Greenland vote damages China’s rare earth plans

April 15, 2021 06:00
Photo: Reuters

The Cold War between China and the United States is extending into many sectors and remote corners of the world -- even Greenland, the world’s largest island of two million square kilometres and just 56,000 people off the west coast of Canada.

In the south of Greenland is the Kvanefjeld mining project, which contains large deposits of the rare earth metals used in many industrial products, including smartphones, wind turbines and fighter jets.

Rare metals are one of the few sectors that China has close to a monopoly position in the world, with nearly 70 per cent of global supply. The European Union relies on China for 98 per cent of its imported rare metals and the U.S. 80 per cent.

Last week, in a general election, the people of Greenland voted for an opposition left-wing party Inuit Ataqatigiit (IA) which has campaigned for years against the Kvanefjeld project. IA received 37 per cent of the votes cast.

Kvanefjeld is owned by Australia’s Greenland Minerals, whose largest shareholder is Shenghe Resources, one of China’s biggest producers of rare earths. This is what Greenland Minerals says about the project on its website:

“Kvanefjeld has the potential to become the most significant western world producer of rare earths. To date, over 1 billion tonnes of mineral resources have been delineated in the project area. Mineralisation is hosted by a rock-type called lujavrite, and is enriched in rare earths, uranium, and zinc. The ores are conducive to simple, cost-competitive processing. The refinery circuit will produce high-purity intermediate rare earth products, and uranium as a by-product. Rare earth products are forecast to generate over 80% of the project's revenue.”

IA has campaigned for years against the project because of the uranium it produces.

The U.S. and China are competing fiercely to gain more control over Greenland and its resources. In 2019, President Donald Trump expressed the interest to buy the island from Denmark, which has sovereignty over it. Denmark and Greenland rebuffed the idea. Then Trump provided an aid package for "sustainable" economic development, focused on developing energy and natural resources, expanding educational exchange and boosting Greenland’s fledgling tourism industry.

In 2018, state-owned China Communications Construction Company offered to build two international airports on the island, as part of a “Polar Silk Road.” It withdrew the offer in June 2019, after the United States pressured Denmark to provide funding to build the airports.

Listed on the Shanghai stock exchange, Shenghe Resources is engaged in the mining, smelting and separation, and deep processing of rare earth. Its main products are rare earth oxide, rare earth salts, rare earth metals and metal catalysts, for sale to domestic and overseas markets. China is one of the largest foreign investors in Greenland. China is also Greenland’s second largest export market, after Denmark.

China has an estimated 36 per cent of the world’s rare metals reserves. Greenland has about 25 per cent, with the Kvanefjeld mine holding 10 per cent. Exploration of the mine was one of the main issues in the election.

Mute Egede, leader of IA, said that his party was not opposed to mining extraction but opposed “dirty mining” like Kvanefjeld. He is likely to be the next Prime Minister. “Our main message is that we do not want to see more militarisation in the Arctic. Dealing with the interests of big powers such as the U.S. and China will be a balancing act,” he said.

Diplomats believe that the arrival of IA in power will be negative for China’s economic ambitions in Greenland.

The U.S. and Europe are racing to reduce their dependence on China for rare earth metals. In February, President Joe Biden, ordered a review of the vulnerability of critical supply chains, including rare earths, and the government has subsidised some miners and processing companies. He wants more mining and processing at home and in friendly countries.

In March, three North American companies announced they were setting up a supply chain for rare earths, after finding a way to produce them safely from radioactive monazite sands. Monazite contains about 50 per cent rare earth metals.

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A Hong Kong-based writer, teacher and speaker.