BHP faces competition from China for Potash

MINING conglomerate BHP Billiton looks set for competition in its multi-billion pound battle for the world's largest producer of fertiliser, with Chinese rivals ranked among the most likely to emerge.

BHP is taking its hostile $39 billion (25bn) offer for Potash directly to the Canadian firm's shareholders, but most analysts believe it will have to shell out more to secure an agreement. Meanwhile, there is stiff opposition to the deal from China, which is the world's biggest user of fertiliser with about 30 per cent of global consumption.

Potash is the world's largest producer of the mineral, a potassium compound used to boost crop production. Experts say Chinese authorities would be reluctant to see Potash in the hands of BHP, particularly given recent discontent about the amount charged by the Australian firm and its counterparts for commodities such as iron ore.

Alternative offers could come from businesses backed by China or India, another leading global consumer of fertiliser. China's Sinochem Group and sovereign wealth fund China Investment Corp have both been mentioned as possible contenders.

BHP rival Rio Tinto is thought less likely to enter the fray, having sold its potash business just last year. Mining group Vale already has a substantial potash operation in Brazil.

BHP has arranged nearly 29bn of loans - the most to finance a takeover since 2008 - and is also sitting on an estimated cash pile of more than 6bn.