Mining Helium-3 on the Lunar surface

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Mining Helium-3 on the Lunar surface

• A Business Strategy and Analysis

Collin Bezrouk Sam Moffatt Mike Zwach Aaron
Olsen James Thomas Elizabeth Kenneick Christine
Fanchiang Julia Freeburg
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Agenda

1. Applications and Problems of He3
2. Solution and Concept of Operations
3. Barriers of Entry
4. Pressure from Substitute Products
5. Bargaining Power of Buyers and Suppliers
6. Government / Industry Competition

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Applications of He3 in Industry

• Medical Research
• Sub 1K cryo-cooling
• Laser research, Lung imaging, etc.
• Fusion Energy Research
• Highly sought by researchers
• Clean energy, no radioactive byproducts.
• Geological Surveying
• Finding oil well or other mineral deposits
• Road construction
• Homeland Security
• Security scanners in airports
• Precision instruments in guided missiles

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Problems Obtaining He3

• 0.000137 of Helium on Earth
• Current Costs 7,000/gram
• Demand Increased 10x in 7 years

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Solution to He3 shortage

• Problem 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.

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Concept of Operations Extraction
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Concept of Operations Transportation
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Threat of Entry Economies of Scale

• 1. Finding H3 LOW Academic work underway
  since 1986
• Mine Layout LOW H3 in upper regolith, easy
  access
• Mine Equipment / Processing VERY STRONG to
  develop and transport
• Transport to Market VERY STRONG Not now
  available
• Overall, Very Strong Barrier of Entry to Market
• favors Large Companies such as Oil Gas
  companies with existing process and funding for
  exploration and prospecting

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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)
• Shouldnt be a significant barrier based on
  established communication and helium distribution
  techniques

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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

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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.

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Force 3 Pressure from Substitute Products

• Overall assessment Low
• Substitutes
• Terrestrial Sources
• Natural Decay of Tritium -decades
• Recycling
• Extraction from natural gas, atmosphere - limited
• Technological Sources
• Technology advancements
• reduction of sensitivity and introduction of
  toxicity

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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)

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Force 5 Bargaining Power of Suppliers
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

• 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.

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Government as an Industry Competition Force

• Industry is concentrated
• DHS could be 80 of purchases
• Govt 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

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Summary
Force Risk
Threat to Entry High
Intensity of Rivalry Very Low
Pressure from Substitute Products Low
Bargaining Power of Buyers Low
Bargaining Power of Suppliers High
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Questions?