This section details PotashCorp’s direct and indirect environmental impacts. Our measures comply with standards set by the newest (G3) Global Reporting Initiative (GRI).

Direct Environmental Impact

Environmental Events and Fines

Environmental events include reportable quantity releases, permit excursions and spills (including provincial and state events). Environmental fines are issued by the US EPA, state regulators, Environment Canada and provincial regulators.

Improved procedures and better controls resulted in a 35 percent reduction in reportable quantities and permit excursions in 2008. This result exceeded our target of reducing the number of such events by 15 percent.

We had zero environmental fines in 2008. This is the first time that we have had zero fines in a calendar year since we started tracking this data in 2002.

Transportation Events and Fines

Transportation events are spills or deviations from the Federal Railroad Administration code for rail cars carrying hazardous materials. We incurred one fine in 2008 related to broken protective housing on a rail car.

We received five awards for our performance in transporting our products in 2007 (the awards are always one year behind).

Environmental Costs

A 60 percent increase in operating costs and a more than 1000 percent increase in capital costs over the past four years demonstrate our long-term commitment to achieving no harm to the environment.

Environmental Operating Costs – by Business Segment

Operating expenses accounted for 62 percent of environmental costs incurred in 2008.

The largest increase in our potash segment was at New Brunswick related to the transportation of brine to the Bay of Fundy.

Most environmental operating costs in phosphate occurred at Aurora and White Springs, while most in nitrogen came from increased pollution controls at Geismar and Augusta. White Springs "Pollution abatement" costs rose from $21 million in 2007 to $27 million in 2008 due to remediation of a sinkhole. Aurora increased "Other environmental expenditures" from $12 million in 2007 to $19 million in 2008 due to rising water treatment costs.

Environmental Capital Costs – by Business Segment

In potash, most of the capital cost increase was attributable to "Pollution abatement" which grew from $22 million to $38 million. Construction of new brine ponds at Rocanville and a brine pipeline at Cassidy Lake accounted for $11 million and $10 million in capital costs, respectively.

In phosphate, PotashCorp spent $33 million for "Protection and Restoration of Wildlife and Habitat," including $31 million at Aurora to purchase wetlands to acquire lands for mitigation activities.

Environmental Costs – by Category

Mine site reclamation projects in Aurora accounted for most of our "Restoration of Habitat" costs, the largest operating cost increase among all the categories. "Pollution Abatement in Capital" also rose significantly, due mostly to brine pond construction at Rocanville and a brine pipeline project at Cassidy Lake.

Asset Retirement Obligations

Inflation, higher costs and new obligations all contribute to increased Asset Retirement Obligations (AROs). This measure changes when accretion expense changes and/or as work is completed on individual AROs.

Materials Mined or Consumed

Our potash and phosphate businesses mine ore to make product. Most natural gas is consumed to make ammonia, while sulfur is used to generate steam and make sulfuric acid. Limestone consumed to produce monoammonium phosphate and diammonium phosphate is mined at Weeping Water and purchased at other locations. Few recycled materials and wastes are used in the production of potash, phosphate or nitrogen compounds, except recovered sulfur – a byproduct of oil refining or natural gas production – in producing phosphoric acid.

Energy

Direct Energy Use – by Type

PotashCorp uses energy in mine and milling processes and in chemical and manufacturing operations. Our operations consume energy from outside sources by burning fossil fuels (44 percent), reforming natural gas to make ammonia (49 percent) and purchasing electricity (7 percent). These outside sources of energy do not include the energy that is recycled within the process to make it more efficient as explained in Energy Efficiency.

Consumption of all three of these energy sources decreases as production slows, except at Aurora, White Springs and Geismar, which generate electricity and steam by Waste Heat Recovery and Cogeneration. When sulfuric acid production decreases, electricity and fossil fuel purchases increase, as was the case in 2008.

Direct Energy Use – by Business Segment

Our nitrogen business uses most of the energy – typically near 85 percent of our total energy consumed – because the ammonia plants use natural gas as a raw material and are the largest consumer of natural gas as a fossil fuel.

Indirect Energy Use

Indirect energy is the energy consumed by providers to make the electricity we purchase. Electricity is the only indirect energy currently monitored. Our electricity purchases vary each year based on the products that we make.

Direct Energy Use – Intensity

As potash production increases, energy use intensity decreases because the production process is more efficient at higher rates. By contrast, energy intensity increases in phosphate and nitrogen as we make more downstream products such as MAP, DAP and ammonium nitrate.

Direct Energy Use – Cost

Although energy usage has stayed relatively constant over the last five years, the prices of energy and natural gas have increased. Our Trinidad facility consumes most of the natural gas PotashCorp uses, with its cost primarily indexed to the price of ammonia. The price of natural gas rose in Trinidad in 2008 due to higher ammonia prices.

Energy Efficiency

Energy Efficiency Projects in 2008

We are continually improving the energy efficiency of our process to use less natural resources such as fossil fuels.

Waste Heat Recovery and Cogeneration

About 25 percent of our total energy used is energy that is recaptured from the process. We recapture heat that would otherwise be wasted and make it into steam or electricity (cogeneration) to drive our processes.

Water Impacts

Water Used

Our operations withdraw water from rivers, groundwater aquifers and the Atlantic Ocean. About 75 percent of the water withdrawn is for phosphate mining operations, which use water to transport raw material. The processes are closed loop by design with minimal loss of water.

Discharges to Surface Water

Salt as brine is discharged to the sea from potash operations, primarily from our New Brunswick facility. The amount discharged has risen as inflow to the mine has increased.

Almost all nitrogen compounds discharged are from the nitrogen facilities. Generally, nitrogen discharges increase with increased precipitation. Fluoride and phosphate discharges are from the phosphate segment and generally depend on annual concentrations and volume of water discharged. In 2008, fluoride and phosphate discharges decreased with less volume of water discharged.

Air Impacts

Direct Greenhouse Gas Emissions

Nitrogen produces more than 80 percent of PotashCorp’s GHG emissions, mostly while producing ammonia and nitric acid. An ammonia plant emits CO₂ in two ways: by burning fuel and as a byproduct of production. Some of the CO₂ produced is sold and some is used to make urea, but what remains is vented as process CO₂. The nitric acid plants account for almost all our nitrous oxide emissions. Production of both ammonia and nitric acid was lower in 2008, so greenhouse gas emissions decreased.

Normalized Greenhouse Gas Emissions – by Business Segment

Greenhouse gas emissions are normalized based on the nutrient produced by each segment: KCl, P₂O₅ and N. The normalized emission rate increased company-wide and in our nitrogen segment because more nitric acid was produced relative to other nitrogen products and less CO₂ was sold.

PotashCorp plans to install GHG controls at nitric acid plants, and we aim to achieve a 10 percent decrease in normalized GHG emissions by 2012, from 2.01 (2007) to 1.81 (2012). We have installed monitors at Geismar and Lima to determine our nitrous oxide emissions baseline.

Indirect GHG Emissions from Electricity

Indirect GHG emissions are an estimate of the emissions stemming from the net electricity purchased. Our Aurora, White Springs and Trinidad facilities sell electricity back to the grid, so curtailed production results in less electricity sold – which was the case at all three facilities in 2008 but most significantly at White Springs.

Criteria Air Pollutants

More than 80 percent of PotashCorp’s nitrogen oxides are emitted by our nitrogen operations, mainly from our nitric acid plants. Emissions vary based on production rates and the test results of our pollution control systems.

Carbon monoxide is emitted from combustion sources such as boilers and industrial heaters. Most of our fuel combustion occurs in nitrogen when ammonia is produced, while our potash operations produce most of our particulate emissions from material handling and road dust. Almost all sulfur dioxide emissions are from our sulfuric acid plants.

Other Significant Air Pollutants

More than 60 percent of volatile organic compounds (VOCs) are generated from our ammonia plants. More than 30 percent are generated from potash, mainly from flotation oil used in separating potash from the raw ore. About 90 percent of ammonia emissions are from nitrogen operations. These emissions vary each year based on production rates and the mix of products produced. The 2008 emission rate of VOCs and ammonia decreased year over year because Trinidad produced less ammonia.

Hydrogen sulfide, sulfuric acid mist and fluoride emissions are from phosphate operations. Emissions rates for all three vary based on testing and production rates.

Waste

Process Solid Waste

Extracting phosphate from ore produces gypsum, clay and silts. Potash mining produces salt and clay waste, and salt as brine is pumped into injection wells. The quantity of salt and clay waste varies based on production rates. The quantity of salt as brine pumped into injection wells varies with annual precipitation. Active portions of the Geismar stacks are lined.

Non-process Wastes

Off-site solid waste disposal occurs in our potash, phosphate and nitrogen operations. Non-process waste includes paper, oil, batteries, spent catalysts, paint, printer cartridges, light bulbs and other materials. The greatest increase in disposals during 2008 occurred in potash, where we were decommissioning a landfill at Lanigan. More waste was also shipped off site at Geismar due to a maintenance outage related to renovations.

Most on-site waste is produced by our potash operations, while phosphate and nitrogen shipped most of their waste off site. More than 95 percent of the on-site waste has historically been produced by Lanigan, but its on-site waste diminished in 2008 when its landfill was decommissioned.

Most recycled solid wastes and disposed hazardous wastes occur in potash operations. The amount varies annually based on construction and maintenance activities.

Hazardous waste volumes vary based on maintenance and renovations at the plant sites.

Land Impacts

PotashCorp conducted production and mining activities on 180,000 acres of company-owned land in 2008: 41,000 acres in potash, 138,000 acres in phosphate and 1,000 acres in nitrogen. Impermeable land – covered by roads, buildings or other fixed structures – comprised 1 percent of potash, 1 percent of phosphate and 15 percent of nitrogen facilities.

As part of land reclamation at our phosphate operations, we plant an average of 30,000-40,000 trees annually. This number can increase significantly during reclamation.

Biodiversity

PotashCorp strives to maintain a healthy environment and to promote natural biodiversity at and near our mining operations. We try to understand, avoid, minimize and mitigate biodiversity impacts throughout the life cycle of our operations. We believe that biodiversity is promoted by enhancing or preserving habitat near our worksites, which minimizes negative impacts on the surrounding lands and water.

Indirect Impacts

Indirect Impacts of Fertilizer

Fertilizer use results in some GHG emissions. If applied in excess, fertilizer runoff can also impact water quality. To educate our customers and farmers on the impact of this runoff we stress the 4R Program: right source, right rate, right time and right place.

To promote the proper use of fertilizer, the company also:

• Works primarily through industry associations such as The Fertilizer Institute (TFI), the Canadian Fertilizer Institute (CFI) and the International Plant Nutrition Institute (IPNI) to educate customers.
• Supports more than 13,000 Certified Crop Advisors in North America through industry organizations. These advisors are critical to helping us educate growers about best management practices in areas ranging from nutrient management to soil and water quality.
• Employs a staff agronomist, Dr. Kim Polizotto, who works closely with industry associations, academic researchers and growers.

Beneficial Products

Many of our products benefit the environment by reducing air emissions, treating water discharges and remediating ground water.