Potash Demand Drivers and Outlook

Transcription

1 Potash Demand Drivers and Outlook William Doyle President & CEO

2 Forward-Looking Statements This 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 that are not historical fact. These statements are based on certain factors and assumptions including with respect to foreign exchange rates, 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 to differ materially from those expressed in the forward-looking statements, including, but not limited to: variations from our assumptions with respect to foreign exchange rates, expected growth, results of operations, performance, business prospects and opportunities, and effective 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 ocean freight; changes in competitive pressures, including pricing pressures; adverse or uncertain economic conditions and changes in credit and financial markets; the results of sales contract negotiations with major markets; the European sovereign 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 in capital 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 government investigations; acquisitions we may undertake; strikes or other forms of work stoppage or slowdowns; changes in and the effects of, government policies and regulations; security risks related to our information technology systems; and earnings, 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 1-K for the fiscal year ended December 31, 211 under the captions Forward-Looking Statements and Item 1A Risk Factors and in our other filings with the US Securities and Exchange Commission and the Canadian provincial securities commissions. Forward-looking statements are given only as at the date of this presentation and the company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. World Potash Fertilizer Consumption Growth Significant Consumption Growth in Large Developing Markets Percent Annualized Growth (21-211) 7 6 Million Tonnes K 2 O Latin America 3 China North America 3 2 Other Asia India Other F Source: Fertecon Potash Demand Drivers and Outlook 1

3 Potash Shipments by Selected Market Despite Global Consumption Growth, Shipments Have Been Uneven Million Tonnes KCl 12 Shipments Shipment Range F F F F F China India Other Asia Latin America North America Source: Fertecon, IFA, Industry Publications, PotashCorp Potash Demand Drivers by Key Market Potash Demand Drivers and Outlook 2

4 China Population and Per Capita Food Consumption Urban Residents Consume More Meats, Vegetables and Fruits Population - Billions 1. Urban Rural Annual Consumption Kilograms per capita Rural Urban F Source: United Nations, National Bureau of Statistics of China, USDA China Grain & Oilseed Profile Despite Increased Acreage, Production Has Not Kept Pace with Demand Harvest Area Million Hectares Million Tonnes 12 6 Production Consumption Source: USDA Potash Demand Drivers and Outlook 3

5 China Agriculture Profile Pressure on Food Supply = Higher Crop Prices and Increased Government Funding Price Index (1984 = 1) Agriculture Subsidies - Billion Yuan 1,1 Corn Soybean Vegetables 1, Grain Seed Machinery Aggregate Inputs Source: USDA, National Bureau of Statistics of China, PotashCorp China Agriculture Profile Gradual Shift to Larger Farms and Increased Mechanization Percent Rented MMT of Nutrients Thousand Tractors MMT of Nutrients 2 Percentage of Farmland Rented Fertilizer Use, Tractor Usage Fertilizer Use 1 4 4, 4 3, , 3 1, Source: Ministry of Agriculture, Center for Chinese Agricultural Policy, Statistic Bureau of China. Beijing Orient Agribusiness Consultant Potash Demand Drivers and Outlook 4

6 Population Growth India Accounts for Over 2 Percent of Projected World Population Growth Population Growth - Millions (21-22F) India China Pakistan US Indonesia Brazil Source: United Nations Per Capita GDP and Crop Consumption Potential For India to Significantly Increase Consumption as Incomes Grow GDP Per Capita (US$) Grain & Oilseed Consumption Kg Per Capita 8, India China 4 India China 7, 4 6, 3, 3 4, 3, 2, 2 2 1, Source: CIC, IMF, UN, FAO, PotashCorp Potash Demand Drivers and Outlook

7 India Food Inflation and Crop Yields Low and Variable Yields are Contributors to High Food Inflation India Food Price Index: 24/ Equals 1 Rice Yield MT/HA India Asia (exc. India) Source: Government of India, USDA Nitrogen to Potash Application Ratio Temporary Pause In India s Efforts to Improve Its Application Balance N:K Ratio 7 India US Percentage of Indian Fertilizer Subsidy 6 Potash 12% 4 3 Phosphate 2% % Nitrogen Source: Fertecon, Industry Publications, PotashCorp Potash Demand Drivers and Outlook 6

8 Other Asia Potash Demand Significant Growth in Southeast Asian Countries Million Tonnes KCl Indonesia Malaysia Vietnam Thailand Other Source: Fertecon, IFA, Industry Publications, PotashCorp Other Asia Crop Production Growth Rising Production of Potash Intensive Crops Million Tonnes 3 Million Tonnes F F Rice Oil Palm Source: FAO, USDA, PotashCorp Potash Demand Drivers and Outlook 7

9 Latin America Potash Demand Brazil is Primary Driver of Growth in Latin America Million Tonnes KCl Brazil Other Source: Fertecon, Potafertz, PotashCorp Brazil Crop Acreage Expanding Area to Meet Rising Domestic and Offshore Demand Million Hectares F F F Soybean Corn Sugar Cane Source: USDA, FAO, PotashCorp Potash Demand Drivers and Outlook 8

10 US Corn/Soybean Potash Application and Removal Higher Yields Drive Increased Nutrient Removal; Application Rates Have Not Kept Pace Million Tonnes KCl Equivalent* 8 7 Potash Application Crop Removal 6 ~2.3 MMT gap between current application and projected removal in E 216F * Excludes industrial uses and crops other than corn and soybeans Source: IPNI, USDA, PotashCorp Estimated Soil Potash Level in the US The Soil Potassium Level Has Declined in Major Potash-Consuming States Change in Soil Potash Levels From 2 to 21 (PPM) 1 Corn Yield - Bushels/acre 2-1 N. America Average Ohio Indiana Iowa Missouri Source: IPNI, USDA, PotashCorp Potash Demand Drivers and Outlook 9

11 Potash Demand Outlook Potash Shipments by Selected Market Expect Significant Demand Growth in Major Offshore Markets Million Tonnes KCl 14 Shipments Shipment Range Previous Record China India Other Asia Latin America North America Source: Fertecon, IFA, Industry Publications, PotashCorp Potash Demand Drivers and Outlook 1

12 World Potash Shipments Expect Long-term Demand Will Be In-line With Historical Trend Million Tonnes KCl 7 Shipment Range Shipments F 214F 216F Shipment range based on 3.-3.% annualized demand growth rate (22-216). Source: Fertecon, IFA, Industry Publications, PotashCorp 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 Potash Demand Drivers and Outlook 11