Hear, hear Minister Clement.
For background, Premier Wall made a patriotic and impassioned speech to the Regina Chamber of Commerce where he explained his decision not recommending the sale. It’s worth listening to. (1/3)
Part Two
Part Three
The issue isn’t so much one company buying another, it isn’t as black and white as that. PCS isn’t the only player in the potash market in Saskatchewan, just the biggest. Agrium, Mosaic and others are also involved.
They all share ownership of a company called Canpotex. Canpotex is basically the distribution and marketing arm for the Saskatchewan potash companies. They own a lot of rail, rail cars and port terminals in Vancouver and Portland. They sell the potash. PCS supplies approximately 60% of the potash Canpotex sells.
BHP has explicitly stated that they prefer to market their own product. They made it clear that they would not be interested in supporting Canpotex.
An affirmative decision from Ottawa with regards to this sale would adversely affect Agrium, Mosaic and Canpotex to a great degree and ultimately leave them ripe for a fire sale.
Last year the potash companies all halted production because the potash market had been saturated. The state of the global economy couldn’t support the volume of potash being mined. This depressed the stock prices, caused lay-offs in numerous Saskatchewan communities (of which Delisle was one because Agrium is about 6 miles away and PCS’s Cory mine is about twenty miles away).
This depressed market is what spurred BHP to come in and make a play for PCS. Good business and I’d applaud them. However the fact that BHP’s business model is so radically different from what is in place, the fact that the proposed take-over would threaten much more than just the board of directors for PCS, and the fact that potash is integral to the Saskatchewan economy made Saskatchewan very leary of the proposed take over.
I applaud Premier Wall for sticking up for his province against his normal prejudice and I applaud Minister Clement for the same. As I understand the Saskatchewan MP’s advocated strongly with the Federal Gov’t on Premier Wall’s behalf. They’ve been through a rough ride over this and they deserve thanks as well.
Gee, cheers lance, isn’t Canpotex like a wheat board for potash? Scratch a right whinger and what do you get???
Goodale says he deserves the credit…Iffy even said it was the hard work of Goodale that made Harper see the light! (In reality they are in shock as they thought they would have a big stick to beat him with)
No, phil, it isn’t.
Lance’s comments raise far more questions than they answer, and as such make a pathetic case for opposing a takeover of Potash Corp by BHP.
What is so radical about BHP’s business model? Why is this assumed to be bad? Why not elaborate on this claim?
Exactly what would the takeover “threaten”? Why not elaborate on this claim too?
That potash is integral to the Saskatchewan economy is glaringly obvious. Why should this factoid on its own make anyone “leery” of a takeover by BHP? Are you suggesting they would shut down the mines? What makes anyone think that this would be any less likely to happen with the present ownership?
So, in the end the principle of laissez faire is one of convenience. Potash shareholders be damned, property rights are not immutable, they’re just upheld or taken away on the whim of the government when acting in the the interest of the “common good”. If crass political manuevering is neccessary then so be it. For all the lipservice paid here to letting the free market decide on the movement of capital and the insults that are commonly hurled at other jurisdictions for acting the way Brad Wall has just acted,(Danny Williams redux) I’m truly surprised. I guess it’s a little different when you have a vested interest and your government will protect you by running roughshod over the freedom of businesses to do business. And before any of you assume that I’m a gloating socialist, think again, I’m as laissez faire as they come. Here is something to think about, if you find yourself agreeing with Michael Ignatieff and Jack Layton, check your premises, there is a contradiction somwehere.
Dennis, go listen to Walls speech if you want the arguments. That’s why I put them up. If you don’t have the half an hour to spend then shut up cause you don’t have a clue what you’re talking about.
What was BHP proposing to move and ship “their” potash ?
Its not like there is a surplus of shipping space on the rail links and vacant spots in Vancouver harbor for a new BHP terminal.
Wow first time in a long time I completely disagree with something posted on SDA.
Protectionism is protectionism whether you say it is a special circumstance or not.
Fear of change again prevails in Saskatchewan. A lot of Brad Wall’s assumptions are on things he can’t predict.
I’m not clear how this move doesn’t make Potash a new Canadian / Saskatchewan sacred cow like our airlines, telecom industry, and banks.
Fred, they wanted to move the potash out of Vancouver, Washington.
You make a good point, although I have trouble with the outcome.
The federal and provincial governments should have anticipated this problem a long time ago. In fact, I was informed that originally there was a Canadian content requirement when the company was privatized. That was then removed by a previous provincial regime to open up the company to investors.
A second concern I have with this action is the chilling effect it may have on foreign investment in Canada. Changing the rules mid-game and talking about “net-benefits” is not a recipe for attracting capital. And foreign capital drives the economy and currency.
So while this may be a short term win for the government, I hope that it does not negatively affect our long term health in other areas.
And I hope that this is a catalyst for the various governments to do a better job of safeguarding national assets before we get to another embarrassing situation such as this.
The Liberals and NDP will crap all over the gov’t for this.
Just as they would have crapped all over them if they went the other way.
Everyone here is speaking as if no foreign investment has ever been allowed in Canada.
For heaven’s sakes try to keep things in perspective.
Also, do your homework on Marius Kloppers, CEO of Potash.
Sorry, meant to type “CEO of BHP.”
Typing too fast….
PHIL – Since when were left wingers ever free enterprisers? Make a leftist styled decision and poof! You’re suddenly opposed! Living proof that you don’t give a crap about this country just yourself.
Thanks for the nasty rebuttal Lance. It’s been pleasant talking with you. How rude of me to dare to question anyone’s assumptions.
Brad Wall nationalizes Potash corp, WTF
“Economic initiative cannot be left to the arbitrary decisions of private, individual interest. Open competition, if not wisely directed and restricted, actually destroys wealth instead of creating it…The proper function of the State in the Fascist system is that of supervising, regulating and arbitrating the relationships of capital and labour, employers and employees, individuals and associations, private interests and national interests…More important than the production of wealth is its right distribution, distribution which must benefit in the best possible way all the classes of the nation, hence, the nation itself. Private wealth belongs not only to the individual, but, in a symbolic sense, to the State as well.”
– Mario Palmieri The Philosophy of Fascism, 1936
Andrew Coyne explains it at Mcleans Magizine
“…they wanted to move the potash out of Vancouver, Washington.”
Again, I ask, why is this a bad thing?
PHIL – Since when were left wingers ever free enterprisers? Make a leftist styled decision and poof! You’re suddenly opposed!
Merely pointing out yet again the egregious hypocrisy of the small dead, tebagging mind.
If the cap fit, then wear it buddy boy.
CPC=LPC with a few shades of grey more or less depending on the circumstances. Actually I liked the Chretien government better than the current Harper govn’t.
I’ve given up on having a true conservative party in Canada (federal level). I’ll be looking for an independent candidate to vote for come the next election.
I dunno. The strategic resource part might move me….
But I really don’t think I am in favor of blocking that sale. Negotiating a better one? sure!. Denying a bad one. Definitely. But isn’t that denial up to the shareholders?
As a shareholder of a publicly owned company (PCS) I want the company to maximize shareholder value. Denying offers would seem to limit the shareholders getting the best offer. Limiting the amount bidders does not have the effect of increasing offers.
As a consumer of the resource… someone who buys potash for use on the farm. I am at a loss given the language used around Canpotex. A marketing group limiting the sale of a product produced by several companies in order to increase the price received for those companies. …
… Now that sounds to me like a cartel. Maybe its to my benefit as a shareholder. But as a consumer,.. I think I should be trying to find out who is launching the class action suit.
So as a Saskatchewanian with 50%+ of a strategic resource, blocking the sale was a good deal. But as someone who both owns shares in PCS, and uses the product… I can’t help thinking I am getting screwed.
Lance
Your snotty rebuttal to Dennis’ reasonable questions is totaly out of line and out of character.
At some point, after the 30 day period I assume, the government will have to make the case why PCS is unique. Then they really should establish a set of criteria that remains consistent.
I think that PCS is unique because its share of world wide reserves. In one trade BHP would have gained enormous control over an essential agricultural product. That kind of market power then gives them a unique trading chip that is rather different than most other foreign investment deals.
Campotex, OTOH, does seem like a private cartel that needs to be looked at. Along with government milk and egg marketing boards.
Although I personally disagree with Premier Wall and Minister Clements, I will still support them in their position based on TRUST that these decisions are not strictly political. If it wasn’t Premier Wall, I doubt I could make this comment. That said, I’m puzzled how ‘I’ could ever trust a Raiders fan. Go Chiefs Go
Also, my instincts now tell me that this is a simple ‘shakedown’ of BHP.I’m not sure of the ethics of the PM helping shake-down BHP, but that’s what it looks like to me.
Canpotex is the OPEC cartel for potash.
Clearly there would be major adjustments in Saskatchewan. Many could, in the short term, even lose their jobs. That sounds like the economy taking care of itself to me, frankly. And you could take Wall’s speech and substituted cars or steel or banks in place of potash.
I don’t for a second deny there would be a harsh economic impact on Saskatchewan, so I do give Wall some room here.
But I think just as much about the shareholders of Potash Corp., the ones who invested in the company when a real conservative government decided to turn it from a public company into a private one. What of their money and investement and choice?
And I think just as much about the other resources and big industries in this country, the ones that need more cash from more sources than may be available from Canadian investors (especially when we don’t allow bank acquisitions) in order to create those jobs and be economically sustainable. Who’s going to come spend millions and millions of dollars in preparing a bid here when the government can just willy-nilly, for its own self-interest, prevent private shareholders from making up their own minds about what’s in their own interest?
The provincial government has to look out for its own province without qualification. Like I said, I give Wall some space on this. A little.
But the federal government is supposed to rise about that and look out for the best interest of the country and the rights of individuals. The Investment Canada Act, which should be thrown out, allows a vague limit to the free market, requiring a deal to be of net benefit to Canada. Not the net benefit of the “Conservative” Party.
Someone up above said “CPC=LPC”. The flaw there is that the LPC has never blocked a private deal (let alone 2), never run up this size of a deficit, never grew the state to this size, never increased their own PMO pork by 30% during a recession, never had a $60 million sign campaign or a $2 billion 78 hour luxury vacation for political elites, never spent $20 billion to “stimulate” the economy and turned it into pork.
Stephen Harper today is why Stephen Harper helped create the Reform Party 23 years ago.
Hear, hear DT @ 1:08 PM.
It’s more of the same lip service to free market capitalism. It’s why I call them CINOs.
Canpotex is the OPEC cartel for potash.
Clearly there would be major adjustments in Saskatchewan. Many could, in the short term, even lose their jobs. That sounds like the economy taking care of itself to me, frankly. And you could take Wall’s speech and substituted cars or steel or banks in place of potash.
I don’t for a second deny there would be a harsh economic impact on Saskatchewan, so I do give Wall some room here.
But I think just as much about the shareholders of Potash Corp., the ones who invested in the company when a real conservative government decided to turn it from a public company into a private one. What of their money and investement and choice?
And I think just as much about the other resources and big industries in this country, the ones that need more cash from more sources than may be available from Canadian investors (especially when we don’t allow bank acquisitions) in order to create those jobs and be economically sustainable. Who’s going to come spend millions and millions of dollars in preparing a bid here when the government can just willy-nilly, for its own self-interest, prevent private shareholders from making up their own minds about what’s in their own interest?
The provincial government has to look out for its own province without qualification. Like I said, I give Wall some space on this. A little.
But the federal government is supposed to rise about that and look out for the best interest of the country and the rights of individuals. The Investment Canada Act, which should be thrown out, allows a vague limit to the free market, requiring a deal to be of net benefit to Canada. Not the net benefit of the “Conservative” Party.
Someone up above said “CPC=LPC”. The flaw there is that the LPC has never blocked a private deal (let alone 2), never run up this size of a deficit, never grew the state to this size, never increased their own PMO pork by 30% during a recession, never had a $60 million sign campaign or a $2 billion 78 hour luxury vacation for political elites, never spent $20 billion to “stimulate” the economy and turned it into pork.
Stephen Harper today is why Stephen Harper helped create the Reform Party 23 years ago.
Lance/Kate: Sorry about the double post. Feel free to delete one.
Meaning, the fed CPC.
Oh the difficulty of being an idealist in a realist’s world A free market is always a good thing. Any government intervention is said free market is a bad thing. So says my idealist side.
Now if I’m a free market kinda guy and I was wealthy enough to control the production of a given commodity in a given country; and I was wealthy enough to increase my production sufficiently as to lower the world price of my commodity thus making my competition vulnerable to take over; and if I were sufficiently wealthy to take over said competition, what would stop me from shutting down or minimizing production of said commodity in entire geographic areas once I own all the means of production? Of course limiting the production would increase the price which I could maintain through the judicious use of limited production.
So let’s say that I own all the potash production in the world and I determine that I will shut down or minimize production in Canada while I increase production in Australia who is to stop me and while my bottom line looks much better what does that do to the potash miner and all the jobs that support him in Saskatchewan? In other words what is the net benefit to Canada? Says my realists side.
Quite possibly the most shocking thing I have ever read on this site. I almost fell out of my chair. Well done. Sanity reigns. At least this time.
Aren’t resources a provincial responsibility? I think so and because of that then I’m glad Saskatchewan got it’s way regardless of what I might think of the proposed deal.
Joe:
Staying idealistic, or at least principled, and staying in the real world are not mutually exclusive and certainly are not mutually exclusive in this situation.
BHP was not going to become as powerful as you claim. Potash Corp is the biggest but not the only and produces only about 25% of the world’s potash.
Another way to look at it from a realists point of view is that prices will come down if a cartel is broken up, inefficient companies may go under without government protection, but ultimately prices will go down. That means that fertilizer prices will go down. That means that farming costs will go down. That means more farmers staying on their land and cheaper food and other agricultural biproducts for consumers. Says my realists side.
The federal government is not changing the rules mid-game, the net-benefits test is a longstanding piece of legislation in this country (and it should be noted that similar, if stricter, legislation exists in essentially every single “free market” economy in the world.) Many here are admitting that the BHP hostile takeover would have significant negative consequences for the province – So I ask, in what way does that provide a net benefit to the country? Canada is not Ontario, and western provincial concerns should be a consideration in deciding what constitutes a net benefit. Significant fiscal destabilization would be a serious problem for the province and have major long term implications for the people of Saskatchewan.
I doubt that this is going to affect Canada’s reputation as much as some pundits are arguing, there is clear differentiation in the importance of this industry to Saskatchewan, and in the importance of this product to world markets. Canada has accepted almost every single foreign takeover off that has been made over the last several decades, one exception is not a going to shatter this record.
Anyway, as a shareholder in POT, $130 a share is a complete joke of an offer and should have been rejected even if the gov’t approved the deal.
On another note, conservative does not equal free market libertarian. There are many strands and types of conservatives that exist in this country, and some of us recognize the limits and faults of the free market and are actually concerned with the future welfare of this province and this country.
Andrew Coyne on Foreign Ownership.
The Property rights of the owners to sell or not to sell?
www2.macleans.ca/2010/09/06/why-sometimes-its-best-just-to-let-go/
Let me guess; if the takeover was Bombardier there would not be a discussion. I doubt CBC would even reprt it let alone have two simultaneous (French and English) overriding the Minister’s comment.
If this were a move on the Fisheries East Coast, Captain Canada would be called out of retirement by Iggy and use the Labradour and Newfoundland Navy to send a shot across the bow of some ship and take a net to the United nations. I know the protest was because of the use of an illegal net, but is there not something untoward about a dramatic increase of artificial, chemically enhanced, fertilizer being used to grow things that ecologically twisted people could eat? sarc off.
What is really sad is awareness most of the naysayers would be protesting “Canada gave away it’s resource heritage” if the decision went the other way. The hypocrisy is annoying for people who have taken the time to review the information provided by and for Premier Wall.
Cheers; from Ontario.
The Canpotex cartel will, if it hasn’t already, come back to bite them in the ass. They are inviting production to compete with them from Russia and other locals that once in place can foul the market for decades.
Bill Doyle did well by it with his stock options, and some POT investors made out well indeed, but the longer term ramifications for POT and the people of Sask is less sanguine.
This protectionist action on the part of the CPC will have negative ramifications also for Canadian companies trying to engage in business and production outside of our borders. Bad decision.
What about the simple principle of property rights? You know, the idea that I should be able to sell my property to whoever I please, be they from Toronto or Australia.
Canpotex good, CWB bad? A cartel is a cartel.Whether it’s created by government fiat or conspiracy within an industry is moot.
And then let’s talk about property rights… Why should PCS shareholders be denied the right to sell their shares?
Property rights are good, except when they aren’t? Some property rights are more equal than others?
Oh, and Clement’s claim that the decision was his alone is completely laughable.
Exactly
Private Property Rights come into play here.
It’s NOT the government’s job to protect the other companies from a fire sale, that is the point. Privately owned companies answer to their share holders not elected officials we are becoming way to much like South America. If Sask’s people were that concerned why’d they let the Provincial government sell their share to private industry?
I love the way he just walked away from the podium without giving the rapacious media a chance to get their fangs in him.
I’m not that familiar with the CWB, but much of the criticism that I have seen on this site seems to be that it is forced upon western farmers, that they do not have the freedom to exit. I’m curious how a freely entered, voluntary corporate cartel can face the same criticisms as a government mandated marketing scheme on western farmers?
Anybody care to explain? Because given the criticism of the CWB on here I can’t see the comparison that everyone is making.
Remember PetroCanada ??
HRC:
I don’t like this decision and don’t like cartels, but you are mostly right about Canpotex not being like CWB. The CWB is imposed by statute and has the protection of the federal government, including this one.
Where there are similarities though is the effect on the market by controlling supply and prices.
puck, you nailed it.
// The Saskatchewan premier opposed the takeover because he feared BHP might wreck the cozy cartel arrangement his province has been using to keep world potash prices high
As he told a Toronto business audience recently, his government feared not only that the Australian company might crank up potash production but that it would withdraw from Canpotex, a marketing agency established by the province. //
Walkom: Potash decision is about politics and cartel pricing