A $20 Trillion Rock That Could Turn a Startup Into Earth’s Richest Company
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This might be way off base, but something like the future East India Company of space, where corporations end up colonizing planets and asteroids and get immensely wealthy and powerful in the process.
For example the asteroid wars v1 - v4 are more first persony.
(http://www.amazon.co.uk/gp/product/075640147X/ref=oh_details...)
http://www.amazon.com/Rendezvous-Rama-Arthur-Charles-Clarke/...
There's some nice stuff about failure of important systems and the consequences of that for outbound travellers; food and shelter; exploration; law and order; and eco disaster. I enjoyed reading them. I wasn't a fan of the audiobooks.
Features asteroid mining, expansion through the solar system in the quest to find more matter to turn into computronium, and some people becoming obscenely rich in the process.
I wouldn't describe space travel itself as the books primary focus, but it's a solid theme. Look into it before you dive into it after just reading my comment, otherwise you'll likely be confused.
Some John Wyndham: http://en.wikipedia.org/wiki/The_Outward_Urge, but that's more geopolitical than economic.
Both very old, so the sci fi has a different flavour (future as projected from the 1950s, rather than from now).
http://en.wikipedia.org/wiki/The_Gap_Cycle
this book series is without a doubt my favourite.
It's been a while since I read them, but basically some rich guys with ideas for space think of various marketing schemes(smuggling in some stamps for collectors for the first trip out and so on) to finance their dream of mankind colonizing the space. As they say, baby steps, baby steps.
Very entertaining read, with some plausible science behind it for the time.
Not exactly what you asked for, but pretty close. Deals with bringing water to Earth.
Edit: Added very brief description
Cars aren't worth very much. Try reselling a car to find out how little they're really worth.
Shoes aren't worth very much. Try reselling a shoe to find out how little they're really worth.
As a private company--especially if this mineral becomes very necessary and expensive--would be a very big target for some sort of 'congressional oversight' to 'protect national interests' and prevent a harmful monopoly.
Second, if it works out for them and they're able to start mining these, other people will start doing it, too.
What if the pioneer's space manufacturing, using their cheap and plentiful resources, gives them an insurmountable lead? They win the race to claim and defend new prospects against latecomers.
(To the planetbound, this might just look like a suspiciously long string of failures by all subsequent foothold missions…)
War.
However, the good news is that even on Earth the benefits of cooperation tend to outweigh the benefits of aggression, in space for the foreseeable future it will be even more so. It is so, so easy to trash a space facility and so, so hard to defend against it that in essence all private companies in space will de facto be in a MAD situation should they decide to go that route. It will be a long time before anyone will have a position where they can afford to attack somebody and have a reasonable expectation of survival.
Imagine they release 100 tons / year.
The world supply of platinum has just gone from 100 to 200 tons / year.
Or they release 200 tons, and the world supply goes up to 300 tons / year.
At some point really low they'll make platinum as common as dirt and worth about as much.
* exaggeration to make point. Point stands.
You cannot value the asteroid at weight * current_price_per_ton.
Because the earth is surviving on 100 tons of platinum / year, and the current_price_per_ton is based on demand to supply.
If you rocket back with a whole 100 tons in the first year, you dramatically affect supply. The price drops; platinum suddenly becomes more affordable for more things, demand may increase and so on.
But we can all see that if there were mile cube of platinum delivered to earth, it wouldn't actually be worth $1500/ounce any more.
(Or maybe they could extract it in space... But that would need new first gen technology, but at least retrieval from space may pay off in the long run, as they'll no doubt require space extraction eventually.)
My guess is that in the initial stage their profit margin would be low, or they'd have to work at a loss, if they have to compete with current prices. As scarcity drives the prices further up and their technology improves, their profit margins would soar, but that would only happen in the long term. Only then would supply start bringing the prices down.
If this appears very valuable, and especially once proven, you can bet other investors will do the same.
Seems oddly reminiscent of the iPhone/iPad market. How's throwing money around worked out for the competition so far?
Extremely well: http://hosted.ap.org/dynamic/stories/A/AS_SKOREA_EARNS_SAMSU...
Or search for "Smartphones fuel Samsung profit to record".
They struggle to see how it could be cost-effective, even with platinum and gold worth nearly £35 per gram ($1,600 an ounce). An upcoming Nasa mission to return just 60g (two ounces) of material from an asteroid to Earth will cost about $1bn.
(http://www.bbc.co.uk/news/science-environment-17827347)
So a back of the envelope calculation: Assuming that it costs as much to haul gold from orbit to Earth, and the Space X Falcon can haul 6.4+ tons per flight, we could bring down $167,116,800 of gold per flight. Since each launch costs $80M+, we're down to $80M of profit. However, this assumes we're just plucking gold out of orbit, not hauling asteroids to orbit, harvesting and processing the gold, and dealing with all of the logistics of this operation - which are bound to be very expensive. It's ambitious to be sure, but we're very far away from platinum as the new aluminum.
Price of gold per ounce: http://goo.gl/htL7b Falcon launch costs: http://goo.gl/SWZlw
It doesn't. Coming down is way cheaper than going up.
But that may not even be particularly relevant, as there's a good chance that a lot of the material may be sold in space. After all, we want to launch more stuff into space, and that's expensive, so why bring it down if you're just going to shoot it back up again?
Of course, not all of it's going to be sold in space. A tonne of aluminum or a tonne of water would be very valuable in orbit, but, at least for now, a tonne of platinum is going to do much more good down here on the ground in catalytic converters and electronics than it would up there being used in... I dunno what. But the stuff that stays in orbit could still be a pretty hefty chunk of the bottom line.
Break even for these people wont come from the first asteroid they mine - and I doubt they are expecting it to.
What if Planetary Resources creates a lab to have the world's best researchers across a variety of fields be able to invent with a nearly unlimited source of free platinum?
Could they make a product that is worth more than the raw platinum (or whatever else they pull down)?
Look, I'm a sci-fi fan like so many other HNers but the economic reality just doesn't add up.
Amun 3554 has a highly eccentric orbit [2], even though it does cross Earth's orbit. JPL has data [3].
You need to consider that:
1. It's expensive to get into orbit. Even at SpaceX's prices, you're talking ~$1000/kg for LEO insertion;
2. You need to get equipment to the asteroid;
3. You need to get to the asteroid. Proximity to Earth isn't the problem here. The problem is the delta-V required to match velocities;
4. You either need to bring back the entire asteroid, which would require a massive amount of delta-V, or you need to mine the asteroid, which would take a massive amount of equipment;
5. If you get raw materials back to Earth orbit, depending on the application, you may then need to get them back to Earth, which granted is significantly easier than escaping Earth's gravity; and
6. If you get a massive quantity of some valuable material it'll change the economics. That $20 trillion won't be $20 trillion with the added supply.
I am assuming this would be an automated operation as the cost of manned spaceflight is significantly higher and automated systems should hopefully improve in the intervening years.
Now, compare this to some other materials we have on Earth. Iron is pretty abundant (both on Earth and in the universe, due to it's energy relationship with fusion). On Earth, we dig up iron for under $30/ton and can ship it anywhere on Earth for another $50-100/ton (IIRC).
For the cost of a single SpaceX launch you'd need to bring back about a million tons of iron to be on the same scale.
Obviously that's why they're targeting much more valuable materials like platinum but I hope that puts things in perspective.
Our society is built on cheap and plentiful resources (fossil fuels, metals and minerals). As abundant as they might be in space, increasing the cost of iron 1000 times is going to have profound implications for our entire species. At some point of course recycling makes more economic sense but that's just a temporary cushion (eg you lose materials through corrosion).
I believe we're coming to a resources-crunch within the next 100-200 years that will result--one way or another--in a massive drop in population and a fundamental change in our society. Let's just hope we survive it.
As much as I'd wish otherwise I have a hard time envisioning space mining or even prolonged living in space as being economically viable in any way, shape or form.
[1]: http://money.cnn.com/2006/02/27/technology/business2_guideto...
Assume $1k/kg for LEO insertion. That means a metric ton of iron, in space, would cost a million dollars if you had to ship it from Earth.
Let's now say that you wanted to build a large space-based manufacturing facility, focused on producing high-value goods like zero-gravity metals and pharmaceuticals. Shipping the raw materials from Earth to build the facility would cost around a half-billion dollars, and then afterwards, you'd need to ship them the additional materials from which to produce the goods.
Or, you can do something crazily ambitious -- figure out how to get the materials from somewhere in near-earth-orbit, and use that to bootstrap both interplanetary travel and space-based industry.
It's crazy. I know. It's crazy enough that it just might work.
Personally, I'm excited. This kind of ambition is what we need as a species right now, and I'd rather see the money spent on this than on yet another collection of mega-yachts.
As in things that can't be made much cheaper (or at all on Earth) and that companies would jump to create if there was a platform for them?
Imagine building a massive spacecraft for long distance travel. It'd never land on a planet, just go between them; you'd take a shuttle from your planet up to the craft and leave from there. This is possible with space-based manufacturing.
If all you can do is build more space stuff but the stuff is more expensive than earth stuff then it's not going to work.
There are 32 troy ounces in a kg.
People are estimating £1000 per kg to get stuff into LEO. It costs less to get stuff back to Earth.
Surely they only have to beat $50,000 per kg to get the mining equipment up there and get the stuff back and they're in profit.
And they amortise the cost of getting the mining equipment up there over all the kg they mine and return. Since they're talking about 16000000000 kg of asteroid that's a lot of amortising.
And even if it doesn't have direct commercial value it has many other benefits - it is inspiring. Perhaps some children are seeing this and wanting to get into science. That's great.
But maybe I'm wrong, and I really welcome better information.
Rare materials will not make you as much money as you can make now because they will become not rare. So you have to make something which only can be made in space or you have to play the De Beers game, be an evil fucker and spend all eternity in hell if it existed.
You really think platinum is going to drop from $50,000 per kg to something like $1,000 per kg before they've made their money back?
why is moving the stuff from Earth to orbit so expensive? Because it takes an absurd amount of energy.
What does it take to move stuff from the asteroid belt to near-Earth orbit? An even more absurd amount of energy.
Absent of some breakthrough in technology that would make orbital factories seem child's play, it's not crazily ambitious, just unrealistic.
It's true that moving an asteroid would require a lot of energy simply because they're unbelievably massive; the space shuttle propulsion system might dish out something like 10^14 joules, but a typical mining asteroid is 10^13 kg or so. But apart from that, space is frictionless, and so moving a longer distance does not require much more energy, just much more time. Sending ships to and from asteroids shouldn't require an energy cost except to cut down the travel times, in principle.
Which isn't to say I expect large-scale returns anytime soon.
See (at least formerly) the diamond industry.
(I am not an economist, so somebody correct me if I'm terribly off base here.)
If you can only sell, let's say, 1 ton each year (worth $53 million), then the present value of the platinum needs to be discounted (because you have to finance the recovery cost upfront).
Assuming a discount rate of 5% (ridiculously low for such a high-risk operation), the present value of 1 ton of platinum delivered 364 years from today is 1 dollar. The present value of an infinite stream of annual deliveries of 1 ton of platinum is $1.1 billion.
The fact of the matter is that platinum has limited uses and even more limited supply, that's why it's very expensive. If you managed to find a huge supply of it, it wouldn't be very expensive anymore, unless you also found thousands of other extremely high-value applications for it. If you can find a way to make platinum entertain people, give them better sex lives, give them better food, help them get to work faster, help them teleport, and help them become famous, then you'd have a $20 trillion opportunity.
With a little googling, it looks like platinum can also be used for producing hydrogen and absorbing CO2 from the atmosphere to produce hydrocarbon fuels.
With lots of cheap platinum, we could make the whole transportation sector carbon-neutral, even if we never manage to make those 600-mile batteries.
It's very difficult to predict what technology is gong to be available in 15-25 years. And making long-term economic predictions in the techy areas is even more difficult. A famous example: "I think there is a world market for about five computers.", Tom Watson, IBM chairman, 1958.
There is also an analogy with early days of aviation, 1905..1912. An idea that airplanes could possibly be used as a means of transportation was considered as pretty ridiculous at the time. Certainly not economically viable. For example: "In 1905, when the Wright brothers offered their invention to the United States Army, it was rejected without any consideration. Even the patent office was skeptical; an application filed in 1903 was finally approved and granted in 1906 for a "flying machine.", from "The Spirit of Innovation", by Curtis Wright corp.
Yet technology improved. And things that haven't been economically viable "in any way, shape or form" time and time again became such.
> For the cost of a single SpaceX launch you'd need to bring back about a million tons of iron to be on the same scale.
> Obviously that's why they're targeting much more valuable materials like platinum but I hope that puts things in perspective.
I'm not sure I understand your point. Obviously it's silly to spend the money to go to space and get something that's commonly available on Earth. (Although capturing an asteroid for science would be good.)
Platinum costs about $1570USD per troy ounce. There are about 32150 troy ounces in one metric ton. 32150 * 1570 == $50475500USD per metric ton.
Amun has about 16000000000 metric tons. That's about 8.07608 × 10^17 USD; with no adjustment for obvious market trashing effects of dumping that much platinum on the markets.
Apologies for mangling scientific units.
The problem: how much does it cost to get a metric ton from that asteroid's orbit to Earth? More than $50m. Probably more than $50b.
Failing to mention that little fact makes the article a fluff piece, and unless the company has some very convincing proposals on how to deal with it, it's little more than a scam.
But maybe it costs $60b to get the entire asteroid to earth. Then you've made money.
Secondly, the article is misleading in speculating on Amun. Planetary Resources is first sending telescopes (in a year or two). That's how very far they are from choosing their target. An extremely low value-per-weight metal, in an expensive orbit, is not representative of their plans.
Also, a proposal to cushion supply decreasing prices is to sell futures in the metals http://www.forbes.com/sites/timworstall/2012/04/25/how-plane...
80% of the platinum comes from South Africa.
China effectively subsidizes mining for strategic purposes. Cheaper mining = cheaper manufacturing = strong industrial base = higher employment and lots of foreign IP to acquire.
This blew up in their face for rare earths, because they are valuable enough that shipping isn't a big deal, so cheaper rare earths in China just means cheaper rare earths in Japan.
If they didn't subsidize mining, or they keep restricting exports, people will look elsewhere. I'm not sure if China has particularly good reserves, I think they just dig it up cheaper, because they want to feed their industrial base.
That attitude will start changing now that they have plenty of IP, and they no longer suck at engineering low cost stuff.
Perhaps though this is all a coverup plan to visit a spaceship that crashed on the moon...
Very true. However, the value of having access to cheap gold and platinum is worth even more for sure.
Only, that value won't be concentrated around the mining company, but the society as a whole.
True, but who says they have to sell it? The way I see it, if they bring that platinum back to earth, they might be better off just using it themselves. That way, yes, they are not making the market value of it in cash - instead, they are saving the market value of it in cash.
Platinum is so expensive because it is rare and you can build awesome stuff with it. If you take rare out of the equation, you can still build awesome stuff - and awesome stuff will surely always sell at a good price.
It's the Netscape strategy. Jim Clark said "I'm selling printing presses, but first I've got to teach people to read".
To put it another way: there's a reason that most of the world's terrestrial mining companies sell raw materials to manufacturers rather than manufacturing end-user products themselves.
Furthermore - The companies that mine the platinum may not be the technologically most advanced while Planetary Resources will surely be the most technologically advanced to have dirt-cheap platinum at their hands.
If using Python used to be a way for entrepreneurs to find top programmers, perhaps being conversant in some or part of this kind of space problem is a way for entrepreneurs and investors to find people with breakthrough ideas.
3554 Amun [1]
Estimated Diameter = 2500 m
Estimated Mass = 16,000,000,000,000 kg
International Space Station [2]
Longest Dimension = 109 m
Mass = 450,000 kg
At some point, mining these asteroids will, for all intents and purposes, be free.
Edit: Another alternative is that these bored billionaires want to actually change the world just for fun, or to see if they can.
You don't need a rocket nor fuel for the full delta-v to put the asteroid into a near earth orbit. Look how mars probes arrive: just use a tiny rocket motor to steer into the athmosphere and perform aero braking. Takes long, could even take years to reshape the orbit, but it doesn't neccessarily take much fuel. I'd just place a light-weight ion engine on the asteroid.
Disclaimer: I haven't the faintest idea of the amount of energy needed to move celestial bodies, but I guess it could be made so the first targets will be small ones and using the resources obtained from them, create stronger and stronger infrastructure to capture bigger ones.
EDIT: Archimedes already said it. To move worlds they first need a big enough lever and a place to put it.
I was thinking they'd crash it into the far side of the moon. Is that an option?
"Practically", you would have to ship your ore / ingots back up the moons gravity well, then to earth. You would need to build a moon base, a moon maglev cannon for shipping your final product, and then, make sure you miss all this infrastructure when you "land" your bundle of resource.
This (mobile) processing plant would need to resist debris from the impact (no air = no slowing down of the debris) and the moon-quakes generated by the impact of millions of tons of dense metal ore at high speed in the vicinity. If your processing plant is far from your impact site, you need your many "harvesters" to transport your ore for a long while.
But at least you don't have to undock your processing plant from your asteroid, only its tug.
Depending on Delta-V it might also dirty up the moon's orbit.
Also, any equipment stuck on the rock is lost (equipment up there cost A + weight-in-kg(A) * 1.n * $1000, unless made "on-site"). But you might end up with an already melted pool of material.
Different challenges.
For comparison, back in 2010 or so it was estimated that all the money in the world was about 70 trillion. That asteroid, if brought in it's entirety and valued at 20 trillion would represent around 30% of the world's money.
They'd have to do some pretty ingenious financial tricks to keep it from extreme devaluation: at the current prices and money supply, there just isn't enough money in the world to sell it off within the next 50-100 years - possibly more.
There is an analogy : the US bullion reserves are something like 12,000 tons of Gold. Obviously if this was all offered for sale at once, then the price of gold would crash. But it doesn't, because they don't.
Assuming someone is sitting on a massive lump of platinum, the market price would only be affected if they chose to dump it all on the market at once. Knowledge that the large supply of platinum exists wouldn't cause the market to crash.
There would likely be some effect of releasing more supply of platinum onto the market, but the company wouldn't be stupid enough to offer it all for sale at once. They would hold it in reserve and sell it according to demand.
So yes, increased supply would affect prices. No, it wouldn't cause chaos.
Of course, this assumes that whomever is in charge has the discipline to do it properly. Perhaps, though, human frailty would win out and your scenario would come to pass. For this, we can look back to the Spanish conquest of the gold and silver mines of South America.
If they succeed, this will be one of the longest market bet in a long while. Longer term than financing land caravans to India to buy spice, clipper to china for tea, or caravels to the americas.
I don't believe this, and you didn't give any kind of evidence for this.
Speculatively, I think the opposite is far more likely: Not only will oil, minerals, etc. not run out, but technology will advance quite rapidly, so it will be less and less an issue. I think the big threat is unrelated sociopolitical developments that constrain freedom, innovation, and technology.
If you have a disruptive innovation (such as cheaply bringing tons of Platinum from space), prices will just settle at the new equilibrium. You wouldn't be able to sell a million tons of Platinum at US$ 1500 an ounce, but, as long as you make a profit, you're good.
But how about the Moon? It's nearby (making remote operation feasible) and bringing back stuff doesn't require more than a large railgun that can be built and powered locally. There is gravity and vacuum (a combination that's very good for working with metals - they fall towards the ground and they don't react with the atmosphere). And we already have soil samples. Plus, people can live there and repair equipment that breaks down.
And for the science types, the far side is an excellent place to put a radiotelescope.
You don't have equity to borrow against unless you can liquidate and transfer to the lender.
You can't liquidate and transfer to the lender unless you can bring it all down here (destroying the market and making the equity worth much less), or transfer any on-going and steady operation that is bringing it down little by little (show me the money), or by bring us up there in the form of widespread operations across multiple companies.
If we go up there in a big way, well, precious metals aren't so precious.
It's sort of like how the value of going to the moon was not just the PR and historical significance, but all of the technical innovations like satellites that ultimately came from that effort.
I don't want to do a TL;DR because I'd mess it up.
They know what's on the surface by looking at IR and radio spectra. This is complicated by overlapping spectra from different minerals, but you can still get a pretty good idea of what range of minerals are there. And since we know the elemental compositions of the minerals on Earth that produce the same spectra, we can use that to predict how much of any particular element the asteroid contains.
Plus, i dont think the price will "plummet". It will at most reach some equibrium, and that new equilbrium ought to still be profitable. More plentifyl resources can only be a good thing.
So instead of lowering the price of gold and palladium, metals that have innumerable uses in technology, revolutionizing the industry, you should create an artificial scarcity?
Iron is hardly scarce, but it is in high demand. There are a thousand uses for cheap gold. It's not like if the asteroid would be made of rare postage stamps that become worthless without the scarcity.
Let's say the huge chunk of gold would drop the market price to 10% of it's current value. If they earn $ 2 trillion at once instead of $ 2 trillion slowly, is it really a problem? It should still be enough to finance the next run, and earn even more.
A large mirror planted on the astroid focuses sunlight onto a small point. The heat from the mirror blasts off (ionizes? vaporizes?) bits of rock. Over a long time period, the rock gradually sails into a more accessible orbit.
Platinum has industrial uses, but it is also a Veblen good--the price decrease due to increased supply wouldn't be the only factor; the abundance of a Veblen good affects the demand curve itself.
Could a large body like an asteroid be used to clean up space junk? Or would that just be way too risky?
Why not?
In reality, it's a rock with some metals running through it, and that's basically a full description. It isn't covered in deadly deadly viruses; if it were, Earth would long since have been exposed to them, we're hit by space rocks all the time. It isn't housing an alien fleet. It isn't anchoring a wormhole to a dimension of Cthuluian horrors. There isn't any bizarre chemistry that will cause a chain reaction that will turn all the oceans into gel if it so much as orbits. It's a rock, except it's in space.
Everything that could go wrong in such a scenario did, a long time ago, over and over again.
I'm wondering if you could build some kind of shock absorbing device to "catch" the asteroid and prevent a crater, or other adverse effects?
I don't see why it wouldn't work in principle.
Anyway, there are a lot of problems with the idea, most having to do with risk and resources required.
I'm not saying it's anything but amazing. However, if the founders think they're going to get today's prices for every last ounce, as the article seems to imply, they are in for a realization.
I wouldn't worry about that one.
You're right, it's a metric shit-ton of material to make any difference, but to say we'll never have done that much is just impossible.
But at the moment the possibility of changing the mass of the earth has to be really low on the list of environmental worries. When we're moving a billion kilograms an hour, net, to Earth, I will sign your petition and donate to your campaign.
That, and the theoretical thought of what would happen should we impact the weight of the world to the point of it having a noticeable impact on earths astronomical characteristics intrigues me.
"2mil ISK OR PODDED"