potashcorp - investor meetings 2014

PotashCorp.com

Investor Meetings

December 2014

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 often

contain words such as “should,” “could,” “expect,” “may,” “anticipate,” “believe,” “intend,” “estimates,” “plans” and similar expressions. 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. Forward-looking statements are subject

to risks and uncertainties that are difficult to predict. The results or events set forth in forward-looking statements may differ materially from

actual results or events. 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; risks and uncertainties related to operating and

workforce changes made in response to our industry and the markets we serve; changes in competitive pressures, including pricing pressures;

risks and uncertainties related to our international operations and assets; 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; adverse or uncertain economic conditions and changes in credit and financial markets; the results of sales contract negotiations

within major markets; unexpected geological or environmental conditions, including water inflows; economic and political uncertainty around the

world; risks associated with natural gas and other hedging activities; changes in capital markets; unexpected or adverse weather conditions;

changes in currency and exchange rates; imprecision in reserve estimates; adverse developments in new and pending legal proceedings or

government investigations; acquisitions we may undertake; increases in the price or reduced availability of the raw materials that we use; strikes

or other forms of work stoppage or slowdowns; timing and impact of capital expenditures; rates of return on, and the risks associated with, our

investments and capital expenditures; changes in, and the effects of, government policies and regulations; security risks related to our

information technology systems; risks related to reputational loss; and earnings, and the decisions of taxing authorities, 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, 2013 under the

captions “Forward-Looking Statements” and “Item 1A – Risk Factors” and in our other filings with the US Securities and Exchange Commission

and the Canadian provincial securities commissions. Forward-looking statements are given only as at the date hereof and the company

disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise,

except as may be required by law.

Forward-looking Statements

Slide#2

PotashCorp Overview

World’s largest fertilizer producer by capacity;

#1 in potash and among the largest in nitrogen

and phosphate.

Potash advantages include highest margins and

significant barriers to entry.

Canadian potash operations and strategic offshore

investments position us to benefit from growth

markets.

World-class nitrogen and phosphate businesses

focused on historically more stable feed and

industrial markets.

Slide#3

• Strong cash flow

• Cash flow from operating activities of $3.2B in 2013

• 95% complete decade-long CDN $8.3B potash expansion program

• Well positioned potash business

• Low-cost supplier to key consuming regions

• Operational capability aligned with anticipated near-term demand

• Flexibility to significantly grow future sales volume

• Proven track record of returning capital to shareholders

• Dividend yield ~4%

• Completed 5% repurchase authorization in 2014

• Since 1999: $7.8B at average purchase price of ~$27 per share

PotashCorp Highlights

Slide#4

Building Blocks

Creating Long-term Value by Capitalizing on Our Unique Potential

Strategic Overview

Pursue disciplined growth initiatives

Create advantaged competitive

position

Enhance operational flexibility

Minimize earnings volatility

Return capital to shareholders

Maximize long-term shareholder value

Goal:

Corporate Priorities:

Operational Priorities:

Near-Term Initiatives:

1. Review assets

• Review alternatives and identify

opportunities in each of our three

nutrients

2. Review investments

• Evaluate alternatives for each equity

investment

3. Review capital allocation strategy

• Review and prioritize opportunities for use

and return of cash

Deliver earnings growth

Slide#5

0

10

20

30

40

50

60

70

80

05 07 09 11 13 15F 17F 19F

Demand

Operational Capability*

Anticipate Supportive Supply/Demand Environment

Potash Environment

Source: Fertecon, CRU, IFA, PotashCorp

1. Demand growth expected to keep market

relatively balanced

• Anticipate demand growth of 2.5-3.0 percent

from 2014 levels

• Operating rates anticipated in the 85-90

percent range

2. Majority of new capability from PotashCorp

and other Canpotex members

• Approximately 40% of new capability from

POT by 2019; Canpotex members represent

approximately 60%

3. Anticipate reduced volatility

• Supply/demand environment expected to be

more balanced

World Potash Supply and Demand Highlights

Slide#6

Million Tonnes KCl

* Estimated annual achievable production level

1. Operational capability limited in 2014

• Capability, not demand, appeared to be the

constraining factor in 2014, suggesting

operating challenges for a number of producers

• Achieving expected levels assumes no major

disruptions (e.g. major equipment failures,

weather issues, strikes or other unplanned

outages)

2. Planned future capacity additions include risks

• A number of global projects taking substantially

longer – and costing considerably more – to

complete and ramp up than initial estimates

• Total capital required to reach forecasted global

operational capability level is substantial

Operational Capability Not Always Achievable

Potash Environment

Source: Company Reports, Fertecon, CRU, IFA, PotashCorp

World Potash Supply and Demand Key Considerations

0

10

20

30

40

50

60

70

80

OperationalCapability*

(2014E)

Production(2014E)

OperationalCapability*

(2019F)

Million tonnes KCl

1

2

1

2

Slide#7

* Estimated annual achievable production level

Focused on Achieving 2016 Cost Savings of $20-$30 per Tonne (from 2013 Levels)

Potash Priorities

Source: PotashCorp

1. Complete remaining lower-cost expansions

• Rocanville expansion on time and budget

• Accelerating Picadilly mine development and

operating Penobsquis through ramp-up period

2. Optimize production costs and product mix

• Produce at lowest cost facilities in Saskatchewan,

while ensuring optimal product mix

• Shifting production to Picadilly in New Brunswick

3. Align staffing levels with anticipated demand

• Ensure staffing levels are managed according to

anticipated supply requirements

Potash Cost of Goods Sold Plans to Achieve Savings

40

60

80

100

120

140

160

2013Cash Cost*

2014ECash Cost*

2015ECash Cost*

2016Cash Cost*

Target

Cash-related Cost of Goods Sold

Depreciation and Amortization

US$ - Per Tonne

* Cash costs refers to total cost of goods sold less depreciation and amortization.

As compared to 2013 levels (not adjusted for inflation, changes to depreciation and

amortization or potash royalties); target assumes successful ramp up of

expansions at lower-cost facilities

Slide#8

Focused on Aligning Operational Capability with Future Demand Growth

Potash Priorities

Source: PotashCorp

1. Rocanville• Tonnes:+3.0mmt

• Timeframe: Planned ramp-up by 2016

• Capital Costs: Within project estimates

2. Other SK Mines• Tonnes: +3.0mmt

• Timeframe: 3-12 months (from decision point)

• Capital: Minimal (<$60M)

3. New Brunswick*• Tonnes: +0.7mmt

• Timeframe: ~36 months (from decision point)

• Capital: Minimal (<$75M)

Operational Capability Opportunity* Incremental Capability

0

4

8

12

16

20

2015F Rocanville Other SKMines

NewBrunswick

Potential

Million tonnes KCl

* Operational capability will be staffed and ramped up according to anticipated

market demand and PotashCorp’s supply requirements

1

23

1

2

3

10.9

mmt

Slide#9

17.6

mmt

* Estimates assume continued operation of Penobsquis in tandem with Picadilly

ramp up. Closure of Penobsquis and full ramp up of Picadilly would require up to an

additional 24 months and $75M capital outlay to achieve 1.8mmt

Focused on Opportunities to Grow Potash Gross Margin

Potash Priorities

Source: PotashCorp

1. Operating cost savings

• On target to achieve $20-$30 per tonne

savings by 2016

2. Logistical and distribution

• Distribution investments and east and west-

coast export capability expected to improve

ability to serve customers in certain markets

3. Improved prices

• Anticipate higher 2015 netbacks given

improved pricing in most markets through 2014

4. Volume growth opportunity

• Unmatched ability to meet market demand as

opportunities develop; granular capability

expected to rise

• Evaluating additional market development

opportunities

Potash Gross Margin Sensitivities Margin Opportunities

Gross Margin per tonne (US$)

$100 $150 $200 $250

8.0 $0.8B $1.2B $1.6B $2.0B

10.0 $1.0B $1.5B $2.0B $2.5B

12.0 $1.2B $1.8B $2.4B $3.0B

14.0 $1.4B $2.1B $2.8B $3.5B

16.0 $1.6B $2.4B $3.2B $4.0B

Sale

s V

olu

me (

mm

t)

2014E: $1.3-$1.4B

Slide#10

Considerations:

• Strategic value; ability to influence

• Likelihood of favorable and successful future control transaction in reasonable time period

• Risk profile of assets

• Valuation and alternative uses of cash

Plan to Evaluate Investment Portfolio

Potash Priorities

Ownership Percentage: 14%

Current Value*: $1.2B

Board Representation: none

ICL



Board Representation: 3 of 8

SQM



Representation: 3 of 13 Board; top 4 Management

APC



Board Representation: 2 of 7

Sinofert

* As at November 27, 2014

Slide#11

Source: Bloomberg

0

5

10

15

20

25

05 07 09 11 13 15F 17F 19F

Demand

Operational Capability*

Anticipate Supportive Supply/Demand Environment

Nitrogen Environment

Source: Fertecon, CRU, PotashCorp

1. US to remain net importer

• Anticipate new capacity to come online

although expect US to remain a net importer

2. US to maintain advantaged cost position

• Lower-cost gas environment expected to

persist for the medium term

• US producers expected to maintain healthy

margins and competitive gas position

• Challenges and costs of exporting ammonia

expected to help insulate US market

US Ammonia Supply and Demand Highlights

Slide#12

Million Tonnes – NH3

* Estimated annual achievable production level from existing operations and

projected new capacity.

0 100 200 300 400 500 600 700

Ukraine Port Plant

Russia - Yuzhnyy

Trinidad

Middle East

US Gulf Producer

US Midwest Producer

Cash Costs

Freight to US Gulf

Freight and Handling to USMidwest

Significant Contributor to PotashCorp’s Value Equation

Nitrogen Environment

Source: Fertecon, PotashCorp

1. Strong gross margin contributor

• Anticipate gross margin contributions to

remain at historically strong levels

2. Reduces earnings volatility

• Diversified nitrogen portfolio enhances

quality of PotashCorp earnings

3. PotashCorp’s assets well positioned

• US assets largely isolated from key import

and new capacity regions

• Trinidad expected to remain key exporter to

US market

4. Synergies within PotashCorp’s portfolio

• Sales and distribution synergies realized

through three-product offering

US Midwest Delivered Ammonia Cost Highlights

Slide#13

US$/Tonne – 2014F

Focused on Reliability, Trinidad Gas Position and Disciplined Growth Opportunities

Nitrogen Priorities

Source: PotashCorp

1. Focus on operational reliability

• High operating rates across all our facilities;

work to further enhance reliability

2. Successful execution of Lima expansion

• On time and budget; expect incremental

100Kmt of ammonia capacity

3. Improve Trinidad gas situation

• Gas availability has limited ammonia

production in recent years; working to

minimize future impacts

4. Assess other US opportunities

• Review other high-IRR brownfield projects;

exploring other low-cost opportunities

PotashCorp’s Ammonia Production Plans

0.0

1.0

2.0

3.0

4.0

5.0

2013 2014F LimaExpansion

(2016F)

TrinidadGas

(Longer-term)

Potential

1 23

1

2

3

Potential: ~500Kmt

Million Tonnes

4

Slide#14

Focus Remains on Cost Improvement and Higher-margin Products

Phosphate Priorities

Source: Company report, CRU, PotashCorp

Phosphate Production Profile Highlights

Slide#15

0%

20%

40%

60%

80%

100%

PotashCorp OCP** Mosaic* Agrium*

Feed & Industrial Fertilizer

Percentage

* Based on most recently reported 12-month sales volume totals as per publicly

available data

** Estimate per CRU. Excludes phosphate rock sales

1. Well-positioned, world-class assets

• Leverage our integrated rock supply to produce

a diversified, higher-margin product mix

2. Challenging margin environment

• Operational challenges due to mining conditions

and lower return for fertilizer products has

impacted profitability

3. Opportunities to improve earnings

• Working on initiatives to improve margins as well

as assess additional opportunities to enhance

shareholder value

0.0

0.5

1.0

1.5

2.0

2.5

2008 2010 2012 2014F 2016E 2018E

Source: PotashCorp

PotashCorp Capital Spending*

Capital Spending Winding Down

PotashCorp’s Opportunity

Sustaining Opportunity

US$ Billions

* Cash additions to property, plant and equipment per cash flow statement (2008-2013); 2014F-2018E includes Major Repairs and Maintenance expenditures. As we

adopted International Financial Reporting Standards (IFRS) with effect from January 1, 2010, information from 2008-2009 is presented on a previous Canadian generally

accepted accounting principals (GAAP) basis. Accordingly, previous results may not be comparable to 2010 forward.

Current Estimate

2015F Spending Composition

Slide#16

Review Underway to Better Define Future Priorities

Capital Allocation Strategy

Source: PotashCorp

1. Dividends

• Will continue as core element of future

capital deployment strategy

2. Share Repurchases

• Better define parameters around buybacks,

including approach to balance sheet

management and targeted debt levels

3. Organic Growth

• No additional potash projects planned;

prioritize high-return nitrogen brownfield

projects (>15% IRR)

4. M&A / Joint Ventures

• Prioritize strategic, high return projects

Considerations

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

OpportunityProjects

ShareRepurchases

Dividends Acquisition &Investments

US$ Billions

Capital Allocation History (2009-2014 YTD)

Slide#17

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