Canpotex Growing Relationships

July 2012
Canpotex
Growing Relationships
www.canpotex.com
Company Mission
A world-class marketing and logistics company that sells and delivers Saskatchewan
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
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Canpotex History
• Canpotex was established in 1970 to market Saskatchewan potash in
overseas markets, with our first sale made in 1972
• Incorporated under Federal Statutes, Canpotex was to establish a single
company responsible for reliable and efficient delivery of Saskatchewan
potash to offshore markets
• Our successful market development programs have provided the
education and resources to help our customers achieve optimal crop yields
since 1983
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Company Overview
• Canpotex is not involved in the independent production decisions of our
shareholders, nor do we regulate or restrict potash supplies
• 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
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Company Overview
And Ownership
• Canpotex sells Saskatchewan potash to markets outside Canada and the
United States
• operational since 1972, with sales of approximately 180 million tonnes
since inception
• Private corporation owned by the Saskatchewan potash producers, all large
integrated fertilizer companies
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Company Overview
• Shareholders have an 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 basis
• Product Supply Agreements, based on
projected annual sales, reflect Producer commitments
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Company Snapshot
• Canpotex sales in 2011 were a record 9.85 million tonnes, with gross revenues
totalling US $4.5 billion
• Approximately 30 offshore markets, including major markets of Australia, Brazil,
China, India, Indonesia, Japan, Korea, and Malaysia
• Competition from producers in Russia, Belarus, Israel, Jordan, Germany, Chile,
Spain, UK, China, Brazil and the USA
• Sales made on CFR and FOB basis
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Company Offices
• Offices located in Saskatoon, Vancouver, Singapore, Hong Kong, and Tokyo
• Currently 115 employees in offices worldwide
• Sales and marketing team decentralized and located in close proximity to major
markets
Office
SASKATOON
VANCOUVER
Employees
Saskatoon
90
Vancouver
8
Singapore
15
Tokyo
2
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Company Strengths
• Committed solely to offshore markets
• Canpotex has offices in key market areas
• focuses on overseas potash markets with a strong
customer orientation
• Long-term direct customer relationships
• over 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 of international marketing
experience
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Company Strengths
• Managed logistics
• coordinates timely arrival of potash to meet
customer requirements
• Innovative marketing supply
• approximately 20 grades of potash
• logistical solutions
• long-term partnership approach with customers
• Canpotex seeks win-win outcomes
• Trusted to deliver quality products on schedule
• provides 100% of the Industrial requirements for Japan, Unid (Korea/China),
Thailand, and Taiwan
• Recognized as a reliable supplier of high-quality products
• Increasing capability to supply rising customer needs
• expanding rail, terminal and ocean vessel capacity
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Marketing
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Canpotex Sales Volume History
10
Million MT KCL
Canpotex Sales Volume History
9
8
7
6
5
4
3
2
1
74
75
76
77
78
79
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
07
08
09
10
11
0
Source: Canpotex (Feb 2012)
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Canpotex Markets
• Potash trade in Canpotex markets averages 30-35 million tonnes per year
• Over the past 10 years, Canpotex markets have experienced an annualized growth rate of
approximately 4.66%
• Canpotex has an overall market share of approximately 30-35% 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 60 countries
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Market Development
•
Canpotex spends approximately US $1.5 million per year on
market development initiatives
–
•
market development expenditures by Canpotex since 1983
total approximately US $36.0 million
Programs in Asia operate in cooperation with the International
Plant Nutrition Institute
–
encourage farmers to use potash by promoting the benefits
of balanced fertilizer application
•
Programs operate in China, India, Indonesia, Vietnam, Argentina,
Colombia, Uruguay, Mexico, Australia and Africa
•
Smaller programs operate in other regions
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Customer Success Stories
• Canpotex introduced the industry’s first market development program in China and
has since spent nearly $36 million on market development programs in over 20
countries to help farmers maximize crop yields through balanced fertilization
• Improved market penetration and freighting economics in developing Asian markets
by:
• converting Indonesia from bag shipments to bulk
• converting Malaysia from container shipments to bulk
• Introducing domestic transshipments through Phu My port in Vietnam
• Canpotex developed a transportation system to comply with AQIS requirements in
Australia, allowing product to be free of organic contaminants
• Supported shift from Standard to Granular grade potash in Latin America which
allows Canpotex customers to utilize bulk blending methods, improving efficiency
and flexibility for specific NPK requirements
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Canpotex Market Development programs help farmers achieve
maximum crop yields
www.canpotex.com
Operations
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Quality Assurance
Quality Control
Quality is paramount
–
product quality and handling processes
are closely monitored throughout the
supply chain
–
independent load and discharge analysis
Routine mine site testing
–
consistent testing methodology
(Saskatchewan Potash Producers Association)
–
continuous measurement against standards
(round-robin testing)
Canpotex Technical Support Working Group
–
participation by Member Producers and Management
–
product development is ongoing and driven by
market requirements
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Rail Access to
Vancouver and Portland
Neptune
British
Columbia
210,000 MT
storage
Alberta
Saskatchewan
Saskatoon
C.P./C.N.
Vancouver
Regina
Kingsgate
Portland
Washington
135,000 MT storage
Portland
Oregon
SASKATOON
VANCOUVER
Montana
SINGAPORE
HONG KONG
Idaho
TOKYO
www.canpotex.com
Logistics and Planning
• Geographic location of Saskatchewan potash mines presents logistical challenges
• 1,600 kilometres to tidewater
• rugged Canadian landscape
• extreme temperatures
• Adaptability and flexibility are key to our effective logistics system
• Ongoing strategic planning ensures our sales commitments are met
• Redundancy and resiliency are embedded into our supply chain
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Inland Transportation
• Canpotex’s specialized fleet totals approximately 5,000 railcars
• designed around the bulk density of potash
• dedicated only to potash service
• full unit trains of up to170 railcars
• 900 railcars dedicated to white potash
• Specialized car design has resulted in an increase of 65% in
operating capacity since 2000
• Canpotex has partnerships with Canadian Pacific Railway and
Canadian National Railway in Canada and with Union Pacific in
the U.S.
SASKATOON
A170-railcar train carries approximately
17,500 MT of potash, and is nearly 2,600
metres long (8,500 feet)
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Inland Transportation
• 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
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Rail Corridor Capacity
•
Commodity shipments through North
American West Coast ports continue
to increase
•
Railways are investing to increase
corridor capacity to satisfy growth in
commodity markets
•
CN, CP and UP have invested several
billion dollars over the past 10 years
•
Strong partnerships are more
important than ever
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Canpotex Export Corridors
Vancouver
and Portland
Thunder Bay
Daily communication among Canpotex offices, railways, terminals and vessels ensure prompt, efficient handling and delivery
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Ocean Transportation
• Approximately 95% of Canpotex’s potash sales are currently made on a CFR basis, where
Canpotex hires and manages the vessel through to the port of discharge
• Canpotex’s Ocean Transportation strategy includes vessel arrangements under long-term charter
or joint venture to minimize the impact of a volatile ocean freight market
• On average, Canpotex operates 35-45 vessels
at any given time
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
U-Sea Saskatchewan shifting to Neptune Terminals for loading
www.canpotex.com
Ocean Transportation
• Canpotex has in excess of US $1 billion in forward vessel commitments, which include 17 new
vessels to be delivered by 2014 through various joint ventures
• Canpotex operates over 225 vessel voyages per year, making approximately 600 port calls to
over 80 ports worldwide
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Terminal Operations
• Canpotex has modern and efficient terminal facilities:
• Neptune Bulk Terminals located at the Port of Vancouver, B.C.
• Portland Bulk Terminals located at the Port of Portland, Oregon
Neptune
SASKATOON
Portland
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Neptune Bulk 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
• Infrastructure includes:
• 210,000 MT storage capacity
• two berths
• two dumper pits
• four loop tracks
• Current terminal throughput is up to 11.5 million
tonnes per year
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Major Capital Investments at Neptune
1992 $30 Million (CDN)
Addition of dedicated potash storage shed, state-of-the-art
reclaimer and second dumper pit
2000 $18 Million (CDN)
Development of Berth #3 resulted in additional terminal loading
capacity, with new conveyor system and new shiploader
2007 $6 Million (CDN)
Investments for improvements at Berth #3
2009 $49 Million (CDN)
Canpotex announces a two-phased project to improve its rail,
conveyor and material handling system
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Portland Terminals
• Wholly owned by Canpotex, located at Portland, Oregon
• developed to handle specialty grade potash
• alternative to loading at Vancouver
• Operated by SSA Pacific, Inc.
• Handles approximately 30% of Canpotex shipments
• Infrastructure includes:
• 135,000 MT storage capacity
• one berth
• one dumper pit
• three loop tracks
• Current terminal throughput up to 3.5 million tonnes per year
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Major Capital Investments at Portland
1997 $50 Million (US)
Canpotex celebrated the opening of its new bulk-handling
terminal facility
1999 $12 Million (US)
Canpotex commissioned a number of 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
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Shaping the Future
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Strategic Initiatives
• Canpotex initiatives are innovative and ongoing:
• terminal expansions
• expanding fleet of potash railcars
• maintenance and staging facility for potash railcars
• increased long-term vessel arrangements
• proprietary, efficient all weather loading systems
• potential for offshore warehouse facilities
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Canpotex Terminal Expansions
•
Canpotex terminal expansion plans support announced Saskatchewan mine expansions
•
Canpotex completed an analysis of site locations for new large-scale terminal expansions to
•
•
build capacity to handle forecast sales volumes
•
mitigate increasing operational costs
Potential projects are
•
Greenfield terminal sites at Prince Rupert and Vancouver
•
expansion of existing Portland facility: Portland Terminals
•
Phased-in approach matching new capacity with volumes
•
Estimated costs are in excess of CDN $700 Million
•
Construction of the Greenfield Terminal Expansion will provide approximately 750,000 –
1 million labour hours and will employ approximately 50 full-time staff once fully operational
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Canpotex 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 railcar fleet management
information system
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
Canpotex 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
Operations: 20 jobs
•Services:
All-weather inspection and light
repair
Automated railcar wash
Wheel maintenance
SASKATOON
VANCOUVER
SINGAPORE
HONG KONG
TOKYO
www.canpotex.com
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 markets
Saskatoon
SASKATOON
VANCOUVER
Vancouver
SINGAPORE
HONG KONG
Singapore
TOKYO
Tokyo
www.canpotex.com
Thank You.
www.canpotex.com
SASKATOON VANCOUVER SINGAPORE HONG KONG TOKYO