A Rocky Path to the Mine in Greenland?

"When [the mine] began its operations, we would only hear about how everyone was happy. The mine was going to bring jobs, improve roads. No one thought much about the inevitable collisions.”

Marco Arana, Activist, Peru
 

Greenland’s mining minister, Jens Erik Kirkegaard, ponders whether to let the big multinational mining companies into Greenland.

BBC report here: http://www.bbc.co.uk/news/magazine-25421967

It is going to be a rocky path that Greenland probably can’t avoid treading. After all, the rest of us want the raw materials for our consumer goods, don’t we? The pressure will only grow on Greenland to open up to big mining.

It may be a bit (read very!) presumptuous of me to say this, but I hope Greenland have carried out their own SWOT analysis, looking for the opportunities and threats through agreeing to mining. It is easy to see the opportunity, the money, the wealth, but they need to be sure they understand their own weaknesses and the threats. And we are talking about a country with a small population trying to control the behaviour of powerful multinational businesses. If they get it wrong they will be as a fly sitting on the back of a beach ball trying to control it when it is blown along the beach.

Greenland - before you start, tell these big companies they have to pay up front to meet the cost of all assessments you deem necessary, and don’t move forward until they have done so. Of course you’ll need the best calibre people to advise you; tell the miners they have to pay for all of this before any commitment can even be considered. Look for advisers who haven’t already accepted the mining company penny – that might be difficult. And remember that even independent advisers can make more money by prolonging the debate. It’s big money and everyone wants a slice.

There are many questions. Who will own the local mining company, who will own the land, who will own the infrastructure created to accommodate the mine, the equipment, the roads, the new port facilities? At the start you want majority local ownership in every entity that participates. You need to keep control.

When you have to negotiate with these big powerful companies, make sure they don’t overwhelm you with their self-serving reports from the best specialists they can pay, their lawyers with their crafty terms, their manufactured deadlines, their hollow threats to go elsewhere. Don’t just ask them what they are offering; decide before you even get into negotiations what you require. And put protection of your environment and heritage above production and making profit. Don’t believe them if they tell you that is what they always do. They’ll want to tell you about the ‘good environmental neighbour’ policies they have in the filing cabinet, but if you need to understand how mining companies behave, just look out around the world. There are many notorious examples of the conflicts that can arise. What Mark Twain said – “A mine is a hole in the ground with a liar standing next to it” – may not be true, but one can understand the sentiment behind it.

Be unreasonable; ask for more than you think they will ever agree to, it is only a negotiating position after all. And when they express anger and frustration, when they tell you your terms are unworkable, when they attack you through their spin doctors and say they will walk away – just let them. For you still have what they want and they will return. And when they walk away make it clear that everything is off the table. Yes it is excruciating to start negotiations afresh, but if they return then you know you can do better. And when things become intractable with the mining companies, whose interests should you give precedence to?

Where will the revenues flow? You will want to tax the corporate entities, but multinationals are very clever at avoiding tax liabilities, better to take revenue also through the sharing of ownership. How will you ensure a fair price for the product? Why wouldn’t you expect the majority of the wealth produced to remain in the country rather than being passed to foreign investors?

“But we are taking huge risks,” they will scream. “We can’t finance the project under such onerous conditions”.

And you can reply, “But we are taking the biggest risk of all, which is that you will pollute our land, take your huge profits and then leave us to deal with the long term consequences alone.”

Look to the worst case. How will a major environmental catastrophy be prevented. How will it be handled when it happens? You need to go beyond understanding what poisonous chemicals they will use in the processing of ore and how they will stop them escaping into the land. You need extensive contingency plans and arrangements for money to be deposited up front which you can access without interference in such an emergency. A lot of money. And remember you can never put polluted land back exactly how it was.

Greenland - have you looked at your international treaties? The mining company’s lawyers certainly will have. Are you adequately protected against the consequences of becoming a ripening cherry? Remember Iraq’s invasion of Kuwait for the oil. What? It couldn’t happen here, our neighbours are our friends. But things can change when the prize is huge.

Look at what is happening now in Costa Rica, where a Canadian mining company has raised a claim for one billion dollars ‘lost profit’ against the Costa Rican government accusing it of breaching a trade treaty with Canada when a mining project was thwarted due to approval irregularities.

Article here: http://www.minesandcommunities.org/article.php?a=12460

The warning is there – big mining companies will pursue aggressive litigation even against host sovereign states.

Think about your own country’s infrastructure. Can your rescue services, your hospitals cope with the consequences of a major mining disaster? Is your police force up to the challenges created by a sudden influx of relatively wealthy migrant workers, which can include increased crime and greater demand for the things that can blight our modern society - alcohol, drugs, prostitution? Will you accept a mine that runs its own substantial private security force, perhaps better resourced than your own police and with accountability only to the mine owners? And are you sure you have the structures and resources to combat any corruption that might seek a home amongst the huge flows of money?

Do you have the laws, rules and regulations to control the mines under your licences? Do you have the people to carry out effective monitoring? And just what will you do if your enforcement people turn up at the main gate in response to some problem and the mine refuses to let them in. Or you find out that an environmental issue was covered up? And what will you do if you ask them to halt production and they ignore you? You need all these things in place before you let the mines into production.

How will you handle the social disruption to long established communities? Do your own people have the skills that are required by the mining companies or will the local people, as has happened elsewhere, end up taking the lower skilled, lower paid, more dangerous work while foreign workers run the mines?

Once Greenland is reliant on mining revenues for the major part of its domestic product, will you continue to welcome the fact that there is diverse opinion in your country? How will you deal with environmental activists, both home-grown and foreign, protests, trouble at the gates of the mine? Will you tighten your anti-terrorism laws like some other countries faced with mining activism have done, will you stifle democracy, stop people from coming to your country in case they ‘cause trouble’?

Would you echo the slogan of the President of Ecuador in opening that country up to mining? - "We can't be beggars seated on a sack of gold."

But the risk is that you could end up seated on a pile of something more unpleasant after the sack of gold has been carried off by the multinationals.

You might say I’m being too pessimistic, only looking at the downside. Perhaps you are right. Unfortunately all the questions I’ve asked here are based on real life conflicts that have arisen around the globe. There are many to choose from.

Greenland, I wish you the very best for the future. You are a big, beautiful country with a small population and, I suspect, a very, very big problem. I hope it is not too big for you to handle. Good luck.

 

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