Menu
Account
China Steps up Its Mining Interests in Greenland
Image Credit: CC0 image via Pixabay

China Steps up Its Mining Interests in Greenland

 
 

A major component of China’s expanding interests in the Arctic, as outlined in Beijing’s January 2018 White Paper on the region, has been the development of joint ventures on resource extraction, including fossil fuels and raw materials. While Russia has been receiving the lion’s share of attention in the area of Chinese resource diplomacy in the Arctic, with the China-supported Yamal liquefied natural gas project being a major example, Greenland is emerging as another key component of Beijing’s emerging ‘Ice Silk Road.’

As the Greenland Ice Sheet continues to erode due to regional climate change (a paper published last month by the U.S. Proceedings of the National Academy of Science concluded that ice loss on the island has been accelerating significantly since the start of this century), more parts of Greenland’s coastal regions are opening up to potential mining projects. The island is seen as an emerging source of base and precious metals as well as gemstones, uranium, and rare earth elements (REEs). Given ongoing demand for these resources in China, Chinese firms have increased their visibility in Greenland. At present, China represents over 90 percent of global rare earth extraction, but Greenland has the possibility of becoming another major hub for REE mining given estimated supplies.

Chinese investment does present economic opportunities for Greenland, which has been seeking to diversify its economy away from a concentration on seafood, as well as the annual stipend given to the Greenland government by Denmark. But there may also be considerable political effects related to growing unease in Copenhagen —and the United States, which maintains a Air Force base at Thule — regarding expanded Chinese economic diplomacy on the island.

Enjoying this article? Click here to subscribe for full access. Just $5 a month.

The most visible Chinese mining joint venture in Greenland thus far has been the Kvanefjeld Project in southern Greenland, namely a planned uranium and REE (neodymium, dysprosium, and yttrium, among others) mine, overseen by Australia-based Greenland Minerals, in partnership with China’s Shenghe Resources, which specializes in REE extraction. In 2016, the two parties agreed to give the Chinese firm a 12.5 percent stake in the project. In August of last year, Greenland Minerals completed a memorandum of understanding with Shenghe, which would see the latter firm take the lead in the processing and marketing of material extracted from the Kvanefjeld site.

In January this year, further steps were taken toward commencing mining operations when it was announced that Shenghe would be partnering with another Chinese firm, China National Nuclear Corporation, to enhance the procedure for separating REEs from uranium and thorium deposits at the Kvanefjeld site. The partnership would create a separate subsidiary, China Nuclear Hua Sheng Mining, which would be authorized to transfer REEs, with uranium and thorium, to China for the necessary processing. The move prompted questions (in Danish) by the Greenland government’s main opposition party, Inuit Ataqatigiit (IA), as to the specifics of the new deal, possible environmental impacts of extracting uranium and thorium, and to what degree Chinese interests will participate in that process.

It can commonly take up to several years before exploitation permission issues for large-scale mining projects in Greenland, not to mention many other potential technical and logistical hurdles before and during operations, can be resolved. Despite these obstacles, the question that remains is how further climate change in the Arctic, along with domestic politics in Greenland and the island’s evolving international relationships, such as with Denmark and the United States, will shape future Chinese mining investment on the island.

The possibility of uranium mining in Greenland was first raised when the island’s parliament reversed a longstanding “zero tolerance” policy toward uranium extraction in 2013, clearing the way for the mining of REEs and uranium, (which co-exist at the Kvanefjeld site). That decision, however, touched off a prolonged legal battle between Copenhagen and Nuuk, which was ultimately resolved in early 2016, allowing the Kvanefjeld project to go forward. At the core of the dispute has been the political relationship between Denmark and Greenland, as the latter is part of the Kingdom of Denmark, but with substantial political autonomy. The 2009 Self-Government Act, which specified the powers of the Greenland government, including over economic affairs, left Denmark with oversight of the island’s defense and foreign affairs.

The issue of mining in Greenland, and notably Chinese investment in that sector, has led to deliberations over what does and does not constitute a security issue, as well as whether Chinese economic interests in Greenland may play a role in ongoing debates over future Greenlandic independence. Another example of Denmark’s “securitization” of Greenland economic issues was the controversy and political outcry last year over the possibility of Chinese investment in Greenland airport expansion projects, which also prompted intervention from Copenhagen to waylay the Chinese bid.

In addition to the Kvanefjeld site, a Chinese firm is also part of a partnership with the Australian firm Ironbark for a zinc mining project at Citronen Fjord in Greenland’s far north, and a Hong Kong company currently owns the mining rights for an iron deposit at Isua. In the area of fossil fuels, two Chinese energy firms, China National Petroleum Corp. (CNPC) and China National Offshore Oil Corp. (CNOOC) expressed interest in bidding for onshore oil and gas blocks opening up for surveys in western Greenland in 2021.

As a recent policy brief from the Danish Institute for International Studies explained, the expanded role of Greenland in China’s economic interests in the Arctic should prompt not only greater scrutiny from the governments of both Greenland and Denmark, but also discussions between the two governments about which types of foreign investment fall under what areas of the 2009 Self-Rule agreement. Climate change has made Greenland an emerging actor for foreign mining interests, and Chinese firms have wasted little time in putting themselves at the forefront of what could be a revolution in extractive industries on the island. The Kvanefjeld project may be the most visible example of China’s economic presence in Greenland, but far from the only one. The question is how Chinese mining investment in Greenland might spill over into the political and security debates surrounding Greenland’s political future.

Marc Lanteigne is an Associate Professor of Political Science at the University of Tromsø: The Arctic University of Norway, and is the editor of Over the Circle, a news blog dedicated to Arctic political affairs. Mingming Shi is a project manager for the journal Icelandic Times, and is a Master’s student in West Nordic Studies at the University of Iceland, Reykjavík.

Newsletter
Sign up for our weekly newsletter
The Diplomat Brief