Saskatchewan set to say 'no' to Potash deal

Saskatchewan Premier Brad Wall says he's not convinced a BHP Billiton takeover of Potash Corp. of Saskatchewan would be good for the province or the country.

"As of today, I still do not see how this takeover is a net benefit to Saskatchewan or Canada," Wall told reporters Wednesday morningas his cabinet prepared to make a final recommendation on the Billiton bid.

Wall is to make a formal announcement Thursday on the government's decision, but he hinted the answer will be no.

In August, Australia-based Billiton launched a $38.6-billion US bid to buy PotashCorp, which has corporate offices in Saskatoon and Chicago and operates five large mines in the province.

Any deal would have to be approved by Investment Canada, and Saskatchewan's opinion will carry considerable weight.

Wall referred to a Conference Board of Canada report on the proposed sale that said Saskatchewan stands to lose billions of dollars in tax revenue over the next decade if Billiton's bid is successful.

"In order for this takeover to be revenue neutral we would need, the people of this province would need, to see $3 billion come from somewhere," Wall said.

On Tuesday, Saskatchewan officials said Billiton had offered to pay $370 million into an infrastructure fund.

Billiton, meanwhile, was responding to the Saskatchewan government's concerns Wednesday.

In a news release, the company said that while the tax deferrals are fully permitted under Canadian law, it was prepared to make commitments "that should effectively address the tax loss concerns of the province."

The company has also promised to boost corporate office jobs in Saskatchewan, by establishing its global potash headquarters in Saskatoon.

Asked about Billiton's offers to sweeten the deal, Wall sounded skeptical.

"In every single takeover of a natural resources company in Canada as of late, there have been promises made and promises are broken," Wall said. "And Investment Canada has been letting the companies off the hook."

In Ottawa, politicians were also weighing in on the Billiton bid.

Federal Industry Minister Tony Clement, whose department is expected to make a final decision about the deal by early November, talked about the strategic importance of potash, which is used to make fertilizer. Saskatchewan has half the world's supply of the pink mineral.

Clement didn't say anything about which way the government was leaning, however.

"My responsibility is to make sure that whatever decision we make is the right decision," he said.

Also commenting Wednesday was Liberal MP Ralph Goodale, Saskatchewan's sole Liberal member.

"We agree with the Province of Saskatchewan in their assessment," Goodale said. "They are obviously much more privy to the detail than we can be and that's one of the problems in this transaction and with the current legislation, that it's far from transparent."

PotashCorp has called Billiton's $130 US-a-share offer inadequate and said the potential losses to Saskatchewan are even worse than the Conference Board says.

PotashCorp shares were down $1.73, to $146.67, in early trading Wednesday on the TSX.