The Greenland Minerals Ltd (ASX: GGG) share price has come crashing down to Earth on Friday.
In morning trade, the rare earth-focused mineral exploration company’s shares were down as much as 38% to 7.7 cents.
The Greenland Minerals share price has since bounced back a touch but currently remains down 29% at 8.9 cents.
Why is the Greenland Minerals share price crashing?
The Greenland Minerals share price crashed today after Greenland’s parliament passed new legislation concerning uranium mining.
The new legislation prohibits preliminary investigation, exploration, and exploitation of uranium, which it defines as uranium content which occurs at 100 parts per million (ppm) or greater in the total resource.
In addition, the legislation permits the Greenland Government to extend that prohibition to other unspecified radioactive elements by imposing permitted limit values on those elements. It also serves to reverse initiatives, policies and legislation adopted by successive governments over the past decade.
But there are no uranium projects in Greenland?
The company notes that there are no active primary uranium projects in Greenland. Therefore, the legislation is directed at the production of rare earth materials and other critical metals, where it is common for ores to contain radioactive elements including uranium and thorium.
Given the company’s hopes of developing the Kvanefjeld rare earth project in the country, this is a bitter blow. Particularly given its belief that the project has the potential to become the most significant western world producer of rare earths.
However, the news is not unexpected. In April the Greenland Minerals share price crashed lower after Greenland’s left-wing environmentalist party won the country’s election. During the campaign, the the Inuit Ataqatigiit party vowed to stop the project.
Management advised that it is seeking clarity as to how the new legislation will effectively modify existing approvals or authorisations.
It also notes that it is not aware of any technical, radiological, or health and safety reasons why the Greenland Government has selected a threshold level of 100ppm uranium for the legislation.
Management highlights that a comprehensive radiological assessment of the Kvanefjeld Project was undertaken by independent specialist consultancy Arcadis. It concluded that “the Kvanefjeld Project is expected to release only small amounts of additional radioactivity to the environment and is not expected to result in an adverse effect, or significant harm, to wildlife or people that live or visit the area.”
Time will tell whether that will be enough for the Greenland Government to allow the project to go ahead.