Canada’s Export Pivot: The Price of a Second Option

Canada is building routes to new markets. The harder question is when sellers should commit—and what a usable alternative actually costs.

On June 30, 2025, a cargo of liquefied natural gas left Kitimat, British Columbia. For Canada, it was a visible turning point: a ship carrying Canadian energy toward international markets from a new Pacific export terminal. The commercial turning point had come much earlier. LNG Canada’s partners approved their investment in October 2018, nearly seven years before that first departure. ¹

By the time the country could watch the ship leave, the project’s output already had a home in its owners’ commercial networks. Each partner supplies gas and markets its respective share. The facility’s initial capacity of 14 million tonnes a year created a Canadian export route, but it did not automatically give an unaffiliated seller access to an LNG cargo. ²

That is the timing problem at the heart of Canada’s resource pivot.

Customers want dependable supply before they commit. Sellers want dependable customers before they expand. Infrastructure needs both, often years before the first shipment can prove the whole arrangement works.

Move too quickly and someone may be left paying for capacity that customers cannot justify. Move too slowly and a producer can spend years accepting the costs of having too few alternatives.

Canada should start preparing additional markets now. The amount it commits should increase with the strength of the evidence. For sellers, the prize is a second route they can actually use—and afford—when the next decision arrives.

A second destination becomes a second option only when the seller can reach a qualified customer, control the necessary rights and retain workable economics.

A changing export map can conceal an unchanged business

In 2025, the United States received 71.7% of Canadian merchandise exports, down from 75.9% a year earlier. Exports to other countries rose 17.2%. ³ Those figures describe meaningful movement. They do not tell us how many Canadian businesses gained a dependable new customer.

Statistics Canada’s separate customs-basis measure of domestic exports illustrates the distinction. Of the C$27.6 billion increase in non-U.S. shipments, C$13.5 billion came from unwrought gold, silver, platinum-group metals and their alloys. Excluding those products, the increase was approximately C$14 billion. ⁴

A change in precious-metal prices or investor demand can alter the national map without opening another market for a particular mine or processor. TD Economics, examining trade through November 2025, similarly found that much of the adjustment involved selling existing products into established markets. ⁵

The seller’s test is more concrete. Could another customer receive this product? Can the business deliver it on relevant terms? Would enough value remain after the journey? Could the arrangement work again?

A successful American relationship can pass those tests exceptionally well. Geography, established specifications and familiar commercial arrangements are valuable. A second option gives the seller another choice when circumstances warrant it. It need not displace the customer who still offers the best business.

The contracts come before the ribbon-cutting

Trans Mountain’s expansion opened in May 2024. Approximately 80% of the expanded system’s capacity—707,500 barrels a day—was reserved under long-term contracts. Approximately 182,500 barrels a day remained for monthly uncommitted shipments. During June 2024–June 2025, the committed portion averaged 99% utilization. ⁶

The distinction matters. The entire system was not reported as 99% utilized by that statistic, and monthly access remained. A new seller was not necessarily excluded. It faced a different choice from a shipper that had secured a long commitment.

Trans Mountain describes 15- and 20-year take-or-pay transportation contracts. ⁷ In plain language, a shipper accepts a payment obligation for reserved capacity even if it does not use all of it. That obligation helps support the infrastructure; the reservation gives the shipper greater certainty.

Early commitment therefore buys access and creates exposure. If production falls or a better market emerges elsewhere, the payment obligation can remain. A seller using monthly access, or buying a marketer’s services, may accept less control in return for fewer fixed obligations.

The contracts that make infrastructure possible also shape how flexibly it can be used. Canada needs enough committed business to support investment and practical ways for additional production and customers to participate.

Delay has its own price. In December 2018, the Bank of Canada linked the record discount on Western Canadian heavy oil largely to transportation constraints, compounded by U.S. refinery maintenance. Inventories had accumulated and Alberta had announced output reductions. ⁸

Quality and normal transport costs also affect Canadian oil prices. But the episode demonstrates how a shortage of routes can weaken the seller’s position. The cost of waiting can reach the income statement well before construction begins.

Who pays while the future is uncertain?

LNG Canada’s seven-year journey from investment decision to first cargo makes the coordination problem visible.

A new terminal cannot demonstrate years of operating sales before it is built. Its investors need other evidence: credible commitments, customers or marketers able to perform, realistic costs and a workable allocation of risk.

Cedar LNG offers a concrete example. Pembina’s first-quarter 2026 disclosure describes capacity agreements covering three million tonnes annually: 1.5 million with ARC Resources, one million with PETRONAS and half a million with Ovintiv. The reported terms are 20 years for ARC and PETRONAS and 12 years for Ovintiv. ⁹

These are liquefaction-capacity commitments. They support the terminal’s revenue; they do not guarantee a profitable final sale for every cargo. The capacity customers still face gas procurement, shipping, price and customer risks.

The chicken-and-egg problem is resolved through participants agreeing who will carry which obligations before every uncertainty is settled. Risk moves between them. It does not disappear.

This is why preparation and commitment belong on different schedules. Exploring a customer relationship costs less than reserving transport for decades. Both can be sensible early actions, but they require very different evidence.

The practical question is how much uncertainty a business should accept at each stage, given the cost and duration of the obligation.

A mine is not a sales contract

Once the product changes, so does the answer.

China and Japan were the principal destinations for Canadian copper ores and concentrates in 2024. Yet more than 99% of Canada’s refined copper exports went to the United States. NRCan valued those two export categories at C$4 billion and C$1.8 billion respectively. ¹⁰

A concentrate needs a customer capable of treating and refining it. Refined copper serves another set of industrial requirements. The processing stage changes the buyer, the charges and the commercial relationship. “Canadian copper exports” is too broad a category to explain what a particular seller can do next.

Ownership can be equally misleading. In March 2025, Hudbay announced an agreement to acquire Mitsubishi Materials’ remaining interest in Copper Mountain. Under the announced terms, Mitsubishi would retain 85% of concentrate offtake for 15 years after closing. Hudbay would receive 15% during that period and become entitled to all of it thereafter. ¹¹

Offtake describes an arrangement governing the purchase or receipt of production. The example shows how owning a mine and controlling the right to sell its output can be different things.

It also reveals another clock. An operating mine may have a future commercial opening when an agreement changes, even if no new export terminal is needed. Conversely, a new asset can start producing with much of its output already committed.

For Canadian sellers, the timing of the pivot depends on the life of their commercial agreements as well as the life of their infrastructure.

The offer is only the beginning of the price

Finding another destination does not settle whether the trade is worthwhile.

The Bank of Canada’s April 2026 assessment reported that Canadian aluminum producers redirected sales to Europe following U.S. trade restrictions, but earned lower profit margins. ¹² The alternative could help maintain operations through a disruption without becoming an equally attractive permanent market.

What matters is the netback: the amount left after the costs and deductions associated with selling and delivering the product.

Suppose an overseas customer offers 40 dollars more per tonne than the incumbent customer. Added transport and handling cost 25 dollars. Extra financing, insurance and inspection cost another eight. Seven dollars remain before other risks and costs. An eight-dollar freight increase would erase that advantage.

These are illustrative amounts, not market quotations. They show why a large foreign market and an attractive headline price cannot establish profitable demand. Someone must pay for the journey.

Nevertheless, a route earning slightly less in ordinary conditions may still be worth maintaining if it protects the business during a disruption. The seller is paying for a form of insurance—but one that requires active upkeep. A customer qualification can lapse. Transport terms can expire. An unfamiliar product may need renewed approval.

The relevant comparison includes both the cost of maintaining the option and the losses it could help avoid. Two customers using the same constrained terminal may offer less protection than their different addresses suggest.

A useful second option must survive the circumstances in which the seller is likely to need it.

Smaller sellers need a place in the story

The largest projects can make diversification seem like a business reserved for companies able to finance terminals and sign decades-long contracts. Existing commercial networks offer another way to participate.

Suncor’s sulphur disclosures describe more than 800,000 tonnes of annual marketable production, molten supply to North American customers, and formed sulphur delivered to Vancouver for third-party overseas marketing. The chain includes trucking, transloading, prilling, rail and marine terminals. ¹³

The product acquires its export capability through several functions. A producer does not have to own every one of them. Processors, aggregators and marketers can provide access, combine smaller streams and reach receivers. Their services cost money and their agreements determine how much control the seller retains.

For a smaller producer, the decision may be whether to use an existing network, establish another marketing relationship or preserve some future allocation for an additional customer. Building a new facility is only one possible route to greater choice.

The challenge is to understand what each arrangement provides: access, certainty, flexibility, customer reach or protection against a disruption—and what the seller gives up in return.

When Canada should pivot

There is no single date on which every Canadian resource seller should turn toward another market. There is a sequence of decisions, and useful preparation can begin before any major obligation is justified.

For an existing route, the progression can include customer qualification, a limited transaction and repeated deliveries before a larger commitment. For a new asset, the sequence is different: forward commercial commitments and financing must support construction before operating performance can be tested.

Waiting for perfect certainty would prevent many useful projects. Treating expressions of interest as dependable demand would support too many bad ones.

Five questions make the distinction practical:

1. What can the customer receive? The exact product form, quality and documentation matter.
2. Who can sell it? Production, ownership and marketing rights must line up.
3. Which route can be used? Relevant access and timing matter more than a facility’s existence.
4. What remains after delivery? Compare full economics, obligations and risks with the incumbent route.
5. What makes it dependable? The customer must be able to perform, and the arrangement must be usable again.

Public investment has to consider more than a seller’s answer. Canada’s C$5 billion Trade Diversification Corridors Fund identifies congestion, connectivity and bulk export capacity among its priorities. ¹⁴ Those investments should be assessed across the complete journey: adding terminal capacity accomplishes little if the inland connection remains the limiting step.

The public also needs to know who bears the downside and who receives the benefits. Workers, Indigenous partners, communities, taxpayers and consumers have interests that cannot be reduced to the margin on a cargo. Environmental performance, project costs and credible demand belong in the same decision.

The OECD’s 2025 assessment supports stronger infrastructure and export diversification as sources of resilience while recognizing that industries differ in their ability to change markets. ¹⁵ Canada’s ambition should accommodate those differences.

For sellers, progress is the ability to answer: how much product could reach another customer, how soon, at what cost, and under whose control? A country with more businesses able to answer those questions has gained something a destination percentage cannot fully capture.

Canada should begin that preparation before a disruption narrows its choices. It should accept larger obligations as the evidence becomes strong enough to support them.

The next shipment may still go south. With a credible alternative behind it, the decision has changed.

About this research

Lumiere’s public research examines Canadian resource commodities, commercial control and international market access. This paper explains the decisions behind a usable alternative market; public disclosures do not establish available supply, buyer mandates or executable terms.

A question for Canadian sellers

Producing or marketing a Canadian resource and evaluating an additional market? A useful first introduction describes the product, your role and the question you are trying to resolve.

Sources and method

This is an editorial synthesis of public evidence, with an analytical framework for interpreting it. Observation periods are stated in the text and notes. The examples explain mechanisms; they are not a comprehensive economic model, an audit of project returns or a ranking of commercial opportunities.

The national merchandise-export figures and customs-basis domestic-export figures use different definitions. They are presented separately. The copper categories retain NRCan’s product definitions. Historical contracts and announcements are described for the cited period and do not establish current availability.

The price illustration is hypothetical. The argument about the value of maintaining alternatives is an analytical judgment, not a measured insurance value. Evidence of constraints supports the case for preparation; it does not establish that every proposed new asset should be built. Private correspondence, buyer requirements and origination intelligence are excluded.

1. LNG Canada, Our Path to FID, October 3, 2018; LNG Canada, First Cargo Puts Canada on the Map of LNG Exporting Nations, announcement dated June 30, 2025, posted July 1, 2025.
2. Shell, First cargo leaves LNG Canada, June 30, 2025. Capacity and participant supply/offtake structure; company disclosure, not independent proof of project returns.
3. Statistics Canada, Canadian international merchandise trade, December 2025, February 19, 2026.
4. Statistics Canada, Recent developments in the Canadian economy: Spring 2026, 2026. Customs-basis domestic exports; published rounded values.
5. Andrew Hencic and Rishi Sondhi, TD Economics, Where and What: Shifting Canadian Goods Exports, February 4, 2026. Analysis through November 2025, not the subsequent full-year release.
6. Canada Energy Regulator, Trans Mountain Expansion eases pipeline constraints and increases exports to overseas markets, September 3, 2025. The 99% statistic applies to committed capacity in June 2024–June 2025.
7. Trans Mountain, Trans Mountain Market Insights, pre-start-up operator explanation of 15- and 20-year commitments and unused-capacity arrangements. Individual transactions require the applicable current terms.
8. Bank of Canada, Year-End Economic Progress Report: Financial Vulnerabilities in Focus, December 2018.
9. Pembina Pipeline Corporation, First Quarter 2026 interim report, MD&A dated May 7, 2026, Cedar LNG discussion. ARC 1.5 mtpa; PETRONAS 1.0 mtpa; Ovintiv 0.5 mtpa. Capacity contracts are distinguished from end-user LNG sales.
10. Natural Resources Canada, Copper facts, 2024 trade data. Product categories retain the source’s definitions.
11. Hudbay Minerals, Hudbay Consolidates 100% Ownership in its Copper Mountain Mine, March 27, 2025. Cited as an announced transaction structure, not proof of closing or current uncommitted output.
12. Bank of Canada, One year later—Assessing the impact of US trade restrictions on Canadian industries, April 29, 2026. Observed redirection at lower margins; no quantified margin estimate supplied.
13. Suncor Energy, Sulphur—Supply and Trading, public operating description accessed September 2026. Disclosed production and marketing pathways do not establish availability of a particular tranche.
14. Transport Canada, Trade Diversification Corridors Fund, modified March 18, 2026. Program scale and priorities, not a measure of completed investment or benefits.
15. OECD, Macroeconomic developments and policy challenges, OECD Economic Surveys: Canada 2025, 2025. Structural context rather than a current forecast.