Canada probably won’t extend limits on takeovers by state-owned enterprises beyond the oil sands unless the target resource is deemed “strategic,” Natural Resources Minister Joe Oliver said.
The Canadian government said in December it would approve acquisitions of control of oil-sands businesses by state-owned firms only under “exceptional circumstances.” The new rules were put in place after the government approved the takeovers of Calgary-based oil and gas producer Nexen Inc. by Cnooc Ltd. of China for $15.1 billion and the C$5.2 billion ($5.1 billion) purchase of Calgary’s Progress Energy Resources Corp. by Malaysia’s Petroliam Nasional Bhd.
Oliver said Canada has a wealth of resources other than oil and gas, including as potash, uranium and diamonds. Still, he said the government doesn’t plan to expand the constraints on state-owned firms to other sectors.
“Unless there’s a very unique strategic interest, I don’t see that being extended,” he said in an interview today in New York. “We need foreign capital.”
The government automatically reviews all foreign takeovers of companies with asset values of more than C$344 million to determine if they are in the national interest.
Oliver said Canada has about 600 resource projects that will require C$650 billion in investment over the next decade to develop.
“We don’t have that capital in Canada,” he said. “We’re open for business and we’re open for investment.”
The government felt the need to shield the oil sands partly because most of the world’s oil reserves are controlled by state-owned enterprises, said Oliver. “The oil sands are unique in one respect, and that’s ownership.”
The government blocked BHP Billiton’s $40 billion hostile takeover of Potash Corp of Saskatchewan Inc. in 2010. At the time, Saskatchewan Premier Brad Wall called potash a “strategic resource” to the province.
Wall said last month Canada should eliminate foreign-ownership limits for uranium companies such as Cameco Corp., except in cases where a state-owned company is the bidder. Current rules limit most foreign ownership of uranium projects to minority stakes.
“Right now, we’re not planning on any change in that regard,” Oliver said.