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STEVE CHIOTAKIS: It’s certainly not the world’s most glamorous product. But the fertilizer potash has been a one of the most sought-after resources in the business world. And today, a blow to the world’s biggest mining company in its quest to grab a key part of the Potash market.
The Canadian government has blocked BHP Billiton’s $40 billion takeover bid of the Canadian company Potash Corporation.
Marketplace’s Stephen Beard is with us live from London to explain the news — and the Potash industry. Good morning, Stephen.
STEPHEN BEARD: Hello Steve.
HOBSON: Why has this mining company been rebuffed by the Canadian government?
BEARD: The bid’s touched a raw nerve in Canada. The Potash Corporation based in Saskatewan accounts for about 30 percent of the world’s potash. As you say a fertilizer is comprised of salts that are dug out of the ground. In a world which will have to grow a lot more food, this is considered a vital, strategic resource for Canada. Max King of Investec Asset Management says Canada’s conservative government had to face the facts there’s a lot of hostility in Saskatewan to this foreign take over.
MAX KING: You can’t ignore the politics of a situation like this and Saskatewan has quite a number of conservative MP’s who are fearful of losing their seats til this bid was blocked. In the real world, a lot of these decisions are based on politics.
And another reason for the hostility in Canda — there’s been a number of foreign take overs in recent years which have lead to big job losses.
HOBSON: We’ve been hearing about this for months. Is the deal dead?
BEARD: No, this is an interim decision. BHP has got 30 days to respond. It could come up with a revised offer with job guarantees for example. This is not an easy decision for the Canadian government. On the one hand it doesn’t want to upset the voters, but it doesn’t hurt one to upset foreign investors either. It needs foreign investment.
HOBSON: Marketplace’s Stephen Beard in London. Stephen, thanks.
BEARD: OK Steve.
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