BHP Billiton plans to base the president and headquarters of its Canadian potash business in Saskatoon if it is successful in acquiring Potash Corp. of Saskatchewan Inc., a BHP executive said on Wednesday.
“We truly believe in actually setting up a Canadian-based business run out of Saskatoon,” said Graham Kerr, president of BHP’s diamonds and specialty products division, after meeting with premier Brad Wall earlier in the day.
Taking aim at PotashCorp’s corporate office near Chicago, where, in addition to Saskatoon, company CEO Bill Doyle also works, Kerr stressed in an afternoon interview BHP’s potash base would be as close to the action as possible.
“We will have the head of our potash operations based in Saskatoon, as will be his management team -Â so you won’t have a series of people based in the U.S. that are running potash,” he said.
More than 60 people already work in BHP’s Saskatoon office, compared to between 30 and 40 at its Canadian head office in Vancouver and between 50 and 60 in Yellowknife near its Ekati diamond mine. Were the acquisition of PotashCorp to be successful, Kerr expects the company’s Saskatoon-based staff to swell to the 200-person range.
“We have a very small office in Vancouver and we plan to keep that office there, but to give you perspective I think we have roughly 34 seats in the Vancouver office whereas the current building we now have in Saskatoon will hold approximately 200,” he said.
“Certainly as the business grows, (even) in terms of just Jansen by itself, that’s where we would see the bulk of the people.”
BHP’s Jansen potash project, located near the community of Lanigan (roughly 140 kilometres east of Saskatoon), could be the province’s first new potash mine in decades. The Australia-based company is set to make a production decision about the site in the fall or winter of 2011.
But the world’s largest mining company makes clear that it wants to own PotashCorp’s already-operating potash mines. On Wednesday, BHP officially announced its proposal to buy the world’s largest producer of fertilizer – of which potash is a key ingredient -Â for $38.6 billion US.
After the Saskatoon company resoundingly, and publicly, rejected BHP’s offer on Tuesday, the mining company said Wednesday it is going straight to PotashCorp’s shareholders with its $130-per-share proposal.
Starting Friday, BHP will formally commence its offer to shareholders via newspaper ads, the company explained in a release. The offer will remain on the table until Oct. 19, unless it decides to extend the proposal.
“We’ve certainly put the offer out on the table now and it’s up to the shareholders to decide what they think,” Kerr said, adding he’s hopeful the acquisition will be a success.
BHP’s acquisition of PotashCorp would bring Canada, Saskatchewan and Saskatoon a range of benefits, including community spending and new environment and safety programs. The company, the division head said, has invested nearly $1 billion in Saskatchewan since opening an office in Saskatoon in 2008.
Kerr said BHP has informed Investment Canada it plans to maintain current employment levels at PotashCorp’s operations. It’s also set to continue PotashCorp’s capital spending programs.
“The reality is we don’t have an operating potash business now, so not only do we need the experience and the people that are currently working at Potash Corporation, we actually need more people to help build and grow Jansen,” he said.
While Kerr says the company has its hands full with plans to acquire PotashCorp and develop its Jansen project, it is fully aware of Saskatchewan’s natural resource bounty.
“I think we’ll look at it all on a commodity-by-commodity basis,” he said. “There’s no doubt that Saskatchewan has a lot of rich resources and, to be honest, there’s no doubt I think it’s a great place to do business.”
Saskatchewan’s Energy and Resources Minister Bill Boyd said Wednesday the province’s talks with BHP have been “informative,” but there has been no discussion about the company’s development of the province’s other natural resources.
Boyd, in a telephone interview from Regina, said talks between the two parties centered around the acquisition attempt and the Jansen project.
“They have provided us with some information with respect to their future plans in Saskatchewan, if they were successful in any acquisition, and also information in terms of . . . the Jansen Lake project,” Boyd said.
The minister said it’s not the government’s role to say which company would be better for Saskatchewan, but explained the province is monitoring the situation closely.
“This is very important,” Boyd said.
“There are a lot of people employed in the potash industry and by PotashCorp and these are very, very, good high-quality jobs, very well-paying jobs. We want to ensure that those jobs remain in Saskatchewan.”
BHP’s proposal to fold PotashCorp into its international portfolio has drawn attention to the province, he said.
“Whether or not this is successful remains to be seen and we certainly wouldn’t want to pre-judge that at all. I would say, though, it has once again put the spotlight on Saskatchewan as a great place to invest,” the minister said.
PotashCorp spokesperson Bill Johnson said Wednesday it has no new response to BHP’s proposal, saying the company made its position “crystal clear” on Tuesday.
Calling the takeover attempt aggressive and opportunistic, PotashCorp president and CEO Bill Doyle said Tuesday BHP’s multi-billion dollar proposal “severely undervalues the company on every count.”
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