Why Greenland’s vast natural resources won’t necessarily translate into huge profits
The US is sabre-rattling over Greenland once again. The vast island’s natural resources are back on the agenda, a year after then-US national security advisor Michael Waltz announced: “This is about critical minerals. This is about natural resources.”
Greenland is endowed with both fossil fuels and critical raw materials. It possesses at least 25 of the 34 raw materials considered critical by the European Union.
The EU’s 2024 Critical Raw Materials Act seeks to improve European supply security of these, and both Trump and the EU want to weaken Chinese dominance in the trade. Meanwhile, vast reserves of oil are found offshore across eastern and western Greenland.
The value of these resources is hard to estimate as the prices of oil and critical raw materials fluctuate wildly. Like with Venezuela’s oil, it will take an enormous amount of money to build the infrastructure needed to mine the natural resources in Greenland. Mining and fossil fuel projects are capital-intensive, requiring large upfront investments with long lead times before projects yield profits.
Outside its capital Nuuk, there is almost no road infrastructure in Greenland and limited deep-water ports for large tankers and container ships.
Around the world, private mining and fossil fuel corporations can exploit public infrastructure such as roads, ports, power generation, housing and specialist workers to make their operations profitable. In Greenland, huge capital investment would be required to extract the first truckload of minerals and the first barrel of oil.
As such, the government faces a classic dilemma. Let private multinationals extract but lose the lion’s share of revenues? Or insist on state ownership but struggle to find the capital and state capacity to enable extraction.
Mining, past and present
Greenland’s mineral riches have been known about for some time. In April 2025, Danish state broadcaster DR aired a documentary about how Denmark had historically siphoned off profits from a cryolite mine in Greenland.
The programme led to a major political and media crisis, with some believing it challenged perceptions of Greenland being financially dependent on Denmark. Minerals are a prominent but sensitive topic in Greenland’s relationship to the rest of the world.
Foreign companies have tried to set up viable mining industries in Greenland for decades, with little to show for it. Indeed, contrary to US President Donald Trump’s assertions, American corporations have long had the opportunity to enter Greenland’s mining sector. The capital intensity twinned with extremely harsh climactic conditions mean that, so far, no firm has begun commercial mining activities.
Greenland’s natural resources minister, Naaja Nathanielsen, said in 2025 that she wanted mining to become a “very good, stable supplement” to the country’s overwhelming dependence on the fisheries industry.
Yet in 2021 Greenland’s new socialist Inuit Ataqatigiit government banned uranium mining on pollution grounds. Australian company Energy Transitions Minerals (ETM) sued Greenland and Denmark in 2023 for 76 billion kroner (£8.9 billion), equivalent to almost four times Greenland’s GDP.
The mining company claimed to have been robbed of future profits after its uranium project at Kuannersuit/Kvanefjeld was terminated.
Danish courts have struck down most of ETM’s claims as baseless and there has been a report of concerns ETM could declare bankruptcy and thereby potentially avoid paying the large legal fees. In a statement, ETM said its subsidiary GM “worked in good faith for over a decade, in close cooperation with the Greenlandic and Danish governments”. It added that both governments had used GM to promote Greenland as a safe destination for mining investors.
But research in 2025 labelled similar behaviour “feigned victimisation”. Generally, this is where corporations perceive or position themselves victims of unfair processes rather than powerful participants concerned with profits.
Read more: Greenland is rich in natural resources – a geologist explains why
Drilling in the Greenlandic crust would reverberate in Copenhagen as Greenland has a mining profit-sharing agreement with Denmark. As part of the gradual transfer of autonomy from Denmark, Greenland now retains ownership over its natural resources.
However, Denmark provides an annual block grant of 3.9 billion kroner (around half of Greenland’s state budget) to support the domestic economy, which is overwhelmingly comprised of fisheries. Denmark will cut its block grant by 50% of mining profits, meaning essentially mining profits are shared 50-50 between the two up to the value of the block grant.
Recently, the Australian-American corporation Critical Metals received construction approval for a permanent office for its Tanbreez project to supply rare earth minerals, including heavy rare earth elements, in southern Greenland.
The following day, mining company Amaroq declared that the US is considering investing in its mining projects in southern Greenland through EXIM, the US Export-Import Bank. If the state loan is approved, it will be Trump’s first to an overseas mining project.
A recent executive order from Trump earmarked US$5 billion (£3.7 billion) to support mining projects critical for national security. This demonstrates the close relationship between the extractive industries and military activity.
Fossil fuel production is less likely to happen any time soon. In 2021, for environmental reasons Greenland’s government banned fossil fuel exploration and extraction. A parliamentary majority still favours the ban.
With volatile oil and gas prices and the same climactic and infrastructural challenges as for other natural resources, fossil fuel production in Greenland is implausible even in the event of a full US takeover.
There are many reasons why the Trump administration might want to dominate the Arctic, not least to gain relative power over Russia and China. But natural resource extraction is unlikely to feature centrally.
What’s more, the US already has military bases in Greenland, following a defence agreement with Denmark. As such, it’s more likely that recent US moves are yet another chapter in the return of the country’s imperialist ambitions.
Lukas Slothuus receives funding from the Engineering and Physical Sciences Research Council.