The question: Where is the space gold mine? While industrial processes add value at every step, space is often seen initially as a source of raw materials. Specifically, asteroids, the Moon, or Mars are seen as sites for future mines. These mines could produce anything from water to gold, Helium-3 to platinum. In this post, I will cover factors general to all material products before diving into specific examples.
My contention is that there are no known commodity resources in space that could be sold profitably on Earth.
The key to a successful business is to obtain feedstocks for cheap and to sell products at a tidy profit. The problem with space mining is that the feedstocks are generally much more expensive than on Earth, and there is an extremely limited market for products, except on Earth. More broadly, for every industrially valuable ore, there is already a competitive and adequate, if not spectacular, supply chain here on Earth.
If and when cities are built on the Moon or Mars, then local sourcing of raw materials makes sense in that context. But until then, the money, the financial resources, are here on Earth. So to make a killing in space, some sort of commodity needs to be obtained, transported to Earth, and sold, all for less money than conventional supply chains.
More broadly, it is instructive to consider the value chain as raw materials are gradually processed into high value commercial goods, such as cell phones. Primary production obtains the ores needed to produce chemically pure elemental feedstocks, which are usually packaged in some standard, fungible way. Secondary production processes those feedstocks into individual components, such as the machining of an aluminium cell phone chassis from a raw billet. Finally, the various components are assembled, packaged, and sold. In something like a cell phone, value accrues at every step along this process, representing the revenue stream for each specialized supplier. As the designer and marketer, Apple pockets something like 30% of the sticker price of each phone sold, while the aluminium smelter takes home much less than 1%. A billet of aluminum is much closer in value to raw bauxite than a finished phone.
Similarly for minerals from space. The value per kg is of crucial importance for products where shipping costs are important, and the value per kg of nearly every commodity good is next to nothing.
But just how important are shipping costs? On Earth, bulk cargo costs are something like $0.10/kg to move raw materials or shipping containers almost anywhere with infrastructure. Launch costs are more like $2000/kg to LEO, and $10,000/kg from LEO back to Earth. Currently there is no commercially available service to ship stuff to and from the Moon, but without a diverse marketplace of launch providers, there’s no reason to expect that the de facto monopoly or duopoly of SpaceX and Blue Origin would sell it for less than $100,000/kg, literally a million times more expensive than shipping anywhere on Earth. Before we hate SpaceX for price gouging, it’s not certain that shipping for less than this amount is even possible, but one could relax this assumption by several orders of magnitude and still arrive at the same answer.
As an aside, one obvious way to sidestep the mass transportation requirement is to choose a product with no mass, such as electromagnetic radiation. And indeed, the most vibrant commercial space product is communications, which are beamed using microwaves. Raw microwaves can be used to transmit electrical power, but in a former post I demonstrated that space based solar power can’t compete with the rapid evolution of ground based solar power. Not even a little bit!
Let’s consider a representative list of the most expensive materials in the world. In descending order, they are:
- Antimatter, currently $62.5t/g.
- Californium, $25m/g.
- Diamond, $55k/g.
- Tritium, $30k/g.
- Taaffite, $20k/g.
- Helium 3, $15k/g.
- Painite, $6k/g.
- Plutonium, $4k/g.
- LSD, $3k/g.
- Cocaine, $236/g.
- Heroin, $130/g.
- Rhino horn, $110/g.
- Crystal meth, $100/g.
- Platinum, $60/g.
- Rhodium, $58/g.
- Gold, $56/g.
- Saffron, $11/g.
The previous ballpark estimate for transport costs was $100,000/kg, or $100/g. Since I want to be inclusive, I’ll include everything down to saffron in the list above, whose cost is roughly equal to the current LEO-surface transport cost.
Despite their high value density, none of these make good candidates for commercial extraction from the Moon or asteroids, for a few different reasons.
- Many do not exist on the Moon at all, or in relatively poor abundances compared to the Earth. This includes everything except for Helium-3, which is slightly more abundant in Lunar dirt.
- Many are only valuable because of artificial scarcity, such as the illegal drugs or diamonds.
- None of the products represent large markets, due to their prohibitive price or relative scarcity. As a result, they are subject to substantial price elasticity depending on supply. For example, the global annual market for Helium-3 is about $10m. Double the supply, halve the price, and the net revenue is still about the same. No-one seriously thinks that Lunar mining infrastructure can be built for less than many billions of dollars, so even at a price of $100,000/kg, annual demand needs to exceed hundreds of tons to ensure adequate revenue and price stability.
- Tritium, helium-3, platinum and antimatter represent speculative future markets, particularly where increased supply could help develop an industry based on, say, fusion, exotic batteries, or a bunch of gamma rays. If fusion-induced demand for helium-3 reaches a point where annual demand has climbed by three orders of magnitude, then I am willing to revisit this point. But current construction rates of cryogenically cooled bolometers are not adequate to fund Lunar mine development, and solar PV electricity production has every indication of destroying competing generation methods, including fusion.
- Some relatively expensive minerals are only expensive because low levels of industrial demand have failed to develop efficient supply chains. If demand increases, new refining mechanisms are invariably developed which substantially lower the price. A salient example here is rare platinum group metals.
In summary, the Moon seems to have nothing that large numbers of humans are willing to part with large sums of cash to obtain.
The elixir of life is something that no shortage of people would pay arbitrary prices to obtain. Alternatively, while extremely unlikely, it may be discovered that living in Lunar gravity extends lifespan. If something like this exists, then I think there is a clear business case to be made for the industrialization of space. Without it, I don’t believe that mining the Moon for rocks and metals makes economic sense.