From September 18 to 21, shares of companies related to resource extraction in Greenland soared upward after Donald Trump announced that the United States, Denmark, and Greenland itself had concluded a security agreement.
If we summarize the treaty, Washington will have to look after the security of the island, receive the right to expand its military presence, and have a veto right over the so-called sensitive investments from China and Russia. This last point is probably the main benefit for the US.
If someone doesn't know what sensitive investments are on the geopolitical arena, these are strategic resources, critical infrastructure, technologies, and defense complexes. I think I won't have to explain the importance of this decision for the US.
By the way, Danish Prime Minister Mette Frederiksen and Foreign Minister Lars Løkke Rasmussen specially flew to the US for the UN General Assembly to sign this trilateral agreement. Denmark separately emphasized that the agreement respects the territorial integrity of the Kingdom of Denmark, and responsibility for security in the Arctic is now officially distributed and will be carried out by NATO.
Well, and clear enough, such news hit the stock market the hardest:
- Greenland Energy (NASDAQ: GLND) — soared by +119–150%.
- Greenland Mines (NASDAQ: GRML) — soared by +58–72%.
- Critical Metals Corp. (NASDAQ: CRML) — soared by +35–43%.
- European Lithium (ASX: EUR) — soared by 14%.
- REalloys (ALOY) — soared by +9%.
And yes, most of these companies are companies that specialize in natural resources and their extraction.
Now let's look a bit deeper into this situation. In essence, no funding, new permits, or specific commercial contracts were provided to these companies under the agreement. The US-Denmark agreement is a security and geopolitical one, not a gift of some subsidies for business.
And Greenland Energy (GLND) doesn't receive any revenue at all. The company is unprofitable, and I wouldn't say that they have a directly perfect financial component, and the launch of drilling was recently postponed altogether to the winter of 2027 due to environmental and regulatory reviews.
As I understood from some agencies, this is because investors assumed that if the US closes Greenland from China and Russia, then the Pentagon or the US government will start massively pouring money into American companies on the island to ensure the supply of metals and energy carriers. In essence, it can be said that all this hype came from political hype.
Moreover, operations in the Arctic remain colossal: from the harsh climate, almost complete absence of logistics, and lack of labor force to insanely expensive permits. As an example, we can precisely bring up the company Greenland Energy (GLND).
In short, I would not buy shares right now or view these companies as a prospect as a whole, since it is quite risky and speculative. And I think that as soon as this news leaves the front pages of financial media, the market on the stock exchange based on the island will settle down again.
The only thing I would add is that you should be careful and always analyze the fundamental financial reports of companies before clicking the Buy button.
