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Economic


G3 Indicator PotashCorp’s Economic Performance in 2008
Economic Performance
EC1.
Direct economic value generated and distributed.

PotashCorp economic value generated has more than tripled in last four years. We generated economic value of more than $9.4 billion in 2008 based on the G3 framework, up from a record $4.9 billion in 2007. Although the primary reason for the increase was rising net prices of our products, appreciation in the income from our global potash investments in SQM, APC, ICL and Sinofert also contributed.

Economic value distributed – as defined by the G3 framework – has increased more than 160 percent in four years.

Economic Value Distributed – Overview ($ millions)
  2004 2005 2006 2007 2008
Goods, services, and materials purchased 1,881.6 2,150.6 2,273.1 2,781.0 4,481.0
Employee wages and benefits 386.7 423.8 430.0 519.7 573.0
Payments to providers of capital: dividends and interest payments 152.3 166.1 194.4 230.9 245.6
Taxes and royalties 250.6 430.1 236.2 507.1 1,684.0
Community donations and investments, political contributions 3.1 3.8 3.0 3.5 6.8
Total 2,674.3 3,174.4 3,136.7 4,042.2 6,990.4
PotashCorp economic value retained has increased more than 500 percent over the last four years. Economic value retained is the difference between the economic value generated and the economic value distributed, as defined by the G3 framework. Rising retained value is the sign of a growing company.
EC2.
Financial implications and organizational risks and opportunities of climate change.		 Climate change risks and opportunities are discussed in the GHG section.
EC3.
Coverage of the organization’s defined benefit plan obligation.

At the end of 2008, PotashCorp’s pension plan obligations were estimated at $698.0 million, while the fair value of plan assets was $479.7 million. Plan assets consisted of a diversified blend of equity investments (57 percent) and fixed income investments (43 percent).
EC4.
Significant financial assistance received from government.		 PotashCorp received no financial assistance from any level of government in 2008.
Market Presence
EC5.
Entry-level wage compared to local minimum wage for significant locations of operation.

To attract and retain employees, PotashCorp offers fair and competitive wages. In all jurisdictions where we operate, our entry-level salaries are significantly higher than the local minimum wage. In 2008, we made all employees eligible for an annual bonus.

Comparison of Entry Wage Levels to Local Minimum Wage (2008 – US $/hr)
  US Canada Trinidad
PotashCorp’s entry-level wage 13.74-19.78 18.75-24.95 4.53
Local minimum wage 6.55-7.75 7.40-8.21 1.60
% PotashCorp entry-level wage/local minimum wage 210-255 254-304 283
EC6.
Policy, practices and proportion of spending on locally-based suppliers at significant locations of operation.

PotashCorp’s local purchasing was 59 percent in 2008, just below our 60 percent target.

By supporting local businesses in the supply chain, PotashCorp benefits from proximity of supply, contributes to local economies and helps attract additional investment to the area. All these factors can contribute to improved community support for our operations.

Our Purchasing Policy requires managers to consider accessibility of supply and potential contribution to the local economy, in addition to price and quality, when making supplier choices.

Local Purchasing*
  2004 2005 2006 2007 2008
% of total purchases made locally* 60 61 62 58 59
* excluding major capital expansions, raw materials, energy and transportation
EC7.
Procedures for local hiring, and proportion of senior management hired from the local community in locations of significant operation.		 We typically hire local residents for our positions. Most employees reside in communities near our facilities.
Indirect Economic Impacts
EC8.
Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind or pro bono engagement.

According to an impact study completed by SJ Research Services in 2008, PotashCorp expansion projects at our Rocanville, Allan, Lanigan, Cory and Patience Lake potash operations are expected to:

  • Add $4.7 billion in cumulative (direct + indirect) GDP to Saskatchewan during construction (2007-2012);
  • Add $3.8 billion in annual GDP from ramp-up in 2014 onward;
  • Create more than 14,500 direct and indirect jobs in the province;
  • Generate taxes totaling $390 million over the five-year construction period, plus $290 million per year after 2014.
EC9.
Indirect economic impacts.		 Through wages, hiring and local purchasing policies, PotashCorp has an economic impact on local labor markets.
Source: PotashCorp