realrobross'  Instablog

Although it may sound like it was ripped from the pages of an Isaac Asimov novel, asteroid mining could be a huge step forward for mankind. The concept has been around for over a century, with Russian scientist Konstantin Tsiolkovsky first postulating the idea in 1903. At the moment, the trek into the great asteroid-laden unknown is being led by one company -Planetary Resources.

One thing Mr. Tsiolkovsky didn't have was connections, something that Planetary Resources has in droves. With a lineup of investors and board members that includes various Google (NASDAQ: GOOG) executives - including founder and CEO Larry Page and former CEO Eric Schmidt - acclaimed film director James Cameron, former Microsoft (NASDAQ: MSFT) executive Charles Simonyi, and Ross Perot Jr., son of former presidential candidate Ross Perot. Seed funding shouldn't be an issue.

Nor did Tsiolkovsky have the vision. Planetary Resources has a three-step plan, with an aim to mine asteroids for water and precious metals. More specifically, the company intends to create a swarm of robotic spacecraft that can use artificial intelligence to coordinate complex mining operations without a human presence.

The whole thing may seem like a bunch of eccentric billionaires getting together to throw hoards of money at a project with little possibility of success. But it's not. According to the company's president and chief engineer Chris Lewicki, Planetary Resources is already cash-flow positive:

"When we started the company, one of the first things we did was to identify the roadmap that would get us from now until we got to the asteroids. That way, we could identify who would be interested in the things we'd be developing along the way. We already have contracts with NASA, some private companies, and even a few private individuals."

That roadmap starts with the Arkyd series 100, also known as the Leo Space Telescope. By designing and selling this "low-cost" telescope, the company believes it will be able to gain the necessary experience to develop more complex models, while generating cold, hard cash in the meantime.

The Leo Space Telescope is designed to track and analyze the size and orbital patterns of near-Earth asteroids. But, in order to generate cash in the short term, the company plans to point some of the telescopes down at Earth. The satellites will gather vast amounts of data which can then be sold to universities, businesses, and governments. Planetary Resources claims the Leo Space Telescope will be sold on private markets at a price "in the single-digit millions," making the Leo the first private space telescope on the market.

The company plans to build on what it learns during the development and launch of the Leo Telescope to get to the next phase, the Arkyd Series 200 - Interceptor. The new fleet of satellites will have added propulsion capabilities, which will be used to hitch a ride on asteroids crossing through Earth's neighborhood.

According to Planetary Resources, two or more Interceptors can work in tandem to identify, track, and "fly by" near-Earth asteroids, capturing high-resolution data in the process.

The new technology will also create an opportunity for the company to update our deep-space communication network. According to Lewicki, who has experience working on the Mars rover projects, the deep-space communication network currently in use is 50 years old and is based on primitive, Earth-based antennae. To improve upon this, the company seeks to develop small, low-power optical communications technologies to couple with the Interceptor, which would offer better communications than the limited bandwidth available on NASA's network.

The third phase of the project will expand upon the Interceptor design. By augmenting it with deep space laser communication capability, the Arkyd Series 300 - Rendezvous Prospector will allow the characterization of an asteroid's value prior to mining operations, collecting data on the asteroid's shape, rotation, density, and surface and subsurface composition. In short, the satellite will serve as a tool to establish which asteroids hold the most valuable resources and which are the most feasible to mine.

The final phase is to actually mine these asteroids. Planetary Resources claims that the initial space-resource development projects will focus on water-rich asteroids. By focusing on water - which can be used in space for hydration, breathable air, radiation shielding, and formulating rocket fuel - the company hopes to enable large-scale exploration of the solar system.

The company has a few ideas on how the actual mining operations will take place. One advanced technique mentioned by Lewicki is to harness the energy generated by the heat and cold differential on an asteroid; this is generated by sunlight hitting part of the asteroid while the rest is in shadow.. In theory, this should provide the energy needed to extract the targeted resources.

Apart from making science-fiction fans cheer, mining asteroids has many implications for life inside and outside our atmosphere. It could make long-term space travel more feasible, since astronauts would not have to return to Earth to resupply certain essential resources, such as water, gas, oxygen, etc.

Another attractive opportunity is the plethora of rare-earth metals - such as scandium, cerium, and gadolinium - contained in certain near-Earth asteroids. It's speculated that a relatively small, 1.6-km diameter asteroid with the right physical characteristics could contain more than $20 trillion worth of industrial and precious metals. For example, near-Earth asteroid 16 Psyche is believed to contain 1.7x10¹⁹ kg of nickel-iron, which would be enough to supply current world production requirements for several million years. Not too shabby.

Basic economics informs us that doubling or tripling the supply of anything while keeping demand constant will certainly drive down its price. If a Planetary Resources fleet returned from a voyage that increased the amount of gold on Earth by 100 times, the price of gold would certainly plummet.

In step, by extending the reach of potential mining operations to space, Planetary Resources could potentially alter the way we currently conceptualize scarcity. It also has the potential to ruin the company's return on investment.

But Lewicki isn't fazed:

"Of course, it's all about supply and demand, and we're subject to those risks as much as any other company. But if we as engineers had materials that were best for a job and could use those materials all the time without thinking of the costs, it would change the world. It's not about scarcity, it's about access. Fundamentally, that's what we're focused on. We want to take opportunities and deliver value just like any other business. Only our business will extend the economic sphere into the solar system.

Although this could leave some BIG GOLD subscribers shaking in their boots, don't expect any of this to come to fruition any time soon. The company plans on launching its first Leo Space Telescope in 18-24 months, and it will probably be decades before any actual space mining takes place.

Of course, the scientific community is not without skeptics. Former NASA aerospace engineer Louis Friedman says it would take "hundreds of millions of dollars" to get started. This shouldn't be a problem considering Planetary Resource's wealthy stakeholders and friends, not to mention the private sector's ability to innovate and cut costs.

It's also worth noting that upcoming NASA mission OSIRIS-Rex will be engaging in some asteroid mining of its own. The mission's goal is to harvest two ounces of material from an asteroid and return to Earth at a cost of about $1 billion. But we all know how efficient government-funded projects are.

Private versus public arguments aside, there are some other fundamental issues related to asteroid mining. Friedman states that the company would have difficulty transferring raw materials extracted from asteroids back to Earth, given the cost of going in and out of Earth's gravity well. So hang on to your gold.

There's also some competition, although it's taking a different approach. Moon Express, led by Intelius founder Naveen Jain, seeks to mine the moon, and he's already secured a $10-million NASA contract. But, considering the legal wrangling that would be involved with strip-mining the moon, I would be skeptical of the company's outlook.

In my opinion, both are interesting concepts that could have far-reaching implications for us here on Mother Earth. Could this technology allow humans to travel millions of miles into space, harvesting water and other nutrients from asteroids along the way?

The science-fiction fan inside of me sure hopes so.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.