China gets chance to buy first foothold in Arctic as Norwegian land plot goes on sale

PUBLISHED : Wednesday, 30 April, 2014, 7:04pm
UPDATED : Wednesday, 30 April, 2014, 7:05pm

A massive piece of privately-owned land in Norway’s Svalbard archipelago has gone on sale, leading to speculation that Chinese buyers could compete for the rare Arctic property.

“China has expressed an interest in the resources and shipping lanes of the Arctic,” said Willy Østreng, president of the Norwegian Scientific Academy for Polar Research. “This land would provide a permanent foothold.”

Østreng stressed that bidders could also come from other countries, adding that he expected widespread interest in the large plot. “It is extremely rare that land goes on sale in Svalbard,” he said. “This is much more than an economic transaction - it also affects regional security.”

The Austre Adventfjord property is located right next to Longyearbyen, the largest settlement on Svalbard. It is one of only two privately owned plots of land in the territory halfway between the North Pole and Norway. Covering an area of 217.6 square kilometres, it is roughly three times the size of Hong Kong Island.

The fjord is a third smaller than the plot Chinese property tycoon Huang Nubo attempted to buy in Iceland in 2011. His US$200 million bid was blocked last year over concerns that too much of the island nation’s land would go into foreign hands.

In an interview with Bloomberg News in February, Huang said he wanted to pour US$100 million into tourism-related property in Norway.

The family owning the Svalbard property has opened its sale to the highest international bidder, Norway’s largest newspaper Verdens Gang reported on Tuesday.

The family has not disclosed their expectations for a minimum bid for the land. A lawyer handling the bid did not reply to an emailed request for comment.

The land, still undeveloped, could prove to be a lucrative investment, according to Norwegian media reports. It contains about 20 million tons of coal reserves, according to the Verdens Gang report.

Earlier this month, the Norwegian Ministry of Foreign Affairs said it had allocated 150 million Norwegian kronor (HK$194 million) in funding to support domestic and international companies seeking to operate in the remote archipelago.

The Norwegian government, which owns most of the land in Svalbard, has declined to buy the property, Verdens Gang reported. Østreng said he expected the government to reconsider, due to strategic implications. However he said the family was ultimately at liberty to sell the land to the highest bidder.

Even though China does not control land in the Arctic, Chinese academics have described the country as a “near-Arctic” state and interest in the North Pole region has also been growing among government agencies.

The Chinese Arctic and Antarctic Administration has been operating the Yellow River research station on Svalbard since 2004. Four years ago, the Chinese Ministry of Foreign Affairs and the State Oceanic Administration set up an inter-agency coordinating mechanism on Arctic affairs.

Last year, China gained observer status on the Arctic Council, which includes the Scandinavian countries, Iceland, Canada, Russia and the US, and it inaugurated the China-Nordic Arctic Research Centre in Shanghai.

“I am glad to say that more and more countries gradually recognise China as an important stakeholder in Arctic affairs,” senior foreign ministry official Jia Guide said at the centre’s inauguration at the time.

A shipowner from Bergen bought the land in 1937. It has stayed with his family ever since. The only other private plot of land is controlled by the Russian state-owned mining company Arktikugol.