Greenland uranium ban endangers miners' ability to feed green energy transition

Greenland's ban on uranium exploration and mining has halted development on one of the world's biggest rare earths deposits and fueled doubts on the mining industry's ability to feed the green energy transition.

Greenland's parliament passed a law Nov. 9 that bans the preliminary investigation, exploration and exploitation of deposits with a uranium concentration above 100 parts per million, which the World Nuclear Association considers very low grade.

As Greenland has no active primary uranium projects, "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," Australian company Greenland Minerals Ltd. said in a Nov. 12 statement. The company owns the Kvanefjeld property in Greenland, which is one of the world's largest rare earth projects.

The world's mining industry is struggling to grow reserves in a modest way, let alone trying to satisfy governments' commitments to move away from fossil fuels even as roadblocks are being put in the way of mining developments, according to Gavin Wendt, founding director of financial services firm MineLife.

Given that elements such as uranium and thorium are common in rare earth deposits, the law highlights how problematic mining projects can be. Rare earth materials have a variety of industrial applications, including green technologies.

The share price of Greenland Minerals, which is trying to obtain an exploitation license for Kvanefjeld, fell 30% to 3.8 Australian cents after the company emerged from a trading halt Nov. 12 on news of the legislation driven by the Inuit Ataqatigiit Party. The party campaigned strongly against uranium ahead of its April election win.

Kvanefjeld's latest optimized feasibility study from 2019 was based on a reserves estimate of 108 million tonnes of ore, grading an average 14,300 parts per million of total rare earth oxides and 362 ppm uranium.

Greenland Minerals said it is not aware of any technical, radiological or health and safety reasons for the Greenland government's selection of the 100 ppm threshold. The company did not respond to a request for comment as of publication time.

Unhelpful optics

The legislation "doesn't help the optics" of investing in Greenland, said Michael Jardine, managing director of Greenland-focused Ironbark Zinc Ltd. The company's share price also took a small hit on the ASX after the announcement of the new law, despite not having any uranium projects.

The law affecting Kvanefjeld shows the difficulty the mining industry is experiencing in various jurisdictions around the world, including copper projects in South America, to "satisfy the exponential increase in demand to move away from fossil fuels with electric vehicles and renewable energy," Wendt said.

Greenland Minerals' exploration license was amended in 2011 to include radioactive materials.

The Greenland government's "flip-flop" about the uranium issue has also not helped sovereign risk perceptions, Jardine said.

"Legislative stability matters when trying to make decisions on a multi-decade project," Jardine said, adding that Greenland's government is "not unaware that there is some reputational risk" in the decision to ban uranium mining.

Jurisdictions "must have a level of comfort or acceptance" of dealing with radioactive elements like uranium and thorium regarding hard rock rare earth mines, Ionic Rare Earths Ltd. Managing Director Tim Harrison said in an interview.

While Ionic's Makuutu rare earths deposit in Uganda also contains uranium, its levels are "negligible," and the project's ionic absorption clay mineralization means the company is "simply washing the rare earths out of the clay, leaving the uranium behind," Harrison said.

Ionic clay mineralization is a softer, easier to mine material with surface mining potential and nonradioactive tailings, according to the company's website.

While investors have been asking questions since April about whether the government is for or against mining, Jardine has "no concerns whatsoever that this will spill over into non-uranium projects."

Ironbark's Citronen zinc-lead project was Greenland's first large resource project to gain an exploitation license, as was the case when its mine closure plan was approved in 2020, Jardine said. It will next apply for the final Section 86 permit for Citronen, in what will be a "test case" for large projects in Greenland, given it would be the first to gain such a license.

Ironbark expects an initial credit decision from the U.S. Export-Import Bank in the December quarter to help finance its $654 million project.