August 19, 2010 / 8:40 PM / in 7 years

Potash bid causing shrugs, not stress in Saskatoon

SASKATOON, Saskatchewan (Reuters) - Potash Corp of Saskatchewan has splashed its name on its home city’s football stadium, the halls of its university, its inner-city food bank and even the lions’ dens at the local zoo.

But now there’s a new name in town, after Australian mining major BHP Billiton sponsored last winter’s world hockey championship, took space in a new downtown office building and this week offered $39 billion for Potash Corp, in what would be this year’s largest takeover to date.

At stake is control of the world’s biggest producer of potash, the pink mineral farmers use to fertilize soil.

The bid shook markets and sent Potash Corp stock spinning above the offer price. But aftershocks are muted in the Prairie city of Saskatoon, where Potash Corp is based, but where BHP’s community boosterism has softened any opposition.

BHP’s bid would need Canadian approval, but neither the federal nor provincial government has signaled much concern.

“I think the people of Saskatchewan are fairly practical people,” said Eric Cline, a former Saskatchewan industry minister and now a top executive at Shore Gold in Saskatoon.

“They have a sense that in some ways the province has not developed as quickly as they might have liked and they want to have opportunities for young people.”

If its bid succeeds, BHP will be required by law to keep the head office of Potash’s current operations in Saskatchewan, a city of 202,000 a six-hour drive from the western business capital of Calgary.

Potash Corp has its headquarters in Saskatoon. But chief executive Bill Doyle is based in Chicago, a point that city residents have not missed, Cline said. “I think people have the sense you’re not losing local control,” he said.

In a dig at that, BHP’s Saskatchewan-based president of diamonds and specialty products division, Graham Kerr, told the local StarPhoenix newspaper that the company’s top potash executives would be in Saskatoon. “You won’t have a series of people based in the U.S. that are running potash,” Kerr said.


BHP has worked to win over Saskatchewan since it launched its own plans for a potash mine near the village of Jansen, about 150 flat km (95 miles) east of Saskatoon. BHP says it will still develop that mine if it wins Potash.

“In reality, we have been practicing for 40 years for this regulatory filing and in Saskatchewan we’ve been practicing for the last 2-1/2 years,” BHP chief executive Marius Kloppers said on Wednesday, a day after Potash Corp dismissed BHP’s offer as inadequate.

“How have we practiced? By the way we treat our employees, by the way we treat the community, by the way we treat the environment.”

In Saskatoon, that included the hockey sponsorship, as well as donations to the Jansen area school and fireworks displays.

“The coffee shop talk, it don’t really seem like a big deal,” said Elmer Kinzel, an elected official in Jansen, population 140.

BHP looks “like a real good corporate citizen,” said Terry Walbaum, former chief operating officer of junior miner Athabasca Potash, which BHP bought earlier this year. “I don’t know that people believe too much will change.”

Potash Corp has often laid off workers under a strategy of cutting production when prices fall, and Mike Pulak of United Steelworkers said the union had mixed feelings about the bid.

Pulak, who represents workers at three Potash Corp mines in Saskatchewan, said layoffs have built resentment. But workers are also nervous about BHP, considering a bitter labor dispute between global mining giant Vale and workers at nickel mines that Vale acquired when it bought Canada’s Inco.

“Big companies have big global policies and they can be tough to deal with,” he said. “(Workers) have never been through an acquisition before and don’t understand what it means, especially when it’s the biggest mining company in the world.”

Potash Corp mine workers earn C$70,000 to C$80,000 ($67,000 to $77,000) on average, a good salary for the province.

Kevin Wipf, executive director of the Saskatoon-based National Farmers Union in Canada was also ambivalent.

“It’s not changing the level of concentration in the industry, just the ownership,” he said. “I don’t see any change in the way they behave.”

Editing by Janet Guttsman

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