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A production supervisor shows off a sample of potash 1,000 metres at a mine in Saskatchewan on Sept. 30, 2010. (DAVID STOBBE/Reuters)
A production supervisor shows off a sample of potash 1,000 metres at a mine in Saskatchewan on Sept. 30, 2010. (DAVID STOBBE/Reuters)

Peter Munk predicts Tory approval for Potash takeover Add to ...

The chairman of the world's largest gold producer believes the Harper government will approve the controversial takeover of Saskatchewan's Potash Corp. and not cave in to short-term political outrage.

"The populist view is 'keep the goddamn foreigners out' but that's a knee-jerk thing," Barrick Gold's Peter Munk said in an interview with The Globe and Mail Tuesday. "We are nation that has lived and has created its prosperity by free trade and for us to cave in to political pressures, short term, that does not improve Canadian investment and takes away the right of shareholders to get maximum value doesn't make sense."

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"The government will approve it," he predicted.

Still, the political backlash has been profound. Saskatchewan Premier Brad Wall, who has vigorously opposed the proposed takeover by an Anglo-Australian firm, has attracted support from his Quebec, Alberta and Manitoba counterparts. Michael Ignatieff's Liberals and the NDP are against the deal. And there are 13 Conservative MPs in Saskatchewan whose electoral prospects hang in the balance.

As a businessman in Canada, however, Mr. Munk is concerned about the message the Conservative government would be sending if it turned down the takeover bid by BHP Billiton. "If Canada started becoming xenophobic what would happen to world trade?"

His views are not entirely in line with those of his Bay Street colleagues. Other chief executives have raised concerns about the benefit of a takeover for Canada. The Globe and Mail reported Tuesday about the view of CEOs on this issue, quoting Onex chairman Gerry Schwartz as wanting the government to be a "tougher and more effective negotiator".

Mr. Munk's take, however, is that BHP is a "world-class company," which has always "behaved well" and would live up to any undertakings it makes to Investment Canada.

Reports Tuesday suggest that Investment Canada has already given the green light to the deal and that it is now up to Industry Minister Tony Clement to announce his decision. The test for approval is whether the takeover would be of "net benefit" to Canada.

Mr. Munk doesn't know the details of the deal but he believes strongly there would be "no net loss" to Canada if it went through. He noted that the $39-billion (U.S.) on offer for Potash Corp. bodes well for the Canadian mining industry and BHP Billiton's commitment to it.

"With all due respect if Investment Canada is satisfied that BHP will do all the things [it has promised] Mr. Munk said, ".... if they are prepared to put up written guarantees and if they are prepared to accept financial penalties ... they make an undertaking [and]they are not going to break it."

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