It was in October 2013 that the Greenland government awarded UK-based company London Mining a 30-year licence to build and run a giant iron ore mine at Isukasia in Western Greenland. At the time it was described by Greenland’s Industry Minister as the largest commercial project in the island nation’s history. Greenland is an autonomous territory still administered by Denmark, however it is moving towards greater independence, and sees the development of a strong mining industry as the strategy that will give it the economic clout to do so.
That ambition has been clouded somewhat over the last few years by the weakening of commodity prices on the international exchanges, however the fundamentals remain strong. In particular global steel demand is expected to recover as China’s economy continues to grow
The Isua deposit, as it is known, is well-placed for exploitation. Just 150 kilometres north west of the capital Nuuk, it is a similar distance from international airport at Kangerlussuaq, and lies 110 kilometres from the coast where it is proposed to build a deepwater port to which the ore would be piped as a slurry. The deposit holds a banded iron formation (BIF) measuring between 180 metres and 440 metres in thickness and extends over a strike length of more than two kilometres. It is open at both sides and outcrops at the centre of deposit. Towards the north and south of the deposit, the BIF is overlain by a sheet of ice that ranges in thickness up to 130m, however the ore can be extracted using open pit methods.
Just before the election of a new government in November 2014 London Mining went bankrupt and was placed into receivership after incurring heavy losses at its Sierra Leone mine due to the Ebola crisis. However its Greenland subsidiary, London Mining Greenland AS, was bought by General Nice Development Ltd, a major commodity trader and investment company incorporated in Hong Kong in 1992 and headquartered at Tianjin, China.
The project has attracted intense interest and a level of participation from major Chinese companies since it was launched in 2011. Under London Mining’s ownership, SNC-Lavalin completed a bankable feasibility report (BFS), with the support of major Chinese companies including China Communication and Construction Corporation and Sinosteel Corporation. In addition Sichuan Xinye Investment Corporation, a subsidiary of Sichuan Metallurgical Bureau carried out a detailed study on the Isua project toward a capital investment of $2.35 billion and Mr. Liu Yikang, the senior advisor with China Mining Association has discussed Greenland’s natural resources, including Isua, at various events, especially presentations to the Ministry of Land and Resources during a high level official visit to Greenland in 2013 and to Chinese investors and mining companies during past few years.
Now the Chairman of General Nice Development Mr. Cai Suixin is keen to set up the Nordic Development fund (NDF) to promote long term development in the region, as a way of sharing various infrastructure. “We very much believe in the potential that exists to open up the natural resources that are locked up in these unexplored areas. This will be of real benefit to all the stakeholders of course, but most particularly to the people and communities of Greenland,” he says.
Vice President Jenny Yang explains the state of play following the acquisition. “We are working on an optimisation plan for the Isua project, and a thorough review its economic value. Meanwhile we are reviewing the potential of other projects in the Nordic region generally, Greenland included. We will consider joint ventures as well as acquisitions as a way to build a portfolio, and have already entered discussions with investors and EPC contracting firms that specialise in mine construction from a number of countries including China, Canada and Denmark. In addition, we are working closely with Danish and Greenlandic governments and a number of banks.”
The Ministry of Mineral Resources is bullish about the involvement of General Nice Development. The work related to the project can now continue, it has said, though before construction and operation of a mine can begin, a number of licensing issues need to be addressed. Details of the exploitation and closure plans as well as technical approvals are currently being finalised and London Mining Greenland A/S, the Government of Greenland and the two municipalities Qeqqata Kommunia and Kommuneqarfik Sermersooq are negotiating an Impact Benefit Agreement (IBA) that has to be concluded before any new development in Greenland can go ahead. These procedures are all expected to be finalised soon, the Ministry says.