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Energy Transition Minerals (ASX:ETM) has seen a huge surge of liquidity hit its books for a very odd reason: Donald Trump’s increasing interest in “buying Greenland.”
If you’re scratching your head, that’s good. You’re paying the right kind of attention. But the share price climb on Wednesday mightn’t necessarily be the world’s most irrational gambit.
For those playing at home, $0.9 million worth of ETM shares had traded hands in lunchtime trades for 13.3 million shares vs. a four-week average of 2.03M. The move pushes one-year returns up +53%; YTD returns +61%.
But let’s cycle back and look at the bigger picture here, starting with ASX-listed Energy Transition Mins.
Trump as wildcard hopium
For starters, that company is already trying to sue the government of Greenland for four-times the island nation’s GDP.
The ins and outs of why aren’t particularly important, just that the company has (or had) a mine there; its permit was allegedly infringed upon by the Greenlandic government, ETM views that infringement as illegal, and now it wants (vast) compensation to make up for speculative losses.
That lawsuit has, however, been kryptonite for the impatient. In October last year, shares tanked 12% (remember we’re dealing with a microcap) when an update on the case effectively represented a very small procedural step forward.
Most court cases are slow, but suing a country’s government is a whole different timescale.
So, in that way, it’s perhaps understandable Trump’s ostentatious claims he’d like to ‘buy Greenland’ for the US, which he was talking about during Trump 1.0, have caused excitement for some shareholders.
Enough to convince investors to sink a collective ~$1M into the stock on Wednesday.
How the hell would that work?
Who knows.
There’s a long history here: The U.S. has proposed to buy Greenland as far back as 1867. Trump is just reviving an old fantasy of conquest.
But there are two interesting points to consider in the modern era.
Firstly, the Kingdom of Denmark recently changed its coat of arms to feature Greenland more prominently. And that’s a big part of this story.
For all (cynical) intents and purposes, Greenland is still effectively a colony of Denmark. Greenland’s political landscape has lawmakers who are keen to declare full independence (think a situation similar to Scotland or Australia) while others are less keen on a separation. But that divide is surely fuel to Trump’s fire.
A Danish lawmaker has in the last 24 hours told the media Greenland isn’t for sale – which Greenlandic lawmakers have also stated in the past.
The second interesting point: Trump Jr. is currently in Greenland. Make of that what you will.
Why does Trump want to buy Greenland?
Probably the same reason the U.S. has always been interested in Greenland: Because it has lots of national resources and it’s an obscure enough governmental entity that it seems like the kind of place you could buy.
(The U.S. did, after all, buy the Danish West Indies in 1917.)
Greenland has in the past recognised its own natural resources’ value potential (much to the chagrin of Energy Transition Mineral shareholders.) The government has tried to get foreign companies to tap its icebergs for fresh water.
Those icebergs form part of a larger eco-macroeconomic play: As the arctic wholemeal melts due to Climate Change, those resources will only be easier to access. Consider Russian companies’ endless sprawl further and further north.
In the background, new Arctic shipping lanes have opened up in recent years for the first time in history that allow ships to travel parts of the ocean at times of year historically prohibited due to frozen oceans.
The ultimate proposition, then, for investors bullish on ETM is twofold: Those resources are increasingly exploitable, and, we all know how Trump feels about resources: Drill, baby, drill.
ETM last traded at 6.3cps.
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