MINING HELIUM-3 ON THE LUNAR SURFACE

A Business Strategy and Analysis

Collin BezroukSam MoffattMike ZwachAaron Olsen

James ThomasElizabeth KenneickChristine Fanchiang Julia Freeburg

Agenda1. Applications and Problems of He3

2. Solution and Concept of Operations3. Barriers of Entry4. Pressure from Substitute Products5. Bargaining Power of Buyers and Suppliers6. Government / Industry Competition

Applications of He3 in Industry1. Medical Research

Sub 1K cryo-cooling Laser research, Lung imaging, etc.

2. Fusion Energy Research Highly sought by researchers Clean energy, no radioactive byproducts.

3. Geological Surveying Finding oil well or other mineral deposits Road construction

4. Homeland SecuritySecurity scanners in airportsPrecision instruments in guided missiles

Problems Obtaining He3 0.000137% of Helium on Earth Current Costs: $7,000/gram Demand: Increased 10x in 7 years

Solution to He3 shortageProblem: Helium 3 is an expensive and scarce material with a growing demand in multiple industries.

Solution: Extract Helium 3 from the lunar regolith and transport it to the Earth.

Concept of Operations: Extraction

Concept of Operations: Transportation

Threat of Entry: Economies of Scale

1. Finding H3: LOW: Academic work underway since 1986

2. Mine Layout: LOW: H3 in upper regolith, easy access3. Mine Equipment / Processing: VERY STRONG: $$ to

develop and transport4. Transport to Market: VERY STRONG: Not now

availableOverall, Very Strong Barrier of Entry to Market

favors Large Companies such as Oil & Gas companies with existing process and funding for exploration and prospecting

Threat of Entry: Capital Requirements Development costs: (High)

Strongest barrier is by far the rover and excavator costs ($3.5 Billion)

Transportation costs: (Medium/High)Possibility of being a significant barrier ($80-

125 Million/launch) Operations costs: (Low)

Shouldn’t be a significant barrier based on established communication and helium distribution techniques

Threat of Entry: Government Policy We would have a monopoly on He3 (High)

Competition encouraged and required. He3 is not on the open market. (Med)

The DOE might assume control over the distribution, limiting our market to government purchases.

Must adhere to refinement and containment standards. (Low)

Outer Space Treaty states that nobody owns the moon (Med)Could apply to Lunar resources and utilization

Force 2: Intensity of Rivalry among existing competitors Small number of firms in market, low initial

competition. Russia currently has largest stockpile of He3,

though their supply is limited. Market unstable due to short supply and limited

number of market participants.He3 on the moon provides nearly unlimited source

He3 a commodity with a falling supply, yet growing demand.

High strategic stakes to be the initial operation on the lunar surface.

Force 3: Pressure from Substitute Products Overall assessment: Low Substitutes:

Terrestrial Sources○ Natural Decay of Tritium -decades○ Recycling○ Extraction from natural gas, atmosphere -

limitedTechnological Sources

○ Technology advancements reduction of sensitivity and introduction of toxicity

Force 4: Bargaining Power of Buyers

Overall Assessment: Medium/Low Buyer groups: (in order of most to least

influential)Scientific Community (particle accelerators,

cryogenics, research)Government (cryogenics –

navigation/guidance of missiles, munitions, land vehicles)

Neutron Detection (homeland security)Non-Government uses (medical uses)

Force 5: Bargaining Power of Suppliers

Supplier labor: highly-skilled workforce, but overall not a major influence to supplier demands

Suppliers are powerful, but also have a strong incentive to provide low-cost reliable product(s).

As market matures the power of suppliers would decrease because more suppliers would be able to enter the market.

Rank Suppliers Ideal Characteristics of Supplier Examples

1 Initial test rover Highly experienced and innovative designers, cheap and fast product turnaround

Lockheed Martin, Boeing, Northrop Grumman, Ball

2 Lunar launch base kit Highly experienced and innovative designers, cheap and fast product turnaround

Lockheed Martin, Boeing, Northrop Grumman, Ball

3 Launch Vehicle/ Infrastructure

Well-established & experienced. ULA, Orbital, SpaceX, SeaLaunch

4 Main rover design materials (electronics, mechanical components, computer systems)

Stable supply and cost. General distributors

5 Storage containers Stable supply and cost. General distributors

6 Distribution Channels Stable platforms; minimal disruption to distribution

Railroad, natural gas pipelines, trucking

Government as an Industry Competition Force Industry is concentrated

DHS could be 80% of purchases

Gov’t is in a power position because they have access to information about what the industry is doing, how they are doing it, and at what cost

SummaryForce RiskThreat to Entry High

Intensity of Rivalry Very Low

Pressure from Substitute Products Low

Bargaining Power of Buyers Low

Bargaining Power of Suppliers High

Questions?