Closing Bell - Manifest Space: Canadian Space Agency's $1 Billion Lunar Play with with MDA Space CEO Mike Greenley 7/3/24

Episode Date: July 3, 2024

The Canadian Space Agency has awarded MDA Space $1 billion to develop an autonomous robotic arm for the lunar Gateway. The space station will serve as a lunar outpost and house Artemis astronauts for NASA and international space partners. MDA Space CEO Mike Greenley joins Morgan Brennan to discuss Canadaarm3, the new space race, and the critical role of AI and robotics in the lunar economy.

MDA Space just received a contract from the Canadian Space Agency for a robotic arm it's developing for the Lunar Gateway. Gateway will be a space station that orbits the moon and houses Artemis astronauts for the U.S. and partners including Canada. MDA CEO Mike Greenlee says the $1 billion Canadian contract covers the next phase of development and production. With Canada Arm 3, the latest iteration of a robotic arm system first used on the space shuttle and still currently in use on the International Space Station. Over the next year or so, they'll go through what's called the critical design phase and finalize all the detailed designs. And then they'll go into production. So in the period sort of, you know, 2025, 6, seven, eight, nine in there, the robotic system will be fully developed and fully tested and then sent to launch so that as we finish the 2020s, before the International Space Station goes out of business in 2030, we should be having our

robotic system going out to Gateway at the moon and commercial derivatives starting to come onto the market. MDA, once known as McDonald, Detweiler & Associates, was sold to private equity by Maxar in 2020. It went public as a standalone company on the Toronto Stock Exchange a year later. Today, MDA touts a $1.5 billion market valuation, as the stock has surged more than 60% over the past year. The company's tech is also being used by the Lunar Outpost team competing to build a moon rover for NASA. And MDA recently joined the Starlab joint venture to build the robotic arm for that commercial space station. If you look at the return to the moon where you've got 42 countries with the U.S. looking at living and working on

the moon and you've got 11 countries with china looking to live and work on the moon that geopolitical tension in terms of making sure that everyone's keeping up with each other um is very very real so the the space agencies are focusing more on the deep space stuff more than the moon stuff um because it requires a bit more heft and it definitely requires geopolitical collaboration whereas in low earth orbit as the international Station goes away, it's becoming much more purely commercial because it's affordable to do so and the business opportunity is real. On this episode, Greenlee discusses the new space race, the critical role AI and robotics will play in it, and how MDA Space is leveraging its work with the government for the commercial market as well. I'm Morgan Brennan, and this is Manifest Space.

Mike Greenlee, the CEO of MDA Space, thanks so much for joining me. It's great to have you on the podcast. Thanks for having me. So let's talk a little bit about MDA, because you have a lot going on. But most recently, the news that you were awarded a billion dollars, Canadian dollars, to continue your work on this arm that's going to be on the lunar outpost. Walk me through it. Yeah, so MDA Space is on a good run these days.

Purely space-focused company involved in three of the big reasons why we go into space. One is to observe the Earth, and we own and operate radar-based Earth observation satellites and participate in Earth observation. The second reason to go into space these days is for communication networks, and we're very busily involved in producing satellites for communication networks of all types. And then the third reason to go into space is to live and to work there. And so we're working in space stations, new space stations that are being developed commercially for low Earth orbit, in addition to Lunar Gateway, the new space station that's being created by the space

agencies that will orbit the Moon in support of the Artemis program, which is 42 different countries all signed up to work together with the United States to be able to start looking at, living and working on the Moon once again. So in the Lunar Gateway Space Station, we've just recently announced a billion dollar program to get into the production phase of Canadarm3, which is our third generation of space robotic systems. The first was on the space shuttle, where we flew 100 missions there. The second was Canadarm2 on the International Space Station, where we've operated for the last 25 years. And now Canadarm3, which will be at Lunar Gateway out at the moon. So these robotic systems will help assemble and operate that space station as it supports operations on the lunar surface. And we're using this technology base for

MDA SkyMaker, our new line of commercial space robotics that we're able to leverage and take out into the broader commercial market as the space sector becomes increasingly more and more commercial. There's a lot there to unpack. If we start with what Canada Arm 3 specifically, the fact that you've been doing this, you have a legacy of doing this already across a number of programs over the decades. What does Canada Arm 3 bring to the equation? What's new in terms of the technologies and the innovations? Yeah, so one of the biggest things will be, I think, a bit more autonomy, more artificial intelligence-based operations. One of the unique features of our robotic systems over the last 40

years is the extensive control systems that we have, highly dexterous robotic systems that can do large, big crane-like tasks in addition to highly focused motor tasks to be able to do things. So those control systems now have to become much more autonomous. When we started back in the space shuttle days, we would have an astronaut in the space shuttle with a joystick looking out the window, you know, operating robotics. And then over time, with the International Space Station, that moved from space station control to Earth-based control. And then we had robotic operators and NASA and the Canadian Space Agency in the last 20 years, you know, providing control from Earth's control stations. Over time, we've focused on making that more and more autonomous so that we can give a higher level abstraction of a command,

and then the robotic system can go and do its thing. The current space station, the International Space Station, is about 400 kilometers above the Earth, but the new lunar gateway out at the moon will be 400,000 kilometers away, so much longer communication distances, and we don't want to be cluttering up networks with robotics control so we will be uh using more autonomy in the robotic system in addition we are we've built new mission control centers in their new offices in toronto canada um to be able to support um robotic operations out at the moon from our new facility. So that's a new evolution as well.

So more autonomy and then more commercialization and industrial partnership in the operation of the robotics over time. Okay. I want to get into the commercialization piece of this, but, but first just one more question, as you mentioned that this latest contract award is tied to production, what is it going to take to produce this? Lots of hard work. So we have a really strong team a really strong team of hundreds of engineers um they're just finishing their preliminary design phase now um over the next year or so they'll go

through what's called the critical design phase and finalize all the detailed designs and then they'll go into uh production so in the period sort of, you know, 2025, 6, 7, 8, 9 in there, the robotic system will be fully developed and fully tested and then sent to launch. So that as we finish the 2020s, before the International Space Station goes out of business in 2030, we should be having our robotic system going out to Gateway at the moon and commercial derivatives starting to come onto the market. What are the commercial derivatives look like? What is that marketplace going to entail? It's really interesting how it's emerged.

We've had our space agencies working together, for example, on the International Space Station, six different groups, five different countries, I guess, working on the International Space Station the last 25 years, which are now all moving on to the moon with so many other countries now. Like I said, 42 countries have signed the Artemis Accords to work with the United States on the moon, and 11 other countries have signed up to work with China on habitat on the moon. So it's about to become busy on the moon as we go through the next decade. But what that means, though, is that low Earth orbit is becoming more commercial.

So as the International Space Station goes out of business around the 2030 mark, right now there are at least three, actually four, commercial space station projects under development. Three of them are funded by NASA. Another one's just purely private, whereby, yeah, commercial interests now see a legitimate market in building, owning, and operating space stations in orbit around the Earth. Those space stations would be used for receiving astronaut flights. So there are dozens of countries around the world now that have a space program and would like their astronauts to be able to live and work in orbit. Those space stations will also be able to do science.

They'll be able to do light levels of manufacturing, would be able to support a minor case like high level, high wealth tourism. People wanted to go up and and have that experience. And so we're seeing very interesting industrial consortiums being assembled out to be able to own and operate these stations in space. In addition to that, there are commercial interests that are building spacecraft with robotic systems on them that can do on-orbit assembly and repair and servicing.

So they can build structures in space, you know, larger than just whatever you can fit in the nose cone of a rocket. So you can take up the pieces and assemble them with robotic systems in space. You can approach satellites and inspect them and service them or change their orbit, deorbit them if they're at the end of their life. So there's a whole commercial service thing evolving there. And then there is an emerging market for active debris removal, people building systems that can go and locate space junk and grab a hold of it and either burn it up in the atmosphere or take it to a

parking lot in a parking lot orbit somewhere get it out of the way um so all these various things are emerging in addition to the activities on the moon we're on another team which is uh on a program with nasa we've been down selected for to look at rovers for the moon and we're there to provide mba sky maker robotics uh for that roaner, for that rover system. And so as the moon starts to get habitated and people start to work there, they'll be driving around, moving cargo, doing light levels of kind of mining activity. And there'll be opportunities for various robotic systems there as well. So it's a very interesting time as the cost of launch continues to go down, businesses have an increasingly ability to have a business case that works and that can create a business to operate in space. And a number of these that I've just described require robotic systems that we can provide. And you are providing. It sounds like you're working across all of these markets simultaneously right now.

Yes, we are. Yep. It's a very evolutionary activity. As all folks try to like advance their projects and business case with the investments that they have. And it's, they'll all catch at different paces. And so we try to be supportive across that landscape. And then different, I think different elements of that market will take off at different speeds as things progress. What do you think is the bigger opportunity? And I realize to your point, this is, you got to look at the timeline to really sort of probably assess and answer this, but what do you think is bigger opportunities, the commercialization of low earth orbit, or is it the lunar economy that's building out and being government led,

at least for now? Yeah, I think both of them play off each other very strongly. I think that you've got two strong factors that are driving the growth of the space economy. One is this decreasing cost of launch that I mentioned. It's now cheaper and cheaper to launch into space. Back in the space shuttle days, it was maybe $20,000 a kilogram to launch. These days, it's $2,000 to $3,000 a kilogram to launch and with starships spacex's new very large rocket say in the next five years you could get down to 200 a kilogram to launch so increasingly accessible in space so if you want to get up into space and have a space station have a small industrial park leverage microgravity for science chemistry materials manufacturing you can get up there and run a business, tourism as well. And so that's a strong driver of economic activity. In addition to the ability for space-based communication networks to be cost-effectively launched and provide communications to the world, a third of the world's not on the

internet yet. They will be as a result of space networks over the next few years. So these activities are all you know great commercial opportunities in the billions of dollars and and they're growing fine the second big driver is geopolitical tension so there is a legitimate space race that's there as space gets more congested it gets more competitive and uh you know people care about um being able to operate in space. And then, you know, if you get geopolitical tensions and you can mess with each other's ability to operate in space.

And so those tensions are real and they exist and they're being managed every day. And if you look at the return to the moon where you've got 42 countries with the U.S. looking at living and working on the moon, and you've got 11 countries with China looking to live and work on the moon that geopolitical tension in terms of making sure that everyone's keeping up with each other um is very very real so the the space agencies are focusing more on the deep space stuff more than the moon stuff um because it requires a bit more heft and it definitely requires geopolitical collaboration whereas in low earth orbit as the international space station goes away it's becoming much more purely commercial um because it's affordable to do so geopolitical collaboration, whereas in low Earth orbit, as the International Space Station goes

away, it's becoming much more purely commercial because it's affordable to do so and the business opportunity is real. A lot there too. You talked about the consortiums with some of the commercial space station projects that are, but I know just recently, a couple months ago, you announced that you'd become what an equity stakeholder and partner in Voyager Spaces team to build a space station as well. I guess, why is that the partnership that was most compelling when you do have a number of players out there? And how does that evolve and materialize? Yeah, so the first part is that that relationship is not exclusive. And so we didn't we didn't pick a winner there we picked a solid group to partner with that we enjoy

partnering with and so we can take a small ownership role in that space station uh we will provide mba sky maker robotics and operate those on that space station that's our our kind of role in the partnership there's a few other things we could probably do but that's our main role um if other space stations wanted us to take a similar role, we would do that too. So we've provided the robotic interfaces to Axiom Space Station, for example, which is another one of the leading commercial space stations. And we talk to them all. And so you could easily see us over time having small equity stakes and or uh you know robotics delivery and operations relationships with multiple stations um it's not a large market and we are legitimate world leaders in this market

and so it's very important to us not to be constrained to just one um this particular group um that the starlab group which is uh voyager space in the united states um airbus in europe mitsubishi corporation in Japan, us in Canada. These are all countries that have worked together for the last 25 years on the International Space Station. So I like to say on this particular joint venture, we kind of got the band back together. And we've got the Space Station team together, but from a corporate perspective, less Russia, of course, but the rest of us are together in being able to take this one to the street or to the orbit. And it's a good relationship. It's a good forward leaning, business focused joint venture that has a great chance of

success. When does that actually reach commercial or low Earth orbit? When do we actually see that materialized? Yeah, as we go through the second half of 2020, these commercial space stations are targeted to be in operations as we go into the sort of 2028-ish time plane as a target. Often large complex infrastructure projects in space like this will drift a bit, but let's call it 28, 29, because you want them in operation before the International Space Station goes out of business in 2030. These are all the target dates. They all might slip a year or

something, but this is the objective. I want to go back to the moon because you made a really key point about the geopolitical tensions and how that is carrying out and playing out, not just on Earth, but of course in space. And especially when you do look at the moon, I mean, at the same time, we're seeing an increased focus on spending and budgets for governments like the US, like others. You're starting to see proposals that would basically flatline some of that spending, including for NASA. What is it going to take to actually see this game plan materialize over coming years and to see, I guess I guess a winner for lack of a better term in this space race yeah I think um commitment obviously um you know people are going to have

to be persistent with this a bit um budgets have increased um and there's been shifts in budgets you know so as low Earth orbit has become more commercial and then the government funding has switched more to deep space and the moon um but but sticking with that is obviously going to be super important the competitive nature of this is very important um i always note uh you know the market analysis that people use when you look at the u.s chamber of commerce and some of the large u.s institutions assessments of the space market, they would indicate that today the global space market is about a $500 billion economic activity expected to grow to about 1.8 trillion a year in the 2035-ish, 2040 period. So that's very

significant growth and very solid. When you read the literature in china about what they call the earth to moon economic zone uh they talk about a 10 trillion dollar a year number by 2050. um and so it's um it's a no fooling around thing in terms of what people are involved in here and it's interesting when you think of competitive nature if if China's viewing the opportunity as 10 times larger than the Western world, that means you might put 10 times the enthusiasm into it. And certainly they're extremely busy in terms of their expansion into space. So I think that that tension will, you know,

it'll cause people to really keep up. And it's a very interesting time. I feel that it's, I always talk about it being like the late 1400s, you know, when a few people have sailed across the Atlantic Ocean and discovered North and South America. And not everyone understands what's going on yet, but people discovered this place that's full of resources and opportunity. And over time, you know, multiple nations now trace their, you know, their roots or

their connections to North and South America, you know, England and Scotland and France, Germany, the Netherlands, Spain, Portugal, all of North and South America is traced back to those links. That's how space is going to be, it would appear. Multiple nations are now exploring space. They see a tremendous opportunity. It's not going to go away. It's a very real and significant economic and geopolitically relevant opportunity. So it's important to stick with it, hold your ground,

and be in the right places at the right times to get the right economic position for your nations or group of nations that are working together. I know MDA used to be part of MaxArt. It was spun out. It was taken private. Then it was taken, or I guess it was private. Then it was brought public again on the Canadian Stock Exchange, the Toronto Stock Exchange back in 2021.

Do you think investors, I know your stock is up something like 60, 70% over the past year. You think investors are starting to fully understand and appreciate what this new space economy is going to look like? Yeah, I think there is some increasing appreciation of that, yes, but there's a lot more to do. One of the things I spend a lot of my time on, we have a very strong performing company and our business metrics are very, very solid. We have 25% growth, 20% profit, 65% to 70% of profit generating cash, low leverage ratios. Like we're in a strong position financially. So that's there. So, you know, I speak to that and I keep people reminded of it, but I spend probably more time explaining the dynamics of the space market

and what's going on and increasingly helping people be comfortable that, you know, it's not the late 1960s. It's not like a blip where we're going to go to the moon, say we did it and not do it for a while. Like this will be, this is an emerging persistent economy with legitimate business opportunities that we're very connected into and a part of. And I think that that, that needs to be a continuing conversation that will only grow in time. We talked about, we started this conversation talking about autonomy

and AI at a time where the market more broadly is very, very focused on these technologies and these capabilities and the next generation of it. How are you thinking about it? Yep. Artificial intelligence has a huge opportunity in space for sure. When you look at us, I talk about autonomy and robotics operations. And so that's key. If you look at our earth observation satellites, the ability to have onboard processing, so the computer's now on the satellite, so that you can process the signals and detect things and just send less information. So one of the things we do, for example, is a lot of maritime domain awareness, it's called. So we're looking for ships in the oceans with our radar satellites um today we get all those radar signals bring them back down to earth and then figure out

where the ships are and then tell people about it um the next phase will be to do all that processing on board a satellite and just detect all the ships and figure it out on the satellite and then just send where are the ship information contact information back down to earth so much more highly efficient higher speed earth observation for example activity with artificial intelligence in communications we are now building large low earth orbit constellations of satellites dozens to hundreds of satellites that work together to provide a network all around the earth with optical inter-satellite links that allow all the satellites to talk each other in a large mesh around the earth and so the role for artificial intelligence to root and manage all of that

communications uh and make it massively efficient is going to be extremely powerful as well as we go forward into the future so us leaning into those um and being able to make sure that we are taking advantage of that emerging technology technology is very important from a competitive perspective in addition to using it in our operations to increasingly work on efficiency. It's important to remember though that that type of artificial intelligence is not like the public forum that people see where you're just sort of you know on chat gbt or the equivalent on your web browser which is very public information. When we're using artificial intelligence, it's very contained inside our own secure communication networks and is being used for operational efficiency. It's such a key point to make. Mike Greenlee, MDA Space CEO,

thank you so much for taking the time. Thank you. Very enjoyable conversation. Appreciate it. That does it for this episode of Manifest Space. Make sure you never miss a launch by following us wherever you get your podcasts and by watching our coverage on Closing Bell Overtime. I'm Morgan Brennan.