Australia-based Greenland Minerals (ASX: GGG) said on Tuesday it will fight the Greenland government’s draft decision to reject a mining permit for the company’s Kvanefjeld rare earths project, based on a nationwide ban to uranium exploitation and exploration passed in November.
The miner’s vast Kvanefjeld project, one of the world’s biggest, was granted preliminary approval in 2020. While focused on rare earths, it would produce uranium as a by-product.
The company is banking on revenues generated by the uranium and other by-products to reduce the rare earth production costs.
Greenland Minerals was on track to gain the government’s final endorsement for the project, but snap general elections held in April 2021 put a new coalition in power. Greenland’s administration structure changed again in April this year.
The explorer had launched in March arbitrations proceedings against the governments of Greenland and Denmark for the legislation passed last year. The ruling limits uranium percentages in total rare earth oxide mining to 100 parts per million.
The company argued the ban hampers exploration and production of key critical metals, including rare earths, which the world needs to switch to a greener economy and reduce carbon emissions.
“There are no active primary uranium projects in Greenland. Therefore, the legislation is directed at the production of rare earth materials and other critical metals, where it is common for ores to contain radioactive elements including uranium and thorium,” the company said when the ban was announced.
Greenland Minerals managing director, Daniel Mamadou, says the draft mining permit rejection was at odds with Greenland’s stated policy to be a significant player in the energy transition.
“We are also frustrated by the approach taken by the government regarding our dispute: although, the parties had agreed to solve their disagreements through arbitration, it is now clear that the government wants to implement a different approach,” Mamadou said.
The Greenland government will make a final decision after a consultation process on the draft resolution, the company said. However, it expects relief from the arbitration process as the draft decision and any subsequent final decision should have no lawful bearing on the arbitration process, Greenland Minerals said.
“Despite the current situation, we hope the legal process will allow for a fully informed assessment of the project,” Mamadou said.
Greenland, a vast autonomous arctic territory that belongs to Denmark, bases its economy on fishing and subsidies from the Danish government.
As a result of melting ice in the poles, companies have become increasingly interested in the mineral-rich island, which has become a hot prospect for miners. They are seeking metals from copper and titanium to platinum and rare earths, which are needed for electric vehicle motors and the transition to green energy.
Residents of the southern town of Narsaq, the closest village to Green Minerals’s project, have raised concerns about the impact that mining, and potential radioactive dust, would have on the area.
Greenland is currently home to two mines: one for anorthosite, with deposits containing titanium, and one for rubies and pink sapphires. Greenland Minerals, while based in Australia, is a Chinese-owned exploration company. Shenghe Resources Holding, its largest shareholder, would process the ore extracted.