Just as a new Greenlandic coalition government was formed last December, Prime Minister and Siumut leader Kim Kielsen declared that mining would be the government’s highest priority to boost the country’s stagnant economy. However, declining global prices on minerals and environmental and social concerns threaten to make this ambition as hollow as the sound of dropping a stone in one of the many abandoned mine shafts.

Following national elections on the 28th November, 2014 and after several days of negotiations, the Siumut Party formed a coalition government with the Demokraatiit and Atassut Parties.

In the announcement speech of the new government (“Naalakkersuisut”), Siumut leader and new Prime Minister Kim Kielsen emphasised his commitment to resource extraction and creating a stable investment environment: “The coalition will ensure a more stable and continuous mining policy to attract foreign investors,” he said at the press conference in Nuuk.

Mr. Kielsen also openly announced that the new government will support the controversial uranium mining project at Kuannersuit in Southern Greenland and maintain the abolition of the so-called ‘uranium zero-tolerance policy’, which was lifted under much controversy in October 2013 following a close 15 to 14 vote in the Greenlandic Parliament. Consequently, Kielsen revives the challenge of the Realm with Denmark and its more than 25-year opposition to nuclear power and extraction of radioactive materials. “We want to kick-start the economy”, Kielsen said, underlining the government’s renewed interest in the mining industry.

NUNAMINERALS CLOSE TO BANKRUPTCY

However, just two months after Kielsen’s declaration a cruel blow to the minerals dream was given as NunaMinerals – Greenland’s biggest and partly government-owned mineral exploration company – announced it is facing bankruptcy. On an extraordinary general meeting in Nuuk on 29 January 2015, it was decided that the company's share value was reduced dramatically from 5 Danish kroner (0.67 euro) to 10 øre (0.013 euro) per share, while the company's capital was reduced from 18.5 million euro to just 375,000 euro. In other words, “the box is empty” as chairman Birks Bovaird openly declared to Greenlandic broadcasting, KNR, adding that “I think our chances for survival are very, very small!”

On the following day, the company’s CEO, Ole Christiansen announced he is stepping down but agreed to stay another 12 months if the board agrees. It is no secret that the air between him and the Siumut party is cold as polar ice as accusations of political incompetence and lack of management skills have been over-floating Greenlandic news media for the past few days. For example, Mr. Christiansen noted that the “elections in 2013 and a subsequent new government with a political change in the mineral industry was as September 11 for our company”.

“The box is empty” - Birks Bovaird, chairman NunuMinerals

As we speak (10 February 2015) a rescue plan for NunaMinerals is being negotiated behind closed doors. The introduction of new private investors, a replacement of management, and even a total governmental overtake of the company are among the ruthless points on the agenda. The result of the drama is unpredictable but will likely fuel the insecurity of foreign investors.

MINING PROSPECTS IN A GLOBAL MARKET

The real challenge, however, may be the lack of competiveness on the global market that minerals extraction in Greenland possesses. The last producing mine – the Nalunaq goldmine in Southern Greenland – closed down in 2013 due to falling market prices on gold. The most prominent mining projects such as the Isua iron mine near Nuuk, the uranium and rare earth metals deposits in Kuannersuit and the zink-lead deposits in Citronen Fjord are not yet in operation but in the proces of applying for commercialisation licenses. While other regions of the world – especially in China and other parts of Asia – can offer skilled and cheap labour, a developed infrastructure and unrestricting environmental regulation, the remoteness of the mine deposits in Greenland, the harsh Arctic climate as well as social and environmental concerns are all challenging the profitably for mineral extraction in Greenland.

Last year a report commisioned by Ilisimatusarfik (the University of Greenland) and the University of Copenhagen concluded that while a limited number of mines may contribute to the economy, mining is no shortcut for Greenland. ”Even though natural resource exploitation will become important for Greenland, it is not enough and it will take many years before the known mineral deposits will develop into commercial operations,” lead-author to the report and professor at the University of Copenhagen, Minik Rosing said at a recent minerals conference in Ilulissat.

“Because of its economy and its demographics, Greenland will need to employ a range of different measures, and that includes fisheries and the block grant from Denmark,” Mr. Rosing added. The reality is that the Greenlandic economy is dependant on the yearly block grant from Denmark of approx. 500 million euro, constituting more than one fourth of Greenland’s total GDP. More than 90% of Greenland’s exports of goods originate from fishing and the industry yearly generates 350-400 million euro in foreign revenue, while mining is still not contributing significant to the country’s economy.

”Even though natural resource exploitation will become important for Greenland, it is not enough and it will take many years before the known mineral deposits will develop into commercial operations” - Minik Rosing, professor at the University of Copenhagen

Besides the economic and demographic challenges, the Siumut led government also faces critique from many sides on their minerals policy. The biggest opposition party, Inuit Ataqatigiit (IA), with 11 seats in the parliament, just as many as Siumut, is against the lifting of the uranium zero-tolerance policy and has announced that fisheries and tourism should be the main future income sources for the Greenlandic economy, not resource extraction. Moreover, NGO’s like WWF and Avataq are critical to several of the mining projects in Greenland due to environmental risks.

POSITIVE PROSPECTS FOR URANIUM MINING

Yet, one of the most controversial developments, is the large-scale uranium and rare earth minerals project, Kuannersuit, near the town of Narsaq in Southern Greenland. The project entails construction and operation of an open pit mine, a processing plant, a port, mine accommodations, two tailings facilities, roads connecting the different parts of the mining project and a power supply including a large dam, reservoir and power generating station. The owner, the Australian corporation Greenland Minerals and Energy (GME) has announced plans to submit a mine permit application in the near future. Now backed by the Kielsen government, this gigantic mining project seems closer to commercialisation than ever and actual production may start as early as 2017.

However, the road to commercialisation will be a difficult one. The Greenlandic opposition parties led by IA, as well as university experts and NGO’s warn about the environmental consequences. Kuannersuit would be the first large open-pit uranium mine located in the Arctic. As the open pit would remove a mountain top, mining water and spills from the processing of the ore will flow off the slopes and cracks in the rock surrounding the pit. And dust from the mining pit will reach wildlife habitats and inhabited areas nearby in a very short time.

The Risø National Laboratory has estimated that up to a thousand tons of radioactive dust will be released annually from the mine. Some of it will be carried by the heavy polar winds towards the nearby town of Narsaq, situated just below the mine, and across the region. The consequences for wildlife and the environment from uranium mining are hence significant and in the long term could include widespread and persistent radioactive contamination, aggravated by the fact that the Arctic environment and the species that depend on it are particularly vulnerable to pollution, because it recovers very slowly.

Low uranium prices on the global market is also an important aspect of the Kuannersuit project. Will it be profitable to the owners? Will it be beneficial to the Greenlandic society?

These questions are certainly difficult to answer and only time will show whether the Kuannersuit project as well as the other mining prospects will be able to start operating and contribute to Greenland’s economy in the near future. There is no doubt, however, that mining will be a main factor in Greenlandic politics in 2015, possibly even widening the gap between those who dream of economic prosperity from mining and those who believe mining comprises no hope at all.


Bo Normander is the Executive Director of Worldwatch Institute Europe.