summary:
The Potash corporation of Saskatchewan wanted to sign up Canadian pension funds as partners.Chinese entities wanted to be partners with them but they rejected the idea. They didn't want to be partners with the Chinese entities because they want the cooperation under Canadian control. If they were under the Chinese sovereign the opportunity cost of the capital is often lower than what it is for a Canadian pension fund. Also they want to make sure that Saskatchewan benefits from the resource even when their partnered up with other funds. Their concerned about the future of Canpotex ltd. ( the group that sets export potash prices) they want to slowly shift away from canpotex and sell potash on its own. The government is worried that such move might lower the provinces legal and legislative options that could bind any buyer of this. They're hoping that this system would work out, so it can be used in the future.
Connections:
The article potash corporation relates to opportunity cost. Saskatchewan realized that if they were to partner up with the Chinese entities then their opportunity cost would be lowered. They think cooperating with Canadian pension funds would benefit them more in many ways. The government of Saskatchewan hired the conference board of Canada to study what is a take over of postash corporation would mean to their province. They did a lot of research on what the effects would be to be working with Asian companies. If asian companies really wanted to buy all or parts potash corporation then they have to find a Canadian partner.
Reflection:
I think it would be a better idea if the Potash Corperation partnered up with a Canadian fund instead of asian companies. They would benefit more from working with Canadian companies. It's always cool to know if your food is locally grown in Canada because we import a lot of our food from other countries. Most of our foods are imported from USA. If they partner up with an asian company then we will lose one of our local food source that is from Canada.
article: http://www.vancouversun.com/business/fp/Pensions+wary+potash/3475247/story.html
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ReplyDeleteI disagree with your suggestion of the Potash Corporation partnering up with a local Canadian fund because there would be more exclusives if they had partnered up Asian entities such as an enhanced positive relationship. If the Potash Corporation partnered with Asian entities there would be many benefits within their positive relationship. For example exposure would be higher because they would have greater sale availability to Asian countries and Canada. Since potash is a fertilizer for crops another variable that would relate with the positive relationship would be the prices. The prices of the Potash Corporation would be different towards the different countries because of competition. The price variable could fluctuate and it would not necessarily make their capital lower because the profits and liabilities would be shared. Overall I believe their best decision would be to be with groups outside of Canada.
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