Greenland’s Rare-Earth Minerals Make It Trump’s Treasure Island

(Bloomberg Businessweek) -- Cast an ultraviolet flashlight on the hills around Narsaq, a coastal town in southern Greenland, after dusk, and the rocks light up like embers. With a land mass larger than Mexico and a population of only about 56,000 people, Greenland is a small economy, heavily reliant on fishing, agriculture, and about $500 million of annual subsidies from Denmark, which has claimed the island as a territory since the early 18th century. The fluorescence in the hills, however, could change all that.

Greenland’s minerals, metals, gems, and potentially oil are of particular interest to those who want full independence from Denmark by 2021, the 300th anniversary of colonization. The island has won back some rights to self-rule over the years, most recently in a 2008 referendum that transferred powers including authority over mineral resources to the Parliament of Greenland. In 2013 legislators voted to overturn a ban on uranium mining that Denmark imposed in the late 1980s. Nevertheless, mineral extraction has proceeded slowly as developers look for funding and grapple with Greenland’s icy terrain.

Recent events may help accelerate that. The rare-earth elements—including neodymium, praseodymium, dysprosium, and terbium—have become a focus of the brewing U.S.-China trade dispute and are found in abundance in the area around Narsaq. Traditionally used in oil refining or to color and polish glass, rare earths have become necessary for all kinds of consumer and industrial products: smartphones, cars, solar panels, MRIs, and, crucially, defense technology. An F-35 Lightning II fighter jet needs about 920 pounds of rare earths, and an SSN-774 Virginia-class submarine requires 10 times that, according to a 2013 U.S. Congressional Research Service report.

China accounts for at least 70% of the global supply of rare earths and has been known to choke off exports to punish political foes. When Vice Premier Liu He visited a production facility in Ganzhou in May, many interpreted it as a warning to the U.S. that rare earths were fair game in the trade war.

Which brings us to the U.S. president. In August, Donald Trump said he’d been talking to advisers about taking Greenland off Denmark’s hands. Although it came as a surprise to many (Danish Prime Minister Mette Frederiksen called the discussion “absurd”), U.S. interest in the country had been intensifying for some time. Secretary of State Mike Pompeo announced plans in May for a new diplomatic outpost in Greenland, and the U.S. Geological Survey has been on the ground in recent months to assess the region’s potential for rare-earths mines.

The Kvanefjeld Plateau, about 5 miles outside Narsaq, holds about a billion tons of mineral resources, according to Australia-listed developer Greenland Minerals Ltd. But to convert any new discoveries into mining operations, the industry will need to win local support and overcome concerns about the potential damage it could do to Greenland’s unspoiled environment.

The new Kvanefjeld project is being built on the bones of an abandoned exploration shaft, part of a 30-year effort to create a uranium industry, which ended with Denmark’s ban. To mine it again will require extracting more uranium, which has stoked community concern over the handling of mining waste. (Promethium, the only really “rare” element among the rare earths, is produced by the breakdown of uranium.)

Even if the Kvanefjeld mine is brought into production, it likely won’t help the U.S.: Chinese producer Shenghe Resources Holding Co. is the developer’s largest shareholder.

 
This story is from Bloomberg Businessweek’s special issue The Elements.

To contact the editor responsible for this story: Jillian Goodman at jgoodman74@bloomberg.net, Jim Aley

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