Government sources revealed late on Tuesday that the provincial authorities of Saskatchewan were set to ditch BHP Billiton's $US38.6 billion or $A39.98 billion takeover proposal for the Canadian firm Potash Corporation, dashing hopes by the giant resources company to secure additional profits from the anticipated demand spikes in fertiliser coming from China and India.

The anonymous sources, who were not authorised to issue statements on the matter, said that BHP's offer were simply inadequate to offset the perceived losses in incomes to be incurred by both the Canadian and Saskatchewan governments.

Aside from that, the officials maintained that the provincial government of Saskatchewan remained firm on its position from day one and that is to protect the strategic and economic interests of the province, stressing that "the potash resource doesn't belong to any company. It belongs to the people of Saskatchewan."

Analysts said that if the sources were to be believed, the pronounced stand of the conservative Saskatchewan government is expected to be supported by the equally conservative federal government of Canada.

Sources privy to the dealings of both the provincial and national governments of Canada have been airing doubts that the acquisition would ever gain support from within the country as federal authorities earlier expressed readiness to block a deal that does not serve the net interest of the country.

Basing on its own calculation, the sources said that Saskatchewan is poised to incur some $US3 billion or $A3.11 billion in revenue losses once the deal is realised but BHP Billiton only committed to make a one-time payment of $US370 million or $A383.18 million the company termed as infrastructure fund.

The sources said that the promised compensation was deemed inadequate by the province of Saskatchewan as the news broke on the back of a scheduled Wednesday announcement of the provincial government's decision on the deal by Saskatchewan Premier Brad Wall.

Premier Wall has been vocal in questioning the merits of the deal for both Canada and Saskatchewan as Potash Corporation gradually emerged as a prised catch for global companies hoping to capitalise on the perceived boom coming in the way of the fertiliser industry as food security becomes the prime concern of giant economies such as China, the USA and Brazil.

Analysts also added that the huge takeover proposal would find it hard to gain support from a country that has been previously burnt by bungled projections of job guarantees and investment from botched resources deals.

The news also served as another setback for BHP Billiton, following the collapse of its $US120 billion or $A124.28 billion iron ore joint venture plans with Rio Tinto Ltd on the two companies Pilbara mining operations in Western Australia due to opposition from government regulators in Australia, Europe and Asia.