A new resource rush in the Arctic?

Worldwide, the consumption of fossil fuels and other natural resources continues to rise. Additionally, several resource exporting nations today are high risk suppliers – the current crisis in Ukraine is a telling example – thus reigniting interest in the Arctic.

The five states directly bordering the Arctic Ocean, namely USA, Canada, Denmark (through Greenland), Norway and Russia, have all staked their claim on its resources. While the UN Convention on the Law of the Sea (UNCLOS) provides a comprehensive regulatory framework, the claims overlap to some extent. On the positive side, in 2008 the five littoral states declared in Ilulissat, Greenland, that they would resolve their claims mutually and in accordance with UNCLOS. However, UNCLOS does not address environmental risks.

Greenland: natural resources and independence

These developments are of special significance for Greenland. Although only its foreign and security policies remain under Danish control since 2008, it continues to be financially and economically dependent. The majority of the 56,000 Greenlanders are employed in the public sector or in the fishing and shrimp export industry. Depleting fish stocks off the coast of Greenland and the desire to overcome financial dependence on Denmark are prompting the country to develop its natural resource sector.

Like the rest of the Arctic, Greenland is rich in resources. It possesses large reserves of oil, gas, gold, niobium, platinum group metals, tantalum, fluoride, zinc and rare earths that are used primarily in high tech products. The natural resource sector was not very significant until now, but this may soon change as the government plans to pursue a highly investor-friendly policy. It can expect support from Denmark and the European Union (EU), both of which regard Greenland as a strategic partner for improving their own supply security.

Impact of mining in the Arctic

Kvanefjeld, a multi-element deposit, illustrates the tremendous challenges. It is one of the largest known rare earth element deposits in the world and could meet global demand for 150 years if consumption remains constant. The site also contains a large amount of uranium. With the lifting of the zero tolerance policy towards uranium mining in 2013 despite protests from civil society, conditions are now in place for mining Kvanefjeld.

The Arctic is a very fragile ecosystem. It is extremely difficult to access information and studies on the precise environmental and social impacts of the Kvanefjeld project. Studies conducted by the Australian company Greenland Minerals and Energy Limited (GMEL) are not publicly accessible. Nevertheless, a number of potential environmental impacts and risks related to mining rare earths and uranium can be identified.

Mining wastes and refining residues, especially, pose a threat to the environment and population. In a worst case scenario these could lead to large scale contamination of the region’s entire river system – right up to the sea – releasing fluoride, heavy metals and radioactive substances. Environmental organizations have warned that GMEL will not be in a position to adequately deal with the anticipated environmental fall-outs.

The risk of water contamination and its impact on drinking water and fish stocks are also one of the main concerns of the local population. At another level, international mining companies tend to employ cheaper or better qualified foreign labour. The resulting influx of migrants can cause not just tensions but also lead to the gradual disappearance of traditional forms of living.

High costs and risks curb natural resource exploitation

It is not clear how quickly these developments will occur. The conditions for profitable exploitation on a large scale are often still too adverse and risky; the required investments too high. GMEL’s current activities are primarily focused on further exploring the site’s potential. It is equally possible that the deposits will remain unattractive for a long time if more favourable alternatives are discovered elsewhere – fracking in the USA is one such example – or if there is a fundamental shift in the energy system towards renewable energies.

A longer article on this topic is available in German.