Melting Ice Cap Draws China, Japan to Seek Arctic Riches

Melting Ice Cap Draws China, Japan to Seek Arctic Riches

Japan, China and South Korea are seeking to expand their influence in the Arctic as melting ice caused by global warming offers potentially lucrative access to resources and shipping shortcuts in the region.

Asia’s biggest economies are among 14 applicants seeking observer status on the eight-nation Arctic Council, which holds its biennial ministerial meeting in Sweden on May 15. Member countries include the U.S., Russia, Canada, Denmark, Finland, Iceland and Norway.

Winning approval would mean greater sway in international discussions over a region estimated to contain 90 billion barrels of oil, according to the U.S. Geological Survey. With climate change resulting in an Arctic that will be almost ice-free in the summer by 2050, according to a U.S. government study, the organization is facing an increase in maritime traffic and environmental disruption.“China, Japan and South Korea say the Arctic will be important, and now is the time to set the table to allow them to do things there later on,” said James Manicom, a research fellow at the Centre for International Governance Innovation in Toronto. “That starts with the Arctic Council.”

The council incorporates six nonvoting international organizations representing indigenous peoples, with 26 countries and groups already recognized as observers. While its agenda has focused largely on the environment since its formation in 1998, industrial activity in the region is rising, spurring a debate over the balance between exploration and protection.

Table Setting

This year’s candidates also include India, Italy, Singapore and the European Union. It remains unclear whether Russia, Canada and the U.S. will back them, said Linda Jakobson, director of the East Asia Program at the Lowy Institute for International Policy in Sydney.

The melting of the ice cap is “going to dramatically change shipping and global commerce,” Jakobson said.

China is interested in importing energy resources from the Arctic for diversification, according to an article published in February by Tang Guoqiang, head of the China National Committee for Pacific Economic Cooperation, which is overseen by the Ministry of Foreign Affairs.

“China has the right to engage in Arctic scientific research and navigation and has the willingness and capability to contribute to the work of the Arctic Council,” wrote Tang, a former ambassador to Norway.

‘Perceived Belligerence’

Having cultivated ties with Nordic nations and exploration deals with Russia, China has sparked concern partly because of its “perceived belligerence” in maritime territorial claims, Manicom said in a report published last month.

China is embroiled in disputes with Japan in the East China Sea and with the Philippines and Vietnam in the South China Sea. Japan said a Chinese ship targeted one of its naval vessels with a weapons-firing radar system in January, while last year Chinese and Philippine vessels became locked in a standoff over fishing rights.

Japan in March appointed Masuo Nishibayashi as its first ambassador to the Arctic, saying it is necessary to be “appropriately involved” in regional discussions.

“We believe we fulfill the conditions and we will be taking every opportunity to press our case,” Nishibayashi said in an interview. “The ice is melting and this means ships will be able to pass through. We have to see if this is commercially viable.”

Melting Ice

The Arctic has lost thick sea ice in the past 12 years. Last September, the amount was less than half the average in 1979-2000, according to a study by researchers from the U.S. National Oceanic and Atmospheric Administration.

According to the 2008 USGS survey, energy reserves north of the Arctic Circle “account for about 22 percent of the undiscovered, technically recoverable resources in the world,” including 1,670 trillion cubic feet of natural gas.

In December, Russia’s OAO Gazprom (GAZP) completed the first ever shipment of LNG via the northern route, taking the fuel from Hammerfest, Norway, to Tobata, Japan.

Almost all of the Arctic sea has been claimed as territorial waters or exclusive economic zones of the Arctic coastal nations, according to an April 1 study by the International Boundaries Research Unit at Durham University in England. While those countries are vying for rights over areas outside the 200 nautical mile (370 kilometer) EEZs, most future resource development and shipping is expected to take place within them, Manicom said.

Arctic nations would benefit by admitting East Asian countries as observers, who don’t have voting rights, Jakobson and Manicom said.

“It’s much better to engage with them and know what they’re doing in the Arctic than keep them out,” Jakobson said. “No one’s giving up any power by letting them in.”

To contact the reporter on this story: Isabel Reynolds in Tokyo at

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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