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Monday Morning Commentary

Rick Swenson

The great potash debate has certainly been ratcheted up a few notches with the Sask Party Premier’s address to the Regina Chamber of Commerce last Thursday. With all of the passion and indignation that he could muster, Mr. Wall now has wrapped himself in the Saskatchewan and Canadian flags and has taken a business transaction between two potash companies to a supposed debate on national sovereignty of our resources. After trying to extort a billion dollars up front from BHP-Billiton which was probably for his domed stadium in Regina and the Children’s Hospital in Saskatoon, he is now saying that he is not interested in fulfilling his duty as Premier of Saskatchewan and negotiating a potential set of rules of engagement for BHP if they should be successful in their takeover of PCS.

I listened to the entire 23 minute address to see how he was going to leave enough wiggle room if the Federal Conservative government does what I and most other people expect and that is not to interfere in the market forces of corporate takeovers. Mr. Wall’s ascertains that it is not possible for the government of Saskatchewan to set in place the proper legal and legislative tools necessary to cope with a company like BHP, I find to be ludicrous.

Each and every week in the province of Saskatchewan, the Department of Energy and Mines tells oil and gas companies how much they can produce from new wells. This is done for several reasons. Firstly, because most oil companies do not own the mineral rights to the entire pool, it is necessary to ensure that reservoir pressure is maintained for other players and to make sure that the province of Saskatchewan gets the maximum amount of the resource. Secondly, if those chokes weren’t put in place, oil companies would pump the maximum amount when prices are high and shut in when prices are low. Every company has a different economic threshold for profitability on their production and there would be absolutely mayhem without the regulation. The same principle has applied to potash but it has been a gentleman’s agreement whereby the companies have controlled production in order to match production and worldwide usage. This has worked nicely for the companies and the government.

Much of the off-shore business in potash until very recently has been done with state-trading agencies. If the politicians here had been setting the removal permit amounts, they would have had to deal with politicians from the many countries that we do business with and it would have been very uncomfortable at times. With the companies doing the shut-in on production to limit supply, they are able to keep the backing of the politicians here and also use the generous unemployment insurance benefits that are provided by the taxpayer of Canada every time they layoff thousands of potash workers in this province when they are shutting in production. But the fact of the matter is that this is no different than what OPEC has done with its member states and probably what you will see emerge out of the industry in Russia and other east European countries. It has always been within the ability of elected politicians in the province of Saskatchewan to set the amount of any resource to be extracted in fact, uranium was classified as a strategic resource for Canada for many years and was strictly monitored as to how much could be produced and where it would go.

It is equally laughable that Mr. Wall would talk about our inability to deal with a large Australian mining company when the biggest shareholder in Mosaic is Cargill – a family-controlled, multi-billion dollar company – that probably dwarfs BHP-Billiton in size but we will never know because it is privately held and not traded on the exchange. That has not stopped the province of Saskatchewan from doing multiple deals with Cargill on things like fertilizer plants because the rules of engagement were carefully thought out and everyone had to sign on the dotted line. To say that the potash industry in Saskatchewan has been controlled by Canadians is totally untrue except for the brief period of time when the NDP bought out numerous American companies and formed the Potash Corp of Saskatchewan. That little experiment in socialism didn’t work because there is not enough money in Saskatchewan to finance the type of expansion and market development that is necessary to make an industry like this successful. They tried to over produce to pay the bills and were falling flat on their face. The international monetary market is necessary to assume the risk of these ventures and we would be totally remiss in taking away that ability of companies currently operating here or ones that wish to come here in the future.

We now have our big talking little Premier going off on a Canada-wide speaking tour at the expense of the taxpayers of Saskatchewan to promote his views on the sanctity of our resources. I would suggest to you that this is all about politics and positioning himself visa vie the NDP for the next provincial election. I wonder what Mr. Wall would have done if BHP-Billiton had taken him up on his billion dollars of cash and what he will do if Mr. Harper says that this deal can go ahead? Will Mr. Wall cancel his speaking tour so as not to infuriate the Prime Minister or will he come home and try and use this issue as a straw man to take away from the budgetary problems which will have to be dealt with in this province because of the disastrous year in agriculture and flooding in many of our urban areas? Mr. Wall definitely needs someone on the outside to become the boggy man so that he and his Ministers don’t have to face up to the realities of their mismanagement of the Saskatchewan economy. I have to hand it to him and his handlers that they are very good at this slight of hand and Mr. Lingenfelter is very bad at calling them to account. And of course, we in the P.C. Party know how adept Mr. Wall and his friends have been at keeping our $3 million Trust Fund away from us so that we cannot point out to Saskatchewan taxpayers another point of view from the right of centre which would expose the Sask Party for what they are.

Mr. Wall says that he cannot change any of the royalty and taxation regimes in the potash business because it would upset Agrium and Mosaic and their expansion plans. Agrium cancelled theirs and I think Mr. Wall’s need to have Mosaic’s name on that new domed-stadium in downtown Regina to placate his friends like Mr. Emsley who sits on the Roughrider Board of Directors might far outweigh the proper course of action by sitting down and hammering out a made-in-Saskatchewan solution to be BHP’s takeover bid. We are the owners of the resource. We should not be afraid to play the cards in our deck.

Once again, I would encourage any of you that receive this missive to express yourselves in Letters to the Editor, phone-in shows or at the local coffee shop on this or any other matter. Rick Swenson’s name alone appearing on these issues is not enough to change the public debate.

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These issues must be debated for “The Right Reasons”.

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