Greenland possesses huge renewable energy resources in the form of hydropower, but is only able to exploit a small percentage of these resources at the present time.
Building hydroelectric power stations requires a lot of resources in itself, but on the other hand hydropower represents a reliable and renewable energy source. Many of the Greenlandic sources of hydropower are so large that it does not make any sense to use them for ordinary domestic electricity supply. However, there are industries which are hugely dependent on large quantities of energy at low cost. In this regard, the aluminium industry is one of the most energy-dependent industries in the world.
It is this need which provides the background for the binding agreement between Alcoa and the Greenland Home Rule Government, the so-called ‘Memorandum of Understanding' (MoU), and it is this agreement that is the cornerstone of the project thus far. The Greenland Home Rule Government must decide whether it wishes to enter into an ownership model with Alcoa or whether Greenland's profit in connection with the smelter is to be based on licensing legislation. In an ownership model, the Greenland Home Rule Government and Alcoa can either each own 50% of the overall project, or the Greenland Home Rule Government's involvement in the project can be realised through a smaller share. If Greenland's commitment to the project is limited to a licensing agreement, the country's revenue will be secured via duties on Alcoa's exploitation of the sources of hydropower.
What will it mean if Greenland gets an aluminium smelter? First and foremost, Greenland will then appear on the list of the world's aluminium-producing countries with an expected annual production of more than 350,000 tonnes. The project will require as many as 3,000 employees during the construction phase to ready the smelter and hydroelectric power plant for operation, after which 600 employees will be required at the smelter. It is expected that operational personnel will as far as possible be native Greenlanders.
The two hydroelectric power plants that are due to supply the smelter will have a total output of more than 650 MW, which is more than 14 times the power of the plant in Buksefjorden near Nuuk. The electricity generated by the two hydroelectric power plants will be carried by a transmission line for a distance of 240 km.
The price for the entire project, smelter and hydroelectric power plants lies in the region of DKK 19-23 billion.
A project that is so extensive and comprehensive will naturally have consequences in a number of different areas. There are of course the economic consequences, which are the raison d'être of the entire project. However, the location of the smelter also has its own tangible consequences. One of the areas that will inevitably be affected is the environment. For this reason, there are comprehensive studies taking place and being planned for the immediate future in order to identify what these consequences might be - not just in terms of direct impacts, but also indirect impacts that may occur.
The size of the project alone will mean that there will be significant impact on the labour market and this effect must of course be clarified. In addition to any such effects being clarified, we as a country must also be prepared and - to a certain extent - know how we can get the maximum benefit from the existence of the smelter. For a short period there will be an enormous need for personnel, in all likelihood in greater numbers than the Greenlandic population can supply, i.e. up to 3,000 people as labour in the construction phase.
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This enormous investment in a country with a population of less than 56,000 will of course have an impact on the macroeconomic situation in the country, and these consequences also have to be considered, in addition to which studies should also be carried out as to how the maximum benefit from the positive effects can be realised.
In connection with the numerous studies, there are a number of field studies that have been performed in order to acquire data. These field studies have primarily concerned animal and fish habitats, as well as the flora surrounding the affected areas.
As it is such an enormous project in relation to the size of the national population, there has been a great deal of focus on involving the population in the discussions concerning the project. Public meetings have been used as a way of reaching out to the population, in addition to which this website and radio transmissions from these public meetings have provided alternative means of reaching as many people as possible. At the end of the day, it is people who feel the impact of such a project, regardless of whether this concerns people who live in the vicinity and will see the changes physically manifested, those who will be employed at the smelter in the future or those who will be indirectly affected by the derived activities resulting from the construction of an aluminium smelter.
In the menu on the left, you can read a lot more about each of these issues.
