A song of ice and metal: Is there a benefit for the US in buying Greenland
Talks about Greenland coming under US control have recently revived again. If earlier the elected American president talked about buying the island (a separate question is from whom exactly it will be bought), now Donald Trump does not rule out a forceful scenario of solving the issue. The largest island in the world, which is extremely sparsely populated and mostly unfit for full-fledged life, is needed by the United States primarily for geopolitical and military purposes. However, we should not miss its commercial attractiveness, which is now largely unrealized. The Izvestia article tells us what Greenland's economy is and how its potential can interest even American business, which is not used to giving away on trifles.
Fish alone
From the economic point of view, Greenland can hardly be called a superpower. Its GDP is about $3.5 billion in nominal terms, an extremely insignificant figure on the scale of the world economy. However, this "pie" is divided into less than 56 thousand people, which makes the GDP per capita of $56 thousand. This is a serious indicator even by European standards. For comparison, in Germany - $55 thousand, and in France - $48 thousand. At the same time, Greenland has no large cities (where a disproportionately large part of the national income is always created), so it can probably be called the richest rural country in the world.
As an autonomous part of the Danish Crown, Greenland, unlike the metropolis, is not a member of the EU. It joined the European Economic Community in 1972, but the move was considered detrimental to national interests. In a 1985 referendum, the island left the community but retained full access to the European common market.
The key industry in Greenland has always been marine fisheries. But while in the 18th and 19th centuries the Inuit primarily harvested sea animals and whales, later fish and other edible seafood - from halibut to shrimp - became the island's main products.
The country's fishing industry provides more than half of the GDP, about 90% of exports and employs about 6,000 people - about 15% of the country's total labor force. It is worth noting that fish factories in the country are owned mainly by state-owned companies. This makes it easier for the government to control quotas to prevent overfishing, which could lead to the depletion of fish resources. Greenland is critically dependent on the latter. The key buyers of the country's products are Denmark (about half of all supplies), Great Britain and Japan. By the way, Greenland has a treaty with Russia, under which Russian fishermen can fish in the exclusive economic zone of the seas around the island and vice versa.
In the long search for oil
Things may soon change. The total area of Greenland is 2.1 million square kilometers, only 3.5 times smaller than the smallest continent, Australia. About 80% of this territory is covered by an ice cap that excludes the possibility of exploiting natural resources. But the remaining territory is comparable to the area of a large European country, not to mention the shelf. And given the rate of global warming, more and more land will be freed from under the glacier, although this is a process that will take hundreds or even thousands of years.
Nevertheless, minerals have been sought in Greenland for quite a long time. From the point of view of hydrocarbons, the island became interesting after the "oil shock" of the 1970s, when oil and gas began to be found almost everywhere. Against the backdrop of significant finds in subsea areas belonging to Norway and the UK, something similar was attempted in Greenland, mainly on the shelf and in the deep waters to the west of the island. However, initial efforts were unsuccessful.
A renewed search in the 1990s, involving ExxonMobil, Chevron and Shell, also failed to yield significant success. Finally, in 2021, the island's government decided to ban drilling and exploration - only three small areas remained, the license for which expires in 2027-2028. The main reason cited was environmental impact, but in general the Greenlanders' enthusiasm for the presence of oil and gas in the subsoil has waned. And the volatility in the hydrocarbon market did not give optimism.
Meanwhile, the U.S. Geological Survey in the 2000s predicted the presence in Greenland and the seas around it 31.4 billion barrels of recoverable oil reserves. This, of course, is not Saudi Arabia or Iraq, but it is quite comparable to the reserves of such a significant oil power as Nigeria.
However, despite the rosy expectations, oil production in the country has not yet started. This is easily explainable: it is difficult and expensive to extract hydrocarbons in the Arctic. All countries operating in the region face this problem. The risks are even greater in areas where it is still not known whether there is oil and gas and whether the reserves can be extracted economically with current technologies. Therefore, the topic is postponed at least for the next few years, unless, of course, the political situation changes.
In the bowels, however, there may be a lot of interesting things in addition to oil and gas. To date, Greenland is mining anorthosite (a stone used in cladding), as well as sapphires and rubies, but only at two mines. This is negligible in the country's overall economic balance. But there is a very wide range of geological exploration.
For example, the Disco-Nuussuaq project in 2021 attracted a lot of attention around the world: it was said that there was a huge deposit of nickel, copper, platinum and cobalt. Bluejay Mining, which was engaged in the development of the site, was invested in by Bill Gates and Jeff Bezos. The organization itself stated that the nickel deposit would be comparable to Norilskoye in terms of its scale. So far, the results have been moderate: geologists have discovered seven anomalies containing, presumably, a substantial amount of resources, but with no further specifics in terms of estimates, much less the timing of the start of mining operations.
Another promising area is rare earth elements, which Greenland may be rich in. They are vital to the development of green energy and, in the context of the phase-out of carbon resources, essential. Greenland now has agreements of intent with the EU and the US, and there is a dialog with China. There are significant obstacles here. For example, in 2021, the government banned uranium mining almost simultaneously with oil, while rare earths at the Kuannersiut project, which the Australian company Greenland Minerals has been engaged in for 15 years, made sense to mine in conjunction with raw materials for nuclear fuel.
The problem with the extraction of numerous metals and other minerals in the country is similar to that of oil extraction - difficult natural conditions. The fjords in the north of the country are covered with ice for most of the year, which makes it extremely difficult to work and especially to export the products. In the south, the situation is better: at least in summer the waterways are ice-free. However, even there the infrastructure is lacking. The development of the mining industry requires significant investment, which companies will only accept if they make a truly phenomenal find.
Nevertheless, the situation will improve over time for natural reasons. Every decade the Arctic becomes more and more ice-free, and Greenland is also affected by this process. There is a possibility that in 20-30 years summer navigation will be free in all Arctic territories, and in some places it will be possible to sail without icebreakers in winter.
Waiting for a clean sea
Greenland is not limited by its wealth: its position can be an advantage in itself. It is closely adjacent to the Northwest Passage, the American alternative to the Northern Sea Route. In theory, it makes it possible to shorten the distance from North American ports to the Asia-Pacific region (primarily Japan) by several thousand kilometers. In 2007, the passage was completely ice-free for several days for the first time. In 2016, the situation was repeated.
So far, we are not talking about significant traffic. Nevertheless, paleoclimatic data show that 8,000 years ago, at the height of the largest warming of our interglacial, the Northwest Passage was ice-free all summer long. The current warming may be even more significant. The problem with the passage is its shallowness, which limits the movement of large ships.
For now, Greenland is cold, and will be for a long time. But that presents a separate opportunity. The ice cap is a free refrigerator that will be able to cool down data centers, of which there will only be more as time goes on. The only question is power supply and connectivity to the Big Earth.
In general, the prospects of Greenland right now look vague - there are resources, but really large deposits have not been found, and to invest in development must be very much. At the moment, there are no immediate benefits for corporations working there. However, unlike commercial firms, the state can aim for much longer terms, so the acquisition of the island in one form or another makes sense for America.
