Canada faces similar policy decision to Australia: to sell assets to China or not

The bid by BHP-Billiton for Potash Corp.of Saskatchewan is presenting the Canadian Government with the same kind of problem the Australian Government had when Rio Tinto tried to get a Chinese government corporation as one of its major shareholders.

The Chinese chemical conglomerate Sinochem Group is seeking assurances from the Canadian Prime Minister’s Office that a potential white knight offer for Potash Corp. will be fairly considered. 
The Toronto Globe and Mail reports “sources close to the state-owned enterprise” as saying they will not proceed with a bid for the world’s largest fertilizer firm unless it receives a positive signal from Ottawa.
The paper’s report says:
The Chinese company is considering leading a consortium bid for Saskatoon-based Potash Corp. that would top a $38.6-billion (U.S.) hostile offer from Australian mining giant BHP Billiton Ltd. The potential Sinochem counterbid would be unprecedented as most Western countries, including Canada, have been wary of allowing state-controlled companies from China to buy major domestic resource assets.
Beijing-based Sinochem is understood to be willing to make extraordinary concessions to both the federal and Saskatchewan governments to assuage concerns over Chinese ownership of the Canadian resource crown jewel.
Among the considerations being discussed is a “golden share” in Potash Corp. that would give the government a veto over any major changes to the corporation and its operations as well as a binding mechanism to allow it to enforce remedies if the new owners fail to live up to their commitments. The Chinese company would also promise to continue to sell Potash Corp.’s production to China through the Canpotex marketing arm.

Comments

Popular posts from this blog

Is Scott Morrison getting ahead of Malcolm Turnbull in the GST debate?

Prime Minister Scott Morrison under pressure as the question about knowledge of a rape gets embarrassing

Remembering that Labor only lost last time because of Bill Shorten