Commodities in Canada

Commodities in Canada

Commodities play an important role in the Canadian economy. Over one quarter of exports in Canada are derived from Base Metals, Forestry Products, or Crude Oil. When researching investment opportunities in Canada it is always good to gain some insight into trends occurring within the commodity dominant sectors of the economy.

Current issues affecting investment in many commodity driven sectors are very similar.

Base & Precious Metals: total world production from mines has been dropping and new deposits have become increasingly more difficult and expensive to find. Further, once new deposits are located, an extensive amount of time is required to bring them into production. At the same time, world demand has been increasing and is expected to continue to increase as China, India and other nations develop. The list of minerals mined in Canada is quite extensive but here are some major examples: Aluminum, Coal, Copper, Diamonds, Gold, Iron Ore, Nickel, and Uranium.

Companies of interest in this sector:

Aber Diamond
Alcan
Barric Gold
Cameco
Platinum Group Metals
Teck Cominco

Crude Oil and Natural Gas: total world production of oil reserves has remained stable for years and no new major refineries are scheduled to open any time soon while world demand has been increasing dramatically. Most analysts believe that this trend of high energy prices is here to stay and I agree. With Canada’s vast oil reserves the future looks very bright for companies investing in the oil sands of Alberta.

Companies of Interest:

Apache Corporation
Canadian Natural Resources
Enbridge
Encana Energy
EOG Resources
Husky Energy
Imperial Oil
Irving Oil
Petro-Canada
Suncor
Talisman Energy

Forestry: Demand for paper and wood products seems to remain strong and Canada is one of the world leaders in this sector. Forces that may negatively affect this sector include a strengthening Canadian dollar, a depreciation of the Euro compared to the U.S. dollar, and slower than expected economic growth.

Companies of Interest:

Canfor
TimberWest
Weyerhaeuser