You are using an older browser version. Please use a supported version for the best MSN experience.

How China's Belt and Road and an Australian mining company could be the deciding issues in the Greenland election

ABC Business logoABC Business 6/03/2021 By Mary Kay Magistad for Sunday Extra

Stretching like a frozen white ocean, Greenland's ice sheet has long helped stabilise the global climate.

It's a third the size of Australia and more than two kilometres thick.

But waterfalls now gush in the summer from melting ice, feeding yellow wildflowers and wild thyme, as climate change accelerates.

Greenland has just experienced its two hottest summers on record. During the summer thaw, the odd stray polar bear has ventured off the ice sheet, looking for food.

"Climate change is also changing how we live," Greenland's finance minister Vittus Qujaukitsoq said.

"Traditional hunters are finding it harder to make a living, and smaller communities are having a hard time surviving, so more people are moving to larger communities," he said.

Large is all relative in Greenland.

Just under 60,000 people live on the island, which is 80 per cent covered by the ice sheet. Greenland's largest town and capital, Nuuk, has a population of about 18,000 people.

Greenland's government has, in recent years, looked for ways to draw in new investment, to boost economic growth, and improve education, quality of life and job prospects for Greenlanders, most of whom are Inuit.

That has included annual trips to China to promote investment in Greenland, in fisheries, mines and more — and China is interested.

A proposed rare earth mine, which if approved will be the world's second largest, is shaping up as the nation's potential answer.

The mined materials would be used in renewable energy technologies that could slow or reverse climate change.

But it's risky business, environmentally and politically, especially when a superpower is involved, and hoping to mine uranium from the same vein.

That's the case for the proposed Kvanefjeld mine, for which Greenland Minerals, an Australian company with a Chinese partner, has been trying for more than a decade to get approval, spending some $83 million on environmental, safety and feasibility studies.

'Risky way' of doing politics

Greenland Minerals' corporate social responsibility manager and geologist Johannes Kyed said studies on the project have been rigorous.

"In my own opinion, this is one of the most comprehensive studies made on a project like this, and [it's] understandable, because there is uranium in the rock," Mr Kyed, who grew up in southern Greenland, said.

But fierce debate among Greenlanders may yet derail the project.

Proponents say profits from the Kvanefjeld mine could speed up Greenland's bid to gain full independence from Denmark rather than its current limited self-rule, by reducing dependence on Denmark's annual subsidy of roughly $800 million.

Opponents say the proposed open-pit mine would deface a pristine and fragile ecosystem in the only part of this mostly ice-covered island, where climate change's warming temperatures allow new farms to provide Greenlanders with lamb, vegetables, strawberries and even honey.

Some residents of Narsaq, a small town six kilometres from the proposed Kvanefjeld site, fear radioactive dust from the mine's construction will settle on those farms, and runoff from radioactive tailings will poison their water.

The former minister for industry and mineral resources with the Inuit Party, Ove Karl Berthelsen, told the 2017 documentary Kuannersuit/Kvanefjeld there were great risks associated with chasing strong financial gains.

"To desire the strongest financial growth as fast as possible is a risky way of conducting politics, because we can risk having to pay with our soul," he said.

Tensions over the Kvanefjeld project came to a head in February, during the public consultation period. A bomb threat was called in. Emotions ran high.

Then the government coalition collapsed when the Democrat Party, which is against the Kvanefjeld project, left a coalition led by the pro-mine Siumut Party.

It has been in power for all but a brief period in recent decades.

New elections are slated for April. The anti-mine Inuit Ataqatigiit (IA) party, is leading the opinion polls.

IA has said that if it wins the most seats in the April election any coalition partners will have to agree to ban uranium mining in Greenland and shelve the Kvanefjeld project.

On this news, Greenland Minerals' share price plunged more than 50 per cent.

Mining, fishing and strategic position

China's government pitches its interest in investing in Greenland as a win-win that will help Greenland diversify its economy, while helping China retain its near-monopoly on the global supply of rare earths.

It's part of what China calls its Polar Silk Road, a plan to increase China's presence in the Arctic, and use the Northern Sea Route that climate change is slowly opening through the Arctic Ocean.

The Polar Silk Road, in turn, is part of China's Belt and Road Initiative, perhaps the most sweeping global infrastructure initiative in human history.

More than $641 billion in loans from Chinese state banks are funding the building of roads, railways, ports, pipelines, 5G telecommunications systems and more, all around the world.

Greenland is of particular interest to China, for its uranium and rare earths, for the substantial oil and gas reserves believed to lie off its shores, for its fish in its territorial waters, and for its strategic position, relatively near the United States. Greenland's west coast is as close to New York City as Sydney is to Perth.

Some Greenlanders welcome what China has to offer.

Others are wary, given what they've heard about Chinese investments elsewhere, especially in mining.

"I think we should be very, very afraid of the Chinese. That's my opinion," says Jorgen Chemnitz, a Greenland Inuit, and a documentary filmmaker.

The Chinese partner in the Kvanefjeld project has drawn particular scrutiny.

A Chinese rare earths processing company with close ties to the Chinese government, Shenghe Holdings, took a 12.5 per cent stake in Greenland Minerals in 2017.

Shenghe's largest shareholder is China Geological Survey, a government-owned research institute under China's Ministry of Natural Resources.

Shenghe is also affiliated with the Aluminum Corporation of China (Chinalco), one of the six state-owned companies that lead China's rare earths industry, and partners with China's National Nuclear Corporation (CNNC), which the US government says has ties to the Chinese military.

China has a near monopoly on the global rare earths market, with Shenghe Holdings involved all along the supply chain: mining, processing and using rare earths in high-tech products.

China has been known to use that near-monopoly for economic advantage — charging export taxes that aren't actually allowed under World Trade Organization rules, and squeezing or threatening to squeeze supply for political leverage.

The US Energy Department warned a decade ago that the United States had become too dependent on China for rare earths. But Shenghe was subsequently allowed to take a stake in the only rare earth mine in the United States.

US President Joe Biden is now ordering a review of US over-reliance on overseas supply chains, including of rare earths.

The US and Danish governments have also been vigilant about the prospect of a Chinese company being able to extract and process uranium from Greenland's Kvanefjeld mine.

While Greenland has the right to exploit its own mineral reserves, including rare earths, Denmark retains the right to oversee uranium mining and export.

Australia, too, has seen Shenghe come in as a potential player in rare earths mining.

In February, Shenghe signed a memorandum of understanding with the Australian company RareX, for what could become a majority Shenghe-owned joint venture, mining rare earths in Western Australia.

China's bid to expand its rare earths empire into the Arctic is just one part of an effort not to let the crisis of climate change go to waste.

"The melting ice also provides economic opportunities for the development of the Arctic, including for the Asian countries," Gao Feng, China's Special Representative for Arctic Affairs, said at the October 2019 Arctic Circle conference in Reykjavik.

China's ambitions in the region

Over the past decade, China has made its Arctic ambitions known.

It successfully lobbied to become a permanent observer to the Arctic Council, a high-level intergovernmental forum formed by the eight countries that have territory in the Arctic: Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden, and the United States.

The US built a strong military presence in Greenland after World War II but now just Thule airbase in northern Greenland remains, with its early warning system for detecting and tracking ballistic missiles.

Meanwhile, a Chinese Arctic think tank has noted that Greenland's strong pro-independence sentiments could result in a huge resource-rich country with roughly 57,000 people — a real opportunity for China.

That may be one reason President Trump, in 2019, offered to buy Greenland from Denmark — an offer Denmark's Prime Minister Mette Frederiksen called absurd.

But the US government is re-engaging with Greenland. It opened a new consulate in Greenland's capital city Nuuk, the first US consulate in Greenland since 1953.

"We are hosting military exercises, strengthening our force presence, rebuilding our icebreaker fleet, expanding coast guard funding, and creating a new senior military post for Arctic affairs, inside of our own military," then-US Secretary of State Mike Pompeo said in a 2019 speech to the Arctic Council.

A year earlier, Russia held its largest military exercises in the Arctic since the Cold War, with a small Chinese contingent joining in.

"Certainly the Chinese military has been more involved in the Arctic, especially through cooperation with Russia," Arctic University of Norway security expert Marc Lanteigne said.

Dr Lanteigne said China's primary interests in the Arctic are more about access to resources and to the Northern Sea Route through the Arctic Ocean.

The Northern Sea Route can shave 10 days or more off the journey for a cargo ship traveling from China to Europe, compared to going through the Suez Canal.

For now, the route is usually only open from late July until the waters freeze, and Russia uses a fleet of icebreakers to clear the ice even then. China has two icebreakers of its own. Both expect that climate change will make increased use of the Northern Sea Route possible, and profitable.

Meanwhile, China has taken a 30 per cent stake in a liquified natural gas project in northern Russia's Yamal Peninsula, with about half of China's liquified natural gas now coming from Russia.

Greenland's finance minister Vittus Qujaukitsoq continues to monitor the situation.

He said any Greenland government needs to remain vigilant about undue influence, whether from China, Denmark or the United States, and that he hopes for a closer relationship with Greenland's nearest neighbours, the United States and Canada.

But in the end, he said, Greenland needs investment to improve education, quality of life and job prospects for Greenlanders — and to stop the brain drain of recent years, with young Greenlanders migrating to Denmark.

"At the end of the day, it's not interesting for me whether the money comes from China or from the US, or from Canada, or from any country," he said.

"For me, the most interesting part is making progress and growth in Greenland."

Mary Kay Magistad is a former Beijing-based China correspondent for NPR and for PRX's The World. Her nine-episode podcast with the Global Reporting Centre, On China's New Silk Road, is being featured in condensed form on ABC Radio National's Sunday Extra. Her Arctic reporting was funded by a grant from the International Women's Media Foundation.

Loading...

Load Error

image beaconimage beaconimage beacon