China may counter BHP Billiton’s move on Potash Corp

BHP Billiton's hostile move to acquire Canada's Potash Corp. of Saskatchewan Inc (PotashCorp) is being closely watched by China as the Anglo Australian miner is repeatedly becoming a pain for Beijing, which wants to thwart the monopolistic moves of the miner.

BHP's hostile $38.6-billion bid for the potash giant has stirred a hornet's nest in China and Sinochem, the country's biggest chemical and fertilizer company is reportedly planning to cobble up a counter offer by roping in other state owned companies as well as China Investment Corp, the country's sovereign wealth fund.

China's frenzy to oppose BHP's so far uncontested bid could be justified since it is the world's biggest importer of potash, consuming 28 per cent of world fertilizer consumption to feed it over 1.3 billion people.

China's consumption of potash in 2009 was nearly 10 million tons, of which 55 per cent was imported. PotashCorp said in its 2009 annual report that Chinese potash consumption could rise from less than 10 million tonnes a year to 30 million by 2020.

South China Morning Post yesterday reported that Sinochem, China Investment Corp. and Sinofert Holdings, the Hong Kong-listed subsidiary of Sinochem that is 22-per cent owned by PotashCorp would be the likely bidders.

PotashCorp is the largest global potash producer by capacity and, in 2008, 17 per cent of world's production came from its operations.