News that China’s Sinochem will not launch a counterbid for Potash Corp., removes one of the biggest potential obstacles to BHP Billiton’s $39 billion offer for the Canadian fertilizer giant.

The fate of Potash is far from certain, however, as other white knights may emerge, and BHP faces regulatory hurdles on the one hand and demands from Potash for a higher bid on the other.

Shares in Potash slipped 1.2 percent in New York at midday on Friday to $145.37, but remained well above BHP’s $130 per share bid, suggesting investors are still confident of a higher offer.

BHP, the world’s largest miner with a tradition of discipline when it comes to takeovers, may even walk away.

Following are some of the scenarios facing Potash:

HOSTILE SHOWDOWN | Probability: Most likely
With Sinochem out of the picture this is the most likely scenario because it makes it more difficult for Potash to convince shareholders there are other bidders and that it is worth more.

Potash shareholders had indicated they would need BHP to raise its $130 per share bid to $162 before accepting an offer, according to a recent Reuters poll.

If BHP sweetens its bid, but still can’t win over Potash’s board, it may again take its higher bid directly to shareholders.

BHP also might persist with its hostile offer and hope Potash shareholders will be convinced of the bid’s merits. For now, Potash is sticking with its “just say no” defense.

A NEGOTIATED DEAL | Probability: Likely
This outcome is only possible if BHP is willing to substantially raise its bid for Potash.

Some analysts argue that it would take an offer of at least $150 a share, while others say Potash’s net asset value alone is in the region of $160 to $170 a share.

Potash shares touched a high of $240 in 2008.

Some analysts say a deal above $165 a share would hurt earnings, but that those levels are unlikely.

BHP’s bid faces the additional obstacle of needing formal approval by its own shareholders if it sweetens its offer to a point where the value of the bid exceeds 25 percent of its own market capitalization.

POTASH FORMS A JOINT VENTURE | Probability: Possible

Potash could foil BHP’s takeover attempt by selling a portion of its assets into a joint venture at a price that implies a substantially higher value for the whole company than BHP’s current bid.

Sinochem, China’s top fertilizer maker and its No. 4 oil company, could be a viable joint-venture partner, especially now that it has abandoned plans for a counterbid for the whole company.

A Chinese company would ideally seek a supply agreement deal with Potash in the event of a joint venture. However, any agreement on this would have to be structured around Canpotex — the international marketing arm of potash producers Potash Corp, Mosaic Co and Agrium Inc.

Analysts have also speculated that a consortium of companies could consider the joint-venture model if they were unable to secure enough capital for an all-out bid.

REGULATORS BLOCK BID | Probability : Low

Canadian regulators rule that the deal is not a “net benefit” to Canada and the province of Saskatchewan, forcing BHP to walk away.

Alternatively, regulators could ask for commitments from BHP that are so onerous that a deal becomes unattractive.

Potash Corp has already offered to relocate several key executives from Chicago to Saskatoon, removing one of the advantages that was being offered under BHP’s proposal and weakening BHP’s case under a “net benefit” test.

An even less likely scenario is that the deal is quashed due to national security concerns under the Investment Canada Act.

BHP WALKS AWAY | Probability: Possible

BHP has a history of being conservative and disciplined on takeovers. It could walk away, just as it did with an attempted takeover of Rio Tinto.

Alternatively, it could raise its bid but fail to win over Potash shareholders and be forced to back out.

Chief Executive Marius Kloppers will want to avoid a replay of Rio Tinto’s 2007 takeover of Canadian aluminum company Alcan, in which Rio got caught up in a bidding war at the height of the commodities boom.

OTHER WHITE KNIGHTS | Probability: Unlikely

Analysts and investment bankers say that of the other global miners, only Rio Tinto and Brazil’s Vale are big enough to consider bids on their own.

Vale has said it is not planning a bid for the company. It already has some potash assets, and is under heavy political pressure to invest in Brazil.

Rio Tinto is also viewed as a long-shot bidder. It recently sold potash assets and is still recovering from its ill-timed $38 billion takeover of Alcan.

British newspapers said this week that Potash was considering defensive moves, including a break-up. They also said Canada’s Ontario Teachers Pension Plan had talked to Singapore investment fund Temasek about launching an offer with Teck Resources.

Sinochem had also approached Temasek to join a consortium that might bid, but the state investor had made no decision, sources have told Reuters. Temasek declined comment on Friday.

Top Canadian pension funds have been approached by the Chinese to explore teaming up to buy the fertilizer maker, but declined because of the size of the assets and the cyclical nature of commodities, neither of which fit their long-term, conservative investment strategies.