Canada Funds Seek to Thwart Stake in Potash

(October 18, 2010) — Alberta’s provincial money manager is heading discussions with some of Canada’s pensions about a plan to maintain the independence of Potash Corp, the Globe and Mail reported Monday.

The plan involves taking an equity investment of about 30% in Potash Corp, the world’s largest fertilizer supplier, which would block BHP Billiton’s $39 billion hostile bid.

Additionally, the plan involves the fertilizer giant agreeing to allot the entire output of one of its larger mines to China in an effort to satisfy Chinese demands for long-term potash supplies while shedding concerns of nationalists and the Saskatchewan government about a foreign takeover of Potash Corp., the Globe reported.

The Canadian newspaper concluded that the pension’s effort would encourage China’s state-owned chemical company Sinochem to lend their financial clout in exchange for a guarantee to a large share of the company’s potash output. Last week, Sinochem said it removed itself from the bidding for Potash Corp., and Industry Minister Tony Clement later clarified that BHP’s bid was the only official offer on the table.

Sources told the Globe that the plan is being championed by Alberta Investment Management Co. (AIMco), led by Leo de Bever, the fund’s chief executive and chief investment officer. Last month, de Bever confirmed AIMco had been approached through intermediaries to join a potential Chinese-led consortium. However, he said at the time he couldn’t justify getting involved. In a September meeting with reporters, he stressed that AIMco’s motives must always be economic, not political or nationalistic.