Extraterrestrial Returns?

You’ve probably heard by now that a group of venture capitalists have formed a company called Planetary Resources for the purpose of mining near-Earth asteroids for precious metals, especially scarce ones like platinum and rare earth metals. The announcement of the venture has sent the internet (and The Daily Show with Jon Stewart) abuzz with varying degrees of skepticism and enthusiasm. Since we’re big sci-fi fans (and because platinum is an exchange-traded commodity) we thought it would be fun to do some back-of-the-napkin calculations to see what would need to happen for a project like this to turn a profit bringing asteroid platinum back to sell on Earth (although the idea might be to mine it and keep it in space, building space hotels and such).

First, you need to get to the asteroid… what will that set you back? Well, NASA is currently looking at a price tag of about $1 billion to retrieve two ounces of asteroid ore. Of course, NASA isn’t attempting to bring back commercial quantities – how much would a larger extraction mission cost? The most serious economic analysis we found suggested a very conservative estimate of $5 billion to establish large-scale extraction from an asteroid, but the upper bound could be much higher.

With a $5 billion price tag, how much platinum would the venture need to bring back to profit? At today’s prices, they would need to bring back more than 200,000 pounds of platinum just to break even. For comparison, the Apollo program’s retrieval of rock and dust samples from the Moon (the largest retrieval of non-Earth material to date) could only handle a payload of about 200 pounds per trip. That clearly isn’t going to cut it.

But what if platinum prices went way up? Say, to $10,000 per ounce? Assuming the same $5 billion cost of extraction, the ambitious space miners would still need to retrieve a hefty 31,000 pounds of platinum to break even. Better, but still no small task.

Obviously these calculations leave many variables out – spaceflight may be much cheaper in the future, and asteroids do contain other valuable rare earth metals (are they still rare earths if they’re from space?). Barring some major development, however, it looks like the dream of bringing extraterrestrial platinum down to Earth will remain science fiction for the time being; we think we’ll stick with managed futures.










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Forex trading, commodity trading, managed futures, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.

The entries on this blog are intended to further subscribers understanding, education, and – at times- enjoyment of the world of alternative investments through managed futures, trading systems, and managed forex, and is not intended as investment advice, or an offer or solicitation for the purchase or sale of any financial instrument. Opinions expressed are that of the author.