Saskatchewan sees no net gain from BHP-Potash deal

Thu Oct 21, 2010 3:11am EDT
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By Rod Nickel and David Ljunggren

REGINA/OTTAWA (Reuters) - Saskatchewan dismissed on Wednesday the idea that a hostile offer from mining giant BHP Billiton for provincial crown jewel Potash Corp would bring net benefits, playing up an argument that the federal government could use to reject a deal.

Ottawa, charged with making the final decision on whether the $39 billion takeover offer for Potash, the world's biggest fertilizer producer, goes ahead, said it was still examining the issue.

"I can't do the dance of the seven veils before the decision is made," Industry Minister Tony Clement told reporters. "The process has to be a pristine process".

The bid is a challenge for the Conservative federal government, which enjoys widespread support in Saskatchewan, but also has a broad pro-business agenda.

Under the Investment Canada Act, the federal government can block a major takeover if it deems that a deal would not present a "net benefit" to Canada. A decision is due November 3.

Ottawa has said it will pay attention to Saskatchewan's views on this deal, as a takeover could have far-reaching consequences for provincial revenues. The bulk of Canada's production of potash, a key crop nutrient, is located within the Western Canadian province.

Prime Minister Stephen Harper caused some confusion by telling the House of Commons that "this is a proposal for an American-controlled company (Potash Corp) to be taken over by an Australian-controlled company (BHP)."

Harper aides later referred to a report that called Potash "a widely held North American company". The Liberal opposition urged the government to listen to Saskatchewan and block the deal.   Continued...

<p>A train car waits in line at the Potash Corp's Cory mine site near Saskatoon August 19, 2010. REUTERS/David Stobbe</p>