National Post

Ottawa’s BHP betrayal
National Post

The Canadian government has damaged the reputation of Canada as an open economy committed to free flows of capital by rejecting BHP Billiton’s proposed US$39 billion bid for Potash Corp. In the process, it has created a major headache for BHP Billiton’s Marius Kloppers, who has massive financial firepower that politicians and regulators are preventing him from deploying.

While BHP Billiton’s ambition of acquiring Potash Corp isn’t quite dead — the Canadians have given it 30 days to make further representations and offer further undertakings — the decision announced by Industry Minister Tony Clement, is going to be very difficult to reverse.

That’s despite the fact that Potash Corp is majority foreign owned already, that BHP Billiton would have ultimately distributed more than US$40-billion to Potash Corp shareholders, would have spent $12-billion developing its own Jansen potash project, would have provided thousands of new jobs and would have relocated the effective head office of Potash Corp from Chicago to Saskatchewan.

While Clement’s statement said the Canadian government remains committed to an open climate for investment, its actions have betrayed its words. The rejection will be interpreted as a turning point in its attitude towards foreign capital and can only encourage the protectionists.