2022 Space Industry Key Themes - Part 2
Lunar Scramble: The Race to Claim the First Strategic Outpost in Space Is Picking Up Speed
ESTIMATED READING TIME: 5 MIN
This is the 2nd of a multi-part series where I will summarize key themes I’ve seen referenced in various 2022 Space Industry outlook reports that investors should be aware of as we start the new year.
Part 1: Geopolitical Competition (see here)
2022 LUNAR MISSIONS OVERVIEW
While 2021 saw the biggest space headlines from “the billionaire space race,” 2022’s space headlines will likely be highlighted by the acceleration of the lunar space race.
There is expected to be up to 10 major missions to the Earth’s moon in 2022—half of them being sponsored by NASA alone and four of them being launched by a SpaceX Falcon 9.
WHY IS THE MOON SO HOT RIGHT NOW?
The establishment of a permanent moon base represents a strategically important “high-ground” for supporting government and commercial space ventures, including scientific experimentation, deep space exploration, and protection of national interests.
Whoever establishes a lunar base first will:
Be able to claim the best location
Have the first say in establishing lunar code of conduct
Get a head-start on processing lunar regolith (moon rock) for resource extraction
However, before a base can be established, governments are looking to study the lunar surface with robots to better understand how and where they should focus their long-term efforts—hence why all the missions in 2022 are rover exploration and orbital study missions.
ICE ICE BABY
The lunar south pole is of particular interest for a lunar base because certain craters there are permanently in shadow, and their cooler temperatures (as low as -280F vs +260F in the sun) potentially hold regolith containing frozen water that is accessible to robot and human explorers.
Access to water is of critical importance on the moon because of its utility—it can be used to sustain life, create rocket fuel, or be used for 3D printing to name a few use cases—all of which would be immensely valuable in the harsh lunar environment.
It is also potentially more economically viable to extract water from lunar regolith vs transporting from the Earth’s surface the amount of water needed to sustain humans—it all depends on what scouting missions find regarding moon regolith water composition.
The below video gives an entertaining and informative overview of why the lunar south pole is important in terms of available resources (namely water). Shoutout to Fraser Cain for making it (YouTube channel here).
YE OLE USA VS CHINA
USA vs China is obviously a re-occurring theme for space activity these days (check out my last post on that topic here), so here is a quick overview of where the two countries are in regards to moon exploration.
China is leading the pack in terms of recent lunar exploration. Its Chang’e Project Missions started with lunar orbits in 2007/2010, followed by soft-landing + rover exploration in 2013/2019, and a sample-return mission in 2020 (the 1st since Russia’s 1976 sample-return mission); the Chang’e Project’s final phase (more rovers/sample-returns) will begin in 2024.
It is speculated that China will first send humans to the moon in the 2030s, as well as begin building a lunar base in that time period (it has announced a partnership with Russia to do the latter).
US officials have expressed concern that that these events will occur sooner than currently anticipated given China’s rapid progression of space technology since 2003, and they are worried about being beat to the punch—hence the proliferation of US lunar scouting missions in 2022, and its recruiting efforts to increase the number of its lunar partners via the Artemis Accords (which 14 other countries have signed on to thus far).
In terms of recent lunar activity, the US has had a satellite in orbit around the moon since 2009, but NASA’s 2022 missions are all in support of the more recently established Artemis Program which has the primary goal of returning humans to the moon (specifically the lunar south pole) by 2025.
Artemis I (2022) will be an uncrewed test of the SLS launch vehicle and the Orion capsule (the 1st mission for both spacecrafts), and will orbit the moon before returning to earth.
Artemis II (~2024) will be the 1st crewed test flight of the SLS and Orion capsule, following the same trajectory as Artemis I.
Artemis III (~2025) will be a crewed lunar landing, and will be done in conjunction with SpaceX’s Starship, which will rendezvous with the Orion capsule in lunar orbit to ferry the crew to the lunar surface and back, after which the Orion capsule will return the humans back to Earth.
Subsequent Artemis missions will take advantage of increasing amounts of lunar infrastructure that are to be landed by support missions, including habitats, rovers, scientific instruments, and resource extraction equipment.
INVESTOR CONSIDERATIONS
Public Market Investors
While any one individual lunar mission is unlikely to be a material contributor to the following companies’ financial results, it is insightful to see which companies have put themselves in a position to be awarded lunar contracts from NASA—these contracts can subsidize development of new technology, putting these companies ahead of competition if there is indeed notable commercial demand for cislunar technology longer-term.
Rocket Lab is the launcher for NASA’s CAPSTONE mission in March 2022, and its Photon satellite bus will deliver the mission payload to lunar orbit.
M&A is positioning Rocket Lab to capture more of the value chain for any given space exploration mission (great slide summarizing this here); if successful during the CAPSTONE mission $RKLB could increasingly become a preferred partner for NASA (and other commercial partners down the road) given its ability to provide more than just launch service.
Notably, Rocket Lab has already been contracted for NASA missions to the moon and Mars.
Redwire’s machine vision camera and advanced avionics systems will be utilized by the Orion capsule, and in 2023 will also be used during a Firefly-led CLPS mission.
Additionally (though the company is still burdened by its ongoing internal accounting investigation), Redwire is uniquely positioned as a space tech manufacturing pure-play with capabilities poised to benefit from increased lunar activity (see slide 12 here…really puts Redwire’s capabilities in perspective).
Its in-space manufacturing and micorgravity biotech R&D have made headlines recently.
Northrop Grumman, Boeing, Lockheed Martin, and Aerojet Rocketdyne are all contractors for NASA’s SLS rocket to be used for the series of Artemis Missions.
I am not an advocate of investing in these legacy A&D companies to gain exposure to space activity, though the SLS is an expensive rocket estimated to cost $2B/launch, so economics should be favorable.
Additionally, these companies’ stocks are likely less volatile during times of general market volatility, so they could represent a less risky way for investors to get exposure to space.
Private Market Investors
Seemingly, there are several large categories of potential lunar-centric investments—with each with their own unique considerations:
Launchers, Landers, Rovers, Satellites
With most of the CLPS contracts having already been awarded, I assume you probably would have wanted to already be invested in one of these contract-winning companies to see material valuation growth (though completion of successful mission still presents upside opportunity for CLPS winner valuations).
However, there are still several CLPS and Gateway logistics missions that have yet to be awarded, which represent opportunities for new contract winners.
Down the road, companies that get a head start with testing their technology in a lunar environment have a good chance of being utilized for future Mars missions—so longer-term, there is even more upside for this category.
Regolith Processing, Human life support
Conversations with investors indicate that tech related to regolith processing is an area garnering considerable interest, as resource extraction and utilization could be the key to enabling long-term bases on the moon, and could both provide support for lunar AND beyond-lunar activity.
However, it is hard to ascertain what the TAM for this type of technology will be until we have a better sense of what the moon’s regolith composition is near the south pole—2022 scouting mission results will be critical for companies and investors in this area.
Human life support likely has a somewhat limited valuation upside for the time being given that there won’t be a material number of humans in space for some time, and those who are in space likely won’t be there more than a month or two at a time. However, governments are likely to pay whatever is necessary to keep their astronauts alive and healthy as we approach missions back to the moon.
Radiation protection is one technology that I believe could be a game-changer, since better radiation protection could extend the timeframe that humans can safely operate in space (the moon has minimal magnetic field to provide natural protection).
Software/AI, Hardware (pick-and-shovel)
Given how expensive space activity is, there will always be opportunities for better and more efficient hardware and software companies to be contracted to help with future missions.
Additionally, I see software and hardware component companies as likely candidates to be acquired by larger companies that are looking to control more of the space exploration value chain (i.e. the way Rocket Lab has done so).
In particular, I believe AI or software that can assist human-less or human-led missions could be of great interest given the hostile environment of space and the difficulties of sustaining life on the moon.
BONUS: ADDITIONAL LUNAR MISSION DETAIL
For the real space enthusiasts out there, below is a more detailed list of the key attributes for upcoming lunar missions in 2022:
USA (NASA)
Artemis I Mission
Overview:
This will be the 1st of a series of four Artemis missions to ultimately return humans to the lunar surface
Artemis I will take Orion capsule (sans humans) around the moon and back, rehearsing the trajectory to be performed in ~2024 on the Artemis II mission (which will include humans)
Artemis III (~2025 at earliest) will result in a moon landing
The Artemis I mission also includes a number of ride-sharing satellites that will orbit the moon
Current Timeframe for Launch: Estimated Spring 2022 (per Eric Berger)
Launch Vehicle: NASA’s interplanetary launch vehicle, Space Launch System (SLS); years and billions of dollars behind schedule, each SLS launch costs $2B (the rocket is not reusable)
Leading Commercial Partners: Lockheed Martin (Orion capsule), Boeing/Northrup Grumman/Aerojet Rocketdyne (SLS)
Commercial Lunar Payload Services (CLPS) Missions
Overview: the CLPS program includes three missions in 2022 (more in subsequent years) and will utilize private company services to advance capabilities for science, exploration, and commercial development of the moon (i.e. stimulate commercial lunar technology)
Leading Commercial Partners: Intuitive Machines (IM-1 and PRIME-1 mission landers) and Astrobotic (Peregrine mission lander), SpaceX (launcher for two Intuitive Machines), and ULA (launcher for the Astrobotic mission)
IM-1 Mission:
Intuitive Machines was awarded $77M by NASA for this mission; its Nova-C lander (called IM-1) will carry six CLPS payloads and four commercial payloads (130kg total) to Oceanus Procellarum (“a scientifically intriguing dark spot on the Moon”)
Current Timeframe for Launch: “Early 2022”
Launch Vehicle: SpaceX’s Falcon 9
Peregrine Mission:
Astrobotic was awarded $79.5M for this mission and its Peregrine lander (called PM1) will carry up to 11 CLPS payloads and (currently) 13 commercial payloads to Lacus Mortis (a larger crater on the near side of the Moon)
Current Timeframe for Launch: late 2022; Astrobotic’s chosen launcher (ULA’s Vulcan Centaur rocket) is slated to make its maiden voyage in 2022, but likely won’t take off until late in the year due to delays from engine supplier, Blue Origin
Launch Vehicle: ULA’s Vulcan Centaur
PRIME-1 Mission:
Orbit Beyond was initially awarded $97M to carry as many as four CLPS payloads (including an ice mining drill and LTE communications testing equipment) to Mare Imbrium (a lava plain in one of the Moon’s craters)
However, after Orbit Beyond dropped out of the contract, Intuitive Machines was selected by NASA to complete the mission and was subsequently awarded an additional $41.6M to build a mini “hopper lander,” which will be able to transmit imaging back to Earth
Current Timeframe for Launch: “By December 2022”
Launch Vehicle: SpaceX’s Falcon 9
Cislunar Autonomous Positioning System Technology Operations and Navigation (CAPSTONE) Mission
Overview: As a precursor for NASA’s planned moon-orbiting outpost, Gateway, the CAPSTONE mission will reduce risk for future spacecraft by testing a unique and strategically advantageous elliptical lunar orbit and validating innovative navigation technologies
Current Timeframe for Launch: March 2022
Launch Vehicle: Rocket’s Lab Electron
Leading Commercial Partners: Advanced Space (dev-ops lead) and Rocket Lab (launcher)
South Korea (KARI, NASA collaboration)
Korea Pathfinder Lunar Orbiter (KPLO) Mission
Overview:
KPLO is South Korea’s 1st lunar mission, targeting a 1-year lunar orbit with the primary objectives being to study the lunar environment, topography, and resources, as well as identify potential landing sites for future missions to the lunar poles
The satellite will carry 4 South Korean indigenous payloads and one NASA payload to carry out experiments
Current Launch Date: August 2022
Launch Vehicle: SpaceX’s Falcon 9
Leading Commercial Partners: SpaceX (launch)
Russia (Roscosmos)
Luna-25 Mission
Overview:
Luna-25 is a lunar lander mission targeting the south polar region of the Moon
Mission objectives are to study composition of polar regolith, and to study the plasma and dust components of the lunar polar exosphere
This will be Russia’s first lunar landing since 1976
Current Launch Timeline: July 2022
Launch Vehicle: Roscosmos’ Soyuz-2
Leading Commercial Partners: NPO Lavochkin (lander)
India (ISRO)
Chandrayaan-3 Mission
Overview:
This is India’s 3rd lunar exploration mission
Following the unsuccessful lunar landing during the Chandrayaan-2 mission, Chandrayaan-3 hopes to successfully demonstrate India’s capability of soft landing on a celestial body + explore the lunar south pole via a lander and a rover
The Chandrayaan-2 mission’s lunar satellite will also be utilized during the mission
Current Launch Timeline: 3Q22
Launch Vehicle: GSLV Mark III
Leading Commercial Partners: N/A
Japan
Smart Lander for Investigating Moon (SLIM) Mission (JAXA)
Overview: with this mission, JAXA plans to demonstrate accurate lunar landing techniques via a small lander, which will study the moon and planets using lighter exploration systems
Current Launch Timeline: April 2022 to March 2023
Launch Vehicle: Mitsubishi Heavy Industries’ H2A
Leading Commercial Partners: Mitsubishi Heavy Industries (launcher)
Hakuto-R, Mission 1 (ispace)
Overview:
Japan’s ispace aims to complete the world’s 1st commercial-led lunar exploration mission via its Hakuto-R Mission 1 (Mission 2 to follow in 2023), with the goal of a successful lunar landing and payload deployment in 2022
Payloads include technology from JAXA and the UAE (this will be the Arab world’s first lunar mission), as well as a number of commercial payloads; the company website notes that there is still payload capacity available
Current Launch Timeline: 2H22
Launch Vehicle: SpaceX’s Falcon 9
Leading Commercial Partners: ispace (mission lead), ArianeGroup (propulsion), SpaceX (launcher)