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Saskatchewan potash: Almost every time these sell-offs beckon, the script offers the same plot (DAVID STOBBE/Reuters)
Saskatchewan potash: Almost every time these sell-offs beckon, the script offers the same plot (DAVID STOBBE/Reuters)

Jeffrey Simpson

Potash: Another selloff, another sellout Add to ...

At heart, sadly, Canadians are a rentier people. We live off the bounty of the land and its resources that we own, but, where possible, we rent to foreigners and their companies. We live a good, comfortable life, without apparently much ambition to be creative.

Canadian history is replete with examples of this attitude, the latest being the apparent acquiescence of the Saskatchewan government, the corporate elites and the corporate editorial boards to the sale of the country's sixth-largest publicly traded company, Potash Corp. of Saskatchewan.

Potash belongs to the people of Saskatchewan. They, and they alone, can decide how the material under their province should be exploited, and by whom. Providentially, Saskatchewan has the world's largest deposits of potash, a key component in fertilizer, at a time when demand for the product is high. The province once had a Crown corporation to control potash production, so the resource and its utilization would be just that - public.

But those days are long gone. Potash Corp. nominally has its headquarters in Saskatoon, but its CEO spends most of his time in Chicago. Now a gigantic mining conglomerate, BHP Billiton, based in Australia and run by a South African, wants to take over Potash Corp., and the only debate seems to be about price.

If there's one industry in which Canada should be a world leader, with its own multinationals spanning the globe, it's mining. Take Toronto's Barrick Gold Corp. out of the equation, and our industry presence worldwide is pathetic, given our domestic attributes.

In mining, however, as in other industries, the Canadian capitalist class taken as a whole is made up of artists whose prime ambition seems to be to build companies to a certain level and then sell them to foreign bidders, so that board members and senior executives (and pension funds and other shareholders) can make the best killing possible on the sale. Hence, the haggling over the appropriate sale price for Potash Corp.

<p>Vale operations in Sudbury, Ont.</p>
It&rsquo;s better to own shares in the seller than the buyer Potash Corp. may fall to a takeover - but its shareholders can't complain, writes Boyd Erman

Almost every time one of these sell-offs beckons, the script offers the same plot. The new owner, circling the acquisition, promises to bring more jobs, import new technology, invest in the local community, be a bigger and better version of what existed before. Ministers - in this case, the hapless federal Industry Minister, Tony Clement (he of the distorting and misleading census explanations) - sing the praises of foreign ownership.

Sometimes, all of this happens, especially if a foreign company rescues a floundering domestic one. Just as often, the promises are hollow. Once possessed of the company, the new owner does the minimum required. If the economy falters, the presale commitments are forgotten or shaved to the minimum.

The federal government, which is supposed to review these transactions and apply a "net benefit" test, goes through the motions. Ottawa never stops a takeover, fearing (wrongly) that it would send a devastatingly negative signal to all foreign investors. Canada is "open for business," even if the result leads to the loss of one major Canadian company after another - Algoma Steel, Falconbridge, Dofasco, Hudson's Bay Co., Cognos, Inco. And Canadians, being fundamentally comfortable rentiers, have given up debating the question as long as their coupons get clipped.

The loss of Potash Corp. will inevitably mean the destruction of Canpotex, the global marketing arm of Canadian potash industries - one of the few industries, by the way, in which Canada is the dominant player and thus somewhat of a price-setter. BHP, the pursuer of Potash Corp., has already said it wants to sell potash itself. Since Potash Corp. is the biggest potash producer, its departure from Canpotex will mean the end of the agency. Put another way, Canada's margin of influence over potash pricing and marketing will be diminished.

BHP, like others before it, will pledge that the head office will remain in Canada, that decisions will be made in the Saskatchewan/Canadian interest. It can't be blamed for advancing this argument; rather, the blame should be shared by those who swallow the argument whole. The company spans the globe. Potash will be but one part of a mining empire, and Potash Corp. will be but one part of that empire.

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