China’s search for rare earths raises Greenland’s government

The election is a blow to a massive project that Beijing viewed as part of its efforts to increase its grip on the world’s rare earths: the raw materials needed to make batteries and magnets that power from mobile phones and electric cars to wind turbines. Global demand for rare earths is expected to increase as countries press to meet their commitments under the Paris Climate Agreement, which President Biden has decided to join.

China extracts more than 70% of the world’s rare earths and is responsible for 90% of the complex process of turning them into magnets, according to Adamas Intelligence, which provides research on minerals and metals. According to Greenland Minerals, the mining project in Kvanefjeld, a mountainous area along the south coast of Greenland, was expected to produce 10% of the world’s rare earths. Ltd.

, a company based in Australia that has the exploratory license for the project.

In 2016, Chinese company Shenghe Resources Holding Co., one of the world’s largest producers of rare earth materials, acquired a 12.5% ​​stake in Greenland Minerals, making it the company’s largest shareholder. Since then, Shenghe’s stake has been diluted to 9%, but Greenland Minerals relies on the Chinese company to process the materials it extracts from Greenland, a technically difficult step that is key to the project’s viability.

Aaja Chemnitz Larsen, a member of the Inuit Ataqatigiit, said the election gave his party a strong mandate to oppose the mine. The concession includes uranium deposits, which residents fear could be released into the pristine natural landscape and farms in the area. The project is also expected to increase C02 emissions from Greenland by 45%.

“It would be devastating for Greenland,” Ms Larsen said

Miles Guy, chief financial officer of Greenland Minerals, said the firm was on the verge of receiving approval from the previous Greenland government to continue the mine when the controversy over the project sparked the speedy elections. The firm has already invested A $ 130 million, equivalent to $ 99.6 million, in the project.

“In our opinion, it would be an extreme demonstration of bad faith to reverse all of this,” Guy said.

The United States, China, and the European Union have been circling Greenland in recent years as they played for influence in a region in transformation as a result of climate change. Warm temperatures and melting ice have opened up the possibility of new sea routes in the Arctic, as well as resource extraction.

A decades-long treaty of defense between Denmark and the United States gives the U.S. military virtually unlimited rights in Greenland to America’s northernmost base, Thule Air Base, which houses part of an early warning system for American ballistic missiles. In 2019, the Journal reported that then-President Donald Trump had privately asked advisers if the U.S. could buy Greenland, expressing interest in its abundant resources and geopolitical importance.

At stake is the path to Greenland’s independence. The island remains a territory of Denmark, which runs the country’s defense and foreign affairs portfolio, in exchange for an annual block grant of approximately DKK 3.9 billion, equivalent to $ 575 million, for help fund basic services. To declare the complete independence of Denmark it would be necessary for the mainly Inuit population of Greenland, of 56,000 inhabitants, to find another source of income to compensate for the loss of this subsidy.

Guy said the Kvanefjeld project is expected to generate $ 200 million in annual tax revenue for the Greenlandic government, as well as hundreds of local jobs.

Residents of Narsaq, a nearby town of about 1,300, feared the environmental damage the project could trigger. Uranium mining is a deeply polarizing issue in Greenland, the 1988 ban on the extraction of radioactive materials was only lifted in 2014 by a single vote in parliament.

The ruling party’s debates forced Prime Minister Kim Kielsen to resign from a party presidency last year as well.

The election does not completely rule out the possibility of rare earth mining in Greenland.

The AI ​​party would be open to a referendum on the project, if any of its potential coalition partners insisted on one as a condition for joining the government, Ms Larsen said: “A referendum is something that could be -ho “.

And the party is not opposed to the development of a second, more remote rare earth deposit in southern Greenland.

“It would be something we can definitely look at,” Ms. Larsen said. “I think we would be much more open to the other project.”

Write to Drew Hinshaw at [email protected] and Stacy Meichtry at [email protected]