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China’s Rare-Earths Quest Upends Greenland’s Government – The Wall Street Journal

china’s-rare-earths-quest-upends-greenland’s-government-–-the-wall-street-journal

China’s global quest for rare-earth supplies has delivered upheaval in the electoral landscape of an icebound island 5,000 miles away.

Greenland’s Inuit Ataqatigiit, a left-wing and environmentalist party, garnered 37% of the vote in a snap election this week that was called amid mounting controversy over plans to develop an unprecedented rare-earths mine along the island’s southern edge. The incumbent center-left party Siumut, meaning Forward, only garnered 29% of the vote after backing the mining project. Mute Egede, the 34-year-old leader of IA, which opposed the project, will now try to form a coalition government.

Members of the Inuit Ataqatigiit party celebrate following the exit polls in the Greenland election on April 6.



Photo:

emil helms/Shutterstock

Mute Egede, the leader of IA, which opposed the mining project, will now try to form a coalition government.



Photo:

christian klindt solbeck/Agence France-Presse/Getty Images

The election is a blow to a massive project that Beijing was eyeing as part of its efforts to increase its grip on the world’s rare earths—the raw materials necessary to make the batteries and magnets that power everything from cellphones and electric cars to wind turbines. Global demand for rare earths is forecast to soar as countries push to meet their commitments under the Paris Climate Accord, which President Biden has decided to rejoin.

China mines over 70% of the world’s rare earths and is responsible for 90% of the complex process to turn them into magnets, according to Adamas Intelligence, which provides research on minerals and metals. The mining project in Kvanefjeld, a mountainous area along Greenland’s jagged southern coast, was expected to produce 10% of the world’s rare earths, according to

Greenland Minerals Ltd.

, an Australia-based firm that holds the project’s exploratory license.

Narsaq in southern Greenland, which is near the site of a rare-earths mine planned by Australian-listed company Greenland Minerals.



Photo:

greenland minerals ltd/Reuters

In 2016, China’s Shenghe Resources Holding Co., one of the world’s biggest producers of rare earths materials, 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 any materials it extracts 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 locals fear could be released into the area’s pristine natural landscape and farms. The project is also forecast 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 firm was on the cusp of receiving approval from Greenland’s previous government to proceed with the mine when controversy around the project triggered the snap election. The firm has already invested 130 million Australian dollars, equivalent to $99.6 million, in the project.

“In our view it would be an extreme display of bad faith to suddenly reverse all that,” Mr. Guy said.

Thule Air Base is the U.S. Air Force’s northernmost base and houses part of a U.S. ballistic missile early-warning system.



Photo:

Ida Guldbaek Arentsen/Ritzau Scanpix/Reuters

The U.S., China and the European Union have been circling Greenland in recent years as they jockey for influence in a region undergoing transformation as a result of 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 U.S. gives the U.S. military virtually unlimited rights in Greenland at America’s northernmost base, Thule Air Base, which houses part of a U.S. ballistic missile early-warning system. In 2019, the Journal reported that then-President

Donald Trump

had privately asked advisers whether the U.S. could buy Greenland, expressing interest in its abundant resources and geopolitical importance.

At stake is Greenland’s path toward independence. The island is still a territory of Denmark, which helms the country’s defense and foreign affairs portfolio, in return for an annual block grant of roughly 3.9 billion Danish kroner, equivalent to $575 million, to help fund basic services. Declaring complete independence from Denmark would require Greenland’s mainly Inuit population of 56,000 to find another source of income to compensate for the loss of that grant.

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

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

Debates within the ruling party forced Prime Minister

Kim Kielsen

to relinquish a party chairmanship post last year as well.

Election campaign posters for the incumbent Siumut party on April 5.



Photo:

christian klindt soelbeck/Agence France-Presse/Getty Images

The election doesn’t totally foreclose the possibility of rare-earth mining in Greenland.

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

And the party isn’t opposed to the development of a second, more remote rare-earth deposit in the south of Greenland.

“It would be something that we definitely can look into,” Ms. 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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