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In August of this year, BHP Billiton began the acquisition of Potash, a Canadian potash company. The company’s board of directors rejected it with “serious underestimationâ€. Subsequently, BHP Billiton launched a hostile takeover, directly to its shareholders a total of 38.6 billion US dollars in the history of Canada's highest purchase price. However, BHP Billiton’s strong attitude has not achieved its intended effect. On the 3rd of this month, the Canadian government rejected BHP Billiton's acquisition plan on the ground that it was not in full compliance with the national interest. Although BHP Billiton can provide a supplementary plan within 30 days in accordance with regulations, the company believes that the Canadian government required BHP Billiton to make too many concessions. , so eventually chose to give up. BHP Billiton stated in its latest statement that the failure of the acquisition plan resulted in BHP Billiton generating $350 million in transaction costs.
Previously, it was widely believed in the industry that BHP Billiton intends to make Potash an even monopoly position after its iron ore reserve through the acquisition of Potash. According to the data, Potash is the world's largest producer of synthetic fertilizers, feeds, and related industrial products, and the world’s largest potash fertilizer company. In 2009, its potash fertilizer production accounted for about 11% of global production, and its production capacity accounted for 20% of global potash fertilizer production capacity.
In addition to being the largest potash fertilizer importer in the world, China is also one of Potash's largest customers. Potash holds a 22% stake in Sinofert. Therefore, industry analysts have pointed out that if BHP Billiton succeeds in its acquisition, it will also indirectly enter the Chinese potash market. This will cause Sinofert to indirectly fall into the hands of BHP Billiton, and China may also repeat the mistakes made by iron ore against others.
"BHP Billiton's acquisition of Canada Potash Corp's failure can be said to have allowed China to escape. However, China must learn lessons from it," said Bai Ming, deputy director of the International Market Research Department of the Institute of International Trade and Economic Cooperation of the Ministry of Commerce. He pointed out that from iron ore to potash fertilizer, it seems that China must be restricted by talented people and start to think of solutions. This can only be regarded as a deadlock. Through the BHP Billiton acquisition, China should understand that it cannot always be a matter of chance. Instead, it should take precautions. For some resource-based industries, the industrial layout can be implemented in advance through investment and mergers and acquisitions.
In fact, although BHP Billiton has failed, China has not escaped its disadvantage due to its high dependence on imported potash. Not long ago, Sinofert and Canadian Potash Corp. and other three manufacturers signed an agreement to purchase 1 million tons, 1.05 million tons, and 1.1 million tons of potash from the latter in 2011, 2012, and 2013 respectively. The total amount is not low. In China, the total amount of potash fertilizer imports was 33.33%. The proposed price is equivalent to 600 US dollars, 695 US dollars, 790 US dollars per ton. This is far higher than the average price of 400 U.S. dollars this year, and it suddenly stirred up thousands of waves.
In fact, many products whose prices have skyrocketed are still in excess of demand several years ago. If they can take action in advance, the current situation will be significantly different. Bai Ming believes that the long-standing institutional problems have caused Chinese companies to place excessive emphasis on immediate interests and lack long-term strategic thinking. This situation needs to be changed.
The global potash monopoly is alarming and alerting Chinese companies
Due to the inability to persuade the Canadian government to release, yesterday, BHP Billiton reluctantly announced that it would abandon the acquisition of Potash, the world's largest potash company. This has caused the industry's sensational mergers and acquisitions to be blown down. It is not a false alarm for China, the largest importer of potash. Experts have warned that the Chinese potash industry should have a sense of crisis and wake up to avoid becoming the second iron ore potash.