Free to Read: Even Before Trump’s Greenland Dreams, the Island Proved Tough for Chinese Miners

Firms have struggled to establish a foothold to exploit the Danish territory’s vast rare earth resources in the face of local and U.S. resistance

Even before President-elect Donald Trump began to show an interest in the U.S. acquiring Greenland, the island had proved a tough bet for Chinese companies.

Mining firms, eager to exploit Greenland’s rich rare earth resources, have struggled to establish a foothold in the face of local and U.S. resistance. The island was a colony of Denmark from 1721 until 1953 but is now an autonomous territory within the kingdom.

Shenghe Resources Holding Co. Ltd.’s attempt to develop the Kvanefjeld mine has stalled, while the joint efforts of Washington and Copenhagen reportedly derailed Chinese bids for the Tanbreez mine. Located in the southern region of Greenland, the two mines are among the world’s largest critical minerals projects.

In September 2016, Shenghe acquired a 12.5% stake in Greenland Minerals Ltd. (GM), which until then had been a wholly owned subsidiary of Australia-based Energy Transition Minerals Ltd. (ETM). The deal also granted Shenghe the option to buy up to 60% of GM’s Kvanefjeld project — which contains large deposits of rare earth elements, uranium and zinc.

However, the Chinese company, which counts a government-backed mineral resources research institute as its biggest stakeholder, has so far not chosen to exercise the option. ETM has been fighting for permission to start mining since late 2021, when the newly elected Greenland government blocked the project’s development by passing a law which prohibits the prospecting, exploration and exploitation of mines with a certain concentration of uranium deposits. Kvanefjeld exceeds the threshold.

In July 2023, ETM asked an arbitration tribunal in Copenhagen to decide whether GM’s legal right to an exploitation license for the Kvanefjeld project had been violated. The Australian firm said in a statement at the time that they wanted the tribunal to determine if Greenland and Denmark are “liable to pay damages for breach of contract.”

Shenghe held an 8.93% stake in ETM as of end 2023.

To date, over 1 billion tons of mineral resources have been discovered within the Kvanefjeld project, according to ETM’s website. It says it has the “potential to become the most significant western world producer of critical rare earths.”

According to a 2023 foreign investment guide published by China’s commerce ministry, Greenland is known to have more than 70 types of minerals, including gold, diamonds, copper, uranium and iron.

The island’s northwestern and northeastern regions are rich in oil and natural gas, while its southern region contains huge rare earth deposits. However, the commercial development of these resources remains limited because of the harsh natural conditions and transposition hurdles, the guide said.

Apart from local government opposition, the U.S. has played a role in keeping Chinese mining companies out of Greenland.

Greg Barnes, CEO of Tanbreez Mining, said that U.S. officials last year lobbied the company not to sell the Tanbreez project to a Beijing-linked buyer, according to a Friday Reuters report.

The mine contains rare earth elements, zirconium, tantalum, hafnium and niobium.

In June, the controlling interest in the project was sold to U.S.-based Critical Metals Corp.

“There was a lot of pressure not to sell to China,” Reuters quoted Tony Sage, CEO of Critical Metals, as saying. Barnes accepted much less than Chinese firms offered, Sage said.

Chinese companies’ difficulties in Greenland come as the U.S. is driving to reduce China’s dominance over rare earths, which are critical to industries ranging from clean energy to consumer electronics and defense systems. China currently produces roughly 60% of the world’s rare earth elements, according to the International Energy Agency.

In June, Australia ordered several China-linked investors including Yuxiao Fund to sell their stake in Northern Minerals, on grounds of national interest.

Later that month, Australian mining company Vital Metals Ltd. said that it would sell its stockpiled rare earth materials to the Saskatchewan Research Council in an arrangement facilitated by Canada’s government, which aimed to prevent the company from selling that same stockpile to Shenghe.