Ottawa must review takeover bid for PotashCorp

NUPGE president James Clancy calls on the Harper Conservatives to intervene on behalf of Canadians and to develop a national industrial strategy for the country.

Ottawa (15 Sept. 2010) - The National Union of Public and General Employees (NUPGE) is asking the federal Conservatives to review the multi-billion-dollar takeover bid of PotashCorp of Saskatchewan (PCS) by the Australian conglomerate BHP Billiton Ltd.

In a letter to Prime Minister Stephen Harper, NUPGE president James Clancy says allowing the fertilizer giant to fall into foreign hands would be bad for the people of Saskatchewan and for all residents of Canada.

Clancy also calls on Harper to develop a national industrial strategy for Canada rather than remain passive year after year as foreign multinationals take over an ever-increasing share of Canadian resources and industry.

"Sadly," he writes, "it seems the only debate that corporate executives, shareholders and the business media want to have about the deal is whether the amount offered by BHP is high enough. They've said next to nothing about whether the sale will benefit the people of Saskatchewan and whether it is in Canada’s best interests."

World's largest

PCS is the world’s largest fertilizer firm in a province that has the world’s largest deposits of potash at a time when global demand is high, notably in China and India. The industry contributes thousands of jobs and the potash royalty and tax system provides significant revenue to support local and provincial public services that benefit everyone in Saskatchewan. 

"As you know, the Investment Canada Act gives the federal government the power to review and reject foreign takeovers of Canadian companies if they do not provide a ‘net benefit’ to Canada," Clancy notes.

"I urge you to challenge BHP to provide the evidence of the significant net benefits this deal offers the people of Saskatchewan and to make that evidence public. For example, what new investments will BHP make that PCS isn’t already making? What guarantee is BHP making to protect and create jobs in Saskatchewan and to recognize the labour rights of workers?"

Clancy says it is also critical for Ottawa to consider how global potash prices will be affected by a takeover by BHP.

"For example, if a new owner plans to quickly increase production and supply to maximum levels, this would drive down prices, and this would mean lower revenues for the province. It is important that the federal government ask BHP executives what their plan is to keep prices strong," he writes.

Canpotex threatened?

He also argues that Ottawa must be concerned about the possibility of BHP pulling out of Canpotex, the global marketing arm of Canadian potash industries – one of the few industries in which Canada is the dominant player and somewhat of a price-setter.

"BHP has already said it wants to sell potash itself. PCS is the biggest potash producer and its departure from Canpotex will mean the end of the agency. That in turn will leave Canada with little influence over potash pricing and marketing," Clancy argues.

He also says the proposed sale puts a spotlight on the fact that Ottawa lacks a coherent national industrial strategy to ensure the business sector is making decisions that protect and promote the interests of Canadian industry, families and communities. 

"Mining is an industry in which Canada should be a world leader, with its own companies spanning the globe," Clancy notes. "Instead, we have have a weak presence worldwide.  It seems the only strategy for our mining sector is to build companies up and then sell them to a foreign owner at a price that ensures corporate executives and shareholders make a ton of money."

'Relentless surge'

He notes that there has been a relentless surge of foreign multinationals buying major Canadian companies over the past decade (e.g. Inco, Stelco, Algoma Steel, Falconbridge and Dofasco) with devastating results for workers and communities.

"Each time the new owners promised to bring more jobs and invest in the local community, only to forget or discard these promises once the deal was done and approved," Clancy writes.

"Once again, I urge you to use the federal government’s authority under the Investment Canada Act to review this potential takeover of PCS and force BHP to provide evidence that the deal will provide a significant net benefit to Canada."

"At the same time, I urge your government to develop a national industrial policy, in consultation with stakeholders – including workers and their unions – that will protect and promote Canada’s priorities and the public interest."

NUPGE

The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE