First-step analysis: mining in Greenland

Mining industry

What is the nature and importance of the mining industry in your country?

The mining industry is very important to Greenland and the development of its economy along with fishery and tourism. At present, there are five exploitation licences in Greenland: a gold mine in south Greenland, an iron ore deposit, a gemstone deposit, an anorthosite mine in west Greenland, and a lead and zinc mine in northern Greenland for which licences were granted in 2013, 2014, 2015 and 2016. At present, only the gemstone and anorthosite mines are in production. Generally, mineral exploration activity has increased in the past 15 years as the world mining community has become more aware of Greenland’s mineral potential. It is therefore expected that new mines will be opened in the coming years and that the mining industry will become of great importance to Greenland.

What are the target minerals?

The target minerals of the current mining and exploration projects base metals, iron and ferroalloys, precious metals, etc, among others ilmenite, molybdenum, coloured corundum (ruby and pink sapphires), gold, diamonds, iron, zinc, lead, copper, nickel and rare earth elements.

Which regions are most active?

The regions of south-west and west Greenland are the most active regions.

Legal and regulatory structure

Is the legal system civil or common law-based?

The legal system in Greenland is a civil law system primarily based on written legislation. Greenland is part of Denmark and is subject to the Danish Constitution, but since 1979 has had an independent status within Denmark by the implementation of the Greenland Home Rule Act. On 21 June 2009, the Act on Greenland Self-Government came into force, replacing the Home Rule Act.

The Danish government still administers certain matters, including the Constitution, foreign policy, defence policy, the Supreme Court, citizenship and monetary policy. Greenland may take over the administration of all other areas of legislation. It took over the legislation on mineral resources shortly after the implementation of the Act on Greenland Self-Government.

How is the mining industry regulated?

The main piece of legislation regulating the mining industry in Greenland is the Greenland Parliament Act of 7 December 2009 on mineral resources and mineral resource activities (the Mineral Resources Act), passed by the Greenlandic Parliament in December 2009. Before the implementation of this Act, mineral resources were regulated by a joint Greenlandic–Danish administration. Greenland now has full authority to make decisions regarding principal investments in mineral resource activities, including the granting of licences. The Greenland government has the right to control and use mineral resources in the subsoil of Greenland, and all industrial prospecting, exploration and exploitation of mineral resources may only be performed under licence.

What are the principal laws that regulate the mining industry? What are the principal regulatory bodies that administer those laws? Were there any major amendments in the past year?

The principal law regulating the mining industry in Greenland is the Mineral Resources Act. Amendments to the Mineral Resources Act were passed by the Greenland parliament in 2012, 2014, 2015 and 2016, 2018 and 2019.

The latest amendments relate to the terms and conditions of an exploitation licence. A licensee who, under an exploration licence, has discovered and delimited deposits that he or she intends to exploit, and who has otherwise met the terms of the licence, is entitled to be granted an exploitation licence.

The requirement that it must be a commercially exploitable deposit and the related requirement for documentation of feasibility studies have been removed.

Also, it has been clarified that in an area covered by an exploitation licence, no parties other than the licensee may perform activities under a licence for prospecting, exploration or exploitation of minerals. Finally, under an exploitation licence, terms may be stipulated on deadlines for matters of material importance to the execution of the exploitation activities and other activities under the licence. The government can decide that a licence shall lapse or be revoked if a deadline or an extended deadline is not met.

Currently, a split of the legislation on minerals and hydrocarbons is being prepared to provide a new mining law. The current main rules and regulation on minerals is expected to be re-enacted. Reference is also made to the Standard Terms for Exploration Licences for Minerals (Excluding Hydrocarbons) in Greenland of 25 June 2013 providing for standard fixed terms applying to prospecting and exploration licences. An addendum to the Standard Terms on payment of royalties was adopted on 1 July 2014.

The government is responsible for all aspects of mineral exploration and mining in Greenland. The regulatory bodies are as follows:

• The Ministry of Mineral Resources (MMR) is responsible for strategy and policymaking, and legal aspects of mineral resources in Greenland. It is also the authority responsible for all socio-economic aspects of mineral resources, including social impact assessment and impact benefit agreements (IBA).
• The Mineral Licence and Safety Authority (MLSA) within the MMR is the one-door administrative authority for licences, mineral resource activities and licence-related safety matters including supervision and inspections.
• The Environmental Agency for the Mineral Resources Area (EAMRA), under the Ministry of Environment and Nature, is the administrative authority for environmental matters relating to mineral and hydrocarbon resource activities, including protection of the environment and nature, environmental liability and environmental impact assessments.

Further information on procedures concerning the granting of licences and relevant legislation applying to the area of mineral resources can be found at www.govmin.gl.

What classification system does the mining industry use for reporting mineral resources and mineral reserves?

There are no specific requirements by law. The Greenlandic mining industry may use any kind of classification system it wishes, as long as it is in accordance with good international practice.

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?

Minerals in the ground in Greenland belong to the Greenland government, and prospecting and exploration for and exploitation of mineral resources in Greenland may only be carried out under licences granted to private parties according to the Greenland Parliament Act of 7 December 2009 on mineral resources and mineral resource activities (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.

An exploration and an exploitation licence will cover all mineral resources except hydrocarbons and radioactive elements, unless otherwise stipulated in the licence. Land cannot be owned in Greenland, which means no large areas are held privately and there are no owners of surface rights. All mining rights rest with the Greenland government and the licensees who have been granted licences by the government.

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 Mineral Licence and Safety Authority (MLSA) provides advice and assistance to private parties that wish 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 there is a wide range of information available, for example, information regarding relevant legislation, application procedures, licence terms, fieldwork, reporting and current licences.

The Greenland Mineral Resources Portal is an entry point to all available information about mineral resources in Greenland. It gives access to data, reports, maps and scientific background information about the geology of Greenland (www.greenmin.gl). The Portal is an ongoing project collaboration between the Department of Geology within the Mineral Resources Authority and the Geological Survey of Denmark and Greenland.

Licensees of exploration and prospecting licences shall forward reporting to the MLSA regarding all geological, geochemical, geophysical, technical, environmental and other investigations that have been carried out regarding the licence area during a calendar year.

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?

Mining rights are granted by the Greenland government upon application (ie, prospecting licences, exploration licences and exploitation licences). A licence issued according to the Mineral Resources Act will cover all mineral resources except hydrocarbons and radioactive elements, unless otherwise stipulated in the licence.

A prospecting licence is non-exclusive and is granted for a five-year period. The granting of the 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 has no exploration commitments and may surrender the licence at any time by written notice to the MLSA. Under certain conditions, expenditure made under a prospecting licence may, within three years of the calendar year in which the expenditure was made, qualify as fulfilment of the exploration obligations for one or more exploration licences.

An exploration licence is exclusive, precluding the granting of a similar licence in the same area to other parties. However, permanent residents may carry out non-commercial collection of loose minerals without a licence in the licence area. An exploration licence is granted for a five-year period 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. 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 to 13, 14 to 16, 17 to 19 and 20 to 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 these 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 stipulated in the standard terms. In addition, a yearly licence fee is payable as from year six of the licence period.

Within 12 months of the termination of the activities under the licence or the granting of a new licence in continuation of this licence, the licensee must: (1) remove all installations, buildings, stored items, etc, in the area that have been established for the activities under the licence, except when the non-removal of these installations, etc, has been approved by the MLSA; and (2) carry out final clean-up activities in the affected areas and remedy any damage to the terrain and vegetation caused by the activities.

The holder of an exploration licence who has discovered and delimited deposits that he or she intends to exploit, and who has otherwise met the terms of the licence, is entitled to be granted an exploitation licence. If an activity is assumed to have significant impact on social conditions and the environment it is a condition for obtaining an exploitation licence that an environmental impact assessment and a social sustainability assessment has been through a public consultation process and approved by the MLSA.

 The licence is granted for those parts of the area that contain deposits that the licensee intends to exploit. The licence is granted for a period of 30 years, unless a shorter period has been laid down as a condition for granting the licence. The government may extend the period for exploitation. The total period is subject to a maximum of 50 years.

An exploitation licence may only be granted to public limited liability companies domiciled in Greenland. The company may only perform activities covered by licences granted under the Mineral Resources Act and must not be taxed jointly with other companies, unless joint taxation is compulsory. It is required that these 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.

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. The licensee is also obliged to enter into an impact benefit agreement with the government and the relevant municipality 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?

A prospecting licence is non-exclusive and is granted for a five-year period. It may not be renewed, but application may be made for a new prospecting licence.

An exploration licence is granted for a five-year period 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. 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 to 13, 14 to 16, 17 to 19 and 20 to 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 these licences granted.

An exploitation licence is granted for a period of 30 years, unless a shorter period has been laid down as a condition for granting the licence. The government may extend the period for exploitation. The total period is subject to a maximum of 50 years.

Any direct or indirect transfer of a licence to a third party requires approval by the 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?

A prospecting licence is granted for five years only.

An 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 to 13, 14 to 16, 17 to 19 and 20 to 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 these licences granted.

An 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.

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, with the exception of an exploitation licence, which may only be granted to public limited companies domiciled in Greenland. However, there is no requirement in relation to the country of origin of the owner of the licence company. Moreover, certain small-scale mining rights apply to residents in Greenland.

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

Decisions that, according to the terms of the licence, depend on the judgement 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 government and the licensee regarding questions concerning the licence will be decided upon by a board of arbitration.

With regard to enforcement in Greenland of foreign arbitration awards, the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards applies as Greenland is a party to the Convention. Thus, awards made in a state that is a party to the Convention can be enforced in Greenland.

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 of land cannot be obtained, as all land is owned by the society. However, upon application, persons or companies can obtain a right to use a piece of land for a defined purpose, such as the construction of a building. When obtaining exclusive exploration and exploitation licences, 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 the Mineral Resources Act, section 17(2) a licence may prescribe that a company controlled by the Greenland government will be entitled on specified terms to join as a participant in the activities covered by the licence. This requirement has been made in licences for exploration and exploitation of hydrocarbons, but not in any mineral exploitation licence.

There is no local listing requirement.

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 consent of the owner. There are no specific rules or regulation for expropriation of licences.

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

The general rule is that expropriation is only possible if it complies with the following conditions:

• the owner of the property being expropriated is fully compensated;
• the alienation is motivated by the interests of the public good; and
• it is made with statutory authority.

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 Icefjord, 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.

Duties, royalties and taxes

What duties, royalties and taxes are payable by private parties carrying on mining activities? Are these revenue-based or profit-based?

Unless otherwise stated in the exploration licence, which precedes the exploitation licence, the economic terms of an exploitation licence will be as follows:

• taxation according to Greenlandic legislation in force at any time;
• payment of a fee of 100,000 Danish kroner to the Mineral Licence and Safety Authority (MLSA) at the granting of an exploitation licence;
• reimbursement of the MLSA’s expenses regarding regulation of the licensee’s activities; androyalties (see below).

The more specific terms on royalties for different types of minerals are stated in appendices 1 to 4 to the addendum to the Standard Terms for Exploitation Licences, which came into force on 1 July 2014. The addendum applies to the following licences:

1. a licence for exploration for minerals (excluding hydrocarbons) in Greenland if the licence is granted on 1 July 2014 or later;
2. a licence for exploration for minerals (excluding hydrocarbons) in Greenland if the licence is granted earlier than 1 July 2014 and it follows from the licence, including any addendum or any other amendment to the licence, that the Greenland government may set terms on the licensee’s payment of royalties or consideration, including royalties in an exploitation licence granted on the basis of the exploration licence; and
3. a licence for exploration for minerals (excluding hydrocarbons) in Greenland if the licence is granted earlier than 1 July 2014 and the Greenland government and the licensee agree that this addendum shall apply to the licence.

This means that the Greenland government cannot lay down terms on royalties when granting an exploitation licence on the basis of an exploration licence granted earlier than 1 July 2014, provided that the original exploration licence has not been amended or does not include any addenda or other terms on royalties (see point (2) above). However, the last two exploitation licences that were granted in October 2013 and March 2014 include an agreement between the government and the licensees on the payment of royalties.

The royalty elements are differentiated for the various types of minerals, and the main terms on royalties are as follows:

• a licensee exploiting minerals, other than rare earth elements, uranium and gemstones, shall pay a sales royalty of 2.5 per cent of the value of minerals (on certain terms, corporate income tax and corporate dividend tax may be offset against sales royalties);
• a licensee exploiting rare earth elements shall pay a sales royalty of 5 per cent of the value of the elements (on certain terms, corporate income tax and corporate dividend tax may be offset against sales royalties);
• a licensee exploiting uranium shall pay a sales royalty of 5 per cent of the value of the uranium; and
• a licensee exploiting gemstones shall pay a sales royalty of 5.5 per cent of the value of the gemstones and a surplus royalty of 15 per cent based on gross profit exceeding 40 per cent.

What tax advantages and incentives are available to private parties carrying on mining activities?

As from 2020, for companies carrying on mining activities, corporate taxation amounts to 25 per cent whereas the corporate taxation of other companies is 26.5 per cent.

The tax on dividends for companies carrying out mining activity is 36 per cent regardless of the municipality in which the company is situated, as opposed to other companies that pay a tax on dividends of 42 to 44 per cent, dependent on their home municipality. Finally, companies carrying on mining activities can bring deficits forward without time limits where other companies have a time limit of five years.

Does any legislation provide for tax stabilisation or are there tax stabilisation agreements in force?

No.

Is the government entitled to a carried interest, or a free carried interest in mining projects?

As a general rule, the government is not entitled to a free carried interest in mining projects. However, according to the Greenland Parliament Act of 7 December 2009 on mineral resources and mineral resource activities, section 17(2), a licence may prescribe that a company controlled by the government will be entitled on specified terms to join as a participant in the activities covered by the licence. This requirement has not been seen in mineral licences.

Are there any transfer taxes or capital gains imposed regarding the transfer of licences?

Capital gains on the transfer of licences are included in the calculation of the corporate taxable income.

Is there any distinction between the duties, royalties and taxes payable by domestic parties and those payable by foreign parties?

There is no distinction between the duties, royalties and taxes payable by domestic licence holders and those payable by foreign parties.

Business structures

What are the principal business structures used by private parties carrying on mining activities?

Exploration licences can be issued to any legal entity based in or outside Greenland. However, an exploitation licence that forms the basis of the right to carry out mining activities will, as a general rule, only be granted to public limited companies domiciled in Greenland exclusively carrying out activities under the licences granted pursuant to the Greenland Parliament Act of 7 December 2009 on mineral resources and mineral resource activities, and not being taxed together with other companies.

Is there a requirement that a local entity be a party to the transaction?

An exploitation licence that forms the basis of the right to carry out mining activities will, as a general rule, only be granted to public limited companies domiciled in Greenland exclusively carrying out activities under the licences granted pursuant to the Greenland Parliament Act of 7 December 2009 on mineral resources and mineral resource activities, and not being taxed together with other companies.

Are there jurisdictions with favourable bilateral investment treaties or tax treaties with your jurisdiction through which foreign entities will commonly structure their operations in your jurisdiction?

Greenland has tax treaties with Denmark, the Faroe Islands, Iceland and Norway. Under certain circumstances it might be relevant for foreign entities established in these countries to structure their operations in Greenland, but this will depend on the specific circumstances.

Financing

What are the principal sources of financing available to private parties carrying on mining activities? What role does the domestic public securities market play in financing the mining industry?

The principal sources of financing available to private parties carrying on mining activities consist of equity raised on the international markets. There is no domestic public securities market in Greenland.

Does the government, its agencies or major pension funds provide direct financing to mining projects?

The Danish Growth Fund and Greenland Venture A/S (owned indirectly by the Greenland government) has invested in several companies involved in mining projects in Greenland, including AEX Gold, Bluejay Mining and Greenland Anorthosite Resources.

Please describe the regime for taking security over mining interests.

According to section 88(2) of the Greenland Parliament Act of 7 December 2009 on mineral resources and mineral resource activities, a licence under this Act cannot be attached by creditors and no systems for perfection of security in mineral licences exist under the laws of Greenland.

Restrictions

What restrictions are imposed on the importation of machinery and equipment or services required in connection with exploration and extraction?

Some types of vehicles are subject to import duty. Otherwise, we are not aware of any restrictions or limitations on the importation of machinery and equipment or services required in connection with mining activities in Greenland.

In terms of services, a licence must lay down the extent to which the licensee must use Greenland enterprises for contracts, supplies and services. Other enterprises may be used if Greenland enterprises are not technically or commercially competitive.

The foreign service provider should note that all foreign workers must obtain a residence and work permit (Greenland is not a member of the European Union), except Nordic citizens, who can stay and work in Greenland without a residence and work permit. In any case, a visa may also be required depending on the country of origin.

Which standard conditions and agreements covering equipment supplies are used in your jurisdiction?

No standards are used on equipment supplies.

What restrictions are imposed on the processing, export or sale of minerals? Are there any export quotas, licensing or other mechanisms that prevent producers from freely exporting their production?

According to the Greenland Parliament Act of 7 December 2009 on mineral resources and mineral resource activities (the Mineral Resources Act) the licensee must use Greenland enterprises for contracts, supplies and services unless Greenland enterprises are not technically or commercially competitive.

Also, it is possible when granting a licence to lay down the extent to which the licensee must process exploited mineral resources in Greenland. However, minerals may be processed outside Greenland if processing in Greenland would result in significantly higher costs or greater inconvenience.

A licence may also stipulate the extent to which the licensee must keep exploited minerals in Greenland and sell them to persons who are permanently residing and fully liable to pay tax in Greenland. Requirements to this effect may be laid down to the extent such persons themselves will process the minerals in Greenland or otherwise use the minerals commercially in Greenland. The licensee must sell the minerals at arm’s-length prices and on arm’s-length terms.

The Greenland government may lay down specific provisions on minerals, including on exploration, exploitation, processing, storage, depositing, transport, trading, export, import and certification of minerals. It may also lay down provisions or make decisions with a view to implementing or applying international agreements or rules on matters under the Mineral Resources Act in Greenland.

The government may lay down provisions on export and import of rough diamonds and activities relating to rough diamonds as well as provisions aimed at implementing or applying international agreements or rules on rough diamonds, including meeting requirements under the Kimberley Process Certification Scheme.

What restrictions are imposed on the import of funds for exploration and extraction or the use of the proceeds from the export or sale of minerals?

We are not aware of any restrictions or limitation on the import of funds for mining activities or the use of the proceeds from the export or sale of minerals. There are no restrictions on foreign investments in Greenland.

Environment

What are the principal environmental laws applicable to the mining industry? What are the principal regulatory bodies that administer those laws?

The Greenland Parliament Act of 7 December 2009 on mineral resources and mineral resource activities provides for several provisions on the protection of the environment, including general rules on environmental protection, environmental protection, climate protection, nature conservation and responsibility for this protection and conservation, and environmental liability.

Greenland has a ‘one-door’ system under which the Mineral Licence and Safety Authority (MLSA) administers all matters regarding exploration and exploitation of mineral resources, but the Environmental Agency for Mineral Resource Activities, under the Ministry of Environment and Nature, is the administrative authority for environmental matters relating to mineral and hydrocarbon resource activities, including protection of the environment and nature, environmental liability and environmental impact assessments (EIAs). Rules and guidelines are published at  https://naalakkersuisut.gl/en/Naalakkersuisut/Departments/Natur-Miljoe/Miljoestyrelsen-for-Raastofomraadet/Regler_og_vejledende_retningslinjer. 

Currently, new acts on environmental protection related to mining activities and hydrocarbon activities, respectively, are being prepared.

What is the environmental review and permitting process for a mining project? How long does it normally take to obtain the necessary permits?

Prior to commencement of exploitation and development activities, a plan for the activities, including organisation of the production and the production installations must be approved by the Greenland government. In this connection, an EIA report must be prepared and a public consultation process be carried out. The purpose of an EIA is to identify, predict and communicate potential environmental impacts of a proposed mining project in all its phases from before the commencement of mining to after closure, and to propose measures to address and mitigate these impacts.

At present, all exploitation licences are granted on an individual basis, and no model exploitation licence is available. Provided that the licensee submits all relevant information with the application for an exploitation licence, it should not take more than approximately three to six months to obtain the necessary permits. However, there are no rules guaranteeing a maximum processing time, and specific circumstances and individual negotiations may lead to a longer processing time.

Do government agencies or other institutions in your jurisdiction provide incentives or publish environmental and social governance (ESG) guidelines for green projects?

No.

What is the closure and remediation process for a mining project? What performance bonds, guarantees and other financial assurances are required?

The licensee shall, within 12 months of the termination of the activities under the licence, remove all installations, buildings, stored items, etc, in the area that has been established for the activities under the licence, except when the non-removal of these installations has been approved by the MLSA. Further, the licensee shall carry out final clean-up activities in the affected area and remedy any remaining damage to the terrain and vegetation caused by the activities.

If the licensee does not comply with the obligations at the termination of the activities these measures may be carried out at the licensee’s expense and risk.

The MLSA may request that the licensee provides security for the fulfilment of their obligations at termination of the activities. In practice, security for the estimated closure costs is almost always required prior to commencement of development and production.

What are the restrictions for building tailings or waste dams?

Terms and restrictions for building tailings and waste dams are laid down directly in the licence inclusive of the exploitation plan, closure plans and other plans that are approved by the government, and as such there are no detailed rules in legislation in this respect.

Health and safety, and labour issues

What are the principal health and safety, and labour laws applicable to the mining industry? What are the principal regulatory bodies that administer those laws?

The main health and safety laws applying to the mining industry are the general rules and regulations laid down in the Greenland Working Environment Act No. 295 of 4 June 1986, as amended.

In addition, the general regulation under Order No. 32 of 23 January 2006 on rest periods and a weekly day off is highly relevant. The Minister of Employment may lay down rules with regard to the design and fitting out of permanent, temporary, varying and outdoor places of work, including rules on special measures in connection with the mining industry. The regulatory body is the Greenlandic Working Environment Authority.

With regard to labour laws, the Salaried Employees Act and the provisions of the Holiday Act apply to the mining industry.

What are the rules related to management and recycling of mining waste products? Who has title and the right to explore and exploit mining waste products in tailings ponds and waste piles?

According to section 51 of the Greenland Parliament Act of 7 December 2009 on mineral resources and mineral resource activities (the Mineral Resources Act), the rules on environmental protection aim to help protect nature and the environment so that society can develop on a sustainable basis. Specifically, the aim, among other things, is to promote recycling and limit problems in relation to the disposal of waste.

In connection with meeting the obligations concerning the protection of the environment the party concerned must ensure and promote the use of the best available techniques, including less-polluting facilities, machinery, equipment, processes, technologies, raw materials, substances and materials and the best possible measures for pollution abatement, insofar as this is technically, practically and financially possible for the party concerned.

When issuing the specific licence, provisions are laid down to ensure that the aim and obligations are achieved in the best possible way considering the concrete circumstances of the project.

What restrictions and limitations are imposed on the use of domestic and foreign employees in connection with mining activities?

According to the Mineral Resources Act and the standard terms of the licences, the licensee shall employ Greenlandic manpower as far as possible. Where there is a lack of Greenlandic manpower with appropriate qualifications, the licensee may employ personnel from other countries.

General regulation applies under the Greenland Parliament Act on regulation of influx of workers, under which job positions for skilled and unskilled labour must be advertised at the government’s job portal (www.suli.gl) and permission obtained from the local municipality before foreign manpower is hired.

Moreover, according to the Aliens Act, residence and work permits can be issued to foreign nationals allowing them to live and work in Greenland for a specified period of time if there is no one in Greenland who can perform a specific function. Salary and employment conditions must correspond to Greenlandic standards. Residence and work permits are not required of Danish citizens or citizens from the other Nordic countries (Sweden, Norway, Finland and Iceland). Residence and work permits are issued by the Danish Agency for International Recruitment and Integration and the Danish Immigration Service. There are some exceptions to the requirement for a residence and work permit in relation to personnel carrying out activities falling within the scope of the Mineral Resources Act.

The Large-Scale Projects Act came into force on 1 January 2013. When certain conditions are fulfilled, it is possible that, for example, a large-scale mining project, during the construction phase, can use foreign labour on terms that are favourable to the employer, which means that the above-mentioned requirement of employment conditions corresponding to Greenlandic standards does not apply if the project is defined under the Large-Scale Projects Act. However, according to this Act, the employer must ensure that the foreign employees have pay and employment terms that are acceptable and objectively and factually justified.

Social and community issues

What are the principal community engagement or CSR laws applicable to the mining industry? What are the principal regulatory bodies that administer those laws?

There is no legislation directly regulating these issues. However, the process of preparing a social sustainability assessment as required under the Greenland Parliament Act of 7 December 2009 on mineral resources and mineral resource activities (the Mineral Resources Act) is characterised by having a high degree of public participation.

If an activity subject to the Mineral Sources Act is assumed to have a potential significant impact on social conditions, a licence for and approval of the activity can be granted only when a social sustainability assessment (SSA) has been made of the performance of the activity and an SSA report has been approved by the government, which also includes a public consultation process. The government decides whether an SSA must be made and an SSA report prepared.

In a licence, the government must specify terms on the extent to which a licensee must enter into and comply with a social sustainability agreement (impact benefit agreement (IBA)) and other socio-economic issues. The IBA is negotiated between the licensee, the relevant municipalities and the government and aims to ensure the social commitment of the parties involved throughout the lifetime of the project.

How do the rights of aboriginal, indigenous or currently or previously disadvantaged peoples affect the acquisition or exercise of mining rights?

According to the Mineral Resources Act,  a person who is a permanent resident of and fully liable to pay tax in Greenland may carry out non-commercial collection of loose minerals without a licence being required, with the exception of licence areas covered by exploitation licences. Otherwise, there are no special rights, including economic rights, of aboriginal, indigenous or currently or previously disadvantaged peoples.

What international treaties, conventions or protocols relating to CSR issues are applicable in your jurisdiction?

With the exception of a number of International Labour Organization conventions, we are not aware of any international treaties, conventions or protocols relating to corporate social responsibility issues applying to the mining industry in Greenland.

Anti-bribery and corrupt practices

Describe any local legislation governing anti-bribery and corrupt practices.

Rules and regulation are set out under the Greenlandic Criminal Code against bribery, abuse of public authority and criminal breach of trust.

Do companies in your country pay particular attention to any foreign legislation governing anti-bribery and foreign corrupt practices in your jurisdiction?

There is no specific foreign legislation relevant other than extraterritorial foreign laws such as the UK Bribery Act 2010.

Has your jurisdiction enacted legislation or adopted international best practices regarding disclosure of payments by resource companies to government entities in accordance with the Extractive Industries Transparency Initiative (EITI) Standard?

Greenland is a supportive member of the EITI.

Foreign investment

Are there any foreign ownership restrictions in your jurisdiction relevant to the mining industry?

We are not aware of any foreign ownership restrictions relevant to the mining industry in Greenland.

International treaties

What international treaties apply to the mining industry or an investment in the mining industry?

We are not aware of any international treaties applying to the mining industry or an investment in the mining industry in Greenland, except regulation applying to uranium and rough diamonds.

Denmark and the Greenland government have established an internal framework within the Denmark regarding the special foreign, defence and security policy issues related to the mining and export of uranium from Greenland. This has led to legislation to implement safeguards and export regulations for uranium produced in Greenland. Among other things, as of September 2016, the Convention on Nuclear Safety also applies to Greenland. Measures are also implemented to comply with Information Circulars INFCIRC176 and INFCIRC176/ADD 1 of the International Atomic Energy Agency. Export control on products with dual use has been introduced in Greenland.

Moreover, in 2015 Greenland was officially admitted into the Kimberley Process through its association with the European Union. This means that trade in rough diamonds in Greenland must be conducted in accordance with EU rules – namely, Greenland will only export rough diamonds to other participants in the Kimberley Process Certification Scheme after they have been certified by an EU authority. The imports of rough diamonds into Greenland will also be verified by EU authorities.

Update and trends

What were the biggest mining news events over the past year in your jurisdiction and what were the implications? What are the current trends and developments in your jurisdiction's mining industry (legislation, major cases, significant transactions)?

The government has approved Greenland’s Mineral Strategy 2020–2024, which contains the following priority areas:

• improved sharing of geological knowledge;
• efficient, predictable and transparent case administration;
• simplified transition from exploration to exploitation;
• sustainable development of the mineral resources industry; and
• competitive tax and royalty model.

The overall objective of these priority areas is to strengthen the mineral resources sector by improving the conditions of licensees (mining companies) while at the same time maximising Greenland’s benefits from the new initiatives in terms of new jobs, increased revenues, knowledge building, etc.

Law stated date

Give the date on which the information above is accurate.

28 April 2020.