Sinochem, the Chinese chemicals giant, has revealed it is paying "close attention" to BHP Billiton's $39bn offer for PotashCorp, highlighting the potential for a bidding war for the potash group.

Sinochem spokesman Li Qiang said that the state-owned group was "very attentive to what happens" to PotashCorp, with which it has business ties.

PotashCorp, the world's biggest potash producer, owns 22% of Sinofert, China's top fertilizer group, which is controlled by Sinochem.

Sinochem would "pay close attention" to the hostile bid for PotashCorp that BHP revealed earlier this week, adding that it was "interested in overseas potash investment opportunities", Mr Li told the Financial Times.

'National security issue'

The comments follow speculation that, although major mining groups Rio Tinto and Vale look unlikely to counterbid for PotashCorp, given that they are still integrating large and recent acquisitions, developing countries could throw up potential rival suitors.

Both China and India are largely importers of potash, largely from Canpotex, the North American consortium of which PotashCorp is a member, giving them a particular interest in purchasing foreign supplies.

"With growing populations in excess of 1bn each, security of food supply is a significant national security issue," Salman Partners analyst Jaret Anderson said.

"Increasing crop yields is not only desirable, it is necessary in order to maintain an orderly society.  Continued availability of fertilizers – particularly potash – is critical to each country's future.

"Somewhere in the bowels of a non-descript government building in Beijing and/or New Delhi, we expect there are some nervous government workers."

BHP options

Furthermore, a Chinese suitor, in particular, may be able to find deep-pocketed investors to back a bid, with the country having, in China Investment Corporation, a $330bn sovereign wealth fund.

BHP's options for raising its bid from $130 a share, which PotashCorp directors have rejected, include raising further debt, so accepting a lower credit rating, and asset sales, UBS analysts said.

Selling PotashCorp's nitrogen and phosphate operations, and stakes in listed companies such as Sinofert, could raise more than $13bn, the bank said.

Standard & Poor's has placed BHP credit on "negative watch", with rival ratings agency Moody's also indicating a potential downgrade ahead.

BHP shares closed 0.6% higher at 1,812p in London.

In New York, PotashCorp shares ended 0.6% higher at $149.67.