Mining at Greenland Minerals' Kuannersuit has been halted by Greenland legislation banning the mining of uranium, Reuters reported.
Kuannersuit is also known as Kvanefjeld.
Australian-based Greenland Minerals had been developing the rare earths mine, located near the town of Narsaq. The mine also contains radioactive uranium.
According to the new law, mining of deposits with a uranium concentration over 100 parts per million (ppm) is illegal.
Greenland Minerals had not yet received final approval of the mine.
The Kvanefjeld project holds over a billion tonnes of mineral resources, with 11.1 million tonnes of rare earth oxide, and 593 million pounds of U3O8.
Greenland Minerals had been finalising its Environmental Impact Assessment for the mine.
Rare earths expected to be produced at the mine include praseodymium, neodymium, terbium, and dysprosium.
Greenland's new governing party Inuit Ataqatigiit, elected in April, focused their campaign on developing Kvanefjeld.