future trends in the phosphate industry - …...1 1 future trends in the phosphate industry by don...

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Future Trends in the Phosphate Industry

by

Don ClarkVice President

Engineering and Technology

International Fertilizer Industry Association2006 IFA Technical SymposiumVilnius, LithuaniaApril 25-28, 2006

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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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Demand Growth

Changes in the product mix

Large scale and integrated operations

New operational challenges

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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

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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


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


China India

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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

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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

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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

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1985 World Phosphate Use

Low Analysis

51%

High Analysis

49%


High Analysis

53%

Low Analysis

47%


Low Analysis

41%

High Analysis

59%


High Analysis

61%

Low Analysis

39%

High analysis products are displacing low analysis products


Source: Fertecon

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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


Source: Fertecon, IFA and Mosaic

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Example: Mosaic MicroEssentalsTM

High analysis specialty products deliver key secondary and micronutrients

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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.


Example: Mosaic MicroEssentalsTM

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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

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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


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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


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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



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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 %



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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


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New Operational Challenges

Changing Customer Requirements

Deteriorating Rock Quality

More Stringent and Uniform EHS Regulation

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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

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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

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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

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International Fertilizer Industry Association2006 IFA Technical SymposiumVilnius, LithuaniaApril 25-28, 2006

Thank You!


by

Don ClarkVice President

Engineering and Technology

future trends in the phosphate industry - …...1 1 future trends in the phosphate industry by don...

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