Mining has vast potential in the Nordic Arctic, which is host to several minerals including REEs. Credit: Biletskiy_Evgeniy / Getty Images

In its 2024 Economic Report, the Arctic Economic Council (AEC) highlighted the potentially pivotal role mining in Arctic nations could play in fuelling the world’s increasing demand for critical raw materials.  

It stated that the Arctic region, which encompasses parts of eight separate countries, is home to 31 of the 34 materials identified as essential for clean energy technology. 

Of note within these are rare earth elements (REEs), materials necessary for a range of clean energy technologies including electric vehicles (EVs), batteries and wind turbines. REEs in particular are being eyed up in Norway, Sweden and Greenland. 

Mining is not new to the Arctic region. Alaska is home to the largest zinc mine in the world and Sweden to the largest iron ore mine in Europe. However, high wages and strict regulatory frameworks have been something of a deterrent to mining companies’ activity in the region as they typically want to extract as much as possible with minimal overheads. 

Short daylight hours and extreme cold have also proven to be a hurdle to investors looking to build infrastructure in the Arctic, as well as companies that must provide high wages to attract any kind of workforce. The result is that the region’s mineral potential has remained relatively untapped despite its resources – something the AEC, among others, is looking to change. 

With projections that critical minerals needs, including those for REEs, are set to rise exponentially, coupled with mounting fears of an overreliance on rare earth superpower China, a renewed spotlight is being put on the Arctic as a potential mining hotspot.

“The Arctic region has three things that have always (and will always) be exported,” says Mads Qvist Frederiksen, executive director at AEC. “Fish, energy and raw materials — with the latter going back to the 1600s. 

“Fast forward, and with the rise of industrialisation the world needs more and more minerals as it needs more technologies, meaning the Arctic's raw materials are getting renewed attention.” 

Indeed, according to the International Energy Agency, demand for critical minerals will nearly triple by 2030, growing to more than 3.5-times the current levels by 2050. This, alongside the fact that the Arctic is feeling the effects of climate change more keenly than anywhere else – warming four-times faster than the rest of the world, according to research in Nature – has given some urgency to the Arctic focus.

Currently, no REEs are mined in Europe, although the landscape is shifting, and exploration of the Arctic has already proven it is home to significant deposits of the materials. 

According to the Arctic Review, Greenland has enough reserves of minerals such as neodymium and dysprosium to meet at least a quarter of future global demand, around 38.5 million tonnes (mt). 

Additionally, in 2023, Swedish miner LKAB made headlines by announcing it had identified a REE deposit in Kiruna that exceeds 1mt of rare earth oxides. The discovery was, briefly, the largest deposit of its kind in Europe, before being overtaken in 2024 by Norway’s Fen Carbonatite Complex in Telemark. 

While LKAB is still conducting research into the Kiruna deposit, the discovery adds to the perception of the Nordic Arctic as a viable supply alternative to China – evidenced by Donald Trump’s renewed mission to gain control of Greenland’s minerals. 

“The two main drivers for people looking to the region are climate change and geopolitics,” explains Frederiksen. “Of course, we need critical raw materials to pursue a green transition, but people are also looking for control, and with nations like China stockpiling materials including rare earths, people are becoming concerned about resource control.” 

In this context, it seems mining in the Arctic region is raring to go; however, there are several challenges that need to be overcome before this can happen.

There is a stereotypical perception of the Arctic as a vacant expanse of ice and sea – a polar tundra that is more like Antarctica. While the perception is untrue, extreme temperatures, remote locations and short days have meant working in the region is not without its challenges. 

In 2019, Guggenheim Partners, an investment firm that helped develop the Arctic Investment Protocol alongside the World Economic Forum, projected that to establish the infrastructure needed for a connected Arctic, $1trn would be needed over the next 15 years. 

If done correctly, a fully-fledged mining industry could bring significant benefits to local Arctic economies and communities as well as the global stage, but there is the caveat that it will require a lot of work. 

“Building a better Arctic – and a better world – requires long-term capital that carefully weighs environmental and societal impact to support sustainable growth,” the report stated. “It demands an entirely new framework for investment on a truly massive scale.”

Significant investment is also needed to attract (and keep) a workforce. In the Nordic regions particularly, salaries, taxes and royalties are typically higher, and must remain so if workers are expected to work long hours at isolated, cold mine sites. 

“Private funding alone won’t be enough,” says Frederiksen. “LKAB is a good example because they have attracted investment from the government and the EU, but as this is state-owned it brings up the question of whether it is only state-owned companies’ [projects] that will be developed?”

Mine development also needs to be done sustainably and with awareness of the Arctic’s unique landscapes. Environmental groups have already voiced concerns over the impact the industry could have on a landscape already susceptible to climate change. 

While these concerns are primarily focused on deep-sea mining in the region – where plans to issue seabed mining exploration permits has been paused due to environmental concerns – they also extend to onshore projects. 

Stringent regulatory frameworks in the Nordic Arctic are expected to help facilitate sustainable development to a degree. However, they have proven a hindrance in the past, with large amounts of red tape often slowing down progress, or halting it altogether. 

Norway has not had a new mine in 30 years, while in 2021, Greenland’s Government banned new oil and gas licences as well as prohibited uranium mining due to environmental concerns. 

Push-back has also centred around another issue, that of ensuring local communities receive adequate communication about the potential impacts of mining operations.

In its report, the AEC highlights the need for investment across the entire mining supply chain, as well as the implementation of policies with a “broad lens” to support development of critical minerals in the Arctic. 

“Global efforts have focused on enabling the construction of downstream battery facilities and retooling factories to make them ready for the future,” the report states. “While these are important investments, the upstream component of that supply chain – the mines that provide the minerals – also need support.” 

Facilitating better dialogue between local communities and the miners working in the area is also needed to improve the perception of mining among local groups.

These sentiments are echoed in a 2019 report from the Arctic Council on Conservation of the Arctic Flora and Fauna, which said collaboration between government agencies, mining groups, environmental organisations and local indigenous communities is key to ensuring mining’s sustainable development.

More research and data collection into the region’s landscape and minerals is also needed before mining can begin in earnest. As an area that has been typically overlooked in mineral research, these are knowledge gaps that cannot be ignored if miners expect to see any success in the Arctic. 

Some moves to achieve this are already under way as the world shifts its attention to critical minerals. 

EU President Ursula von der Leyen’s inauguration of an office in Nuuk, Greenland, least year, representing Europe's “concrete presence in Greenland and in the wider Arctic region”, and the establishment of the Nordic Forum on Raw Materials in 2023 are both markers that interest in the region is growing. 

While the interest is welcome, consensus is that respect and sensitivity to the region’s social and environmental development is paramount if local approval is to be secured. As Frederiksen puts it: “We just need people to understand the Arctic.”