It may be recalled that I had issued a report previously on November 30, 2011 regarding rare earth metals. This report is an update of that report regarding a commodity, which has assumed increasing importance for the developed world because of the widespread demand there for these minerals.
China currently enjoys a monopoly in the mining of rare earth metals from its territory amounting to around 90% of the annual rare earth metals global production. This situation gives China considerable clout vis-à-vis countries especially the industrialized countries, which require these metals to manufacture a wide array of products ranging from cell phones, wind turbines and hybrid cars etc.
Now Greenland, a thinly populated country of 57,000 persons mostly indigenous Inuit, is a dependency of Denmark, and is therefore semi-independent. It has voted to end a decades long prohibition on mining for radioactive materials, like uranium. According to Reuters, the move will not only allow the mining of uranium deposits, but also of rare earth minerals used in the above mentioned 21st century products which are currently mostly extracted by China.
Previously, Greenland and Denmark both had zero tolerance toward the mining of uranium, as increased uranium stocks could conceivably be used in manufacturing nuclear weapons. Explaining the rationale for Greenland’s vote, which the government won by a razor thin majority of 1 vote (15-14), Greenland’s Prime Minister Aleqa Hammond stated “we cannot live with unemployment and cost of living increases while our economy is at a standstill. It is therefore necessary that we eliminate zero tolerance towards uranium now.” However, the former colonial ruler, Denmark, has to concur in Greenland’s decision to mine radioactive materials. Some observers think that given Denmark’s opposition on the subject the concurrence may not be given easily.
Be that as it may, uranium which is currently only a byproduct of the rare earths minerals embedded under the ground in Greenland could become the main product if legal and economic concerns surrounding it between Denmark and Greenland can be overcome. Estimates suggest that Greenland could contain some 575 million pounds of it. According to Foreign Affairs, “the most bullish analysts predict that Greenland could become the world’s fifth-largest uranium exporter, with the potential to bring in revenues of $20 billion a year.”
Apart from the uranium issue, which could roil relations between Denmark and Greenland, the Australian owned Greenland Minerals and Energy Company is exploring rare earth deposits in Greenland. The importance to the world is the potential for Greenland to chip away at China’s monopoly of rare earth metals. It is likely that sooner rather than later, Greenland could become a viable alternative source for rare earth metals, a commodity much in demand among developed countries. Roderick McIlltree, a managing director of Greenland Minerals and Energy Ltd. estimates that mining could raise the country’s present day GDP of $2 billion by as much as 25 percent. His company has already invested $110 million in Kuannersuit a region in southern Greenland.
Last summer Chinese President Hu Jintao was the first Chinese head of state to visit Denmark, on a visit lasting more than three days. According to the Foreign Affairs article, China is interested not only in Greenland’s resources but also in its strategic position in the Arctic. Last summer China achieved observer status in the Arctic Council. China’s Sichuan Xinye Mining Investment Company has already partnered with London Mining to provide labor and capital for an iron mine near Greenland’s capital, Nuuk.
It is becoming more apparent that Greenland because of its mineral wealth is receiving considerable interest from investors. It has been reported that investors from Australia to Canada to China are flocking to the island in the words of Foreign Affairs for the “next great contest for mineral riches.”