Mosaic Company (the) · NYSE:MOS

Mosaic Company (the) — Sixth CRU-GPCA Fertilizer Convention (September 2015)

38 slides from Mosaic Company (the)'s conference presentation, Sep 15, 2015

  1. Slide 1: Outlook for Brazil

    1 Outlook for Brazil Dr. Michael R. Rahm Vice President – Market and Strategic Analysis (with an assist from Mosaic’s Sao Paulo team) Sixth CRU-GPCA Fertilizer Convention InterContinental Dubai Festival City, UAE September 16, 2015

  2. Slide 2: Safe Harbor

    2 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

  3. Slide 3: Topics and Take-Aways: Agricultural Powerhouse and Nutrient Demand

    3 Topics and Take-Aways  An Agricultural Powerhouse - A large, diverse and rapidly growing agricultural sector (abundant land and favorable climate) - Soybeans and second crop corn are the main engines of growth - Production increases are mostly from more planted area (and world-class yields) - Lar

  4. Slide 4: Topics and Take-Aways: Production, Imports and Distribution

    4 Topics and Take-Aways  Plant Nutrient Production and Imports - Imports currently account for ~80% of nutrient and ~75% of product shipments - Import shares have trended upward since 2000 and have accelerated recently - Several N, P and K projects are under construction or development today - Econ

  5. Slide 5: An Agricultural Powerhouse

    5 An Agricultural Powerhouse

  6. Slide 6: A large and diverse agricultural sector

    6 A large and diverse agricultural sector Soybeans: Second largest producer Corn: Third largest producer Sugar Cane: Sugar: Largest producer Ethanol: Second largest producer Coffee: Largest producer Source: USDA

  7. Slide 7: A large and diverse agricultural sector

    7 A large and diverse agricultural sector Cotton: Fifth largest producer Oranges: Largest juice producer Cattle: Second largest producer Source: USDA

  8. Slide 8: A large and diverse agricultural sector

    8 A large and diverse agricultural sector 2014 Production Global Share Production Global Rank Export Global Share Export Global Rank Main Market Sugar 22% 1 46% 1 China Ethanol 27% 2 55% 1 USA Soybeans 30% 2 39% 1 China Soybean Meal 15% 4 22% 2 Europe Corn 8% 3 8% 2 Japan Rice 2% 9 2% 8 Venezuela Or

  9. Slide 9: Strong positive trends with tailwinds and headwinds

    9 Strong positive trends with tailwinds and headwinds Source: CONAB and projections from FIESP Outlook - 20 40 60 80 100 120 140 160 180 200 220 240 2000 2002 2004 2006 2008 2010 2012 2014 2016F 2018F 2020F Mil Tonnes Brazil Grain and Oilseed Production Soybeans Summer Corn Second Crop Corn Wheat Co

  10. Slide 10: Increases from both harvested area and yields

    10 Increases from both harvested area and yields  The increase in grain and oilseed production has come from both additional harvested area and higher yields  Soybeans accounted for 84% of the increase in harvested area from 2000 to 2014  Second crop corn accounted for another 11% 20 25 30 35 40

  11. Slide 11: Increases in soybean production mostly from more area

    11 Increases in soybean production mostly from more area  Increases in harvested area have accounted for nearly four-fifths of the gain in soybean production since 2000  Harvested area has more than doubled since 2000  Brazil soybean yields have trended upward and rank at world-class levels  Thi

  12. Slide 12: Large areas of land available to bring into production

    12 Large areas of land available to bring into production Pasture 200 million hectares 59% of arable land Urban Area 2.1 million hectares Planted Area 79.7 million hectares Or 22% of arable land Arable land 340 million hectares Total Area 850 million hectares Source: Conab and IBGE Crop Mil Ha Soybe

  13. Slide 13: Brazilian soils require large plant nutrient applications

    13 Brazilian soils require large plant nutrient applications Source: USDA and IFA High Low Very low Medium Medium to high Soil Fertility The Case of Soybeans 2010 Statistics Country Area (Mil Ha) NPK (MMT) Rate (kg Ha) Yield (MT Ha) Brazil 23.5 3.30 140 2.94 USA 30.9 1.12 37 2.96 Argentina 18.6 .41

  14. Slide 14: Potent impact of exchange rate: the case of soybeans

    14 Potent impact of exchange rate: the case of soybeans  Soybean area responds to the local currency price of soybeans  The run-up of soybean prices coupled with a weak real super-charged soybean operations in 2002-04 and again in 2012-14  Area remained flat during the jump in soybean prices in 2

  15. Slide 15: Brazil-to-China soybean pipeline to grow

    15 The Brazil-to-China soybean pipeline to grow despite economic slowdowns on both ends  China is the world’s largest soybean importer by a wide margin  The current economic slowdown is not expected to threaten imports in 2015 (estimated at 75-80 million tonnes)  Brazil and the United States are

  16. Slide 16: Implications for Plant Nutrient Demand

    16 Implications for Plant Nutrient Demand

  17. Slide 17: Strong correlation between crop production and plant nutrient use

    17 Strong correlation between crop production and plant nutrient use (no soil alchemy!)  Grain and oilseed production has increased 5.6% per year since 2000  Not surprisingly, plant nutrient use also has increased 5.6% per year  Product shipments have increased at a slightly slower rate given the

  18. Slide 18: Strong correlation between crop production and plant nutrient use

    18 Strong correlation between crop production and plant nutrient use (no soil alchemy!)  Assuming an average yield of 3.75 tonnes per hectare, this analysis suggests that roughly one- quarter of a tonne of plant nutrients or about one- half tonne of plant nutrient products (MOP, MAP and urea) are r

  19. Slide 19: Plant nutrient demand scenarios

    19 Plant nutrient demand scenarios  Demand scenarios are based on assumptions about grain and oilseed production and correlations with NPK use  This analysis indicates that total nutrient use likely will increase from 14 million tonnes in 2014 to 16-18 million tonnes in 2020  Total product shipme

  20. Slide 20: Nitrogen use by product 2000-14

    20 Nitrogen use by product 2000-14 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Mil Tonnes Nutrient Brazil Nitrogen Shipments by Leading Products Urea DAP/MAP AMN AMS Source: ANDA and Mosaic Urea 53% AMN 13% AMS 20% DAP/MAP 13% NPK 1% Brazil Nitrogen Use - 2000 1.

  21. Slide 21: Nitrogen demand scenarios

    21 Nitrogen demand scenarios 0 1 2 3 4 5 6 7 00 01 02 03 04 05 06 07 08 09 10 11 12 13 1415F 20F Mil Tonnes Nutrients Brazil Nitrogen Shipment Scenarios Actual High Low Medium Source: ANDA and Mosaic 0 1 2 3 4 5 6 7 0 1 2 3 04 05 06 07 08 09 10 11 12 13 14 20F Mil Tonnes Product Brazil Urea Shipment

  22. Slide 22: Phosphate use by product 2000-14

    22 Phosphate use by product 2000-14 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Mil Tonnes Nutrient Brazil Phosphate Shipments by Leading Products MAP SSP TSP DAP Source: ANDA and Mosaic DAP 3% MAP 43% TSP 17% SSP 35% NPK 2% Brazil Phosphate Use - 2000 2.3 MM

  23. Slide 23: Phosphate demand scenarios

    23 Phosphate demand scenarios 0 1 2 3 4 5 6 7 00 01 02 03 04 05 06 07 08 09 10 11 12 13 1415F 20F Mil Tonnes Nutrients Brazil Phosphate Shipment Scenarios Actual High Low Medium Source: ANDA and Mosaic 0 1 2 3 4 5 6 7 0 1 2 3 04 05 06 07 08 09 10 11 12 13 14 20F Mil Tonnes Product Brazil MAP+DAP Shi

  24. Slide 24: Potash shipments by product and demand scenarios

    24 Potash shipments by product and demand scenarios 0 2 4 6 8 10 12 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 20F Mil Tonnes Product Brazil MOP Shipment Scenarios Actual High Low Medium Source: ANDA and Mosaic 0 1 2 3 4 5 6 7 00 01 02 03 04 05 06 07 08 09 10 11 12 13 1415F 20F Mil Tonnes Nutrient

  25. Slide 25: Plant Nutrient Production and Imports

    25 Plant Nutrient Production and Imports

  26. Slide 26: Increasingly dependent on imports

    26 Increasingly dependent on imports  Imports account for about three-quarters of total product shipments today  Imports account for a slightly smaller share of total product shipments due mainly to the large amount of lower analysis SSP production 45% 50% 55% 60% 65% 70% 75% 80% 0 5 10 15 20 25 3

  27. Slide 27: Import shares by nutrient

    27 Import shares by nutrient  Imports account for ~80% of N shipments  Imports account for ~60% of P shipments  Imports account for 95+% of K shipments  Shares have trended upward especially this decade 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 00 01 02 03 0

  28. Slide 28: Major nitrogen and potash projects

    28 Major nitrogen and potash projects Company Project Products Annual Capacity 1000 MT Estimated Start-Up Vale Carnalita MOP 1,300 Post 2020 Source: IFA “. . . the only operating mine is located at Taquari-Vassouras in Sergipe State. Reserves at the Vale mine would allow mining operation until 2019

  29. Slide 29: Major phosphate projects

    29 Major phosphate projects Company Project Products Annual Capacity 1000 MT Estimated Start-Up Anglo Catalao (Ouvidor) Rock Acid (P2O5) MAP TSP 1,200 400 520 240 Post 2020 2018 2018 2018 Galvani Serra do Salitre Rock Acid (P2O5) MAP/NPK 1,200 200 350 2018 Santa Quiteria Rock Acid (P2O5) MAP/NPK 800

  30. Slide 30: Key product imports for medium demand scenario

    30 Key product imports for medium demand scenario 40% 50% 60% 70% 80% 90% 100% 0.0 1.0 2.0 3.0 4.0 5.0 6.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 20F Import Share Mil Tonnes Product Brazil Urea Shipments Domestic Supply Imports Import Share Source: ANDA and Mosaic 50% 55% 60% 65% 70% 75% 80% 8

  31. Slide 31: Plant Nutrient Distribution Trends

    31 Plant Nutrient Distribution Trends

  32. Slide 32: Distribution profile

    32 Profile  Products - Bulk blends account for 75% of products delivered to end users - Bulk blends include N+P+K as well as key micro nutrients (many SKUs)  Seasonality - First semester: 35%-40% of total shipments - Second semester: 60%-65% of total shipments  Shipments today - By type • 40% in

  33. Slide 33: Slowly developing distribution trends

    33 Slowly developing distribution trends  From low analysis to high analysis products  From bags to big bags to bulk distribution  From south/southeast to north/northwest  From many small to fewer large distributors  From few to more transportation and logistical options

  34. Slide 34: From south/southeast to north/northwest

    34 From south/southeast to north/northwest 4.60 M MT 28% 5.65 M MT 34% 4.46 M MT 27% 1.68 M MT 11% 2014 2000 8.77 M MT 27% 8.04 M MT 25% 10.53 M MT 33% 4.85 M MT 15% Source: ANDA Region 2000 2014 CAGR South 4.60 8.78 4.7% Midwest 4.46 10.53 6.3% Southeast 5.65 8.04 2.6% North/Northeast 1.68 4.85 7.9

  35. Slide 35: From many small to fewer large distributors

    35 From many small to fewer large distributors Source: SIACESP, press clippings. Recent Developments 1. Yara acquires: • Bunge (2012) • ODF Holdings (2013) • Galvani 60% equity stake (2014) 2. Mosaic acquires ADM (2014) 3. Heringer: • OCP acquires 10% stake (2014) • PCS acquires 10% stake (2015) 4.

  36. Slide 36: From many small to fewer large distributors

    36 From many small to fewer large distributors Importers Producers Blenders End Users Distributors • Mosaic • OCP • Yara • Ameropa • Anglo America • Petrobrás • Vale • Mosaic • Yara/Galvani • Mosaic • Yara • Heringer • Fertipar • Cooperatives • Retail Dealers • Trading Companies (Cargill, ADM, Bunge

  37. Slide 37: From few to more transportation and logistical options

    37 From few to more transportation and logistical options Legend: Roadway (awarded) Railroad (awarded) Railroad (existing) Railroad (under study) Waterway (existing) Port Project MT MS TO GO BA PA Key Brazilian Agricultural Infrastrcture Projects 3x 3x MA More than 10 port terminal projects valued a

  38. Slide 38: Thank You!

    38 Outlook for Brazil Dr. Michael R. Rahm Vice President – Market and Strategic Analysis (with an assist from Mosaic’s Sao Paulo team) Sixth CRU-GPCA Fertilizer Convention InterContinental Dubai Festival City, UAE September 16, 2015 Thank You!

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