Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Investor Day (November 2008)
99 slides from Cf Industries's investor day presentation, Nov 18, 2008
Slide 1: Investor/Analyst Day, Tampa, Florida, November 2008
Corporate Development Supply Chain Sales Finance Legal Operations Human Resources Dv Sc Sa Fi Le Op Hr CF Industries Holdings, Inc. NYSE: CF Investor/Analyst Day Tampa, Florida November 2008
Slide 2: For CF Industries Today
2 Investor/Analyst Day November 2008 For CF Industries Today . . . Steve Wilson Chairman, President & CEO
Slide 3: Welcome to CF Industries' First Investor Day
3 Investor/Analyst Day November 2008 Welcome to CF Industries’ First Investor Day ! Our Schedule This morning: an overview of agricultural markets and our strategies to serve them This afternoon: a visit to our Hardee County phosphate mine and beneficiation plant Tomorrow: a tour of our Plant City c
Slide 4: Safe Harbor Statement
4 Investor/Analyst Day November 2008 Safe Harbor Statement Certain statements contained in this presentation may constitute “forward-looking statements” within the meaning of federal securities laws. All statements in this presentation, other than those relating to historical information or current
Slide 5: Overview of World Agricultural and Fertilizer Markets
5 Investor/Analyst Day November 2008 Overview of World Agricultural and Fertilizer Markets Glen Buckley Chief Economist Director, Agri-Business Analysis
Slide 6: Presentation Overview
6 Investor/Analyst Day November 2008 Presentation Overview Deciphering crop balances and economics Corn vs. beans: drivers & misconceptions Acreage outlook for ‘09 Fundamentals still drive outlook The volatile fertilizer market What drove prices up – and then down Key drivers to watch: short term an
Slide 7: Crop Balances and Economics: Let's Talk About Corn
7 Investor/Analyst Day November 2008 Crop Balances and Economics Let’s Talk About Corn
Slide 8: Ending Stocks Are Low Under Any Scenario
8 Investor/Analyst Day November 2008 Source: USDA USGC +200 MM bu. Yield Not Settled Crop Balances and Economics Questions Remain, But No Matter The Scenario, Ending Stocks Are Low Marketing Years Proj. Change (Yr. Beg. - Sept. 1) 2007/08 2008/09 2007 - 08 Planted Area 93.6 85.9 -7.7 Harvested Area
Slide 9: Corn Acreage Will Depend On Price
9 Investor/Analyst Day November 2008 Old supply/demand price models no longer work Futures prices reflect commodity markets, not crop fundamentals Average farm level prices may (or may not) reflect farm values Crop Balances and Economics Corn Acreage Will Depend On Price – But Which Price?
Slide 10: Structural Shift From Supply- To Demand-Driven Market
10 Investor/Analyst Day November 2008 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 0% 10% 20% 30% 40% 50% 60% 70% ‘08 ‘07 Demand Driven Markets ‘06 Supply Driven Markets ‘95 ‘83 ‘85 Source: USDA Crop Balances and Economics Structural Shift From Supply- To Demand-Driven Market Means Old Mode
Slide 11: Corn Cash Prices and Futures Aren't Converging
11 Investor/Analyst Day November 2008 Crop Balances and Economics Corn Cash Prices and Futures Aren’t Converging $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 1/24 2/21 3/20 4/17 5/15 6/12 7/10 8/7 9/4 10/2 10/30 Nearby Futures Monthly Average Cash
Slide 12: Corn Futures: Cash and Futures Aren't Converging
12 Investor/Analyst Day November 2008 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 JAN MAR MAY JUL Mar. 08 May 08 July 08 Sept. 08 Contract High Contract Settle Contract Low Source: USDA, CBOT Crop Balances and Economics Corn Futures Cash and Futures Aren’t Converging Cash Price
Slide 13: Corn Futures Long Positions
13 Investor/Analyst Day November 2008 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Hedge/Index Funds In Hedge/Index Funds Out Source: CFTC Crop Balances and Economics Corn Futures – Long Positions: As Non-Traditional Interest Exits, A Return To Stability? Contract
Slide 14: Crop Returns: Strongly Favor Corn
14 Investor/Analyst Day November 2008 Corn Soybeans Revenue Yield (bu/acre) 156.50 42.20 CBOT New Crop ‘09 4.34 9.18 Total Revenue $679.21 $387.40 Costs (per acre) Non-Land Variable Costs Fertilizers $181.53 $22.61 Crop Protection - Herbicides $28.93 $16.17 Seed Costs $60.96 $49.77 Other (Interest,
Slide 15: Higher Midwest Land Cost Offset By Higher Yields
15 Investor/Analyst Day November 2008 Corn Soybeans Revenue Yield (bu/acre) 167.5 46.0 Price 4.34 9.18 Total Revenue $726.75 $422.27 Costs (per acre) Non-Land Variable Costs Fertilizers $215.73 $27.73 Crop Protection - Herbicides $31.50 $16.32 Seed Costs $61.40 $59.39 Other (Interest, Insurance, Etc
Slide 16: Estimated Corn Returns Over Variable Cost
16 Investor/Analyst Day November 2008 0 50 100 150 200 250 300 350 400 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 $/Acre Source: USDA, Doane, CF Crop Balances and Economics Estimated Corn Returns Over Variable Cost: Down From 2008, But Double Historic Average
Slide 17: U.S. Corn Acreage Outlook Remains Positive
17 Investor/Analyst Day November 2008 Source: USDA, Doane 50 60 70 80 90 100 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 10-Yr Historic Avg. = 79.1 MM Acres 93.6 85.9 89.0 MM Acres Crop Balances and Economics U.S. Corn Acreage Outlook Remains Positive
Slide 18: Demand Driven By Population And Improving Diets
18 Investor/Analyst Day November 2008 0 50 100 150 200 250 300 1990 1995 2000 2005 2010 2015 2020 Swine 1.5% Beef 1.9% Poultry 3.2% % Growth Feed Conversion Beef 4.2 Pork 2.8 Poultry 1.6 MM Tonnes Source: USDA, CF Crop Balances and Economics Demand Driven By Population And Improving Diets
Slide 19: World Coarse Grain Fundamentals
19 Investor/Analyst Day November 2008 200 400 600 800 1000 1200 ‘90 ‘92 ‘94 ‘96 ‘98 ‘00 ‘02 ‘04 ‘06 ‘08 5% 10% 15% 20% 25% 30% Source: USDA, Doane Consumption Production Ending Stocks (Right Axis) MM Tonnes Crop Balances and Economics World Coarse Grain Fundamentals: Ending Stocks Remain At Record L
Slide 20: Ethanol: Cash Margins Volatile, But Positive
20 Investor/Analyst Day November 2008 -$0.50 -$0.25 $0.00 $0.25 $0.50 $0.75 15-Feb 14-Mar 11-Apr 9-May 6-Jun 3-Jul 1-Aug 29-Aug 26-Sep 24-Oct Iowa Nebraska Illinois South Dakota Source: USDA, ACE, CF Crop Balances and Economics Ethanol: Cash Margins Volatile, But Positive
Slide 21: Obama On Ethanol
21 Investor/Analyst Day November 2008 Obama: “I have supported and advocated an expansion of the Renewable Fuels Standard” According to RFA, “the new Senate is likely to be even more supportive of ethanol than the previous senate.” Crop Balances and Economics Obama On Ethanol October 11, 2008 ProFar
Slide 22: Corn Prices: Recent Projections May Be Conservative
22 Investor/Analyst Day November 2008 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 $6.00 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 $/Bu Source: Doane, CF Doane Projection Crop Balances and Economics Corn Prices: Recent Projections May Be Conservative Double Historic
Slide 23: Record Farm Income
23 Investor/Analyst Day November 2008 Record net cash farm income of $101.3 billion for 2008 0 10 20 30 40 50 60 70 80 90 100 110 ‘90 ‘92 ‘94 ‘96 ‘98 ‘00 ‘02 ‘04 ‘06 ‘08 Income Ex- Gov’t Payments Government payments Crop Balances and Economics Record Farm Income U.S. Net Cash Farm Income Bln $ Sourc
Slide 24: Growth In Crop Production = Growth In Fertilizer Demand
24 Investor/Analyst Day November 2008 0 20 40 60 80 100 120 140 160 180 ‘81 ‘84 ‘87 ‘90 ‘93 ‘96 ‘99 ‘02 ‘05 ‘08 N P K Source: USDA, ACE, CF MM Tonnes Crop Balances and Economics Growth In Crop Production = Growth In World Fertilizer Demand
Slide 25: The Volatile 2008 Fertilizer Market
25 Investor/Analyst Day November 2008 Let’s Talk About Fertilizers The Volatile 2008 Fertilizer Market
Slide 26: World Urea Prices
26 Investor/Analyst Day November 2008 200 400 600 800 1,000 1/3 1/31 2/28 3/27 4/24 5/22 6/19 7/17 8/14 9/11 10/9 11/6 US Gulf Middle East Yuzhny (Prills) Source: Green Markets “China export tax” “Brazil buying, expectations for India” $/Tonne The Volatile 2008 Fertilizer Market World Urea Prices: C
Slide 27: Brazil Urea Imports By Month
27 Investor/Analyst Day November 2008 0 50 100 150 200 250 300 350 400 J F M A M J J A S O N D 2007 2008 Calendar Year 000 Tonnes The Volatile 2008 Fertilizer Market Brazil Urea Imports By Month Source: Industry Publications Projected
Slide 28: World Urea Trade: Record Import Demand In India
28 Investor/Analyst Day November 2008 0 10 20 30 40 ‘98 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 0% 5% 10% 15% 20% 25% India Rest of World % of World Trade Source: Fertecon, CRU, CF MM Tonnes The Volatile 2008 Fertilizer Market World Urea Trade: Expectations For Record Import Demand In India
Slide 29: India Delays Buying; World Market Collapses
29 Investor/Analyst Day November 2008 200 400 600 800 1,000 1/3 1/31 2/28 3/27 4/24 5/22 6/19 7/17 8/14 9/11 10/9 11/6 US Gulf Middle East Yuzhny (Prills) “World Market Collapses Source: Green Markets The Volatile 2008 Fertilizer Market India Delays Buying; Brazil Stocks Soar; U.S., Latin America, a
Slide 30: Indian Urea Imports
30 Investor/Analyst Day November 2008 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 Apr May Jun Jul Aug Sep India Fertilizer Year (Year Beg. April 1) Fertilizer Year 07/08 Fertilizer Year 08/09 Imports down 957,000 tonnes Source: FAI The Volatile 2008 Fertilizer Market Indian Urea Imports: Buyers Delay And April/
Slide 31: India Urea Supply/Demand
31 Investor/Analyst Day November 2008 April-Sep Oct-Mar Total Fertilizer Year 07-08 Production 9.78 10.34 20.12 Imports 3.39 3.54 6.93 App. Demand 13.17 13.89 27.05 Fertilizer Year 08-09 Production 9.92 10.64 20.56 Imports 2.43 4.55 6.98 App. Demand 12.35 15.19 27.54 Indian Fertilizer Year (MM Tonne
Slide 32: U.S. Dry Urea Supply/Demand
32 Investor/Analyst Day November 2008 Prod Imports Supply Jul-Sep 0.77 1.22 1.99 Oct-June 2.14 5.03 7.17 Total 2.92 6.25 9.17 Fertilizer Year 09 (MM Tons) U.S. will have to import significant tons prior to spring to meet projected demand Source: TFI, CF The Volatile 2008 Fertilizer Market U.S. Dry U
Slide 33: World Urea Production Outages
33 Investor/Analyst Day November 2008 0.0 0.5 1.0 1.5 2.0 Q107 Q2 Q3 Q4 Q108 Q2 Q3 Q4 Average = 834,000 Source: Industry Publications The Volatile 2008 Fertilizer Market World Urea Production Outages: Low Prices Drive Marginal Capacity Out of Production MM Product Tonnes
Slide 34: World Urea Supply Cost
34 Investor/Analyst Day November 2008 0 100 200 300 400 500 W. Europe (Contract Gas) W. Europe (Spot) Romania Ukraine U.S. Spot Market ($/Tonne FOB) Source: Fertecon, CF The Volatile 2008 Fertilizer Market World Urea Supply Cost: World Price Falls Below Cost Of Marginal Producers $ per tonne
Slide 35: The Volatile Urea Market
35 Investor/Analyst Day November 2008 The Volatile Urea Market Market appears to be at the bottom (STC Tender) Production outages Required import demand – India, U.S., Latin America However, still some major question marks Chinese export tax? Timing: When will buyers be back in the market?
Slide 36: U.S. UAN Prices: Peak, Then Decline
36 Investor/Analyst Day November 2008 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 J06 A J O J07 A J O J08 A J O Gulf Midwest Majority of demand not until spring High downstream inventory Declining urea prices Source: Green Markets The Volatile 2008 Fertilizer Market U.S. UAN Prices: Peak, Then Decline
Slide 37: Current UAN Delivered Cost To The U.S. Gulf
37 Investor/Analyst Day November 2008 0 50 100 150 200 250 300 W. Europe (Contract Gas) Romania Ukraine U.S. Source: Fertecon, CRU ($/Tonne) The Volatile 2008 Fertilizer Market Current UAN 32% Delivered Cost To The U.S. Gulf Current U.S. Gulf Low Spot Price
Slide 38: U.S. UAN Imports
38 Investor/Analyst Day November 2008 2006 2007 Volume % of Total Canada 467 673 637 18.2% FSU 1,405 1,122 1,951 55.9% E. Europe 301 410 320 9.2% ROW 665 183 587 16.8% Total 2,838 2,389 3,492 100.0% Fertilizer Year 2008 Two-thirds of U.S. UAN imports are sourced from Russia, Ukraine, Romania and oth
Slide 39: The Volatile UAN Market
39 Investor/Analyst Day November 2008 The Volatile UAN Market Market at or close to bottom? Urea stabilizing However, no incentive to book additional tons until spring Floor will be set by landed import prices – and U.S. requires significant UAN imports
Slide 40: DAP Publications Price: Central Florida and Export
40 Investor/Analyst Day November 2008 100 300 500 700 900 1,100 J07 M M J S N J08 M M J S Cur Florida ($/ston) U.S. Export ($/tonne) Source: Fertecon The Volatile 2008 Fertilizer Market DAP Publications Price – Central Florida and Export
Slide 41: U.S. DAP/MAP Supply/Demand
41 Investor/Analyst Day November 2008 Domestic Total Production Demand Exports Demand Q307 1,801 869 993 1,862 July 594 104 432 537 Aug 610 153 449 602 Sep 501 130 358 488 Q308 1,705 387 1,239 1,627 Change -5.3% -55.4% 24.8% -12.6% Source: TFI, DOC, CF The Volatile 2008 Fertilizer Market U.S. DAP/MA
Slide 42: Announced DAP/MAP Curtailments
42 Investor/Analyst Day November 2008 The Volatile 2008 Fertilizer Market Announced Curtailments (000 Tonnes) DAP/MAP Company Location Outage OCP Jorf Lasfar, Morocco 800 GCT Gabes, Tunisia 240 EuroChem Lifosa, Russia 80 EuroChem Phosphorit, Russia 50 PhosAgro Balakova, Russia 85 PhosAgro Cherevpovi
Slide 43: Spot Rock And Sulfur Prices Into India
43 Investor/Analyst Day November 2008 Source: Fertecon, GM 0 100 200 300 400 500 600 700 800 900 J07 M M J S N J08 M M J S India Rock India Sulfur ($/Tonne) The Volatile 2008 Fertilizer Market Spot Rock And Sulfur Prices Into India
Slide 44: Integrated versus Non-Integrated DAP Production Cost
44 Investor/Analyst Day November 2008 Source: Fertecon, FMB ($/Tonne) The Volatile 2008 Fertilizer Market Integrated versus Non-Integrated DAP Production Cost India U.S. 0 200 400 600 800 Oct. 08 Integrated Upgrading Ammonia Rock Sulfur
Slide 45: DAP Market Outlook
45 Investor/Analyst Day November 2008 DAP Market Outlook Market currently under pressure U.S. – Late crop, weather, buyer uncertainty International – credit, demand destruction Production curtailments enough to offset decline in demand? What about China? Key factor – rock prices – i.e. Morocco
Slide 46: CF Industries' Sales and Marketing
46 Investor/Analyst Day November 2008 CF Industries’ Sales and Marketing Monty Summa Vice President, Sales
Slide 47: Sales and Marketing Overview
47 Investor/Analyst Day November 2008 Sales and Marketing Our products and markets The CF Industries brand Growth initiatives
Slide 48: Sales and Marketing: Today's CF Industries
48 Investor/Analyst Day November 2008 Sales and Marketing For almost 60 years, a limited mission: serve cooperative owners New business model broadened our customer base Today’s CF Industries: Ammonia, urea, and UAN – almost exclusively in North America, with 26 percent Corn Belt market share DAP an
Slide 49: 2008 Branding Initiative
49 Investor/Analyst Day November 2008 Sales and Marketing In 2008, we completed Branding Initiative Extensive customer interviews and surveys
Slide 50: Branding Initiative Key Findings
50 Investor/Analyst Day November 2008 Sales and Marketing Branding Initiative Key Findings: 2007 Our customers want to purchase more product from us Our customers want offerings and relationships beyond pricing We are unknown to some potential customers We have limited global capabilities Customers
Slide 51: Growth Initiatives: Ammonia and Distribution Assets
51 Investor/Analyst Day November 2008 Sales and Marketing Growth initiatives: derive greater value from existing assets and products Maximize the value of distribution assets for ammonia, including larger position in the industrial ammonia market Optimize the direct application ammonia business arou
Slide 52: Growth Initiatives: Phosphate and KEYTRADE
52 Investor/Analyst Day November 2008 Sales and Marketing Growth initiatives: derive greater value from existing assets and products Optimize our partnership with KEYTRADE for phosphate exports, targeting “niche” markets as “nimble supplier” Develop value-added phosphate products Purchase product fo
Slide 53: Leader in Sales Support: PROMISE
53 Investor/Analyst Day November 2008 Sales and Marketing We are a leader in sales support CF Industries offers PROMISESM, a secure Internet site providing 24/7 contract, order, and invoice management to customers Includes real-time updates on barge and rail shipments
Slide 54: Forward Pricing Program (FPP)
54 Investor/Analyst Day November 2008 Sales and Marketing CF Industries’ Forward Pricing Program (FPP) We offer forward prices and volumes, primarily for nitrogen, for up to 20 months out For nitrogen, we match orders with derivatives for required natural gas, locking in substantial portion of margi
Slide 55: FPP Advantages
55 Investor/Analyst Day November 2008 Sales and Marketing FPP advantages: Locks in substantial portion of margin on nitrogen sales More effectively schedules production Minimizes working capital requirements Provides exceptional price discovery and market insights Builds closer, committed relationsh
Slide 56: FPP Facts
56 Investor/Analyst Day November 2008 Sales and Marketing FPP Facts We manage volume to our advantage Future price offerings reflect market expectations as well as locked-in natural gas costs FPP targets margins, not prices
Slide 57: A Premier Resource for Seamless Supply of Fertilizer
57 Investor/Analyst Day November 2008 Sales and Marketing ‘A premier resource for a seamless supply of high-quality fertilizer’
Slide 58: Overview of CF Industries' Operations
58 Investor/Analyst Day November 2008 Overview of CF Industries’ Operations Dave Pruett Senior Vice President, Operations
Slide 59: Operations Overview
59 Investor/Analyst Day November 2008 Operations Overview Manufacturing operations and the strategic advantages they provide Continuous improvement investments and opportunities Focus on Environmental, Health, and Safety Extensive flexibility and responsiveness of our manufacturing assets
Slide 60: Building Today's CF Industries
60 Investor/Analyst Day November 2008 Building Today’s CF Industries CF Industries founded in 1946 as cooperative fertilizer buying group Owners concentrated in the U.S. Corn Belt, the “sweet spot” of our market and focus of our operations Initial strategy: smaller nitrogen complexes located in the
Slide 61: Building Today's CF Industries: Nitrogen
61 Investor/Analyst Day November 2008 Building Today’s CF Industries: Nitrogen During 1980s, strategic decision to close smaller complexes and focus on large facilities with flexibility, economies of scale, and advantaged transportation Today, Donaldsonville, Louisiana and Medicine Hat, Alberta nitr
Slide 62: Donaldsonville Nitrogen Complex
62 Investor/Analyst Day November 2008 Building Today’s CF Industries: Nitrogen Donaldsonville Nitrogen Complex: Four ammonia plants Four urea plants (three granular) Two UAN plants Net capacities: 1.7 million tons of granular urea 2.7 million tons of UAN 330,000 product tons of ammonia for direct ap
Slide 63: Production Flexibility: Respond to Market Conditions
63 Investor/Analyst Day November 2008 NATURAL GAS AMMONIA #1 AMMONIA #2 AMMONIA #3 AMMONIA #4 AMMONIA STORAGE UREA #1 UREA #2 UREA #3 UREA #4 UREA #1 GRANULATOR UREA #2 GRANULATOR UAN #1 UAN #2 UREA #4 GRANULATOR UAN STORAGE UREA STORAGE SHIP BARGE RAIL CAR TRUCK BARGE BARGE SHIP SHIP SHIP PIPELINE
Slide 64: Production Flexibility: Dial Production Up and Down
64 Investor/Analyst Day November 2008 NATURAL GAS AMMONIA #1 AMMONIA #2 AMMONIA #3 AMMONIA #4 AMMONIA STORAGE UREA #1 UREA #2 UREA #3 UREA #4 UREA #1 GRANULATOR UREA #2 GRANULATOR UAN #1 UAN #2 UREA #4 GRANULATOR UAN STORAGE UREA STORAGE SHIP BARGE RAIL CAR TRUCK BARGE BARGE SHIP SHIP SHIP PIPELINE
Slide 65: Production Flexibility: Dial Production Up and Down
65 Investor/Analyst Day November 2008 NATURAL GAS AMMONIA #1 AMMONIA #2 AMMONIA #3 AMMONIA #4 AMMONIA STORAGE UREA #1 UREA #2 UREA #3 UREA #4 UREA #1 GRANULATOR UREA #2 GRANULATOR UAN #1 UAN #2 UREA #4 GRANULATOR UAN STORAGE UREA STORAGE SHIP BARGE RAIL CAR TRUCK BARGE BARGE SHIP SHIP SHIP PIPELINE
Slide 66: Production Flexibility: Dial Production Up and Down
66 Investor/Analyst Day November 2008 NATURAL GAS AMMONIA #1 AMMONIA #2 AMMONIA #3 AMMONIA #4 AMMONIA STORAGE UREA #1 UREA #2 UREA #3 UREA #4 UREA #1 GRANULATOR UREA #2 GRANULATOR UAN #1 UAN #2 UREA #4 GRANULATOR UAN STORAGE UREA STORAGE SHIP BARGE RAIL CAR TRUCK BARGE BARGE SHIP SHIP SHIP PIPELINE
Slide 67: Continuous Improvement at Donaldsonville
67 Investor/Analyst Day November 2008 Continuous Improvement at Donaldsonville Building Today’s CF Industries: Nitrogen * Representative of complex’s four ammonia plants 30.00 31.00 32.00 33.00 34.00 35.00 36.00 37.00 38.00 39.00 40.00 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992
Slide 68: Make versus Buy at Donaldsonville
68 Investor/Analyst Day November 2008 Make versus Buy at Donaldsonville Donaldsonville can receive and ship product via three docks on Mississippi River. Can also transfer from vessel directly to barge Building Today’s CF Industries: Nitrogen
Slide 69: Medicine Hat Nitrogen Complex
69 Investor/Analyst Day November 2008 Medicine Hat (Alberta) Nitrogen Complex Two ammonia plants One urea plant Net capacities 810,000 tons of granular urea 790,000 tons of ammonia for direct application (Additional 460,000 tons of ammonia is upgraded) Building Today’s CF Industries: Nitrogen
Slide 70: Continuous Improvement at Medicine Hat
70 Investor/Analyst Day November 2008 Continuous Improvement at Medicine Hat Natural Gas Gains at Medicine Hat Building Today’s CF Industries: Nitrogen 30.00 31.00 32.00 33.00 34.00 35.00 36.00 37.00 38.00 39.00 40.00 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 19
Slide 71: Building Today's CF Industries: Phosphate
71 Investor/Analyst Day November 2008 Building Today’s CF Industries: Phosphate First manufacturing operations: Idaho Phosphate Works – complex permanently shut down in 1963 Complexes at Bartow and Plant City in Florida operated using purchased rock. Bartow shut down most operations in 1983 Phosphat
Slide 72: Central Florida Phosphate Operations
72 Investor/Analyst Day November 2008 Building Today’s CF Industries: Phosphate Central Florida phosphate operations can produce approximately 2.1 million tons of DAP and MAP annually Hardee County is industry’s newest mine and beneficiation plant, with 24 years of proven reserves – 15 fully permitt
Slide 73: Phosphate Continuous Improvement Projects
73 Investor/Analyst Day November 2008 Building Today’s CF Industries: Phosphate Continuous improvement/de-bottlenecking projects – primarily in sulfuric acid production – during 2007 added approximately 60,000 tons of annual DAP/MAP and in 2008 approximately 80,000 tons
Slide 74: Environmental Policy
74 Investor/Analyst Day November 2008 Environmental policy ‘ conduct its business and operate its facilities in a manner designed to protect the environment, the health and safety of its employees, and the communities where its facilities are located’ In phosphate, a number of environmental innovati
Slide 75: Employee Health and Safety
75 Investor/Analyst Day November 2008 Building Today’s CF Industries A commitment to employee health and safety is central to CF Industries’ culture In 2006 and 2007, company’s incidence rates were well below general industry averages Five company facilities have achieved 40+ years without a lost-ti
Slide 76: Modern, Efficient, and Flexible Production Assets
76 Investor/Analyst Day November 2008 Building Today’s CF Industries ‘Modern, efficient, and flexible production assets, well positioned to serve our customers’
Slide 77: CF Industries' Supply Chain
77 Investor/Analyst Day November 2008 CF Industries’ Supply Chain Phil Koch Vice President, Supply Chain
Slide 78: A System Built on Flexibility and Responsiveness
78 Investor/Analyst Day November 2008 A system built on flexibility and responsiveness Make versus Buy capability at Donaldsonville Advantages in the marketplace today – and strategies to build on those advantages tomorrow CF Industries’ Supply Chain
Slide 79: Supply Chain Mission
79 Investor/Analyst Day November 2008 ‘Optimize the purchase of raw materials and product, scheduling of operations, and distribution of product to improve CF Industries’ profitability’ CF Industries’ Supply Chain
Slide 80: Raw Materials: Natural Gas
81 Investor/Analyst Day November 2008 Raw materials: Natural Gas Medicine Hat, Alberta nitrogen complex is served by two pipelines from Canada’s AECO Hub Medicine Hat is ‘The Gas City,’ a reference to region’s abundant supplies of natural gas. AECO natural gas typically provides nearly $30 per ton c
Slide 81: Phosphate Raw Materials: Sulfur
82 Investor/Analyst Day November 2008 Phosphate raw materials: Sulfur Eight major sulfur suppliers Close committed relationships No lost DAP/MAP production due to sulfur in ‘08 CF Industries’ Supply Chain
Slide 82: Phosphate Raw Materials: Ammonia
83 Investor/Analyst Day November 2008 Phosphate raw materials: Ammonia Sourced primarily from Trinidad and the Black Sea region Imported through our deep-water ammonia terminal at Port of Tampa CF Industries’ Supply Chain
Slide 83: Transportation Flexibility: Nitrogen
84 Investor/Analyst Day November 2008 Transportation flexibility: Nitrogen Barge, pipeline, rail, and truck at Donaldsonville Barge and pipeline very cost effective for ammonia Truck and rail at Medicine Hat CF Industries’ Supply Chain
Slide 84: Transportation Flexibility: Phosphate
85 Investor/Analyst Day November 2008 Transportation flexibility: Phosphate Rail, truck, and vessel from Central Florida phosphate operations Warehouse at Port of Tampa CF Industries’ Supply Chain
Slide 85: Manufacturing and Distribution Network Map
86 Investor/Analyst Day November 2008 Medicine Hat Nitrogen Complex Ammonia Terminal and UAN Terminal Urea Warehouse Ammonia Terminal UAN Terminal Low High Donaldsonville Fertilizer Intensity CF Industries’ Supply Chain Nitrogen Manufacturing Complex Ammonia Terminal Ammonia Terminal & UAN Terminal
Slide 86: Distribution Flexibility
87 Investor/Analyst Day November 2008 CF Industries’ Supply Chain Distribution flexibility: Distribution assets: high-volume operations and extremely productive Positioned in Corn Belt to serve America’s breadbasket 2200 rail cars 6 ammonia and 20 UAN barges In-market storage for 1.2 million tons of
Slide 87: The Hub of Our Operations
88 Investor/Analyst Day November 2008 ‘The hub of our operations’ CF Industries’ Supply Chain
Slide 88: CF Industries' Strategy to Grow
89 Investor/Analyst Day November 2008 CF Industries’ Strategy to Grow Steve Wilson Chairman, President & CEO
Slide 89: A Strategy To Build Value
90 Investor/Analyst Day November 2008 A Strategy To Build Value Optimize value of existing business Pursue value-added investments
Slide 90: Optimize Existing Nitrogen Operations
91 Investor/Analyst Day November 2008 A Strategy To Build Value Optimize Existing Nitrogen Operations North America is once again the place to be! Outlook for North American production is positive – new global paradigm for natural gas Gas production (e.g. shale gas) has responded rapidly to price si
Slide 91: Natural Gas Conversion Efficiency and De-bottlenecks
92 Investor/Analyst Day November 2008 Focus on natural gas conversion efficiency and de-bottlenecks to add incremental capacity In 2006, approved $11 million-plus project at Donaldsonville that reduced energy consumption by 0.42 MMBtu per ton of ammonia at two plants In 2007, approved $25 million-pl
Slide 92: Nitrogen Efficiency Continued
93 Investor/Analyst Day November 2008 Focus on natural gas conversion efficiency and de-bottlenecks to add incremental capacity Also implemented changes to reduce gas usage in urea plants and modestly increase UAN capacity Ongoing pipeline of new internal opportunities A Strategy To Build Value Opti
Slide 93: Optimize Existing Phosphate Operations
94 Investor/Analyst Day November 2008 Phosphate in uncharted waters: outlook remains positive Availability of economically recoverable phosphate reserves is limited Rock and phosphoric acid exporters recognize their products are key drivers in phosphate value chain U.S. integrated industry is well p
Slide 94: Phosphate: Output, Reliability, Asset Life
95 Investor/Analyst Day November 2008 Focus on increased output, improved reliability, and extended asset life Ongoing expansion of sulfuric acid capacity 2007: 40,000 tons 2008: 110,000 tons 2009: 125,000 tons In Q3 ‘08, purchased third dragline for Hardee County mine Ongoing acquisitions of small
Slide 95: Optimize Existing Supply Chain
96 Investor/Analyst Day November 2008 Focus on: Extracting more value from UAN and dry product distribution systems Capitalizing on value-added opportunities in ammonia In 2006 Deepened navigation channel at Donaldsonville Mississippi River docks to enhance ammonia import capability In 2008 Purchase
Slide 96: Identify External Growth Opportunities
97 Investor/Analyst Day November 2008 General strategy: pursue best available opportunities consistent with ‘what we do well’ Industry consolidation and turnover will increase opportunities to acquire existing assets/players Growing demand for food/fiber will create opportunities in new markets Furt
Slide 97: Perú Nitrogen Complex and KEYTRADE
98 Investor/Analyst Day November 2008 Perú Nitrogen Complex New source of natural gas with attractive pricing Access to ‘underserved’ markets Follows ‘what we do well’ criterion Requires an attractive rate of return Acquisition of 50 percent of KEYTRADE in 2007 Real time global market intelligence C
Slide 98: A Strategy To Build Value: Discipline
99 Investor/Analyst Day November 2008 Disciplined operations management Disciplined capital investment Disciplined financial management A Strategy To Build Value
Slide 99: [LOGO]
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