Canadian Prime Minister Stephen Harper has entered the battle for ownership of Potash Corporation of Saskatchewan, the world's largest producer of potassium carbonate, used as fertilizer all over the world.
Anglo-Australian mining giant BHP Billiton has launched a hostile takeover bid to acquire Potash Corp for $39 billion, but Harper warned yesterday that his government could block a takeover if it was not a "net benefit" to Canada.
Potash Corp has called the BHP offer "wholly inadequate", as worldwide demand for potash is expected to soar in the coming years. "The Potash Corp board of directors is unanimous in its belief that the BHP Billiton offer substantially undervalues Potash Corp and fails to reflect both the value of our premier position in a strategically vital industry and our unparalleled future growth prospects,” said the group's chief executive Bill Doyle.
Potash Corp is said to be looking at alternative deals to fend off BHP, and Chinese investors are involved in discussions, among others. China is the second largest importer of potash, after India, and is concerned about the effects of industry consolidation on the price of the mineral.
"There are a number of people who have contacted us... all sorts of different players. People would be surprised at what we're seeing," said Doyle.
The Chinese state-owned trading company Sinochem Group has asked the Beijing government for help in raising enough funds to outbid BHP. China Blue Chemical Ltd, China's largest trading company currently focused on petrochemicals, and a subsidiary of the profitable state-owned oil company China National Offshore Oil Corp, has also expressed an interest in Potash Corp.
Meanwhile, BHP's chief executive Marius Kloppers is visiting Canada to try to drum up support for the deal. BHP has extended its original 60 day bid deadline by almost a month to 18 November, after the Canadian Competition Bureau requested more information, but Kloppers insisted that BHP would not be increasing its bid.
BHP’s bid values Potash Corp at $130 per share, but the shares have risen above that figure since the bid was made, closing at $152.53 in Toronto yesterday.
As the world population grows, existing arable land will need to become more productive to meet increased demand. As well as crops for human consumption, more will also be required for animal feed as demand for meat increases.
The UN's Food and Agriculture Organization says demand for meat products in developing countries is being pushed up by rising incomes, population growth and urbanisation, and has forecast global meat production to double by 2050.
