Chinese chemical conglomerate Sinochem has formally asked the government to back a bid for Canada's Potash, a local newspaper reported on Sunday.
Sources close to the deal as said that, according to a preliminary assessment, Sinochem would need $40 billion to $60 billion to trump a $39 billion hostile offer by BHP Billiton for Potash.
The amount would be too much for Sinochem, which reported $25 billion in total assets at the end of 2009. In its application to the government, Sinochem argued that Beijing should back a bid for the Canadian firm because potash is key to China's national food security.
The story chimes with a report last Friday that Sinochem was trying to drum up support for a Chinese-led bid for Potash. Sinochem is the parent of China's largest fertilizer company, Sinofert.
Sources told press represantatives last week that Sinochem had invited Singaporean state investor Temasek Holdings to join a consortium exploring a bid for Potash.
China, which typically buys about 7% of the output of Potash, fears a BHP takeover might push up the cost of fertilizers that it will need to produce food for its huge population in coming years.
China's Ministry of Commerce said last week that it would pay close attention but that it had not received any material or information from a Chinese enterprise regarding the deal.
