High crop prices: Positive for fertilizer demand – what about supply?Dag Tore Mo, Head of Market Intelligence

Urea57%

UAN5%

AN/CAN8%

NPK9%

DAP/MAP6%

Ammonia4%

Other11%

MOP/SOP72%

NPK23%

Other5%

DAP/MAP52%

NPK21%

SSP13%

TSP6%

Other7%

Key global fertilizer products

103 million tons

27 million tons 40 million tons

Nitrogen N

Potash K2O Phosphate P2O5

Source: IFA 2010 (nutrient totals) and 2008 (product split)

1 800

1 900

2 000

2 100

2 200

2 300

2 400

1997 1999 2001 2003 2005 2007 2009 2011 2013F0%

5%

10%

15%

20%

25%

30%

35%

1997 1999 2001 2003 2005 2007 2009 2011 2013F

Consumption

Production

Source: USDA November 2012

A third year of lower grain stocks, very

supportive

68 days inventory

Million tons

Main agricultural commodity prices at historic

high levels

050

100150200250300350400

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TD12 Oct

USD/t

Wheat (HRW US Gulf)

0

100

200

300

400

500

600

700

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TD12 Oct

USD/t

Rice (Thailand)

050

100150200250300350

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TD12 Oct

USD/t

Corn (US Gulf)

Source: World Bank, November 2012

0

100

200

300

400

500

600

700

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TD12 Oct

USD/tSoybeans (cif Rotterdam)

Average prices 2002- 2011

0

100

200

300

400

500

600

700

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012TD

Index2000 = 100)

Urea fob Black Sea

DAP fob Tampa

MOP fob Vancouver

Oil Brent

Wheat fob US Gulf

Source: International publications

Fertilizer prices not very different from other

commodities

y = 1,3164x - 9,6469

R² = 0,5665

100

200

300

400

500

600

700

800

900

100

150

200

250

300

350

400

450

500

Ure

a f

ob B

lack S

ea

Wheat fob US Gulf

Relationship between wheat and urea prices ( from 2003 )

Main fertilizer commodity prices

Source: International publications

0

100

200

300

400

500

600

700

Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

USD/mt Urea fob Black Sea DAP fob Tampa MOP fob Vancouver

Profitability of investment in mineral fertilizers

� The investment in nitrogen fertilizer is highly profitable for growers

� Fertilizer investment: 261 USD/ha

� Net return: 1,745 USD/ha

� Net return > 6 x investment

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

10,0

0

500

1 000

1 500

2 000

2 500

3 000

0 50 100 150 200 250 300

Yield, ton/haIncome USD/ha

Fertilizer application, kg N/ha

Source: Winter wheat yield data: Long term trial, Broadbalk, Rothamsted (since 1856).

Yield response (monetary value) to N fertilizer rate

Apparent nitrogen consumption ex. China

75

80

85

90

95

100

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

mil

lio

n t

on

sn

itro

ge

n

Source: IFA

The trend from 2001-2011 shows a growth rate of 2.1%/year

Standard deviation of annual growth rates: 4%-points

10 largest ammonia producers in 2011

0,0

10,0

20,0

30,0

40,0

50,0

60,0

Ch

ina

Ru

ssia

Ind

ia

US

A

Ind

on

esia

Tri

nid

ad

Uk

rain

e

Ca

na

da

Eg

yp

t

Sa

udi

Ara

bia

mil

lio

n t

on

s a

mm

on

ia

2010 2011

Source: IFA

Main urea flows 2011

10.91.0

0.84.7

2.3 1.7 0.9

1.6

1.5

0.9

Source: IFA 2011

Million tonnes

0.8

0.7

2.2

0.8

1.8

Net urea export from China

0

1000

2000

3000

4000

5000

6000

7000

8000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

kt

pro

duct

2009 2010 2011 2012

300

350

400

450

500

550

600

650

700

1 750 1 950 2 150 2 350 2 550

Fob China

Domestic price ex works, RMB/t

Chinese export tax 1 Jul – 1 Nov

Lower Chinese urea export price in 2012

* China Fertlizer Market Week

1 600

1 700

1 800

1 900

2 000

2 100

2 200

2 300

2 400

2 500

Jan Apr Jul Oct

RMB/t

Domestic urea price in China

2011

2012

2011

2012

Source: Fertecon urea update October 2012. Consumption data source is IFA. Previous update in brackets.

Year Driving regionsUrea capacity growth relative

to nitrogen capacity

World Excluding China World Excluding China2011 China 36%

Pakistan 24%Pakistan 37%

Iran 18%1.2% (1.3%) 1.2% (1.3%)

2012 China 60%

Qatar 14%

Qatar 34%

Vietnam 20%

3.5% (4.1%) 2.2% (2.1%)

2013 China 63%

Algeria 14%

Algeria 38%

UAE 18%

4.4% (2.7%) 2.6% (3.1%)

2014 China 45%

Egypt 13%

Egypt 25%

Algeria 16%

1.7% (1.0%) 1.5% (1.2%)

2015 China 42%

Saudi Arabia 9%

Saudi Arabia 15%

Brazil 14%

2.6% (1.2%) 2.5% (1.9%)

Gross annual addition 2011-2015 ~2.0%

Assumed annual closures ~0.5%

Net annual addition 2011-2015 ~1.5%

Trend consumption growth from 2001 2.5% 2.1%

Projected nitrogen capacity additions outside

China in line with historical consumption growth

Source: Fertecon urea updates

Continued project delays

7,5

5,2

2,5

2,5

1,2

0,4

0

1

2

3

4

5

6

7

8

2012Oct 11 est.

2012Oct 12 est.

2013Oct 12 est.

Million tonsAdditional urea capacity

Startup in UAE in Jan 13

Startups in Algeria in Jul 12, Jan 13 and Jul 13

1 new site in Egypt from Jul 13

Fertecon assumptions:

0

10

20

30

40

50

60

70

80M

t Roc

k

2011 2010

Ten largest phosphate rock producers 2011

Source: IFA

Record net phosphate exports from China

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

2005 2006 2007 2008 2009 2010 2011

Million tons P2O5

DAP MAP TSP Other NP

Source: IFA, BOABC for 2011. ( Assuming 25% P2O5 in “Other NP”, included from 2009 )

80

100

120

140

160

180

200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Mt R

ock

Excluding China

In 2011 global phosphate rock production

increased by 3.8% to 191 million tonnes

2001-2011 annual growth rate 2.1% per year

Source: IFA

Main DAP/MAP/TSP flows 2010 (Mt P2O5)

1.17

Source: IFA

0.24

1.28

0.34

0.39

0.21

0.19

0.490.25

0.10

10

15

20

25

30

35

40

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Mt K

2O

In 2011 global potash production increased by

8.2% to 34.3 million tonnes K2O

2001-2011 trend growth rate 1.0% per year

Source: IFA

0

2

4

6

8

10

12M

t K2O

2011 2010

Ten largest potash producers 2011

Source: IFA

Main potash flows 2011 (Mt K2O)

3.7

Source: IFA

1.9

0.5

0.7

2.1

2.03.6

3.7

0.9

0.7

1.7

1.4

0

100

200

300

400

500

600

700

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

USD/mt

Rock fob Morocoo

MOP fob Vancouver

Source: International publications

P and K – decades of surplus capacity gone

Phosphate rock reserves are not limited

(numbers are billion tons)

Source: CRU

Potash Exploration Activity, no lack of resources, it is a question of price

UNITED STATES

American Potash

IC Potash (SOP)

Mesa Uranium

NA Potash Developments

Passport Potash

Potash Minerals

Potash Ridge (SOP)

Prospect Global Resources

Red Metal

Sirius Minerals

Universal Potash

ARGENTINA

Allana Potash

Dajin Resources

Lithium Americas Corp

Lithium One

Marifil Mines

Orocobre

Rincon Lithium

Rodinia Lithium

BRAZIL

Verde Potash

Brazil Potash Corp.

Lara Exploration

Petrobras

Aguia Resources

Redstone Resources

Rio Verde Minerals

Vale

Western Potash

ERITREA & ETHIOPIA

Allana Potash

BHP Billiton

Ethiopian Potash Corp

Ethiopotash

NGEx Resources

Nova Potash

Sainik / IFFCO

South Boulder MinesAUSTRALIA

Sirius Minerals

Highfield Resources

Potash West

Rum Jungle Resources

South Boulder Mines

WPG Resources

THAILAND & LAOS

ASEAN Potash Mining

Asia Pacific Potash (Ital-Thai)

Mingda Thailand

Sinoagri Mining

Sinohydro Mining

Viet-Lao Salt & Chemicals

Zhongliao Mining

Kaiyuan Potash

AsiaBaseMetals

RUSSIA (URALS)

Acron

EuroChem

CONGO

MagMinerals

Congo Potash Co.

Elemental Minerals

NEWFOUNDLAND &

NEW BRUNSWICK

Atlantic Potash Corp.

Red Moon Potash

PERU

GrowMax Agri Corp

Salmueras Sudamericanas (SOP)

KAZAKHSTAN

Fortis Mining

Satimola

TURKMENISTAN

Turkmenkhimiya

SASKATCHEWAN

BHP Billiton

Canada Potash Corp.

Encanto Potash

Karnalyte Resources

North Atlantic Potash (Acron)

Western Potash

Vale

MONGOLIA

General Mining Corp.

ALBERTA

First Lithium Resources

Grizzly Discoveries

Pacific Potash Corp.

Softrock Minerals

Universal Potash

MANITOBA

BHP Billiton

Western Potash

UNITED KINGDOM

Sirius Minerals (SOP)

BOLIVIA

Comibol

Ballpark investment costs - Greenfield

� Potash– 2 billion USD for a 1 million ton/year potash mine, USD2000/annual ton

– Time from start to mine output: 8-10 years

� Phosphate rock– 1.2 billion USD for a 2 million ton/year mine, USD600/annual ton

– Time from start to mine output: 6-10 years

� Ammonia/Urea– 1.5 billion USD for a 1 million ton/year urea plant, USD1500/annual ton

– Time from start to production: 4-6 years

Source:Department of Natural Resources Canada, British Sulphur(Fosfertil), Stamicarbon