Like the Idea of Asteroid Mining? Be Careful What You Wish For

2022-04-29 02:05:00

Raise your hand if you remember the day you first heard about asteroid “16 Psyche.”

In 2020, newspaper headlines around the world exploded with the news that NASA had discovered a “failed planet” in the asteroid belt between Mars and Jupiter. This rock tried to evolve into the metallic core of a planet, but never quite made it. Yet it is still composed primarily of dense, valuable metals — as much as $10,000,000,000,000,000,000 worth of iron and nickel alone.

That’s 10,000 quadrillion dollars. Or it may be easier to think of it as 10 million trillion dollars. Any way you say it, it’s a lot of money.

Image source: Getty Images.

Some companies are eager to mine Psyche 16, and NASA plans to visit the asteroid later this year, to confirm its initial guesses. (There have been hypotheses that 16 Psyche is more porous than first thought, containing less metal. But even if 16 Psyche isn’t the orbiting goldmine it was once thought to be, the asteroid belt has long been understood to be full of riches.

The above chart is a bit long in the tooth, having been prepared before planetary scientists turned their focus to 16 Psyche. But even in 2016, it was clear there were lots of other options for mining in the asteroid belt, yielding additional quadrillions’ worth of iron, nickel, and other valuable metals.

What is a quadrillion, anyway?

Numbers like “quadrillion” boggle the mind, and naturally get investors thinking about the potential riches from mining these space rocks. But here’s the thing: Were the ore contained in these asteroids ever to flood onto the global metals market — and granted, that would depend in large part on companies’ developing methods to economically mine the space rocks and bring their wealth down to Earth — it could upend the metals market, and metals stocks.

Consider: In 2021, all the iron mines on Earth, combined, produced about 2,600 million metric tons of iron ore. This tallies with the below chart showing how consumption of iron ore has generally risen over the past decade, growing as the global economy grows.

At today’s price of about $152 per ton, 2,600 million metric tons works out to market demand for about $395 billion worth of iron ore annually. But what do you think would happen if even a relatively tiny space rock — say, 51 Nemausa up above, believed to contain mostly water, iron, and nickel — were brought back to Earth and mined for its $2.5 quadrillion worth of valuable metal?

Just divide 2.5 quadrillion by 395 billion to find the answer: All of a sudden, the iron market might be flooded with more than 6,300 years’ — twice as long as humans have even been mining iron — worth of iron, and asked to absorb it all at once.

All of a sudden, iron would become as plentiful as water (undrinkable ocean water, at least), and about as valuable. And the value of the asteroid would presumably depreciate as well. It’s worth thinking about if you’re thinking of investing in space companies touting the attractions of asteroid mining. Yes, one day it will become possible, and it might even happen…

But be careful what you wish for — just in case it does.

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