by the International Seabed Authority (ISA) (which the company had previously been following), might trigger a scramble for lucrative minerals extraction in the deep ocean.
Two recent events suggest that this risk has only increased.
Firstly, Norway’s Loke Marine Minerals went bust.
No surprise there. Whilst industry leader The Metals Company has seen its stock price triple since December, it remains perilously short of cash and dependent on shareholder loans, despite its current US$1 billion market capitalisation.
This is an industry where nobody has any commercial revenue yet and has never had any.
Founded in 2019, Loke claimed on its website that TechnipFMC, Wilhelmsen and Kongsberg were technology partners and investors. TechnipFMC invested in 2021, but never disclosed how much cash it had put into the business or what shareholding it had taken.
Loke just ran out of funds having acquired two licences issued by the ISA to explore for mineral-rich polymetallic nodules in an area covering 133,000 square kilometres of the Pacific Ocean through a British subsidiary that Loke acquired from American defence contractor Lockheed Martin in 2023, along with a 19.9 per cent stake in Ocean Mineral Singapore.
Ocean Minerals is a subsidiary of Singapore's Keppel Corporation and this company also holds a Pacific Ocean polymetallic nodules licence from the ISA. Watch this space to see whether Keppel succeeds here.
Loke was also seeking to win licences in the Norwegian exclusive economic zone from the Norwegian government, awards that were suspended in December after an environmental backlash against the government. The company blamed the ISA’s failure to agree to a mining code in a timely manner for its final failure, as per the Financial Times.
The bankruptcy began an auction process for the two exploration permits that were issued with the support of the British Government as the sponsoring state at the ISA. Lockheed Martin needed the British Government to sponsor it due to American failure to ratify the UN Convention on the Law of the Sea treaty, which means the US is not an ISA member.
Now, national security considerations have predictably come to the fore. The UK Government is threatening to reject the transfer of the licences unless the winning bidder can pass review under Britain’s National Security Investment Act. An official wrote to the CEO of Loke to politely make a suggestion:
“We would strongly suggest that you investigate restructuring as a UK holding company as a priority.”
Incredibly, Greenpeace then apparently entered the auction to see what was happening. The move suggests that the pressure group is considerably more savvy than the individuals running the restructuring process.
The ecological activists were able to sight a pack of documents between the company, the ISA and the British Government, and were apparently informed that other bidders included Loke’s founders and TechnipFMC. We had previously warned that if The Metals Company did restructure, then the founders could simply take over the business’ assets using the leverage of being the only creditors to the company via the shareholder loan.
A revival of a new Loke under its old founders or one of its shareholders seems possible, then. Watch this space.
No sooner has The Metals Company decided it would apply for a licence in international waters in the Pacific from the United States Government than its rival, Impossible Metals, went one better, at least from a legal point of view.
Last week, Impossible Metals submitted a request to commence a leasing process for exploration and potential mining of critical minerals in the deep sea off the coast of American Samoa.
Impossible Metals is the first company to request a lease of critical minerals under the Outer Continental Shelf Lands Act of 1953, which is regulated by the US Bureau of Ocean Energy Management, part of the US Department of the Interior. This is important because it cannot be challenged by the ISA, and is certainly within current legal and regulatory norms.
I suspect in the "wild west" mentality, which is starting to envelop the sector, this application will not be the last. Look out, seabirds of Midway Island; you are likely to be caught in the middle of a metaphorical gold rush and a literal manganese rush.
The Trump administration has stated that it wishes to break its dependence on China for critical minerals, and American waters in the Pacific will be a likely focus for this ambition, notwithstanding the environmental challenges and the high cost of deepwater mining operations.
"Drill, baby, drill" will likely become "Dredge, baby, dredge."
We should emphasise that Impossible Metals is at a much earlier stage of development than The Metals Company, although one of the early staff members from The Metals Company’s predecessor DeepGreen, Peter Jantzen, joined Impossible Metals last year.
The Metals Company has proven that it can mine thousands of tons of polymetallic nodules from its Allseas-owned mothership Hidden Gem successfully in waters down to 4,500 metres.
Impossible Metals has demonstrated the capabilities of their its Eureka II autonomous underwater vehicle (AUV) in a successful deep-water test a year ago.
However, tests of the next model AUV Eureka III using the German state research vessel Sonne have been postponed from early next year, as the AUV seems not to be ready, and from the footage it is not at all clear how this system could be scaled, anyway.
The Eureka AUVs feature what Impossible Metals says is, “precision selective harvesting technology and life detection algorithms,” complete with a buoyancy engine, a fast underwater robotic arm, and an AI-driven computer vision system.
Unfortunately, attempting to move from developing prototype AUVs to funding the necessary surveys and capital expenses for a full scale, industrial mining operation in over 4,000 metres of water is a massive undertaking.
I believe that Impossible Metals will have to either sell itself to a deep-pocketed corporate sugar daddy, or face a funding crunch like Loke. Call me a doubting Thomas.
Another organisation seeking resurrection is Britain’s troubled engineering and maintenance contractor the Wood Group.
Seven years ago, the company was valued at over US$6 billion. Now it is for sale for less than US$330 million and directors have indicated that they will try to turn the one “non binding” offer on the table into a binding proposal.
We have extensively covered Wood’s woes, and we have seen the group pay US$177 million in fines for legacy bribery and corruption problems in one subsidiary, lose its CFO because he made incorrect statements about his professional qualifications on his resume, and two failed attempts to sell the company.
In, 2023 Wood was nearly acquired by American private equity group Apollo, and then Dubai-based Sidara made an approach in 2024. Each one valued the equity of the business at over US$1 billion.
When Sidara abandoned its bid, it blamed global market turmoil and geopolitical risks. Clearly, those have gotten worse in the intervening period (which makes 2024 look like the calm before the storm).
But one thing has improved: the price of Wood, which plunged in January after a profit warning. It was a loss warning, actually, as there likely won’t be any profit this year, it turns out.
Now Sidara is willing to pay just 35 pence a share for Wood, 85 per cent less than it offered last year. This values the equity in the company at £242 million (US$324 million), although there is also an additional US$1.1 billion of debt that will need to be refinanced.
This weekend, we saw the best ever Wood-related headline in Scotland’s Press and Journal: “Former Wood Group director slams ‘screw up’ of perfectly good business.”
Mike Straughen, the former head of the Wood Group’s engineering division, told the Aberdeen paper of record that the company’s downfall is result of ‘very poor judgement’ at the highest levels.
Good to see that Roman governor Pontius Pilate is not the only person to wash his hands of a problem at Easter.
But this being the UK, do we seriously expect anyone to be held accountable?
When publicly listed outsourcing and construction company Carillion went bust in 2018, with 19,000 British staff and over US$1.5 billion of debt, the only consequences were two former finance directors being barred from serving as directors.
Nobody had to pay back their bonuses and nobody went to prison, even though the company’s financial statements were found in court to be misleading to the tune of around US$250 million for the financial year 2016, which resulted in Carillion paying out a large dividend just seven months before it went into liquidation.
The best outcome for the Wood Group's staff and shareholders is to take Sidara’s money. They should have taken the 2024 offer, but with hundreds of millions of debt due for refinancing, a sale to the Middle Eastern buyer is the best outcome to secure the continuity of the business, especially if Sidara is true to its commitment to reinvest in the company after the acquisition.
Bidders often say this, so Doubting Thomases are right to be sceptical until the investment is actually made.
Sadly, Wood is not the only Scottish company with accountability issues.
Now that the first of the long delayed and massively overbudget Scottish ferries from Ferguson Marine shipyard on the Clyde has entered service seven years late, you would have thought the people of the west coast and the islands would be delighted. Unfortunately, this is not the case.
Despite having nine years to prepare for the arrival of the first ferry, nobody got around to upgrading Ardrossan Harbour to accommodate the new ferry Glen Sannox. That vessel currently sails to the Isle of Arran from Troon in South Ayrshire, as it is too big for Ardrossan, which currently has no traffic.
The other ferry serving the port has been out of service for three months, with at least another month of repairs to run. Predictably, the impact on local businesses has been devastating.
The Scottish Government is in secret talks to buy the port (another set of discussions where US Defense Secretary Pete Hegseth needs to create a public group chat) as at least US$100 million of modifications will be required to accommodate the new Ferguson ferries. Peel doesn’t seem to want to make that investment, or can’t.
Earlier this month, locals from Ardrossan staged a protest sailing.
If the Scottish model is anything to go by, the Americans shouldn’t just worry about shipbuilding fiascos; there will also be screw ups in the ports. The words attributed to Jesus on the cross in the Gospel of St Luke (23:34) do seem to resonate here:
“Father, forgive them, for they do not know what they are doing.”
And unfortunately, everyone else has to pay the price.
Background reading
Surprise! Impossible Metals and its CEO and co-founder Oliver Gunasekera believe that the United States should create a stockpile of polymetallic nodules. Well, they would say that, wouldn’t they, given Impossible Metals has licences to mine… polymetallic nodules?
As we have seen in Europe with various forms of green energy, nothing excites corporate leaders more than the prospect of state hand-outs.