Sovereign Wealth Fund Institute

The Canadian province of Saskatchewan produces around half of the world’s known potash. Potash is mostly used for fertilizers and is a key import for emerging market food supplies. The province extracts royalties from potash production based on potash prices. Alberta has their Heritage Fund and now Canada’s New Democratic Party (NDP) political leader Dwain Lingenfelter laid out plans to create a potash fund that will set aside $100 million annually.

Canada is the biggest producer of Potash.

The proposed fund dubbed the “Bright Futures Fund” would grow to $10 billion in forty years according to the NDP. The NDP drafted the idea of a long-term savings fund similar to Alberta’s permanent savings fund and Norway’s oil fund. One key feature of the proposed fund is that it would not be used as a rainy day fund to balance the province’s fiscal budget. Implementation of the proposed fund will depend on regional elections and most likely provincial legislative action.

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Leo de Bever

Apparently, Alberta Investment Management Corporation, an investment management organization that helps invests Alberta’s Heritage Fund was approached by a sovereign wealth fund for a deal to rival the $39 billion offer from BHP Billiton.  Potash has rejected the BHP Billiton offer.  It will be interesting to see who ends up backing Potash in the long run, as a number of suitors are being worked on behind the scenes.

“We can’t right now make the economics work,” The head of AIMCo, Leo de Bever told journalists in Calgary. “If it were to work it would take a consortium of pension funds if you were to do it, but the question is, is that really appropriate for those pension funds.”

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