When Buzz Aldrin and Neil Armstrong hoisted the Stars and Stripes on the moon, the act was purely symbolic. Two years earlier, mindful of Cold War animosity, the 1967 Outer Space Treaty (OST) had decreed that outer space, including the moon and other celestial bodies, “is not subject to national appropriation by claim of sovereignty”.

In other words no country, not even the US, could own the moon or any other part of space, regardless of how many flags they erected there. Half a century on, though, the OST could prove the biggest obstacle to one of the most exciting new frontiers of space exploration: asteroid mining.

The reason lawyers could soon be poring over that 48-year-old document is that space mining could become a reality within a couple of decades.

In what is being seen as a major breakthrough for this embryonic technology, the government of Luxembourg has thrown its financial muscle behind plans to extract resources from asteroids, some of which are rich in platinum and other valuable metals. It plans to team up with private companies to help speed the progress of the industry and draw up a regulatory framework for it.

One such firm, Deep Space Industries, wants to send small satellites, called Fireflies, into space from 2017 to prospect for minerals and ice. The satellites would hitch a ride on a rocket, and larger craft would then be used to harvest, transport and store raw materials.

Metals such as nickel and iron, which are plentiful on Earth, could be processed while in orbit and used to build equipment or spacecraft. And it may eventually be possible to extract valuable minerals from asteroids cheaply enough for it to be worth bringing them back to Earth.

Rival Planetary Resources has a slightly different plan, in which telescopes would be used to analyse asteroids before craft were sent to mine them. Its backers include Google co-founder Larry Page and billionaire businessman Ross Perot, and it thinks it could be operating in space by 2025.

One of the difficulties facing these would-be space miners is cost, which is fittingly astronomical. Nasa’s Osiris-Rex expedition, which aims to bring just two kilos of asteroid material back to Earth by 2023, is set to cost $1bn. But Deep Space Industries thinks it can get the ball rolling by putting three of its Fireflies in space for just $20m.

The other obvious barrier is the technological progress that is still required if commercial asteroid mining is to become practically possible and economically viable.

However, considerable as these hurdles are, experts believe the legal component is the most pressing. Late last year, the US government made an attempt to update the law on space mining, producing a bill that allows companies to “possess, own, transport, use, and sell” extra-terrestrial resources without violating US law. The problem is that putting this into practice violates the OST.

“The way a private company would enforce their right to mine is through a national court,” says space law expert Dr Chris Newman of the University of Sunderland. “In making a ruling, that court would exercise sovereign rights, contravening the OST. We will only know how this would play out if it is tested in court.”

US lawyer Michael Listner, who founded thinktank Space Law and Policy Solutions, says the US law is incompatible with the OST and risks souring international relations: “China and Russia will want in. If you have conflicts of law, things start getting dicey and that could lead to legal and political conflict.”

Newman believes that one reason why Luxembourg has included plans for drawing up a regulatory framework is to show the world that work is under way on untangling such legal knots. “This is something for investors to hang their hat on,” he says, “to give them confidence and say that there is a nascent legal framework.”

But Dr Gbenga Oduntan, a space law expert at the University of Kent, warns that the international community needs to get its act together quickly. “What we don’t want is a free-for-all over asteroids,” he says. “We need to come together and do that thinking, because the law we have right now does not allow us to repatriate resources for commercial purposes.”

One way to do this, he suggests, is to draw on existing legislation such as the UN Convention on the Law of the Sea, which governs how nations use the ocean. Another option might be to revive the Moon Treaty of 1979, which deemed space to be the “common heritage of mankind” but failed to win support from any space-faring nation.

Such complex legal wrangles could indeed prove harder to overcome than other difficulties, such as the huge costs involved. But some experts believe that investing large amounts early on could create a space economy in which costs are forced down by collaboration.

Ian Crawford, professor of planetary science at Birkbeck, London, says asteroid miners would most probably start off by mining water-ice, which can be broken down into hydrogen (for fuel) and oxygen (for supporting life).

It is much cheaper to produce water in space than to take it there, and this process could generate revenue and technical support from other players in the space game. Once companies had that revenue stream under their belts, they could start thinking more seriously about the more costly business of extracting minerals and bringing them back to Earth.

“Eventually you can imagine the whole process supporting itself,” says Crawford. “The main hurdle is the initial investment, and it seems these companies think they can get started and jump over that hurdle.” But he agrees that the more pressing concern is the legal picture, which “badly needs to be updated”.

Christopher Barnatt, professional futurist and author of The Next Big Thing: From 3D Printing to Mining the Moon, says history shows us that if governments such as Luxembourg’s get behind asteroid mining, the space industry will deliver on its promise.

“With the moon landings, the aspiration was way ahead of the technology. [President] Kennedy had spoken to Nasa and they’d said it couldn’t be done. He thought it could. We’ve got evidence from throughout history that when we commit ourselves to a broad goal, we can achieve it.”

The ramifications could be huge, he believes, as progress in one technology spurs breakthroughs in another.

“If you can use asteroids to make fuel, a lot of space exploration becomes cheaper. Then there’s progress in robotics and artificial intelligence... it all starts to make things possible.”