Article

Seabed Mining in Exclusive Economic Zones: Key Considerations for Investors, Mining Companies and Regulators8 January 2025

Introduction

The seabed contains a range of mineral resources, some of which are critical to the net zero transition, as well as offering significant economic opportunities for governments and industry. Work to recover and develop these resources in international waters continues to progress, with the International Seabed Authority (“ISA”) hoping to adopt regulations for the exploitation of mineral resources in international waters in 2025 and contractors keen to commence commercial operations in the near future. At the same time, several governments are examining the potential opportunities presented by seabed mineral resources in their Exclusive Economic Zone (“EEZ”) which are subject to their jurisdiction. The ISA’s work has several points of relevance for the conduct and regulation of seabed activities in EEZs. There are also a range of regulatory and legal issues that investors and companies seeking to participate in such operations should be mindful of.

"One of the key resources that is of commercial interest are polymetallic nodules, which are typically found at depths of around 4 to 6 kilometres from the sea surface."

In this article, we examine recent seabed mining developments in EEZs, highlight the importance of regulatory alignment with international processes, set out some common concerns that companies should be attentive to when evaluating different jurisdictions and explain how investors can minimise risks to their investments in EEZ seabed mining projects.

What is seabed mining?

Seabed mining refers to the recovery or extraction of minerals and resources from the seabed. One of the key resources that is of commercial interest are polymetallic nodules, which are typically found at depths of around 4 to 6 kilometres from the sea surface. These nodules are rich sources of copper, nickel, cobalt, iron, manganese and rare earth elements. Other resource sources on the seabed are seafloor massive sulphides and cobalt-rich crusts.

Seabed mining can take place in international waters (which is regulated by the ISA) or within maritime zones where coastal States have certain rights, such as territorial seas, EEZs or continental shelves. The EEZ is an area of the ocean extending 200 nautical miles from each coastal State’s baseline or coast. Under the United Nations Convention on the Law of the Sea (“UNCLOS”), coastal States have jurisdiction over living and non-living resources within their EEZ and the sovereign right to explore, exploit, conserve and manage the natural resources of their EEZ’s seabed.

Recent developments

Significant and promising deposits of seabed resources have been identified on the seabed in the EEZs and waters of the Cook Islands, Papua New Guinea, Norway, Japan, Oman and several other States. Recovery and commercial use of resources from EEZs is governed by the domestic legislation and regulatory regime of the relevant coastal State.

Recent years have seen active preparations by several coastal States to enable the exploration within, and eventual recovery of mineral resources from, their EEZ. This includes:

The Cook Islands, which is a leader in the development of a domestic seabed mining industry. In 2022 the Cook Islands Seabed Minerals Authority granted three exploration licenses for nodules within its EEZ, which provide for a five-year exploration phase of activities. The Cook Islands has also passed regulations on the “harvesting” of nodules but has said its decision on whether to allow mineral harvesting will depend upon further scientific research and environmental impact assessments;
Norway, which has carried out subsea surveys in its EEZ since 2011 and has had specific seabed mining legislation since 2019. In 2024 the Norwegian Parliament voted to allow exploration to commence in its EEZ, with the primary resources likely being seabed massive sulphides and cobalt-rich crusts. While the first exploration licenses were expected to be issued in early 2025, the Norwegian government recently announced a delay to this timetable with licenses now more likely to be awarded in 2026;
Sweden, which granted an exploration permit for nodule deposits in the Bothnian Bay in 2023. The permit holder is planning to commence small scale nodule harvesting this year, with full production expected to start from 2028; and
Japan, which has a lengthy history of involvement with deep seabed mining work and has indicated it would like to see mining commence in its EEZ by the late 2020s. Japan has had a range of exploration and research activities undertaken within its EEZs, including multiple small-scale mining tests.

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"Engagement with regulatory consultation processes can help inform the regulatory choices taken by governments and address issues."

International law implications for EEZ operations

In addition to specifying that coastal States have sovereign rights regarding the mineral resources on the seabed within their EEZ, UNCLOS also imposes obligations upon States when considering how they will exercise those rights.

In particular, as we covered in a previous Insight, Article 208 of UNCLOS obliges coastal States to ensure that their regulation of seabed activities within their jurisdiction is at least effective as the international rules, standards, and practices and procedures being developed internationally in regard to preventing, reducing and controlling pollution of the marine environment. The key source of such international guidance is the work of the ISA and its regulations governing activities in the Area. It is also important to note that additional obligations apply regarding activities that take place on a State’s continental shelf.

Beyond the legal requirements under UNCLOS, ensuring that a State’s seabed regulatory regime aligns with the work of the ISA also helps to:

reduce duplication of efforts given the extensive expert work that has been undertaken in ISA bodies such as the Legal and Technical Commission;
ensure the domestic regulatory regime reflects international best practice, including in terms of environmental protection and oversight of seabed activities; and
enhance the attractiveness of a State for investment by companies operating or engaged in activities in multiple jurisdictions or under the auspices of the ISA, by aligning requirements and standards used.

Common concerns for investors and companies

For companies looking to establish or invest in EEZ seabed activities, early engagement with regulators and States regarding their design and approach to regulation can be key.

Engagement with regulatory consultation processes can help inform the regulatory choices taken by governments and address issues such as:

overly complex or unclear approval processes, including requirements to apply through multiple agencies, uncoordinated timeframes and requirements, or a lack of objective criteria for assessing applications;
lengthy or unspecified timeframes, which can reduce the certainty regarding when decisions will be made;
duplicative or irrelevant documentary requirements, including requirements to disclose sensitive or information from sub-contractors or other sources that is not available to the applicant;
the use of unrealistic or inappropriate standards, including technical standards that are not reflective of seabed mining or industry best practice; and
overly burdensome financial, insurance or indemnity requirements.

"Fostering an informed and collaborative relationship between government and industry will be essential to unlocking the potential of EEZ seabed mining."

Supporting governments in the development of their regulatory regimes through stakeholder consultation processes can help ensure a smoother and more efficient operating environment and also help States to improve their overall attractiveness for investment and the effectiveness of their regulatory regime.

Investment protections and dispute settlement options

Investors and companies operating within domestic jurisdictions should also carefully consider what protections may apply to their investments and what dispute resolution options are available should there be unanticipated and adverse regulatory changes. While disputes are always preferably avoided, having and being aware of these rights can be useful in early engagement and negotiations with host governments regarding regulatory issues.

Given the international nature of this sector, investment protections under international investment treaties can be useful tools for minimising sovereign risk and avoiding regulatory instability. Further, ensuring the availability of international arbitration for enforcing these protections, rather than being forced to rely on only domestic administrative or legal proceedings, is key.

Common avenues for accessing investment protections and international dispute settlement options include:

through investment treaties or trade agreements, if the host State is party to such agreements;
legislative protections that allow for foreign investment to have recourse to appropriate forms of international arbitration to resolve disputes; and
Host State agreements between the investor or company and the host government.

Each of these options requires careful consideration early in the life of the project to minimise any risks and uncertainty. For Host State agreements, the relevant protections and dispute settlement clauses must be carefully drafted to ensure they are effective and enable the investor to access the most appropriate form of international arbitration. For treaty-based protection, there may be multiple available treaties or corporate structures available for an investment that need to be properly analysed to determine which is most appropriate and effective for a given project.

Conclusion

The on-going development of seabed mining within EEZs is set to quickly advance in the near future. This presents both opportunities and challenges for mining companies and investors, as well as governments putting in place new, novel and evolving regulatory regimes.

As coastal States continue to mature their regulatory frameworks, ensuring their alignment with international standards, particularly those set by the ISA, can enhance their efficiency and help attract investment. Interested companies and investors should also be looking to proactively engage with governments to help improve regulatory processes and outcomes. They should also be considering options to ensure they can access investment protections and international arbitration to reduce the risks associated with these investments.