Industry Minister Tony Clement will make a decision on the government’s power to block the sale of Potash Corp by Australia-based BHP Billiton later today when markets are closed in Canada and Australia – between 4:30pm and 7pm EST.
From discussions that I’ve had over the past week, I’ve learned that it is expected that the Minister will likely not block the takeover, however, if the takeover goes ahead, strict conditions of sale will be in place which may include promises to invest in infrastructure funds, heritage funds and the like.
Politically, this puts a few federal Conservative MPs in a shaky spot as 85% of their fellow Saskatchwans have expressed concern over the foreign takeover. Conservative-leaning Premier Brad Wall has already read the tea leaves and has come out strongly against the deal.
The decision comes on the heels of a bit of a scatter approach by Industry Canada under this federal Conservative administration when it comes to foreign influence in the Canadian marketplace. Radarsat-2 was blocked for sale by former Industry Minister Jim Prentice, citing the national interest, yet the Amazon and Wind Mobile decisions have suggested a openness to foreign investment in the highly regulated culture and telecommunications sectors.
If Minister Clement announces today that Potash Corp. is ready for sale, it will signal that Canada is open to business and open to foreign investment in the natural resources sector. In a time where this government has fought foreign protectionism due to the global economic collapse of 2008, this will further indicate that the Harper government is not simply paying lip service and lecturing other countries on the same. The liberalization of markets and business is a positive step forward as the global recovery has taken longer than projected. The election of a free-trading Republican House of Representatives and Senate now susceptible to filibuster also helps this cause.
As for today’s decision, the Investment Canada Act stipulates that the Minister must first inform the BHP Billiton of his decision. Until the company makes the decision public the government will be able to comment according to the law.
UPDATE: SHOCKER. Minister Clement determines that BHP Billiton’s bid does not provide a net benefit to Canada.
A very disappointing decision economically in my opinion. Politically it is the safe decision as it will save more votes in Saskatchewan than it will lose from investors. However, sometimes you just hope your government will do the right thing.
The government’s decision is “No” to BHP, however, the world’s largest mining company now has 30 days to revise its bid. This is largely a formality under the Act and a takeover of Potash Corp by BHP is not exactly viable after today.
It was widely expected among Ottawa Conservatives that while the Minister was in a tough position on the potash file, the heightened heat exchanged (and subsequent chill) between the Premier’s office and the PMO indicated that the deal was to be done and that it would be done on the principles listed above.