All right. Thank you and good morning, everyone. I appreciate everyone continuing to join us here at our Goldman Sachs Industrials and Materials Conference. My name is Adam Samuelson. I'm the agribusiness and packaging analyst here at Goldman. Really pleased today to continue our conference with The Mosaic Company. We've got Joc O'Rourke, their President and Chief Executive Officer, as well as Jenny Wang, who's their Senior Vice President of Global Strategic Marketing. We're doing this in fireside chat format. We do want questions from the audience. There is a microphone that can circulate, so please don't be shy. I will happily take questions from the floor as we get going. Joc, Jenny, thank you so much for joining us today. Obviously, look, we're in the middle of the spring, it's a pretty dynamic time, in the agricultural markets. You just reported earnings last week. I think maybe just to start with a high level on demand and fertilizer, across potash and phosphate, what you're seeing as we move through, a pretty critical North American spring season. Yeah. If we look at North America right now, you know, we've had a very strong, certainly a very strong start and middle of the season. With last Year's lower application and this Year's, we've got much better pricing compared to grain pricing for fertilizers, it seems that that has created a very strong demand for our products. We're seeing, you know, I think we reported last week, the highest April we've had in over 5 Years. That really bodes well for the spring season. Generally, it seems to me the farmer economics are good. Farmers know they need the product, so they're putting it down in the US. Okay. I wanna maybe split this a little bit between talk about potash and phosphate a little differently. Sure. of the dynamics of the 2. Yeah. While related, do have real differences. Maybe we'll start on the phosphate side. Can you just maybe lay out, kind of, as you see the market as it's evolved this Year, kind of with the dynamic moves in the inputs with ammonia and sulfur, where do we see the cost curve today? How do we think about that helping to inform pricing, as we sit here? You know, it's been a very interesting couple of Years for the cost curve, if you will. There's really 4 main players at the bottom of the cost curve. There's OCP, there's the Saudis, there's ourselves, and there's the Russians, you know, particularly PhosAgro. You know, if you look at the Saudis, they are highly advantaged on their price of ammonia because they buy their natural gas at probably under $1 MMBtu. In cases of high natural gas prices, high sulfur prices, the Saudi Arabians go right to the bottom of the cost curve, and that's probably what we saw up until probably the middle of last Year. You saw they did quite well financially. Certainly our joint venture paid out its first dividend, they've done quite well. On the other side, you have the Moroccans who have inexpensive rock costs, but they pay market price for both ammonia and sulfur. You know, in the case of during the run-up when the, you know, European gas price was in the, what, 30s per MMBtu, the price of ammonia went up to what, $1,600? You know, you're dealing with a $1,600 ammonia price, in which case our advantaged ammonia costs probably put us ahead of everybody except for the. Well, the Russians would have done fine too, except in the North American market, where they're, it's assumed that they are actually being subsidized for that. You know, it puts us all ahead of Morocco. When you swap back to where it is today, you probably move us to more around the middle of the cost curve. The non-integrated players obviously are always going to pay, you know, the large price. Today they're probably in a $550-$600 range, if you consider a rock cost of maybe $175, ammonia at, you know, $350-$400, and sulfur at $150 if you're buying. In that case, you know, you're probably talking about, like I say, a $600, $550-$600 total cost. Whereas the rest of us are probably in the low $300s. It's quite a steep cost curve and gives some real strength to the long-term pricing environment. As I think about kind of that framing, and I'm, probably some distinction between your Florida mining, your Florida and U.S. operations. Right. versus your Brazilian operations. Definitely. Help me think about the sources of cost advantage versus those high-cost producers in for each region. Okay. inform kind of a more normal phosphate margin that you should be realizing. In the US, obviously, we have the advantage of location. We have a big advantage on ammonia between the CF contract and our own production. I think next Year we're only looking at maybe buying 25% of our ammonia on the open market. Obviously, you know, in today's market, I don't think our CF contract is highly in the money. It was earlier in the Year, but it's not highly in the money now, although still in the money. Here, you know, we have that ongoing competitive advantage, I think, in this market. When we export to Brazil, we're just, and like anybody else on the cost curve. If we look at Uberaba or Araxá or some of our Brazilian operations. You know, when it costs at least $100 to get from the coast to anywhere in the center of Brazil, we hold that bottom of the cost curve because of that transport. While our costs are probably, you know, in the sort of average range for an integrated producer, sorry, you know, middle of the cost curve, when you take into account the where it's located, we have a pretty good advantage there, and we can normally, you know, take advantage of that and have a pretty strong position. Okay. If I'm thinking about the pieces of that, especially in Fertilizantes, and there's a distribution component. Yeah. You've talked about the normalized margin. Yeah ...$30-$40 a ton in phosphates, or in the distribution business in Brazil. On your production business down there, you produce 3.5 or so million tons of finished product, and some of it's MAP and SSP. Some SSP, yeah. ...and the other products. What's that freight advantage that should be pretty structural when you think about your delivery costs? I think for the high analysis products like the MAP, then you probably have that $100 is pretty baked, and that's really what you get. You end up with that $100 margin pretty regularly. If you think about SSP, though, SSP is a lot more dependent on, you know, what the Chinese might bring in or the Egyptians. That market is a little different, and obviously the cost of making it doesn't include ammonia, so there's. A lot of it we make, you know, for instance, with uncertain, we make it right at the coast with purchased rock. Up at the Esterhazy and stuff like that, yes, we have a pretty good thing. You probably can't capture that whole $100 on SSP all the time, obviously depending on market. Okay. Maybe then thinking on the supply side and on phosphates, of the 3 nutrients, this is the 1 that was probably the least directly disrupted by events in the. Right ...in the Black Sea in Russia and Black Sea last Year. Certainly cost curve with ammonia had volatility. It saw seemingly some more demand declines and has had a lot of trended a lot of the same directions as the other 2. Kind of where do you see the supply-demand in phosphate today, and what are the big swings that kind of would move from a tight market to seemingly it's been a kind of buyer's market for the last nine months? Let me, I'm gonna hand part of this over to Jenny 'cause she has all the S&D details, obviously more than I do. You know, let me start by saying with the changes last Year we saw, the biggest 1 was, of course, a much lower export from China. I think last Year we were somewhere in the range of 6 million tons out of China. From a supply side, we were down significantly. I think at the same time we didn't see extra tons from either OCP or ourselves, so that, you know, that left a pretty good hole in the market. I think overall last Year the market was actually supply constrained, and it started not because of the war, but because before the war when China started putting on the restrictions on exports. We saw very much the same pattern in pricing where the price went up to $1,200 a ton and people slowed down their purchases. As we've come out of that, I would say, you know, phosphates more than potash has held price fairly well. Sorry. It's held margin fairly well because the price of the inputs has gone down quite a bit. Let me get Jenny to walk through some of the supply and demand dynamics around the world. Sure. Sure, Joc. From demand side, last Year, you're right, Adam. We had some disruptions out of Russia, Ukraine war as well, especially the EuroChem facility in Europe. As Joc mentioned, the biggest drop was actually out of China, largely reduced export out of China. That drop of the supply basically constrained demand, and that was about 10% last Year. We believe this Year the demand is going to largely recovered because of the supply situation is like slightly different. On the supply side, we believe China export will stay restrained, restricted by the Chinese government. We will see some moderate increases from last Year on the Chinese export side. We think EuroChem's production site in Europe will come back slightly, like 50% of operating rate, which they were completely down last Year. We baked in the forecast of OCP will come back as well. Last Year, their total DAP, MAP, TSP sales were down over 10%. We don't know the reason. We believe this is going to come back. We had some production hiccups over the last Year because of the hurricane thing. We baked in our production to recover as well. All added together, this market is going to be slightly short on supply. We believe it's going to be 9% of the recovery on the demand. Again, this is a supply constraint. Going forward over the next 3 to 5 Years. There's no immediate new capacities coming out of the market over the next 3 to 5 Years. The major ones, as announced, the Saudis. Ma'aden has announced their Phosphate 3, and the current forecasted starting point is 2027. We have been through this with our own joint venture. It will take 3, 4 Years to get to designed capacity, which is basically beyond 5 Years time, timeframe. OCP, their last announced expansion, which is S line, is basically fully wrapped up in the first 1/4 this Year. There's no new P2O5 production announced over the next 5 Years. 1 announced in the Southern part, Morocco, uncertain, and that's it's again, it's a 2027 timeline. That's the major new capacities, if you look at relatively mid to long term. Over the next 5 Years, this is going to be a very tight market. The only swing factor is China. As we think about, you feel comfortable on demand returning to more normal levels this Year, and the North American spring is certainly encouraging evidence of that. How do you think about channel inventories today, I mean, outside of the U.S., which is in the middle of the season, that would be a clear signal that demand is could be coming back and improving the market in the back 1/2 of the Year? I think that if we look around the world, I mean, you know, 1 of the big consumers last Year was India. They did, you know, a lot of the, sort of the 1 that performed well. I think all that's gone to the ground. Obviously China, they continue to want to bring their own product into, you know, to consume it internally. There's also the move away from agricultural products and moving towards things like the batteries, right? In China, that's becoming a pretty big deal. What gives me encouragement is, 1, inventories around the world aren't building. I think in Brazil, they're probably built right now, but they're not going to... I mean, once this starts, I mean, we're looking at probably the next couple of weeks just before you really start gearing up for the safra season. They're waiting till the last moment, but once that happens, you know, they've gotta move, what, 40-some, 40-plus million tons of fertilizer in the Year. It's gonna have to move pretty soon. You know, I feel comfortable that the inventories aren't too high there. In any of these gap times, like in March in North America, where you don't quite have the market, you see this buildup of inventory, and everybody starts getting concerned. If you look at, use the example of the U.S., that disappeared really in 3 weeks. Now I think everybody's hand-to-mouth now, right? Yeah. We're resupplying the second and third time already. Yeah. I think the same will happen in all the other markets. You still have, you know, the monsoons to come, and then you got India, Pakistan... Oh, my gosh! ... Bangladesh, all of those countries, Sri Lanka, all of those countries. You've got the Southeast Asia, Vietnam, Philippines, Indonesia, Malaysia, and all that, so the big rice crops. You know, from our perspective, there isn't a lot of stuff sitting on the ground, and there is a lot of pent-up demand because last Year we just didn't use as much fertilizer and still got good yields. And if you think about it, we were doing the math quickly here, and you probably remove about what was I saying? About 70 kilos of DAP per acre in, you know, Illinois for corn. You probably remove 50 kilos an acre for potash. You know, you think about just how much has been removed from the soil last Year with the under-application, and it's a lot. Okay. I wanna come back to the battery. Yeah. Battery point after. After potash. After potash, I think. Right. Yeah. Maybe let's switch gears. Potash has been, I think, more dynamic and certainly a much more significant supply disruption in terms of the third biggest exporter, having kind of their main route to market cut off at least temporarily. It's also 1 that seems to have the biggest demand vacuum over the last 6-9 months. I, how is this being resolved as we sit here today? Are you seeing evidence of the demand elasticity is now back to a point where, hey, the pricing and the affordability works and there's tons going to ground? Yeah. I think in almost all markets now, if you look at it from that perspective, you know, we settled in India, the problem in India, of course, is that they haven't come up with their subsidies. India is an artificial market, right? You know, I think the importers are waiting for the subsidy. China, we don't have, and I gotta come back to China to talk about that. The palm oil, you know, producers, Indonesia, Malaysia, they're gonna come back. They have to. They have to have their... You know, they have to put potash down every Year for good palm oil. If you think about all oils, with the loss of the Ukraine sunflower oil, edible oils are gonna be tight. That bodes really well for palm oil and others, sun, canola oil and whatnot. Those markets are gonna be strong. Brazil is a depleted tropical soil. If they're going to get their yields that they need, they can't go 2 Years depleting them. Then you've got U.S. doing very well. Europe has been slow. I don't know what that means for, you know. I think where the supply gap is hurting is probably Europe and North Africa. Mm-hmm. Europe. Having said that, we don't ship to Europe or anything, so our markets really don't get disrupted. What does that mean from a price perspective? I think you'll see, you know, you should see a strengthening of price when everything starts moving. Well, it's already moving. We're seeing, you know, like I say, we saw a great April for North America. We're moving reasonable tons in Brazil. I think I saw today, at least for orders, Brazil is at 61% of a total 45 million-46 million ton Year. While they haven't been delivered yet, the orders are coming in. 45 million tons just for the. The whole fertilizer market. that's NPK, that's not just- Yeah ...potash. That's for the whole fertilizer market, of which, what, 25-ish% is potash, which is almost all imported right now. The 1 that kind of throws a little bit of wrench in the normal supply and demand... First of all, Belarus is doing probably a little better than people had expected. We think they're shipping 2 million tons through Russian ports. Probably more than that. $2 million through-. Two and a 1/2- Yeah through Russian ports and 2 through rail. Mm-hmm. You know, they're shipping 4.5 million tons, and we really were probably working on them being less than 4. It's not huge, but that's. You know, 2 million tons is going by rail to China from the Belarusians. 2 million tons is going to China over the Urals from the Russians. That's always been there. Then the Laos is actually shipping probably 0.5 million tons to China. It just means that the demand balance, the global, you know, flows are slightly different because there's more product going to China from these sources than normally would be sea bound. The China 1 is still up in the air. You know, you look at China, it's no longer really the bellwether it once was. It's a pretty minor market. I think it might be, what, 1 million tons for Canpotex- Mm-hmm ... total. It's, you know, of, you know. What were we last Year? Almost 14 million tons for Canpotex. You know, less than 10%, 5-7%. I think your shipment, global shipment number for 2023 was 64-67. Yeah ... million metric tons, and that's relative to 2022, which was somewhere between 60, Sixty ... 61. To, yeah, $61.6. On a Year-on-year basis, if the global market is growing 3 to, roughly 3 to 5 million tons, how much is Mosaic actually shipping kind of incrementally? Well, Canpotex. I think you got to look at Canpotex there, you know, will they ship? Again, it kind of depends on what Canpotex ships. I mean, North American market's gonna be up. That's gonna be a pretty good market for us. Internationally, you know, we're what? 38% of Canpotex or 37% of Canpotex. 37 in the market they operate. In the markets that they operate. You know, Canpotex should be shipping somewhere in the range of, 14+ million tons. Of that, our portion would be 36% or something like that. The 14 would be pretty flat Year-on-year. It's flat Year-on-year. Probably that's. Look, it's been, you know, some of these markets have stuck slower and slower. It may come down to constraints of trying to get it there at some point. You know, that's why we haven't started Colonsay yet, is because we haven't needed it. Would that be less than Canpotex would have thought 3 or 6 months ago for 2023? I think so, yeah. I think we're probably down a bit. In that context, I mean, Canpotex, Most of the global spare capacity sits within you. Yeah ... and your Canadian, your co-Canadian producer. The, I appreciate the point of prioritize price necessarily over volume and market share. Right. We've also had this period of destocking and kind of at best, hand-to-mouth buying. Mm-hmm it would seem. The absence of liquidity, and maybe partly from China on the seaborne contract, but elsewhere as well. What can Canpotex do to maybe think about changing this market structure that is, I think, incenting bad behavior on the part of your buyers? I think the. You know, you look at I got to say, the 2 things that really do hurt the whole market, and it hurts the buyers as much as it hurts the suppliers I think at some point, and that's these Yearly, big Yearly contracts that people look at as benchmarks, right? I think while people need product, a lot of folks are waiting for, you know, well, what is the China contract gonna look like? If there was a ongoing spot market in China and India, I think what would happen is you would start following the market, and then, you know, the needs would be more met as they're needed rather than this waiting and then. You know, I said Canpotex at, say, 14 million tons, but if Brazil takes off like North America took off, you know, we'll be scrambling to move enough tons to get down there. You know, with the length of the supply chain in terms of time, it's gonna be tight. You know, it could easily be tight. maybe, and you brought up Colonsay, which you have not-. Yeah. You idled in the 4th 1/4 of last Year and been waiting to restart it now the second 1/2. Talk about kind of what has to happen for you. What do you have to see to think about restarting Colonsay? How long is it gonna take... Well- to get that back, that operation back running? Let's say we're making, we're now over 6 million tons at Esterhazy. Esterhazy is up, you know, close to 1 million tons of capacity. Once the 13th miner is there, it's certainly up over 6 million tons of capacity. Each of those miners adds about 0.5 million tons of capacity. The, you know, that mine will be running pretty hard. Belle Plaine is a 3 million ton mine, you got 9 million tons there. I think our quick calculation says Canpotex has to be over, what, 13.5 million tons. you know, if things really start running towards the middle of the Year when the safrinha is going in Brazil, we're delivering to, you know, India, China, Pakistan, et cetera, Malaysia, Indonesia, Vietnam, well, then all of a sudden you well would, you know, at least at a run rate. Remember, you know, you could be doing at a run rate of 1 million tons a month, at which point, it's nice to say you can do 10 million in a Year, but you've gotta be able to do 1 million in a month. Colonsay could well have to come back. I think we were looking at that and saying... it all depends on how this market progresses, right? I mean- Clearly the demand in Brazil, the demand in Southeast Asia, China will be pretty critical. Yeah. No, that's absolutely right. Yeah. I think it really hinges it... You know, and I said China's only 1 million tons, but Colonsay probably hinges on China, you know, coming back strong in the second 1/2 of the Year. Okay. Before I do that, in the meantime, I wanna make sure if there's questions from the audience. If you do have a microphone, raise your hand. I'm happy to keep going, but I'm happy to take from the group. Right in the front here. Please wait for the microphone for the webcast to start. Right here. Great. Great. Sorry, I missed the point earlier on you were making about capacity in China being used for other applications outside fertilizers. Can you just explain that a little bit more? Yeah, sure. In the last 4... Well, let's say the last 5 Years, a couple things have really changed in China. One is, you know, due to environmental reasons, they shut down a lot of phosphate capacity along the Yangtze River. Right off the top, their excess capacity went down over the last 5 Years. More recently, China has moved from, you know... and moved more and more product away from DAP, MAP into industrial uses, whether that be food or otherwise. The biggest one now is the use of it to make batteries for cars and stationary batteries for power. Where historically the batteries, you know, your Tesla's and stuff have been Lithium-ion nickel cobalt batteries, particularly for lower kilowatt, lower horsepower cars and for stationary batteries. The Chinese in particular have been moving away from nickel cobalt because of its expense towards iron phosphate. The, the new cathodes, I guess, are Lithium iron phosphate. Jenny, what's been the growth of that? I think your growth has been quite extraordinary. Yeah. Over the last 3 Years, every Year more than double. Where are we at now in terms of total? End of last Year, last Year, the total shift from DAP to LFP battery material was 1 million tons. First 1/4, 1 million tons. That was a 100% increase over the previous Year. This 1/4, the first 1/4, LFP production once again doubled the same time of Q1 last Year. That's 1 million tons DAP equivalent. Yeah. Not P2O5, DAP equivalent. Yes. Yeah. Just easier to look at. Yeah. DAP equivalent. Yeah. You know, if you think about that as in a, you know, that would be 10% of their potential export capacity. Yes. You know, even if they were unrestricted and everything else. Yeah. Yeah. Growing at that kind of rate. From our perspective, this is a pretty big game changer in the phosphate industry. You know, not unlike corn ethanol, you know, and what that kind of did for demand for corn, this is gonna change a lot of what's demand for phosphates. Europe and the U.S. will follow. You know, we're doing studies right now to see if we can build, what we've done piloting and whatnot, and we're doing the economics of building our own, purified phosphoric acid capacity. It's just gonna take more and more away from agriculture. I was gonna ask about batteries, so I'm glad we addressed that. On sort of shifting to capital allocation, and last Year, and you again said the same similar thing this Year, where basically all excess cash flow is being returned to... Free cash. Yeah. free cash is being returned to shareholders. In terms of you are spending CapEx above sustaining CapEx. Oh, yes. Yeah. Oh, Yeah. Oh, Yeah. Oh, for sure. Talk about where you actually are investing from a expansionary kind of return-seeking capital perspective. Yeah. How long it will take to actually see that in the results, and what it does to your cost position or market profile? Yeah. Okay. Well, let's just go through a few of them. You know, the first one is probably our most successful product that we have had, other than commodities, has been our MicroEssentials product. Two big advances in that. Today, we've got the second generation of MicroEssentials will be coming out very soon. Further to that, we are now getting to the point where we are actually production constrained on what we can sell of MicroEssentials. You know, we built a plant, now what would it be? 2016, 2014, somewhere in that range. A 1.2 million tons of new capacity at New Wales. That's now been completely consumed. The next phase of MicroEssentials will be built at Riverview, and probably the next generation, which does a couple things. It extends the patents and all of that good stuff. It seems to have some great agronomic benefit as well. We're putting money into that. Those are high return. You know, that's our best margin product that we make. It's just an easy return on investment. We talked about batteries. You know, we're doing work on the feasibility study and the initial engineering and costing and permitting for a battery plant in Louisiana. Not a battery plant, sorry, a purified phosphoric acid plant in Louisiana. We're not gonna build the batteries. We would be. We've been in talk with the major OEMs and whatnot about, you know, a long-term contract there. That would be a pretty good payback. Some of the other ones, we're building a new distribution facility at Paranaguá, which is up in the Northeast Brazil. It's an area which is growing at probably 10% a Year, where the rest of Brazil is growing at 5% a Year. Our market share in that, overall in Brazil, is probably 19%. There, we're only 5%. We feel that, you know, even without taking market share there, even if we just participate in the growth, we're gonna make a good return. The other 1, we're extending our, you know, we're putting money into extending our South Fort Meade mine, which is gonna give us, you know, low cost. If you think about that 1, 10 Years ago, we were talking about building the Ona mine, which was a Southern mine. What we've been able to do in the last number of Years is we've extended the existing mines a couple of times and been able to really do that. Those are all fantastic payback projects. I can't think of any other big ones we're doing, but those would be the, you know, the 3 or 4 that are really the best, and they're all within a couple of Years payback. Understanding that we're short on time and you're still doing engineering studies on purifying phos acid, is there opportunities for that to get funding through the IRA that to defray some of the capital costs? It wouldn't actually increase your aggregate P2O5 production, so you'd be shifting kind of your P2O5 out of fertilizer into... Yeah into batteries. Yeah. There's a couple, certainly tax credits and stuff that come out of IRA that we would be able to achieve. I guess that's the other one we're studying right now is the collection and storage of, the CO2 from our ammonia plant, which would, you know, there's like an $85 per ton tax credit there. You know, we might be able to do that virtually cost-free, if you will, by the time it gets done. Okay. Well, I think we're just about at time, so I think we'll leave it there. Joc, Jenny, thank you. Thank you. Thank you both so much for joining us. Thank you everyone for participating today. Thank you. Thank you.