Thursday, October 27, 2011

Moon Mining: BHP's next frontier?

Australia's BHP Billiton is, by anyone's standard, a big company. In fact, it is the world's largest mining company by revenue, and is one of the world's biggest companies by market capitalisation. In August this year, it announced the biggest profit in Australian corporate history, and most of the investments it announces are spoken about in tens of billions of dollars. In fact, BHP is actually bigger than the economy of many small nations around the world.

They are experts at what they do - "discovery, acquisition, development and marketing of natural resources", and have a strong track record of success.

Recently, the moon has become increasingly attractive from a mining perspective with the discovery of higher concentrations of valuable and sometimes rare minerals.  This year the US Lunar Reconnaissance Orbiter has helped identify that the Moon has much higher amounts of Titanium Ore than previously expected, together with large quantities of platinum, iron, oxygen and an element known as Helium-3 that is rare on earth but very useful for Nuclear fusion research.

The moon is also known to have deposits of several rare-earth minerals such as Yttrium and Dysprosium, and we now know that the moon contains a small amount of water, that could be very useful for any future mining operation or settlement.

The combined quantity of these minerals has now attracted the attention of some serious entrepreneurs, who are pressing ahead with the business case of a moon mining venture. Moon Express was founded in 2011 by a set of successful silicon valley entrepreneurs, combined with some great space minds to develop a spacecraft that can take a 100kg payload to the surface of the moon, win the Google Lunar X-Prize and to build the business case to mine the moon. Whilst previous start-ups have set such goals and failed, Moon Express was founded by a group of highly successful business people who have money to invest, have received backing and support from NASA, and have already been testing several of the critical technologies required to get to the moon. They are currently looking at a 2013-2014 time frame for their first moon landing -  which is not really that far away!

Meanwhile, back closer to home, BHP Billiton and other major mining companies, are slowly perfecting the ability to operate a mine from a remote location and are turning more and more to robotic technology to run their mines, both of which are ideally suited for a moon mining operation. They have also had a remarkable few years in terms of financial results, and now have the financial reserves to look at a variety of new and major resource opportunities.

Several estimates have suggested a moon mining operation would be in the order of $20 Billion to set up, which  is similar to a medium mine setup cost on earth, and one that BHP Billiton invests on a somewhat regular basis. BHP is also one of the few companies that has the financial strength and technology to actually assess, invest and make a success of such an operation.

In addition, a moon mining venture would open up major scientific and space tourism opportunities, as well as develop a new suite of space technologies that would make the business case even more attractive. Whilst each of these may not be economically viable on their own, together the business case might make sense.

The aim of this article is not to outline the business case for mining the moon, or in fact call for BHP to start mining the moon tomorrow - I understand that this concept is not seriously considered within the mainstream space industry. The idea is rather to provoke some discussion of how we can take some of the best capabilities Australia has, and apply them to a space application to deliver real and sustainable outcomes.

Of course, such a venture will not be possible for the better part of this decade in reality, but I do believe it is time we start thinking about the real business conversation about a moon mine, that comes with a unique set of logistics challenges to say the least.

A venture such as moon mining and settlement will need to deliver financial returns to shareholders over the long term to be sustainable, and I'm not quite sure we're at that point yet. However, in the corridors of the BHP headquarters in Melbourne, is it not time that someone starts paying attention to Moon Mining? The concept has started moving from the science fiction world to the real world, and it will not be long before countries like China and India will have the technologies, resources, and the political motivation to undertake such a venture, with no competitors in the market and no other nation to interfere.

Perhaps it's time to start developing the business case numbers, and possibly even time to start looking at how such an operation could be set-up. BHP, together with a major Aerospace company such as a Lockheed Martin or Boeing, would have the resources and expertise to build an end-to-end business case, to determine at what cost the venture becomes viable.

As time goes by, we continue to find more resources on the moon and the price of launch continues to drop. At the same time, the price of resources on earth trends up, and the cost of obtaining them generally increases, as we have mined the easiest-to-access resources first.

At some point, the business case will become viable. When it does, I hope it is companies like BHP Billiton who will be amongst the pioneers of moon mining.

1 comment:

  1. Unless nuclear fusion fueled by Helium 3 takes off properly - and that seems somewhat distant at the moment - I can't see moon mining take off any time soon. Only Helium 3 would provide the value-to-weight that would make moon infrastructure and transport economically viable.

    Saying that, nuclear fusion experiments are moving forward and if Helium 3 turns out to be the perfect fuel as many believe, well, then it's game on. The Chinese certainly are not ignoring the opportunity. And if Helium 3 does provide the incentive to build the infrastructure then other metal mining might be profitable too.