Capital Markets DayExperience growth. Capital Markets Day Fertilizer Perspectives Joachim Felker Member of the Board of Executive Directors Berlin, 8 December 2010 Fertilizer Perspectives

Experience growth.

Capital Markets Day Fertilizer Perspectives

Joachim FelkerMember of the Board of Executive Directors

Berlin, 8 December 2010

Capital Markets Day Fertilizer Perspectives

Joachim FelkerMember of the Board of Executive Directors

Berlin, 8 December 2010

December 2010 K+S Group 1

Content

A. Fertilizer Market Environment

K+S Group

B.

Nitrogen Market Environment

- Compo-

K+S Nitrogen

-

Potash One

C.

Potash Market Environment

-

Future Potentials in Germany

-

Growth Perspectives


Key Drivers of the Fertilizer Business

Despite decreasing availability of arable farmland, global production of soft commodities has to increase:

steadily increasing world populationchanging diets toward higher meat consumption (e.g. 1 kg beef = 8 kg animal feed) increasing importance of renewable raw materials for the production of bio energy

As a consequence, fertilizing with key nutrients nitrogen (N), phosphate (P)and potash (K), but also increasingly magnesium (Mg) and sulphur

(S)is the solution to coping with this challenge

Nutrients cannot be substituted and a balanced fertilization of all nutrients is necessary to achieve optimal yields. Emerging countries, in particular, should still significantly increase the potash proportion of their total fertilizer application

Medium- and long-term increase in global fertilizer consumption (N, P and K)of 2 to 3% p.a. expected

(Source: IFA)

K+S offers its worldwide customers all nutrients in a market-oriented specialised product range

K+S Group


Development of Demand – Long-term Trend

60

2417

112

5966

0

20

40

60

80

100

120

Nitrogen Phosphate Potash

Current Application Rate

Scientifical Recommended Application Rate

lb/acre

Current Application RateScientifically recommended Application Rate

Sources: IFA, IPNI Studies, Ohio State University Studies

Global Application Rate for Major Nutrients

Potash in particular offers the highest growth potential medium to long-term

Potash and Magnesium Products


Over the past thirty years, annual global production of cereals has often fallen short of demand

Despite reasonable harvest levels during the last ten years, these structural supply anddemand gaps have resulted in low stocks-to-use ratios on a historical basis

Although ideal weather conditions in 2008 and 2009 resulted in record harvests worldwide, stocks-to-use ratios remained on a relatively low level

Low Stocks-to-use Ratios of Agricultural Products

Production and consumption development vs. stocks-to-use ratio (Wheat and coarse grains)

1.000

1.200

1.400

1.600

1.80019

81/8

2

1986

/87

1991

/92

1996

/97

2001

/02

2006

/07

in m

illion

tonn

es

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

Stocks-to-use ratio

Production Consumption Stocks-to-use

2010

/11e

Source: USDA; as of 9 November 2010

1,800

1,600

1,400

1,200

1,000

40.0

35.0

30.0

25.0

20.0

15.0

10.0

5.0

0.0

K+S Group

Critical Level


1731

1827

1650

1700

1750

1800

1850

Crop Prices: Key Fertilizer Demand Driver

5

Potential global cereals* shortfall in 2011/12

Consecutive years with above-average yield unlikely (weather conditions driven)

-

Even more unlikely given past general under-application of fertilizer

Surplus/deficit in crop production key price trigger for soft commodities

High crop prices enable and incentivise farmers to apply fertilizers

-

Yield and quality game

High production

deficit

Stocks-to-use ratio to decline

from 19%

to 13%****

*

Wheat and coarse grains**

Based on last 5 years average of harvested area multiplied by last 5 years’

average yield (531m hectares x 3.3 tonnes per hectare) ***

Based on 2010/11 consumption (1,790mt) multiplied by last 5 years’

annual average demand growth rate of 2.1%****

Implied stocks-to-use ratio: ending

stock 2010/11 (333mt) less potential shortfall (96mt) divided by potential consumption 2011/12 (1,827t)

Note: 2009/10 and 2010/11 USDA estimates

K+S Group

Forecast production

for 2011/12 **

Forecast

consumption

2011/12***

Forecast

shortfall 2011/12

96


50%

100%

150%

200%

250%

300%

350%

400%

70%

80%

90%

100%

110%

120%

130%

Prices for Agricultural Products – spot Prices for Agricultural Products – future

Prices for Agricultural Products – Spot vs. Future

Strong increase in prices for agricultural products since the middle of the year

Future prices of agricultural products mirror the capital markets’ expectation of an elevated price level for the next two years

K+S Group

Wheat Soybeans Corn Palmoil

Dec.‘05

Dec.‘06

Dec.‘07

Dec.‘08

Dec.‘09

Nov.‘10

Dec.‘04

Dec.‘10

Dec.‘11

Dec.‘12

May‘13

Sourcee: Bloomberg; as of 26 November 2010


Plant

protection agentsVariable costs

Fixed costs (incl. lease)

FertilizationOther costs (e.g. insurance, water) Seeds/plants

Profitability of Wheat in EuropePotash and Magnesium Products

Assumptions: without

agricultural

subsidies, incl. interest

expenses

for

pre-financing

costs, 100% use

of mineral fertilizers

(no organic

fertilizing), straw

stays

in the

field

(straw

fertilizing); fertilizer

use

for

8 t/ha yield: 80 kg/ha MOP, 536 kg/ha KAS and 139 kg/ha TSP; for

lower

yields, lower

fertilizer

requirement

adjusted

accordingly; Sources: costs

(20 ha) according

to Kuratorium für Technik und Bauwesen in der Landwirtschaft e. V. (KTBL), LAND & Forst, yield

according

to Agrarstatistik Destatis, nutrient

extractions

according

to Guidelines

for

Fertilizer Use

in German Federal States; fertilizer prices: Retail

prices

2010 taken

from

LAND & Forst: KAS 208 €/t, MOP 335 €/t, TSP 357 €/t. Wheat

price

estimate

follows

the

development

of Euronext

price

less

transportation

cost

assumption.

The

latest

increase

of the

wheat

price

should

enable

farmers

to realize

a profit

potential of around

€

325 per hectare

(excl. subsidies) in 2010 compared

to €

231 per hectare

in 2008 and €

71 per hectare

in 2009.

Yield: 8 t/ha Yield: 8 t/ha Yield (e): 7.0 t/haWheat price: 180 €/t Wheat price: 135 €/t Wheat price (e): 190 €/t

7

CostsCostsRevenues

2008 2009 2010e

Costs

RevenuesProfit

potential: € 231

Revenues

Profitpotential:

€ 325

2008

2009

2010e

Year Fertilizer share of total costs

30% fertilizer

costs

(4% K)

18% fertilizer

costs

(4% K)

17% fertilizer

costs

(2.5% K)

459 459 459

183 165

110 119 113

70 77 77

366181 174

157

0

200

400

600

800

1000

1200

1400

1600

Profit potential:

€ 71


Content

A.

Fertilizer Market Environment

-

Potash One

C.

Potash Market Environment

-


B. Nitrogen Market Environment

-

Growth Perspectives

- Compo-

K+S Nitrogen

K+S Group


BASF Antwerp

NPK (MOP, SOP)ENTEC-NPKKASANAS

BASF PEC Rhin Ottmarsheim

KASAN

Lanxess Antwerp

AS StandardGranammon

BASF Ludwigshafen

ass / ENTEC 26

Nitrogen FertilizersK+S Nitrogen – Strong Production Partners

Business Model:Trading BusinessContractual agreements with BASF for the exclusive marketing of their fertilizers with limited chances and risks for K+SOne of the leading suppliers of ammonium sulphate


0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

AS KAS/AN ASS ENTEC26

NPKC/NP SCl

NPK S ENTECNPK/NP

kt OverseasEurope (ex Germany)Germany

Sales volume: 4.7 million tonnes

Europe (ex Germany)53%

Overseas32%

Germany15%

Nitrogen FertilizersK+S Nitrogen – Sales Volumes by Region

Major Product Groups Sales Volumes by Region 2010e

Ammonium Sulphate Straight Nitrogen Fertilizers Complex Fertilizers


Nitrogen FertilizersPremium for N in KAS vs. Urea

0

0,2

0,4

0,6

0,8

1

1,2

1,4

Jul-05 Jan-06 Jul-06 Jan-07 May-07 Nov-07 May-08 Nov-08 May-09 Nov-09 May-10 Nov-10-50%

0%

50%

100%

150%

200%

250%

300%

N Urea €/kg N Premium for KAS €/kg Premium in %

30%

1.4

1.2

1.0

0.8

0.6

0.4

0

0.2

€/kg


Poor earnings position of all competitors

Many suppliers present themselves as full-range providers

Shelf place being bought aggressively in individual countries

Conditions, rebates in kindare widely used

Mid-price ranges underpressure

Heterogeneous European market

Moderate growth to be expected in segment

Influence of weather on demand situation

More strict guidelines in Europe(fertilizers and plant protection)

Concentration process

Internationalisation

Powerplay in purchase

Assortment reduction- Fewer brands- Expansion of private labels

Trend towards introducingbio-/eco-products

Competitive pressure on price

Oversupply of shelf space

Nitrogen FertilizersCompo Consumer – Market Environment

Competition

Demand

Customers

Climate / laws


COMPO is a leading provider in a market that requires consolidation

In compliance with our growth strategy, we will focus our financial and management resources in particular on the Potash and Magnesium Products and Salt business segments

On the other hand, appropriate capacity to act is important for COMPO, especially atpresent

Therefore, we announced in June 2010 that we are considering the sale of COMPO.A result of the process is expected within one year

K+S is Considering the Sale of COMPONitrogen Fertilizers


Project Status

Concept worked out for a possible corporate and business carve-out of COMPO from the K+S Group

All COMPO interfaces within the K+S Group identified

Concept worked out to separate the sales platforms in Asia, Europe andNorth/Central/South America

Preparing global IT separation

Creation of a Financial Factbook

Potential interested parties to be spoken to at end of 2010 / beginning of 2011

A result of the process is expected by mid-2011

Nitrogen Fertilizers


Content

A.

Fertilizer Market Environment

-

Potash One

C. Potash Market Environment

-


B.

Nitrogen Market Environment

-

Growth Perspectives

- Compo-

K+S Nitrogen

K+S Group


~0.7

~16

~9.7

~18

~4.2~9

~23.3

World Potash Production and Sales by Region K+S Group

Million tonnes

Incl. sulphate

of potashand low-grade

potashSources: IFA, K+S

World potash production:2010e: ~51 million t2009:

33.7 million

t2008:

56.0 million

t2007:

57.8 million

t

World potash sales:2010e: 52-53 million t2009:

31.0 million

t2008:

54.5 million

t2007:

58.7 million

t

~6 ~5.9

~1.5

~8.6


World Potash Capacity, Production and Sales

55.0 35.2 45.1 46.0 48.5 53.9 56.5 50.9 57.8 56.0 33.7 51

36.2 31.0

52.6

43.9 45.549.1

54.2 54.4

50.7

58.754.5

0

10

20

30

40

50

60

70

1988 1993 2001 2002 2003 2004 2005 20072006 2008 2009 2010e

China Financial crisisSoviet Union

K+S Group

Million tonnes

ProductionAvailable capacity Sales

Sources: IFA, K+S; incl. sulphate

of potash

and low-grade

potash; based

on IFA supply

capability

data

Transitional year 2010: significant revival in demand expected, but no satisfactory utilisation of capacity yet

52-53


0

200

400

600

800

1000

0

200

400

600

800

1000

MOP Price DevelopmentUS$/t

US$/t


Overseas (cfr)

Northwest-Europe (standard, fob)

Brazil

(granular)

South-East

Asia (SEA, standard)

● 23 December 2009:Contract with Chinese importers and BPC fixed at

US$ 350/t for standard MOP

● Beginning of 2010: Contracts with India and Canpotex/BPC fixed at US$ 370/t

● Mid January 2010: In Europe K+S announced €

285/t for granulated MOP and a price increase by €

12/t as of March

● Mid June 2010:K+S announced an increase of a further

€

8/t to €

305/t in Europe

● End of August 2010: BPC announced US$ 420/t for granulated MOP in Asia and Brazil

● Mid September 2010:K+S announced a further increase of €

12/t to €

317/t in Europe

● Beginning of November 2010: BPC announced US$ 450/t for granulated MOP in Asia and Brazil* Until

end of September 2010 MOP standardSource: FMB; as of 18 November 2010‘05‘042003 ‘06 ‘07 ‘08 2010‘09

‘05‘042003 ‘06 ‘07 ‘08 2010‘09

374

413 BrazilSEA409

*


10.7

32.9

23.9

9.68.5

3.41.6

6.3

3.1

11.2

23.021.7

11.1

8.6

3.1 2.7

13.9

4.73.4

8.1

1.93.5

9.59.0

22.7

31.8

10.1

K+SBPC•

Belarus-

kali• Uralkali

ICL• DSW• CPL• Iberpotashparticipationof PotashCorp. in ICL

APCparticipationof PotashCorp.

SQMparticipationof PotashCorp.

IPC• Silvinitparticipationof Uralkaliin Silvinit

Others• Intrepid• Vale• Compass

Supplier Structure on the World Potash Market

Canpotex• PotashCorp

• Mosaic• Agrium

China• morethan

20producers

Figures

in %20092008

K+S Group

Sales volumes

in metric

tonnesSources: IFA, K+S

2010


World Potash Capacity, Production and Sales

33.756.057.850.956.553.948.546.045.135.255.0 51

54.558.7

50.754.454.2

49.145.543.9

52.6

31.036.2

0

10

20

30

40

50

60

70

80

1988 ’93 ’01 ’02 ’03 ’04 ’05 ‘13’07’06 ’08 ’09 ’10 ’11 ’12(e)

ChinaFinancial

crisis

Soviet

Union


Million tonnes

ProductionAvailable capacity

Sales

Incl. sulphate

of potash

and low-grade

potashCapacity

development

2010-2014 based

on IFA supply

capability

data Sources: IFA, K+S

Transitional year 2010: significantrevival in demand expected, butno satisfactory

utilisation of capacity

yet

As of 2011, long-term growth ratesagain expected at 3% to 5% p.a.

Utilisation levels are estimated to be about 85% annually until 2014 and will thus reach a good level

Risk: announced new capacitycould be delayed, postponed orcancelled due to an inadequateprice level and technological/ geological challenges

Ø +3%

60Ø +5%

‘14

55

6367

Brownfield projectsGreenfield projects

52-53


0

2000

4000

6000

8000

10000

80/81 84/ 88/ 92/ 96/ 00/ 04/ 08/ 12/f

0

8.000

16.000

24.000

32.000

40.000

80/81 84/ 88/ 92/ 96/ 00/ 04/ 08/ 12/f

0

4.000

8.000

12.000

16.000

20.000

24.000

80/81 84/ 88/ 92/ 96/ 00/ 04/ 08/ 12/f

Central and Eastern Europe, Central Asia Latin America, Asia, Africa, Oceania

0

4.000

8.000

12.000

16.000

20.000

80/81 84/ 88/ 92/ 96/ 00/ 04/ 08/ 12/f

North America, Western Europe, Australia, Japan

World

1.00

0 t K

2O

1.00

0 t K

2O

Developed markets

Transitional markets

1.00

0 t K

2O

Emerging markets

1.00

0 t K

2O

Potash and Magnesium ProductsAgricultural Potash Consumption by Region

Source: IFA


K+S Group

Located in the Heart of Saskatchewan’s Potash-Rich Basin

Regina

Two additional potash permit areas in the Esterhazy potash region

Potash One is a Vancouver-basedresource company engaged in the exploration and development of advanced potash properties.

Potash One holds several potashexploration licences in the Canadianprovince of Saskatchewan, includingthe Legacy Project – an advanced Greenfield project to develop a potash solution mine.

K+S estimates production capacity of up to 2.7 million tonnes of potassium chloride per year.

The realisation of this production capacity would represent an approximately USD 2.5 billion capital investment into Saskatchewan and create up to 300 highly-skilled jobs.

Initial production no earlier than 2015.

Friendly Takeover Bid for Potash One


Overview of the Legacy Project

Legacy Project

Depth 1,500 metres

Total capex $2.5 billion

K+S Group

Mining technique Solution Mining

Expected maximum production capacity 2.7 million t KCl

product/a

Patience Lake

Belle Plaine

Esterhazy

Geological Overview Key data *

Environmental impact statement approved

* Data based on K+S due diligence


Solution Mining Expertise Within the K+S Group

With more than 100 years experience in potash mining, K+S has the geological and miningexpertise to successfully execute this greenfield project

K+S will also engage consultants and certain personnel from Potash One to supplementits team

Our new Canadian potash development complements our existing presence in saltproduction stemming from our successful acquisition of Morton Salt in 2009 and ourlongstanding history of potash distribution in Canada and the US

K+S Group

esco Frizia

Zout

Site, Harlingen, The Netherlands

Examples of Solution Mines within the K+S Group

esco Bernburg

Site

Germany

Lindbergh Alberta, Canada



● K+S evaluates the reactivation of former potash sites such as Rossleben

or

Siegfried-Giesen, the latter being a K+S reserve capacity since 1987

Overall target: To replace Sigmundshall, which will be depleted by 2018

● We are in contact with GVV, the owner of the Rossleben

potash mine

and consider a feasibility study on Siegfried-Giesen

for 2011

Zielitz

Neuhof-Ellers

Sigmundshall Bergm.-Hugo

Siegfried- Giesen

HattorfUnterbreizbach

Wintershall


RosslebenKassel


This presentation contains facts and forecasts that relate to the future development of the K+S

Group and its companies. The forecasts are estimates that we have made on the basis of all the

information available to us at this moment in time. Should the assumptions underlying these fore-

casts prove not to be correct or should certain risks –

such as those referred to in the recent Risk

Report –

materialise, actual developments and events may deviate from current expectations. The

Company assumes no obligation to update the statements contained

in this presentation, save for

the making of such disclosures as are required by the provisions

of statute.

K+S GroupForward-Looking Statements

K+S Group


K+S AktiengesellschaftBertha-von-Suttner-Straße

734131 Kassel | Germanyphone:

+49 (0)561 / 9301-0fax:

+49 (0)561 / 9301-1753

Investor Relationsphone:

+49 (0)561 / 9301-1100fax:

+49 (0)561 / 9301-2425email:

[email protected]:

www.k-plus-s.com

K+S AktiengesellschaftBertha-von-Suttner-Straße

734131 Kassel | Germanyphone:

+49 (0)561 / 9301-0fax:

+49 (0)561 / 9301-1753

Investor Relationsphone:

+49 (0)561 / 9301-1100fax:

+49 (0)561 / 9301-2425email:

[email protected]:

www.k-plus-s.com

Experience growth.

Documents

Capital Markets DayExperience growth. Capital Markets Day Fertilizer Perspectives Joachim Felker Member of the Board of Executive Directors Berlin, 8 December 2010 Fertilizer Perspectives