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Social and economic impact issues

This Q & A is a practical tool to help people find information about rare earth elements and uranium in regards to the mining project on Kvanefjeld.

This Q & A is divided into the following 5 sections:
1) Facts on rare earth elements and uranium
2) Business case issues
3) Environmental issues
4) Social and economic issues
5) Uranium issues

4) Social and economic impact issues

Q: What social impact will the mine have on Narsaq and Greenland?
A: Greenland Minerals & Energy will need to invest around 5 billion Danish kroner over the next four years to establish the mining operations. This investment includes amongst other things, a new deep water harbour, various access roads, processing facilities, an accommodation village and new power station. The mining operation will create hundreds of jobs, and economically benefit the people of Narsaq and the rest of Greenland. This will be particularly important in the case of Narsaq, where the community is challenged by high unemployment rates and is experiencing a decline in population as young people leave due to the lack of a viable future.  

Q:  Will Narsaq close down when the mine opens?
A: No, Narsaq will not close if the mine opens. Narsaq is key to the project at Kvanefjeld, given it is access to local workforce and services. The location allows Greenland Minerals and Energy to integrate the local population and workforce in a way that is not possible for other mining projects. At the same time, Narsaq will benefit from the work and infrastructure advantages that will help develop the area in a positive way.

Q: How much money will Greenland earn from the mine? Will all profit just ‘go abroad’?
A: Prior to generating a net profit the mining operation must first meet all its obligations in terms of corporate and employee taxes. As the mine should generate healthy profits and will create many well paid jobs it is expected that the Greenlandic self-government will benefit from the mine for many years to come. There is no doubt that mining will add positively to financial growth and increased job opportunities in Greenland.

Following full plant ramp-up it is anticipated that a tax instalment in the order of US$55M per annum will be payable to the Greenland Government based on sales income derived from the base case of the Kvanefjeld Project. This excludes any tax derived from:
Payroll
Import duty
Royalties.

In addition to this, there will be significant tax revenues generated during the 2 year construction phase.

For the expansion case, the notional tax instalment is expected to increase to US$120M per annum.

Q: How many jobs do you expect to create?  
A:  Initial estimates for the project are that up to 383 personnel will be required for the operating phase and approximately one third of these ideally would be recruited locally from within the Kommune Kujalleq. The balance of the personnel required will most likely be employed on a fly-in/fly-out basis, with up to a third of these likely to be from elsewhere in Greenland. The fly-in/fly-our personnel will be accommodated in a new village. To help meet the local employment target Greenland Minerals & Energy is preparing a training and development program to provide assistance for those who may wish to participate in the future mining operations.

Q: Where will the workers live?
A: Most of the fly in/fly out personnel required to staff the management, operations and maintenance functions of the Kvanefjeld mine, plant and port facilities will be accommodated in a custom built village, likely to be located somewhere in between the existing town of Narsaq and the process plant.  

Q: How will the mine impact on the unemployment rate?
A: As there is a large potential workforce in South Greenland due to the current high unemployment rate (approximately 11%) it will have a positive impact. The types of job opportunities available, and suitable for local workers, in a typical mining operation include among others:
a) Unskilled job opportunities such as digger operators, truck drivers, drillers, plant operators etc.
b) Skilled job opportunities supervisors, administration staff, health and safety providers, surveyors, engineers, geologists, etc.

Q: How will the mine affect the sheep farmer and the sheep meat?
A: Sheep have been farmed around the Narsaq Peninsula for many years. The meat is regularly tested and locals can eat the sheep meat without any negative consequences. The sheep farmers’ grazing areas will not be affected by the mining activities at Kvanefjeld. Greenland Minerals and Energy has installed radiation monitoring in places around the town of Narsaq and the farm in the Narsaq Valley, in order to collect background data as part of the environmental studies. As part of the stakeholder engagement process Greenland Minerals and Energy consult regularly with the local farming community and their concerns about the possible impact of mining are being addressed as the studies progress.

Q: How will you ensure that such a large project, which would attract an international workforce, will not negatively affect the small Inuit community?
A: Before establishing the mine, Greenland Minerals & Energy will perform at least a 2 year-long, and in some cases longer, assessment of the potential social impact. This involves consultation with the local communities and will help identify the issues and concerns that may exist in relation to establishing a nearby mining facility. Concerns about the impact of economic development on Inuit culture, way of life, and community will be positively addressed so that the local Inuit population are able to take full advantage of the economic opportunities if they so desire.   

Q: Will the Kvanefjeld have any economic impact on Denmark?
A: Denmark will benefit from the development of the mining operation in a number of ways. It is likely that the Greenland Government will receive significant taxation revenues which may in turn reduce Greenland’s financial dependency on the Danish block grant to Greenland. It is certainly likely that numerous Danish companies would have the opportunity to supply goods and services during the development and operation of the project.

Q: What kind of impact will the mine have on Greenland tourism?
A: The mining project is located within a popular tourism region in Greenland and many people fly to Narsarsuaq from Denmark/Iceland to hike or sail, or to join one of the many cruise ships that visit the area.

It is unlikely that the presence of the mining project itself will deter tourism, given the careful design and landscaping planned for the mining project. In fact, the tourism industry could benefit from the project due to the increase in commercial flights, better accommodation etc., as presently the lack of such infrastructure creates a transport bottleneck within South Greenland.

 

This Q & A is divided into the following 5 sections:
1) Facts on rare earth elements and uranium
2) Business case issues
3) Environmental issues
4) Social and economic issues
5) Uranium issues

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