Investment Impact Analysis of Rare Earth Resource Development in Greenland Amid Geopolitical Tensions

Based on the latest market data and geopolitical developments, I have prepared this systematic analysis report on

.

---

Recently, the U.S. policy stance towards Greenland has seen a significant escalation. In early January 2026, U.S. President Donald Trump explicitly stated “we absolutely need Greenland” in a media interview, emphasizing the island’s critical importance to U.S. national security [1]. Meanwhile, the U.S. appointed Louisiana Governor Jeff Landry as the “U.S. Special Envoy to Greenland”, and Landry publicly stated that he would work to make Greenland “part of the United States” [2].

This series of actions is not an isolated incident, but a systematic manifestation of U.S. strategic considerations. In 2025, the U.S. Department of Defense transferred Greenland from the jurisdiction of U.S. European Command to U.S. Northern Command [3]. While this move may seem geographically reasonable, its political implications are highly sensitive—it further blurs Greenland’s positioning as a “European territory”, laying groundwork for potential future U.S. actions.

The U.S. actions have triggered unprecedented divisions within NATO. On January 4, 2026, Swedish Prime Minister Ulf Kristersson posted on social media to explicitly support Denmark, emphasizing that “only Denmark and Greenland have the right to decide matters concerning themselves” [4]. Norwegian Prime Minister Jonas Gahr Støre, the Finnish government, and European countries including the UK and France have successively expressed their positions. French Foreign Ministry Spokesperson Pascal Confavreau clearly stated: “Borders cannot be changed by force; Greenland belongs to the Greenlandic people and the Danish people, who should decide their own future” [5].

Danish Prime Minister Mette Frederiksen responded more strongly. In a statement, she pointed out that the U.S. has no right to annex any part of the Kingdom of Denmark, and warned: “If the U.S. sends troops to attack another NATO country, everything will end. This includes NATO itself, as well as the security system maintained since the end of World War II” [6]. Greenlandic Autonomous Government Premier Jens-Frederik Nielsen emphasized that the U.S. remarks are “completely unacceptable” and called for an end to “threats, pressure, and talk of annexation” [7].

From a military deployment perspective, the U.S. currently operates the Pituffik Space Base (formerly Thule Air Base) in Greenland. Built after the U.S. and Denmark signed the Greenland Defense Agreement in 1951, the base primarily provides missile early warning, missile defense, and space monitoring support for the U.S. and NATO [8]. In addition, Greenland guards part of the waters of the “GIUK Gap” (Greenland-Iceland-UK Channel), where NATO monitors the movements of the Russian Navy in the North Atlantic.

Developments on the intelligence front also merit attention. Reports indicate that U.S. intelligence agencies are strengthening intelligence work targeting Greenland, showing that the U.S. government is attempting to gradually integrate Greenland into its strategic system through a three-pronged approach of military, diplomatic, and intelligence efforts [9].

---

Greenland possesses extremely rich rare earth mineral resources. According to 2025 data from the U.S. Geological Survey (USGS), Greenland has approximately 1.5 million metric tons of rare earth reserves, ranking 8th globally [10]. However, the Geological Survey of Denmark and Greenland (GEUS) provided a more optimistic assessment, stating that Greenland may actually have 36.1 million metric tons of rare earth reserves—if this data is accurate, it will make Greenland the world’s second-largest holder of rare earth reserves [11].

More importantly, Greenland has exceptionally high concentrations of heavy rare earth elements, including terbium, dysprosium, and yttrium. These elements typically account for less than 10% of most rare earth deposits, but they are key materials for permanent magnets used in wind turbines, electric vehicles, and defense systems [12]. A research report from HSBC points out that Greenland has 29 of the 38 “critical raw materials” identified by the European Commission as high or medium importance [13].

In addition to rare earths, Greenland has a diversified mineral resource portfolio. According to USGS estimates, Greenland also holds approximately 17.5 billion barrels of undiscovered oil and 41.5 trillion cubic meters of natural gas [14]. Furthermore, the island has medium reserve potential for minerals such as nickel, copper, lithium, and tin. The USGS estimates that the Arctic Circle may hold approximately 30% of the world’s undiscovered natural gas reserves [15].

This diversified mineral resource portfolio gives Greenland potentially important status in the global critical mineral supply chain, especially in the current geo-economic environment where countries are seeking supply chain diversification to reduce geopolitical risk exposure.

Greenland’s geostrategic location also cannot be ignored. As the world’s largest island, covering an area of 2.166 million square kilometers, Greenland is situated between the Arctic Ocean and the Atlantic Ocean, bordering Canada to the west and overlooking Europe to the southeast, making it a strategic hub “connecting two oceans and overlooking two continents” [16].

As global climate change accelerates the melting of Arctic ice, the commercial value of Arctic shipping routes is increasingly prominent. According to statistical data from the Arctic Council, the number of ships navigating Arctic waters increased by 37% between 2013 and 2023 [17]. This route shortens voyages by thousands of kilometers compared to traditional routes and may become a new global trade artery in the future. Michael McFaul, a professor at Stanford University, pointed out that from a geopolitical perspective, Greenland is a “highway” connecting the Arctic and North America, with significant strategic significance [18].

---

Despite Greenland’s rich mineral reserves, there is a huge gap between theoretical reserves and actual mining capacity. The primary challenge comes from extreme geographical and climatic conditions: 80% of Greenland’s area is covered by ice, and more than half of the mineral potential sites identified by GEUS are located north of the Arctic Circle [19]. Such extreme climatic conditions significantly increase mining difficulty and operating costs.

Taking rare earth mining as an example, although the Kvanefjeld and Tanbreez deposits in southern Greenland have development potential (the Tanbreez project has set an initial target of producing approximately 85,000 metric tons of rare earth oxide annually starting in 2026), no large-scale mines have actually been put into operation yet [20]. This reflects the huge time span and technical obstacles between exploration and commercial production.

At current prices and production costs, Greenland’s rare earth resources may not be economically viable for mining in the near term. Considering the additional complexity of the ice-covered geographical environment and relatively strict environmental legislation, the GEUS report clearly states that Greenland’s deposits will require higher future commodity prices to achieve economic mining [21].

HSBC’s research draws an analogy with Venezuela’s oil dilemma. Although Venezuela has the world’s largest proven oil reserves, only a small portion can be economically mined. The same applies to Greenland: the reserves are huge, but the economic viability of mining is still unclear [22]. The key is not only whether a country has commodity resources, but also whether mining these resources is economically feasible.

Greenland and Denmark have relatively strict environmental regulations, which constitute another important consideration for potential investors. Against the backdrop of increasingly fierce global geo-economic competition, where countries are increasingly using trade and commodity access as geopolitical tools, environmental regulations are both a barrier to protecting local ecosystems and a factor that may delay resource development.

In addition, rare earth development projects involve complex approval processes, including permit applications, waste management, engineering and feasibility studies, local and environmental regulations, on-site construction, and other links [23]. All these procedures must be completed before the first batch of rare earth metals and oxides can be produced, which means that it may take up to a decade or even longer from project initiation to actual production.

---

To understand the investment value of Greenland’s rare earth resources, it must be analyzed against the backdrop of the global rare earth supply chain. Currently, China holds a near-monopolistic position in the global rare earth industry chain, which is reflected in the following key links:

• Rare Earth Smelting and Separation Capacity
  : China controls 92.3% of the world’s rare earth smelting and separation capacity [24]
• Rare Earth Mining Share
  : China accounts for 69% of the global rare earth mining market share
• Magnet Manufacturing
  : China holds a 98% market share in rare earth magnet manufacturing
• Heavy Rare Earth Supply
  : 99% of the global supply of heavy rare earths such as dysprosium and terbium comes from China [25]

This all-round dominance gives China strong economic and geopolitical influence in the critical minerals market. The duopoly pattern of China’s rare earth industry (Northern Rare Earth + China Rare Earth) further strengthens its supply advantage: Northern Rare Earth controls more than 50% of the resources in the Bayan Obo Mine, and its annual mining quota accounts for more than 30% of the national total [26].

Facing China’s dominance, Western countries are accelerating the construction of independent rare earth and magnetic material supply chains. The U.S. Department of Defense has reached an important agreement with MP Materials, including a minimum price commitment of $110 per kilogram for neodymium-praseodymium oxide [27]. Meanwhile, the U.S. Department of Energy announced a nearly $1 billion investment plan to support the supply chain of critical minerals and rare earths, covering mining, processing, manufacturing, recycling, and by-product recovery [28].

However, this restructuring process faces two core challenges. First, known reserves of certain rare earths (especially heavy rare earths that have recently been restricted) are very scarce outside Myanmar and China, and mine construction typically takes 8-10 years [29]. Second, rare earth refining technology is complex and requires deep professional knowledge; the construction and capacity expansion of refineries usually take about five years.

2026 will become a critical node for the rare earth supply chain. Starting from January 1, 2026, the U.S. will impose a 25% Section 301 tariff on Chinese permanent magnets [30]. However, analysts point out that U.S. domestic magnet factories will not be able to achieve large-scale production until the end of 2026 or even 2027, which means that U.S. manufacturing will face cost pressure without alternatives throughout 2026.

Analysis from Goldman Sachs shows that starting around mid-2027, most sales contracts of companies with refining capacity will be signed at a minimum price of over $100 per kilogram (actual price). This contrasts with the spot price of Chinese neodymium-praseodymium oxide, which is expected to rise to $85 per kilogram [31]. This price gap reflects a new logic for strategic resource pricing: it is no longer determined entirely by market supply and demand, but instead reflects national security considerations to a greater extent.

---

Geopolitical tensions have significantly increased investment uncertainty in Greenland’s rare earth resource development. From an investor’s perspective, this uncertainty is mainly reflected in the following aspects:

1. Sovereignty Risk
   : Diplomatic games between the U.S. and Denmark may affect existing investment arrangements and future development rights
2. Policy Risk
   : The new geopolitical landscape may lead to policy changes such as rare earth export controls and investment reviews
3. Operational Risk
   : Tensions may affect equipment imports, personnel mobility, and logistics arrangements

Market data reflects the pricing of this uncertainty. From recent market performance, the basic materials sector (including mining) rose by 1.27%, while the energy sector fell by 1.59% [32], showing that investors are making selective allocations within the resources sector.

Facing changes in the geopolitical landscape, institutional investors are adjusting their investment strategies. According to market analysis, the only viable logic for rare earth investments in 2026 is to seek “non-market-based” profit sources [33]. Investors are focusing on the following types of assets:

1. “Privileged Assets”
   : Enterprises with government guarantees or long-term offtake agreements, such as MP Materials
2. Supply Chain Closed-Loop Enterprises
   : Companies that achieve vertical integration to reduce supply chain risks
3. Resource Endowment Leaders
   : Resource enterprises with quotas or cost advantages

For investments in Greenland, special attention needs to be paid to its unique geopolitical attributes. Since the region is currently under Danish jurisdiction, any investment must consider potential policy changes brought about by U.S. involvement.

Despite numerous short-term challenges, the long-term investment value of Greenland’s rare earth resources still merits reassessment. Analysis from several dimensions:

1. Driven by Supply Chain Security
   : Against the backdrop of U.S.-China tech competition, critical mineral supply chain security has become a national security issue, which provides long-term demand guarantees for non-Chinese rare earth projects
2. Expected Price Increases
   : With the establishment of minimum price mechanisms in Western countries and growing demand, rare earth prices are expected to rise in the long term
3. Resource Scarcity
   : Greenland’s high concentration of heavy rare earths gives it greater strategic value against the backdrop of increasingly tight heavy rare earth supply

However, investors need to clearly recognize that there is a long transformation process between “theoretical reserves”, “mineable resources”, and “economically mineable resources”. At current price levels, Greenland’s projects may require a significant increase in commodity prices to become attractive investment targets [34].

---

The Greenland dispute marks the profound “geopoliticization” of critical mineral investments. Traditionally, commodity investments mainly focused on economic factors such as supply and demand fundamentals, inventory levels, and cost curves. But in the current landscape, resource investments increasingly need to incorporate geopolitical risk assessments.

The European Policy Centre, a EU think tank, points out that the U.S. government’s high-profile statements on the Greenland issue are widely seen as a typical case of bypassing allies again to pressure other countries’ sovereignty in the name of “national security” [35]. This pattern of behavior is exacerbating collective anxiety within the EU about the direction of transatlantic relations and has become a new variable affecting U.S.-Europe relations.

Geopolitical tensions are driving the rise of resource nationalism. Countries are increasingly inclined to view critical mineral resources as strategic assets rather than ordinary commodities. This means:

1. Strengthened Investment Reviews
   : More countries will strengthen reviews of foreign investors’ acquisitions of critical mineral projects
2. Expanded Export Controls
   : Resource export controls may become a tool for geopolitical games
3. Localization Requirements
   : Localization requirements for processing and manufacturing may restrict raw ore exports

For investors, this means needing to pay more attention to the policy stability of the host country of the investment target, as well as its diplomatic relations with major economies.

The global rare earth supply chain is undergoing profound restructuring, which creates new opportunities for investors:

1. Western Processing Capacity
   : The construction of rare earth processing and magnet manufacturing capacity in North America and Europe is accelerating
2. Development of Alternative Supply Sources
   : Rare earth projects in regions other than Greenland, such as Australia and Africa, are receiving more attention
3. Recycling Industry
   : Rare earth magnet recycling has become an important supplementary source of short-term supply

Goldman Sachs’ analysis points out that new magnet capacity will be added in the West by mid-2027, indicating that strategic shifts are actively influencing future market dynamics and contract structures [36].

---

For investments in Greenland’s rare earth resources, the following factors need to be carefully evaluated:

:

• Geopolitical uncertainty may lead to project development delays
• Economic viability is questionable at current price levels
• Environmental approval and public opposition may hinder project progress

:

• Supply chain security needs provide long-term demand support
• Scarcity of heavy rare earths gives strategic premium
• Potential for price increases

:

• Focus on mature projects that have received government support
• Diversify investments across multiple geographic regions to reduce single risk exposure
• Emphasize enterprises with technological barriers and cost advantages

Based on the current geopolitical landscape and market dynamics, the following strategies can be considered for allocations in the rare earth sector:

1. Overweight “Privileged Assets”
   : Allocate to enterprises with government long-term offtake agreements, such as MP Materials
2. Focus on Vertically Integrated Enterprises
   : Enterprises with a complete industrial chain from mining to processing have stronger risk resistance
3. Layout Processing Capacity
   : Refining capacity is the current key bottleneck in the supply chain, and enterprises with relevant capabilities are expected to obtain excess returns
4. Beware of Overvalued Assets
   : Remain cautious about pure concept targets without substantive support

Investment decisions need to consider the following key risk factors:

Risk Type	Specific Content	Impact Assessment
Geopolitical Risk	Shifts in U.S.-Denmark relations, internal divisions within NATO	High probability, may affect project development
Policy Risk	Changes in export controls, investment reviews	Medium-high probability, impacts investment returns
Price Risk	Commodity price fluctuations	Medium probability, affects project economic viability
Technical Risk	Challenges in mining and processing technologies	Medium probability, impacts development progress
Environmental Risk	Environmental regulations and public opposition	Medium probability, may delay projects

---

Geopolitical tensions are profoundly reshaping the investment environment for rare earth resource development in Greenland. The U.S.'s ambitions towards Greenland, the strong reactions from NATO allies, and the resulting tensions in international relations collectively constitute key background factors that must be considered in investment decisions.

From a resource endowment perspective, Greenland has world-leading rare earth reserves and rich critical mineral resources, particularly high-concentration heavy rare earth elements with important strategic value. However, from an investment perspective, there is a huge gap between theoretical reserves and economically mineable resources—extreme climatic conditions, strict environmental regulations, and questionable economic viability at current prices collectively constitute major barriers to development.

For the global supply chain, the Greenland dispute marks the accelerated “geopoliticization” of critical mineral investments. Western countries are accelerating the construction of rare earth supply chains independent of China, which creates opportunities for enterprises with technological advantages and policy support. It is expected that a new market landscape will gradually take shape around 2027, at which point enterprises with refining capacity will gain significant competitive advantages.

For investors, a prudent and flexible investment strategy should be adopted under the current landscape: emphasize “privileged assets” and vertically integrated enterprises, while remaining cautious about concept speculation without substantive support. The investment logic for critical minerals is shifting from the traditional “supply and demand cycle” to “geopolitical arbitrage”, and understanding and adapting to this shift will be the key to successful future investments.

---

[1] Securities Times - “Has the U.S. Showed Its Hand? Trump Reiterates ‘Seizing the Island’!” (https://www.stcn.com/article/detail/3573913.html)
[2] Xinhua Daily - “Why Is the U.S. Eyeing Greenland?” (https://www.xhby.net/content/s695c6a7ae4b06e2d8a5c5c8d.html)
[3] Center for American Studies, Fudan University - “Wei Zongyou: Why Is the U.S. Eyeing Greenland?” (https://iis.fudan.edu.cn/b0/fc/c6893a766204/page.htm)
[4] Phoenix Net - “Trump Says ‘We Absolutely Need Greenland’, Denmark Responds Strongly” (https://news.ifeng.com/c/8pgZkuVTOGk)
[5] CCTV News - “U.S. to Hold Talks with Denmark on Greenland Issue, President of the European Council…” (https://app.dahecube.com/nweb/pc/article.html?artid=258762)
[6] International Financial News - “Has the U.S. Showed Its Hand? Trump Reiterates ‘Seizing the Island’!” (https://www.stcn.com/article/detail/3573913.html)
[7] Securities Times - Ibid.
[8] Fortune China - “Who Does Greenland Serve Strategically?” (https://www.fortunechina.com/shangye/c/2026-01/10/content_471446.htm)
[9] Center for American Studies, Fudan University - Ibid.
[10] Wall Street Insights - “Why Is Trump Eyeing Greenland? Beyond a Strategic Hub, This Icy Island Holds ‘Critical Resources’” (https://finance.sina.com.cn/roll…