The Fractured Power
How to Overcome Tribalism
Benedikte Vahl, a retired schoolteacher, has just one hope for Narsaq, her hometown of colorful wooden houses on a fjord in southern Greenland: that a mine will open soon in nearby Kuannersuit, bringing badly needed jobs and investment. Times are so tough that, over the past five years, more than 600 of her neighbors have left an already small municipality of 7,000. Mining might be the last hope. “I see no other solution,” Vahl says.
Kuannersuit has long been of interest to geologists. It is filled with pretty stones such as the pink tugtupite (“reindeer blood” in Greenlandic) and is home to more than 200 rare minerals, 15 of which cannot be found anywhere else in the world. But these days, all eyes are on the region’s so-called rare earth elements -- raw materials essential to technology products such as cell phones, wind turbines, and hybrid cars. For years, China has held a near monopoly on the global supply, controlling an 85 percent share. (That figure is down from a high of 95 percent a year ago, thanks to U.S. and Australian efforts to start mining their own rare earths.) Kuannersuit contains as much as 10 million tons of such metals and could potentially produce 40,000 tons a year. In total, Greenland could potentially produce upward of 20 to 25 percent of the world's supply.
Global power brokers once dismissed Greenland as a white blot on the world map. No longer: Investors from Australia to Canada to China are flocking to the island in the next great contest for mineral riches. And there aren’t many people to stand in their way. Greenland is one of the least densely populated parts of the planet. Its 57,000 inhabitants -- 90 percent are indigenous Greenlandic Inuit -- live scattered across an ice-covered expanse roughly a third the size of Australia.
Although Greenlanders won the right to govern their own domestic affairs in 2009, they have yet to realize their aspirations for full independence. Denmark still provides for Greenland’s defense, and the state church and monarchy have retained their official roles. But the greatest source of dependence has always been economic: Greenland still uses the Danish kroner as its currency, and it relies on Danish markets to absorb over 60 percent of its exports and provide almost 65 percent of its imports. To achieve full independence, in other words, Greenland must find new trading partners and have something to trade. Greenland lacks the infrastructure, population, and educational system to otherwise develop its economy; natural resources offer the best chance of progress.
Historically, though, three barriers have stood in the way of large-scale mining. First, until recently, a thick ice sheet covered the mineral-rich areas of the north. Second, until 2009, the Kingdom of Denmark, which opposed mining for uranium, exercised near-total control over Greenland’s affairs. Third, a long-standing ban on mining uranium effectively prevented any kind of rare earths extraction in places like Kuannersuit, where lucrative rare earths are tied up with plentiful uranium deposits.
But now the ice is melting and Greenland governs itself. The laws are changing as well. In elections here last March, the ban was the dominant campaign issue. The social democratic Siumut (Forward) Party won 43 percent of the vote on promises to lift the ban and negotiate large royalties from international mining companies. This week, Prime Minister Aleqa Hammond took a crucial first step in making good on that promise, overturning the law in parliament with a single 15–14 vote. Her government has also signed a 30-year licensing agreement with London Mining to extract iron ore -- the largest project of its kind in Greenland’s history.
The victory did not come easily. On the eve of the vote, Hammond’s government had to sack one of its two coalition partners, the leftist nationalist Partii Inuit (People’s Party), because it wouldn’t support the repeal. With Hammond triumphant, Benedikte Vahl may finally see her hopes for a mine in Kuannersuit realized.
What hasn’t changed in recent years is the fact that mining around radioactive material poses serious risks, both to Greenland’s environment and to international security. And Greenland’s opposition party, Inuit Ataqatigiit (Community for the People), has channeled many Greenlanders’ fears and hesitations, particularly through its citizens’ meetings in Nuuk. With only 16,000 inhabitants, Greenland’s capital isn’t exactly Copenhagen or Washington, but by Greenland standards, Nuuk is the rare Arctic metropolis. At the foot of the Sermitsiaq mountain, a 12-story apartment complex and a new shopping mall sit side by side with brightly colored wooden houses from the eighteenth century. Copenhagen sends its public transportation buses to retire here, where 4,000 cars share 60 miles of paved road. Not everyone appears to be ready for the radical changes that mining would bring.
At a recent citizens’ meeting, held in a wooden hall filled with murals depicting Greenlandic landscapes, tensions were high. Relieved of heavy winter jackets, hats, scarves, and mittens, the participants sipped one-dollar coffee and nibbled on homemade cake. In between their emotional speeches in passionate Greenlandic, with simultaneous interpretation for Danish speakers, the moderator had to remind those assembled to remain calm and respectful. No one seemed to be against mining to strengthen the economy, but many worried about the prospects of mining uranium. Almost everyone asked for more time before repealing the country’s zero tolerance policy. And the party suggested that the public should have a chance to decide on the issue by popular referendum.
As it stands, uranium is only a byproduct of the rare earths mining. But it could become the main product if the economics worked out. No one knows exactly how much uranium Greenland has, but estimates suggest that Kuannersuit could contain some 575 million pounds of it. The most bullish analysts predict that Greenland could become the world’s fifth-largest uranium exporter, with the potential to bring in revenues of $20 billion a year.
But if uranium isn’t mined carefully, it can poison land and water for generations. The Chinese government, for example, has reportedly begun spending billions of dollars to repair the environmental damage of nearly two decades of unregulated rare earth mining and refining; runoff has destroyed rice fields and streams, cancer rates have skyrocketed, entire villages have had to be resettled, and a toxic soup of chemicals and radioactive waste is slowly seeping toward the Yellow River. In fact, one of the main reasons China has been able to dominate the rare earths market has been its disregard for environmentally devastating extraction processes. More than any other mineral, uranium brings to the fore highly charged emotions, reviving Cold War–era fears about nuclear disasters or the more recent memory of the 2011 Fukushima disaster.
Uranium extraction also has real security implications. Although Greenland has the power to control its own underground resources, Denmark has retained responsibility for the country’s foreign policy, security, and defense. Since uranium can be used for nuclear weapons, Danish Secretary of State Villy Søvndal has made clear that Denmark will participate in all Greenlandic dealings with uranium. Still, although the European Union has strict laws on mining for uranium, Greenland -- unlike Denmark -- isn’t part of the EU. Creating a legal framework for exporting uranium from Greenland will still require a lot of lawyers, says Cindy Vestergaard, a Danish expert on uranium policies. She estimates that such a framework would require five to ten years of planning. Yet it could be done; there is no reason that Greenland couldn’t live up to the standards set by uranium-exporting neighbors such as Canada, Norway, and Sweden. So far, firms interested in bidding on mining contracts have not raised any concerns about Danish oversight, which will be crucial to upholding high safety standards.
Outside Greenland, many countries are wary of the closer ties to China that mining would bring. Last summer, Chinese President Hu Jintao was the first Chinese head of state to grace Denmark with a visit, one that lasted three days. China is interested not only in Greenland’s resources but also in its strategic position in the Arctic. This summer, it became an observer state on the Arctic Council. China’s Sichuan Xinye Mining Investment Company has already partnered with London Mining to mine Greenland’s iron ore, providing labor and capital for the Isua iron mine near Nuuk. The project could bring $5.9 billion to Greenland over the next 15 years.
Chinese investment -- and Chinese markets -- will be critical to Greenland’s future as a mining nation, but financial dependency on China brings other concerns. China has a history of unregulated nuclear power production -- only three of its 17 nuclear facilities are under IAEA safeguards -- and is known for horrible conditions for mining workers, especially in Africa. In 2010, for example, Human Rights Watch reported on Zambian copper mines where workers worked 12–18 hour shifts, 365 days a year, in fume-filled tunnels without access to clean drinking water or safety equipment. And a recent U.S. State Department report detailed how the China Henan International Cooperation Group in Mozambique had Mozambican workers wearing badges that read “escravo” -- “slave” in Portugese.
DIGGING FOR GIGAWATTS
Despite such concerns, fundamental economic needs are likely to propel Greenland's mining projects forward. Fish constitute 90 percent of Greenland’s exports, and the economy depends heavily on an annual $600 million grant from Denmark. Roderick McIllree, a managing director of Greenland Minerals and Energy Ltd., estimates that mining could raise the country’s present-day GDP of $2 billion by as much as 25 percent. His company has already invested $110 million in Kuannersuit. He is happy to pay royalties and expects to produce revenues for Greenland 50–100 years into the future.
For all the risk and the work to be done, Greenlanders still hope that McIllree and others like him can deliver on their promises. But that might be a long shot. The country needs to find more investors to back the implementation of large-scale mining, and London Mining alone requires another $2.5 billion in financing before it can even break ground.
Even if Greenland manages to build the capacity for large-scale mining, there is no certainty that demand for rare earths won’t slump. Some argue that China’s near-monopoly on chemical elements has forced others to focus on recycling rare earth elements and on researching alternatives, which might ultimately cause the market to disappear. Others compare rare earths to aluminum, reasoning that if a steady supply can be guaranteed over several decades, the price of the elements themselves will fall.
Uranium prices also depend on an uncertain market; many countries, including Germany, are working to wean themselves off of nuclear power. There are, of course, more than 400 nuclear reactors in the world; most of them were built in the 1960s and 1970s and will soon need more uranium to continue energy production. For its part, China has already begun construction on 30 reactors, and plans to build 50 more in the coming years. That would translate into a fourfold increase in nuclear capacity -- to at least 58 gigawatts of electricity by 2020, 200 by 2030, and 400 by 2050. It would be tempting for Greenland Minerals and Energy to dig out as much uranium from Kuannersuit as possible, as quickly as it could, to feed Chinese demand. On the other hand, such a flood of supply could easily cause prices to crash.
For the immediate future, at least, politics could still stand in the way of mining projects before they can break ground. Greenland is small enough to be drawn by big dreams into potentially risky schemes, but also to be redirected by a vocal opposition. On a recent afternoon in Nuuk, a crowd of more than 100 took to the streets of the capital with chants of “Naamik uran” -- Greenlandic for “No uranium.” Many wore white hazmat suits over their puffy winter clothes, carrying signs with slogans like “No More Fukushima.” Considering the weather -- freezing, stormy -- and the city’s population -- only 16,000 -- the turnout was impressive. The crowd caused enough of a stir that, after walking through the town to the parliament, it was greeted by a number of politicians, including Prime Minister Hammond. Titsiaat Johansen, 28, a tall Inuit with a tattooed face and broad cheekbones, said that he knew uranium was a necessary part of rare earths mining, but didn’t think the risks were worth taking. “I know that nuclear provides energy to a society,” Johansen said. “But it can also ruin a society.”