Deep sea mining projects, particularly for extracting manganese nodules, have been identified as a costly investment. In a recently published report, Koinon analysts examined the profitability potential of these projects, referencing the investment drafts of two projects owned by The Metals Company.
Economic and Environmental Risks
This study, supported by five non-governmental organizations and foundations opposing the rapid commercialization of deep sea mining operations, shows that high operational costs and environmental risks could lead to the unprofitability of these projects. Koinon analysts conducted 10,000 simulations on various scenarios, and the results indicate that in 60% of cases, the net cash flow of the projects was negative.
Significant Findings
According to this report, the likelihood of loss recovery in the mentioned projects is estimated at 83%, and their net present value reaches -5 billion dollars. While The Metals Company has projected that these projects could yield 23 billion dollars in profit, Koinon's analysis clearly shows that financial and environmental risks could impact these projections.
Koinon states that the initial costs of the mineral collection system are recognized as the main factor in profitability. Estimates suggest that the actual costs of this system may be 1.9 times higher than the company's estimates. These additional costs could significantly affect the profit margins of the projects.
Ultimately, this study emphasizes that deep sea mining projects are not economically attractive, and the risks associated with this industry could also affect the countries supporting the projects and those dependent on land mining.
