Shenghe’s Greenland U+REE investment gets FIRB approval

Australia’s Foreign Investment Review Board has approved Shenghe 盛和 Resources’ purchase of one eighth of GME, the ASX-listed owner of the license for the Kvanefjeld uranium-rare earth project in Greenland. Other approvals should be coming these days, as everyone concerned in Australia and China should be happy with the deal.

Meanwhile in Greenland, things aren’t looking so simple. As explained in my previous post, Greenland is ruled at the moment by a Große Koalition of parties that agree on everything, except uranium mining. GME should be applying for a production permit before the end of the year, and that application could be handled by Múte Bourup Egede, a new minister who has already said he’s ‘against’ uranium mining, in so many words. Conflict within the ruling coalition is already showing. On the one hand, Jens-Erik Kirkegaard (long-time readers will remember his ’13 Jiangxi Copper visit) from majority partner Siumut thinks that GME have earned themselves a right (retskrav) to get their permit as long as they comply with environmental and other regulations, and the new anti-uranium minister “can’t just take a political decision.” On the other hand, Sara Olsvig, chair of coalition partner IA (long-time readers will remember her Tibet visit and meeting with the Tibetan gov’t in exile), says GME’s application could be rejected not only on environmental, but on “political” grounds (Weekendavisen via Sermitsiaq). Egede, the new minister, who’s from Olsvig’s party, has said he’ll decide based on the application’s merits as well as ‘listen to the people.’

Shenghe: new Greenland minister ‘against uranium’

The composition of Greenland’s ruling coalition has changed in the last few days, becoming more ideologically homogeneous (viz., homogeneously pro-independence). Their agreements, however, don’t cover the most crucial issue from the perspective of Sino-Arctic relations: the uranium-rare earth project in Kvanefjeld (Kuannersuit) in the south of the island.

As I reported a bit over a month ago, state-linked rare-earth company Shenghe 盛和 Resources agreed to buy a minority stake in GME, the Australian owner of the project, and expressed an intention to eventually increase that to a 60% stake if things go well. That remark, which I wrote after simply reading Shenghe’s Shanghai Stock Exchange announcement, generated a minor controversy after being picked up by Danish and Greenlandic media, who wondered why the 60% part was left out of GME’s own announcements. It even prompted Greenland’s ministry for natural resources to say they would ‘investigate’ and ask GME to show them the contract they signed with Shenghe, which GME declined, arguing they don’t trust the Greenlandic government’s ability to keep it confidential. (Good luck telling the Chinese gov’t you won’t show them documents because you don’t ‘trust’ them.)

Even with those disagreements, which largely boil down to poorly handled PR; the GME-Shenghe project had good chances of getting through under the previous coalition, and specifically the previous natural resources minister, who were unambiguously pro-uranium. That has changed now. The two junior parties in the current government are against uranium mining in Greenland. The coalition’s official position, if we may call it that, is now that they’ve ‘agreed to disagree’ on uranium.

The new Naalakkersuisoq (minister) of natural resources, Múte Bourup Egede, is himself from the anti-uranium Inuit Ataqatigiit (IA) party, and is “against uranium mining,” in so many words. His ministry will have to review GME-Shenghe’s application for a production license, expected to be submitted as early as this year. He says he can’t anticipate what the decision will be like before seeing the application, and that it will be made based on the natural resources law and after ‘listening to the people’. It’s early to tell; pro-uranium forces could prevail and let the project go ahead. The current coalition setup and portfolio allocation could also be shorter-lived than the application process (Múte is the fourth minister in charge of natural resources in just over a year).

GME are optimistic, though. Their ASX-listed shares fell 20% in the days following the coalition shakeup (but are still well above the price one month ago, and almost twice what Shenghe agreed to buy them at), after which they stated they’re happy with the new Große Koalition and praised their plans for the mining sector without mentioning the explicit disagreement over their project.

Meanwhile in China, another Greenland minister, Vittus Qujaukitsoq, whose portfolio includes commerce, energy and foreign affairs, is leading a delegation in a week-long visit. Compared to his previous Chinese visits, this one seems to show increased emphasis on the seafood and sealskin industries over mining. The trip includes stops in Qingdao and Chongqing.