ES #130: The Strategic Case for Greenland

Energy Shots #130:

Greenland vaulted back into headlines early in the second Trump administration after a series of official visits and provocative statements about an expanded U.S. footprint in the semi-independent Danish Arctic territory.

Unlike the unfavorable tilt seen in most media coverage, however, the island’s March 11 election results indicate a potential shift in Greenlanders’ sentiment for a future U.S. partnership after the first-ever victory for Greenland’s pro-independence Demokraatit party.

• Former governing parties lost 31 percentage points compared to the previous election. Pro-independence, pro-development Demokraatit and Naleraq parties more than doubled their support from 2021, receiving 29.9% and 24.5% of votes, respectively to put 33-year-old Jens-Frederik Nielsen at the helm as Prime Minister.

While the fate of the U.S.’ relationship with Greenland’s new government remains fluid, the development offers a timely opportunity to evaluate Greenland’s strategic value from three high-level angles— trade security, energy production and exports, and non-energy natural resource potential.

2025 vs. 2050+ Trade Flows

Currently, approximately 70% of global maritime trade volume passes through just four chokepoints: the Red Sea, the Strait of Malacca, the Panama Canal, and the Cape of Good Hope.

For some global superpowers, almost all economic activity depends on the flow of energy and goods through a single chokepoint. For example, over 80% of China’s crude imports pass through the narrow Strait of Malacca between the Indian Ocean and the South China Sea.

Furthermore, 2023 and 2024 proved that the economic risks from these chokepoints aren’t hypothetical.

Global trade patterns are still recovering from Panama’s record drought and Houthi Red Sea attacks that pushed the majority of East-West trade around Africa’s Cape of Good Hope and increased shipping costs by as much as 700% from pre-COVID levels.

Over the next two decades, however, thinning sea ice in the Arctic Ocean will open three alternative shipping routes that offer distance savings of as much as 50% for vessels transiting between Asia and Northern Atlantic ports—and lack the piracy risks associated with maritime trade through geopolitically unstable regions in the Indian Ocean, Red Sea, and South China Sea.

Shipping Route Distance Comparison

• Shanghai-New York: 18.4% faster via Arctic NWP than Panama Canal

• Shanghai-Rotterdam: 19.2% faster via NSR than Suez Canal

• Hamburg-Seattle: 54.8% faster via NSR than Suez Canal

• Longdon-Yokohama: 34.7% faster via NSR than Suez Canal

As shown in the Arctic shipping route graphic above, Greenland borders two of the three Arctic shipping lanes and geographically encloses the Atlantic entrance point of the North-West Passage running along the Canadian and Alaskan coastlines.

This geostrategic proximity similarly applies to emerging energy production and export infrastructure around the Arctic Ocean.

Approximately 27 Bcf/d of LNG export capacity is planned or under construction in the Arctic, led by Russia, the United States, Canada, and Norway.

Arctic shipping routes enable more direct export opportunities to import-dependent natural gas markets like EU, UK, Japan, China, and other developing Asian countries.

Greenland’s Natural Resource Potential

Longstanding opposition to mineral extraction could remain a substantial headwind for Greenland’s natural resource development.

However, the territory offers long-term strategic value with an estimated $4.4 trillion in undeveloped energy and mineral resources, including large deposits of 25 of 34 critical minerals, ~148 trillion cubic feet of natural gas reserves, and ~31.4 billion barrels of oil equivalent. Economically viable deposits of all minerals represent an estimated 4.4% or $186 billion of this total.

As discussed in last week’s Energy Shots, the U.S. critical mineral supply chain relies on a low-security combination of adversarial nations and politically volatile regions. Greenland’s proximity and relative stability offers an attractive alternative for the U.S.’ critical mineral supply chain.

• DRC-M23 Rebels & 80% of Global Mined Cobalt

We have attached two PDFs below for those interested in taking closer look at Greenland’s natural resource assessments.

See you next Sunday.

ES.

This commentary contains our views and opinions and is based on information from sources we believe are reliable. This commentary is for informational purposes, should not be considered investment advice, and is not intended as an offer or solicitation concerning the purchase and sale of commodity interests or to serve as the basis for one to decide to execute derivatives or other transactions. This commentary is intended for Mobius clients only and is not considered promotional material.