Garth MoorePresident PCS PotashPotash Supply Overview        PotashCorp.com       PotashCorp.com
Forward-Looking StatementsThis presentation contains forward-looking statements or forward-looking information (forward-lo...
Potash Supply OutlookWe Believe Financial Markets Overestimate Future Supply Projections1   Nameplate capacity overstates ...
Potash Capacity and Operational Capability Outlook We Believe Financial Markets Overestimate Future Supply Projections Ind...
1 How PotashCorp Estimates Operational Capability
PotashCorp Capacity and Operational CapabilityScheduled Downtime and Ramp-up Timelines Impact CapabilityMillion Tonnes KCl...
World Capacity and Operational CapabilityNameplate Capacity Exceeds Actual Operational CapabilityMillion Tonnes KCl – 2011...
Estimated Ramp-up Time for New Capacity   Completion of Construction Does Not Mean Immediate Production   Million Tonnes K...
2 Why We Believe Number and Timing of New Projects is Overstated
Independent Consultant Potash Capacity OutlookHistorical Overestimation of Capacity Additions Cumulative Capacity Addition...
Timeline: PotashCorp Brownfield ProjectsOur Brownfield Experience Illustrates Development Timelines Are Significant       ...
Timeline: PotashCorp Brownfield Project Work HoursSignificant Engineering and Construction Hours Associated with More Comp...
Timeline: Picadilly (New Brunswick) Brownfield Project  Complex Brownfield Project Takes 7+ Years to Reach Operational Cap...
Timeline: Conventional Potash Mine Considerations… Greenfield Projects Expected To Require More Time Than Brownfield• Deve...
Timeline: Conventional Potash Mine Considerations… Greenfield Projects Expected To Require More Time Than Brownfield• Infr...
Timeline: Conventional Potash Mine Considerations… Greenfield Projects Expected To Require More Time Than Brownfield• Head...
Picadilly Service Shaft Development
Conventional Potash Mine Considerations… Greenfield Projects Expected To Require More Time Than Brownfield• Mine Developme...
Conventional Potash Mine Considerations… Greenfield Projects Expected To Require More Time Than Brownfield• Mill Construct...
Conventional Potash Mine Considerations… Greenfield Projects Expected To Require More Time Than Brownfield• Mill Commissio...
3 Projects are Becoming More Complex and Costly to Complete
Costs: Estimated Greenfield Potash Capital Costs*Investment in Greenfield Capacity Goes Beyond Mine and MillCDN$ Billions ...
Costs: Saskatchewan Brownfield and Greenfield PotashNew Projects Are Increasingly Expensive and Complex to CompleteCapital...
Thank You There’s more online      PotashCorp.com      Visit us online      Facebook.com/PotashCorp      Find us on Facebo...
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PotashCorp - 2012 Analyst Meeting - Garth Moore Presentation

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PotashCorp - 2012 Analyst Meeting - Garth Moore Presentation

  1. 1. Garth MoorePresident PCS PotashPotash Supply Overview PotashCorp.com PotashCorp.com
  2. 2. Forward-Looking StatementsThis presentation contains forward-looking statements or forward-looking information (forward-looking statements).These statements can be identified by expressions of belief, expectation or intention, as well as those statements thatare not historical fact. These statements are based on certain factors and assumptions including with respect to foreignexchange rates, expected growth, results of operations, performance, business prospects and opportunities and effectivetax rates. While the company considers these factors and assumptions to be reasonable based on information currentlyavailable, they may prove to be incorrect. Several factors could cause actual results to differ materially from thoseexpressed in the forward-looking statements, including, but not limited to: variations from our assumptions with respect toforeign exchange rates, expected growth, results of operations, performance, business prospects and opportunities, andeffective tax rates; fluctuations in supply and demand in the fertilizer, sulfur, transportation and petrochemical markets;costs and availability of transportation and distribution for our raw materials and products, including railcars and oceanfreight; changes in competitive pressures, including pricing pressures; adverse or uncertain economic conditions andchanges in credit and financial markets; the results of sales contract negotiations with major markets; the Europeansovereign debt crisis and the recent downgrade of US sovereign debt and political concerns over budgetary matters;timing and impact of capital expenditures; risks associated with natural gas and other hedging activities; changes incapital markets and corresponding effects on the company’s investments; unexpected or adverse weather conditions;changes in currency and exchange rates; unexpected geological or environmental conditions, including water inflows;imprecision in reserve estimates; adverse developments in new and pending legal proceedings or governmentinvestigations; acquisitions we may undertake; strikes or other forms of work stoppage or slowdowns; changes in and theeffects of, government policies and regulations; security risks related to our information technology systems; andearnings, exchange rates and the decisions of taxing authorities, all of which could affect our effective tax rates.Additional risks and uncertainties can be found in our Form 10-K for the fiscal year ended December 31, 2011 under thecaptions “Forward-Looking Statements” and “Item 1A – Risk Factors” and in our other filings with the US Securities andExchange Commission and the Canadian provincial securities commissions. Forward-looking statements are given onlyas at the date of this presentation and the company disclaims any obligation to update or revise the forward-lookingstatements, whether as a result of new information, future events or otherwise, except as required by law.
  3. 3. Potash Supply OutlookWe Believe Financial Markets Overestimate Future Supply Projections1 Nameplate capacity overstates actual operational capability • Regular maintenance downtime required • Significant ramp-up time for new capacity2 Number and timing of new projects generally overstated3 Projects are becoming more complex and costly to complete
  4. 4. Potash Capacity and Operational Capability Outlook We Believe Financial Markets Overestimate Future Supply Projections Independent Consultant Global Capacity Forecast PotashCorp Global Operational Capability Forecast*Million Tonnes KCl Million Tonnes KCl90 Brownfield Projects Column7 9080 8070 7060 6050 5040 4030 3020 2010 10 0 0 2011 2012F 2013F 2014F 2015F 2016F 2011 2012F 2013F 2014F 2015F 2016F * Based on historical maximum reported output by region, publically announced projects and estimated completion dates and ramp-up periods for new capacity (ramp-up estimate based on PotashCorp project experience).Source: Fertecon, CRU, IFA, PotashCorp
  5. 5. 1 How PotashCorp Estimates Operational Capability
  6. 6. PotashCorp Capacity and Operational CapabilityScheduled Downtime and Ramp-up Timelines Impact CapabilityMillion Tonnes KCl - 2012 16 Factors Impacting Capability: 14 1) Estimated Operating Days 12 10 • Account for scheduled maintenance and capital project related downtime 8 2) Estimated Output Rate 6 4 • Based on historical proven output rates, annual mining plans and 2 expected ramp-up schedules 0 POT Capacity POT Operational CapabilitySource: PotashCorp
  7. 7. World Capacity and Operational CapabilityNameplate Capacity Exceeds Actual Operational CapabilityMillion Tonnes KCl – 2011 North Factors Impacting Capability:America 1) Historical Maximum Output by Region FSU 2) Estimated Ramp-up Periods for New CapacityEurope Capacity Middle Operational Capability East Other 0 4 8 12 16 20 24 28Source: Fertecon, CRU, IFA, PotashCorp
  8. 8. Estimated Ramp-up Time for New Capacity Completion of Construction Does Not Mean Immediate Production Million Tonnes KCl 2.00 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0.00 3 6 9 12 15 18 21 24 MonthsPotashCorp estimate of operational capability following construction of a 2 million tonne capacity conventional mine in Saskatchewan. Source: PotashCorp
  9. 9. 2 Why We Believe Number and Timing of New Projects is Overstated
  10. 10. Independent Consultant Potash Capacity OutlookHistorical Overestimation of Capacity Additions Cumulative Capacity Additions - Million Tonnes KCl 10 Actual Capacity Additions Forecast Capacity Additions* 8 6 4 2 0 2009 2010 2011 * Based on 2009 consultant forecastsSource: Independent Consultants
  11. 11. Timeline: PotashCorp Brownfield ProjectsOur Brownfield Experience Illustrates Development Timelines Are Significant Projects in Progress Completed Projects Rocanville #1 Allan #1 Patience Lake Lanigan Allan #2 Cory Rocanville #2 New Brunswick 0 1 2 3 4 5 6 7 8 Years to Complete (Including Ramp Up)Source: PotashCorp
  12. 12. Timeline: PotashCorp Brownfield Project Work HoursSignificant Engineering and Construction Hours Associated with More Complex Projects Million Hours 12 Engineering 10 8 6 4 2 0Source: PotashCorp
  13. 13. Timeline: Picadilly (New Brunswick) Brownfield Project Complex Brownfield Project Takes 7+ Years to Reach Operational Capability … 2007 2008 2009 2010 2011 2012 2013 2014Engineering &Design Environmental Infrastructure Mill Construction Head Frame/ Shaft Sinking/ Hoist Installation Mine Development/ Ramp Up Mill Commissioning Source: PotashCorp
  14. 14. Timeline: Conventional Potash Mine Considerations… Greenfield Projects Expected To Require More Time Than Brownfield• Development (2-4 years) – Exploration (2D/3D seismic, bore holes) – Environmental assessment – Secure mineral rights (Crown & Freeholders); convert from permit to lease – Unitization of mineral rights – Engineering and design; purchase engineered equipment – Mine plan
  15. 15. Timeline: Conventional Potash Mine Considerations… Greenfield Projects Expected To Require More Time Than Brownfield• Infrastructure (2-3 years) – Power, gas and water supply – Roads and rail spurs – Employee camp – Product storage and rail yard
  16. 16. Timeline: Conventional Potash Mine Considerations… Greenfield Projects Expected To Require More Time Than Brownfield• Head Frame/Shaft Sinking/Hoist Installation (3-4 years) – Select shaft location based on seismic and surface factors (access, topography and hydrology) – Bore holes with core samples – Head frame design (shaft sinking equipment then production setup) – Freeze plant design/installation (for new shafts in Saskatchewan) – Shaft sinking; design liner (tubing or composite – steel and concrete) – Install hoists and skips
  17. 17. Picadilly Service Shaft Development
  18. 18. Conventional Potash Mine Considerations… Greenfield Projects Expected To Require More Time Than Brownfield• Mine Development/Ramp Up (2-3 years) – Connect production and service shafts; develop service area – Lower and assemble development machines – Develop main entry way and maintenance areas; connect power and piping; lower and assemble service equipment – Lower and construct conveyor systems – 2 million tonne mine would require approximately 5-7 mining machines (assemble 2-3 mining machines per year)
  19. 19. Conventional Potash Mine Considerations… Greenfield Projects Expected To Require More Time Than Brownfield• Mill Construction (3-4 years) – Raw ore storage – Wet mill (brine tanks, thickeners, flotation systems, screening) – Dry mill (compactors, dryers, precipitators) – Load out facilities
  20. 20. Conventional Potash Mine Considerations… Greenfield Projects Expected To Require More Time Than Brownfield• Mill Commissioning (~ 1 year) – Define and prioritize sequence of systems (Cory mill involved 242 systems) – Circulate brine and feed raw ore – Evaluate performance, tune, and ramp up
  21. 21. 3 Projects are Becoming More Complex and Costly to Complete
  22. 22. Costs: Estimated Greenfield Potash Capital Costs*Investment in Greenfield Capacity Goes Beyond Mine and MillCDN$ Billions 7.0 $4.7B-$6.3B 6.0 $0.0-$1.0B $0.6B-$2.2B Infrastructure and $0.6-$1.2B Potential Deposit 5.0 Purchase 4.0 $3.0B $4.1B 3.0 2.0 Mine and Mill 1.0 $1.1B 0.0 Mine Surface Development of Acquisition of Total Development Facilities Infrastructure** Deposits*** * Based on 2mmt-per-year conventional mine in Saskatchewan; costs could vary depending on conventional vs. solution mine, depth of ore body, location and other factors. Includes escalation, contingency and owner costs. ** Dependent on location, access and distance to port. Includes railcars, utility systems, port facilities, etc. *** Based on publicly reported cost of recent purchases.Source: AMEC, PotashCorp
  23. 23. Costs: Saskatchewan Brownfield and Greenfield PotashNew Projects Are Increasingly Expensive and Complex to CompleteCapital Cost per Tonne – (CDN$) 3,500 Greenfield (Excluding infrastructure and reserve costs) 3,000 Greenfield (Including infrastructure and reserve costs) 2,500 2,000 1,500 1,000 500 0 POT Projects POT Projects in MOS Projects in AGU Project SK Greenfield** Completed Progress* Progress * New Brunswick cost per tonne based on new 2MMT mine (net addition totals 1.2MMT). ** Based on 2MMT conventional greenfield mine constructed in Saskatchewan. PotashCorp project costs exclude infrastructure outside the plant gate. Assuming US$/CDN$ at parSource: AMEC, Company Reports, PotashCorp
  24. 24. Thank You There’s more online PotashCorp.com Visit us online Facebook.com/PotashCorp Find us on Facebook Twitter.com/PotashCorp Follow us on Twitter PotashCorp.com

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