Focus On

Space: The final financial frontier, legally speaking

Thursday, April 07, 2016 @ 8:00 PM | By Geoff Kirbyson

Space may be the final frontier but it represents the start of a whole new world to the mining industry.

With rising concerns about the sustainability of global natural resources reserves, the stage is slowly being set to exploit minerals on the Moon and even on the countless asteroids orbiting the Earth.

Ram Jakhu, associate professor and incoming director at the Institute of Air and Space Law at McGill University in Montreal, says a variety of studies have shown that the Earth’s natural resources are depleting at an increasing rate and could be exhausted as early as the end of the century.

“That means one has to look outside this planet,” he says.

The private sector in the U.S., Canada and several countries in Europe has become “quite interested” in space mining over the last two to three years because of the growing belief that there is a significant amount of money to made in harvesting space minerals. At the same time, governments are increasingly looking to reduce the amount of time, money and effort they put into the space business and believe the private sector should take the lead. The exceptions to this are China and India, where governments are still very much involved and neither country has much interest from the private sector.

As ludicrous as space mining might seem to some observers, remember that the Internet was seen in the same light a quarter-century ago.

Jakhu says numerous studies show there are thousands of small asteroids — or “near-Earth objects” — circling the planet that are reachable from Earth.

“One asteroid could be worth trillions of dollars,” he says. “The technologies are being developed. Fly-by missions have taken some pictures to get a sense of what minerals are there. Some missions have landed and done some experiments.”

The U.S. is trying to get out in front of the pack with asteroids, which are hoped to be rich in heavy elements such as cobalt, gold, platinum, rhodium and tungsten. NASA plans to launch a spacecraft on a mission later this year to retrieve a mineral sample from the near-Earth asteroid Bennu.

And while the Moon might have long ago lost its lustre for human-led flights, robotic and other missions have continued over the last half-century, he says.

So, how will it work from a legal point of view? Does the first company or country to shoot a rocket full of miners into space get all the spoils?

Because this is such a new area, the amount of legislation governing it is still in its relative infancy. International laws need to be passed spelling out how who or what owns the mineral rights to the moon or asteroids, says Darrell Podowski, a Vancouver-based partner at Cassels Brock.

“You can’t have people going up there and digging things up and then having multiple claims on [minerals]. It could get messy,” he says.

Not only that, but it also needs to be determined how the minerals are to be brought back to Earth safely, tested for radioactivity, processed and marketed.

Podowski says the percentage of minerals in undersea deposits is significantly higher than rocks taken out of the ground and the hope is the same principle will apply in space.

“The way the genealogy is on asteroids, the quality of ore may be way higher than on Earth. Once you get there it could be pretty lucrative,” he says.

Some experts believe the question of jurisdiction on the Moon will fall to the United Nations. It’s also widely believed that Canada needs to develop its own safety standards, considering that space travel not only comes with its own dangers — a total of 14 lives were lost with the explosions of the Challenger and Columbia space shuttles in 1986 and 2003, respectively — but measures need to be in place to ensure all of humanity isn’t affected by a mining-related disaster in space or on the Moon.

The U.S. recently passed a law giving authority to the federal government to license private companies to explore and exploit space resources but some scholars and politicians have countered by saying that is contrary to international law.

Jakhu doesn’t agree with legal analogies of the high seas, where private companies can’t exert any ownership but they can take out the fish.

“You don’t determine law in one environment for another. It may be a good law for the sea but how can you say it’s good for outer space? It’s completely different,” he says.

He believes Canada needs to start off by ratifying the Moon Treaty, which maintains the rule of law in outer space.

“Our interests are better served by multilateralism,” he says.

Jakhu believes that an international consortium bringing together private companies and some governments could be the best way to make the most of space mining.

But before any private companies take flight, they’ll want to ensure they have the right to exploit and mine the minerals.

“There’s no point investing billions of dollars if they can’t own it,” he says.

Podowski says space mining faces many of the same issues that mining under the sea did and continues to have.

“But times 100,” he says.

Podowski agrees that it has to make economic sense before entrepreneurs will take a serious run at space mining. With the current state of capital markets around the world and low commodity prices, he doubts it could be feasible in the next five to 10 years.

Some issues in space mining are the same or similar to operating in remote locations, says Chad Eggerman, a Saskatoon-based lawyer specializing in energy, mining and natural resources at Miller Thomson LLP.

“It’s no different from mining a copper mine in the mountains of Chile. How do you get your miners there, how do you get the (minerals) down?” he says.

While there aren’t a lot of professionals specializing in space mining, Eggerman says it is a topic of conversation among lawyers. Much of the discussion relates to jurisdiction, just as it does with traditional mining when determining whether you have to deal with private land owners or the Crown.

What will propel the investment into the hundreds of millions or billions of dollars is somebody finding, or believing they’ve found, a very valuable commodity.

“At some point as we explore, it will be, ‘we found this amazing mineral or something that can generate energy,’ ” he says.

“The challenge we’re facing now is getting private miners up there. That will change. People will be able to buy their way on to a shuttle flight in the near term.”