Will pensions hook up with a Chinese sovereign wealth fund to outbid BHP? Who knows what they’ve got cooking on this deal? And what about PE funds? The risks are high but the returns are equally attractive. Stay tuned, things are heating up in the commodity space.
I’ve been slow to this story, but here’s a round-up of commentary at Zerohedge to get you started.
I was wondering why, since public school teachers and municipal employees are among the most vociferous proponents of economic Canadian nationalism, that we didn’t see OMERS and the Teacher’s Pension funds, two of Canada’s largest, join forces to bid for Potash. Guess they’d rather purchase Australian hotels and/or second rate hockey teams than a Canadian firm that actually makes money, helps solve world hunger, provides exports, and delivers a lot of jobs.
I’m waiting for the CBC investigative report that asks these funds why they don’t put their money where their members’ collective mouths are.
Here come the Chinese … POT is just the start:
http://ca.news.finance.yahoo.com/s/02092010/2/biz-finance-chinese-firm-makes-bid-sask-coal-landowner-deal.html
Any deal involving the Chinese would have to have some pretty iron-clad clauses. It is beneficial to PCS to keep it’s partners in selling potash. The Chinese if it is government has absolutely no interest in that. They want it cheap.
I like the idea being tossed around that the Prov. retains mining rights. In the event of a contract dispute the Prov. removes the right to mine until resoloution of the dispute. It does sound a little socialist but I have a healthy dislike for the court and it’s costs. Why should the taxpayer pay for contract disputes?
Give the Chinese nothing. Sell them nothing. Involve them in nothing. Do not hand over controlling interests of any resource to the Chinese government. These are the same people who pay their own slaves virtually nothing, who tear down houses, shoot political prisoners, commit acts of female feticide and infanticide, squash free expression and have a hand in the torment of the North Koreans.
Give them nothing. No amount of money can be worth having them as partners.
Only in Canada would we be dumb enough to sell Potash Corp to the Chinese.
I have been following this closely, since BHP made its offer. I don’t know if there will be a higher bid or by whom, however the thought that the Sask gov’t. would institute rules or “Provincial demands” smacks of Danny Williams latest triumph or Hugo Chavez. I thought Sask. believed in free enterprise.
Not really knowledgable about Potash Corp but conventional wisdom makes it an unlikely private equity target. Even if you could find interested lenders you can’t leverage those assets easily and what’s the exit plan, sell to BHP? Even a long hold needs to exit….
I am not overly familiar with the BHP bid but I can’t imagine it gets approved at $130 and it is difficult to see any other legit bidders in the wings. Maybe if Glencore decides to take over the world?
Osumashi, you’ve forgotten one key thing about Canada: no property rights. The government still can take it away from you.
If the Chicoms buy Potash Corp, it isn’t like they’ve bought something that they can carry away with them, right? More fool they are. Pass a little bill, SHAZAM! no more Chicom controlled mine in Saskatchewan.
However your point is well taken. “Let them starve in the freezing dark” is an excellent policy wrt Chicomland’s lovely government.
Trade….
Not just goods and services….
Much like the petro-shieks, China needs to invest it’s US $$$ equity into something productive.
We, Canada, always need investment and only the air-headed reject foreign investment….as Phantom has pointed out a mine cannot be hauled away and legally the Crown owns everything anyhoo.
When the usual suspects complained bitterly about massive US investment in Canada….the Brits were whinning about Canadian investment in the UK…especially media……now they have the AAArabs…..
The fall of the USSR, required massive foreign investment to prime the economic pump but Putin’s crowd has put an end to that….and Russia’s economic recovery….
Investment foreign and domestic is what boosts an economy…..OBOZOs stimulus just expanded government producing jobs(for the faithful)costs (no income)…..no contribution to the GDP.
The only reason d’etre for the stock market is to organize/facilitate investment. T-Bills don’t produce widgets but increase taxation penalizing economic activity. Much like payroll taxes penalize employment.
Workers complain bitterly about payroll deductions but stupidly are ignorant that it they who actually pay employer payroll taxes. Payroll expenses include wages, employer pension/comp contributions AND payroll taxes. Employer contributions are labled such to conceal worker taxation…and it works….
Brad Wall appeared on BNN Thursday night looking for a way to block the Chinese intentions.
as Phantom has pointed out a mine cannot be hauled away
Yeah, but the stuff that’s in the mine, the reason for it’s existence, gets mined out and hauled away.
Sure it’s Canadian miners that get the potash out, but it’s Chinese factory workers that will refine the potash.
About 93% of world potash consumption is used in fertilizers, with small amounts used in manufacturing soaps, glass, ceramics, chemical dyes, drugs, synthetic rubber, de-icing agents, water softeners and explosives.
About 150 countries use potash for their crops, but it is only produced in only about a dozen of them.
If China gets their hands on PotashCorp they’ll have effective control of 1/3rd of the world’s potash and leverage over the food production of about 140 countries.
I doubt it is military strategy, they are just trying to get their hard currency into things that have intrinsic (inflation-deflation proof) value. Remember that they just got burned to the tune of half a trillion dollars in bad paper investments.
If China started any real trouble, it is unlikely that their paper ownership of a company in Canada would continue to be respected.
Anything that would give China the octopus a leg up is a bad idea.
Just my thoughts.
It doesn’t have to be a military strategy.
It could simply be a “do what we want or you don’t get any potash at a reasonable price” strategy.
It’s about influence.
Remember when oil was $140+/bbl?
That was China doubling their strategic reserves at the same time that the U.S. was doubling their strategic reserves.
The suspension of mining rights would not be used for labour disputes. It would be used if the company reneges on their commitments. We do not want it dragged through the courts while the company is in non-compliance.
Better to keep this loc cost source of a strategic commodity out of Chicom hands.
If Canada refuses the sale, the Chicoms will have to respect Canada’s wishes that much more, as China must feed herself to be a geostrategic force. China wants self-sufficiency so she can have a free hand in foreign policy.
Is that the same rural conservative welfare bum Bill Boyd who, as part of the Devine debacle,
ideologically, ( in a small dead teabagging sort of way) gave PCS away for chump change…..
you know….Chucky Childers got the gold, SK taxpayers got the shaft??? And now you free enterprisers are singing the blues….ain’t life a bitch?
I believe in free enterprise, but government owned companies are not free enterprise. Governments have a monopoly on the use of force and they make the laws. I know that the Chinese can’t make laws in Canada, but owning assets here gives them strategic and diplomatic pull non the less. If our government does something they don’t like private Canadian interests in China will suffer in exchange.
phil Those of us that could read bought the maximum amount of 10% convertible bonds at 18.00/share
or cash at maturity.
Those that didn’t are still paying union dues and bitching.
See a difference?
It is not exactly a military strategy, rather it is food strategy.
Chinese already cornered most of the raw-materials mining in (black) Africa, they are also the main producers of some raw-materials necessary for computer production and they also want to have large influence in production of fertilizers. If China will produce most of world’s fertilizers it will have a large influence on food production and in consequence on food prices.
If that Chinese company is small (as was said in the article) then it is backed by Chinese government and, therefore, by Chinese Communist Party.
Unfortunately many Canadians look at immediate profits forgoing long-term gain but Chinese ( or at least Chinese government)look at long term profits forgoing immediate gain. Sometimes PRC even force some of their private companies to loose profits against these companies and their managers’ will.
I think that if Canadians and Canadian companies will be looking only at short-term profit then in competition with Chinese we will loose, and loose big.
Conclusion – I am against this sale to Chinese or the partial ownership of Potash Corp. by Chinese.
The real problem is that PUBLIC Union Pensions in CANADA have a vested interest (Monopoly) & effective Control over Gov’t Policy… Its the Anti-Trust issues that Canadian Pension Investments Pose.. They are not really investments but a Guaranteed return on what is actually Gov’t debt…
Public Union Pension Funds should not be allowed to Invest in a Monopoly dependant Business, like Broadcasting (CTV) or Crown Corporations that are controlled by Government policy… It’s a conflict of interest
If the Sask wants to sell a Crown Asset, like SASK Power, they MUST desolve the monopoly such that the business is Competitive..
JMHO
BYW: I only used Sask Power as an Example..Those that remember that the “PAST” NDP SASK Gov’t was found Guilty of International Potash Price fixing, don’t know the present legal status of that “past” Crown Asset….
Fear of the unknown informs many of the posts here. What evidence can you bring to show me that Chinese ownership has caused real economic harm to Canadians? I’ll be persuaded by that, not the xenophobic rantings of people whose ancestors thought that robbing Japanese-Canadians of their property and sending them to internment camps was a good idea because they looked like the enemy.
Does anyone know that the public sector pension funds haven’t already considered a POT takeover?
Allen,
A business investment by China does not damage anyone, but if part of that investment is actually the Canadian Government off loading pension benefits (Debt) to future generations.. I would say it is Corrupt…
An Example of BS Economics:
The Obama stimulus spending produces a debt that is backed by US Bonds, the bonds are intended to be sold to wealthy US investors or institutions. The fools that put up their cash (spending money for Government) get paid by bigger fools…It’s economics by fiat that requires the middle class & Businesses to work harder to earn the same level of living/wealth…The US Investors & Business interests are instead cutting costs & Jobs. The Gov’t is buying its own Bonds
I will skip Gold and go to Bullets & Beer
Allen. I’m not too sure about the rest of the country but there is no pension funds as such. The Fed. pension surplus was basically confiscated to pay the debt down under Martin. The Feds exempted themselves from federal law requiring funds be held in trust. There is no fund, it is general revenue.
The Prov. I reside in matches employee contributions invested in an investment firm located in BC.