Outlook Explainer: Why Are Trump, Xi Eyeing Greenland's Rare Earth Riches

Dressed in a casual blue hoodie, Greenland’s Prime Minister Jens-Frederik Nielsen delivered one of the most non-casual (and unlikely) statements. He said that Greenland is not for sale and it will not be governed by the United States.

Nielsen affirmed if they have to choose between Copenhagen and Washington, Greenland would opt for Denmark, NATO and the European Union. Denmark's Prime Minister Mette Frederiksen too said "Europe won't be blackmailed”.

For the modern world, where territorial demarcations are recognised by international laws and centuries old treaties deciding a state’s sovereignty have materialised, US President Donald Trump’s obsessive interest in taking over Greenland, with or without the consent of local government, seems otherworldly. 

However, his threats are ever real, especially in the context of the US abduction of the Venezuelan President earlier this year, and the bombing of Iran’s nuclear sites last year. Trump seems to be superseding international laws at his whims, an act first and think later administration. 

But his interest in Greenland is not new, he floated the idea of acquiring the region in his previous presidency as well. Furthermore, US’ interest in the area too goes back centuries. 

Is the interest in Greenland new?

The first recorded expression of official US interest in Greenland dates back nearly two centuries, shortly after the dissolution of the 434-year political union between the kingdoms of Norway and Denmark. 

Under the 1814 Treaty of Kiel, Greenland came under Danish control. In 1832, US President Andrew Jackson floated the idea of purchasing the island. In 1867, US Secretary of State William Seward recommended that Greenland be acquired alongside Alaska, which he had just negotiated to buy from Russia.

Throughout World War I and World War II and the Cold War, the US assessed the importance of Greenland and its geographic location, and discussed its purchase.  Throughout the Cold War, the US used Greenland as a bulwark against the Soviets. The 1951 defence agreement between the US and Kingdom of Denmark set the way for the establishment of Thule Air Base, now known as Pituffik Space Base.

It formed a key part of NATO’s northern shield, and as the nuclear arms race intensified, American nuclear weapons were stored at the base despite Denmark’s 1957 policy designating the country a nuclear weapons-free zone. The strategically vital facility, located 750 miles north of the Arctic Circle, hosts the world’s most northerly deep-water port, a 10,000-ft runway, and extensive missile warning and space surveillance sensors. About 150 American troops are permanently stationed there.

Not only does Greenland sit on minerals crucial for the global economy and enrichment, but it is also located between the US and Europe and straddles the so-called GIUK gap, the maritime corridor linking Greenland, Iceland and the UK that connects the Arctic to the Atlantic Ocean. 

This position makes it critical to controlling access to the North Atlantic for both commercial shipping and security purposes.

Now, Trump has stated: “We need Greenland from a national security situation. It’s so strategic. Right now, Greenland is covered with Russian and Chinese ships all over the place.”

What about Greenland’s rare-earth minerals:

A mineral-rich island of 2.16 million square kilometres, Greenland is a former Danish colony and now an autonomous territory of Denmark, situated in the Arctic.

With 81 per cent of its land under ice, Greenland has few towns and a population of 56,000, with its economy dependent on fishing.

However, its geographical location is accentuated by the climate crisis melting the island’s ice, which potentially opens up new shipping routes.

Currently, fish and shrimp accounts for more than 95 per cent of its exports. Denmark is its largest market, taking 49 per cent of exports in 2022, followed by China at 24 per cent, Britain at 6 per cent and Japan at 5 per cent. 

However, the region holds trillions of dollars’ worth of minerals beneath the ice, along with about 30 per cent of the world’s undiscovered gas and 13 per cent of undiscovered oil. 

In 2021, Greenland imposed a ban on all new oil and gas exploration, with officials arguing that the environmental costs of extraction outweighed the benefits, even as estimates pointed to billions of barrels of oil along the west coast and beneath the seabed off the east coast. 

Announcing the decision, the government said the ban was imposed “for the sake of our nature, for the sake of our fisheries, for the sake of our tourism industry and to focus our business on sustainable potentials”. Energy development has since shifted towards hydropower, driven by concerns over climate change.

That same year, Greenland’s parliament also banned uranium mining, halting development of the Kuannersuit mine near the southern town of Narsaq, one of the world’s largest known deposits of rare earth elements.

That said, the intermingling of factors like melting of ice opening up shipping routes, renewed interest in its untapped natural resources and its strategic location in the Arctic has made the island a focal point again. 

The race for Rare Earth

Currently, China dominates the rare-earth supply chain, accounting for nearly 70 per cent of global mining and up to 90 per cent of the world’s processed rare earths. China has used its dominance as a bargaining chip in its trade deals with the US.

These rare-earth minerals, although not rare, are integral to the running of our contemporary economy. It is integrated in miniaturisation of technology, electric vehicles, transportation to military equipment.

According to Benchmark Mineral Intelligence, a UK-based pricing and data research firm specialising in energy transition minerals, Chinese companies account for as much as 99 per cent of global heavy rare-earth processing.

Of the more than 30 raw materials designated as “critical” by the EU, 25 are found in Greenland. The territory also hosts valuable metals such as gold, zinc and iron, along with oil and gas resources.

Now even though Trump has claimed that he wants Greenland “from the standpoint of national security,” the factoring in of territory’s proximity to Russia with its natural richness married with Trump usual attitude of “Drill baby, drill” seem congruent. 

Last year in January, Michael Waltz, the United States Ambassador to the United Nations, was blunt in his assessment when asked about Trump’s fixation on bringing Greenland. “This is about critical minerals. This is about natural resources,” Waltz told Fox News in an interview on January 9.

“This is about reintroducing America in the Western Hemisphere,” Waltz said. “You can call it Monroe Doctrine 2.0, but this is all part of the ‘America First’ agenda.”

This sets a different narrative from the simplistic geopolitical relevance of the island. Russia has previously issued a warning to the US over the territory. “The Arctic is a zone of our national interests, our strategic interests,” a Kremlin spokesman stated. “We are interested in preserving the atmosphere of peace and stability in the Arctic zone. We are watching the rather dramatic development of the situation very closely, but so far, thank God, at the level of statements.”

During a controversial visit to the base in March last year, JD Vance, the US vice-president, told troops: “The president is really interested in Arctic security, as you all know, and it’s only going to get bigger over the coming decades.” 

However, the discussion has been ramped up now, with the President himself having visited the region. 

The European Union has stepped up in support of Greenland, however, not without consequences. Amidst risking the NATO alliance, Trump has imposed a 10 per cent tariff from February 1 on Denmark, Norway, Sweden, France, Germany, the UK, the Netherlands and Finland, and said that unless a deal is reached tariff could later rise to 25 per cent.

"Tariff threats undermine transatlantic relations and risk a dangerous downward spiral," the European countries stated in a joint statement. The European Council will also be calling a summit of EU leaders in the coming days to discuss the matter.

With the European Union, Russia, China and the US involved, and Greenlanders themselves protesting against Trump’s repetitive statements of acquisition, it remains to be seen what the US President’s next move would be. 

However, his track record offers little reassurance that any resolution would be pursued peacefully.