In late June, Japanese researchers found around 230 million metric tons of critical minerals on the seabed within Japan’s Exclusive Economic Zone. The resources include enough cobalt to meet the country’s consumption needs for 75 years and over a decade’s supply of nickel. These minerals are crucial components of electric vehicle car batteries central to the low-carbon energy transition.
This discovery is also good news to critics in the West anxious to strip China of its monopolistic control over supply chains for components crucial to high-tech goods and defense technologies.
Despite the apparent benefits, there are significant legal gaps and technological limitations that must be addressed before this mineral wealth on the seafloor can be brought to market.
Deep Sea Mining and Critical Mineral Supply Chains
Chinese companies control 70 percent of the global supply of critical minerals and 90 percent of the processed supply. China’s dominance of the global market has proven to be a national and economic security risk for Japan, whose high-tech industry makes it the world’s second-largest consumer of rare earth metals, following China itself.
Over the past three decades, China has periodically withheld its supply of rare earth minerals to Japan and the global market. In Japan’s case, the export ban came as retaliation for territorial disputes in the East China Sea. In 2009, a Chinese fishing vessel rammed two Japanese Coast Guard vessels in waters near the disputed Senkaku Islands, known in China as the Diaoyu Islands. Japan’s Coast Guard arrested the captain and crew. In response, China curbed its rare earth elements exports to Japan, which at the time compromised 80 percent of Japan’s supply. The crisis prompted legal action by the U.S., Japan, and EU in the World Trade Organization and led the West to scramble to “de-risk” the international supply chain from Chinese retaliation.
Japan’s recent discovery of deep seabed critical minerals is located within the EEZ of Minami-Torishima, a small coral atoll located 1,848 km southeast of Tokyo. This atoll is of strategic importance because it allows Japan to claim a 428,875 square kilometer EEZ. Deep-seabed mining is permitted within these Exclusive Economic Zones.
According to the United Nations Convention on the Law of the Sea (UNCLOS), deep seabed mining will not be permitted in international waters until the International Seabed Authority – an institution under the purview of the United Nations that administers permits to mine the seabed floor – promulgates a Mining Code to regulate standards for environmental protection and legal liability. It is expected to be finalized in July 2025.
Environmental Damage and Risk Associated with Seabed Mining
That’s the good news. However, the Mining Code has been delayed for so long – despite states possessing the technological capabilities to mine the seabed for some time – because there is significant environmental risk and uncertainty associated with seabed mining.
The seabed is a home for a highly sensitive ecosystem that has developed over millions of years. The digging, pollution, and noise associated with seabed mining are expected to cause irreversible disruptions to the ecosystem. The extent of the damage caused is not known because of how under-studied the depths of the oceans are.
In a single 2023 study of the Clarion-Clipper Zone, a seabed in the Pacific Ocean targeted for mining, identified more than 5,000 new species living in the deep-sea habitat. The speed of discovery in this region demonstrates how little scientists know about this ecosystem, and thus how mining activities will affect the seabed in the long term.
Dozens of states, alongside hundreds of environmental NGOs, have banded together to protest the initiation of deep seabed mining. So far, they have been successful in halting international activities. However, it is likely not a matter of if but when such activities will occur, given the economic incentives motivating exploration.
Should Japan start mining in its EEZ, it will likely face significant pushback from civil society in Japan and around the world. The Japanese government and industry will need to consider the environmental risks associated with such activities – or wait until there is greater certainty of the risks to begin production.
Economic Uncertainties and Geopolitical Considerations
Cobalt is a valuable component of high-performing batteries, including those used in EVs. Cobalt-made batteries have the highest discharge capacity, and as a result, greater voltage and better performance than substitute materials.
Currently, 70 percent of the world’s cobalt supply comes from the Democratic Republic of the Congo. The majority of this supply comes from large-scale operations that are Chinese-owned. However, about a third of the supply is produced by artisanal mining. Artisanal miners hand-dig and hand-process the ore in extremely dangerous and unregulated conditions, often involving child labor.
Due to the geopolitical implications and significant human rights abuses associated with cobalt mining, many car companies are experimenting with alternative materials. Chinese EV giant BYD has pioneered the use of cost-effective sodium-ion batteries.
At present, manufacturers would likely welcome cobalt supply diversification considering China’s current domination of the world’s supply and increased scrutiny over cobalt sourced from the DRC. But should more automakers follow BYD’s lead and move away from cobalt entirely, an expensive and environmentally damaging gambit to mine cobalt from the deep seabed may turn out to be a bad bet.
Rapidly evolving technologies in the renewable energy sector can make affordable products come to market quickly and change the cost basis for opting for traditional solutions. If sodium-ion batteries continue to improve at current rates, the market for cobalt will shrink substantially and any capital stock in deep-sea mining operations – in Japan or elsewhere – will become stranded assets.
Final Considerations and Alternatives to Deep Sea Mining
Japan and its Western allies have other opportunities to secure critical mineral supplies without relying on economically unpredictable and environmentally destructive seabed mining.
For cobalt and lithium specifically, many alternative and more accessible reserves exist. Since the mining industry is highly cyclical, miners tend to prefer high-purity ores. The ease of extraction has brought investments en masse to the DRC. However, the cost of developing technology to reduce the cost of purifying lower-grade cobalt ores from other locations may fall far lower than those associated with pioneering deep-sea mining.
Improvements in refinery recovery efficiency have already opened up greater potential for lithium mining. The mining industry is also eager to adopt new technology given increasing investor scrutiny over ESG standards and mounting disclosure requirements imposed by stock exchanges in Hong Kong, Shanghai, London and EU capitals.
Western allies have an opportunity to de-risk supply chains by incentivizing the development of technology to improve the cost-effectiveness of purifying low-grade ore. Governments can also support investors in establishing processing facilities without Chinese investment throughout Southeast Asia and the Americas, all the while continuing to promote international standards of environmental and labor rights protection throughout the critical minerals supply chain.
Such investments are necessary to scale down global greenhouse gas emissions and address rising geopolitical tensions while continuing to protect vulnerable ecosystems and communities from the localized effects of mineral mining.