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PotashCorp - BMO Capital Markets Farm to Market Conference - May 14, 2013

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  • 1. PotashCorp.comBMO Farm toMarketConferenceMay 14, 2013Bill DoylePresident and CEO
  • 2. This presentation contains forward-looking statements or forward-looking information (forward-looking statements). Thesestatements can be identified by expressions of belief, expectation or intention, as well as those statements that are nothistorical fact. These statements are based on certain factors and assumptions including with respect to foreign exchangerates, expected growth, results of operations, performance, business prospects and opportunities and effective tax rates.While the company considers these factors and assumptions to be reasonable based on information currently available,they may prove to be incorrect. Several factors could cause actual results or events 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 within major markets; economic andpolitical uncertainty around the world; timing and impact of capital expenditures; risks associated with natural gas and otherhedging activities; changes in capital markets; unexpected or adverse weather conditions; changes in currency andexchange rates; unexpected geological or environmental conditions, including water inflows; imprecision in reserveestimates; adverse developments in new and pending legal proceedings or government investigations; acquisitions wemay undertake; strikes or other forms of work stoppage or slowdowns; rates of return on and the risks associated with ourinvestments; changes in, and the effects of, government policies and regulations; security risks related to our informationtechnology systems; and earnings, exchange rates and the decisions of taxing authorities, all of which could affect oureffective tax rates. Additional risks and uncertainties can be found in our Form 10-K for the fiscal year ended December 31,2012 under the captions “Forward-Looking Statements” and “Item 1A – Risk Factors” and in our other filings with the USSecurities and Exchange Commission and the Canadian provincial securities commissions. Forward-looking statementsare given only as at the date of this release and the company disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.Forward-looking Statements
  • 3. SQMICLAPCNitrogenPhosphate(Mining/Processing)PotashInvestmentsSinofertSource: Fertecon; CRU; Blue, Johnson & Associates; PotashCorpA Global Crop Nutrient CompanyPotashCorp ProfilePotash Nitrogen Phosphate% of Global Capacity* 20% 2% 5%Global Position #1 #3 #3% of Gross Margin (2012) 57% 29% 14%* Based on nameplate capacity at year-end 2012, which may exceed operational capability (estimated annual achievable production level)
  • 4. Source: PotashCorp* 2013F as at April 25, 20130.01.02.03.04.05.06.02002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F*Potash Nitrogen PhosphateUnique Potash Position Drives Earnings GrowthPotashCorp ProfilePotashCorp Gross Margin64%43%22%0%10%20%30%40%50%60%70%Potash Nitrogen PhosphatePotashCorp Gross Margin PercentagePercentage of Net Sales (2012)10-Year Growth: +1,000%Gross Margin - US$ Billions
  • 5. Agricultural Market Update
  • 6. 1,6001,8002,0002,2002,4002,6002001 2003 2005 2007 2009 2011 2013FConsumption Production2013F refers to the 2013/14 crop year. Consumption forecast based on historical trend line growth.Million TonnesWorld Grain and Oilseed Supply/DemandNeed Historically Large Production Increase to Avoid Further ShortfallSource: USDA, PotashCorp2013 Production GrowthRate Scenarios6% (~ 3X Historical Growth Rate)4% (~ 2X Historical Growth Rate)
  • 7. 50100150200Jan-10 Jan-11 Jan-12 Jan-13Crop Price Index* Fertilizer Price Index**Price Index (2010 Average = 100)Crop and Fertilizer Price RelationshipSignificant Economic Incentive for Increased Fertilizer UsageSource: Bloomberg, PotashCorp* Based on corn, soybean and wheat prices (weighted by global consumption)** Based on urea, DAP and KCl prices (weighted by global consumption)
  • 8. Fertilizer Market UpdatePotash Update
  • 9. Source: Fertecon, PotashCorp0102030405060Million Tonnes KClWorld Potash ShipmentsSlower Demand Periods Have Historically Been Followed by Robust Growth6.5%CAGR5.3%CAGR
  • 10. Potash Shipments to Key Regions Excluding IndiaStrong Growth in Key RegionsSource: Potafertz, Fertecon, CRU, IFA, IPNI, USDOC, AAPFCO, Industry Publications, PotashCorpMillion Tonnes KCl0510152025303540452008 2009 2010 2011 2012 2013FLatin America China Other Asia North America
  • 11. Source: Fertecon, CRU, Industry Publications, PotashCorp464850525456582012 China India Other AsiaLatin AmericaNorth AmericaOther 2013FMillion Tonnes KClWorld Potash DemandConsumption Expected to Drive 2013 ShipmentsRegion 2012 2013FChina 10.6 ~11.5India 3.5 ~4.0Other Asia 7.5 ~8.3Latin America 9.5 ~10.2North America 7.9 ~9.5Other 12.0 ~12.5Total 51.0 55-57Estimated Shipments by Region*(million tonnes)* 2013F based on midpoint of estimated global shipment range** Estimates per PotashCorp
  • 12. North America UpdateLow Dealer Inventories and Strong Crop Economics Support DemandSource: IPNI, USDOC, AAPFCO, PotashCorpCommentary• Expect fertilizer applications to be robust dueto supportive crop economics and increasedagronomic requirements from decliningpotassium levels• Strong start to the season as buyers begin tosecure product for spring needs given limitedinventory at the distributor and retail level024681012Shipments Jan-Jun Shipments Jul-Dec ConsumptionMillion Tonnes KCl
  • 13. Latin America UpdatePotash Import Demand Anticipated to Remain RobustSource: PotafertzCommentary• High planted acreage and very supportive farmeconomics leading to robust fertilizer demand• Off to a record start in 2013 with strong potashshipments from both Canpotex and NewBrunswick• Given port congestion issues, distributorsworking to more evenly spread fertilizershipments throughout the year• 2013 demand for potash on pace to meet orsurpass 2012 record levelsMillion Tonnes KCl0246810122003 2005 2007 2009 2011 2013FPotash Shipments Potash Consumption
  • 14. China UpdateConsumption Growth Expected to Increase Import RequirementsSource: Fertecon, CRU, IFA, Industry Publications, PotashCorpCommentary• Anticipate growth in potash consumption givenneed to increase domestic productivity due torising costs of soybean and corn imports• Significant tonnage currently contracted forfirst-half 2013 delivery• Canpotex contract commitments for first-half2013 represent record levelsMillion Tonnes KCl024681012142003 2005 2007 2009 2011 2013FPotash Shipments Potash Consumption
  • 15. India UpdateExpect Modest Growth From 2012Source: Fertecon, CRU, IFA, Industry Publications, PotashCorp0.000.050.100.150.200.25012345672003 2005 2007 2009 2011 2013FPotash Imports K:N RatioK:N Ratio Commentary• Lower potash prices have translated intomarginal savings for farmers due to subsidychanges• Total shipments in 2013 expected to surpassprevious year; Canpotex’s contracted volumesrepresent a significant increase above those in2012• Based on estimated imports, K:N ratio likely toremain well-below scientifically recommendedlevels; unlikely to sufficiently improve laggingyieldsMillion Tonnes KCl
  • 16. Other Asia UpdateExpect Strong Demand Growth in Indonesia and MalaysiaSource: Fertecon, CRU, IFA, Industry Publications, PotashCorpCommentary• Strong consumption trends were masked bydestocking activities in 2012• Shipments to this market accelerated soonafter the settlement of new contracts in Chinaand India• Despite volatility in prices of palm oil, a keyconsumer of potash in the region, growereconomics remain supportive for robust potashdemandMillion Tonnes KCl02468102003 2005 2007 2009 2011 2013FPotash Shipments Potash Consumption
  • 17. The PotashCorp Advantage: Positioned to Deliver Superior Performance
  • 18. 42%PotashCorp Rest of WorldSource: Fertecon, CRU, IFA, Company Reports, PotashCorpPositioned to Respond to Expected Potash Demand GrowthPotashCorp’s OpportunityPercentage of New Operational Capability(2012-2016F)*3.5%1.3%2.7%0.0%1.0%2.0%3.0%4.0%Potash Nitrogen PhosphateGrowth in Global Fertilizer ConsumptionEstimated Annual Increase (2012-2016)23%Percentage of Global Operational Capability(2016F)** Based on public filings and PotashCorp’s estimates of globaloperational capability
  • 19. Source: AMEC, Company Reports, PotashCorp1 New Brunswick cost per tonne based on new 2MMT mine (net addition totals 1.2MMT).2 PotashCorp project costs exclude infrastructure outside the plant gate; assuming US$/CDN$ at par.3 Based on 2MMT conventional greenfield mine constructed in Saskatchewan.4 Calculation of IRR assumes: PotashCorp average per tonne capital cost; 4 year construction timeline, 1 year ramp up and no potash production tax on incremental tonnes.05001,0001,5002,0002,5003,0003,500POT ProjectsCompletedPOT Projects inProgressSK GreenfieldGreenfield (Including infrastructure and reserve costs)Greenfield (Excluding infrastructure and reserve costs)US$ per TonneHigher-Cost, Low-Return Greenfield Potash Projects Could Be DeferredPotashCorp’s Opportunity0%10%20%30%40%$300/tonne $400/tonne $500/tonneEstimated PotashCorp Brownfield IRREstimated Greenfield IRR (Excluding infrastructure and reserve)Estimated Greenfield IRR (Including infrastructure and reserve)1,231,2,433Internal Rate of Return (IRR) - PercentageEstimated Capital Cost of Greenfield Projects Estimated Return on Brownfield vs GreenfieldNegativeReturnNetback Scenarios
  • 20. Source: PotashCorpAmmonia Capacity*New Ammonia Capacity Adds Margin Growth PotentialPotashCorp Nitrogen Profile36%21%43%Ammonia Urea Solutions/NA/AN2013 YTD Nitrogen Product Mix (Sales Volume)0.00.51.01.52.02.53.03.54.04.52012 2013FTrinidad Augusta Lima GeismarMillion Tonnes$190 million expansion of our Lima, OH ammonia (+88,000 short tons/year)and urea capacity (+80,000 short tons/year) expected to be complete by late 2015* All estimated capacity amounts as at beginning of yearIncremental GMof approximately$100-130 million
  • 21. Source: PotashCorp, Company Reports0100200300400500600700800Q2-09 Q1-10 Q4-10 Q3-11 Q2-12 Q1-13Fertilizer Feed & IndustrialPotashCorp Average Realized Sales PriceIndustrial and Feed Products Enhance Stability in PhosphatePotashCorp Phosphate Profile0%20%40%60%80%100%PotashCorp* Mosaic**Feed & Industrial FertilizerPhosphate Product Mix (Sales Volume)US$/tonne* Based on 2013 YTD sales volumes** Mosaic’s percentage based on feed sales volume relative to total phosphatesales volume as publicly disclosed for the last four fiscal quarters
  • 22. Cash Flow Opportunity
  • 23. Strong Cash Flow + Reduced Capital Spending = Greater Financial FlexibilityPotashCorp’s Opportunity05001,0001,5002,0002,5003,0003,5004,0002003 2004 2005 2006 2007 2008 2009 2010 2011 2012Cash Provided by Operating ActivitiesCapital SpendingUS$ MillionsSource: PotashCorp* As we adopted International Financial Reporting Standards (IFRS) witheffect from January 1, 2010; 2003 to 2009 information is presented on aprevious Canadian Generally Accepted Accounting Principals (GAAP)basis. Accordingly, information for 2003 to 2009 may not be comparable to2010 , 2011 and 2012.05001,0001,5002,0002,5003,0003,5004,0002006 2007 2008 2009 2010 2011 2012 2013F 2014F 2015FUS$ Millions** Excluding capitalized interest, major repairs and maintenance and Lima expansionAnnual Cash Provided by Operating Activities* PotashCorp Capital Spending**
  • 24. There’s more online:PotashCorp.comVisit us onlineFacebook.com/PotashCorpFind us on FacebookTwitter.com/PotashCorpFollow us on TwitterThank you
  • 25. Try Our Overview Site: www.potashcorp.com/overviewLooking For More Industry and Company Information?Explore our Key Markets… Find Data on Key Crops… Learn about our Company