Canada defends block on BHP bid for Potash decision

BHP Billiton's $39bn (£24bn) bid for Potash Corp would have given Australia an edge in key markets such as China and India, Canada's agriculture minister said yesterday, giving the first hints to the reasons behind the country's rejection of the proposed deal.

Canada's industry minister Tony Clement rejected the deal on Wednesday, giving the Anglo-Australian mining company 30 days to come up with additional proposals before he makes a final ruling on the offer for the world's largest producer of potash, a key fertiliser ingredient. Mr Clement said he will explain his decision at the time of the final ruling.

But yesterday the country's agriculture minister, Gerry Ritz, said a deal would have been "very detrimental". He told Parliament: "Having someone different mine [potash] certainly does make a difference in that Australia is a major marketer of a lot of the same foodstuffs that Canada is. We're a volume producer – so are they. And for them to be able to go to the Indias and Chinas of the world and say, 'We now control your fertiliser too', I think would have had a very detrimental effect. And I know the ministry of industry took all of that under advisement."

Meanwhile, Phosagro, the Russian fertiliser producer which signalled an interest in Potash Corp before Canada's decision on the BHP offer, said it will announce its next move after 15 November. On Wednesday, Phosagro's chairman Vladimir Litvinenko ruled out a bid, but said Russian firms should step in, possibly via a stake purchase, to block BHP's advance.

"At the moment, Phosagro is in intensive consultation with the Russian government, Russian and foreign banks on a possible deal," the group said yesterday.