China’s Back Door into the Arctic Resource Race


Desperate times call for desperate measures. In spite of set backs in commodity prices over the last several years, there will inevitably be rising demand for raw materials that are increasingly expensive to extract.

While it may not seem like China is in desperate need for more iron right this second, it will have to scramble if it wants to ensure long-term cheap supply from mines that may take up to a decade to develop. That may lead to Chinese worker camps near the Arctic Circle halfway around the world in Greenland.

A British company, London Mining, is in talks with a state-owned Chinese mining company to finance and build a $2.3 billion iron mining operation in Greenland. The country, with a mere 57,000 citizens, would see an influx of 2,300 Chinese workers. A vast majority of any iron extracted in the mines would be shipped back to China.

Thawing glaciers and long-term warming trends could potentially free up a vast quantity of raw materials that could enrich the relatively poor country. Denmark currently funds 40% of Greenland’s budget but mining deals may result in fiscal autonomy and an increased chance of political independence as well.

In addition to the iron mine, interest is growing in uranium and rare earth element exploration. Greenland’s government has issued scores of permits for exploration and is showing no preference for American, Canadian or European companies.

That is causing concerns for some. The Artic Ocean is already the focal point of an unprecedented race to secure oil, fishing waters and shipping routes. China may come to influence Arctic issues through Greenland and work its way into claims and political issues far from its borders.

As Paula Briscoe, an analyst for the Council on Foreign Relations, warns in “Greenland- China’s Foothold in Europe:

If Greenland, a littoral Arctic territory, becomes increasingly dependent on Chinese investment, Beijing’s influence in Greenland and Arctic affairs also grows. China’s application to be elevated to permanent observer status is on the Arctic Council’s agenda in 2013, and Greenland’s administrator, Denmark, is already a supporter of China’s bid. Should Greenland become fully autonomous, and then a likely permanent member of the Arctic Council—two possibilities made more likely by heavy Chinese investment—China’s increased influence in Greenland could help buy Beijing a proxy voice in Arctic matters….

It is conceivable—but certainly many years off—that China could at some point in the future use its economic might and the lure of more money flowing into Greenland’s economy to persuade Greenland to allow Beijing to base permanent military and intelligence capabilities in Greenland. China has global economic interests and may want to be better positioned to protect them in the future. Depending on the evolution of China’s foreign policy over the coming years, such worries may be well-founded or for naught.”

Categories: Business, News mix

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