- Hubert Walas
Rare earth elements.
In the 10th century AD, Erik the Red, the first explorer of Greenland, named this island as such so as to encourage settlement in the newly discovered area. Today, no such encouragement is needed. Minerals found under the surface of Greenland make the island a new "Promised Land." The U.S. Geological Survey calls Greenland the largest treasury of undiscovered rare earth elements on Earth. What does it mean for Greenland?
Rare Earth Elements
Greenland has some of the oldest rocks on the Earth's surface, some nearly a billion years old. These rocks often contain so-called “rare earths,” which are 17 elements that can be found on the periodic table. These elements, including scandium, yttrium, neodymium, cerium, and ytterbium, have unique characteristics that make them key to the development of modern technology. They are extremely important in the production of components for consumer electronics, electric cars, wind turbines, and/or military jets. Every modern electronic device contains a trace of rare earth metals. Thus, if you want an iPhone, a Long-Range Tesla model, or a precise missile system, rare earths are indispensable.
Despite their name, these elements are not really uncommon. However, finding them in concentrated form and aggregated in one area, which would make extraction financially viable, is the problem. Additionally, their processing is extremely difficult and often results in severe pollution of the local environment. Therefore, the United States, which at one time was the leader in this sector, has begun to take production out of its own territory. Into this vacuum entered, who else, but the People's Republic of China and soon began to dominate the market. And its presence is overwhelming. China possesses about 35% of the world's recognized resources of rare earth elements, but above all, it has by far the largest production capacity, accounting for almost 60% of all global production. In comparison, the share of the United States is barely 15%. Interestingly, Myanmar is third with 12% - but almost all of its production goes to China. It should be noted, however, that 10 years ago this disparity was even greater. China controlled 95% of global production.
Now Greenland is an opportunity for the West to bridge this disparity, which could be used as a geopolitical weapon by Beijing. However, in practice this has already happened. In 2010, at the height of tensions between China and Japan, the Chinese Communist Party stopped exports of rare earth elements to Japan. Applying a similar maneuver to Washington would not be a problem for Beijing, as between 2016 and 2019, 80% of U.S. rare earth imports came from China.
Although Greenland's resources are now in the sights of many giants from the mining industry, the game is now focused mainly on two projects seeking full concessions from local authorities. Both entities have their roots in Australia, but the first - Tanbreez Mining Greenland - has American support, while the second - Greenland Minerals - has Chinese support. Both require an investment of about $500 million to begin mining. It is speculated that Greenland Minerals' location - Kvanefjeld - could account for 10% of the world's rare earth mining in the future.
For Nuuk, the capital of Greenland, the new industry potentially means an avalanche of money. Greenland is an autonomous territory of Denmark. It has only 56,000 inhabitants and makes its living mainly from fishing and Danish subsidies. Copenhagen supports the island with more than 600 million dollars a year and is also responsible for the defense and foreign policy of Greenland, while Nuuk deals with domestic policy issues. Greenland's GDP is a mere $3 billion, about the size of Andorra's, while the estimated revenue from just one project is $250 million a year, the equivalent of 15% of public spending. In a 2013 survey, just over half of the population said they wanted the mining industry to become the main income for the state.
The problem is that another part of society fears environmental contamination. The Kvanefjeld project alone would raise Greenland's carbon dioxide emissions by 45%. Waste from the Tanbreez project, on the other hand, would be dumped into a nearby lake that, while fish-free, feeds a river with a large Arctic char population. In a way, the irony is that Greenland, whose melting ice cap is a tangible, visual example of climate change, is now supposed to be the source of raw materials that are supposed to create technology capable of mitigating that change.
In April 2021, the social democratic party - "Community for the People" - won the elections in Greenland. Significantly, the party is not against the mining industry, but it is in opposition to uranium mining. And this element can be found in the Kvanefjeld mining area owned by Greenland Minerals. So it is not surprising that the new ruling party presents a less friendly approach to the Chinese-backed project. However, stopping this initiative may not be that simple, Greenland Minerals has invested millions of dollars in research and development on the project based on previously received permits. If Greenland were to put up a stiff refusal it would expose itself to lawsuits and potentially large compensation, which could be challenging for the island's small economy.
Not For Sale
In the past, the main geopolitical attribute of Greenland was its great geographical location. That is why the Allies occupied Greenland during the Second World War. The post-war US president Harry Truman wanted to formalize this situation. In 1946, he wanted to buy the island from the Danes for $100 million. The offer was rejected. A similar proposal was made by Donald Trump in 2019, but even now the topic was quickly dropped by Copenhagen and, above all, by the indigenous inhabitants of the "Green Island."
Trump's motivations could be justified by several factors, two of which are significant. First is the geostrategic position. The U.S. Navy Strategic Blueprint for the Arctic, a document released on January 5, 2021, names China and Russia as the main rivals in the struggle for peace and prosperity in the Arctic. The island, on the other hand, is the northern gateway to Europe forming the GIUK gap, which shortens the distance to Russia's northern coast and is crucial in controlling the sea routes of the Northern Seaway, or the Arctic Silk Road, which will steadily grow in importance as the arctic waters melt. A second, more recent motive is the wealth of Greenlandic lands. And the current estimates may be just the tip of the iceberg.
However, the Americans still have almost full freedom on the island, which is ensured by the 1951 treaty between Copenhagen and Washington. Greenland hosts the northernmost base of American forces, the Thule Air Base.
The U.S. diplomatic offensive towards the island will likely continue to grow. In June 2020, the United States reopened a consulate in Nuuk, signaling the need for greater presence in Greenland and economic cooperation with the country. The Americans have expressed interest in new international airports in Nuuk and Ilulissat, as well as using Greenlandic ports as U.S. Naval bases. Secretary Anthony Blinken's recent visit to the Faroe Islands and Greenland was further evidence of Washington's strong interest in the region. The Faroe Islands are being eyed as a location for an integrated support point for the U.S. Navy and its increased operations in the Arctic, as well as for a new NATO radar station. Today, however, it is the battle for rare earth metals that makes Greenland the Holy Grail for the Americans.
Its leadership position in rare earth processing gives China the ability to dictate the pace of development of the transition from fossil to renewable energy sources and to shape that market as it sees fit. Whereas the energy revolution and combating climate change is a cornerstone of the agenda of the Biden administration and the Western world in general. Currently, the keys to this transition are held by the Chinese.
Greenland is therefore a hope for the United States, and also for the European Union, to regain autonomy in this area, since Brussels is even more dependent on China than the USA in this regard. The EU imports 98% of its demand for rare earth elements from the Chinese. The situation in Greenland is also being carefully watched by the Russian Federation. The Russians would like to see the American and Chinese extraction plans falling apart as the new technologies of obtaining energy are a threat to the Russian economy based on export of hydrocarbons.
The battle for Greenland's resources is also a key element that will determine the island's statehood. If the new influx of cash helps improve the island's autarky, Greenland could become the world's first fully independent indigenous country. Rare earth elements could thus contribute to the emergence of a new independent country on the world map.
https://www.arctictoday.com/how-geopolitics-is-complicating-two-greenland-rare-earths-mining-projects/
https://www.theatlantic.com/science/archive/2021/05/greenlands-rare-earth-election/618785/
https://foreignpolicy.com/2021/04/22/rare-earths-china-us-greenland-geopolitics/
https://greenlandperspective.ku.dk/this_is_greenland_perspective/background/report-papers/Greenland_Geopolitics_Globalisation_and_Geopolitics_in_the_New_North.pdf
https://www.theassay.com/articles/feature-story/all-eyes-on-greenlands-political-moves/
https://worldview.stratfor.com/article/geopolitics-climate-change-race-new-energy
https://geographical.co.uk/nature/polar/item/4113-dossier-mining-the-arctic
https://polarconnection.org/greenland-biden-blinken-strategy/
https://www.wsj.com/articles/chinas-rare-earths-quest-upends-greenlands-government-11617807839
