Greenland to push ahead with REE projects

OREANDA-NEWS. Greenland's new government led by the social democratic Siumut party will push ahead with plans to develop the country's mining industry, including rare earth projects.

But growth in the sector is likely to be much slower than expected, owing to factors beyond Greenland's control, including China's removal of export quotas on rare earth elements (REEs) at the start of this year.

The Siumut party won a snap election in 2014 following a scandal over party leader Aleqa Hammond's alleged misuse of public funds, which led to her resignation.

Siumut received 34.3pc of the vote and formed a coalition government with two smaller parties. The main opposition party, Inuit Ataqatigiit (IA), won just over 33pc of the vote.

All major political parties in Greenland support the development of the mining industry, but Siumut and IA are divided over uranium mining. Siumut is in favour of uranium mining, while IA is against it on the grounds that it could damage Greenland's fragile environment.

Following the 2014 election, Greenland is likely to push ahead with large-scale mining and energy projects but the pace of development would probably be slower than the government had expected owing to declines in iron ore prices and its overly optimistic expectations of REE demand.

"It appears increasingly unlikely that any of the large-scale mining and energy projects that Greenland has been counting on will get off the ground in the near term," Washington-based think-tank the Brookings Institution said.

China's decision to drop REE export quotas this year could spell bad news for Greenland's plans to develop mining projects. Investment in REE projects outside China has been driven by expectations of limited supply from China, where quotas have restricted production capacity and exports. But the removal of China's export quotas may reduce interest in international rare earth developments, including Greenland's two projects, Kvanefjeld and Kringlerne.

While the Greenland government supports the development of uranium mining, security concerns remain, with the Danish government having a decisive say in matters concerning the island's national security.

This is important for the Kvanefjeld REE project, which contains high levels of uranium, but it may also affect the Kringlerne rare earths project that does not contain uranium, as Denmark has reserved the right to reject REE projects even when uranium content is not an issue.