Rare Earth Exchanges

What’s Greenland’s Role in Commodities Markets?

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Highlights

  • Greenland’s rare earth resources and mineral potential attract global powers like the US, EU, and China amid complex political and environmental considerations.
  • The Critical Raw Materials Act (CRMA) aims to reduce EU dependency on Chinese mineral imports while navigating environmental and extraction challenges.
  • Geopolitical interests, including potential US involvement and Danish territorial dynamics, significantly influence Greenland’s emerging role in global commodity markets.

Benjamin Koch’s (opens in a new tab) paper (opens in a new tab), “Greenland’s Role in the Commodities Market: Tariff Dynamics, Energy Resources, and Inflationary Pressures in 2025,” explores how Greenland’s vast energy and mineral resources are becoming increasingly important in the global market.

The author, employed at the European Central Bank, focuses on how changes in tariffs affect Greenland’s exports, especially during times of global inflation and shifting geopolitical priorities. It highlights Greenland’s unique political and economic status as a territory of Denmark, which adds complexity to trade agreements and legal matters. The paper emphasizes Greenland’s potential to influence global supply chains for essential commodities like rare earth elements, fossil fuels, and renewable energy materials. It also discusses how tariff policies can lead to price fluctuations, increase inflation in countries that import these resources, and affect Greenland’s ability to attract foreign investment.

Additionally, the study examines how governments, multinational companies, and local stakeholders make decisions amid regulatory uncertainties, considering factors like risk aversion and strategic adaptation. Koch calls for policy measures based on international law and economic reasoning to reduce inflation risks while promoting sustainable development and fair trade practices.

Of course, the topic of Danish territory is highly relevant given incoming American Donald Trump’s overtures to reestablish a geopolitical stake in the land to access critical minerals and the Arctic sea lanes.

The land’s vast reserves of rare earth elements have attracted significant interest from global powers, notably most recently the United States, the European Union (EU), and China, due to their essential role in modern technologies and green energy solutions. The 2021 electoral victory of anti-mining parties in Greenland led to a ban on uranium mining, effectively halting major rare earth extraction projects like the Kvanefjeld mine.

In response to its reliance on Chinese imports for these critical materials, the EU introduced the Critical Raw Materials Act (CRMA). This legislation aims to boost domestic extraction, processing, and recycling of essential minerals, set annual benchmarks, and limit dependence on any single non-EU country to 65% of the Union’s annual consumption for each material.

Yet despite the CRMA’s incentives, Greenland’s environmental concerns, particularly regarding the potential radioactive byproducts of rare earth mining, persist. The CRMA emphasizes fast-tracking strategic projects, which may compromise thorough environmental assessments, leaving Greenland’s apprehensions unaddressed.

Even if Greenland resumed mining, the EU’s quest to reduce dependency on Chinese rare earths would still face challenges. Currently, European mines supply only about 30% of the EU’s critical raw material needs. Significant dependency reduction would require successful partnerships with third countries and a comprehensive approach to the entire supply chain, including processing and manufacturing capabilities. Now, of course, this could be a wild card with the U.S. and the Trump presidency, which are talking far more aggressively about accessing the Danish holding.

In summary, while Greenland’s rare earth resources present a potential avenue for both the EU and the U.S. to diversify their supply, environmental concerns and the complexities of developing a self-sufficient supply chain—that vertical integration we write about in Rare Earth Exchang_es—mean that Greenland alone cannot resolve the EU’s dependency on Chinese rare earths.

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