Greenland prime minister eyes independence from Denmark

Greenland's prime minister hailed the lifting of its ban on mining uranium as a big step towards both economic and political independence from Denmark as well as challenging China's dominance in extracting rare earths.

The vast country with just 56,000 inhabitants thrust itself to the heart of the debate about the commercial exploitation of the Arctic after its parliament reversed a quarter-of-a-century ban on uranium mining in a close and controversial vote.

The end of the ban could have global geopolitical implications, as Greenland could potentially supply as much as a quarter of the world's rare earths, minerals used in everything from mobile phones and lightbulbs to weapon systems. China controls about 90 per cent of rare earths production.

"It is a great step towards independence," Aleqa Hammond, Greenland's prime minister, told the Financial Times while at the Nordic Council meetings in Oslo.

Greenland became self-governing in 2009 but still depends on Denmark for defence and security as well as an annual grant of about DKr3.3bn that accounts for a third of its budget. Its main industry is fishing, responsible for more than 80 per cent of its exports.

"Having an economy that is based on one source, and so fragile a one, it will never be the one that carries us to economic independence. We have a high unemployment rate and we want to create jobs for the next generation," Ms Hammond said.

She added: "Our economy should be based on what we have, not a grant from Denmark. I can't help it that we have mountains with uranium, mountains with iron ore, mountains with rare earths. That is a fantastic option for a population that is so small."

Any mining is still several years off and Greenland will need foreign help to extract the minerals. "This policy change is a transformative event. With the lifting of this ban, what it means is that one of the great mines in the world can move forward," said Roderick McIllree, chief executive of Australia-based Greenland Minerals and Energy.

He said that GME's Kvanefjeld project in the south of Greenland - the most high profile and advanced of several discoveries - could boost the country's gross domestic product by as much as 25 per cent once production started. The company will begin discussions with Greenland's government over a licence with construction not expected to start until 2015 and production in 2017 at the earliest.

Unconnected to the uranium ban, a vast iron ore mine close to the capital Nuuk has just been approved by Ms Hammond's government. But it has provoked strong feelings in the country too, as 3,000 workers - likely to be predominantly Chinese - will be needed to build the infrastructure.

The lifting of the ban has been even more controversial with Greenland's population. Many of the complainants claim there should have been a referendum for the decision.

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But, perhaps bruised by the intensity of the debate that has included some of the biggest demonstrations in Greenland's history as well as public haranguing of politicians, she held out an olive branch to critics, saying a public vote could come once companies such as GME made clear what their production plans would be.

"I will probably take a referendum: is it the right time now for mining to start with uranium as a byproduct? That will be for the people to decide," she said.

The end of the ban has also created strains with Denmark. Helle Thorning-Schmidt, its prime minister, said in Oslo: "Greenland is a self-governing country and it's up to the Greenlandic government and authorities to make these choices. This is something we have the fullest respect for.

"It is also clear that if you start taking uranium out of the ground there are certain rules that have to be applied and with regards to the rules it's up to the Kingdom of Denmark."

Ms Hammond disputes that, saying Denmark ceded control over the extraction of minerals in 2009. But she and Ms Thorning-Schmidt have agreed to set up a working group to ensure that Denmark's defence and security interests are respected.

Greenland's prime minister is also keen to ensure that the potentially vast inflow of money does not destabilise the country. Greenland has set up a fund along the lines of Norway's oil fund. "We have to be prepared so that we do not become a new Kuwait. Norway is a great example: it is a fishing nation but at the same [time] a very highly industrialised nation with oil," Ms Hammond said.

But she added that change could come quicker than many people thought with the mines potentially able to replace Denmark's grant "easily within my lifetime".

She added: "Are we ready for this? Are we ready for being a mining nation where we have thousands of people coming from outside to work? Are we able to stop Greenlanders becoming the minority? It will have an immense impact and this impact I have to work hard to make sure it is for the better."

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