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CORRECTED-INTERVIEW-Greenland warns EU may miss out on its mineral wealth

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(Globalpost/GlobalPost)

(Corrects paragraph 17 to say workers are expected to flow in, not that they have flown in)

* EU signed memorandum on raw materials with Greenland last year

* Prime Minister says he may put it aside as bloc has failed to act

* Foreign investment in resources major issue of next week's polls

By Alistair Scrutton

NUUK, March 7 (Reuters) - Greenland's prime minister warned the European Union he could scrap a preliminary deal intended to safeguard the bloc's access to his country's huge mineral resources, saying Brussels has failed to follow through.

"I don't understand the behaviour of the (European) Commission," leftist Kuupik Kleist said on Wednesday in his office over looking snow-capped hills around the capital Nuuk.

Kleist's comments to Reuters signal Greenland may be increasingly willing to play off rival powers from Brussels to Beijing that are drawn by its minerals as global warming opens up sea routes and mining prospects.

Kleist, who grew up harpooning whales from a remote village in northern Greenland, faces a general election next week which is widely seen as a referendum on his opening up of the country to foreign investment, especially in minerals and oil.

To the dismay of many European politicians, China has been eyeing investments in the former Cold War ally of the West, which include iron, zinc and the rare earth minerals that are crucial for technology products such as smart phones.

EU Vice President Antonio Tajani flew to Greenland last year to sign a memorandum of understanding (MOU) over its raw materials. Greenland has large deposits of 6 of the 14 raw materials seen as crucial to European industry.

The document was aimed at improving European access to Greenland's minerals. Some diplomats said it was effectively about ensuring Greenland did not lock in mining contracts with just one country, such as China.

Kleist said it was time for Europe's executive Commission to follow up with action, including a firm deal on resources.

"I signed a letter (to the EU) last month (saying) if we were not to take further steps to negotiating a real agreement we would rather put aside the MOU. I have not got any answer on that still."

"I have been to Brussels many times," Kleist added. "I don't have a thorough explanation why the big interest in Greenland and the Arctic area does not play out in really concrete activities from the European side."

He said European companies would always be welcome to invest in Greenland, an increasingly autonomous country within Denmark, which is not part of Danish membership of the European Union.

There was little surprise the memorandum with the EU was signed in the same month as Chinese President Hu Jintao - leader of the world's most populous nation - paid a three-day visit to Denmark , with just over 5 million inhabitants. It was a visit that many observers said was chiefly about a stake in Greenland.

"The Commission was really eager to negotiate this (the MOU)," Kleist said. "We initially told the Commission we are really busy handling big issues in that field. But they kept pressing, visiting us."

Kleist said he had broadly agreed with Brussels that Greenland would receive around 25 million euros ($33 million)a year to help mutual research and development in the mining sector.

Despite strong interest from China and other Asian countries, Greenland so far has only one mine in operation.

THOUSANDS OF CHINESE WORKERS

Greenland has awarded some 150 licences in all for mineral exploration compared with less than ten a decade ago. Companies spent about $100 million last year alone on exploration on land and oil companies spent more than $1 billion exploring offshore.

One of the biggest new mining plans is a $2.3 billion project by UK-based London Mining Plc near Nuuk to supply China with much needed iron to fuel its economy. Some 2,000 Chinese workers are expected to flow in for its construction.

But many voters are uneasy over the impact of a drive to develop the resources of the huge island, a quarter the size of the United States, which has a population of 57,000, mostly indigenous Inuit peoples.

Kleist said the elections was throwing up a backlash against his four years of government.

In addition, many companies had put investment decisions on hold, fearing an opposition win could usher in more taxes and royalties.

Anti-Chinese rhetoric from politicians is also rising. The main opposition leader, Aleqa Hammond, has threatened to revise a law allowing Greenland to import cheap Chinese labour to help build mining projects.

"There is a growing nationalist backlash. It's not a nice thing to see," Kleist said. "The fear of being overrun by foreigners is exaggerated. We are becoming a global player. We need to avoid ethnicity, nationalistic feelings."

It is unclear who will win the Tuesday election.

Kleist, who is one of Greenland's most famous musicians with a string of recordings of traditional Greenland music, was philosophical about potential defeat.

He looked out of his ninth floor window at a windswept bay, dotted with icebergs.

"I would be very sad to leave office," he said. "For the view." ($1 = 0.7644 euros) (Editing by Anthony Barker)

http://www.globalpost.com/dispatch/news/thomson-reuters/130307/interview-greenland-warns-eu-may-miss-out-its-mineral-wealth