By paNOW Staff

Saskatchewan doesn’t support the takeover of Potash Corp

Oct 21, 2010 | 1:01 PM

Saskatchewan must say no to BHP Billiton taking over PotashCorp, not yes with conditions, said Premier Brad Wall who was heard live on News Talk Radio speaking to those gathered at a Chamber of Commerce luncheon in Regina.

Allowing the hostile takeover to proceed would put jobs, the value of our resource and Saskatchewan and Canada's position on the world stage at risk, said Wall.

Never before has Canada faced a takeover of this magnitude. Wall spoke to the diligence his government has done to ensure a thorough investigation into the net benefits and risks involved in such a transaction.

In the end, Wall says there are too many risks.

Wall said he believes the next century belongs to Saskatchewan and Canada. The world is looking for food and energy security, which Saskatchewan and Canada can provide, but that ability depends, in part, on Canada controlling its own resources.

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Wall focused on jobs, royalty and tax revenues for the province and Saskatchewan and Canada’s strategic interests to be able to compete in the world.

Jobs could be lost at PotashCorp and Agrium due to overproduction of potash and risk to planned investment in the province worth. Canpotex, which BHP Billiton has said it would pull out of, could have to cut jobs if a planned terminal for B.C. didn’t proceed.

Royalties and tax revenues that Saskatchewan depends upon would be lost, not deferred, said Wall. Tax revenues would be lost for the length of time that the debt incurred when purchasing PotashCorp existed for BHP Billiton.

Overproduction would cause the price of potash to drop significantly affecting royalties paid. Changing the current royalty structure would fundamentally impact PotashCorp and Agrium. Creating a second royalty structure for BHP Billiton would not be appropriate, said Wall.

As for Saskatchewan and Canada’s place in the world, having a company that is focused on potash, such as PotashCorp, rather than a company that mines several resources, like BHP Billiton, makes more sense to Wall.

He believes Canada needs to ensure Canadian mining companies continue and are strong so as to generate the revenues needed to advance Canada’s economy from resource-based to knowledge-based.

BHP Billiton has made a number of commitments to Saskatchewan, but Wall said promises aren’t enough. He provided examples of other companies that have made promises, but reneged on them when market conditions or interest rates changed. Should BHP Billiton back away from their promises, Saskatchewan would be at risk of having to cut government programs, increase taxes, take on more debt or some combination of those options.