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Oil & Minerals
Once more, with realism

Nuuk: minerals not economic silver bullet

Minerals are important to Greenland’s economy. But the new government understands that they are just one part of a larger picture
Oil & Minerals
This is our economy on minerals

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Yesterday, Greenland’s largest mining project ever was rescued from bankruptcy. That the handover of the Isua iron mine to the General Nice Group, a Hong-Kong based firm, was announced in a press release, rather than the high-profile signing that marked the original October 2013 deal with London Mining, is perhaps symbolic of the new mindset among the country’s leadership.

London Mining has since gone bankrupt, and the government that it signed the deal with is also history. So too are the expectations that Greenland can base its economy solely on mineral wealth.

“We might have been a little quick on the trigger there,” Andreas Uldum, the minerals minister, said during a press briefing in Copenhagen today. “Minerals are going to be a part of our economy, but they are not going to save it.”

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For the previous government, Greenland’s underground, a treasure trove of resources that includes gold, uranium, rare earths, zinc and possibly oil, was a short-cut to economic and, ultimately, political independence, potentially within a generation.

As part of that process, the previous government led a campaign to end a moratorium on uranium mining. The measure passed Inatsisartut, the national assembly, but only by a single vote, and it remains a divisive issue.

The new government, led by Kim Kielsen, who was elected premier on November 28, replacing his former boss after she stepped down amid questions about her use of public funds on personal expenses, will carry on development of uranium and other minerals, and has plans to engage a panel of experts to advise it on how best to do that.

“We’re taking it one step at a time,” Kielsen said “It’s not just a dream. It’s something that will become reality.”

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However, Uldum and Kielsen said they recognised the mines will not start producing in the near-term. Instead, they will focus on developing other economic activities, including fishing (already the country’s largest economic activity) and tourism (which will look to Iceland’s rapid growth as a destination for inspiration).

Greenland’s 2015 budget is expected to be 270 million kroner in the red. That is just 5% of total spending, but the shortfall is expected to grow in the years to come. Both Kielsen and Uldum remained upbeat that the country could eventually balance the budget through a combination of reform, privatisation and economic growth.

To save their economy, they must be realistic about it.