UPDATE 2-Saskatchewan may consider potash royalty

[sandi66]

UPDATE 2-Saskatchewan may consider potash royalty change

Thu Sep 2, 2010 6:29pm EDT

* Premier concerned about impact of Potash Corp takeover

* "Very circumspect" on sovereign funds buying into potash

* Says licensing system gives Saskatchewan some leverage (In U.S. dollars, unless noted)

TORONTO, Sept 2 (Reuters) - The government of Saskatchewan may consider changes to its potash royalty system, in the event of a foreign takeover of Potash Corp (POT.TO), the premier of the western Canadian province said in a television interview on Thursday.

"In the long term there are royalty changes that are possible to take the bias away from prices and more toward volumes," Premier Brad Wall said in an interview with BNN Television.

Wall said that while Saskatchewan was not opposed to Chinese investment in the province, the situation on potash is a little different, because of the strategic importance of the crop nutrient and the fact that Potash Corp controls a vast amount of the province's reserves.

"We want to be very circumspect about sovereign entities from customer countries and their involvement in all of this," said Wall.

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For more on the BHP bid [ID:nN22340110]

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The prairie province has commissioned an independent look into BHP Billiton's (BHP.AX) (BLT.L) proposed takeover of Potash Corp, including conditions that Canada could impose on the deal.

China, which buys about 7 percent of the output of Potash Corp, fears a BHP takeover might jeopardize supplies it will require to feed its huge population in coming years.

Chinese sovereign wealth funds and other investors have approached at least one big Canadian pension manager about a possible counter-bid for Potash Corp to rival BHP Billiton's $39 billion hostile offer.

However, the possibility of Chinese involvement in a valuable Canadian resource has raised concerns in Saskatchewan, which is worried that a takeover by either BHP or other foreign entity could affect jobs and government revenue.

"This is an issue absolutely and we will be analyzing it very, very carefully," said Wall.

The province has asked the Conference Board, a nonprofit research organization, to examine the effect of a takeover, including the conditions Saskatchewan might ask the federal government to impose on a deal and ways to mitigate risks from BHP's bid and any others that could come forward.

"We have looked at options around pre-defining what conditions might be put on a deal. In other words, belling the cat a little bit more clearly in terms of any conditions that come with an approval to any deal," Wall said.

The premier stressed that the province would clearly outline the implications for a foreign buyer that violates any of the conditions that come with an approval.

"At the end of the day there isn't any potash mined in the province without a license from the province of Saskatchewan and that's obviously a source of some leverage," he said


www.reuters.com/article/idAFN0224906520100902?rpc=44

[sandi66]

Saskatchewan may consider potash royalty change

Thursday September 2, 2010, 6:31 pm EDT
TORONTO (Reuters) - The government of Saskatchewan may consider changes to its potash royalty system, in the event of a foreign takeover of Potash Corp, the premier of the western Canadian province said in a television interview on Thursday.

"In the long term there are royalty changes that are possible to take the bias away from prices and more toward volumes," Premier Brad Wall said in an interview with BNN Television.

Wall said that while Saskatchewan was not opposed to Chinese investment in the province, the situation on potash is a little different, because of the strategic importance of the crop nutrient and the fact that Potash Corp controls a vast amount of the province's reserves.

"We want to be very circumspect about sovereign entities from customer countries and their involvement in all of this," said Wall.

The prairie province has commissioned an independent look into BHP Billiton's proposed takeover of Potash Corp, including conditions that Canada could impose on the deal.

China, which buys about 7 percent of the output of Potash Corp, fears a BHP takeover might jeopardize supplies it will require to feed its huge population in coming years.

Chinese sovereign wealth funds and other investors have approached at least one big Canadian pension manager about a possible counter-bid for Potash Corp to rival BHP Billiton's $39 billion hostile offer.

However, the possibility of Chinese involvement in a valuable Canadian resource has raised concerns in Saskatchewan, which is worried that a takeover by either BHP or other foreign entity could affect jobs and government revenue.

"This is an issue absolutely and we will be analyzing it very, very carefully," said Wall.

The province has asked the Conference Board, a nonprofit research organization, to examine the effect of a takeover, including the conditions Saskatchewan might ask the federal government to impose on a deal and ways to mitigate risks from BHP's bid and any others that could come forward.

"We have looked at options around pre-defining what conditions might be put on a deal. In other words, belling the cat a little bit more clearly in terms of any conditions that come with an approval to any deal," Wall said.

The premier stressed that the province would clearly outline the implications for a foreign buyer that violates any of the conditions that come with an approval.

"At the end of the day there isn't any potash mined in the province without a license from the province of Saskatchewan and that's obviously a source of some leverage," he said

finance.yahoo.com/news/Saskatchewan-may-consider-rb-2237163525.html?x=0&.v=1

[sandi66]

Canada fund approached by China investors on Potash

Thursday September 2, 2010, 6:49 pm EDT
By Rod Nickel and Joseph Chaney

TORONTO/HONG KONG (Reuters) - Chinese and other investors have approached at least one big Canadian pension manager about a bid for Canada's Potash Corp to rival BHP Billiton's $39 billion hostile offer.

Thursday's disclosure by Alberta Investment Management Corp, which manages some C$70 billion ($67 billion) in public sector pension funds, is one of the first pieces of hard evidence to back suspicions that China is looking for a way to derail a takeover of Potash Corp by the powerful Anglo-Australian miner.

In another sign of Chinese interest in countering BHP's $130-a-share offer, China's state-run chemical group Sinochem has hired HSBC to advise on its options, the Wall Street Journal said, while Saskatchewan, where Potash Corp is based, is seeking its own independent probe of the takeover.

China, which buys about 7 percent of the output of Potash Corp, fears a BHP takeover might jeopardize supplies it will require to feed its huge population in coming years.

Leo de Bever, chief executive of the Alberta public-sector pension manager, said he had fielded inquiries from a number of parties, including sovereign wealth funds.

He said Chinese investors were among those asking him to consider participating in a bid for Potash Corp, the No. 1 fertilizer supplier.

"We don't have any feeling of nationality of counter-parties. We work with people in other countries all the same, and we would be pleased to work with the Chinese entity if that made sense," said de Bever. But he also said AIMCo was not interested in a Potash deal at this point.

"We can't right now make the economics work," he told journalists in Calgary.

"If it were to work it would take a consortium of pension funds if you were to do it, but the question is, is that really appropriate for those pension funds."

JOBS AND REVENUE

The possibility of Chinese involvement in a valuable Canadian resource has raised concerns in Saskatchewan, which is worried that a takeover of its largest company by a foreign company could affect jobs and government revenue.

It said it had asked the Conference Board, a nonprofit research organization, to examine the effect of a takeover, including the conditions Saskatchewan might ask the federal government to impose on a deal and ways to mitigate risks from BHP's bid and any others that could come forward.

"We have done a lot of work on both foreign direct investment in Canada and on M&A in the past ... so we are probably as well equipped as any other organization to do this," Conference Board chief economist Glen Hodgson said.

"But the time-frame is tight, so we are going to have to go fast," he told Reuters. The board would provide recommendations, but focus on identifying implications and opportunities for the Prairie province, he added.

Saskatchewan Premier Brad Wall said in a television interview that the province may consider changes to its potash royalty system, in the event of a foreign takeover of Potash Corp.

"In the long term, there are royalty changes that are possible to take the bias away from prices and more toward volumes," Wall said in an interview with BNN Television.

The premier stressed that the province would clearly outline the implications for a foreign buyer that violates any of the conditions that come with an approval.

"At the end of the day there isn't any potash mined in the province without a license from the province of Saskatchewan and that's obviously a source of some leverage," he said.

Saskatchewan Energy Minister Bill Boyd has raised concerns about China buying into Potash Corp and about BHP's stated intent to eventually market its potash offshore on its own, rather than through the export consortium Canpotex.

"That is where some of the concern would be: having a customer whose interests obviously are to have very low prices," Boyd told Reuters this week.

Any changes to marketing or production could lower potash prices, which determine the size of Saskatchewan's royalties.

The province, which produces one-quarter of the world's potash, depends on those royalties for hundreds of millions of dollars a year and collected nearly C$1.4 billion in 2008-09 after potash prices spiked.

SINOCHEM SEEKS ADVICE

Sinochem has ranked near the top of the list of entities that analysts think could mount a competing bid, and the Wall Street Journal, citing sources close to the matter, confirmed the Chinese firm might be interested.

But it said the move to hire HBSC was preliminary and did not mean Sinochem would make a counterbid for Potash Corp.

Sinochem in Beijing was not available for comment, while HSBC in Hong Kong declined to comment.

A source close to the matter told Reuters in August that Potash Corp has held discussions with Sinochem. Potash has a 22 percent stake in Sinofert, a Sinochem subsidiary that is China's top fertilizer producer.

Rio Tinto, Brazil's Vale and Canada's Teck Resources are all seen as unlikely to get into a bidding war against BHP as they have other priorities or don't have the balance sheet strength.

That leaves big Canadian pension fund managers, including Ontario Teachers' Pension Plan and Canada Pension Plan Investment Board, as being among those with the wherewithal to mount a competing bid.

Potash Corp shares rose 1.9 percent on Thursday to $147.82 in New York The stock is nearly 14 percent above BHP's offer of $130 a share, with investors holding out for a higher offer.

BHP shares in London dipped 0.11 percent to close at 1,904.71 pence.

BHP shareholders polled by Reuters on average see $155 a share, or $46 billion, as the maximum BHP should pay for Potash Corp. Potash shareholders see $162 a share clinching a deal, according to a separate Reuters poll.

finance.yahoo.com/news/Canada-fund-approached-by-rb-3416415205.html?x=0&.v=10

[sandi66]

Saskatchewan to wait on any changes to potash royalties

Potash Corporation of Saskatchewan Inc.

Thu Sep 9, 2010 4:49pm EDT

* Saskatchewan to consult miners on any changes-official

* Province not pressured by BHP takeover timeline

By Rod Nickel

WINNIPEG, Manitoba, Sept 9 (Reuters) - Saskatchewan won't change how it taxes potash production until well after any takeover of Potash Corp (POT.TO) (POT.N), fearing a hasty move could jeopardize mine expansion, a top official of the Canadian province said on Thursday.

Saskatchewan, with its rich reserves of potash, usually collects hundreds of millions of dollars per year in royalties from Potash Corp, Mosaic Co (MOS.N) and Agrium Inc (AGU.TO). It is worried that those revenues will shrink if BHP Billiton's (BHP.AX) (BLT.L) takeover bid succeeds.

BHP, the world's biggest miner, traditionally runs production flat-out in contrast to Saskatchewan miners' carefully timed approach to support global prices. Under its complex royalty formula, Saskatchewan benefits more greatly from high prices than high production.

Changing how it calculates royalties "is not something we take lightly," said Kent Campbell, Saskatchewan's deputy minister of energy and resources. "It's one of government's ultimate levers. It's something we would prefer not to have to do, but if we see changes in market structure that ... isn't providing a fair return, then we would look at it."

The government would do extensive consultations with potash producers, Campbell said, and doesn't feel pressure to make changes prior to the potential takeover.

BHP's $38.6 billion hostile takeover bid, which Potash Corp has rejected, expires on Oct. 19.

All three big potash companies are planning major expansions based on the current royalty structure and Saskatchewan doesn't want to put those in jeopardy, Campbell said.

"We wouldn't want there to be any surprises," Campbell said.

Mosaic spokesman Brad DeLorey said the company concluded talks with Saskatchewan leading to royalty changes last year, adding, "we are pleased with the royalty structure that is in place."

A spokesman for Agrium declined to comment.

www.reuters.com/article/idAFN0918779620100909?rpc=44