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Summary
‘Equal children play best together', says a Danish proverb. But if that’s true, Greenland will
be facing an unequal playmate and a huge challenge when the global mining companies
arrive in the country. London Mining, for example, expects to invest an amount in the
construction of the Isua mine that will be equal in size to Greenland’s entire GDP.
But, as we all know, challenges also open the door to opportunities. In this study, we have
found that there are significant differences in the size of the potential benefits that could
accrue to Greenlandic society, depending on how we approach the 'game’.
The most important thing is perhaps to recognise that coercion is necessary. The Impact
and Benefit Agreement (IBA), which is the contract between the Government of Greenland
and the mining company that sets out goals and requirements in connection with the use
of local labour and local companies, must ensure that first priority is given to local people.
This is not an area in which market forces can be given free rein, in the sense that the
supplier who offers the lowest price wins the subcontract. The whole idea is for the local
business community to be able to use the mining projects as leverage to develop better
quality and to grow. This will require skills that many lack today, but which they could
acquire through the mining activities. The IBA should make this quite clear, laying down
targets for the number of local employees and the extent of outsourcing, without the
possibility of sidestepping these. These targets must apply right from the construction
phase. The synergies for the coming mining projects and the operational phase mean that
local skills enhancement should begin during the construction phase.
The binding targets and close bonds created through the IBA will increase the incentive of
the mining company to do what it can to enhance the professionalism, capacity and quality
of the local employees. We find that the IBA should promote what we call ‘proactive
outsourcing’. This refers to a close collaboration between the subcontractors and the
mining company with a view to increasing the productivity and quality of the subcontractors
through the mining company’s provision of tools, processes and skills.
We find that proactive outsourcing will be the key to sustainable economic growth. At the
same time, the management of subcontractors and the transfer of skills is a core
competency of the mining company, and since the mining company must make use of
subcontractors in any case, it will be no great burden for the company to provide an extra
effort in this area. The companies can thus do a great deal to professionalise and support
the local business community, which will not impose any significant costs on the company,
but will be of tremendous importance to achieving sustainable economic growth in
Greenland.
Conversely, the Government of Greenland should not pressure the mining companies to
carry out activities that have no connection to their core competency, namely the
extraction of raw materials. Such activities might for example involve contributing to the
support of primary education. This would stimulate economic growth in Greenland, but it
would also impose a significant burden on the mining company, as it would not thereby
reap any direct benefit. For such purposes, the Government should utilise the proceeds of
the corporate taxation paid by the mining company.
Finally, maximum economic benefit implies the implementation of reforms by the
Government of Greenland to increase the supply and mobility of labour, strengthen
incentives to work, improve the possibility of matching job seekers with jobs right across
the country, and ensure that foreign knowledge, labour and capital can easily acquire
access to and be anchored in the business community and the population. Such measures
will also reduce the risk of overheating in the economy.