“Build the wall!” he chanted. And they laughed.
Until he actually started building the wall.
“Cut corporate taxes!” he campaigned. And they laughed.
Until the Tax Cuts and Jobs Act of 2017.
“Buy Greenland!” he tweeted. And they laughed.
Until . . .
The Original Green New Deal
Greenland doesn’t seem to have a lot going for it. There’s almost zero infrastructure, no land for crops, and it runs a consistent deficit. Most of its money comes from fish.
The country’s national anthem roughly translates to “Our country is really old.” The backup national anthem translates to “Our country is really long.”
Financially, Greenland is a mess. Denmark subsidizes Greenland to the tune of about half a billion dollars a year. That’s two-thirds of the annual budget. Without that help, Greenland would face complete collapse within years.
So at face value, Greenland looks like a horrible proposition.
But this isn’t even the U.S.’s first, or second, or even third attempt to pick up the Arctic country.
One of those attempts was right after World War II. The U.S. offered Denmark $100 million (~$1.4 billion today) in gold to buy Greenland.
A memo from that time, written by the U.S. Director of the Office of European Affairs, stated that “the control of Greenland is indispensable to the safety of the United States.”
That’s never been more true than it is now, eighty years later.
Red China Moves Into Greenland
As they’ve done in Latin America, Australia, and Africa, China is buying their way into Greenland.
They’re using the same model there that they have used everywhere else: provide the country with airports, running water, roads… everything citizens are used to doing without.
Kuupik Kleist, former prime minister of Greenland, spoke of China’s involvement in the country: “We need it, you see.”
But of course, China has its own ideas about the Greenland play. It has begun to call itself a “near-Arctic” country… despite being more than 1,500 miles from the Arctic Circle.
So they’re taking actions to make themselves an Arctic country: I call it the creeping takeover.
- Three years ago, a company owned by the Chinese government tried to buy a naval base in Greenland. Denmark had to keep them from doing so.
- Last year, China tried to finance three airports to gain access to the region, with a possible military foothold in the works. The U.S. stepped in and shot the plan down.
- Now, China is desperately trying to take control of several valuable resources unique to Greenland.
In 2008, a U.S. Geological Survey was conducted in Baffin Bay, which separates Greenland from Canada. The survey estimated that the Bay holds more than seven billion barrels of oil and fifty-two trillion cubic feet of natural gas.
Greenland also holds incredible proven and unproven reserves of resources such as gold, diamonds, lead, and iron ore.
Not to mention, Greenland holds 10 percent of a resource that is becoming a lot more valuable around the globe.
But those are nothing compared to a priceless resource hidden deep under Greenland’s ice.
The country that controls the supply of this resource has the same control that oil powers had in the mid–twentieth century. Every other country in the world must do their bidding.
A Time Bomb of Rare Earth Metals
Rare earth metals are a resource crucial to the production of electric vehicles (EVs), wind turbines, military technology, cell phones…the list goes on.
There are 17 rare earth elements and they have fancy names like Yttrium, Erbium, Cerium and Lanthanum.
These metals are crucial not just for national security, but for the technology we use every day.
Total global reserves for rare earth metals are estimated at 120 million tons (excluding Greenland). Greenland adds 38.5 million tons to that total—a full quarter of the global supply. But they’re not mining it yet.
The country that predominantly controls rare earth metal production is China.
It has the world’s biggest rare earth ore deposits. And it absolutely dominates the market: more than 70% of rare earth metals are produced in China.
In June 2019, the U.S. Commerce Department issued a warning. If China halted their rare earth exports — which they did in 2010 – it would significantly shock both the U.S. and foreign supply chains.
The U.S. government is desperately looking to diversify outside of China.
Greenland is a logical choice. It gets a near-perfect score on the AK-47 indicator. It’s politically stable, has a long-standing legal system, and low corruption.
As its rare earths thaw out, literally, Greenland presents a natural solution for the United States’ national security interests.
Most of the rare earth metals are currently under a layer of ice one to two miles thick. But that ice is melting fast. Much faster than scientists had originally predicted.
According to Denmark’s Polar Portal…
“In July alone, [Greenland] lost 160 billion tonnes of ice through surface melting. That’s roughly the equivalent of 64 million Olympic-sized swimming pools. Just in July.”
Greenland itself is already getting ready for when the ice melts. Speaking to the Wall Street Journal, Prime Minister Aleqa Hammond declared, “Mining will come to Greenland.”
The political party, wanting to eventually separate from Denmark, has seen resource extraction as its chance to gain economic independence.
But several roadblocks stand in its way.
Greenland has always been a poor, dependent country. So it has never had the money to develop its natural resources.
The country is huge – more than three times the size of Texas. But its entire, rapidly aging population wouldn’t even fill a football stadium. So there’s no one to extract the resources.
Finally, the country is almost completely defenseless. It relies on far-off Denmark for its national security, and is trying to gain complete independence from the country.
The Polar Silk Road
All of this makes Greenland the perfect target for China.
If China’s President Xi Jinping plays his cards right, he could get a near-total monopoly on rare earth metals, valuable plays in oil & gas and the upper hand in global affairs with a new base in the Arctic.
Xiao Yang, director of the Arctic Research Center, said:
“A small and weak Greenlandic nation . . . will be the key node for the successful implementation of the Polar Silk Road.”
To see just how easy it will be for China to take over, consider a project Greenland recently approved for London Mining.
Don’t let the name fool you: It’s almost entirely backed by Chinese companies.
The single project is a $2.35 billion iron ore mine… or about the entire GDP of Greenland.
It will require up to 3,000 workers that represents about 6 percent of the nation’s entire population.
In other words, China won’t even have to make an offer or start a war. It’ll be a takeover from within. We have seen this story unfold before in places like Central America and Africa.
Denmark is already wary of the threat. But a foreign affairs spokesman in the Danish government, said:
“We don’t want a communist dictatorship in our own backyard.”
That leaves Greenland with only one place to turn for help: the United States. And the United States needs Greenland to secure its own naval defense in the Arctic Circle.
It’s probably premature to add new stars to the American flag just yet. Any movement will be at a glacial pace. It’s taken seventy years for the U.S. consulate to finally reopen in Greenland.
Greenland is increasingly fighting for complete independence, with 2021 being given as a potential date to break free from Denmark.
So with time… we might not be laughing anymore.
I’m currently doing advanced research on several rare earth opportunities for subscribers and me.
And when I do publish an investment idea on rare earths, members of Katusa’s Resource Opportunities will be the first ones to know about it.
Regards,
Marin
