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Greenland’s large scale ruby industry hurts small scale miners

by Bridget Honan

Some rubies in Greenland are classified as 'pigeon blood', the highest value type of rubies. Pigeon blood can be worth 10 times as much as diamonds. This one is illuminated by a phone light.

Forget about Australia’s gold fever, Greenland is in a ruby psychosis. The red gems are the most valuable precious stones in the world, worth up to ten times as much as diamond, and Greenland is chock full of them. But at the moment, Canadian mining company True North Gems are the only ones who stand to make money off them, and local Greenlanders are crying poor.

Niels Madsen has a rough ruby in his house the size of two fists. The rock sparkles and shines with veins of red crystal, and he believes it’s worth up to half a million dollars.But because he can’t get an export license, he can’t sell it. With no ruby market to buy his gem stone in Greenland, it’s basically worthless.

Meanwhile the large scale mining industry in Greenland is expanding at an incredible rate. New laws passed just last week have made it possible for large scale mines to hire 3500 foreign workers in order to staff their new projects. The government is trying to encourage large scale mines to invest in Greenland in order to kickstart a stalling economy and help the country gain financial independence from Denmark.

But while the door is held open for large scale, foreign mining companies, local Greenlanders are finding it more difficult to make money off their own resources.

Niels Madsen owns a ruby the size of two fists

Changes to the law leave locals filing for licenses
Previously, under section 32 of the mineral code of Greenland’s constituion, lnuit people were allowed to collect rubies they found. This all changed in 2009 when Greenlander Niels Madsen was arrested on site of True North Gems mine.

“The helicopter came with the police and an employee from the Bureau of Minerals and Petroleum (BMP). They said I couldn’t collect one single rock in Greenland and I wasn’t allowed to sell any rock i’ve collected,” says Mr Madsen.

Greenland’s ombudsman found that the BMP was wrong in arresting the group, but the Mineral Resources Act was subsequently updated and small scale licenses were introduced.

Mining without a license is now criminal.

Greg Valerio, a fair trade jeweler who runs Fair Jewelry Action believes the BMP behaved unethically.

“The Greenlanders had the right to hunt, mine and fish. Then the BMP had the police arrest them and confiscate the ruby, and then they had to change the law to justify their behaviour.”

“The law was preventing the development of a gemstone industry. Basically they were criminalizing anyone who picked up a gemstone,” says Mr Valerio.

BMP says everyone can apply for a license

But Jørgen T. Hammeken-Holm, acting director of the Bureau of Minerals and Petroleum says under the Mineral Resources Act 2009, if a Greenlandic person wants to mine for rubies it’s simply a matter of applying for a small scale license.

“This is an easy and inexpensive way to be granted the right to explore and exploit minerals.”

Mr Valerio disagrees, and says the BMP is unaccountable.

“Basically if the BMP don’t like you, you can’t get a license.”

Niels Madsen,one of the arrested Inuit prospectors says, he has been consistently denied in his application to mine or export, so he can’t do anything with his previously collected rubies.

Niels Madsen has been denied a license so he isn't allowed to mine or sell rubies

Mining companies don’t own the land they operate on

Even if a license has been granted, where a Greenlander can prospect becomes relatively complex.

The area where True North Gems are operating is under an exploration license, not exploitation. This means they have the right to search for rubies but they don’t own anything they find.

When True North Gems receive an exploitation license they can sell their rubies and keep people like Mr Madsen off their property. Until then, it’s a legal free for all.

CEO of True North Gems Nicholas Houghton says he has no problem with locals trying to prospect, but he does not like people doing it on the property where True North is exploring.

“If someone’s already spent the millions to do all of this, would you expect them to come onto your ground and help themselves?” he said.

Ruby mines in Greenland cannot export rubies until they have an exploitation license

Large scale mines pay big bucks in tax

Mr Houghton emphasizes the time and effort True North Gems has put into finding the rubies.

“We’ve spent millions. I’m not talking a couple of dollars, i’m talking millions of dollars, in the ground to try and find a deposit. And once you find that deposit you spend more millions to put a production and then you give the country that you work in, millions in taxes.”

Building up tax revenue is one reason the BMP created the licensing laws in the first place.

Mr Hammeken-Holm from the BMP says this way, Greenland’s resources will benefit the entire population rather than individual prospectors.

Greenland needs to consider small scale mining

But Mr Madsen believes Greenland will receive little benefit from the large scale mines and would be better to encourage and develop it’s own small scale mines.

He believes small scale miners were operating, they could exploit one ruby outcrop, then when it emptied, move on to the next. This is a more long term option than large scale mining, which could take all the rubies in a short period.

“They want to hit the ground running, start big scale. Then there’s nothing left in the future. It’s as if the future is limited to their political career,” says Greenlander Mr Madsen

Small scale mining better for employment than large scale mining.

The Greenland government has been focusing on the importance of large scale companies like True North Gems for their employment opportunities they will provide.

But fair trade jeweler Mr Valerio says large scale mining brings little social benefit, and because of it’s industrialized nature, it employs hardly anybody.

According to the International Labor Organization (ILO) 11 million people are employed by the large scale mining sector.

In comparison, the ILO states as many as 100 million people worldwide depend on small-scale mining for their livelihood, either directly or indirectly.

Greenland could take a different road from large scale mining.

Aleqa Hammond, Chairman of Greenland’s opposition party Siumut agrees that the importance of large scale mining is overstated.

The opposition believe the government are pandering to large scale mines, leading to bad policy making.

“It’s not even selling our resources, it’s giving them away,” says Ms Hammond.

According to Mr Valerio, “It’s dinosaur policy run by dinosaur personalities. These people are not the future of the mining industry, they’re the history,”

Back at Mr Madsen’s house, he carefully wraps up his rubies in plastic and carefully places them in a cupboard, where they are destined to remain. He shakes his head at the news of the new laws being passed, which aim to encourage large scale mines.

“It’s like saying , ‘please come and take our resources, we can never ever learn to do it ourselves, please come and take it now before the rocks go bad,” he says.

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4 thoughts on “Greenland’s large scale ruby industry hurts small scale miners

  1. Jay says:

    Interesting article. I’ve been trying to find more videos about this issue. But apart from yours, I can only find TNG ones. Would you happen to have any links?

  2. Sorry, but Marc Choyt’s article DOES NOT provide a well-balanced picture of Greenland’s ruby issue, nor does it begin to tell 1/3 of the story. One might well wonder how Madsen, who was apparently a former employee of True North, came across a half million dollar stone so easily, when True North’s projects supervised by Mr. William Rohtert, who hired Madsen, came up with far less in spite of far larger scale exploration activities. The fact that Madsen came back to this site to stage a well-planned confrontation (and if you talk to people at the site, they can confirm this), raises the question of what the agenda of Madsen is, who was behind it, and what they stand to gain.True North has spent considerable money on the local community, doing training on jewelry making and lapidary work, hiring locals, etc. To mine the rubies, they must prove that they are being environmentally responsible, will benefit Greenland and local communities, and in the end they will be taxes on an efficiently scales operation that will benefit ALL Greenlanders. Apparently some people, including Mr. Madsen, think that these rubies belong to a few. People further down the supply chain, who think that they will make money buying rubies coming from a few connected people like Mr. Madsen, are part of that few. Sorry, but these rubies belong to ALL Greenlanders, and first and foremost, the right to development belongs to the people who have discovered them, invested the money, and proven that they will share the proceeds through tax dollars with all.

  3. Bridget says:

    Hi,
    Okay, you take issue with Marc Choyt’s article. However, I don’t know Marc Choyt. My name is Bridget Honan and this is my blog. I’m a journalist. I presented both sides of the story. My article includes quotes from the CEO of true north gems, saying exactly what you said; that they pay taxes so the wealth from the rubies goes to all Greenlanders, not just a select few. Do you have an issue with my article or just this Marc Choyt character?
    Best,
    Bridget.

  4. Yet, like Greg Valerio, of Cred Jewellery , I believe that True North is still sitting on the fence—an electric fence, about to get switched on. Their arctic rubies have been labeled as “apartheid rubies” by Niels Madsen, an emerging leader in the local community.

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