Alcoa, Strategic Resources, and Glencore: War and the Energy Transition Are Driving Business!

Alcoa: The War Profiteer

For years, Alcoa was not a favourite among most investors. Aluminum was not very "sexy," and unlike other metals, prices remained depressed for a long time. Accordingly, the stock has experienced significant price movements, albeit highly volatile. The war in the Persian Gulf has now dramatically changed conditions for the company. Just a few months before the war started, the stock began an upward trend that, surprisingly, stalled at the start of the war. Since then, the share has been trading sideways. Yet Alcoa is one of the biggest beneficiaries of this war. The US aluminum company is already receiving high demand from customers in Europe, the US, and Asia who normally source aluminum from the Middle East. Prices are currently rising and are likely to remain so for some time.

Alcoa has its plants far removed from the war zone (in the US, Canada and Mexico) and accounts for about 9% of global aluminum production. Outside of China, this share is even around 20%. Due to attacks on major smelters such as Al Taweelah in the Emirates and Alba in Bahrain, as well as the blockade of the Strait of Hormuz, the global aluminum market has slipped into a severe supply deficit. On the LME (London Metal Exchange), aluminum is trading near a four-year high. Among all industrial metals, it has shown the best performance since the start of the year, up around 18%.

When production in the Gulf will resume, and the material can be shipped, is currently anyone's guess, especially since the number of blockades has now doubled. Alcoa, as one of the few alternatives in the Western world, should benefit from this. The stock is trading around 15% below its annual high. In the first quarter alone, the company showed a clear increase in margins. And one advantage is currently likely being underestimated by the market: Alcoa produces its own alumina. The smelters in the Gulf, on the other hand, must import around 60% of the material. However, these imports are currently at a standstill, just like many facilities there.

Strategic Resources: Green Iron for the Steel Industry

Secure supply chains are increasingly in demand, even in traditional industries such as steel and iron ore. Strategic Resources could benefit from this structural shift in Western industrial policy. The company is currently transforming from a pure-play explorer to a future producer of iron ore and iron pellets. The core asset is the BlackRock project in northern Québec. The deposit and planned concentrator site are located near Chibougamau. BlackRock stands out due to its distinctive geology. The ore is a Vanadium-Titanium-Magnetite (VTM). The metallurgical facility is located 380km away in Port Saguenay. During processing, high-purity pig iron is expected to be produced alongside vanadium and titanium, which can command premium prices on the global market. According to feasibility studies, the project is expected to achieve an average annual production of approximately 526,000 tonnes of pig iron.

A Step Toward Becoming a Processor

But Strategic Resources does not want to become just another mining company. The goal is to produce processed iron pellets. To this end, the company plans to develop a pelletizing plant at the port of Saguenay (Québec). Capacity is expected to reach 4 million tonnes per annum (mtpa) of iron pellets. These would be premium Direct Reduction (DR) grade pellets, used in low-emission steel production processes such as electric arc furnaces. The location offers a key logistical advantage. Saguenay is a deep-water port connected to the North American and European markets via the St. Lawrence River. The energy comes from Québec's vast hydroelectric grid, making production particularly low-emission.

Strategic Resources has already secured a major partner for this project. An agreement with Javelin Global Commodities was announced as early as the end of 2024. Under the terms of the agreement, Javelin will exclusively supply Strategic Resources with high-grade iron ore—which will serve as the feedstock for the planned pellet plant in the Port of Saguenay—until the BlackRock mine begins production. Javelin has also committed to purchasing 100% of the iron pellets produced, as well as future pig iron from the BlackRock project, and to marketing them globally. Financially, the partnership offers a major advantage, as Javelin is providing a USD 150 million working capital credit line. This secures liquidity for ongoing operations.

Strategic Resources' stock remains largely under the radar of many investors in North America and Europe. Its market capitalization is just under CAD 17 million. Four years ago, the stock price was about 12 times higher. Accordingly, there is significant potential here for bold investors with a long-term perspective.

Glencore: Strong Numbers

Many copper producers are currently facing production challenges. In Chile, the world's largest producer faces declining ore grades, and massive investments are required to maintain current output levels. Companies like Quantum and Freeport-McMoran are also reporting production issues. This makes Glencore a welcome development for the market. The company released its first-quarter production figures a few days ago (financial results are not yet available). And lo and behold: Glencore has increased its copper output by a whopping 19% to nearly 200,000 tons. This is due to improved ore grades at its African mines. The Switzerland-based commodities trader and mining group also reported higher output at its Antamina mine in Peru. Despite operational challenges and the closure of two Australian mines that had reached the end of their economic life, Glencore maintained its production forecast for 2026. And there was some good news on the cost front as well: According to CEO Gary Nagle, the war in the Persian Gulf had only a limited impact on operations in the first quarter. However, pressure is emerging due to higher diesel and sulfuric acid prices. In this respect, 2026 could still prove challenging. The company had only returned to profitability in 2025 after several difficult years and celebrated a spectacular comeback.
In any case, investors remain optimistic for now. Glencore's stock has risen by around 50% since November and is holding at that high level. Should bad news emerge, however, profit-taking could be on the horizon.

Alcoa is a war profiteer, stepping into the breach where aluminum producers in the Gulf are falling short. Higher prices are improving margins, so the stock has further upside potential. Strategic Resources is a stock for a strategic portfolio. With low-emission iron pellet production, the Canadians aim to break into the global market. The low market capitalization and currently limited investor interest offer potential. Glencore, on the other hand, has had a strong run. However, if diesel and sulfuric acid prices remain high, profit-taking could occur here.