As the global race for green resources intensifies, the United States and the European Union should turn their attention to Greenland, the large, resource-rich island in the North Atlantic. Instead of attempting to acquire the territory, as former US President Donald Trump famously proposed in 2019, the true value lies in developing Greenland’s vast mineral resources. By working together, the US and EU can provide the necessary expertise and investments to unlock Greenland’s potential, crucial for the clean energy transition.
Greenland’s untapped potential
Greenland, home to only 57,000 people, was a Danish colony until it gained home rule in 1979 and further autonomy through the Self-Government Act of 2009. Today, Greenland controls its subsoil resources, including the exploration and exploitation of minerals. The island is rich in rare earth elements, graphite and lithium—essential components for electric vehicles, wind turbines, and transmission lines.
Currently, China dominates the global market for these critical minerals. In 2021, China produced 98% of the world’s gallium, 82% of natural graphite, and 60% of processed rare earth elements. This concentration of supply creates vulnerabilities for the US and EU, both of which rely heavily on Chinese imports. For instance, the US sources 72% of its rare earth compounds and 42% of its graphite from China, while the EU relies on China for 100% of its heavy rare earth supply.
The need for diversification
Recognizing the strategic risks of this reliance, the G7 allies have begun to pursue “friendshoring,” a policy that encourages mineral extraction and processing in politically aligned countries. The Biden administration has led efforts to secure supply chains for the energy transition, forming the Minerals Security Partnership (MSP) in 2022, a coalition of 14 like-minded countries. However, the demand for critical minerals continues to outpace these efforts.
Greenland’s potential to meet this demand is immense. The island’s 6 million tons of known graphite resources could exceed the projected global demand for electric vehicle batteries by 2040. Additionally, Greenland may hold one of the world’s largest reserves of rare earth elements, potentially rivaling China’s dominance.
Challenges and opportunities
Despite its resource wealth, Greenland faces significant challenges in developing its mining industry. The island’s remote location, harsh climate, and lack of infrastructure make mining difficult and expensive. Additionally, Greenland’s limited workforce necessitates reliance on foreign labor. Politically, Greenland’s government supports mining but has imposed restrictions, such as a 2021 ban on uranium exploitation, which complicates the extraction of rare earth elements often found alongside uranium.
These challenges, however, can be addressed through thoughtful government coordination and strategic investments. Greenland offers a stable political environment, low investment risks, and a pro-mining government—attributes that make it a more attractive partner than many other resource-rich nations.
The role of China and Western response
China has shown interest in Greenland as part of its Polar Silk Road initiative. In response, the EU signed a Memorandum of Understanding with Greenland in November 2023, aiming to secure a strategic minerals partnership. The EU also launched a €22.5 million Green Growth program in March 2024 to further its clean energy initiatives and counter Chinese influence.
The US, under both the Trump and Biden administrations, has taken steps to engage with Greenland. In 2020, the US opened a consulate in Nuuk, followed by the launch of a two-year Enterprise-Driven Growth Initiative (EDGI) in 2022 to support Greenland’s commercial development. However, these efforts have not yet attracted significant private investment, with no US-owned companies holding mining licenses in Greenland as of 2021.
A new strategic partnership
As EDGI’s project lifespan ends in June 2024, there is an opportunity to forge a new kind of partnership focused on Greenland’s mining sector. This partnership should aim to lower barriers and attract private investment from US and allied companies. Three key areas require attention: resource mapping, early investment support, and labor development.
The US Geological Survey, NASA, and institutions like the Colorado School of Mines could provide technical assistance to expand Greenland’s mineral resource mapping. Programs like the Earth Mapping Resources Initiative could offer precise, low-impact assessments of subsoil resources.
To de-risk new ventures, the US Export-Import Bank (EXIM) should extend its financing packages to more firms interested in Greenland. This could include loans, guarantees, and insurance, similar to the support given to the Citronen Zinc mine in northern Greenland. The European Investment Bank could also play a role by offering investment partnerships, following its model of cooperation with Rwanda on raw materials.
Finally, addressing Greenland’s labor challenges is crucial. The US Department of Labor could collaborate with Greenland’s government to develop a strategy that ensures the local workforce benefits from the mining industry’s growth while also accommodating the need for foreign workers.
Conclusion
A direct purchase of Greenland, as once proposed, is off the table. However, a strategic mineral partnership between the US, EU, and Greenland could unlock the island’s vast resources, securing a stable supply of critical minerals for the clean energy transition. With careful coordination and targeted investments, Greenland could become a key player in the global effort to diversify supply chains and reduce dependency on Chinese imports. As the US and EU seek to mitigate supply chain vulnerabilities, both stand to gain from deeper collaboration with Greenland in developing its mineral wealth.
