Global Potassium Reserves and Potassium Fertilizer Use

Terry L. Roberts,President, IPNI

Symposium Global Nutrient CyclingMonday, October 6, 2008

2008 Joint Annual Meeting

Potassium (K) and Potash

Kpresentinmostrocksandsoils

Economicsources sedimentarysaltbedsremainingfromancientinlandseas(evaporitedeposits)

saltlakesandnaturalbrines

PotashreferstoavarietyofKbearingminerals

Common K Minerals

Mineral Composition K2O,%

Sylvite KCl 63.1

Sylvinite KCl/NaClmixture ~28.0

Carnallite KCl MgCl2 6H2O 17.0

Kainite 4KCl 4MgSO4 11H2O 19.3

Langbeinite K2SO4 2MgSO4 22.7

Polyhalite K2SO4 2MgSO4 2CaSO4 H2O 15.6

Niter KNO3 46.5

Common K Minerals

Sylvite(KCl)abundantincommercialdeposits

Sylvinite(KCl+NaCl)alsocommon

HartsalzoredepositswithSO4 salts(kieserite[MgSO4]oranhydrite[CaSO4])arelimitedEurope

LangbeiniteoccursNewMexicoandUkraine

KCl

World Potash Reserves

About100largeburieddeposits+100brinedepositsofcommercialpotential

The world has an estimated 250 billion metric tons of K2O resources

Source: U.S. Geological Survey

Potash Resources and Reserves

Resourcesincludeproven,probable,andinferredreserves

Reserves:depositsofsufficientquantityandqualitythatarecurrentlymined

Reservebase:reserves+depositsthataremarginallyeconomicorsubeconomic

U.S.GeologicalSurveyestimatesglobalreservesat18billiontK2O8.3billontconsideredcommerciallyexploitable.

Source:U.S.GeologicalSurvey,MineralCommoditySummariesandPotash,January2008

Potash Reserves and Reserve Base

ReserveBase,000tK2O

Reserves,000tK2O

Source:U.S.GeologicalSurvey,MineralCommoditySummariesandPotash,January2008

Potash Deposits North America

WorldslargestreservesoccurinSaskatchewan

Oreisexceptionallyhighgrade(2530%K2O)atdepthsof9501,100mincreasingto>3,500m

Uniformthickness(2.43m)andmineralizationandnostructuraldeformations

Sylvinite,somecarnallite,andclay

Potash Reserves In Saskatchewan

Source:PPIC1989

Potash Deposits FSU

FSUhasextensiveprovenreservesofKmineralssecondonlytothedepositsinSaskatchewan

Russia VerkhnekamskdepositintheUralsnearSolikamsk Potashdepthat75to450min13potentiallyminablebedsranginginthicknessfrom26to30m(sylvinite)and70to80m(zoneofsylvinitecarnallite).

Minedbeds1.2to6mthickwith15%K2Owith3to5%insolubles

Belarus Starobinskdepositis2nd largestinorebodyinFSUnearSoligorsk

30potashbedsin4horizons.Mostmining350to620mdepthinsecondhorizon(1.8to4.4mthick)

Sylviniteoreaveraging11%K2Oand5%insolubles

Source:Searls2002,U.S.GeologicalSurvey,MineralsYearbook;Stone,2002,CanadianMineralsYearbook

Potash Deposits Western Europe

OldestdepositsaretheHessenandThringenbedsinsouthernGermany

contain15to20%sylvite,kieserite,andcarnallite(~10%K2O)

Bedsarerelativelyflatlying,butalsofolding,withsomebarrenzones,suddenthicknesschanges,etc.makingminingdifficult

AlsocarnalliteandkieseritedepositsincentralGermanyandsylviteandcarnalliteinnorthernGermany

SylvitedepositsinEnglandandsylviniteinSpain

Source:Searls2002,U.S.GeologicalSurvey,MineralsYearbook;Stone,2002,CanadianMineralsYearbook

Potash Deposits

MiddleEast:KextractedfromDeadSea containsanestimated1billiontKCl

LatinAmerica sylviniteandcarnalliteintheSergipebasininBrazil KNO3 inChileinAtacamaDesert(est.1billiontNaNO3 and100milliontKNO3)andSalardeAtacama,ahighattitudedrylake(brineest.at120milliontKCland80milliontK2SO4

Asia:CarnalliteandKbearingbrinesinQinghaiandXinjiangProvinces

UndevelopedDeposits

Thailand,Argentina,AmazonBasininBrazil,Morocco,Poland,andadditionaldepositsintheFSU

Source:U.S.GeologicalSurvey,MineralCommoditySummariesandPotash,January2008

Production of KCl and K2SO4, Mt

Source:IFAStatistics

World Mine Production, 2007000 t K2O

Source:IFAStatistics

Canada: potash export by destination in 2007, 000 t K2O

4,501

66

From Canada

1,900

3,340

580

214

Source:IFAProductionandTradeStatistics

Russia: potash export by destination in 2007, 000 t K2O

344

1,961

1,896

From Russia/Belarus

1,059

4,339

Source:IFAProductionandTradeStatistics

116

78

Germany: potash export by destination in 2007, 000 t K2O

670

40

From Germany

109

430

126

52

1,515 92

Source:IFAProductionandTradeStatistics

Israel/Jordan: potash export by destination in 2007, 000 t K2O

353

856

From Israel/Jordan

1,132

137

67

14496

3

Source:IFAProductionandTradeStatistics

World Potash Production and Consumption,

Mt K2O

Source:IFAStatistics

Regional potash consumption,000 t K2O

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

WesternandCentralEurope

EasternandCentralAsia

NorthAmerica

LatinAmericaandtheCaribbean

Africa

WestAsia

SouthAsia

EastAsia

Oceania

Source:IFAProductionandTradeStatistics

Potash consumption, 000 t K2O

4countriesaccountedfortwothirdsofpotashimports US18%,Brazil16%,China21%,andIndia9%

Source:IFAProductionandTradeStatistics

Global Fertilizer Consumption Forecaststo 2012/13 (Mt nutrients)

N P2O5 K2O Total

Ave.2005/06to2007/08(e)

95.5 38.6 27.6 162.1

2012/13 (f) 115.6 45.7 33.0 194.3

Ave. AnnualChange

+3.2% +2.8% +3.0% +3.1%

Source:P.Heffer,2008.MediumTermOutlookforWorldAgricultureandFertilizerDemand2007/0820012/13.IFAAnnualConference,Vienna,Austria

Forecast Potash Demand Through 2012/13

0

1

2

3

4

5

6

% A

ve. i

ncre

ase

in p

otas

h us

e% Average Annual Increase 2005/0607/08 vs. 2012/13

Source:P.Heffer,2008.MediumTermOutlookforWorldAgricultureandFertilizerDemand2007/0820012/13.IFAAnnualConference,Vienna,Austria

World potash supply/demand balance

15,000

18,000

21,000

24,000

27,000

30,000

33,000

36,000

39,000

42,000

45,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

000

t K

2O

Supply of potash

Source:Prudhomme2008.GlobalFertilizersandRawMaterialsSupplyandSupply/DemandBalances20082012.IFAProductionandTrade

World potash supply/demand balance

15,000

18,000

21,000

24,000

27,000

30,000

33,000

36,000

39,000

42,000

45,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

000

t K

2O

Supply of potash Available for fertilizer

Source:Prudhomme2008.GlobalFertilizersandRawMaterialsSupplyandSupply/DemandBalances20082012.IFAProductionandTrade

World potash supply/demand balance

15,000

18,000

21,000

24,000

27,000

30,000

33,000

36,000

39,000

42,000

45,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

000

t K

2O

Supply of potash Available for fertilizer Fertilizer Demand

Source:Prudhomme2008.GlobalFertilizersandRawMaterialsSupplyandSupply/DemandBalances20082012.IFAProductionandTrade

World potash supply/demand balance

Supply/demandbalanceisconsideredverytightandisexpectedtobesoforthenextfewyearstriggeredanincreaseinworldpotashprices

100

600

500

400

300

200

2006 2007 2008

J F M MA JJ S O N DA J F M MA JJ S O N DA J F M MA JJ A

$/t f

.o.b

. Van

couv

er

Potash prices, January 2006 September 2008

New Potash Capacity2008 to 2012

Year MtK2O Country

2008 0.0

2009 0.84 Jordan,Russia,Israel,Canada,USA

2010 1.02 Canada,Russia,Israel

2011 1.14 Canada,Russia,Israel

2012 4.74 Canada,Argentina,Belarus,Jordan

Total 7.74

Source:Prudhomme2008.GlobalFertilizersandRawMaterialsSupplyandSupply/DemandBalances20082012.IFAProductionandTrade

Tight supply/demand balance new interest in potash mining

Saskatchewanistheworldslargestproducerwith37%ofsupplyand>50%ofglobalpotashreserves

Nopotashexplorationpermitsissued15yearspriorto2004next3yearstheareaunderleaseincreasedfrom250,000to3millionhectares

NewcompaniesBHPBilton,PotashOneInc.,PotashNorthResourceCorp.,AthabascaPotash,IvanyPotash,SidonInternationalResources,GrizzlyDiamondsLtd.,AlixResourcesCorp.,GeoMineralsLtd.,andJSCAcron

Estimatedcapitalcostforaconventionalmine$2.8billion,excludinginfrastructureoutsidetheplantgateandwithnoproductionfor57years.

Why the increased demand for fertilizer?

Increasedfooddemandandlesslandtoproduceit

0

2

4

6

8

10

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050

Population, billions

0.00

0.10

0.20

0.30

0.40

0.50

0.60

1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005

Arable land per capita, ha

Source:FAO

Why the increased demand for fertilizer?

Dietsarechangingmoreprotein

Requiresmorefeedgrainstoproduceprotein

7kg/kgbeef, 4kg/kgpork,and 2kg/kgpoultry

0102030405060708090

1995 1997 1999 2001 2003

Developed World Developing World

Source:FAO

Meat con