Canada and Denmark are close to settling a decades-old territorial dispute over a tiny island in the Arctic, a Canadian newspaper said Wednesday.

Negotiators have put forth a proposal to split down the middle Hans Island, a barren rock of 1.3 square kilometers (0.5 square miles) that sits between Ellesmere Island and Greenland, the National Post reported.

The plan, which has yet to be approved by either nation, would give Canada a second land border and settle a spat that is seen as both absurd and essential for economic development and better environmental stewardship of the Arctic.

But officials would not confirm a settlement has been reached.

"Canada and Denmark are cooperating in developing a mutually agreeable way forward with respect to Hans Island," said Joseph Lavoie, spokesman for Canada's Foreign Minister John Baird.

The snow-covered site is uninhabitable, but the onset of global warming is expected to bring ship traffic to the region and open it up to mining, fishing or drilling for oil and gas.

The dispute over the island, which is less than 100 meters (330 feet) wide, dates back to 1973 when the border was drawn between Canada and Greenland, which is part of Denmark.

Danes and Canadians have visited it often since then to lay claim to it, leading to diplomatic protests, vivid online campaigns and even a Canadian call for a boycott of Danish pastries.

Denmark fears that losing the battle for Hans Island would undermine relations with its giant overseas territory Greenland, while Canada is concerned it could lose ground in a far more consequential dispute with the United States over the Beaufort Sea.

In 2010, however, Ottawa vowed in its first policy statement on the far north to quickly settle border disputes with Denmark and the United States, in order to move forward on broader issues of Arctic resource development.

Since then, it has cooperated more closely with other nations to map the shape of the seafloor in disputed areas ahead of a UN deadline next year for claiming undersea territories.

Canada, Denmark, Norway, Russia and the United States claim overlapping parts of the region believed to be rich in hydrocarbons, and are rushing to gather evidence in support of their respective claims.