O U R M I N ERA L RE S O U RC E S – C RE AT I N G P RO S P ERI T Y F O R G REEN LA N D

Quick Read Version

Greenland’s oil and mineral strategy 2014-2018

Published byGovernment of Greenland

CopyrightGovernment of Greenland

ProductionProGrafisk ApS

PublishedMay 2014

Did you know … that the objective of the strategy is to establish concrete mineral resources projects which promote growth in society and new jobs. The way to achieve this is to provide a clear and competitive framework for the mineral resources industry.

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CONTENTSPreface � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 4

Introduction � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 5

ACTION NOW – our economy needs it � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 7

Mineral resources create prosperity � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 8

Environmental protection� � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 9

Oil/gas New licensing rounds � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 10

Status � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 10

New objectives 2014-2018 � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 10

Government take on oil/gas � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 11

Minerals Government take from year 1� � � � � � � � � � � � � � � � � � � � � � � � � � � � � 12

Status � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 12

New objectives 2014-2018 � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 13

Uranium � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 14

Government take on minerals� � � � � � � � � � � � � � � � � � � � � � � � � � � � � 16

GeoSurvey Greenland � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 18

A GOOD FRAMEWORK – makes for a sustainable mineral resources sector � � � � � � � 21

The business sector � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 21

Aligning the framework to industry needs� � � � � � � � � � � � � � � � � � � � � 22

Labour market and employment � � � � � � � � � � � � � � � � � � � � � � � � � � � 22

Training � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 23

Health and social sectors � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 23

Citizens, local community and stakeholders � � � � � � � � � � � � � � � � � � � � 23

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PREFACE

• has prepared its oil and miner-al strategy 2014-2018, which is a comprehensive piece of work including relevant multi-page appendices� The Government of Greenland has therefore pre-pared a ’quick read’ version of the strategy with photos and illustrations�

• wants to promote prosperity and welfare for the Greenlan-dic society, e�g� by creating new income and employment opportunities in the area of mineral resources activities�

• wants to amend the Miner-al Resources Act to clearly establish that environmental protection in the context of mineral resources activities is handled independently of the general mineral resources authority under the Ministry of Environment and Nature�

• estimates that in the strategy period, three to five mines may be opened and that addition-al offshore oil drillings may be carried out� The strategy initiatives will contribute to achieving this level of activity�

• also points to the need for in-creasing our efforts to secure the best possible interplay between the mineral resourc-es sector and other areas of our society, e�g� training pro-grammes, the labour market, infrastructure and the health and social sectors�

• finds it important that we all contribute to a sustainable development of the mineral resources area� The strategy therefore also focuses on how to ensure that the opening of new mines will benefit our society the most in the form of new jobs and increased revenues�

• considers the development of the mineral resources sector a high-priority area – BUT it must take place with the greatest possible respect for our environment and nature and not least for all of us liv-ing in Greenland�

• wishes you all happy reading�

The Ministry of Industry and Mineral Resources

and the Ministry of Environment and Nature

T H E G O V E R N M E N T O F G R E E N L A N D

Ministry of Industry and Mineral ResourcesJens-Erik Kirkegaard

Ministry of Environment and NatureKim Kielsen

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INTRODUCTION

The previous mineral and hydrocarbon strategies expired at the end of 2013� There is therefore a need for a new strategy in the period from 2014 to 2018 to offer new specific proposals as to the direction in which Greenland should go the next five years� The strat-egy will also identify the areas which

should be strengthened in order to support the development of the area of mineral resources activities�

The Government of Greenland has ambitious objectives within the mineral resources area�

The Government of Greenland wants to promote prosperity and welfare by creating new income and employment opportunities in the area of mineral resources activities�

THE OVERALL OBJECTIVE

• If the number of mines in operation has increased in five years and more than 1,500 people are employed in proper mining jobs, a simultaneous launch of these mining projects may over a 15-year period generate more than DKK 30bn in tax revenues (royalty and corpo-rate taxes will accrue to the Mineral Resources Fund)�

• If two big oil fields are established at an inter-val of 5 years, the Mineral Resources Fund will accumulate a capital of more than DKK 435bn in 40 years� These calculations have been made by the internationally reputable audit firm PwC, whose areas of expertise include the oil industry, for the Tax and Welfare Commission� The calculations constitute a base case of what may happen under specific assumptions�

CALCULATIONS SHOW THAT:

The objective of the Government of Greenland until 2018• that three to five mines may be opened within

five years• that additional offshore drilling projects may

be carried out

Potential income from mining activities• If a mining project is established, it will

generate income for Greenland from the very first year in the form of royalty and income tax

… AND MORE SPECIFICALLY IN THE SHORT RUN

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The strategy contains a number of new initiatives in the follow-ing areas: • Oil/gas• Minerals• Taxation• GeoSurvey Greenland• Sustainable development

» … how the companies’ turnover is to be taxed if they want to extract minerals or oil … «

Did you know …that the strategy’s base case calculations of the DKK 435bn to the Mineral Resources Fund after 40 years of oil production following initiation of the two big oil fields were performed by the internationally reputable audit firm PwC for the Tax and Welfare Commission in 2010.

The focus of the most recent strategy (2009-2013) was on maintaining a high level of activity and increase the oil/gas and mineral exploration activities� The purpose of this focus was to use the oil or gas finds which are sustainable� And the same applied to applications by the mineral resources industry for exploration and exploitation licences� We delivered on both these objectives, and this focus will be maintained and further developed in the next strategy period� This focus must be maintained and also further developed�

The new strategy (2014-2018) takes over where the previous strategy left off, but it further focuses on sustaina-ble development within the area of the environment, training and employment� Infrastructure challenges are also ad-dressed on a separate basis, and active citizen and stakeholder involvement are central new objectives� Establishment of a geosurvey in Greenland under the name of GeoSurvey Greenland� Another focus area of the strategy is on how to approach the mineral resources produc-tion from a societal perspective, includ-ing on how to tax the companies�

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ACTION NOW – our economy needs it

Greenland’s economy is under pressureIf we want to maintain the same welfare level in 2030 as today, we are around DKK 1bn short every year in order for the revenue-expenditure math to add up (se graph)� This means that either we need to cut down on our welfare benefits such as schools, nursing homes and hospitals� Or we need to increase the general level of income in our soci-ety to increase the inflow of taxes into the common purse� In that way we can bridge the expenditure-revenue gap�

Why will we be DKK 1bn short?

First of all, the number of old peo-ple relative to the labour force will increase. This means, for example, that the number of people available to pro-vide for the relatively higher number of retirees will be relatively lower – which will be our reality in 2030� This will mean less revenues�

Moreover, old people are more often hospitalised – and for longer periods of time than younger people� This means higher expenses� These two factors contribute, among other things, to

increasing expenses – and conversely to declining revenues� Furthermore, we have in recent years seen a net emigra-tion from Greenland. This means that overall more people are leaving Green-land than are coming into the country�

It is worth noting in this connection that many of those leaving Greenland are the resourceful ones� The ones with an education and who are able to con-tribute to strengthening our economy and business sector� If this emigration

continues, it will turn into a much more serious problem to our society as we will need their heads and hands in the development of our society�

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1998

Perc

enta

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f GNP

2002

2006

2010

2014

2018

2022

2026

2030

2034

2038

95

90

85

80

75

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Total expenditureTotal revenue

Public revenue / expenditure in the years 1994-2038DKK

» If we want to maintain the same welfare level in 2030 as today, we are around DKK 1bn short every year … «

MINERAL RESOURCESCREATE PROSPERIT Y

In order to bridge the gap in our econo-my, we will need private sector growth� The obvious thing to do in that connec-tion is to focus on our common mineral resources� Especially given the saying that as long as the mineral resources are in the subsoil, they create no prosperity to society� In the Government of Green-land’s opinion, this should be changed� The mineral resources should – so to speak – be made to work for us�

The advantages are obvious. Active mining and/or oil/gas extraction will create a basis for local jobs in the mineral resources sector, an increasing number of jobs in other sectors (e�g� construction and trade) and generate in-creased revenues to the common purse�

Another important point to remember is that the additional jobs generated by mineral resources projects (with the project itself, but also with subcontrac-tors) result in a lower unemployment rate� The positive consequence of this is that fewer persons will be on transfer income – and increased tax revenues as more people will be employed�

In addition – all other things being equal – there will be a build-up of competences in our society which will transmit positively into the project

in progress – but also into the next mineral resources projects� This will mean that we will have the capability to provide more services than today� In that way we can minimise the share of foreign labour – and the use of expen-sive experts� For the good of Greenland�

Overall, a mineral resources project has a number of important upsides to our society which the right framework conditions for the companies will allow us to capture�

• How Greenland will benefit from a mineral resource project

The mineral resources generate the following sources of income to our society:

• Tax revenues – Corporate and withholding

taxes and royalty (a way to tax the company’s turnover)

– Income tax

• Wages and salaries – Income to employees

• Profit – The company’s profit (typical-

ly subcontractors and service industry)

Let’s make it concrete – using a mi-neral resource project as a base case:

» In that way we can minimise the share of foreign labour – and the use of expensive experts. For the good of Greenland. «

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ENVIRONMENTALPROTECTION

Following the amendment of the Mineral Resources Act, the responsibilities of the former Bureau of Minerals and Petrole-um were divided as per 1 January 2013 between the Ministry of Industry and Mineral Resources and the Ministry of Environment and Nature�

In the same way as the Ministry of In-dustry and Mineral Resources is working with GEUS and major Danish consultancy firms with regard to economic and legal matters, the Ministry of Environment and Nature is working closely with the Danish Centre for Environment and En-ergy (DCE) under the Aarhus University and the Greenland Institute of Natural Resources (GINR) concerning scientific environmental protection advice as it relates to mineral resources activities� In the strategy period the Mineral Resourc-es Act will be amended to provide a clearer and more transparent division of competences between the environmental authority and the licensing authority, and the sets of rules applying to envi-ronmental protection will be developed, as will the co-operation with DCE and GINR, including among other things to transfer competence to GINR�

The Ministry of Environment and Nature is responsible for en-vironmental protection in a broad sense within the area of mineral resources activities, including guidelines for environmental impact assessments, protection of vulnerable natural resorts and protection against pollution and negative climate impact�

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Did you know …that the Government of Greenland is currently identifying particularly vulnerable natural resorts in North and North-East

Greenland.

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OIL/GAS – new licensing rounds

The Government of Greenland’s long-term goal in the oil/gas area is clear: to maintain a high level of exploration activity� This way, we will improve the prospects of an oil field becoming active� If we are to deliver on this goal, a higher level of exploration activity is required from the oil companies in the form of a higher number of licences granted� This is because the companies are relinquishing a large number of the existing blocks�

So in the period between 2014 and

What is a licensing round?In brief, a licensing round means that a designated area is divided into licence areas or ”blocks” and made available for licensing� The companies will then have a specified period in which to apply for an exclusive licence to explore for and exploit oil and gas in one or more blocks�The Government of Greenland will describe the licensing terms and conditions in the dossier, e�g� the size of the blocks and their exact location, licence terms, application deadlines and evaluation criteria� When the application period ends, the applications received will be examined� If there are two or more applicants for the same block and there is competition for the block, the applications will be compared� The comparison will be made on the basis of the evaluation criteria set out in the dossier�

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Paamiut

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Qaqortoq

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Nanortalik

Kangaatsiaq

Qeqertarsuaq

Illoqqortoormiut

Nationalparken

Qaasuitsup Kommunia

Kommuneqarfik SermersooqQeqqata Kommunia

Kommune Kujalleq

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70°0'0"N

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65°0'0"N

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New licence areas 2014-2018

Open door areas 2014-2018

Existing licences

2016/2017

2016/2017

2018

2014

2016

2014

• Jameson Land (onshore), 2014

• Areas offshore South-West

Greenland, 2014

• Nuussuaq Peninsula and Disco

(onshore), 2016

• Baffin Bay, 2016/17

• Davis Strait, west of Nuuk,

2018

2018, the following areas in and around Greenland will be made available:

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Over the strategy period, licensing rounds are expected to be conducted at intervals of two or three years� Until now, licences have been granted for blocks of 10,000 square kilometres or even larger�

Government take on oil/gasThe overall tax revenues on oil/gas are also collectively referred to as the government take� The term covers elements such as corporate tax, royalty

» In addition, the Government of Green-land’s goal is to maintain and expand oil exploration activities in different areas of Greenland. «

on turnover (a royalty on the company’s turnover from the project in ques-tion), surplus royalty (a royalty on the company’s profits from the project in question) and carried state participation in the form of Nunaoil (Nunaoil must be a partner in all exploration projects to represent the Self-Government)�

In relation to oil/gas, the Government of Greenland recommends the following government take model:

• Corporate/withholding tax at the rate applicable from time to time

• A 2�5% royalty on turnover• A surplus royalty of 7�5%,

17�5% and 30%, payable when accumulated revenues exceed accumulated expenses by 35%, 45% and 55%, respectively

• Participation by Nunaoil as a carried partner in the explora-tion phase, with an ownership interest of 6�25%

Did you know …that a foreign oil companywill only venture into an offshoreoil drilling project in Greenland if it expects to find oil inthe order of several

hundred millionbarrels.

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MINERALS – government take from year 1

eters for mineral investment in a given country are the following:

For the very same reason, the overall goal of the Mineral Strategy 2009-2013 was to:

StatusThe number of licences has increased considerably over the past decade� Apart from traditional licences (exploration, prospecting and exploitation licences), a new type of licence has been intro-duced: the small-scale licence� This licence type is typically granted to private collectors of gemstones�

Not only has the number of licences increased� The companies’ exploration expenses have also increased over the years, from 2002 to 2012 – with 2011 as the peak year so far�

When selecting an area for explora-tion activities, the mineral company will base its decision on a number of parameters� The most important param-

» In this context, iron ore, gold and copper are the most important minerals with regard to market value. This is positive – for Greenland, since we have large resources of those minerals. «

• Geological potential and pro-spects (metals and minerals)

• Mineral legislation• Fiscal conditions• Institutional factors and fra-

mework conditions • Political stability

• Accumulate geological know-ledge

• Increase specific knowledge about attractive geological areas of mineral deposits in Greenland

Foto

: ©

Ava

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Exploration costs800

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700

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

DKK

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This knowledge is used in the marketing activities towards potential mineral re-sources companies in the hope that they will apply for an exploration licence and subsequently an exploitation licence in Greenland�

The focus of the strategy was particular-ly on the areas where only limited geo-logical data were available� One of those

areas was South-East Greenland in gen-eral� As a result, our geological knowl-edge of South-East Greenland increased substantially over the period� Another focus area was North Greenland�

New objectives 2014-2018The new objectives have been set on the basis of the global demand for minerals�

In this context, iron ore, gold and copper are the most important minerals based on their market value� This is pos-itive – from a Greenlandic perspective, as those minerals are found in many places�

The mineral part of the strategy will focus on carrying out geological projects and marketing activities concerning:

• Iron ore, copper and zinc• Gold• Gemstones• Rare earth elements

Phot

o: ©

Gre

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nd M

iner

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In the new strategy period, we will carry on with our efforts to map the geo-graphical distribution of the metals and the potential for and size of new depos-its� An obvious example in this context would be the zinc potential of North Greenland, where it will be possible to apply for an exploration licence from the end of May 2014�

Uranium At its autumn session in 2013, the Par-liament of Greenland resolved to abolish its zero-tolerance policy with regard to extraction of uranium and other radioac-tive minerals� Before the zero-tolerance policy was abolished, a task force had been set up with representation from

the Self-Government of Greenland and the Danish Government to assess the consequences of uranium extraction and export activities� In October 2013, the task force issued its report�

The report notes that the responsibility for the mineral resources area trans-ferred to the Self-Government with effect from 1 January 2010, including the legislative and executive powers in the area� As a result, Greenland holds the right to issue uranium exploitation licences, but if uranium export activities are envisaged which may have foreign, defence and national security policy implications, Denmark must be involved�

Canada and Australia export uranium – in a safe mannerCanada and Australia both extract uranium – and export it to third countries, which use it for peaceful purposes such as nuclear power plants� Both countries have implemented systems to safeguard the environmental, health and safety aspects� In addition, the two countries have also set up stringent uranium export controls�The Government of Greenland is planning to implement similar systems to ensure that we only export our uranium to countries which will put it to peaceful use – like Canada and Australia�

» At its autumn session in 2013, the Parliament of Greenland resolved to abolish its zero-tolerance policy with regard to extraction of uranium … «

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On that basis, the report makes the following recommendations:• That Greenland should become a

signatory to a number of conventions of importance to nuclear safety and physical protection of nuclear sub-stances and facilities� The Government of Greenland expects to introduce a bill to the Parliament in this regard in the autumn session of 2014

• Allocation of tasks and responsibility between Greenland and Denmark with regard to export controls and compli-ance with the IAEA safeguards

• Compliance with obligations under international law and other interna-tional rules concerning uranium and other radioactive materials

Did you know …that when a mine is opened, it will generate tax revenues for Greenland from year one of the project’s operational phase. This is because of a new royalty levied on the mining company’s turnover.

What is the IAEA?

The International Atomic Energy Agency is an interna-tional organisation based in Vienna, which was set up in 1957 within the United Nations family� The IAEA plays an important role in the international community’s efforts to secure compliance with the Treaty on the Non-Prolif-eration of Nuclear Weapons (NPT) of 1968, which is the cornerstone of international non-proliferation activities�

The IAEA mission spans three areas, also known as the three pillars: ”Safeguards and verification”, ”Safety in relation to protecting people and the environment from harmful radiation exposure” and ”Terrorism and science and technology”�

For more information: See www.iaea.org

?!

• Establishment of a co-operation structure between the Government of Greenland and the Danish Govern-ment, addressing defence and national security policy matters of importance to export of uranium extracted in Greenland

Greenland is already covered by the Treaty on the Non-Proliferation of Nu-clear Weapons and an additional proto-col� These are the most important agree-ments on nuclear disarmament – and promotion of the peaceful use of nuclear energy� Under the treaties, Greenland/Denmark is required to conclude safe-guards agreements with the IAEA�

The preparations involved in establish-ing the regulatory framework to govern uranium extraction are expected to be completed by early 2016� This means that administrative systems will be in place – and required procedures com-pleted�

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Government take on mineralsThe overall tax revenues on minerals, except for income taxes, are also re-ferred collectively to as the government take� The term covers elements such as corporate/withholding tax, royalty on turnover (a royalty on the company’s turnover from the project in question)

and surplus royalty (a royalty on the company’s profits from the project in question)�

In relation to minerals, the Government of Greenland recommends the following government take model:

What do the different tax elements mean – and when will Greenland begin to see any revenue?

When a mineral resources company has been granted an exploitation licence – and has procured the financing neces-sary for its project, the project phase will begin� The project phase is divided into two phases: the construction and the operating phase�

Construction phaseThe construction phase is characterised by being the phase in which the mineral resources company constructs the nec-

essary facilities (e�g� harbour facilities, roads, employee housing, etc�)� The phase typically lasts between one and three years, depending on the size and complexity of the project� In this phase, no taxes will be payable on the mining activities as such as they have not start-ed yet – as opposed to the next phase, the operating phase�

Instead, taxes are generated by the en-terprises (typically building contractors) involved in the construction phase� The revenues from the construction phase are ordinary A-taxes and corporate taxes from the Greenlandic subcontractors�

» The mineral resources company will pay tax on its profits at the applicable rate of corporate tax – currently 30% … «

• All metals and minerals except for uranium, rare earth elements and gemsto-nes: Corporate/withholding tax at the rate applicable from time to time� In addition, a 2�5% royalty on turnover will be introduced and the corporate/withholding tax will be deductible against the calculated royalty�

• Rare earth elements: Corporate/withholding tax at the rate applicable from time to time� In addition, a 5% royalty on turnover will be introduced and the corporate/withholding tax will be deductible against the calculated royalty�

• Uranium: Corporate/withholding tax at the rate applicable from time to time� In addition, a 5% royalty on turnover will be introduced�

• Gemstones: Corporate/withholding tax at the rate applicable from time to time� In addition, a 5�5% royalty on turnover will be introduced, as will a 15% surplus royalty based on gross profits in excess of 40%�

Operating phaseIn the operating phase, there are the following kinds of taxes: Corporate tax, withholding tax, royalty on turnover and surplus royalty�

The different rates are based on compre-hensive benchmark studies conducted by PricewaterhouseCoopers (PwC), one

of the world’s largest consultancy and audit firms� It has been the Government of Greenland’s goal to set the rates at a level which will capture as high a government take as possible while also being sufficiently favourable to attract mineral resources companies to invest in our society�

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• Corporate tax: The mineral resources company pays tax on its profits at the applicable rate – currently 30%

• Withholding tax: When the mineral resources company is operating at a profit, the owners can take out money for the owners/shareholders� The share of the profits which is distributed to the owners/shareholders is subject to withhol-ding tax – currently 36% for mineral resources companies

• Royalty on turnover: A royalty on turnover is payable, regardless of whether the company is operating at a profit or loss, as the royalty is payable on turnover� There are two upsides for Greenland in this: We will receive revenue from the mine at an earlier stage in the process – and we will also receive revenue even if the company is operating at a loss in the relevant year

• Surplus royalty: When the mineral resources company has accumulated an extraordinary profit, a surplus royalty will be payable� The surplus royalty is only levied on oil and gemstones

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GEOSURVEY GREENLAND

For a long period of time, Greenland’s mineral resources have attracted consid-erable foreign interest� The Government of Greenland recommends setting up a GeoSurvey Greenland (GSG) for mineral exploration, oil/gas exploration and mining development activities in Nuuk�

The GSG will be tasked with the follow-ing activities:

The institution will thus contribute to an active use of geo-data to promote efficient and sustainable management of Greenland’s mineral resources and environment� The GSG will provide ge-ological advice to public authorities on mineral resources questions and provide input with regard to the regulatory

tasks to be carried out in this area� In addition, the GSG will be a nation-al geological data centre making data and knowledge available to authorities, educational institutions, businesses and private individuals both at the infor-mation level in the form of marketing activities and on commercial terms�

• Safeguarding Greenland’s interests within geological, ge-ophysical and geochemical data collection

• Storage of those data for the benefit of developing Green-land’s mineral resources

• Heightening awareness of Greenland’s mineral resources potential by means of marketing activities

• Geological data will be stored in databases – and will thus become Greenland’s archive for new as well as old data, and this is very much in the interest of society and industry

The plan is to start on the GSG project in the strategy period, where the GSG will be an item on the Self-Government’s budget� The plan is to make the GSG an independent sector research institution under the Self-Government� This means, among other things, that the GSG can participate in national and international research programmes and receive grants from research funds�

Specifically, the GSG is to carry out a broad range of functions:

• Geo-mapping activities (col-lection of geophysical and geochemical data)

• Laboratories (study of the geology collected)

• Databases (storage of geophys-ical data)

• Communication of information (sharing information with the general public about the country’s minerals and hydro-carbons)

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Today, mineral samples are sent overseas for laboratory testing� This often means that analysis results will not be available until the next exploration season� The mineral resources companies will therefore benefit from the GSG in the following ways:

• Increased exploration efficien-cy (saves the transport)

• Lower exploration costs• Less time spent on explora-

tion activities overall• Analysis results will be

available in time for field activities to be initiated the same season

Did you know …that a base case is a kind of calculation which is based on a number of assumptions to show that something would happen. This is not the same as saying that it will in fact happen. When the Oil and Mineral Strategy uses a base case to show the government take on two oil fields, the very purpose is to exemplify the effects which two oil fields may have on Greenland’s economy under the given assumptions.

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Did you know …that GeoSurvey Greenland (GSG) is to be an independent sector research institution under the Self-Government. This means, among other things, that the GSG can participate in national and international research program-mes and receive grants from research funds.

A GOOD FRAMEWORK – makes for a sustainable mineral resources sector

The Government of Greenland wishes to focus on sustainable development in a broad sense, with regard to the society and the economy� The areas cover the infrastructural framework (e�g� air-ports), the labour market and employ-ment, training and the health sector and various other areas�

The novel feature in relation to the former strategy is that these areas are to be integrated to a larger degree in the development of the establishment of a mineral resources sector� The above areas contribute to getting the most of Greenland’s mineral resources – and minimising any risks involved in devel-oping the mineral resources sector�

The business sectorThe business structure in Greenland is characterised by many sole traders and small businesses with a few employees� The businesses are most often from the building and construction industry, the service industry and traditional trades�

This is a perfect match with the capabil-ities in demand by the mineral resourc-es sector when the projects are to be

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realised, both in the construction and the operating phase�

According to a GAP analysis conducted by the consultancy firm Rambøll, how-ever, there is a gap between the capabil-ities possessed by Greenland businesses today and the capabilities in demand by the mineral resources industry� The gap is particularly noticeable in small businesses with few employees� The need to enhance capabilities is espe-cially great within the area of safety in a broad context, i�e� health, safety and environment�

» For the very same reason, the Government of Greenland will carry on in its drive to enhance the capability of small and medium-sized enterprises to enable them to become subcontractors to the mineral resources industry. «

What is an environmental impact assessment?• An introduction describing the mining project and its background and purpose• An in-depth description of the natural environmental condition of the area before the

project• A description of the mining project’s life: all phases from exploration to post-closure of the

project• An assessment of the environmental impact of the project, including an evaluation of alter-

natives to the preferred solution• An environmental management plan describing how the identified impact is to be dealt with• An environmental monitoring plan describing, for instance, species to be monitored• A public consultation procedure

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With the investments required being in the billion kroner range – and invest-ments which Greenland is unable to provide on its own, the Government of Greenland will invite institutional partners to jointly examine whether it is possible to support the mineral resourc-es sector by encouraging the financing arrangement known as public-private partnership (PPP) – a co-operation between public and private interests or, in the alternative, between one or more mineral resources investors and institu-tional investors�

Labour market and employmentThe situation in the labour market is as follows: Unemployment must be fought with skill development initiatives fo-cused on the mineral resources sector� The sector is expected in future to need unskilled workers who have undergone tailored mineral resources courses� At the level of semi-skilled workers, the sectors involved include building and construction, iron ore and metal, cater-ing and cleaning as well as cargo� The major part of the courses may be offered by our industry schools, which must therefore be provided with the relevant

Did you know …that a strategy sets

the direction for the Government of Greenland’s

activities in a given period.

• Financing infrastructural facilities

• Energy supply to the sites of the mineral resources com-panies

• Air transport to and from the companies’ mines and oil rigs

• Harbours: The main part of all goods in Greenland is transported by sea� It will be a challenge for existing harbours to meet the needs of the increasing number of mines and oil rigs� This will place new demands on exist-ing harbours

• Telecommunications: Mines have great telecommunication needs� And with the current telecommunications infra-structure, the present level is not sufficient� An analysis must therefore be made to find out how mines can have access to the best telecommu-nications possible

For the very same reason, the Govern-ment of Greenland will carry on in its drive to enhance the capability of small and medium-sized enterprises to enable them to become subcontractors to the mineral resources industry� The capa-bility enhancement initiative began in 2012 – and is currently scheduled to continue until 2015�

The Government of Greenland will also work to establish a co-operation be-tween the mineral resources companies on the one hand – and local businesses on the other hand� The goal is to have local businesses involved in the mineral resources projects�

Aligning the framework to industry needsAt the infrastructural level, there are a great number of challenges to the mineral resources companies which need to be addressed� The challenges are as follows:

resources to allow them to expand their course activities, both with regard to teaching resources/competences and with regard to facilities� In addition, workers’ skills must be upgraded with regard to health and safety to comply with international standards applying to workers in the mineral resources sector�

TrainingIn continuation of the above, the min-eral resources sector and related sectors may contribute to creating a large number of new jobs� For many unskilled unemployed workers, training is the road to good jobs�

Against this background, the Gov-ernment of Greenland recommends ensuring that training and upskilling initiatives are better targeted at the mineral resources sector and related jobs, including also training programmes in the building and construction sector� Moreover, an effort must be made to create new apprentice and trainee jobs – this is a good way to expand the local labour force within these disciplines� It is therefore necessary to foster closer co-operation between the

labour market offices under the local authorities, which are in contact with the unemployed, the businesses which are in need of labour and can implement on-the-job training programmes and the industry schools, which can provide the job-related courses�

Health and social sectorsToday, the healthcare system is geared to the needs of the local population – but not in a scenario where mineral resources activities are initiated in a given area and where foreign workers are recruited from abroad, e�g� from Asia�

The important thing is therefore to en-sure that the healthcare system will be able to meet the needs in the strategy period�

The mineral resources companies must ensure that insurance schemes are established for all employees to cover the costs of evacuation, transport and hospital treatment of sick and injured employees� In that connection, the mineral resources company must ensure that sufficient and necessary trained

healthcare professionals are available, reflecting the number of employees and the size of the project� Citizens, local community and stakeholdersThe development of the mineral resourc-es sector requires broad popular and stakeholder support and support from the players who affect or are affected by the development set to take place in the mineral resources sector�

The changes caused by the development of the mineral resources sector are dramatic� They involve an adjustment of our entire way of organising society� Our educational institutions, local business-es and the public sector (the Self-Gov-ernment and local governments) in particular must adapt to the new chal-

lenge to enable us as a society to make the most of the significant opportuni-ties involved in further developing our mineral resources sector� And, secondly, it requires each individual to adapt to the new requirements, challenges and opportunities�

Therefore, the Government of Greenland recommends a strengthening of the public consultation process by formal-ising form and procedure� This means, among other things, that citizens and stakeholders will be involved at an earlier stage in the process by way of pre-consultation� It will also become a statutory requirement that the con-sultation period must be eight weeks� Those measures were incorporated into the Mineral Resources Act at the Parlia-ment’s spring session of 2014�

» Unemployment must be fought with skill development initiatives focused on the mineral resources sector. «

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Did you know …that the Oil and Mineral Strategy proposes to introduce a statutory 8-week consultation period to allow the public to submit their comments.