RBC Capital Markets Global Mining & Materials Conference June 19, 2013 William J. Doyle President and CEO
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. incorrect Several factors could cause actual results or events to differ materially from those expressed in the forward-looking statements, including, but not limited to the following: 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 within major markets; economic and political uncertainty around the world; timing and impact of capital expenditures; risks associated with natural gas and other hedging activities; changes in capital markets; 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; rates of return on and the risks associated with our investments; 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 10-K for the fiscal year ended December 31, 2012 under the captions “Forward-Looking Forward Looking Statements” Statements and “Item Item 1A – Risk Factors” Factors and in our other filings with the US Securities and Exchange Commission and the Canadian provincial securities commissions. Forwardlooking statements are 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.
Slide#1
% of Global Capacity*
PotashCorp Profile A Global Crop Nutrient Company
Global Position % of Total Gross Margin (2012)
Potash
Nitrogen
Phosphate
20%
2%
5%
#1
#3
#3
57%
29%
14%
* Based on nameplate capacity at year-end 2012, which may exceed operational capability (estimated annual achievable production level)
Sinofert APC ICL Potash Phosphate (Mining/Processing) Nitrogen Investments
SQM
Slide#2
Source: Fertecon; CRU; Blue, Johnson & Associates; PotashCorp
RBC Capital Markets Global Mining & Materials Conference 1
PotashCorp Profile Unique Potash Position Drives Earnings Growth PotashCorp Gross Margin
PotashCorp Per-tonne Gross Margin Percentage of Net Sales (2012)
Gross Margin - US$ Billions 60 6.0
70% 60%
64%
Potash
Nitrogen
Phosphate
5.0
50%
4.0
40%
43% 3.0
30% 2.0
20%
22% 1.0
10%
0.0
0% Potash
Nitrogen
Phosphate
02 03 04 05 06 07 08 09 10 11 12 13F
10-Year Growth: +1,000% * 2013F as at April 25, 2013
Slide#3
Source: PotashCorp
Agricultural Market Update
RBC Capital Markets Global Mining & Materials Conference 2
World Grain and Oilseed Supply/Demand Need for Historically Large Production Increase to Avoid Additional Shortfall
Million Tonnes Consumption p
2 500 2,500
2013 Production Growth Rate Scenarios
Production
2,400
8.3% (> 4X Historical Growth Rate) 6% (~ 3X Historical Growth Rate)
2,300
4% (~ 2X Historical Growth Rate)
2,200 2,100 2,000 1,900 1,800 1 700 1,700 1,600 2001
2003
2005
2007
2009
2011
2013F
8.3% production growth rate scenario is based on USDA’s June 2013 forecast (assumes large acreage increase and record yields) 2013F refers to the 2013/14 crop year.
Source: USDA, PotashCorp
Crop and Fertilizer Price Relationship Significant Economic Incentive for Increased Fertilizer Usage
Price Index (2007 Average = 100) 300
Crop Price Index* Index
Fertilizer Price Index** Index
Jan-09
Jan-11
250 200 150 100 50 0 Jan-07
Jan-08
Jan-10
Jan-12
Jan-13
* Based on corn, soybean and wheat prices (weighted by global consumption) as of June 7, 2013 ** Based on urea, DAP and KCl prices (weighted by global consumption) as of June 7, 2013
Slide#6
Source: Bloomberg, PotashCorp
RBC Capital Markets Global Mining & Materials Conference 3
Fertilizer Market Update Potash Update
World Potash Shipments Slower Demand Periods Have Historically Been Followed by Robust Growth
POT Sales Volume CAGR: 7%
Million Tonnes KCl 60
5.3% CAGR
50 40
6.5% CAGR
30 POT Sales Volume CAGR: 15% 20 10 0 1993
1995
1997
1999
2001
2003
2005
2007
2009
2011 2013F
Slide#8
Source: Fertecon, PotashCorp
RBC Capital Markets Global Mining & Materials Conference 4
Potash Shipments to Key Regions Excluding India Strong Growth in Key Regions
Million Tonnes KCl 45
Latin America
China
2009
2010
Other Asia
North America
40 35 30 25 20 15 10 5 0 2008
2011
2012
2013F
Slide#9
Source: Potafertz, Fertecon, CRU, IFA, IPNI, USDOC, AAPFCO, Industry Publications, PotashCorp
World Potash Demand Consumption Expected to Drive 2013 Shipments Estimated Shipments by Region** (million tonnes) Million Tonnes KCl
R i Region
58 56
2012
2013F
China
10.6
~11.5
India
3.5
~4.0
Other Asia
7.5
~8.3
Latin America
9.5
~10.2
54 52 50 48 46
2012
China
India
Other Latin North Other Asia America America
North America
7.9
~9.5
Other
12.0
~12.5 12.5
Total
51.0
55-57
2013F*
* 2013F based on midpoint of estimated global shipment range ** Estimates per PotashCorp
Slide#10
Source: Fertecon, CRU, Industry Publications, PotashCorp
RBC Capital Markets Global Mining & Materials Conference 5
World Potash Shipments Expect Key Offshore Regions To Drive Future Demand Growth
Million Tonnes KCl 80
~3
~5
70
74
~12
60 54
50 40
41
30 20 10 0 2000
2010
Asia
Latin America
Other
2020F
Slide#11
Source: Fertecon, CRU, Industry Publications, PotashCorp
China Potash Market Profile Strong Historical Growth Trends; Significant Future Needs Potash Fertilizer Consumption
Potash Use on Corn* Scenarios Million Tonnes KCl
Percentage - CAGR 18%
5
16% 4
14% 12%
3
10% 8%
2
6% 4%
1
2% 0% 20022012
20022007
19932012
19932007
19622012
19622007
0 9.5 to 1**
5 to 1
3 to 1
2 to 1
N to K Application Ratio * Corn represents approximately 10% of China’s current potash consumption; Significant growth potential exists on other crops. * *Current practice
Slide#12
Source: Fertecon, IFA, USDA, PotashCorp
RBC Capital Markets Global Mining & Materials Conference 6
India Potash Market Profile Despite Recent Challenges, Significant Long-term Growth Potential Potash Fertilizer Consumption
Potash Consumption Scenarios N to K Ratio
Percentage – CAGR 10
12%
India - 2009/10 N to K Ratio
9 10%
8 7
8%
6 6%
5 4
4%
3 2
2%
1 0% 20022012
20022007
19932012
19932007
19622012
19622007
0
3 MMT
4 MMT
5 MMT
6 MMT
7 MMT
8 MMT
Slide#13
Source: Fertecon, IFA, PotashCorp
Indonesia and Malaysia Potash Market Profile Strong Consumption Growth Trends Expected to Continue Potash Consumption
Palm Oil Production Million Tonnes
Percentage - CAGR 14%
60
12%
50
10%
Indonesia
Malaysia
40
8% 30 6% 20
4%
10
2%
0
0% 20022012
20022007
19932012
19932007
19622012
19622007
2001
2004
2007
2010
2013F 2016F 2019F
Slide#14
Source: Fertecon, IFA, USDA, Food and Agricultural Policy Research Institute, PotashCorp
RBC Capital Markets Global Mining & Materials Conference 7
Brazil Potash Market Profile Strong Historical Growth Trends; Increased Acreage Expected to Drive Future Needs Potash Fertilizer Consumption
Planted Area Million Hectares
Percentage - CAGR 70
12%
Soybeans
Corn
Sugarcane
60
10%
50 8% 40 6% 30 4%
20
2%
10
0% 20022012
20022007
19932012
19932007
19622012
19622007
0 1970
1980
1990
2000
2010
2020F
Slide#15
Source: Fertecon, IFA, PotashCorp
The PotashCorp Advantage: Positioned to Deliver Superior Performance
RBC Capital Markets Global Mining & Materials Conference 8
PotashCorp’s Opportunity Positioned to Respond to Expected Potash Demand Growth Percentage of New Operational Capability (2012-2016F)*
Growth in Global Fertilizer Consumption (IFA) Estimated Annual Increase (2012-2016) 4.0%
42% 3.5%
3.0%
2.7%
PotashCorp
2.0%
Rest of World
Percentage of Global Operational Capability (2016F)* 1.3%
1.0%
23%
0.0% Potash
Nitrogen
Phosphate
* Based on public filings and PotashCorp’s estimates of global operational capability
Slide#17
Source: Fertecon, CRU, IFA, Company Reports, PotashCorp
PotashCorp’s Opportunity Anticipate Increasing Canpotex Entitlement and New Brunswick Capacity Percentage of Canpotex Entitlement
New Brunswick Sales Opportunity**
(First-half 2013) Million Tonnes KCl
~48%
2.0 1.8 1.6 1.4
PotashCorp
Other Canpotex Members
Percentage of Canpotex Entitlement (2016F)*
1.2 1.0 0.8 0.6 0.4
~56%
0.2 0.0 Current Operational Capability
* Based on public filings of expected project completion timing and capacity increase; percentage of Canpotex entitlement based on PotashCorp’s estimates of Canpotex entitlement runs for completed projects.
Anticipated Operational Capability
** New Brunswick sales are sold through PCS Sales. Utilization of new capacity will be dependant on market conditions.
Slide#18
Source: Company Reports, PotashCorp
RBC Capital Markets Global Mining & Materials Conference 9
PotashCorp’s Opportunity Offshore Incremental Sales Growth Potential Significant
Million Tonnes KCl
Million Tonnes KCl 4.5
Canpotex Allocation Change*
4.0
+4.2MMT
Canpotex Sales Growth**
1.2
New Brunswick Incremental Sales
+1.0MMT
1.0
3.5 +3.0MMT
3.0
+0.8MMT
0.8 2.9MMT
2.5 2.0
+2.0MMT
1.5
1.0MMT
1.0
+0.8MMT
05 0.5
0.8MMT
0.0
Scenario One Canpotex @10MMT
+0.6MMT
0.6
1.9MMT
+0.4MMT
0.4 0.2
1.0MMT
1 1MMT 1.1MMT
1 3MMT 1.3MMT
Scenario Two Scenario Three Scenario Four Canpotex @12MMT
Canpotex @14MMT
0.0
Scenario One NB @ 40%*
Canpotex @16MMT
* Canpotex total sales * 8% entitlement change (56% of Canpotex by 2016)
Scenario Two Scenario Three Scenario Four NB @ 60%*
NB @ 100%*
NB @ 80%*
* Based on % of incremental operational capability (1 million tonnes by 2015)
** Incremental Canpotex sales * current entitlement (48%)
Slide#19
Source: PotashCorp
PotashCorp’s Opportunity Higher-Cost, Low-Return Greenfield Potash Projects Could Be Deferred Estimated Return on Brownfield vs Greenfield
Estimated Capital Cost
Internal Rate of Return (IRR) - Percentage
US$ per Tonne 3 500 3,500
40%
Greenfield G fi ld (I (Including l di iinfrastructure f t t and d reserve costs) t ) Greenfield (Excluding infrastructure and reserve costs)
3,000
1,2,4
Estimated E ti t d PotashCorp P t hC Brownfield B fi ld IRR 3 Estimated Greenfield IRR (Excluding infrastructure and reserve) Estimated Greenfield IRR (Including infrastructure and reserve) 3
30%
2,500 2,000
20% 1,500 1,000
10%
500 0 POT Projects Completed
POT Projects in 1,2 Progress
SK Greenfield
3
Negative Return
0% $300/tonne
$400/tonne
$500/tonne
Netback Scenarios
1
New Brunswick cost per tonne based on new 2MMT mine (net addition totals 1.2MMT).
2
PotashCorp project costs exclude infrastructure outside the plant gate; assuming US$/CDN$ at par.
3
Based on 2MMT conventional greenfield mine constructed in Saskatchewan.
4
IRR assumes: PotashCorp average per tonne capital cost; 4 year construction timeline, 1 year ramp up and no potash production tax on incremental increase tonnes.
Slide#20
Source: AMEC, Company Reports, PotashCorp
RBC Capital Markets Global Mining & Materials Conference 10
IFA Potash Operational Capability Outlook Significant Project Delays and Deferrals Over the Past Twelve Months
Million Tonnes KCl Equivalent 90
IFA Forecast as of May 2013
IFA Forecast as of May 2012
85 8 million tonnes
80 75 70 65 60 55 50 2012
2013F
2014F
2015F
2016F
IFA derives operational capability by multiplying capacity with the highest historical achievable operating rate.
Slide#21
Source: IFA
PotashCorp’s Opportunity PotashCorp’s CAPEX Spending Largely Complete; Competitors Facing Rising Costs Competitor Greenfield Projects1
PotashCorp Potash Projects Estimated Capital Spending* Completed
Remaining
Billions - US$ 20.0 18.0
14%
16.0 14.0 129% Increase
12.0 10.0 8.0 6.0 4.0 86%
2.0 0.0
2
Original Estimate
Current Estimate 3
* As at April 24, 2013 1
Greenfield projects include: K+S (Legacy) ; Eurochem (Volgograd); Vale (Rio Colorado)
2
Estimate based on publically available project cost discussion from current project developer or, in certain cases, previous project developer
3
Estimate based on publically available comments in presentations or transcripts from current project developer
Slide#22
Source: PotashCorp, Company Reports
RBC Capital Markets Global Mining & Materials Conference 11
PotashCorp Nitrogen Profile New Ammonia Capacity Adds Margin Growth Potential Ammonia Capacity*
2013 YTD Nitrogen Product Mix (Sales Volume)
Million Tonnes Ammonia
Urea
Solutions/NA/AN
4.5
Trinidad
Augusta
Lima
Geismar
4.0
Incremental GM of approximately ~$130 million
3.5 3.0
36% 43%
2.5 2.0 1.5 1.0 05 0.5
21%
0.0 2012
2013F
* All estimated capacity amounts as at beginning of year
$190 million expansion of our Lima, OH ammonia (+88,000 short tons/year) and urea capacity (+80,000 short tons/year) expected to be complete by late 2015
Slide#23
Source: PotashCorp
PotashCorp Phosphate Profile Industrial and Feed Products Enhance Stability in Phosphate Phosphate Product Mix (Sales Volume)
PotashCorp Average Realized Sales Price US$/tonne Fertilizer
800
Feed & Industrial
Feed & Industrial
Fertilizer
100% %
700 80% 600 500
60%
400 40%
300 200
20%
100 0 Q2-09
Q1-10
Q4-10
Q3-11
Q2-12
Q1-13
0% PotashCorp*
Mosaic**
* Based on 2013 YTD sales volumes ** Mosaic’s percentage based on feed sales volume relative to total phosphate sales volume as publicly disclosed for the most recent four fiscal quarters
Slide#24
Source: PotashCorp, Company Reports
RBC Capital Markets Global Mining & Materials Conference 12
Cash Flow Opportunity
PotashCorp’s Opportunity Strong Cash Flow + Reduced Capital Spending = Greater Financial Flexibility PotashCorp Capital Spending**
Annual Cash Provided by Operating Activities*
US$ Millions
US$ Millions 4,000 3,500
Cash Provided by Operating Activities Capital Spending
4,000 3,500
3,000
3,000
2,500
2,500
2,000
2,000
1,500
1,500
1,000
1,000
500
500
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 * As we adopted International Financial Reporting Standards (IFRS) with effect from January 1, 2010; 2003 to 2009 information is presented on a previous Canadian Generally Accepted Accounting Principals (GAAP) basis. Accordingly, information for 2003 to 2009 may not be comparable to 2010 , 2011 and 2012.
0
2006
2007
2008
2009
2010
2011
2012 2013F 2014F 2015F
** Excluding capitalized interest, major repairs and maintenance and Lima expansion
Slide#26
Source: PotashCorp
RBC Capital Markets Global Mining & Materials Conference 13
PotashCorp’s Opportunity Utilizing Strong Cash Flow to Enhance Long-term Shareholder Returns Opportunity Capital (10-year total) = $8.1B
Dividend* per Share – US$
24% Return
$0.40 $0 35 $0.35
$0.35 $0.30
5-year Average Cash Flow Return 1,2 (2008-2012)
$0.28 $0.28
Share Repurchases (since 1999) = $6.3B $0.25
60% Increase
$0.21 $0.21
$0.20 $0.15 $0.10 $0.05
in Current Share Price2 above average repurchase price
$0.14 $0.14
Equity Investments 3 (since 1998) = $2.0B
$0.07 $0.07 $0.07 $0.07
384% Increase
$0.03**
$0.00 Q4-10
Q2-11
Q4-11
Q2-12
Q4-12
Change in Market Value of Investments Since Acquisition2
Q2-13
* Dividends declared each quarter ** $0.10 per share dividend adjusted for 3 for 1 stock split; rounded to nearest cent.
1 See 2 All
reconciliation and description of certain non-IFRS measures at www.potashcorp.com figures as at June 10, 2013 acquisition cost for SQM, APC, Sinofert and ICL
3 Total
Slide#27
Source: PotashCorp
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