Greenland election result expected to boost mining prospects

Greenland's fledgling mineral projects are set to benefit from a surprise victory by the center-right opposition in the general election held March 11, business and industry stakeholders surveyed by S&P Global Commodity Insights said.

The official election results show a clear victory for Demokraatit party with 30% of the vote, followed by fellow opposition party Naleraq in second with 25%. The incumbent ruling party Inuit Ataqatigiit came in third with 21.4% of the vote, while its left-wing coalition partner Siumut came in fourth with 14.7%.

The Demokraatit party is currently engaged in talks to form a coalition government.

The election result is expected to have a significant impact on regulatory policy towards mineral exploitation as the new government seeks to boost foreign investment and diversify Greenland's economy away from a reliance on subsidies from Denmark.

"We expect Demokraatit to manifest a greater push for diversification of the economy, aiming for a stable investment climate for foreign investments and business development in the fisheries, mining, hydropower, and tourism sector," international consulting firm Kaya Partners said in an update released March 12.

"Demokraatit wants a stronger business sector, a stabile investment climate, more openness to foreign investments in the mining sector," it said.

According to Stefan Bernstein, CEO of GreenRoc Mining, most of Greenland's political parties have acknowledged the importance of developing the domestic mining industry.

GreenRoc is developing its wholly-owned Amitsoq graphite project in southern Greenland. According to a preliminary economic assessment published in October 2023, Amitsoq is expected to produce 77,000 mt/year of high-grade graphite concentrate (in excess of 94%) over a 22-year mine life. The company is awaiting a decision regarding its application for a mineral exploitation license.

"We are confident that the outcome of the election in Greenland will be beneficial to the minerals industry in Greenland," Bernstein said. "There is a consensus between the parties in Greenland, both before and after the election, that building a minerals industry is an important way to diversify Greenland's economy, he added.

Bernstein noted that Demokraatit leader, Jens-Frederik Nielsen, previously served as minister for raw materials in 2021 and is well-acquainted with the opportunities and challenges facing the industry.

It was a sentiment echoed by Christian Keldsen, director of the Greenland Business Association, who said that Nielsen has a strong understanding of the mining industry and what is required to strengthen the investment environment in Greenland.

"The Demokraatit party acknowledges that it is important for local businesses to derive benefit from foreign investment in Greenland's mining projects," he said, adding that the new government is likely to move away from the restrictive regulatory and permitting regime of the previous government which was widely interpreted as anti-mining.

Adopted by Greenland's Parliament on May 31, 2023, the Act on Mineral Activities established that the holder of an exploitation license must have a company registered in Greenland and granted authorities the power to decide whether all conditions for the issuance of the license had been fulfilled, along with the power to demand a project developer utilized local labor and suppliers.

"They do not want to preserve with conditions that scare investors, so we expect to see a shift toward more favorable policies for the industry," Keldsen said.

Keldsen added that the new government could also apply some flexibility to the application of a regulation passed in 2021 preventing the exploitation of rare earth deposits containing uranium.

"We're hopeful that they will find some leeway to negotiate some on the ongoing industry activities within the scope of the ban, he said. "However, the people of Greenland are not interested in having these sudden changes of policy, from uranium ban to no ban and back again."

Keldsen cautioned that future regulations governing Greenland's mining industry remain wholly dependent on the composition of the incoming coalition government.

He added that despite the previous government's strict mining regulations, attitudes towards the industry in Greenland appear to have shifted.

"We're seeing more and more young people take an interest in the industry and the opportunities it can present in terms of personal skills and education as well as local economic development," he said.

Despite this sentiment, Keldsen added that many Greenlanders remain wary of projects being developed near their townships and the potential impact on their day-to-day lives.

The significance of Greenland's mineral resources has intensified in recent years owing to China's growing influence over critical mineral supply chains and the perceived risk to US and European industry.

This mineral wealth includes rare earth elements, graphite, copper, nickel, zinc, iron ore and tungsten, considered critical across a host of energy transition technologies including lithium-ion batteries, solar photovoltaic panels, wind turbines, and military applications.

Despite the occurrence of these minerals, Greenland's resources have remained largely underdeveloped owing to strict environmental regulations, a lack of necessary infrastructure and opposition from environmental groups and local stakeholders.

The island currently boasts two active mines, neither of which is focused on critical minerals, alongside a handful of projects led by US, Australian, and Canadian stakeholders in later-stage development.

Platts, part of S&P Global Commodities Insights, assessed CIF China clean copper concentrate treatment and refining charges at minus $16.6/mt and minus 1.66 cent/lb, respectively, March 17, up $2.50/mt and 0.25 cent/lb from March 14.