Greenland rewrites regulations governing mining development

This vast island, with its interior ice cap and coastal fringe of bare, prospective rock is open for business — the mine exploration business in particular.

In co-operation with the senior Danish government, the Greenland Home Rule government has rewritten legislation pertaining to mine exploration and exploitation, corporate tax structure and writeoff provisions. Today, Greenland’s enticing geology is no longer overshadowed by the risk presented by the old rules.

Gone is a “back-in” provision that had allowed the state to acquire at least a 20% stake in mine development projects.

Also shelved is a requirement for negotiating separate “exploitation” licences that made committing money to exploration a rather “iffy” proposition. Without the certainty of development after spending millions of dollars on exploration, a mining company is naturally wary of embarking on exploration at all.

“In the past, if you got the right to explore you didn’t necessarily have the right to exploit,” Ove Rosing Olsen, the Greenland Home Rule government’s minister of industry, trade and tourism, told The Northern Miner. “That has changed.”

Greenland also allows for up to a 100% writeoff of exploration and development costs in the first year of operation.

Geologically, the island has always been prospective ground. The Black Angel mine, a zinc-lead producer on the northwestern shore, operated profitably for most of its nearly two decades of production. The deposit graded 16% zinc and 4% lead.

There was another zinc-lead producer on the eastern side of the island. As well, a cryolite mine operated for decades in the southern sector. North American exploration geologists will find many familiar rocks: greenstone belts, massive sulphides, Caledonian rocks, even kimberlites. “Canadian companies should feel very much at home in Greenland,” said Chris Pegg, chief research geologist for Lac Minerals (TSE). The Northern Miner caught up with him on the east side of the island, where he was on a tour sponsored by the Geological Survey of Greenland.

Five geologists from BHP Minerals were on the same tour. “Basically, you have every kind of rock a geologist could want,” said Roger Kuhns, a regional manager for BHP who works out of San Francisco.

Field geologists will discover that the bane of the Canadian North — the mosquito — has bloodthirsty cousins in coastal Greenland.

The arctic climate is also a drawback. The field season is, at best, 3.5 months long. The terrain generally is rugged, with little overburden and no trees. The sun in summer doesn’t set at all in the central-to-northern part of the island; this is the land of the midnight sun. In winter, darkness descends for months at a time.

Infrastructure is also lacking: there is no island-wide power grid nor are there roads connecting the settlements that dot the coast.

However, living conditions are not primitive. This is a well-ordered and hospitable Danish society. Hotels are clean and comfortable, and their menus are laced with seafood delicacies. Dash 7s or big Sikorsky helicopters connect major towns and villages. And social services are likely on a par with those of any Scandinavian country.

But exploring in this land is expensive — likely double the costs of exploration in Canada’s North. For example, Falconbridge, with a nickel occurrence on the west side, is spending $800,000 this year. Helicopter rentals will account for almost half the total spending, said Tony Green, who is overseeing the project for Falconbridge.

While the coastal terrain and the lack of infrastructure are costly to overcome for exploration outfits, there is an upside. Because of the interior ice, only deposits near tidewater will ever be found. And that spells huge cost savings once a mine is in production.

Robert Gannicott, president of Platinova (TSE) and former chief geologist for the Black Angel mine, said that in the mid-1970s shipping charges were about $10 per ton of concentrate. At Pine Point, he recalls, the price was $67 per ton.

“Being on tidewater makes a huge difference,” he said.