Reliance on extraction of natural resources set to increase

The mineral industry is likely to become the most important industry in Greenland in the years to come. Several laws regulate this industry - most importantly, the Mineral Resource Act and the Large-Scale Projects Act. These laws must be seen in connection with the Danish Strategy for the Arctic 2011-2020, the purpose of which is to reinforce the foundation for appropriate cooperation on the many new opportunities and challenges that the Arctic is facing.

Introduction

Greenland has recently accelerated the process of redefining its foundation, moving from a reliance on fisheries to becoming an industrialised country within the kingdom of Denmark (ie, Denmark, the Faroe Islands and Greenland). Due to findings already made, as well as expected future discoveries of mineral deposits (including oil and natural gas), the mineral industry is likely to become the most important industry in Greenland.

Several laws regulate this sector - most importantly, the Mineral Resource Act and the Large-Scale Projects Act. These laws must be seen in connection with the Danish Strategy for the Arctic 2011-2020, the purpose of which is to reinforce the foundation for appropriate cooperation on the many new opportunities and challenges that the Arctic is facing. Emphasis is placed on growth and development of the Arctic with respect for the vulnerable climate, environment and nature.

Regulation of mining industry

The principal law regulating the mining industry in Greenland is the Mineral Resource Act 2009, which came into force on January 1 2010. The administration regarding mineral resources in Greenland is handled by the Bureau of Minerals and Petroleum under the Greenland government authorities. However, for administrative work, the bureau cooperates with the Danish Energy Agency and the Danish Environmental Protection Agency, among others, when necessary.

The act is intended as a framework law laying down the main principles for the administration of mineral resource activities. The Greenland government has detailed provisions in executive orders and standard licence terms that aim to ensure that the activities are performed securely, as regards safety, health and the environment.

Large-Scale Projects Act

On January 1 2013 the Large-Scale Projects Act came into force. The act allows a company to invite tenders for construction projects on special terms, provided that it has been granted the necessary approval. The act stipulates a minimum hourly wage for foreign workers in Greenland. In addition, access for companies employing foreign workers in large-scale projects has been expanded during the construction phase of the projects. The act thereby allows companies to hire foreign workers outside the collectively agreed hourly wage in Greenland.

The act aims to promote foreign investment in Greenland and to prevent and limit negative consequences to Greenlandic society. There are only approximately 57,000 inhabitants in Greenland, of which 16,000 live in the capital Nuuk. The act is thus likely to have a huge influence on the community - for example, London Mining Plc, which is planning a large iron ore mine near the capital, could increase Greenland's population by 4% through the hiring of Chinese workers.

Under the act, an evaluation of the environmental and social sustainability of the project must be made before approval is granted. Before it is pased to the Greenland government, the report must be submitted for discussion with local authorities, industry and local organisations.

The report constitutes the framework for the impact benefit agreements between Greenland's other authorities and the company involved in the project concerned. The agreement must include provisions dealing with subjects such as education and supplementary education to Greenland inhabitants. Furthermore, the agreement must deal with the requirement of using Greenlandic workers, based on objective criteria regarding the availability of highly educated workers and the competence and capacity of companies in Greenland.

The rules of act apply only to projects amounting to more than DKK5 billion. In addition, there must be no capable and available workforce available in Greenland. The rules of the act also allow a Greenlandic sub-supplier to employ foreign workers and pay them in accordance with the act.

Because the Danish government administers foreign policy in Greenland, the Danish parliament must pass a special act regulating such foreign workers in order for the act to achieve the desired effect in Greenland; this is expected later in 2013.

Links with Danish regulation

Greenland is an autonomous country within the kingdom of Denmark. Exploration licences for minerals in Greenland are subject to the laws of both Greenland and Denmark. Disputes arising between the Greenland government and the licensee will in some cases be reviewed by the Danish courts, and in other cases be subject to an arbitration tribunal seated in Copenhagen. The arbitration tribunal will apply Danish law when making its award.

Thus, knowledge of Danish regulations and case law, as well as the Danish language, are crucial to energy companies when operating in Greenland.

Greenland

 

Greenland is an autonomous country within the Kingdom of Denmark (ie, Denmark, The Faroe Islands and Greenland). Greenland is subject to the Constitutional Act of the Kingdom of Denmark but has had self-government since 2009 meaning that Greenland can control most legislative areas, including the regulation of natural resources.

Due to the findings already made, as well as expected future discoveries of mineral deposits, the mineral industry is likely to become the most important industry in Greenland. The following mineral deposits are already found or expected to be found: rare earth elements, aluminium, coal, oil, natural gas, platinum, gold, silver, lead, copper, ruby, nickel, zinc and many more.

 

Several laws regulate the area - most importantly the Mineral Resource Act and the Large Scale Project Act. Exploration licenses for hydrocarbons and minerals in Greenland are subject to the laws of both Greenland and Denmark. Disputes arising between the Greenland Government and the licensee will in some cases be reviewed by the Danish courts and in other cases be subject to an arbitration tribunal seated in Copenhagen. The arbitration tribunal will apply Danish law when making its award.