The world has, I think in many ways, tuned in a little bit more to what has been happening in Saskatchewan over the last number of years and certainly over the last number of weeks.
If you were watching the Google trends back in August, when the BHP Billiton hostile takeover story broke, you would have seen a real spike in terms of the number of stories with the word Saskatchewan. In fact, we broke our own record in terms of the number of media stories around the world involving the word Saskatchewan, at the time of this announcement of this hostile takeover. It wiped out previous record, happily, because the previous record was the 13th man story from the Grey Cup. So there have been some unintended benefits to all of this.
I remember a night in August when I got a call from someone who told me that the next day the news would break, that the PostashCorp of Saskatchewan would become the target of a hostile takeover bid by BHP Billiton. It was one of those rare nights where Tammy and I had actually organized a date night. We were going to be going to the movie, and the movie we went to that night was Inception. I don't know if you have seen it, it's the new DiCaprio movie and it's pretty complex. It's one of those movies you've got to pay attention to, there's about seven different dream plots with one dream plot and I don't remember anything of the movie, I can tell you that. I was thinking mostly about potash and what the implications for what I had just been told might be. Tammy and I are going to have to rent that when it's out on DVD.
Immediately upon learning the news, the Government of Saskatchewan struck an internal task force made up of representatives, senior officials in Finance, Energy and Resources, in Justice and in Enterprise Saskatchewan. We retained the services of the Conference Board of Canada to help us provide some qualitative analysis as to the impact of this takeover on the provincial economy and on the revenues for the province of Saskatchewan. We also retained what we think is among the best legal counsel you'll find in Canada when it comes to these kind of takeovers, when it comes to learning more about and piloting through the Investment Canada review process.
I sought the counsel of other premiers. We had a chat, sir. I had a chat with the previous premier; I had a discussion with Premier Romanow, provided good advice.
I talked to Premier Lougheed. I think Premier Lougheed was one of Canada's best premiers in terms of balancing the need to have a brand of welcoming climate for investment in his province, but also a being careful steward of the resources of his province. He said what he often says to me; he asked a rhetorical question. He said, "Who's resource is it, Brad?" And I said, "Premier, it's the resource of the people of the province of Saskatchewan." And he said, "You're right. Act like it, and you'll be fine." And we have. And we will.
We have engaged with the companies involved in this particular takeover and some of the companies on the periphery of this potential takeover. We have engaged with them, all along seeking to further the interests of the owners of the resource, the people of the Province of Saskatchewan. And we have sought through this process to make sure that we were balancing the protection of our strategic interests. The protection of this resource that we have, with the need for us to continue with this brand improvement that you've been a part of that has made Saskatchewan not a great place to be from, but a great place to be. We want to build on our brand as a place where investment from all over the world is welcomed. And we have sought throughout this process to balance that against the need to also protect, for future generations, the strategic interests of Saskatchewan.
We have used in our analysis the metric that the federal government uses measure whether or not these takeovers are good or bad - it's a net benefit analysis. This process asks the question, is there a net benefit to Canada, to Saskatchewan, of this proposed takeover. We have applied this net benefit analysis in three different areas. Number one is jobs. Number two is revenue, your revenue, the rent you should be getting for the resource that you own. And number three is this concept of what about our strategic interests in the world going forward.
Let's start with jobs.
Let's take BHP Billiton's comments about full production at face value. That added production would place current expansion plans now being pursued by other players, we believe, in potential jeopardy. Currently, Mosaic and Agrium, the other companies, are undertaking about six billion dollars in expansion of their assets in the province. That is 750 permanent direct jobs, 8,000 person years of construction in those particular projects. If the production model is flat out production, we know what that will do to price, and I think the companies will tell you that those jobs are then potentially at risk.
What about Canpotex? It is an agency that BHP Billiton quite honestly has said they are not interested in a long term relationship with. But, it is an agency that is very well respected. It has served your province very well. It has carved out a position for us in the world stage and in the potash market and yesterday, Canpotex announced a three year deal with China. A three year deal with Sinofert covering 3.15 million tonnes of potash with a price to be negotiated every six months. If the takeover goes ahead and when Billiton then eventually pulls out of Canpotex, that's potentially 88 more jobs at risk. Most of them in the Province of Saskatchewan; most of them high level international marketing jobs, and there is more to consider. Canpotex is right now analyzing, and I think getting close to making a positive decision on a new rail car maintenance and staging facility. The preferred sight is the PostashCorp's mine at Lanigan. Phase one of the project is 55 million dollars invested here in the province, 120 person years of employment for construction, 20 full time jobs. If the future of Canpotex is in question, does that project go ahead? I don't know.
Add to this the announcement last year from Canpotex on the planned expansion of shipping capacity on the west coast, at a cost of 500 million dollars. This includes a new terminal facility on Ridley Island near Prince Rupert, along with the separate expansion right beside the existing terminals at the Port of Vancouver. Construction at Prince Rupert will create about 600 person years of employment during the construction phase and 60 full time jobs in British Columbia. But this is a Canadian question that we are engaged in today. If the future of Canpotex is in question what about those jobs?
BHP Billiton has been very honest about their plans for shipment of potash. They want to build their own terminal in Vancouver /Washington USA. What is the impact on the families that are working at the port facilities in Vancouver and Prince Rupert of that - in the midterm, in the long-term? Some have postulated that any job losses as we have delineated here this afternoon are going to be made up for by the fact that there is a brand new Greenfield mine BHP is planning for Jansen Lake. But they have said that mine will happen anyway. And by the way, we welcome that investment. That obviously isn't a takeover that's new investment into the province. That is what we are striving for and we are greatful that BHP Billiton has made that decision that would have that vote of confidence in our economy but, they have said though that that mine is going ahead anyway, notwithstanding the result of the process we are involved in.
So, when you review the jobs test on the net benefit question, the question then exists about the jobs that are in play as a result of Mosaic and Agrium's expansion. What about the impact on Canpotex and planed port and rail car expansions in Saskatchewan and BC? It's not a net benefit, possibly a loss, and Jansen Lake, not a net benefit.
Let us turn to the impact of this takeover proposal on royalties and taxation revenue for the province that is point number two for the province and for the country. Consider the losses from writing off the interest costs of acquiring PostashCorp anywhere from 168 to 200 million dollars per year on our budget. That is not a net benefit. And make no mistake there is not a deferral or a delay in payments of moneys to come eventually. This is would be a loss that is ongoing for as long as it takes for the debt to be retired that stems from the takeover.
What about the fiscal impact from BHP Billiton in the stated position that they want to be a price taker. Full production, stand in front of your customer, take the price. Well, we have commissioned our report. The Conference Board has weighed in on that and they have said if you run potash assets at full capacity, and if you take the market price that results, the resulting oversupply could cut the price by 60 per cent, and then our revenue exposure is up to 570 million dollars annually. So, we have a range of revenue risk to this province as a result of this, ranging from 3 billion to 6 billion plus. And Canada of course is impacted especially on the corporate income tax side. Not a net benefit.
Finally, what about the strategic interests of our province? Let me just say on these first two issues, we have engaged with BHP Billiton. They have made known to us they wanted to talk a little bit about these two issues. They have been trying to meet our concerns. We have appreciated that dialogue and that discussion, but we are obviously a long ways away from any result that would protect the revenue and protect, potentially, the economic strength of the Province of Saskatchewan. And even were we to get to that stage, I have real doubt whether or not we should overcome the concerns that we should have about the impact on this about the strategic interests of our province and of our country.
Think for a moment about the scope and the scale of the proposal before the people of our province, and before the people of Canada, and before the financial markets. I don't think there has been a bigger corporate takeover proposed in the history of our country. Consider what is at stake in terms of potash. We all know that arable land is actually decreasing in supply, because of urban sprawl and population growth. We know that countries are getting hungrier, that the protein intensity of diets is increasing and therefore agricultural intensity will be also on the rise up. We know then that this amazing nutrient we have in such great abundance in the province, this potash, is going to be in greater supply. It is a strategic resource. And we should act like it. The country should act like it.
What other takeover in the history of corporate takeovers has involved up to 25-30% of the world's anything? Can you name one? Can you think of one?
This takeover involves 25-30% of the known reserves in the world's potash. This is different. This is not like any other takeover that we have contemplated in the country. Are our strategic interests in the province likely better served by a company who's vested in potash, that that's their really number one priority? That's their most important profit centre. Or are we better served by a company, a good company, but one that has 100 different mines in 25 countries? A company for whom this massive proposition still only accounts for about 20-25% of their business. Will potash become a lost leader for a company that has other things to sell? These are questions. These are serious questions about the strategic position of your Saskatchewan and of our country as a result of this takeover. And there are others.
How is the end of Canpotex, an agency that has put us on the map in the potash sector, an agency that has built strong strategic and successful marketing alliances around the world, how does its end further our strategic interests, our strategic position? I don't believe that it does.
And in all of this PCS is lost. And there's probably a lot of good debate around the province about the amount of officers now in Chicago, and I appreciate their pledge to Saskatchewan. It sounds like they are going to be retrenching back to Saskatoon, where there headquarters are. But imagine the loss of the Potash Corporation in all of this. Notwithstanding what was debated in the House of Commons yesterday, this is not a foreign controlled company. Potash Corporation is 49% percent owned by Canadian shareholders, 38% percent by Americans and the rest by others. 8 out of the 12 directors are from Canada. Two of them are from Saskatchewan. One's got a farm in Saskatchewan. Right now, the proponent in this deal is offering one board seat to Canada, not to Saskatchewan. And we need to think about how another foreign takeover in our mining sector would be for the country, for Canada's influence over strategic resources.
Canadian led mining companies are at risk of becoming an endangered species. This is the last and the biggest one, some have said. The list of those companies who have now fallen under foreign control is significant including Cohen, Falconbridge and Alcan. The people of this province are asking themselves, what happens to the country, what happens to our economy, if the Potash Corporation of Saskatchewan is next?
In this deal, we would lose a proud Canadian company. We would lose a loss in our international leverage in the potash sector, a loss of our marketing agency, along with the good will and contacts in which it provides. And we would transition from being price leaders to price takers. I don't see how there is a net benefit there, then, in terms of the strategic interests of the country.
We have expressed these concerns in meetings and publicly we have had quick answers provided to us to solve them. Why not just change your royalty structure? That's been offered up as an answer. How would we do that exactly? Agrium and Mosaic have made 6 billion dollars worth of decisions to create jobs and attract investment in this province based on the current royalty structure. The current royalty structure is the reason why there is, today, 12 billion dollars worth of potash expansion underway in your Saskatchewan, creating thousands of jobs. It is a good royalty structure for that reason because it is paving the way for growth-the growth you prize, that I prize and our province wants for Saskatchewan. So are we then to have two structures? One for BHP that has its marketing model, and we've got to keep Mosaic and Agrium whole, I would say. We know the affect on businesses and the investment climate, on your economy when you're having royalty shock. When there is a bunch of changes in your royalty structure. We don't want to do that. Right next door we saw what happened as a result of that. When a company makes a multi-million dollar decision to invest in a mine, that company requires a very clear understanding of the costs. That's what the Saskatchewan Potash Producers Association have said about this issue.
Another quick answer we've received to our concerns is well just get some undertakings then, get the company to make some promises then. Promises about the head office, promises maybe about Canpotex, promises about the revenue situation for the province. But I don't find much solace today, ladies and gentlemen, to be derived from the historical record of companies involved in takeovers, and of promises being kept, or of Investment Canada holding companies to their promises. Market conditions can change, interest rates change, and before long companies come with a request to have something adjusted or something changed.
Here in our province in 1994, ironically, the Potash Corporation came and asked for changes and dilution of the Golden Share that was established in the 80s, and it was granted in 1994. According to the Globe and Mail, 10 years ago, an antecedent of BHP Billiton, Billiton PLC made a promise to locate its global headquarters for base metals in Toronto, relative to an acquisition of Rio Algom, a copper producer. Less than a year later, the federal government gave permission for that promise to be broken, and after the merger they created a new company. That base metal producer moved its headquarters to Houston, Texas. It was a promise that was made and I'm sure from a corporate standpoint it needed to or it was broken and those jobs went to Houston.
There are other examples. Xstrata paid $18 billion for Falconbridge in the summer of 2006. The federal government extracted a promise that no jobs would be cut and the promise was broken. With Vale of Brazil, commitments were made that staffing would be maintained after purchasing Inco. In March of '09, 463 jobs were cut, and I'd say the promise was broken. Rio Tinto promised not to cut jobs or operations when it took over Alcan. Hundreds of millions of dollars in cuts to scheduled upgrades to smelters in Quebec and BC occurred then thereafter, and 300 jobs were cut, including 18% of the head office at Alcan.
I know that there is this suggestion out there that, well, promises can be made but pardon the Government of Saskatchewan, or anyone in this province of Saskatchewan if we're a little bit concerned about them being kept. We can't build schools on promises. We can't reduce taxes on promises. We can't pay off the debt on promises. We need greater assurances than that, on something as important as this.
In 1904, Prime Minister Laurier declared that the 20th Century would be Canada's century. I liked what he was thinking about, but he might've been 100 years too soon. I think this could be Canada's century, if we get it right. Today the world is facing two important questions of food security and energy security. And Canada has the answer those questions in prolific production of agriculture, of food, an amazing profile and inventory of natural resources.
I believe there is a vision for our country that beckons us. A vision that would have us take our rightful place in leading a world that needs answers to these questions on food security and energy security. It is a vision of a country, then, that through the benefit of this natural resource and exports reinvest in the next economy, in the knowledge economy, the new economy, and continue to grow in the interests of future generations. But to do that, we as Canadians, all of us, we need to have that vision in the first place. And we will need the requisite courage required to fulfill that vision. We will need the courage to make tough decisions. This has been a tough decision. Decisions like saying to an eager world that, well, we welcome investment, but there are certain strategic resources that call for circumspection. That call from discipline on our part as Canadians. That call on us to keep an eye to the future. We see a place for Canada in the world, and a big role for Canadian companies, situated in a world that wants what has been bestowed upon us by providence, and in such abundance.
Ladies and gentlemen, we have done our due diligence, exhaustively. We have asked the questions. We have made our assessment of this foreign takeover and what it represents. We believe there is a risk for a net loss to jobs in the country. We believe there is a significant risk to net loss to revenue for the Governments of Saskatchewan and Canada, revenue that in our province that would require deficits, or tax increases, or program cuts, or some combination of those things. And our assessment also tells us that the takeover will result in a net loss of our strategic influence around the world, at a time when the influence of our province, and I think our country, should be on ascendancy.
So, in the interests of jobs for Saskatchewan families, in the interests of the quality of life that we prize that is funded by revenue to government, and in the interests of the place of our province and our country in the world, we must say no to this hostile takeover.
And let me just say this, the answer no is not unprecedented. It has been given in free market economies around the world. Here is an example from Australia, the home of BHP Billiton. When Shell bid $10 billion for a controlling stake in a leading company developing Australia's offshore natural gas reserves, an answer came from the enterprise-friendly government of Prime Minister John Howard in April of 2001, and that answer was a respectful no. Not yes with conditions, it was no. Australia's then-treasurer Peter Costell said it was in the country's best interests to have these offshore reserves to be quote "unequivocally managed and operated and marketed for Australia." Why in the world should we deserve anything less than that in Saskatchewan and in Canada? Why wouldn't we make that same kind of decision, so that we can ensure the great natural resources we have are managed and operated and marketed for Canada and for Saskatchewan? And by preserving just such an environment, we are saying yes to a bright future for this industry. We say yes to the national interests of our country. We say yes to fulfilling the potential of our province and our nation. We say yes to controlling the resource and our future. We say yes to Canada's century. We say yes to Saskatchewan's century, because a world that needs food security, a world that needs energy security and innovation, that world needs a strong and vital Canada. Let's be that Canada for the world. That big hope and grand vision requires on this occasion a modicum of courage and one little word.