Wednesday, October 13, 2010

The opening bid

For those waiting on tenterhooks for one of Saskatchewan's political parties to step forward with a plan to handle foreign potash takeovers, the wait is over thanks to the NDP's detailed set of principles released yesterday. And the outcome looks to nicely combine public participation in the future management of one of the province's most valuable resources with assurances that the province won't be worse off as the result of any deal:
• That the people of Saskatchewan be given a Golden Share in the corporation. A Golden Share gives the holder ‘veto power’ over all other shareholders, with respect to specific corporate decisions. In the case of the Saskatchewan Golden Share, it should be used to require:

o That all corporate operations will be registered under Canadian law, so that all profits are subject to Canadian taxes and all operations are subject to Canadian laws and regulations

o That the corporation’s Head Office, all of its senior executives and all of its senior marketing staff be permanently based in the Province of Saskatchewan, and that

o The corporation will continue to market its potash through Canpotex

• That the people of Saskatchewan own shares in the corporation, whether Preferred or Common Shares, that will see the people of this province participate in the corporation’s future profitability.

• In addition to participating shares, the Board of Directors of the corporation should include two representatives appointed by Saskatchewan

• The corporation will sign an agreement with the Government of Saskatchewan to adjust its potash royalties, such that the people of Saskatchewan will be made whole for any loss in royalties due to the construction of new or expanded mines or due to corporate tax write-offs from acquisition debt

• The corporation will sign an agreement with the Government of Saskatchewan to set immediate and long-term targets for the growth of Saskatchewan potash employment and Saskatchewan potash production

• The corporation will sign an agreement with the Government of Saskatchewan to commit to world class standards with respect to environmental stewardship, community corporate contributions, workplace safety, and increased involvement for Saskatchewan’s Aboriginal workforce and communities

• Finally, the corporation will agree to the creation of a Potash Review Commission, comprised of independent officers, who will determine whether the Corporation is living up to its commitments to the people of the Province, and who will have the power to enforce severe financial penalties if it is not
Now, there are a couple of points that I'd think deserve to be tweaked as Saskatchewan's options on potash continue to be hashed out, with both focusing on the proposed agreements with bidders. For example, I'm not sure that the province should be concerned with an independent commitment to meeting "world class standards" rather than focusing on a bidder's commitment to complying with the standards governing all potash operations in the province. And there might be concerns about enforcing agreements based on output and employment.

But those points can be worked out as the bidding process continues. For now, the detailed plan should either set the starting point for provincial discussions, or force the Wall government to explain why it's prepared to accept anything less. And either way, the result should be to push toward a better deal than we'd have any hope of seeing as long as the Sask Party sets the terms of discussion.

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