The Trump Intervention

With a flourish of his now infamous signature, US President Donald Trump sent crash waves through the international community this week.

Behind closed doors, away from the media glare he loves to loathe, he signed one of his most consequential executive orders to date: An Order To Restore American Dominance in Offshore Critical Minerals and Resources.

Yep, deep sea mining.

It was historic. No country has ever mined the open sea bed. It’s fraught, technically challenging, and a potential environmental nightmare. Just ask the 32 countries that have opposed it so far or called for a moratorium. Some are strong American allies like Germany, France, and neighbouring Canada.

But treasures are hard to resist and this could be a 20 trillion dollar haul. For context, US GDP in 2024 was 30 trillion, so even by conservative estimates, deep sea minerals are quite the loot.

The Trump administration says it's looking to surface at least US$300 Billion worth for the US economy and add 100, 000 new jobs in ten years.

Treasure Ocean

The minerals he's after are packed into potato-sized rocks on large swathes of the Pacific Ocean floor.

Cobalt, nickel, copper and manganese, as well as other rare earth elements, are critical for the production of electric vehicles, smart phones, clean energy infrastructure, and crucially for America, defence weapons.

Securing the supply chain has never been more urgent to winning the race for the 21st century.

And Donald Trump likes to win.

But arguably, he hates to lose even more and on the minerals that matter, the United States has been losing big time. Against his biggest nemesis, China.

China, China, Chiiiinnnna

Controlling the global mining and metals industry with almost 70 percent of rare earth production and 90 percent of mineral processing plants, China has the global market in a chokehold.

And the Asian dragon is tightening its grip, staving off geopolitical attacks (like the one Trump launched in his ongoing trade war), with deft moves like restricting shipments of 16 minerals and seven rare earth metals to US defence manufacturers, who rely on China for over 80 percent of supply.

Or, imposing export licences on domestic refiners who must now get China's permission to send any of 20 raw earth metals to overseas buyers.

And don't think the yanks can use third party countries to get the goods either, because the Xi Jinping administration makes foreign buyers sign agreements not to onsell without its permission.

Light work, whilst it continues to assert its dominance by investing heavily in the supply chains it already controls around the world.

In resource rich Africa, China has been aggressively funding new lithium mines along with the cobalt producing ones it already owns a third of in mining-weary Democratic Republic of Congo. Meanwhile, at home, it's limiting the capacity for foreign investment in its own domestic plants.

As if raw materials aren't enough leverage (China produces 80 percent of global graphite, nearly 70 percent of refined lithium and 55% of refined copper) it also leads production on many of the key finished products they're used for.

Two thirds of the world's new electric vehicles (which are set to replace the 2 billon petrol cars in the world this century) are made in China. Yup. And they lead on solar panels and wind turbines too.

This isn't by chance. It's strategy. The culmination of 14 successive Five Year Plans for national development over a 70-year time span, plus the wind of a 5000 year old civilisation at its tail.

The verdict is in. China is winning.

Those who play by the rules get shafted - a Jamaican proverb

But its entire minerals supply is terrestrial. And China has been playing by the rules. The rules of multilateralism to which it subscribed when it ratified the United Nations Convention of the Law of the Seas (UNCLOS) and became a member of the international regulatory body for conduct on the high seas, the International Seabed Authority.

Along with most countries of the world, its diplomats have been showing up to the ISA base in Kingston, Jamaica for 30 years to hash out regulations for sea-bed mining, and slowly come to a position on whether it's worth it.

Emphasis on slowly. .

The ISA is responsible for issuing deep sea mining licences and drafting regulations to govern them. But it's only managed to do one of those.

Whilst struggling to gain consensus on the important boring stuff like acceptable noise levels and sediment, it's also handed out 22 provisional licences for mining and China has secured the most, at five.

Not a signatory to the convention, the United States secured none.

Mr. Barron goes to Washington

There's no doubt this scorecard was in the back pocket of Gerard Barron, the CEO of lead Canadian miner, The Metals Company, when he visited Trump in March to make the case for the US to live up to its reputation as a maverick.

He would have been bolstered by an ally within, Marco Rubio, the Secretary of State, who made it clear China was top of mind when he took to social media platform X to purr, hours after the executive order.

The meeting with Trump was a follow up act. Barron had made an impassioned testimony to the Select Committee on the Chinese Communist Party only months before, making the case for deep sea mining as the answer to the Chinese problem. Proud of his showing, it's still his pinned post on X.

Back from the brink

For its CEO's bullishness, The Metal Company's share prices surged dramatically on the back of the executive order Thursday and the mining company announced promptly that it would get in line later this year to apply, through its US subsidiary, for one of the deep sea mining licences the executive order makes possible. It also promises to release a pre-feasibility report it says will help quell concerns.

What a day, TMC's business account posted to X on Friday.

But relief must have been part of the mix, because only three months ago, the Nasdaq warned TMC that its share price was so perilously low, it was at risk of being delisted.

Thursday was its Hail Mary.

Facing down China's dominance and its supply chain squeeze, Donald Trump made the decision everyone should have seen coming.

They should have seen it coming

At the end of his first term, Trump had signed an Executive Order that was a portent to things to come.

A month before the election in 2020 that saw him booted from office after one term, Trump signed an EO Addressing the Threat to the Domestic Supply Chain from Reliance on Critical Minerals from Foreign Adversaries.

It was only his second salvo.

The first came in 2017, towards the end of his first year as US president, when he signed A Federal Strategy To Ensure Secure and Reliable Supplies of Critical Minerals, or Executive Order 13817.

And last March as he campaigned successfully for his second term, he told a campaign stop in Dayton, Ohio that a previously energy independent America was practically "begging for oil from Venezuela" and that he would "solve the problem in a year".

Shock, but no awe

Despite the signs, many have been left reeling by Trump's decision to pull the trigger on deep sea mining. Chief among them, environmentalists like GreenPeace, which less than a year ago published an optimistic article outlining five reasons they were feeling hopeful in their fight against deep sea mining.

The National Oceanic and Atmospheric Administration, itself as obscure as the ISA, has promised to "carry out environmental compliance measures consistent with applicable law" while it administers deep sea mining as the responsible agency of the United States government.

But Environment America, a network of 30 national environmental groups, said the move was an unnecessary risk and described the executive order as hubris.

China didn't hold back either, calling it a breach of international law, likely a reference to the fact that the US had bypassed the UN regulator.

Its foreign ministry spokesman Guo Jiakun warned on Friday that the move would "harm the overall interests of the international community".

The regulator agreed.

In a Q&A style response posted to its website on Friday, the ISA insists it is the only body with the power to issue licences and govern deep sea mining. It wrote:

No private entity or State may undertake such activities outside this framework without contravening the international legal regime — including customary international law — that governs the Area as the common heritage of humankind. Any action outside this multilateral system undermines this principle.

But it was quick to note that the executive order was still just a plan at this point and it would not venture into hypotheticals on what it would do if the US grants TMC and other domestic miners licences:

While it is premature to comment on specific scenarios or hypothetical overlaps at this stage, in which it is currently merely an intention without an application, ISA remains fully committed to upholding its legal mandate under UNCLOS. Any exploration or exploitation activities in the Area must be conducted under a contract with ISA and in accordance with the rules, regulations and procedures it has established.

So for now, it's wait and see. See if licences are issued, on what terms, and based on which regulations. See whether areas mined overlap those licences provisionally issued by the ISA. See whether the important boring stuff form part of any guidance for US licensees or whether the famously regulation-phobic Republican crowd which controls the US legislature will thumb their noses.

The fastest moving company in the business may hold the clue. So let's take a closer look at The Metals Company.

Up next: The Metals Company

Subscribe to get it in your inbox

Get in touch via email at contact@deepblueleague.com

#Deepseamining #tradewar #Trumptariffs #China #BatlefortheBlue #miningandmetals