UPDATE 1-Greenland Minerals to begin talks with new govt over Kvanefjeld project

(Adds comment from PRPI)

April 21 (Reuters) - Australia’s Greenland Minerals Ltd said on Wednesday it would start talks with Greenland’s newly-formed government over its Kvanefjeld rare earth mining project, which has been facing political opposition.

The Australian miner has sought legal advice, including over its right to be granted an exploitation licence.

Last week, Greenland’s left-wing Inuit Ataqatigiit (IA) party announced a new government coalition and reiterated its stance to block the project.

International mining companies have been pushing for rights to exploit rare earth deposits in Greenland, which the U.S. Geological Survey says are the world’s biggest undeveloped deposits.

Kvanefjeld contains a large deposit of rare earth metals but also radioactive uranium, which many fear will harm the country’s environment.

“My suspicion is that Greenland Minerals will focus more on the rare earth elements (REE) now and less on the uranium,” said Dwayne Menezes, founder and managing director of think-tank Polar Research and Policy Initiative (PRPI).

Menezes said while focussing more on REE does not mean IA will let the project go through, it might “open up a window of opportunity to engage in dialogue a little while longer.”

Earlier in April, Greenland Minerals said uranium was of no great importance to its project, seeking to assuage concerns.

The Australian explorer, which has been operating in Greenland since 2007, holds the licence for the project and gained preliminary approval for it last year. It plans to continue its public consultation process, which runs until June.

Its shares, which were halted on Monday, dived more than 18% to A$0.086 on Wednesday. They have slumped about 60% so far this year. (Reporting by Shruti Sonal in Bengaluru; Editing by Subhranshu Sahu and Uttaresh.V)