It will showcase the strengths of Chinese private companies and their ability to take big risks, Wei said.

The unit cost for the iron ore from Isua is around $45 a metric ton and shipping costs about $15 a ton. That means iron ore products from Greenland will not be able to compete with producers from Australia, whose cost is as low as $30 a ton, he said.

The investment amount of about $2 billion is just an estimate and the actual cost can increase as the project progresses, Wei said. "It is possible that the project cost may double."

It will not be feasible for Chinese companies to invest in Greenland or other Arctic regions in the foreseeable future due to the low iron ore prices, said Liu Xiaoliang, secretary-general of the China Metallurgical Mining Enterprise Association.

There are enough iron ore supplies in the market, due to major mining giants' capacity expansion in past years and output increases since 2014, he said.

"There is no need for other Chinese mining companies, especially private ones, to take risks to invest in Arctic regions," he said.