Highlights
- Greenland’s rare earth elements deposits represent a critical geopolitical and economic asset of significant global interest.
- The island’s strategic location and resources have sparked international competition, particularly between the US and China.
- Greenland is progressively moving towards potential independence while balancing complex international economic and political relationships.
Greenland, the world’s largest island, has garnered significant attention due to its strategic location in the Arctic and its abundant natural resources, particularly rare earth elements (REEs). These elements are crucial for modern technologies, including electronics, renewable energy systems, and defense applications. Perhaps the driving force for incoming POTUS Trump’s interest is the opening sea in the Arctic, meaning it has become an increasingly geopolitically important part of the world. China, for example, has attempted several deals to land in and secure connectivity in Greenland, only for the U.S. to thwart such deals.
Rare Earth Elements in Greenland
Greenland is endowed with several large REE deposits, notably the Kvanefjeld (Kuannersuit) project (opens in a new tab), which is claimed to be one of the world’s largest deposits of rare-earth oxides. The primary REEs found in Greenland include neodymium, praseodymium, dysprosium, and terbium. These elements are essential for manufacturing high-strength permanent magnets used in wind turbines and electric vehicles.
Geopolitical Significance
The Arctic region’s increasing accessibility due to melting ice has heightened geopolitical interest. Greenland’s location offers strategic military advantages, and its resources present economic opportunities. The United States has historically shown interest in Greenland; for instance, in 1946, the U.S. offered to purchase the island from Denmark, which was declined. However, the U.S. used the massive island for bases both in World War II and during the Cold War, given its proximity to the then USSR, now, of course, Russia.
Recent Developments
In recent years, there has been renewed interest from the U.S. in Greenland. President-elect Donald Trump has expressed a desire to acquire Greenland, citing its strategic importance and resource wealth. This proposition has been met with firm resistance from both Denmark and Greenland. Danish Prime Minister Mette Frederiksen stated that Greenland is not for sale, emphasizing the island’s autonomy.
Yet the indigenous people of Greenland have expressed interest in both independence and making money via the deal making pathway. Could Trump’s move further nudge the people to make a move toward America? What is the implication for Denmark, always a U.S. ally?
Greenland’s Path to Independence
Greenland has been moving towards greater autonomy from Denmark. In 2009, it gained self-rule, and in 2023, Greenland’s government presented its first draft constitution, signaling a step towards potential independence.
However, economic challenges, including reliance on Danish subsidies, pose obstacles to full independence. Over the last decade or so, the U.S., via various agency channels, has started to make various investments and/or grants.
While Greenland’s vast resources and strategic position make it a focal point of international interest, any attempts by external nations to acquire the territory face significant political and ethical challenges. Greenland’s future will likely be determined by its people’s aspirations for independence and their ability to manage and benefit from their natural resources.
Steep, Costly Path for POTUS and USA
Acquiring Greenland’s vast REE reserves would mark only the initial phase in the United States’ pursuit of independence from China’s dominance in this sector. China’s supremacy extends beyond mere resource extraction; it encompasses a comprehensive command over the entire REE supply chain. This includes advanced processing and refining capabilities, as well as the manufacturing of high-value products like neodymium-iron-boron magnets, which are essential for various technologies.
Establishing a comparable infrastructure in the U.S. would necessitate substantial investment, technological development, and time. Rare Earth Exchanges has suggested that this investment over time could go into hundreds of billions and over a decade, meaning that in the short to intermediate run, there is a high degree of risk associated with supply chain resilience.
For instance, Japan’s experience post-2011, where significant financial backing and years of development were required to achieve a degree of supply chain independence, underscores the protracted nature of such endeavors.
Therefore, even with access to Greenland’s REE deposits, the U.S. would face a decade or more of intensive effort to build the requisite processing, refining, and manufacturing capabilities to diminish its reliance on China’s well-entrenched rare earth industry. Note this would likely have to be accomplished via a network of allied countries, and substantial investment, undoubtedly with the backing of taxpaying voters, would be required across multiple nations in such a network.
Daniel
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