WWF and BMW call for deep-sea mining ban
Four leading global companies have announced their support for a global moratorium on deep seabed mining. Initiated by BMW Group and WWF, and signed by Samsung SDI, Google and Volvo Group, the companies have joined those concerned by the potential for significant risks to economies and to ocean health that could arise from opening up the deep seabed to extraction of minerals.
“Despite uncertainties and risks to the future health of our ocean and to those who depend upon it for food and jobs, there is increasing pressure from a few companies to begin mining the deep seabed. With much of the deep-sea ecosystem yet to be explored and understood, such activity would be recklessly short-sighted,” the companies stated.
Calls for a global moratorium on deep seabed mining are coming from diverse actors, including scientists, communities, the fishing industry, political leaders, NGOs including WWF, and now also from companies. By committing to this public statement, the signatories pledge not to source any minerals from the deep sea, and to refrain from using mineral resources from the deep sea in their supply chains and not to finance deep-sea mining activities.
Mining the ocean floor has been positioned as an alternative to land-based mining to meet demand for the minerals, such as cobalt and nickel, required to support the green energy transition. Deep-sea mining companies are focused on harvesting polymetallic nodules found in the mud layers of the seafloor which are also rich in copper manganese and rare earths
"WWF is calling for a moratorium on deep seabed mining. We welcome this important step, and call on other companies who care about the ocean to join these leaders by signing on to the statement. It is a clear message to those who are swayed by the false promise that deep seabed mining is a ‘green’ and attractive investment proposition. It is not so," said John Tanzer, Global Ocean Leader, WWF International.
Regulations to support deep-sea mining have yet to be agreed upon by the International Seabed Authority (ISA). The UN-backed body of 167 countries has already issued exploration contracts to 21 companies, but they cannot begin this type of mining operation until the regulation is passed.
BHP deliberates ditching fossil fuels for greener mining
The world’s biggest miner, Australian-based BHP, is supposedly considering withdrawing from a multi-billion dollar contract, which would see the company generate more than US$2bn due to mounting pressure over aligning its business with ongoing climate concerns and ESG-compliance measures.
Exiting the agreement would mean BHP escalate its distancing from oil and gas and subsequently cut down on the amount of fossil fuels used by the company when mining.
It’s estimated that the petroleum business being debated upon could actually be worth around US$15bn but is still under talks to be put up for sale.
Global Mining Giant Considers Greener Future
BHP has made itself clear that it wants to avoid becoming unable to sell its assets. As competition within the market increases following higher numbers of oil giants wrestling with investors to deal with climate pressure, so too are the number of mining rivals looking to make environmental changes for the future.
However, BHP currently has the upper hand as a stalwart mining company that established itself back in the 1960s, allowing it the time to grow and dominate over other fast-appearing mining competition.
Mike Henry, BHP Chief Executive, has an optimistic outlook for the future of oil and gas despite worries over rising demand to align his business with the Paris Climate Agreement. Henry argues that prices remain promising due to a lack of industry-wide investment.
BHP’s petroleum business won’t be easy to say goodbye to. Forecasted to generate around 6% of profits during the ongoing financial year (US$2bn), and around US$1.6bn revenue produced by BHP petroleum in the six months leading to December 2020, BHP is due to take a hit no matter what agreement they choose.
On the other hand, distancing itself from thermal coal and petroleum would arguably aid the company’s case to possible - and valuable - investors who may be required to fund BHP’s increased output to places such as Australia and Mexico in the near future.
BHP considers cutting billion-dollar contract to aid climate
An exit away from petroleum has the potential to be “a powerful corporate catalyst,” says Dominic Kane, Analyst at JP Morgan.
“We believe an exit would likely ring-fence BHP’s exceptional cash flows for non-fossil fuel organic growth, mergers and acquisitions and generous shareholder distributions since BHP could avoid a major new capital investment phase this decade in petroleum.”
BHP is also set to sanction a giant US$5.7bn Canadian potash mine in August of this year, already seeing potash as a long-term substitute for gas and oil going into the future. The company has also previously announced plans to abandon its 80% share in its joint endeavour with Mitsui, owner of two lower-quality mines in Queensland, Australia.
BHP is scheduled to report its annual results on August 17, after which it may become clearer on whether the company will choose to focus its shift to a low-carbon economy or whether it will stay with its current contract into the coming year.