Sunday , 22 December 2024

Chinese Trade Agreement Bullish for Canadian Mining & Energy Companies – Here’s Why (+2K Views)

While the world has been consumed watching the geo-political events unfolding in Europe and the Middle East, China and Canada have entered into a major trade agreement which should be long-term bullish for Canadian mining, energy and transportation companies. [Let me explain what is unfolding.] Words: 585

So says Tom Essaye (www.moneyandmarkets.com) in edited excerpts from his original article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited below for length and clarity – see Editor’s Note at the bottom of the page. (This paragraph must be included in any article re-posting to avoid copyright infringement.)

Essaye goes on to say, in part:

About two weeks ago officials from Canada travelled to China and held the largest trade meeting between the two countries in decades. The net result of those talks, the most material and fruitful in years, was the signing of a declaration of intent to agree to a Foreign Investment Promotion and Protection Agreement (FIPA).

The agreement is an important step in further Canadian/Chinese trade, as it sets a broad framework for ensuring equitable treatment for foreign investors in both countries. Basically, it removes a large degree of risk for Chinese and Canadian firms investing with the other country by providing a legal framework and set of laws that protect foreign investors.

Now to be fair, there is tremendous legal review that has to occur before this becomes ratified between the two countries, so it’s not like things are going to change tomorrow but the trend of Canadian/Chinese trade is clearly improving… [as] they have been trying to get this done since 1994. While better Chinese/Canadian trade relations is a bad thing for us here in the U.S., it’s a good thing for Canadian natural resource companies and transportation companies.

Specifically, the agreement should be long-term bullish for Canadian mining and energy companies, as there will be increased demand for their exports from China’s growing economy. Additionally, it is bullish for Canadian rails and shipping companies, as they will have to transport these natural materials that will be exported to China.

While trade between Canada and China will increase over a [number] of years, one concrete and much more near-term agreement came out of the meetings and that was the amending of a 1994 nuclear agreement that will now allow Canadian uranium companies to export to China — a country where, according to the World Nuclear Association, uranium demand will quadruple by 2020 as more power plants come online. [This is certainly] good news for uranium producers.

One way to play this potential growth in nuclear power demand is through uranium miners… like Cameco (CCJ)… [which] should profit from increased nuclear power here in the U.S., and from increased uranium exports from Canada.

*http://www.moneyandmarkets.com/china-canadian-trade-talks-open-doors-for-uranium-producers-49072?FIELD9=2

Editor’s Note: The above article has been has edited ([ ]), abridged (…) and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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