The Saskatchewan government’s opposition to BHP Billiton’s $39 billion takeover bid for Potash Corp., the crop nutrient producer based in the Canadian province, is not a negotiating stance aimed at squeezing concessions out of BHP, Premier Brad Wall said Monday.
Saskatchewan is recommending that the federal government reject the bid by BHP, the Anglo-Australian mining giant, on the grounds that it provides no net benefit to the country and will instead cost Saskatchewan revenue, jobs and strategic influence over a key commodity.
Potash Corp. is the world’s biggest producer of potash, a key fertilizer ingredient, and it mines most of it in Saskatchewan, where it also has a head office.
“This isn’t a bargaining position that we’ve come to,” Wall said in an interview with Reuters. “It’s our position and that’s what we’re going to advocate for.”
Wall dispatched two of his cabinet ministers to Ottawa Monday to begin lobbying politicians and government officials to reject the deal. Ottawa is scheduled to make a decision on whether to allow the takeover bid to go ahead by Nov. 3.
Saskatchewan’s most immediate concern is the potential loss of C$3 billion to C$6 billion ($2.9 billion to $5.9 billion) over 10 years in taxes and potash royalties if the takeover proceeds. The money would be lost because of expected changes in how BHP would produce and market potash and how it could capitalize on the province’s tax laws.
BHP has offered to find ways to ensure Saskatchewan doesn’t lose revenue, but Wall has said that preventing a foreign takeover is also of strategic importance to Canada.
The operational capacity of Saskatchewan potash mines represent almost one-third of the global total.
The premier said he has not spoken with Prime Minister Stephen Harper since Wall made a speech Thursday outlining Saskatchewan’s reasons for opposing the deal.
Wall did not rule out negotiating with BHP if Ottawa approves the deal on the condition that the miner makes moves to appease Saskatchewan.
The province is preparing a contingency plan in case Ottawa approves the bid, including a possible tax on the potash reserves that BHP would acquire, Wall said.
Saskatchewan is doing due diligence on whether it can tax BHP differently than the province’s other potash producers, Mosaic Co. and Agrium Inc., he said.
The premier said the province will not risk the C$6 billion worth of mine expansions planned by Mosaic and Agrium by changing Saskatchewan’s potash royalty structure.
“We’re not going to mess with that,” he said. “What I don’t want is royalty shock in this province, we want royalty stability.”
Wall took aim at BHP earlier Monday, issuing a press release that highlighted 2-year-old remarks by former BHP Chairman Don Argus that raised concerns about Australia losing control of its resources.
“If we fail to remain competitive, Australia will incur a substantial opportunity cost and, in the worst-case scenario, our resources will fall into overseas hands and we will become a branch office — just like Canada,” Argus is quoted as saying in the July 21, 2008 Hellenic Shipping News.
A BHP spokesman did not immediately respond to a request for comment.
