Author Topic: Goldman Sachs Report on Asteroid Mining  (Read 20218 times)

Offline Warren Platts

Re: Goldman Sachs Report on Asteroid Mining
« Reply #20 on: 04/06/2017 08:21 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 ?

{citation needed}
"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 RotoSequence

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #21 on: 04/06/2017 08:39 PM »
Well, if this chart is accurate, there's plenty of other resource opportunities in space mining. The distribution of elements in the universe is full of surprises.

Offline Warren Platts

Re: Goldman Sachs Report on Asteroid Mining
« Reply #22 on: 04/06/2017 09:12 PM »
Actually, there is reason to believe the costs of production could be radically lower. The cost of "mining" the asteroid is really mainly the cost of moving the object to Earth orbit. Once there, since it's mostly metal, slabs of the asteroid could be fed directly into an electric arc blast furnace. This is A LOT easier than trying to beneficiate ore.

The thing is, the "slag" that would result is basically nature's own Inconel steel, which is the best steel known to mankind. You could then use this to manufacture satellites and other structures for use in space. The deadweight value of these items would be equal to the cost it would take to launch the same mass from Earth's surface. Basically, the value of the steel would be the per kg launch costs.

Thus enough steel to build a structure with twice the mass of the ISS (~500 mT), and if launch costs are $10K/kg, then the value added would be worth ~$10B right there. If Pt is at 100 ppm concentration (which is extremely high), after producing 1,000 tonnes of steel, you'd have a paltry 0.1 tonnes of Pt.

Flipping that around, if you produced the optimal amount of Pt (~200 mT sold for $4.5B), the excess steel would be 2 million tonnes--enough to build 4,000 ISS's. At 10K/kg, that's worth $20 trillion; that is equal to the US GDP.

Bottom Line: it's quite clear that platinum is wagging the dog when it comes to mining iron asteroids.
« Last Edit: 04/06/2017 09:13 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 allhumanbeings07

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #23 on: 04/07/2017 12:16 AM »
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 ?

{citation needed}

Well, we have solar panels and electric cars already, no asteroids required
I love Star Trek more than anyone, but we don't (and shouldn't) spend tens of billions of dollars on space programs for fun

Offline Robotbeat

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #24 on: 04/07/2017 01:10 AM »
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.


I like your analysis. Really drives home the point that the market even for all of the platinum group metals is pretty small. Smaller than Intelsat and SES's revenue combined, even assuming you saturate the market. Even so, it's a big enough market to be interesting if you can somehow get the costs low enough. But it's not going to dramatically expand the space economy.
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Offline savuporo

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #25 on: 04/07/2017 03:20 AM »
Demand for $1 per gram of platinum doesn't look like that, at all
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Offline A_M_Swallow

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #26 on: 04/07/2017 09:05 AM »
Heat shields for ore can be very different than those of people. It does not matter if the shield melts providing it does not burn off. Vacuum can be used as an insulator.

Offline Warren Platts

Re: Goldman Sachs Report on Asteroid Mining
« Reply #27 on: 04/07/2017 04:59 PM »
Demand for $1 per gram of platinum doesn't look like that, at all.

OK, fine. Let's assume brand new uses of platinum can be found if the price drops low enough. If the entire 500 m asteroid was processed in a year, that's comparable to the annual earthly production of silver, which is currently about $586/kg, so the price of Pt at that point is going to be comparable. I suspect that since Pt is harder to worker with (due to it's much higher melting point), it would be worth a little less than silver. So let's just call it $0.50 per gram when production get's to 22,750 mT/yr (the 175X the current production mentioned in the article).

So that gives us our three points from which to calculate a curve:

(Q, P)
(104, 33)
(130, 30)
(22750, 0.5)

I found this calculator for constructing a curve of the form y = (ax + c)/(x - b) that has the general shape you're looking for. It matches the 3 points to within tiny fractions of a percent.

http://www.had2know.com/academics/rational-function-regression-calculator.html

On this curve, revenue always keeps increasing no matter how much you produce, but you run into heavy diminishing returns. Processing the entire asteroid (i.e., increasing production by a factor of 175) increases revenue to $11B--an increase by a factor of less than 3. Another doubling of production to 50,000 mT/year only brings in a total of $15B/year.

Now, $11B is certainly a lot of money to you or me, but it's about 0.05% of the US economy. There's no way the next trillionaire is going to come from a platinum titan.

On the other hand, after you're done processing your 22,750 mT of Pt, you've now got $20 trillion worth of Inconel steel waste you've got to throw away....  :-X

"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 savuporo

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #28 on: 04/07/2017 07:03 PM »
I found this calculator for constructing a curve of the form y = (ax + c)/(x - b) that has the general shape you're looking for. It matches the 3 points to within tiny fractions of a percent.

http://www.had2know.com/academics/rational-function-regression-calculator.html

WolframAlpha does that pretty well too, btw
http://www.wolframalpha.com/input/?i=logarithmic+fit+%7B104,+33%7D,+%7B130,+30%7D,+%7B22750,+0.5%7D

Or if you want widget: http://www.wolframalpha.com/widgets/view.jsp?id=a96a9e81ac4bbb54f8002bb61b8d3472
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Offline DanielW

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #29 on: 04/07/2017 07:31 PM »
I think predictions of asteroid mining crashing markets are a bit premature. Once you capture that amazing shiny rock, you still need to process it and transport it. None of that is going to be free or fast.

If prices do indeed fall significantly that open the possibility of using what were exotic materials for more mundane things. The final market could be larger.

Offline Warren Platts

Re: Goldman Sachs Report on Asteroid Mining
« Reply #30 on: 04/08/2017 08:49 AM »
I found this calculator for constructing a curve of the form y = (ax + c)/(x - b) that has the general shape you're looking for. It matches the 3 points to within tiny fractions of a percent.

http://www.had2know.com/academics/rational-function-regression-calculator.html

WolframAlpha does that pretty well too, btw
http://www.wolframalpha.com/input/?i=logarithmic+fit+%7B104,+33%7D,+%7B130,+30%7D,+%7B22750,+0.5%7D

Or if you want widget: http://www.wolframalpha.com/widgets/view.jsp?id=a96a9e81ac4bbb54f8002bb61b8d3472

Interesting, but the logarithmic plot doesn't capture the features we want very well. First of all, it goes to zero soon after 22,750 mT (24,618 mT to be exact), so it doesn't truly capture the idea that new uses will enter the game at cheap prices. (An artifact of any demand curve that goes to zero revenue levels is, apparently, there will be an optimal price point: 9,000 mT @ $2.57/gram $5.92 in this example generating $23B$53B/year.)

Also, it's not very accurate at the left end, if I entered the formula correctly: =-5.8854*LOGLN(0.0000406214*V12)

The three points for the log graph are reproduced as {104, 13.97}, {130, 13.40}, {22750, 0.2}
{104, 32.17}, {130, 30.86}, {22750, 0.46} compared to
{104, 33.00002}, {130, 30.00002}, {22750, 0.50004} for the rational function regression.
« Last Edit: 04/09/2017 02:27 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 Oli

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #31 on: 04/08/2017 04:38 PM »

I've been searching for "MITís Mission 2016", which the article refers to.

I only found this site, which itself refers to websites which themselves refer to 2012 studies by planetary resources and NASA on the asteroid retrieval mission (among others).

http://web.mit.edu/12.000/www/m2016/finalwebsite/solutions/asteroids.html

A lot of hot air if you ask me.

Offline Warren Platts

Re: Goldman Sachs Report on Asteroid Mining
« Reply #32 on: 04/09/2017 06:46 PM »
A lot of hot air if you ask me.

It is. Also, one must question the wisdom of a 98 page report on space mining (I still can't locate a copy--if anyone can, please post it here) that does not compare and contrast lunar mining with asteroid mining. It's not at all clear which activity would have the comparative advantage in the "short run" at least.

However, the presence of a 500 m metallic asteroid in Earth orbit (I'd put in one of the Trojan Lagrange points in order to minimize orbital debris issues) remains an intriguing concept from a scifi viewpoint if nothing else.

The thing is, the Pt contained within the asteroid is small potatoes. The main thing is you've got 524 million tonnes (assuming a 500 m sphere, density 8,000 kg/m^3) of good nickel ore. It is an exaggeration to say an iron meteorite is "Nature's Inconel"--since Inconel is mostly made of nickel, not iron, whereas iron is the dominant constituent of an iron meteorite. Thus, if the prospectors did their job properly, they would try to find an asteroid with a high nickel content, which can get up to 25%. At current prices, that' would  be worth $1.3 trillion. Of course there's still the problem of dumping: 131 million tonnes of Ni exceeds the current production of 2 million tonnes by a factor of 65. Less bad than the 175X that the Pt would entail, but would have a big effect.

That leaves the iron. Scrap steel goes for around 10 cents a kilogram. Meanwhile, total steel production is like 1.6 billion tonnes, compared to the mass of the asteroid of 524 million tonnes. That's going to have a big effect on the market, but at least it won't swamp it by multiple factors. Assuming you could get $0.10/kg, (I figure the Ni would be worth at least that), total value would be $52.4 billion. NOW, we're finally talking some turkey--albeit, still not quite in the Exxon ballpark. The benefit to society would be huge as well, as it would crash the price of Inconel, and make it an everyday material, causing a huge consumer surplus for that product.

« Last Edit: 04/09/2017 06:48 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 Paul451

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #33 on: 04/10/2017 03:39 AM »
I think predictions of asteroid mining crashing markets are a bit premature. Once you capture that amazing shiny rock, you still need to process it and transport it. None of that is going to be free or fast.

The issue isn't that mining PGMs from asteroids is cheap, it's whether the total annual demand for extra platinum is sufficient to pay for the minimum cost of mining the asteroid.

At some rate of production, you are causing the market price to drop below your production costs. Resulting in zero profit. If you do nothing, you also make zero profit. Somewhere in between is the maximum profit, at a specific rate of production.

If the global market is too small, that maximum profit is below the ROI necessary to attract enough investment to pay for the initial development & infrastructure costs.
« Last Edit: 04/10/2017 03:40 AM by Paul451 »

Offline incoming

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #34 on: 04/11/2017 08:47 PM »
Actually, there is reason to believe the costs of production could be radically lower. The cost of "mining" the asteroid is really mainly the cost of moving the object to Earth orbit. Once there, since it's mostly metal, slabs of the asteroid could be fed directly into an electric arc blast furnace. This is A LOT easier than trying to beneficiate ore.

The thing is, the "slag" that would result is basically nature's own Inconel steel, which is the best steel known to mankind. You could then use this to manufacture satellites and other structures for use in space. The deadweight value of these items would be equal to the cost it would take to launch the same mass from Earth's surface. Basically, the value of the steel would be the per kg launch costs.

Thus enough steel to build a structure with twice the mass of the ISS (~500 mT), and if launch costs are $10K/kg, then the value added would be worth ~$10B right there. If Pt is at 100 ppm concentration (which is extremely high), after producing 1,000 tonnes of steel, you'd have a paltry 0.1 tonnes of Pt.

Flipping that around, if you produced the optimal amount of Pt (~200 mT sold for $4.5B), the excess steel would be 2 million tonnes--enough to build 4,000 ISS's. At 10K/kg, that's worth $20 trillion; that is equal to the US GDP.

Bottom Line: it's quite clear that platinum is wagging the dog when it comes to mining iron asteroids.

I think there's another point embedded here that always seems to materialize whenever I look at these types of analyses - space resources can absolutely be viable economically...as long as you are planning to use them in space.  I've just never seen a compelling business case where bringing large amounts of space resources down to Earth makes much sense without large "and then a miracle happens" speculative leaps.

Which is interesting, because harvesting space resources is often cited as a rationale for increased activity in space (most often, in support of a moon base).  See the circular logic?   

Offline savuporo

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #35 on: 04/12/2017 05:52 AM »
.. I've just never seen a compelling business case where bringing large amounts of space resources down to Earth makes much sense ... 

PGMs have have only a few geographical locations on earth with substantial viable resources. What if access to some of those is suddenly destabilized ?
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Offline Paul451

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #36 on: 04/12/2017 08:16 AM »
I think there's another point embedded here that always seems to materialize whenever I look at these types of analyses - space resources can absolutely be viable economically...as long as you are planning to use them in space.  I've just never seen a compelling business case where bringing large amounts of space resources down to Earth makes much sense without large "and then a miracle happens" speculative leaps.

While I generally agree, and I prefer to focus on volatiles for use in space, PGMs are valuable enough that they are on the cusp of viable.

Which is interesting, because harvesting space resources is often cited as a rationale for increased activity in space (most often, in support of a moon base).  See the circular logic?

It's not circular. If you have an industry that extracts resources for use in space (such as fuel), you lower the price for other activities (such as PGM mining). If you have a market for asteroid-mined PGMs, then you have the basic infrastructure necessary to extract other resources for use in space. It doesn't matter which comes first, it one is viable, it makes the other more viable. Once regular mining is established, the "waste" from one process becomes cheap enough that you might as well bring it back to Earth (such as nickel), even though it would never have justified the creation of the necessary infrastructure on its own. Likewise, bulk materials left over from other processing may end up cheap enough that they can substitute for bulk material (aluminium tanks, shielding, trusses, etc) that would otherwise be brought from Earth.

It's about self-reinforcing development. Not a circle, but a spiral.

Offline mikelepage

Re: Goldman Sachs Report on Asteroid Mining
« Reply #37 on: 04/12/2017 09:02 AM »
Doesn't the idea that extra Platinum will crash the market assume that there won't be new uses for Platinum once the price drops?

I've heard Aluminium used as a analogy for something that was once expensive and rare.

Platinum, Palladium, Iridium are all metals that would be really useful in wider applications if they were less expensive and less rare.

Offline Paul451

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #38 on: 04/12/2017 10:46 AM »
Doesn't the idea that extra Platinum will crash the market assume that there won't be new uses for Platinum once the price drops?
I've heard Aluminium used as a analogy for something that was once expensive and rare.
Platinum, Palladium, Iridium are all metals that would be really useful in wider applications if they were less expensive and less rare.

Sure, but it takes time. And you don't know, in advance, what the market demand and demand/price curve will look like. Which means you can't play with mine production rates vs infrastructure and operations costs, to see if your business case closes.

Offline incoming

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Re: Goldman Sachs Report on Asteroid Mining
« Reply #39 on: 04/12/2017 01:25 PM »
I think there's another point embedded here that always seems to materialize whenever I look at these types of analyses - space resources can absolutely be viable economically...as long as you are planning to use them in space.  I've just never seen a compelling business case where bringing large amounts of space resources down to Earth makes much sense without large "and then a miracle happens" speculative leaps.

While I generally agree, and I prefer to focus on volatiles for use in space, PGMs are valuable enough that they are on the cusp of viable.

Which is interesting, because harvesting space resources is often cited as a rationale for increased activity in space (most often, in support of a moon base).  See the circular logic?

It's not circular. If you have an industry that extracts resources for use in space (such as fuel), you lower the price for other activities (such as PGM mining). If you have a market for asteroid-mined PGMs, then you have the basic infrastructure necessary to extract other resources for use in space. It doesn't matter which comes first, it one is viable, it makes the other more viable. Once regular mining is established, the "waste" from one process becomes cheap enough that you might as well bring it back to Earth (such as nickel), even though it would never have justified the creation of the necessary infrastructure on its own. Likewise, bulk materials left over from other processing may end up cheap enough that they can substitute for bulk material (aluminium tanks, shielding, trusses, etc) that would otherwise be brought from Earth.

It's about self-reinforcing development. Not a circle, but a spiral.

I agree that once you are out there going for volatiles it's perhaps marginally less to go for metals as well, and vice-versa.  I do not agree that it's ever trivial to bring back large amounts of very heavy, dense material to Earth.  The ISS program is an example, albeit an imperfect one.  But from time to time cargo downmass can be just as big of an issue for them as cargo upmass.  Granted returning raw material that isn't sensitive to g-loads and far less sensitive to other natural and induced environmental factors isn't the same as returning lab samples or hardware for repair. But it still requires a lot of delta V that you have to produce somehow, and unless we're willing to pick a country to rain asteroids down on and then go collect our bounty it has to be done gracefully. And when people on this thread are talking about doing that for hundreds of thousands of tons of metal, that is not at all trivial. 

Finally - I'm not sure how your argument refutes my point that resource extraction is not a compelling rationale for exploration of  space, at least given the current economics surrounding PGMs.  It's certainly an enabling technology for exploration, and there may come a day when, if we're out there anyway for a different reason or set of reasons, it starts to make sense to bring stuff back. But I think that day is a long time and several technological generations in the future, and I stand by my point that any argument that we should explore space in order to bring back resources is illogical given the current and foreseeable term economics.  I would love to be convinced otherwise, but not if it requires "the willing suspension of disbelief."

   

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