Kvanefjeld Mining Dispute: Tribunal Clarifies Jurisdiction for Rare Earths Project

Procedural Milestone Reached in Kvanefjeld Arbitration

A significant procedural milestone has been reached in the ongoing arbitration case concerning the Kvanefjeld rare earth project in southern Greenland. An arbitration tribunal issued a decision in October 2024, clarifying the jurisdictional boundaries for the dispute between Energy Transition Minerals (ETM), formerly Greenland Minerals Ltd., and the Government of Greenland. This ruling sets the framework for the next stages of the complex legal battle over one of the world's largest undeveloped rare earth deposits.

Background of the Kvanefjeld Dispute

The Kvanefjeld project, located in the Ilímaussaq intrusive complex near Narsaq, is recognized as a globally significant source of rare earth elements, including critical 'magnet metals' such as neodymium, praseodymium, terbium, and dysprosium. These minerals are vital for renewable energy technologies like wind turbines and electric vehicles. The deposit also contains significant uranium content.

The dispute originated in 2021 when the Greenlandic parliament passed new legislation, known as the Uranium Act. This act effectively banned prospecting, exploration, and exploitation of mineral resources if the average uranium content exceeded 100 parts per million (ppm). The Kvanefjeld deposit's uranium content, approximately 360 ppm, brought it under this restrictive framework, thereby blocking ETM's path to securing an exploitation license despite years of exploration and development work.

In March 2022, ETM's subsidiary, Greenland Minerals (GM), initiated formal arbitration proceedings under international investment protection frameworks, arguing that the regulatory changes constituted an unfair taking of its established rights.

Tribunal's Jurisdictional Ruling

The October 2024 tribunal decision provided crucial clarity on the procedural path forward. Key aspects of the ruling include:

• Exclusion of Denmark: The tribunal determined that the Government of Denmark should not remain a party to the arbitration proceedings, focusing the dispute specifically on Greenland's actions and regulatory responsibilities.
• Bifurcated Proceedings: The tribunal established a two-track approach for resolving the claims. Claims concerning the confirmation of the right to an exploitation license are to be determined by domestic courts in Greenland. Conversely, claims related to contract breach and damages may still proceed through international arbitration.

This bifurcation means that the arbitration for contract breach and damages would be stayed pending the outcome of the court proceedings regarding the exploitation license.

Implications and Next Steps

Following the tribunal's decision, ETM has filed litigation in Greenland in May 2024 to contest the formal denial of an exploitation license by the Greenlandic government. Litigation was also filed in Denmark in May 2024 for non-arbitrable disputes.

ETM has expressed confidence in achieving a positive outcome, emphasizing the significant potential of the Kvanefjeld project to provide substantial long-term revenues and new jobs for Greenland, as well as critical minerals for the global transition to renewable energy.