Minister of Industry and Mineral Resources

Jens-Erik Kirkegaard

The government of Greenland’s policy on mineral resources

The new government in Greenland

As you no doubt have already heard, Greenland has a new, broad governing coalition.

It consists of three parties: Siumut, Atassut and Partii Inuit.

And although each party has entered the new government with its own party platform, they have a united approach when comes to industrial policy.

We want to continue with the positive industrial development that Greenland has experienced for many decades now.

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The new government programme

Government take on mining projects won’t increase – but the taxation model has to be organised in a different manner.

The zero-tolerance policy on uranium must be amended.

  The Large-Scale Project Act needs to be adapted – the Greenlandic trade unions’

negotiating position has to be strengthened.

Mining and large-scale projects have to help create growth and prosperity.

The Government of Greenland will proceed cautiously with the allocation of new license blocks, but wants to see exploration continue at the current level

New oil licensing rounds are necessary to maintain the level of exploration because other license blocks on the west coast will expire.

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The goal of our industrial policy

It is the clear goal of the Government of Greenland to create the most positive business environment possible, and this is an area that we are striving to improve even further over the coming years.

On this note, I feel that it is important to point out that we are open to international commerce and foreign investment.

We are staunch supporters of free and open trade, where all businesses are subject to the same set of rules.

Because equal conditions mean that as many businesses as possible will take part in the competition to win a contract – for everyone’s benefit, not least of all for consumers and society.

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Foreign investment

Over the past few years, there has been a great deal of focus in the foreign media on our mineral resources.

This is an interest that we heartily welcome.

This has already resulted in a great deal of interest among foreign oil and mining companies that are seeking to acquire exploration licenses for specific areas.

This is true for both oil and minerals. A total of nearly 150 licenses have been granted to a wide range of companies. This is nearly ten times as much activity as we had just over 10 years ago, which is something that we are very proud of.

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Other industries

Fishing remains our main industry, and this is an area where we are constantly striving to achieve increased growth.

Tourism is another industry with big opportunities for growth.

Greenland is a unique tourist destination because our attractions are significantly different and more distinctive than what Western tourists can experience in their home countries or local communities.

This is an area that we intend to focus on. We view tourism as a major growth market. One of the opportunities that I want to examine as a relatively new minister in this sector is how we can attract tourists to our country who mainly visit Iceland. Every year, Iceland is visited by over 500,000 tourists.

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Growth potential for the Greenlandic economy

A recent analysis by the magazine Mandag Morgen concludes:

•“The resource crisis will accelerate until 2025, when there will be one billion more people in the world and the global middle class will broaden thanks to strong economic growth in China, India and other developing countries." •"The demography and historic boom in prosperity in the BRIC countries will simultaneously trigger a huge increase in the demand for energy, minerals and water, and there is no indication that oil-producing and mining companies can keep pace with this demand. According to the International Energy Agency (IEA), energy consumption alone will have increased by 35 percent by 2035. The United States National Security Council estimates that energy consumption may even rise by 50 percent by 2030."

•The analysts conclude that the mineral resources sector has the potential to support future growth in Greenland.  

The urgent need to turn around Greenland’s economic development

Outlook for low growth – after high growth in 2011

A net total of more than 7,000 people have emigrated from Greenland since 1993

Source: 2012 report of the Danish Economic Council

Income per inhabitant

Norway

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Iron (Isukasia)

REEs (Killavaat Alannguat)

REEs (Kuannersuit)

Rubies (Fiskenæsset)

What the new government is concretely doing to turn this trend around

What the new government is concretely doing to turn this trend around

We intend to decide on applications for exploitation licenses for mining projects during the course of 2013.

Lead and zinc (Citronen Fjord)

New mining projects

 

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Project Investment Workforce

London Mining - iron Approx. 13 billion kr. 

Construction: 3,000Operation: 800

Tanbreez Greenland (REEs, niobium, tantalum, zirconium)

Approx. 1 billion kr. 

Construction: 40-140Operation: 80-100

Greenland Minerals & Energy (REEs, uranium 

Approx. 2.5 billion kr. Construction: 1,000 Operation: 380

Citronen Fjord (zinc and lead) Approx. 3 billion kr. Construction: 465 Operation: 300

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New mining permits

• All mining projects will have to be environmentally and socially sustainable.

• Comprehensive hearings will have to be held.

• Both society and the companies will receive a fair share of the profits.

• Impact and benefit agreements (IBA) will have to be made for all mining projects to ensure:

• Maximum local employment • Maximum involvement of Greenlandic companies • Enhancement of skills and competencies among workforce,

etc.

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• Royalties will have to be paid on turnover – but at the same time we intend to reduce the corporation tax for the relevant mining companies so there will be no increase in the overall taxation of these projects.

• We have already engaged in a productive dialogue with a number of companies on determining the overall taxation model – and will finalise this model during the course of the summer.

• Greenland continues to be very competitive in this area:

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Til rettighedshaver efter udbytteskat

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Taxation of mining projects

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New policy on radioactive minerals - 1

• The majority of the known deposits of rare earth elements (REEs) in Greenland are associated with uranium and/or thorium.

• The exploitation of rare earths thus requires an amendment to the current zero-tolerance policy on radioactive minerals.

• The Government of Greenland intends to put forward a proposal on a decision-in-principle to amend the zero-tolerance policy concerning uranium and other radioactive minerals at the parliamentary session in the autumn of 2013.

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New policy on radioactive minerals - 2

• The parliament has commissioned an independent report on the consequences relating to a possible lifting or changing of the zero-tolerance policy on the exploitation of uranium and other radioactive minerals.

• Likewise, a Greenlandic-Danish team of experts is compiling a report on the regulatory aspects of a change in policy on radioactive minerals.

• These and other reports and studies will be incorporated into our ongoing work, including:

• Drawing up a proposal for a decision-in-principle to amend the zero-tolerance policy

• Compiling a possible follow-up set of rules and procedures for mining operations involving radioactive minerals

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Oil licensing policy

Tirsdag 7. maj 13.30 – 14.10

Status

The license blocks cover an area of over 200,000 km2.

There are over 20 license blocks with 14 companies involved.

The participating companies include some of the world’s largest independent oil corporations.

A total of 14 wells have been drilled in Greenlandic waters and many more are expected during the course of the next few years.

Exploration in Greenland is in its infancy and many challenges lie ahead.

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Drilling in 2010 and 2011

Exploratory drilling

2010 2011

3 drilled holes 5 drilled holes

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The results of the drillings: confirmation that there is oil/gas in the area, but not yet in commercial quantities.

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Greenland Sea 2012/2013 bidding round

Bidding area covers:

49,949 km2

And is divided into:

19 blocks

Block sizes range between:

1,752 km2 and

3,803 km2

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Greenland Sea 2012/2013 bidding round

2012 bidding round reserved for members of the KANUMAS group Members of the KANUMAS group:

StatoilHydro BP ExxonMobil Chevron Texaco Shell Japan Oil, Gas and Metals National Corporation NUNAOIL

Applications for licenses were submitted by 15 December 2012

The Government of Greenland will decide on these applications during the

course of the summer.

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Greenland Sea 2012/2013 bidding round

2013 bidding round is open to all interested

parties

Applications for licenses must be submitted

by 15 October 2013.

The bidding round will be conducted as

planned.

Upcoming oil drilling

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• Applications for permits to conduct new exploratory drilling for oil are expected during the course of 2013.

• No applications for 2013 have been received at present.

Thank you for your attention.

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