Research reveals minimal financial gains for governments and high environmental cost of deep sea mining

Planet Tracker previously highlighted the negative environmental impacts of deep sea mining – but there’s another factor to consider – the minimal financial benefits for countries do not outweigh these negative impacts on the planet.

• Countries are unlikely to see significant financial benefits from deep-sea mining corporate income tax and royalties, estimated at an average of $42,000 to $7.35 million each annually.

• Planet Tracker urges governments and investors to consider the potentially vast and irreparable environmental damage and financial risk and support a moratorium on deep sea mining.

As the International Seabed Authority (ISA) is currently debating whether to allow deep sea mining in international waters, Planet Tracker’s latest report – Race to the Bottom – analyses the taxes and royalties countries could receive, revealing insignificant economic returns.

According to Planet Tracker, there is no financial justification for deep sea mining, yet the environmental impact is vast. Planet Tracker’s previous research indicates that deep sea mining would cause significant, permanent damage to deep sea ecosystems and the broader ocean systems they support.

Even in the most optimistic scenarios, the report reveals that countries could earn up to US $6.25 million each in annual corporate income tax, an insignificant contribution to government revenues for almost all countries. The report finds that actual income may be negligible, as deep sea mining companies are unlikely to be profitable and the current tendency is to exclude corporate income tax from sponsorship agreements.

On top of this, ISA Member States are likely to receive only a small amount of royalties from deep sea mining – US $42,000 – $1.1 million per year each, a trivial amount in comparison to the size of all but a few national economies. The report also highlights that these royalties could be subject to unlimited reductions from the ISA, making it likely that the ISA’s royalty fund will be too small to distribute any money directly to Member States.

“Deep sea mining is expected to offer minimal financial returns to ISA Member States,” says Emma Amadi, Investment Analyst at Planet Tracker. “Countries do not own deep sea mineral resources in international waters and companies can seek sponsorship from any ISA Member State, leading to a race to the bottom when it comes to corporate income tax.”

A further report on the topic – Mining for Trouble – released by Planet Tracker simultaneously, highlights that deep sea mining will also negatively affect countries that mine copper, cobalt, nickel and manganese on land, risking over US $560 billion in annual export earnings per year in total for these countries.

Planet Tracker urges governments and investors to support a moratorium on deep sea mining to address widespread environmental concerns over deep sea mining and its irreversible impact on deep sea ecosystems.

Read the full Race to the Bottom report here.

For more information, please contact:

Izzy Schaw Miller, ESG Communications

+44 7905 619881 | izzy@esgcomms.com  

ABOUT PLANET TRACKER

Planet Tracker is an award-winning non-profit financial think tank aligning capital markets with planetary boundaries. Created with the vision of a financial system that is fully aligned with a net-zero, resilient, nature positive and just economy well before 2050, Planet Tracker generates break-through analytics that reveal both the role of capital markets in the degradation of our ecosystem and show the opportunities of transitioning to a zero-carbon, nature positive economy.