Tuesday January 24, 2017

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REGIONAL JOURNALISM, GLOBAL PERSPECTIVE.

Oil & Minerals
Mining

Squeezing the lemon

Greenland’s largest mining project to date will be a matter of take and give
Oil & Minerals
Happy enough for two (Photo: Leiff Josefsen)

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Much needs to be done before work at Greenland’s largest mining project to date can begin. Located on Citronen Fjord, on Greenland’s northern coast, the mine will begin its life as an underground operation that uses a process known as flotation to separate valuable ores from worthless soil and rock. After 11 years, it will be converted to an open-pit. During its lifetime, Ironbark, the Australia-based firm that owns the rights to project, expects to mine 3.3 million tonnes of ore, and that some 360,000 tonnes of concentrated ore will be shipped each year.

Ironbark was officially granted permission to begin operations during a signing ceremony on December 16 (pictured above) after Greenland's mining authorities the day before had approved the firm’s assessment of the mine’s impact on the surrounding environment. Before any operations can begin, however, Ironbark and its managing director, Jonathan Downes (seated at left), must first raise the final $430 million needed to establish the mine.

The money will go towards establishing all necessary infrastructure and purchasing other equipment. Building the mine is expected to take two years, according to the impact and benefit agreement, a statement of the consequences the mine will have, filed in September.

Location of Ironbark’s planned mine (green field) and Citronen Fjord (inset)

Ironbark’s agreement with Greenland’s Self-Rule Authority gives the firm permission to mine for zinc and lead for 30 years, although the agreement can be extended for another 20 years. However, the impact and benefit agreement, which was approved both by national authorities and, since the mine is placed in a national park, all four of the country’s local councils, only covers the first 14 years of the licence period.

During the signing ceremony, Mr Downes said he was optimistic that enough capital can be raised to begin constuction in 2017 and mining in 2019.

Two of the largest expected buyers of the zinc concentrate that will be shipped from the mine are part owners of Ironbark. Nyrstar, a Belgium firm that owns a 22% stake, is one of the world’s largest zinc mining and metals firms. Glencore, an Anglo-Swiss commodity trader, owns 10%.

Ironbark also has an agreement with China Non-Ferrous Corporation, a firm that is also involved with other Greenlandic mining projects, that would give it a 19.9% share of the Citronen mine in exchange for footing 70% of the establishment cost.

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Once in production, ore can be shipped aboard ice-breaking bulk carriers between July and September each year, although the majority of the shipping is expected to take place in August. A total of three ships, each making two trips during the three-month shipping window, will sail the ore along the eastern coast.

The ships will also carry cargo to the mine. During the rest of the year, the mine will receive new staff and supplies by air. Two flights are expected to be scheduled each week. Additional cargo flights can also be requested if necessary.

For Greenland, establishment of the Citronen Fjord mine will serve as a litmus test for the country’s mining policy. The market for zinc is healthy and prices are high; if the project fails, the market will not be at fault.

One of the Self-Rule Authority’s requirements is that Ironbark hires as many Greenlanders as possible. Once the mine gets started, 20% of the workforce, or 63 employees, must be Greenlandic during its first year. After eight years of operation, when Ironbark expects the mine will employ 470, 90% of the workforce must be Greenlandic.

SEE RELATED: Breaking through

If all goes according to plan, the mine will begin production in 2019, at which time it is expected to employ 362, including 30% local hires. Once fully staffed, the mine will have 470 employees. By the third year, the share of Greenlandic employees is to increase to 50%. By the seventh year of operation, this will rise again to 90%, where it will remain for the rest of the mine’s life.

In addition to hiring requirements, Ironbark has also agreed to have at least eight Greenlandic apprentices at any given time.

Ensuring that there are enough local workers to hire will be the job of KNI, a technical college. The school’s administration expects to be able to so, in part by working with Ironbark to ensure that its students complete their training with the proper skills.

Ironbark has also agreed to contract with Greenlandic firms to the extent possible. This is expected to amount to a minimum of 20% of costs associated with construction of the mine and 70% of its operational costs.

Ironbark’s agreement with the Self-Rule Authority also calls for the firm to fund social, educational and business-development programmes.

This article originally appeared in Sermitsiaq, a Greenlandic newspaper published by this website’s parent company.