Deep-Sea Mining Investment: What a PACM-1 Lease Really Buys

A government auction for seabed minerals sounds like the start of an industry. It is not. If the US Bureau of Ocean Energy Management (BOEM) holds its first deep-seabed lease sale, PACM-1, on 19 November 2026 as proposed, the winners will receive a lease. They will not receive a right to mine.

That distinction matters for anyone weighing a deep-sea mining investment. Three things are converging at once: policy momentum in Washington, a streamlined federal permitting pathway run by the National Oceanic and Atmospheric Administration (NOAA), and a listed sector with no revenue.

Headlines blur these together. The economics do not.

Here is where the risk and the opportunity actually sit along the value chain, so you can judge what the market has priced in and what it has not.

Why is Washington pushing seabed minerals, and who actually benefits?

The strategic case looks almost self-evident. Polymetallic nodules are potato-sized lumps of metal-bearing rock on the seafloor. In the Pacific’s Clarion-Clipperton Zone (CCZ), they hold nickel, cobalt, copper and manganese, the metals behind batteries and defence hardware.

Polymetallic nodule deposits in the Clarion-Clipperton Zone are attractive because several battery and defence metals sit together in a single resource, though that concentration only matters if collection and processing can be done economically.

On 24 April 2025, President Donald Trump signed Executive Order 14285 to accelerate seabed mining in US and international waters and to cut reliance on foreign suppliers, mainly China. Several agencies are carrying it out:

• BOEM and the Department of the Interior: advancing PACM-1 in American Samoa waters and weighing further sales
• NOAA: running a consolidated permitting pathway under the Deep Seabed Hard Mineral Resources Act (DSHMRA) for areas beyond national jurisdiction
• US and New Zealand governments: jointly funding a Cook Islands port development expected to support seabed mining

Law firm Nelson Mullins, in its Summer 2026 commentary, frames PACM-1 as a long-term strategic option rather than an immediate source of supply. That framing is the first clue that backers and producers want different things.

Rob McCallum, founder of EYOS Expeditions, likens the nodules to gold-rush nuggets lying on the ground. He also has doubts.

Rob McCallum, EYOS Expeditions McCallum worries the investment pitch for seabed nodules is too good to be true.

Some undersea specialists go further, suspecting that early backers and equipment suppliers will capture more value than the miners themselves. The research also found no explicit mechanism for how this push would counter China’s dominance in metals processing.

What this tells you is that government support lowers regulatory friction. It does not create demand or fix engineering costs, so treat it as an enabler rather than a source of returns.

What does a PACM-1 lease actually give you?

The auction mechanics are simple. BOEM published its Proposed Leasing Notice (91 FR 44870) on 17 July 2026, setting out an ascending oral auction in Camarillo, California. Two lease areas are on offer: Lease Area 1 at about 16.3 million acres and Lease Area 2 at about 15.2 million acres.

The sale is still only proposed. The Governor of American Samoa has a 60-day review window, and BOEM must publish the Final Leasing Notice at least 30 days before the sale.

The clause that matters is the legal effect. A winning bid grants a federal mineral lease with rights to evaluate and potentially develop the minerals, but it does not authorise mining. Any testing or commercial recovery requires detailed operational plans under 30 C.F.R. Part 582, plus further government approvals.

Leases versus permits versus international rules

PACM-1 covers waters under US jurisdiction. The DSHMRA track covers US applicants in international waters, where TMC USA filed the first consolidated application for an exploration licence and commercial recovery permit. The International Seabed Authority (ISA), which governs international seabed mining, has yet to finalise rules, and the US and ISA frameworks may conflict.

Global permitting frameworks remain fragmented, and a US lease or DSHMRA permit sits uneasily beside an unfinished ISA regime, so investors should expect legal friction rather than a clean pathway to production.

BOEM is also weighing sales off the Northern Mariana Islands and Alaska, with no dates set.

A lease win is an option on future development, not a producing asset. You should discount any valuation that treats lease acquisition as the moment the risk falls away.

Deep-sea mining 101: how nodule collection works and why depth changes the economics

Those regulatory layers sit on top of an engineering problem that has not been solved at commercial scale. The basic collection chain runs in four steps:

1. A robotic collector moves across the seabed, gathering nodules.
2. A riser, a long pipe system, lifts the nodules toward the surface.
3. A surface vessel receives and stores the material.
4. The nodules go to processing to extract the metals.

No commercial-scale system exists yet. McCallum notes that pressure at these depths is hundreds of times atmospheric, which makes every component harder and costlier to build.

Victor Vescovo, an investor and submersible pilot with a metals-processing background, argues the industry is too optimistic.

Victor Vescovo, investor and submersible pilot Vescovo says pressure, salt water and cold are underestimated, broken collectors must be hauled up from great depth, and investors and managers make optimistic assumptions.

The two sides disagree on the offshore oil and gas comparison. Vescovo says those operations generally do not go below 4,000 metres, while The Metals Company (TMC) says oil and gas has reached about 3,600 metres, so seabed mining does not push the envelope much. TMC did not answer ABC’s questions on technical and economic criticisms.

Two precedents frame the debate. In 2021, Belgian firm Global Sea Mineral Resources lost a prototype collector to 4,500 metres when its cable disconnected, though it was recovered; Seaver Wang cited small compounding losses of around 5% as an industry challenge. In 2022, TMC’s pilot lifted more than 3,000 wet tonnes of nodules.

Reliability data and cost-curve comparisons were not available. Read pilot success as evidence the method can work, not as proof that costs can be controlled at scale.

For readers wanting to see where costs can build downstream, our detailed coverage of deep sea mineral processing plant engineering examines the processing challenge after collection.

Will battery chemistry leave nodule metals behind?

Even a working collector needs buyers. The International Energy Agency’s Global EV Outlook 2026 found that lithium iron phosphate (LFP) batteries, which contain no nickel or cobalt, made up more than 55% of EV batteries deployed in 2025, up from nearly 50% in 2024. Crux Investor cited the same figures on 5 October 2026.

That shift chips at the core nickel-and-cobalt premise.

Skeptic and supporter views

Griffith University economist Chris Fleming says it is unclear deep-sea mining is needed for vehicle electrification. He points out that Volvo has ruled out deep-sea minerals and that sodium batteries could sharply cut demand.

Seaver Wang of the Breakthrough Institute sees narrower openings. He argues nodules could change the manganese market as lithium-manganese iron phosphate batteries grow, and says about half of US cobalt demand goes to superalloys for turbines, aerospace and defence.

Prices add another layer. Lithium fell about 25% despite strong EU EV demand, according to Crux Investor, a reminder that battery-metal prices can decouple from demand. Quantitative forecasts for nickel, cobalt and manganese were not available.

Longer-run critical mineral demand forecasts matter here because the case for nodule metals depends on how much nickel and manganese demand survives battery chemistry shifts, a question that quantitative projections help frame.

The verdict is split. If the case narrows to manganese and defence-grade cobalt, ask whether a project sized around four metals still makes financial sense.

Where does the money come from? TMC’s balance sheet and the funding risk

TMC is the dominant listed vehicle, and it has no revenue. The numbers show how much it costs to stand still while waiting for permits.

At 30 June 2026, TMC held about $98.7M in cash and roughly $143M in total liquidity, with runway of at least 12 months. It has funded itself through a private placement with Korea Zinc, registered direct offerings, at-the-market share sales and warrant exercises.

Fabrication of its offshore collection system is slated to begin in Q4 2026, with installation and commissioning targeted for Q4 2027. Its 2025 pre-feasibility study forecast phased production ramping toward multi-million-tonne annual rates.

Set those dates against the runway. About a year of cash against a commissioning target more than a year away means further raising, and the dilution it brings, is the base case.

Vescovo draws the harder conclusion.

Victor Vescovo Vescovo predicts investor funding will eventually stop once long-term unprofitability becomes evident, as happens with failing start-ups, though a compelling story can delay it.

The risk picture stacks up across five fronts:

• Regulatory: PACM-1, DSHMRA and ISA processes all remain incomplete
• Funding: no revenue, recurring losses and dilution exposure
• Chemistry: LFP and possible sodium adoption weaken nickel and cobalt
• Rights versus authority: leases and permits do not authorise commercial mining
• Value capture: suppliers and early backers may profit before miners

Regulatory and rights risks are binary; dilution and chemistry risks erode gradually. Little disclosure exists for other listed players, so TMC carries most of the sector’s visible exposure.

Weighing the opportunity against the risk before November 19

Four strands pull together. The sector is policy-driven, not producing; it rests on one listed vehicle; its metals face chemistry and price risk; and its regulatory and execution risks stack on each other. That makes deep-sea mining investment a high-beta, long-dated option rather than a near-term production story.

The milestones that would change the picture are clear:

• Close of the DSHMRA comment period on 19 October 2026
• PACM-1 Final Leasing Notice and the proposed 19 November 2026 sale
• NOAA’s Q1 2027 completion target and the ISA’s March 2027 session
• TMC’s Q4 2026 fabrication start, its next financing and its Q4 2027 commissioning goal

For a pre-revenue theme, position size and time horizon should reflect how far away revenue still is.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions. Past performance does not guarantee future results. Financial projections are subject to market conditions and various risk factors. Forward-looking statements are speculative and subject to change based on market developments and company performance.