Greenland said on Monday it has stripped a Chinese mining company of its license to an iron ore deposit near the capital Nuuk, dealing a blow to attempts by Chinese companies to gain a foothold on the resource-rich Arctic Island.

General Nice, a Chinese coal and iron ore importer, took control of the Isua mine project in 2015, replacing previous owner London Mining, which went bankrupt.

It was the first Chinese firm to have the right to exploit minerals in Greenland, which has attracted international interest as climate change has opened up waterways and access to the vast Arctic island's mineral resources.

The license was withdrawn because of inactivity at the site, the government said in a statement, adding it will be offered to new interested companies once it has formally been handed back.

The company also failed to make the agreed guarantee payments, it said.

"We cannot accept that a license-holder repeatedly fails to meet agreed deadlines," Greenland's Resources Minister Naaja Nathanielsen said.

The government requested that all geological data is returned, remaining payments of 1.5 million Danish crowns are deposited, and the mining area is cleaned up.

London Mining, which obtained the exploitation license in 2013, had initially planned to hire some 2,000 Chinese workers to construct the project and aimed to supply China with around 15 million metric tons of iron ore a year.

However, it failed to secure sufficient financing.

Greenland's government, elected in April, has said it supports environmentally responsible mining.

This year it banned uranium mining, effectively halting development of the Kuannersuit mine, one of the world's biggest rare earth deposits, which is partly owned by a Chinese company.

General Nice also attempted in 2016 to buy an abandoned naval station in Greenland from Denmark, but Copenhagen vetoed the offer because of security concerns, sources told Reuters at the time.

General Nice could not be reached for comment.

In 2018, Greenland rejected an offer from a Chinese state bank and a state-owned construction company to finance and build two airports in Greenland.

(Reuters)

Icebergs and the edge of the ice sheet are seen at the west coast close to Tasiilaq, Greenland. (Reuters)

Greenland strips Chinese mining firm of license to iron ore deposit