Billiton fires back over potash report
The Australia-based mining company that wants to take over Potash Corporation of Saskatchewan is firing back against a report that says the proposed deal would be bad for the provincial treasury.
Saskatchewan typically receives hundreds of millions of dollars in potash royalties and taxes every year.
However, a Conference Board of Canada analysis released Monday said if BHP Billiton is successful in its $38.5 billion US bid to buy the Saskatoon-based PotashCorp, the negative fiscal impact for the Saskatchewan government would be $2 billion over 10 years.
In a news release Friday, Billiton said the Conference Board underestimated all the good effects flowing from its proposed Jansen Lake mine.
While the board said Billiton would be able to write off the costs of developing the $12 billion mine against current income generated by PotashCorp mines, Billiton argues that analysis ignores the bigger picture.
"Over the multi-decade operating life of Jansen, BHP Billiton expects to pay approximately $90 billion in royalties and taxes to the municipal, provincial and federal governments," Billiton said in a news release. "Approximately 65 per cent of such payments will be to the Government of Saskatchewan."
Billiton also says an average of 2,900 employees will be working while the mine is being constructed and they and other companies "are likely to pay an average of $280 million per year in federal and provincial taxes."
Meanwhile, Saskatchewan Energy and Resources Minister Bill Boyd said Billiton's comments don't make sense, because the company has always said that its new mine is going ahead, no matter what.
"They've always indicated publicly and privately ... that they intend to go ahead with Jansen," Boyd said. "To use that as an argument that there would be a great deal of economic activity offsetting any losses there may be ... we've always been anticipating that revenue in the first place."
Boyd said he will try to contact Billiton officials for clarification.