Greenland’s vast array of untapped mineral resources constitutes a striking global opportunity right now for those in the international extractive sector investment community.

It is, in short, a rising star in the extractive sector, well placed to deliver returns over the long term in a sustainable fashion.

With broad ranging and prospective geological credentials, a supportive government and population, an absence of first nations land rights issues and deep water fjord access, it is small wonder that Greenland is looking toward a future of attracting investment into its mineral resources sector. It is fair to say that the Greenland economic trajectory has mineral resources as a key component, as part of a transition to a state where the economy is not exclusively reliant on fisheries, such that annual earnings will reach a state where the country can go it alone, in line with the Greenlanders’ wish for full independence from Denmark. 

A clear part of the roadmap to this goal involves capitalising on its known and prospective natural resource wealth in respect of iron, aluminium, copper, nickel, platinum, titanium, tungsten and zinc, as well as petroleum, the sheer range of resources affording great scope for a diversified economy. To this end, the Greenlandic Government has worked to create a stable and favourable investment and tax environment, as part of a strategy to become fully financially self-sustainable. In line with this, a major zinc-lead project owned by Ironbark Zinc Ltd has had granted an exploitation licence in 2016 and other major projects are moving toward full submission of exploitation licence applications. Furthermore, the Mineral Resources Act, which governs such activities, has scope for modification to ensure Greenland remains internationally competitive.

The country’s interest to investors is enhanced by external factors. These include global warming, which has acted to accelerate the melting of Greenland’s ice cap in recent years. Although a concerning process worldwide, for Greenland it has also acted to expose previously unknown geology including ore deposits, increasing the potential for economically viable mineral exploitation.

In addition, Greenland’s relationship with Denmark, serves to provide reassurance to investors seeking predictability and pedigree. Equally, the fact that Denmark is a member of the European Union affords Greenland the status of an Overseas Country or Territory of that body, whereby it enjoys various privileges. This connection to a stable international organisation is another instiller of confidence to cautious investors, and may act to tip the balance when weighing up Greenland with other prospects in less predictable jurisdictions.

Moreover, despite the sensitive state of the mining sector since the global financial crisis took hold in 2008, Greenland is fortunate in being blessed with resources that are in high demand, such as zinc, thereby increasing the viability of some projects. Not least of these sought-after resources are rare earth metals, such as neodymium, dysprosium, terbium and praseodymium and which are occur in large resources in two of the advanced project in South Greenland. Geographically, Greenland’s enviable location between key North American and European markets also stands in its favour, allowing for considerable savings in respect of both upstream and downstream costs.

On the geological front, Minister of Mineral Resources, Mr Múte Bourup Egede describes the country’s enviable geological profile thus: “Greenland is a country full of opportunities for mining companies. It has a long history of varied mines, such as coal, cryolite and gold, and continues to possess a unique and attractive geology comprising of many different minerals.”

While Greenland’s fundamental credentials may be assured, the skill is in capitalising upon these to create an investment scenario too compelling to ignore, and in this respect Greenland has worked toward improving Greenland’s standing in the world market.The Greenlandic Government has a strong ambition to make mineral resources a key driver of the country’s wealth, a vision shared by many of Greenland’s 57,000-strong population, seeing in mining opportunities for skilled employment, better wages and an enhanced quality of life.

The government’s flexibility is evidenced in its efforts to maintain Greenland’s competitive edge, so that legislation, systems and obligations can be amended in accordance with benchmark analyses, to the benefit of investors and ultimately to Greenlandic society as a whole. For example, the Government recently incentivised exploration through temporarily adjusting down to zero the expenditure obligation for licences older than five years, assisting in the raising of capital, given prevailing difficult market conditions.

The prioritisation of investors’ interests is evidenced by the Minister of Mineral Resources comments to New European Economy, where he remarks that, “the Government of Greenland is firmly committed to supporting the development of the exploration and mining industry. It is therefore a very high priority for the Government to create the best possible conditions for the companies operating in the country. I believe that one of the best ways to do this is to have a mineral policy in Greenland which is investor-friendly, transparent and accountable.”

The Greenland Government has also invested a lot of time, energy and financial resources into ensuring the availability of comprehensive mapping and geoscience data, thereby helping investors make fully informed decisions, communicating transparency, responsibility and accountability in the process.

While Greenland promotes and expects the use of local labour and suppliers where possible, in accordance with the Impact Benefit Agreement, which companies must negotiate and agree with the Government, it makes financial sense to recruit locally. It is also, of course, the right thing to do, something the industry has been increasingly keen to embrace in recent years as they recognise the long-term merits to shareholders of doing so. The supply of skilled local labour has been enhanced, thanks to the Government’s drive to reform its educational resources to make studying opportunities more vocational.

Accordingly, the Greenland School of Minerals and Petroleum, has been established, providing a source of educated, experienced local workers for exploration and mining projects in Greenland. As Minister of Mineral Resources, Mr Múte Bourup Egede, puts it, “We are very proud of our Mining School in the town of Sisimiut. It is of utmost importance to the Government that Greenland has a skilled workforce, since it ensures that the local people are involved in the projects, and enables companies to utilise the competency of the local people of Greenland.”