Caterpillar: Fuelling the Future of Space Exploration
By: Reza Qurban-Ali
The Ivey Business Review is a student publication conceived, designed and managed by Honors Business Administration students at the Ivey Business School.
Space exploration and tourism has steadily increased in popularity in recent years, with companies such as Virgin Galactic, SpaceX, and Blue Origin leading the charge. As a result, significant global investments are being channeled into the industry — a development that has uncovered many space-related operational challenges. The most notable of these problems is inefficient space shuttle refueling infrastructure, an unmet need that Caterpillar is well-positioned to address by creating the first official space supply chain in collaboration with SpaceX.
Inching Ahead
Beyond its position as the global leader in the manufacturing of construction and mining equipment, Caterpillar also produces machines for diesel gas engines and hybrid locomotives. In 2021, Caterpillar achieved $51 billion in total revenue, a sales figure that dwarfs the $19 billion revenue of their closest competitor, Japan-based Komatsu. Although the company initially struggled with pandemic-related project delays, Caterpillar’s strong balance sheet coupled with the global economic reopening culminated in a net income growth to $6.5 billion in 2021, surpassing its pre-pandemic net income of $6.1 billion in 2019.
Caterpillar has a history of pursuing opportunities for industrial operations beyond Earth. In 1969, Caterpillar developed several communication devices used to contact Earth during the Apollo 11 moon landing. Since then, the company has only held a few contracts with national space agencies, including a mining equipment commitment for NASA’s next moon expedition in 2024. Comparatively, competitors such as Komatsu have already created contracts with national space exploration agencies to develop autonomous mining and construction equipment.
While public partnerships have helped initiate Caterpillar’s entry into this industry, issues with low public funding, delays, and regulations limit future opportunities for Caterpillar’s expansion into space operations. To expedite growth and gain an advantage over competitors, Caterpillar should expand its partnerships to the private space exploration industry.
Astronomical Growth
The opportunity to enter the space exploration business has been an area of interest for companies in related industries since the first moon landing. Space operations had historically been monopolized by national agencies until the recent rise of new rocket and spacecraft manufacturers. Companies like SpaceX and Planetary Resources have sought to commercialize space through travel, tourism, and resource extraction. Since the launch of SpaceX in 2008, the private space exploration industry has boomed since the introduction of reusable rockets. From 2017 to 2025, the industry is expected to grow at a CAGR of 24 percent to almost $4 billion USD. The industry is expected to reach $1 trillion and $3 trillion by 2040 and 2050, respectively. This forecasted growth is largely driven by rapid cost reductions in space exploration technology, which has significantly improved investment feasibility.
SpaceX, We Have Liftoff
Founded by Elon Musk, SpaceX was created with the goal of revolutionizing space technology. The company manufactures spacecraft, rocket engines, crew spacecraft, as well as Starlink communications satellites. As of March 2022, the company reported 31 liftoffs with two more Falcon rocket launches planned for the remainder of 2022. The company competes on launching vehicles at lower costs than competitors, with SpaceX rocket boosters designed to be reusable, thus significantly reducing costs and allowing the company to undercut prices. For example, SpaceX’s Dragon 2 Rocket costs 22.8 percent of NASA’s $1.75-billion-per-launch Shuttle Program, and the new BFR rocket designed by SpaceX is expected to reduce costs even further.
From International to Intergalactic
Near the height of the space race in 1967, the global community realized the potential of space exploration, as well as the risk of conflict over resource ownership. As a result, over 100 countries signed the Outer Space Treaty of 1967. This treaty declared that no country is allowed to lay claim to any region or entity of space or obstruct other countries from their exploration of space; in essence, space is open for any country, without limitations for private companies. The lack of sovereignty in space makes the industry an attractive opportunity for private companies and provides a unique advantage to private partnerships.
A few years into the boom of private space investment, the US government decided to create legislation for its future. The US Commercial Space Launch Competitiveness Act of 2015 designates that any US citizen or corporation can “engage in the commercial exploration and exploitation of space resources.” This legislation has paved the way for private space exploration, while public agencies have been stalled by international agreements. Specifically, it permits private companies to extract resources found in outer space, presenting an opportunity and fuelling the privatized space race.
Tonnes of Weight on its Wings
The ability to launch satellites or capsules into Earth’s orbit is becoming increasingly affordable; however, more ambitious missions like establishing permanent stations on the Moon or visiting Mars remain elusive. One of the main challenges obstructing space exploration is the need to load fuel for the entire journey before lift-off. In addition to the reserves required for maneuverability, speed, size, and range, massive amounts of fuel are needed to bring satellites and spacecraft out of and back into orbit. However, added fuel comes with its own weight, thereby increasing the fuel requirements in a recursive cycle that reduces resource efficiency.
The 550-tonne SpaceX Falcon 9 was one of the most efficient rockets launched at the time of its inception in 2010, despite 57 percent of its mass (312 tonnes) being dedicated to the fuel required to break into orbit. Seeing as the rocket can only carry eight tonnes of payload and this fuel only gets the rocket into earth’s orbit, increasing the potential of space expeditions cannot be easily done with rockets only fueled from earth.
The solution would be to carry only the amount of fuel necessary to get the vessel into space, and refuel as necessary in space for the mission ahead. Without the restrictive force of Earth’s gravity, a spacecraft will not have to use the majority of its fuel to move short distances, and can then use it to drastically increase the range or length of its operation. In fact, the components of rocket fuel can already be found in sufficient quantities in space, in the form of water.
Water in space can be readily converted into rocket fuel using electrolysis powered by solar energy, a process which splits water into its constituent elements of hydrogen and oxygen with electricity — an optimal mixture for rocket propulsion in the vacuum of space. The moon in particular has much more water than originally thought, with an estimated 600 billion kilograms of ice, likely enough to support a fuel supply chain in space. Since the moon’s gravity is one-sixth that of Earth’s, getting this propellant into orbit is much cheaper than on Earth. Access to this fuel means greater capabilities for space exploration, higher capacity for operations near-orbit, and more possibilities for any space agency or company.
Exploring New Waters
Caterpillar is in a prime position to become the leader in space-bound fuel mining. It has already partnered with NASA from 2004 to 2013 with a focus on robotic operations in space. More recently, as one of 38 companies awarded seed funds from NASA’s Innovative Partner Program, Caterpillar is currently developing operator-less drilling and digging machines to mine water, oxygen-rich rocks, and moon dust. Caterpillar should enter into a partnership with SpaceX to develop its expertise in fuel mining and offer the premier platform for future long-range space missions.
While there will certainly be some overlaps in expertise between mining equipment on Earth and mining equipment suited to space operations, there is still a significant knowledge gap for Caterpillar. Existing Caterpillar products are entirely unsuited for space missions. For one, weight is far less critical for Earth-based equipment. Caterpillar’s smallest rotary mining drill, the MD6200, has a minimum working weight of over 37,500 kg, exceeding even the extra-powerful Falcon Heavy’s payload limit of 26,700 kg to geostationary transfer orbit. Additionally, volume is at a premium within a rocket’s payload cone, which means designing for compactness is more important than ever. This can include folding components to conform to the rocket’s shape, such as the James Webb Space Telescope’s folding mirror array.
Therefore, a partnership with SpaceX is necessary for both Caterpillar and SpaceX to begin developing expertise in designing, manufacturing, and packaging industrial equipment for space use. As the largest private space firm, SpaceX is likely to be the contractor of choice for many organizations looking to launch missions beyond the Earth’s orbit. Developing a solution for water mining, electrolysis, and refueling is also in SpaceX’s best interest to maintain its dominant position in private spaceflight, especially as the missions of client organizations become more ambitious. Currently, its approach to refueling is inefficient and it relies on transferring propellant from launched tankers to starcraft. In partnership with Caterpillar, SpaceX can remain involved with the refueling process of the future: drilling for fuel in space. This would eliminate the cost of launching tankers of fuel and position SpaceX to be able to complete longer distance flights.
Caterpillar, on the other hand, needs SpaceX’s help to understand the requirements for cost-efficient space mining equipment and develop offerings to that end. Since SpaceX launches more rockets than any other organization, Caterpillar would have access to the testing platform necessary to refine and perfect their product for commercial use. After this development period, Caterpillar stands to become the premier choice for space-bound industrial equipment. The resulting synergies between SpaceX’s space expertise and Caterpillar’s technologies on earth will position the partnership to be able to develop technogy in-space mining and refueling capabilities.
The Complete Metamorphosis
As space becomes more accessible in the coming years and companies begin to take advantage of its commercialization, Caterpillar can institute itself as the key player controlling the space fuel supply chain through a strategic partnership with SpaceX. Its historical involvement with space exploration, industry dominance, technological innovation, and access to capital make it the best candidate to revolutionize humanity’s ability to explore and extract resources from the moon and beyond.