(CNN) The European Space Agency plans to start mining for water and oxygen on the moon by 2025.

The agency announced Monday it has signed a 1-year contract with European aerospace company ArianeGroup to explore mining regolith , also known as lunar soil or moon dust.

Water and oxygen can be extracted from regolith, potentially making it easier for humans to spend time on the moon in the future, according to ArianeGroup. The research could also make it possible to produce rocket fuel on the moon, enabling future expeditions to go further into space, the aerospace company said.

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"The use of space resources could be a key to sustainable lunar exploration," said David Parker, ESA Director of Human and Robotic Exploration, in a statement.

Regolith is the layer of loose soil that covers the moon's surface, which is rich with iron oxide. And it is possible to extract large amounts of oxygen trapped in the soil's rocky materials, scientists say.

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