November 25th 2015 marked a landmark day for space exploration and commerce as President Obama gave American citizens the right to mine asteroids for rare earth metals and minerals. This avant-garde industry has the potential to address the commodities deficit we face on earth, but what repercussions will it have politically, socially and economically?
There are few events in US history that can be credited with the idea of giving birth to a new era. The signing of the United States of America’s Declaration of Independence in 1776 is one, as well as the reformation which was instigated by Martin Luther’s 95 theses in 1517. It seems as if the year 2015 may also have the potential to enter into the legislative hall of fame.
This is because the U.S. Commercial Space Launch Competitiveness Act- H.R.2262 or as it is colloquially termed Space Act of 2015, was in November 25th 2015, officially signed into law by President Obama. This law recognises the right of U.S. citizens to own asteroid resources they obtain, and encourages the commercial exploration and utilisation of resources from asteroids.
Man has, since the days of old, looked up towards the stars with ambitions to explore and conquer the heavens. It is however, only since the mid-1950s that global powers have had the ability to actually do so.
We have come a long way from 1961. The world’s technological abilities are at a level where debates on outer space have now evolved to encapsulate potential commerce and property rights, with some experts voicing admiration and others concerns over this legislative adventure by the US.
Specifically, this bill directs the President (among other things) to facilitate the commercial exploration and utilisation of space resources to meet national needs. It has been described by Eric Anderson Co-Founder of, Planetary Resources as “the single greatest recognition of property rights in history”. Others however like Professor Ram Jakhu of McGill University, oppose these developments on legal grounds stating it directly challenges Article 2 of the 1967 Outer Space Treaty where it states “Outer space, including the moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means.”
Predicting profits and market trends
According to the website Asterank which compiles a database of asteroid specifics and then estimates the costs and rewards of mining them; we are set to experience a very lucrative market opening to us. With asteroids like Ryugu fetching an estimated profit of 32.54 bn dollars, enough to make most investors sit up and pay attention.
But one must be warned that these estimates are based on limited information. Furthermore, it is almost impossible to accurately predict or even estimate what markets will look like in 10-20 years time. However, the physical pay-off of successful mining and retrieving the material is astronomical. In a promotional video by Planetary Resources they state that "one asteroid may contain more platinum than has been mined in all of history".
This sounds like the perfect cure to a resource thirsty world. However, one must seriously consider the economic repercussions of such abundant supply. Our world economy is one based on scarcity and balanced demand and supply. How would the introduction of potentially unlimited resources affect the global economy? What will it mean to commodity intensive economies like the BRICS? And what does that mean for jobs? We have seen the recent lay-offs in Britain with the downturn of the steal industry. Could we be seeing a global employment shock as well? Unfortunately we do not have the answers to these questions, yet.
This has not stopped the likes of Larry Page of Google, entrepreneur Richard Branson and director James Camron from investing in this future. It’s no wonder; these companies have been trying to sell the dream of space commerce for a long time now, and for good reason. The pay-offs if successful are truly visionary in terms of physical pay-offs, maybe not so much for the current status quo. In either case, investor must also be aware of risk.
Risk and further questions
The major risk for any investor fundamentally lies in his or her return on investment. Space mining will initially be a very high stakes game with operations costing in the hundreds of millions. Cost over time versus projected profits will be something space mining companies will need to sell hard on. This is an industry that does not have the luxury of having a history to learn from, meaning; initially only seasoned investors with a passion for the avant-garde will likely be willing to take on the risk.
Also, but perhaps less so, investors might be turned off due to the potential political ramifications of such an investments. As mentioned above, there has been talk of the illegality of such a bill. Could we envision a scenario where countries like Russia and China retaliate to such entrepreneurship by freezing the assets of investors?
Two further questions I think must be considered from a policy point of view. Firstly, what happens if multiple countries pass a similar law and companies from around the world want to mine the same asteroid? Secondly, how can we make sure these technologies will be used in a cooperative way that benefits all man-kind? The first will be a legal nightmare, the second a moral dilemma.
No doubt we will be seeing a lot more interest in outer space mining in the next decade which will raise economic, moral and political questions. This dialogue is healthy for global cooperation. So as an investor and as an informed global citizen it will be worth watching this space - no pun intended.