Why would people invest in very-long-term commercial space exploration projects?

Question

In a relatively near future, the humanity discovered a way of commercializing space, in the sense that a project emerged that is extremely costly, but if successful, would be worth it and then some. The only problem is that the time span between the investment and the return would be significantly longer than the human life span. (For concreteness, we discovered precious mineral resoureces on one of Jovian/Saturnian/Uranian moons. We can send unmanned missions to build mining facilities, but we cannot really send enough fuel to break, so we are stuck with Hohmann transfer, that takes decades one way. We then produce fuel for the return trip on site, by an energy-costly process fueled by energy harvested on site, which also takes quite long. Then, the ore is sent back, again by Hohmann transfer, so it starts to arrive some 70-150 years later.) And, this is a risky investment, in that the mission may fail, or resources may lose their market value.

The question: what social/economical conditions allow for such a mission to be funded? As far as I understand, IRL, the longest commercial contracts we have have span of a few decades, maybe 40 years at most, and those are mortgages, a different thing completely. When investing in stock or investing directly, we typically expect return within a decade or two. We do have agreements that span, say, 100 years, but those feel more like an euphemism for "eternity" to whose who sign them, say, as in Great Britain Hong Kong deal. I am not aware of any commercial contracts that only target revenue decades later. And that is rather logical - why would someone invest their money if they have no hope of seeing returns in their lifetime?

Then again, if public money is spent, then you need to convince the public that it is worth it, and the same problem emerges, exacerbated by the riskyness. If some kind of a dictator or plutocratic elites control the public spending, then again they seem to lack incentive to spend money on such a project that they could rather spend on their villas. Etc.

So, is there a realistic mechanism such long-term missions can be funded? I'd like it to be rationally motivated, no religious cult or such.

Answer 1

Trading in promises

Two mechanisms can play a part here but essentially you don't have to wait for the ore to return to sell your investment, it's all about share value and the promise of a return.

Shares in a business are proportional to their promise of return - sometimes even if that return hasn't happened yet the implication that in the future the profit will be there can drive the price of a share up. There are several stages to this:

1. Launch to landing - Depending on how far along your tech is this could be a risky stage. High risk, low share price because your money may go up in flames. Once past each risky stage the price will increase because the chance of return is higher.
2. Prospecting - This can make or break the value, another high risk position. The number of possible sites would guide the initial share price but finding, and staking claim to, places where ore is known to exist will skyrocket your share price. Selling the rights to mine those areas would be a business all in itself I imagine.
3. Launch and land of mining vehicles - Each bit of mining equipment that makes it to the ground safely will increase the value of the shares, the chance that sooner in the future ore will be ready.
4. Return and sale - When the value is known, the ore is safely to it's buyer, the risk is at its lowest and the share value at its highest.

In theory someone could hold onto a share for the whole of the lifecycle of this process but most people will sell along the way. Each stage relates to different investment tactics - some people may never invest before machinery is down and mining - the lowest risk, lowest return stage, but some may gamble with the highest risk and invest in pie (or ore) in the sky projects.

The second mechanism is the future sales promises. After the prospecting stage the project could sell off the promise of certain sales at a reduced rate to companies who need the ore. Like share prices this value will fluctuate and companies may well trade these promises between themselves too.

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Just some thoughts on this.

Mining beyond Earth but within our solar system is likely to be followed by production moving out too. There is no sense using all that fuel shipping the full weight of mined ore that, once the useful product is extracted, will have its weight substantially reduced.

The refinery process will move out too, they'll buy up the ore. Manufacturers (especially of space faring vehicles) may well move their production to space too. All of this will mean that profit can be made quicker. Not to mention that once a mine is set up it will continue to produce value for years to come, it isn't a one off profit.

Answer 2

Counterpoint:

This mission isn't a good investment and would probably never take off

Mainly, 70-150 years is a very long time. Hell, 150 years ago humanity didn't have powered flight, let alone space travel, and if anything, the rate of technological progress has only gotten faster. Furthermore, while investors are fundamentally gamblers, all our modern capitalistic markets are predicated on constant market growth and betting against long-term technological progress is insane. It is all but inevitable that a better space-travel technology will be developed (better engine, faster fuel process, space elevator, etc) and the smart money's on this advancement happening in less than 150 years.

Let me give a hypothetical example: in 1950, engineers at XYZ corp decide that making a supercomputer to do automatic stock trading will be hugely profitable. To do so, they've found a genius mathematician who's developed a nobel-prize winning algorithm for this task, but the catch is that it simply requires immense computational power. The engineers plan to build a computer to do this, and figure out they need 10,000 computer cores and they calculate that their company can build 150 a year. This way, in around 67 years, their computer will be built, they can load the software, and basically print money.

Unfortunately, when 2016 rolls around and XYZ corp finally brings their multi-warehouse computational cluster online, the markets have fundamentally changed, their algorithm is no longer relevant, and the smartphones that the engineers have in their pockets can all out-compute their supercomputer without even getting warm.

A similar thing would happen to your 150-year operation, I think. Space travel will be cheaper, faster and more efficient engines will exist, and maybe the resource that they were out to get in the first place can now be synthesized from dirt using your average basement particle accelerator.

Also, while I'm on the topic of technological progress over time, I'd say that there are even odds the first immortal person has already been born. Eventually, the progress of medical and anti-aging technology will outstrip actual aging and it's entirely possible that people in their 20's today will live long enough for anti-, and eventually, de-ageing treatments to exist. For the young and affluent, long-term investments will become more attractive soon.

Answer 3

I'd buy it, and so would millions of other other speculative traders.

I'd totally buy a 0.00001% share of such a mission for \$50, because I'd be expecting to sell it in 10 years for \$60, not because I'd be expecting to be around in 150 years when it returns and I can claim my \$300 cut of the mining profits.

When people think there's money to be made in a stock, long or short, term, they will buy it. But when a stock is bought by other people, speculative investment follows. When that happens, people are buying the stock only as an investment on the value of the stock, not because they're waiting 150 years for the company to turn a profit.

For example:

• Uber only JUST became profitable, but still hasn't done a full year profit, despite trading for 10 years.

• 90% of bitcoin purchases are speculative, 10% are actual transactions. People are only holding bitcoin because they know the value is rising, not because it's useful to them.

• Tesla has never made a profit, but the expectation of making a future profit (or speculation) has driven it's stock price up so high that it's the most valuable car maker on the planet.

I may not care if Tesla ever makes a profit, but if I bought it shares for \$900 a piece and sold them for \$1100 each 3 years later who am I to care?

The share of the company, (or the mission itself depending on how it's financed), has an implicit value because of that long term expectation of profit. The share of that expectation could be traded on the open share market.

The company can raise more capital by releasing more shares to the market - either diving the company into even more parts or selling some of the founders shares. That capital raising can be used to finance the mission.

Assuming the tech is reliable enough and there's some refund guarantee if the mission is scrubbed, this would be a really stable investment to make actually. By the time I die of old age the ship is still in transit, not much is likely to go wrong in the decades its slowly travelling, but as the ship gets closer and the payoff gets closer the expected value is guaranteed to rise (\$1tril in 50 years is more "valuable" than \$1tril in 100 years). By not caring about the final outcome, only the change in the value of a share of that outcome, it's a pretty safe investment. I can sell it for my retirement, or even use it as security to borrow against to pay for my retirement, long before the operation returns its first gram.

Answer 4

They're not being funded by an individual; they're being funded by conglomerates.

An awful lot of banks accounts/pension funds/mind boggling sums of money are not invested by any one individual. They are funded by investment firms which aggregate up all the money that they have been given and then invest it in a variety of different potential revenue streams. I'm simplifying greatly, of course, but by aggregating lots of small sums investments can be made that would otherwise be impossible, both in terms of risk profile and time needed for the investment to become profitable.

For example: Investments can (really simplifying) be split into low risk, low reward investments and high risk, high reward investments. If I (as an individual) decide I want 95% of my money to be safe investments, and only 5% to be high risk: That might not amount to a lot of capital in the 'high risk' bucket. But if there were a million of me all going through the same investment firm? Suddenly they've got the money to use.

Not only that, but the firm can expect to be running for a long time, certainly longer than your average human. As such they can afford to make longer term investments, trusting that short term investments can cover their obligations (Various financial laws apply here, but I'm sure sufficiently motivated lawyers can weasel around that) while their higher risk portfolios sit and wait for the big payoff. If one big payoff never comes: Oh well, they have others. As long as the risks and rewards are properly quantified (There's a reason actuaries and quants get paid a lot) it won't affect the investment firm in the long run. In this case the investment can be made by one person knowing full well that they will be retired by the time the return arrives: as long as the risks are signed off by the company it will still be worth it.

So, that's the private side of things covered. Now for public sector. Governments are free (subject to the constitutions/laws of their respective countries) to invest public money wherever they like, and write whatever laws are politically expedient. If it seems worthwhile to their people a government can start funnelling small amounts of money into their space programs, and while it might not seem like much money that can then be fed to a larger multinational corporation that can use the money to achieve much more.

If you want a historical perspective you might want to take a look at trade and exploration in the age of sail: Government (or sometimes privately) funded expeditions could take decades to offer any kind of return, and there was every chance a ship worth a sizeable chunk of a fortune could be lost without trace. You cold often find that expeditions would be funded by companies instead of individuals or government bodies, since this would reduce the risk to any individual and allow those individuals to see a return on their investment even if their particular investment hasn't actually returned yet.

In the real world this is done via a complex web of contracts, investment firms, government contracts and (last but not least) the stock market. SpaceX, for example, gets paid by space agencies and private companies from multiple nations for services rendered (launching satellites), and they re-invest that money in projects which they don't expect to show short term gains but (they hope) will net them a sizeable long-term gain. Various investment companies, seeing the success of SpaceX in the 'think big and then make it work' stakes, invest in them (via buying their stocks) in the hopes that they can then make money off their success (by selling those stocks later). So far it seems to be working out for them. Longer and longer missions are simply a matter of momentum, since the money will keep rolling in from the 'lower risk' missions and increasing political and private interest in their success.

Basically: We keep doing what we're doing. The risk on the long-term contracts is quantified and agreed to by every company involved, and while waiting for the contract to actually make money those companies live off their other investments.

Answer 5

It's an enterprise undertaken by states, not individuals or firms, for several reasons:

• It's a good long term investment financially
• It's a good investment from the perspecive of a nations economy: The first nation to receive the return shipment could dominate the market in certain minerals for some time, either by dumping it on the global market to wreck certain terra-based mining operations or by ensuring global dominance to the respective nations industry
• It's teh superpower thing to do - someone recently answered the question why China did a sample return mission to the moon: "Superpowers have space programs. China wants to be a superpower, so China has a space program"
• the investment dumps a lot of money into the economy, which can serve as a stimulus. This can only work in a state with a "private or public" native space industry to support the project.

To really take off, one or both of the following should exist:

• if there exists a 'star-fraction' in one state - a large coalition of capitalists who will benefit short term of the investment, and of starry eyed space fans who act as political support of these capitalists (think of the US and the weird Elon Musk fans).
• a political leadership who sees andrealizes the short term benefits, but thinks in longer terms than one election cycle or even one generation (Maybe China? more likely the Chinese leadership is just muddling through like eveyone else, but better at hiding this fact. This neednt be the ase in your story and Xi Yinping has weird fans too).

Answer 6

Why would someone invest their money if they have no hope of seeing returns in their lifetime?

Maybe they are so rich they literally can't find any other half sensible places to stuff that money into. This is very plausible in fact.

If public money is spent, then you need to convince the public that it is worth it

Heh, really? How much of your government's spending has your or your friends' permission? Even most democracies are only borderline democratic, and spend countless billions on stuff almost no voter would accept. That doesn't even take into account less democratic nations.

Arms races have successfully spurred nations into investing about 5% of their gdp into space programs. This can even have some sort of rough democratic mandate given suitable propaganda! It is probable that if one centrally planned and dictated nation state decided to try to take space colonization superiority, even if no profits were in sight for decades, other powers would be forced to follow.

Answer 7

Another counterpoint: commercial company won't have monopoly on space exploration (or won't be expected to hold it for 70-150 years).

This would not only be a long term, high risk investment, it also can be ruined at any moment.

Even if a space program hits all the milestones over a very long period of time and delivers all the promised results, there is no way to guarantee that the value of these results would match the expectations. Halfway through the development process, a different company may jump into the business, and building on what is already developed, overtake the original company and making the returns much less profitable.

Consider a Soviet space program which enjoyed a good head start in the late 1950s only to be overtaken by the Apollo program by the late 1960s. Moon landing was the big prize, but someone else had won it.

Sure, the original program would have long term benefits - it's just the rate of return would not be quite great.

Answer 8

Society is run by AI, not humans

As it will likely be decision making is going to be in the hands of artificial intelligence, not humans. If the profits of an enterprise are worth it and the risk acceptable the AI will invest into it. Its scope is that of the lifetime of the company, not that of human life.

According to a report published by the Bank of Korea in 2008 that looked at 41 countries, there were 5,586 companies older than 200 years.

List of Oldest Companies

Humans may still profit after all, in more than one way.

• shareholders / investors will gain by the value of the company. That value is calculated (by AIs of course) also by the number of active enterprises and their potential future revenue
• workers will gain because they will have jobs. Human workers may still be needed for some tasks, not everything is economically feasible with robots. Of course human workers will do their job (designing, testing, cleaning, etc.) in close relation with the AI and using also robotic assistance
• consumers will benefit from previous missions which will have brought back to Earth materials that are nigh depleted on the planet. Without them products won't be made.

It's nice to have almost free electricity but how can you have it if not mining for Helium-3 in the clouds of Jupiter? Of course the elements that fuel fusion that is powering the planet now were searched for over 150 years ago, those that are being mined now will be used by mankind in another 150 years. Does it really matter? Not really. What matters is continuity. The machines must run.
The same actually can be said for any long spanning project, like interstellar exploration. Or genome modification.

And so mankind will grow out of it's own limits.

Answer 9

Not viable as a commercial enterprise

Consider that large capital, properly invested, generates 10% annual return rate.

GDP of the world, \$84T, divided by 1.1^150 is a meagre \$52M.

Alternatives

Consider governments, universities, religious and non-profit organisations as your donors instead.

More alternatives

Figure out how to sell "space land", and allow the investors to extract rent from this "land" indefinitely. Then, it makes sense to buy a chunk of land now, because as time goes by and technology improves, the value of "land" will increase too.

Answer 10

Milk it for all it's worth.

In addition to Lio Elbammalf's great answer, no project this large will ever have just one goal. Sure, the mining mission is the main objective, but there are tons of other profitable things you can do along the way. Sell some payload space to research institues; offering to bring experiments to this distant world for them. Livestream major events during the mission and sell ads on the stream; I'd watch the landing and I'm sure tens of thousands of other people would too. Sell some more payload space to the estates of rich people, offering to scatter their ashes in space or on the planet. Sell the documentary rights to the highest bidder. Sell the rights to use the mission in fiction. All of these things will pay off well before you sell the first ounce of ore. They probably won't cover the entire investment, but they don't need to.

Answer 11

Here is my attempt.

As mentioned in the comment by AlexP above, "The greatest part of investment money (by far) belongs to immortal legal persons, such as pension funds, investment funds, sovereign funds and so on".

Project Mine-the-moons major investments will come from governmental investments as well as trust fund investments, with an absolute minority investment coming from all the Joes and Johns who want to have some financial assurance later in life.

The majority of individual investments would be in the supplier companies, as they will see returns of profit on a much faster scale as they would need to be paid for their services rendered.

The first ship that is launched - someone needs to transport all the raw materials to the factory to build the ship, all the ingredients for the fuel need to be transported, someone needs to make the switches and circuit boards, someone needs to design the communications software and equipment, etc.

This can even be taken further to the very first steps of someone will need to mine the initial metals to smelt down into raw material to be sent to the factory.

No matter how much of the actual work is done by the mining company of designing and manufacturing the ship themselves, there will always be work that is outsourced and subcontracted to other companies, and those companies will want to be paid now, not in 150 years, and I think that during the initial stages as mentioned by Lio Elbammalf these companies will see the majority of individual investments.

Answer 12

If the gems held an intrinsic value beyond their market value as gemstones.

Only rare gems formed under particular circumstances hold the attribute of rare attribute can . . .

• be sliced thinly enough to create room temperature super-conductors
• or be used to build RNA filters used in longevity treatments
• or are large enough to focus light beams for hand held Synchrotrons that create and isolate anti-matter used to generate power
• or whatever . . .

Make what they're used for be valuable beyond all imagination, and people will queue up to buy stock in the mining of them.