Greenland critical of expert economic-independence report

Published: Friday, 21 February 2014

There are rare earths, olivine and feldspar deposits on Greenland, but hopes for independence lie with Denmark

By Gerard O’Dwyer

Greenland’s semi-autonomous government and main opposition parties have united against a new report that seriously questions the island’s ability to secure independence from Denmark based solely on its future mineral wealth. The ice-bound island, the report concluded, needed to build a strong and more diversified economy before full independence became a viable long-term option or ambition.

Moreover, the report, titled ‘For the Benefit of Greenland’ and authored by 13 experts drawn mainly from the universities of Greenland and Copenhagen, cast grave doubts regarding the capacity of Prime Minister Aleqa Hammond’s centre-left government coalition to implement reforms needed to maximise gains from the country’s fledgling mining sector, despite Greenland’s abundance of potentially commercial-sized rare earths, uranium and metal deposits.

What does the report say?

The report praises Greenland for its efforts to regulate natural resource exploitation and confirms that such activity could serve to help Greenland on its path to development. However, the report also finds that Greenland’s known mineral resource deposits are not large enough to serve as the country’s sole additional source of income in addition to fisheries.

In order for Greenland to rely solely on mining, 12 “large scale” mines would need to be operational by 2040, with five such mines in operation at any one time. Currently there are six known major mineral deposits, making such a goal, in the opinion of the Committee, unrealistic. Even with that many mineral operations, it would still be impossible to end Greenland’s reliance on the block grant.

The report’s authors suggest that permitting a restricted number of mines, operational for a limited number of years, in a controlled number of areas has the greatest potential benefit for Greenland.

The Committee looked at Greenland’s ambitions to have economic independence, as well as becoming a natural resource exporter, in a broad perspective, including such things as; geology, environmental impact, geo-politics, law, societal impact and the economy. The report contains five scenarios for Greenland’s development, identifying 21 areas that Greenland must focus on if the country’s natural resources are to benefit the country in the long term.

Views on the findings

Jens-Erik Kirkegaard, Greenland’s Industry and Minerals Minister, and member of Hammond’s socialist Siumut party, conceded that while short-term independence was unlikely, the government plans to introduce a four-tier economic development plan to deliver a diversified economy.

The strategy would “have a significant focus on mining development” but also on energy (of importance to develop mineral processing), fishing and tourism. He added that Greenland would publish a plan for uranium extraction in the fourth quarter of 2014.

“The Greenland government’s removal of a 25 year old ban on uranium mining in October 2013 would attract interest from leading mining companies,” said the minister. “The potential is even higher given that the element is often found mixed with other rare earth metals widely used for high-end uses such as in phone handsets and weapons systems,” Kirkegaard explained.

As for the opposition, Inuit Ataqatigiit (IA), Greenland’s leftist-separatist party, and in particular, Sara Olsvig, an IA MP who holds one of Greenland’s two seats in the Danish parliament (the Folketing) and who chairs the Danish parliament’s Arctic Committee, said that one way to finance a diversified economy is “by creating a profitable mining industry”.

Jess G Berthelsen, the president of Sulinermik Inuussutissarsiuteqartut Kattuffiat (SIK), Greenland’s largest trade union, believes that the report grossly under-estimates the potential for economic development, wealth creation, and state revenue intake that can flow from a vibrant mining industry.

“Naturally, as a government and people, we need to agree on how best to develop the island’s mineral wealth. We are already seeing growing activity in the mining area, and there is much untapped interest. That will only come when we have a proper and balanced development plan for the industry that attracts investments while protecting workers’ rights and the environment,” Berthelsen said.

However, Minik Rossing, head of geology at the University of Copenhagen, who chaired the ‘Committee for Greenlandic Mineral Resources to the Benefit of Society’ that was behind the report, backed its conclusions. “We could not find any basis in fact to affirm that Greenland’s mining industry could be a fast-track financial gateway to economic independence. For the foreseeable future, the island will continue to need to receive a block grant from Copenhagen and remain part of the Kingdom of Denmark,” said Rossing. In 2013 the grant totalled 3.3bn Danish Krone (DKr) ($596m*).

Rossing argued the island’s confirmed mineral resource deposits fall short of providing a sustainable long-term basis to generate income for Greenland. The report calculated that in order for a Greenland economy to exist solely on mining, the island would need a minimum of 12 “large-scale” operating mines by 2040. The report noted that just six commercial-scale mineral deposits have so far been identified. “A mining-focused economic development strategy could also have serious negative consequences for Greenland’s 57,000 inhabitants,” said Rossing.

“Most of the mining jobs would come from imported labour. This could change the social fabric of the island, and also impede the island’s own indigenous development in terms of skills and learning,” said Rossing. “The creation of a national resource wealth fund is fundamental to ensuring that Greenland both extracts maximum gain from future mining activities and bolsters its self-sufficiency,” he added.

Soren Espersen, a Danish MP and Arctic spokesperson for the populist Danish People’s Party (DPP), said, “The report is the best proof yet that Greenland is better off remaining a part of the Kingdom of Denmark. Its government needs to regard Denmark as its partner in the development of the island’s mineral resources.”

*Conversion made February 2014.