Potashcorp Case Study

Resource nationalism is largely perceived as developing countries phenomena, with Latin America and African resource-rich countries leading the way in terms of increasing government stakes in the extractive process, mainly through tax and royalty regimes. Nonetheless, resource-rich developed countries, notably Australia and Canada have increasingly adopted resource nationalist policies that include the blocking of Chinese investments and the tightening of fiscal regimes in the extractive sectors. The failure of BHP Billiton’s bid for PotashCorp in November 2010 blamed by the company’s chairman, Jac Nasser, on a global trend towards “protectionism or nationalism” arguably represents an escalation of the politics of resource nationalism in the developed world.
However, prior to the BHP Billiton bid for PotashCorp, Ottawa had blocked just one of over 1,600 foreign acquisitions since the adoption of the Act in 1985. Some of the apparent underlying reasons for withholding approval for the deal had to do with the anticipated revenues from potash in an environment of high commodity prices a dynamic that underlies other resource nationalist policies. The decision to block the BHP bid also appears to relate to populist resource nationalist rhetoric. Saskatchewan’s centre-right premier, Brad Wall, was the most vocal and determined opponent of the transaction, arguing that increasing food security concerns had made potash a vital resource, and argued that control over this ‘strategic asset’ was crucial for Canada. In terms of claiming larger