Greenland passes mining projects bill, opens for cheap labor

COPENHAGEN Fri Dec 7, 2012 3:28pm EST

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COPENHAGEN (Reuters) - Greenland on Friday passed a bill setting the framework for foreign mining and exploration companies to take advantage of the natural resources of the Arctic island and opening up for cheaper labor, including staff from China.

The legislation defines the size of what is determined a large scale project and regulates minimum salary levels for foreign workers.

The law has been criticized for paving the way for companies to employ foreign workers at a lower salary than what the companies would be paying Greenlandic workers.

With global warming thawing its Arctic sea lanes and global industry eyeing its minerals, Greenland, population 57,000, is wrestling with opportunities that offer rich rewards but risk harming a pristine environment and a traditional society that is trying to make its own way in the world after centuries of European rule.

Greenland, semi-autonomous from Denmark, wants to encourage foreign companies to come in with workers to set up exploration while unions fear the move will undercut the Greelandic workers.

Whether in iron, zinc or rare earth minerals vital for 21st-century technology like smartphones, China has been eyeing investments in Greenland, whose increasingly autonomous national government is looking further afield for investors.

All parties except the biggest opposition party, which abstained and said the bill needed more work, voted in favor of the legislation.

Kaj Kleist, spokesman at British company London Mining Plc, which plans a large iron ore mine near the capital of Nuuk, said the company was pleased with the bill.

"Several issues around the big scale projects, such as salaries, are quite heavy politically. With the legislation in place that we can follow, we will be able to have less debate," he said.

"Greenland never had a big work force from abroad before, that's why we need to regulate this," Kleist said.

He said the new legislation sets the minimum hourly wage for foreign workers in large scale projects at 80.40 Danish crowns, less than what most Greenlandic workers earned.

London Mining's $2.3 billion project stands to increase Greenland's population by 4 percent by hiring Chinese workers and would supply China with iron.

Greenland has awarded overall some 150 licenses for mineral exploration compared with only a handful in existence a decade ago, with around $100 million spent by companies last year alone. Oil companies have spent more than $1 billion in exploring offshore.

(Reporting by Anna Ringstrom, Katja Vahl and Mette Fraende; Editing by Kenneth Barry)

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