Building Excellence On Potash First
Potash Is the Heart of Our Business
Our biggest earnings contributor, generating almost half of our total gross margin in 2007, potash offers our greatest growth potential. Therefore, it is the focus of our long-term strategic plan – our Potash First strategy.
Potash also provides significant global reach, in end-markets and through our investments in related offshore companies. Almost 60 percent of our production is used in growing international markets for agricultural commodities such as rice, soybeans, corn, palm oil, sugar, rubber, bananas, oranges and coffee. The remainder goes to offshore industrial uses and to the North American market, which has historically been stable due to the maturity of its agriculture system.
Nitrogen and Phosphate Add Depth and Breadth
PotashCorp is also a major global producer of nitrogen and phosphate. In 2007, our nitrogen business generated about 28 percent of our gross margin, while phosphate produced about 23 percent.
Our nitrogen operations are divided between Trinidad, where we have long-term, lower-cost gas contracts with National Gas Company of Trinidad and Tobago Limited, and the US. We produce approximately two-thirds of our ammonia in Trinidad while emphasizing industrial products in the US.
As the most diversified global phosphate producer, we offer a full product range: phosphoric acid, liquid and solid fertilizers, feed supplements for livestock and poultry, and products used by industry, such as purified acid.
Feed and Industrial Are Stable Businesses
Our feed and industrial sales are considerably less seasonal and cyclical – and therefore less volatile – than fertilizer sales, which increases the quality of earnings in these segments.
We sell feed products primarily to US bulk feed producers that blend them into animal feeds. Latin America and Asia are our largest offshore feed markets.
Nitrogen, phosphate and potash are used by industry to make important products for modern living, such as adhesives, resins and foams for the construction and automotive industries, soft drinks, metal cleaners, computer and TV screens, soaps, de-icers and water softeners. Rising incomes in developing countries are driving growth in offshore demand for these products.
Availability of Supply and Quality Matter
In the current robust agricultural markets, availability of supply is customers’ first concern in their buying decisions for our products. PotashCorp ranks well above the industry average in reliability of supply and product quality, according to our annual customer surveys.
Our Value Proposition
Potash for Growth, Trinidad Nitrogen and Phosphate Diversity for Earnings Stability
We strive to generate long-term growth while minimizing fluctuations in our earnings.
To maximize long-term value, we concentrate on areas of our business that generate the highest margins – potash, Trinidad nitrogen and our diverse phosphate products. Sustained margins in these businesses are supported by our lower-cost production capabilities. Our long-term natural gas contracts in Trinidad and proximity to the US market give us significant cost advantages in nitrogen, just as our high-quality rock enables us to make the entire range of phosphate products.