PotashCorp - 2012 Analyst Meeting - Bill Doyle Presentation

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PotashCorp - 2012 Analyst Meeting - Bill Doyle Presentation

  1. 1. Bill DoylePresident and CEOPotash Demand Driversand Outlook 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. World Potash Fertilizer Consumption Growth Significant Consumption Growth in Large Developing MarketsPercent Annualized Growth (2001-2011) Million Tonnes K2O Latin America Other Asia 7 35 China India North America Other 6 30 5 25 4 20 3 15 2 10 1 5 0 0 Source: Fertecon
  4. 4. Potash Shipments by Selected MarketDespite Global Consumption Growth, Shipments Have Been UnevenMillion Tonnes KCl Shipments Shipment Range 12 10 8 6 4 2 0 10 11 12F 10 11 12F 10 11 12F 10 11 12F 10 11 12F China India Other Asia Latin North America AmericaSource: Fertecon, IFA, Industry Publications, PotashCorp
  5. 5. Potash Demand Drivers by Key Market
  6. 6. China Population and Per Capita Food ConsumptionUrban Residents Consume More Meats, Vegetables and FruitsPopulation - Billions Annual Consumption – Kilograms per capita Urban Rural Rural Urban1.50 1201.25 1001.00 80 600.75 400.50 200.25 00.00 1970 1980 1990 2000 2010 2020FSource: United Nations, National Bureau of Statistics of China, USDA
  7. 7. China Grain & Oilseed ProfileDespite Increased Acreage, Production Has Not Kept Pace with DemandHarvest Area – Million Hectares Million Tonnes Production Consumption120 600116 500 400112 300108 200104 100100 0 1991 1996 2001 2006 2011 1991 1996 2001 2006 2011Source: USDA
  8. 8. China Agriculture ProfilePressure on Food Supply = Higher Crop Prices and Increased Government FundingPrice Index (1984 = 100) Agriculture Subsidies - Billion Yuan 1,100 160 Corn Soybean Vegetables Grain 1,000 140 Seed 900 Machinery 120 800 Aggregate Inputs 700 100 600 80 500 60 400 40 300 200 20 100 0 2004 2005 2006 2007 2008 2009 2010 2011Source: USDA, National Bureau of Statistics of China, PotashCorp
  9. 9. China Agriculture Profile Gradual Shift to Larger Farms and Increased MechanizationPercent Rented MMT of Nutrients Thousand Tractors MMT of Nutrients20 Percentage of Farmland Rented 50 5,000 Tractor Usage 50 Fertilizer Use Fertilizer Use 4,00015 45 45 3,00010 40 40 2,000 5 35 35 1,000 0 30 0 30 2004 2005 2006 2007 2008 2009 2010 2011 2004 2005 2006 2007 2008 2009 2010 2011 Source: Ministry of Agriculture, Center for Chinese Agricultural Policy, Statistic Bureau of China. Beijing Orient Agribusiness Consultant
  10. 10. Population GrowthIndia Accounts for Over 20 Percent of Projected World Population GrowthPopulation Growth - Millions (2010-2020F) 180 160 140 120 100 80 60 40 20 0 India China Pakistan US Indonesia BrazilSource: United Nations
  11. 11. Per Capita GDP and Crop Consumption Potential For India to Significantly Increase Consumption as Incomes GrowGDP Per Capita (US$) Grain & Oilseed Consumption – Kg Per Capita8,000 450 India China India China7,000 4006,000 3505,000 3004,000 2503,000 2002,000 1501,000 0 100 1970 1980 1990 2000 2010 1970 1980 1990 2000 2010 Source: CIC, IMF, UN, FAO, PotashCorp
  12. 12. India Food Inflation and Crop YieldsLow and Variable Yields are Contributors to High Food InflationIndia Food Price Index: 2004/05 Equals 100 Rice Yield – MT/HA 200 3.25 India Asia (exc. India) 3.00 175 2.75 2.50 150 2.25 2.00 125 1.75 100 1.50 2005 2006 2007 2008 2009 2010 2011 2001 2003 2005 2007 2009 2011Source: Government of India, USDA
  13. 13. Nitrogen to Potash Application RatioTemporary Pause In India’s Efforts to Improve Its Application Balance N:K Ratio Percentage of Indian Fertilizer Subsidy India US 7 6 Potash 12% 5 4 Phosphate 20% 3 2 68% Nitrogen 1 0 2010 2011Source: Fertecon, Industry Publications, PotashCorp
  14. 14. Other Asia Potash DemandSignificant Growth in Southeast Asian CountriesMillion Tonnes KCl 2011 2001 Indonesia Malaysia Vietnam Thailand Other 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5Source: Fertecon, IFA, Industry Publications, PotashCorp
  15. 15. Other Asia Crop Production Growth Rising Production of Potash Intensive CropsMillion Tonnes Million Tonnes 350 200 300 150 250 200 100 150 100 50 50 0 0 1996 2001 2006 2011 2016F 1996 2001 2006 2011 2016F Rice Oil Palm Source: FAO, USDA, PotashCorp
  16. 16. Latin America Potash DemandBrazil is Primary Driver of Growth in Latin AmericaMillion Tonnes KCl Brazil Other 11 10 9 8 7 6 5 4 3 2 1 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Source: Fertecon, Potafertz, PotashCorp
  17. 17. Brazil Crop AcreageExpanding Area to Meet Rising Domestic and Offshore DemandMillion Hectares 30 25 20 15 10 5 0 06 11 16F 06 11 16F 06 11 16F Soybean Corn Sugar CaneSource: USDA, FAO, PotashCorp
  18. 18. US Corn/Soybean Potash Application and RemovalHigher Yields Drive Increased Nutrient Removal; Application Rates Have Not Kept PaceMillion Tonnes KCl Equivalent* 8 Column4 Crop Removal 7 ~2.3 MMT gap between 6 current application and projected removal in 2016 5 4 3 2 1 0 1986 1991 1996 2001 2006 2011E 2016F * Excludes industrial uses and crops other than corn and soybeansSource: IPNI, USDA, PotashCorp
  19. 19. Estimated Soil Potash Level in the USThe Soil Potassium Level Has Declined in Major Potash-Consuming StatesChange in Soil Potash Levels From 2005 to 2010 (PPM) Corn Yield - Bushels/acre 200 10 5 150 0 N. America -5 Average 100 -10 50 -15 -20 0 -25 Ohio Indiana Iowa MissouriSource: IPNI, USDA, PotashCorp
  20. 20. Potash Demand Outlook
  21. 21. Potash Shipments by Selected MarketExpect Significant Demand Growth in Major Offshore MarketsMillion Tonnes KCl Shipments Shipment Range Previous Record 14 12 10 8 6 4 2 0 China India Other Asia Latin North America AmericaSource: Fertecon, IFA, Industry Publications, PotashCorp
  22. 22. World Potash ShipmentsExpect Long-term Demand Will Be In-line With Historical TrendMillion Tonnes KCl Shipment Range Shipments 70 60 50 40 30 20 10 0 1996 1998 2000 2002 2004 2006 2008 2010 2012F 2014F 2016F Shipment range based on 3.0-3.5% annualized demand growth rate (2002-2016).Source: Fertecon, IFA, Industry Publications, PotashCorp
  23. 23. 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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