Why the Wall Street Journal is Dead Wrong about Asteroid Mining

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Asteroid mining hasn't even gotten off the ground yet.

But it's already drawing some bad – and very misguided – press

I wrote to you last month to tell you about a new startup that wants to mine asteroids for resources that could be worth trillions.

Indeed, as I said, just one of these rocks the size of an art museum could be worth $100 billion. (See "'Mining the Sky' for an Abundant Future.")

I also told you to keep an eye on Planetary Resources and its breakthrough high-tech system as a possible future investment.

Not only does the new firm have the backing of several billionaires, it also has the support of the U.S. government.

And let's not forget our friends across the pond…

This month, the European Space Agency will begin training a team to land on one of these giant space rocks and return with samples for researchers to study. They want to tap asteroids for metals and minerals, too.

Clearly, some very bright leaders all over the world believe "mining the sky" will be a key part of our future.

That's why I still believe the question isn't if we will mine asteroids, but when.

But in a story last Tuesday, none other than The Wall Street Journal tried to cast doubt on the whole concept.

The headline says it all: "Exhausting Earth's Resources? Not So Fast."

The central part of the report is that Earth has more resources than we can dig up in decades.

As a long-time Journal reader, I have to say I was surprised the writer was so naive.

The article focused on only one aspect of space mining – that Earth is running out of resources like gold, silver, and platinum. As I see it, the Journal was bending over backwards to support the current, terrestrial mining industry.

Because there's much more to the story than that…

We really are reaching the practical resource limit here on Earth, for three main reasons – cost, red tape, and politics.

1) First, while it's true we have decades worth of gold and silver, getting those metals out of the ground remains a challenge and an extremely expensive proposition. All the easy-to-reach metals got mined out long ago. Today, you have to crush tons of rock to get just a few ounces of gold.

So there's a lot of room for asteroid mining to become easier and less expensive than conventional mining.

2) Second, governments around the world keep adding new regulations.

No doubt, some of that stems from safety concerns. For instance, Europe contains several deposits of the rare earth minerals needed for many high-tech gadgets, such as smart phones. There's just one problem. The tracts contain radioactive rocks, too. For obvious reasons, Europe doesn't want workers exposed to the hazards of radiation, so the government refuses to grant mining permits in such cases.

And here in the U.S., state and federal regulators remain committed to protecting the public against mining pollution.

Take the case of the Mountain Pass rare-earth mine near California's Mojave Desert. Though it was the only U.S. rare earth mine, it closed in several years ago in part because of pressure over contaminated wastewater. After a major cleanup effort to meet government standards, it recently reopened. The mine now belongs to Molycorp Inc. (NYSE:MCP) and is the largest operating rare-earth mine in the western world.

3) Finally, politics also drive up the cost of mining by making it an uncertain business in a volatile world.

To see what I mean, just look at recent events in Peru, a world leader in metals mining. When former leftist rebel Ollanta Humala became president last year, many feared he would hit miners with huge taxes. Or even worse… nationalize their firms.

Just the reverse has occurred.

Humala has cracked down on massive protests over a $4.8 billion Conga gold and copper mine. He even declared a state of emergency after 10,000 rioters clashed with police and shut down a regional airport. Now, should Humala lose power, that would cast grave doubt on that mine's future and its value for investors.

All of this goes to show that mining here on Earth doesn't just center on the amount of reserves we have in the ground. It's all about what you can feasibly dig up.

Not so in outer space.

Since there is no life form we know of on asteroids, we don't have to worry about hurting a rare species. There are no rivers to pollute or skies to poison. Only a thriving commercial space sector awaits. (See "Why I'm Watching Tomorrow's Rocket Launch.")

Speaking of which, there's another big reason I believe we will mine asteroids in the Era of Radical Change.

We need to tap these orbiting rocks to support a vast new space system that will emerge in the near future. That's because commercial space travel will become a regular part of our lives in the very near future.

I believe the U.S. and other nations will build hundreds of new space ships and satellites. We will send them to the far reaches of our solar system.

Getting all the needed supplies from Earth and transporting them into outer space is just too costly. That means we must gather supplies along the way.

So, no matter what the Wall Street Journal says, you can bet that we will mine asteroids, and that it will be a key part of life in the Era of Radical Change.

P.S. If you're interested in learning about high tech investment opportunities long before they hit the pages of the main stream press, the Era of Radical Change newsletter is a great place to start.

And you can't beat the price. You can get it free by clicking here.

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About the Author

Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.

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  1. Jeff Pluim | June 10, 2012

    It might be a little difficult to mine, and especially process, the minerals from space. So the logical solution is to merely transport them to Earth to process. That's where huge environmental problems come into play. The Earth currently grows its mass by about 100,000 tons a day, in the form of space dust and meteorites that land on the planet. But what happens when we start to increase that daily mass by hundreds more tons a day, through our space mining efforts. And what about the potential for bringing home a space bug that our environment or our bodies are not prepared to deal with. I have no doubt that space mining will happen, and sooner than most people think. But we had best look at the potential consequences to Earth first.

    • Curt Prasky | June 12, 2012

      Jeff Plum writes:

      "It might be a little difficult to mine, and especially process, the minerals from space. So the logical solution is to merely transport them to Earth to process. That's where huge environmental problems come into play."

      Aside from the environmental concerns Mr. Plum cites, bringing the stuff back to Earth to process would add costs that are completely unnecessary. The thing to do is to build parabolic mirrors in orbit and use solar energy at least for some of the pre-processing. We might end up bringing raw material to Earth at first, but I believe the ultimate goal should be to move most of our heavy industry into space, leaving Earth to produce agricultural foodstuffs for what will become a growing population scattered throughout the Solar System. I can see a probability that in another 500 years or so, the majority of the human population will be located off Earth, with a brisk trade going on between Earth providing food to the habitats and manufactories in space and the outer population providing machinery and other manufactured products, gases (the methane lakes on Titan) and agricultural chemicals to Earth.

    • Robert Horning | June 12, 2012

      Surprisingly, it isn't nearly so hard to process minerals in space as it is on the Earth. There are two things that are a huge problem with minerals on the Earth that aren't even a problem in space: gravity and an oxygen rich atmosphere.

      Most minerals, in space as well as on the Earth, are tightly bound with oxygen, where most of the refining process deal in some way with trying to remove that oxygen. That requires very complex systems that are very dangerous to work with and are best done in large batches in terms of economically producing things like steel. That is where you have steel mills costing billions of dollars to build come from, not to mention the chemicals, by-products of the refining process, and the intermediary steps in that refining process to deal with terrestrial issues of the refining process.

      In space, on the other hand, you don't need to worry about keeping that oxygen in the air from getting into the process because it isn't there at all. A vacuum is "free" and indeed the by-product of the refining process, namely all of that oxygen bound up with the minerals, has economic value all to itself as it is something useful both for rocket fuel and something to breathe. Refining materials in space can also be done on a much smaller scale, where you might be talking about a refinery producing dozens of pounds of material per hour rather than necessarily tons of the stuff in order to be economically practical. Minerals can be sintered or melted with what amounts to be a magnifying glass turned to the Sun focused on the minerals being refined… with a minimum number of moving parts.

      As for mining asteroids, you don't need to be worrying about all of the problems that deep mining has here on the Earth in part because gravity doesn't play nearly so big of a problem. A large branch mine on an asteroid doesn't need nearly all of the structural supports and complex engineering needed to keep the mountain from collapsing in on top of you, but instead would be simply worrying about trying to keep the ore body from flying apart as the minerals are being extracted. It is a very different environment.

      No doubt getting this mining and refining equipment into space is a problem, and as long as it costs $10,000 per pound to put equipment into space it won't be economically viable to start a mining operation on an asteroid. That is the huge problem facing the aerospace industry and any would-be asteroid miners, not the technical problems of actually extracting the minerals. As soon as that price for travel to orbit around the Earth itself drops to reasonable levels, this asteroid mining industry will take off. BTW, this goal of reducing launch costs is something that is the focus of a whole bunch of activity in the commercial spaceflight industry and there are a number of promising ideas which could blow the traditional price point of launches into space out of the water, dropping that cost by 1/100th of the current launch prices or more.

    • paul canosa | June 12, 2012

      Jeff, I think when you factor in the cost of putting a half a kilogram into low earth orbit (currently at $10,000) one comes to the conclusion that resources mined off planet are best left in zero G. This will enable value added processing where it is most needed. Perhaps a facility can be constructed at Lagrange points which will further push development outward. Thus greater profits can be realized which in turn will foster more investment. At least that is how I see it in the foreseeable future

  2. Fernando Pelatos S, | June 10, 2012

    Dear Michael Robinson,

    Why don't have been mining the mediun or big asteroids that fall or fell on earth in my state we have one medium size that fell about 15 years, and it's diameter is about 10 meters, we where too close when this aesteroid fell and burned and smoked a big area. Could this be mining or change it's mineral properties ?. If can be mining this way won't affect ecological enviroment. Do you know what use can we do to this aesteoid ?.

    Best Regards,

    Fernando Pelatos S.

  3. Fred Stork | June 10, 2012

    I have this strange feeling, not long ago, "experts" were trying to convince general public, that oceans "can't be polluted, they are just too big". Whatdaya know, look at them now just a few decades later, a thick soup of poison, mountains of trash, fish uneatable because of extreme mercury poisoning. Some fools still eats fish, because "it's good for yea".
    Hello, what happens in Vegas, stays in Vegas, what you pollute in solar system, STAYS IN SOLAR SYSTEM.
    Anyway, the argument that is sooo self defeating, is — DO YOU LIKE FIAT CURRENCY, the worthless paper being printed by trillions? most likely not.
    So how can you justify mining gold out in space, and completely under-mining (pun intended) the value of the only money on Earth that's not yet completely corrupted. Why don't make iron a money, yes, exactly, you will be made a fool, iron is not a precious metal. If you start mining massive amounts of gold, it will become industrial metal, just like iron did. (it used to be minted as money, before technology made it affordable). Aluminum was precious, when Napoleon got a goblet made from aluminum, it was worth more than it's volume in platinum.
    Can't you understand, it's all a zero sum game, you can't bring gold in and make everyone more rich, everything will inflate to add up to same total value, of course not the same numbers, maybe that's what fools you.
    Did you ever watch old westerns, they robbed a bank of 5,000 dollars, big deal, you think, but in those days you could retire on that sum of money.

    • David | June 12, 2012

      You are right, the gold would become inflated and become a useful industrial material. The new currency would no longer who had cash but mineral wealth. The one with the most resources would be the richest person alive since that person can build the most with it. All that matters in the future would be who has the most energy "nuclear, solar, etc" and the most resources.

  4. Jim Thompson | June 11, 2012

    Say Michael,

    You mention in your article titled "Why the Wall Street Journal is Dead Wrong about Asteroid Mining" that that would be no pollution in your statement "Since there is no life form we know of on asteroids, we don't have to worry about hurting a rare species. There are no rivers to pollute or skies to poison. Only a thriving commercial space sector awaits."

    I would say that unless you plan to use all of the rock and dust associated with any asteroid you are mining, you will have pollution. Just image all those little pieces of dust and rock shooting around at very fast speeds waiting to puncture some space ship that happens to be in the wrong place at the wrong time like a missle.

    I am not saying that can not happen today. It can and does. I believe the MIR space station had been struck at least 1 time if not more by micrometeorites. But in this case the small particles are positioned randomly in space and not part of the dust/rock stream as what might be produce duuring a space mining operation.

    Like you I am excitied about all this, but we should do a thorough job of researching and enginering so we don't repeat the mistakes of the near Earth space environment by making the space environment away from Earth too dangerous to work and navigate through. Look how many times the ISS has had to move out of the way from debris.

    Thanks for reading what I think.

    Jim

    • paul canosa | June 12, 2012

      Jim, I think that ore processing in zero g is not going to be anything like "open pit" mining. Quite likely there will be a sleeve fitted over the asteroid thus keeping all gases and important mineral "chips" from flying off station. Simply vacuum up the residue to realize greater profits.

  5. Jack Carroll | June 11, 2012

    Dear Michael

    I enjoyed reading your article. It was very entertaining, in the way that Star Trek is entertaining. Your quote: “Asteroid mining hasn't even gotten off the ground yet” is very apt. The rockets may get off the ground, and they may bring back some sample at enormous cost, and take one hell of a long time to do it, but that’s as far as will get in our lifetime, or maybe our grandchildren’s lifetimes. The Wall Street Journal has it mostly right this time.

    The idea of mining asteroids for heavy minerals any time soon is so hair brained that the people in NASA and the JPL, and I’m talking about the people in those organizations who know what the hell they’re doing, must be quietly laughing their heads off at the idea. They will go along with it of course in the interests of science and lots of new funding in the form of new investment, and who can blame them?

    Don’t get me wrong, I’m no Luddite. Great art in the Renaissance depended on rich patronage just as great science does today, unless it’s projects are already proven commercially viable. This is going to be great science, and I’m all for it, but it is not going to make any money for it’s investors if they think that getting a few tons of heavy minerals back to Earth from millions of miles away at enormous expense, nay astronomical expense, is going to make a profit. And that’s if our embryonic space technology is even capable of such a feat which I seriously doubt. More about that later.

    You also mention that some companies involved in terrestrial mining are reluctant to expose their workers to radiation form certain minerals, and hence the need to go to space for them. Does’nt anyone in the asteroid mining project realize that radiation exposure in outer space is infinitely more dangerous, especially over the very long periods of time which space travel requires? Does the “team in training” know this? They will be lucky to survive the journey, and that’s without all the other physical and psychological problems they will have to overcome in order to survive in that tremendously hostile environment. There is no doubt that people will be fighting to get on the team and take part in this great adventure, I wish them luck and they’ll need lots of it, but the shareholders will still be creamed.

    I notice there is no mention in your article about re-entry. How do you get a few hundred tons or more of heavy minerals, or even a few tons, from space to Earth, and at reasonable cost, without it burning up in the atmosphere? Has anyone answered that question? It may turn out to be the biggest problem of all to solve, at reasonable cost, unless factories using these minerals are going to be built in orbit or on the Moon. Can’t you just imagine the cost of that! When all is said and done business is about making money, which in this instance means overcoming huge technical problems at reasonable cost. I find myself repeating that phrase “at reasonable cost”. All potential shareholders in this project should do the same.

    Yours sincerely

    Jack Carroll

    Dublin, Ireland

    • John Doe | June 12, 2012

      It's funny that you mention Star Trek. Science fiction is only fiction till science makes it fact.

      "it is not going to make any money for it’s investors if they think that getting a few tons of heavy minerals back to Earth from millions of miles away at enormous expense"

      You're ignoring that mining asteroids for metals will not be their initial goal. It will be to obtain a source of water which can be used to create fuel already in orbit around the Earth to GREATLY decrease that "astronomical expense". They can then sell this fuel to any agency that wants to go anywhere further then LEO (Low Earth Orbit). This would decrease mission costs of any mission further then LEO by at least a factor of ten. Not needing to bring fuel for your mission up with you means you can either:
      a.) Bring way more material up with you therefor getting more done for the same cost.
      or b.) Do smaller sized missions at a fraction the cost.
      Not to mention all the other things water is needed for in space. As it stands right now. It costs about $20000 to get just one kilogram of water into LEO for the astronauts on the ISS.

      "radiation exposure in outer space is infinitely more dangerous, especially over the very long periods of time which space travel requires"

      For some reason when people say radiation everyone freaks out. The facts are even on a three year mission to Mars. The increased likelihood of getting cancer is still less then it is for smokers. Somewhere between 1% and 19%. For smokers it's about an increase of 20%. It would be significantly less for a trip to a near Earth Asteroid.

      "How do you get a few hundred tons or more of heavy minerals, or even a few tons, from space to Earth, and at reasonable cost, without it burning up in the atmosphere? Has anyone answered that question?"

      SpaceX's Dragon Capsule seems to be fine at that. Though on it's recent voyage to the ISS it only brought back 450kg of material. With the market price of platinum at 1450/oz a single load would be worth $23 million dollars. Not to mention they know they wont be bringing anything back for near fifteen years, and who knows what advancements in engineering with allow for greater hauls back by then.

    • Bill Hensley | June 12, 2012

      The idea of mining asteroids for heavy minerals any time soon is so hair brained that the people in NASA and the JPL, and I’m talking about the people in those organizations who know what the hell they’re doing, must be quietly laughing their heads off at the idea.

      Actually, Jack, they're hiring people from JPL. Specifically, Chris Lewicki, who is the President of Planetary Resources was a Mission Manager and Flight Director at JPL. And JPL recently published a feasibility study on moving a small asteroid to lunar orbit to be mined for resources. There's no doubt the business risk is significant, but technically it looks doable with enough capital. And capital is one thing Planetary Resources should have plenty of, judging by the A-list billionaires among their backers.

  6. D Wenzel | June 12, 2012

    This will be a long term project, and I doubt there will be great returns for investors for many years. But, in the long term, it will make some people very rich indeed, and all the technical challenges listed above will be addressed.

    For example, reentry of the material? Easy, use some of the slag/waste from processing the ore to make a rough ablative heat shield. It can be oversized for the job since there is plenty of such material to use at little or no marginal cost. Regards the radiation risk in space – well, who says the mining will use people at all? It would make much more sense to use robots, perhaps with human maintenance crews, although even that may not be needed. And so on…

    Once you have the infrastructure to extract, process and move large amounts of material from asteroids to Earth, the marginal cost of producing the materials will be much lower than extraction on Earth, and mining of materials available from asteroids will rapidly shift from Earth. How long this wil take is anyone's guess, and the smart investor would probably wait until others have developed and demonstrated the tools, then simply copy and improve. Finance will be much easier once the viability has been demonstrated. It might take a long time to reach this point, but after that, it will be like a gold rush, and many competitors will rush in. I could imagine the shift from Earth to space mining then taking perhaps a decade or two, but no longer.

  7. Jack Carroll | June 12, 2012

    Hi John Doe

    I think you are missing my main point. The Dragon capsule has limited capabilities and it won't be transporting 450kg of pure platinum to earth any time soon unless we find a way of refining thousands of tons of ore in outer space or on the moon.

    There is no reason to believe that the concentration of platinum in asteroids is much more than in the earth's crust which is 0.005ppm. Getting thousands of tons of ore to earth from space is just too big a task. Can you imagine the spectacular splashdown even if it was feasible? It would probably trigger a tsunami. I just ain't gonna happen!

    • Ryan B. | June 13, 2012

      Planetary Resources will not undertake to transport humans to space. The costs are huge, the risks advanced, the utility negligible. As explained in the announcement video on their website, their plan is to use redundancy and automation via swarms of robotic craft enhanced by AI developed for the purpose (refining this is part of the time scale for profitability).

      Naturally, they have to figure out how to process the asteroids to a significant degree in space. Hence the long time scale for return on investment. If immediate profitability was the the only standard for producing something, nothing would ever have been produced. It is not immediately or even imminently profitable. I submit to you, however, that it is inevitably profitable.

    • John Doe | June 13, 2012

      We've still got at least 15 years of development at least to increase the carry capacity of Dragon capsule before Planetary Resources is ready to do any mining.
      Sure there's reason so believe platinum is in higher concentration of asteroids then the Earth crust. Platinum is a heavy metal. Meaning when the Earth was forming most of it sunk way back when our pale blue dot was just a hunk of molten slag itself.

      I'm not sure what your obsession with getting thousands of tons down from space at once is. There no reason you couldn't just slap some heat shielding and a parachute on a couple hundred kilograms and still make damn good money.

      "I just ain't gonna happen!"
      I'll assume you mean 'it just ain't gonna happen'. This is the most common and most silly statements I hear. Of course it's going to happen. The Earth alone will eventually not be able to support humanity. We've always been grasping for more. It's merely a matter of when.

    • Curt Prasky | June 13, 2012

      "There is no reason to believe that the concentration of platinum in asteroids is much more than in the earth's crust which is 0.005ppm. "

      Of course there is. The thin layer of clay at the K-T boundary is significantly richer in iridium and other platinum-group elements than the Earth's crust in general. This is what led to the asteroid-impact theory for the dinosaur extinction 65 million years ago. Plus, we have have been studying the composition of meteoroids for long enough to be certain that the nickel-iron asteroids are considerably richer in the platinum group metals than the Earth's crust.

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