Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Piper Jaffray Technology-Enabled Industrials Symposium 2015
30 slides from Mosaic Company (the)'s conference presentation, Aug 5, 2015
Slide 1: The State of Agriculture and Plant Nutrient Industries
1 The State of Agriculture and Plant Nutrient Industries Piper Jaffray Technology-Enabled Industrials Symposium Minneapolis, MN August 5, 2015 Dr. Michael R. Rahm Vice President Market and Strategic Analysis The Mosaic Company
Slide 2: Topics and Take-Aways
2 Topics and Take-Aways Agricultural Observations and Outlook - Near term: Bipolar markets but likely no price collapse or spike - Long term: Food story not in vogue today but still solidly intact Plant Nutrient Observations and Outlook - The Mosaic Company - Near term • Cautious sentiment but p
Slide 3: Safe Harbor
3 Safe Harbor This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the Wa’ad Al Shamal Phosphate Company (also known as the Ma’aden joint venture), the acquisiti
Slide 4: Agricultural Observations and Outlook Near Term
4 Agricultural Observations and Outlook Near Term
Slide 5: Bipolar agricultural commodity markets
5 Bipolar agricultural commodity markets Prices trended down during the first half following record harvests – fears of $3 corn, $8 soybeans and $4 wheat Weather/short-covering rally during FH July – worries of crop disasters in USA and Europe and uncertainties about impact of an El Niño Price
Slide 6: Bipolar traders and fund managers
6 Bipolar traders and fund managers In the case of soybeans, managers moved from a net short soybean position of 64,000 contracts or 320 million bushels on June 16 to a net long of 90,000 contracts or 450 million bushels on July 21. Funds began to slowly liquidate net long positions in late July
Slide 7: Bullish vs. bearish arguments and our call
7 Bullish vs. bearish arguments and our call Bullish Rage Bearish Funk Much lower 2014/15 U.S. carry-out stocks due to a smaller than estimated 2014 harvest and larger than estimated demand especially for feed use Lower 2015 U.S. harvested acreage and yields than the market is trading today as a
Slide 8: Agricultural Observations and Outlook Long Term
8 Agricultural Observations and Outlook Long Term
Slide 9: Food story not in vogue today but still solidly intact
9 Food story not in vogue today but still solidly intact Demand is projected to increase another 420 million tonnes during the next decade -- so world production again will need to increase by the current output of the ABCs, plus Australia. Farmers around the world will need to plant record area
Slide 10: More mouths to feed and a larger and more affluent middle class
10 More mouths to feed and a larger and more affluent middle class More mouths to feed especially in Africa and Asia (80% of projected population growth) A larger and more affluent middle class in much of the developing world who upgrade diets to more protein rich and grain and oilseed intensive
Slide 11: Plant Nutrient Observations and Outlook The Mosaic Company
11 Plant Nutrient Observations and Outlook The Mosaic Company
Slide 12: Overview of The Mosaic Company
12 Overview of The Mosaic Company Mosaic helps the world grow the food it needs by mining phosphorus (P) and potassium (K) minerals and refining these ores into plant nutrient products that are essential for global agriculture. In big round numbers, our North American operations typically dig, pump,
Slide 13: Phosphate Operations
13 Phosphate Operations U.S. Phosphate Operations 53% 47% Phosphate Sales 2012-14 North America Offshore Offshore Phosphate Operations 35% equity stake in Bayovar phosphate rock mine in Peru 25% equity stake in Ma’aden II mine and chemical complex under development in Saudi Arabia (2016)
Slide 14: Phosphate Cost Position – Lowest Quartile
14 Phosphate Cost Position – Lowest Quartile Vertically integrated with large-scale and low- cost phosphate rock operations in Florida Saudi Arabian JV is expected to be low cost with advantaged access to India CF phosphate business acquisition provides access to more phosphate rock and abilit
Slide 15: Potash Operations
15 Potash Operations NA Potash Operations 47% 53% Potash Sales 2012-14 North America Offshore
Slide 16: Potash Cost Position – Increasingly Competitive
16 Potash Cost Position – Increasingly Competitive • Competitive cash cost position on relatively flat cost curve • Optimization of North American operations • New K3 shaft at Esterhazy provides the option of mitigating brine management costs Mosaic Advantage: Relatively Flat Cost Curve Brine costs
Slide 17: Innovation: Our MicroEssentials Story
17 Innovation: Our MicroEssentials® Story Investing in expected future demand growth - Produced today in three granulation plants with annual capacity of 2.3 million tonnes - $225 million project approved and in progress will convert two more granulation plants at New Wales and increase capacity t
Slide 18: Integration of ADM's distribution business
18 Integration of ADM’s distribution business The Transaction Strategic Rationale • Mosaic is largest P&K producer and Brazil is the fastest growing P&K market • Provides downstream market access/pull through for our North American P&K operations • Accelerates our strategy to expand distribution i
Slide 19: Our Strategic Priorities
19 Our Strategic Priorities + =
Slide 20: Plant Nutrient Observations and Outlook Near Term
20 Plant Nutrient Observations and Outlook Near Term
Slide 21: NPKs remain affordable and generate high ROIs
21 NPKs remain affordable and generate high ROIs Our plant nutrient affordability metric has bobbed and weaved with agricultural commodity prices, but the current reading indicates that plant nutrients still remain affordable The metric registered .81 at the end of July, off from .88 a year ago
Slide 22: Cautious sentiment but still positive demand prospects
22 Cautious sentiment but still positive demand prospects We have narrowed the range of our 2015 P&K shipment estimates and tabled preliminary forecasts for 2016 Global shipments of the leading solid phosphate products are projected to total 65 to 66 million tonnes this year and then increase to
Slide 23: Insulated from the vagaries of ag commodity prices
23 Insulated from the vagaries of ag commodity prices China - Government supports crop prices at high levels through procurement programs that are designed to build strategic reserves and support rural economies. - Corn traded at an average price of $9.35 per bushel on the Dalian exchange and whea
Slide 24: North American shipment prospects
24 North American shipment prospects Potash shipments in 2013/14 likely were elevated due to large summer fill shipments during the last half of May and June last year Shipments are projected to decline in 2014/15, but the drop likely was smaller-than-expected and implies that the pipeline remai
Slide 25: Several supply hic-cups keep markets roughly balanced
25 Several supply hic-cups keep markets roughly balanced Phosphate Potash - Potential loss of Uralkali’s Solikamsk 2 mine - Long strike at ICL’s Dead Sea Works operations in Israel during FH 2015 Year Country Company Facility Closed Capacity Permanent Closures Spain Fertiberia Huelva 2010 740 US
Slide 26: Plant Nutrient Observations and Outlook Long Term
26 Plant Nutrient Observations and Outlook Long Term
Slide 27: Solid demand drivers and forecasts
27 Solid demand drivers and forecasts Global shipments have increased 7.6 mmt from 2010 to 2014 but most of the growth occurred in 2014 Growth led by China and Brazil with help from other regions India also was a major drag on global K demand Shipments projected to increase 2.0% to 2.5% per
Slide 28: A new supply ballgame
28 A new supply ballgame Significant new capacity expected on line during the last half of this decade Most or ~87% of new capacity from brownfield expansion by current producers Some or ~10 million tonnes required to replace depleted or flooded mines Limited greenfield capacity by new entra
Slide 29: Stable & better-than-expected supply/demand balances
29 Stable & better-than-expected supply/demand balances Most consultants project that MOP capacity will climb to 95-100 million tonnes KCl by the end of the decade Based on our assessment of operational capacity (approximately 80 million tonnes in 2020), the global operating rate is expected ran
Slide 30: Thank You!
30 The State of Agriculture and Plant Nutrient Industries Piper Jaffray Technology-Enabled Industrials Symposium Minneapolis, MN August 5, 2015 Dr. Michael R. Rahm Vice President Market and Strategic Analysis The Mosaic Company Thank You!
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