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How earth-bound mining lawyers think about space mining

TFT-admin | January 3, 2020

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Amanda Stutt

The asteroid mining market is already valued at up to trillions of dollars, but a single drill from earth has yet to make it to space.

European scientists have announced plans to start mining the moon as early as 2025.

Space mining is a concept still out of this world to most, but it is real for the mining industry. After being considered mostly science-fiction, governments are now implementing programs and legislation that allow them to join the race for mining in space.

Scot Anderson, attorney and Global Head of Energy & Natural Resources with Hogan Lovells in Denver, has a podcast on asteroid mining, and has compiled compelling legal implications and insider tactics for getting in the asteroid mining business.  Anderson spoke with MINING.com to break down the issues, challenges and opportunities.

MINING.com: Tell us about your position.

Anderson: I do oil & gas and mining work for terrestrial mining. A lot of this is in the Mountain West, but we do work on mining projects all over the world. We have been interested in the astro mining piece of it, and we have an aerospace group out of Washington DC.

The way I think about it is that a lot of times these folks are doing space exploration and aerospace, trying to figure out mining, and our group here in Denver, we’re the mining folks who think about it would work in outer space. We figure out how to gain access to the minerals, how to develop them, and what we’re trying to do is take that expertise on how mining works on earth and translate that into how mining and resource development might work in outer space, which is a kind of interesting interaction because not everybody is coming out of that particular standpoint.

MINING.com: A big question is: How far away are we from this actually happening?

Anderson: We’ve been in a lot of programs and you get different views on that. I would say that folks are kind of bullish on that for the next five to ten years, closer to ten years [we could] extract on the moon. Almost sure that it will happen on the moon first, because we know the moon a little bit at least, and we have a pretty good sense of where there’s water, and where there’s ice available, which is the key thing. The people who do space exploration talk about it, they say the moon is halfway to anywhere; If you can get to the moon, it’s a lot easier then to go somewhere else because you’ve got lower gravity.

What we’re trying to do is take that expertise on how mining works on earth and translate that into how mining and resource development might work in outer space

Some extraction using ice to create water and fuel, I’d say in the next ten years, conceivably, and from there getting the asteroids is not as big a leap. Within 20 years it will probably be the beginning, and people start using the resources. It’s not 100 years from now.

MINING.com: So how do earth – bound mining lawyers think about space mining?

Anderson: When we talk about how we do mining on earth: what are some of the issues? If you’re going to do a project and you submit in a new jurisdiction, what do you have to know to make sure that you’re comfortable you’re going to get a project?

So we said: let’s take that conceptual framework and think about that in outer space, and there are four issues we think about: Security of tenure — do you actually have the right to extract the mineral?  The fiscal regime, and the other two are bankability and feasibility.

Here’s the issue on the security of tenure and the fiscal regime: there’s an Outer Space Treaty that was signed by a lot of countries when the moon exploration was going on, and the treaty includes a provision that says you can’t appropriate celestial bodies, that would include the moon.

The question is — what happens if I go to the moon? I set up shop, and I extract ice and rocks and start making things, do I own the rocks that I’ve extracted? I’m not saying that I own the moon, but if I put in the effort, do I own the resources? Same thing with asteroids, if I send a robot to the asteroid, it sets up shop and starts extracting things and using them, do you own the extracted mineral? And that’s the legal issue, that’s the unsettled question.

Here’s how that question plays out: I’ll say that the reason we view Luxembourg as the leader is that the States and Luxembourg have statutes that say: if you’re a US or Luxembourg company and you extract a resource, you own the resource. They’ve interpreted the Outer Space Treaty to say that it doesn’t preclude ownership of the extracted minerals. There are some folks who would argue that’s not the right interpretation, but it’s a little bit uneven. So that’s where the gap is, that needs to be resolved. Luxembourg already said “we’ve resolved it” under the law of our country, if you extract the mineral then you own it, because the Outer Space Treaty didn’t talk about that.

If I send a robot to the asteroid, it sets up shop and starts extracting things and using them, do you own the extracted mineral? And that’s the legal issue, that’s the unsettled question

There’s this Outer Space Treaty, and then there’s a new treaty, which came along later as the Moon Treaty, and none of the space countries signed the Moon Treaty. The Moon Treaty also includes other celestial bodies and asteroids as well, and it says the moon and other celestial bodies are the common heritage of mankind, and again, the Outer Space Treaty doesn’t use that language, but the Moon Treaty does.

The reason that matters is because there’s another treaty, there’s an existing treaty in the United Nations Convention on the law of the sea, which says that the deep sea, which is outside of the territory of one of the countries and nobody owns, is the common heritage of mankind. As a result, there’s actually an international seabed authority that exists that regulates activities in the deep sea and charges a royalty – like a profit- sharing thing – that all the countries on earth can share to some extent in the benefits of mineral extraction from the deep sea.

Because the Moon Treaty uses this common heritage of mankind language like the law of the sea, the Moon Treaty would imply that you have to pay some sort of a royalty that would get redistributed among all the countries of the world for the extraction of resources in outer space. But nobody signed the treaty that’s active in outer space, but the Outer Space Treaty, which a lot of people did sign was a constitution of outer space development and did not have the language framework.

The argument is that under the Outer Space Treaty, which is the operative document, you don’t have to pay a royalty for cost sharing among all the countries on earth for the minerals being extracted in outer space. That’s how the two things are tied together. There’s the notion of ‘do you have the legal right to go and explore and extract minerals?’

Luxembourg and the US have said yes, because they have used the language of the Outer Space Treaty and then the fiscal regime, do you have to pay anything? The argument for space explorers is no, because the Outer Space Treaty doesn’t have the common heritage of mankind language that was interpreted under the law of sea, so therefore there’s no royalty due or payable for extracted resources from the moon or other celestial bodies. There’s a lot of literature on this and a lot of academic thinking, and the UN has different bodies, but I would say the majority position is you can keep resources you extract in outer space and not pay royalties on resources, but there’s strong minority view on both of those.

We attended a seminar here in Colorado, and one of the questions was: Would the framework that I just described be a burden on outer space exploration?  People are not going to move forward because of the uncertainty, and the strong consensus was this was not an impediment to moving forward with development of resources in outer space. There’s enough certainty and there’s enough stuff to do before got there, and that there wasn’t an urgent need to get an international treaty to fix all of this. The framework was robust enough to allow further development of these projects.

MINING.com:  Several challenges exist in outer space exploration. How advanced is the aspect? How developed are the trucks, ships, and mining robots needed?

Anderson: The Near Earth Objects (NEOs) are close enough that you can actually get to. A couple of things: water is crucial, because you can take the H2O and break it into hydrogen and oxygen and make fuel out of it. And in addition you can have people around it. But even if it was all done robotically, [an issue is] getting to somewhere where you can get water, that’s why I said the craters in the moon that have ice in them are one of the most promising pieces of the puzzle. There you can start using it for manufacturing purposes.

As far as the engineering goes, there are engineers who are designing all this already, and the Colorado School of Mines, one of the great mining universities, they have a space mining program. You can go get a masters or PHD in space mining there, and their engineers are designing.

One of the presentations was to extract water from these craters in the moon, and it’s fully engineered. You set a kind of a bubble over the ice in the crater, and have these … near the edge of the crater, and you focus the sun on the bubble and it heats up, and the water vaporizes and collects on the inside of the bubble. They also have the distances and calibrations; they have everything needed to make that work.

There are folks who are absolutely working through and running the numbers, and doing the engineering, to have all this happen. The other thing is on the NEOs, sort of the feasibility. Economically, for now at least, and probably for a very long time, you really can’t justify bringing in an asteroid, however you do it. You bring the asteroid to earth or you break it up and process it. Right now the economics of getting it to earth just really don’t make that viable. There are two ways: One is to bring an object near the moon and orbit it around the moon, work on it and bringing it down to the moon, which makes it a lot more cost effective. But the other one, which is very fascinating to me, is basically using a 3D printer. So you basically put a 3D printer up to the asteroid and you set it up, and can actually manufacture the equipment parts for your spaceship, so you actually set your manufacturing up in outer space rather than bringing [materials] back to the earth.

MINING.com: It has been argued that the most cost-effective way to build asteroid mining equipment is to do so in space, which would occur on assembly platforms with automated robots. How would those pieces get to the assembly stations?

Anderson: If you did the 3D printing approach, you can also set up a space station, like a manufacturing platform in space, and then bring materials to that, so you can have it relocated. The other thing is when you are mining metallic asteroids, is basically you put it in a big plastic bag and then you use vibration to break it up, take the bag full of processed granulated materials and move it somewhere. You can either have the 3D printer on the asteroid itself and bring it to the moon, or you can have a centralized facility.

The thing about mining on an asteroid is that they’re not as stable as the moon. You can kind of tumble and spin. So you have to find the right one that is stable to do. I think the idea is that you build, and then bring them over. It would be done with robotics rather than people. The idea with moon based, you could have people on there, the economics of this. Space tourism is one of the things that would provide economics, where you got a bunch of people that would be willing to pay a large sum to go to the moon. So you set up your ice mining venture and you generate an environment with the water and the oxygen, and fund it by having people come out and do a tour.

MINING.com: What about the impact of the influx of space commodities on economies here?

Anderson: There’s a website called Asterank. It ranks the asteroids and shows all the asteroids in the solar system. It models the asteroids and planets. They have a ranking of how valuable the minerals from each asteroid are, but that’s a little bit spurious, because it’s an earth- bound price but the cost of getting to earth significantly diminishes it’s value. It’s kind of a plunked-up number.

The thing about a mining project anywhere is that you spend a lot of capital before you get anywhere, it’s different kind of investment than any other.So the psychology of a mining company is well suited to developing resources in space

There is some concern if you brought some gigantic palladium asteroid to earth efficiently, where that metal is not significantly rare anymore, and that would have an effect on pricing. But I think we’re a long way from that. Theoretically, if you could get it to earth efficiently, it could have a dramatic effect on pricing.

As we deal with the change and how we generate energy and how we consume things, and somebody said if you electrified all the vehicles that are planned to be electrified, you need three times as much copper that’s ever been mined. There are a thousand numbers that are like that. So, there are some practical limits on how much we can transition to different models and how you get this. So to an extent, we want to change the way we generate and use energy, and perhaps there maybe reasons to try to get this to earth. There are papers where part of the pitch is they talk about asteroid mining and they say well, we’re going to create colonies in outer space. You just look at how many people are coming over the next 20 years, so that sort of flattens out 40 or 50 years from now. There’s all these people coming and there’s stress on resources, of course the next move is to open up outer space. Again, I think there are some practical limits. It’s definitely an artificial environment and you can’t just wander around.

MINING.com: What’s the next thing that needs to happen to move the whole concept toward fruition?

Anderson: I think it’s probably proof of concept. There’s a lot of engineering on the drawing board, but the actual work has been fairly limited. But there are companies like iSpace, a Japanese company that’s going to do a lap around the moon and put a rover down, in 2022 to 2024, and the engagement of private enterprise in this process is really different. I think the public-private partnership and having funding coming from outside the governments is going to break this open.

To me, it’s the investment of private industry and continuing this investment, getting the proof of concept and return on the investment will take a while, but if companies are willing to make the long-term investment, then there’s definitely some opportunities to make this all work and make it economically viable at some point. But it’s a long-term play. The thing about a mining project anywhere is that you spend a lot of capital before you get anywhere, it’s different kind of investment than any other. So the psychology of a mining company is well suited to developing resources in space, because it’s got to have the same level of basics to making the investment in the front end before making a return somewhere down the road.