Canpotex: Growing Relationshipsg p

June, 2011

Canpotex

Canpotex is a world-class marketing and logisticscompany that sells and delivers Saskatchewan potashp y pto international markets

Canpotex enhances the international salesCanpotex enhances the international salesand distribution capabilities of its individual shareholders andcustomers by sharing logistical assets and obtaining benefitsfrom economies of scalefrom economies of scale

Canpotex Adds Value

• Vast international marketing experience and loyal

t b t bli h d

• World-class inland transportation systems

customer base established over a 40-year period

• Ground-breaking market

• Proven and expanding terminal capacity

• Comprehensive oceanG ou d b ea g a etdevelopment programs

• A reliable source ofd t l

• Comprehensive ocean freight services

• The ability to adapt quickly product supply

• High quality standards in potash production and

y p q yin periods of strong demand

• Long term focusp phandling processes

• Knowledge and experience in international trade

• Long-term focus

• Low-cost, efficient financing model

international tradeg

Canpotex History

• Canpotex was established in 1970 to market Saskatchewan potash in overseas markets, with our first sale in 1972 p ,

• The primary reason for the formation of Canpotex was to establish a single company responsible for reliable and efficient supplies of Saskatchewan potash for offshore salesefficient supplies of Saskatchewan potash for offshore sales

• Incorporated under Federal Statutes, Canpotex provides consistent optimum services to customersp

• Our successful marketing programs and efficient handling and distribution logistics demonstrate that Canpotex remains ideally placed to utilize economies of scale and coordinateideally placed to utilize economies of scale and coordinate shipments abroad

Company Overview

• Canpotex is an open and transparent export marketing, sales and logistics organization, focused exclusively on promoting the efficient and reliable export sale and shipment of potashthe efficient and reliable export sale and shipment of potash independently produced in Saskatchewan by our shareholders

• Canpotex is not involved in the independent production decisions of our shareholders, nor do we regulate or restrict potash suppliesp pp

• Our sole marketing focus is overseas, and our main objectives are to maximize exports and efficiently serve our customers to the benefit of our shareholders and the Provincecustomers to the benefit of our shareholders and the Province of Saskatchewan

• Our export promotion mission is critically important to our shareholders, our customers and the economic well-being of Saskatchewan

Company Overview and Ownership

• Canpotex sells Saskatchewan potash to marketsoutside Canada and the United States– operational since 1972, with sales exceeding

169 million tonnes since inception

• Private corporation owned by the Saskatchewan potash• Private corporation owned by the Saskatchewan potash producers, all large integrated fertilizer companies

Company Overview

• Shareholders have equal ownership in theaffairs of the Company (one member one vote)

• Governed by an entitlement process based onthe production capacity of Member Producers

• Operates on a flow through basis• Operates on a flow-through basis

• Product Supply Agreements, based onprojected annual sales, reflect Producer commitmentsp j

Company Snapshot

C 2010 8 2• Canpotex sales in 2010 were 8.2 million tonnes, with gross revenues totalling US $3.0 billion

• Record global potash demand projected for 2011Record global potash demand projected for 2011

• Approximately 30 offshore markets, including major markets of Australia, Brazil, China, India, Indonesia, Japan, Korea,

d M l iand Malaysia

• Competition from Russia, Belarus, Israel, Jordan, Germany, Chile, Spain, UK, China, Brazil and the USAChile, Spain, UK, China, Brazil and the USA

• Sales made on CFR and FOB basis

Canpotex Offices

• Offices located in Saskatoon, Vancouver, Singapore, Hong Kong, and Tokyo

• Currently 95 employees in offices worldwide

• Sales and marketing team decentralized and located inl i it t j k tclose proximity to major markets

OfficeOffice EmployeesEmployeesOfficeOffice EmployeesEmployeesSaskatoon 69

Vancouver 8

Singapore 15

Hong Kong 1

Tokyo 2y

Canpotex Employees

• Exceptional range of professional skills and international expertise

• Canadian-based and expatriate employees have over 50 university degrees amongst themuniversity degrees amongst them

• More than 75% obtained degrees and diplomas from learning institutions in Saskatchewan

• More than 85% of Canadian-based employees are from Saskatchewan

A t f ll t ff i 9 2• Average tenure of all staff is 9.2 years

Executive Management Team

• The average tenure of our 9-member Executive Management Team is 17 years; with 6 based in SaskatoonTeam is 17 years; with 6 based in Saskatoon

• 8 members are Canadian

• 6 members are University of Saskatchewan alumni with one6 members are University of Saskatchewan alumni with one or more graduate and/or undergraduate degrees or certifications

C ’ i f 40 h b d l d• Canpotex’s commitment for 40 years has been to develop and promote Saskatchewan people in international business

• Canpotex shares an ongoing relationship with the UniversityCanpotex shares an ongoing relationship with the University of Saskatchewan, sending staff to a variety of its Executive and Management Development Programs for nearly 20 years

Marketing

Canpotex Sales Volume

10 0million tonnes KCL

Historical Perspective

7.0

8.0

9.0

10.0Over 169 million MT sold since inception

3.0

4.0

5.0

6.0

0.0

1.0

2.0

Source: Canpotex January 2011

Canpotex Markets

• Potash trade in Canpotex markets averages 22-28 million tonnes per year

• Canpotex maintains an overall market share of approximately 35% in the markets it serves; whilemarket share varies significantly from country to country

• Since being established Canpotex has delivered quality potash to more than 135 customers in approximately 60 countriespp y

Company Strengths• Committed solely to offshore business

– Canpotex has offices in key market areas– focuses on overseas potash markets with a strongfocuses on overseas potash markets with a strong

customer orientation

• Long-term direct customer relationshipsl 40– nearly 40 years

– exclusive supplier support– no trader intervention

• Long-standing cultural appreciation– representation in most local markets – routine Canpotex market visitsroutine Canpotex market visits– annual customer visits to Canada

• A highly knowledgeable senior marketing teamWith 25 f i t ti l k ti– With an average 25 years of international marketing experience

Company Strengths

• Managed logistics– coordinates timely arrival of potash to meet

t i tcustomer requirements

• Innovative marketing supply– approximately 20 grades of potashapp o ate y 0 g ades o potas– logistical solutions– long-term partnership approach with customers– Canpotex seeks win-win outcomesCanpotex seeks win win outcomes

• Trusted to deliver quality products on schedule– provides 100% of the Industrial requirements for Japanprovides 100% of the Industrial requirements for Japan,

Unid (Korea/China), Thailand, and Taiwan

• Recognized as a reliable supplier of high-quality products

Company Strengths• Increasing capability to supply

rising customer needs

– leading market share in over half the countries it serves

– increasing market share

– long-term customer support

– privileged long-term relationships with premium customers in key markets

– expanding rail, terminal and ocean vessel capacity

Canpotex Top Five Markets

• Five largest buyers are10.0

Percentage of Total SalesMillion MT

Five largest buyers are Brazil, China, India, Indonesia and Malaysia

7 0

8.0

9.0

- accounting for nearly 70% of Canpotex sales

5.0

6.0

7.0

- nearly 90 million tonnessold to these markets since inception 57% 62%

65%63%

67%

3.0

4.0

since inception 57% 62%

54%57%

63%

73%

67%

0 0

1.0

2.0

0.001 02 03 04 05 06 07 08 09 10

Top 5 Markets Total Canpotex SalesSource: CanpotexDecember 2010

Customer Success Stories

• China– industry’s first market development programy p p g

• Indonesia– from bag shipments to bulk

Wilmar is our largest single customer– Wilmar is our largest single customer

• Malaysia– from container shipments to bulkp

• Vietnam– introduced domestic transshipments

• Latin America– supported shift from Standard to

Granular grade potashg p

Market Development• Canpotex spends approximately US $1.5 million per year

on market development initiatives– market development expenditures by Canpotex sincemarket development expenditures by Canpotex since

1983 total US $35.0 million

• Programs in Asia operate in cooperation with theI t ti l Pl t N t iti I tit tInternational Plant Nutrition Institute– encourage farmers to use potash by promoting balanced

fertilizer application

• Programs operate in China, India, Indonesia, Philippines ArgentinaPhilippines, Argentina, Colombia, Guatemala, and Mexico

• Smaller programs operatein other regions

Operations

Quality Assurance/Quality ControlQuality is paramount

– product quality and handling processesare closel monitored thro gho t theare closely monitored throughout thesupply chain

– independent load and discharge analysis

Routine mine site testing– consistent testing methodology

(Saskatchewan Potash Producers Association)(Sas atc e a otas oduce s ssoc at o )– continuous measurement against standards

(round-robin testing)

C t T h i l S t W ki GCanpotex Technical Support Working Group– participation by Member Producers and Management– product development is ongoing and driven by

k t i tmarket requirements

Logistics and Planning

• Geographic location of Saskatchewan potash mines presents logistical challenges

– 1,600 kilometres to tidewater– rugged Canadian landscape and extreme temperaturesugged Ca ad a a dscape a d e t e e te pe atu es

• Adaptability and flexibility are key to our effective logistics tsystem

• Ongoing strategic planning ensures our sales commitments• Ongoing strategic planning ensures our sales commitments are met

Canpotex Railcar Fleet

• Canpotex’s specialized fleet totals approximately 5,000 railcars– designed around the bulk density of potash

d di t d l t t h i– dedicated only to potash service– full unit trains of 130, 142 or 170 railcars– 900 railcars dedicated to white potash

• Average increase of 65% in operating capacity since 2000

• Canpotex has exclusive partnerships with CP Rail in Canada and UP Rail in the U.S.

A170-railcar train carries approximately 17,500 MT of potash, and is nearly 2,600 metres long (8,500 feet)

Canpotex Railcar Fleet

• Canpotex trains are the heaviest by capacity in North American bulk shipping

• Built in Canada by National Steel Car Limited

• Railcar investments since 1999 exceed $US $370 million

• Canpotex manages and directs the inlandand directs the inland potash journey to the customer, ensuring product is deliveredproduct is delivered to the load port to meet sales requirements

Rail Corridor Capacity

• Commodity shipments through North AmericanWest Coast ports continue to increase

• Railways are under pressure to increase corridor capacity to satisfy growth in commodity markets

C• CP Rail and UP Rail have invested several billion dollars over the past 15 years– improved service to Vancouver

and Portland• Strong partnerships are more

important than ever

Canpotex Export Corridors

Vancouverand Portland Thunder Bay

Daily communication among Canpotex offices, railways, terminals, and vessels ensure prompt, efficient handling and delivery

Rail Access toVancouver and PortlandVancouver and Portland

Neptune

BritishColumbia Alberta Saskatchewan210,000 MT storage

C.P.Saskatoon

VancouverKingsgate

Portland

Regina

135,000 MT storage

Washington

Oregon

MontanaPortland

OregonIdaho

Ocean Transportation

• Approximately 75 to 90% of Canpotex’s potash sales are made on a CFR basis, where Canpotex hires and manages th l th h t th t f di hthe vessel through to the port of discharge

• Canpotex’s OceanCanpotex s Ocean Transportation strategy includes vessel arrangements under long-term charter or joint venturelong-term charter or joint venture to minimize the impact of avolatile ocean freight market

U-SEA SASKATCHEWAN

Ocean Transportation

• Canpotex has more than US $900 million in forward vessel commitments, which include 15 new vessels to ,be delivered by 2014 through various joint ventures

• Canpotex operates over p p200 vessel voyages per year, making approximately 700 port calls to over 100 00 po ca s o o e 00ports worldwide

Terminal Operations

• Canpotex has modern and efficient terminal facilities at Port of Vancouver and Port of Portland– Neptune Terminals– Portland Terminals

Vancouver Portland

Neptune Terminals• A Canpotex joint venture with Teck Coal and Bunge Canada,

located at Vancouver, B.C.

• Operated by Neptune Management Groupreporting to the Neptune Board of Directors

• Handles approximately 70% of Canpotex shipmentsHandles approximately 70% of Canpotex shipments– 210,000 tonne storage capacity– two berths

two dumper pits– two dumper pits– four loop tracks

• Capacity– current terminal throughput

is up to 10.5 million tonnesper year

Major Capital Investments at Neptune1992 $30 Million (CDN)Addition of dedicated potash storage shed, t t f th t l i d d dstate-of-the-art reclaimer, and second dumper

pit2000 $18 Million (CDN)( )Development of Berth #3 resulted in additional terminal loading capacity, with new conveyor system and new shiploadersys e a d e s p oade2007 $6 Million (CDN)Investments for improvements at Berth #3

2009 $50 Million (CDN)Canpotex announces a two-phased project to improve its rail, conveyor, and material handling systems

Portland Terminals

• Wholly owned by Canpotex, located at Portland, Oregon– developed to handle specialty grade potash

lt ti t l di t V– alternative to loading at Vancouver

• Operated by SSA Pacific, Inc.– handles approximately 30% of Canpotex shipmentsa d es app o ate y 30% o Ca pote s p e ts– 135,000 tonne storage capacity– one berth– one dumper pitone dumper pit– three loop tracks

• Capacityt t i l th h t t 3 5 illi t– current terminal throughput up to 3.5 million tonnes per

year

Major Capital Investments at Portland

1997 $50 Million (US)Canpotex celebrated the opening of its newb lk h dli t i l f ilitbulk-handling terminal facility1999 $12 Million (US)Canpotex commissioned a number of poperational enhancements to the terminal2007 $14 Million (US)Canpotex completes Phase 1 of a newCanpotex completes Phase 1 of a new expansion plan to accommodate expected increases in potash demand2008 $12 Million (US)Ongoing investments for leasehold improvements at Portland Terminals

Shaping the Future

Shaping the Future• Canpotex initiatives are innovative and ongoing:

Shaping the Future

- terminal expansions- expanding fleet of potash railcarsp g p- maintenance and staging facility for potash railcars- increased long-term vessel arrangements- proprietary, efficient all weather loading systems- potential for offshore warehouse facilities

Canpotex Terminal Expansion Plans supports announced Saskatchewan Mine Expansionsannounced Saskatchewan Mine Expansions• Canpotex completed an analysis of site locations for new

large-scale terminal expansionsbuild capacity to handle forecast sales volumes– build capacity to handle forecast sales volumes

– mitigate increasing operational costs

• Confirmed and potential projects are– expansion of existing Vancouver facility: Neptune

Terminals– potential Greenfield terminal sites at Prince Rupert p p

and Vancouver

• Phased-in approach matching new capacity with volumes

• Estimated costs are in excess of CDN $500 Million

• Construction of the Greenfield Terminal Expansion will provide approximately 1 million man hours and uponprovide approximately 1 million man hours and, upon completion, will employ 60 full-time staff

Railcar Maintenance and Staging Facility DevelopmentStaging Facility Development• Canpotex is establishing a new Railcar Maintenance and

Staging Facility to:Staging Facility to:

– Enhance reliability of potash delivery management

– Support the mine expansion activities of Canpotex’s member Producers

– Increase overall rail corridor performance

– Control long-term preventative maintenance

– Improve railcar fleet management information systemp g y

Railcar Maintenance and Staging Facility DevelopmentStaging Facility Development

• Site: Rural Municipality of Usborne

12 kilometres southwest of Lanigan, Saskatchewan

• Estimated costs: CDN $55 Million

• Railcar spots: 510

• Employment: Construction: 40 jobs

O i 20 j bOperations: 20 jobs

• Services: All-weather inspection and light repair

A t t d il hAutomated railcar wash

Wheel maintenance

Shaping the Future• Canpotex is recognized globally as a leading potash

exporter, with consistently efficient and timely deliveries that continue to meet the growing demand in overseas g gmarkets

Saskatoon

Singapore

Hong Kong

TokyoVancouver

THE WORLD’S LEADING POTASH SUPPLIER TO INTERNATIONAL MARKETSTHE WORLD S LEADING POTASH SUPPLIER TO INTERNATIONAL MARKETS

SASKATOON VANCOUVER SINGAPORE HONG KONG TOKYO