Greenland's 1.5 Million Tons of Rare Earths Might Never Get Mined Due to Lack of Infrastructure

Greenland's potential to become a major supplier of rare earth elements has drawn increasing international attention. The U.S. government is exploring opportunities to secure access to the Arctic island's mineral resources, with Secretary of State Marco Rubio set to meet with Danish officials to discuss the matter. The White House has identified Greenland's deposits as a potential way to reduce China's dominance in the critical minerals space.

Trump has highlighted national security as a key reason to pursue control of Greenland. However, former national security advisor Mike Waltz emphasized that U.S. interest is primarily focused on critical minerals. Despite these claims, experts have pointed out that mining in Greenland is not economically viable due to the harsh conditions and lack of infrastructure.

The Trump administration's renewed push for Greenland has caused unease among Greenland's population, who largely support eventual independence. Denmark has also rejected the notion that Russian or Chinese vessels are operating near Greenland.

Why the Move Happened

The Trump administration's focus on Greenland is driven by a desire to secure access to critical minerals and reduce reliance on China. The White House sees Greenland's deposits as a potential way to break China's dominance in the rare earths space.

Trump has also emphasized the strategic importance of Greenland in terms of military positioning. The island's location makes it a key asset in the Arctic, with Pituffik Space Base serving as America's northernmost military installation.

How Markets Responded

Stocks of companies involved in rare earth mining and processing have seen increased activity due to the heightened interest in Greenland. For instance, Energy Transition Minerals Ltd. has seen its shares surge nearly 80% this year. The company is developing a flagship rare earths project in Greenland and has continued to attract investor interest.

Defense stocks have also gained traction, with companies like Lockheed Martin benefiting from increased defense spending in the region. The U.S. government has invested in MP Materials, the only integrated U.S. rare-earth company, and is working to expand the supply of rare earths outside of China.

What Analysts Are Watching

Analysts have raised concerns about the feasibility of mining rare earths in Greenland. The island's harsh climate, isolated terrain, and limited infrastructure are major obstacles to unlocking its strategic value. Additionally, the low grades of rare earths in Greenland raise the cost of extraction and processing.

Experts warn that even if mining proceeds, processing remains a bottleneck. China has a near-monopoly on rare earth processing, and the U.S. is seeking to reduce its reliance on Chinese processing.

The U.S. Treasury Secretary Scott Bessent is expected to urge Group of Seven nations to accelerate efforts to reduce reliance on critical minerals from China. The U.S. has already signed an agreement with Australia to develop a strategic critical minerals reserve and supply pipeline.

The geopolitical dynamics surrounding Greenland continue to evolve. Denmark has increased its defense spending significantly, including purchasing F-35 fighter jets and enhancing its Arctic capabilities. Greenland's population, however, remains largely in favor of independence and is not keen on becoming part of the U.S.