Yara International Asa · OSL:YAR
Yara International Asa — Investor Presentation (January 2017)
99 slides from Yara International Asa's investor presentation, January 2017
Slide 1: Yara Fertilizer Industry Handbook
Yara Fertilizer Industry Handbook January 2017
Slide 2: List of contents
List of contents • Fertilizer industry overview • What is fertilizer? p. 2 • Why mineral fertilizer? p. 5 • Environmental impact of fertilizer p. 9 • The fertilizer industry p.17 • Fertilizer industry dynamics p. 28 • Ammonia p. 30 • Urea p. 35 • Nitrates p. 40 • NPKs p. 47 • Industry value drivers
Slide 3: What is fertilizer?
What is fertilizer? 2
Slide 4: Fertilizers are plant nutrients, required for crops to grow
Fertilizers are plant nutrients, required for crops to grow • Crops need energy (light) CO2, water and minerals to grow • The carbon in crops originates from CO2 absorbed through the leaves • Crops absorb water and plant nutrients from the soil • Plant nutrients are building blocks of crop material.
Slide 5: Principle of crop nutrition: crop growth limited by most deficient nutrient
Principle of crop nutrition: crop growth is limited by the most deficient nutrient Soil conditions • Law of the Minimum” (Liebig, 1843): “Crop yields & other growth are proportional to the amount of the most factors limiting nutrient.” YIELD • Plant nutrients have specific and essential functions in
Slide 6: Why mineral fertilizer?
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Slide 7: Mineral fertilizer replace nutrients removed with the harvest
Mineral fertilizer replace nutrients removed with the harvest Supply of crop residues and organic fertilizer NPK • Export of nutrients with the Organic N K harvest material, P humus Mineralisation S Mg • Growing demand for food Ca & feed Crop residues are decomposed to minerals Mineral fertilizers a
Slide 8: Mineral fertilizer characteristics compared to organic fertilizer
Mineral fertilizer characteristics compared to organic fertilizer Characteristics Mineral fertilizer Organic fertilizer Nutrient Nitrogen from the air, Crop residues and animal manures source Phosphate and Potassium from deposits / mines Nutrient High nutrient concentration Low nutrient concentratio
Slide 9: Nitrogen – the most important nutrient
Nitrogen – the most important nutrient Nutrient characteristics Primary benefit Application Industry structure Potassium (K) 18% Improve Application Fewer suppliers, production crop quality can be varied discipline Phosphorus (P) 23% Increase crop size Annual application Fragmented Indus
Slide 10: Environmental impact of fertilizer
Environmental impact of fertilizer 9
Slide 11: Fertilizer reduces the carbon footprint of farming
Fertilizer reduces the carbon footprint of farming Fertilizer - an efficient solar energy catalyst Production is a marginal part of the carbon footprint; efficient application is more important Huge positive effects of fertilizer use, since higher yields enable lower land area use Production App
Slide 12: The right nitrogen fertilizer rate is key to avoid nitrate leaching
The right nitrogen fertilizer rate is key to avoid nitrate leaching Grain yield (t/ha) Nitrate in soil after harvest (kg N/ha) • Leaching of nitrate into groundwater 10 100 affects water quality and contributes to eutrophication 9 80 • Oversupply of organic and mineral 8 60 nitrogen fertilizer repre
Slide 13: Choosing the right nitrogen fertilizer to avoid ammonia volatilization losses
Choosing the right nitrogen fertilizer to avoid ammonia volatilization losses • Volatilization of ammonia gas contributes Ammonia volatilization in % NH3-N per unit N applied to pollution, affects air quality and induces soil acidification 19.9 • The use of organic or urea-based nitrogen fertilizer
Slide 14: Water availability is the main constraint on agricultural production
Water availability is the main constraint on agricultural production in many important growing areas Agricultural water use has to The segment has seen Water scarcity is a clear issue become more ”intelligent” strong growth historically Rio Grande 17% of cropland is irrigated, it is twice as Expansi
Slide 15: Good crop nutrition enables increased water efficiency
Good crop nutrition enables increased water efficiency: “more crop per drop” • Water is a key input for crop growth Water requirement (liter per kg of wheat grain) • About 70 % of global water consumption is for agriculture 600 • Sub-optimal crop nutrition tends to drive 510 450 over-consumption of
Slide 16: Carbon footprint of urea production differs by region
Carbon footprint of urea production differs by region kg CO2 equivalents per kg urea nitrogen 6.53 3.99 4.14 3.78 3.50 3.61 EU 27 Russia US Africa China China (coal-based) (gas-based) Source: Fertilizers Europe (2016) for production in 2014 15
Slide 17: Carbon footprint of ammonium nitrate production by region
Carbon footprint of ammonium nitrate production by region kg CO2 equivalents per kg AN nitrogen 11.06 8.61 7.23 6.82 3.42 EU 27 Russia US China China (coal-based) (gas-based) Source: Fertilizers Europe (2016) for production of granulated AN in 2014 16
Slide 18: The fertilizer industry
The fertilizer industry 17
Slide 19: Consumption trend per nutrient
Consumption trend per nutrient Million tonnes nutrient 140 120 N 1.2% growth pa.* 100 80 60 P 1.6% growth pa.* 40 20 K 2.3% growth pa.* 0 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017F 2020F Source: IFA, June 2016 * CAGR avg. 2013-2015 to 2020 18
Slide 20: Key global fertilizer products
Key global fertilizer products Nitrogen N Other Ammonia 11% 4% DAP/MAP Urea 7% 58% Potash K2O Phosphate P2O5 NPK 6% Other Other 3% AN/CAN 9% TSP 10% NPK 6% UAN 21% 5% SSP 9% DAP/MAP 108 million tonnes* 57% MOP/SOP NPK 76% 18% 32 million tonnes 41 million tonnes Source: IFA 2015 (nutrient totals) and
Slide 21: Nutrient application by crop
Nutrient application by crop By tonnes nutrient N+P+K Nitrogen Other Wheat Other Wheat 12% 16% 12% 18% Fruit & veg Fruit & veg Rice 15% 15% Rice 14% 15% Sugar crops Sugar crops 4% 4% Cotton Cotton Maize 4% Roots/Tubers Maize 4% 16% 17% 3% Oilseeds Oilseeds Other cereal 7% Other cereal 11% 5% 5% Sour
Slide 22: Fertilizer consumption by region – key markets
Fertilizer consumption by region – 5 key markets Million tons nutrient consumption Russia West/Central 1.5 Europe United States 11.4 11.8 0.6 0.4 4.1 4.4 2.6 2.9 China N P K 32.9 N P K N P K India 11.4 Brazil 7.4 16.8 5.4 4.8 3.9 N P K 6.0 2.5 N P K N P K Source: IFA 2014 21
Slide 23: Nitrogen consumption in key regions
Nitrogen consumption in key regions Million tonnes nitrogen 80 Asia: 1.4% * 70 60 50 40 30 Europe: 0.8% * 20 North America: 0.4%* 10 Latin America: 4.4%* 0 2000 2004 2008 2012 2016F 2020F Source: IFA, June 2015 * CAGR 2015-2020 22
Slide 24: The N industry is fragmented, while P and K are more concentrated
The N industry is fragmented, while the P and K industries are more concentrated 1 2015 figures , million tonnes nutrient Yara CF Agrium TOAZ PCS Other non- Orascom • Despite a consolidation trend, the industry is Chinese Eurochem still higher fragmented Nitrogen1 Uralchem Koch • (N) Top 3 producers
Slide 25: Nitrogen fertilizer application by region and product
Nitrogen fertilizer application by region and product West /central Europe (11.4 mt) China (32.9 mt) USA (11.8 mt) Other DAP/MAPOther DAP/MAP 11% Other 9% 1% DAP/MAP 3% Urea NPK 7% NPK 6% 21% 6% Urea NPK 7% 22% 11% ABC UAN 17% Urea 12% Nitrates 70% UAN Ammonia 43% 28% 27 % Nitrates 2% India (16.8 mt
Slide 26: Nitrogen fertilizer application by region and crop
Nitrogen fertilizer application by region and crop Russia EU-27 USA Other Oilseeds 21% Other Wheat 2% Other 27% 28% Wheat Maize 48% 33% 7% Maize Fruits & Sugar crops 49% vegtables Maize 8% Other China Other Other 13% cereals 7% cereals Oilseeds cereals 14% 3% Fruits & 10% 15% Other vegtables Wheat C
Slide 27: Fertilizer company comparison
Fertilizer company comparison Revenues - USD billion 12.2 Yara 13.4 13.9 Agrium 14.8 7.5 Mosaic* 8.9 5.3 PCS 6.3 3.9 K+S 4.6 5.5 ICL 5.4 3.9 CF L4Q 2015 4.3 Source: Thomson Worldscope 26
Slide 28: Yara – the leading nitrogen fertilizer company
Yara – the leading nitrogen fertilizer company 2016 production capacity, excl. Chinese producers1 (mill. tonnes) Global no 2 in ammonia Global no 1 in nitrates Global no 1 in NPK 9.9 7.4 8.42 7.2 5.3 4.5 4.2 4.1 3.2 3.3 2.7 2.7 2.7 2.3 1.9 1) Incl. companies’ shares of JVs * Incl. TAN and CN * Compo
Slide 29: Yara – the European cost leader
Yara – the European cost leader Production cost index: 100 = European industry average excl. Yara Ammonia cost position Nitrate cost position Index Index 110 110 100 100 90 90 80 80 70 70 60 60 50 50 Average cost Yara’s European plants Source: Fertilizer Europe European average (excl. Yara) 28
Slide 30: Ammonia
Ammonia 29
Slide 31: Global ammonia production
Global ammonia production Million Total production Million 10 largest producers (2015) tonnes tonnes 200 66.6 180 160 140 120 100 15.2 13.8 11.7 80 6.0 5.3 4.9 3.7 3.7 3.7 60 2005-2015 trend growth rate = 2.2%/year Source: IFA 30
Slide 32: Most ammonia is upgraded to urea and other finished fertilizer
Most of global ammonia production is upgraded to urea and other finished fertilizer Million Ammonia trade - seaborne Million Ammonia use tonnes tonnes 25 World trade 143 20 15 10 Yara trade 37 5 0 Fertilizer Industrial use Urea Nitrates DAP/MAP NPK Other N Source: Yara, IFA Source: Fertecon 31
Slide 33: Global ammonia trade
Global ammonia trade Million 10 largest exporters (2015) Million 10 largest importers (2015) tonnes tonnes 5.4 4.5 3.6 2.3 1.2 1.2 1.1 1.0 1.0 0.8 0.9 0.9 0.8 0.7 0.7 0.7 0.6 0.6 0.4 0.5 Source: IFA 32
Slide 34: Main ammonia trade flows (2015)
Main ammonia trade flows (2015) Million tonnes 1.7 1.2 0.5 0.6 0.9 1.1 0.6 2.6 3.6 0.5 0.9 1.5 Source: IFA 2015 trade statistics ( covering 85% of total trade) 33
Slide 35: Urea
Urea 34
Slide 36: Global urea production
Global urea production Million Total production Million 10 largest producers (2015) tonnes tonnes 200 71.0 180 160 140 120 24.0 100 80 7.2 7.0 6.2 5.7 5.3 4.0 4.0 3.8 60 2005-2015 trend growth rate = 3.1% p.a. Source: IFA 35
Slide 37: Global urea trade
Global urea trade 10 largest exporters (2015) 10 largest importers (2015) Million Million tonnes tonnes 13.7 10.6 7.9 5.4 4.2 5.0 3.7 3.4 2.6 2.1 1.8 1.9 1.7 1.6 1.5 1.2 1.1 1.0 1.0 0.9 Source: IFA 36
Slide 38: Main urea trade flows (2015)
Main urea trade flows (2015) Million tonnes 0.8 2.2 1.0 1.1 4.3 1.8 1.2 7.0 9.3 2.6 2.2 0.6 2.4 0.5 0.9 0.6 1.5 3.0 Source: IFA 2015 trade statistics ( covering 87% of total trade) 37
Slide 39: Chinese domestic urea price and export tax set the global floor price
Chinese domestic urea price and export tax set the global floor price USD/mt Urea price China (inland proxy price) 600 Urea fob Black Sea 500 400 300 200 100 0 Source: China Fertilizer Market Week, International publications 38
Slide 40: Nitrates
Nitrates 39
Slide 41: Nitrate production
Nitrate production Million 10 largest producers (2015) Million 10 largest producers by company (2015) tonnes tonnes nitrogen(AN/ AN/CAN/CN CAN) Exports 7.4 Domestic consumption 1.6 4.5 0.2 3.2 0.1 2.7 2.3 2.2 1.9 1.8 1.8 2.2 2.3 1.6 1.8 0.2 0.1 1.0 0.7 0.0 0.9 0.3 0.4 0.6 0.4 0.2 0.3 0.1 Source: IFA
Slide 42: Nitrates are products with a nitrate content of 50% or more
Nitrates are products with a nitrate content of 50 % or more N fertilizer N content Nitrate (% of total N) Other nutrients CAN (calcium ammonium nitrate) 27% 50% 4% MgO AN (ammonium nitrate) 34% 50% NPK various about 50% P&K CN (calcium nitrate) 15.5% 93% 19% Ca Urea 46% 0% UAN (liquid urea ammonium
Slide 43: Nitrates vs. urea
Nitrates vs. urea Nitrate is the most important fertilizer in Europe Urea (CON2H4) Ammonium (NH4+) Nitrate (NO3-) Urea-N needs to be converted into Ammonium-N is fixed onto clay minerals in Nitrate-N is always dissolved in the soil ammonium-N before it is plant the soil and therefore immobile. The p
Slide 44: Urea and UAN underperformance compared with ammonium nitrate
Urea and UAN underperformance compared with ammonium nitrate Trial results for arable crops (cereals, UK) Extra N required for same yield Protein content at identical N rate Yield at identical N rate % % % 118 114 8.6 12.6 12.3 8.3 100 8.3 12.1 AN UAN Urea AN UAN Urea AN UAN Urea To maintain the sam
Slide 45: Yield advantage of nitrates in tropical climate
Yield advantage of nitrates in tropical climate Brazil, main season corn Grain yield (t/ha) • Research shows that the benefits of nitrates 12.0 are even more pronounced in the tropics than YaraBela Nitrates in colder climates Urea 10.0 • YaraBela nitrate provides direct and efficient uptake of nitra
Slide 46: Nitrates' agronomic advantage has higher value for cash crops
Nitrates’ agronomic advantage has higher value for cash crops than for commodity crops Crop value with nitrates Increase in crop production value using nitrates instead of urea €/ha 3,192 Index 1,016 1,553 100 Wheat/UK Oranges/Brazil Wheat/UK Oranges/Brazil (160 kg N/ha) (180 kg N/ha) 45
Slide 47: NPKs
NPKs 46
Slide 48: Compound NPKs contain all nutrients in one particle
Compound NPKs contain all nutrients in one particle Compound NPKs NPK bulk blends A mix of products with different All nutrients in each and every particle spreading properties Risk of segregation and uneven Even spreading of all nutrients spreading 47
Slide 49: Bulk blend segregation during loading and unloading
Bulk blend segregation during loading and unloading Urea + DAP + MOP Compound NPK 15-15-15 15-15-15 Compound NPK 20 - 15 - 10 15 + 15 + 15 Compound NPK 13 - 17 - 15 15 + 15 + 15 Compound NPK 12 - 13 - 20 15 + 15 + 15 N – P2O5 – K2O analysis N – P2O5 – K2O analysis in a pile of poor quality blend in
Slide 50: Better spreading with compound NPKs
Better spreading with compound NPKs Spreading width Spreading width of light particles like Urea is less than those of Urea heavier particles like DAP DAP and MOP MOP Poor spreading patterns cause striped fields and significant yield losses Compound NPK 49
Slide 51: Compound NPKs give excellent spatial distribution and higher yields
Compound NPKs give and excellent spatial distribution of nutrients and as a result higher crop yields Average yield of potato (n = 9 years) Potato yield, tonne per ha NPK Compound NPKs NPK 41 16+16+16 39 more particles and better distribution NPK NPK N P Bulk blend Urea-DAP-MOP K fewer particles, lo
Slide 52: Compound NPK capacities
Compound NPK capacities Million 10 largest producers Million 10 largest producers by company (ex. China) tonnes tonnes 47.1 5.3 3.3 2.7 2.7 1.9 1.8 1.8 2.6 2.6 2.5 2.5 2.2 1.5 1.5 6.8 6.2 1.1 4.2 3.7 Source: IFA 2013/2014 Source: Yara estimates, company info 51
Slide 53: Industry value drivers
Industry value drivers 52
Slide 54: Key value drivers
Key value drivers Ammonia fob Black Sea (USD/t) Urea prilled fob Black Sea (USD/t) CAN cif Germany (USD/t) 525 545 466 516 477 496 499 423 407 379 387 337 316 329 357 341 318 308 244 261 268 289 245 264 240 236 214 240 195 223 249 272 198 06 07 08 09 10 11 12 13 14 15 16 06 07 08 09 10 11 12 13 14 1
Slide 55: Nitrogen fertilizer value drivers
Nitrogen fertilizer value drivers Drivers Effect on Chinese coal prices Supply-driven price for urea Grain inventories/prices Urea demand Revenue Urea supply New urea capacity vs. closures drivers Global urea demand vs. supply Urea price (above floor) Urea price Most other nitrogen fertili
Slide 56: Drivers of demand
Drivers of demand 55
Slide 57: Drivers of fertilizer consumption growth
Drivers of fertilizer consumption growth • Food demand drives fertilizer consumption • Population growth of about 80 million each year • Economic growth change diets • Higher meat consumption in developing countries • More protein-rich diets • More fruit and vegetables • Reduce hunger • Biofuels • I
Slide 58: Key crops by producing by region
Key crops by producing by region Maize-global production 975 mt Wheat-global production 733 mt Other EU-27 Other 21% 25% United States 33% Ukraine 36% 2% China EU-27 18% 6% China US Brazil Russia India 23% 8% 12% 8% 8% Rice-global production 473 mt Soybeans-global production 321 mt India 3% Other Ch
Slide 59: Growing meat consumption increases demand for cereals
Growing meat consumption increases demand for cereals China example Direct cereal consumption, Mio. Mill. tons tonnes Meat consumption, Mill. tonnes 260 35 +4% p.a. -2% p.a. 200 0 0 1990 2005 1990 2005 Total cereal demand, Mill. Mio. tons tonnes • The example of China illustrates that changing 370 d
Slide 60: Steady growth in grain consumption, while production is more volatile
Steady growth in grain consumption, while production growth is more volatile due to weather variations Grain consumption and production Days of consumption in stocks Mill. tonnes Days 2,600 95 2,550 90 2,500 2,450 85 2,400 2,350 80 2,300 75 2,250 2,200 70 2,150 2,100 65 2,050 60 2,000 1,950 55 07 08
Slide 61: China drives recent years' increases in global grain stocks
China drives recent years’ increases in global grain stocks Grain stocks – China versus the rest Days of consumption in stocks Mill. tonnes Days 400 250 350 200 300 250 150 200 150 100 100 50 50 0 0 08 09 10 11 12 13 14 15 16E 17F 08 09 10 11 12 13 14 15 16E 17F China Rest of world Source: USDA Dece
Slide 62: Profitability of investment in mineral fertilizers
Profitability of investment in mineral fertilizers Yield response (monetary value) to N fertilizer rate Income USD/ha Yield, tonne/ha • The investment in nitrogen fertilizer is highly 3,000 10.0 profitable for growers 9.0 2,500 • Fertilizer investment: 126 USD/ha 8.0 2,000 7.0 • Net return: 973 USD/
Slide 63: Breakdown of grain production costs
Breakdown of grain production costs Example: 2016F average US corn production costs Fertilizers as proportion of US corn Seed production costs 15% 30% Other 7% 25% Fertilizer 20% 21% Land 26% 15% Chemicals 4% 10% Labour Power & Machinery 5% 5% 22% 0% 2001 2003 2005 2007 2009 2011 2013 2015 2017F Sou
Slide 64: Large variations in yields across regions
Large variations in yields across regions Maize yields Wheat yields Tonnes/Ha Tonnes/Ha 10.7 7.4 5.0 6.6 6.0 5.2 3.0 2.9 2.5 3.3 US Argentina China Brazil Mexico France China India US Russia Tonnes/Ha Rice yields Tonnes/Ha Soybean yields 3.2 6.7 2.9 2.8 5.8 5.1 4.4 1.8 3.6 1.0 China Viet Nam Indones
Slide 65: Seasonality in fertilizer consumption
Seasonality in fertilizer consumption Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Corn USA China Europe Brazil, first crop Brazil, second crop Wheat China (winter wheat) China (spring wheat) India (Rabi) USA (winter wheat) USA (spring wheat) Europe (winter wheat) FSU (winter wheat) Rice China (s
Slide 66: N-fertilizer consumption from biofuels production
N-fertilizer consumption from biofuels production Million tonnes nitrogen 2.2 0.6 0.3 0.4 US - maize for ethanol Europe - rapeseed for biodiesel Brazil - sugarcane for ethanol Others Source: IFA 2013/2014 65
Slide 67: Organic farming represents a marginal share of cultivated land
Organic farming represents a marginal share of total cultivated land 50 1.2% • The principles of crop nutrition are also valid for 45 organic farms 1.0% 40 • Organic farms use manure and crop residues to 35 0.8% deliver minerals to their crops 30 • Organic farming is a niche market, mainly for 25 0.
Slide 68: Drivers of supply
Drivers of supply 67
Slide 69: Nitrogen value chain
Nitrogen value chain Raw material Intermediate Finished Industrial products products products H, Ar, CO etc Industrial gases C02 Ammonia Ammonia Environmental Urea products Natural gas Nitric acid Industrial nitrogen Nitric acid Nitrates chemicals Calcium Nitrate 68
Slide 70: Fertilizer production routes
Fertilizer production routes Finished fertilizer products Natural gas Ammonia (coal, oil) Ammonia Ammonia plant Air CO2 Urea Ammonia Air Nitric acid plant Ammonium Nitrate (AN) Nitric acid Calcium Ammonium Nitrate (CAN) Rock (P) Triple Super Phosphate (TSP) H3PO4 Phosphoric acid plant Single Super P
Slide 71: NPK production routes
NPK production routes Natural gas Ammonia plant (coal, oil) Ammonia Air Air Nitric acid plant Nitric acid Nitrophosphate based NPK Nitrophosphate plant + Calcium Nitrate (CN) 1 Phosphate rock1 H3PO4 Phosphoric acid based NPK Phosphoric acid plant 2 + gypsum Urea AN/CAN Dry blend Sulphur Sulphuric ac
Slide 72: Nitrogen technology evolution
Nitrogen technology evolution 450 400 Birkeland-Eyde electric arc method 350 300 GJ/tN 250 Cyanamid method 200 150 Haber-Bosch synthesis Steam reforming natural gas 100 50 Theoretical minimum 0 1910 1915 1930 1950 1960 1975 2000 71
Slide 73: Projected nitrogen capacity additions outside China
Projected nitrogen capacity additions outside China Capacity additions, excl. China (mill. tonnes urea1) 8.0 Nigeria 0.7 Iran 1.5 5.7 Indonesia 0.7 5.3 Malaysia 0.6 Algeria 1.2 Nigeria 1.3 Russia 0.2 Egypt 0.6 Saudi Arabia 0.5 Bangladesh 0.2 Romania -1.8 3.6 Russia 1.0 3.8 3.5 Vietnam -0.2 Iran 1.9
Slide 74: 30% of announced nitrogen projects realized on time
30% of announced nitrogen projects realized on time Likely and probable ammonia projects in pipeline 2002-2008; Million tons 52 17 30 35 22 22 -70% 11 2 Projects in Added to Total projects Due after 08 Due within 08 Cancelled Delayed Realized 02 pipeline pipeline in pipeline from 02-08 between 02-08
Slide 75: 5 year typical construction time for nitrogen fertilizer projects
5 year typical construction time for nitrogen fertilizer projects* 4–6 years Business development Concept Feasibility Prepare selection Construction Operation phase for execution Gas phase agreement 12-24 months 30-36 months depending on complexity 6-12 months - check cost assumptions by approaching
Slide 76: Price relations
Price relations 75
Slide 77: Upgrading margins from ammonia to urea
Upgrading margins from ammonia to urea USD/tonne 900 800 700 600 500 400 300 200 100 0 Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16 Urea fob Black Sea 0.6 * Ammonia fob Black sea + 15 Source: Average of international publications 76
Slide 78: Grain prices important for fertilizer demand
Grain prices important for fertilizer demand Corn USD/t Urea USD/t 350 700 300 600 250 500 200 400 150 300 100 200 50 100 0 0 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Corn Urea fob Middle East Source: World Bank, Fertilizer publications 77
Slide 79: The urea market has been supply-driven since 2014
The urea market has been supply-driven since 2014 USD/t 600 500 Urea price, fob Yuzhny 400 300 200 100 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Europe oil index Ukraine (Fertecon) US China Source: Fertecon (Ukraine), Yara estimates 78
Slide 80: Nitrate premium is mainly a function of crop prices and marketing
Nitrate premium is mainly a function of crop prices and marketing Wheat price, USD/t CAN price, USD/t 450 400 400 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 Adjusted urea* Nitrate premium, USD/t Wheat price * Urea fob B
Slide 81: Grain/oilseed prices – yearly averages
Grain/oilseed prices – yearly averages USD/bu Wheat (HRW US Gulf) USD/t Rice (Thailand) 10 800 8 600 6 400 4 200 2 0 0 06 07 08 09 10 11 12 13 14 15 16 06 07 08 09 10 11 12 13 14 15 16 USD/bu Corn (US Gulf) USD/bu Soybeans (cif Rotterdam) 8 20 6 15 4 10 2 5 0 0 06 07 08 09 10 11 12 13 14 15 16 06 07
Slide 82: Cash crop prices – yearly averages
Cash crop prices – yearly averages USD/kg Cocoa USD/kg Coffee (arabica) 4 8 3 6 2 4 1 2 0 0 06 07 08 09 10 11 12 13 14 15 16 06 07 08 09 10 11 12 13 14 15 16 USD/kg Cotton USD/kg Orange 4 2.0 3 1.5 2 1.0 1 0.5 0 0.0 06 07 08 09 10 11 12 13 14 15 16 06 07 08 09 10 11 12 13 14 15 16 Source: World Bank
Slide 83: 10-year fertilizer prices – monthly averages
10-year fertilizer prices – monthly averages USD/t Ammonia fob Black Sea USD/t CAN cif Germany 1,000 500 800 400 600 300 400 200 200 100 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 USD/t Urea prilled fob Black Sea/Urea granular fo
Slide 84: Production economics
lon economics Product ° 2 © 99 000% te} 0% Sige oreo lo} SO ey e ° e anna eaeee ee ®? e 5 ° e e e oS fe} ° oO ° °
Slide 85: Yara's operating cash costs are mainly variable
Yara’s operating cash costs are mainly variable NOK Operating cash cost 2015 Billions • Temporary plant closures can be carrie out 100 with limited stop/start costs 90 80 • Example for ammonia/urea plants: 70 • Typically half a week to stop and a week to start 60 • Cost of stopping is 2 days energy
Slide 86: Ammonia cash cost build-up – example
Ammonia cash cost build-up – example Gas price: 4 USD/MMBtu 36 MMBtu natural gas/tonne ammonia x Gas consumption: 36 MMBtu/mt NH3 = Gas cost: 144 USD/mt NH3 Ammonia (NH3) + Other prod. cost: 29 USD/mt NH3 (82% N) = Total cash cost 173 USD/mt NH3 Typical natural gas consumption for ammonia production
Slide 87: Urea cash cost build-up – example
Urea cash cost build-up – example Ammonia price: 173 USD/mt NH3 36 MMBtu natural gas/tonne ammonia x Ammonia use: 0.58 NH3/mt urea = Ammonia cost 100 USD/mt urea Ammonia (NH3) (82% N) + Process gas cost* 21 USD/mt urea 0.58 mt ammonia per CO2 + Other prod. cost**: 25 USD/mt urea tonne urea = Total c
Slide 88: Theoretical consumption factors
Theoretical consumption factors Ammonia (82% N) P and K Urea AN CAN NPK (46% N) (33.5% N) (27% N) (15-15-15)* • Price comparisons should always be based on nutrient tons, not product tons * There are many NPK formulas; 15-15-15 is one example 87
Slide 89: Main phosphate processing routes
Main phosphate processing routes 2015 production and exports, million tons product Rock production: 201 Phosphate rock Rock exports: 30 Sulphuric (72% BPL*, 33% P2O5 ) acid** Phosphoric acid Production: 44 (100% P2O5) Export: 4 Ammonia ( 82% N) SSP DAP MAP TSP (15-22% P2O5) (18% N, 46% P2O5) (11% N,
Slide 90: Industrial applications
Industrial applications 89
Slide 91: Nitrogen has many industrial applications
Nitrogen has many industrial applications H2S abatement H S abatement Technical nitric 2 in oil fields in sewage acid Cleaning/ AdBlue ®/heavy-duty vehicles scrubbing NITCAL® Concentrated Aqueous Vessels DIPCAL® nitric acid ammonia CN Acrylonitrile Stationary sources Glue NOX ANFO TAN abatement Dry
Slide 92: Industrial use accounts for 21% of global nitrogen consumption
Industrial use accounts for 21% of global nitrogen consumption ~30 million tonnes N ~9.5 million tonnes N as urea Environment Environment 6% 10% Other 11% Explosives 18% Melamine 21% Chemicals Glue 76% 58% ~21% of total nitrogen consumption ~12-13% of total urea consumption Source: Yara estimates 20
Slide 93: Global demand development of nitrogen chemicals for industrial applications
Global demand development of nitrogen chemicals for industrial applications is strong CAGR Million tonnes nitrogen 3% 11.3 9.5 Urea Ammonia 8.5 23.4 18.8 20.5 2013 2015 2020E Demand growth for Industrial applications is estimated to ~3 % annually Source: Yara estimates 2015, IFA, Fertecon, CRU 92
Slide 94: Reagents, technology and services to improve air quality
Reagents, technology and services to improve air quality Nitrogen oxides (NOx) are a major air quality issue causing serious problems mostly in urban centers related to both the environment and human health. Legislation around the world drives the business growth. • Air 1™ AdBlue/DEF is a generic na
Slide 95: Calcium Nitrate applications in wastewater, concrete, oil fields and latex
Calcium Nitrate applications in wastewater treatment, concrete manufacturing, oil fields and latex industries • Nutriox™ provides H2S prevention for Corrosion, Odor and Toxicity control of municipal and industrial waste water systems • Nitcal™ is a multifunctional concrete admixture serving concrete
Slide 96: Technical Nitrates for Civil Explosives
Technical Nitrates for Civil Explosives • Various grades of Ammonium Nitrate and Calcium Nitrate for use in the civil explosives and mining industries • Largest customer segment are civil explosives companies and open-pit coal and iron mining sectors 95
Slide 97: Animal Feed industry with nutritional products based on core chemicals
Animal Feed industry with several nutritional products based on core chemicals Feed Phosphates – Macro-minerals such as phosphorus and calcium are essential elements to sustain healthy and productive animal growth Feed Acidifiers – Antimicrobial effect and lowering pH, replace AGP (antibiotic gr
Slide 98: Sources of market information
Sources of market information • Fertilizer market information • FMB www.fmb-group.co.uk • Fertecon www.fertecon.com • Fertilizer Week www.cruonline.crugroup.com • Profercy www.profercy.com • The Market www.icispricing.com • Green Markets (USA) www.greenmarkets.pf.com • Beijing Orient Business (China
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Yara International — Investor Presentation (January 2017) on 6ix