by David Drake
Space mining, a concept that was only heard of in science fiction, is now a little bit closer to reality thanks to a new initiative by Luxembourg. The tiny European country has a population of almost 600,000 and is roughly the size of Rhode Island.
Yet Luxembourg has one of the highest per capita incomes, and it’s proving to the world that it has big plans. Situated between France and Germany, Luxembourg announced that it will be entering the ‘space mining race’ as Jean-Jacques Dordain, former director of the European Space Agency puts it.
More important is the country’s decision to legislate new laws to facilitate space mining. Indeed, there is a high demand for legislation in the space mining industry because of the resources that can be found in outer space.
Unfortunately, there are currently laws in the United Nations which are seen as stumbling blocks to the development of space mining as a profitable industry. The Outer Space Treaty of 1967 was the first ever legislation regarding space law.
Under the treaty, no country could lay claim to any celestial body. Ratified by more than 100 nations, the treaty restricts any and all activities in space, except for those that benefit humanity.
Other laws that came after The Outer Space Treaty, such as the Moon Treaty and the Liability Convention, were all but drawn out replicas of the first one. Under these laws, there is no provision for any country to own any natural resources in space.
It is clearly understood that anything in outer space is considered to be shared heritage. They generally ban any form of economic activity since it would not be for ”the benefit of all humankind”.
During the Cold War, the world was in need of such laws so as to check the activities of superpowers like Russia and U.S. who were in an arms race, with plans to include space in their ambitions; the moon landing is a testament to this fact. Be that as it may, fifty years later and with space being the next frontier, this law has become a great hindrance to the progress of humanity.
The U.S. has tried to address this need for constitutional change with the U.S. Commercial Space Launch Competitiveness Act signed in October 2015. The law gives U.S. firms the right to own resources in space and sell them to other parties for a profit.
Private companies in the country are the biggest beneficiaries of this law. One such firm is Planetary Resources, a major player in the space mining industry, which hailed the bill as “the single greatest recognition of property rights in history”.
Nevertheless, some experts still deem this step as a possible violation of the 1967 Space Treaty. Others justified the law by saying that it prohibits U.S. citizens from owning celestial bodies, but does not prohibit them from extracting their minerals.
Yet, no matter how the law is interpreted, its success or failure will come later when U.S. companies, such as Planetary Resources, have to defend their actions in an inevitable space rush.
But what everyone seems to be missing is that the law, as it stands now, is insufficient to ensure an unregulated mining industry in space. The law only gives mining companies ownership of minerals already mined.
The problem, however, is in the minerals still not mined. When a company makes a discovery of a valuable mineral and starts mining, another company can come the next day and simply start mining on the same ground.
For this reason, there has to be a way to ensure that once mining has begun on a particular asteroid, no other company can follow suit. Only the company that made the initial discovery can own the mining rights to that particular asteroid, even if it’s for a specific period of time.
Nobel Laureates Elinor Ostrom and Ronald Coase proposed a collective, private market solution to the quandary which is mainly based on the idea of private property, an idea that goes directly against the UN space law. To this end, it is hard to conjure up an easy fix to this situation because, for the earth to survive and prosper, we need to extract the necessary resources from asteroids.
Yet at the same time, we also want to ensure that all of humanity can equally benefit from such measures. As proven above, even simple changes to the UN laws might not be a lasting solution.
To achieve any progress in the industry, countries both big and small must reach an agreement. Rules remain just that until they are enforced by the signatories as well as the participants.
Many institutions like Space Agency, which focus on such issues, are now involved in the process of reaching an amicable, beneficial and long-lasting solution. There is also LDJ Capital, a company that advises various countries, such as Marshall Islands, Dominica and more relevantly Luxembourg, on financial technology.
LDJ Capital is on the team tasked with the responsibility of advising the government of Luxembourg on space mining. Stephane Boudon, the company’s director of renewable energy and his group, are currently looking into viable solutions for the country.
In truth, space mining remains to be an abstract idea until all the infrastructure is put into place to turn it into a reality. As engineers look into ways of successfully getting machines on asteroids, economists and legislators should also find ways to make space mining legal and profitable.
David Drake is the Chairman of LDJ Capital, a multi-family office; Victoria Partners, a 300 family office network; LDJ Real Estate Group and Drake Hospitality Group; and The Soho Loft Media Group with divisions Victoria Global Communications,Times Impact Publications, and The Soho Loft Conferences. Reach him directly at David@LDJCapital.com.
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