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Greenland licensing

The Mineral Resources Act provides for prospecting, exploration and production licences.


The prospecting licence
The prospecting licence is non-exclusive and is normally granted for five years over large areas, excluding those areas already covered by exploration licences. It does not contain any exploration commitments and, in certain cases, individuals can be awarded a personal prospecting licence.


The exploration licence
The exploration licence is exclusive and covers specified areas. It is normally granted for five years and may be extended to a maximum of 16 years. This licence can cover any size of area, which can be enlarged upon application. The licence area may be wholly or partly relinquished at any time. Exploration commitments are expressed as expenditure obligations based on the size of the licence area, and the time for which it has been held. These commitments increase with both area and time. First-year expenditure commitments are calculated on the area initially granted under the licence, but for subsequent years they are re-calculated according to the land area held at the year-end. Thus if the holder decides to relinquish all or part of the licence in a later year, the commitment for that year is decreased accordingly, or even cancelled.

A special three-year exploration licence, with reduced exploration commitments, is available for areas of over 1,000 km2 in North and East Greenland.

Any exploration licensee who delineates a viable mineral deposit is entitled to be granted a production licence. The transition between these two licence types is described in the standard terms for exploration licences.


The production licence
The production licence is also exclusive, and will normally comprise a restricted area covering only the deposit. Production licences are normally granted for 30 years and can be extended to 50 years. Normally granted to public limited companies domiciled in Greenland, they are also only issued to companies that can demonstrate that they have the necessary technical and financial capabilities needed to establish a mining operation. A production licence allows the licensee to construct the facilities needed for the project, subject to the BMP's approval of the development plan, which includes an environmental impact assessment and restoration plan.


Licence terms
Standard terms apply to the licences in each category. Further information about the Mineral Resources Act and the licence terms can be obtained from the BMP.

Application procedures are described in 'Application Procedures and Standard Terms for Exploration and Prospecting Licences for Minerals in Greenland'. Published in November 1998, this is available from the BMP or from the BMP website: www.bmp.gl

Under the Greenland Income Tax Act, any company holding a production licence is subject to corporate income tax, which is currently 30%. There are no ring-fencing rules with respect to mineral activities. Tax losses can be carried forward for an unlimited period and, in certain cases, can be carried back for five years. Assets can be fully depreciated in the first year, or over time. Dividends are normally deducted from taxable income. In addition, the Government of Greenland can grant a special annual relief of up to 10% on direct investments for adding value to mineral products.


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MINEX is published by GEUS in co-operation with Bureau of Minerals and Petroleum, Greenland Government