BURIED TREASURE

Greenland looks set to benefit from big oil finds and mining for precious stones and metals if surveys bear out their promise

Greenland's potential for big economic change is most evident in oil and hard minerals. Indeed, the ramifications of recent surveys for this tiny economy are enormous. Seismic and satellite data from Greenland's Bureau of Minerals and Petroleum and the US Geological Survey indicate deposits of 110 billion barrels – about 42% of Saudi Arabia's reserves – at one off-shore site to the north-east. An environmental assessment of the site will begin in January 2007, with possible production at least a decade away, according to Jorn Skov Nielsen, deputy minister of the Bureau of Minerals and Petroleum (BMP). Seismic data by BMP indicates that another offshore area, located west of Nuuk, may contain about two billion barrels, about one-third the amount in the North Sea at its peak. Canadian company EnCana and Greenland's state-owned NunaOil already have the licence in this area; exploratory drilling could start within a few years. Just to the north, another offshore site is tantalising as well. Thirteen oil companies – the government will not reveal the names yet, other than to say they are the biggest players in western Europe and North America – have applied for approval to operate in this area. BMP expects to announce its choices in March 2007. Tangible results, positive or negative, may come five or six years later, Nielsen says. Greenland and Denmark will each get half of the first €40m in annual tax revenue and royalties from oil; officials are hammering out how to divvy up amounts above that. A two-billion-barrel field, as the site already licensed may be, could haul in about €26.5bn in tax and royalties over 30–50 years, according to Nielsen.

Meanwhile, exploration for nickel, platinum, gold, diamonds, rubies, olivine, kimberlite, zinc and lead is accelerating: 19 new exploration and four prospecting licences were issued in 2005, bringing the total to 45. Two mines are operating; three more are likely within five years, says Nielsen. Canadian outfit Activation Laboratories recently came in, and is building a mineral testing facility, Greenland's first, in a growing industrial park in Nuuk. Nalunaq Gold Mine opened in 2004, Greenland's first such operation in 30 years. Geologist Ole Christiansen, director of one of the mine's owners, NunaMinerals (London-based Crew Gold Corporation is the majority owner), points out that while current production is still minute by world standards, it nevertheless represents 10% of European production. That percentage is growing in grams and significance; Greenland's geology, warming climate, logistics and especially its political stability are seen as increasingly valuable assets at a time when 63% of the planet's gold is coming from less stable sources in the developing world, according to Christiansen. The politics of mining may also favour Greenland in terms of diamonds. A thousand diamonds have reportedly been found in western Greenland, which shares its geology with Canada, a global leader in diamond production. The discoveries are accompanied by increasing global awareness of 'blood diamonds', gems mined in Africa whose sales finance wars there. Greenland's precious stones present no such problems. However, it will be costly to exploit Greenland's riches. Conditions will be harsh, the drilling season short, and health, safety and environmental concerns will have to be addressed to the satisfaction of government officials. In some instances, more ice needs to thaw and some new technologies will be necessary. Indeed, it is hard to predict the course of future events. But the data are promising enough to have experts and companies keenly interested.