Greenland gov’t allowed to review uranium project agreement; confirms Shenghe “intent” to buy controlling stake

Greenland’s department of natural resources has had a third-party legal firm go over the contract giving Shenghe 盛和 a stake in the Kuannersuit (Kvanefjeld) uranium and rare-earth project in the island’s south. The review was meant to establish whether the agreement gave a Shenghe a right to increase its stake to a controlling one, a possibility I first mentioned almost eight months ago. According to a Greenland government press release, the review has concluded that “the contract does not give [Shenghe subsidiary] Leshan [乐山] Shenghe the right to overtake a controlling share” of GME, the Australian firm that owns the licence. Although the press release doesn’t mention it, the department’s head also confirmed to Sermitsiaq that the agreement includes “non-binding statements of intent” regarding Shenghe eventually increasing that stake. This is consistent with those earlier reports, according to which Shenghe would like to have up to a 60% stake in the project if things go well once it enters production.

This ‘60% saga’ began when I noticed that a Shanghai stock exchange press release by Shenghe said the agreement, that involved the sale of one eighth of GME, contemplated eventually increasing the stake to 60% once the project enters the production phase. (I gave the exact phrasing in Chinese, with translation, in a later post.) The news subsequently spread to Danish and Greenlandic media, generating a little brouhaha in which GME denied, then admitted the reports, and Greenlandic officials promised to “investigate” the matter, since an eventual takeover of the project would need their approval. Such an investigation was complicated by GME’s refusal to show the Greenlanders the contract, plainly stating that they didn’t trust “the government’s ability to maintain and protect the confidentiality of documents which, under Australian law, must remain private and confidential between GME and Shenghe” (my back-translation). The government then reportedly said they wouldn’t let the project go ahead if they didn’t know the text of the agreement.

This raises the question of why anyone felt a need to have a third party review the agreement. It has already been reviewed by Australia’s Foreign Investment Review Board, which approved it in November. Shenghe is, in practice, controlled by the Chinese ministry of land and resources, which has circulated information praising the Greenland operation as partially “implementing a vision on mining cooperation” reached by Jiang Daming 姜大明 and Greenland officials in 2015; this makes it clear that relevant Chinese state organs are well acquainted with the details of the agreement. As a non-expert in Greenlandic law, I found the fact that the Greenlandic government could be left out of this knowledge rather counter-intuitive. The purchase would have been blocked if GME had refused to ‘trust’ the ability of Chinese and Australian authorities not to leak the document.

I reached out to Jørgen Hammeken-Holm, the deputy minister (departementschef) enquiries are directed to in the government’s press release, to confirm that his department was given access to the agreement, as opposed to GME just showing it to the (unnamed) third-party legal firm. If he replies, I will update this post in the space below:

[UPDATE: Hammeken-Holm replied, confirming that a member of the legal staff at Greenland’s department of natural resources was given access to and read the agreement.]

The entire 60%-saga is little more than a PR hiccup. As I’ve noted before, most people involved (GME management and shareholders, Chinese and Greenlandic officials) would likely see the eventual controlling stake as good news. The only explanation I can muster for the early refusal to disclose the news to the non-Chinese public is a fear talk of a ‘Chinese takeover’ would generate negative comments from the Danish and global geopolitical commentariat. (Such comments did indeed arise.)

Unlike other mining projects, the Kvanefjeld uranium mine is highly divisive in Greenland. Chinese involvement isn’t generally unwelcome, but environmental issues are a concern for many. These divisions are visible at the highest level of Greenlandic politics: the very minister for natural resources, Múte Bourup Egede, is openly “against uranium mining”. For a recent survey of views on Kvanefjeld among (a small sample of) local community members, see this ‘briefing note‘ by Rachael Lorna Johnstone and Anne Merrild Hansen.

I reviewed the current state of Chinese involvement in Greenland in a post for CPI Analysis a few months ago.

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