Birger Poppel

In February 2014 Naalakkersuisut, the Government of Greenland published Greenland’s Oil and Mineral Strategy 2014 – 2018. The ‘Summary’ of the strategy states that:

The Government of Greenland’s goal with the mineral resources sector is clear. It wants to promote prosperity and welfare by creating new income and employment opportunities in the area of mineral resources activities. More specifically, the Government of Greenland’s long-term goal is to further the chances of making a commercially viable oil find – and that there are always five to ten active mines in Greenland in the long term. Mining activities of this scale will provide tax revenues of more than DKK 30bn over the next 15 years. The potential of an oil find may be much larger. Based on the current assumptions, the establishment of two oil fields – a 500m barrel field from 2020 and a 2bn barrel field from 2025 – would generate more than DKK 435bn to the Mineral Resources Fund until 2060 (Naalakkersuisoq, 2014: 8).

 

This optimistic approach might be supported by the number of exploration licenses for mining activities that increased from 2002 until 2011 (followed by a decrease) and that exploration expenses from 2007 to 2012 on average amounted to roughly DKK 500 mill. Furthermore seven exclusive oil and gas exploration and exploitation licenses were granted in 2010 to seven blocks in the Greenlandic part of Baffin Bay.

However, this approach is not supported by the hard facts of the Greenlandic situation according to opinions by most industry experts and researchers [see for instance: The Economic Council of Greenland (2013) and The Committee for Greenlandic Mineral Resources to the Benefit of Society (2014)] – including the actual activities and known future plans of the major industrial stakeholders. Rather, the overly optimistic view substantiate skepticism:

At the time of writing there are no active mines in Greenland. The last mine in operation, the Nalunaq goldmine near Nanortalik in South Greenland, was shut down October 31, 2013 and the remaining equipment and waste was carried away in August 2014 (Nyvold, 2014). Two projects, an iron ore project (London Mining’s Isukasia project) in the Nuuk Fiord and a gemstone project (True North Gem’s ruby project) at Qeqertarsuatsiat south of Nuuk, have exploitation licenses and both projects are in the process of raising capital. The iron ore project is a so-called ‘large scale project’ with estimated total construction costs of DKK 13 billion. The expectations for the impacts on employment and the Greenlandic economy have been significant but – supposedly not least because of decreasing world market prices – London Mining has not been successful in raising capital.

Apart from seismic surveys in North East Greenland no oil exploration has been carried out in Greenland since 2010 and 2011. Cairn Energy, the most active company so far, has declared a break in their exploration activities and has closed their Greenland office in Nuuk; StatOil is focusing their activities north of Norway and ExxonMobil did not give a bid for the northeastern coast of Greenland offshore licenses and no exploration activities are announced. The strikes and exploitation of shale gas in USA and potential finds in Europe definitely contributed to the decreasing interest in more costly and environmentally risky exploration activities in Arctic – including Greenlandic – waters. Even if mining activities have not yet significantly impacted the Greenlandic society, the public debate has raised awareness on a variety of aspects of mineral extraction and has fueled a number of civil society activities and NGO initiatives. An overall driver uniting most of the political landscape has been the vision of being able to become economically self-sufficient and obtain political independency from Denmark. Furthermore a number of themes have been part of the mineral resource discourse including aspects of:

  • Sustainable development: including the social, economic, environmental and cultural approaches;
  • Democracy: for instance public participation and informed consent, transparency in the administrative procedures as well as the planning processes of the companies;
  • Economic development: how much and under which legislative conditions and tax regimes will Greenland and its people benefit from the activities of extractive industries – and is there a risk that Greenland might be caught in the ‘resource curse’?;
  • Labour market concerns: including necessary skills, education, mobility and the potential use of immigrant labour and risk of ‘social dumping’;
  • Environmental protection of a pristine and vulnerable nature and living resources;
  • Uranium mining: the political parties had for several years agreed upon a zero-tolerance on uranium mining – including mining activities were uranium was a by-product. The ban on uranium mining was lifted in the Fall 2013 with a one-vote-majority in Inatsisartut, the Greenland Parliament;
  • Rights issues of indigenous peoples and of specific groups, not least hunters and fishermen;
  • International relations: strategic resources like rare earth elements and uranium as well as the potential influence of, for instance, Chinese investments.

A number of the, now mature, mining projects were developed in a period of increasing world market prices on minerals. Facing decreasing world market prices and subsequently, a reluctance among investors to provide capital might inspire political decision makers, other stakeholders and the general public to ‘reinvent’ a more diverse and multifaceted economic development strategy including mining activities. Greenland’s export of shellfish (especially prawns) and fish (especially Greenland halibut) still make up roughly 90 percent of Greenland’s total export. It thus seems obvious to ground an economic development strategy also on renewable resources – including to a larger degree processing and refining marine products. It might furthermore be advantageous to focus on areas and products where Greenland indisputably has comparative advantages and the possibility to develop niche products – for instance within tourism, the cultural sector and potentially a growing agricultural sector. Last but not least, the energy potential, primarily hydropower, might offer a potential in the Greenland economic development strategy (Poppel, forthcoming).

References

Committee for Greenlandic Mineral Resources to the Benefit of Society (2014). To the Benefit of Greenland. http://news.ku.dk/greenlandnaturalresources/rapportandbackgroundpapers/To_the_benefit_of_Greenland.pdf retrieved September 7, 2014.

Economic Council of Greenland (2013): The Economy of Greenland 2013. Nuuk. http://naalakkersuisut.gl/~/media/Nanoq/Files/Attached%20Files/Finans/DK/Oekonomisk%20raad/Rapport%202013FINAL2%20GR%20ENG%203.pdf retrieved September 7, 2014.

Naalakkersuisut, Government of Greenland (2014): Greenland’s Oil and Mineral Strategy 2014-2018. http://www.govmin.gl/images/stories/about_bmp/publications/Greenland_oil_a nd_mineral_strategy_2014-2018_ENG.pdf retrieved September 7, 2014.

Nyvold, M. (2014). Færdig med at rydde op efter mineprojekt. Sermitsiaq 36:11.

Poppel, B. (forthcoming). Les défis économiques du Groenland (The Economic challenges of Greenland). In: Masson-Delmotte, V., Gauthier, É., Gremillet, D., Huctin, J.-M. and Swingedouw, D. (Eds.): Groenland. CNRS Éditions.

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