* Low iron prices make funding for project difficult
* Greenland seeking to develop metals, minerals
By Gwladys Fouche
TROMSOE, Norway, Jan 26 (Reuters) - A Chinese mining firm that took over a planned $2 billion iron ore mine project in Greenland is unlikely to develop it as long as iron prices remain low, Greenland’s finance minister told Reuters.
General Nice, one of China’s top coal and iron ore importers, took control of the Isua mine project January, in another example of the Asian country’s global search for commodities.
General Nice replaced previous owner London Mining, which went bankrupt, becoming the first Chinese firm to have the right to exploit metals and minerals in Greenland. But it is currently unable to get funding for the mine’s construction.
“Commodity prices are preventing possible investors to approve the funding. That is the question mark,” Vittus Qujaukitsoq, Greenland’s minister of finance, mineral resources and foreign affairs, said in an interview.
The global benchmark for physical iron ore from Australia to China .IO62-CNI=SI is down 78 percent over the past five years and was trading at $41.10 per tonne on Tuesday.
London Mining said in 2012 operational costs at Isua would be $45 per tonne, on top of which comes shipping costs.
The level of activity by foreign mining firms in Greenland had dropped due to lower commodity prices, Qujaukitsoq said.
Companies such as Royal Dutch Shell and BP hold licences to explore for oil while smaller Canadian and Australian miners have been looking to develop mining.
“We see a fall of the number exploration activities, especially offshore oil exploration, and we see less exploration for the various metals and minerals,” Qujaukitsoq said on the sidelines of a conference on Arctic issues in northern Norway.
“(But) we need to maintain the growth in the mining and minerals sector. We have a desire to increase our income revenues away from the fisheries, which represents 90 percent of our tax revenues.”
Still, one mine began production in December, the Aappaluttoq ruby and pink sapphire mine, some 150 km south of the capital Nuuk, operated by Norway’s LNS Greenland and in which Canada’s True North Gems has a stake.
The nation of 56,000 people has been opening up to foreign companies with hopes that its vast resources in metals and minerals, including rare earths, would help finance its ambition to become independent from Denmark.
“This has not changed,” he said.
The U.S. Geological Survey estimated there are 31.4 billion barrels of oil equivalent off the east coast alone, about the same as the proven reserves of Nigeria, and some of its largest rare earth deposits are found on land.
Greenland, whose capital Nuuk is closer to New York than Copenhagen, became a Danish colony in the early 19th century but has been gradually gaining its own powers since World War Two.
Editing by David Evans