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BHP's Potash Bid Up in Smoke


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Johannesburg, Nov 4 (I-Net Bridge) - Global resources giant BHP Billiton (BIL) said Thursday that it is disappointed by the announcement by the Canadian Minister of Industry Tony Clement that he is not satisfied at this time that its offer to acquire Potash Corporation of Saskatchewan Inc. is likely to be of net benefit to Canada.

The Minister has advised BHP Billiton that it has 30 days or such further period as may be agreed to make further representations and undertakings to the Minister with respect to the offer.

At the end of that time period, the Minister will notify BHP Billiton whether he is or is not satisfied that the offer is of net benefit to Canada.

BHP Billiton said in a statement that it is is disappointed, but continues to believe that the offer is of net benefit to Saskatchewan, New Brunswick and Canada. It will continue to cooperate with the Minister and the Investment Review Division of Industry Canada and will review its options, the company said.

BHP Billiton has made a US$130-a-share cash bid for all of PotashCorp but after being rejected by the world's largest potash producer, the resources giant took the offer directly to PotashCorp's shareholders.

"Potash is a mineable commodity in which we can use our core skill-set of building, expanding and operating mines," BHP Billiton CEO Marius Kloppers said at BHP's recent AGM.

"PotashCorp's long life, low-cost assets are a natural fit with our portfolio, and will further diversify our product offering by commodity, geography and market," he said.

BHP Billiton said it had been analysing the potash market since 2003 and made its first potash investment in 2006 but the acquisition of PotashCorp, the world's largest producer, is timely in that there is a marked increase in global consumption of goods, including food.

As demand for food increases farmers seek to improve food production yields and potash is a mineral used to enhance crop yields.

PotashCorp's tier one, low cost and expandable assets are seen as further diversifying BHP's portfolio by commodity, geography and customer.

But there is still a way to go before BHP can claim victory.

The offer, which closes on November 18, must still be approved by Canada's federal government, which has in turn asked the provincial government of Saskatchewan for input.

And Saskatchewan, which is home to PotashCorp's main mining operations, is not yet convinced of the merits of the takeover.

The province is concerned that provincial revenues would be hurt over the long term if control of PotashCorp shifts to BHP and reportedly stands to lose US$3 billion in revenue if the deal goes ahead.

Saskatchewan Premier Brad Wall has echoed this, saying the BHP bid was not beneficial for the province or for Canada.

"As you know we have been a long-time investor in Canada. Canada is a premier mining investment destination, and we believe that we have made a positive contribution to the Canadian communities in which we currently operate," said Kloppers.

"We also believe that the same net benefits will accrue to Saskatchewan if we are successful in acquiring PotashCorp," he said, adding that the group continues to focus on gaining Canadian regulatory approvals.

I-Net Bridge, Tel: +27-11-280-0814,
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