China buys shares in Greenland mining company

4 October 2016

Australian Mining company Greenland Minerals and Energy Ltd (GME) announced in a stock exchange release on 23 September that China’s Shenghe Resources company had bought 12.5% of the shares through a new share issue at a price of DKK23.5m ($3.5m). GME has calculated that about 270,000 tons of uranium are deposited at Kvanefjeld which could potentially be one of the world's largest uranium mines. GME has previously signed agreements with Chinese companies, but only as non-binding declarations of intent.

"It's generally known that Shenghe has valued projects involving rare earths all over the globe for many years, so their participation is strong support for the Kvanefjeld project," said GME’s John Mair in the stock exchange release.

He points out that working in Greenland is expensive and complex and that it requires the best possible partners, such as Shenghe, which has its own processing facility for rare earths.

"The partnership brings the best Chinese mining technology together with a significant project of rare earths, and thus it becomes a real and strong commercial project. And if a project from Greenland is to be competitive, it must have the best qualifications," he noted.

Danish leading privately-owned independent newspaper Politiken commented that it is not certain that the project will be realised, given the low world prices of raw materials and the need for investment that is estimated by GME at a little over DKK5bn. There are also local concern about radioactive pollution of the mining area and the nearby city of Narsaq. However, a long period of disagreement between Greenland and Denmark over ownership of the Greenland uranium was eventually resolved with an agreement in February   on how to jointly safeguard production and export.

Now, before anything can be done, Denmark would have to sign a number of international agreements on behalf of Greenland. Finally, the agreement would have to be approved by Chinese and Australian authorities

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