Overview

PotashCorp is an integrated producer of fertilizer, industrial and animal feed products. We are the world’s largest fertilizer enterprise, producing the three primary plant nutrients: potash, phosphate and nitrogen. With almost one-quarter of global capacity, we are the world’s largest potash producer. We are also the world’s third largest producer of phosphate and nitrogen. Our products serve customers on six continents.

Our head office is in Saskatoon, SK. We also have a major corporate office in Northbrook, IL and production facilities in Canada, the United States and Trinidad.

For further information about our company’s 2008 performance and strategies, see our 2008 Online Annual Report.

Legal Form and Ownership

PotashCorp is a publicly traded Canadian corporation (organized under the Canada Business Corporations Act) with all shares listed and traded on the Toronto and New York stock exchanges (symbol POT).

We had 295.2 million common shares outstanding at the end of 2008. Institutional shareholders in Canada and the United States are the primary holders.

All monetary amounts in this report are stated in US dollars, unless otherwise noted.

Business Segments and Operations

PotashCorp has potash operations in Canada, phosphate operations in the United States and nitrogen operations in the United States and Trinidad.

We produce most of the product we sell, and do not use outsourcing as a production strategy.

Potash Operations

Potash is the residue of an ancient evaporated sea. PotashCorp mines and produces potash (potassium chloride). Saskatchewan mines are located at depths of approximately 1,000 meters, and potash is processed in above-ground mills.

The refining process separates clays and sodium chloride from the potash and then dries, screens and, if customers want, compacts the product. Potash is primarily used as a fertilizer but can also be used as a de-icing salt.

In 2008, we produced 8.7 million tonnes of potash, down from 2007’s record of 9.2 million tonnes.

Phosphate Operations

Phosphate comes from marine fossil-bearing ore beds. The company mines the ore and transports it to processing plants. Phosphate rock is crushed and combined with sulfuric acid to produce phosphoric acid (P₂O₅), which is used as a feedstock for the solid fertilizers diammonium phosphate (DAP) and monoammonium phosphate (MAP), liquid fertilizers such as merchant-grade phosphoric acid (MGA), superphosphoric acid (SPA) and other products.

Phosphoric acid can be combined with limestone or phosphate rock to produce animal feed products or purified by solvent extraction to produce industrial-grade phosphoric acid.

In 2008, we produced 7.1 million tonnes of phosphate rock for internal use, down from 7.3 million tonnes in 2007, and 1.9 million tonnes of phosphoric acid (measured as P₂O₅), down from 2.2 million tonnes in 2007.

Nitrogen Operations

PotashCorp produces nitrogen products used in fertilizers, industrial products and animal feed.

Nitrogen is not mined – it exists in the atmosphere. However, plants cannot absorb nitrogen in its natural state, so it must be converted into ammonia or other products for which ammonia is a feedstock. We make ammonia by extracting nitrogen gas from the air and combining it with hydrogen reformed from natural gas.

Ammonia is used to produce upgraded nitrogen products, including urea, nitrogen solutions, ammonium nitrate and nitric acid. Ammonia, urea and nitrogen solutions are sold as fertilizers. Urea is also used in animal feed, and all products except nitrogen solutions are sold for industrial use.

PotashCorp produced 3 million tonnes of ammonia in 2008, down from 3.2 million tonnes in 2007. We also produced 1.3 million tonnes of urea solids, 1.3 million tonnes of nitric acid, 0.9 million tonnes of nitrogen solutions and 0.6 million tonnes of ammonium nitrate solids.

Investments

We invest in offshore potash businesses to expand the benefit of the value of this nutrient on a global basis. Our investments are:

• 28 percent of Arab Potash Company Ltd. (APC) in Jordan and 11 percent of Israel Chemicals Ltd. (ICL) in Israel, key producers and suppliers of potash to Mediterranean and East Asian markets
• 32 percent of Sociedad Quimica y Minera de Chile S.A. (SQM) in Chile, a specialty potash, iodine and lithium producer
• 22 percent of Sinofert Holdings Limited (Sinofert), the largest distributor of potash and other fertilizers in China.

Company-wide performance does not include performance in these investments.

Suppliers

Production feedstocks such as natural gas, ammonia and sulfur account for a major part of PotashCorp’s annual procurement. Other significant goods, services and materials purchased include rail and ocean freight services, electricity, materials for maintenance and repair, and contract services.

The total value of goods, materials and services purchased in 2008 was $4.5 billion, up 61 percent from $2.8 billion in 2007. These are provided by more than 380 key suppliers, mainly in the United States, Canada and Trinidad.

Customers

In potash, Canpotex Limited (Canpotex), the offshore marketing company owned by the three Saskatchewan producers, handles all sales of Saskatchewan potash to markets outside of the US and Canada. Apart from sales to Canpotex, no single customer accounted for more than 10 percent of our sales in 2008.

In phosphate, PhosChem, a US marketing association that includes Mosaic, sells our phosphate fertilizers offshore.

In North America, PotashCorp sells all three fertilizer nutrients to retailers, cooperatives and distributors, who provide storage and application services to farmers, the end-users.

Governments and private importers in China and India usually buy under contract, while spot sales are more prevalent in other markets.

Industrial customers for nitrogen products and phosphoric acid, including purified acid, are mainly based in North America. We have long-term relationships with industrial customers, including BASF and DSM in nitrogen and ICL Performance Products and Innophos in phosphate. Rising incomes offshore are driving growth in consumption of industrial products that require nitrogen and phosphate inputs. Industrial products have historically experienced less seasonality and cyclicality than fertilizer sales.

The main customers for animal feed products are US bulk food producers, and their proximity to our plants is an advantage. Brazil and Mexico are our largest offshore customers. These products are typically also less seasonal and cyclical than fertilizer sales.

Find more discussion on Customers here.

Employees

Employee engagement is discussed in the Governance section. Employment statistics, demographics and benefits are discussed in the Social section.