Potash call a tough one for Ottawa

By Paul Marck

Clearly the Potash Corp. conundrum is a vexing one for the Harper government. Let another Canadian resource giant slip through its fingers and find new ownership with BHP Billiton, which would be letting market forces prevail? Or play the nationalism card, and keep the world’s biggest fertilizer company in Canadian hands?

The months-long wrangling over whether BHP can proceed with its $38-billion hostile takeover will surely come to an end by Nov. 3, when Investment Canada issues its ruling whether there is a net benefit for Canada in the deal. Betting now is that there is no reason not to let the deal go through, though whispers say that Ottawa will attach enough conditions to make a foreign-owned Potash palatable to the Saskatchewan government.

Don’t double down on that last part. Premier Brad Wall is adamant. He says the deal is a bad one for Canada, wants the deal rejected and says he has no faith in Ottawa’s bid to make BHP come to heal on any number of promises, such as locating its international potash headquarters in Saskatchewan, keeping Potash Corp. within its marketing framework and — most importantly — ensuring the province gets if fair share of royalties.

Saskatchewan wants $3 billion up front. And that’s a big gulp that BHP is not prepared to make, in addition to is acquisition offer.

So is there a face-saving solution to all this? Maybe.

If the rumoured rival bid by Canada’s big institutional pension funds — fronted by Alberta’s AimCo and Ontario Teachers — pans out, Potash could pay big dividends to Canadians for decades to come. It is up to those funds to determine whether Potash is in fact worth buying at a premium. That’s called an opportunity cost, when you decide to buy an asset because you believe the price will be reflected in good returns down the line.

Potash Corp. certainly is an opportunity — for somebody. I am pulling for the home team.

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