April 28, 2012
Asteroid Mining Venture Could Change Supply/Demand Ratio On Earth
Peter Suciu for RedOrbit.com
On Tuesday, Planetary Resources announced its plan to mine Near-Earth Asteroids (NEAs), paving the way for mankind's reach beyond the Earth. This would include mining for raw minerals, ranging from water - which would be required for any future human colonization — and two precious metals such as gold and platinum.
“Many of the scarce metals and minerals on Earth are in near-infinite quantities in space,” said Dr. Peter Diamandis, Co-Founder and Co-Chairman of Planetary Resources, Inc. during Tuesday's press conference.
Although the group suggested that much of the resources mined might not actually return to Earth, and instead would be used as stepping stones for deep space exploration, the fact that gold was mentioned repeatedly helped evoke a vision of a future asteroid gold rush.
During Tuesday's press conference it was noted that this endeavor would also expand the resource base, which implied that some the precious metals found in the asteroids could be brought back to Earth. Given the price of gold, which hovers over $1500 an ounce, it isn't hard to see why the future space gold rush could happen.
There is however, the issue of the cost to bring it back. The Collaborative Modeling for Parametric Assessment of Space Systems (COMPASS) team at NASA Glenn Research Center in Cleveland, estimated that asteroid mining could cost upwards of $2.6 billion. Thus it could cost billions to make thousands.
But there is another issue that hasn't been addressed. Namely that the world supply of gold isn't that large to begin with, and any outside source of additional gold could drive prices down exponentially.
How small is the world supply of gold? Smaller than many might think.
“The World Gold Council is the authoritative source for gold production, (and) states that all of the gold ever mined ℠would fit into a crate of 20 meters cubed.´ That's 8000 cubic meters,” Lawrence H. White, Professor of Economics at George Mason University, told RedOrbit.com. “A standard Olympic swimming pool is 50 m long x 25 m wide x 2 m deep or 2500 meters cubed. So that's 3.2 Olympic pools.”
Now imagine setting out, after spending billions of dollars in this endeavor, and finding a large source of gold in an asteroid. It could still be a losing venture, even if gold prices continue to rise.
“The price of gold is affected by the number of gold atoms on Earth,” said White. “It is not ℠dictated´ by that quantity alone, because the demand for gold also matters, and the marginal cost of extracting gold from the Earth also matters.”
But if a large quantity of gold were brought to Earth from an asteroid, it would indeed lower the price of gold, emphasized White. “Possibly, but not necessarily, by enough to doom the venture, supposing that it would have been profitable at the previous price of gold.”
Given that it would be profitable as we've already seen, it certainly wouldn't help matters to flood the commodities market on Earth with gold from the stars.