By Patricia Zengerle
KIRUNA, Sweden (Reuters) - The Arctic Council agreed on Wednesday to admit emerging powers China and India as observers, reflecting growing global interest in the trade and energy potential of the planet's Far North.
The organization, which coordinates Arctic policy, is gaining clout as sea ice thaws to open up new trade routes and intensify competition for oil and gas - estimated at 15 percent and 30 percent respectively of undiscovered reserves.
China has been active in the polar region, becoming one of the biggest mining investors in Greenland and agreeing a free trade deal with Iceland. Shorter shipping routes across the Arctic Ocean would save its companies time and money.
The council groups the United States, Russia, Canada and Nordic nations. Observer status gives countries the right to listen in on meetings and propose and finance policies.
China, Japan, India, South Korea, Singapore and Italy were granted observer status.
"Despite the varied interests we have heard today from the permanent participants, there is nothing that should unite us quite like our concern for both the promise and challenges of the northernmost reaches of the Earth," U.S. Secretary of State John Kerry told the meeting in Sweden's northern town of Kiruna.
Canada, which will chair the council for the next two years, said the time had come to realize the "tremendous potential and opportunities" in the Arctic, which has rich reserves of gold, tin, lead, nickel and copper.
"This development must be done in a responsible and an environmentally sustainable manner so that the land, the water and the animals ... are not negatively impacted," Canadian Health Minister Leona Aglukkaq told reporters by phone from Kiruna.
Indigenous groups have expressed concern the number of observers could dilute their voice as their traditional cultures are threatened by a possible influx of oil and mining projects.
A Chinese shipping firm is planning the country's first commercial voyage through a shortcut across the Arctic Ocean to the United States and Europe in 2013, saving time and money. The distance from Shanghai to Hamburg is 2,800 nautical miles shorter via the Arctic than via the Suez Canal.
The council ruled the Europe Union could observe meetings until a final decision on its status was taken.
Diplomats said Canada and other Arctic states objected to an EU ban on imported seal products. Indigenous groups say they depend on the seal trade.
Aglukkaq said she would hold talks with the EU in a bid to find a compromise on the seals issue but gave no details.
WORLD'S BIGGEST DEPOSITS OF RARE EARTHS
China already has mining links with Greenland and trade ties with Iceland. Greenland may have the world's biggest deposits of rare earths, used in smart phones and green technology.
"The entry of countries like China not only reflects how the Arctic has become a region of global interest, it also shows how the Arctic Council has become the main body of Arctic governance," said Damien Degeorges, founder of the Arctic Policy and Economic Forum.
The council also adopted an agreement to coordinate a response to potential spills that could result from increasing oil and gas exploration, including joint training exercises to deal with major accidents.
The meeting also heard about the threat to the region's biodiversity. Summer temperatures are warmer than at any time in the past 2,000 years, threatening animals and plants, according to an Arctic Biodiversity Assessment report given to ministers.
"Decisive action taken now can help sustain vast, relatively undisturbed ecosystems of tundra, mountains, fresh water and seas and the valuable services they provide," it said.
(Additional reporting by Alister Doyle, Alistair Scrutton and David Ljunggren; Editing by Janet Lawrence and Cynthia Osterman)