China and the World

Greenland gambit

China gets first Arctic resources project

Children hold Greenland's national flags to welcome Denmark's Crown Prince Frederik, Crown Princess Mary and their children in Nuuk

Ready to welcome Chinese funds?

One has to marvel at the string of events that led to Tianjin-miner General Nice buying a $2 billion iron-ore deposit in western Greenland late last year.

First the global price for iron ore dropped, largely because of weak demand from China. Then a deadly disease, namely Ebola, broke out in West Africa, affecting, amongst many other things operations at a mine belonging to a British based company London Mining.

Those two factors led to London Mining going bust. Administrators deciding to sell off some of its assets, including the undeveloped Isukasia project in Greenland.

Luckily for the administrators, General Nice wanted to buy it and on December 21 Greenland’s government, known as the Naalakkersuisut, approved the licence transfer.

“An indirect transfer of the licence means that the structure around London Mining Greenland is the same, but the ownership behind the company is now General Nice Development Limited,” it said. “It is the assessment of the Government of Greenland that the company will be able to raise the necessary financing, including equity financing and additional debt financing, for the development of the exploitation licence at Isukasia,” it added.

The move is a boon for Greenland which wants to develop its natural resources, but the investment will likely play into fears that China is trying to increase its strategic presence in the Arctic.

That narrative started to emerge about seven years ago when China began to invest in its polar programmes, in particular, its icebreaker vessel Xue Long. Then in 2011 Chinese billionaire Huang Nobo tried and failed to buy a chunk of Iceland for a luxury hotel and eco resort.

A year later and the Xue Long sailed to Iceland via the Northern Sea Route – the first time a Chinese ship had done so, and stoking hysteria over Beijing’s Arctic intentions. China was asked to join the Arctic Council, although some Western accounts claimed it had “demanded” to be granted a seat as a permanent observer (which it got in 2013).

A paper by a People’s Liberation Army think tank last year reiterated China’s interest in the region. Widely quoted by the domestic media the Defence Policy Research Centre of the Academy of Military Sciences observed: “The Arctic region has rich oil and gas resources, quick and convenient shipping conditions, which has important meaning for ensuring the sustained development of China’s economy.”

Why do people get so upset by Chinese involvement in the Arctic? Partly it is to do with its terrible environmental record at home. In addition there is an unpleasant irony to the world’s largest carbon dioxide emitter benefiting from the effects of global warming – the Northern Sea Route is navigable because sea temperatures have risen.

But there is little evidence to suggest that China is behaving less responsibly in the region than other countries and even less evidence to suggest it plans to rely on Arctic shipping lanes – indeed its new Maritime Silk Road might do a far better job.

Last year in a bid to counter the negative press China was getting about its polar activities, the Arctic Council put out a report pithily titled How We Learned to Stop Worrying about China’s Arctic Ambitions.

Similarly the London-based International Institute for Strategic Studies has said that “while China’s intensifying activity in the Arctic is often viewed with suspicion, it is part of a strategy of general expansion of its maritime interests and capabilities, seeking a level of influence to match its global economic status”.

Last week the Xue Long – which means ‘Snow Dragon’ – refuelled in Christchurch after a trip to Antarctica. And in attempt to boost relations it welcomed New Zealanders aboard for a look around. The head of New Zealand’s Antarctic programme Peter Begg welcomed the move, saying China’s involvement in polar research was of great assistance to smaller countries like his own that were strong in expertise but less so in hardware.

“We have a much more modest budget, and for the Chinese to help us with their vessel means we can have a much stronger science programme in more complex places,” Begg told 3 News.

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