This is not a NASA Website. You might learn something. It's YOUR space agency. Get involved. Take it back. Make it work - for YOU.
Commercialization

About That Asteroid Mining Thing

By Keith Cowing
NASA Watch
October 13, 2019
Filed under
About That Asteroid Mining Thing

That Giant Asteroid of Gold Won’t Make Us Richer
“Rejoice, people of Earth! News outlets are reporting that NASA is planning to visit an asteroid made of gold and other precious metals! At current prices, the minerals contained in asteroid 16 Psyche are said to be worth $700 quintillion — enough to give everyone on the planet $93 billion. We’re all going to be richer than Jeff Bezos! OK, now for the bad news: This isn’t going to happen. Yes, 16 Psyche and other asteroids will probably be mined for their metals. But once those metals start hitting the market in large quantities, they’re unlikely to be precious for much longer. As any introductory economics student knows, price is a function of relative scarcity — flood the market with gold, and it will go from being a rarity to being a common decoration. Supply goes up, price goes down.”

NASA Watch founder, Explorers Club Fellow, ex-NASA, Away Teams, Journalist, Space & Astrobiology, Lapsed climber.

32 responses to “About That Asteroid Mining Thing”

  1. spacegaucho says:
    0
    0

    I understand the supply and demand argument but aren’t the missing the qualitative implications? Wouldn’t this permit the use of metals in a way that would permit new and better products that can’t be produced now because of the costs?

    • SpaceRonin says:
      0
      0

      Indeed, it is a bit of a hand waving article this. Sure gold has limited value
      if it floods the market. However to run with that analogy a bit: It
      would make effective thermal radiation isolation cheap as dirt given
      that gold is the best reflector. At least three engine manufacturers out
      there use platinum alloys for their chambers these have seen 600 -800%
      price rises over the past few years. There is a similar story for
      iridium and rhenium. Scarcity is being driven by increasing demand for
      technical applications of these metals. They are all on the Technology
      Critical Element (TCE) list. Would hauling in commodity metals depress
      the markets for these materials? yes… is this a bad thing .. no. Unless you are a hedge fund manager parking other peoples money in these metals.

    • gunsandrockets says:
      0
      0

      An expanding supply contributes to expanding an economy. An expanding economy means expanding demand.

    • ThomasLMatula says:
      0
      0

      Yes, when Aluminum was very expensive it had few uses and there was no industry to produce it. When technology made it cheap a huge global industry was created around it. The same was true for oil and steel. Falling prices from an increase in supply may create lower per unit prices but total revenues increase when you hit the elastic part of the demand curved for it. This article illustrates a limited understanding of resource economics. It sees demand as static instead of dynamic.

      It’s just one of many flaws in this article’s reasoning. The other is that supply is always limited by cost of production which creates a base price for a commodity. So the price of Gold on won’t fall below the cost of producing it from space resources.

      • Vladislaw says:
        0
        0

        I am sure that wild catters drilling for oil said “gosh this will increase supply we better not drill this oil well”

        • TheBrett says:
          0
          0

          The wildcatters in Pennsylvania and Texas had far lower startup costs before they started producing a valuable product. Any asteroid mining effort is probably at least $1 billion in the hole along with several years of no revenue before they produce any revenue from their mining efforts.

          • ThomasLMatula says:
            0
            0

            The average startup cost for a mine on Earth is $5 to 10 billion. Exxon spends over a $100 billion a year just on energy exploration. A $1 billion is not a problem for either the big mining firms or investors if you show a path to a solid ROI.

          • Michael Spencer says:
            0
            0

            “Exxon spends over a $100 billion a year just on energy exploration”

            Dr. M: That number sounds huge…do you have a source, or perhaps I need to get out more?

          • ThomasLMatula says:
            0
            0

            Actually it is high as it included Chevron and BP’s exploration figures as well. Sorry.

            Exxonmobile’s capital budget in 2014 was $42.5 billion when energy prices were high, but have fallen because of the low price oil and huge reserves created by fracking.

            https://www.ft.com/content/

            Oil industry’s $1tn spending cut raises fears over future supply

            The world’s largest energy project, Kashagan is estimated to cost $116 billion.

            https://money.cnn.com/galle

        • fcrary says:
          0
          0

          Back then, probably not. Today? People still drill wells. But organizations like OPEC are based on the idea of, “Let’s not sell too much and glut the market.”

    • TheBrett says:
      0
      0

      The problem is that there’s a potential “death zone” there for asteroid mining efforts, where the price they get for the mined materials drops faster than they can reduce the costs of mining it (especially since building infrastructure to mine it cheaper would also be enormously expensive). You’d have to line up a lot of futures contracts on the material to avoid that.

      Not to mention that you’re in competition with Earth-side sources of the material, recycling of already used material that you’ve brought back to Earth (a big problem by comparison for the segment of the steel industry that produces new steel, versus the mini-mills and their ilk who just recycle it), and outright substitutes. Mining on Earth is a volatile business as is.

  2. tesh says:
    0
    0

    Is there also the small matter of that this is unlikely to come to pass any time soon – no one alive today will likely see a mining facility established and churning out blocks of gold, silver, beryllium, unibotium, or whatever… .

  3. Michael D says:
    0
    0

    You realize they don’t send the whole thing to earth in one day. Mining an asteroid that size would take decades, giving the markets plenty of time to adjust.

  4. Tom Mazowiesky says:
    0
    0

    Well it really depends on the use of the material. While gold has some practical use in electronics and some other industries, it’s primary use has been as a base material for money and for jewelry. A large injection of gold into the market, as long as it is reasonably low cost to secure would surely send gold prices plummeting.

    Now if titanium became readily available, while prices for raw materials would fall, it could be used more extensively in many industries, reducing cost of manufactured goods, similar to aluminum. This could be said of many materials that are not readily available in abundance on the planet.

    • TheBrett says:
      0
      0

      Would it? I thought the main obstacle to more heavy use of titanium is that it’s a pain in the ass to work with relative to steel and other materials.

      • Jeff Greason says:
        0
        0

        Both factors are significant; actually, now that additive manufacturing is on the rise, titanium is something I see showing up in engineering solutions more often. Titanium lends itself well to additive manufacturing and the cost of the raw material is less important (less waste) in additive. Titanium metal is too low price to credibly source from extraterrestrial materials.

        • fcrary says:
          0
          0

          Which, in a way, makes me wonder why anyone would consider selling asteroidal titanium on Earth. Additive manufacturing can be done in space. Why ship the raw metal all the way down to Earth, use it to build things, and then launch those things all the way back to deep space? Why compete with the cost of raw titanium from terrestrial sources? Why not compete based on the cost of local manufactured goods versus the cost of imports from Earth?

          (By the way, I liked machining titanium. It’s slow and wears out tools, but it doesn’t stick and pull the way copper or brass do. But I understand it is a pain to weld compared to steel.)

    • Jeff Greason says:
      0
      0

      Platinum group metals have a host of industrial uses and many more which have been shown in the lab but not made practical because of price alone (high temperature Iridium based alloys, for example). Bringing the price of platinum group metals down ten-fold on a sustained basis would have implications up and down the engineering/technology chain while still having a high enough value to be a potentially valuable commodity. In other words, the demand curve for platinum group metals is elastic — lowering price will increase demand, in the long run.

      You might be right about gold — it isn’t obvious that industrial uses would expand very much with lower price, though cosmetic/jewelry uses might well expand considerably.

  5. mfwright says:
    0
    0

    I’m thinking find a asteroid (preferably one that crashed on the moon) that has significant amounts of platinum, that will change many things like when aluminum became cheap.

  6. Vladislaw says:
    0
    0

    ya .. but . who brings in the first one … will be getting a great return..

  7. Michael Spencer says:
    0
    0

    Where to begin?

    1. This is the same Bloomberg that published a story about Chinese hacking server motherboards supplied by Supermicro- a charge that has been denied repeatedly and which has not a single shred of evidence. Not one.

    2. Bloomberg being business-oriented should realize as I did in Accounting 101 that the cost of production is a huge factor setting prices – how do you economically land mega-tons of raw material? Orr even finished goods?

    While the Belt is full of very valuable elements, and minerals, and energy, only one of the three will ever be part of primary manufacturing on the surface of the earth: sunshine. The others on that list will be used for in situ manufacturing – and that is something just waiting to make hundreds of new billionaires.

    It’s a very long way into the future, for many reasons, not the least of which is demand for manufactured products from customers in space, not on earth.

    The net effect of this type of silly reporting could nonetheless be positive, at least for those of us who agree with Mr. Bezos. It will help turn the gaze of ordinary folks toward space, and could, just could, start a conversation that links terrestrial degradation with the possibilities of space development.

    Political view follows: My own sense about the future of the earth is grim, very grim indeed. Why? Because all of those Indian and Chinese and the rest of them experiencing subsistence living all want our standard of living. They can glimpse television depictions of life in Europe, or Montana, or Osaka; or indeed Islamabad or Beijing, and say “I want that”. And why not?

    Here’s why not: This of us in the West are approaching terrestrial bankruptcy; we’ve far exceeded the carrying capacity of the planet. Add a few billion and what do you get?

    Well, one thing you might get is an argument for space-living. And that while a sweet-sounding concept, is centuries away, centuries filled with war and other human unpleasantries. The ability to make this transition should probably be a term in the Drake Equation.

    The those of us alive now and largely in the west are living at the apex of social evolution. It’s downhill from here, by and large, fits and starts, but downhill. So live it up.

    /political views, thank you very much.

    • ThomasLMatula says:
      0
      0

      Its easy to get into that doom and gloom mode given all the doom and gloom news. But the future is still bright. A book that puts perspective on it written before the doom and gloom era.

      Harrison Brown -“The next hundred years: Man’s natural and technological resources” 1970

      Shows that we haven’t even started to tap the Earth’s wealth.

      G. J. Leigh – The World’s Greatest Fix: A History of Nitrogen and Agriculture

      In the late 19th Century the doom and gloom crowd was focused on the Nitrogen Crisis. Technology eliminated it so well no one even remembers that civilization was suppose to collapse because of it.

  8. TheBrett says:
    0
    0

    16 Psyche would have to park itself in GEO for it to be profitable to mine it. Estimates on the cost per kilogram of launch to GEO alone run at $20,000 to $30,000/kg, which is nearly half the price of gold per kilogram.

    • ThomasLMatula says:
      0
      0

      Those are NASA prices and should drop by 1-2 orders of magnitude when Starship is operational. That is why Starship is so important. IF it succeeds it is a gamer changer that enables the future.

      Space will be a very different place with launch prices of $100 kg to LEO and $400-600 kg to the lunar surface.

    • DougSpace says:
      0
      0

      The mining robots would produce more mass of metals than their own mass. So, their product could cost much less to produce than the cost of launching that same amount of mass.

    • gunsandrockets says:
      0
      0

      Not the right measure.

      The correct measure is: what would be the cost per kilogram of GEO to Earth surface?

  9. Michael Mahar says:
    0
    0

    All the precious metals will be owned by the govt/consortium that mined it. They won’t dump it on the market and crash the price. They will lower the price to undercut other suppliers and then stop. DeBeers used to own almost all the diamonds in the world and kept the price high for decades. They had grain silos full of them. It’s not the total supply. It’s the supply available.

  10. fcrary says:
    0
    0

    I think some of you, and especially whoever came up with the title for that _Bloomberg_ article, are missing an important point.

    16 Psyche is not made of gold. The best actual data we have say it’s largely metallic. Based on cosmic abundances, it’s probably a safe guess to say that’s mostly iron. If the theories of its formation (as the core of a larger body which differentiated and then got broken apart or battered down to the core) are correct, then the abundance of gold in Psyche are probably much higher than their abundances in terrestrial, crustal rocks. But that’s a whole lot of ifs, and even so, we still wouldn’t know where on the asteroid the gold was most concentrated or easily mined.

    Yes, I know that doesn’t affect any of the issues about flooding the market or how to sell the metals. But it does mean that, on top of the costs of extraction and return to the desired market, there are other costs. The cost of prospecting. And, since some of those prospecting efforts will not pan out, amortizing the cost of failed prospecting efforts.

    • ThomasLMatula says:
      0
      0

      So it is likely the Gold will just be a by product of extracting metals that are more important to space settlers, like the Iron, Copper, etc.

  11. BlueMoon says:
    0
    0

    I think a lot of people are missing an essential point: A commodity is only worth what someone will pay or barter for it. On delivery.

  12. Bill Housley says:
    0
    0

    You know what? A world where we can hit an astroid (variable distances and velocities relative to Earth), extract stuff, and bring it home routinely enough, cheaply enough, and in enough quantity to disrupt the current industry…is not the same world that we live in now. Gazillions of other industries will be permanently and dramatically disrupted before that will ever happen so as to make ANY predicted impact of any one of them impossible.