Playing with political fire on Potash file

News report: Ottawa wary of Potash takeover

When I read the views of unnamed sources in my morning newspaper, it can be fun to try to guess where they work, and even who they are. In the case of secret sources, at least on most stories, you simply start by asking the rhetorical question: who benefits from this storyline getting out there?

As someone who has long challenged the wisdom of allowing Canada’s resource and industrial giants to be sold off to foreign concerns, the Globe and Mail headline reporting that Ottawa is “wary” of the proposed Potash (POT:TSX) takeover is more than a bit titillating. Downright good news, in fact.

The lobbying is fierce from what I can tell, and that’s just we can see firsthand. Saskatchewan Premier Brad Wall send me and others in Canada’s Venture Capital and Private Equity Assoc. an email blast last week, in the form of a personal letter on his letterhead, extolling his position against the proposed takeover. His upcoming speeches in key centres are well-designed to keep the pressure on the federal government.

And what of that pressure? According to The Globe & Mail’s “sources”, the worm is starting to turn at Industry Canada:

While BHP continues to negotiate with Investment Canada, Industry Minister Tony Clement appears to be swayed by Premier Brad Wall’s insistence that Potash Corp. of Saskatchewan Inc. has a dominant position in a critical commodity sector, and that no other country would allow such a business to be sold off to a foreign acquirer, sources close to the discussions said Wednesday.

The challenge with these or any “sources”, is determining 1) where they work, 2) if they are part of an intentional PR strategy or just freelancing to advance their personal agenda on a topic, and/or 3) if they are on an intentional mission, what the ultimate endgame of their employer is.

Although the story’s sources could have come from anywhere (Wall’s circle, Clement’s circle, Industry Canada, PMO, investment bankers working on the file for either Potash or BHP, PR advisors to Potash or BHP, etc), the fact that the story wasn’t written from Bay Street (or even with “files from Boyd Erman”) cancels out a few of those choices. The Vancouver & Ottawa dateline is curious, but let’s assume for a moment that these are Ottawa sources, in light of the lead authour. And if we also assume that these plural “sources” aren’t a rogue Nationalist cell within the Industry Canada bureaucracy, then this story has some legs.

The challenge is to determine if 1) this is Minister Clement’s political trial baloon in advance of turning the proposed takeover down, or 2) this is a negotiating tactic in the attempts to get more “net benefit” concessions out of BHP (see prior post “Letter of Credit would solve hollow “Net Benefit” rule” Oct 2-10), with the full intention of approving the deal at the end of the day.

If it is the latter, I fear that the government is playing with fire. If the goal is to extract a bigger pound of flesh from BHP, it makes sense to say so. Don’t tease the populace, or the Liberal Party. Otherwise, the expectations will soon be such that the Feds will look weak if they don’t say “no”.

MRM
(this post, like all blogs, reflects a personal opinion)