Planetary Resources Seeks to Mine Asteroids, but Skeptics Say Plan Amounts to Hot Air

By Karan Kumar — Exclusive to Resource Investing News

Planetary Resources Seeks to Mine Asteroids, but Skeptics Say Plan Amounts to Hot Air

Mark Twain once said that a mine is “a hole in the ground with a liar standing next to it.” If he were alive today, one wonders what he would say of a US startup’s plan to mine asteroids in space for precious and rare metals and bring the bounty back to Earth.

The media has, naturally, been skeptical, and has raised the question of whether the endeavour is possible. But with Google Inc. (NASDAQ:GOOG) executives Larry Page and Eric Schmidt, filmmaker James Cameron, Ross Perot Jr., son of the former electronics executive turned presidential candidate, and Charles Simonyi, an early manager at Microsoft Corp. (NASDAQ:MSFT) who led the team that devised Microsoft Office, backing Planetary Resources’ space mining venture, the project at the very least deserves some measure of seriousness.

“Many of the scarce metals and minerals on earth are in near-infinite quantities in space,” Peter Diamandis, co-founder and co-chairman of Planetary Resources, said in a statement. “As access to these materials increases, not only will the cost of everything from microelectronics to energy storage be reduced, but new applications for these abundant elements will result in important and novel applications.” He added that a single 500 meter platinum-rich asteroid contains the equivalent of all the platinum group metals mined in history.

A recent feasibility study by the Keck Institute for Space Studies reported that the retrieval of a single 500 ton asteroid to the moon would cost $2.6 billion.

Mineral rich near-earth asteroids

Earlier research has suggested that, to have any chance of success, an asteroid-mining venture would need to be capitalized to the tune of $100 billion, The Economist reported. Further, several new technologies will be required, including more powerful solar panels, electric-ion engines, extraterrestrial mining equipment, and robotic refineries.

Most asteroids are between the orbits of Mars and Jupiter. But near-earth asteroids (NEAs), pieces of small planets that crashed into each other over the past few billion years, are at the top of Planetary Resources’ list because they could contain high amounts of platinum group metals and other elements, such as gold. Planetary Resources explained at a press conference last month that the inaugural step, to be achieved within two years, is to launch the first in a series of private telescopes to search for the right type of asteroid. Then, the idea is to build robotic spaceships to squeeze rocket fuel and valuable minerals out of the rocks that routinely whizz past the Earth. Space gas stations could be ready by 2020.

Expense out of this world

Currently about 9,000 NEAs are known to exist. Setting up the telescopes is the easy bit; the tough part starts if the company finds valuable asteroids. How will the resources be brought back to Earth? The Economist reported that the options include mining an NEA in orbit, which will require intelligent robots that can work by themselves. The other option is to bring smaller asteroids into Earth’s orbit. “But that limits the value of the haul and risks a catastrophic impact if something goes wrong while the asteroid is being manoeuvred,” the magazine reported. “Either way, the expense involved promises to be out of this world.”

Planetary Resources’ co-founders Diamandis and Eric Anderson declined to discuss how much money has been raised for their venture so far. The company has also declined to discuss specifics about how and when asteroid mining will begin. A 30 meter asteroid can hold as much as $25 billion to $50 billion worth of platinum at today’s prices, Diamandis said.

Eric Andersen has said the company will prove naysayers wrong. “Before we started launching people into space as private citizens, people thought that was a pie-in-the-sky idea,” Anderson was quoted as saying in the Telegraph. “We’re in this for decades. But it’s not a charity. And we’ll make money from the beginning.”

Hot air and gobbledegook

However, Javier Blas, commodities editor of the Financial Times, believes Planetary Resources’ space mining talk amounts “to no more than hot air and gobbledegook.”

Quoting research from two Barclays Capital commodities analysts, the newspaper reported that NASA‘s forthcoming OSIRIS-REx mission, which aims to launch a probe in 2016 to take samples from an asteroid called 1999RQ36 and bring them back to Earth, is expected to cost about $1 billion. “Using the metrics proposed by Barclays, the Financial Times commodities team estimates that copper prices would need to rocket from today’s $3.81 an ounce to $476 million for a similarly-funded space mining project to cover its costs. Clearly, it does not look like base metals from space are likely to provide a good return on capital.”

The newspaper added that it searched for past space missions that have successfully returned samples back to Earth. “Apollo took material from the moon, but sadly its sample did not contain any valuable commodities…But the Japanese Hayabusa probe did return samples from the near-Earth asteroid 25143 Itokawa. The probe cost about $200-million and brought home 1,500 microscopic dust particles, totaling less than a gram, in 2010. Using Hayabusa as a base to calculate break-even prices, we estimate that the cost of gold needs to rise to about $6.2-billion per ounce troy to make asteroid mining economical.”


Securities Disclosure: I, Karan Kumar, hold no direct investment interest in any company mentioned in this article.

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  • This is not a reasonable skepticism and these are not reasonable arguments.  This article is just silly.  There are real issues and challenges for this company to overcome, but the items stated above are not even close to those issues. The copper argument would be reasonable — if the company were after copper.  The gold argument would be reasonable — if the company were pursuing gold.  Neither of these is the case.  The company is primarily after harvesting water for the purpose of manufacturing rocket fuel.  Water is easily harvested, all you need to do is heat the rock up.  Rocket fuel already in orbit would be extremely profitable and would offset the cost of any launch by millions of dollars, making it of extreme interest to companies and governments in the business of launching satellites and science craft.  Second to water, Planetary Resources will be seeking out plutonium group metals, which are already at a very high price.  They would only need to capture a few small asteroids between the size of a basketball and a hatchback car, and then lower them safely through earth’s atmosphere in order to make a profit.  Finding asteroids with precious materials is not even where the challenge lies.  The majority of asteroids have valuable resources.  Even an asteroid made of nothing but pure stone, once collected and under a controlled trajectory, could be sold to scientists for study or used as radiation shielding by a government or other spacecraft manufacturer.

    But there is plenty of room for reasonable skepticism.  This undertaking has unparalleled expense and risk involved, how much are the investors willing to spend and endure?  Is the strategy right or is it too conservative or too aggressive?  There are a number of peripheral technological improvements necessary, the kind of development only ever undertaken by governments in the past – what will this level of research look like as it is embarked upon by a company that is priding itself on a “fast and cheap” low quality approach to space?  Are robots the answer, or would it be better & cheaper (ultimately) to put people in space as operators of space mining equipment?

  • I have to agree, this article is just plain ill-informed and silly.  The examples are a joke, and indicate that the author has no concept of how this commercial venture aimed at profit differs from a bloated, government run venture aimed at research.   Planetary Resources has no plans to move asteroids, or take them to the moon, so again, a ridiculous example.  As far as I can tell, they intend to intercept them as  they near earth orbit, and work on them as they continue in their normal orbit.  Thus they use very little fuel, and only ever “move” to or from the asteroid as it nears earth.  This article is gobbledegook, and certainly smells fishy.

  • A naive person might think that Barclays Capital and Financial Times would only produce reliable investment advice based on analysis by experts in the relevant fields.  But no, why not just take the total cost of a NASA-funded research mission, divide it by the weight of material returned, and use that as the basis for valuing a commercial mining venture?

  • Help!!! Somebody put LSD in my morning coffee and I am hallucinating!!!!  This article can’t be what I am reading.

  • I would be curious what the economic analysis of Rio Tinto opening a new copper mine would be?  It certainly wouldn’t be out of the ordinary for them to spend between $2-$3 billion on establishing the infrastructure and building the processing facilities for a major open pit copper mine, much less going for Platinum group metals.  Oil companies spend far more than that for opening up new fields in places like the Gulf of Mexico or the North Sea.

    Keep in mind that at current market prices, the amount of Platinum Group metals for a smaller metallic asteroid (the examples above are not metallic asteroids) can be worth Trillions of dollars.  On top of that, mining operations in space don’t need to worry about a constant 10 m/s^2 acceleration crushing your whole mine down on top of you.

    The economics are different in space and it does take a different approach to get them, but spending billions to make trillions sounds like a good proposition if you can get the technical expertise.

    The ignorance displayed in this article is astounding though.  Don’t even get me started on launch costs… this will be a hundred paragraphs longer if I even tried to debunk that myth.


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