This ASX stock could sue Greenland’s government for 4x its annual GDP

ASX-listed Energy Transition Minerals (ASX:ETM) has filed writs in the court of Greenland (and Copenhagen) seeking confirmation of its right to mine from the two inter-linked governments, the latest step in a lawsuit kicked off in 2023.

Under new applications, ETM is also now appealing the Government of Greenland’s decision to reject requests for an exploitation licence, providing an additional avenue for the company to pursue compensation.

Greenland is effectively a smaller government with its own powers under the larger umbrella of the Kingdom of Denmark. The latter ultimately provides the funding for Greenland to continue existing.

“By commencing litigation proceedings in parallel to the ongoing arbitration, [ETM subsidiary] GMAS ensures that it will be able to continue to pursue its claims against the Defendants in the event of an unfavourable finding in the arbitration,” the company wrote on Monday.

“[An unfavourable finding would be] the arbitral tribunal deciding it does not have jurisdiction over (a part of) GMAS’ arbitration claims.”

ETM has also requested that the cases go straight to the Danish High Court.

Since 2007, ETM has been operating in Greenland for rare earths. In 2021, the Greenland government installed a uranium mining ban impacting the company’s Kvanefjeld Project.

That has hurt ETM’s ambitions to mine Greenland for rare earth elements (REEs), given uranium often coincides with REE mineralisation. For this reason, the Australian nuclear regulator ANSTO is responsible for conducting all REE assay testwork.

ETM now finds itself in a position where it can’t mine for REEs given that it could technically mine uranium at the same time, now a prohibited activity in Greenland.

If it doesn’t win a right to mine, the company is alternatively seeking US$11B (A$17.3B) in compensation from the government of Greenland – well beyond the value of the country’s GDP. In fact, that’s a fourfold increase.

Whether it can get that or not remains to be tested in court. The European Journal of International Law (EJIL) wrote on its blog earlier this year that ETM’s claim it has a “right to mine” is based on implied rights granted to it in 2021, before the uranium mining ban was ratified.

The company has held a licence in the region since the mid-2000’s but an addendum added in 2011, in ETM’s view, unrightly gave the Greenlandic government a god-clause power to veto the project after the fact.

ETM has cited legal opinion that this cannot be enforced under Danish law – with Greenland as a sort of autonomous region part of the Kingdom of Denmark – given that the addendum doesn’t harmonise with 2009 mineral resources legislation from Greenland.

“The arbitral proceedings involve both the Danish and Greenlandic Governments as the 2007 mining licence was granted before competence over minerals was devolved,” EJIL wrote.

ETM last traded at 3.4cps.