Industry Minister Tony Clement said the Anglo-Australian mining company had not satisfied the requirement that such a large foreign investment create a "net benefit" for Canada. While Canada gave BHP 30 days to come up with a better proposal for the world's largest fertilizer producer, the chances of the company making a successful modified offer appear remote, Reuters reports.
The Canadian government has also approved takeovers of three of the nation's biggest mining and steel companies over the past several years. Potash controls more than a fifth of the world's reserves of potash, a key ingredient in fertilizer, and is considered an important global price-setter.
A Deeply Conflicting Issue
A recent Globe and Mail poll of Canadian business executives found a nearly equal split between those who said they were concerned about the government's action and those who weren't.
"I find myself very conflicted by this issue," Ian Telfer, chairman of Goldcorp (GG) told the Globe. "As a long time proponent of free markets it pains me to see governments interfere in the movement of capital. However, as a proud Canadian .... I agree with the decision and I am very pleased that Canadians will continue to have the opportunity to invest in these unique Canadian assets for decades to come."
Canada is not the first nation to block such asset sales, especially when it comes to natural resources. Just last year, it was the Australian government that blocked a mine sale to China, citing national security concerns. Similarly, a Chinese company withdrew its bid for Nevada's mining company Firstgold after it became clear the U.S. might object because of security concerns, though some Firstgold investors accused the government of "anti-Chinese protectionism."
Shares of BHP Billiton were up nearly 5% in morning trading.