Potash has seen wild changes in price over the past three years, ranging from $200 to $1,000. It was driven higher by food shortages, but pushed down during the recession as farmers moved to less expensive fertilizers. Potash prices are now rebounding, sitting around $375 as of 19 August, 2010. This photo shows mill manager Josh Wheeler examining a pile of processed potash at the Mosaic Potash mine storage facility in Colonsay, Saskatchewan.
Potash Corp. of Saskatchewan Inc. won the first round in a legal fight against its hostile suitor, BHP Billiton Ltd., after a judge ruled BHP must hand over documents detailing its actions leading up to its $38.6-billion (U.S.) bid.
BHP had asked the court to reject Potash Corp.'s request for a wide range of documents, calling the company's legal action a burdensome "fishing expedition" and an abusive tactic to check out the competition.
A Chicago judge ruled Monday that Potash Corp. can get some of the documents it wants, but that the two sides must meet to narrow the scope.
The judge also set Nov. 4 as the date it will begin hearing Potash Corp.'s entire complaint filed last week, which alleges BHP misled investors in its offer. Potash Corp. has rejected the offer as opportunistic and too low, given its belief that potash prices are poised to rise amid growing global demand for food. Potash is used as a crop nutrient.
In response to Monday's ruling, BHP said it was "gratified" the court made it clear that the information Potash Corp. requested was "excessively broad."
The Australian-based miner was also quick to point out that the ruling didn't address the "sufficiency" of Potash Corp.'s lawsuit or its merits. It also portrayed the hearing date as a positive, "well in advance of the November 18 scheduled expiration of our offer."
BHP, the world's largest miner, said it will continue with plans to file a motion later this week seeking to dismiss Potash Corp.'s lawsuit.
Potash Corp. is alleging BHP plotted for years to drive down the price of potash to try to win control of the company at a lower price. In particular, it sees BHP's pledge to build its own mine in Saskatchewan and run capacity full-out as a ploy to scare off investors and drive down prices.
The lawsuit also accuses BHP of making misleading statements about its plans to remain a part of the powerful Canpotex marketing arm, and its plans for a possible sale of Potash Corp.'s nitrogen and phosphate businesses.
Potash Corp. is asking the courts to block BHP's bid until it corrects or clarifies public statements it claims undermine investor confidence in the potash industry, and the company's stock price.
BHP has said the lawsuit is "entirely without merit" and the allegations in it "implausible."
Meanwhile, Potash Corp. is in talks with other potential bidders, and chief executive officer Bill Doyle has vowed repeatedly that "BHP will not be the only bidder."
A Chinese-led consortium bid or the purchase of a major stake in Potash Corp. are considered to be the Saskatoon company's most likely defence to trump BHP's offer.
Chemical conglomerate Sinochem Group is considered the lead contender for a possible Chinese bid. Sinochem is the parent of China's largest fertilizer firm, Sinofert, in which Potash Corp. has a 22-per-cent stake.