Raise Capacity to Meet Rising Demand

It is no accident that PotashCorp has the world's greatest potash capacity when demand for this nutrient is climbing swiftly. We began preparing yesterday for the catch-up demand of today – with strategic purchases that consolidated our Saskatchewan base and added an operation in New Brunswick, Canada's only East Coast producer. We also invested in offshore companies to extend our global reach. We are preparing for tomorrow by bringing on capacity through debottlenecking and expansion projects at our existing mines for substantially less than the cost of greenfield capacity. We continue to look for opportunities to extend our global enterprise through strategic investments or acquisitions.

Timing Capacity Additions to Market Need

Our potash value proposition requires us to time the completion of our expansion projects to the expected growth in offshore demand. This is more of an art than a science, since demand rarely moves in a straight line upward. The substantial increase in 2007, however, demonstrated that it is better to be slightly ahead of the curve in getting additional production capacity ready for the market.

Producing to Meet Market Demand

For almost two decades, we have sought to minimize downside risk by following the strategy of matching our production to market demand. This has caused some fluctuations in our sales volumes, as temporary events can negatively affect short-term buying patterns even when the long-term trend is upward. This is particularly true when growth depends on offshore markets.

Greenfield Unlikely Threat to Our Strategy

With no significant greenfield projects announced and long lead times for new developments, we do not expect new competitor mines for at least five to seven years. While rising potash prices and profitability increase the possibility that greenfield mines could be developed, the cost and time required to establish a world-scale mine, mill and supporting infrastructure remain a major impediment.