The Economist explainsWhy does Greenland’s election have global implications?

The importance of polar politics

ONLY 57,000 people live in Greenland, and little more than 30,000 of them turned out to vote in the country’s general election on March 12th. But the outcome of the ballot in the sparsely populated country may be felt by millions of people around the world. Greenland is sitting on an untapped export industry that, if exploited, could have an impact on the wallet of anyone buying a computer, television or refrigerator.

The world may not often be very interested in Greenland but it is fascinated by what lies beneath it. As the country’s ice cap melts, hidden mineral wealth is coming tantalisingly within reach. The country’s riches include “rare earth” metals that are essential in the production of many electronic devices, from electric-car batteries to television screens. Metals such as cerium (used in glass manufacturing) and yttrium (which goes into electronic displays) are among those that are hidden under the ice. Many rare earths are not as scarce as their misleading name suggests, but they are scattered thinly and can be difficult to extract. In Greenland they are often mixed up with uranium, which under the country's current laws is illegal to mine. Most of the precious metals therefore remain underground.

Mining was the issue that decided the recent election. With 43% of the vote, the social democratic Siumut party ousted the ruling socialist Inuit Ataqatigiit party, which won 34%. Siumut’s leader, 47-year-old Aleqa Hammond (pictured), who grew up in a remote fishing village, became Greenland’s first female prime minister. Both main parties were generally pro-digging, but Ms Hammond said she would lift a ban on the extraction of uranium, thus making it easier to get at the valuable rare earths. She also proposed that mining firms should pay larger royalties, which went down well with voters, many of whom felt that the previous government had been too generous to foreign companies keen to exploit the country's resources.

Should Ms Hammond’s plans go ahead, and Greenland manage to ramp up its extraction of rare earths, it could deliver a jolt to the market for the valuable metals. At the moment rare-earth supply is dominated by China. In recent years China has restricted its exports of rare earths, citing environmental concerns. Extraction of the metals is dirty and dangerous, and stories of poisoning are common. But some see an ulterior motive in China’s cutbacks: by controlling the supply of high-value materials, China can also control their use in finished products. That could help it in its broader strategy to move from low- to high-value manufacturing. If Greenland becomes a big supplier of those same minerals, China’s grip on the market could loosen, and prices around the world may fall. Polar politics therefore matter to many more than the 57,000 people who live in Greenland.

(Photo: AFP)

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