Varda Space Industries had a problem. The Californian start-up wanted to manufacture drugs in space – there was money to be made from pharmaceutical firms that wanted to process medication in microgravity.
It had a partner to get it up there – Elon Musk’s SpaceX – but it was not easy finding a place for its capsules to land. Utah had been the plan, but after eight months, permission to drop into the desert was not forthcoming.
That’s when Varda, founded by former SpaceX employees in 2021, turned to Southern Launch, a South Australian company that happened to have 41,000 square kilometres of uninhabited land ready for the job. In February, Varda’s capsule will land at the company’s Koonibba Test Range.
Eric Lasker, a Varda executive, says the company is simply commercialising research that astronauts have been conducting on the International Space Station for decades. And he says it would have been difficult without a partner in Southern Launch and the space afforded in Australia.
“What’s really changed in the past five to seven years is the advent of the reusable rocket with SpaceX, which has really dropped the price to go to orbit precipitously,” said Mr Lasker, one of the presenters at the Sohn Hearts & Minds investors conference in Adelaide on Friday.
“It’s also dramatically increased the cadence to get to orbit.”
$1 billion industry
Demand from businesses like Varda has fuelled a rush of investment into Australian space start-ups that are working on everything from private rocket launches from regional Queensland to spacecraft services.
The federal government estimates that spaceport operators like Southern Launch could assist with up to 95 launches over the next decade. That could be worth between $460 million and $1.2 billion, a long way from what the local launch sector was worth in 2022 – just $27 million.
Lloyd Damp, Southern Launch’s chief executive and majority shareholder, says the company has 12 space launch permits approved or in progress for its Koonibba site. Its Whalers Way Orbital Spaceport, located 400 kilometres from Koonibba, is approved to conduct 42 launches per year.
“Australia’s commercial space launch and returns [business] as has come of age,” Damp, an aerospace engineer who was previously employed by the Australian government’s Defence and Technology Group, says.
Damp founded Southern Launch in 2017 and has largely funded its operation through customers that pay in advance to launch their own rockets from its spaceports. In May, German rocket manufacturer HyImpulse completed its suborbital test launch from Southern Launch’s Koonibba site, while Equatorial Launch Australia launched three NASA rockets over 15 days from the Northern Territory in 2022.
“We make it very easy for the company to then operate from our site. We secure all the import permits and do all of the safety analysis, so the customer can focus on – literally – the rocket science,” Damp says.
Blast-off
Queensland’s Gilmour Space is hoping to go a step further next month by launching the first orbital rocket that the company, backed by Blackbird Ventures and superannuation giant HostPlus, has manufactured locally.
Gilmour Space is valued at $605 million and represents Australia’s most promising chance to own a piece of the space market, delivering satellites and other hardware in competition with SpaceX and Jeff Bezos’ Blue Origin.
Investors believe Gilmour is at an inflection point, where a successful orbital launch will be a major catalyst for a jump in valuation. The Australian Financial Review reported last week that the company had finally secured a launch permit from the Australian Space Agency after months of delay.
Gilmour Space will have to wait until next month to complete final preparations, and apply for airspace approval from the Civil Aviation Safety Authority before the regulator gives the company its final approvals.
Blackbird founding partner Rick Baker, who first invested in Gilmour in 2017, said launching the first Australian-made rocket into orbit will be a “huge milestone” in a market where the demand far outweighs supply.
“If Gilmour can get to space next month, it will make Australia one of the few countries that has a local launch capability. This is a big moment for our nation,” Baker says.
“Launch is the bottleneck for the space industry globally, and Gilmour’s rockets target a satellite size and weight which is in high demand. If they can complete the mission to produce a reliable launch capability, we are confident it will be a highly valuable business.”
Varda’s Lasker says his company is open to using new launch providers in the future, but for now, SpaceX’s reusable Falcon 9 rocket offers the best price and the most frequent timetable. “It’s hard to argue with SpaceX’s cadence and cost. We’re excited to see if there are other launch providers that want to give us a nice and cheap ride to orbit, we’ll take them,” he adds.
Hostplus, one of the country’s largest superannuation funds, has exposure to a handful of Australia space businesses including Gilmour Space and South Australian satellite start-ups Fleet Space and Myriota, which is also backed by former prime minister Malcolm Turnbull.
“We have observed a significant increase in investment opportunities within the space sector, reflecting the broader growth and advancements in Australia’s space industry. We anticipate this trend will continue as the domestic space economy expands,” a Hostplus spokesman said.
The Australian Financial Review is a media partner of Sohn Hearts & Minds.
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