Why is Trump eyeing Greenland? Beyond its strategic location, this frozen island holds "key resources."

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According to CCTV News, on January 8 local time, US President Trump stated that the United States must "own" the entire Greenland, making Greenland once again a focal point of geo-economic attention.

According to Zhui Feng Trading Platform, HSBC’s latest research report reveals that the world's largest island not only occupies a strategic geographic position, but also contains abundant key mineral resources such as rare earths.

Greenland possesses the world’s 8th largest rare earth reserves (about 1.5 million metric tons), which could rise to the second largest in the world (36.1 million metric tons) if potential reserves are included. The island is also home to 29 types of mineral resources listed as critical or moderately important raw materials by the European Commission.

However, the key issue is: although Greenland has the world’s eighth largest rare earth reserves, at present prices and mining costs, these resources may not have economic extraction value in the near term. 80% of the island is covered by ice, more than half of the mineral deposits are located north of the Arctic Circle, and strict environmental regulations make mining costs high. This means that Greenland is unlikely to become a major supplier of critical minerals in the short term, unless commodity prices rise significantly in the future.

Geopolitics Push Greenland Back into the Spotlight: Triple Strategic Value

The US interest in Greenland is nothing new. As early as the 19th century, the US had proposed the idea of purchasing Greenland. Since the Trump administration took office, this topic has been raised multiple times in 2019, 2025, and 2026, shifting the rhetoric from "economic security" to a current emphasis on "national security."

Greenland is a semi-autonomous territory of the Kingdom of Denmark, with a population of just 57,000 and a GDP ranking 189th in the world—its economic scale is negligible. But its geographical significance is extraordinary: as the world's largest island, its area ranks 13th among the world’s economies. More importantly, about 80% of the island is covered by ice and its strategic location is between the US, Europe, and Russia.

HSBC points out that attention on Greenland is driven by the combined effect of three key factors:

First is security considerations. Greenland occupies a pivotal strategic position between the US, Europe, and Russia, giving it great military value.

Second is shipping potential. As climate change melts Arctic ice, northern sea routes may become more navigable and important, making Greenland’s location key in future global shipping patterns.

Third is natural resources. This is the core of the current interest.

Top-Tier Global Rare Earth Reserves, Outstanding Heavy Rare Earth Proportion, Possesses 29 Types of Critical Mineral Resources

The report states that according to the US Geological Survey (USGS) 2025 data, Greenland has about 1.5 million metric tons of rare earth reserves, ranking 8th in the world. However, the Danish and Greenland Geological Survey (GEUS) is more optimistic, believing Greenland may actually possess 36.1 million metric tons of rare earth reserves, which, if accurate, would make it the world's second-largest rare earth reserve holder.

More importantly, Greenland has an unusually high concentration of heavy rare earth elements (including terbium, dysprosium, and yttrium), which generally account for less than 10% in most rare earth deposits, but are key materials for permanent magnets used in wind turbines, electric vehicles, and defense systems.

Apart from rare earths, Greenland also has moderate potential reserves of minerals such as nickel, copper, lithium, and tin, as well as oil and gas resources. The USGS estimates that the Arctic Circle may hold about 30% of the world’s undiscovered natural gas reserves.

Greenland possesses 29 out of 38 types of "critical raw materials" that the European Commission (2023) identified as highly or moderately important. These minerals are also deemed to have strategic or economic importance by GEUS (2023).

This extensive mineral resource portfolio gives Greenland potential significance in global supply chains for key minerals, especially as countries seek supply chain diversification under the current geo-economic climate.

Major Economic Barriers to Exploitation

However, there is a significant gap between theoretical reserves and real extraction capacity, and exploiting Greenland’s resources faces severe challenges.

Harsh geographic challenges: Of the sites with mineral potential identified by GEUS, more than half are north of the Arctic Circle. 80% of Greenland is ice-covered, and extreme climate conditions greatly increase mining difficulty and cost.

Slow project progress: In rare earth mining, for example, despite promising deposits in southern Greenland such as Kvanefjeld and Tanbreez (the Tanbreez project has set an initial goal of annual production of about 85,000 tons of rare earth oxides from 2026), there are still no large mines in actual operation.

Doubtful economic viability: At current prices and production costs, considering the added complexity of the icy geography and relatively strict environmental laws, Greenland’s rare earth resources are unlikely to be economically feasible in the near term. GEUS reports explicitly state that Greenland’s deposits require higher future commodity prices for extraction to become economically viable.

HSBC’s research report states that this situation is similar to Venezuela’s oil dilemma. Although Venezuela has the world’s largest proven oil reserves, only a small portion can be economically extracted.

For Greenland, the story is the same: huge reserves, but unclear economic feasibility for extraction. The key is not simply whether a country has a resource, but whether its extraction is economically viable. In an increasingly competitive geoeconomic environment—where more and more countries use trade and commodity access as geopolitical tools—this distinction is particularly important.

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