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A wall is covered with a mural of the Cuban flag and an image of Cuba's revolutionary hero Ernesto (Che) Guevara in Havana on Jan. 27, 2012.

FRANKLIN REYES/ASSOCIATED PRESS

Canadian businesses – from mining giants to cigar stores – are beginning to calculate the fallout from the U.S. move to open up relations with Cuba, which could eventually generate opportunities for some and increased competition for others.

While the moves by U.S. President Barack Obama to ease economic, travel and diplomatic relations between the United States and Cuba are small steps, and fall far short of an end to a decades-old trade embargo, they could lead to a broader opening up of relations.

One of the biggest Canadian investors in Cuba is Sherritt International Corp., a resource company that generates the majority of its cash flow from Cuban oil and gas operations, along with a nickel and cobalt mining joint venture.

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Chief executive officer David Pathe said the changes will have little immediate impact on his company, but could lead to major gains if the full embargo is eventually lifted. Because of the embargo, Sherritt cannot sell any of its production in the United States, and cannot use any U.S.-made mining equipment. And it can't raise money in the United States.

The easing of relations is "is a good start," Mr. Pathe said, although "it is early days yet."

Cuba has been a "stable jurisdiction" for Sherritt, and the company has had success there, but "there has always been some noise around it and some uncertainty as a result of the relationship between Cuba and the United States," he said.

"If [this] is a step towards alleviating some of those concerns in the minds of investors, that will be good for Cuba, and what is good for Cuba is good for us," Mr. Pathe added. Sherritt investors appeared to agree. The stock rose 26 per cent on the TSX Wednesday.

Mr. Pathe, his children, and a number of directors and officers of Sherritt are still unable to travel to the United States because of restrictions that apply to people linked to companies that do business in Cuba. "That has not changed as a result of anything that has been announced, [but] I would be delighted if it did in the future," he said.

Wally Berukoff, president and chairman of Red Lion Management, which has a long history of doing business in Cuba and a number of interests in the country, primarily related to real estate, said the potential for Canadian companies to expand operations in the Caribbean's largest island is immense.

And, he said, these prospects span a wide range of industries. "I foresee a day where a lot of our green vegetables come from Cuba, not California."

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Providing the technology to increase crop yields, exploiting mineral deposits, dredging ports, developing and managing resorts, drilling for oil in the North Cuba Basin, financing business ventures, and rebuilding highways are some of the best opportunities available for Canadian firms, according to Mr. Berukoff.

On the financial side, Bank of Nova Scotia and Royal Bank of Canada are positioned to take advantage of increased activity in Cuba once capital is allowed to flow more freely into the country, given their ties to the area and surrounding regions.

But across all industries, Canadian firms could face new, stiff, competition.

"I hope that Canadian companies see this as an opportunity and take advantage of it before the Americans do," Mr. Berukoff said. "We can't compete with the vast amount of American capital, but we've been friends with Cuba for a long time and there's a vast amount of respect for Canadians in the country."

Dundee 360 Real Estate Corp., a Canadian firm that has three hotel projects under way in Cuba, sees the opening up of relations with the United States as being positive, on balance.

The moves to increase commerce, travel and telecommunication will be good for local and foreign businesses operating there, and could eventually improve access to financing for projects on the island, said Dundee 360 chief financial officer Colin Yee. While there may be more competition for real estate development, "we have first mover advantage," he said. "We have the contacts there."

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But John Price, a Canadian who is a Miami-based managing director at Americas Market Intelligence, thinks a full end to the embargo – when and if it comes – "will take some of the lustre out of Canada's position in Cuba. Right now, he said, Canada has "a sort of disproportionate influence in importance as a source of tourism, as a source of trade and as a source of investment." But that "will certainly be weakened if suddenly there's a normalization of economic relations between the U.S. and Cuba."

For some, however, an opening up of trade between Cuba and the United States is entirely bad news. Anis Serhan, manager of the Downtown Cigar Shop in Windsor, Ont., said an end to restrictions on U.S. imports of Cuban cigars would be very damaging to his business, which sees a large number of Americans crossing the border to buy them in Canada. Mr. Serhan said even his Canadian customers will desert him to cross-border shop if those cigars are available in the United States with lower taxes. While Cuban tobacco restrictions have not yet been fully lifted, when they are, "it is going to hurt my business, really big time," he said.

With files from reporter Tavia Grant

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