Author Topic: Goldman Sachs Report on Asteroid Mining  (Read 20220 times)

Offline Warren Platts

Goldman Sachs Report on Asteroid Mining
« on: 04/06/2017 02:28 PM »
This story is all over the news this morning: apparently a 98 page report written by Noah Poponak, an aerospace and materials analyst at Goldman, that has a favorable take on the prospects of asteroid mining:

Quote
“While the psychological barrier to mining asteroids is high, the actual financial and technological barriers are far lower. Prospecting probes can likely be built for tens of millions of dollars each and Caltech has suggested an asteroid-grabbing spacecraft could cost $2.6bn,” the report says.

$2.6 billion (£2 billion) sounds like a lot, but it is only about one-third the amount that has been invested in Uber, putting the price well within reach of today’s VC funds. It is also a comparable to the setup cost for a regular earthbound mine. (This MIT paper estimates a new rare earth metal mine can cost up to $1 billion, from scratch.)

There is just one problem: That same asteroid would instantly tank the entire platinum market: “Successful asteroid mining would likely crater the global price of platinum, with a single 500-meter-wide asteroid containing nearly 175X the global output, according to MIT’s Mission 2016.”

Nonetheless, Goldman is bullish. “We expect that systems could be built for less than that given trends in the cost of manufacturing spacecraft and improvements in technology. Given the capex of mining operations on Earth, we think that financing a space mission is not outside the realm of possibility.”

https://business-insider-uk-yahoopartner.tumblr.com/post/159260933765/goldman-sachs-space-mining-for-platinum-is-more

No mention of lunar mining. I would be VERY interested in reading the original 98 page report, if anyone can find it.

Here is a year old video produced by Mr. Popanak:




« Last Edit: 04/06/2017 02:30 PM by Warren Platts »
"When once you have tasted flight, you will forever walk the earth with your eyes turned skyward, for there you have been, and there you will always long to return."--Leonardo Da Vinci

Offline clongton

  • Expert
  • Senior Member
  • *****
  • Posts: 10275
  • Connecticut
    • Direct Launcher
  • Liked: 2047
  • Likes Given: 628
Re: Goldman Sachs Report on Asteroid Mining
« Reply #1 on: 04/06/2017 02:37 PM »
There is just one problem: That same asteroid would instantly tank the entire platinum market: “Successful asteroid mining would likely crater the global price of platinum, with a single 500-meter-wide asteroid containing nearly 175X the global output, according to MIT’s Mission 2016.”

Assuming they found a 500 meter-wide asteroid composed almost entirely of platinum. The odds of that are really slim at best.
Chuck - DIRECT co-founder
I started my career on the Saturn-V F-1A engine

Offline Warren Platts

Re: Goldman Sachs Report on Asteroid Mining
« Reply #2 on: 04/06/2017 03:03 PM »
There is just one problem: That same asteroid would instantly tank the entire platinum market: “Successful asteroid mining would likely crater the global price of platinum, with a single 500-meter-wide asteroid containing nearly 175X the global output, according to MIT’s Mission 2016.”

Assuming they found a 500 meter-wide asteroid composed almost entirely of platinum. The odds of that are really slim at best.

A 500 meter sphere of platinum would mass 1.4 billion tonnes. Since global production of Pt is about 130 mT, that's 10,000,000X the global output.

175 X 130 =  22,750 mT of Pt. Assuming a density of 8,000 kg/m^3 then that implies a Pt concentration of about 43 ppm, which is definitely on the high side (normal concentrations are on the order of a ppm), but not out of the realm of possibility perhaps.

But even so, such an asteroid would crash the market. 130 tonnes of Pt is about 6% of the total global production of gold. Thus, if you wanted to make a killing in space mining, gold would be the target IMHO. YMMV.
"When once you have tasted flight, you will forever walk the earth with your eyes turned skyward, for there you have been, and there you will always long to return."--Leonardo Da Vinci

Offline Tuts36

  • Full Member
  • *
  • Posts: 138
  • Memphis, TN
  • Liked: 139
  • Likes Given: 966
Re: Goldman Sachs Report on Asteroid Mining
« Reply #3 on: 04/06/2017 03:17 PM »
Quote
But even so, such an asteroid would crash the market. 130 tonnes of Pt is about 6% of the total global production of gold. Thus, if you wanted to make a killing in space mining, gold would be the target IMHO. YMMV.

Depends.  The current players in platinum production would definitely not want to crash the market.  I wouldn't hold my breath looking for them to branch into asteroid mining unless they are forced into it to stay relevant.

However, a non-mining corporation that would benefit from large quantities of bargain-basement platinum might be willing to invest in this, if new space manages to lower launch costs far enough to make the gamble enticing.

Offline Kansan52

  • Full Member
  • ****
  • Posts: 863
  • Hutchinson, KS
  • Liked: 255
  • Likes Given: 305
Re: Goldman Sachs Report on Asteroid Mining
« Reply #4 on: 04/06/2017 03:33 PM »
Tomorrow's announcement, Discovery Channel's new reality TV show, "Gold Rush - Space".

Offline Tuts36

  • Full Member
  • *
  • Posts: 138
  • Memphis, TN
  • Liked: 139
  • Likes Given: 966
Re: Goldman Sachs Report on Asteroid Mining
« Reply #5 on: 04/06/2017 03:42 PM »
Tomorrow's announcement, Discovery Channel's new reality TV show, "Gold Rush - Space".

I would watch that!

Offline Warren Platts

Re: Goldman Sachs Report on Asteroid Mining
« Reply #6 on: 04/06/2017 03:48 PM »
Quote
But even so, such an asteroid would crash the market. 130 tonnes of Pt is about 6% of the total global production of gold. Thus, if you wanted to make a killing in space mining, gold would be the target IMHO. YMMV.

Depends.  The current players in platinum production would definitely not want to crash the market.  I wouldn't hold my breath looking for them to branch into asteroid mining unless they are forced into it to stay relevant.

However, a non-mining corporation that would benefit from large quantities of bargain-basement platinum might be willing to invest in this, if new space manages to lower launch costs far enough to make the gamble enticing.

What they could do is use predatory pricing to crash the price of Pt on Earth, and put all producers completely out of business. Once that was done, they would have monopoly pricing power, and could then set the price forever at just below the marginal cost of the most productive platinum mine on Earth.

I've been trying to get a quantitative handle on the Pt demand curve. In 2014 there was a big strike that took about 20% of the 6 mo. supply out of the market, and there was a correlated price rise of about 10%. So if they wanted to crash the price by half, they'd have to quadruple the world's supply. Assuming they could capture the entire market at this point, it would be worth $15K/kg x 4 x 130,000 kg = $7.8B/year. Is that enough to run a major space program? Maybe. But it's hard to see how you're going to generate the world's first trillionaire with that revenue level. For comparison Exxon pulls in about $200B/year (down by half from a few years ago).
« Last Edit: 04/06/2017 03:49 PM by Warren Platts »
"When once you have tasted flight, you will forever walk the earth with your eyes turned skyward, for there you have been, and there you will always long to return."--Leonardo Da Vinci

Offline RonM

  • Senior Member
  • *****
  • Posts: 2124
  • Atlanta, Georgia USA
  • Liked: 995
  • Likes Given: 776
Re: Goldman Sachs Report on Asteroid Mining
« Reply #7 on: 04/06/2017 03:55 PM »
Once the asteroid is in orbit, the platinum still needs to be extracted. That's not going to be an easy task and would be expensive. Impact on the market should be the same as discovering a new mine. Once production ramps up the commodity price could go down. Whoever is doing the asteroid processing can limit production to prevent a market crash.

Offline Tuts36

  • Full Member
  • *
  • Posts: 138
  • Memphis, TN
  • Liked: 139
  • Likes Given: 966
Re: Goldman Sachs Report on Asteroid Mining
« Reply #8 on: 04/06/2017 03:56 PM »
Quote
But even so, such an asteroid would crash the market. 130 tonnes of Pt is about 6% of the total global production of gold. Thus, if you wanted to make a killing in space mining, gold would be the target IMHO. YMMV.

Depends.  The current players in platinum production would definitely not want to crash the market.  I wouldn't hold my breath looking for them to branch into asteroid mining unless they are forced into it to stay relevant.

However, a non-mining corporation that would benefit from large quantities of bargain-basement platinum might be willing to invest in this, if new space manages to lower launch costs far enough to make the gamble enticing.

What they could do is use predatory pricing to crash the price of Pt on Earth, and put all producers completely out of business. Once that was done, they would have monopoly pricing power, and could then set the price forever at just below the marginal cost of the most productive platinum mine on Earth.

I've been trying to get a quantitative handle on the Pt demand curve. In 2014 there was a big strike that took about 20% of the 6 mo. supply out of the market, and there was a correlated price rise of about 10%. So if they wanted to crash the price by half, they'd have to quadruple the world's supply. Assuming they could capture the entire market at this point, it would be worth $15K/kg x 4 x 130,000 kg = $7.8B/year. Is that enough to run a major space program? Maybe. But it's hard to see how you're going to generate the world's first trillionaire with that revenue level. For comparison Exxon pulls in about $200B/year (down by half from a few years ago).

The first effort to capture a Pt heavy asteroid for mining purposes would get heavy press coverage, and it would all happen in slow motion.  That's the point where everyone else would scramble to do the same before your monopoly scenario could play out.  Would they be able to move quickly enough?  I don't know, but it'd be entertaining to find out  ::)

Offline MikeAtkinson

  • Full Member
  • ****
  • Posts: 1680
  • Bracknell, England
  • Liked: 453
  • Likes Given: 53
Re: Goldman Sachs Report on Asteroid Mining
« Reply #9 on: 04/06/2017 03:59 PM »
The trick will be to turn greater platinum production into a better product (worth 10x as much) and then leverage that better product in a service (worth 100x as much).

This is what SpaceX are trying to do with their LEO and vLEO constellations, start with a relatively small advantage in launch, use that to enable better/cheaper LEO satellites, then use those to provide communications services worth much, much more. [would not be surprise if SpaceX offered end user services as well bringing in even more revenue).

Given how useful the platinum group metals are, there are numerous potential avenues to exploit in this way.

What they could do is use predatory pricing to crash the price of Pt on Earth, and put all producers completely out of business. Once that was done, they would have monopoly pricing power, and could then set the price forever at just below the marginal cost of the most productive platinum mine on Earth.

If they did this, then they may be able to leverage their monopoly in platinum into becoming a major chemical manufacturer, which might then be leveraged into finished products using those chemicals. [as just one example]

Offline Archibald

  • Senior Member
  • *****
  • Posts: 2070
  • Liked: 213
  • Likes Given: 583
Re: Goldman Sachs Report on Asteroid Mining
« Reply #10 on: 04/06/2017 04:32 PM »
If goldman Sachs show interest in asteroid mining, then it might be a sign the market is ready to provide a crapload of benefits (to their pocket)

http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405

Offline Lar

  • Fan boy at large
  • Global Moderator
  • Senior Member
  • *****
  • Posts: 8609
  • Saw Gemini live on TV
  • A large LEGO storage facility ... in Michigan
  • Liked: 5366
  • Likes Given: 3550
Re: Goldman Sachs Report on Asteroid Mining
« Reply #11 on: 04/06/2017 04:45 PM »
Unless you have space fighters to shoot down rival asteroid miners... (let's not go there)  you can't get monopoly pricing for long. I can see a space based mining cartel forming ala OPEC (MAYBE, but I doubt it) but not a single producer holding pricing power.

I just like that people are starting to think through "what if launch prices DID come down, what if Jeff and Elon aren't just crazy billionaires ranting.... but crazy billionaires that are going to make prices come down... what then? How can we benefit?"
« Last Edit: 04/06/2017 04:45 PM by Lar »
"I think it would be great to be born on Earth and to die on Mars. Just hopefully not at the point of impact." -Elon Musk
"We're a little bit like the dog who caught the bus" - Musk after CRS-8 S1 successfully landed on ASDS OCISLY

Offline Rocket Science

  • Senior Member
  • *****
  • Posts: 7948
  • NASA Educator Astronaut Candidate Applicant 2002
  • Liked: 2155
  • Likes Given: 5090
Re: Goldman Sachs Report on Asteroid Mining
« Reply #12 on: 04/06/2017 05:26 PM »
Goldman Sachs, my favorite people... :-X
"The laws of physics are unforgiving"
~Rob, Physics instructor, aviator, vintage auto racer

Offline john smith 19

  • Senior Member
  • *****
  • Posts: 6044
  • Everyplaceelse
  • Liked: 782
  • Likes Given: 4866
Re: Goldman Sachs Report on Asteroid Mining
« Reply #13 on: 04/06/2017 05:41 PM »
but crazy billionaires that are going to make prices come down... what then? How can we benefit?"
And by "we" understand that's Goldman Sachs.

Not necessarily their customers.  :(
"Solids are a branch of fireworks, not rocketry. :-) :-) ", Henry Spencer 1/28/11  Averse to bold? You must be in marketing."It's all in the sequencing" K. Mattingly.  STS-Keeping most of the stakeholders happy most of the time.

Offline Lar

  • Fan boy at large
  • Global Moderator
  • Senior Member
  • *****
  • Posts: 8609
  • Saw Gemini live on TV
  • A large LEGO storage facility ... in Michigan
  • Liked: 5366
  • Likes Given: 3550
Re: Goldman Sachs Report on Asteroid Mining
« Reply #14 on: 04/06/2017 05:42 PM »
OK that's two posts in a row hating on GS. Point taken I think?

How many other mainstream outfits would need to say similar things before conventional wisdom shifts?
« Last Edit: 04/06/2017 05:43 PM by Lar »
"I think it would be great to be born on Earth and to die on Mars. Just hopefully not at the point of impact." -Elon Musk
"We're a little bit like the dog who caught the bus" - Musk after CRS-8 S1 successfully landed on ASDS OCISLY

Offline incoming

  • Member
  • Posts: 70
  • washington, DC
  • Liked: 46
  • Likes Given: 29
Re: Goldman Sachs Report on Asteroid Mining
« Reply #15 on: 04/06/2017 05:48 PM »

What they could do is use predatory pricing to crash the price of Pt on Earth, and put all producers completely out of business. Once that was done, they would have monopoly pricing power, and could then set the price forever at just below the marginal cost of the most productive platinum mine on Earth.


A quick internet search puts the average cost of platinum production on the order of $1200-1600/oz.  Ultimately, that's the number to beat for space-based platinum mining, assuming the point is to bring it back to Earth (hopefully one day we'll need a constant supply of platinum in space along with other raw materials). So the real question is, can a company profitably return platinum to Earth at a rate low enough to keep from crashing the market but high enough to have sufficient economies of scale to beat the terrestrial production cost.

That raises an interesting thought on the demand side of the equation.  Platinum and Gold exist in similar quantities and concentrations terrestrially, and platinum is about 20% more expensive to produce than gold.  Yet over 10 times as much gold is produced annually than platinum. (One might speculate that the cost of platinum production might even come down to match gold if the production rate was higher.) 

Looking to future demand, one of the largest consumers of platinum is the auto industry for cat beds, how likely is a shift in the coming decades away from internal combustion powered autos, vs. growing demand in the developing world for internal combustion powered autos? 

Understanding the demand side of the equation could go a long way to determining the threshold amount for "crashing" the market.     

Offline TrevorMonty

Re: Goldman Sachs Report on Asteroid Mining
« Reply #16 on: 04/06/2017 05:58 PM »
If Warren theory about gold deposits in polar craters is correct, it could be viable along with propellant production from lunar ice. At $40m ton it could be worth while especially as water for fuel to transport gold to LEO would as be extracted at same time.

Offline john smith 19

  • Senior Member
  • *****
  • Posts: 6044
  • Everyplaceelse
  • Liked: 782
  • Likes Given: 4866
Re: Goldman Sachs Report on Asteroid Mining
« Reply #17 on: 04/06/2017 06:39 PM »

A quick internet search puts the average cost of platinum production on the order of $1200-1600/oz.  Ultimately, that's the number to beat for space-based platinum mining, assuming the point is to bring it back to Earth
So that's a minimum of $19200/ lb. Well lowering the launch costs below that should definitely be possible.
Building a mining and return system (especially one that does not literally burn up every time) is more difficult.
Quote from: incoming
Looking to future demand, one of the largest consumers of platinum is the auto industry for cat beds, how likely is a shift in the coming decades away from internal combustion powered autos, vs. growing demand in the developing world for internal combustion powered autos? 

Understanding the demand side of the equation could go a long way to determining the threshold amount for "crashing" the market.   
Indeed.

Just a wild notion but in the long run maybe a large Lithium deposit will prove more profitable?
There's also the ability to harvest sunlight relatively easily for on orbit smelting and concentration.
"Solids are a branch of fireworks, not rocketry. :-) :-) ", Henry Spencer 1/28/11  Averse to bold? You must be in marketing."It's all in the sequencing" K. Mattingly.  STS-Keeping most of the stakeholders happy most of the time.

Offline floss

  • Full Member
  • ***
  • Posts: 386
  • Liked: 13
  • Likes Given: 110
Re: Goldman Sachs Report on Asteroid Mining
« Reply #18 on: 04/06/2017 08:03 PM »
Platinium is far from the most valuable material that can be mined in space Iridium is worth far more to terrestrial civilisation because you can use iridium to create artificial photosynthesis and remove atmospheric  CO2 from the atmosphere and turn it into fuel .

How would anyone like a panel on their roof that makes fuel that they can put in their car or heat their house for free ?

Offline Warren Platts

Re: Goldman Sachs Report on Asteroid Mining
« Reply #19 on: 04/06/2017 08:13 PM »
Understanding the demand side of the equation could go a long way to determining the threshold amount for "crashing" the market.

Yes, the demand curve will be key. I did some fooling around with the (linear) demand curve seemingly implied by the 2014 Pt strike (where a 20% reduction in supply caused an apparent 10% spike in prices), and I get a formula of:

P = -0.115384615 * Q + 45,000

where P is the price in $/kg, and Q is total annual production in kilograms per year. (For present prices I'm assuming $30K/kg and 130,000 kg of produced Pt.)

I got some interesting results: once production causes the price to decline below $22.5K/kg (25% less than current prices), total revenue starts going down. So the optimal price point is $22.5K/kg, with a total production of 195 mT, and total revenue of $4.4B, compared to total revenues today of approximately $3.9B.

Thus, to do the predatory pricing strategy, assuming a 50% price reduction would do the trick, they would have to double the total production, and their revenues at that point would still be $3.9B.

As for the benefit to society, at the optimal point, the consumer surplus per year would be about $1.2B (that is, money freed up that can be spent on other things). If they kept the price at $15K/kg (50% of today's price), then the consumer surplus would be nearly $3B/year.



"When once you have tasted flight, you will forever walk the earth with your eyes turned skyward, for there you have been, and there you will always long to return."--Leonardo Da Vinci

Tags: