Hot commodity

Bill Doyle has done his part to put Saskatchewan on the map. He’s led one of the country’s most valuable companies, Potash Corp. of Saskatchewan, for the past decade and doesn’t shy away from superlatives when describing the business of mining the pink, potassium-rich salts that are used in fertilizers. “When you really think about it, our business is indispensable to humankind,” boasted Doyle of the dusty Prairie industry in a video uploaded on YouTube earlier this year. “There is no advancement on the face of this Earth without feeding people.”

It’s a grandiose statement, to be sure, but one that now sounds less over-the-top in light of recent events. Earlier this month, Australian mining giant BHP Billiton expressed interest in buying Potash Corp. through a hostile US$39-billion takeover—a move that has suddenly left those in Saskatchewan’s business circles blinking in the global spotlight. “The people in the business community always understood its importance,” says Kent Smith-Windsor, the executive director of the Greater Saskatoon Chamber of Commerce, of the underground mineral. “But the extent to which this has hit popular media has taken us a little bit by surprise.”

So far, however, there’s surprisingly little local opposition to the prospect of BHP gobbling up the former Crown corporation, which generated $4 billion in sales last year, accounts for 20 per cent of the world’s potash production, and is deeply intertwined with the community. One possible reason is because BHP’s overtures have finally conferred upon Saskatchewan a sense of global importance, right alongside Alberta and its vaunted oil sands. Fertilizer is expected to be a growth industry as the world’s population continues to balloon and developing countries increase their consumption of not just grains, but related products such as grain-fed beef. “It does suggest the amazing resources of the central plains of Saskatchewan,” Smith-Windsor says.

For its part, BHP has pledged to build “a sizable new business in Saskatchewan,” where it already owns rights to potash reserves, but critics are quick to note that buyers of iconic Canadian firms haven’t always lived up to their promises. Bill Boyd, Saskatchewan’s minister of energy and resources, says the province intends to conduct a review of any sale to ensure “the taxpayers of Saskatchewan, the people that own the potash resource, benefit from any kind of takeover now or in the future.”

Doyle, who stands to reap a US$500-million payday from any sale, and the board have so far resisted BHP’s $130 a share offer, calling it an attempt to “steal” the company—a move analysts have interpreted as a ploy to extract a higher price (shares are currently trading at US$145). But some local business people aren’t so sure investors are eager to sell. Potash Corp. shares hit a high of US$240 a few years ago during the global commodities boom, and some may be betting on a repeat performance. “You don’t need to sell your company lock, stock and barrel if the price is going back to $240,” says Neil McMillan, CEO of Saskatoon-based gold miner Claude Resources, who described Potash Corp. as a “jewel” of the industry. “It used to be automatic that once you’re put in play, you’re gone. But I would be surprised if Potash Corp. went quietly and easily.” All of which means the world’s focus on Saskatchewan is unlikely to fade any time soon.