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1
Future Trends in the Phosphate Industry
by
Don ClarkVice President
Engineering and Technology
International Fertilizer Industry Association2006 IFA Technical SymposiumVilnius, LithuaniaApril 25-28, 2006
2
Forward- Looking StatementsCertain statements contained herein constitute “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995. 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, 2005.
This presentation may not be distributed, reproduced, or used without the express written consent of The Mosaic Company.
Safe Harbor Statement
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Future Trends in the Phosphate Industry
Demand Growth
Changes in the product mix
Large scale and integrated operations
New operational challenges
4
Demand Growth
World Phosphate Use
0
5
10
15
20
25
30
35
40
45
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
Mil Tonnes P2O5
Developed Countries Developing Countries Transition Economies
Source: IFA
3
5
Demand Growth
World Population
0
1
2
3
4
5
6
7
8
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
Bill
ion
Source: Global Insight
6
Demand Growth
World Annual GDP Growth Rates
0%
1%
2%
3%
4%
5%
6%
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06
Source: Global Insight
4
7
Demand Growth
Annual GDP Growth Rates in China and India
0%
2%
4%
6%
8%
10%
12%
2000 2001 2002 2003 2004 2005 2006
Source: Global Insight
China India
8
Demand Growth
World Fuel Ethanol and Biodiesel Production
3
4
5
6
7
8
9
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04
EthanolBil Gal
0.0
0.1
0.2
0.3
0.4
0.5
0.6
Biodiesel Bil Gal
Ethanol Biodiesel
Source: International Energy Agency
5
9
Demand Growth
U.S. Corn Utilized in Fuel Ethanol Production
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1.75
2.00
2.25
2.50
2.75
3.00
3.25
80 85 90 95 00 05 10 15
Bil Bushels
Source: USDA
10
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
6
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1985 World Phosphate Use
Low Analysis
51%
High Analysis
49%
1995 World Phosphate Use
High Analysis
53%
Low Analysis
47%
2000 World Phosphate Use
Low Analysis
41%
High Analysis
59%
2005 World Phosphate Use
High Analysis
61%
Low Analysis
39%
High analysis products are displacing low analysis products
Changes in the Product Mix
Source: Fertecon
12
Processed Phosphate Import Demand by Product
Processed Phosphate Import Demand1995
TSP14%
MAP17%
DAP69%
Total 21.1 MMT
Processed Phosphate Import Demand2005
TSP17%DAP
58%
MAP25%
Total 21.3 MMT
Changes in the Product Mix
Source: Fertecon, IFA and Mosaic
7
13
Changes in the Product Mix
Example: Mosaic MicroEssentalsTM
High analysis specialty products deliver key secondary and micronutrients
14
TwoTwo--year average milk production increased more than 570 year average milk production increased more than 570 pounds pounds per acreper acre or approximately $70 per acre using MicroEssentialsor approximately $70 per acre using MicroEssentialsTMTM S15.S15.
Changes in the Product Mix
Example: Mosaic MicroEssentalsTM
8
15
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
16
World Phosphate Rock Trade
25
26
27
28
29
30
31
32
33
34
95 96 97 98 99 00 01 02 03 04 05
Source: IFA and Mosaic
MMT Rock
17%
18%
19%
20%
21%
22%
23%
24%
25%
26%
Percent
Trade Percent of Production
Large Scale and Integrated Operations
9
17
Rock Exports 2005
0
2
4
6
8
10
12
14
16M
oroc
co
Jord
an
Rus
sia
Syria
Chi
na
Egyp
t
Togo
Alg
eria
Tuni
sia
Isra
el
MMT Rock
20%
30%
40%
50%
60%
70%
80%
90%
100%
Cumulative %
Source: IFA
Large Scale and Integrated Operations
18
Chinese Rock Production and Exports
0
5
10
15
20
25
30
35
40
95 96 97 98 99 00 01 02 03 04 05
MMT Production
0
1
2
3
4
5
6
7MMT Exports
Production Exports
Source: IFA and Mosaic
Large Scale and Integrated Operations
10
19
Phosphate Rock Imports 2005
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0In
dia
USA
Spai
n
Pola
nd
Bel
gium
Sout
h K
orea
Indo
nesi
a
Bra
zil
Lith
uani
a
Mex
ico
MMT Rock
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Cumulative %
Source: IFA and Mosaic
Large Scale and Integrated Operations
20
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
Large Scale and Integrated Operations
11
21
New Operational Challenges
Changing Customer Requirements
Deteriorating Rock Quality
More Stringent and Uniform EHS Regulation
22
New Operational Challenges
World Grain and Oilseeds Area and Yields
660
680
700
720
740
760
780
800
820
840
860
880
70 75 80 85 90 95 00 05
Mil Hectares
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
3.0
Tonnes per Hectare
Harvested Area Yield
Source: USDA
12
23
New Operational Challenges
U.S. Average Rock BPL Content
60%
61%
62%
63%
64%
65%
66%
67%
68%
69%
70%
90 91 92 93 94 95 96 97 98 99 00 01 02 03
Source: The Fertilizer Institute
BPL
24
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.
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 changeCharles DarwinTheory of Evolution1859
13
25
International Fertilizer Industry Association2006 IFA Technical SymposiumVilnius, LithuaniaApril 25-28, 2006
Thank You!
Future Trends in the Phosphate Industry
by
Don ClarkVice President
Engineering and Technology