Impact Benefit Agreement (IBA)
According to the Mineral Resources Act, mineral resource companies wishing to carry out activities that significantly affect Greenland societal conditions, must carry out a Social Impact Assessment (SIA). The SIA must be approved by the Government of Greenland. This applies in connection with applications for utilisation permits for minerals (mining projects) and exploration drilling for hydrocarbons.
Mineral resource companies must carry out an SIA according to the provisions of the Mineral Resources Act on this and in accordance with the “Guide to mineral projects on the process and preparation of a SIA.”
According to the Mineral Resources Act, the Government of Greenland can determine to what extent Greenlandic companies are used in connection with, for example, a mining project or an exploration drilling.
Regardless of whether the mineral resource company wants to establish a mine or perform exploration drilling, the mineral resource company has to state in the SIA the extent to which Greenlandic companies are able to perform contract jobs and deliver services and products to the mine or exploration drilling.
The use of Greenlandic companies in mineral resource projects
On the basis of the SIA, the Government of Greenland sets out in Impact Benefit Agreements (IBA’s), for the municipality(s) and the mineral resource company concerned, the extent to which the mining company or oil company must make use of Greenlandic companies.
The IBA is divided into two main parts.
1: The general part of the IBA
In the general part of the Impact Benefit Agreement, there can, among other things, be
- General provisions on information requirements in connection with invitations to tender
- Information requirements in connection with the procurement of goods and services
- Provisions on collaboration with Greenlandic companies.
2: Project-specific and company relevant annexes to the IBA
The project-specific annexes to the Impact Benefit Agreement, which relates to the use of Greenlandic companies, specifies, as the general rule, the more general provisions. The company relevant annex will therefore usually contain more specific requirements relating to, for example:
- % rate for the purchase of goods and services from Greenlandic companies
- The size of the contracts must, as far as possible, be adapted to the Greenlandic companies’ capability
- Which contracts will only be offered to Greenlandic companies
- Which contracts will be offered to both Greenlandic and foreign companies
- A minimum rate for the procurement of goods and services from Greenlandic companies in the construction and operation phase
- Holding a seminar for Greenlandic companies on tender procedures
- Advertising tenders in Greenlandic media
- The tender advert in Danish and Greenlandic
- The use of Greenlandic labour
- Employing Greenlandic apprentices
- The application of Greenlandic conditions in connection with tendering and contracting
- Involvement of Greenlandic employees, companies and apprentices must be included in the criteria for the evaluation of tenders received in connection with the invitation to tender.
Active IBA’s with mineral resource companies
The table below shows the active Impact Benefit Agreements with the licence holder in the area of mining
Provision 13 and Annexes 7 & 8
|Ruby Greenland A/S
Ruby mine at Appaluttoq
Provisions 10 & 11 and Annexes 6, 7 & 8
Lead and Zinc mine at Citron Fjord
Provision 13 and Annexes 7 & 8
|Hudson Greenland A/S
|Anorthosite mine at Najaat
|Provision 11 and Annexes 6, 7 & 8