An Evolving Industry

Protecting Our Future

Making a Difference

In the developmental days of the modern fertilizer industry, people believed its greatest contribution would be to increase crop yields. Time, experience and new opportunities, however, have brought clarity and a broader vision for our company. We do more than enrich the land; we enrich lives.

While helping farmers meet the demands of a growing population remains at the heart of our business, we also set goals and targets that reflect our expanded role in protecting the environment, supporting healthy communities and operating a business enterprise that provides value to investors, customers, employees, suppliers and our neighbors.

These are important issues to stakeholders in our company – issues that will affect our performance and our planet for years to come. It is our pleasure to report on our actions in all areas that impact the sustainability of our business.

An Evolving Industry

The growth of our business today is still driven by the powerful and persistent need to increase food production. The number of people on the planet has more than doubled in the past 50 years and is now approaching 6.6 billion. A recent report by the United Nations forecasts that world population will grow to more than 9 billion by 2050. Producing enough food takes an ever-increasing toll on an agricultural land base that is shrinking due, in part, to population expansion.

This population growth is occurring largely in regions with rapidly expanding economies, most notably in China and India. With more money, people not only want more food, they want better food. This heightens demand for fertilizers, which replenish essential nutrients in the soil needed by the plants that become part of the food supply. This makes our products vital to sustaining a growing population and improving the quality of life.

The recent surge of interest in biofuels has further increased the need for crops and, along with that, fertilizers. Biofuels provide an alternative to oil and burn cleaner than fossil fuels. Today there are approximately 120 ethanol plants operating in the United States. With facilities currently under construction, that number is expected to be around 200 in two years. Including those still in the planning stages, the number of ethanol plants could climb substantially higher within three years. Already, for crop year 2007/08, ethanol plants are expected to consume as much as 27 percent of the new US corn crop – approximately 3.4 billion bushels. That demand will continue to increase.

This is a global story, as farmers in other countries are growing crops like sugar cane, soybeans and oil palm for use in biofuels. This need must be met without negatively impacting the food supply for a growing global population.

As a result of these expanding opportunities for our products, we achieved a third consecutive year of record earnings in 2006. We used this financial strength to expand our production capacity and plan further expansions that will increase our ability to meet the future needs of our customers around the world.

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Protecting our Future

Our relationship with the environment is an important part of PotashCorp's sustainability journey. Without crop nutrients increasing the productivity of soil, the world would need approximately 50 percent more farmland to produce enough food. Increasing farmland would require more of the world's forests to be destroyed. That has far-reaching implications, as forests are the greatest offset to greenhouse gas emissions and play a critical role in protecting the planet against climate change.

As we work to maximize the environmental benefits of our products, we also strive to reduce our environmental footprint. We measure water and energy use and monitor emissions, setting targets to lessen our impact on the environment. In 2006, we reduced our water use, increased energy efficiency in Trinidad and had fewer reportable releases and permit excursions. Over the past three years, we have increased our environmental expenditures by almost 50 percent, a short-term expense that will have long-term benefits for our company and communities. This year, we intend to set five-year targets for energy efficiency, extending our planning and strategies further into the future.

These goals and targets rely on the commitment of a well-trained and highly committed workforce. The safety of our employees is a core value for our company, and we placed special emphasis on improving performance in this area in 2006. Our employees around the world, with the support of our Senior Safety Leadership Team, reduced our recordable injury frequency rate to its lowest level ever – a major accomplishment and a source of tremendous pride for all of us. We will continue to work toward our goal of no harm to people, no accidents and no damage to the environment.

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Making a Difference

Strong financial and operating performance enables us to expand the reach we have in our communities. In Saskatoon, our sponsorship of the Canadian university football championship, the PotashCorp Vanier Cup, created a legacy that included a revamped facility suitable for a wide range of community uses, and brought significant economic benefits to the local economy. Not all of our relationships in the community draw national attention, but our goal is to have a positive impact wherever we do business.

By maintaining a focus on continuing improvement, we enhance our operations. The economic, environmental and social targets we set reflect our strategies for long-term growth and sustainability. In the pages ahead, you will read more about our performance and how we measure up to the expectations of our stakeholders.

William J. Doyle
President and CEO
PotashCorp
July 30, 2007