China’s Rare Earth Search raises the Greenland government

The election is a blow to a massive project Beijing is pursuing 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 everything from mobile phones and electric cars to wind turbines. Global demand for rare earths is expected to increase as countries meet their commitments under the Paris Climate Agreement, which President Biden has decided to join.

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

, an Australian company licensed to explore the project.

In 2016, the Chinese company Shenghe Resources Holding Co., one of the largest producers of rare earth materials in the world, acquired a 12.5% ​​stake in Greenland Minerals, thus becoming 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 any materials extracted 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 locals fear could be released into the area’s clean natural landscape and farms. The project is also expected to increase CO2 emissions from Greenland by 45%.

“It would be devastating for Greenland,” Larsen said

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

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

The US, China and the European Union have been touring Greenland in recent years, playing for influence in a region that is changing as a result of climate change. Heated temperatures and melting ice have opened up the possibility of new shipping routes in the Arctic, as well as resource extraction.

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

At stake is Greenland’s path to independence. The island is still a territory of Denmark, which leads the country’s defense and foreign affairs portfolio, in exchange for an annual grant of about DKK 3.9 billion, equivalent to $ 575 million, to help finance basic services. Declaring full independence from Denmark would require a Greenlandic Inuit population of 56,000 to find another source of income to make up for the loss of that subsidy.

Mr Guy said the Kvanefjeld project would 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 people, feared the environmental damage the project could unleash. Uranium mining is a deeply polarizing issue in Greenland, whose 1988 ban on the extraction of radioactive materials was lifted only in 2014 by a single vote in parliament.

Debates within the ruling party forced Prime Minister Kim Kielsen to step down as party chairman last year.

The elections do not completely rule out the possibility of rare earth mining in Greenland.

The IA would have opened a referendum on the bill 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 one.”

And the party does not oppose the development of a second more remote landfill in southern Greenland.

“It would be something we can definitely look at,” said Larsen. “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]