It’s been almost two weeks since the announcement that General Nice (俊安集团) has acquired rights to the Isua iron project in Greenland, and Chinese business media’s reporting on it starts to show a pattern of mild skepticism about the likelihood of the new license owner actually developing the mine any soon.
Writing for Caixin (财新网), Zhang Boling 张伯玲 quotes someone involved in the transfer of Isua to General Nice to the effect that it was a real bargain: the price is lower than you’d imagine, and “not all of it in cash.” The source stopped short of disclosing any numbers though. Zhang’s piece also channels skepticism from industry sources that General Nice can get investors attracted to a project given the lack of infrastructure and development and transportation costs given the current state of the iron ore market.
Zhang Guodong 张国栋 from Yicai 一财 contacted General Nice but was unable to elicit much comment other than that there will be public statements when the time comes. Industry sources recall that, a few years ago, when the iron market was looking better, many international majors including a large Chinese steelmaker were looking at Greenland with interest, where deposits are large, reserves abundant and you tend to bump into high-grade magnetite. Since numbers don’t add up at the moment, General Nice might be thinking strategically, in terms of NSR shipping becoming feasible at some point. Zhang Lin 张琳, an analyst with LGMI (兰格钢铁网), enumerates the hurdles: a short window for extraction each year, high shipment costs, lack of basic infrastructure, leaving “not much room for profit”. An unidentified industry source also reminisces the days when Isua was in everyone’s eyes, while now, they add, “with even the three largest miners being unable to sell their iron ore, only a fool would develop an iron ore mine in Greenland.” Or literally a ‘silly melon’ (shagua 傻瓜).
The suggestion is that the deal is rather speculative: by throwing around the idea that they’ve got resource assets, General Nice (who have HKEX and SGX-listed subsidiaries) might be able to get their share prices a bit up.
A piece by Zhang Han 张涵 for the 21st Century Business Herald (21世纪经济报道) reports doubts about whether General Nice will be able to deal with the financial and political issues that got the project stalled the previous times. The $2.35bn figure quoted as the investment required by the project is still a “variable” taking on a different value now as conditions might have changed from London Mining’s days.