Countries around the world are standing by with baskets of cash to pour into Greenland’s mining industry. In the wake of Chinese president Hu Jintao’s recent trip to Denmark, China has 13 billion kroner burning a hole in its pocket to invest in an iron mine near the capital city, Nuuk. A South Korean group reportedly wants to pump 15 billion kroner into the Kvanefield rare earth mine in southern Greenland, making it the single biggest investment in the country’s history.

But any decision to start mining comes with a dilemma: either extracting them will only be possible with uranium as a by-product, and Greenland’s government has a zero-tolerance policy for any mining that involves uranium or kicks up radioactive dust.

In 2010, Greenland’s government allowed mining companies to explore the prospects for potential uranium mining. The first company granted permission to include radioactive elements in its exploration phase was Greenland Minerals and Energy (GME), an Australia-based company that said that due to the high content of uranium it could not complete any mining feasibility studies without violating the zero-tolerance policy.

Greenland continues to uphold its ban on mining radioactive elements, but the pressure is mounting to change this to allow for uranium by-products if other minerals are the primary targets.

“I hope we can soon change the zero-tolerance policy and produce the uranium that we have rather than being an open-air Arctic museum,” Doris Jakobsen, an MP for opposition party Siumut told Information newspaper. Jakobsen stressed that Greenland’s uranium would not be used to make weapons.

With Greenland sitting on some of the world’s largest uranium reserves and the available world supply already falling short of demand, uranium could be a huge cash generator for Greenland’s struggling economy.

But the decision to mine uranium as a by-product has a host of domestic and international considerations.

Greenland’s leading political party, the left-leaning IA, continued to state its resistance to mining uranium while recognising that the ban may soon be repealed.

“If one is totally realistic and considers the parliamentary situation, it might be difficult to continue to maintain a zero-tolerance policy,” Sara Olsvig, one of Greenland’s representatives in the Danish parliament, told Information. “But the fact that we may soon abolish the ban means that we should also build the institutional knowledge that is necessary.”

If Greenland does decide to become a major exporter of uranium, the decision will have geopolitical implications far beyond the borders of both Greenland and Denmark.

While Greenland’s three-year young Self-Rule government has domain over the country’s natural resources, courts and corporate law, Denmark still has responsibility for its foreign affairs and defence.

Cindy Vestergaard, from the Danish Institute for International Studies (DIIS), said the debate over uranium will be a test of Greenland’s self-rule.

“Both Greenland and Denmark have so far had a wait-and-see approach to exporting uranium. Greenland is responsible for its own uranium exports but does not have the expertise and resources for export control if the country becomes one of world’s top 10 suppliers,” Vestergaard told Information.

In a report for DIIS, Vestergaard said that crucial questions remain as to whether future Greenlandic uranium exports will be used in peaceful applications, or inadvertently wind up as part of a nuclear weapons programme. She said that uranium is hard to track once it is available on the open market and called on elected officials in Nuuk and Copenhagen to think hard before lifting the ban.

“These discussions must aim at maximising the degree of regulation: the worst-case scenario should not be that Greenland’s uranium be diverted or misused for weapons purposes,” she wrote.

Per Stig Møller, a former foreign minister and Greenlandic spokesman for the Konservative party, agreed with Vestergaard:

“We would probably not think it’s a good idea to give nuclear material to Iran for example,” he told Berlingske newspaper.

Vestergaard called the world uranium market “one of the most opaque and unregulated in the world”.

“Nuclear states can do whatever they want, and that must always be in the mind of those who export uranium,” she told Information. 

“If you ask the Australians if any of the uranium they have sent to the US in the last 30 years has been used in weapons they reply, ‘We are as sure as we can be that it has not’.”