Europe moves to join China and the US in the Arctic gold rush

Given growing geopolitical interest in the Arctic Circle, it is no surprise that the EU is raising its profile in Greenland
The EU is also sealing a raw materials partnership with Greenland in an attempt to reduce Europe’s reliance on China

Andrew Hammond

Published: 8:30pm, 18 Mar 2024

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Greenland is about 80 per cent ice-capped and until the 1940s was a protected, isolated society. Today, the growing geopolitical and geoeconomic focus on the Arctic Circle has made the world’s largest island a major prize for powers including China, Russia, the United States and the European Union.

As the region’s melting ice caps expose unclaimed ocean and land, what has been called a new gold rush has commenced for the Arctic’s territory, natural resources and strategic position. The economic value of this is obvious. However, the geopolitical dimension is also key, given the Arctic’s critical location between North America and Eurasia.

In this context, the 810,000 square-mile Greenland is an increasingly prominent player with huge potential. This is not least as it boasts the world’s northernmost territory off its coast, which is the closest point of land to the North Pole.

In recent decades, Greenland, with a small population of fewer than 60,000, has become a largely autonomous territory of Denmark. These days, Denmark – which is one of 27 European Union states and also a member of Nato, the transatlantic security alliance – retains only control of the island’s monetary policy and foreign relations.

One sign of Greenland’s growing prominence came in 2019 when Donald Trump, then president of the United States, floated the idea of buying the huge island. This was dismissed by Danish Prime Minister Mette Frederiksen as “absurd”.

Nonetheless, the United States soon after reopened a consulate on the island in 2020. The United States has had military assets on the island since World War II, including Pituffik Space Base, which was built as Thule Air Base in 1951 and has a ballistic missile early warning system and satellite tracking.

Thule Air Base of the US Air Force in Greenland, in October 2018. Photo: EPA-EFE

China too had interest in building airports and mining facilities in Greenland in the 2010s, but eventually withdrew its bids. Beijing’s interest in the region is, in part, related to development of trade through new North Atlantic shipping lanes that are opening due to melting ice caps. These could significantly decrease voyage times, compared to the current reliance on the Suez and Panama canals for maritime trade and transport around the globe.

Given US and Chinese interest in Greenland, it is no surprise that the EU is also raising its profile there too. The 27-member bloc is especially alert to the island’s vast natural resources, including coal, zinc, iron ore and rare earths. Europe tends to lack access to both supply and processing of raw materials, and is seeking to reduce its reliance on China, which dominates production of rare earths and other critical minerals.

To this end, the EU and Greenland last November signed a memorandum of understanding for a strategic partnership to develop sustainable raw materials value chains needed for the transition to low-carbon energy. More than two-thirds of the 34 critical raw materials identified by the European Commission as strategically important for the bloc’s industry and the green transition are located in Greenland.

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As part of the EU’s Global Gateway strategy, Brussels has also recently established similar strategic partnerships on raw materials with Ukraine, Kazakhstan, Namibia, Argentina, Chile, Zambia and the Democratic Republic of the Congo. The partnerships enable trade and investment in secure, sustainable and resilient raw materials value chains, key to achieving the transition to climate-neutral and digitalised economies.

Such is the importance that Brussels places on its deepening relationship with Greenland, the EU’s first Arctic office was opened there last Friday by European Commission President Ursula von der Leyen, who was joined by Frederiksen. The visit included a stop-off in the Faroe Islands, another self-governing territory of the Kingdom of Denmark.

Nuuk is the capital of Greenland. More than two-thirds of the 34 critical raw materials identified by the European Commission as strategically important for the bloc’s industry and the green transition are located in Greenland. Photo: Universal Images Group via Getty Images

The EU-Greenland memorandum of understanding may evolve into one of the EU’s Green Alliances, akin to those with Canada, Norway and Japan. It will contribute to the development of sustainable projects along the raw materials value chains, and to the deployment of infrastructure required to develop them.

The memorandum establishes particularly close cooperation between Greenland and the EU in five areas starting with economic and industrial integration of value chains for critical and other raw materials. This includes developing projects jointly, creating and promoting new business models, attracting investments, supporting access to finance, facilitating trade linkages, as well as developing and integrating support for economic diversification.

In terms of next steps, the European Union and Greenland are set to develop a joint road map with multiple actions to put the strategic partnership into practice. This helps Europe to deliver on its Green Deal and to secure a diversified sustainable supply of raw materials, especially critical raw materials, following Russia’s invasion of Ukraine. As part of the action plan for the EU Critical Raw Materials Act, the bloc has committed to developing strategic international partnerships and associated funding with places like Greenland.

Thus, von der Leyen’s trip helps to cement the new EU-Greenland MOU, and may provide a big boost to ties. As world powers’ interest in the Arctic grows, the bloc is keen to double down on relations, not only to seize new economic opportunities on the horizon, but to also boost the EU’s geopolitical standing in the region.

Andrew Hammond is an associate at LSE IDEAS (the Centre for International Affairs, Diplomacy and Strategy) at the London School of Economics and Political Science