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As a general rule, the most successful man in life is
the man who has the best information
Greenland is located in the North Atlantic Ocean
adjacent to the Canadian arctic archipelago. About 80 per cent of Greenland
is ice cap that can be up to 3kms thick. Approximately one-twentieth of the world's
ice and one-quarter of the earth's surface ice is found in Greenland - the
ice-free zone around the ice cap is up to 300 kms
wide and covers an area of 410,000 km² (area of Germany is 357,000 km).
Norsemen settled on the uninhabited southern part of
Greenland in the 10th century.
"The descendants of the Vikings had persevered in
their North Atlantic outpost for almost 500 years, from the end of the 10th
century until the mid-15th century. The Medieval Warm Period had made it
possible for settlers from Norway, Iceland and Denmark to live on hundreds of
scattered farms along the protected fjords, where they built dozens of
churches and even had bishops." Günther Stockinger, Abandoned Colony in Greenland: Archaeologists
Find Clues to Viking Mystery
Greenland has been inhabited, on and off, by Arctic
peoples for up to 5,000 years. The Thule are the
prehistoric ancestors of the current Greenlandic Inuit population. They left
Alaska about 1000 AD and arrived in Greenland, via dogsleds (usually made of
driftwood with whalebone runners) and umiaks (large
whaling and travelling boats constructed with a frame of walrus ribs covered
with walrus hide), in the 13th century.
The Norse colonies had disappeared by 1500 AD, beaten
by a cool climate turned much colder by the Little Ice Age - a period of
cooling extending from about 1350 to roughly 1850.
According to radio-carbon dating of plant material it
was almost the geological equivalent of turning off a light switch. Between
1275 and 1300 AD summers suddenly turned very cold, seas normally open froze
over and glaciers started their inexorable advance. Between 1430 and 1455 AD
the cold intensified substantially.
Contact was re-established between Scandinavia and
Greenland in the early 18th century and Denmark established rule over
Greenland.
In 1979, Denmark granted home rule to Greenland. In
2008, Greenland voted to transfer more power from the Danish royal government
to the local Greenlandic government. This became effective the following
year. The 2009 Act on Greenland Self-Government gave Greenlanders authority
over a number of new sectors including mineral resource activities.
Copenhagen remains constitutionally responsible for
Greenland's foreign, defense and security policy.
As previously mentioned approximately 80 percent of
Greenland is covered by ice with the exposed area forming a fringe around the
coast. These non ice covered coastal areas -
geological terrain that is simply an extension of the Canadian Shield -
expose numerous mineral belts that are highly prospective for gold , lead, zinc, uranium , molybdenum, copper , tantalum and
niobium, iron ore, nickel , several forms of
industrial minerals, platinum group elements (PGE),
diamonds, cobalt , rubies and rare earth elements (REEs).
As competition from the developing world pushes up the
price of energy and minerals finding new sources of supply is crucial.
The combination of a stable political and regulatory
landscape, global warming
thawing Arctic sea lanes and large mineral reserves have made 'Kalaallit Nunaat - Country of
the Greenlanders' an increasingly attractive location to look for
minerals.
The population of Greenland is 56,648 with 14,719
inhabitants living in the capital Nuuk (formerly
Godthab). The majority of Greenland's population live
in towns along the fjords in the southwest of the country where the climate
is relatively mild.
There are no roads between the towns on the coast so
people travel by airplanes, helicopters or by boat.
Greenland is far from financially self-sufficient -
currently there is just the revenue from fishing and a little tourism, there
is no manufacturing sector.
Half of the Self-Rule administration's revenue is
derived from the annual 3.5 billion kroner grant from Denmark.
A shortage of labor and the lack of infrastructure are
the most formidable challenges facing the country. Both are huge stumbling
blocks in the countries quest for self sufficiency
and financial independence by utilizing its natural resources.
The benefits from the country's emerging mining
industry will include:
- Employment and job training for some of the
highest paying jobs in the country. Provide jobs in 'rural' areas of the
country with involvement of local laborers and local companies
- Education
- Infrastructure improvements in communities/cities.
Also improvements in remote areas that remain long after each particular
mine has shut down
- Financial independence from Denmark, significant
tax revenues or royalties for government
- Business and investment opportunities
Mines need their own power plants and transportation
facilities such as runways. Other projects, such as the planned construction
of an aluminium smelter (Alcoa Inc. plans to launch
a US$ 2 billion aluminum-smelting project in Greenland with an annual
capacity of 360,000 tons as well as two hydroelectric power plants) would
require first building basic infrastructure - roads, power plants and port
facilities. It is estimated that the aluminium
smelter alone would require over 5,000, mostly imported, workers to build.
Greenland, with a population of just over 56,000 and a
workforce of only 36,000, is unable to provide the necessary labor to tackle
their infrastructure issues on anything but a much smaller scale.
That is why the Greenlandic Parliament passed an act
allowing large-scale extraction projects to use imported labor and
contractors during the development phase of the projects. When the
development phase is over the migrant workers must leave the country and the
indigenous workforce will replace them.
Greenland's Bureau of Minerals and Petroleum (BMP) has
so far awarded 150 licences for mineral exploration
with around 600 million kroner spent by companies in 2012 - just ten years
ago there were almost no requests for mining licences.
Figures from the BMP show that the area covered by mining licenses increased
over the last ten years from approximately 6,000 km2 to well over 40,000 km2.
A list can be downloaded here
showing all active licenses and current applications.
Plans are on the table for a 12 billion kroner iron ore
mine. London Mining (London Mining is a United Kingdom (UK) company, but most
of the finance and direction comes from China) is going to use Chinese
workers to build the mine, as well as to build power plants, new roads and a
port near Nuuk - construction could start at the Isua iron ore deposit in 2013 and Greenland stands to
earn a billion kroner in tax revenue.
China is presently leading the race to develop
Greenland's resources with several Chinese companies trying to establish a
presence in the country.
Chinese investors are reportedly preparing to put 1.3
billion kroner into major infrastructure projects, including three new
airports and the expansion of port facilities in Nuuk
- Chinese labor will be used in these projects.
But Greenland has strong historical ties to the European
Union (EU) through Denmark and the Chinese will face stiff competition from
not only the EU and Denmark, but from South Korea as well.
EU Industry Commissioner Antonio Tajani
was in Nuuk last summer (2012) to sign a letter of
intent (LOI) to cooperate with Greenland on its raw materials. South Korean
President Lee Myung-bak signed several memorandums
of understanding (MOU) with Nuuk in 2012, paving
the way for Korea-backed science, exploration and resource development
efforts in Greenland.
Currently Canadian and Australian listed company's dominate the mining exploration sector.
Proponents of Chinese investment say it will
leave behind the infrastructure the country needs to develop but can't build
on its own. Detractors would say that while Chinese investments were first
welcomed by African states (there are roughly one million Chinese nationals
working in Africa ) poor construction, questionable business
practices and a reluctance to use local workers brought a swift end to
China's African honeymoon.
"Once the projects get started, they will influence
many aspects of life in Greenland along the way." Kuupik Kleist, Greenland's
highest elected official
Conclusion
Dutch disease, in economics, means that an increase in
revenues from natural resources will make a nation's currency stronger
compared to that of other nations. The stronger currency has the effect of
making exports more expensive for other countries to buy, thus making the
manufacturing sector less competitive.
Greenlanders are soon going to reap the possible
benefits - economic self-sufficiency and full independence from Denmark - of
an international push to exploit its abundant natural resources.
The Danish Centre for Environment and Energy (DCE) has
helped government officials in Nuuk carefully lay
out stringent environmental guidelines. Mining activities, in regards to
environmental, health and safety protection are also regulated by the Mining
Act passed in 2009.
The rewards sure to come from investing in a few
quality junior resource companies working in Greenland should be on all our
radar screens. Is investing in Greenland on your screen?
If not, maybe it should be.
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