Potash Growth Potential

Analyst Meeting

May 19, 2010

David Delaney
President PCS Sales
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Good afternoon.

As we’ve discussed, potash holds tremendous growth potential in the years ahead
– and we often talk about that potential on a global basis.

This afternoon, we want to look at conditions and opportunities in each of our

key markets.

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Our potash business is divided into two distinct markets: North America and
offshore.

North America is one of the most sophisticated agricultural markets and provides
a solid foundation for our business, typically accounting for about one-third of our
total shipments.

The remaining two-thirds of our shipments are sent to offshore markets. China,
India and other Asian countries – where agricultural practices are improving, but
less advanced – represent significant areas for growth because of their expanding
populations, strengthening economies and historically low potash application rates.

Latin America is another important offshore growth market, as its increasing

agricultural strength and potassium-deficient soils, especially in Brazil, require
significant potash volumes.

Potash demand in these developing markets has nearly tripled over the past
20 years.

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Something very real is happening on the food front in China. With emerging
wealth and a growing population, unprecedented stresses are being placed
on food production.

By 2020, China’s population is expected to be double its 1970 level, with an

increasing percentage of its people living in cities. The average income among
China’s urban population has nearly tripled over the past 10 years and is now more
than three times that of people in rural areas. Growth in urban incomes is a positive
development but the issue of lagging rural incomes is now a top priority for the
Chinese government.

In an effort to improve this situation, China has set a target of doubling farmer
incomes from 2008 levels by 2020. To support this target, China has increased
subsidies to farmers and raised the minimum purchase prices for key crops. It is also
beginning to allow the transfer of land-use rights, which should ultimately lead
to larger and more efficient farms.

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The long-term food production challenge is illustrated by China’s increasing level
of soybean imports and declining corn stocks.

Over the past 40 years, China’s meat consumption has increased nearly tenfold –
creating significant pressure on farmers to meet the growing demand for
feed grains.

The strain on China’s corn stocks is likely to continue this season, as extreme
drought in China’s southwest and cold temperatures in the north are impacting this
year’s crop.

Corn prices in China remain much higher than in the United States and tight
domestic supply recently led China to purchase some US corn. This development
has not gone unnoticed by the Chinese government and we believe it will be one
of the catalysts that support improved fertilization practices in the years ahead.

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While China is a major producer of rice, corn and wheat, a rise in fruit and
vegetable demand reflects China’s changing economic situation. With more money,
people want more fruits and vegetables in their diet. This heightens the need for
potash, which is vitally important to the taste, texture and nutritional content of
many crops.

As a result, approximately one-half of China’s total potash consumption is directed

to fruit and vegetable crops.

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Impacted like all consumers by global uncertainty, China’s potash consumption fell
from 11 million tonnes in 2007 to 7 million tonnes in 2008 and 2009, leaving its
N to K ratio at around 6 to 1 – far from the scientifically recommended level of
approximately 2 to 1.

After years of under-application, China needs to significantly increase potash use

to address deficiencies in its soil and keep pace with projected growth in food
demand. It is science that gives us confidence that potash consumption and
farming practices in China will improve – because the alternative is to import more
food. We believe they would rather import potash than significantly increase food
imports.

Scenarios two and three illustrate the long-term potash consumption potential
based on more scientifically sound application rates. Over time, China’s potash
application must roughly triple to achieve an optimal N to K ratio.

China’s government has demonstrated its commitment to this issue, introducing

plans to send 100,000 agronomists and experts into the field to provide training
to farmers on balanced fertilization.

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In India, food inflation is a major concern, as food prices are currently rising at more
than 15 percent annually.

With India’s population expected to increase by 150 million over the next 10 years
and annual economic growth projected to be around 8 percent, the demand for
food is likely to rise dramatically, putting additional pressure on food supply.

To meet this challenge India’s focus is expected to shift to agricultural productivity

rates, as it must make significant gains in crop yields.

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In an effort to increase domestic production over the past five years, the Indian
government raised its procurement price for rice and wheat. This, along with
subsidized input costs, has improved farmer returns, but has not addressed the
problem of lagging productivity.

This is because India’s subsidy system did not promote balanced fertilization. To
address this problem the government recently introduced a nutrient-based subsidy
program to encourage more balanced fertilization.

Ultimately, these changes should lead to better fertilization practices, increased

potash consumption and, importantly, improved productivity for Indian farmers.

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Wheat and rice remain the primary food grains in India and are interchangeable
in the average diet. Together, these two crops account for 42 percent of potash
consumption in India.

Over the past 40 years, fruit and vegetable production has more than tripled and
now accounts for 22 percent of potash use.

Population and economic growth will continue to drive production of these

key crops –and potash use with it.

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More than 70 percent of India’s soils are low to medium in potash fertility. Yet
India’s N to K ratio is around 5 to 1, well below scientifically recommended rates.

Similar to the situation in China, we believe recent government initiatives and

long-term food production requirements will support a move to more balanced
fertilization practices.

Scenarios two and three illustrate this potential for India. Over time, this means
Indian farmers need to roughly double their current consumption of approximately
6 million tonnes.

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Other Asian countries are home to more than one billion people and are major
producers of rice and higher-value crops such as fruits, vegetables and oil palm.
These countries account for approximately 70 percent of total potash consumption
in this region. Indonesia and Malaysia are the largest consumers due mostly to the
rapid expansion of potash intensive crops such as oil palm.

Japan and Korea are more stable long-term customers for agricultural and industrial
grade potash.

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Potash consumption in this region has grown by around 3 percent per year over the
past 20 years – and we expect similar growth rates over the next 10 years. The
majority of growth is expected in Southeast Asian countries as a result of growing
populations and expanding economies in the region.

Oil palm accounts for almost half of the potash used in Southeast Asia and strong
growth in edible cooking oil is expected to drive demand for this crop.

Potash consumption in the region could increase from current levels of around
6 million tonnes to approximately 9 million tonnes by 2020.

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Latin America has emerged as a major producer of soybeans, corn and sugar and is
a key growth market for potash. Soybean’s requires significant potash applications
and production has more than doubled in just the past 10 years.

Brazil has the most advanced biofuels industry in the world, a major driver of sugar
demand in that country. As the leading agriculture market in the region, Brazil
accounts for around three-quarters of total potash consumption.

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Brazil is a growing agricultural powerhouse and has become a major exporter
of a number of crops, most notably soybeans to China.

Given the growing global demand for food, Brazil’s Cerrado region represents
a unique opportunity, as it is one of the few areas of the world where agricultural
development can be readily expanded.

One of the challenges to unlocking this vast potential is the lack of roads and rail
lines to move inputs and crops in and out of the region.

Over time we expect investments will be made to improve infrastructure that will
lead to increased crop production and ultimately higher demand for fertilizer,
in particular potash.

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Potash consumption in Latin America has grown by nearly 5 percent annually over
the past 20 years. Brazil’s soils are highly acidic and naturally deficient in potassium,
which means more potash is needed to meet rising crop production requirements.

We expect potash demand growth rates will remain strong over the next 10 years
and consumption could increase by more than 4 million tonnes.

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Shifting to North America, the rapidly evolving biofuels industry has driven
significant growth in demand for US corn and created a need for more planted
acres and higher yields. Over the next 10 years, corn demand could increase to
around 15 billion bushels, reflecting the rising need for US corn exports and
expansion of biofuel production to meet government mandates.

The challenge of producing this massive amount of corn will likely require
historically high corn acres and a continued strong upward yield trend.

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Until the early 1990s, US potash applications exceeded the volumes removed by
crop production, building healthy inventories in the soil. But as corn and soybean
production increased, so did the level of nutrient withdrawals. This resulted in a
growing application deficit, as farmers have been drawing down reserves that had
been built up in their soils.

This practice is not sustainable in the long term. Crop production is expected to
increase in the years ahead and we believe more potash will be required to match
the level of nutrients removed from the soil.

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Although North America is a more mature fertilizer market, it still holds
growth potential.

Annual North American potash demand has historically been around 9 million
tonnes but could grow to a range of 10 to 14 million tonnes, assuming farmers
increase application rates to meet projected nutrient removal.

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When we combine the potash consumption potential in all of our key markets, we
see significant long-term opportunities for our company. Over the next 10 years, we
believe the scientific potash requirements to meet projected food demand –
especially in offshore markets – could push consumption closer to 80 million
tonnes. If all markets moved to the recommended rates and producers have the
capability to keep pace, potash consumption could approach 100 million tonnes,
nearly double current levels.

While scenario three is not a 10-year forecast, it illustrates the potential for long-
term demand growth as farmers face the challenge of meeting global food demand
while protecting the health of their soils.

Thank you. I will turn it back to Denita for the next presentation.

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