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The proposed takeover of Nexen Inc. by China National Offshore Oil Company, or any other like it, cannot be allowed. If the acquisition of Canada’s resource companies is not banned, then much of Calgary’s skyline will be snapped up by the world’s gigantic state-owned enterprises.
Resource companies are as important as banks or the stock exchange. The same ownership ring fence must be drawn around them, or a limit of 10% foreign ownership imposed. If that policy had not been adopted years ago by Ottawa, Toronto’s skyline would be very different.
The reality is that Canada is a small economy that must be protected, from potash to the TMX, from the foreign governments that have more money than Ottawa and bankroll enterprises and investment portfolios.
The new Game of Thrones is not about military conquest but about picking off trophy assets from countries, like Canada, that are Boy Scouts and naïve enough to let them do so. And growing and nurturing large successful entities is essential to any nation-state. Size matters.
The foreign buyout of resource, infrastructure and agricultural corporations simply has to stop. Foreigners can partner or do startups but nothing more.
This debate has nothing to do with economics or ideology. This is about street smarts. The U.S. — that bastion of free enterprise — did not allow CNOOC buy Unocal in 2005. It did not allow a Dubai company to control port infrastructure assets.
Developing nations like Brazil or China would never allow a Nexen to be bought even though their publicly protected resource giants prowl the world for other peoples’ assets. Even undeveloped nations like Nigeria require foreign oil or mining explorers to joint venture with government-controlled local corporations.
Canada should never have allowed Inco, Alcan, Petrokazakhstan, Addax, agri-business Viterra and dozens more resource companies to be picked off. That these deals have been rubber-stamped by Investment Canada does not establish a precedent. These represent disastrous mistakes and a dangerous trajectory.
Here are 14 concrete reasons why: Nexen’s purchase will create a Takeover Hit List, among Canada’s 150 largest corporations, which includes Suncor Energy Inc., Enbridge Inc., Agrium Inc., Cenovus Energy Inc., Canadian Natural Resources Ltd., Teck Resources Ltd., TransCanada Corp., Canadian National Railway Co., Talisman Energy Inc., Gibson Energy Inc., Canadian Oil Sands Ltd., Pacific Rubiales Energy Corp., Penn West Petroleum Ltd.and Keyera Corp. Further down the food chain will be Canadian Pacific Railway Ltd., Sherritt International Corp., Pembina NGL Corp., Crescent Point Energy Corp., Pembina Pipeline Corp. and ARC Resources Ltd.
For the rest of this column, please go to the National Post website: http://opinion.financialpost.com/2012/07/27/stop-state-backed-foreign-buyouts-in-canadas-resource-sector-now/