Report: BHP takeover of Potash bad for provincial treasury

BHP Billiton's potential hostile takeover of Potash Corp could reduce the provincial Saskatchewan government's revenues by at least US$2 billion over the next 10 years, a Saskatchewan government-commissioned report released Monday said.

Australia's BHP Billiton Limited launched a US$39 billion takeover bid in August after Potash directors rejected its offer.

Canada's federal government can block a foreign takeover if it's not a "net benefit" to Canada.

The federal government has asked for input from the provincial Saskatchewan government.

In response to the report, Saskatchewan Energy and Resources Minister Bill Boyd called the potential revenue loss "concerning".

Boyd said they will consider the Conference Board of Canada report before they provide their views to Ottawa. He reiterated that that no matter who owns the mines, the people of Saskatchewan own the potash and that Saskatchewan Premier Brad Wall said the government will protect the interests of the Saskatchewan people.

The report also said a successful takeover would likely have little or no net effect on employment.

"There are both pluses and minuses to this BHP bid," Boyd said in a statement upon releasing the report. "This report will help to inform our view of whether an ownership change represents a 'net benefit' to Canada and to the people of Saskatchewan."

Chinese state-owned companies are also interested in making a rival bid. The Saskatchewan government is wary of both a Chinese and BHP takeover of Potash.

State-owned enterprise

The report said the province should be concerned about a Chinese state-owned enterprise like Sinochem buying Potash, especially given that China is major importer of potash.

Potash Corp is the world's largest fertiliser company and one of the Saskatchewan's largest revenue-generating companies. The provincial government collects royalties from the resource.

The federal government blocked a US company's takeover of the space and satellite division of MacDonald, Dettwiler and Associates Limited, Canada's leading space technology firm, in 2008. It was the first time Canada has rejected a foreign takeover outright since the Canada Investment Act took effect in 1989.

- AP