who will take the plunge on rare earths?

The rare earths race could be about to dive into the deep sea as demand intensifies for new supply channels of these critical elements. Forget about pleading with China, or foraging about in landfills, or trying to work out how to prise apart a smartphone - all it might take is a pair of flippers.

Not wanting to get too flippant over flippers, but deep sea diving - as an industry - could provide 5% of total rare earths supply by 2020, rising to 10% by 2030. Considering that demand for rare earths could outstrip supply by some 40,000 tonnes annually in the coming years, this is one watery nugget not to be sniffed at.

Besides rare earths, the ocean floor comes littered with an abundance of gold, copper and zinc. According to a recent World Economic Forum report, some tests show that undersea deposits can contain more than ten times the concentration of minerals found on land.

Furthermore, a study just out from global law firm Mayer Brown estimates such lucrative digging of the seabed could be worth $65 billion. It's incentive enough to get venture capitalists talking, but these investment opportunities also come with a range of challenges that first must be resolved.

Firstly, such mining is at the exploratory stage - operations will need to be licensed, and clear guidelines issued on how the proceeds will be shared between the mining companies, the International Seabed Authority (who awards such contracts) and any other relevant stakeholders.

Regulatory issues will also need to be ironed out. As commercial interest grows, it is likely that legislative and institutional frameworks will need to be developed by individual coastal states to ensure that the exploitation of seabed minerals within national jurisdiction is controlled and managed.

According to Mayer Brown, it remains to be seen whether state party consensus on these issues can be achieved. The aim, apparently, is for companies to be able to apply for licenses for exploitation by 2016.

Meanwhile keep a watchful eye on Greenland and Russia, both of whom have both opened new tracts to rare earths exploration in the past year. There are also significant sites under development in central Australia and northern Canada.

While the potential of deep sea diving for rare earths has been known for some time, only recently has it become technically and scientifically feasible. However, expect water stewardship and biodiversity protection issues to come into play as the reality inches ever closer.