Greenland appears headed for new election, opposition claims majority

COPENHAGEN - The leader of Greenland's top opposition party said on Wednesday enough parliamentarians have crossed over to her side to bring about fresh elections after the prime minister took a leave of absence in a dispute over her use of public finances.

The political turmoil is likely to paralyse the government at a critical juncture as international companies such as London Mining Plc (LOND.L) and Greenland Minerals and Energy (GGG.AX) are considering opening iron ore and rare earth mines.

Prime Minister Aleqa Hammond, in power since April 2013, escaped a no-confidence vote on Tuesday but stepped down temporarily until the end of an investigation into her spending of public money on hotels and flights.

The opposition kept up pressure on Wednesday and four ministers in total stepped down from the government, including two from Hammond's Siumut party and two from junior coalition partner Atassut.

Atassut had bolted to the opposition, according to Greenlandic media and Sara Olsvig, leader of the largest opposition party, the Inuit Ataqatigiit.

Olsvig said thanks to Atassut's defection, her bloc has a majority of 17 votes of the 31 in total.

Greenlandic media reported that acting premier Kim Kielsen had called for an election on Nov 28 and parliament was to hold a vote on that proposal at 2300 GMT, assembly chairman Lars-Emil Johansen told Reuters.

Horsetrading

Olsvig said political horsetrading had dominated the day in the 31-member assembly.

"During the day we heard different stances from the former coalition party Atassut on how they were dealing with this issue - did they want an election or not?" she told Reuters by telephone from Greenland's capital Nuuk.

"They did want a new election. So, we wrote a formal letter to the speaker of parliament saying we, as a majority in parliament, wanted an extraordinary meeting to vote on this."

Greenlandic media said Hammond had stepped down as leader of the Siumut party but her status in government was unclear.

"When they (Siumut) invited us to negotiate a new coalition, my answer was that I didn't know who their leader was or who the premier was," Olsvig said.

But she said a coalition with Siumut was out of the question also due to their "bad governance".

Greenland is a self-ruling country within the Kingdom of Denmark and has a population of about 56,000 people.

Until Wednesday morning, all nine ministers had stood behind Hammond's argument that government should wait until an audit commission provides its conclusions on her spending, expected on Oct. 20, before taking any action.

"It now seems that a third of the cabinet disagrees with that view and is clearly driving Greenland towards political chaos that will be quite repellent to many investors from the mining, oil and gas and fishing sectors," chief Greenland analyst and managing partner at Polarisk consulting firm Mikaa Mered said earlier on Wednesday.

Siumut ministers for mining and natural resources, Jens-Erik Kirkegaard, and for education, Nick Nielsen, who both resigned, said in the joint announcement they believe Hammond should "take the natural consequence of her actions and step down".

Kirkegaard had been due to travel to China in three weeks to present Greenland's mining potential and meet with several Chinese and Australian officials and investors to boost the sector's interest in the vast Arctic country.

"That will obviously not happen and it is quite a catastrophe since this journey was one of Greenland's last chance to save the London Mining's Isua iron ore project," Mered said.

London Mining has one of the most advanced plans for a mine in Greenland, but its shares have fallen more than 70 per cent this week after it warned it did not have enough cash to operate its only existing mine in Sierra Leone.