Australia’s Greenland Minerals (ASX: GGG) said on Wednesday it was seeking to engage in talks with Greenland’s authorities over its Kvanefjeld rare earth project, as the newly-formed government opposes the development.
The uranium and rare earths-rich Arctic island has gained notoriety in the past two years following former US President Donald Trump’s offer to buy it. The move sought to partly help address Chinese dominance of the rare earths market, as the nation accounts for almost 80% of the global mined supply of the elements used in everything from hi-tech electronics to military equipment.
Greenland’s new coalition government, which consists of the Inuit Ataqatigiit (IA) and Naleraq parties, has publicly stated its intention to block Kvanefjeld’s development, due to the presence of uranium as a by-product.
Earlier this month, Greenland Minerals said uranium was of no great importance to its project, seeking to appease concerns. The miner had previously that revenues generated by the uranium and other by-products of the operation would help offset rare earth production costs.
The company’s shares have lost 50% of its value since April 6, when the IA party won the parliamentary election with more than a third of votes. The IA dethroned the ruling Siumut party, which had led every government except one since 1979.
The Australian explorer said on Wednesday the exploration licence for its Kvanefjeld project was granted under the Greenland Mineral Resources Act and had been operated by the company in close dialogue with all the island’s governments since beginning operations in 2007.
The miner noted it had sought legal advice regarding its rights to continue developing Kvanefjeld, adding it would continue with the public consultation process for the project initiated by the Greenland government until June 1.
“We view this as potentially another blow to the growing coordinated push to develop an adequate rare earth supply chain outside of China and could therefore delay ongoing efforts to erode the current reliance on Chinese material,” Colin Hamilton, commodities analyst for BMO Capital Markets, said in a research note.
Greenland Minerals’ stock dropped almost 20% to A$0.085 on Wednesday, following the company’s update. They have fell about 60% so far this year.
Kvanefjeld is one of the world’s largest and most advanced rare earth projects, which are key to the electric vehicle and renewable energy revolution.
The project is forecast to be a globally significant producer of all commercially important rare earth elements including neodymium, praseodymium, terbium and dysprosium, over an initial 37-year mine life.