Mining Asteroids And Getting Rich (Or Not)

June 29, 2009

This special Space Disco Guest Article, is written by friend and co-author Greg Fish. Greg and I are currently putting the finishing touches to a book called Astroeconomics: Making Money from the Vacuum of Space, where we investigate the various opportunities space exploration presents to the world. In this post, Greg dips into one of the topics from Astroeconomics and discusses the pros and cons of asteroid mining (and discovers there are actually more 'cons' than we originally thought).

Like Earth, Only Far Away

Between Mars and Jupiter lies the asteroid belt. Circling around the sun, this is the resting place of countless giant clumps of debris from the chaotic collisions and gravitational tides of our early solar system. However, these asteroids are not totally alien to us.

They’re made from the same components as Earth, albeit in different proportions and with a few exotic additives like rare amino acids and iridium. And because they’re made from the same materials as our planet, it means that they’re loaded with the kinds of natural resources we’ve been exploiting for thousands of years now, and will be exploiting for thousands of years in the future. A single asteroid’s cache of natural resources can be worth literally trillions of dollars. Yes, that’s trillions with a T.

But while our musings about exploiting the vast resources of asteroids are all well and good, we need to keep in mind that for mining corporations to devote the time and effort to the idea, asteroid mining needs to be a profitable line of business which brings in a tidy sum at the end of the fiscal year and looks good on a balance sheet. Considering that major mining conglomerates have annual revenues between $30 and $50 billion, that number has to be very big.

Parts Per Billion

To make up even 5% of their operation, asteroid mining would have to haul in around $2 billion per year. Considering the time it would take to get to the asteroid belt, mine the ore, come back, unload and prepare to travel back, realistically, we'd only have one delivery per year.

So what exactly could we mine on asteroids? Pretty much anything really, but the vast majority of the minerals we'll find could be extracted on Earth in existing mines. One of the most abundant compounds is going to be some form of silicon, a material out of which the inner solar system is built and it's lying under our feet in vast amounts. We'd have to focus on precious metals which are much more abundant in space than on Earth due to the way asteroids form.

However, when we say much more abundant, we're really talking about going from parts per billion to parts per million at best. When we run the numbers, we come up with only hundreds of grams per metric ton or a kilogram or two with an estimated worth roughly $14,500 to $30,000. So when we try to extrapolate how approximately much material we'd have to mine to arrive at our target revenue of $2 billion, we get an impressive 125,000 metric tons. (Or almost 138,000 short tons.)

Crunching The Numbers

You might note that that number was derived using an optimistic projection per ton of precious metals. Where do the other minerals and metals fit into the equation? When we start talking about the price they fetch on the open market, we move from tens of thousands of dollars per kilogram to hundreds of dollars per ton. A plausible revenue split between precious and non-precious materials would be 90/10 at a ratio of mass at an average of 1 to 1,000. Our solar system seems to be very familiar with the Pareto Principle.

Usually, when businesses invest in new ventures, they expect to pay them off in three to five years so the R&D budget for an asteroid mining venture would be capped at about $10 billion. Assuming that technological progress will let us build spacecraft for hundreds of millions of dollars instead of the billions it takes today and we have advanced plasma rockets and a complete orbital infrastructure for loading and unloading spacecraft in Low Earth Orbit readily available, going to the edge of the inner solar system to prospect and mine is still going to be a dangerous and expensive proposition. All sorts of new mining and processing technology will need to be designed. Will a big mining enterprise decide to take the plunge?

Tons Of Risk

For all the brave talk we hear about the need for innovation and risk-taking coming from companies, large concerns are very risk averse entities by nature. There are simply too many stakeholders who invested far too much into the company to let it take what they see as wild and unnecessary risks, plowing billions into getting a rather small return in half a decade. Smaller start-ups may try to get into the business and even make some profits but asteroid mining won’t become a major industry until we know how to safely and efficiently process more than 1 million tons of material a year to extract $20 billion worth of precious metals or more. That’s when even the most risk-averse companies will be willing to investigate the jump into space with high tech drills.

So what happens when that tipping point is reached and space gold and platinum flood the Earth? At first, it could be sold at an extremely high markup due to its novelty and rarity. Expect rings made from the platinum of an asteroid with an exotic name to fetch more than twice the price of its terrestrial counterpart. But the more we retrieve and smelt into the existing precious metals supply, the more the prices will fall until they’re in line with commodity markets. And eventually, in the far future, there may be a point when we’d import so many precious metals from space that it will actually depress prices of gold, silver and platinum across the board.

But until then, nations which open a direct pipeline to the wealth in the asteroid belt will have the potential to upset global markets with their newfound economic power and there will be bitter fights about who can mine where and who owns what asteroid. The Outer Space Treaty which declares celestial bodies the province of all mankind will go out the window when there are trillions of dollars at stake.

--Greg Fish

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Greg Fish works with technology and digital media. He contributes essays to BusinessWeek.com on the Internet, business practices, and current events. He also researches and covers a wide variety of popular science topics on his blog, worldofweirdthings.com.

Comments

[hollis rogers]

hi i thank i have a asteroid could u get in tuch wit me fast at 828 479 6563
i live in robbinsville nc

[EarthlingX]

Asteroids are not only in asteroid belt. They are also closer and they are called Near Earth Asteroids - NEA.

One very interesting and valuable mineral would be water ice, which at least for some, probably presents higher than assumed fraction of ore. If mined with robots, then transported either in one big shipment or in a stream of smaller, it could probably be done with reasonable costs.

If you could bring 125 000 tons of water in LEO, it would be, assuming around 4 k$/kg for Zenit-2, worth $ 500 000 000 000. I m a bit scarred to use calculator and put in shuttle costs, no need of that for water and also that number is a moving target, but more $ in any case.

Also, if you already have so much cheap stuff in orbit, you start building there. Solar arrays, space docks, interplanetary ships, colonies, everything. There are probably many new jobs, in space and on the Earth, that we can t really imagine now.

There's also many of such asteroids in different sizes and composition and hopefully enough to avoid show stopping conflicts.
Some internationally accepted legislation, covering ownership of mining rights, would definitely be a bonus and helpful in this area.

[Rustin H. Wright]

Okay, you completely lost me about three paragraphs in. What possible relevance does the size of the industry have to do with this discussion? I don't know about you but among the folks I know, the size of industry is *maybe* tenth on the list of variables considered. Rate of return? Yes. Initial investment? Certainly. Time to market, competition, technological barriers, legal concerns, substitution effects? Sure to all of them. But size of the industry? Huh?

Nothing personal, but if you're going to write about the viablity of asteroid mining, choose a couple of specific possible products (gold? iridium, helium 3?), give me data on what asteroids seem to have them and where they are, tell me the cost of getting there and back, the challenges in extracting, refining, etc., maybe some time on legal rights to the results, and *then* we can start talking about whether this idea makes sense or not.

I don't doubt your qualifications as a scientist but if you're going to write about business, please look at a couple of typical business plans first and *then* write about it.

Otherwise the only thing you're really supplying anybody with is handwavium.

[ivank2139]

Here's a few ideas for you:

Send a robotic vehicle to the belt designed to find suitable asteroids. When a candidate has been located, the vehicle would push the asteroid enough to send it on a near earth crossing orbit. Careful, near, not collision. The vehicle could be powered by a nuclear engine using hydrogen gas, so perhaps it could be refueled by scooping gas from Jupiter's atmosphere. The small nudge it gives the asteroids would not have to be much delta vee to cause the asteroid to swing close to earth in a few years. When it gets close it could be diverted into a suitable orbit close to earth for processing.