Election in Greenland will be watched closely by global mining industry

March 31, 2021

An election in Greenland could have wide ramifications for the global supply of rare earth materials.

The April 6 parliamentary poll could decide the fate of rare earth deposits. Reuters reported that the government called the April 6 snap parliamentary poll after a junior coalition partner quit in a dispute caused by growing public concern over the potential impact of a big mining project on Greenland’s pristine environment.

U.S. Geological Survey says Greenland is home to the world’s largest undeveloped deposits of rare earth metals. International mining companies are working to win the right to mine the deposits that include neodymium, used in wind turbines, electric vehicles and combat aircraft.
However, opinion polls show the biggest party in the next parliament could be Inuit Ataqatigiit (IA), which opposes the major rare earth mining project at Kvanefjeld in southern Greenland because the site also contains radioactive materials.

If IA can form a coalition, it is possible that the project will be halted or delayed, with potential repercussions for global mining investors.
Acting Minister of Resources Vittus Qujaukitsoq has warned that if Greenland backtracks now, it could scare mining investors away, and “the credibility of the whole country is at stake.”

Such an outcome could also dent hopes of reviving Greenland’s fragile economy, built mainly on expected mining revenues.

“If we don’t attract capital and create new jobs, I’m not sure what the future looks like for our country,” Jess Berthelsen, head of Greenland’s biggest labor union SIK, told Reuters.

A self-governing territory of the Kingdom of Denmark with a gross domestic product of only around $3 billion, Greenland’s population of 56,000 mostly relies on fishing and grants from Copenhagen.

Though it has broad autonomy, the island’s government leaves foreign, monetary and defense policy to Copenhagen.

Economic experts say Greenland needs to diversify its economy, improve acute healthcare and housing problems and tackle social problems including widespread alcoholism, sexual abuse and the world’s highest suicide rate.

The Kvanefjeld project has been debated for years. Support from Prime Minister Kim Kielsen and his governing Siumut party helped license-holder Greenland Minerals gain preliminary approval for the project last year, paving the way for a public hearing.

But when Kielsen was ousted as party chief in December, new leader Erik Jensen - a candidate to become prime minister - cast doubt on support for the project.

The small Demokraatit party quit the coalition in early February as opposition to the project mounted.

If IA wins power and delays the project, “they will face the challenge of having to explain to the global mining industry that Greenland actually wants mining, and that it is only this particular project that is problematic,” said Rasmus Leander Nielsen, assistant professor at the University of Greenland.



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