Interview: Chinese firm unlikely to develop $2 bln Greenland iron ore mine soon -minister

TGX Energy & Resources

26/01/2016 16:32

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    * Low iron prices make funding for project difficult 
    * Greenland seeking to develop metals, minerals 
 
    By Gwladys Fouche 
    TROMSOE, Norway, Jan 26 (Reuters) - A Chinese mining firm 
that took over a planned $2 billion iron ore mine project in 
Greenland is unlikely to develop it as long as iron prices 
remain low, Greenland's finance minister told Reuters. 
    General Nice, one of China's top coal and iron ore 
importers, took control of the Isua mine project January, in 
another example of the Asian country's global search for 
commodities. 
    General Nice replaced previous owner London Mining, which 
went bankrupt, becoming the first Chinese firm to have the right 
to exploit metals and minerals in Greenland. But it is currently 
unable to get funding for the mine's construction.  
    "Commodity prices are preventing possible investors to 
approve the funding. That is the question mark," Vittus 
Qujaukitsoq, Greenland's minister of finance, mineral resources 
and foreign affairs, said in an interview. 
    The global benchmark for physical iron ore from Australia to 
China  .IO62-CNI=SI  is down 78 percent over the past five years 
and was trading at $41.10 per tonne on Tuesday. 
    London Mining said in 2012 operational costs at Isua would 
be $45 per tonne, on top of which comes shipping costs. 
    The level of activity by foreign mining firms in Greenland 
had dropped due to lower commodity prices, Qujaukitsoq said. 
    Companies such as Royal Dutch Shell  RDSa.L  and BP  BP.L  
hold licences to explore for oil while smaller Canadian and 
Australian miners have been looking to develop mining.  
    "We see a fall of the number exploration activities, 
especially offshore oil exploration, and we see less exploration 
for the various metals and minerals," Qujaukitsoq said on the 
sidelines of a conference on Arctic issues in northern Norway.  
    "(But) we need to maintain the growth in the mining and 
minerals sector. We have a desire to increase our income 
revenues away from the fisheries, which represents 90 percent of 
our tax revenues."      
    Still, one mine began production in December, the 
Aappaluttoq ruby and pink sapphire mine, some 150 km south of 
the capital Nuuk, operated by Norway's LNS Greenland and in 
which Canada's True North Gems  TGX.V  has a stake.   
    The nation of 56,000 people has been opening up to foreign 
companies with hopes that its vast resources in metals and 
minerals, including rare earths, would help finance its ambition 
to become independent from Denmark.  
    "This has not changed," he said. 
    The U.S. Geological Survey estimated there are 31.4 billion 
barrels of oil equivalent off the east coast alone, about the 
same as the proven reserves of Nigeria, and some of its largest 
rare earth deposits are found on land. 
    Greenland, whose capital Nuuk is closer to New York than 
Copenhagen, became a Danish colony in the early 19th century but 
has been gradually gaining its own powers since World War Two. 
 
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 (Editing by David Evans) 
 ((gwladys.fouche@thomsonreuters.com; +47 23 31 65 94; Reuters 
Messaging: gwladys.fouche.reuters.com@reuters.net)) 
 
Keywords: GREENLAND MINING/CHINA