Environment

Our potash and phosphate businesses mine ore to make product. Most natural gas is consumed to make ammonia, while sulfur is used to make sulfuric acid and generate steam. Limestone consumed to produce monoammonium phosphate and diammonium phosphate is mined at Weeping Water NE and purchased at other locations. We consumed less potash ore, phosphate rock, sulfur and limestone in 2009 since we reduced production of the products that use these raw materials.

Materials Mined or Consumed

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 (41 percent), reforming natural gas to make ammonia (53 percent) and purchasing electricity (6 percent). Electricity and fossil fuel usage declined primarily because of the 60 percent year-over-year decrease in potash production. Although process natural gas use increased overall due to higher ammonia production, ammonia plant efficiency improvements helped to slightly reduce consumption.

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 NC, White Springs FL and Geismar LA, which generate electricity and steam by recapturing heat from sulfuric acid production. Potash and nitrogen operations also utilize a significant amount of recaptured heat.

Direct Energy Use — by Type

Indirect energy is the energy consumed by the providers who make the electricity we purchase. Our electricity purchases vary each year based on the products that we make.

Indirect Energy Used

Waste Heat Recovery and Cogeneration

About 25 percent of our total energy used 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.

Energy Efficiency Projects in 2009

• Allan SK — Installed new burners and other equipment on both boilers, which will increase energy efficiency by about 6 percent.
• Patience Lake SK — Recaptured heat from the dust collection system to reduce natural gas usage.
• Aurora NC — Completed construction of a new, more energy-efficient sulfuric acid plant to replace two sulfuric acid plants built in the 1970s; expanded an existing electricity generator to use steam from the new sulfuric acid plant.
• Joplin MO — Installed a new, more energy-efficient boiler.
• Marseilles IL — Used more photocells for lighting and insulated the laboratory building.
• Weeping Water NE — Installed more energy-efficient lighting and motion sensors to reduce usage.
• Trinidad — Increased the energy efficiency of the 01, 02 and 04 ammonia plants.

Our operations withdraw water from rivers, aquifers and the Atlantic Ocean. About 75 percent of the water withdrawn is for phosphate mining operations. The processes are closed-loop by design, with minimal loss of water. In 2009, we recycled 83 percent of all water used in our processes.

Water usage dropped in all three of our business segments due to decreased production.

Water Used

Water used by PotashCorp’s operating sites does not significantly affect any ecosystems, habitats or water sources.

Water Withdrawn — by Business Segment

The processes are closed-loop by design, with minimal loss of water. In 2009, we recycled 83 percent of all water used in our processes.

Water Recycled — by Business Segment

PotashCorp conducted production and mining activities on 183,000 acres of company-owned land in 2009: 41,000 acres in potash, 141,000 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.

A major focus is to reduce the impacts on wetlands. 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. In 2009, we donated CDN $50,000 to Ducks Unlimited in the second installment of a CDN $250,000 multi-year commitment to support wetlands conservation.

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 lifecycle 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.

Summary of PotashCorp Initiatives to Protect and Restore Ecosystems
Impact on Species on the International Union for Conservation of Nature Red List of National Conservation List

Impact on Species on the International Union for Conservation of Nature Red List of National Conservation List

Direct Greenhouse Gas Emissions

Production of nitrogen products results in 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 as product and some is used to make urea, but what remains is vented as process CO₂. The nitric acid plants emit almost all our nitrous oxide (N₂O). Nitric acid production decreased in 2009, resulting in a reduction of nitrous oxide emissions.

Direct Greenhouse Gas Emissions — by Type

Indirect GHG emissions are an estimate of the emissions stemming from purchased electricity. Our Aurora NC, White Springs FL and Trinidad facilities sell electricity back to the grid.

Indirect GHG Emissions from Electricity

Greenhouse gas emissions are normalized in each business segment based on the nutrient produced there: KCl, P₂O₅ or N. The GHG intensity increased 46 percent in potash because GHG intensity increases as production decreases. The company has a target to reduce GHG emissions by 10 percent on a normalized basis, from 2.09 in 2007 to 1.8 by the end of 2012. We are evaluating the installation of GHG emission controls at our nitric acid plants to achieve this target. We have already installed the GHG monitors at Geismar LA and Lima OH and await clarification of pending US GHG legislation before the controls are installed.

Normalized Greenhouse Gas Emissions — by Business Segment

More than 80 percent of PotashCorp’s nitrogen oxides are emitted by our nitrogen operations, mainly from our nitric acid plants. Emissions decreased by 21 percent because of control systems added at Augusta GA.

Carbon monoxide (CO) is emitted from combustion sources such as boilers and industrial heaters. Since less fuel was burned in 2009, less CO was emitted. 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. Dust emissions declined in 2009, mostly due to lower potash production, and partially due to the installation of TurboScrubbers at Cory SK and Lanigan SK.

Almost all sulfur dioxide emissions are from our sulfuric acid plants, where emissions decreased with lower production in 2009.

Criteria 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. In 2009, VOCs declined as potash production decreased. Transfer of a gas well from our New Brunswick facility to another company also contributed to lower VOCs.

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. Emissions increased in 2009 because of increased ammonia production at Trinidad.

Hydrogen sulfide, sulfuric acid mist and fluoride emissions are from phosphate operations. Emission rates for all three vary based on testing and production rates. Hydrogen sulfide emissions decreased year-over-year with less phosphoric acid production at Aurora NC. Sulfuric acid mist emissions decreased in 2009 because of lower sulfuric acid production at White Springs FL.

Other Significant Air Emissions

In 2009, we eliminated our water discharge outfall to the Couva River in Trinidad to comply with the future temperature discharge requirements of our permit. Now all water discharges from Trinidad go to the Atlantic Ocean.

At Cincinnati OH, we have installed new monitoring and pollution control equipment for suspended solids, copper and zinc.

Salt as brine is discharged to the sea from our Sussex and Cassidy Lake potash operations in New Brunswick. The amount discharged has risen as the capacity to remove the brine — via a newly constructed pipeline — has increased to allow us to remove more water than the inflow to the Sussex mine.

Most nitrogen compounds discharged are from the nitrogen facilities with a lesser amount from phosphate operations at Aurora NC and White Springs FL. Generally, nitrogen discharges increase with increased precipitation.

Fluoride and phosphate discharges generally depend on annual concentrations and volume of water discharged. Most of our fluoride and phosphate discharges are at Geismar LA. With very little rainfall there in 2009, we were able to take water that is usually discharged from inactive areas and recycle it to the process, reducing the amount discharged.

In January 2010, the US EPA proposed limits on phosphate and nitrogen water discharges in Florida, which could impact our White Springs facility. In March 2010, the EPA decided to delay promulgating the new limits until 2011. We continue to participate in public hearings and comment on the rulemaking to the EPA through The Fertilizer Institute, a trade organization. These new rules could also affect fertilizer application on farm fields. We continue to work with farmers though our trade associations to promote proper and efficient fertilizer application and usage (see Indirect Impacts of Fertilizer at the bottom of this page).

Discharges to Surface Water

Extracting phosphate from ore produces gypsum, clay and silts. In 1985, our facility in Aurora NC became the first mining and mineral processing complex in the world to operate a process in which clay washed from the mined phosphate ore is blended with this gypsum and used to fill mined land. The gypsum/clay blend provides a reclamation base that dewaters rapidly, is similar to natural soil and supports a variety of grasses, trees and agricultural crops. The quantity of gypsum, salt and clay waste varies based on production rates. Both phosphate and gypsum production dropped by 23 percent in 2009.

Potash mining produces coarse tailings, fine tailings, waste salt and clay, and salt as brine, all of which are impacted by the rate of potash production. The quantity of salt as brine pumped into injection wells varies with annual precipitation and the ability to manage water levels in the storage ponds.

A 61 percent drop in potash production led to a 63 percent year-over-year reduction in coarse tailings produced and a 50 percent decline in fine tailings.

Waste from Mining

Non-Mining Wastes

Offsite solid waste disposal occurs in our potash, phosphate and nitrogen operations. Non-process waste includes garbage, insulation, soil, wood and other miscellaneous items. The greatest increase in disposals during 2009 occurred at our Lanigan SK facility, where we continued to decommission a landfill and ship waste off-site.

All on-site waste is in potash, 95 percent of which comes from Lanigan. It disposed of much less waste in 2009 as part of its landfill decommissioning.

Waste is recycled at all our plants. The amount varies annually based on construction and maintenance activities. In 2009, recycled waste returned to normal levels after we recycled 10,000 tons of off-spec coal in 2008.

Non-Mining Wastes

Environmental events include reportable quantity releases, permit excursions and spills (including provincial and state events). Environmental fines can be issued by the US EPA, state regulators, Environment Canada and provincial regulators. Environmental incidents increased by 16 percent in 2009 — short of our target of a 15 percent reduction. Three of the seven permit excursions occurred at our Cincinnati OH facility; we have installed new wastewater treatment equipment to continuously monitor suspended solids and remove zinc and copper from the discharge that leaves the facility. We also had more spills — mostly salt water associated with the disposal of inflow at Sussex NB, which was corrected by constructing a new pipeline.

Environmental Events and Fines

Fertilizer use results in GHG emissions. If applied in excess, fertilizer runoff can impact water quality. To educate our customers and farmers on the impact of excess fertilizer usage, 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.

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

Environmental incidents increased by 16 percent in 2009 — short of our target of a 15 percent reduction. Three of the seven permit excursions occurred at our Cincinnati OH facility; we have installed new wastewater treatment equipment to continuously monitor suspended solids and remove zinc and copper from the discharge that leaves the facility. We also had more spills — mostly salt water associated with the disposal of inflow at Sussex NB, which was corrected by constructing a new pipeline.

Environmental Events and Fines

Transportation events are spills or deviations from the US Federal Railroad Administration code for railcars carrying hazardous materials. We had 21 transportation events among more than 87,500 shipments. Hazardous material incidents are related to transporting materials by rail. Fines in 2009 were issued by the US Department of Transportation or the Federal Railroad Administration.

Transportation Events and Fines

We received three awards for our performance in transporting our products in 2008 (the awards are always one year behind).

Transportation Awards

Reduced production led to lower potash environmental operating costs in 2009, with tailings disposal at Rocanville SK and Sussex NB contributing significantly.

Most of the environmental operating costs in phosphate are incurred at Aurora NC and White Springs FL. Aurora increased costs for land reclamation, land mitigation and lime treatment, while White Springs increased costs for lime treatment and accrued costs for the remediation of a sinkhole discovered in December 2009.

Nitrogen business segment costs declined due to reduced nitric acid production at Geismar LA, which lowered the cost of air pollution controls, and lower costs resulting from decommissioning an inactive site at Savannah GA.

Environmental Operating Costs — by Business Segment

Our environmental costs (operating and capital) are also classified by category. Construction of the brine pipeline at Cassidy Lake and the slurry wall and pond expansion at Rocanville accounted for a 400 percent increase year-over-year in pollution prevention capital costs, the largest increase in any category. Reduced wetlands acquisition led to a 67 percent decrease in restoration of habitat costs.

Environmental Costs — by Category