China’s quest for rare earths upsets Greenland government

China’s quest for rare earths upsets Greenland government

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China’s global quest for rare earth supplies has changed the electoral landscape of an Ice Island 5,000 miles away.

Greenland’s Inuit Ataqatigiit, a leftist and environmentalist party, garnered 37% of the vote in a snap election this week that was called amid growing controversy over plans to develop a land mine rare unprecedented along the southern edge of the island. The outgoing center-left party Siumut, i.e. Forward, won only 29% of the vote after supporting the mining project. Mute Egede, the 34-year-old AI leader, who opposed the project, will now try to form a coalition government.


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christian klindt solbeck / Agence France-Presse / Getty Images

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

China exploits 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 researches minerals and metals. The Kvanefjeld mining project, a mountainous area along Greenland’s jagged south coast, is expected to produce 10% of the world’s rare earths, according to Greenland Minerals Ltd.

, an Australian-based company that holds the exploratory license for the project.


Greenland Minerals Ltd / Reuters

In 2016, Chinese company Shenghe Resources Holding Co., one of the world’s largest producers of rare earths, 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 is relying on the Chinese company to process all the materials it extracts from Greenland, a technically difficult step that is critical to the viability of the project.

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

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

Miles Guy, chief financial officer of Greenland Minerals, said the company was set to receive approval from the previous Greenland government to proceed with the mine when controversy over the project sparked early elections. The firm has already invested 130 million Australian dollars, or 99.6 million dollars, in the project.

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


Ida Guldbaek Arentsen / Ritzau Scanpix / Reuters

The United States, China and the European Union have surrounded Greenland in recent years as they vie for influence in a region undergoing transformation due to climate change. Warming temperatures and melting ice have opened up the possibility of new shipping routes in the Arctic Sea 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 over the northernmost base in the United States, Thule Air Base, which houses part of the United States. ‘an American ballistic missile early warning system. In 2019, the Journal reported that then President Donald Trump privately asked advisers whether the United States could buy Greenland, expressing interest in its abundant resources and geopolitical importance.

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

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

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

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


christian klindt soelbeck / Agence France-Presse / Getty Images

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

The IA party would be open to a referendum on the project, if one 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. “

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

“It would be something we could definitely look at,” 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]

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