Greenland’s green power attracting outsiders
Greenland’s rocks are attracting outsiders – superpowers riding a green revolution.
Greenland has huge resources of metals known as ‘rare earths,’ used to create compact, super-strong magnets which 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. The US used to dominate production but handed over that position to China about 20 years ago.
As Greenland’s ice sheet and glaciers recede, two Australia-based mining companies are racing for approval to dig into the world’s biggest undeveloped deposits of rare earth metals.
One of the Australian-based companies is seeking funding from the US, the other is part-owned by a Chinese state-backed firm.
Rare earth metals have many uses. Last year China produced about 90 per cent of them. As US-China tensions mount, President Biden’s administration said it will review key US supplies, including rare earths, to ensure other countries cannot weaponise them against the US.
Each Greenland mine would cost about $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 Greenland sites are less than 10 miles from each other at the southern tip of the island. Debate on them has triggered a political crisis in the capital of Nuuk, forcing a general election on the island of 56,000, due in April. Many Greenlanders, while concerned about pollution, feel mining is key to developing their fragile economy. In a 2013 poll, just over half said they want raw materials to become the country’s main source of income.
The country may 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 U.S. officials, would not involve nuclear material. It has won preliminary environmental approval, but it needs cash and a processing plan.
The second one has already spent more than $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 it recently ran 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 opposition lawmaker who lives in the town. “We use these lands to hunt and fish.”
Greenland has a gross domestic product of around $3 billion. With its people living mostly on fishing and grants from Copenhagen, its government is keen to attract foreign investments.
It does not have an estimate for royalties from the first project, but expects around 1.5 billion Danish crowns ($245 million) each year from the Chinese-linked one.
Acting Minister of Resources Vittus Qujaukitsoq said last month that if Greenlanders suddenly decide they don’t want the second project, “we’ll make a fool of investors. The credibility of the whole country is at stake.”
US & Europe control
The Island’s rare earth metals are a chance for the US and Europe to regain control of a strategic resource.
Back in 2010, Greenland’s potential as a source of the raw materials needed for renewable energy tech gained momentum when China threatened to cut off its supply of rare earth metals to Japan and tightened quotas to international buyers.
The last few months have seen prices for some of the metal’s surge, due to the rise for electric vehicles as well as concerns that Beijing may restrict sales.
Friedbert Pflüger, a senior fellow at the Atlantic Council think tank, says the revenues generated by a major mine could give its owner leverage over policies in Greenland, and a strong Chinese presence there may pose strategic threats.
“The very presence of Chinese companies in Greenland could be used as justification for China to intervene,” said Pflüger, a former German politician and ex-deputy defence minister.
China’s foreign ministry said in a statement that such comments politicise economic and trade issues through “groundless speculation,” adding “China has always supported Chinese companies to carry out foreign economic cooperation in accordance with market principles and international rules.”
The U.S. State Department said: “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.”
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