Saskatchewan is playing hardball with BHP Billiton Ltd. over its $38.6-billion (U.S.) hostile bid to buy Potash Corp. saying it's not convinced a sale of the resources giant is good for the province, or the country.
Shortly after meeting with BHP executives in Saskatoon on Monday, Saskatchewan Premier Brad Wall indicated the province doesn't see significant benefits from the proposed acquisition.
"My views may change … but as of today, I don't know how we are better off if this takeover or any other subsequent change happens," Mr. Wall told reporters. "I don't see how Saskatchewan or Canada is better of."
Saskatchewan's support for any takeover of Saskatoon-based Potash Corp., the world's largest potash producer, is seen as crucial to Ottawa's decision on whether to approve the deal. Any major foreign takeover of a Canadian company must be considered of "net benefit" to the country, according to the Investment Canada Act.
Prime Minister Stephen Harper said he has discussed Saskatchewan's concerns with Mr. Wall.
"I have spoken about the particular case with the Premier of Saskatchewan and obviously we will examine his concerns as we do the review that is required under the Foreign Investment Review Act," the Prime Minister told the House of Commons on Monday, the first day of its return from summer recess.
Late Monday, BHP extended its bid deadline for Potash Corp by a month to Nov. 18. The move came after the Canadian Competition Bureau requested more information from the miner on its offer, BHP said in a release.
BHP said it's "confident" the offer will receive all required regulatory approvals.
Mr. Wall said Australia-based BHP, the world's largest mining company, has assured him it will keep Potash Corp.'s corporate head office in the province, and plans to complete the Jansen potash project. Still, Mr. Wall said his current view is that the planned takeover fails to provide the necessary benefits.
"If we were asked for a recommendation, using the federal government's own measures - and we think they are appropriate by the way … as of today, I just haven't seen it," Mr. Wall said.
BHP vowed to make Saskatchewan the world headquarters of its potash operations, no matter the outcome of its unsolicited bid for Potash Corp.
"[Potash]is a good business for us and a good business for the people of this province," BHP chief executive officer Marius Kloppers said Monday during an event to officially open its new office building in downtown Saskatoon, a few blocks away from Potash Corp.'s offices.
"Our aim is to build a material potash business and not just one mine. … The centre of our potash business will be right here in Saskatchewan," Mr. Kloppers added.
BHP has also vowed to maintain jobs in Saskatchewan. However, its plan to pull out of the Canpotex potash-marketing arm has created concern with the Saskatchewan government. The province worries BHP's move to market potash on its own and operate at full capacity will lead to lower potash prices, which, in turn, will mean lower revenues for the province, which collects royalties from the resource.
Saskatchewan has hired the Conference Board of Canada to review the risks and opportunities behind a takeover of Potash Corp., one of its largest taxpayers.
The report is due by the end of the month and will form the basis of the province's decision on whether to support the takeover bid.
Mr. Wall was careful to point out that the government is still doing its homework on the deal.
"I'm not telling you this is what we are going to say to our federal government, but I think it's important to sound this note: That as of today ... the government of Saskatchewan needs to be looking out for the interests of the Saskatchewan people and asking the question, 'How is this province better off because of this or some other deal? How is Canada better off?'"
Potash Corp. has rejected BHP's offer and is looking at other deals. Chief executive officer Bill Doyle has reassured investors another offer is coming, saying "BHP will not be the only bidder."
The Chinese government is close to a decision on how it plans to trump BHP's offer, and is considering a number of key proposals from state-owned firms, according to people familiar with the matter. While China hasn't said for sure that it will bid, sources say the country is anxious to see whether it can make a counteroffer to both upset BHP's plans to gain a large stake of the potash market, as well as to secure its own supply of the crop nutrient.
Liberal Leader Michael Ignatieff said Monday that the potash issue warranted a cautious approach.
"We want to make sure that this doesn't cause us to lose head-office capacity, Canadian leadership in an industry where we have an extremely important position," he said during a press conference held to mark the return of Parliament for the fall session. "And we want to make sure that this purchase is reviewed and looked at carefully to make sure it is of net benefit to Canadians."
Ralph Goodale, the deputy Liberal Leader who represents a Regina riding, said the federal government must work very closely with Saskatchewan on the potash file.
"When it comes to potash, the national interest and the Saskatchewan interest become very much the same thing," Mr. Goodale said. "They need to work up that set of principles that can be applied under the Investment Canada Act to make sure that the net benefit is there."
The critical issue is the marketing strategy, Mr. Goodale said. That strategy, he said, must continue to work in the best interests of Saskatchewan.
With files from reporters Shawn McCarthy and Gloria Galloway in Ottawa.