BHP Billiton, the $200bn mining company, will tomorrow find itself in the middle of a massive geopolitical independence row due to its hostile takeover of Potash Corporation of Saskatchewan.
Marius Kloppers, the chief executive of FTSE 100 stalwart BHP, is taking a $39bn offer for Canadian fertilizer giant PotashCorp directly to shareholders after its board dismissed the amount as "grossly inadequate".
However, the deal is set to get even uglier due to PotashCorp's relationship with Office Chérifien des Phosphates (OCP), Morocco's state phosphates company. OCP is estimated to supply around 500,000 tonnes of phosphates to PotashCorp.
The Sahrawi people have long fought for the independence of the Moroccan-occupied Western Sahara and have accused PotashCorp of propping up an "illegal regime" by importing so much phosphate. Three vessels filled with phosphates are understood to have sailed to PotashCorp facilities so far this year.
In a letter to William Doyle, the PotashCorp president and chief executive, dated 1 October 2008, Western Sahara Resource Watch (WSRW), an activist group, said: "We urge you to demonstrate your attachment to international legality, human rights and basic standards of corporate social responsibility by reconsidering your involvement in shipping phosphate of Western Sahara origin."
WSRW's international co-ordinator, Sara Eyckmans, said that the group will write to BHP's management and shareholders tomorrow. "Given the urgency of the situation, we need to get our case in on Monday," Ms Eyckmans said. "If BHP does take over the company, we do not see how it could help its corporate responsibility profile [unless it stopped trading in Western Sahara]. We will tell management about our concerns. To the shareholders, we will highlight that we are in close dialogue with ethical investors around the world."
Ms Eyckmans added that the group had raised its concerns to PotashCorp several times in recent years but had not received a response. A spokesman for the company said that it had replied on each occasion.
WSRW's claim of influence with ethical investors has some weight; €32.5bn Norwegian life insurer and investor Kommunal Landspensjonskasse blacklisted PotashCorp for purchasing phosphate from Western Sahara.
BHP's offer for the potash and phosphate group is one of three big deals last week that electrified the City, which has been starved of major acquisitions since the credit crunch began to bite. FTSE 100 group Cairn Energy agreed to sell a 51 per cent stake in its Indian operations to miner Vedanta and Korea National Oil went hostile with a £1.9bn bid for Dana Petroleum.
Remarkably, despite the enormity of BHP's offer, the group's huge market value means that it does not cross the percentage threshold that would force the mining colossus to get the deal approved by shareholders.
However, Mr Kloppers is expected to outline the rationale of the takeover to analysts following BHP's full-year results on Wednesday. Cairn and Dana release first-half figures on Tuesday and Friday respectively.
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