COPENHAGEN (Reuters) -Greenland on Thursday handed a 30-year permit to a European Union-backed project that aims to mine molybdenum, a critical metal used in aerospace, energy and defence and on which China has imposed export controls.

The resource-rich Arctic island has seen rising activity in its mining sector over the past month, after U.S. President Donald Trump expressed an interest in purchasing it earlier this year.

The permit was granted to Toronto-listed Greenland Resources, a company backed by the European Raw Material Alliance, and holds the licence to the Malmbjerg project in eastern Greenland, the country's government said in a statement.

The open pit Malmbjerg mine can produce an average 32.8 million pounds of concentrated molybdenum per year, potentially supplying around 25% of Europe's molybdenum use, according to the company.

Molybdenum is a silvery-white metal used primarily to strengthen steel and improve its resistance to heat and corrosion, making it critical for industrial applications such defence and clean energy.

China imposed export controls in early February on five metals, including molybdenum-related products, in response to U.S. President Donald Trump's tariff on Chinese goods.

China accounted for about 40% of global molybdenum production last year, according to U.S. Geological Survey. Molybdenum is considered a critical mineral by both the European Union and the United States.

Earlier this year, Greenland Resources signed off-take agreements with Finland's Outokumpu and Italy's Cogne Acciai Speciali.

Although rich in natural resources, development of Greenland's mining industry has been slow due to bureaucracy and lack of financing.

However, Greenland last month granted an exploitation licence to a Danish-French mining group, while the EU this month picked 13 new critical material projects, including a graphite project in Greenland, to increase supply of metals and minerals.

Last week, the U.S. government's export credit agency said the company developing a large rare earth mine in Greenland, had met initial requirements to apply for a $120 million loan.

(Reporting by Jacob Gronholt-Pedersen; editing by David Evans)