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Stephen Harper is promising to revisit foreign takeover rules after rejecting an Australian buyout of Potash Corp., an indication that the government was ill-prepared to deal with a bid for a company it now describes as strategically important and deserving of protection.

Federal law prevents Industry Minister Tony Clement from divulging for 30 days his reasons for blocking BHP Billiton's $38.6-billion (U.S.) offer for Saskatchewan fertilizer company Potash Corp., but Agriculture Minister Gerry Ritz defended the move as an attempt to preserve international clout.

Mr. Ritz signalled the Conservative government's growing conviction that a hands-off attitude may not serve the national interest when it comes to supporting - and even protecting - companies that have a dominant position in important sectors and can strongly influence Canada's economic well-being.

"From a strategic standpoint, I think we have it in spades here," Mr. Ritz told the Commons in reference to Potash Corp.

In the Commons on Thursday, Mr. Harper defended blocking BHP but acknowledged the government's investment policy needs to be re-examined.

"No one should doubt this government's policy ... that, generally speaking, foreign investment is in the interests of the Canadian economy and an open global trading economy."

In answer to opposition demands that Ottawa rewrite the act to make the foreign investment review process more transparent and to give Canadians more of a say in takeovers, Mr. Harper said "the act should be reviewed."

He did not elaborate on what form the review might take or when it would begin.

Although Mr. Ritz touted Potash Corp. as a "strategic resource," the Harper government did not use such terminology when it recently overhauled its foreign takeover rules.

The word "strategic" does not even appear in the Investment Canada Act, which the Conservatives amended in 2009.

Mr. Clement said among the things he wants to examine is whether foreign bidders should be legally required to make public the terms they are prepared to meet as a condition of approval.

"As Industry Minister, I've sought to ensure that whenever there are undertakings by a bidder that part of the undertakings is that [they]become public. ... So those kinds of things I think we should look at, quite frankly, and I'd be quite prepared to do so."

The Conservatives appear to have been caught off-guard by Saskatchewan Premier Brad Wall's insistence - after failed negotiations with BHP - that Potash Corp. is a Canadian corporate champion that should not be lost to a multinational bidder.

Just before Mr. Wall came out squarely against the BHP offer two weeks ago, Mr. Harper was famously unconcerned about the takeover, calling it merely "a proposal for an American-controlled company to be taken over by an Australian-controlled company."

Mr. Harper's breezy dismissal was at odds with a growing feeling among Tories studying the takeover that the Potash deal was special. The company controls about a quarter of global production capacity for a vital fertilizer ingredient.

At the same time, the ground was shifting under Australia-based BHP's feet. The company had entered the bidding for Potash thinking it could easily meet Canada's "net benefit" test for foreign takeovers.

As recently as last Sunday, BHP officials came away from discussions with Industry Canada believing they had handily proven their offer would provide an overall economic benefit to the country.

This might have carried the day were it not for Mr. Wall's escalating campaign to protect what he called a vital provincial resource - which applied a steady drumbeat of pressure on Ottawa. The Premier said in an interview he went so far as to fax the federal government any and all arguments he could find against the deal.

In the end, fear for their 13 Saskatchewan seats persuaded the minority Harper government to shelve its unvarnished enthusiasm for foreign investment. "We can't really make the free-market case to voters in Saskatchewan because they don't buy it" where Potash is concerned, a Tory official said.

The government is now facing complaints about disarray in its foreign investment policy and outright protectionism.

The influential The Economist magazine on Thursday attacked Ottawa's decision, warning "the damage to Canada's reputation as a place to do business is done."

Mr. Clement dismissed the charge as "patently ridiculous," telling the CBC that the Tories have made Canada a more welcoming place to invest through tax reductions and tariff cuts.

However, many prominent business leaders argue the government needs to clarify its stand.

Oil patch veteran Jim Gray said the government needs to spell out its evolving approach to takeovers of key companies in strategic industries.

"We need to have a national conversation on this," Mr. Gray said. "We need to find a way to deal with strategic companies, but it is very, very hard to define in words."

Mr. Ritz said the Tories heard from business leaders across the country on the need to protect corporate champions. He noted on Thursday that Canada competes with Australia in the farm sector.

"The country's dominant position in potash provides it leverage in markets like India and China as it looks to expand agricultural exports to emerging markets like India, Brazil and China," he said.

"Therefore, under the net benefit [test] having someone different mine [potash]certainly does make a difference in that Australia is a major marketer of a lot of the same foodstuffs that Canada is."

The minister said Canada should prepare for a rising appetite for its resources, including fresh water.

"We are going to have to come to grips with a growing demand from the rest of the world to either invest or buy outright these types of commodities," he said.

"At this time and place, we are standing and saying no, because we do have some guidelines. Could they be better guidelines? Probably. We are looking at things that are in demand now that never were when this act was written in 1985."

With a report from Nathan VanderKlippe