Greenland’s nascent mining industry is not without its problems. A lack of optimism is not among them...
To understand Greenland, those with an interest in mining there were told today, you must go to Greenland. For those who are interested in its minerals but have not been there to see them for themselves, the Arctic Cluster of Raw Materials, a Danish lobby group, did its best to put on a show in Copenhagen that could give them a sense of what they have to learn.
The undeniable fact is that Greenland’s mining industry is all potential and no production. Several mines have operated there in the past, but the country has been without an active operation since 2013, when the Nalunaq gold mine closed.
That is due to change: two mines are expected to be online by the end of 2017. Few expect they will be the last. Seven others, including Nalunaq and another dormant mine, make the ACRM’s list of those within reach of being licenced to drill.
For now, most of the focus is on getting the first two operations up and running. That is because their effect, according to Brian Buus Pedersen, the head of Sulisitsisut, a Greenland business lobby, will be much greater than their direct contributions to the economy.
“Their wider impact will be as proof of concept for the mining industry,” he says. “They will convince the world that things work in Greenland.”
Convincing potential investors that Greenland’s underground is rich in a wide range of minerals is not the problem; even those urging a cautious approach to mining accept that mines will form an important part of the Greenlandic economy at some point.
Instead, the effort, Mr Pedersen explains, must go into reassuring potential investors that they can be confident that regulations governing the industry will not change half-way through the game.
Sulisitsisut is confident they will not, but Mr Pedersen and miners already active in Greenland agree that there are things that can be done better. He mentions lower taxes and a smoother application process for firms seeking permission to operate there as two of his organisation’s biggest wishes.
Others point to a situation that requires a significant amount of all investment to be used to build everything from roads and ports to power stations and coming up with a way to access the internet. The consequence of this is that only the most valuable deposits can be considered for development, according to Gilbert Clark, an investment advisor for the Sentient Group, private equity investment firm.
Other problems holding the industry back are too big for any one country to control. Low commodity prices, supply gluts and economic downturns have been blamed for Greenland’s slow progress, but, Christian Motzfeldt, the director of Vækstfonden, a Danish state-run investment fund, suggests that the downtime should be used to prepare for an inevitable upswing.
Greenlandic authorities argue they have been doing this all along, but Mr Motzfeldt wonders whether firms will arrive in time.
“It’s a matter of getting ahead of the curve. The time to invest is before prices peak,” he says.
Once things begin picking up Greenland may face another problem, warns Anders Nørby-Lie, an executive partner with 21st North, the sole junior exploration firm left operating in Greenland.
The current crop of mines nearing operational status, he points out, are the product of 40 years of exploration. He admits there are enough potential projects out there to keep the industry growing in the short-term, but he worries the industry may be focusing too heavily on extraction right now.
Mr Motzfeldt agrees that the timeline from exploration to operational mine is a long one, but Greenland, he notes, is off to a slow start. This may be putting a lid on explorers’ enthusiasm right now, but as soon as mines begin opening he believes more explorers will come.
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