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Showing posts with label natural resources. Show all posts
Showing posts with label natural resources. Show all posts

Wednesday, August 26, 2026

Build a Canadian strategic-resources portfolio that could benefit from deteriorating Canada-U.S. trade relations, Canadian export diversification, defence/energy security and the Western world's need for non-Chinese resource supply.

 


starting from a blank sheet today—August 26, 2026—and the mandate were simply:

Build a Canadian strategic-resources portfolio that could benefit from deteriorating Canada-U.S. trade relations, Canadian export diversification, defence/energy security and the Western world's need for non-Chinese resource supply.

My "Know Nothing About the Investor" portfolio

RankCompanyTickerStrategic resourceWeightThesis
1NutrienNTRPotash20%Exceptional Canadian leverage over U.S. agriculture
2CamecoCCOUranium20%Nuclear/energy-security winner
3Canadian Natural ResourcesCNQOil & gas15%Massive reserves + global diversification
4SuncorSUOil12.5%Integrated oil + export diversification
5Teck ResourcesTECK.BCopper12.5%Electrification/defence/AI infrastructure
6CenovusCVEOil & refining10%Heavy crude + integrated downstream
7EnbridgeENBEnergy infrastructure10%Owns the pipes rather than betting on commodity price

That is a considerably better risk-adjusted portfolio for an unknown Canadian investor.

Canada is actively pursuing exactly the broader strategy behind this portfolio: expanding global market access for Canadian oil, accelerating critical-mineral production and processing, and reducing excessive dependence on the United States. Ottawa's July agreement with Alberta and the oil-sands producers explicitly calls for expanded global market access and production growth.

But which companies could actually benefit from the trade war?

This is the more important distinction. Being strategically important doesn't automatically make a stock a trade-war winner.

#1 — Nutrien:

If forced to select one Canadian resource company whose strategic importance increases because of this dispute, I would pick Nutrien.

Canada is the world's leading potash producer. And the current U.S. tariff regime specifically exempts potash—an important signal that Washington recognizes how difficult it would be to disrupt that supply.

Nutrien therefore possesses something unusual:

pricing power + scarce resource + enormous U.S. dependence + global alternative customers.

If Canada diversifies additional potash toward Brazil, India and Asia, Nutrien isn't trapped by the American market.

That is genuine geopolitical optionality.

Trade-war beneficiary score: 9/10.


#2 — Cameco: perhaps the best long-term strategic asset

Cameco is somewhat different.

I wouldn't buy it because I expect Canada to restrict uranium exports. I don't.

I'd buy it because this trade conflict reinforces the value of secure, allied, non-Russian/non-Chinese nuclear fuel supply.

Canada is already the world's second-largest uranium producer, and Cameco's mines produce the purest uranium on the planet, by a factor 10

The enormous buildout of electricity generation required for AI/data centres plus Western nuclear restarts and energy-security concerns creates a structural uranium story independent of Trump.

The trade war merely strengthens the strategic premium attached to Saskatchewan uranium.

Trade-war/geopolitical beneficiary score: 9/10.


#3 — CNQ: my preferred Canadian oil producer

I would slightly favour Canadian Natural Resources over Suncor and Cenovus for this particular portfolio.

The key reason isn't retaliation.

It's market diversification.

Canada's long-standing problem was:

enormous oil reserves + essentially one customer.

TMX materially changes that equation, and Ottawa is now explicitly pursuing additional West Coast export capacity. The July federal-Alberta-oil industry agreement calls for expanded and diversified global market access and substantial oil-sands production growth.

That potentially increases the strategic value of enormous long-life Canadian reserves.

CNQ owns an extraordinary amount of them.

Score: 8.5/10.


#4 — Teck: the one I might overweight

Copper is an interesting case because it doesn't require Canada to weaponize anything.

Canadian copper exports to the United States have actually surged—running about 40% above their 2024 average, according to the Bank of Canada.

Meanwhile copper sits at the intersection of:

AI data centres + electrical grids + EVs + robotics + defence + renewable energy + conventional infrastructure.

That's exactly the sort of commodity I want exposure to regardless of whether the Canada-U.S. dispute gets better or worse.

And that gives Teck an attractive characteristic:

The thesis doesn't require the trade war to continue.

If Canada-U.S. relations improve, copper demand remains.

If relations deteriorate and Canada accelerates trade with Europe and Asia, Teck has global customers.

If Western countries accelerate strategic-resource investment, copper benefits again.

Score: 8.5/10.


What about Microcaps like Ucore and Canada Nickel?

This is where knowing nothing about the investor makes the biggest difference.

I wouldn't put either into the seven-stock core portfolio.

Not because I dislike them.

Because they represent something fundamentally different.

Ucore (UCU) is essentially a venture-style bet on successful commercialization and scaling of rare-earth separation infrastructure.

Canada Nickel (CNC) is substantially a project-development/execution/financing bet.

Neither belongs in the same risk category as CNQ, Nutrien or Cameco.

Canada is unquestionably pushing this sector aggressively. Ottawa announced more than C$3.6 billion of new critical-mineral programs and investments this year, while its Critical Minerals Strategy now has roughly C$3.87 billion allocated and explicitly contemplates equity investments, loan guarantees, offtake agreements and strategic stockpiling.

That creates potentially enormous upside for the right development-stage company.

But enormous strategic importance doesn't eliminate:

financing risk, dilution risk, construction risk, technology risk, permitting risk and execution risk.

So I'd put Ucore/CNC into a separate 5–10% speculative satellite allocation, rather than pretend they're equivalent to Nutrien or Cameco.


There's also a company I'd reconsider: Enbridge

ENB isn't going to produce enormous alpha merely because Canada and the United States quarrel.

In fact, its integrated North American footprint makes a serious trade rupture undesirable.

But that's precisely why I like it in the portfolio.

If the thesis turns out to be wrong—Trump and Carney reach an agreement and the trade war largely disappears—Enbridge doesn't suddenly lose its investment case.

It gives the portfolio ballast.

Think of it as:

NTR/CCO/TECK = strategic-resource growth

CNQ/SU/CVE = energy/resource diversification

ENB = infrastructure/income stabilizer

That's a much more coherent construction.


What changes my perspective

I would stop thinking about this as a "stocks Canada can weaponize against America" portfolio.

That's too narrow.

I'd instead invest in:

"Resources the world increasingly needs that Canada can sell to more than one customer."

That distinction is crucial.

Canada's weakness isn't lack of resources.

It's historically been customer concentration.

Even today, the United States takes approximately 57% of Canada's critical-mineral exports, worth about C$28.8 billion in 2025.

The emerging Canadian strategy is therefore not simply retaliation against America. It's:

produce more → process more in Canada → build Pacific/Atlantic infrastructure → diversify customers → develop allied supply chains → reduce U.S. dependency.

Natural Resources Canada's current 2026–27 plan explicitly calls for vertically integrated critical-mineral supply chains, strategic stockpiling and partnerships with G7 and NATO countries.

That is a much more durable investment thesis than betting on tariffs.

Therefore, knowing nothing about the investor, my top five would be:

1. Nutrien — NTR ★★★★★
2. Cameco — CCO ★★★★★
3. Canadian Natural Resources — CNQ ★★★★½
4. Teck Resources — TECK.B ★★★★½
5. Suncor — SU ★★★★

And if someone told me, "Forget diversification; give me the three Canadian stocks with the best combination of strategic importance, secular growth and potential upside from Canada's economic realignment," I would narrow it further to:

NTR + CCO + TECK.B

That's actually the three-stock Canadian strategic-resource basket I find most interesting right now. It gives you food security + nuclear/energy security + electrification/industrial security without requiring the Canada-U.S. trade war to get worse for the investment thesis to work.

Monday, March 3, 2025

Commodities are often overlooked in a young investors portfolio. They should not be!


 Investors looking for stability and lucrative returns over the next two years, I would rank these natural resources in the following order, considering supply-demand dynamics, geopolitical risks, energy transition trends, and industrial importance:

Ed Note: 

We are currently invested in companies producing 5 of these commodities.

1. Uranium

  • Bullish Case: Nuclear energy is experiencing a renaissance, with increasing global support for clean energy. Supply is constrained, and demand is rising with new reactor projects and small modular reactors (SMRs).
  • Key Players: Cameco (CCJ), Kazatomprom, NexGen Energy (NXE).
  • Risk: Some policy risks if governments shift focus.

2. Copper

  • Bullish Case: Essential for electrification (EVs, power grids, renewables), and long-term supply deficits are expected due to lack of new mines. Prices have remained strong.
  • Key Players: Freeport-McMoRan (FCX), Southern Copper (SCCO), BHP.
  • Risk: Short-term recession could dampen demand.

3. Oil

  • Bullish Case: Despite the energy transition, oil demand remains strong. OPEC+ supply cuts and geopolitical risks (Middle East conflicts, Russia sanctions) keep prices elevated.
  • Key Players: ExxonMobil (XOM), Chevron (CVX), Saudi Aramco.
  • Risk: Demand destruction if global economic slowdown occurs.

4. Natural Gas

  • Bullish Case: Europe's pivot away from Russian gas, LNG export growth (U.S. to Europe/Asia), and continued reliance on gas as a transition fuel.
  • Key Players: Cheniere Energy (LNG), EQT Corp (EQT).
  • Risk: Overproduction could lower prices, mild winters reduce demand.

5. Lithium

  • Bullish Case: EV demand remains strong, but overproduction has led to price volatility. Long-term supply chain constraints could tighten the market again.
  • Key Players: Albemarle (ALB), SQM, Lithium Americas (LAC).
  • Risk: High volatility, price declines if demand slows.

6. Rare Earths

  • Bullish Case: Critical for defense, electronics, and EVs. China dominates supply, but Western nations are ramping up production. Supply chain security remains a priority.
  • Key Players: MP Materials (MP), Lynas Rare Earths (LYC).
  • Risk: Geopolitical uncertainty; rare earth processing is complex.

7. Nickel

  • Bullish Case: Needed for EV batteries and stainless steel. Supply disruptions in Indonesia and Russia could support prices.
  • Key Players: Vale (VALE), Norilsk Nickel, BHP.
  • Risk: EV battery chemistry shifting away from high-nickel designs.

8. Gold

  • Bullish Case: Inflation hedge, central bank demand, and safe-haven asset during global uncertainties.
  • Key Players: Barrick Gold (GOLD), Newmont (NEM).
  • Risk: Interest rate cuts could impact returns.

9. Water

  • Bullish Case: Scarcity makes it an essential resource. Water infrastructure, desalination, and privatization could drive investment.
  • Key Players: American Water Works (AWK), Veolia (VEOEY).
  • Risk: Regulatory constraints on private water ownership.

10. Potash

  • Bullish Case: Fertilizer demand is steady due to global food security concerns.
  • Key Players: Nutrien (NTR), Mosaic (MOS).
  • Risk: Agricultural cycles can impact demand.
  • .

Final Thoughts:

For a balanced, stable, and profitable investment in natural resources over the next two years, Uranium, Copper, and Oil seem the strongest plays due to demand-supply imbalances and global energy trends. Natural Gas and Lithium are also good, but face short-term price volatility. Rare Earths and Nickel are critical, but geopolitical risks and tech advancements could impact pricing. Gold, Water, and Potash are more defensive but lack aggressive upside.