China wants Greenland station ‘ASAP’; one candidate site near planned China Nonferrous investment

China wants to establish a permanent ground research station in Greenland ‘as soon as possible’, Yu Yong 俞勇, a researcher at the beautifully named PRIC (Polar Research Institute of China, 中国极地研究中心), said at the yearly Reykjavik ‘assembly’ of the Arctic Circle, an organisation chaired by former Icelandic president Ólafur Ragnar Grímsson. This was first reported by Danish journalist Martin Breum for Sermitsiaq and on his Twitter account. Breum has long been covering Greenland, where he lived as a teenager, and has written a must-read book whose English version is free to download.

Breum tweeted a picture showing two candidate locations for the base:

 

breum

Via Martin Breum’s twitter.

The map shows two possible locations. One is in the southwest, near Kangaamiut or Maniitsoq. (Readers with better visual acuity and knowledge of Greenlandic geography may come to a more precise conclusion.) The northern one is of particular interest, and will be discussed below. The third red mark in the northeast, labelled 丹麦站 Dānmài zhàn ‘Danish station’ is indeed a Danish station, the military and scientific outpost Station Nord.

The Chinese delegation at the Reykjavik event includes several officials: State Oceanic Administration deputy director Lin Shanqing 林山青, MFA special Arctic representative Gao Feng 高风, and of course PRIC head Yang Huigen 杨惠根 (who sits at the board of the entity behind the event). Skimming through the programme, I see three sessions organised by Chinese entities (the PRIC (whose session is plenary), Beijing Normal University (北师大) and the China-Nordic Arctic Research Centre (CNARC, 中国—北欧北极研究中心)). In terms of quantity, that makes the Chinese presence comparatively strong among non-Arctic states, larger than e.g. South Korea’s. However, the Chinese delegation is unremarkable in terms of seniority next to, e.g., the UAE and, of course, some of the Arctic states.

It is remarkable that the event was chosen for the first official discussion of the Greenland station plans. On the other hand, it was left to a relatively junior figure, Yu Yong, a marine microbiologist with an ‘associate research fellow’ (副研究员) position. (Breum’s article misidentifies him as ‘vicedirector of PRIC’; the confusion might have been due to Yu’s status as ‘deputy head’ of a division within the PRIC.) Chinese plans for a base in Greenland had been under discussion for some time, in particular during a SOA visit to Greenland last year. What the announcement shows, besides the public disclosure of the potential locations, is that China can already count on the agreement of the Greenland government. As Breum notes, scientific research falls under the devolved purview of the Greenland government, and Copenhagen’s approval isn’t necessary in principle.

As quoted by Breum, Yu said China wants to build the station “as soon as possible”, while adding there’s no clear schedule yet.

The more impressive of the two proposed locations would of course be the northernmost one. The area will be familiar to regular readers: it’s near the Citronen Fjord zinc project, where minor miner Ironbark from Australia holds a mining permit. An arm of state-owned China Nonferrous (中色) has long had a series of non-binding agreements with Ironbark, showing an interest in financing and building the project. Zinc prices have been rising, which is good news for Ironbark, but the site’s remote location and lack of infrastructure make costs unusually high (indeed prohibitive, according to some). Ironbark shares don’t show signs of generalised enthusiasm for the mine.

There is, however, one entity that remains interested in the project: China Nonferrous, specifically its listed arm NFC (中色股份). One of its deputy general managers (副总经理), Qin Junman 秦军满, visited the Citronen site last August, accompanied by the crème of Greenland’s resources ministry: the minister (naalakkersuisoq) Múte Bourup Egede and the top career official, deputy minister (departmentschef) Jørgen Hammeken-Holm. The display of support is understandable: Citronen Fjord is one of two important, viable projects for Greenland’s economic development; the other one, the Kvanefjeld (Kuannersuit in Greenlandic) uranium and rare-earth project, also with Chinese involvement, is controversial, and indeed less to the minister’s liking. Ironbark is now working with NFC towards obtaining financing from Chinese banks.

If the project goes ahead, the Citronen mine would be, by a long stretch, the world’s northernmost (at 83°N), and indeed the northernmost settlement of any kind on dry land. During the initial phases of the project, most workers will be foreign, indeed most likely Chinese, so that nationality, and the state behind the entity doing the building, would hold the record. A competitor for that record could be the planned Chinese research station, assuming the northern site is finally chosen. It’s hard not to see the connection between these two planned locations; as is well known, neither Chinese scientific projects of this kind nor those of state-owned companies are disjoint from broader state policies. An obvious example is the Kvanefjeld uranium+REE project, where the Chinese investor is under the PRC Ministry of Land and Resources, and “implements a vision” reached at a meeting between the minister and Greenlandic officials.

(For those wondering: Citronen (‘the lemon’) Fjord isn’t so named because any citrics grow there. It honours Jørgen Haagen Schmith, who used the pseudonym as a resistance fighter during the Nazi occupation of Denmark. Walter Turnowsky has written about this for Sermitsiaq. I try to provide Greenlandic names for any Greenland locations I mention on this blog, but I’ve looked and asked around and apparently Citronen Fjord doesn’t have another name, possibly due to its remote location even by Greenlandic standards.)

As Yu’s map helpfully shows, the northern candidate site is located northwest of Station Nord, a rather strategic point. It’s only to be expected that the Danes are paying close attention at Chinese plans for the area. Indeed, some minor friction already occurred late last year, when Ironbark was applying for the exploitation licence; the Danish foreign ministry wrote to Greenland enquiring about the project, something the local authorities didn’t appreciate. The fact that no such enquiries had been sent concerning other mining projects without Chinese involvement makes the People’s Republic the elephant in the room.

Even though it hasn’t generated the mining boom that, as some might have imagined at some point, would suddenly make Greenland economically independent of Denmark, Chinese interests in the island are slowly increasing. Besides the mines and research stations, another interesting development is the last few month has been the start of the construction of a satellite ground station in cooperation between Beijing Normal University (北师大), Tele-Post and the Greenland Institute of Natural Resources (Pinngortitaleriffik/Grønlands Naturinstitut), announced last May.

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update on General Nice: assets ordered seized

In another blow to the licence holder for the (inactive) Isua project in Greenland, a court in Zhejiang province has ordered the seizure of shares in several General Nice (俊安集团) companies. This includes the entire share capital of Tianjin General Nice Coke and Chemicals Co., Ltd (天津俊安煤焦化工有限公司) , whose legal representative is the chairman of General Nice Group, Cai Suixin 蔡穗新.

This adds to the legal troubles that haunt various General Nice companies, as well as the family in charge of it (including chairman Cai, his sister Cai Suirong 蔡穗榕 and their father Cai Mingzhi 蔡明志). I have given a sample of these cases in earlier posts.

The latest court order doesn’t directly target the owner of the Greenland project, but a Hong Kong case does. All cases against General Nice I’m aware of, in at least three jurisdictions, are related to unpaid debts. As detailed in my previous post on the topic, companies in the group, as well as Cai senior personally, have made it to the Supreme People’s Court “List of Dishonest Persons Subject to Enforcement” (失信被执行人名单) after dodging court-mandated payments. Besides public humiliation, List members can be subjected to other forms of government punishment, such as not being allowed to buy plane tickets.

update on General Nice: attack of the Dishonest Persons

After failing to comply with Chinese court orders, companies part of General Nice (俊安) group, the owner of the Isua iron-ore project in Greenland, as well as two members of the family in control of it, have been added to the “List of Dishonest Persons Subject to Enforcement,” as the name (失信被执行人名单) of a Supreme People’s Court-issued list of judgement defaulters is often translated in PRC sources. The companies directly affected by the judgements behind the listing are not the direct owners of the Greenland project, so the only relevance for Greenland is what it can suggest about the Group’s practices and financial health. However, a more direct Greenland connection comes from a separate source. According to a long-time Hong Kong publisher and financial analyst, the Hong Kong parent of the Greenland entity has been directly targeted by a lawsuit in that city.

Both individuals involved are related to the company’s chairman, Cai Suixin 蔡穗新. They are his father, Cai Mingzhi 蔡明志, and his sister, Cai Suirong 蔡穗榕. Both have long had a number of positions in multiple Group companies. Cai senior is, or at least used to be, one of the main ultimate owners of the company, together with his son. Cai Mingzhi’s political contacts in Guangzhou province reportedly opened many doors for General Nice, a (mostly) private player in a state-dominated sector. For more on the history of General Nice, see my General Nice backgrounder.

The List lists people and companies that have failed to comply with court judgements. Its purpose is to induce compliance by public shaming. For example, a sample of it was once displayed for two weeks on an enormous screen at Changsha railway station. It’s searchable online. An evolving (and quite Orwellian) ‘social credit’ system is expected to impose a range of penalties on those on the wrong side of it, and that includes denizens of the List like the Cais. If they don’t remove themselves from it on time, they could be prevented from buying plane tickets, to mention just one possible consequence. I’ve written about the List of Dishonest Persons before: one noted member of it is Huang Nubo 黄怒波, everyone’s favourite poet-tycoon-mountaineer, known for his attempts to buy land in Iceland and Norway. Since I wrote that almost three years ago, old Huang Nubo List entries have been removed, suggesting he has perhaps paid up, but he has been honoured with a new one, over a new dispute that need not concern us here.

The judgements that landed the Cais on the list concern, among other companies, General Nice (Tianjin) Industry Co., Ltd (俊安(天津)实业有限公司). One of the creditors is an Agricultural Bank of China branch. The sums General Nice (and General Nice-linked) companies have failed to disburse as ordered by the courts total more than 70m yuan. Of course, it is possible that all those outstanding amounts have just been paid, but the online version of the List hasn’t been updated yet.

In a separate development, Target, a Hong Kong publication by venerable Hong Kong financial analyst, journalist, editor, restaurant reviewer and poet Raymonde Sacklyn, reported in late April on a lawsuit brought against General Nice Development Ltd (俊安发展有限公司) and all three Cais by ICBC, over a mortgage and a guarantee. General Nice Development, another Group company, is the ultimate owner of the Jersey entity that owns the Greenland company that owns the Isua mine.

I’ve mentioned worrying developments about General Nice (while still omitting a few) in several posts, starting with that ‘backgrounder‘ in 2015, months after the company entered the Greenland game. The Cais’ group has kept afloat despite all these. In a surprising move, last year they attempted to purchase a derelict naval base in Greenland, only to be blocked by the Danish intervention, as leaked to Defence Watch and (months later) Reuters. In my previous long-ish read on China and Greenland, I speculated that the attempt to buy the base, despite hardly making any obvious business sense, catered to a Chinese state interest in it, perceived or explicit. The Isua mine purchase can also be read in that context: if questionable as a commercial investment, sitting on the licence can make General Nice useful in the eyes of state entities that would like to see the Greenland mine stay in Chinese hands.

This blog has featured poetry in the past, namely that of Huang Nubo, a celebrated poet under the pen name Luo Ying 骆英. I have quoted his verses about Château Lafite, about stockpiling condoms. I have mentioned how he flies first-class because that helps him write, and hope he’ll make it out of the List of Dishonest Persons before the Social Credit System can prevent him from flying. With such precedent, I feel obliged to quote from Sacklyn’sserendipitously-titled poem The Loan:

The body dies and, then, putrefies:
Nature decides the timeframe of this glorious fate.
Man bemoans his ultimate demise,
Fearing the unknown; the darkness; and, the empty plate[.]

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.

first Chinese workers arrive in Greenland

The first Chinese workers are coming to Greenland, to work at state-owned Royal Greenland’s fish processing plants on the island (Sermitsiaq). Of the 38 workers the company has employed, seven came to Maniitsoq two weeks ago, and the rest should be coming during June.

China is a big market for Royal Greenland, and the company has worked with Chinese partners for quite some time. A representative office they opened in Qingdao as early as ’98, was upgraded to a foreign-owned limited company two years ago under the name Royal Greenland Seafood (Qingdao) Co., Ltd (皇家格陵兰水产(青岛)有限公司).

The company struggles to recruit enough staff locally for the summer season, and had been trying to bring in Chinese workers for years. Three years ago, I wrote about how local authorities were blocking the company from bringing just 15 employees. The relevant municipalities have now finally got over this immigration conundrum, and everyone is reportedly happy.

According to a Royal Greenland factory head quoted on a company website quoted in the Sermitsiaq article, the Chinese workers are getting along perfectly well with their new colleagues, who “also speak Greenlandic to them, so they may learn the language faster”. Some “can already say a few short words in Greenlandic”, which is a remarkable feat, even if the longer words ccould pose more of a challenge. Greenlandic is massively polysynthetic, featuring (arguably) noun incorporation, a vast array of derivational affixes, and a jillion other interesting aspects.

More significant numbers of Chinese workers can be expected to come to Greenland in the medium term, once a few major mining projects enter production. The most important (and most controversial) such project, the Kuannersuit (Kvanefjeld in Danish) uranium and rare-earth deposit, is one-eighth owned by the state-controlled Shenghe 盛和, through an agreement that contemplates increasing that ownership to a majority stake. Another important project approaching production is the Citronen Fjord (no known Greenlandic name) zinc and lead deposit in the extreme north of the island. China Nonferrous (中色) is expected to help finance and build the mine, and during the construction stage most of the workers would be foreign, most likely Chinese. At 83°N, they would be come the inhabitants of the Earth’s northernmost mine, or settlement of any kind for that matter. An inflow of Chinese workers was once extremely controversial in Greenland, but things have calmed down since.

did a Greenland minister plan to visit Taiwan? [UPDATE: yes he did]

In a mystifying exchange at the regular Chinese foreign affairs ministry press conference, someone asked spokesman Geng Shuang 耿爽 if China had forced Greenland’s trade minister to cancel a visit to Taiwan last November. Here’s Geng’s answer, as published by the English-language MFA website (it matches the Chinese version just fine):

We stand firmly against any forms of official contact and interaction between Taiwan and countries that have diplomatic ties with us. The Chinese side appreciates Denmark’s adherence to the one China principle. As Denmark’s autonomous constituent country, Greenland should follow the foreign policy upheld by Denmark.

So, was a visit to Taiwan planned and then cancelled? A delegation including Vittus Qujaukitsoq, the Greenland minister (naalakkersuisoq) whose portfolio includes trade, certainly was all around China in late October and early November last year, as I reported at the time. They were in places as distant as Qingdao and Chongqing promoting different Greenlandic products, so it would have made perfect sense to go to Taiwan as well. Only without the minister, since taking an official to Taiwan would obviously generate a crisis with China.

As it happens, a Greenlandic trade delegation did visit Taiwan, only without the minister and while he was in China. In written comments to Sermitsiaq, the relevant Greenland government department denies there were any plans for the minister to go to Taiwan, a decision they took of their own accord rather than under Chinese pressure, even while they are “acquainted” with the One-China policy (i.e. the contention that Taiwan is a Chinese province).

It’s hard to imagine anyone in Greenland would have considered sending a minister to Taiwan, which makes Geng’s answer, without denying Chinese pressure to prevent a visit, only more mysterious.

[UPDATE, Jan 7: The mystery has been solved. Berlingske now says it was them who asked the question at the MFA press conference. Invitations had been sent for a ‘Greenland Day’ event in Taipei the minister would attend, but the he didn’t go, after China showed unease. The event proceeded without him.

And indeed, after reading the Berlingske story I went to the Facebook page of the Danish Trade Council in Taipei, where as late as October 19 a post linked to invitations to the event at the Taipei Regent, in English and Chinese, “on behalf of the Greenlandic delegation headed by the Ministry of Industry, Labour and Trade, and Foreign Affairs, Vittus Qujaukitsoq.” The minister was scheduled to open the event with a “welcome” at 9AM.

It’s quite remarkable the visit was organised thinking the Chinese wouldn’t notice or care, considering how much the Greenland gov’t care about cultivating relations with China. This has probably been Greenland’s first lesson on China’s ‘core interests’.]

General Nice’s Greenland subsidiary under compulsory dissolution [UPDATED: now back in GN’s hands]; accounting docs ‘disappeared’

After last week’s news about a HK subsidiary of General Nice (俊安集团) going into liquidation and a general picture of problems with creditors, it has now emerged that their Greenland subsidiary, London Mining Greenland A/S, is undergoing a compulsory dissolution process (tvangsopløsning). According to Sermitsiaq, a request to have the company dissolved was filed at the Court of Greenland in August 2016. The distressed Greenland subsidiary owns the mining license for the Isua iron mine.

Sermitsiaq also talks of accounting problems related to the transfer of London Mining Greenland from its previous owner to General Nice in late ’14. All accounting materials for that year appear to have disappeared: the location of “electronic data as well as physical documents” was unknown at the time of compiling the following annual report.

In other General Nice news: a North Sydney office building GN’s HK-listed arm North Sydney bought for $50m in ’13 to try and offset losses in their main business (mentioned in my General Nice backgrounder) is now part of an asset restructuring, and should end up being at least partially owned by Huarong, the asset manager that has also taken over management of the HK-listed subsidiary.

[UPDATE (Jan 3): Sermitsiaq reports today that two weeks ago the Court of Greenland allowed General Nice to retake the Greenland subsidiary, after four months under management by a liquidator. The reason for the dissolution order was that the company had failed to produce an annual report on time. Other than the report, a requirement to come out of dissolution was a capital injection, which apparently also happened. It remains unclear whether those missing documents related to the transfer to General Nice have materialised.

So the Isua mine in Greenland is back in General Nice’s hands for the time being. It remains to be seen whether the company’s dire situation in Hong Kong will affect the Greenland subsidiary.]