Trevor Gardner
Welcome back to Strategic Alternatives from RBC Capital Markets. I'm Trevor Gardner, Head of Investment Banking Coverage here at RBC. And today, we're bringing together three of our sector leaders to examine what 2026 may hold across energy, power, utilities, and critical minerals. This is a moment where the need for energy and more raw materials is broadly understood. Demand growth tied to electrification, AI, and industrial expansion is running into real supply constraints. Policy shifts, capital costs, and security of supply concerns are shaping investment decisions. And across all of these sectors, clients are asking how to navigate long-dated projects in an environment where stability, visibility and partnership matter more than ever. To explore these themes, I'm excited to be joined by Chris Redgate, Head of Canadian Energy Investment Banking, as well as Craig Edgar, Managing Director, Power and Utilities and Farid Dadashev, Global Co-Head of Mining and Metals. Terrific to have you all here.
Craig Edgar
Thanks for having us.
Chris Redgate
Thanks, Trevor.
Farid Dadashev
Hi, Trevor, thank you for having us.
Trevor Gardner
Great. So, let's start big picture. When we think about macro forces in 2026 and we think of each of your sectors, what are clients really trying to navigate? And Chris, I'll start with you.
Chris Redgate
Trevor, there are a number of key themes that we saw through 2025 that we expect to continue or accelerate into 2026. We are seeing a substantial build out of North American LNG and AI data center gas-fired demand that is driving significant investment and is really setting the stage for a pretty material natural gas demand growth over the next decade. We've also seen a return of international buyers seeking North American resource and a scarcity of tier one resource in the lower 48 that is driving transaction activity and a renewed interest in Canadian resource. We've seen an increase in investor interest in long-duration resource, and as a result, saw pretty notable performance of Canadian energy equities in 2025, despite a pretty significant decline in oil prices through the year. And lastly, energy policy in a more supportive regulatory environment in Canada and the U.S. is creating the environment to drive significant investment in the coming years.
Trevor Gardner
Craig, how about on your side?
Craig Edgar
I think Chris hit it really well. The obvious force that's driving power demand growth around AI came at a time where we were really already dealing with the forces associated with reindustrialization of the manufacturing economy and electrification associated with vehicles and so on. And when you stack all this on top of each other, from a macro perspective, we're just seeing demand growth for power that we haven't seen in generations. We had an industry that was growing at sub or 1% and now we're talking about nine, 10% type growth, year-over-year, in the need and demand for power. And so, as clients are faced with this insatiable demand, it's having a real effect on how to meet it, how to build assets, how to think about that in the context of a more volatile overall political and policy backdrop.
Farid Dadashev
It is very consistent with what Chris and Craig mentioned. On mining side, I would say copper demand accelerating from electrification, AI the data centers, which I think is fair to say, is going to require substantially more input from critical minerals. Over the next 20 years, we are likely to need a lot more copper than we consume over the past 10,000 years combined. And that's a lot of copper. And frankly, where we're standing today, and considering how difficult it is to source, finance, and develop the copper mines, it's really hard to see where all this copper is going to come from in order to continue to power our global economies. And on top of that, the role that the governments and the sovereign funds are playing in order to secure the supply of the critical minerals. You know, we've seen the governments take an equity stake mines, which is again, something that we haven't seen, at least on this scale, in the past. So, it's really fascinating to actually watch how all of that unfolds, but it clearly presents a great opportunity for us to continue staying close to our clients and support them as they navigate all of these new things.
Trevor Gardner
So let's dive in on 2026. And what are what are people doing now to meet the demand, and what can they do now?
Chris Redgate
As we look out to 2030 and beyond, certainly seeing a significant build out of LNG export capacity in Canada and the U.S., with an associated requirement for considerable natural gas production growth. The Federal Government recently formed the major projects office, which has been set up to streamline the regulatory process and really create the conditions to incentivize investment in LNG energy infrastructure, power generation and transmission, critical minerals and mining projects and other strategic infrastructure. The Federal Government and the province of Alberta recently signed an MOU that's really the foundation for a potential million-barrel-a-day oil pipeline to the west coast and the pathways CCUS project that would be the world's largest carbon capture project. We see these tailwinds as very encouraging. Our sector has really retooled itself over the last decade with a high degree of capital discipline, with clean balance sheets and with a focus on shareholder returns. As we sit here today, we don't have the price signals that would really encourage significant production growth, but as mentioned, we do see meaningful demand growth. And do have companies that are thinking about how to position themselves both on the upstream side and the midstream side for that potential demand growth over time. I think one element here is the project duration here, measured in decades, far exceeds the political cycle and so real focus on resiliency of policy that will allow for returns over these long duration projects.
Craig Edgar
I would say in the power slash utilities sector, what I'm seeing across our client base is really that turning the eye to the future and what can they do today to be ready to meet this increasing, ever increasing need for capital and need for development. And so, a lot of focus on capital planning, balance sheet quality, making sure that the enterprise is prepared and ready to meet ever growing challenges. And that means diversification and funding sources, looking at alternatives in both, you know, the traditional capital markets, but private capital markets, establishing those relationships, really preparing themselves for that next, even larger wave of capital that's needed to meet this demand, and then, I think also, at least as it relates to the power sector, specifically, it's, you know, thinking about other supply chain challenges, other diversification of sources of power, such as nuclear, and how do they really prepare the organization, whether it's putting orders in for turbines, developing capabilities around new nuclear technology and other ways to ultimately meet, you know, meet this demand down the road.
Farid Dadashev
I think it's fair to say that for a very long time the mining sector has been fairly underinvested and underexplored. Again, it takes about 15 to 18 years from exploration to sustainable production. And all of that supply disappearing, while the demand has never been higher, basically creates a structural deficit for some of the most important critical minerals. The supply of copper, especially in the last six to 12 months, has been very, very tight. If you look across the top 10 copper mines, seven out of those experienced significant reduction in their production, which was one of the key reasons why the copper price achieved an all-time high. But it's not just that, you know, like it's just the combination of the risks. It's obviously the new focus on ESG, it's risk associated with certain jurisdictions, its ability to obtain the social license, the permitting, it takes a very long time. So, ability to sanction, build and finance projects is going to be absolutely important. But we're talking about projects which cost multi-billion dollars, and this is going to be the major challenge of the sector. How do you bring the partners together? Gone are the days when the companies were building the project by themselves. There has to be project syndication. There has to be risk sharing. We've seen this most in the last few years than probably previously, this idea of, you know, syndicate the risk, share the risk, and build the project.
Trevor Gardner
It's fascinating, isn't it, what's happening right now? Because we've got this well-established mismatch of duration. We've got demand that's coming fast and furious right now, and the supply, in many cases, takes a lot longer to bring on. What makes me optimistic, though, and what's so interesting with our clients right now is the ability of markets and the ability of clients to figure that out. It's not easy, but a lot of smart people and a lot of smart teams are thinking about this dynamic right now. So, I'd like to explore in each of your sectors, what are some of the things that people are doing to move faster to meet this demand that's here right in front of us?
Craig Edgar
In the power sector in particular, the dynamic you just described is playing out in real time. And the innovation that we're seeing is really multifaceted, but that innovation is leading to new, newfound partnerships. We're seeing the largest financial firms, the largest providers of private capital, partnering up directly with the corporates that have the expertise to build data center power supply, partnering up with the data center developers that need the supply, and really using that as a way to accelerate the growth to meet this demand. We're starting to see in the current administration in the United States, at least, the government really leaning in to support companies. And so whether that's in the form of loan guarantees, whether that's the form of other ways to provide capital to help bridge some of the needs of the of the industry to meet this demand. We're really starting to see that accelerate.
Farid Dadashev
It's also very consistent across the mining industry. I mean, gone the days when there was only access to capital for large companies. Now, what we're seeing across industry is that if the core of the project is solid there will be potentially options out there, be either from the government, or you could do project financing, or could raise a stream. We see, given how rapid prices for gold and silver [increased], we've seen many companies, even the early stage, actually funding the project through a gold or silver stream, which have provided very attractive cost of capital. We also see, the project syndications, either from Japan or sovereign wealth funds. So, there are quite a number of options
Chris Redgate
And Trevor, we touched on the outlook for medium term natural gas demand, certainly seeing entities positioning for that future demand, securing upstream resource from key plays and thinking about other plays to satisfy future demand. We're seeing a lot more interest in integration across sectors, energy sub-sectors and integration across value chains. We are certainly seeing more interest from buyers to integrate through the natural gas value chain, through long-term supply arrangements, partnerships and acquisitions amongst producers, mid streamers, LNG entities and off-takers, power producers and data centers. On the oil side of the equation, certainly a realization that there's a finite oil inventory in the lower 48 with most producers sitting on kind of mid, single digit, high, single digit years of tier one inventory. These companies have been acquiring remaining tier one inventory in the U.S., and many have been acquiring or evaluating opportunities beyond the lower 48 to backfill inventory into the 2030s.
Trevor Gardner
It's definitely a change in the environment where I think a lot of companies in all industries, for a period of time, energy was kind of a given. If you wanted it, you got it, you didn't have to think about it. And there is definitely a shift where companies are seeing their consumption needs go up, and they really have to think about the security and nature of supply and all forms of energy are incredibly relevant. Technology, an important part of the equation as well. Each of your sectors have constantly innovated over time. But Farid and Craig in your sectors. Can you comment a little bit on what's happening today and what people are doing to change the game and use technology to advance and meet some of these needs?
Farid Dadashev
Trevor, I'm glad you asked this question, because it is indeed very topical for us on the mining side. We are beginning to see various technologies that are aimed at enhancing coper commerce through various processes. I think it's fair to say that some of those are more advanced than others, but they do take a very long time to get to the desired results. In fact, one of them, which took probably close to 30 years of research and development is Rio Tinto’s owned Nuton technology, which effectively harnesses the power of a bacteria to extract copper from the primary sulfides. And in fact yesterday, Rio Tinto announced that they produced the first [copper] cathode using the Newton technology in 18 months, which is actually much quicker and also more environmentally and cost efficient than building mills and all the other mining infrastructure that you need to produce copper through the conventional fashion. So this could be the inflection point where technologies such as Nuton start playing a more important and pivotal role in helping us balance the copper market, which is extremely exciting. Look, lots of work still has to be done to commercialize it on a broader scale. But this is, as I said, very exciting news, and a huge step forward for Nuton.
Craig Edgar
And I think you know that this is really proving out to be an inflection point for the broader power industry around accelerating new technology. I would say, to your point, Trevor, it's an industry that has always innovated, but I would say that what we're seeing today, the pace of that innovation and the willingness to consider new technologies has really dramatically increased, and that's across the spectrum. So when we talk about technological advancement. You know, the big one that in the power industry we're really trying to bridge towards is the reemergence of a nuclear power supply in the form of SMR, small modular reactors, that use advanced technology and most, most large utility companies today have a plan, or at least are working on getting to utilizing that new technology for power supply, and I think there's broad growing acceptance that that has to be part of the solution as a means to supply the grid. And then I would say that's also quite interesting. A lot of these larger utility companies have really started to establish what I would characterize as, you know, an internal sort of VC function. So when they look at their business and they look at some of the emerging technologies out there, there's now dedicated resources and people within these corporates that are meant to evaluate this new technology, and really change the way that we're both supplying and delivering energy to the customer.
Trevor Gardner
Terrific. So, pivoting to capital formation, M&A, the way that this growth is being fueled and sectors are being optimized. When you look at ‘25 and look into ’26, what stands out to you in terms of deal activity, and what do you see as the potential themes for the upcoming year? And ‘25 has been somewhat breathtaking in the back half of the year overall for capital markets in terms of the tailwinds that we've seen, and hopefully that continues. But what are you seeing in each of your sectors, specifically?
Chris Redgate
In terms of deal activity for energy, we’re seeing international buyers, particularly for natural gas and LNG Integrated Gas, return to Canada and the U.S. In Canada, we've really seen a resurgence of U.S. and international interest from private equity and strategics, after almost a decade where we saw a wide range of foreign exits with Canadian domestic buyers. Over the last five years, we've seen a number or the majority of tier one private upstream companies and assets transact, which is really pushing buyers to evaluate public corporate opportunities. 2025 saw very notable increase in public corporate consolidation in Canada, a trend that we certainly expect to continue into 2026. One other area of activity in Canada has been the creation of provincial and federal indigenous finance, loan guarantee programs. We've seen a number of large energy infrastructure partnerships. We would expect that indigenous participation will be an important element in all large-scale infrastructure projects in Canada over the coming years.
Craig Edgar
In our sector, the deal activity that we've seen has really been around capital allocation and companies looking at the businesses that they're in, and really trying to decide and define what are the businesses they're meant to be in going forward. And so, whether that be electric companies selling their gas subsidiaries to focus on electric growth, or, you know, large regulated companies divesting non regulated businesses in order to take that capital and reallocate it back into the core. And then I think we've seen a lot of deals where you're taking the strategics in the industry and doing deals to partner with sources of private capital. The emerging scale and scope of these large, diversified sources of financial capital has proven to be a major force for M&A activity in our space, whether that be minority interest type transactions or, even at a project level, transactions to bring in that private capital to help support the growth. And I think we're definitely going to see that going forward. Of late, we're starting to see the emergence of a trend back towards corporate-to-corporate combinations, merger transactions. And I think as we again, as we move forward, it's really a derivation on the same theme, which is to say, with all this growth coming as a strategic enterprise. Are we scaled appropriately to meet that growth? Do we need to affect some form of a merger to get scale? Size and scale matters when you're talking about very large projects, to better prepare the enterprise for the opportunities of the future?
Trevor Gardner
I think that scale is a really important point. And against that, we've had a lot of companies be really successful and rewarded by shareholders for returning capital, whether it be dividends or buybacks or other things. Farid, on the mining side, you've already touched on scale, but maybe you can take us into what you see for the year ahead in terms of M&A and capital formation for your clients.
Farid Dadashev
Look, I mean, obviously 2024-2025 has been very busy and fairly eventful years for global mining M&A. It also coincided with commodity prices reaching all time high across gold, silver and copper. Going forward, it feels like the combinations with a strong strategic rationale now probably going to be the ones that we expect to be pursued to leverage the infrastructure or technical expertise to unlock value. The other trend I'm also expecting is mining companies in general, they have significant amount of infrastructure, right, and some of that infrastructure is absolutely essential, and the miners want to hold on to this. But some of the other infrastructure may not be essential, right? And as we know, the cost of capital for some of the pension funds and infrastructure funds is a lot less. So, I will not be surprised if we see some of the fundraising coming through a potential leveraging the infrastructure that can provide the capital that the miners can more effectively use in driving the mine across. So overall, I expect activity levels to continue robust. But the capital allocation is going to be very important. So the miners will be very careful how they spend the money, but they do have options to raise the capital very attractive terms, and try to put it back into mining.
Trevor Gardner
So when I think about the conversation so far, scale, complexity, convergence between each of your sectors. It's a really, really interesting time. So as our clients are navigating this, what do they need the most from RBC?
Craig Edgar
Great, great question, Trevor. This podcast is a good example, least as it relates to the power sector clients, because our cross-industry, multi-faceted expertise is something that my clients certainly value. So, when you know facing a large hyper scaler and looking to understand what it is that, that's important to that hyper scaler, they look to RBC to help us translate. When thinking about capital sources, whether that be, you know, public markets or private markets, looking to RBC to really help them navigate the best cost of capital and the best terms, or the best strategic relationships that they can develop to help navigate through this time. And that would extend also to relationships with some of the governmental agencies and funds that are looking to support this build out. So I think the breadth of the RBC franchise across multiple industry groups that are all dealing with the same forces, is really noted by clients as important and helpful.
Farid Dadashev
Given where we are trading today and given the current regime, and given all they are navigating all of the sources going to be quite nuanced, and it's very case specific? But where we could be very helpful is our ability and track record to connect our clients looking to build the next scalable project with sovereign investors or the international trading houses, or strategic partners as well as to help our clients navigate potential cross border M&A. But one thing I always like to say is mining is in our DNA. Being a Canadian heritage bank, we have a deep expertise across the global sector, which gives our clients assurance that we've been around for a very long time, and we tend to be around for longer. So, so we look forward to helping to support our clients as they try to navigate through very interesting times.
Chris Redgate
In energy we're seeing significantly more cross-border international interests with global pools of capital, looking at opportunities around the world. What RBC brings is a global franchise that can provide perspectives across geographies, from cross-functional teams with access to global buyers and pools of capital. We bring highly integrated teams across energy, PU&I, mining, technology and other industry groups in really close partnership with project finance, corporate banking, debt capital markets, and equity capital markets teams to provide leading expertise on complex global transactions and support financing of very large scale transactions and projects.
Trevor Gardner
When you take it all in, I think the global approach is really important, the consistency, as Farid mentioned, that we've been in front of clients in these sectors for many, many years and will be in the future. And doing it together. You know, it's a time when scale is more important than ever, as we've talked about. And working across the organization, whether it be across geographies or across sectors, is just really, really important. And while we all count on and hope for markets to be constructive in 2026, we all know markets are volatile, and if we do end up in a place where the market conditions aren't quite as positive as they are today, or a little bit different or a little more adverse, importantly, we're going to be there to support our clients in all these sectors in a material way. Because one thing we know is the amount of capital that's required and the amount of projects that need to be developed in the energy demands are not going in reverse, and that's something that we need to be there to help our clients across all sectors deliver on. So, let me wrap up, I've got one final question for the group, what's a prediction for 2026 that might be a little bit different than what, what the market's been focused on over the last year?
Craig Edgar
I think there's been a broad acceptance of many of the themes we're talking about. What we're not hearing about, that maybe we should be hearing about a little bit more, is what if we're wrong? As industry, we can't bank on that, because we have to both from a RBC perspective and capital provision perspective and advice perspective, but also for our clients, we have to bet on the affirmative. We have to meet this challenge and meet this need for energy head on. But I think we have to do it in a way that we're also mindful of things like, these risks that I'm talking about. And so, diversification, thinking about alternatives from a capital provision source. What happens if the volatility that you talk about reemerges in the capital markets. What happens if cost of financing goes up? And I think that's where we can provide real leadership and advice is helping clients not only meet these challenges for more energy, but also prepare them to meet them in a resilient way that if, if the future isn't as well defined as maybe we think it is today, that they're able to thrive and survive through those challenges.
Chris Redgate
We certainly see very constructive tailwinds for both oil and natural gas, but there are a range of scenarios, technological advancements, that could impact that longer term outlook for both commodities. I think that really drives to the importance of companies that are built to withstand lower commodity prices. And so while we're very optimistic, I think just the importance of continuing to build businesses that can thrive in in more challenging environments will be important.
Farid Dadashev
I agree with everything said - mining, like energy and the power business, is very global. We have to produce a lot more commodity than has been done for thousands of of years, right? Technologies such as Nuton start playing a more important role in helping us balance the market. I do look optimistic for 2026 and beyond that, you know, a cross border cooperation, the partnership, that will continue for the benefit of the industry and everything else.
Trevor Gardner
Well, that's a great place to wrap. Chris, Craig, Farid, thank you. And to our audience, you've been listening to Strategic Alternatives, the RBC Capital Markets podcast. This episode was recorded on December 5, 2025. Listen and subscribe to Strategic Alternatives on Apple, Spotify, or wherever you listen to your podcasts. If you enjoyed this conversation, please leave us a review and share it with others. Thank you.
This content is based on information available at the time it was recorded, and is for informational purposes only. It is not an offer to buy or sell or a solicitation, and no recommendations are implied. It is outside the scope of this communication to consider whether it is suitable for you and your financial objectives.