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WINNIPEG/TORONTO (Reuters) - The Canadian province of Saskatchewan, home of takeover target Potash Corp, would have "lots of concerns" about a Chinese sovereign fund or state-owned company buying part or all of the company, Energy Minister Bill Boyd said on Tuesday.
Potash Corp is currently facing a $38.6-billion hostile takeover bid from BHP Billiton, leading to speculation that top potash consumer China could become involved in a competing bid.
"That's where some of the concern would be, having a customer whose interests obviously are to have very low prices," Boyd told Reuters in an interview.
Saskatchewan, which produces one-quarter of the world's potash, depends on royalties from the crop nutrient for hundreds of millions of dollars in revenue each year. It received nearly C$1.4 billion ($1.3 billion) in 2008-09 after potash prices spiked.
The battle for control of the world's biggest potash producer is now drawing in the company's customers, Potash Corp said on Tuesday, accusing BHP of making "inappropriate and highly unethical" contact.
In a letter to its customers, Potash Corp said it recently learned that Chris Ryder, the head of potash marketing for BHP, made calls to many of them.
"Since the purpose of BHP Billiton's call clearly was not to solicit your potash order from BHP Billiton's Jansen project ... we consider this contact to be inappropriate," Stephen Dowdle, Potash Corp's head of sales, said in the letter dated August 30.
BHP's Jansen project, also located in the potash-rich province of Saskatchewan, is still years away from completion.
Potash Corp, which has rejected BHP's $130 a share offer as "grossly inadequate," questioned the purpose behind BHP's calls to its customers.
"We can only assume that BHP Billiton's purpose is to sow seeds of doubt and confusion about the future of Potash Corp by raising questions about our ability to do business across the nutrient spectrum, as well as the future location and makeup of our sales organization," said Dowdle, in the letter.
BHP declined to comment on the matter.
The Anglo-Australian mining giant has also gone offside with the Saskatchewan government because of its public comments about possibly marketing potash independently, rather than through Canadian marketing agency Canpotex.
Boyd said the provincial government is now considering legal options such as regulations and laws to force BHP, or any other buyer of Potash Corp, to remain within Canpotex with partners Agrium Inc and Mosaic Co.
Saskatchewan's royalties hinge more on prices than production levels and Canpotex is one of two potash export consortiums that dominate global trade.
The other, Belarussian Potash Co (BPC) is again pushing for higher prices, hoping a strong outlook for grain prices will persuade farmers to accept an increase at this time.
BPC has posted new potash prices for exports to Asia and Brazil beginning in September, according to FMB, an industry publication.
BPC mounted a similar drive in February, but resistance from customers was too strong to sustain the increase.
"Buying activity has picked up quite a bit -- Brazil is buying and farmers in the U.S. are also ready to buy for this fall ... The market is much tighter now, than it was back then," said Gleacher & Co analyst Edlain Rodriguez.
Editing by Janet Guttsman and Rob Wilson