The more you hear about the opposition to BHP's (NYSE:BHP) bid for Potash Corp. (NYSE:POT), the more you realize it's a good thing, and you check under the more carefully as to why there is such an uproar over a simple bid for the company.
It has largely to do with the misguided partnership of the province of Saskatchewan with Potash, where the Canpotex cartel wrongly manipulates prices and supply in order to maintain the prices and margins they want.
They have a major competitor in the Belarusian Canpotex cartel as well, although they seem to work closely in unison as far as pricing and supply goes, effectively controlling the overall global market.
This is why Phosagro, a Russian-based company has emerged out of nowhere as a potential bidder for Potash, as they recognize the threat to the control of potash from BHP Billiton.
Phosagro's chairman, Vladimir Litvinenko, said, "If BHP controls the potash market, the consequences for our producers may be serious ... we can lose part of [our] markets. This is obvious."
This is also the reason Saskatchewan has been opposing the bid, as they have a sweetheart royalty deal with Canpotex over potash produced in the province, and the also see BHP as a detriment to their siphoning off of billions from the above-market prices and royalties generated from the cartel.
Why this is a threat is because BHP doesn't like the cartel mentality and obvious socialist way the consortium is being operated, and have publicly stated they will produce potash at the rate they choose to and charge competitive prices, not what the other members of the cartel want them to charge, which include Mosaic (NYSE:MOS) and Agrium (NYSE:AGU).
The bottom line? BHP would be good for the industry which has been silently controlling the price of potash, which by extension, controls, to a certain degree, the price of the crops that use the fertilizer.
BHP would be one of the best things to happen to the industry if they are allowed to go forward with the bid and take charge of Potash Corp.
Showing posts with label Belarusian Potash Company. Show all posts
Showing posts with label Belarusian Potash Company. Show all posts
Wednesday, November 3, 2010
Thursday, October 14, 2010
BHP's (NYSE:BHP) Potash (NYSE:POT) Bid Opposed Because of Canpotex?
Although there has been increasing concern over the control of the potash industry by a couple of major players, including Canpotex and Belarusian Potash, it's puzzling as to why there hasn't been more support for BHP's (NYSE:BHP) bid for Potash Corp. (NYSE:POT), as they've stated they want to pull out of the monopoly once the existing agreements expire.
That raised a firestorm in Canada and among other Canpotex members Agrium (NYSE:AGU) and Mosaic (NYSE:MOS), who have been controlling prices for a long time.
You would think there would be a rally on behalf of BHP. Some think BHP would stay in Canpotex once they controlled Potash, but I don't think so.
In the past BHP has been known for moving according to market conditions of supply and demand and not holding back in order to push up the price of potash to protect margins and earnings.
So farmers and consumers would strongly benefit from a BHP takeover of Potash, and hopefully this part of the story will get out more before the foolish and irresponsible leaders of Potash go the Chinese to protect them from the BHP bid.
That raised a firestorm in Canada and among other Canpotex members Agrium (NYSE:AGU) and Mosaic (NYSE:MOS), who have been controlling prices for a long time.
You would think there would be a rally on behalf of BHP. Some think BHP would stay in Canpotex once they controlled Potash, but I don't think so.
In the past BHP has been known for moving according to market conditions of supply and demand and not holding back in order to push up the price of potash to protect margins and earnings.
So farmers and consumers would strongly benefit from a BHP takeover of Potash, and hopefully this part of the story will get out more before the foolish and irresponsible leaders of Potash go the Chinese to protect them from the BHP bid.
Wednesday, September 29, 2010
BHP (NYSE:BHP) Acquisition of Potash (NYSE:POT) Good for Market
The reason so much resistance has emerged from the BHP Billiton (NYSE:BHP) bid for Potash Corp. (NYSE:POT) has been the socialist nature of the agricultural industry in general, and the potash industry in particular.
With the Canpotex consortium and the Belarusian Potash Co., they pretty much control the potash market and its prices. That needs to end and free market prices allowed to determine how much the fertilizer will cost.
In the case of Potash, the Canadian Province of Saskatchewan sucks a bunch of money out of them, the reason they want things to continue on as they are with controlled prices, rather than allowing the market to dictate events.
The Canadian consortium includes Agrium (NYSE:AGU) and Mosaic (NYSE:MOS), along with Potash. They oppose the acquisition by BHP as well, as they would have to compete with them directly, rather than continue the cozy relationship among one another.
Competition is always the best way to decide who wins in business, and to keep Canpotex operational goes against that idea, as well as keeps the costs of Potash artificially high.
Interestingly, China is concerned about higher prices of Potash if BHP takes over the fertilizer giant, and the Province of Saskatchewan is concerned about lower prices if they do.
All that government has to do is start to become more limited, the best way to deal with out-of-control spending and promises.
Either way, BHP is good for the industry, and whether they land Potash or not, they'll eventually ramp up their Jansen property, which may produce 8 million tons of potash a year.
With the Canpotex consortium and the Belarusian Potash Co., they pretty much control the potash market and its prices. That needs to end and free market prices allowed to determine how much the fertilizer will cost.
In the case of Potash, the Canadian Province of Saskatchewan sucks a bunch of money out of them, the reason they want things to continue on as they are with controlled prices, rather than allowing the market to dictate events.
The Canadian consortium includes Agrium (NYSE:AGU) and Mosaic (NYSE:MOS), along with Potash. They oppose the acquisition by BHP as well, as they would have to compete with them directly, rather than continue the cozy relationship among one another.
Competition is always the best way to decide who wins in business, and to keep Canpotex operational goes against that idea, as well as keeps the costs of Potash artificially high.
Interestingly, China is concerned about higher prices of Potash if BHP takes over the fertilizer giant, and the Province of Saskatchewan is concerned about lower prices if they do.
All that government has to do is start to become more limited, the best way to deal with out-of-control spending and promises.
Either way, BHP is good for the industry, and whether they land Potash or not, they'll eventually ramp up their Jansen property, which may produce 8 million tons of potash a year.
Wednesday, September 1, 2010
Potash (NYSE:POT) Downgraded by BMO Capital
BMO Capital downgraded Potash Corp. (NYSE:POT) from "Outperform" to "Market Perform."
A growing number of investors are questioning whether or not it's time to take profits with Potash, as it soared after the hostile bid from BHP Billiton (NYSE:BHP), which it rejected.
That rejection generated speculation BHP would sweeten the bid, making investors hold off to see if that would materialize.
BHP CEO Marius Kloppers has attempted to manage expectations there, saying the bid is a fair one, and implying he isn't going to acquire Potash at any cost.
Executives at Potash believe the bid is far too low, and are looking for a white knight to acquire the company, although that hasn't happened, suggesting the bid by BHP is indeed a fair one.
A new development which could challenge that are reports on Russian potash suppliers, who are attempting to raise potash prices in its Brazilian and Asian markets.
An earlier attempt this year failed to convince customers, so we'll have to wait to see if the price increases really happen.
If they do, then Potash would have a supportive argument for being vastly undervalued.
Russian potash producers pretty much guide the global potash prices through the Belarusian Potash Company, the equivalent of Canada's Canpotex, both marketing arms of the industry.
A growing number of investors are questioning whether or not it's time to take profits with Potash, as it soared after the hostile bid from BHP Billiton (NYSE:BHP), which it rejected.
That rejection generated speculation BHP would sweeten the bid, making investors hold off to see if that would materialize.
BHP CEO Marius Kloppers has attempted to manage expectations there, saying the bid is a fair one, and implying he isn't going to acquire Potash at any cost.
Executives at Potash believe the bid is far too low, and are looking for a white knight to acquire the company, although that hasn't happened, suggesting the bid by BHP is indeed a fair one.
A new development which could challenge that are reports on Russian potash suppliers, who are attempting to raise potash prices in its Brazilian and Asian markets.
An earlier attempt this year failed to convince customers, so we'll have to wait to see if the price increases really happen.
If they do, then Potash would have a supportive argument for being vastly undervalued.
Russian potash producers pretty much guide the global potash prices through the Belarusian Potash Company, the equivalent of Canada's Canpotex, both marketing arms of the industry.
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