Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — The Mosaic Company — Sixth CRU-GPCA Fertilizer Convention (September 2015)
38 slides from Mosaic Company (the)'s conference presentation, Sep 16, 2015
Slide 1: Outlook for Brazil
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 1
Slide 2: Safe Harbor
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 acquisition
Slide 3: Topics and Take-Aways
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) - Large
Slide 4: Topics and Take-Aways
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 - Econom
Slide 5: An Agricultural Powerhouse
An Agricultural Powerhouse 5
Slide 6: A large and diverse agricultural sector
A large and diverse agricultural sector Soybeans: Corn: Second largest producer Third largest producer Sugar Cane: Coffee: Sugar: Largest producer Largest producer Ethanol: Second largest producer Source: USDA 6
Slide 7: A large and diverse agricultural sector
A large and diverse agricultural sector Cotton: Fifth largest producer Oranges: Largest juice producer Cattle: Second largest producer Source: USDA 7
Slide 8: A large and diverse agricultural sector
A large and diverse agricultural sector Production Production Export Export Main 2014 Global Share Global Rank Global Share Global Rank 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 Oran
Slide 9: Strong positive trends with tailwinds and headwinds
Strong positive trends with tailwinds and headwinds Mil Tonnes Brazil Grain and Oilseed Production 240 220 200 180 160 140 120 100 80 60 40 20 - 2000 2002 2004 2006 2008 2010 2012 2014 2016F 2018F 2020F Soybeans Summer Corn Second Crop Corn Wheat Cotton Others Mil Tonnes 2000 2014 Change CAGR Soybea
Slide 10: Increases from both harvested area and yields
Increases from both harvested area and yields Mil Ha Brazil Harvested Area MT Ha Brazil Average Yield Leading Grain and Oilseed Crops Leading Grain and Oilseed Crops 55 3.75 Source: USDA Source: USDA 50 3.50 45 3.25 40 3.00 35 2.75 30 2.50 25 2.25 20 2.00 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Slide 11: Increases in soybean production mostly from more area
Increases in soybean production mostly from more area Mil HA Brazil Soybean Area MT HA Brazil Soybean Yield 35 3.25 Source: USDA Source: USDA 30 3.00 25 2.75 20 2.50 15 2.25 10 5 2.00 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Change in Brazil Soybean P
Slide 12: Large areas of land available to bring into production
Large areas of land available to bring into production Pasture 200 million hectares 59% of arable land Urban Area 2.1 million hectares Arable land 340 million hectares Planted Area Total Area 79.7 million hectares 850 million hectares Or 22% of arable land Crop Mil Ha Soybeans 31.9 Available Land Co
Slide 13: Brazilian soils require large plant nutrient applications
Brazilian soils require large plant nutrient applications The Case of Soybeans 2010 Statistics Area NPK Rate Yield Country (Mil Ha) (MMT) (kg Ha) (MT Ha) Brazil 23.5 3.30 140 2.94 Soil Fertility USA 30.9 1.12 37 2.96 Very low Argentina 18.6 .41 22 2.93 Low China 9.2 .78 85 1.63 Medium Source: USDA a
Slide 14: Potent impact of exchange rate: the case of soybeans
Potent impact of exchange rate: the case of soybeans Brazilian Real Brazil Soybean Area and Local Price Reais/USD Monthly Average of Daily Rate Mil Ha Real Bu 4.00 Source: Forex 35.0 32.5 3.75 Source: USDA and CME 3.50 32.5 30.0 30.0 27.5 3.25 27.5 25.0 3.00 25.0 22.5 2.75 22.5 20.0 2.50 20.0 17.5 2
Slide 15: The Brazil-to-China soybean pipeline to grow despite economic slowdowns
The Brazil-to-China soybean pipeline to grow despite economic slowdowns on both ends Brazil Soybean Exports China Soybean Imports Mil Tonnes Mil Tonnes 50 100% 80 55% Source: GTIS Source: GTIS 45 90% 70 50% 40 80% 60 45% 35 70% 30 60% 50 40% 25 50% 40 35% 20 40% 30 30% 15 30% 20 25% 10 20% 5 10% 10
Slide 16: Implications for Plant Nutrient Demand
Implications for Plant Nutrient Demand 16
Slide 17: Strong correlation between crop production and plant nutrient use
Strong correlation between crop production and plant nutrient use (no soil alchemy!) Brazil N+P+K Shipments and Crop Production Brazil N+P+K Shipments vs. Crop Production Mil Tonnes Mil Tonnes 2000-2014 Product Crops 200 32.5 225 190 Source: ANDA and USDA 30.0 210 180 y = 6.6926x - 21.541 Crop Produ
Slide 18: Strong correlation between crop production and plant nutrient use
Strong correlation between crop production and plant nutrient use (no soil alchemy!) Brazil N+P+K Shipments and Crop Production Brazil N+P+K Shipments vs. Crop Production Mil Tonnes Mil Tonnes 2000-2014 Nutrients Crops 200 15.0 225 190 Source: ANDA and USDA y = 14.152x - 3.4908 13.5 210 180 Crop Pro
Slide 19: Plant nutrient demand scenarios
Plant nutrient demand scenarios Brazil N+P+K Shipment Scenarios Mil Tonnes Nutrients 20 Source: ANDA and Mosaic Demand scenarios are based 18 on assumptions about grain 16 14 and oilseed production and 12 correlations with NPK use 10 8 This analysis indicates that 6 4 total nutrient use likely w
Slide 20: Nitrogen use by product 2000-14
Nitrogen use by product 2000-14 Brazil Nitrogen Shipments by Leading Products Brazil Nitrogen Use - 2000 Mil Tonnes 1.7 MMT N Nutrient NPK 4.0 DAP/MAP 1% Source: ANDA and Mosaic 13% 3.5 3.0 2.5 AMS 20% Urea 2.0 53% 1.5 1.0 0.5 AMN 0.0 13% 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Urea DAP/MAP AMN
Slide 21: Nitrogen demand scenarios
Nitrogen demand scenarios Brazil Nitrogen Shipment Scenarios Brazil Urea Shipment Scenarios Mil Tonnes Mil Tonnes Nutrients Product 7 7 Source: ANDA and Mosaic Source: ANDA and Mosaic 6 6 5 5 4 4 3 3 2 2 1 1 0 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 1415F 20F 00 01 02 03 04 05 06 07 08 09 10 11
Slide 22: Phosphate use by product 2000-14
Phosphate use by product 2000-14 Brazil Phosphate Shipments by Leading Products Brazil Phosphate Use - 2000 Mil Tonnes 2.3 MMT P 2O5 Nutrient 4.5 NPK DAP Source: ANDA and Mosaic 2% 3% 4.0 3.5 SSP 3.0 35% 2.5 2.0 1.5 MAP 43% 1.0 0.5 TSP 0.0 17% 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 MAP SSP TSP
Slide 23: Phosphate demand scenarios
Phosphate demand scenarios Brazil Phosphate Shipment Scenarios Brazil MAP+DAP Shipment Scenarios Mil Tonnes Mil Tonnes Nutrients Product 7 7 Source: ANDA and Mosaic Source: ANDA and Mosaic 6 6 5 5 4 4 3 3 2 2 1 1 0 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 1415F 20F 00 01 02 03 04 05 06 07 08 09 1
Slide 24: Potash shipments by product and demand scenarios
Potash shipments by product and demand scenarios Brazil Potash Shipment Scenarios Brazil Potash Shipments by Leading Products Mil Tonnes Mil Tonnes Nutrients Nutrient 7 6.0 Source: ANDA and Mosaic Source: ANDA and Mosaic 6 5.0 5 4.0 4 3.0 3 2.0 2 1 1.0 0 0.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Slide 25: Plant Nutrient Production and Imports
Plant Nutrient Production and Imports 25
Slide 26: Increasingly dependent on imports
Increasingly dependent on imports Mil Tonnes Brazil N+P+K Shipments Import Mil Tonnes Brazil N+P+K Shipments Import Nutrient Share Product Share 16 90% 35 80% Source: ANDA and Mosaic Source: ANDA and Mosaic 14 85% 30 75% 12 80% 25 70% 10 75% 20 65% 8 70% 15 60% 6 65% 10 55% 4 60% 2 55% 5 50% 0 50% 0
Slide 27: Import shares by nutrient
Import shares by nutrient Mil Tonnes Brazil Nitrogen Shipments Import Mil Tonnes Brazil Phosphate Shipments Import Nutrient Share Nutrient Share 4.5 95% 5.0 75% Source: ANDA and Mosaic Source: ANDA and Mosaic 4.0 90% 4.5 70% 3.5 85% 4.0 65% 3.5 60% 3.0 80% 3.0 55% 2.5 75% 2.5 50% 2.0 70% 2.0 45% 1.5
Slide 28: Major nitrogen and potash projects
Major nitrogen and potash projects Annual Capacity Estimated Company Project Products 1000 MT Start-Up Nitrogen Petrobras Tres Lagoas Ammonia 730 2017 “. . . Brazil will remain a major urea importer, but annual Urea 1200 imports would decline gradually towards 4.0 million tonnes in Linhares Urea 700
Slide 29: Major phosphate projects
Major phosphate projects Annual Capacity Estimated Company Project Products 1000 MT Start-Up Phosphate Anglo Catalao Rock 1,200 Post 2020 (Ouvidor) Acid (P2O5) 400 2018 “. . . mining expansions are pursued by Vale, Anglo American and Galvani. All these developments are aimed to secure MAP 520 2018 f
Slide 30: Key product imports for medium demand scenario
Key product imports for medium demand scenario Mil Tonnes Brazil Urea Shipments Import Mil Tonnes Brazil MAP+DAP Shipments Import Product Share Product Share 6.0 100% 7.0 85% Source: ANDA and Mosaic Source: ANDA and Mosaic 5.0 90% 6.0 80% 5.0 75% 4.0 80% 4.0 70% 3.0 70% 3.0 65% 2.0 60% 2.0 60% 1.0 5
Slide 31: Plant Nutrient Distribution Trends
Plant Nutrient Distribution Trends 31
Slide 32: Profile: Products and Seasonality
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 50
Slide 33: Slowly developing distribution trends
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 33
Slide 34: From south/southeast to north/northwest
From south/southeast to north/northwest 2000 2014 1.68 M MT 4.85 M MT 11% 15% 4.46 M MT 10.53 M MT 27% 5.65 M MT 33% 8.04 M MT 34% 25% 4.60 M MT 8.77 M MT 28% 27% 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% Brazil Total 1
Slide 35: From many small to fewer large distributors
From many small to fewer large distributors 2006 Imports 2014 Imports Share on total Share on total Largest importers Imports Largest importers Imports Recent Developments Yara 24% Bunge 25% Mosaic (+ADM) 16% Fertipar 12% 1. Yara acquires: Fertipar 16% Heringer 11% • Bunge (2012) Heringer 14% Trevo
Slide 36: From many small to fewer large distributors
From many small to fewer large distributors Importers • Mosaic • OCP • Yara • Ameropa Blenders Distributors End Users • Mosaic • Cooperatives • Farmers • Yara • Retail Dealers • Agroindustries • Heringer • Trading Companies • Megafarmers (Cargill, ADM, Bunge, LDC) • Fertipar Producers • Anglo Americ
Slide 37: From few to more transportation and logistical options
From few to more transportation and logistical options Key Brazilian Agricultural Infrastrcture Projects Approximately US$435 billion in infrastructure investments either in public investments or in concessions during the next several years. RR AP More than 10 port 3x terminal projects Cost reductio
Slide 38: Thank You!
Thank You! 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 38
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