Future Trends in the Phosphate Industry. Don Clark Vice President Engineering and Technology. Forward- Looking Statements

Transcription

1 Future Trends in the Phosphate Industry by Don Clark Vice President Engineering and Technology International Fertilizer Industry Association 2006 IFA Technical Symposium Vilnius, Lithuania April 2-28, Safe Harbor Statement Forward- Looking Statements Certain statements contained herein constitute forward-looking statements as that term is defined under the Private Securities Litigation Reform Act of 199. Although we believe the assumptions made in connection with the forward-looking statements are reasonable, they do involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of The Mosaic Company, or industry results generally, to be materially different from those contemplated or projected, forecasted, estimated or budgeted (whether expressed or implied) by such statements. Factors affecting forward-looking statements may include, among others, the ability to successfully integrate the former operations of IMC and the Cargill fertilizer businesses; the ability to fully realize the expected cost savings from the business combination between IMC and the Cargill fertilizer businesses within expected time frames; the ability to develop and execute comprehensive plans for asset optimization and/or rationalization; the financial resources of, and products available to, Mosaic s competitors; the retention of existing, and continued attraction of additional, customers and key employees; changes in the outlook of the nitrogen, phosphate or potash markets; changes in the costs of raw materials or energy; the effect of any conditions or restrictions imposed on or proposed with respect to Mosaic by regulators; the effect of legislative or regulatory changes in jurisdictions where Mosaic operates; the ability of Mosaic to obtain the regulatory permits necessary for the continued operation of its businesses in a manner consistent with current practices or anticipated expansions; contingencies related to environmental liability under U.S. federal and state and foreign environmental laws and regulations; adverse weather conditions affecting central Florida or the Gulf Coast of the United States, including the impact of potential hurricanes or excess rainfall; the rating of The Mosaic Company s and Mosaic Global Holding Inc. s securities and the changes that may occur in the U.S. securities markets; and the factors described in our filings with the SEC, including our Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 200. This presentation may not be distributed, reproduced, or used without the express written consent of The Mosaic Company. 2 1

2 Future Trends in the Phosphate Industry Demand Growth Changes in the product mix Large scale and integrated operations New operational challenges 3 Demand Growth Mil Tonnes P 2 O 4 Source: IFA 40 World Phosphate Use Developed Countries Developing Countries Transition Economies 4 2

3 Demand Growth 8 World Population 7 6 Source: Global Insight Billion Demand Growth 6% World Annual GDP Growth Rates Source: Global Insight % 4% 3% 2% 1% 0%

4 Demand Growth 12% Annual GDP Growth Rates in China and India Source: Global Insight 10% 8% 6% 4% 2% 0% China India 7 Demand Growth Ethanol Bil Gal 9 World Fuel Ethanol and Biodiesel Production Biodiesel Bil Gal Source: International Energy Agency Ethanol Biodiesel 8 4

5 Demand Growth Bil Bushels U.S. Corn Utilized in Fuel Ethanol Production Source: USDA Changes in the Product Mix High analysis products displace low analysis products MAP captures a larger share of the phosphate market High analysis specialty products deliver key secondary and micronutrients 10

6 Changes in the Product Mix 198 World Phosphate Use 199 World Phosphate Use High 49% High 3% Low 1% 2000 World Phosphate Use High analysis products are displacing low analysis products Low 47% 200 World Phosphate Use High 9% High 61% Low 41% Source: Fertecon Low 39% 11 Changes in the Product Mix Processed Phosphate Import Demand by Product Processed Phosphate Import Demand 199 Processed Phosphate Import Demand 200 MAP 2% DAP 69% Total 21.1 MMT TSP 14% MAP 17% DAP 8% Total 21.3 MMT TSP 17% Source: Fertecon, IFA and Mosaic 12 6

7 Changes in the Product Mix High analysis specialty products deliver key secondary and micronutrients Example: Mosaic MicroEssentals TM 13 Changes in the Product Mix Example: Mosaic MicroEssentals TM Two-year average milk production increased more than 70 pounds per acre or approximately $70 per acre using MicroEssentials TM S

8 Large Scale and Integrated Operations The global phosphate supply chain is becoming more efficient The world can not afford highly inefficient or sub-optimum trade flows High analysis products Integrated production Bulk distribution systems World scale production and distribution operations 1 Large Scale and Integrated Operations MMT Rock World Phosphate Rock Trade Source: IFA and Mosaic Percent 26% 2% 24% 23% 22% 21% 20% 19% 18% Trade Percent of Production 17% 16 8

9 Large Scale and Integrated Operations MMT Rock 16 Rock Exports 200 Cumulative % 100% Source: IFA 90% 80% 70% 60% 0% 40% 30% 0 20% Morocco Jordan Russia Syria China Egypt Togo Algeria Tunisia Israel 17 Large Scale and Integrated Operations Chinese Rock Production and Exports MMT Production 40 Source: IFA and Mosaic MMT Exports Production Exports

10 Large Scale and Integrated Operations MMT Rock.0 4. Phosphate Rock Imports 200 Cumulative % 100% Source: IFA and Mosaic 90% % 3. 70% % 2. 0% % 1. 30% % 0. 10% 0.0 0% India USA Spain Poland Belgium South Korea Indonesia Brazil Lithuania Mexico 19 Large Scale and Integrated Operations Current developments will accelerate these trends during the next five years The world now really can not afford inefficient or sub-optimum trade flows Surging energy prices Escalating raw materials and other production costs De-coupling of EU and U.S. farm income support payments Evolving fertilizer subsidy schemes 20 10

11 New Operational Challenges Changing Customer Requirements Deteriorating Rock Quality More Stringent and Uniform EHS Regulation 21 New Operational Challenges Mil Hectares Source: USDA World Grain and Oilseeds Area and Yields Tonnes per Hectare Harvested Area Yield

12 New Operational Challenges BPL 70% 69% 68% U.S. Average Rock BPL Content Source: The Fertilizer Institute 67% 66% 6% 64% 63% 62% 61% 60% A lesson from Darwin It is not the strongest of the species that survive, nor the most intelligent; it is the one that is most adaptable to change Charles Darwin Theory of Evolution 189 It is not the oldest or biggest or most revered players in the crop nutrition industry who will survive. Only those who correctly analyze, boldly embrace and quickly adapt to change will survive and prosper

13 Thank You! Future Trends in the Phosphate Industry by Don Clark Vice President Engineering and Technology International Fertilizer Industry Association 2006 IFA Technical Symposium Vilnius, Lithuania April 2-28,