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The Chinese Scramble into Greenland Over-hyped

May 07, 2013

In Greenland the snows usually lie until May; this year I landed at the Cold War era airstrip at Kangerlussuaq in April and the bare hillsides were already visible. Under those slopes sit a wealth of minerals and the coveted rare earths, and many Greenlanders believe this bounty is their ticket to prosperity and independence from Denmark. 

This has opened up the possibility of large-scale Chinese involvement in getting hold of those minerals. Beijing’s thirst for such resources is well known, and it has become very interested in what lies beneath the melting icecaps of the Arctic region. 

That headline has been so compelling that a top level EU negotiator even told the French AFP news agency that 2000 Chinese workers were on the ground in Greenland. A former top American diplomat, Thomas Pickering, wrote in the New York Times about Chinese ambitions of reaching up into the Arctic through Greenland and Iceland, threatening US interests. 

This fitted into the 21st century geopolitical narrative of jousting between a US that maintains military dominance, including a base in Northern Greenland, and a China that concentrates on expanding its resource empire. Chinese cash would allow it to gain an advantage in getting access to Greenland’s mineral wealth, followed swiftly by thousands of Chinese workers (like those that have fanned out over Africa, but with warmer clothing). 

But on my visit I saw little to believe a quick Chinese scramble for the Arctic. I did not spot any Chinese on my own visit to Greenland, so instead I discussed their possible presence with the territory’s decision makers. The newly elected head of government, Aleqa Hammond said that she hoped there would be many Chinese workers there in the future, depending on the projects. Herman Bertelsen, the mayor of Sisimiut, home to a possible aluminium-smelting project, was equally welcoming to Chinese guest workers. 

The appearance of Chinese workers serves as a rough yardstick for determining whether international mining interest materialises. This in turn is seen as crucial if Greenland is to continue its drive towards economic and then de facto independence from Denmark. The local dream scenario is to transform into the mineral Saudis of the far North. 

They may be waiting for some time before that dream materialises. Actually, the public face of Chinese involvement, Xiaogang Hu of London Mining, who was spearheading a high profile investment in an iron ore project, left his position in April. Locals explained this as a result of new Greenlandic leader Hammond’s intention to revise the Large Scale Act, which was enacted under the previous government and allows scores of foreign workers on mining projects. Xiaogang was also the link to Chinese investors like Sichuan Xinye Mining Investment or the China Development Bank. 

The Western media buzz on China’s scramble into Greenland even led to a formal rebuke from the spokeswoman of the Chinese ministry of Foreign Affairs, who pointed out that no licence on Greenland so far has gone to a Chinese company. Her conclusion was that the media hype was “way beyond the truth.” With the uncertainty over the Large Scale Act, it looks like Chinese investors – and their workers – are waiting and watching, rather than invading. 

Yet the real challenge for Greenland isn’t merely handling Chinese interest but how to transform into a successful resource economy. 

I visited Greenland’s brand new mining school, which is an effort to satisfy some of the demand for expertise with local labour. Greenland’s own labour force is, however, only 30,000 strong, and needs substantial contributions from overseas given the massive size of the island and the remarkable lack of infrastructure that is all too visible from the air. 

The new government, aware that its minerals are the opportunity that can underpin independence, has just introduced royalties to prevent profits disappearing offshore. With its tiny population there are question marks over the ability of Greenland’s small negotiation teams of officials to secure sufficiently stringent criteria to ensure that investments are sustainable and environmentally acceptable. If unsuccessful, Greenland might simply become just another country that thought it had hit the resource jackpot, only to find out that it was really a curse. 

Jonas Parello-Plesner is a Senior Policy Fellow at the European Council on Foreign Relations.

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