Greenland Rare Earths: An “Absurd” Solution to China Dependence, Experts Say
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Despite a surge in investor interest, a push by Washington to secure Greenland’s rare earth deposits is largely seen as an unrealistic solution to reduce reliance on Beijing, according to industry analysts. The skepticism centers on the low quality of the deposits, the challenging Arctic climate, and the inescapable reality that any mined materials would likely require processing in China – the current dominant force in rare earth refining.
The renewed focus on Greenland’s potential followed revived discussion from former U.S. President Donald Trump regarding the acquisition of the territory, citing national security concerns related to increasing Russian and Chinese activity in the Arctic. Shares of companies with projects in Greenland experienced a significant boost, with Critical Metals Corp., developing the Tanbreez project, jumping approximately 25% on Tuesday, and Energy Transition Minerals, owner of the Kvanefjeld project, climbing over 30%.
Strategic Importance in a Changing Arctic
Greenland, home to roughly 57,000 people, holds strategic importance due to its location between the U.S. and Russia. The territory is positioned near emerging Arctic shipping lanes, which are becoming increasingly viable as melting ice reduces transit times between Asia and Europe compared to the Suez Canal. The White House views Greenland’s resources as a potential means to challenge China’s control over the rare earth supply chain, as stated by Brendan Clark, CEO of Victory Metals. A year ago, Michael Waltz, then the incoming national security adviser in the Trump administration, emphasized the importance of Greenland’s resources, stating, “This is about critical minerals. This is about natural resources.”
Initial market optimism assumed that U.S. control would lead to swift mining approvals, a sentiment echoed by Mathan Somasundaram, founder and CEO of Deep Data Analytics. However, experts caution that this enthusiasm overlooks significant obstacles in both extraction and processing. “The reality is that with weather, it is very hard to do and not very economical,” one analyst noted. “Even if you mined it, then you have to send it to China for processing… In the medium to long term, it makes nearly no difference.”
Low Grades and Logistical Challenges
At the heart of the criticism lies the quality of the ore. While Greenland possesses substantial volumes of rare earth-bearing rock, the concentration levels are significantly lower than those found in existing mines globally. Furthermore, many Greenland projects lack the high concentrations of strategically important heavy rare earths – dysprosium, terbium, and yttrium. “Although these are very large volumes of rock that are enriched in rare earths, their grades are very low,” explained John Mavrogenes, Professor of Economic Geology at the Australian National University.
The low grades translate directly into higher costs. “When the grades are so low, it means you have to move a hell of a lot of rock,” Mavrogenes said. “Imagine comparing 1% rare earths to 10% rare earths. It means 10 times the volume of rock you need to move in a place with no infrastructure, with no existing equipment, with no workforce.” Even under optimistic scenarios, large-scale production is estimated to be at least a decade away, leading one expert to call the short-term prospects “absurd.”
China’s Dominance in Processing
Even if mining were to proceed, the industry’s central bottleneck remains the processing and refining of rare earths. These materials must be separated and refined into metals or magnets, a process currently dominated by China. Beijing controls approximately 90% of global refining capacity, giving it significant leverage over supply chains critical to electric vehicles, renewable energy, and defense systems. “It is all about processing outside China,” Somasundaram emphasized. “Greenland resources do not change the dynamics, as rare earth is not that rare. It is everywhere… Anyone who can do processing at scale outside China will get a premium.”
According to Jon Hykawy, president and director of Stormcrow Capital, the U.S. already possesses substantial rare earth reserves – estimated at 1.9 million tonnes, compared to Greenland’s 1.5 million tonnes, according to the U.S. Geological Survey. “If the U.S. wants rare earths, they could simply dig them up in the continental USA.”
Political and Environmental Hurdles
Beyond the technical challenges, Victory Metals’ Clark highlighted potential environmental and political risks, noting strong opposition to mining on the Arctic island. Investors face exposure if the U.S. fails to address these concerns. Kingsley Jones of Jevons Global summarized the disconnect between political aspirations and commercial realities, stating, “Securing new rare earths in the ground, in Greenland, will have zero impact on this area of supply chain insecurity. The problem, as we see it, is that political rhetoric has far outrun commercial reality.”
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