Cash in space – five billionaires shooting for the stars
Sunday, April 29, 2012/
Gina Rinehart was back in the courts last week, this time with her joint venture partner Rio Tinto firmly in her sights. She wants a 40-year-old agreement made by her father and Rio recognised and is claiming she is owed back-payment of royalties from two mines.
Gina can’t seem to keep out of the courts these days, but sadly we think she’s on the wrong track.
You see, these earthly court disputes matter little in the grand scheme of things. Where Rinehart should be aiming is not the Pilbara, but somewhere north – the heavens.
Last week, Google’s billionaire co-founders Sergey Brin and Larry Page were joined by filmmaker James Cameron and billionaire Ross Perot Jnr as investors in a new company called Planetary Resources, which is claimed to be the first asteroid mining company in history.
Officially launched at a press conference on April 24, the company said the plan to mine asteroids could potentially add trillions of dollars to the global (or should that be universe’s?) economy, providing of course that the rare minerals can be mined and brought back to earth.
It’s a long-term bet of course – the company will start sending up spacecrafts to look for suitable asteroids in 2014, with the task of landing on an asteroid and mining it unlikely to be tackled much before 2022.
But make no mistake – this is no novelty project.
“This is smart money investing in one of the largest commercial opportunities ever – going to space to gain resources for the benefit of humanity,” co-founder Peter Diamandis said last week.
“The Earth is feeling a resource pinch and ultimately we have the ability to turn that which is scarce into abundance.”
The idea of tipping money into something so risky would make most earthly entrepreneurs scoff, but in fact we shouldn’t be surprised by the involvement of these billionaires in Planetary Resources.
Just as space has fascinated humans for centuries, so too has it attracted the interest and dollars of several prominent billionaires.
Right now, it’s very much a speculative investment – and an expensive one. But these billionaires are betting the stars will eventually align.
Google co-founder Sergey Brin is no stranger to space investment. In June 2008, he was announced as the major investor in Space Adventures, which describes itself as “the only company that has provided human space missions to the global marketplace”. The company offers orbital spaceflight, suborbital spaceflight, zero gravity flights and has sold two seats on its lunar mission set to take-off in 2015. Estimates suggest about $US4.5 million has been tipped into the venture so far, but with prices for space flights running into the tens of millions of dollars, that sort of investment can be recouped if the customers start flowing.
Another serial space investor, Microsoft founder Paul Allen has actually had something of a return on his spending – back in 2004, an experimental spacecraft he funded called the SpaceShipOne was awarded the $US10 million Ansari X Prize in 2004 after it manage to get to space and back twice within five days. Allen is now the backer of Stratolaunch Systems, which was established in December 2011 and is building a giant aircraft – it will have six 747 jet engines – to launch medium-sized payloads into space. Allen is also talking big. “We are at the dawn of radical change in the space launch industry,” he said in December last year.
One of the customers of Allen’s Stratolaunch Systems will be Richard Branson, who has poured millions to his space tourism venture, Virgin Galactic. The company is probably the most high-profiled player in the space sector, thanks in no small part to its valuation. Abu Dhabi investment fund Aabar Investments pumped in $US280 million for a 32% stake in July 2009 (on a valuation of $US900 million) and then buttered up again in October last year, investing another $110 million to take its stake to 38%. Virgin Galactic now has 500 passengers signed up (actor Ashton Kutcher was the latest) although it’s not exactly clear when the company will move on from test flights to the real thing.
He’s hardly a household name, but Elon Musk is one of the most storied entrepreneurs of Silicon Valley thanks to his role as co-founders of PayPal, eBay and electric car maker Tesla. Musk’s other passion is SpaceX, founded in 2002 with some of the money from his sale of his PayPal stake. The space travel company is perhaps a little further along than some of its rivals – it is actually scheduled to send an unmanned spacecraft to the International Space Station on May 7. According to Forbes, the company has already been awarded more than $1 billion in contracts from NASA to make 12 unmanned cargo runs to the ISS and Musk says manned flights could occur within three years. However, he’s not in the space game for a big financial payoff. “It’s a terrible risk adjusted return,” he told Forbes. “But it’s gotta happen. I think that for me and a lot of people, America is a nation of explorers. I’d like to see that we’re expanding the frontier and moving things forward. Space is the final frontier and we have to make progress.”
Amazon co-founder Jeff Bezos is seen as running one of the more secretive space ventures, which is called Blue Origin. The company started in 2000, but its existence was not known until a few years later, such was Bezos’ secrecy. The company won $US3.7 million in funding from NASA in 2009 (the agency was most interested in the company’s launch abort technology) and in April last year it received a commitment for a further $US22 million in funding. Blue Origin had a setback in September last year when a test flight went wrong. Bezos, who is worth $18 billion, was philosophical. “Not the outcome any of us wanted, but we’re signed up for this to be hard, and the Blue Origin team is doing an outstanding job. We’re already working on our next development vehicle,” he said at the time.