COLUMN | The Metals Company goes full MAGA: subsea miner tilts to Trump as international waters threaten to become the new Wild West [Offshore Accounts]

We all have experienced the frustration of waiting for official approval for something we want, where it’s a visa for a travel to a foreign country, class approval for a modification to a ship, planning permission for a new garage, or an environmental permit for a project. It’s boring and tedious, and the wait can be painful.

If only there was a way to speed up the process...

One company believes it has a solution this problem: change regulator from Kingston, Jamaica, to Washington, DC, for a fast-track win.

The Metals Company is tired of waiting

Publicly listed Canadian seabed miner The Metals Company has faced long delays at the International Seabed Authority (ISA), as member states battle to agree on a mining code for the nascent subsea mining industry. The ISA was launched in 1994 by the United Nations Convention on the Law of the Sea.

The ISA members include every major economy with a coastline except for one: the United States, which never ratified the treaty.

This wrangling at the ISA between environmental scientists, governments concerned about causing irreparable harm to the fragile and little studied deepwater marine environment, and those states seeking to profit from the subsea mining has delayed the commencement of commercial operations by the company.

It has licences to extract harvest gather remove (hoover up?) millions of tons of polymetallic nodules lying 4,000 metres down on the frigid seabed of the Clarion-Clipperton Zone in the Pacific Ocean.

Supported by Nauru, as the sponsoring micro-state of the venture at the ISA, The Metals Company had been hoping to extract and smelt over a million tons a year of nickel, copper, cobalt, and manganese from the nodules, starting this year.

It has proven the mining technology it has developed with Dutch/Swiss contractor Allseas, based around the converted drillship Hidden Gem, and it filed two year’s notice in 2023 that it intended to kick off commercial activity this year, after pilot extraction schemes proved the viability of the technology.

Unfortunately, the Mining Code needs to be agreed first, and this is taking time, with the most recent meeting of the ISA members in Jamaica ending in stalemate last week.

The same controversies and environmental concerns led to Norway pausing its plan to open up its national seabed for commercial-scale deep-sea mining, in December.

It turns out that agreeing on rules for the regulation of subsea mining is quite difficult.

Turn to Daddy Trump

Faced with gridlock in the ISA, The Metals Company's CEO Gerard Barron has found a new source of leverage. Last week, he issued a statement saying that the company was prepared to bypass the ISA entirely.

Instead of seeking approval from the ISA, The Metals Company would seek authorisation from the United States, which is not an ISA member.

“Following successful mining tests by US consortia and pioneering environmental impact assessment by the National Oceanic and Atmospheric Administration (NOAA) in the Clarion Clipperton Zone in the 1970s, the United States Congress passed the Deep Seabed Hard Mineral Resources Act (DSHMRA) in 1980 to enable exploration and commercial recovery of deep-sea minerals in the high seas.

"DSHMRA, along with its implementing regulations completed by NOAA in 1989 and other landmark legislation on environmental protection invoked in DSHMRA, provide a robust, predictable regulatory regime while the International Seabed Authority (ISA) has not yet adopted the Exploitation Regulations in breach of its treaty obligations under UNCLOS and the 1994 Agreement.

"The company has met with officials in the White House and US Congress and is encouraged by interest in the role deep-sea minerals can play in securing America’s supply chain.”

This is consistent with the company’s positioning that battery minerals are a strategic resource for the United States. Andrei Karkar, a major investor in The Metals Company, has highlighted many times on social media that it is strategically placed to support the Trump administration’s focus on acquiring strategic minerals.

"As the US scrambles for friendly supply in the face of overwhelming Chinese dominance, The Metals Company is well positioned to deliver true mineral independence and fill stockpiles of the critical raw materials needed to support homegrown auto, defense and steel industries," Mr Karkar wrote.

This American drive for mineral self-sufficiency has been a major rationale for the President to try to acquire Greenland, and for bullying Ukraine into handing over its natural resources. This culminated with the FY25 National Defense Authorization Act passed by congress, which mandated a Defense Department feasibility study on refining polymetallic nodule-derived intermediates to high-purity nickel, copper, and cobalt products in the United States.

So, the company has set up a US subsidiary and says it will apply to the Commerce Department for approval to commence subsea mining. The message to the ISA seems to be that if they don’t approve the mining, then the company will find someone else who can, in Washington.

I see a few problems with this strategy.

What problems might there be?

The most obvious problem is that all the work The Metals Company has done to date has been with its partners in Tonga and Nauru on its existing licences issued by the ISA. The most prolific and nodule-rich areas of the Clarion Clipperton Zone have already been licenced by the ISA. It is not clear to me where The Metals Company will apply for its new mining permit in Washington.

It has no environmental data outside its existing permits, to my knowledge, and it has contracts with Tonga and Naura to develop those blocks. It is not clear to me how this will work from a legal basis. Will Tonga and Nauru resign from the ISA and seek to accept American oversight of their mineral sector?

Or will Mr Barron just turn up on the blocks and start work without the support of the previous national governments? Maybe backed by a US Navy destroyer so that he “holds all the cards.”

I imagine he has been fielding some calls from the Pacific Islands this week along the lines of “WTF?”

Do the high seas become the Wild West?

What’s to stop China, which has been licenced for five nodule blocks by the ISA, and other countries, following suit?

This could create a "wild west" of self-regulated plunder of the seabed with no oversight. A stampede to grab nodules is in nobody’s interest. If there is a manganese nodule rush, my money is on China doing it better and faster than Mr Barron can.

The Metals Company has a market capitalisation of just under US$600 million now, after its shares surged to US$1.72, but it is still a toddler compared to the multi-billion dollar Chinese state mining companies and their shipyard resources.

There should be a single mining code and a single process that all companies have to follow. The United States is alone amongst developed nations in not joining the ISA, which is precisely why The Metals Company is a Canadian company working with the Pacific Islands within the ISA framework, even if it is US-listed.

Having spent the best part of a decade emphasising the benefits of the ISA regime to support poor countries through mineral royalties, walking away from the process and starting afresh with the US looks like a move designed to pressure the ISA to hurry up rather than a serious and well thought out plan to extract minerals.

Dependence on contractors may be a weakness

Secondly, The Metals Company is dependent on key contractors to perform its work. In the past, these have included Ocean Infinity, a private British company seemingly owned by British nationals, as per Bloomberg; Maersk Supply Service, now part of DOF, listed in Norway; and Allseas, the privately held company with the critical mining mothership.

Already the ISA and its members are saying that mining outside the United Nationals system would be illegal under international law. Mr Barron may be prepared to go it alone with President Trump, but his international subcontractors may be less willing to be accused of colluding in a breach of international law, especially if states opposed to mining are prepared to take them to court in the International Tribunal of the Sea in Hamburg.

Leticia Carvalho, the Secretary-General of the ISA, has made it clear that she believes The Metals Company’s decision is illegal under international law. President Trump has shown a complete disdain for international law, it is true, but foreign companies are far more vulnerable than American ones, and The Metals Company has consistently relied on foreign subcontractors.

At a meeting of ISA delegates last Friday, The Guardian reported that Ms Carvalho said that all exploration and exploitation activities in the area "must be carried out under the authority’s control. Any unilateral action would constitute a violation of international law and directly undermine the fundamental principles of multilateralism, the peaceful use of the oceans and the collective governance framework."

Is The Metals Company really going to go there?

Why is Mr Barron in such a hurry?

Nobody likes delays, especially not individuals or companies which are running out of money.

At the same time that Mr Barron announced his “come to MAGA moment,” he also announced The Metals Company’s full year 2024 results. They were ugly. There is a cash crunch approaching.

US$13.8 million cash was used in operations for the quarter ended December 31, 2024 and the company reported a net loss of US$16.1 million for the fourth quarter and a full year 2024 net loss of US$81.9 million (compared to a net loss of US$73.8 million in 2023.)

The Metals Company is now reliant on funding from Mr Barron and ERAS, Mr Karkar’s investment firm. They have lent the company a couple of million dollars already and have granted a lending approval (named the “ERAS/Barron facility”) of up to US$44 million, of which US$41.5 million remains available.

There’s no cash from operations and no prospect of any cash from operations until the Mining Code is agreed, and in order to begin operations, the company’s vendors will need to grant credit or additional equity will need to be raised.

At December 31, 2024, the company held cash of approximately only US$3.5 million, barely enough to pay for an Ocean Infinity spread for a month, and it had short-term debt of US$11.8 million, with an affiliate of Allseas (US$7.5 million) and with the Barron/ERAS unsecured credit facility (US$4.3 million). Unless it can start mining soon, The Metals Company will either have to dilute its own shareholders with a huge capital raising or risk insolvency. 

If it needs to do new surveys on new areas for exploration under US regulatory approval, where will the funds come from?

So where does this end?

Mr Barron’s backstory is interesting, as this piece from Mining.com in 2017 highlights. He was an angel investor of the pioneering underwater mining company Nautilus Minerals in 2001, and he made a one hundred-fold return on his investment, as well as millions of dollars from the sale of an online services company named AdStream, which he also founded. In 2007, Nautilus listed and raised over US$400 million, and Mr Barron exited.

Nautilus subsequently went bust amid similar environmental controversies about hacking into subsea hydrothermal vents. The bankruptcy cost the government of Papua New Guinea US$157 million (full details here) and there were farcical elements, as a Nautilus employee “accidentally” transferred US$10 million of the company’s final money to a cyber scammer in early 2015.

But from the ashes of Nautilus, a phoenix arose – a new company named DeepGreen, which the founder of Nautilus and Mr Barron set up and used to acquire Nautilus’ subsea nodule licences in the Clarion Clipperton Zone. DeepGreen was the foundation of The Metals Company before it listed via a special purpose acquisition company in 2021.

If there is a creditor debt for equity swap, who wins?

To me, the most telling line in The Metals Company’s 2024 results was the line about the company borrowing from Mr Barron and Mr Karkar’s ERAS. If The Metals Company were to go bust, heaven forfend, as the main creditors, they might, in some circumstances, be able to acquire its assets.

Who would have guessed? Third time lucky for Mr Barron, perhaps?

Even if The Metals Company can get the green light to proceed from the ISA, or the Americans, it will need to raise additional capital.

Mr Barron has cleverly switched to resource nationalism, emphasising that the United States cannot and should not be dependent on foreign-sourced battery metals.

As we highlight above, however, this is a dangerous strategy for a Canadian company run by an Australian from Queensland dependent on foreign subcontractors.

Firing the starting pistol on a global grab for minerals on the seabed threatens to start an unregulated gold rush that Mr Barron (and his long suffering shareholders) may yet regret.

And finally…. fake Insurers busted in Oslo

If you only read one other marine story this week, read Michelle Weise Bockmann and Danwatch’s devastating investigation into the fraud perpetuated by Ro Marine, a shell insurance  company purported registered in Norway but in reality controlled by a Russian businessman based in Saint Petersburg and a Bulgarian board member.

Ro Marine issued fake insurance papers (blue cards) to show that vessels held the relevant compulsory civil liability insurance against oil pollution. These papers were then used to obtain certificates of compliance from the vessels’ flag states under the Civil Liability Convention 1969 or 1992 (CLC). The flag authorities did no checking of the validity of the underlying insurance. Surprise!

That oil spill insurance did not really exist, and flag states were duped by the Ro Marine blue cards. The blue card documents were then used by dark fleet tankers to justify transit through littoral waters in the Baltic and elsewhere.

If there had been an accident, there was no insurance cover in place to pay for the clean-up of any oil spill. Now four people, including two Norwegians, have been charged by Norwegian police with forgery and issuing illegal insurance papers, after a raid in Oslo.

The case only came to light when a Ghanaian insurance manager wrote to the Norwegian financial authorities to check the credentials of the insurance cover he was looking at buying. didn’t look right to him, and it wasn’t right, even though Baltic coast guards were accepting the spurious paperwork when checking the paperwork of tankers.

The dark fleet is a major risk

We highlighted in October in our piece “The Dark Tanker Fleet and its insurance: how a major oil spill may not be covered” that many of the aged tankers in the dark fleet that transport Russian, Iranian and Venezuelan crude oil lack sufficient insurance to meet the clean up costs of a spill. But we never expected there to be no insurance whatsoever.

Once again, the dark fleet never fails to surprise, and never in a good way.

We reiterate that flag states need to up their game and stop collecting money for doing nothing. They should not be issuing Civil Liability Convention 1969 or 1992 certificates based on blue cards issued by fake or non-existent insurers, and if they are, then they should be liable.

It is only when the governments of Sao Tome, Comoros and Gabon and other, similar dark fleet registries are held accountable for the actions of the private companies operating ship registries in their names that this shameful situation will change.

Does there have to be a major environmental disaster before the IMO compels its members to do their jobs properly? Unfortunately, it seems so.

In the meantime, the authorities in the Baltic, and the Bosphorus and the Strait of Malacca should be doubly vigilant regarding the insurance of the oil laden rust-buckets transiting their waters. Check and detain if necessary.

From Russia… with oil, with love, and with fake documents. Well done, Michelle and team.

Background reading

We have covered at length the extensive debates on how the potentially billions of dollars of royalties and fees generated from the activity should be paid, or allocated “for the good of humanity” in the words of the ISA. We covered how the ISA’s previous ISA Secretary General Michael Lodge tried to sue critics who called him a “cheerleader” for subsea mining, and we have covered the extensive scientific debate on the deepwater ecosystems in which the polymetallic nodules are found.

Our full back catalogue of The Metals Company stories is here.

Our earlier three pieces on the dark fleet provide a good overview of the challenges facing flag states and the IMO – a world where private companies run open registries like the Cook Islands, Gabon and Sao Tome, providing what are often referred to as “flags of convenience” to the owners of aging and often unsafe vessels trading sanctioned cargoes, switching flag and changing class to stay ahead of regulators.

Part I: flag state responsibility should be flag state liability 

Part II: who profits from these sanctions-busting ships?

Part III: Palau, the Cook Islands and the Swedbank precedent