Mining rights and title in Greenland

Mining rights and title

To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?

Metallic minerals in the ground of Greenland belong to Greenland’s government, and prospecting and exploration for and exploitation of mineral resources in Greenland can only be carried out under licences granted according to the Mineral Resources Act.

However, the resident population of Greenland may carry out non-commercial collection of loose minerals without a licence being required, but only with respect to exclusive licences for exploration and exploitation of mineral resources granted to other parties.

What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?

The MLSA provides advice and assistance to private parties wishing to engage in activities of mineral exploration and development in Greenland.

Moreover, their English language website (www.govmin.gl) is an important means of communicating relevant information to the mining industry. On this website wide range of information is available, for example, information regarding relevant legislation, application procedures, licence terms, fieldwork, reporting and current licences.

The Geological Survey of Denmark and Greenland, situated in Denmark, provides a wide range of geoscientific information, which can be obtained from their website (www.geus.dk).

What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?

A licence issued according to the Mineral Resources Act will cover all mineral resources except hydrocarbons, radioactive elements and hydropower, unless otherwise stipulated in the licence.

Prospecting licence

A prospecting licence is non-exclusive, meaning that the granting of such a licence does not preclude the granting of similar licences to other parties and the licence lapses to the extent that exclusive licences may be granted later as regards the area and the resources in question. Further, the licensee has no right prior to other parties when applying for an exclusive exploration licence as regards the area and the resources in question.

The licensee will have no commitments and may surrender the licence at any time with written notice to the MLSA. However, under certain conditions, expenditure made under a prospecting licence may, within three years from the calendar year in which the expenditure was made, qualify as fulfilment of the exploration obligations for one or more exploration licences.

Exploration licence

Applications for an exploration licence shall be submitted to the MLSA, which registers the applications in either batch A (dating between the first and 15th of the month) or batch B (dating between the 16th and the last day of the month).

If the case of competing applications (applications within the same batch and with overlapping licence areas), the Greenlandic government will make a discretionary decision concerning the granting of the licence.

An exploration licence is exclusive, precluding the granting of a similar licence in the same area to other parties. The exploration licence is granted for a period of five years and at the expiry of the first licence period the licensee is entitled to be granted a new licence for the same area for five years. Pursuant to the Standard Terms, at the expiry of the second licence period (years six to 10), the licensee may be granted additional new three-year licences for years 11-13, 14-16, 17-19 and 20-22 for the same area, wholly or partly, provided the terms of the licence have been complied with. However, the licensee is not entitled to have such licences granted.

During the licence period the licensee is obliged to spend a fixed minimum of exploration expenses per calendar year calculated as the sum of an amount per licence per year and an amount per square kilometre per year.

Exploitation licence

If a licence holder of an exclusive exploration licence has found and delineated a commercially viable deposit that the licensee intends to exploit and provided the terms of the licence have been complied with, the licensee is entitled to be granted an exploitation licence.

An exploitation licence regarding mineral resources will, as a main rule, only be granted to limited companies domiciled in Greenland, exclusively carrying out activities under the granted licences and not being taxed together with other companies. It is required that such companies may not be more thinly capitalised than the group of which the company forms part, but the company’s loan capital must always exceed the shareholders’ equity up to a ratio of 2:1. The licensee shall, further, have the necessary expert knowledge and adequate financial background with respect to the exploitation activities in question. The licence is granted for 30 years.

Following the granting of an exploitation licence and prior to commencement of development and production, the licensee must submit a development plan (including a closure plan) for MLSA approval and an environmental impact assessment. Further, the Mineral Resources Act stipulates that if an activity is assumed to have a significant impact on social conditions, a licence for the activity can be granted only when a social sustainability assessment has been approved by the MLSA. Finally, it is determined in the licence to what extent the licensee is obliged to enter into an impact benefit agreement imposing obligations for the licensee regarding the use of Greenlandic labour and enterprises and also regarding the education of Greenlandic labour.

What is the regime for the renewal and transfer of mineral licences?

See question 10. Any direct or indirect transfer of a licence to a third party requires approval by the Greenlandic government. Indirect transfer means any transfer of ownership interests that will affect the controlling interest of the licensee.

What is the typical duration of mining rights?

The exploration licence is granted for a period of five years and at the expiry of the first licence period the licensee is entitled to be granted a new licence for the same area for five years. Pursuant to the Standard Terms, at the expiry of the second licence period (years six-10), the licensee may be granted additional new three-year licences for years 11-13, 14-16, 17-19 and 20-22 for the same area, wholly or partly, provided the terms of the licence have been complied with. However, the licensee is not entitled to have such licences granted.

The exploitation licence is granted for 30 years. The period for exploitation may be extended if warranted by special circumstances, however, the total period cannot exceed 50 years.

A licence may be revoked in the following situations:

• if the licensee breaches the terms of the licence or the provisions laid down pursuant to the Mineral Resources Act or pursuant to the licence, or if the licensee fails to meet specified time-limits;
• if the licensee acts fraudulently while submitting information to the MLSA; or
• if one or more of the parties participating in the licence goes into liquidation or is declared bankrupt.

Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?

There is no distinction between mining rights that may be acquired by domestic and foreign parties, except regarding exploitation licences, which can only be granted to limited companies domiciled in Greenland.

How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?

Decisions, which according to stipulations of the licence depend on the judgment or resolve of the minister for Mineral Resources or the MLSA, are not subject to arbitration. This stipulation does not exclude ordinary reviews by the courts.

In any other case, disputes arising between the Greenlandic government and the licensee regarding questions concerning the licence will be decided upon by a board of arbitration.

Concerning enforcement of foreign arbitration awards, the New York Convention applies.

What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests?

In Greenland, ownership to land cannot be obtained, as all land is owned by the society. However, persons or companies, on application, can obtain a right to use a piece of land for a defined purpose, for example, the construction of a building. When obtaining an exclusive exploration and exploitation licence, the licensee acquires the right to explore and exploit the minerals under the conditions of the licence terms for the area covered by the licence.

Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?

As a main rule the government or state agencies do not have the right to participate in mining projects. However, according to section 17(2) of the Mineral Resources Act, a licence may prescribe that a company controlled by the Greenlandic autonomous government will be entitled on specified terms to join as a participant in the activities covered by the licence.

An exploitation licence regarding mineral resources will, as a main rule, only be granted to limited companies domiciled in Greenland, exclusively carrying out activities under the granted licences and not being taxed together with other companies.

Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?

Expropriation is defined as the government taking over private property without the owner’s consent.

According to section 73 of the Constitution of the Kingdom of Denmark Act, which also applies in Greenland, the legislature is authorised to make regulation on expropriation within the framework hereof.

Expropriation is only possible if the legislation complies with the following conditions:

• that the owner of the property being expropriated is fully compensated;
• that the alienation is motivated by the interests of the public good; and
• that the restraint is authorised by said act.

Are any areas designated as protected areas within your jurisdiction and which are off-limits or specially regulated?

There are currently 12 protected areas in Greenland. The areas each have their own history and serve to protect unique landscapes or wildlife habitats, the most notable being the Ilulissat ice fiord, which is included on the United Nations Educational, Scientific and Cultural Organization’s World Heritage list. Further information about the areas in question can be obtained by contacting the MLSA or the Ministry of Nature, Environment and Energy.