I want you to put yourself in the shoes of someone working in the resource sector.
I don’t mean a high-end desk job, but someone with boots on the ground.
Now imagine where you might end up…
Chances are, you’re probably in an isolated, desolate and uncomfortable spot!
You see, mines tend to exist where no one wants to live. That’s probably a good thing.
Many projects exist in Canada’s frigid, icy north.
Or Australia’s hot, barren outback, where even the flies can’t tolerate the heat!
While Canada and Australia are at opposite ends of the Earth (and the temperature spectrum), we have a fair bit in common with our Commonwealth brethren…
Resources are a staple for the Canadian economy, just like Australia.
But here again, there are differences… Each country plays host to a very different set of commodities.
As you probably know, the Australian market is heavily pegged to iron ore, coal, and natural gas. Gold and even lithium also make a sizeable contribution.
Meanwhile, Canadian stocks are more leveraged to copper, zinc, silver, uranium, and crude oil.
And these differences are why Aussie resource investors should pay close attention to the Canadian market.
Why the Coming Boom Won’t Look Like the Last
Each resource boom tends to be marked by one key commodity… Nickel booms, silver squeezes, oil embargoes, and gold rushes.
And over the last resource boom, iron ore was king.
That placed Australia’s resource sector in pole position.
Don’t get me wrong—Canada did well, too, but thanks to our locational advantage in Asia and massive iron ore reserves, the Australian market was the place to invest.
Here’s a chart (from the RBA) comparing the Terms of Trade (TOT) between Australia (pink) and Canada (blue) over those boom years:
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Economists like to use the ‘TOT’ to measure a country’s overall health… Simply, it’s the ratio of a country’s export prices to import prices.
While Canada’s economy performed well, Australia’s concentrated iron ore business threw its terms of trade into overdrive in the early 2000s.
And that catapulted the economy against its resource-exporting rival, Canada, generating a deep pool of opportunity for Aussie investors.
But will Australia repeat this outperformance?
China’s infrastructure surge drove the last commodity boom, which demanded lots of iron ore. But this time, demand drivers are less visible and arriving from multiple sources.
Here’s one example…
Earlier in the year, OpenAI CEO Sam Altman revealed plans to invest $500 billion in AI infrastructure, equivalent to Ireland’s GDP!
Dubbed the ‘Stargate Project,’ Altman set an ambitious deadline—just four years to complete the whole project.
But why the rush?
As you may know, US tech is in an ‘AI’ arms race against China… Fueling what could become a global capex boom.
An event that will require huge volumes of natural resources.
But this time it won’t be iron ore.
Conductive metals like silver, copper, aluminium, and various critical minerals. These could be the ‘iron ore’ like performers of the early 2000s.
It’s just one aspect of why the NEXT commodity surge could look much different from the last.
And why Investors need a global focus
Don’t get me wrong, if higher commodity prices arrive, the Australian market will do well. But don’t expect it to OWN the cycle like it did last time.
The distribution of key raw materials fueling this boom is NOT concentrated in Australia.
And that’s why you’ll need a global focus to tap into this opportunity.
Take copper…
According to the Australian Department of Industry, copper export earnings are forecast to reach $15.3 billion over 2024–25.
Significant. However, that only represents about one-tenth of the value of its iron ore exports, which is expected to reach $138 billion over the same period.
So, why not add some Canadian Stocks?
Over at my two paid advisory services, our decision to look beyond the ASX has enabled us to bank some tidy wins in an overall lacklustre junior mining market.
Our copper-gold developer, Filo Mining [TSX: FIL], was acquired by BHP and Lundin Mining last year and received a sizeable premium on our opening price. That was a Canadian-owned company.
We also banked a quick 130% profit late last year on another Canadian copper explorer, Aldebaran Resources [TSX-V: ALDE].
Meanwhile, another Canadian copper-gold play sits in the portfolio with around a 180% profit from our original entry.
In fact, most of our exploration hits have come from TSX-listed companies!
You can find what explorers I’m recommending to readers here.
But the key point is this…
By diversifying into a different market, we’ve expanded our opportunities.
This gives us access to projects that offer superior scale or grade to those in Australia, especially when looking at copper, zinc, silver, platinum, or crude oil opportunities.
Access to international markets is also straightforward. Most broker firms include the Canadian market in their list of global exchanges.
However, as a resource investor, I suggest focusing on just two exchanges, the ASX and TSX.
That should give you excellent coverage across the full spectrum of commodity opportunities.
Until next time.
Regards,
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James Cooper,
Editor, Mining: Phase One and Diggers and Drillers
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