What Greenland’s Resources Mean for the EU

Nuuk (dpa) – US President Donald Trump has justified his interest in acquiring Greenland with national security. However, observers assume that there is also an economic reason behind his desires: Greenland’s vast reserves of critical raw materials. How important such mineral resources are to Trump is evidenced by his courting of resources in Ukraine. But for the EU, Greenland’s resources are also important.

What are critical raw materials and what are they good for?

Critical raw materials (CRM) are materials with great economic importance and at the same time high supply risk. Among them are the much-noted rare earth elements (REE), which consist of 17 metals, summarized as nine heavy and eight light rare earths. They are found in everyday items such as smartphones, laptops, and televisions. Depending on the design, these electronic devices require, among others, yttrium, praseodymium, terbium, and dysprosium.

Rare earth metals are fundamentally crucial for the green transition: They are used, among other things, in electric cars and wind turbines. These products require strong permanent magnets, which in the case of electric cars can contain up to several kilograms of neodymium and praseodymium, depending on the motor size.

What makes them interesting for the EU and Trump’s USA?

Germany has a capable industry but very few critical raw materials. German companies, therefore, rely as much on foreign deliveries as companies in other EU countries. This is especially evident with rare earths: On the one hand, the EU is a global market leader in manufacturing car engines and wind turbines; on the other hand, it meets its demand for rare earth magnets almost exclusively with imports from China, which is the absolute global leader in that area. 

Such dependency makes the EU vulnerable to geopolitical tensions: It would face a considerable problem if China were to reduce or even stop deliveries for political or strategic reasons, perhaps due to a customs dispute. Especially considering the EU climate policy and digitization, this would be disastrous.

Trump is known to care little about the climate, but very much about big money and containing any Chinese leadership role – and this is where the resource-rich Greenland, part of the Kingdom of Denmark, comes into play. “I think Trump is more interested in the rare earths than in having military presence in Greenland,” estimates former Greenlandic Finance Minister Maliina Abelsen, who is now chair of the board of directors at the fishing company Royal Greenland.

What do Greenland’s mineral resources mean for the EU? 

The EU, too, has long set its sights on these resources. Nearly a year ago, Commission President Ursula von der Leyen opened an EU office in the capital Nuuk and signed two cooperation agreements totaling 94 million euros – part of which is to be invested in value chains for energy and critical raw materials.

An agreement has already been made at the end of 2023 to position Greenland as a strategic supplier of resources for ecological change in Europe. It is not only about rare earths but also copper, graphite, and lithium: The EU has identified 34 critical raw materials necessary for the green and digital transition – and 23 of them are found in Greenland, according to mineral researcher Jakob Kløve Keiding from the Geological Survey of Denmark and Greenland (Geus).

The potential in Greenland is deemed particularly high for several of these. “Some of Greenland’s rare earth deposits are among the largest in the world,” says Keiding.

How could Greenland benefit?

That these mineral resources have immense value is obvious. How high this exactly is, is difficult to estimate, says Keiding. Only this much: “They are worth nothing as long as they remain in the ground.”

This brings Trump’s USA and the EU into play again. The mere extraction of raw materials does not yield big money, but rather the later stages in the value chain – and the know-how for this exists mainly in China, says Keiding. Both in the USA and the EU, efforts are being made to catch up. “It has been realized that China practically has a monopoly and controls the market.”

Greenland is currently largely dependent on fishing and a Danish financial subsidy of over 500 million euros per year. The income from mining licenses and taxes alone could provide a new economic pillar for the 57,000-inhabitant island. “98 percent of our exports currently come from fishing,” says ex-minister Abelsen. The mineral sector, like tourism, could contribute to a more diversified economy – something Greenland, in turn, needs for a much-discussed possible independence from Denmark.

Are there downsides to mining?

Yes, in the form of risks to the sensitive Arctic environment, as well as to local people due to radioactive by-products. In Greenland, these downsides even decided the last parliamentary election in 2021: At that time, there was public debate over an Australian mining project for rare earths and uranium in southern Greenland. The left-wing party IA won the election by positioning itself against the project. Six months later, uranium mining was banned.

Another problem is the harsh Arctic conditions and high operating costs. “We are a remote location, which is why it is so expensive to mine minerals in Greenland. Therefore, we are often the last option considered,” says Abelsen. “But as we run out of rare earths, it becomes increasingly attractive to look back towards Greenland.” (February 25)