In spring, two Greenlandic officials from the Ministry of Mineral Resources in Nuuk traveled to Copenhagen. They knew that they were due to appear before the Court of Arbitration, but they did not anticipate what awaited them in the court room located in a glass building overlooking the Langelinie promenade in Copenhagen.
They were met with seventeen lawyers, each representing an international mining company.
The lawyers were claiming damages that could topple Greenland’s economy and an ultimatum to the Cabinet of Greenland: either you give the green light to the controversial Kvanefjeld mining project in South Greenland, or you cough up money.
Danwatch, in collaboration with Politiken, can now disclose several new details in the Kvanefjeld case, which has major political implications and could ultimately leave Danish taxpayers with a huge bill.
For years, the mining company, Energy Transition Minerals, has been trying to get permission to extract critical minerals from Kvanefjeld, which boasts one of the largest deposits in the world.
But alongside the critical minerals, there are the radioactive substances uranium and thorium that could pose a risk to Greenlanders living near Kvanefjeld.
Therefore, with a new uranium law in hand, Greenland will soon reject the mining company’s application.
Energy Transition Minerals are aware of this, which is why they will counter with a claim for damages that could amount to 15 billion Danish kroner, which corresponds to at least three years of the block grant that Denmark gives Greenland.
But the case is about much more than the legal dispute between the mining company and the Cabinet of Greenland.
The critical minerals in Kvanefjeld are essential for a green energy transition and are at the center of a security race between the US and China, who are both lurking in the wings.
The case is shrouded in its own mystery.
Many sources have something to say about Kvanefjeld, but few will put it in writing.
To get the whole picture, we have to go back 70 years to the first pursuit for critical minerals in Greenland’s subsoil.
Hope and fear surround Kvanefjeld
Hope and fear have encircled Kvanefjeld in South Greenland since the 1950s, when Niels Bohr first set foot on the mountain. It was the famous Danish nuclear physicist who discovered the minerals in the mountain and envisaged mining uranium for Danish nuclear power plants.
Even then, the inhabitants of the town of Narsaq, which lies at the foot of the mountain, feared the deadly contamination and radioactive irradiation, for the sake of their children and animals.
Deep in Kuannersuit, the Greenlandic name for Kvanefjeld, there is also one of the world’s largest deposits of critical minerals.
It is the mineral Steenstrupine, named after the Danish geologist K. J. V. Steenstrup, which is gaining interest because it contains fifteen of the critical minerals that are in short supply needed for the technology that will ensure the green energy transition.
But it is difficult to excavate these critical minerals without bringing uranium to the surface and exposing humans and animals to radiation hazards.
That is why it was controversial when the mining company, then called Greenland Minerals, was granted an exploration license for Kvanefjeld in 2007.
The geological surveys by the mining company were promising. In the mountain’s interior, the much sought-after minerals were found in large quantities. So were uranium and thorium.
And while the mining company saw big business in the mine, the radioactive substances caused fear among many Greenlanders, and a popular protest movement coalesced around the slogan ‘urani naamik’, no to uranium.
At the same time, the planned construction of the mine raised concerns among professionals. The mining company would dig a hole in the mountain top and dump the toxic and radioactive wastewater into a lake behind a dam at the top of the mountain.
If something went wrong, it could prove fatal for the town of Narsaq at the mountain’s foot. In the past, several similar dams have burst. Hundreds of lives were lost.
Nevertheless in 2021, the Greenlandic authorities gave the mining company’s environmental report the green light. The next step was to gain permission to extract 30,000 tons of critical minerals per year, for the next 37 years.
But then the proposed mine at Kvanefjeld was hit by another significant crisis. Policy.
Resistance unites
The same spring that the mining company got the environmental report approved, Greenlanders went to the polls.
And the mining project was top of the agenda. In many places, posters displaying ‘urani naamik’ were alongside election posters. An opinion poll in South Greenland showed that 71% of the population were against the mining project.
In fear that the project will scare away tourists or become a health hazard to the local population. More than half of the citizens did not trust the authorities to manage the Kvanefjeld project.
A 34-year-old man who grew up in Narsaq overlooking Kvanefjeld led the political opposition to the mining project. His name is Múte B. Egede, a former Minister for Raw Materials, leader of the opposition party IA (Inuit Ataqatigiit) and a fierce opponent of the mining company. After the election, he became the prime minister of Greenland.
“The people have spoken and the people are right, the project will not happen”, Múte B. Egede announced shortly after the April 2021 elections.
Seven months later, Inatsisartut, the Parliament of Greenland, convened on a new law, which passed by a slim majority.
Politicians adopt the ban on uranium, a death sentence for the Kvanefjeld project. The path to critical minerals and uranium is definitively blocked by a five-paragraph law. The day after the election, Greenland Minerals’ shares fall by 44 percent.
Authorization before compensation
Today, two years later, the project is in a strange kind of limbo. On one side of the conflict is an accountant, on the other a lawyer.
The accountant is Miles Guy, Chief Financial Officer of Energy Transition Minerals, formally Greenland Minerals. He has been involved since 2009 and he has seen several attempts to shut down the project. The Uranium Act is another setback in the fight for Kvanefjeld.
“They passed a law at the 11th hour to stop this project”, says Miles Guy about the uranium law.
But the mining company has not given up yet, and Miles Guy insists that they have complied with all the requirements set by the authorities.
“Our assessment is that we are entitled to an exploitation license, and that is the right we are trying to enforce. If it is proven that we are not entitled to it, our argument will be that we have been expropriated and are therefore entitled to compensation. But our primary goal is to enforce our right to an exploitation license,” he says, pointing a legal gun towards the government of Greenland and in part Denmark too, to which this case is also directed.
Denmark’s role in the dispute
- The mining company has brought the case against both Greenland and Denmark, because the Minerals Authority was part of the Danish civil service at the start of the mining project in 2007. Denmark also pays one third of the costs of the case.
- The Danish Ministry of Climate and Energy has no comment on the case as long as it is pending in court.
The lawyer is Jørgen Hammeken-Holm, who has just celebrated his 25th anniversary as a civil servant in the Greenlandic civil service.
As Permanent Secretary for Mineral Resources, he has seen politicians come and go over the years, and this is not the first time an Australian mining company has flexed its muscles in front of him and his small office.
“I sleep peacefully at night”, says Jørgen Hammeken-Holm.
He denies that the mining company has been expropriated.
Instead, he believes that the uranium law trumps the authorization previously granted and the new legislation is one that everyone must follow.
“Naalakkersuisut, the Cabinet of Greenland, decides on the grounds of the rules in force at any given time.
The Uranium Act specifies which licenses the Act applies to, and the Government of Greenland must, of course, follow those rules”, he says.
If Greenland and Denmark end up losing the case, Jørgen Hammeken-Holm does not belive that the two countries could be ordered to pay compensation.
Instead, he suspects that the judges will tell the Government of Greenland that it has interpreted the rules incorrectly.
Compensation is out of the question because, according to him, the law does not allow for expropriation.
“This means that the lawsuit has to begin from the point where it was last left off. In the worst case, we would start the lawsuit from where we left it and in doing so they can get an exploitation license,” says Jørgen Hammeken-Holm.
Gambling with your own future
While Jørgen Hammeken-Holm is confident, experts warn that Greenland is gambling with its own future.
Poul Hauch Fenger is a lawyer with expertise in international law.
As a lawyer, he has had insight into several arbitration cases and believes that from the outside it seems as if Greenland has adopted the new uranium law in an attempt to stop the mining project in Kvanefjeld.
In his opinion, this creates a “Gordian knot” for Energy Transmission Minerals, because the mining project has been organized according to an existing legislation and is now suddenly presented with a completely new and stricter legislation.
“With the proviso that I do not know the finer details of the case, I would say that the existing legislation must be stronger than the new legislation. Therefore, my immediate thought would be that mining company has a good case”, he says, also issuing a warning to Greenland:
“When companies consider throwing millions or billions of dollars into a project, they do so based on the expectation that their investment will be returned. But if they can see that the political climate means that a new, blocking legislation can suddenly be adopted, they could find themselves on thin ice and become very reluctant to invest,” says Poul Hauch Fenger.
Former Deputy Director of the research institution GEUS (Geological Survey of Denmark and Greenland) Flemming Christiansen agrees.
He believes the case presents Greenland with a “credibility problem”.
“As a matter of principle, you don’t legislate retroactively, as I believe has happened here. Previously, it would have been the case that you would automatically get an exploitation license if you had first obtained an exploration license and at the same time met the requirements laid down,” says Flemming Christiansen.
He also believes that the lawsuit’s biggest loser will be the green energy transition.
“If people are going to have electric cars and wind turbines, then somewhere in the world mining must be carried out to get the metals we need,” he says, arguing that concerns about radiation could be addressed through various forms of environmental protection.
The easy alternative is for Greenland to allow the project to proceed in a form that is as safe as possible for everyday life around Kvanefjeld.
This will provide Greenland with jobs and large tax revenues, while making critical minerals available as soon as possible for the green energy transition.
And it would certainly avoid a potential bill of 15 billion Danish kroner.
But against this backdrop and with cryptic references, sources say that you have to look beyond Greenland to understand why the government of Greenland does not just take the easy way out.
You have to look to the east.
The threat lies far away from South Greenland
On a winter afternoon in 2019, a Chinese man takes the stage at a conference at Industriens Hus in Copenhagen and begins to speak.
The man’s name is Mr. Hu Zesong, and the Confederation of Danish Industries has invited him to talk about mining investments in Greenland.
Mr. Hu Zesong is the CEO of the Chinese company Shenghe Resources, one of China’s leading companies in the processing of critical minerals and uranium.
Mr. Hu Zesong is enthusiastic about the Kvanefjeld project in Greenland and about Energy Transition Minerals, of which Shenghe Resources owns 12.5 percent.
Chinese co-ownership has caused a stir in Greenland, particularly back in 2016 when it emerged that Shenghe Resources had the opportunity to buy 60 percent of shares in the mining company.
But Shenghe Resources are also interesting because they are partly owned by the Chinese state and are a crucial piece in China’s attempt to control the world’s critical minerals.
Until the Uranium Act, all indications were that when critical minerals were extracted from Kvanefjeld, they would be shipped to China, where Shenghe Resources, together with China National Nuclear Corporation (CNNC), would process them.
This in itself is controversial because the two Chinese companies agreed to import critical minerals into China, where they would be separated from the thorium and uranium, both of which can be used as radioactive fuel.
For example, in nuclear weapons.
The US authorities link the China National Nuclear Corporation to the Chinese military.
The great race
It is important to understand the role of Shenghe Resources because they are one of China’s key players in the great power struggle for critical minerals, and because it is a battle that is largely being played out on Greenland soil.
In 2019, the then US President, Donald Trump, even wanted to buy Greenland, while the then US Ambassador to Denmark Carla Sands participated in ceremonies and excursions to Kvanefjeld and the US opened an Arctic Embassy in Nuuk.
During a trip to South Greenland, the US Geological Survey determined that “one of the world’s largest reserves of critical minerals is found here”.
On the other hand, the US and China have been fighting over the rights to a mining project at Citronen Fjord in North Greenland.
Another Chinese company, General Nice, in 2015 bought a company that holds the rights to a large iron mine at Isua, not far from the capital, Nuuk.
The EU has opened an official office in Greenland as part of its new Arctic policy.
And the EU is very clear about the need to access Arctic resources, the vast majority of which are held by China.
While Greenland does not have a problem with Chinese investments, Danish and American politicians are quite nervous about them.
Recent threat assessments by the Danish Defense Intelligence Service (Forsvarets Efterretningstjeneste) state that the threat of espionage from China is increasing and commercial interests can lead to political influence. And most recently, last week PET warned of a massive and growing espionage threat from China.
In July 2021, Denmark adopted two laws to prevent foreign investments and economic agreements – mainly Russian and Chinese – from threatening Denmark’s national security.
The chair of the Foreign Affairs Committee, Michael Aastrup Jensen, urges Greenland and the Faroe Islands to implement the same type of laws.
The warnings were clear during the meeting at Parliament.
“We need to look at how we can have closer cooperation on critical infrastructure,” Aastrup Jensen told the Greenlandic and Faroese members for parliament.
In less than two months, the army of lawyers will meet again in the Copenhagen Arbitration Court.
Three judges have to decide whether the case should go to arbitration at all or be transferred to the ordinary courts.
In that case, the lawsuit is likely to be played out in the courts in Greenland until the dispute is settled.
The battle for Kvanefjeld continues.
In cooperation with Politiken
