* Province wants to keep BHP in marketing arm
* China is world's top potash consumer
* Potash Corp slams BHP calls to customers
* Belarussian exporter seeking higher prices
(Repeats to widen distribution)
By Rod Nickel and Euan Rocha
WINNIPEG/TORONTO, Aug 30 The Canadian province
of Saskatchewan, home of takeover target Potash Corp (POT.TO)
(POT.N), would have "lots of concerns" about a Chinese
sovereign fund or state-owned company buying part or all of the
company, Energy Minister Bill Boyd said on Tuesday.
Potash Corp is currently facing a $38.6-billion hostile
takeover bid from BHP Billiton (BHP.AX) (BLT.L), leading to
speculation that top potash consumer China could become
involved in a competing bid.
"That's where some of the concern would be, having a
customer whose interests obviously are to have very low
prices," Boyd told Reuters in an interview. [ID:nN31264758]
For stories on BHP's takeover bid: [ID:nN22340110]
Saskatchewan, which produces one-quarter of the world's
potash, depends on royalties from the crop nutrient for
hundreds of millions of dollars in revenue each year. It
received nearly C$1.4 billion ($1.3 billion) in 2008-09 after
potash prices spiked.
The battle for control of the world's biggest potash
producer is now drawing in the company's customers, Potash Corp
said on Tuesday, accusing BHP of making "inappropriate and
highly unethical" contact.
In a letter to its customers, Potash Corp said it recently
learned that Chris Ryder, the head of potash marketing for BHP,
made calls to many of them.
"Since the purpose of BHP Billiton's call clearly was not
to solicit your potash order from BHP Billiton's Jansen project
... we consider this contact to be inappropriate," Stephen
Dowdle, Potash Corp's head of sales, said in the letter dated
BHP's Jansen project, also located in the potash-rich
province of Saskatchewan, is still years away from completion.
Potash Corp, which has rejected BHP's $130 a share offer as
"grossly inadequate," questioned the purpose behind BHP's calls
to its customers.
"We can only assume that BHP Billiton's purpose is to sow
seeds of doubt and confusion about the future of Potash Corp by
raising questions about our ability to do business across the
nutrient spectrum, as well as the future location and makeup of
our sales organization," said Dowdle, in the letter.
BHP declined to comment on the matter.
The Anglo-Australian mining giant has also gone offside
with the Saskatchewan government because of its public comments
about possibly marketing potash independently, rather than
through Canadian marketing agency Canpotex.
Boyd said the provincial government is now considering
legal options such as regulations and laws to force BHP, or any
other buyer of Potash Corp, to remain within Canpotex with
partners Agrium Inc (AGU.TO) and Mosaic Co (MOS.N).
Saskatchewan's royalties hinge more on prices than
production levels and Canpotex is one of two potash export
consortiums that dominate global trade.
The other, Belarussian Potash Co (BPC) is again pushing for
higher prices, hoping a strong outlook for grain prices will
persuade farmers to accept an increase at this time.
BPC has posted new potash prices for exports to Asia and
Brazil beginning in September, according to FMB, an industry
BPC mounted a similar drive in February, but resistance
from customers was too strong to sustain the increase.
"Buying activity has picked up quite a bit -- Brazil is
buying and farmers in the U.S. are also ready to buy for this
fall ... The market is much tighter now, than it was back
then," said Gleacher & Co analyst Edlain Rodriguez.
(Editing by Janet Guttsman and Rob Wilson)