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Two Key Steps Greenland Should Take to Make Sure Mining Benefits All its Citizens

  • Samuel Gant
| Aug. 11, 2020

By adopting world-class standards and creating a sovereign wealth fund, Greenland can ensure mining serves its best interests.

Greenland has vast mineral resources, including nickel, gold, and uranium, but at present the country only has two producing mines. Although Greenland has had autonomous rule since 2009, the economy depends on Danish subsidies, which represent one-third of national income. Greenland's government has identified the mining industry as a source of national revenue and local jobs. The 2019–2023 National Mineral Strategy sets the goal of simplifying the transition from resource exploration to exploitation, and the nation is actively seeking foreign investment in the mining sector. There is tremendous potential for growth. A 2018 Danish geological study inferred resources of 125,000 tons of uranium under the Kvanefjeld Plateau (the sixth-largest deposit in the world), at a time when 70 new nuclear reactors are under construction globally.

Greenland's eagerness to accelerate mining raises two key questions. First, how will Greenland's government ensure that profits from mining are managed sustainably and distributed equitably? Second, how will Greenlandic citizens be consulted during the exploration, construction, and resource exploitation stages of mine development?

In the 1970s, Alaska found itself confronted with similar questions about natural resource management. Similar to Greenland, Alaska was a low-income, sparsely populated Arctic state without a diversified economy. In 1976, oil from Alaska's North Slope began flowing to market through the trans-Alaska pipeline, and Governor Jay Hammond amended the state constitution to create the Alaska Permanent Fund. Some 25 percent of state revenues from land leases and oil royalties are contributed to the fund, which will be kept intact in perpetuity to benefit future generations of Alaskans.

From an initial investment of $734,000 in 1977, the fund increased to over $53 billion by 2015. Interest from the fund finances state operations and infrastructure investment. Sovereign wealth funds have also been used to manage mining revenues. Chile's copper industry and Botswana's diamond mines both support national funds that increase government revenue....

For more information on this publication: Belfer Communications Office
For Academic Citation: Gant, Samuel.“Two Key Steps Greenland Should Take to Make Sure Mining Benefits All its Citizens.” ArcticToday, August 11, 2020.

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