SpaceX IPO: Why Asteroid Mining Could Launch a Precious Metals Boom
SpaceX IPO Makes Asteroid Mining More Likely
Although NASA is the most obvious beneficiary of a SpaceX Technologies Corp. initial public offering (IPO), other space-related firms will also reap the rewards. Planetary Resources Inc., which hopes to extract precious metals from asteroids, has already transported a test probe aboard SpaceX’s Dragon capsule. Mining asteroids is no longer science fiction; it’s quickly becoming a reality.
The issuance of SpaceX stock would be a big step for the industry. Opening themselves up to the whims of the market could be dangerous, but SpaceX has a secret weapon, and his name is Elon Musk.
Not all companies are shackled by quarterly earnings expectations. Some firms, usually with charismatic CEOs or monopolistic business models, are able to earn leeway from the market. Take, for example, Amazon.com, Inc. (NASDAQ:AMZN).
The company has barely ever produced a profit, yet investors continue to prop up its share price. CEO Jeff Bezos convinced investors that Amazon.com could use razor thin margins to weed out competitors and establish itself as the undisputed king of retail.
But razor thin margins meant no return on capital in the short term. Amazon shares traded at a hundred, and sometimes thousand, times their earnings. Investors can be patient if they are convinced future growth will compensate them.
Considering the Amazon model, is it ridiculous to imagine that a bunch of futurists like Elon Musk can win markets over with dreams of asteroid mining and interstellar travel?
SpaceX Stock Could be the Tipping Point
Luckily for Elon Musk, SpaceX stock would likely perform better than shares of Amazon.com. The company has a stream of revenue from NASA and is actively courting the Pentagon and the CIA for further contracts.
But SpaceX is aiming much higher than just survival. Musk wants to make interplanetary travel possible in our lifetimes. The grandness of that scheme requires more than just one firm; it needs an entire space economy.
Mining is a key facet of commercializing space. Asteroids come in three varieties: C-type, X-type, and S-type. Both C and X will help make the economics of space exploration so that Elon Musk can finally set foot on Mars. (Source: Planetary Resources, last accessed October 5, 2015.)
The composition of C-type asteroids will allow companies like SpaceX and Planetary Resources to harvest water from the rocks. By splitting water into hydrogen and oxygen, the companies could establish refuelling stations for traveling deeper into space.
Water is the “oil of space.” It is the base price of inter-planetary travel, costing firms like SpaceX billions of dollars. Reducing the cost would dramatically expand the range of space travel, while also minimizing the industry’s reliance on Earth-based resources.
Following Elon Musk Pays Off
Harvesting water will obviously help the inter-planetary travel ambition, but X-type asteroids are the real money makers. They are composed almost entirely of precious metals.
For instance, a “single 500-meter platinum-rich asteroid can contain more platinum group metals than have ever been mined in human history.” (Source: Planetary Resources website, last accessed October 5, 2015.)
The high degree of concentration makes asteroid mining a hugely profitable opportunity. SpaceX would continue its role as a transportation company, ferrying back loads of precious metals to Earth, where Planetary Resources would turn a tidy profit.
The returns would provide an incentive for further development in the space economy, thus pushing us further towards the long-term goals of colonizing other planets. Plenty of smart people have already gamed out this situation to its logical end.
Just look at Planetary Resources’ prestigious list of backers. They include investments from Google founder Larry Page and Virgin Galactic billionaire Richard Branson.
However, let’s not get ahead of ourselves. A SpaceX IPO is still the first step towards commercializing space in a big way. The success of Tesla Motors Inc. shows us that Elon Musk commands the respect of investors, so the future of space is in good hands.
Read More:
