Saskatchewan concerned about China Potash Corp buy

Tue Aug 31, 2010 7:02pm EDT
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By Rod Nickel and Euan Rocha

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.   Continued...

<p>Marius Kloppers, BHP Billiton Chief Executive, poses for photographs in central London August 25, 2010. REUTERS/Toby Melville</p>