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Greenland votes to allow uranium, rare earths mining

NUUK (Reuters) - Greenland's parliament voted on Thursday to end a decades-long prohibition on mining for radioactive materials like uranium, further opening up the country to investors from Australia to China eager to tap its vast mineral resources.

The move will not only allow the mining of uranium deposits, but also of rare earths, minerals used in 21st century products from wind turbines to hybrid cars and smart phones and that are currently mostly extracted by China.

With sea ice thawing and new Arctic shipping routes opening, the former Cold War ally of the West has emerged from isolation and gained geopolitical attention from the likes of Beijing and Brussels thanks to its untapped mineral wealth.

"We cannot live with unemployment and cost of living increases while our economy is at a standstill. It is therefore necessary that we eliminate zero tolerance towards uranium now," Greenland Prime Minister Aleqa Hammond was quoted as saying by local newspaper Sermitsiaq during the debate.

Hammond's government won the heated debate by 15-14 votes.

The possibility of uranium mining has been criticized by environmental groups. Earlier, a group of non-governmental organizations warned uranium mining in Greenland could threaten the Arctic region's pristine ecological system.

While Greenland is self governing, it is still a part of the Kingdom of Denmark. The former colonial ruler still has a say in security and defense issues and the uranium decision may need to be approved by the Danish parliament - possibly putting the two nations on a diplomatic collision course.

"Concrete actions on the mining and export of uranium will potentially have far-reaching implications for foreign, defense and security policies and are as such a matter for the Kingdom," Denmark's Minister for Trade and European affairs said in a statement after the vote in Greenland's parliament.

Greenland's "zero tolerance" policy on mining radioactive materials is inherited from Denmark, but the island is keen to develop mining to help pay for welfare and jobs in this country with a population of around 57,000 people, mostly Inuits.

Since Greenland won self-government in 2009, most politicians have aimed for growing autonomy and eventual independence.

The more revenues from mining or oil, the more Greenland weans itself off Denmark's annual grant that accounts for more than half the island's budget.

One rare earth deposit being explored by Australian-owned Greenland Minerals and Energy could be one of the largest outside China, which accounts for more than 90 percent of global production.

But still, mining production could be a long way off.

"I think the Danish government is prepared for the no-tolerance to be lifted" said Cindy Vestergaard, senior researcher at Danish Institute for International Studies.

"After that the Greenlanders and the Danes are going to start hammering all the legal aspects. We will not be mining on Friday, nor next year, or 2015."

Separately, iron ore producer London Mining said on Thursday it had received the go-ahead from the Greenland government for a 15 million tonne (1 tonne = 1.102 metric tons) a year mine in the country, paving the way to attract partners for the project.

The Isua project which will cost an estimated $2.3 billion has been controversial in Greenland as fears its construction would attract a flood of Chinese workers into the country.

(Reporting by Katya Vahl in Nuuk, Alistair Scrutton in Stockholm and Teis Jensen in Copenhagen; Editing by Sandra Maler and Catherine Evans)

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