Sales and Markets

Sales

In 2007, PotashCorp sold products for net proceeds** of almost $4.8 billion, an increase of 93 percent since 2003. The growth over this period is the result of increased volumes and much higher prices realized per tonne for all three nutrients.

** See reconciliation and description of certain Non-GAAP measures in Financial Performance Indicators in the 2007 Financial Review Annual Report

Sectors Served

PotashCorp's products serve three different market sectors:

• Fertilizer, which involves the plant nutrients potash, nitrogen and phosphate;
• Animal feed supplements, mostly phosphate and some urea; and
• Industrial, focused on products for high-grade food, technical and other applications (mainly nitrogen products and purified phosphoric acid).

Fertilizer is the most important business, and over the last four years it has generated 60 percent of PotashCorp's sales and 70 percent of gross margin.

Potash, the core nutrient in the company's long-term strategy, generated almost half of total gross margin in 2007, while the nitrogen business generated more than 28 percent and phosphate produced 23 percent.

Markets

On a company-wide basis, North American markets account for the bulk of PotashCorp's sales volumes. In 2007, 93 percent of nitrogen sales, 69 percent of phosphate sales and 37 percent of potash sales were made within North America.

Offshore potash shipments are important, driven primarily by growth in demand. More than 60 percent of the company's potash goes offshore to nations with growing populations and economies. More than 30 percent of phosphate sales are now offshore and 7 percent of nitrogen sales.

Sales Volumes by Country

Sales Volumes by Country

Sales Volumes to the US, Canada and Other Countries
	2004	2005	2006	2007
Potash	35% to the US 4% to Canada 61% to other countries	34% to the US 5% to Canada 61% to other countries	35% to the US 4% to Canada 61% to other countries	34% to the US 3% to Canada 63% to other countries
Nitrogen	93% to the US 0.2% to Canada 6.8% to other countries	93% to the US 1% to Canada 6% to other countries	93% to the US 1% to Canada 6% to other countries	92.4% to the US 0.3% to Canada 7.3% to other countries
Phosphate	65% to the US 8% to Canada 27% to other countries	63% to the US 7% to Canada 30% to other countries	57% to the US 7% to Canada 36% to other countries	60% to the US 9% to Canada 31% to other countries
Source: PotashCorp

Customers

PotashCorp has a diversified customer base. In potash, Canpotex Limited (Canpotex), the offshore marketing company owned by the three Saskatchewan producers, handles all sales of Saskatchewan potash destined for markets outside of the US and Canada. Apart from sales to Canpotex, no one customer accounted for more than 10 percent of the company's sales in 2007.

In North America, PotashCorp sells all three fertilizers to retailers, cooperatives and distributors that provide storage and application services to farmers, the end users. Governments and private importers in China and India tend to buy under contract, while spot sales are more prevalent in other markets.

Nitrogen and phosphate are important to industry as inputs for a wide range of products. Industrial customers for nitrogen products and phosphoric acid, including purified acid, are mainly based in North America. The company enjoys long-term relationships with industrial customers, such as BASF and DSM in nitrogen and ICL Performance Products and Innophos in phosphate. Offshore growth in industrial products that require nitrogen and phosphate inputs is being driven by rising incomes.

Sales of animal feed products have significantly less seasonality and cyclicality than fertilizer sales. US bulk feed producers are the main feed customers, and their relatively close proximity to the company's plants is an advantage. Brazil and Mexico are the largest offshore customers for animal feed products.