New mining legislation in Greenland
A new extensive Act on Mineral Activities was adopted by the Greenland Parliament on 31 May 2023 - issues remain unclear regarding market needs and industry demands.
This entirely new act applies to all mining activities in all of Greenland, except for hydrocarbons and local usage of minerals. The act replaces the former act adopted by the Greenland Parliament in December 2009, when the authority was taken over by Greenland authorities.
The new Act comprises 143 articles. The authorities circulated a first draft in November 2022 for comments by various institutions, companies and other concerned parties. Minor changes were implemented in revisions in January, March and May 2023, but the vast majority of input from the market and the industry left only little trace in the final text of the Act.
The Act enters into force on 1 January 2024. Existing permits remain valid, but exploitation permits will be comprised by some of the new rules (art. 143) and any new permits by all rules.
It is for the authorities to decide whether any and all conditions for the issuance of an expected exploitation licence have been fulfilled (art. 41).
Any disputed issue regulated by the Act can only be submitted to court (art. 25 and 72), e.g. not arbitration, unless specifically provided for (art. 73).
The holder of an exploitation license must be a Greenland limited company. "The management of the limited company shall have seat in Greenland" (art. 45).
There are conditions regarding taxation and capitalization (art. 46).
The authorities may demand that the company shall use local labour and suppliers (art. 52), and that production takes place in Greenland (art. 53).
The new Act is likely to cause uncertainty, concerns and a set-back to new investments in mining in Greenland:
- Corporate barriers and impacts as well as taxation regarding the new requirements to management seat (in art. 45) are open.
- The powers of Government regarding licences (art. 41) and dispute resolution in courts of law in Greenland and Denmark may cause concerns about entitlements and enforcement.
- The preferences regarding local production etc. (art. 53) are not new and were said to equal existing practice, but energy consumption etc. and new green ESG requirements, control and market demands for certificates may render products in-competitive or worthless.
EU Council Decision (EU) 2021/1764 of 5 October 2021 applies to the relation between EU and Greenland. Moreover, the EU in March 2023 released a new draft Critical Raw Materials Act to secure a sustainable supply.
Alignment of practices under the new Act on Mineral Activities remains open.
Do you want to know more?
Greenland Parliament Act on Mineral Activities (English translation by Plesner)
Recent article on doing business in Greenland written by Plesner published by Legal500