In the 10th century, Erik the Red, a Viking from Iceland, was so impressed with the vegetation on another arctic island he had found he called it “the green land.” Today, it is Greenland’s rocks that are attracting outsiders — superpowers riding a green revolution.
The world’s biggest island has huge resources of rare earth metals, used to create compact, super-strong magnets, that help power equipment such as wind turbines, electric vehicles, combat aircraft and weapons systems.
The metals are abundant globally, but processing them is difficult and dirty — so much so that the US, which used to dominate production, surrendered that position to China about 20 years ago.
Illustration: Tania Chou
As Greenland’s ice sheet and glaciers recede, two Australia-based mining companies — one seeking funding in the US, the other part-owned by a Chinese state-backed firm — are racing for approval to dig into what the US Geological Survey (USGS) calls the world’s biggest undeveloped deposits of rare earth metals.
The contest underscores the polluting side of clean energy, as well as how hard it is for the West to break free of China in the production of a vital resource.
Rare earth metals have many uses and last year China produced about 90 percent of them, according to Toronto-based consultancy Adamas Intelligence.
As US-China tensions mount, Washington last month said that it would review key supplies, including rare earths, to ensure other nations cannot weaponize them against the US.
Each Greenland mine would cost about US$500 million to develop, the companies say. Both plan to send mined material away for final processing, an activity that is heavily concentrated in China.
The only rare earth mine now operating in the US — Mountain Pass in California — is partly owned by a Chinese state-backed company that sends material mined to China for processing.
The Greenland sites are less than 16km apart at the southern tip of the island, near a UNESCO World Heritage Site. Debate about them has triggered a political crisis in the capital, Nuuk, forcing a general election next month on the island of 56,000 people.
Many Greenlanders, while concerned about pollution, feel mining is key to develop their fragile economy. In a 2013 poll, just over half said they want raw materials to become the nation’s main source of income.
Greenland could ultimately back either project, both or neither, but for those Greenlanders open to mining, the two proposals boil down to a choice between one mine that would not produce radioactive material and another that would.
The first mine, a private initiative from an Australian geologist who has presented it to US officials, would not involve nuclear material. It has won preliminary environmental approval, but it needs cash and a processing plan.
The second has already spent more than US$100 million preparing to mine, has proven processing technology through its Chinese partner, and won initial political support from Greenland’s coalition government, but its plans include exporting uranium, a nuclear fuel, to China, and that has run into strong opposition, including from residents of the nearby town of Narsaq.
“As indigenous people, we have lived in harmony with nature for many, many years,” said Mariane Paviasen, an Inuit Ataqatigiit (IA) lawmaker who lives in Narsaq. “We use these lands to hunt and fish.”
Greenland, a self-governing territory of Denmark, has a GDP of about US$3 billion — similar to Andorra and Burundi. With its people living mostly on fishing and grants from Copenhagen, its government is keen to attract foreign investment.
It does not have an estimate for royalties from the first project, but expects about 1.5 billion Danish krone (US$241 million) each year from the Chinese-linked mine — equivalent to about 15 percent of public spending.
The Greenlandic government did not respond to requests for comment for this story.
Acting Greenlandic Minister of Mineral Resources and Labor Vittus Qujaukitsoq last month said that if Greenlanders suddenly decide they do not want the second project, “we’ll make a fool of investors. The credibility of the whole country is at stake.”
Greenland’s rare earth metals are also a chance for the US and Europe to regain control of a strategic resource.
The island’s potential as a source of the raw materials needed for renewable energy technologies gained momentum in 2010, when China threatened to cut off its supply of rare earth metals to Japan and tightened quotas to international buyers.
Prices for some of the metals have jumped, driven by surging demand for electric vehicles, as well as concerns that Beijing could restrict sales.
Greenland’s position near the eastern flank of the US makes it a sensitive location.
Former US president Donald Trump in 2019 offered to buy the island, and he was not the first US president to do so: Former US president Harry S. Truman in 1946 offered Denmark US$100 million for it.
A defense treaty between Denmark and the US dating back to 1951 gives the US military almost unlimited rights in Greenland and it houses the northernmost US military base.
Friedbert Pfluger, a senior fellow at the Atlantic Council think tank, says that the revenue generated by a major mine could give its owner leverage over policies in Greenland and a strong Chinese presence there could pose a strategic threat.
“The very presence of Chinese companies in Greenland could be used as justification for China to intervene,” said Pfluger, a former German state secretary of defense.
The Chinese Ministry of Foreign Affairs said in a statement that such comments politicize economic and trade issues through “groundless speculation,” adding that “China has always supported Chinese companies to carry out foreign economic cooperation in accordance with market principles and international rules.”
“We encourage our allies and partners to carefully review any investments ... that could give China access to critical infrastructure in ways that compromise their security or allow China to exert undue, adverse influence over their domestic economies,” the US Department of State said.
Denmark, which handles foreign affairs and defense for Greenland, has in the past headed off Chinese involvement in infrastructure projects, which government sources say was because of security concerns.
Danish Minister of Foreign Affairs Jeppe Kofod declined to comment on the security implications of China’s involvement, but he told Reuters that Copenhagen’s close ties with the US “should not be seen as an obstacle to commercial investments in Greenland.”
China is a member of the International Atomic Energy Agency, so it can import uranium from Greenland, but since the fuel is used in nuclear weapons, that would be sensitive.
Copenhagen, which has the final say, declined to comment.
Trump’s offer for Greenland aimed to help address Chinese dominance of supplies of rare earth metals.
Those involved say he was partly following up on talks between US officials and private company Tanbreez Mining Greenland A/S. Tanbreez is the owner of the first Greenland site — Kringlerne, or Killavaat Alannguat in Greenlandic.
The company’s owner, Australian geologist Greg Barnes, said that he had met US officials weeks before Trump made the offer, and the company’s Web site shows Barnes with them and the former US ambassador to Denmark on a site visit.
The USGS confirmed its officials had visited the site in 2019, while the US government and a representative for Trump declined to comment.
Barnes said that he had invested A$50 million (US$38.5 million) of his own cash into the Greenland project.
New York-based investment banker Christopher Messina, managing director at capital markets advisory services firm Mannahatta Partners, is trying to assemble more financing and said the Kringlerne is “such a huge deposit that what comes out of it could satisfy manufacturing demands in the US for years to come.”
Whether or not that pans out, Barnes said that the rare earth metals produced by his project could be processed outside China, although he has not yet decided where and declined to say at what cost.
He said the royalties it would generate for Greenland would be roughly the same as those promised by the China-linked plan.
“We’ve managed to get our capital costs down without Chinese technology,” Barnes said.
The only major plant outside China that does the complex work of separating individual rare earth elements is in Malaysia, but others — including the Mountain Pass mine in the US — are planning or have started to build such facilities.
“For the foreseeable future, China is going to be the major player in all of these supply chains simply because it’s so far advanced, and because it’s not stopping and waiting for alternatives to catch up,” Adamas Intelligence managing director Ryan Castilloux said.
Tanbreez said that half of the rare earth metals it plans to mine would be lanthanum and cerium — relatively plentiful metals used in telescope lenses and automotive catalytic converters. About one-fifth would be yttrium, which is in demand for lasers and the superconductors used in quantum computing.
Neither of the Greenland projects would be pollution-free. Both plan for mined rock to be locally crushed and separated into concentrates to send for final processing.
Tanbreez’s mining waste would be piped to a lake which, while it does not contain fish, feeds a river with a large population of Arctic char. Turbid water could impact the fish, according to the company’s environmental report, which says it plans to dump about 550 tonnes a day of waste material into the lake, which it would dam to prevent disruption downstream.
Tanbreez’s plan has passed public consultations and received a government permit in September last year. The company is now working on parliamentary approval.
Both the Greenland projects, though run from Australia, are part of an EU initiative, the European Raw Materials Alliance, to boost Europe’s output of critical minerals and cut dependence on China for rare earth metals.
The alliance, funded by the EU, is coordinating investment and providing seed money for European mines, processing plants and industries such as magnets.
Last year, the EU began 10 billion euros (US$12 billion) of investment into rare earth metals and other green energy projects, and it says its demand for rare earth metals could surge as much as 10-fold by 2050. It says China currently makes up 98 percent of its supply.
“This is a very critical period of time,” European Raw Materials Alliance chief executive Bernd Schafer said. “We in Europe are facing raw materials scarcity on many levels and also the need for action.”
The rival mountaintop site not far from Tanbreez is called Kvanefjeld, or Kuannersuit in Greenlandic.
For John Mair, managing director of owner Greenland Minerals Ltd, it is a world-class opportunity at the right moment.
Kvanefjeld’s main offer is neodymium, needed for wind turbines. Brussels says the EU’s demand for the metal could reach 13,000 tonnes per year by 2050, three times more than it used in 2015. Neodymium is also used in combat aircraft.
Greenland Minerals is a listed firm in which Chinese company Shenghe Resources is the biggest shareholder, with just under 10 percent.
Shenghe, which also has a similar size stake in Mountain Pass, declined to comment for this story.
Greenland Minerals, which bought its concession from Barnes, says its planned mine would, at least initially, send the minerals it produces to China for final processing. It says it plans to find a site in Europe, but has not said when.
The company has a strong hand. Back in 2011, the estimated costs for setting up Kvanefjeld were US$2.3 billion. By 2019, they shrank to US$505 million.
The company says that Shenghe, whose biggest shareholder is a state-run Chinese mineral research institute, has helped boost efficiency.
However, Greenland Minerals faces public opposition. It is one step behind Tanbreez in the environmental vetting process — and its ores include significant amounts of radioactive materials.
When Greenland Minerals embarked on public consultations earlier this year, protests erupted. At one meeting in Narsaq on Feb. 10, locals both inside and outside the hall banged windows and played loud music to disrupt presentations.
As opposition mounted, a small pro-mining party, Demokraatit, triggered a general election by pulling out of Greenland’s coalition early last month.
Polls suggest opposition party IA, which has a zero-tolerance policy for uranium, is likely to become the biggest in parliament, so would be first to try to form a coalition.
“Our aim is to halt the [Kvanefjeld] mining project,” Paviasen said.
However, IA has not expressed opposition to Tanbreez, which is seen as less of a threat to the environment.
Kvanefjeld would dump much more waste than Tanbreez — about 8,500 tonnes a day — into a lake on top of a mountain, the Greenland Minerals plan says.
Greenland Minerals says any increase in background radiation from its Kvanefjeld mine would be minimal. It plans to build a concrete 45m dam to contain the radioactive waste and to spray water on the ground to keep the dust from blowing away.
The dam is to be built to international standards to “withstand even the worst imaginable seismic activity,” it said in a report submitted to the Greenlandic government.
Even so, residents say they worry contaminated water would seep into nearby rivers or that the dam would fail entirely. They cite the collapse of a dam in Brazil two years ago that killed 270 people.
As the crisis has deepened, shares of Greenland Minerals have fallen by more than 50 percent.
If the mine goes ahead, many people plan to move away, Paviasen said.
Additional reporting by Ernest Scheyder, Humeyra Pamuk and Tom Daly
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