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REGIONAL JOURNALISM, GLOBAL PERSPECTIVE.

Oil & Minerals
Idle, but only for a while

New ownership structure approved for ruby mine

A former minority owner could soon take control of Greenland's Aappaluttoq mine

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Greenland’s best bet to restart its mining industry may soon be back on track. After accepting the previous owners’ request, filed on September 5, to declare the Aappaluttoq ruby mine bankrupt, lawyers said on Thursday they had accepted a bid by LNS Greenland to overtake its operation.

LNS Greenland is the local subsidiary of a Norwegian firm that previously held a 27% stake in the mine, and had been responsible for building its infrastructure.

“LNS believes firmly in the Aappaluttoq project,” said Frode Nielsen, the managing director, in a statement. “Once the mine is running, it will have a major impact on employment in Greenland and its future prospects as a mining country.”

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The decision must be approved by mining officials. Should it be approved, LNS Greenland would hold a 90% stake in the operation. The remaining 10% would be held by Greenland Venture, a nationally controlled investment fund that previously held a 7% stake.

A decision is expected within two months. Initially, it had been hoped the mine would be operational by the end of 2016, giving the country an operational mine for the first time since 2013. Although the date appears to be pushed back, experts did not expect the delay to have significant ramifications on the mine’s profitability.

“It’s highly likely the project will be able to move on after a reconstruction, so we’ll be able to keep the jobs and the income it was being counted on to create,” Ole Christiansen, a geologist, wrote in an analysis published in this week’s edition of Sermitsiaq, a newspaper published by this website’s parent company.

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In the longer term, Mr Christiansen reckons that, even with the quick rescue, Aappaluttoq’s collapse will only add to the uncertainty surrounding Greenland’s mining industry.

“Interest in opening a mine is at rock bottom. Those investors that do remain now have a higher risk premium,” he said.

Although True North's collapse appeared to surprise the media and the public, Mr Christiansen said the bankruptcy had likely been a long time coming.

“The reality is that bankruptcies come gradually. You work hard to find a way to save the company. It is a long, arduous road, but in the end it takes very little to upset the cart.”

The first reports about the mine’s problems securing investors appeared in April, but, Mr Christiansen said, they dated back to March 2014, when True North Gems, the mine’s previous majority owner, was awarded a licence to begin mining on the site.