Greenland, a semi-autonomous part of Denmark, wants to step up its mining of rare earths, valuable elements used in the production of smartphones, weapons systems and other modern technologies. But uranium is often found mixed into rare earths, so the ban was blocking key mining activity.
Cameco (TSX:CCO), one of the world's largest uranium producers, welcomed the decision, adding that it would be open to setting up projects in Greenland.
"We are pleased to see that Greenland has opened the door to safe and responsible uranium mining," said Rob Gereghty, a spokesman for the Saskatoon-based company.
"Currently, we are focusing our exploration efforts in Canada, Australia, Kazakhstan and the United States. As we look forward, the removal of this barrier will allow us to consider Greenland for potential uranium exploration projects."
Experts estimate that a mine in southern Greenland could contain the largest rare-earth metals deposit outside of China, which currently accounts for more than 90 per cent of global production. An Australian company has estimated it could extract up to 40,000 tons of rare earth metals per year.
In a 15-14 vote with two absentees, the parliament Greenland parliament backed late Thursday the centre-left governing coalition's desire to remove the ban. The government also gave a British company a license to extract iron.
The company, London Mining, is now seeking investments to develop a mine northeast of Nuuk, the capital, and is expected to bring in foreign workers, possibly from China.
Many Greenlanders want to use the island's mineral resources as a way to reduce dependency on a subsidy from Denmark, which now accounts for about two-thirds of the island's economy. Denmark is open to allowing Greenland greater independence, but there is currently no way the island can support its costs without the subsidy.
Denmark's foreign trade minister, Nick Haekkerup, sought to ease concerns that Greenland might sell the uranium it finds in the rare earths mining. He said Friday that the country cannot decide that alone because Denmark still handles its security and foreign policy.
Jens-Erik Kirkegaard, Greenland's minister for natural resources, said after Thursday's vote that several laws need to be changed before exports of rare earths can start "in a couple of years or more."
The government wants to introduce royalties on the mining industry and revise a law that would allow an influx of foreign labour.
Environmental activists lamented parliament's narrow vote in favour of lifting the ban on uranium extraction.
"It can have great consequences for the environment and the people of Greenland," said Greenpeace spokesman Jon Burgwald in Copenhagen. "So we suggest that specific maximum limits on how much radiation, wastewater discharge, etc." are allowed.
— With files from The Canadian Press