I've now seen several headlines along the lines of "NASA to explore $10,000 quadrillion metal asteroid"
What does this even mean?
Two things, really:
- NASA is planning a mission to the nickel-iron asteroid 16 Psyche, which is true
- That asteroid contains $10 quintillion worth of metal, which is, um ...
I mean, on the one hand it's a simple calculation: Psyche contains X tons of nickel at $Y/ton, and likewise for iron. Total value: $10 quintillion or, for whatever reason, $10,000 quadrillion.
Except that's about 100,000 times the world's GDP, so maybe we're missing something?
Suppose we could magically bring all the nickel and iron in Psyche to earth. That's a ball about 200km across, so we'd have to be a bit careful, but say we break it down into a few million 1km heaps distributed strategically around the world. How much is that really worth?
You might think "Yay, free iron and nickel!" but that's not quite right. Even scrap iron, which has already been refined and packaged into usable pieces, costs something to buy, something to transport and something more to put to use, unless it happens to be in just the form you need. More realistically, it would mean no more iron mining, which is great unless you happen to be in the iron/nickel mining business. That's not nothing -- world iron production looks to be around $300 billion and nickel maybe more like $20 billion. But it's not a trillion dollars, much less a quadrillion or quintillion.
Or look at it another way: We've got a rock out in space that's worth as much as the entire world economy would produce in 100,000 years at current rates. The total budget of NASA is around $20 billion, with ESA JAXA and the Russian space agency accounting for a few billion more. Surely it would be worth it to throw the world's entire space budget into mining that rock.
Except, the question isn't whether there's a bunch of valuable metal to be mined. The question is whether it's worth mining. It currently costs about $20,000 per kilogram to get a payload to low earth orbit. It's anybody's guess what it would cost to actually mine a given amount of metal in the asteroid belt and bring it back to Earth safely -- though if you're transporting a hunk of metal I suppose you just have to make sure that it doesn't hit anything on the way in. But bulk nickel from Earth runs more like $10/kg and iron is cheaper yet, so ... maybe not.
I don't really want to pick on NASA for trying to drum up a little interest in its latest mission -- though it's probably worth mentioning that the past couple of decades of unmanned missions by NASA and the other space agencies have been spectacularly successful in exploring the solar system and in an ideal world that would speak for itself. If there's a point here, it's that it's a good idea not to take numbers, especially eye-catching dollar amounts, at face value without asking what they actually mean.
Scrap iron right now is worth about $.35/Kg, but what would it be worth if we had 100 cubic kilometers of iron just sitting here? If it were aluminum the situation would be more dramatic: we already have so much refined aluminum to recycle that bauxite mines have shut down.
ReplyDeleteWhat is someone's "brand" worth? During the recession Alan Mullaly mortgaged every thing Ford had, including the blue oval logo. A Rolex is worth what it's worth not because it keeps better time than your cell phone, which it doesn't,but because it's a Rolex. But the value of the brand is much less transferable than the value of nickel. Not sure how much Alan got on the oval.
ReplyDeletePeople sometimes ask me what something I've made is worth. I have no idea. But I know what it costs.
Economists sometimes say that value is created by scarcity. So if your asteroid of iron/nickel were here, those metals would be abundant, and cheap. Gold is more valuable than iron because scarcer, but if all the gold and all the iron were to vanish, which would we miss more?