The Arctic than the global average, transforming the frozen landscape at an astonishing rate. While devastating for wildlife and communities that live there, governments and businesses spy an opportunity.
The region is rich in resources, including untapped fossil fuel reserves and critical minerals necessary for the energy transition. Arctic nations have jostled for control of these resources for decades, and some exploitation – mostly fossil fuel extraction in the Russian Arctic – is already underway.
By the end of the decade, the Arctic Ocean could be ice-free during the summer, allowing ships to journey directly over the North Pole for the first time. This rapid melt is making the region more accessible than ever, fuelling expectations of fast industrial growth in the Arctic. Since taking office in January, US President Donald Trump has loudly declared his desire to take over Greenland, a Danish territory, as well as Canada. But will climate change really deliver an Arctic industrial boom?
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There is no doubt the region harbours valuable resources, including about 90 billion barrels’ worth of oil and about 30 per cent of the world’s undiscovered natural gas reserves,
Rare earth minerals are also plentiful. Greenland alone is thought to have enough reserves of metals such as neodymium and dysprosium, which are used in the manufacture of wind turbines and EVs, to . It also boasts significant quantities of cobalt, copper, graphite and nickel.
Demand for these materials is rising rapidly around the world as the energy transition gathers pace. China now dominates global supply chains, with other regions – most notably Europe – racing to secure alternative supplies.
“There is increased interest from mining companies, multinational mining companies, for exploring and mapping the deposits in the Arctic, due to the need for particularly critical raw materials in Europe,” says at Aalborg University in Denmark.
Merrild spent her childhood in Greenland and still has family living there. She says the interest from the US has “shocked” residents but also strengthened their resolve to develop the island’s resources to bolster its case for independence. “Greenlanders are very proud people,” she says. “Developing our resources is one way to strengthen our economy, to set the path forward.”
But despite the hype, Greenland’s actual mining industry is minuscule. The island has only two active mines, and while it has issued around 100 mining licences, mostly for exploration, it will be many years before any transition to commercial ventures.
This is not a new issue; geologists have known for decades about the Arctic’s potential riches. The problem has been accessing them.
Most of the Arctic is ocean, covered for most of the year by thick sea ice. But even though this ice cover is thinning and retreating, open-water oil and gas exploration and drilling is still a hugely expensive and dangerous endeavour, justified only if the oil price is high enough. Even onshore fossil fuel extraction in the Arctic is in Alaska than in Texas.
There is also the reputational and financial risk if something goes wrong. “The Arctic environment is harsh but at the same time it is vulnerable; it is fragile,” says Merrild. “The flora and fauna is delicate and it takes a long time to rebuild if it is damaged.”
Western oil companies, for example, are wary of operating in such an environmentally sensitive region, where mistakes can be costly. In 1989, the Exxon Valdez, an oil tanker owned by Exxon Shipping Company, hit a reef off the coast of Alaska, draining almost 23 million litres of oil into the ocean just a few hours. The disaster killed thousands of seabirds, otters, bald eagles, orcas and other wildlife and destroyed marine habitat for hundreds of kilometres, with the impacts still apparent decades later. Exxon was forced to spend about $2.2 billion on cleaning up the spill and pay a further $1 billion in damages.
For critical mineral exploration, which primarily means land-based mining, companies have historically had to contend with huge glacial crusts or frozen permafrost. Local infrastructure, such as roads and ports, is often sparse, and the available workforce is limited.
Rapid melting alleviates some of those problems but also creates new ones. Melting permafrost improves accessibility to critical materials, but destabilises existing infrastructure and increases the risk of environmental disasters. In 2020, a fuel reservoir collapsed at a Russian power plant operated by a subsidiary of metals giant Norilsk Nickel, flooding local rivers with up to 21,000 tonnes of diesel oil. The spill, which caused $1.5 billion worth of environmental damage, was blamed in part on the collapse of the tank’s foundations due to thawing permafrost.
“The melting permafrost will make life much more difficult,” says at the Oxford Institute for Energy Studies. Building new infrastructure – such as houses, operational buildings and roads that can cope with the thaw – is much more expensive, he points out.
Meanwhile, in Greenland, where the US’s attention has been focused, melting glacier ice has exposed thousands of kilometres of new coastline. But this new land is precarious, vulnerable to landslides that can trigger huge tsunamis. “If you have infrastructure on land, say for mining or drilling or building, you would probably rather have permafrost where you can predict what the stability of the land will be, than going into a warmer surface that melts half the time,” says at Durham University in the UK. “Climate change is not always, at least, the economic boon for Arctic extraction that it’s made out to be.”
The Arctic’s Indigenous communities could also have a say in how much mining activity gets going. Often these communities mount strong opposition to development proposals, fearing new industrial activities will damage the local environment and cut off their traditional migration routes. In 2023, Swedish mining firm LKAB identified massive deposits of iron ore and phosphorus in the Swedish Arctic, which it says but the Indigenous, reindeer-herding Sámi people oppose the mine’s development.
Such clashes will stymie development in parts of the Arctic, predicts Andrews-Speed, limiting the role the region will play in bolstering global supplies of critical minerals needed for the energy transition. “Whether you are looking at Canada or Northern Europe, the Indigenous people of the Arctic are going to, at minimum, slow things down,” he says.
Taken together, the physical, environmental and social risks of developing industrial activities in the Arctic will deter many firms, despite the rapid melt underway in the region. “It’s never going to be an easy operating environment for mining, for drilling, for shipping even,” says Steinberg. Andrews-Speed agrees: “The projects will go ahead, but it will not make a big difference, with one or two small exceptions,” he says. “The big difference will be in other parts of the world, where it is cheaper and easier to do business at a scale.”
The rise of Arctic shipping
As sea ice retreats in the Arctic, new shipping routes are opening up, allowing for the transport of goods and commodities into, through and out of the region. , part of the international Arctic Council, suggests that shipping activity in the Arctic increased 37 per cent between 2013 and 2024. Fishing vessels are the most common kind of vessel in the Arctic, but there has been a surge in the number of crude oil tankers, gas tankers, cruise ships and bulk carriers, the data shows. The rise in bulk carriers and fossil fuel transporters points to increasing industrial activity in the Arctic, PAME notes, with the distance sailed by bulk carriers increasing by 205 per cent in the last 13 years. Climate change enables the “easier transport of materials in and out of the Arctic region,” notes at Aalborg University in Denmark. But it may be the arrival of new trans-continental trading routes, such as the trans-Arctic passage, that really puts the Arctic on the map for global shipping activity.
