By Karan Kumar — Exclusive to Resource Investing News
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.
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.