Officials from Deep Space Industries, a potential investor in Luxemnbourg’s asteroid mining proposal, announces its fleet of commercial asteroid-prospecting spacecraft in California. Picture: REUTERS
Officials from Deep Space Industries, a potential investor in Luxemnbourg’s asteroid mining proposal, announces its fleet of commercial asteroid-prospecting spacecraft in California. Picture: REUTERS

LOONY Luxembourg? Or great forward thinking by the Grand Duchy? The Luxembourg government’s recent announcement that it is to promote a commercial asteroid mining industry astonished even seasoned observers.

The story provoked many readers to check that April 1 had not come early. Doubters had many questions. Is it feasible to extract materials from asteroids — lumps of rock and ice hundreds of millions of kilometres away — and process them into useful products and commodities? If so, can anyone make money out of it? And even if the economics stack up, why should little Luxembourg be involved?

Further consideration and conversations with the project’s promoters begin to make a convincing case that it should not be dismissed as a crazy science fantasy.

Space agencies from the US, Europe and Japan have sent probes to asteroids and comets.

This year Nasa will launch a mission to the asteroid Bennu and aims to bring a sample back to Earth, with the intention of "helping us learn how to mine asteroids".

These bodies, left over from the origins of the solar system 4.5-billion years ago, are generally richer in valuable materials than Earth’s crust. This is because heavier elements, such as platinum metals, sank into their cores as the young planets cooled.

Sending small scout satellites into interplanetary space to find the best prospects for exploitation is relatively simple and affordable.

The technology required for the next stages — scooping or drilling material off the asteroid’s surface and processing it — has not been demonstrated in space, but needs no outlandish developments to be feasible. The economics are harder to fathom.

Even if cost-slashing companies such as SpaceX rather than expensive space agencies are involved in providing the hardware, an asteroid-mining operation would surely require tens of billions of dollars to set up.

Potential returns will depend on the types of resource exploited.

At one end of the scale are precious metals such as platinum, which are richly concentrated in some asteroids. On the face of it, vast sums could be made by bringing them back to Earth and selling them, though the marketing would have to be organised with great care to avoid a plentiful new supply from space causing the price to crash.

A different approach would be to use asteroid materials in orbit rather than returning them to Earth.

Less precious metals such as iron, tungsten and titanium could be converted into parts for spacecraft using 3D printing and other automated manufacturing techniques.

Water, which is plentiful on some asteroids, could be split into hydrogen and oxygen for rocket fuel.

Manufacturing objects in orbit from materials available in space could be more economic than making them down here and lifting them into orbit.

But this revenue stream depends on the continuation or expansion of a well-funded international space programme.

One way to judge the financial viability of a business prospect is to ask who is putting money into it.

On this score, asteroid mining seems to be doing well.

It is the main focus of two US companies, Planetary Resources and Deep Space Industries, which have attracted substantial private investment. Planetary Resources has brought in not only wealthy individuals such as Google founder Larry Page, who could possibly be dismissed as vanity investors, but also hard-headed venture funds and Bechtel, one of the world’s largest engineering groups.

What then can Luxembourg bring to this interplanetary party? One thing is recognition and credibility.

It may be a small country (with a population of just 540,000) associated recently with corporate tax avoidance, but it is also a centre of advanced technology research and commerce, including various space ventures.

The Grand Duchy played a significant role a generation ago in developing communication and broadcasting satellites and it is home to SES, a service provider that is one of the world’s top satellite operators.

The Luxembourg government plans to offer hard cash to space resources companies.

It will also provide Europe’s first legal framework giving private operators property rights to resources they extract in outer space.

No wonder both Planetary Resources and Deep Space Industries responded enthusiastically to the announcement in Luxembourg.

Many years will pass before the wisdom or folly of Luxembourg’s initiative can be judged.

But anyone who believes in long-term economic planning should wish it success.

© Financial Times Limited 2016