The Kvanefjeld project is also led by an Australian mining company, Greenland Minerals. But she has just suffered a severe setback. In the recent elections to the Greenlandparliament Parliament, two parties that want to prevent the project have won. The reason is that the ore in the Kvanefjeld massif, unlike Kringlerne, also contains the radioactive elements uranium and thorium. Because the mine is only a few kilometres from the town of Narsaq and a considerable amount of ore waste is accumulated after the extraction of the rare earth concentrate, it is feared that it will deal with a major environmental problem with it, as well as with the dust from the open-cast mining industry. Despite the lure of high levels of foreign investment and a significant number of new jobs, the Kvanefjeld project is therefore widely opposed locally.
With or without China?
Tanbreez does not have this problem, and in another respect you are driving on a different track. While Greenland Minerals has a wholly owned Chinese company Shenghe Resources (with a 10% stake) and a strategic partner, Greg Barnes explicitly wants to make a bow around China – the country that controls about 60% of the world market in the extraction of rare earths and currently controls the downstream processing of ore concentrate into separated metals to virtually 100%.
With this strategy, Tanbreez hopes to have hit a nerve of the times. After all, the world's almost total dependence on China for products that are becoming increasingly important for a wide range of civil and military high technology is perceived by the US, the EU, Japan or even South Korea as increasingly problematic. Especially since China knows the value of its position and does not shy away from using its leverage.
In 2010, for example, Beijing imposed export restrictions on Japan, causing the prices of processed rare earth products to explode. And recently, China has put more emphasis on its own needs. Even if "only" this is due to the fact that China would rather produce and export higher-quality goods (such as magnets) at home rather than semi-finished products, it shows how Beijing can influence the international market with its quasi-monopoly position.
In today's constellation, China has the potential to use rare earths as a political tool, Jesper Zeuthen, a political science professor at the University of Aalborg, said recently at a web event of the Danish Institute for International Studies.
Pentagon's Concerns
The creation of a separate value chain for rare earths from the mine to the final product has therefore gained urgency in Washington as well as Brussels. The US, for example, is concerned about the availability of processed critical raw materials for its high-tech armament program. Even if it is only a fraction of the volume used in electromobility or wind turbines, for example, one does not want to be put under the risk of not being able to access the material.
That's why the Pentagon is providing support to both the recently reopened California Mountain Pass mine, where a processing plant is to be built, and the Australian mining company Lynas, which plans to build an installation in Texas to refine light and heavy rare earths.
As far as Europe is concerned, Per Kalvig of the Geological Institute for Denmark and Greenland (GEUS) sees the problem in the relatively limited demand for rare earth metals. In order to make it worthwhile to take the processing into its own hands, certain volumes and secure sales opportunities are decisive criteria. This involves a wide range of industries. The field of magnets, important as it is, is not enough on its own.
The Challenge of the West
The processing of rare earths is difficult and expensive because it is so complex. Each mine provides a concentrate of a different composition, which requires individualized separation methods. Much of this knowledge is now concentrated in China and would have to be rebuilt elsewhere. This is also the logic behind the combination of Greenland Minerals and Shenghe Resources, a company with broad experience and best contacts in this area. If, on the other hand, the competitor Tanbreez focuses on a US and EU focus, this is useful and comprehensible from a geostrategic perspective. But the structures for this have to be built up first.
The bottleneck for the West in rare earth metals is therefore not the availability of raw materials per se, but their processing into industrially usable semi-finished products. In fact, according to a conservative estimate by the US Geological Survey, the known global reserves for rare earth concentrate amount to around 120 million tonnes in 2019. Even if one assumes that the world's annual consumption doubles to about 500 000 t, this is sufficient for more than 200 years, says the Danish geologist Kalvig. In other words, the international market does not necessarily need to meet demand for each of the fifteen or so mine projects currently underway outside China.
If in Greenlandic politics the wind turns again in favour of Kvanefjeld in a few years, it could be too late for the mammoth project if the market actually goes towards oversupply. Tanbreez, on the other hand, is looking better; Chief executive Greg Barnes has already had his mining concession in his sack since last September. For him, it is now crucial that the value chain outside China, on which his strategy is based, is also created.
Dutch
GGG Price at posting:
7.9¢ Sentiment: Hold Disclosure: Held
(20min delay)
