Greenland Is Not For Sale. But It Has Rare Earth Minerals America Wants

The southern Greenland town of Narsaq is just a speck of place. About 1,200 people live in colorful A-frame houses along a fjord, and it's a good hour's boat ride from the nearest community. While it may be remote, Narsaq has strategic importance.

The craggy hills surrounding the town are estimated to hold about a quarter of the world's rare earth minerals. With names such as cerium and lanthanum, rare earths contain key ingredients used in many of today's technologies — from smartphones to MRI machines, as well as electric cars and military jets.

A bumpy ride up the hills delivers you to the Kvanefjeld project, one of two major rare earth mineral deposits in Greenland. The rocky plateau at the base offers majestic views of this corner of the vast Arctic island. It is empty and silent out here; the mine is not yet up and running.

Across the plateau there are large piles of dull, gray rocks. When you shine an ultraviolet light on them, they explode with vivid pink and orange hues, revealing the rare earths inside the rocks.

When President Trump made the surprise suggestion in August that the U.S. should buy Greenland, which is a semi-autonomous territory of Denmark, it drew an immediate rejection from the leaders of both areas. The news caused widespread confusion and speculation about Trump's motivations. But mining experts have a hunch about one possible reason: Greenland holds rare earth minerals America wants — but which it largely relies on China to get.

Jorgen Waever Johansen, a former mining minister of Greenland, says the U.S. needs to find a way to be less reliant on China. "When you are so dependent on natural resources coming from one place then you are making yourself more vulnerable than you ought to be," he says.

The U.S. was once the world's top producer of rare earths. Now China is. China also has most of the world's capacity to process the elements. The Trump administration has labeled rare earth elements essential to national defense, and Washington is working to bolster the national industry.

In June, the U.S. signed a memorandum of understanding with Greenland to help develop its energy and mining sectors, including rare earth minerals.

Access to Greenland's resources could help break U.S. dependency on China for rare earths. But already a Chinese state-owned company has more than a 12% stake in the Kvanefjeld deposit.

Kvanefjeld is owned by Greenland Minerals, an Australian company, and China's Shenghe Resources is its largest shareholder and strategic partner.

The other major deposit in Greenland is owned by another Australian company, Tanbreez. Both firms are waiting for Greenland's government to give them the go-ahead to start mining.

Much of Greenland is buried under a sheet of ice, more than a mile thick in some places. But warming temperatures in the Arctic are making some of Greenland's riches, including gems, iron and zinc, more accessible, creating a geopolitical competition for new transportation routes and natural resources.

"We are happy that the crazy idea of buying Greenland was made into a global news thing because of all the ... attention that Greenland got as a result of it," says Johansen, now the CEO of Greenland Invest, a private investment company focusing on shipping and seafood. That's even though Greenlanders don't agree with Trump's offer. "We are not for sale, but we are open for business," Johansen says, echoing remarks by government leaders.

For years, Greenland appeared to be virtually ignored by world powers, according to Rasmus Nielsen, an associate professor of international relations at the University of Greenland. Now it receives a steady stream of officials from the U.S. Geological Survey, the State Department and the Pentagon. Nielsen says it's clear that Greenland is strategically important for the U.S.

"The last couple of years we can see a bigger focus and also involvement that the U.S. wants to have [in Greenland]," he says. "You can feel that the U.S. is really waking up to Arctic reality — partly because of Russia, partly because of China."

Russia is building up its military capability in the Arctic. China also has clear designs on the region. It calls itself a near-Arctic nation even though it's about 900 miles away. Beijing wants to extend its massive infrastructure project, the Belt and Road Initiative, to create what it calls a Polar Silk Road by developing shipping lanes and investment opportunities across the Arctic.

Greenland is bigger than Mexico with a sparse population of just 56,000 people. Its economy is heavily dependent on fishing, agriculture and subsidies from Denmark. China sees the Arctic — with its shortage of infrastructure — as ripe for investment.

"China's really tried to approach the region as a potential partner to say that we're here to help set up joint ventures, we're here to provide potential finance for new economic endeavors," says Marc Lanteigne, a political science professor at the University of Tromso in Norway. Beijing is trying to "play up the idea that we're here to help rather than here to kind of throw weight around," he says.

The University of Greenland's Nielsen agrees China has been using a "hearts and minds" kind of diplomacy in Greenland. "They have a [scientific] research collaboration with some Greenlandic research projects," he says. There was a Chinese film festival last year, and other cultural events in the capital city, Nuuk.

China's efforts to invest in Greenland have hit some hurdles. In 2016, the Danish government in Copenhagen turned down an offer by a Chinese company to buy an abandoned naval base in the south of Greenland.

The state-owned Chinese Communication Construction Company was on a short list to help build new airports in Nuuk and Ilulissat, a popular tourist destination. Currently, the airports, built during World War II, can only accommodate small prop planes.

That became a problem. The U.S. has a key military installation in northern Greenland, Thule air base. It is the United States' northernmost military base and includes a radar station that is part of a ballistic missile early warning system. University of Tromso's Lanteigne says there was concern that China could get a major foothold on transportation in the Arctic with its involvement in the Greenland airports. Denmark, a strong ally of the U.S., pulled the Chinese construction bid.

"The United States has been pushing on Denmark — not even subtly anymore — to say, 'Look, do whatever you need to do to ensure that China does not set up some kind of security presence or any kind of dual-use operation that could affect American security,'" Lanteigne says.

Greenland may be semi-autonomous, but Copenhagen has the final word when it comes to national security issues. University of Greenland professor Nielsen says many in Greenland felt Denmark had overstepped its authority.

"You often hear the argument from Greenlandic diplomats and Greenlandic politicians that they don't really understand why Denmark can have pretty close cooperation with China and Greenland is not allowed to," he says. "Because Greenland in many ways sees this is a commercial issue."

And business opportunities — as well as geopolitical competition — are likely to grow as the polar ice continues to melt and Greenland opens up.

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