Provinces mount pressure on Canada over Potash

By Reuters
Posted Oct. 29, 2010 at 2:32 p.m.

Saskatchewan lined up more support for its attempt to overturn a hostile bid for provincial crown jewel Potash Corp. on Friday, increasing political pressure on the Canadian government to reject the deal.

Industry Minister Tony Clement must decide by midnight November 3 whether to approve the $39 billion bid from Anglo-Australian mining giant BHP Billiton.

Saskatchewan Premier Brad Wall said he could see no conditions that might persuade him to accept the bid, which he says would take a strategically significant resource out of Canadian hands.

Potash Corp is the world’s biggest producer of its namesake crop nutrient, demand for which is soaring as food prices rise and demand for fertilizers rise. It has flatly rejected BHP’s offer as inadequate.

Wall’s fierce resistance to the bid spells trouble for the federal Conservative government, which has only a minority of seats in the House of Commons and relies on opposition legislators to govern.

Saskatchewan said the provinces of Manitoba, New Brunswick and Quebec backed its position that the federal government should block the BHP bid.

Earlier this week the premier of Alberta sided with Wall, who also says the deal would result in lost revenue and jobs.

Backers of the bid say the federal government — which portrays itself as pro-business and regularly rails against protectionism — would send the wrong message to trade partners if it rules out the BHP approach. Its Potash bid is the largest in any industry so far this year.

“Whatever we decide, when we decide, we owe a full explanation to Canada and Canadians and to the international investment community as well,” Clement told reporters.

The left-wing New Democratic Party, the smallest opposition party in the Canadian Parliament, said it would present a motion to the House of Commons demanding that legislators formally oppose the BHP bid.

Polls show the Conservatives are 6 percentage points in front of their Liberals, their main rivals, ahead of an election widely expected in the first half of the next year.

If voters decide Ottawa has bungled the BHP decision, it could cut into Conservative support in its western heartland.

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