Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

NASA Is Buying Moon Rocks for Dirt-Cheap Prices

By Rich Smith - Dec 20, 2020 at 7:47AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

You won't believe the bargain price NASA just got for moon mining -- or who's doing the mining.

Call it an offer they could not refuse, because it was almost too good to be true.

Three months ago, the National Aeronautics and Space Administration -- NASA -- told space companies that if they could figure out a way to get to the moon, and scrape as little as 50 grams of moon pebbles together in a pile, NASA would buy those rocks. Sight unseen, no delivery necessary -- all a company would need to do is sweep up some moon dust and tell NASA where to find it, and the space agency would cut them a check.

Then NASA sat back and waited for the bids to roll in.

Full moon against a black background

Image source: Getty Images.

Open the floodgates

The reaction from would-be space miners was immediate and enthusiastic. Even with just three months to put together proposals, 22 separate companies submitted bids to collect space rocks for NASA. Still, in the end, the space agency picked just four winners: 

  • Lunar Outpost of Golden, Colorado,
  • Masten Space Systems of Mojave, California,
  • ispace Japan, based in Tokyo, and
  • ispace Europe, based in Luxembourg.

According to NASA, Lunar Outpost is proposing to send a robot miner to the moon aboard Blue Origin's planned Blue Moon lunar lander in 2023. That same year, Masten plans to send its XL-1 lander. The two ispace companies will likewise utilize their own landers, the Hakuto-R, with ispace Japan going in 2022, and ispace Europe the following year. 

Of the four companies, Masten is the most firmly established, having been founded in 2004 according to data from S&P Global Market Intelligence, and having already won several NASA contracts related to the Artemis moon landing project.

Why investors shouldn't get too excited -- yet

Now, before you get too excited about the investment prospects here -- don't.

There are two reasons why these initial NASA contracts don't amount to a hill of moon beans for investors just yet. Firstly, because none of the four companies named above is currently publicly traded. And secondly, because the dollar values of the contracts NASA awarded are ridiculously low, ranging from just $15,000 awarded to Masten, to $5,000 for each ispace company, to just $1 awarded to Lunar Outpost -- both regardless of how many moon rocks they collect.

Is this a good price? A bad price?

Considering what it would cost NASA to do the work itself, I'd say all three prices quoted are very good for NASA, and for taxpayers. But most importantly, with these contract awards, NASA has set a reference price for resources gathered off-world. In so doing, it has established a market for lunar mineral resources.

Why investors might want to get excited later

And this is why NASA's contract awards this month could turn out to be a really big deal for investors -- eventually. Think about it. Whatever the dollar value ascribed, why is NASA paying these companies anything at all to collect moon rocks on the moon and then just leave them there? Two reasons:

First, NASA doesn't necessarily need moon rocks. It's already got a bunch left over from the Apollo missions conducted back in the '60s and '70s. And yet, the space agency believes that "in-situ resource utilization (ISRU) will play a vital role in" the future, because it will permit bases on the moon and Mars to become more self-sustaining, and less dependent on expensive delivery of supplies from Earth. It's therefore essential to develop and test ISRU processes and technologies "on the Moon, building the required knowledge to implement [these] new capabilities." 

And second, NASA wants to create "a stable and predictable investment environment for commercial space innovators and entrepreneurs," explains NASA director of Commercial Spaceflight Development Phil McAlister. By setting a price -- any price -- for moon rocks, NASA has (1) confirmed that off-planet resources have at least some value, and (2) made a first small step toward creating a market that can establish that value between buyers and sellers. And now that there is a market for off-planet resources, the risk for other, larger and more established companies venturing off-world to conduct mining expeditions in space, and selling the resources they find (water for fuel and breathing, for example, iron for construction, or copper for electronics) has decreased.

Granted, we may still be years, or even decades, away from companies doing large volumes of business away from Earth. But the movement has begun. Call it one small step for NASA, and perhaps one giant leap for the space economy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/06/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.