Exclusive-US lobbied Greenland rare earths developer Tanbreez not to sell to China

By Melanie Burton and Ernest Scheyder

MELBOURNE/HOUSTON (Reuters) - U.S. and Danish officials lobbied the developer of Greenland's largest rare earths deposit last year not to sell its project to Chinese-linked firms, its CEO told Reuters, adding it has been in regular talks with Washington as it reviews funding options to develop the island's critical minerals.

The move underscores the long-running economic interest U.S. officials have had in the Danish territory, well before U.S. President-elect Donald Trump began musing in recent weeks about acquiring it.

Rare earths have strong magnetic properties that make them critical to high-tech industries ranging from electric vehicles to missile systems. Their necessity has given rise to intense competition between Chinese and Western interests to ease China's near-total control of their extraction and processing. 

Greg Barnes, CEO of privately held Tanbreez Mining , said U.S. officials who visited the project in southern Greenland twice last year had repeatedly shared a message with the cash-strapped company: do not sell the large deposit to a Beijing-linked buyer. 

The U.S. State Department was not immediately available to comment. The White House did not respond to a request for comment. The Danish Foreign Ministry declined to comment.

Barnes ultimately sold Tanbreez to New York-based Critical Metals as part of a complex deal that will be complete later this year. Tanbreez aims to mine 500,000 metric tons annually of the crimson rare earths-containing mineral eudialyte as soon as 2026.

"There was a lot of pressure not to sell to China," Tony Sage, CEO of Critical Metals, told Reuters. Barnes accepted payment of $5 million cash and $211 million in Critical Metals stock for Tanbreez, far less than Chinese firms offered, Sage said. 

Barnes said offers from Chinese and other parties were not relevant because they had not clearly outlined how they could pay.  

Neither executive disclosed which officials they met with or identified the Chinese companies that made offers.

U.S. interests appear to be changing the game for rare earths projects that had previously not been seen as attractive investments, analysts said. 

"While the size of the Tanbreez is significant, the grade and the mineralogy are nothing to be shouted about," said David Merriman, research director at minerals consultancy Project Blue, which considers the chance of the project reaching commercial production as low, given its complex mineralogy. 

The Tanbreez sale to Critical Metals shows that U.S. officials have had more success in Greenland than they have in Africa, where they have been working to offset China's grip on the mineral-rich central African copper belt.

"While Greenland is not for sale, it is open for business," Dwayne Menezes, head of London-based think tank Polar Research and Policy Initiative. "It would welcome greater investment from the U.S."

A rival Greenland rare earths project from Energy Transition Minerals - which counts China's Shenghe as its largest shareholder - has stalled amid protracted legal disputes.

WASHINGTON TALKS

Donald Trump's eldest son, Donald Jr., arrived in Nuuk on a private visit on Tuesday, a day after the president-elect reiterated his interest in taking control of the island. Denmark has repeatedly said Greenland, a self-governing part of its kingdom, is not for sale.

That visit came two months after a State Department official spent four days in the island's capital in a push from the outgoing Biden administration to encourage Western mining investment there. 

Critical Metals applied for funding to develop a rare earths processing facility from the U.S. Department of Defense last year, but the review process has stalled ahead of Trump taking office on Jan. 20. Sage said he expects talks to resume after Trump's inauguration and that Trump's transition team has already contacted him. 

"We're already in discussions with the U.S. to sell (rare earths) to the U.S. and build the processing plant in the U.S.," he said.

Critical Metals' third-largest investor is brokerage firm Cantor Fitzgerald, led by Howard Lutnick, who Trump nominated to run the U.S. Commerce Department. Sage said he has never met or talked to Lutnick, but acknowledged Cantor's investment is a positive for his company.

The Tanbreez deposit is about 30% heavy rare earths, which are used widely in defense applications. The site also contains gallium, which China imposed export restrictions on last year.

Critical Metals has held supply talks with defense contractor Lockheed Martin (NYSE:LMT ) and has upcoming talks with RTX and Boeing (NYSE:BA ), Sage said.

Lockheed said it continuously assesses the rare earth supply chain to ensure access to critical materials. RTX and Boeing did not respond to requests for comment. 



GreenRoc has applied for an exploitation license to develop a Greenland graphite project and has held funding talks with U.S. officials in the past year, CEO Stefan Bernstein told Reuters. 

Neo Performance Materials and Anglo American (JO:AGLJ ) are also exploring on the island. 

Source: Investing.com