About Canpotex

Canpotex:
g Relationships
p
Growing
June, 2011
Canpotex
Canpotex is a world-class marketing and logistics
company
p y that sells and delivers Saskatchewan p
potash
to international markets
Canpotex enhances the international sales
and distribution capabilities of its individual shareholders and
customers by sharing logistical assets and obtaining benefits
from economies of scale
Canpotex Adds Value
• Vast international marketing
experience and loyal
customer
t
base
b
established
t bli h d
over a 40-year period
• Proven and expanding
terminal capacity
G ou d b ea g market
a et
• Ground-breaking
development programs
• Comprehensive ocean
freight services
• A reliable source of
product
d t supply
l
p q
quickly
y
• The abilityy to adapt
in periods of strong
demand
• High quality standards in
potash p
p
production and
handling processes
• World-class inland
transportation systems
• Long-term
Long term focus
• Low-cost, efficient
• Knowledge and experience in
financing
g model
international trade
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 sales
• Incorporated under Federal Statutes, Canpotex provides
consistent optimum
p
services to customers
• Our successful marketing programs and efficient handling and
distribution logistics demonstrate that Canpotex remains
ideally 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 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 supplies
p
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 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 markets
outside Canada and the United States
– operational since 1972, with sales exceeding
169 million tonnes since inception
• Private corporation owned by the Saskatchewan potash
producers, all large integrated fertilizer companies
Company Overview
• Shareholders have equal ownership in the
affairs of the Company (one member one vote)
• Governed by an entitlement process based on
the production capacity of Member Producers
• Operates on a flow-through
flow through basis
• Product Supply Agreements, based on
projected
p
j
annual sales, reflect Producer commitments
Company Snapshot
• C
Canpotex sales in 2010 were 8
8.2
2 million tonnes, with gross
revenues totalling US $3.0 billion
• Record global potash demand projected for 2011
• Approximately 30 offshore markets, including major markets
of Australia, Brazil, China, India, Indonesia, Japan, Korea,
and
dM
Malaysia
l
i
• Competition from Russia, Belarus, Israel, Jordan, Germany,
Chile, 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 in
close
l
proximity
i it tto major
j markets
k t
Office
Employees
Saskatoon
69
Vancouver
8
Singapore
15
Hong Kong
1
y
Tokyo
2
Canpotex Employees
• Exceptional range of professional skills and international
expertise
• Canadian-based and expatriate employees have over 50
university 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
• Average
A
t
tenure
off allll staff
t ff is
i 9.2
9 2 years
Executive Management Team
• The average tenure of our 9-member Executive Management
Team is 17 years; with 6 based in Saskatoon
• 8 members are Canadian
• 6 members are University of Saskatchewan alumni with one
or more graduate and/or undergraduate degrees or
certifications
• C
Canpotex’s
’ commitment
i
ffor 40 years h
has b
been to d
develop
l and
d
promote Saskatchewan people in international business
• Canpotex 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
Historical Perspective
10
10.0
0
million tonnes KCL
Over 169 million MT sold since inception
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
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; while
market share varies significantly from country to country
• Since being established Canpotex has delivered
quality potash to more than 135 customers in
approximately
pp
y 60 countries
Company Strengths
• Committed solely to offshore business
– Canpotex has offices in key market areas
– focuses on overseas potash markets with a strong
customer orientation
• Long-term direct customer relationships
– nearly
l 40 years
– exclusive supplier support
– no trader intervention
• Long-standing cultural appreciation
– representation in most local markets
– routine Canpotex market visits
– annual customer visits to Canada
• A highly knowledgeable senior marketing team
– With an average 25 years off iinternational
t
ti
l marketing
k ti
experience
Company Strengths
• Managed logistics
– coordinates timely arrival of potash to meet
customer
t
requirements
i
t
• Innovative marketing supply
– app
approximately
o
ate y 20
0g
grades
ades o
of potas
potash
– logistical solutions
– long-term partnership approach with customers
– Canpotex seeks win
win-win
win outcomes
• Trusted to deliver quality products on schedule
– provides 100% of the Industrial requirements for Japan
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
Percentage of Total Sales
Million MT
10.0
• Five largest buyers are
Brazil, China, India,
Indonesia and Malaysia
9.0
8.0
70
7.0
- accounting for nearly
70% of Canpotex sales
- nearly 90 million tonnes
sold to these markets
since inception
6.0
5.0
4.0
65%
3.0
57%
2.0
62%
67%
63%
54%
57%
63%
62%
73%
1.0
00
0.0
01
02
Source: Canpotex
December 2010
03
04
05
06
Top 5 Markets
07
08
09
Total Canpotex Sales
10
Customer Success Stories
• China
– industry’s
y first market development
p
p
program
g
• Indonesia
– from bag shipments to bulk
– Wilmar is our largest single customer
• Malaysia
– from container shipments
p
to bulk
•
Vietnam
– introduced domestic transshipments
• Latin America
– supported shift from Standard to
Granular g
grade p
potash
Market Development
• Canpotex spends approximately US $1.5 million per year
on market development initiatives
– market development expenditures by Canpotex since
1983 total US $35.0 million
• Programs in Asia operate in cooperation with the
I t
International
ti
l Plant
Pl t Nutrition
N t iti Institute
I tit t
– encourage farmers to use potash by promoting balanced
fertilizer application
• Programs operate
in China, India, Indonesia,
Philippines Argentina
Philippines,
Argentina,
Colombia, Guatemala, and Mexico
• Smaller programs operate
in other regions
Operations
Quality Assurance/Quality Control
Quality is paramount
– product quality and handling processes
are closely
closel monitored thro
throughout
gho t the
supply chain
– independent load and discharge analysis
Routine mine site testing
– consistent testing methodology
(Saskatchewan
(Sas
atc e a Potash
otas Producers
oduce s Association)
ssoc at o )
– continuous measurement against standards
(round-robin testing)
Canpotex
C
t T
Technical
h i lS
Supportt W
Working
ki G
Group
– participation by Member Producers and Management
– product development is ongoing and driven by
market
k t requirements
i
t
Logistics and Planning
• Geographic location of Saskatchewan potash mines
presents logistical challenges
– 1,600 kilometres to tidewater
– rugged
ugged Canadian
Ca ad a landscape
a dscape a
and
de
extreme
t e e te
temperatures
pe atu es
• Adaptability and flexibility are key to our effective logistics
system
t
• 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
– dedicated
d di t d only
l tto potash
t h service
i
– 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 inland
potash journey to the
customer, ensuring
product is delivered
to the load port to
meet sales requirements
Rail Corridor Capacity
• Commodity shipments through North American
West 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
Vancouver
and Portland
Thunder Bay
Daily communication among Canpotex offices, railways, terminals, and vessels ensure prompt,
efficient handling and delivery
Rail Access to
Vancouver and Portland
Neptune
210,000 MT storage
British
Columbia
Alberta
Saskatchewan
Saskatoon
C.P.
Regina
Vancouver
Kingsgate
Portland
Washington
135,000 MT storage
Montana
Portland
Oregon
Idaho
Ocean Transportation
• Approximately 75 to 90% of Canpotex’s potash sales are
made on a CFR basis, where Canpotex hires and manages
th vessell through
the
th
h tto th
the portt off discharge
di h
Canpotex s Ocean
• Canpotex’s
Transportation strategy includes
vessel arrangements under
long-term charter or joint venture
to minimize the impact of a
volatile 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
p
operates
p
over
• Canpotex
200 vessel voyages per
year, making approximately
700
00 port
po calls
ca s to
oo
over
e 100
00
ports 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 Group
reporting to the Neptune Board of Directors
• Handles approximately 70% of Canpotex shipments
– 210,000 tonne storage capacity
– two berths
– two dumper pits
– four loop tracks
• Capacity
– current terminal throughput
is up to 10.5 million tonnes
per year
Major Capital Investments at Neptune
1992 $30 Million (CDN)
Addition of dedicated potash storage shed,
state-of-the-art
t t f th
t reclaimer,
l i
and
d second
dd
dumper
pit
(
)
2000 $18 Million (CDN)
Development of Berth #3 resulted in additional
terminal loading capacity, with new conveyor
system
sys
e a
and
d new
e sshiploader
p oade
2007 $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
– alternative
lt
ti tto lloading
di att Vancouver
V
• Operated by SSA Pacific, Inc.
– handles
a d es app
approximately
o
ate y 30% o
of Ca
Canpotex
pote sshipments
p e ts
– 135,000 tonne storage capacity
– one berth
– one dumper pit
– three loop tracks
• Capacity
– currentt terminal
t
i l throughput
th
h t up to
t 3.5
3 5 million
illi ttonnes per
year
Major Capital Investments at Portland
1997 $50 Million (US)
Canpotex celebrated the opening of its new
b lk h dli tterminal
bulk-handling
i l facility
f ilit
1999 $12 Million (US)
p
commissioned a number of
Canpotex
operational enhancements to the terminal
2007 $14 Million (US)
Canpotex completes Phase 1 of a new
expansion plan to accommodate expected
increases in potash demand
2008 $12 Million (US)
Ongoing investments for leasehold
improvements at Portland Terminals
Shaping the Future
Shaping the Future
• Canpotex initiatives are innovative and ongoing:
- terminal expansions
p
g fleet of p
potash railcars
- expanding
- 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 Expansions
•
Canpotex completed an analysis of site locations for new
large-scale terminal expansions
– build capacity to handle forecast sales volumes
– mitigate increasing operational costs
•
Confirmed and potential projects are
– expansion of existing Vancouver facility: Neptune
Terminals
– p
potential Greenfield terminal sites at Prince Rupert
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
and, upon
completion, will employ 60 full-time staff
Railcar Maintenance and
Staging Facility Development
• Canpotex is establishing a new Railcar Maintenance and
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
p
railcar fleet management
g
information system
y
Railcar Maintenance and
Staging 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
Operations:
i
20 jjobs
b
• Services:
All-weather inspection and light repair
A t
Automated
t d railcar
il
wash
h
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 g
growing
g demand in overseas
markets
Singapore
Saskatoon
Hong Kong
Vancouver
Tokyo
THE WORLD’S
WORLD S LEADING POTASH SUPPLIER TO INTERNATIONAL MARKETS
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO