| DEEP-SEA SPLIT — As the world's leading automakers look for ways to ensure access to raw materials needed to meet targets for producing electric vehicles, they are increasingly being driven into the roiling global debate around deep-sea mining for critical minerals. Tesla and GM investors will vote next month on shareholder resolutions calling on the companies to disclose where they stand on the issue, which has caused divisions both between governments and corporations in the face of surging demand for cobalt, nickel and other minerals needed to help fuel the green transition. The Tesla proposal also calls for the company to commit to a global moratorium on sourcing materials from the world’s oceans. The two U.S.-based automakers are urging shareholders to oppose the proposals, and both said in their proxy statements that they have engaged with industry stakeholders and scientific research on the issue and want to have flexibility to make decisions around deep-sea mineral sourcing in the future. GM said that it “has not invested” in seabed mineral extraction and doesn't plan to. The pressure to pick a side comes as auto companies face supply chain constraints and look to benefit from incentives to shift sourcing to counter China’s mineral dominance. “From my conversations with the North American car companies, the uncertainty that we've seen up to this point is partly because it's such a controversial issue,” said Duncan Wood, vice president of strategy and new initiatives at the Wilson Center, a Washington-based nonpartisan think tank. “That’s pulling in one direction. And the desperate need to secure supply chains for battery metals is pulling in the other direction.” As You Sow, the shareholder advocacy nonprofit leading the proxy proposals, said the opposition from GM and Tesla shows there is a split between the big U.S.-based automakers and their foreign rivals: BMW, Volkswagen, Renault and Volvo backed a 2021 World Wildlife Fund moratorium. (Rivian, a U.S.-based company, also supports the moratorium.) Both Tesla and GM and those backing the moratorium have expressed a desire for more scientific information on the environmental impacts of deep-sea mining before deciding whether to source those minerals. But there's still clearly a divide in how far the companies will go on the issue. “Americans are behind. We think it puts companies at a competitive disadvantage globally, said Danielle Fugere, As You Sow’s president and chief counsel. “What we do is bring these issues to the board’s attention and let shareholders weigh in.” The Metals Company Chair and CEO Gerard Barron said companies that are both concerned about the planet and want to profit from the green transition wouldn’t write off the ability for deep-sea mining to boost the supply of critical minerals without the damages of terrestrial mining. “What do they want? Give me the solution here,” said Barron, whose firm holds a license through a U.N. regulatory body to explore deep-sea mining and plans to file what would be the first-ever mining application this year. “It’s not as though there’s an infinite supply of these metals. The smart companies will do their best to lock it away.” There’s a long way to go before seabed mining can be done at commercial scale. The primary hurdle at this point is whether the U.N.’s International Seabed Authority will agree to deep-sea mining regulations at its July meeting. The U.S. doesn’t get to vote on the issue because it hasn’t ratified the U.N. Convention on the Law of the Sea, but allies including the U.K., France and Canada back a pause, citing concern over the potential environmental impact. There is, however, growing domestic interest from lawmakers like Sen. Lisa Murkowski (R-Alaska), who said in a statement that as mineral demand rises “it’s no surprise” that automakers are looking to deep-sea mining. She added that while seabed mining has promise, it “isn’t a substitute for terrestrial mines in places like Alaska.” The Wilson Center’s Wood said that it would be “very difficult if not impossible” for automakers to resist minerals from the seafloor if they were to enter the supply chain, even for those who swore them off. “This is becoming more and more real,” he said. “Is there going to be a separate market for seabed minerals and have a battery passport process? There’s the complexity of the problem, and it’s going to make it a lot more expensive." In the meantime, Fugere said she expects to file similar shareholder proposals at more companies. “This is one more problem that the world would be better off not creating,” she said. “If we don't need to, if we can move to a circular economy, if we can move to new technologies, why would we go do this?”
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