China’s Rare-Earths Quest improves Greenland’s government

The election is a blow to a massive project that Beijing has been watching as part of its efforts to increase its grip on the rare earthly world – the raw materials needed to manufacture the batteries and magnets that make up everything from cell phones and electric cars to supply wind turbines. Global demand for rare earth is predicted to rise as countries meet their commitments under the Paris climate agreement, to which President Biden decides to rejoin.

According to Adamas Intelligence, which conducts research on minerals and metals, China accounts for more than 70% of rare earths and is responsible for 90% of the complex process of turning them into magnets. According to Greenland Minerals, the mining project in Kvanefjeld, a mountainous area along the southern coast of Greenland, would yield 10%. Ltd.

, an Australian firm that holds the exploratory license of the project.

In 2016, China’s 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 firm to process all materials it takes from Greenland, a technically challenging step that is key to the project’s viability.

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

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

Miles Guy, chief financial officer of Greenland Minerals, said the firm was about to receive approval from the previous government of Greenland to continue with the mine when controversy surrounding the project caused the quick election. The company has already invested 130 million Australian dollars, equivalent to $ 99.6 million, in the project.

“In our opinion, it would be an extreme display of bad faith to stop it all of a sudden,” he said.

The US, China and the European Union have been circulating around Greenland for the past few years as they rejoice over influence in a region that is undergoing transformation due to climate change. Warming temperatures and melting ice have opened up the possibility of new shipping lanes in the Arctic Sea as well as the exploitation of resources.

A defense agreement between Denmark and the United States has given the U.S. military virtually unlimited rights to Greenland on the northernmost base of America, Thule Air Base, which contains part of a U.S. ballistic missile warning system. In 2019, the Journal reported that then-President Donald Trump had asked advisers privately whether the US could buy Greenland, which was interested in its abundant resources and geopolitical interest.

Greenland’s path to independence is at stake. The island is still an area of ​​Denmark, which supports the country’s portfolio of defense and foreign affairs, in exchange for an annual block grant of about 3.9 billion Danish kroner, equivalent to $ 575 million, to help basic services finance. The declaration of complete independence from Denmark would require the 56,000 inhabitants of Greenland, mainly 56,000 inhabitants, to find another source of income to compensate for the loss of the grant.

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

Residents of Narsaq, a nearby city of about 1,300, feared the environmental damage the project could unleash. Uranium mining is a deeply polarizing issue in Greenland, of which the ban on the extraction of radioactive substances in 1988 was only lifted by a single vote in parliament in 2014.

Debates within the ruling party forced Prime Minister Kim Kielsen to resign from a post as chairman last year.

The election does not completely rule out the possibility of scarce land mining in Greenland.

The IA party will be open to a referendum on the project, if one of its potential coalition partners insists on it as a condition of joining the government, Ms. Larsen said: “A referendum is something that can be one.”

And the party is not opposed to the development of a second, more remote settlement in southern Greenland.

“That would be something we can definitely look at,” she said. Larsen said. “I think we will be much more open to the other project.”

Write to Drew Hinshaw at [email protected] and Stacy Meichtry at [email protected]