The Chinese scramble into Greenland is overhyped

Talk of thousands of Chinese workers on the ground in Greenland masks the reality of a country still coming to terms with its potential mining wealth

In Greenland the snows usually lie until May, but this year in April, looking from the western Greenland settlement of Kangerlussuaq, the bare hillsides were already visible.

Under those slopes sit a wealth of minerals and coveted rare earths, and many Greenlanders believe this bounty is their ticket to prosperity and independence from Denmark. 

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

The hype about Chinese involvement has reached such a degree that a top level EU negotiator even told the French news agency AFP that 2,000 Chinese workers were on the ground in Greenland. A former top American diplomat, Thomas Pickering, wrote in the New York Times about how Chinese ambitions of reaching up into the Arctic through Greenland and Iceland threaten US interests.

This thesis fitted into the 21st century geopolitical narrative of jousting between the militarily dominant United States, with its military base in Northern Greenland, and China that concentrates on expanding its resource empire. Chinese cash would allow it to gain an advantage in accessing Greenland’s mineral wealth, and this would be followed swiftly by thousands of Chinese workers entering the territory.

Yet there is little evidence of a Chinese scramble for the Arctic.

Chinese workers are not visible in Greenland but their possible presence was discussed with the territory’s decision makers on the writer’s visit to Greenland. The newly elected head of government, Aleqa Hammond said that she hoped there would be many Chinese workers there in the future, but this would depend 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 will materialise. 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 Greenland’s citizens into the mineral Saudis of the far North.

Greenland’s resource curse

But they may be waiting for some time before that dream comes to pass. 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 is not merely handling Chinese interest but how to transform into a successful resource economy. To this end, Greenland has a brand new mining school, which is an effort to satisfy some of the demand for expertise with local labour. But Greenland’s own labour force is only 30,000 strong, and needs substantial contributions from overseas given the massive size of the island and its remarkable lack of infrastructure

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