A Business Case for Asteroid Mining

In light of this post on Mining Asteroids, I’d thought I’d post a little piece I wrote early last year for a class assignment on developing innovative businesses. Note that while I did research my numbers, I did not spend a great deal of time double and triple checking them, so take all numbers with a grain of salt.

Humans are evolving technologically at a geometric rate, and that technological growth is fuelled by a series of rare earth metals, many of which are currently found only in China. The recent Chinese announcement that it would place a combined cap of 35,000 tonnes upon all rare earth metal exports has sent the price soaring, as manufacturers around the world in the automotive, green tech, and electronics space all rely on these metals for various segments of their equipment. The scarcity of these metals, and their corresponding high price, can be used to pry open other economic avenues that have been closed, as has happened with Canadian oil shale and the recent spike in oil prices.

These metals, while in restricted supply on Earth, are not in short supply off of Earth, and especially not in the asteroid belt, where a single C-class asteroid of one kilometre diametre contains approximately two billion tonnes of material, which, using 2003-2004 numbers, is worth about 2.5 trillion dollars. Also, because of their lower gravity, and other myriad factors, the required delta-v to reach a near-Earth asteroid is lower than that required to reach the moon, Mars, or any other nearby astronomical body. This reduces the levels of recurring costs necessary for transport, and promotes the economic usage of these asteroids.

Economics for this industry are somewhat difficult to ascertain, as it lies within the purview of the NewSpace start-up focused industry. However, in order to reach the moon, it currently costs NASA $50,000 per pound of equipment. When examining business prospects, a smaller number of $25,000 to $10,000 a pound should be used, as new competitors such as SpaceX’s Falcon 9 and OSC’s Taurus 2 continue to force the price of reaching LEO and GEO downwards. Further cost savings can be created through the use of VASIMR-equipped space tugs, using that engine’s higher efficiency and lack of propellant to create a system where most of the equipment stays at the asteroids, rather than constantly being forced to ship it up from Earth. This creates a situation with very high fixed costs to start, but much lower incremental costs. Investment lag-time from beginning to end is likely on the order of five to ten years before the company begins returning profit, and the initial investment could likely spiral to several billion dollars, although advances from other corporations involved in space industry, such as those focused on space-based solar power, would likely reduce the research and development cost.

As to competitors, there are currently no companies engaged directly in this market, although many are mining here on Earth, and thus direct competitors at the product level. As mentioned above, many of the rare earth metals are found in such limited location that any returning shipments of them could be charged at the same monopoly prices that are currently enjoyed by the existing sole provider, while other, lesser, minerals, such as gold and platinum, could likely be sold at the existing market prices, as gold currently retails for over $30 million per tonne, while platinum is above $35 million. In order to have the highest return on investment, it is better to ship these metals back to Earth in a processed form. If that is not feasible at the beginning of the project, then the economics become significantly worse, but not so much that the company is no longer viable. It is far easier to drop large masses down into a gravity well than it is to pull them back out, and that significantly reduces the return-to-Earth cost for any ore or processed metals.

When the initial implementation succeeds, another aspect in favour of the company will be (hopefully) a near total domination of access to near-Earth asteroids for mining purposes. It is not assumed that this will last for more than a total of five years, as competitors will enter if the business proves to be viable, piggy-backing on the R&D our company had to conduct. However, during those initial years of monopoly access to the asteroids, it is hoped that the most valuable metals can be recovered in sufficient quantities to greatly increase the value of the company, at a benefit to all investors.

Mankind has long ago proven that given adequate resources, it will find a way to move forward. What the company seeks to provide is those adequate resources, ensuring that the supply of rare earth metals and other precious minerals is maintained, thus allowing progress to continue unfettered. The research that the company undertakes will also be licensed to others seeking to use mining in space, especially those who wish to promote the advancement of human living outside of the single basket within which humanity currently resides.

That, then, is the end goal of the company: not merely to provide extra resources for Earth-based manufacture, but rather to change the way in which mankind lives life, and where that life is located. Given the resources, this is already technically feasible. It merely waits on investment to change the course of human history. Will you join us?

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