Phosphates Market Outlook 2012

TFI Fertilizer Technology & Outlook Conference St Petersburg, Florida

16 November 2011

Profercy

Profercy Phosphates & NPKs

• Price discovery, forecasting; Publication• 2 years clocked up; but 15 years experience

What we do

• Market today – Price Tracking (all P2O5)• Price Forecasts & S/D Modelling• Longer-term Outlook Research• Costs & competitiveness, Entry cost

Short-term Specifics, & Supplier Tactics◦ 2012-13 A turning point

◦ Capacity changes: Saudi, USA, Morocco, Brazil

◦ Buyer deferral vs destruction

Long-term Outlook & Industry Strategies◦ Integration, stand-alone, off-shore jvs?

◦ Determining the P2O5 destiny

China export policy (but loopholes exist) Arab Spring; rock exports; hits Europe Florida rock litigation, duration, US imports

With both industry and importer pipeline stocks thin on both sides of the equation, further supplyshocks are powerful.

Rock prices are up 50% in 18 months

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$ pt

fob

Tam

pa

Challenges Finite resources Food, Feed & Energy Environment High entry cost

Consequences Supply squeeze Price rises New capacity delays

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$pt f

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3 India contracts; 3 corrections

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b.

Conjecture

Demand India, Brazil (driven back to DAP/MAP?) , US imports,

Supply China policy conf, US output? More Arab Spring rock impact?

1.65 mt net increase would restore world trade total to 2010 @ 25mt (D/MAP/TSP)

DAP/MAP/TSP & Equiv (million tonnes)

Gains + Impact +/- Losses -

Saudi Exports +1.9 -1.5 China Exports (DAP equiv. all prods)

Tunisia return +0.6 -0.2 US Exports (Agrifos)

Tunisia phosacid (India jv) +0.3

Brazil MAP/TSP +0.4

Egypt TSP +0.15

Gains total +3.35 -1.70 Losses total

Net impact +1.65

*Bayovar first full year

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'000t P

2O5 in DAP

& NP/Ks

NP/K Imports DAP imports Local NP/K prodn Local DAP prodn DAP $pt cfr India DAP $pt fob Tampa

3.7mt P2O5

= 8mt DAP

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Export tax (mid 2011 flexi-tax) Export tax (anticpated 2012) DAP fob Tampa

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Rock Exports

Acid‐based NPKs, TSP

SSP/FMP

MAP

DAP

Rock avail for ferts

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NPs TSP MAP DAP DAP $ pt fob US

1.5mt DAP equ.

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Production Tampa DAP $pt pt fob Producer stocks (right axis)

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Phosacid DAP, MAP, TSPConcentrate

2010

Middle East instability New & growing exports: Peru, Egypt Russia export squeeze China concentrate export collapse,

export taxation USA production challenges

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million tonn

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Regular output Production 2010

OCP 28 m

Top 5 rock producers control 32% of total world output

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% Produ

ction to Export

Milliontonn

es & $pt fo

bMorocco

(30%

 P2O

5)

World Production Exports Local processing % Production to Export

Net Impact: Cumulative Capacity Changes Kt

New capacity +38,115 (incl Florida, China, Saudi, Peru*, Jordan, Russia,Brazil, Tunisia, Kazakhstan

Likely depletions -12,900

Total +25,215 (+12.5% vs 2010 @ 200m tonnes or CAGR 4%

Phosphate Rock Mine Depletion

2011-13 Kt Company, Location Destiny

2011 6,000 Mosaic, South Fort Meade, Florida, US ID*

2011 500 Mosaic, Hopewell, Florida, US ID

2013 900 Agrium, Kapuskasing, Ontario, Canada ID

2012-13 5,500 China, various South China, Sichuan, Hubei ID

Total -12,900

*Bayovar first full year

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  Exports  Domestic Shipments  Production  Domestic price (year ending)

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DAP/MAP000tRock 

Monthly US Rock Output Monthly DAP/MAP Output

Railway: $1.20bnMitsui & Barclay Mowen won contract to build the 1,500km link, one of the earliest contract awards in early

2007. The initial cost estimate was $770m.Mine: $400mBeneficiation plant: $350m

China’s Guizhou Hongfu Industry Co (Wengfu) awarded $350m contract for beneficiation plant to process ore into 4.6 m tpa of dry concentrate.

Power, Substation & Desalination plants $280m & $100mKorea's Hanwha awarded contract for power and desalination plants at Ras al Khair. Desalination unit

processes max. 40,000m³ of water per day. According to power configuration, Ma’aden may be net supplier to local grid

Ammonia plant: $950mSamsung EPC contractor for 3,300t/day capacity ammonia plant, in turn selecting Uhde for process license

& basic engineering for single-train unit.Phosphoric acid plants: Litwin $525mLitwin built 3 phosacid plants, total capacity of 1.45m tpa P2O5. Litwin selected Tekfen for construction

services & Yara semi-hydrate process technology.Sulphuric acid plant: Outotec $270mFinland's Outotec built the world's largest sulphuric acid facility; output capacity 13,500tpd at Ras al Khair.

All acid is used in the captive process.DAP plant: Dragados (value not disclosed, but thought near $500m)Four DAP granulation trains total 2.95m tpa DAP

Ma’aden investment breakdown

Year Cost US $bn

2007-11 EPC contracts (breakdown opposite) 4.54

2008 Financing costs 0.98

Total cost 5.52

Equity

2008 Ma'aden & Sabic (respectively 70%/30%) 1.66

Finance agreements2

Conventional and Islamic facilities1 2.06

Saudi Public Investment Fund 1.07

Export-Import Bank of Korea 0.40

Korean Export Insurance Corporation 0.20

Saudi Industrial Development Fund 0.13

Total investment 5.52

0.2

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0.25

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Arab

le land

/cap

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Popu

latio

n (bn)

 Arable Land ha/cap Population Developed Population Developing

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Production Consumption Stocks‐to‐use ratio (%, right axis)

Main Assumptions Agri-sector fundamentals to remain robust China export controls strict through 2012 Ma’aden challenged; Exports thus far absorbed India attempted to split market again; but found limited scope How may India tactics be modified in 2012? US DAP output maxed out in 2011: What level in 2012? Scope for further US capacity reductions? May restrict US exports; lift competition for merchant DAP Litigation & EPA Florida Environmental Impact Study Proceeds

Thank you

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Profercy Phosphates & NPKs(Daily, Weekly & Monthly)

Profercy Phosphates Horizon 2015

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