Investors sought for $2.3 billion mine in Greenland

January 8, 2014

London Mining announced that it has has opened talks with companies interested in investing in the construction of a $2.3 billion mine in Isua, an uninhabited region of Greenland just south of the Arctic Circle.

London Mining chief executive Graeme Hossie said the company was looking at "all options, including Danish, other Nordic, Chinese and other global investors." He said the competition for funding was challenging and it was hard to predict when it would be in place, the Guardian reported.

Greenland and the wider Arctic is seen as one of the new frontiers for exploiting mineral wealth, but uncertain national boundaries have also opened up potential political, if not military, conflicts.

London Mining has already opened talks with Chinese mining group Sichuan Xinye and others about helping finance a new mine at Isua.
The project has received government approval and could result in an influx of more than 3,000 construction workers into the country, which has a population of 57,000, to build a port and pipeline to serve the mine.

At present there is no mining of any kind in Greenland.

In October, a new government in Nuuk led by prime minister Aleqa Hammond gave the go-ahead to the Isua scheme and another at Kvanefjeld, while lifting a decades-long ban on mining uranium and rare-earth minerals.

Parliament voted to end the ban by 15 votes to 14 amid concern about the environmental and social impact of large mining schemes – particularly those involving radioactive materials such as uranium.

Oil firms including BP, Shell, Statoil and ConocoPhillips have been awarded licenses to operate in the region to join those previously given to ExxonMobil and Cairn Energy. 

But wider concerns surround the uncertain national boundaries with Canada and Russia, which are among the countries pressing territorial claims through a process handled under the UN convention on the law of the sea.

When Canada announced last month it intended to lay claim to the north pole – never before taken as national territory – the move caused alarm among the other Arctic states: Denmark, Russia, Norway and the US. Russian president Vladimir Putin quickly promised to increase Russia's military presence in the region in response to Canada's claim, which would extend its territory by half a million square miles. Canada itself and Norway also plan to increase defence spending in the far north.

The Arctic nations are increasingly looking to the north as a source of natural resources and shipping lanes. The US Geological Survey has estimated the region has 30 percent of the world's undiscovered natural gas and 15 percent of the oil. In 2012, Lloyd's of London warned of the environmental dangers of more than £60 billion of investment heading to the Arctic over the next decade.

To request an extension of their nautical borders countries must submit proposals to the UN commission on the limits of the continental shelf. Under international law the five countries with territories near the Arctic Circle are allotted 200 nautical miles from their northern coasts. Under the UN convention on the law of the sea, exclusive claims can be vastly expanded for Arctic nations that prove that their part of the continental shelf extends beyond that zone – as Canada intends to do with a claim to the Lomonosov Ridge, an undersea mountain range between Ellesmere Island, Canada's most northern land mass, and Russia's east Siberian coast. That would extend Canada's claim 200 nautical miles beyond the north pole.


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