Yara International Asa · OSL:YAR
Yara International Asa — Investor Day (November 2007)
12 slides from Yara International Asa's investor day presentation, Nov 20, 2007
Slide 1: Estimated European energy cost (excl KGH)
Estimated European energy cost (excl KGH) NOK millions Actual for quarter October 2007 estimate (Yara 3Q report) 600 Energy and sourcing strategy 500 550 Cost change on previous year 400 300 250 200 100 0 (23) (100) (104) (200) (300) (258) 1Q07 2Q07 3Q07 4Q07 1Q08 IR - Date: 2007-11-20 IR - Date: 20
Slide 2: High-cost producers' competitive position has improved; improved energy sourcing flexibility in Europe
High-cost producers’ competitive position has improved Improved energy sourcing flexibility in Europe Low-cost gas (LCG) High-cost gas (HCG) Yara’s European energy contract links (pre-GrowHow in brackets): Million tons NH3* Million tons NH3 * Higher energy costs Hub Gas ~35% (~35%) Qafco 1-4 0.5 Slu
Slide 3: Increased European forward energy prices; LNG expansion is fundamental for the energy market
Increased European forward energy prices LNG expansion is fundamental for the energy Quarterly averages for 2006 and 2007 with forward prices for 2008* market trends and assumed beneficial for Yara USD/MMBtu 14 Yara Europe oil & gas cost (weighted average) 12 11.4 11.4 11.3 11.6 LNG expansion to cre
Slide 4: Strong LNG expansion: towards a globalisation of the gas market
Strong LNG expansion Towards a globalisation of the gas market High rate of expansion in LNG industry 10,00 Even stronger growth projected for • Ongoing expansion in LNG next 5 years capacity will lead to a 9,00 globalisation of the gas market 8,00 $ / M M b tu Fastest growing demand in the • Europe
Slide 5: Gradually more efficient markets also in Europe: global gas market through LNG
Gradually more efficient markets also in Europe Global gas market through LNG Full cost for development of new LNG capacity should limit the long Substantial increase in LNG market share 8 % in 2005 to 21% in 2015 (IEA, BP, Rabobank) term price differential between Low Cost Gas Regions and High Cost
Slide 6: Gas for power – crude for transport
Gas for power – crude for transport World power generation 1973 - 2004 NG use Europe: Gas for power to increase: World power generation • Oil reduced by 23 % and Hydro Other •Substitutes 1973 21% ”market share” has declined •Coal (Oil) Gas price by more than 70% Coal Resid./ 38% Nuclear Industry Com
Slide 7: Crude premium high and at record level today; increased decoupling in efficient gas market
Increased decoupling in efficient gas market Crude premium high and at record level today 100 90 Crude vs gas on a calorific value basis 80 Avg. crude1 premium 24% $ / ba rre l oe 70 80% 60 60% 50 40% % p r e m iu m c r u d e 40 20% 30 0% 20 -20% 10 -40% Feb. 2003 Feb. 1996 Oct./Dec. 0 -60% 2005 Nov
Slide 8: Evolution of gas supply-demand balance in EU; improved energy sourcing flexibility in Europe
Evolution of gas supply-demand Balance in EU Improved energy sourcing flexibility in Europe Assuming that gas demand will grow on average by 2.5% per year BCM 900 12 Increased competition in European Current Supply (incl. Projects) 11 LSFO 1% natural gas markets due to new 800 Current Supply + Under
Slide 9: Crude prices to increase relative to gas; scope for increased gas-to-gas contracts
Crude prices to increase relative to gas with Scope for increased gas-to-gas contracts implications for wanted contract structure Expiry of existing oil-linked natural gas contracts Existing oil-linked contracts 60% 48% of European gas Crude linked to transport feedstock contracts linked to 50% 48%
Slide 10: Overall raw material strategic platform including Kemira GrowHow
Overall raw material strategic platform The acquisition of Kemira GrowHow extended including Kemira GrowHow the P2O5 strategic scope for Yara A. External sourcing of raw materials for Yara owned plants Before KGH Yara’s focus was exclusively on rock and phosphoric acid 1,400 kT of phosphate rock (50
Slide 11: Strong recent improvement in P2O5 market; impact for Yara
Strong recent improvement in P2O5 market Impact for Yara The demand for all P2O5 products has increased significantly as a result of higher crop prices and reduced inventory levels of grain We have to expect high sourcing costs for phosphate rock for the coming years Supply of P2O5 products has not
Slide 12: Sokli phosphate rock status
Sokli phosphate rock status Still uncertainties related to infrastructure and permits, but ambition for Yara to make mining decision early 2009 1.5 mill tons p.a. phosphate rock concentrate production over 20 years+ Investment costs tentatively estimated to USD 600-1,000 mill Expected price per ton