Mining firms from China to Canada watch as Greenland holds election

NexMetals Mining

20/04/2018 17:34

* Tuesday's vote could herald improved investment climate
    * China already actively seeking opportunities
    * New government could shift focus away from Denmark

    By Jacob Gronholt-Pedersen
    COPENHAGEN, April 20 (Reuters) - With melting ice expanding
access to the Arctic, investors from China to Canada are
watching Greenland's election next week for signs of the
political will to get a flagging mining programme on the island
back on track. 
    Greenland is hoping rising commodity prices can help attract
foreign investment and get its fragile economy up to speed to
realise a long-term goal of independence from Denmark.
    Hype about a possible mining boom in Greenland after it
achieved self-rule from Denmark in 2009 faded in a morass of red
tape and a commodity price slump around five years ago. It left
the economy reliant on fishing and grants from Denmark. 
    But with the country's sole producing mine starting up last
year - a ruby pink sapphire mine operated by Norway's LNS Group
- and Canada's Hudson Resource's  HUD.V  anorthosite project due
to begin operations this year, locals are again hoping more
investments will follow.
    Improved access to and from the Arctic island as the ice
melts, and a more favourable investment climate, would go some
way to alleviate the barriers to business of perpetual winter
darkness and temperatures reaching as low as minus 50 Celsius. 
    With that in mind, a central theme for the new government
elected on Tuesday will be to decide whether it wants to shift
focus away from Denmark and strengthen economic and diplomatic
ties with other countries, including China.
    Chinese interest in Greenland comes after Beijing laid out
its ambitions to form a "Polar Silk Road" by developing shipping
lanes opened up by global warming and encouraging enterprises to
build infrastructure in the Arctic.
    The main contenders to lead the next government are Prime
Minister Kim Kielsen of the social-democratic Siumut party and
Sara Olsvig of the left-wing Inuit Ataqatigiit party (IA).
    The most recent poll shows that the two parties are likely
to continue working together in a coalition. 
    "A new government led by Kielsen and Siumut but without IA
will create more openness towards attracting investments,
including from China," said Rasmus Leander Nielsen, assistant
professor at the University of Greenland in Nuuk.
    "IA is more sceptical. They want mining activity, but have
more emphasis on the environment," Nielsen said.
    Demokraterne, Greenland's third biggest party, and the new
Nunatta Qitornai party are also pro-mining.
        
    CHINESE INVESTMENT
    Greenland, whose capital Nuuk is closer to New York than the
Danish capital Copenhagen, is more than three times larger than
the U.S. state of Texas. But with a population of just 56,000,
it is the most sparsely populated nation on earth.
    It has shortlisted a Chinese consortium to expand three
airports, causing concern in Denmark which has given its ally
the United States wide military access - just one of many
sources of friction as independence rhetoric sharpens.
    China's Shenghe Resources  600392.SS  is also already
partnering with Greenland Minerals and Energy  GGG.AX  to
develop a rare earth and uranium project. Ironbark Zinc  IBG.AX 
has asked state-owned China Nonferrous Metal Mining Group to
help it finance and develop a zinc and lead project.
    But development in the mining sector has so far been slowed
by a lack of infrastructure and by heavy red tape, observers
say. Assistant professor Nielsen said he would consider the
uranium project dead if IA formed a government without Siumut.
    The previous licence holder to the new ruby mine went
bankrupt in 2016, as investors turned its back on the project
that for years failed to secure the necessary approvals.
    "I think the politicians are keen to get things moving. But
it often drowns in bureaucracy," said Bolette Maqe Nielsen,
chairman of Australia's Tanbreez Mining, which for more than six
years has been negotiating with Greenland for a rare earth
mining project. 
    The island lacks simple infrastructure, but is betting that
the expansion of the three airports by 2022 will help kick-start
a wave of economic activity.
    "The commodity business cycle is pointing upwards. But
Greenland must be alert and ready to act when prices go up,
otherwise they might miss the chance once again," said Brian
Buus Pedersen, head of the Greenland Business Association.
    For now, mostly smaller and mid-sized mining companies such
as North American Nickel  NAN.V  and Bluejay Mining  JAY.L  are
actively pursuing projects there, while larger Western industry
players stay on the sidelines.
    Prime Minister Kielsen and his cabinet travelled to Beijing
last year, where he openly courted Chinese investors and
officials. The government is also considering opening a
representation office in Beijing, following one in Washington in
2014 and the opening of another in Iceland this year. 
    "To get really large scale projects to happen, it looks like
they need Chinese investments," said Ulrik Pram Gad, an
associate professor at Aalborg University and a former official
in Greenland's government.

 (Reporting by Jacob Gronholt-Pedersen 
Additional reporting by Simon Jessop
Editing by Alison Williams)
 ((jacob.pedersen@thomsonreuters.com; +45 3396 9673; Reuters
Messaging: jacob.pedersen.thomsonreuters.com@reuters.net))