Friday, April 13, 2018

Ukrainian Rockets Like the Cyclone 4M Are Too Dangerous an Investment for Western Interests: Kyiv Post

         By Chuck Black

Many of those responsible for "the building of the spaceport’s launch centre, integration facility, and launch pad," for the proposed Cyclone 4M rocket launch facility on Canada's East coast, are also involved in an ongoing $800Mln US ($1Bln CDN) Ukranian state scandal over misappropriation of State Space Agency of Ukrainian (SSAU) funds and other "continuing scandals" which occurred throughout the "still incomplete" Ukrainian designed Cyclone-4M rocket development project.

Screen shot from the YSDO website. The number of "successful launches" the company tracks includes a variety of land and sea launch Zenit rockets, but doesn't include the Cyclone 4M, which has never flown. The company has been heavily promoting it's proposed Canadian launch facility to potential investors for at least two years and was originally quite open about asking for money up front. As outlined in the September 11th, 2016 post, "Ukranian Based Yuzhnoye Design Office Eyeing a Canadian Spaceport for its Cyclone-4 Rocket," Yuzhnove's then North American business representative John Isella said "we're looking for approximately $150Mln US (just under $200Mln CDN) in cash or kind (to build the rocket port), although we're certainly willing to negotiate for an appropriate facility." Graphic c/o YSDO.

At least that's what most reasonable people would conclude after reading two recent articles on the topic. That's without even mentioning other recent articles on Ukranian efforts to drum up interest in rocket launch facilities for Scotland and now Australia.

The first article, the March 14th, 2018 Ukrainian based Kyiv Post article, "Investors in Ukraine’s space industry face ‘Iron Curtain’" explicitly blamed senior officials at Dnipro, Ukraine based Yuzhmash (the Cyclone 4M builders) and the Yuzhnoye State Design Office (YSDO) which designed the Cyclone 4M, for "continuing scandals," the billion dollars worth of missing space agency funds and the current overall failure of the Ukraine rocket industry.

According to the article, the two state sponsored firms, along with their government patrons, have made it impossible for western based business interests, such as those represented by Hawthorne CA based SpaceX CEO Elon Musk, to even consider independent investments in Ukrainian based rocket technology:
... blame for the failure of the launch of Ukraine’s rocket industry cannot be placed with its rocket designers; given the realities in Ukraine, the two most obvious reasons are continued corruption, along with inflexible regulatory management policy in this formerly “flagship” economic sector.
On the one hand, the continuing scandals at Yuzhmash and YSDO (Yuzhnoye State Design Office), the two largest enterprises in the field in Ukraine, do not enhance investor appetites to fund space industry development. On the other hand, potential investments in Ukraine’s rocket science are unrealistic even for a dreamer such as SpaceX founder Elon Musk, due to the total state monopolization of the field.
Those statements goe a long way towards explaining why Nova Scotia based Maritime Launch Services (MLS), a joint venture of three US based firms planning to open a East Coast based Canadian launch facility, has been so reticent about where they were going to get its funds.

The usual suspects. The team responsible for the building of the proposed MLS spaceport’s launch centre, integration facility, and pad as introduced on December 17th, 2017 at a private MLS promotional event in Halifax, NS. From left to right: MLS CEO Stephen Matier with YSDO Ukraine representatives Maksym Degtiarov, Olexiy Vel'Mogin, Vitalii Baloshov, Anatolii Demchenko, Ruslan Potomkin, Sergii Podolskyi and Yeris Yevhen. YSDO’s head and general director Aleksander Degtyarev (not pictured in this photo) has been called "fully to blame for the failure of the (Cyclone 4M) project" by the Kyiv Post, but remains in charge at YSDO. Photo c/o MLS.

As outlined in the February 6th, 2017 post, "Europe Will Fund the Prometheus Reusable Engine; Canada Pitched Cyclone-4's," MLS spent most of its short life acting as a local agent for Yuzhnoye and YSDO, which seem to have been doing all the heavy lifting on the project and were actively soliciting international backers.

That seems to have changed recently and the second recent post on the topic, the April 11th, 2018 SpaceQ post, "Undisclosed Launch Company Signs Letter of Intent to Use Maritime Launch Services Spaceport," mentions three specific new areas of focus:
  • MLS has "received a letter of intent from an undisclosed launch company to use the spaceport." 
It's not that there is anything wrong with finding a replacement for the incomplete Cyclone 4M originally promised, or with adding a second customer to the mix. But the inability to attach a specific identity to the new tenant suggests a cautious approach to accepting the claim.
The proposed Canadian location. Graphic c/o CBC News.
It's also worth noting that specific rockets have specific, often unique, fuel and servicing requirements. MLS may require two separate launch pads to deal with different rockets. That could easily wind up as an extra expense instead of a benefit. 
  • MLS, through its local contractor, Bedford, NS based Strum Consulting, has "completed all the data collection required for the environmental assessment and has compiled the report, which is currently being submitted to Nova Scotia Environment. Once submitted and accepted by Nova Scotia Environment, the government conducts a 50-day review which includes a 30-day period for public input.”
Not that there is anything wrong with that either. But since required paperwork is still in progress, MLS will have a difficult time making its self imposed start date to begin construction of the launch facility. The November 9, 2017 SpaceQ post, "Maritime Launch Services Targets May 1 to Begin Construction at Nova Scotia Spaceport" will almost certainly turn out to be in error.
  • MLS has also engaged Toronto, ON based Jacob Capital Management Inc. (JCMI), to "lead the team of strategic and financial advisory services associated with MLS’s investor strategy."
All that really means is that the previous fund raising strategy (depending on Yuzhnoye and YSDO to solicit western investors) didn't work and the company is starting over from scratch. 
This lends credence to the Kyiv Post accounts of corruption and mismanagement within the Ukrainian space program, as discussed above.
According to the article, MLS is "making progress with working its Ukrainian suppliers."

As outlined in the March 11th, 2018 The West Australian post, "Ukrainian government wants to send rockets into orbit from WA’s Kimberley" Ukraine's ambassador to Australia, Nikolai Kulinich has pitched a "very realistic" proposal to the Australian government to build a "conmodrome"  outside the Curtin air base in the Kimberley, pitching the idea as an answer to Australia’s "decades-old dream to host its own launch facility." As outlined in the November 16, 2017 post, "More Rocket Shenanigans, Parts Problems at KB Yuzhnoye & Skyrora's Plan for a Scottish/ Ukrainian Spaceport," Scotland land has also been pitched. Only a year ago, as outlined in the March 15th, 2017 post, "Canada to get its own spaceport," MLS and it's Ukrainian partners had announced that they had "settled" on building a rocket launching facility just outside of Canso, NS after a long search. Photo c/o Sputnik

At one point, as outlined in the April 28th, 2017 Halifax, NS meeting of the Federal government mandated Space Advisory Board (SAB) Roundtable on Canada's Future in Space, "there was considerable optimism and excitement regarding plans for a spaceport in the Province of Nova Scotia."

Now that MLS has solicited a Canadian firm to fund raise for the spaceport, let's hope those credulous first impressions will soon be replaced with a deeper, skeptical and more fact based assessment.

Canadian investors and governments need to engage in appropriate due diligence before they begin to hand over any large sums of money to this project.
Editors Note: An example of the dangers companies face when investing in Ukrainian rocket programs can be found in the April 17th, 2018 Russian Space Web post, "S7 Group closes Sea Launch deal but has no rocket to fly." 
That post reported on Novosibirsk, Russian based S7 Airlines and its purchase of Sea Launch, a rocket launch system which used a mobile, seagoing barge (called the "Odyssey platform") to launch commercial payloads using Ukrainian built Zenit-3SL rockets.
Sea Launch was originally a multinational spacecraft launch partnership between Moscow, Russia based Energia (which supplied the 3rd stage), St. Louis, MI based Boeing Commercial Space (which provided system integration services and the nose-cone), Fornebu, Norway based Aker Solutions (which provided the seagoing barge) and Ukranian based SDO Yuzhnoye / PO Yuzhmash (which provided the first two rocket stages). 
The Sea Launch System hasn't functioned since 2014, when the Russian Federation annexed the Crimea from the Ukraine.
The Sea Launch fleet including the Odyssey barge (with a conveniently located Zenit rocket in launch position, on the right) and Sea Launch Commander support ship (left) in an undated marketing photo. As outlined in the December 26th, 2017 NASA Spaceflight post, "Zenit rocket lofts AngoSat-1," the Zenit rocket recently resumed limited launches from the Baikonur Cosmodrome in Kazakhstan in an attempt to fulfill contracts signed before the Crimean crisis. However, no new contracts for the system have been announced and new rocket supplies are limited. Photo c/o Sea Launch.
As noted in the Russian Space Web post, while the April 17th, 2018 S7 press release, "S7 Group purchases Sea Launch," promised great things from the purchase, the truth of the matter is that "For all practical purposes, S7 Group found itself with expensive infrastructure on its balance sheet, but no compatible rocket to launch and no customers to serve." 
This situation is expected to remain in place at until relations between Russia and the Ukraine are restored. 
Chuck Black.

Chuck Black is the editor of the Commercial Space blog.

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