Premier says BHP sees Canada as 'branch office'

AP News
Posted: Oct 25, 2010 2:22 PM
Premier says BHP sees Canada as 'branch office'

Saskatchewan's premier said Monday he expects the federal government to follow his recommendation to block BHP Billiton's foreign takeover of Potash Corp. and said Ottawa should heed the words of a former BHP chairman who called Canada a branch office.

Premier Brad Wall stepped up the pressure to make sure Prime Minister Stephen Harper's Conservative government blocks what would be the largest takeover in the world this year.

Anglo-Australian BHP Billiton launched a hostile $38.6 billion takeover bid in August for the world's largest fertilizer company after Potash Corp. directors called BHP's $130 a share offer wholly inadequate. Potash, a key fertilizer ingredient, is critical to international food security.

Wall noted that former BHP Billiton Chair Don Argus once warned that too much foreign control of resources in his home country of Australia would turn Australia into a "branch office _ just like Canada."

Wall said he takes exception to that and said it's up to Ottawa to ensure Canada controls its natural resources so that the country doesn't become a branch office "like BHP apparently see us."

The premier also outpointed in a release that in 2009 Argus made comments to the Melbourne Herald Sun that further cautioned that "Australia risked hollowing out its key industry (mining) though allowing too much offshore control of its major assets, just as Canada had done in recent years," and that "Canada had forfeited its resources sector, much to detriment of the country."

"There's a view out there that Canada is easy pickings when it comes to these takeovers," Wall said in an interview with The Associated Press.

"It's his counsel, clearly, that Australia should be very circumspect about these things, should be careful, and use this important metric of strategic interests in looking at control of its resource industry. I think it's supportive of our position and it comes from someone that supports the markets."

Ottawa can block a foreign takeover if it's not a "net benefit," and Harper's government has asked for Wall's input.

"We will be speaking with the federal government about our position in the days ahead and we expect them to follow our recommendation," Wall said in an earlier statement.

Wall said tax and development natural resource policy is exclusively the purview of Canada's provinces. He said all Canadian provinces will be watching the federal government's decision closely.

Harper was at odds with Wall last week when he described the deal in Parliament as a "proposal for an American-controlled company to be taken over by an Australian-controlled company."

Potash Corp.'s headquarters is listed as being in Saskatchewan, but the chief executive and many top executives are American and live and work in the Chicago area.

Wall asserted Friday that Harper just made a mistake, but a spokeswoman for Harper said the prime minister wasn't mistaken and said the headquarters is in Illinois.

Wall called the remarks by the prime minister's office "unbelievable" on Monday.

"Every time they say that, they are alienating Saskatchewan people, especially those that work in the head office in Saskatoon, especially when the Potash Corp. has said 'Hey, there are some head office positions that are in Chicago, but the head office is in Saskatoon, that's where it's registered and we're going to move the others ones back,'" Wall said.

Wall said he didn't know why officials in the prime minister's office persist in the argument.

"Every time they do, I think they alienate more people in our province that think, 'Man, they are going to take this decision and they don't the facts,'" Wall said.

Wall publicly rejected the bid last week, saying it just isn't in the strategic interest of Canada to allow a foreign takeover of a company that controls more than 25 percent of the world's reserves of potash.

Saskatchewan has over half the world's reserves of potash, and Potash Corp. is one of the province's largest revenue-generating companies, accounting for 15 percent of its budget as recently as two years ago. The provincial government collects royalties from the resource.

A foreign takeover of the company would come just as Saskatchewan is starting to boom after suffering low growth and population loss for decades. Potash is the province's most prized resource and there are also concerns in Canada about foreign takeovers after previous resource deals led to broken promises about job guarantees and investment.

Andrew Mackenzie, BHP's Chief Executive, Non-Ferrous, has said he's by no means given up on the takeover. He said BHP can make Potash Corp. more profitable than the current management and in turn more lucrative for the province. He has said he believes he can bring the province and the federal government to approve of the deal.

The federal government is due to announce a decision by Nov. 3. Canada's main opposition parties are against the deal.

Canadian opposition lawmaker Ralph Goodale, who represents a Saskatchewan district in Ottawa, has said he'd be shocked if the federal government didn't support the province.

BHP Billiton, the world's largest mining company, is hoping to profit from what it expects will be rising fertilizer demand in China and India.

Shares of Potash Corp. are up 1 percent, or $1.45, to 143.24 in afternoon trading on the New York Stock Exchange.