"In the Race for Space Metals, Companies Hope to Cash In"
I suppose it's time to dust off the alchemists fallacy for a new half-generation.
First though, from Undark, May 8:
Mining asteroids could, in theory, reduce the burden on Earth’s resources. Will it live up to its promise?
In April 2023, a satellite the size of a
microwave launched to space. Its goal: to get ready to mine asteroids.
While the mission, courtesy of a company called AstroForge, ran into
problems, it’s part of a new wave of would-be asteroid miners hoping to
cash in on cosmic resources.
Potential applications of space-mined material abound: Asteroids
contain metals like platinum and cobalt, which are used in electronics
and electric vehicle batteries, respectively. Although there’s plenty of
these materials on Earth, they can be more concentrated on asteroids
than mountainsides, making them easier to scrape out. And scraping in
space, advocates say, could cut down on the damaging impacts that mining
has on this planet. Space-resource advocates also want to explore the
potential of other substances. What if space ice could be used for
spacecraft and rocket propellant? Space dirt for housing structures for
astronauts and radiation shielding?
Previous companies have rocketed toward similar goals before but went
bust about a half decade ago. In the years since that first cohort left
the stage, though, “the field has exploded in interest,” said Angel
Abbud-Madrid, director of the Center for Space Resources at the Colorado
School of Mines.
A lot of the attention has focused on the moon, since nations plan to
set up outposts there and will need supplies. NASA, for instance, has
ambitions to build astronaut base camps within the next decade. China, meanwhile, hopes to found an international lunar research station.
Still, the pull of space rocks remains powerful and the new crop of
companies hopeful. The economic picture has improved with the cost of
rocket launches decreasing, as has the regulatory environment, with
countries creating laws specifically allowing space mining. But only
time will tell if this decade’s prospectors will cash in where others
have drilled into the red or be buried by their business plans.
n asteroid-mining company needs one major
ingredient to get started: optimism. A hope that they could start a new
industry, one not of this world. “Not a lot of humans are built to work
like that,” said Matt Gialich, co-founder and CEO of AstroForge. Since
the company’s April 2023 demo mission, it has yet to come close to
mining anything.
What he and colleagues hope to extract, though, are platinum-group metals,
some of which are used in devices like catalytic converters, which
reduce gas emissions. Substances like platinum and iridium, meanwhile,
are used in electronics. There are also opportunities in green
technology, and new pushes to produce platinum-based batteries with better storage that could end up in electric vehicles and energy storage systems.
To further the company’s goals, AstroForge’s initial mission was
loaded with simulated asteroid material and a refinery system designed
to extract platinum from the simulant, to show that metal-processing
could happen in space.
“The field has exploded in interest.”
Things didn’t go exactly as planned. After the small craft got to
orbit, it was hard to identify and communicate with among the dozens of
other newly launched satellites. The solar panels, which provide the
spacecraft with power, wouldn’t deploy at first. And the satellite was
initially beset with a wobble that prevented communication. They have
not been able to do the simulated extraction.
The company will soon embark on a second mission, with a different
goal: to slingshot to an asteroid and take a picture — a surveying
project which may help the company understand which valuable materials
exist on a particular asteroid.
Another company, called TransAstra, is selling a telescope and
software designed to detect objects like asteroids moving through the
sky; Chinese corporation Origin Space has an asteroid-observing
satellite in orbit around Earth, and is testing out its mining-relevant
technology there. Meanwhile, Colorado company Karman+ plans to go
straight to an asteroid in 2026 and test out excavation equipment.
To achieve the ultimate goal of pulling metals from space rocks,
TransAstra, Karman+, and AstroForge have received a combined tens of
millions of dollars in venture-capital funding to date....
I've referred to the Alchemist Fallacy quite a few time over the years,
most recently in the context of mining the moon or asteroids or somesuch
but haven't highlighted the paper where I first saw the term.
It's by Yale's Professor Nordhaus, one of the heavyweights.
(if you glance through his c.v. you'll find at least three Nobel Laureates he's co-authored with, among other stuff)
Via the Social Science Research Network:
27 Pages
Posted: 5 Oct 2005
William D. Nordhaus Yale University - Department of Economics; Cowles Foundation, Yale University; National Bureau of Economic Research (NBER)
Date Written: April 2, 2005
Abstract
The present study examines the importance of Schumpeterian profits
in the United States economy. Schumpeterian profits are defined as those
profits that arise when firms are able to appropriate the returns from
innovative activity. The paper derives the underlying equations for
Schumpeterian profits. It then estimates the value of these profits for
the non-farm business economy and for major industries. It concludes
that only a miniscule fraction of the social returns from technological
advances over the 1948-2001 period was captured by producers, indicating
that most of the benefits of technological change are passed on to
consumers rather than captured by producers. These results indicate that
the bubble of new-economy stocks in the 1990s resulted from the
alchemist fallacy.
Alchemy was an ancient art devoted to discovering a miraculous
substance that would transmute common
metals into gold. Most recently,
this philosophy resurfaced with the
view that the “new economy” could
spin rapid technological change into profits and fantastic stock values.
Many have scoffed at the idea that
base metals can be transmuted into
precious ones. However, that is not
the alchemist fallacy. Many far more
miraculous things have arisen than such a physical transformation. Rather,
the alchemist fallacy is to think that, once such a process for producing gold
is discovered, gold would retain its
scarcity, and the discoverers would be
rich beyond belief.
The modern analog to alchemy is
the new economy, which indeed
provides miraculous productivity growth along with a dazzling array of
new goods and services. The phenomenal
increases in computer power over
the twentieth century, for example, were
far more rapid than anything in the
historical record. Many
financial analysts apparently believed that a
substantial part of the economic value of the innovations in new-economy
firms would be captured by the innovators, and this in part drove the stock
market boom of the dot.com firms
and the NASDAQ market sector. The
result was the rise in the value of
computer-related firms from virtually
nothing to over $4 trillion in early 2000.
The present paper investigates whether in fact investors in the 1990s
once again succumbed to the alchemist fallacy. The United States economy
did indeed benefit from rapid technological change over the last decade.
Were innovators able to capture a significant fraction of the benefits from
new technologies? Alternatively, were most of the benefits of improved
productivity passed on in
lower prices? These are among the topics studied
below.
I. A Model of Appropriability and Schumpeterian Profits A. Background
Endogenous growth theory, alon
g with the theory of induced
innovation, has developed important new approaches to understanding the
role of innovation in economic growth. Joseph Schumpeter introduced
modern approaches in his pathbreaking book,
The Theory of Economic
Development.
The formal theory of induced i
nnovation arose in the 1960s in
an attempt to understand why technological change appears to have been
largely labor saving.
3
More recently, theories of induced technological
change were revived as the new growth
theory, pioneered by Robert Lucas
and Paul Romer.
This has blossomed into a
major research field, with a
wide variety of theories and applications.
The underlying idea to be developed
in this section is straightforward.
Numerous individuals and firms in
a modern economy are engaged in
innovative activities designed to produce new and improved goods and
services along with processes that reduce the cost of production. Some of
these are formalized in legal ownership
of intellectual property rights such
as patents, copyrights, and trademarks, while others are no more than trade
secrets or early-mover advantages. Some
of the innovative activities produce
extra-normal profits (called Schumpeterian profits), which are profits above
those that would represent the normal return to investment and risk-taking....
Like another of our fav. economists, Professor Shiller, Nordhaus also hangs his hat at the Cowles Foundation.
which, as we've noted has been home to Econ. Laureates (Robert Shiller,
Tjalling Koopmans, Kenneth Arrow, Gerard Debreu, James Tobin, Franco
Modigliani, Herbert Simon, Lawrence Klein, Trygve Haavelmo, and Harry
Markowitz) at a rate approaching, but inferior to, that of Cambridge's
Cavendish Lab, 29 Laureates, mainly in physics, at last count but then the econ version isn't one of the original Nobels and hasn't been around as long.
The miners will probably also keep an eye peeled for Californium-252 at $27 million per gram, but finding any is a bit of a long shot, 8 grams known to date....
The thing is, such an enormous increase in supply would crash the
market, something the ancient alchemists didn't mention when they were
pitching their lead-into-gold private placements to their version of
accredited investors, the princely class, back in the day.
It is for this reason that the astro-miners have changed their
approach and are now talking about looking for oxygen, water, nitrogen
and
other elements that can be used to take us farther into the universe. Presumably to sell to Elon Musk to speed him on his way.
The European Space Agency, among others, thinks He-3 is where the action is going to be, not mining metals on asteroids:
