Chinese involvement in mining in the Arctic: increasing or declining?
The Arctic has become an arena of geostrategic competition, accentuated by the diminishing size of the maritime ice cover due to global climate change. Given rising concerns about the availability of critical minerals and China’s centrality in their mining and processing, mineral resources in the Arctic have become an area of international focus.
However, the high cost of operating in the Arctic renders most deposits of critical minerals uneconomic without state support. Chinese firms’ investments in mineral projects in the Arctic have raised concerns about such state support and potential Chinese “control” of Arctic critical minerals.
While Chinese outward investment in mineral projects has been an important component of the nation’s Belt and Road Initiative since its launch in 2013, growing sharply since 2022, investments in the Arctic remain limited.
A previous study documented 43 of these investments in Arctic regions and countries (excluding Russia) between 2005 and 2022 and concluded that Chinese firms were only involved in about 2 percent of all mineral licenses in the regions studied. This studies provides an update and finds that Chinese involvement is declining in Canada and Greenland, due to political factors as well as the high costs and risks of operating.
This highlights that rising concerns over Chinese centrality in minerals extraction, alongside political tensions in the case of Canada, are leading to (slow and subtle) changes in mining. At the same time, despite some state support for Chinese firms, the economics (in Greenland for instance) still deter investment.
The departure of Chinese companies from Canada and Greenland provides more opportunities for the West to take control of mineral resources. However, the need for capital combined with social and environmental concerns remains an obstacle.
In Russia, however, Chinese investments are growing, reflecting the strengthening economic and political relationship between China and Russia. These will help Russia increase its production of critical minerals but given ongoing sanctions on Russian firms and output, could see a rising trend, similar to oil and gas markets, of bifurcated supply markets and structures.
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