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December 5th, 2012

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A multi-billion kroner rare earth mineral mine in Greenland could break China’s near-monopoly on the minerals and bring enormous wealth to the semi-autonomous Danish territory.

But while the mine’s operator, the Australian company Greenland Mineral and Energy (GME), is eager to get going, they can’t until a ban on uranium mining is lifted.

Uranium would be an inevitable by-product of the mine in the Kvanefjeld region, and GME has been placing pressure on Greenland’s Self-Rule government to lift the ban so it can invest an additional 15 billion kroner to get the mine started.

Lifting the ban is not simple, however. While Greenland has full jurisdiction over which resources it allows to be mined, if the mines affect the security of the Kingdom of Denmark, then the central Danish government also has a say.

As a result of the joint interest, the Greenlandic Self-Rule government and the Danish government recently agreed to establish a commission that will access the impact of lifting the ban.

Thee results of the study won’t be ready before the spring when the Self-Rule government will vote on whether to allow uranium mining. But according to GME, they already have the support of the Danish government.

“The Danish foreign minister Villy Søvndal […] has indicated that Denmark will support Greenland in pursuing uranium production,” GME's managing director Roderick McIllree wrote in a press release. 

The statement caused a stir. A science and technology website, Ingeniøren, published a story based on the press release with the headline: “Mining company: Søvndal gives green light to uranium production in Greenland.”

The problem is it wasn’t true. “The zero-tolerance principle applies to Greenland, in which the exploration of radioactive material is still forbidden,” the Foreign Ministry replied in a press release before condemning Ingeniøren for running the article.

GME did not reply to a request to comment, but McIllree’s enthusiasm could be connected to the fact that GME has so far invested over 350 million kroner into exploration and feasibility studies for the Kvanefjeld project that the company describes as “an asset of immense global strategic significance”.

China currently holds a near monopoly on rare earth minerals, which are vital for the production of components in everything from cars, to smart phones and windmills.

Providing about 20 percent of the global supply, the Kvanefjeld mine would be the largest rare earth mineral mine outside China. And strategically located between Europe and Asia, and beside deep fjords enabling the ore to be shipped directly to clients, it would be a global game changer.

Regardless of whether McIllree’s statement was actually “an attempt by the mining company to manipulate Greenlandic politicians” – the view of Greenlandic MP Sara Solvig (IA) – his statement at best over-simplifies the complexity of abolishing the uranium ban that would allow the mine to go ahead.

Firstly, while it is up to Greenland whether to mine for uranium, the Kingdom of Denmark has responsibilities and obligations under international treaties and agreements concerning uranium. It is currently uncertain how allowing uranium mining would affect these responsibilities, which is why the two governments have established the commission to map these international obligations.

According to an official at the Foreign Ministry, the debate about allowing uranium mining ought to be had after the commission has presented their findings.

“Greenland’s parliament will need to decide what it wants to do with its zero-tolerance policy on uranium. And we are awaiting this decision. But in view of the decision it has to take, it needs to be aware of the international constraints that uranium mining would involve,” the official stated.

Secondly, mines in Greenland could affect the security of the Kingdom of Denmark. For example, the buyers of uranium need to be carefully chosen, and a large rare earth mineral mine could put Denmark on a collision course with China by breaking its near monopoly.

This means that the central Danish government actually retains a say in whether the mines go ahead.

“Greenland is responsible for decisions regarding the extraction of their raw materials, except when doing so would affect the foreign and security policies of the Kingdom of Denmark, in which case we have a joint responsibility,” the official said.

There are further issues. Even if Greenland and Denmark decide to allow uranium mining, researchers at the Danish Institute for International Studies (DIIS) point out that Greenland does not have the necessary infrastructure and bureaucracy to manage the radioactive material.

“Greenland currently does not have the necessary official bodies that can regulate exports that satisfy national and international commitments to nuclear security,” DIIS researchers France Bourgouin and Cindy Vestergaard stated in an article for Jyllands-Posten. “Regardless of whether uranium is permitted as a by-product or not, a supervisory body, which abides by international commitments that are observed by both Denmark and Greenland, is needed before mining for uranium can occur.”

The very fact that GME was allowed in 2010 to conduct exploratory studies of minerals which included uranium suggests that there is some political support for allowing uranium mining. As it stands now, the current governing party IA opposes it, though opposition party Siumut is strongly in favour.

“We need to move on from the zero-tolerance policy,” MP Karl Lyberth (Siumut) told Sermitsiaq newspaper. “Siumut thinks it’s necessary to allow for the mining of minerals that contain uranium.”

McIllree will have to wait for the spring to find out whether the mine gets the green light. But given the complexity of handling the uranium, he may have to wait even longer before his company is digging up Greenland’s mineral wealth.