Edited from: “Strategy” and “Outlook” annual report 2009
Mosaic states that fiscal year 2009 “tested” the company to a new level, due to the effects of the global economic crisis. This led to a sharp decline in US phosphate and potash use in fiscal 2009 and, as a consequence, reduced demand for Mosaic products.
“As a leader in this industry, our charge is to capitalise on the best of times and to make the best of the more challenging times,” says president and chief executive officer, James Prokopanko.
Mosaic further states that the following three words: “extraordinary, exceptional and essential” describe the company’s history and its future. The investments being made to grow Mosaic into the future are designed to capitalise on the growing global demand for food, feed and fuel. Even with the volatility of the past year, long-term fundamentals remain intact.
“Mosaic is taking advantage of these challenging economic times in order to build a stronger, more resourceful company: to expand our capabilities, to develop innovative products, to create efficient processes and to think in new ways,” continues Prokopanko.
However, the company states that despite short-term market volatility, it will continue with its goal of pursuing growth. Mosaic also says that it is taking advantage of these challenging economic times in order to build a stronger, more resourceful company to expand its capabilities, to develop innovative products, to create efficient processes and to think in new ways.
“Though many companies have been forced to postpone expansion plans for the foreseeable future, Mosaic is executing on growth opportunities,” says Prokopanko.
Mosaic says that the potential for growth and return on investment (ROI) is more evident in its Potash business. Steady and robust potash demand growth is forecast for years to come due to historically low application rates in developing countries and the key nutritional value of potash in optimising crop yield. Potash deposits are only found in limited regions of the world.
Mosaic estimates that potash reserves are over 100 years and it is now well into a phased, multi-year capacity expansion of its Saskatchewan mining operations.
In fiscal 2009, Mosaic commenced the second phase of a long-term expansion initiative of its Canadian mines.
In addition, it is making these investments at an estimated average capital cost that is significantly lower than that of developing new mines. By 2020, it expects to be producing approximately 17m tonnes/year. On this basis, Mosaic says that it is “ensuring that the company remains one of the premier potash companies in the world”.
In addition to potash, Mosaic says that phosphate is also essential to crop production. Mosaic claims that it produces more finished phosphate fertilizers than any other producer in the world.
“Scale, geographic location and vertical integration all combine to position Mosaic as one of the world’s lowest cost producers,” says Prokopanko.
Its Florida-based rock reserves is said to provide a “significant competitive advantage” over non-integrated producers who incur rock input costs. Though its Florida reserves are said to provide decades of mining opportunity, Mosaic says that acquiring additional high-quality rock resources is a “priority”.
“We are making ongoing investments in this business to ensure we maintain our world-class competitiveness. Cost and quality improvement initiatives include becoming energy self-sufficient and developing premium products that differentiate our position in the marketplace. When phosphate demand is high, our Phosphates business provides exceptional returns and cash flows,” says Prokopanko.
“Our goal is to ensure that the Phosphates business generates attractive returns on a through-business-cycle basis with the most compelling returns at the top of the cycle. With global phosphate demand forecasted to grow between 2.0% and 2.5% annually, we are excited about the value creation opportunities Mosaic can capture,” continues Prokopanko.
Mosaic states that the investments being made to grow Mosaic into the future are designed to capitalise on the growing global demand for food, feed and fuel. Even with the volatility of the past year, long-term fundamentals remain intact. The company says that there are 75m more people to feed in the world each year. By the year 2020, the world’s farmers will need to provide for 7.6bn people, requiring that world grain and oilseed production grows by about 20%.
“As we execute our strategic growth plan, our strong balance sheet and strong cash returns remain two of our most powerful assets. Funding growth opportunities and internal investments to sustain peak operational efficiency is a top cash priority,” concludes Prokopanko.
Please also see US Mosaic returning cash to shareholders on ICIS news
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Financial highlights: Mosaic, year ended 31 May
|
|
2009 |
2008 |
2007 |
2006 |
2005 |
|
Sales (€ m) |
10,298 |
9,813 |
5,774 |
5,306 |
4,397 |
|
Operating Profit (€ m) |
2,401 |
2,807 |
616 |
106 |
319 |
|
Net Profit (€ m) |
2,350 |
2,083 |
420 |
-121 |
166 |
|
Total Assets (€ m) |
12,676 |
11,820 |
8,802 |
8,721 |
8,412 |
|
Number of Employees |
7,400 |
7,000 |
8,000 |
8,000 |
8,000 |
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Mosaic
Company Structure
Mosaic is a US-based producer of phosphate and nitrogen fertilizers, potash and animal feed products. Mosaic was created in October 2004 through the integration of the business and assets of the Cargill Crop Nutrition business units of privately held Cargill and with the business of IMC Global (IMC). IMC Global dates back to 1909 when entrepreneur Thomas Meadows started in the phosphate mining business. In 1940 the company mined 50,000 tonne of potash from its Carlsbad, New Mexico plant.
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