Skip to main content

Ottawa rejected BHP Billiton's $38.6-billion takeover offer for Potash Corp. of Saskatchewan

TIM WIMBORNE/REUTERS

BHP Billiton Ltd. , the world's largest mining company and former Potash Corp. of Saskatchewan nemesis, may be inadvertently helping out its Canadian rival. At least for now.

The Anglo-Australian firm, pressured by rising costs and slowing demand for resources, is reconsidering the timing of three major projects, including its $12-billion Jansen potash mine east of Saskatoon.

Globally, there are four large new potash mines currently being considered. Jansen -- which has the potential to become the globe's largest -- is one of them, notes Joel Jackson, an analyst at BMO Capital markets. (Germany's K+S has dibs on a project in Saskatchewan; Russia's EuroChem Mineral and Chemical Co.'s plans to dig for potash in its home country; and Vale SA is toiling in Argentina).

Story continues below advertisement

Three of these new projects are facing problems. BHP may hold off on making major investments on Jansen; EuroChem is struggling with sinking shafts; and Vale may ditch plans as Argentina threatens to nationalize assets, Mr. Jackson said.

This puts Potash Corp., along with Mosaic Co., in a comfy spot. Just a few months ago, these two power players (along with their Russian counterparts) were facing fresh competition, threatening to end their near-monopoly. But with major projects on the rocks, Potash and Mosaic investors have a little extra breathing room.

Some investors have been concerned that Potash Corp., Mosaic, and Russian potash firms would react unwisely as outsiders threaten their monopoly. The market worried "new greenfield supply will come on from new entrants that don't want to practise producer discipline," Mr. Jackson said.

New potash mines would change the game. But now, instead of new potash supplies trickling in around 2015-2016, it could take until 2019 before a fresh wave of the commodity hits the market.

As a result, Potash Corp.'s grip on the market remains tight. And Bill Doyle, the company's chief executive, has rival BHP CEO Marius Kloppers to thank.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

If your comment doesn't appear immediately it has been sent to a member of our moderation team for review

Read our community guidelines here

Discussion loading…

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.