A Business Strategy and Analysis Collin Bezrouk Sam Moffatt Mike Zwach Aaron Olsen James Thomas...
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Transcript of A Business Strategy and Analysis Collin Bezrouk Sam Moffatt Mike Zwach Aaron Olsen James Thomas...
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
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
Applications of He3 in Industry
1. 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 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.
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 access
3. Mine Equipment / Processing: VERY STRONG: $$ to develop and transport
4. 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
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 concentratedDHS 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 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
Questions?