Economic

In 2009, we generated the third-highest economic value as defined by GRI in our history despite a 65 percent decrease in year-over-year potash sales volumes. Dramatic reductions in tonnes of potash sold occurred in both North American (-63 percent) and offshore (-66 percent) markets. Realized prices held considerably better for potash than for phosphate (-50 percent) and nitrogen (-48 percent): Potash net sales prices were up 5 percent in North America, while offshore prices declined 18 percent.

Economic Value Generated

Economic value distributed has increased by 41 percent since 2005.

Economic Value Distributed — Overview

Short-term market conditions combined with increased spending on potash expansions led to more value being distributed than generated in 2009. Year-over-year value generated decreased by 59 percent, due mostly to sales decreases in all segments. Value distributed also decreased, but by a smaller magnitude, 36 percent.

While negative economic value retained is unsustainable in the long term, in the short term it reflects our commitment to our Potash First strategy (expanding our potash production capacities) and our confidence in this segment to generate significant value in the future.

Economic Value Retained

Climate change risks and opportunities are discussed in the GHG section.

PotashCorp provides retirement income and other post-retirement benefits for most employees. Retirement benefits help attract and retain a dedicated workforce and support long-term financial planning for our employees and labor stability for the company.

The investment portfolios for our defined benefit pension plans include equity and fixed income investments but do not include private equity, real estate or hedge fund holdings.

Asset Allocations of PotashCorp’s Significant Defined Benefit Pension Plans
PotashCorp’s Defined Benefit Pension Plan Assets and Obligations ($ millions)

PotashCorp received no financial assistance from any level of government in 2009.

To attract and retain employees, PotashCorp offers fair and competitive wages. In all jurisdictions where we operate, our lowest entry-level wages are significantly higher than the local minimum wage.

In 2009, our Board of Directors agreed to an exemption under our Short-Term Incentive Plan (STIP), allowing employees at our plant sites to be eligible for bonus payments based on site-specific safety and environmental performance, even though the company did not reach the required economic targets. We permanently raised the recognition factor for individual performance for non-hourly employees to plus or minus 30 percent of the award calculation. For the 2009 award year, this was increased from plus or minus 20 percent.

Comparison of Entry Wage Levels to Local Minimum Wage

PotashCorp local purchasing was 62 percent in 2009, exceeding our 60 percent target.

Local Purchasing

We typically hire local residents for our positions. Most employees reside in communities near our facilities.

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:

• Create CDN $3.2 billion in economic activity in Saskatchewan during construction from 2005 through 2013;
• Add up to CDN $3.8 billion in annual GDP from ramp-up in 2014 onward;
• Create almost 15,000 direct and indirect jobs in the province from construction and operation;
• Generate taxes totaling CDN $390 million over the construction period, plus CDN $290 million per year after 2014.

Through wages, hiring and local purchasing policies, PotashCorp has an economic impact on local labor markets.