POTASH CORPORATION OF SASKATCHEWAN INC, 10-K, 2000-03-28

POTASH CORPORATION OF SASKATCHEWAN INC
10-K, 2000-03-28
MINING & QUARRYING OF NONMETALLIC MINERALS (NO FUELS)

Previous: POTASH CORPORATION OF SASKATCHEWAN INC, DEF 14A, 2000-03-28

Next: TEMPLETON GLOBAL OPPORTUNITIES TRUST, 24F-2NT, 2000-03-28

<PAGE> 1

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
COMMISSION FILE NUMBER 1-10351

------------------------------------

POTASH CORPORATION OF SASKATCHEWAN INC.
(Exact name of the registrant as specified in its charter)

<TABLE>
<S> <C>
SASKATCHEWAN N/A
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
</TABLE>

122 - 1ST AVENUE SOUTH
SASKATOON, SASKATCHEWAN, CANADA S7K 7G3
306-933-8500
(Address and telephone number of the registrant's principal executive offices)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<S> <C>
TITLE OF EACH CLASS NAME OF EXCHANGE ON WHICH REGISTERED
Common Shares, No Par Value New York Stock Exchange
(Including rights under the Shareholder Rights
Agreement)
</TABLE>

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

At March 15, 2000, the registrant had 53,041,972 Common Shares outstanding,
and the aggregate market value of the 52,969,028 Common Shares held by
non-affiliates of the registrant was approximately $2,413,401,351.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Annual Report to Shareholders for the fiscal
year ended December 31, 1999 (the "1999 Annual Report") are incorporated by
reference into Part II.

Portions of the registrant's Proxy Circular for its Annual Meeting of
Shareholders to be held on May 11, 2000 (the "2000 Proxy Circular") are
incorporated by reference into Part III.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

PART I

ITEMS 1 AND 2. BUSINESS AND PROPERTIES.

GENERAL

Potash Corporation of Saskatchewan Inc. ("PCS") and its direct and indirect
subsidiaries (together with PCS' predecessors, the "Company") is one of the
world's largest integrated fertilizer and related industrial and feed products
companies. In 1999, the Company's potash production represented an estimated 15%
of global potash production. In 1999, the Company had 24% of global potash
capacity and an estimated 60% of global excess potash capacity, giving it more
available potash capacity than any single company or country other than Canada.
The Company is the third largest producer of phosphates worldwide by capacity,
currently representing approximately 7% of world phosphoric acid production and
7% of world phosphoric acid capacity. The Company is currently the largest
nitrogen producer in the Western Hemisphere.

PCS is incorporated under the laws of the Province of Saskatchewan and is
the successor to a corporation without share capital established by the Province
of Saskatchewan in 1975. Between 1976 and 1990, the Company acquired substantial
interests in the Saskatchewan potash industry. It purchased the Cory mine in
1976, the Rocanville and Lanigan mines in 1977, and, by 1990, 100% of the Allan
mine when the Company acquired all of the outstanding shares of Saskterra
Fertilizers Ltd. In addition, in 1978 the Company acquired reserves at
Esterhazy, which are mined by a third party.

In November 1989, the Company was privatized by the Province of
Saskatchewan. While the Province initially retained an ownership interest in the
Company, this interest had been reduced to zero by the end of 1993. In October
1993, the Company acquired from Rio Algom Limited ("Rio") its New Brunswick
potash mine and port facilities and its Patience Lake mine in Saskatchewan (the
"Rio Acquisition").

In April 1995, the Company purchased all of the outstanding shares of
Texasgulf Inc. ("Texasgulf") from Elf Aquitaine, Inc. ("Elf (USA)") and Williams
Acquisition Holding Company, Inc. ("Williams"). At the time of the acquisition,
the name "Texasgulf Inc." was changed to PCS Phosphate Company, Inc. ("PCS
Phosphate"). PCS Phosphate manufactures and sells solid and liquid phosphate
fertilizers, animal feed supplements, and purified phosphoric acid which is used
in food products and industrial processes. Its facility in Aurora, North
Carolina is the largest vertically-integrated phosphate mine and processing
plant in the world. Other assets of PCS Phosphate include: animal feed plants in
three states; two industrial phosphoric acid plants owned through the joint
venture carrying on business as PCS Purified Phosphates, formerly Albright &
Wilson Company; an undivided 50% interest in an ammonia storage terminal in
Savannah, Georgia; and PCS Phosphate's product distribution infrastructure.

In October 1995, the Company purchased all of the outstanding shares of
White Springs Agricultural Chemicals, Inc. ("White Springs") from Occidental
Chemical Corporation ("OxyChem"). White Springs' primary assets are a phosphate
mine and two chemical plant complexes in northern Florida, Swift Creek and
Suwannee River. Other assets of White Springs include an animal feed plant in
Davenport, Iowa, two additional animal feed plants at the Suwannee River
facility, and the remaining undivided 50% interest in the ammonia storage
terminal in Savannah, Georgia owned with PCS Phosphate.

In March 1997, the Company through its subsidiary PCS Nitrogen, Inc. ("PCS
Nitrogen") acquired all of the outstanding shares of Arcadian Corporation
("Arcadian"). PCS Nitrogen produces nitrogen fertilizers and nitrogen chemicals
at facilities in Georgia, Louisiana, Ohio and Tennessee in the United States,
and has large scale operations in Trinidad. Other assets of PCS Nitrogen include
a 50% interest in a joint venture that owns and operates an ammonia storage
terminal near Houston, Texas and a 50% joint venture interest in a carbon
dioxide processing operation at PCS Nitrogen's plant in Augusta, Georgia.

In December 1998, the Company purchased, pursuant to a public offering by
the State of Israel, 108,359,925 Ordinary Shares of Israel Chemicals Ltd.
("ICL") for approximately $92 million. This purchase represented 9.03% of the
issued and outstanding Ordinary Shares of ICL. ICL, through its subsidiaries, is
a potash, phosphate and bromine producer and is also involved in other specialty
chemical products.

I-1
<PAGE> 3

In July 1999, the Company purchased all of the outstanding shares of Minera
Yolanda SCM, a Chilean sodium nitrate and potassium nitrate producer for
approximately $37 million. At the time of the acquisition, the name was changed
to PCS Yumbes SCM ("PCS Yumbes"). See "Potash Operations - Properties".

In February 2000, the Company sold its shares in Moab Salt, Inc. to
Intrepid Oil & Gas, LLC. The primary asset of Moab Salt, Inc. is a solution
potash and salt mine in Moab, Utah.

On March 23, 2000, the Company completed a transaction with Rhodia Inc. to
acquire the remaining 50% ownership interest in the merchant grade phosphoric
acid joint venture company formerly called Albright & Wilson Company for
approximately $42 million. Upon closing of the transaction, the joint venture
company was renamed PCS Purified Phosphates. The Company and Albright & Wilson
Americas Inc. had been operating the business as a 50/50 partnership. With the
completion of the transaction, the Company now owns 100% of the purified acid
plant and blending plant in Aurora, North Carolina and 100% of the blending
plant in Cincinnati, Ohio. Rhodia Inc. retained a polyphosphoric acid production
unit in Charleston, South Carolina.

PCS has its head office and executive offices at Suite 500, 122 - 1st
Avenue South, Saskatoon, Saskatchewan, Canada S7K 7G3. In this Form 10-K, the
term "Company" means PCS, its predecessors and its direct and indirect
subsidiaries unless the context otherwise indicates.

The Company has three principal business segments: potash, phosphate and
nitrogen. For information with respect to the net sales revenue, operating
income and assets attributable to each segment and to the Company's domestic and
international sales, see Note 18 to the Company's audited consolidated financial
statements as at December 31, 1999 and 1998 and for each of the three years
ended December 31, 1999 (together with the Notes thereto, the "Consolidated
Financial Statements"), incorporated by reference under Item 8.

The Company presents its financial statements in accordance with accounting
principles generally accepted in Canada ("Canadian GAAP"). See Note 32 to the
Consolidated Financial Statements for a discussion of certain significant
differences between Canadian GAAP and accounting principles generally accepted
in the United States as they relate to the Company.

Unless otherwise specified, dollar amounts are stated in U.S. Dollars.

Except for the historical statements and discussions contained herein,
statements contained in this report on Form 10-K constitute "forward looking
statements" within the meaning of Section 27A of the U.S. Securities Act of 1933
and Section 21E of the U.S. Securities Exchange Act of 1934. Forward looking
statements may include words such as "expect", "estimate", "project",
"anticipate", "should", "intend" and similar expressions or variations on such
expressions. Any filing of the Company with the U.S. Securities and Exchange
Commission may include forward looking statements. In addition, other written or
oral statements which constitute forward looking statements have been made and
may in the future be made by or on behalf of the Company, including statements
concerning future operating and financial performance, the Company's share of
new and existing markets, general industry trends and the Company's performance
relative thereto and the Company's expectations as to requirements for capital
expenditures and environmental matters.

These forward looking statements rely on a number of assumptions concerning
future events and are subject to a number of uncertainties and other factors,
many of which are outside the Company's control, that could cause actual results
to differ materially from such statements. These factors include, but are not
limited to, fluctuations in supply and demand in fertilizer, sulfur and
petrochemical markets, changes in competitive pressures, including pricing
pressures, potential higher actual costs incurred in connection with
restructuring charges as compared to costs estimated for the purposes of
calculating such charges, uncertainty and variations in future undiscounted net
cash flows from use together with residual values estimated for purposes of
calculating restructuring charges, changes in capital markets, changes in
currency and exchange rates, unexpected geological and environmental conditions,
imprecision in reserve estimates, the outcome of legal proceedings and changes
in government policy and regulation, including environmental regulation.

I-2
<PAGE> 4

The Company disclaims any obligation to update or revise any forward
looking statements, whether as a result of new information, future events or
otherwise.

POTASH OPERATIONS

The Company's potash operations include the mining and production of
potash, which is predominantly used as fertilizer.

PROPERTIES

The Company controls the right to mine 615,400 acres of land in
Saskatchewan. Included in these holdings are mineral rights to 507,000 acres
contained in blocks around the six mines in which the Company has an interest,
of which acres approximately 36% are owned by the Company, approximately 50% are
under lease from the Province of Saskatchewan and approximately 14% are leased
from other parties. The majority of the leases are for 21-year terms, renewable
at the Company's option. The Company's remaining 108,400 acres are located
elsewhere in Saskatchewan.

Potash is mined by the Company from two main potash bearing formations in
Saskatchewan: the Patience Lake member of the prairie evaporites in the north
and the Esterhazy member of the prairie evaporites in the south. The Patience
Lake member is mined at the Lanigan, Allan, Patience Lake and Cory mines, and
the Esterhazy member is mined at the Rocanville and Esterhazy mines.

Under a long-term mining and processing agreement (the "Mining and
Processing Agreement") effective through 2026, International Minerals & Chemical
(Canada) Limited Partnership ("IMC") mines and processes PCS reserves at the
Esterhazy mine. PCS has the option to terminate this agreement every five years.
It did not opt to give notice to terminate in December 1995. IMC has the option
of abandoning the mine at any time after 2011, thus terminating the Mining and
Processing Agreement. In 1998, the Mining and Processing Agreement was amended
to provide for the operation of the agreement on a calendar year basis as
opposed to a fiscal year ending June 30. In each year the maximum the Company is
permitted to take under the Mining and Processing Agreement is 952,500 tonnes
and the minimum required amount is 453,600 tonnes. For the year ending December
31, 2000, the Company has notified IMC that it requires 725,700 tonnes of
finished product.

Water inflow at the Esterhazy mine has continued, to a greater or lesser
degree, since December 1985. Substantial pumping capacity has been installed and
remedial efforts have been undertaken. The Company's share of water inflow
remediation costs for 1999 was $6.9 million. IMC has stated that it will
continue conventional mining. PCS has no indication from IMC that solution
mining or substitute shafts will be pursued at this time.

Potash is also produced by the Company at its New Brunswick mine from the
flank of an elongated salt structure. Granular product is also produced by the
Company at its Cassidy Lake, New Brunswick facility using standard grade product
from certain of the Company's other mine sites.

PCS Yumbes, acquired in 1999, holds mining concessions on certain sodium
nitrate reserves in the Atacama desert in northern Chile. The production
facility is in the development stage and has been designed to produce 300,000
tonnes of sodium nitrate per year at full production. Production is expected to
begin in 2000. Sodium nitrate is combined with potassium chloride to produce
potassium nitrate, primarily used for intensely cultivated and chloride
sensitive crops.

PRODUCTION

The Company produces potash using both conventional and solution mining
methods. In conventional operations, shafts are sunk to the ore body and mining
machines cut out the ore, which is lifted to the surface for processing. In
solution mining, the potash is dissolved in a warm brine and pumped to the
surface for processing.

In 1999, the Company's conventional potash operations mined 16.80 million
tonnes of ore at an average grade of 23.1% K(2)O. In 1999 the Company's potash
produced consisted of 6.39 million tonnes of potash (KCl) with an average grade
of 60.98% K(2)O, representing approximately 43% of North American production.

I-3
<PAGE> 5

The Company's present annual potash production capacity is approximately
12.2 million tonnes KCl, which includes maximum annual production under the
Mining and Processing Agreement with IMC of approximately one million tonnes at
Esterhazy. In 1999, the Company's production capacity represented approximately
55% of the North American total while its excess capacity was an estimated 80%
of North American excess production capacity. The Company allocates production
among its mines on the basis of various factors, including the grades of product
which can be produced and cost efficiency. The Patience Lake mine, which was
originally a conventional underground mine, now employs a solution mining
method, while the other Saskatchewan mines which the Company owns or in which it
has an interest employ conventional underground mining methods.

The New Brunswick mine is a conventional cut and fill mine, while the Moab,
Utah mine, which was sold in February 2000, employs a solution mining method. In
addition to their potash production, these mines also produced .81 million
tonnes of sodium chloride (salt) in 1999.

As part of the Rio Acquisition, the Company granted a royalty interest to
Rio based upon production and revenue from the New Brunswick and Patience Lake
potash mines and mills (the "Royalty"). The terms of the Royalty provide that if
production meets specified base production levels or the sales of potash are at
prices which meet specified base sales prices, a royalty per tonne is to be
paid, calculated on a formula basis. Payments under the Royalty are limited to a
term expiring October 7, 2003 and to a maximum aggregate payment of Cdn$50
million. No payments have been made in respect of the Royalty to date.

RESERVES

The Company estimates that its conventional mines in Saskatchewan contained
4.76 billion tonnes of recoverable ore at an average grade of 22.9% K(2)O as at
December 31, 1999, and that such ore will yield 1.5 billion tonnes of finished
product (KCl) at an average grade of 60% K(2)O.

The Company's ore reserve estimates for its conventional mining operations
in Saskatchewan are based on exploration drill hole data, seismic data and
actual mining results during the past 25 years. The Company's estimated
recoverable ore and the estimated volumes of finished product from such ore are
as follows:

<TABLE>
<CAPTION>
RECOVERABLE FINISHED
MINE ORE PRODUCT
- ---- ----------- --------
(MILLIONS OF TONNES)
<S> <C> <C>
Allan........................................... 1,390.9 447.9
Cory............................................ 1,050.3 350.7
Esterhazy....................................... 76.8 24.4
Lanigan......................................... 1,554.8 501.8
Rocanville...................................... 683.0 217.5
------- -------
Total......................................... 4,755.8 1,542.3
======= =======
</TABLE>

The Company believes that, with production rates at full capacity and
utilizing current technology, each of the Allan, Cory and Lanigan mines has a
reserve life in excess of 100 years, the Rocanville mine has a reserve life in
excess of 90 years, and that the Esterhazy mine has a reserve life of at least
20 years.

Given the characteristics of the solution mining method employed at the
Patience Lake mine, it is not possible to estimate definitively the productive
capacity of or the recoverable ore from this operation. However, based on
information obtained upon the acquisition of the mine, current technology and
the present mining area for this operation, the Company believes that the mine
has a reserve life of at least 40 years for the existing mine workings.
Different techniques will have to be utilized to mine reserves outside of the
existing mine workings.

Based on geophysics, exploration drill hole data, definition drilling
underground and actual mining results, the Company estimates proven reserves of
48.0 million tonnes of recoverable ore and 16.6 million tonnes of estimated
finished product (KCl) at its New Brunswick mine. The Company believes that,
based upon its proven reserves, the New Brunswick mine has a reserve life of at
least 21 years with production at full

I-4
<PAGE> 6

capacity. The Company estimates that probable reserves at the New Brunswick mine
consist of 200 million tonnes of recoverable ore and 72 million tonnes of
estimated finished product (KCl). The Company believes that, based upon its
proven and probable reserves, the New Brunswick mine has a reserve life in
excess of 100 years at full production capacity and utilizing current
technology.

PHOSPHATE OPERATIONS

The Company mines phosphate ore and manufactures solid and liquid
fertilizers, animal feed supplements and purified phosphoric acid which is used
in food products and industrial processes.

PROPERTIES

The Company conducts its phosphate operations primarily at two facilities,
one a 35,000-acre facility near Aurora, North Carolina (the "Aurora Facility")
and the other a 96,000-acre facility near White Springs in northern Florida (the
"White Springs Facility"). The Company believes the Aurora Facility to be the
largest integrated phosphate mine and phosphate processing complex at one site
in the world. The Aurora Facility, having an annual P(2)O(5) capacity of 1.2
million tonnes, includes a six million tonne per-year mining operation, four
sulfuric acid plants, four phosphoric acid plants, a liquid fertilizer (11-37-0)
plant, a superphosphoric acid plant, two diammonium phosphate ("DAP") plants and
a solid fertilizer plant capable of producing DAP, granular triple
superphosphate ("GTSP") or monoammonium phosphate ("MAP"). The Company also
holds all outstanding interests in PCS Purified Phosphates (formerly Albright &
Wilson Company) which produces high purity phosphoric acid at Aurora. The White
Springs Facility is the third largest P(2)O(5) producer, by capacity, in the
United States, with an annual capacity of 1.1 million tonnes. The White Springs
Facility includes a mine and two production facilities, Suwannee River and Swift
Creek, with two sulfuric acid plants, three phosphoric acid plants, two DAP
plants, a superphosphoric acid plant, a dicalcium phosphate plant and a
deflourinated phosphate rock plant located at the Suwannee River complex and two
sulfuric acid plants and a phosphoric acid plant located at the Swift Creek
complex. The Company's other properties include animal feed plants in Davenport,
Iowa; Kinston, North Carolina; Marseilles, Illinois; and Weeping Water,
Nebraska, and bulk terminal facilities at Morehead City, North Carolina.

At its Geismar, Louisiana facility ("Geismar Facility"), acquired as part
of the Arcadian acquisition, the Company manufactures a variety of phosphate
products that are used for agricultural and industrial purposes. The Geismar
Facility has a sulfuric acid plant, a phosphoric acid plant, a superphosphoric
acid plant, and a liquid fertilizer (11-37-0) plant. A significant portion of
the phosphoric acid produced at the Geismar Facility is sold as feedstock to
Rhodia, Inc. for use in its neighboring purified acid plant.

PRODUCTION

The Company extracts phosphate ore using surface mining techniques. At each
mine site, the ore is mixed with recycled water to form a slurry, which is
pumped from the mine site to the Company's processing facilities. The ore is
then screened to remove coarse materials, washed to remove clay and floated to
remove sand to produce phosphate "rock". The annual production capacity of the
Company's mines is currently 9.6 million tonnes of phosphate rock. During 1999,
the Aurora Facility's total production of phosphate rock was 4.4 million tonnes
and the White Springs Facility's total production of phosphate rock was 3.6
million tonnes. The Company generally operates its phosphate mine and phosphate
processing plants 24 hours a day, seven days a week, using rotating shifts. The
sequence for mining portions of the Aurora property has been identified in the
permit issued by the U.S. Army Corps of Engineers in 1997. For the near term,
the Company expects to be mining in an area of non-optimal mining conditions.
The quality and condition of the ore is relatively inferior to ore previously
mined at the Aurora Facility. This, combined with the general configuration of
the area, does not allow efficient use of the Company's mining equipment and
technology. Beginning in late 2000, the Company expects to enter areas believed
to hold ore superior in thickness and quality, located closer to the Company's
chemical plants, and configured so as to generally allow efficient use of
Company mining equipment and technology.

I-5
<PAGE> 7

Phosphate rock is the major input in the Company's phosphorus processing
operations. In addition to phosphate ore, the principal raw materials required
by the Company are sulfur, sulfuric acid and ammonia. The production of
phosphoric acid requires substantial quantities of sulfur, which the Company
purchases from third parties. In December 1997, the Company entered into a
ten-year supply contract with an offshore supplier to supply a portion of the
Company's sulfur requirements and also committed to build a multipurpose
ocean-going vessel to ship such sulfur as well as handle sulfuric acid,
phosphoric acid and other chemicals. The Company produces sulfuric acid at the
Aurora Facility, White Springs Facility and Geismar Facility and purchases
additional sulfuric acid from unaffiliated sellers. The Company also transports
surplus production of sulfuric acid at the White Springs Facility to the Aurora
Facility as needed. Sulfur and sulfuric acid have been in abundant supply in
recent years. However, in 1998, the remaining U.S. Frasch sulfur producer
announced the closure of one of its two mines, an action which reduced readily
available U.S. supplies of sulfur and increased prices, notwithstanding a world
market having excess supplies of sulfur. While sulfur prices rose during the
first quarter of 1999, prices declined during the second half of 1999.

The Company purchases all of its ammonia from or through PCS Nitrogen and
PCS Sales (USA), Inc., wholly owned subsidiaries of the Company. The Company
reacts phosphoric acid with ammonia to produce DAP and MAP, as well as liquid
fertilizers. In addition, ammonia operations include the purchase, sale and
terminalling of anhydrous ammonia. Most of the ammonia that is currently
purchased by PCS Nitrogen is produced in Russia and imported through a Company
operated ammonia terminal located within the port of Savannah (Garden City,
Georgia).

Substantially all of the phosphate rock produced by the Company is used
internally for the production of phosphoric acid, superphosphoric acid ("SPA"),
chemical fertilizers, purified phosphoric acid and animal feed products.

A portion of the Company's phosphoric acid production, merchant grade
phosphoric acid ("MGA"), is sold in liquid form, mostly to foreign and domestic
producers of solid fertilizers. The solid fertilizers produced by the Company
are DAP and, to a lesser extent, GTSP and MAP. Over one-half of the Company's
DAP is exported, with the balance sold domestically, mostly to large regional
dealers that custom blend solid fertilizers.

The Company's liquid fertilizer products, 74% of which were sold
domestically, consist principally of low-magnesium SPA, which the Company
markets under the name "LoMag". The Company believes that it is the largest U.S.
producer of SPA.

The Company also processes phosphoric acid to produce animal feed
supplements for the poultry and livestock markets. The Albright joint venture
produces purified phosphoric acid for use in various food products and
industrial processes.

In addition to nitrogen products, the Company also produces phosphate
products at the Geismar plant for which supplies of phosphate rock and sulfur
are necessary. PCS Nitrogen purchases phosphate rock from Morocco pursuant to an
agreement with a Moroccan government-owned company, the current term of which
expires on December 31, 2002, wherein prices are reset annually through
negotiation. If no agreement on price is reached, either party may terminate the
agreement. Changes in the agreement could affect the stability of the supply of
the raw material and the profitability of these phosphate products.

RESERVES

At December 31, 1999, the Company's Aurora phosphate mine had estimated
proven and probable reserves of approximately 380 million tonnes of phosphate
rock, at an average grade of 30.7% P(2)O(5). These reserves would permit mining
to continue at current rates for about 75 years. The Aurora phosphate mine has
an estimated annual capacity of 6.0 million tonnes of phosphate rock and its
processing plants have the capacity to produce 1.202 million P(2)O(5) tonnes of
phosphoric acid. Prior to the acquisition of Texasgulf by the Company in April
1995, approximately 408 million tonnes of phosphate reserves were transferred by
Texasgulf to a newly established company, the common stock of which was
transferred to Elf (USA) and Williams. The Company was granted a 20-year right
of first refusal (from April 10, 1995) in the event that the newly

I-6
<PAGE> 8

established company proposes to sell the reserves. In addition, the newly
established company and Elf (USA) and Williams agreed, for a period of ten years
from April 10, 1995, not to compete, and for the first five years not to make
certain preparations to compete, with the Company with respect to those
reserves.

The White Springs phosphate mine had estimated proven and probable reserves
of approximately 53 million tonnes of phosphate rock, at an average grade of
30.7% P(2)O(5). The Company estimates that an additional 9 million tonnes of
phosphate rock could be purchased at market rates from nearby owners.
Accordingly, the total reserves of 62 million tonnes of phosphate rock at White
Springs would sustain the mine for 18 years at a mining rate of 3.6 million
tonnes per year. The White Springs mine has an estimated annual capacity of 3.6
million tonnes of phosphate rock and the processing plants have the capacity to
produce annually 1.093 million P(2)O(5) tonnes of phosphoric acid. See
"Environmental Matters -- Permits and Regulatory Approvals".

NITROGEN OPERATIONS

The Company's nitrogen operations include production of nitrogen
fertilizers and nitrogen chemicals. These products are used for both
agricultural and industrial purposes.

PROPERTIES

PCS Nitrogen manufactures nitrogen products at five facilities, of which
four are located in the United States and one is located in Trinidad. The
following table sets forth the facility locations and production capabilities:

<TABLE>
<CAPTION>
PLANT LOCATIONS PRODUCTS PRODUCED
- --------------- -----------------
<S> <C>
Augusta, Georgia..................... Ammonia, urea, nitric acid, ammonium nitrate and nitrogen
solutions
Geismar, Louisiana................... Ammonia, nitric acid, nitrogen solutions, phosphoric acid,
super-phosphoric acid, phosphate solutions and sulfuric acid
Lima, Ohio........................... Ammonia, urea, nitric acid and nitrogen solutions
Memphis, Tennessee................... Ammonia and urea
Point Lisas, Trinidad................ Ammonia and urea
</TABLE>

In the third quarter of 1999, in response to market conditions, the Company
announced the permanent closure of the Clinton, Iowa plant and the LaPlatte,
Nebraska plant. The Clinton plant had a capacity of 238,000 tonnes for ammonia,
79,000 tonnes of ammonia nitrate, and 163,000 tonnes for nitrogen solutions. The
LaPlatte plant had a capacity of 182,000 tonnes for ammonia and 436,000 tonnes
for nitrogen solutions.

On December 31, 1999, the Company announced that its subsidiary, PCS
Nitrogen Trinidad Limited, indefinitely shut down its 01 and 02 ammonia plants
in Trinidad following expiration of the natural gas supply contract between the
National Gas Company ("NGC") of Trinidad and Tobago Limited and PCS Nitrogen
Trinidad Limited. The parties had been in negotiation for two years in an
attempt to secure a new agreement but were unable to bring the negotiation to an
acceptable conclusion. Active discussions with the NGC are continuing and the
Company continues to operate its two remaining ammonia plants and one urea plant
in Trinidad.

PRODUCTION

Unlike potash and phosphate, nitrogen is not mined. It is taken from the
air and reacted with a hydrogen source, usually natural gas reformed with steam,
to produce ammonia. PCS Nitrogen produces ammonia at all domestic plants and in
Trinidad. The ammonia is used to produce a full line of upgraded nitrogen
products, including urea, ammonium nitrate, nitric acid and nitrogen solutions.

SERVICE AGREEMENTS

The Geismar plant is integrated with a larger chemical manufacturing
complex owned by Honeywell International, Inc. ("Honeywell"). PCS Nitrogen and
Honeywell have an agreement to provide certain

I-7
<PAGE> 9

support services to each other, including the provision of utilities, the
discharge of wastewater, security and emergency services, and other essential
services. PCS Nitrogen believes that most of the services that PCS Nitrogen
requires are available from other sources, if necessary. However, the
termination of, or the need to replace, certain of the services provided (such
as steam, well water supply and dock services) could, in the aggregate, involve
potentially significant capital expenditures, increased operating costs and
disruptions to the operations of the Geismar plant.

BP Chemicals, Inc. ("BPC") operates the Lima plant on PCS Nitrogen's behalf
under an operating agreement that can be terminated by either party with nine
months' notice. PCS Nitrogen's payments to BPC under the operating agreement are
generally based on BPC's previous cost of operating the Lima plant and are made
through the reimbursement of expenses incurred by BPC in providing such
operating services. In addition, due to the mutual interdependence of the Lima
plant and BPC's operations, PCS Nitrogen and BPC have agreed to provide each
other with certain manufacturing support services at cost pursuant to a contract
extending for as long as the plants continue to operate and either party is
required to provide support services thereunder.

PCS Nitrogen uses contract labor personnel provided by Augusta Services
Company, Inc., which is owned 50% by PCS Nitrogen and 50% by DSM Chemicals North
America, Inc., to provide purchasing, stores and spare parts management,
maintenance, repair, shipping and certain other services for the Augusta plant.

RAW MATERIALS

Natural gas is the primary raw material used for the production of ammonia
and, as a result, virtually all of PCS Nitrogen's other nitrogen products. The
purchase and transportation of natural gas accounts for approximately 40% of PCS
Nitrogen's total domestic production cost. With the Trinidad 01 and 02 plants
running, PCS Nitrogen's domestic gas requirements comprise approximately 52% of
its total gas requirements (68% with Trinidad's 01 and 02 plants idled). PCS
Nitrogen's current natural gas strategy is to purchase approximately one-half of
its domestic natural gas in the spot market or on short-term contracts and
approximately one-half of its domestic natural gas pursuant to fixed-price
physical contracts or forward contracts which fix the price of future
deliveries. The remaining approximately 48% of its natural gas (assuming
Trinidad 01 and 02 plants are running, 32% if not) is purchased in Trinidad
using pricing formulas related to the market price of ammonia. With the
exception of the Trinidad facility, PCS Nitrogen purchases nearly all its
natural gas from producers or marketers at the point of delivery of the natural
gas into the pipeline system, then pays the pipeline company and, where
applicable, the local distribution company to transport the natural gas to PCS
Nitrogen's facilities. Approximately 85% of PCS Nitrogen's domestic consumption
of natural gas is delivered pursuant to firm transportation contracts which do
not permit the pipeline or local distribution company to interrupt service to,
or divert natural gas from, the plant.

PCS JOINT VENTURE

The Company indirectly holds all outstanding interests in a limited
partnership (the "PCS Joint Venture") doing business in Florida as Florida
Favorite Fertilizer and in Georgia and Alabama as Farmer's Favorite Fertilizer.
PCS Joint Venture manufactures, processes and distributes fertilizer and other
agricultural supplies from plants located in Florida, Alabama and Georgia.

I-8
<PAGE> 10

MARKETING

The following table summarizes the Company's net sales revenue of potash,
phosphate and nitrogen products (by nutrient) in the past three calendar years:

<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Potash
Canada................................................... $ 21,429 $ 21,885 $ 14,460
United States............................................ 215,993 205,701 195,780
Canpotex................................................. 254,711 252,464 229,666
Other.................................................... 71,163 65,441 64,261
Phosphates
Canada................................................... 24,010 25,386 24,268
United States............................................ 594,183 688,198 632,616
PhosChem................................................. 186,494 262,168 261,502
Other.................................................... 39,153 35,237 35,223
Nitrogen
Canada................................................... 5,284 4,422 2,879
United States............................................ 480,213 585,672 694,566
Other.................................................... 168,431 161,189 170,708
Florida Favorite Fertilizer................................ 52,850 55,344 57,156
</TABLE>

The following table summarizes the Company's net sales revenue from
products, by category:

<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C>
Potash..................................................... $563,296 $545,491 $504,167
Florida Favorite Fertilizer................................ 52,850 55,344 57,156
Phosphates
Liquid Fertilizers....................................... 268,903 331,672 283,110
Solid Fertilizers (DAP, MAP, GTSP)....................... 283,455 374,525 362,625
Animal Feed.............................................. 176,783 187,557 191,016
Phosphate Rock, Industrial Products...................... 114,699 116,544 116,858
Nitrogen
Ammonia.................................................. 244,719 258,387 376,972
Urea..................................................... 180,545 200,103 209,825
Nitrogen Solutions....................................... 111,080 163,018 162,885
Other.................................................... 117,584 129,775 118,472
</TABLE>

For further financial information about the Company's business segments and
domestic and international sales, see Note 18 to the Consolidated Financial
Statements.

The Company has a diversified customer base, and apart from sales to
Canpotex Limited ("Canpotex") and Phosphate Chemicals Export Association, Inc.
("PhosChem"), no one customer accounted for more than 10% of the Company's sales
in 1999.

Potash from the Company's Saskatchewan mines produced for use outside North
America is sold exclusively to Canpotex. PCS Sales (Canada) Inc. executes
offshore marketing and sales for the Company's New Brunswick potash and executes
marketing and sales for the Company's potash, phosphate and nitrogen products in
Canada. PCS Sales (USA), Inc. executes marketing and sales for the Company's
potash, phosphate and nitrogen products in the United States. PhosChem, an
association formed under the U.S. Webb-Pomerene Act, is the principal vehicle
through which the Company executes offshore marketing and sales for its
phosphate fertilizers. See "Offshore Marketing".

I-9
<PAGE> 11

Ammonia, urea, ammonium nitrate and nitrogen solutions are sold as
fertilizers to agricultural customers and to industrial customers for various
applications, while nitric acid is sold to industrial customers as an
intermediate chemical feedstock.

In the past, fertilizer prices have been volatile. No assurance can
therefore be given that the average market prices for the Company's fertilizer
products will continue at current levels.

NORTH AMERICAN MARKETING

In 1999, North American net sales revenue from potash products represented
12% of the Company's total net sales revenue, substantially all of which was
attributable to potash customers in the United States. Typically, North American
potash sales of the Company are greatest in the second calendar quarter. The
vast majority of sales are made on the spot market with the balance made under
short-term contracts. The Company has no material contractual obligations in
connection with North American sales to sell potash in the future at a fixed
price.

In 1999, North American net sales revenue from phosphate products
represented 30% of the Company's total net sales revenue, substantially all of
which was attributable to phosphate customers in the United States. Typically,
North American phosphate product sales are greatest in the first and second
calendar quarters. In 1999, the majority of PCS Phosphate's phosphate product
sales were made on the spot market, with the balance made under short-term
contracts (generally on an annual basis) and a limited number of sales made
pursuant to multi-year contracts. The Company has no material contractual
obligations in connection with North American sales to sell phosphate in the
future at a fixed price.

In 1999, North American net sales revenue from nitrogen products
represented 29% of the Company's total net sales revenue and PCS Nitrogen's
non-fertilizer products accounted for approximately 47% of PCS Nitrogen's
nitrogen revenue. Typically, North American nitrogen fertilizer sales are
greatest in the second calendar quarter. In 1999, the majority of PCS Nitrogen's
nitrogen product sales were made on the spot market, with the balance made under
short-term and multi-year contracts. The Company has no material contractual
obligations in connection with North American sales to sell nitrogen in the
future at a fixed price.

Ammonia purchased by PCS Nitrogen is used in the Company's operations and
is sold to third party customers by PCS Sales (USA), Inc.

The primary customers for fertilizer products are retailers, dealers,
cooperatives, distributors and other fertilizer producers. Such retailers,
dealers and cooperatives have both distribution and application capabilities.
The primary customers for industrial products are chemical product
manufacturers.

At December 31, 1999, the Company's North American sales functions were
handled by 78 employees in Chicago, Illinois and various other locations in the
United States, and 17 employees in Saskatoon, Saskatchewan.

OFFSHORE MARKETING

Potash produced by the Company in Saskatchewan for sale outside North
America is sold to Canpotex, which is owned in equal shares by the three potash
producers in the Province of Saskatchewan (including the Company). Canpotex,
which was incorporated in 1970 and commenced operations in 1972, acts as an
export company and as a unified marketing force for all Saskatchewan potash
production in the offshore marketplace. Each shareholder of Canpotex has an
equal voting interest as a shareholder and through its nominees on the board of
directors. The Company and the other shareholders of Canpotex have agreed that,
as long as they are members of Canpotex, and with respect to potash produced in
Canada, they will not make offshore sales independently. The Company's
production from its New Brunswick mine has been exempted from this requirement
by the members of Canpotex. Any member may terminate its membership in Canpotex
at specified times of the year on six months notice.

In general, Canpotex sales are allocated among the producers based on
production capacity. If a shareholder cannot satisfy demand for potash by
Canpotex, the remaining shareholders are entitled to satisfy

I-10
<PAGE> 12

the demand pro rata based on their allotted production capacity. The Company
currently supplies 55.65% of Canpotex's requirements. Canpotex sells potash to
government agencies and private firms pursuant to six-month contracts at
negotiated prices or by spot sales.

The following table sets forth the percentage of sales by Canpotex for the
past three calendar years in the various geographical regions:

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Asia........................................................ 75% 69% 72%
Latin America............................................... 13 17 14
Oceania..................................................... 8 9 9
Europe...................................................... 4 5 5
---- ---- ----
Total....................................................... 100% 100% 100%
==== ==== ====
</TABLE>

For 1999, sales to Canpotex represented 12% of the total net sales of the
Company and net sales revenue from offshore sales of potash from the New
Brunswick mine, through PCS Sales (Canada) Inc., represented 3% of the total net
sales of the Company.

Since 1975, PhosChem has been the principal vehicle for United States
exports of phosphate fertilizers. Currently, the members of PhosChem are PCS
Phosphate, IMC-Agrico Company ("IMC-Agrico"), a joint venture between IMC Global
Inc. and Phosphate Resource Partners LLP, Mississippi Phosphates Corporation
("MissChem") and Mulberry Corporation. The PhosChem members have agreed to
export their fertilizer products exclusively through PhosChem, except for
exports to Canada, any member state of the European Union or the European
Economic Area, and sales through the U.S. Agency for International Development
Tenders and sales to certain buyers affiliated with members. Historically,
PhosChem negotiated prices and other terms for the export sale of fertilizer
products. According to the terms of a PhosChem agreement effective January 1,
1995, IMC-Agrico is responsible for the marketing of solid fertilizers (DAP, MAP
and GTSP), and PCS Phosphate, or its sales affiliate (PCS Sales (USA), Inc.), is
responsible for the marketing of liquid fertilizer products (MGA) to export
countries. Total sales for 1999 were apportioned as follows: 62% to IMC-Agrico,
20% to PCS Phosphate, 8% to MissChem, and 10% to Mulberry Corporation. The
PhosChem agreement is currently in effect through December 31, 2000, and subject
to renewal thereafter. If the PhosChem agreement is not renewed, the Company
does not believe the disbanding of PhosChem would materially affect the
Company's sales of fertilizer, but there can be no assurance that, if PhosChem
were to be disbanded, the Company would be able to find alternative outlets for
its products or sell its products at prices or on terms similar to those
expected to be obtained by PhosChem. The Company's estimated 2000 PhosChem
allocation is 22.56%.

Revenue from sales to PhosChem accounted for 9% of the Company's total net
sales in 1999. Other offshore phosphate sales accounted for 2% of the Company's
total net sales in 1999. All of the Company's phosphate sales to China and India
were made through PhosChem. Most of the Company's sales of phosphate products to
China are made to the central purchasing authority of the Chinese government.
Sales in India were made through the Fertilizer Association of India to many
independent buyers.

The following table sets forth the percentage of sales of PhosChem for the
past three calendar years in the various geographical regions:

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Asia........................................................ 81% 77% 75%
Latin America............................................... 11 14 15
Mid East.................................................... -- 1 2
Oceania..................................................... 8 8 8
---- ---- ----
Total....................................................... 100% 100% 100%
==== ==== ====
</TABLE>

I-11
<PAGE> 13

With respect to offshore sales of nitrogen, ammonia and urea sales
predominate and originate primarily from Trinidad, with other sales coming from
purchased product locations. For 1999, net sales revenue from offshore sales of
nitrogen represented 3% of the net sales revenue of the Company.

Offshore sales are subject to those risks customarily encountered in
foreign operations, including (i) fluctuations in foreign currency exchange
rates, (ii) changes in currency and exchange controls, (iii) the availability of
foreign exchange, (iv) laws, policies and actions affecting foreign trade and
(v) other economic, political and regulatory policies of foreign governments.

DISTRIBUTION AND TRANSPORTATION

The Company has an extensive infrastructure and distribution system to
transport and store its products. Other than storage facilities located at
production plants, in 1999 the Company used 147 locations to store and handle
its products in the field. The Company owns or net leases 2,003 railcars and
full service leases an additional 3,634 railcars.

Transportation costs add significantly to the total amounts paid by
purchasers of potash. Producers have a definite advantage in markets close to
their sources of supply (e.g., Saskatchewan producers in the Midwestern United
States, New Brunswick producers on the U.S. Eastern Seaboard and New Mexico
producers in the Southern and Western United States). International shipping
cost variances permit offshore producers (including those in the former Soviet
Union ("FSU"), Germany, Israel and Jordan) to compete effectively in some of the
Company's traditional markets.

Most of the Company's potash for North American customers is shipped by
rail. Shipments are also made by rail from each of the Company's Saskatchewan
mines to Thunder Bay, Ontario, for shipment by lake vessel to the Company's
warehouses and storage facilities in Canada and the United States.

Potash from the New Brunswick mine is shipped primarily by ocean-going
vessel from the Port of Saint John, although truck and rail transport are also
used for North American customers.

In the case of the Company's sales to Canpotex, potash is transported by
rail principally to Vancouver, British Columbia, where port facilities exist for
storage pending shipment overseas. The Company has an equity interest in
Canpotex Bulk Terminals Limited, which is a part owner of these port facilities.
The Company, through Canpotex, also has an interest in a port facility located
in Portland, Oregon.

With respect to phosphates, the Company has long-term leases on shipping
terminals in Morehead City and Beaufort, North Carolina, through which it
receives and stores raw materials for, as well as the products manufactured by,
the Aurora Facility. The Company owns nine barges (four used for solid products,
two for phosphoric acid, one for sulfuric acid and two for sulfur) and three tug
boats, which are used to transport materials between its Aurora Facility and
Morehead City. Raw materials and products are also transported to and from the
Aurora Facility by rail. The Company transports sulfur it purchases from Canada
in large, dedicated unit trains. Both CSX Corporation and Norfolk Southern
Corporation serve the Aurora Facility. The Company believes that its location
and diversified transportation and terminalling capabilities put it in a
comparable position to most of its Florida competitors in purchasing sulfur. In
December 1997, the Company entered into a ten-year supply contract with an
offshore supplier to supply a portion of the Company's sulfur requirements and
also committed to build a multipurpose ocean-going vessel to ship such sulfur as
well as handle sulfuric acid, phosphoric acid and other chemicals. The vessel is
expected to be in service in the first half of 2000. The Company receives
ammonia for its phosphate operations at Aurora through its ammonia terminal in
Savannah, Georgia; the ammonia is shipped by rail from Savannah to the Aurora
Facility.

Sulfur is delivered to the White Springs Facility by unit trains from
Canada and by rail from multiple domestic sources. The Company receives ammonia
for its phosphate operations at White Springs through its ammonia terminal in
Savannah, Georgia; ammonia is shipped by rail from Savannah to the White Springs
Facility. Until 1999 the Norfolk Southern Corporation was the only railroad
providing service for the White Springs Facility. However, a nearby transload
facility at Lake City, Florida, which became operational in 1999, is serviced by
the CSX Corporation. Most of the phosphoric acid and chemical fertilizers
produced at the White Springs Facility are shipped to domestic destinations by
rail. The Company also ships some of its
I-12
<PAGE> 14

phosphoric acid, chemical fertilizers and animal feed products, produced at the
White Springs Facility, through the bulk terminal located in Morehead City,
North Carolina, for offshore sales. This latter option allowed the Company to
close the more costly Jacksonville, Florida terminal.

The Company makes domestic deliveries of animal feed products (bulk and
bagged) by rail or truck from its manufacturing facilities and from several
warehouses supplied from its manufacturing facilities.

The Company distributes its nitrogen products by barge, railcar, truck, and
direct pipeline to its customers and through its strategically located storage
terminals in high consumption areas. The Company leases or owns approximately 50
nitrogen terminal facilities with an aggregate storage capacity of approximately
600,000 tons of product. The terminals provide off-season storage and also serve
local dealers during the peak seasonal demand period.

The Company distributes products from the Trinidad plant to markets in
Latin America and Europe in addition to the United States. The Company's
distribution operations in Trinidad employ two long-term chartered ocean-going
vessels and utilize spot charters as necessary for the transportation of
ammonia. All bulk urea production is shipped through third-party carriers.

COMPETITION

The markets for potash, both domestic and foreign, are highly competitive.
Since potash is a commodity, producers must compete based on price and service
(e.g., delivery time and ability to supply all grades). Apart from competitive
pricing, the Company's principal method of competition is the quality of service
it provides to customers. Among other things, the Company provides quality
service by maintaining warehouses and leasing railcars to enhance its delivery
capability. The high cost of transporting potash limits competition in various
areas.

The Company's potash competition includes three North American producers
and potash producers located outside North America in the FSU, Israel, Jordan,
Germany and France. Because of the high capital cost and lead time required to
construct a new mine, the Company's principal competition is expected to
continue to come from the owners of existing operations.

Most phosphate products, particularly solid fertilizers, are commodities,
with little or no product differentiation, and thus trade on the basis of prices
determined in highly competitive markets. The vast majority of the U.S.
phosphate rock not mined by the Company is produced in central Florida,
southeast of Tampa, and most of the U.S. phosphate processing capacity, other
than at Aurora, is located in Florida and along the coast of the Gulf of Mexico.

The Company's principal advantage at Aurora in competing with other
producers is that it operates integrated phosphate mine and phosphate processing
complexes while most of its competitors are required to ship phosphate rock by
rail or truck from their mines to their chemical processing plants, thus
incurring substantially higher transportation costs.

As a result of its location in North Carolina and the relatively high cost
of transportation, the Company's U.S. phosphate sales from Aurora have a natural
advantage in the Northeast, mid-Atlantic and eastern Midwest regions, while
White Springs and other Florida producers have a natural advantage in the South,
and Gulf coast producers have a natural advantage in areas of the Midwest
accessible to barge traffic up the Mississippi River.

The Company also competes with governmental enterprises and independent
phosphate producers in important exporting countries, including Morocco,
Tunisia, Jordan and South Africa.

Although there has been extensive consolidation and privatization
worldwide, substantial competition exists in the nitrogen industry. The Company
competes domestically with a broad range of companies in the production and sale
of nitrogen products, including subsidiaries of larger chemical companies, farm
cooperatives, integrated energy companies and independent fertilizer companies.
Because fertilizer is a commodity, competition takes place largely on the basis
of price and delivery. The relative cost of, and

I-13
<PAGE> 15

availability of transportation for, raw materials and finished products to
manufacturing facilities and markets are important competitive factors.

The Company also competes with foreign companies whose nitrogen products
are imported into the United States. Although diminishing in number, various
foreign competitors receive subsidies from their governments. Some countries
also have natural gas supplies that are surplus to domestic demand. This surplus
natural gas may have a low alternative value and, when used as feedstock for the
manufacture of ammonia and urea, can result in low-cost production. These
low-cost products are being imported into the U.S. and compete with domestically
manufactured nitrogen fertilizers, including the Company's. In addition, other
importers subsidized by their governments may import products into the U.S. for
reasons not related to U.S. fertilizer market conditions, such as a need to
obtain U.S. dollars.

Pursuant to the Uruguay Round Agreements Act, on March 1, 1999, the U.S.
Department of Commerce and the U.S. International Trade Commission commenced a
"sunset" review of antidumping orders restricting exports of urea from the FSU
and Romania into the United States in order to determine whether such orders
should be terminated or should remain in effect. Effective October 1999, those
agencies determined that the antidumping orders should remain in effect for
Romania and substantially all relevant FSU states.

The Company's nitrogen production capability is currently the largest in
the Western Hemisphere. The Company's domestic nitrogen plants serve
agricultural markets with a diversified crop base that spans a lengthy growing
season and chemical industrial manufacturers located throughout the U.S. Those
plants are strategically located in agricultural as well as industrial end-use
markets in the Southeast, Midwest and Gulf Coast regions. The Company believes
that it is more economical to transport natural gas, the primary raw material in
the production of nitrogen fertilizers and chemicals, to plants situated in the
product markets than to transport such products over long distances. Several of
the Company's domestic nitrogen plants are located closer to their primary
customers than are their competitors. The Company concentrates its nitrogen
marketing efforts on these nearby markets where lower transportation costs offer
the potential for better margins. The Company believes that its product mix
diversity and the number and geographic diversity of its nitrogen plants provide
competitive advantages in manufacturing, distribution, marketing, customer
service and other areas when compared to competitors controlling only a few
facilities. In addition, the industrial demand for nitrogen products is
typically less volatile and follows different demand cycles than agricultural
demand for fertilizer. The Company believes that its industrial sales add a
measure of stability to its revenue and are a desirable complement to
agricultural demand.

EMPLOYEES

At December 31, 1999, the Company actively employed 5,506 persons, of whom
1,899 were salaried and 3,607 were hourly paid. Of these employees, the
Company's potash operations employed 1,736 people, the phosphate operations
employed 2,615 people, the nitrogen operations employed 966. The corporate
office had a staff of 94 and 95 people were employed in the Company's sales
group.

The Company has entered into nine collective bargaining agreements with
labor organizations representing employees. The collective bargaining agreements
at the Allan, Cory and Patience Lake divisions expire on April 30, 2000. The
Lanigan agreement expires on January 31, 2001. The Company and the Rocanville
Potash Employees Association have a contract that expires on May 31, 2001. The
agreement between IMC and the union representing the employees at the Esterhazy
mine expires on January 31, 2001. The union agreement at PCS Cassidy Lake
expired December 31, 1998 and negotiations are continuing. The Company's Sussex,
New Brunswick and Aurora operations are non-union. The collective bargaining
agreement with the union representing employees at the White Springs plant
expires on December 1, 2000 and the agreement with the employees at the
Jacksonville terminal expires September 30, 2001. PCS Nitrogen has three
locations with collective bargaining agreements: Clinton, which contract expired
July 31, 1999 but has been extended to May 1, 2000; Memphis, which contract
expires September 17, 2000; and LaPlatte, with a contract that expires January
31, 2003. Clinton and LaPlatte were permanently closed in the third quarter of
1999. In addition, the agreement between BPC and the union representing
employees at the Lima plant expires February 16, 2002. The Company believes its
relations with its employees to be good.

I-14
<PAGE> 16

ROYALTIES AND CERTAIN TAXES

Saskatchewan potash production is taxed at the provincial level under The
Mineral Taxation Act, 1983 (Saskatchewan). This tax consists of a base payment
and a profit tax. In addition to the Potash Production Tax, rental fees, taxes
and royalties are payable to the Province of Saskatchewan and municipalities by
potash producers in respect of potash reserves or production of potash in the
Province of Saskatchewan. The Company's taxes, fees and royalty expenses were
$72.7 million in 1999.

The Company is subject to capital tax on its paid-up capital (as defined in
The Corporation Capital Tax Act of Saskatchewan) and its taxable capital (as
defined in the New Brunswick Income Tax Act). In addition, a resource
corporation in the Province of Saskatchewan pays a corporate capital tax surtax
based on the value of Saskatchewan resource sales. This surtax is only payable
to the extent that it exceeds the regular capital tax. In 1999, the Company paid
capital tax of $3.8 million and surtax of $15.3 million.

The Company pays royalties to the New Brunswick government on the basis of
production from its New Brunswick mine. In addition, the Company pays municipal
taxes. The Company's expenses for such royalties and municipal taxes were $5.0
million in 1999.

The Company does not make royalty payments in connection with its phosphate
and nitrogen operations.

INCOME TAXES

The subsidiaries of the Company which operate in the United States are
subject to U.S. federal and state income taxes. These subsidiaries are not
currently subject to federal cash income taxes by virtue of net operating losses
incurred. The Company's nitrogen subsidiaries operating in Trinidad are subject
to Trinidad taxes.

The effective consolidated tax rate for 1999 was 30% (1998 -- 31%) of
income before income taxes (exclusive of the goodwill impairment charges
recorded in the third quarter of 1999). The reduction in total income tax
expense was principally due to a deferred tax recovery of $48.6 million relating
to the plant closures and impairment charge and lower income before income
taxes.

RESEARCH AND DEVELOPMENT

The Company maintains potash research and development facilities located in
Saskatoon, Saskatchewan, employing approximately 30 persons who concentrate on
improving efficiency in mine operations and product quality. Research continues
on the use of three-dimensional seismic methods and other geophysical tools to
detect geological disturbances in potash ore bodies. The Company is also
proceeding with automation of mining machines and improving process control in
mills. Other research includes new product development and measures to maintain
and enhance product quality in transit and at offsite storage facilities. The
Company funds research in agronomy through Potash & Phosphate Institute
programs.

The Company continues to evaluate ways to more fully automate its phosphate
production facilities, including improvements to its beneficiation (mill),
sulfuric acid and phosphoric acid plants. The Company is also exploring ways of
further debottlenecking its phosphate and nitrogen production facilities,
selectively adding capacity and otherwise enhancing production and process
efficiencies through technological enhancements. The Aurora Facility has
increased direct blending of gypsum and clays which the Company expects should
reduce long-term gypsum handling and reclamation costs.

ENVIRONMENTAL MATTERS

Certain environmental matters which are the subject of investigation or
litigation are discussed under the heading "Legal Proceedings". The Company's
operations are subject to numerous environmental requirements under Canadian,
U.S., Chilean and Trinidad and Tobago federal, provincial, state and local laws
I-15
<PAGE> 17

and regulations. Such laws and regulations govern, among other matters, air
emissions, waste water discharges, land use and reclamation and solid and
hazardous waste management. Many of these laws and regulations are becoming
increasingly stringent, and the cost of compliance with these requirements can
be expected to increase over time. In particular, Trinidad and Tobago
governmental authorities are considering measures providing for the increased
regulation of environmental matters, including the potential implementation of
more stringent wastewater effluent standards which may require PCS Nitrogen to
take certain actions to maintain compliance. Nonetheless, PCS Nitrogen does not
currently expect that such legislation or regulations will have a material
adverse effect on the Company's financial condition or results of operations.

The Company believes that it is currently in material compliance with
applicable environmental laws and regulations. The Company believes that it is
well positioned to meet anticipated requirements under the applicable
environmental laws and regulations. Although significant capital expenditures
and operating costs have been incurred and will continue to be incurred on
account of environmental laws and regulations, the Company does not believe,
except as otherwise set out herein, that such environmental laws and regulations
have had, or will have, a material adverse effect on its business. However, the
Company cannot predict the impact of new or changed laws or regulations or
permit requirements, including the recently-enacted potash decommissioning
regulations discussed below or changes in the ways that such laws and
regulations are administered or interpreted. The Company anticipates that its
routine expenditures related to environmental regulatory matters in 2000 will
not differ materially from the previous year.

The Company and its facilities are also subject to a range of environmental
statutes and programs focused on site reclamation and restoration and on
investigation and, where necessary, remediation of contaminated properties. The
Company's obligations and potential liabilities under these programs have been
and can be expected to continue to be significant. The Company does not believe,
except as set out herein, that such obligations and potential liabilities have
had, or will have, a material adverse effect on its business. However, it is
often difficult to estimate and predict the potential costs and liabilities
associated with these programs and there is no guarantee that the Company will
not in the future be identified as potentially responsible for additional costs
under these programs, either as a result of changes in existing laws and
regulations or as a result of the identification of additional matters or
properties covered by these programs.

ENVIRONMENTAL EXPENDITURES

Reclamation and Restoration Costs

Site restoration and reclamation costs have been accrued for various sites.
At December 31, 1999, the Company had accrued the following amounts for site
reclamation and restoration: $28.5 million for the Aurora Facility, $55.8
million for the White Springs, Florida Facility, $27.4 million for the Moab,
Utah Facility, $0.6 million for various idle sulfur facilities, $18.4 million
for certain Florida Favorite Fertilizer facilities, and $4.3 million for the
Cassidy Lake Facility. The idle sulfur facilities were part of the acquisition
of Texasgulf and are undergoing dismantlement and environmental restoration
efforts. The current portion of restoration and reclamation costs accrued in
1999 totaled $22.7 million. These amounts represent the Company's current
estimate of potential site restoration and reclamation costs as last assessed in
December 1999. The expenditures are generally incurred over an extended period
of time.

Annual environmental expenditures for reclamation and restoration during
the year ended December 31, 1999 were $79.3 million. Of this amount, $70.3
million was charged to operations, $3.1 million was capitalized and $5.9 million
was charged against accrued reclamation costs.

Capping of By-product Gypsum Stacks

In 1993, the State of Florida passed certain legislation requiring
companies to reduce the potential environmental hazards associated with
accumulations of by-product gypsum (gypsum stacks). The regulations implementing
this legislation require companies to "cap" the gypsum stacks in order to reduce
seepage into groundwater when such stacks reach their design capacity (for the
Company, in approximately 35 years), or after March 25, 2001 if groundwater
standards are not being met. At December 31, 1999, a balance of $35.4 million
was included in accrued reclamation costs for this gypsum stack capping
requirement.
I-16
<PAGE> 18

The obligations of White Springs regarding the gypsum stacks are guaranteed by
PCS (see "Permits and Regulatory Approvals").

In North Carolina, on exhaustion of the mine's phosphate reserves,
disposition of the remaining gypsum must comply with the laws in effect at that
time.

Other Environmental Costs

The Company's operating expenses, other than reclamation and restoration
and gypsum stack capping, relating to compliance with environmental laws and
regulations governing ongoing operations were approximately $20.2 million for
the year ended December 31, 1999 as compared to $20.5 million for the year ended
December 31, 1998.

Capital Expenditures

The Company routinely undertakes capital projects to improve pollution
control facilities. In 1999, a total of approximately $5.1 million in capital
expenditures (exclusive of capitalized reclamation expenditures) was spent to
meet the Company's environmental control objectives as compared to $9.9 million
in 1998. The Company expects that its capital requirements for environmental
projects may increase in the future due to increasingly stringent environmental
regulations arising from current and future requirements of law.

With respect to air emissions, the Company anticipates that additional
expenditures may be required to meet increasingly stringent U.S. federal and
state regulatory and permit requirements. These requirements include existing
and anticipated regulations under the U.S. federal Clean Air Act, particularly
the 1990 amendments thereto, and under state law. In particular, both federal
and state regulation of hazardous air pollutants (including ammonia in certain
states) are expected to require additional air emission control equipment and
increased operating expenditures at some U.S. facilities. Further, the U.S.
Environmental Protection Agency ("EPA") has published new National Ambient Air
Quality Standards for both ozone and particulate matter which are more stringent
than existing standards and has issued a number of regulations establishing
requirements to reduce nitrogen oxide (NOx) emissions. The Company continues to
monitor developments in these various programs and to assess their potential
impact on the Company's operations.

The federal Clean Air Act operating permit program is expected to require
the addition of enhanced emissions monitoring equipment at some facilities, as
well as the imposition of permit fees based upon facility air pollutant
emissions. If the Company undertakes facility expansion at its U.S. plants, a
federal Prevention of Significant Deterioration or New Source Review Permit may
need to be obtained prior to any such expansion of these facilities. Such
permits would impose certain restrictions on air pollutant emissions from the
expanded portions of such plants and compliance with those restrictions would
likely require installation and use of additional pollution control devices.

SITE ASSESSMENT AND REMEDIATION

In addition to environmental regulation of its present operations, the
Company also may incur costs and liabilities in connection with its and its
predecessors' past and present waste disposal practices and ownership and
operation of real property and facilities, as well as its mining activities. The
U.S. federal Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA") and other U.S. federal and state laws impose liability
on, among others, past and present owners and operators of properties or
facilities at which hazardous substances have been released into the environment
and persons who arrange for disposal of hazardous substances that are released
into the environment. Liability under these laws may be imposed jointly and
severally and without regard to fault or the legality of the original actions,
although such liability may be divided or apportioned according to various
equitable and other factors. In the course of its present and former operations,
including those of divested businesses, PCS Phosphate, White Springs and PCS
Nitrogen have generated and the Company will generate wastes that could result
in liability for the Company under these laws.

I-17
<PAGE> 19

During the past ten years, EPA officials or EPA contractors have conducted
and completed independent, limited site assessments at Aurora, Marseilles and
Saltville facilities. The Company has no information indicating that any cleanup
required in connection with the Aurora, Marseilles and Saltville sites will have
a material adverse effect upon the Company's financial condition or results of
operation. Further, the Company believes that if it has any material liability
for such costs, it would have claims against third parties in connection with
such liability. Any such claims would be based on statutory and/or common law
causes of action against third parties, such as former owners, occupiers or
disposers.

PCS Phosphate was initially named as a potentially responsible party in two
cleanup matters involving the Colorado School of Mines Research Institute
("CSMRI") in connection with hazardous substances allegedly generated at some of
the former operations of CSMRI. During May, 1995, Elf (USA) advised EPA that Elf
(USA) was handling the matter on behalf of Texasgulf and another former Elf
(USA) subsidiary, Texasgulf Metals and Minerals Co. On January 28, 1997, EPA
issued a notice that the required cleanup work at one of the sites had been
completed. To date, PCS Phosphate has had no further involvement with these
matters.

PCS Joint Venture and its general partner, Potash Corporation of
Saskatchewan (Florida) Inc. ("PCS Florida"), a wholly-owned subsidiary of the
Company, are subject to various environmental laws of the federal and local
governments in the United States, and from time to time investigations relating
to such laws. Currently, the Florida Department of Environmental Protection
("FDEP") is conducting an investigation into soil and ground water contamination
of a PCS Joint Venture fertilizer plant located in Lakeland, Florida and certain
adjoining property. Assessment of the contamination of the plant site and of
certain adjoining property is continuing. On April 8, 1997, FDEP filed a
Complaint and Petition for Enforcement against PCS Joint Venture and others. The
Company filed an Answer, Affirmative Defenses and Cross Claims on May 12, 1997.
Discovery is still continuing in this litigation.

On October 30, 1998, EPA notified the Company of potential liability under
Section 107(a) of CERCLA. On December 1, 1998, the Company replied to EPA's
Initial Information Request. By letter dated February 8, 1999, the EPA notified
PCS Joint Venture that the EPA was initiating a period for negotiations to
assist in the preparation of an Administrative Order on Consent and a Remedial
Investigation and Feasibility Study ("RI/FS") Work Plan. On October 13, 1999,
PCS Joint Venture submitted to the EPA Phase I of a work plan to conduct a RI/FS
of certain releases to the soil and groundwater of the PCS Joint Venture
facility in Lakeland, Florida and other area properties (the "Landia Site"). On
October 21, 1999, PCS Joint Venture signed an Administrative Order by Consent
under which PCS Joint Venture agreed to conduct the RI/FS work. PCS Joint
Venture is in the process of implementing the agreed upon RI/FS work plan.
Starting in September 1999, the EPA conducted additional investigations of
environmental conditions at focused areas of the Landia site. In February 2000,
the EPA notified PCS Joint Venture and two other entities of the Agency's intent
to undertake interim site response activities at specific areas of the Landia
Site. The Notice letter also advised PCS Joint Venture of an opportunity to
negotiate with the EPA regarding a commitment to conduct these site response
activities pursuant to a proposed Administrative Order on Consent. On March 17,
2000 PCS Joint Venture and another entity advised the EPA that they had reached
an agreement in principle between themselves and were willing, subject to the
negotiation of an acceptable scope of work and Administrative Order on Consent,
to undertake certain of the interim response activities at the Landia Site. PCS
Joint Venture intends to defend itself vigorously in all legal proceedings while
also continuing to work to assess and evaluate the nature and extent of the
impacts at the Site. No final determination has yet been made of the nature,
timing, or cost of remedial action that may be needed, and PCS Joint Venture is
unable at present to determine whether and to what extent it may be able to
recover any costs incurred from third parties.

In June 1994, the Georgia Department of Natural Resources, Environmental
Protection Division ("GEPD") wrote to PCS Joint Venture seeking certain
environmental information regarding its Moultrie, Georgia location. In October
1994, an additional request for information was received from the EPA pursuant
to Section 104(e) of CERCLA. Responses to both requests have been provided by
PCS Joint Venture. Preliminary investigations have confirmed the presence of
lead-contaminated soil at the site. The initial assessment is that this lead
contamination is attributable to former operations at the site, the facilities
of which were dismantled some time ago. However, a complete assessment of the
site has not yet been completed, and
I-18
<PAGE> 20

the full nature and extent of the contamination cannot be quantified at this
time. On September 30, 1997, the GEPD requested that Farmers Favorite Fertilizer
submit a Compliance Status Report ("CSR") by March 30, 1998, pursuant to the
applicable state site remediation program. A consultant prepared and submitted
the CSR for Farmers Favorite Fertilizer. On September 22, 1998, GEPD requested
that a revised CSR be prepared and submitted by December 31, 1998. On December
15, 1998, a Request for Extension to File the revised CSR was submitted to GEPD,
seeking an extension to complete needed field work and correspondingly revise
the CSR. GEPD and Farmers Favorite Fertilizer executed a Consent Order
authorizing the extension. The revised CSR was submitted during March 1999. At
the request of GEPD, Florida Favorite Fertilizer had prepared and had filed
during July 1999 a Corrective Action Plan. No recommended course of action has
yet been approved by GEPD.

PCS Joint Venture is co-operating with regulatory authorities in their
investigations of the Lakeland and Moultrie sites. It is also attempting to
determine the number and location of other parties who may be liable for
remediation of these sites. However, because site assessments are ongoing and
because other parties may be liable for some or all costs of remediation, the
ultimate liability of PCS Joint Venture has not yet been determined.

The Company received a request for information dated August 28, 1998, from
the United States Department of Agriculture Forest Service ("USDA Forest
Service") alleging that a subsidiary of Texasgulf, dissolved over forty-five
years ago, may have contributed to environmental impacts in the Klamath National
Forest in northern California. In a letter dated November 2, 1998, a
representative of the Washoe Tribe of Nevada and California invited the Company
to evaluate its potential liability and to participate in an assessment of
natural resource damages in connection with the Leviathan mine in Northern
California. The Company has advised the USDA Forest Service that the Company
does not believe it is a potentially responsible party with respect to the
alleged impacts. The Company has advised the Washoe Tribe that the Company did
not wish to participate in the assessment.

In February 1996, the North Carolina Department of Environment, Health and
Natural Resources notified PCS Nitrogen that the Navassa, North Carolina
terminal site had been included on the state's Inactive Hazardous Waste Sites
Priority List. Listed sites normally are subject to detailed assessment of the
environmental condition of concern and the feasible remediation options. PCS
Nitrogen nonetheless currently expects that the cost and liability, if any,
associated with the Navassa terminal site will not have a material adverse
effect on the Company's financial condition or results of operations.

PCS Nitrogen, in 1991, voluntarily installed a remediation system at the
Memphis plant to address certain contaminants found in the groundwater. In 1993,
the Tennessee Department of Environment and Conservation ("TDEC") proposed to
include the Memphis plant on the state's list of Inactive Hazardous Substance
Sites, potentially requiring further assessment and remedial actions. In
response to that proposal, PCS Nitrogen in 1994 entered into a consent agreement
with the TDEC providing instead for its oversight and possible modification of
PCS Nitrogen's current remedial action. While there can be no assurance that the
Memphis plant will not be listed in the future, PCS Nitrogen does not expect
that costs associated with such listing would have a material adverse effect on
the Company's financial condition or results of operations.

Since 1990, pursuant to ongoing negotiations with the Iowa Department of
Natural Resources ("IDNR") PCS Nitrogen has administered a voluntary program to
assess, and where necessary, remediate nitrates in groundwater at its now idled
Clinton facility. As part of that program, PCS Nitrogen, with IDNR's approval,
is currently addressing the presence of nitrates by: (i) participating in the
creation of adjacent wetlands; (ii) phytoremediation (planting of trees to
absorb nitrates); (iii) operation of a groundwater recovery trench with
discharge through an existing water effluent outfall; and (iv) restoring
approximately 100 acres of farmland to its natural state of grasses and
woodlands. Although IDNR may require PCS Nitrogen to take further action in the
future, PCS Nitrogen does not currently expect that the cost of such actions or
the current program will have a material adverse effect on the Company's
financial condition or results of operations.

DSM, which conducts manufacturing operations immediately adjacent to the
Augusta plant, is subject to certain corrective action requirements under its
Resource Conservation and Recovery Act ("RCRA")
I-19
<PAGE> 21

hazardous waste management permit. Pursuant to these requirements, the GEPD
identified a number of solid waste management units on DSM's property, including
several on property formerly leased from DSM by PCS Nitrogen, for assessment and
potential remediation. During 1996, PCS Nitrogen purchased the formerly leased
land and the GEPD required PCS Nitrogen to enter into a corrective action
consent order for the performance of the assessment and remediation actions
which would have been required of DSM with respect to the purchased land under
its RCRA permit. In November 1999, PCS Nitrogen submitted an amendment to its
draft remediation investigation work plan to provide for the assessment of
another area of contamination suspected to be present at a location along the
PCS Nitrogen/DSM property boundary. Although GEPD has yet to approve the plan,
PCS Nitrogen does not expect to incur material costs in connection with its
implementation.

PERMITS AND REGULATORY APPROVALS

Many of the Company's operations and facilities are required by federal,
provincial, state and local environmental laws to obtain and operate in
compliance with a range of permits and regulatory approvals. Such permits and
approvals typically have to be renewed or reissued periodically. The Company may
also become subject to new laws or regulations that require it to obtain new or
additional permits or approvals. The Company believes that it is in material
compliance with its current permits and regulatory approvals. However, there can
be no assurance that such permits or approvals will issue in the ordinary
course. Further, the terms and conditions of future permits and approvals may be
more stringent and may require increased expenditures on the part of the
Company.

A significant portion of the Company's phosphate reserves in Aurora, North
Carolina is located in wetlands and, under the U.S. federal Clean Water Act, a
permit must be obtained from the U.S. Army Corps of Engineers (the "Corps")
before mining activity that will disturb the wetlands may occur. As part of the
permit process for PCS Phosphate, the Corps issued a draft Environmental Impact
Statement in January 1994 which was supplemented in May 1995. In 1997, PCS
Phosphate received its required authorizations from the State of North Carolina
and on August 14, 1997, the Corps issued a permit granting approval to mine
certain areas described in the Environmental Impact Statement through 2017. The
permit contains a section on wetlands mitigation approach and methods regarding
wetland impacts associated with mining covered by the permit. The Company has
acquired additional land adjacent to its Aurora, North Carolina facilities for
mitigation purposes. In order to demonstrate the feasibility of such activities,
as of December 31, 1999, the Company had created or restored 2,904 acres of
wetlands.

On May 6, 1999, the Southern Environmental Law Center ("SELC") and the
Pamlico-Tar River Foundation ("PTRF") gave notice to the EPA and the Department
of the Army of their intent to file a civil action under the citizens suit
provisions of the Clean Water Act. To date, no such action has been filed. The
notice letter asserts that the Army Corps of Engineers failed to comply with
certain provisions of the Clean Water Act when it issued a permit to PCS
Phosphate in August 1997. The notice letter also requests revocation of the
permit. PCS Phosphate believes that the permit was properly issued. PCS
Phosphate intends to monitor the status of this matter and take any steps needed
to protect its ability to continue the operations authorized by the permit.

In addition to the wetlands permit from the Corps, the Company also needs
additional authorizations from agencies of the State of North Carolina to
continue its mining activities in North Carolina. The Company is required to
have State mining permits that contain bonding and reclamation requirements. The
Company has a State mining permit for the areas presently being mined by the
Company that is effective through 2003, but this permit must be amended
periodically to add additional acreage during this period. The Company also
holds another mining permit from the State for the area of the property that
contains the wetlands covered by the permit issued by the Corps. This State
permit has been renewed until 2005.

Gypsum is a byproduct of the production of phosphoric acid. Gypsum is
normally placed in above-ground storage areas called gypsum stacks. The gypsum
stacks at the White Springs Facility will continue to be used and when closed
will be covered or capped to the extent required under applicable regulations.
The Florida Phosphogypsum Rule permits the use of existing gypsum stacks until
they reach capacity, if groundwater

I-20
<PAGE> 22

standards are met as of and after March 25, 2001. The Company's management
believes that it will be in compliance with such Rule and as such should be
allowed to continue using its three gypsum stacks for their useful lives of
approximately 35 years; however, until a final determination is made by Florida
environmental authorities, it is not certain how long White Springs will be
allowed to continue using its gypsum stacks beyond the year 2001. A regulatory
prohibition on use of existing stacks would result in a closure/new stack
construction cost currently estimated in excess of $100 million.

Lands mined by White Springs after July 1, 1975 and unmined lands used in
the mining operations after July 1, 1984 are subject to mandatory reclamation
requirements of the State of Florida. Wetlands must be reclaimed on an
acre-for-acre basis under the rules of the State of Florida Department of
Environmental Protection ("FDEP") unless otherwise provided in, or pursuant to,
a Memorandum of Agreement ("MOA"), dated February 1, 1995, between OxyChem and
FDEP (which agreement was later assigned to the Company). The MOA established
alternate procedures for the Company to follow. The cost of reclamation of
mandatory lands is borne solely by White Springs. The current practice of White
Springs is to return most upland areas to commercial pine plantation, which is
the predominant pre-operation land use. Reclaimed lands include uplands,
wetlands and lakes.

Land reclamation at White Springs is currently performed pursuant to
federal, state, and local regulatory approvals granted in 1996 and 1997 to
implement the 1995 MOA between OxyChem and FDEP. The MOA provides for mitigation
of mining impacts, particularly impacts to wetlands, to be done through funding
of public acquisition of environmentally sensitive lands in the region. Land
reclamation continues to be done on-site but is undertaken using the alternate
standards of the MOA which do not require the on-site reclamation of wetlands
and which allow for the construction of lands that are expected to be of greater
future utility. The Company's contributions for the land acquisition program
through 1999 totaled $4.2 million.

White Springs has initiated a process for securing an additional federal
permit and ancillary modifications of state and local regulatory approvals
needed for continuation of mining operations beyond the expiration of its
current federal permit in 2002. The process involves environmental studies of
potential mining areas and evaluation of mine plan and reclamation alternatives.
All affected regulatory authorities, various commenting agencies, and interested
outside parties are participating in the process and completion of the process
is targeted approximately for the conclusion of the year 2000. Applications
covering an interim area to allow orderly continuation of operations were
submitted to the federal and local authorities in 1999. Favorable action on
those applications is anticipated in the first half of 2000. Selection of mine
plan and reclamation alternatives and the results of the environmental studies
could result in changes to reclamation and mitigation practices with higher
costs and changes to mining areas with reserve impacts. The magnitude of such
cost impacts cannot be estimated until the studies and evaluations are
completed. Failure to secure the required approvals for continuation of the
mining operations under any reclamation or mitigation alternative would
negatively affect reserves and costs.

The local government, with jurisdiction over the White Springs operations,
is Hamilton County, Florida. In 1999, Hamilton County adopted extensive
revisions to its mining and reclamation regulations. The Company participated in
the development of these revisions, which would be applicable to future local
approvals. The revisions principally address information and procedural
requirements and are not expected to materially affect operating conditions or
costs for White Springs.

The Lima plant discharges wastewater to the Ottawa River under a National
Pollutant Discharge Elimination System permit issued by the Ohio Environmental
Protection Agency ("OEPA"). When the permit was renewed in 1989, the OEPA
initially proposed to impose substantial limitations on certain substances
present in the wastewater, based on concerns over the already impaired quality
of the river water as a result of industrial or municipal discharges. The OEPA
later agreed in an administrative settlement to a five year permit for the Lima
plant with discharge conditions that were more acceptable to the Lima plant's
prior owner, BP Chemicals Inc. The permit expired in 1994 and was
administratively extended and renewed by the OEPA in July 1996, for a shorter
than customary term ending October 31, 1997. In July 1999, the OEPA granted PCS
Nitrogen's permit renewal application for a term ending March 31, 2004, without
substantial additional discharge limitations. Nonetheless, the OEPA may again
seek to impose discharge reductions in the

I-21
<PAGE> 23

future which may require the installation of improved treatment technology, the
cost of which will depend on the limitations ultimately imposed.

POTASH DECOMMISSIONING REGULATIONS

The environmental regulatory authority in the Province of Saskatchewan has
adopted regulations which require owners or operators of potash mines to produce
decommissioning and reclamation plans including provisions for financial
assurance. These plans, which are subject to the approval of the responsible
Minister, require that a financial assurance plan be established within one year
following approval of the decommissioning and reclamation plans. Pursuant to the
regulations, the Company filed decommissioning plans for each of the Company's
Saskatchewan mines with the responsible Minister in the spring of 1997. In
February 1998, the Company was advised that, although the technical aspects of
the plans were acceptable, the regulatory authority does not accept the schedule
proposed in the plans for decommissioning the waste salt piles. Following
discussions between the provincial potash industry and the regulatory agency, it
was agreed to establish a joint government-industry task force to produce a
mutually acceptable, cost-benefit analysis of the available decommissioning
options. Because of the uncertainty regarding the final nature of the
decommissioning plan, the timing of its implementation and the structure of the
financial assurance mechanism, the Company is unable, at this time, to
accurately estimate the financial implications to the Company.

GOVERNMENT REGULATIONS

In September 1987, legislation was adopted in Saskatchewan that authorized
the government to control production at potash mines located in the Province of
Saskatchewan. The legislation, which has not taken effect but which can be
brought into effect by proclamation of the Cabinet of Saskatchewan, permits the
Cabinet, and the Potash Resources Board which would be created under such
legislation, to prescribe rates of potash production in Saskatchewan and to
allocate production among individual mines. In determining rates for individual
mines, the Potash Resources Board would take into account a mine's productive
capacity, the rate of production from the mine, the present and future inventory
and stockpile requirements for the mine, the portion of demand for potash that
has been fulfilled by the primary production of potash from the mine and any
additional factors that may be prescribed by regulation. Increases in production
capacity would be subject to the approval of the government of Saskatchewan. The
Company cannot predict at this time if or when the legislation will be
proclaimed or its effects on the Company's financial condition or results of
operations.

EXECUTIVE OFFICERS OF THE COMPANY

The name, age, period of service and position held for each of the
executive officers of the Company as at March 24, 2000 are as follows:

<TABLE>
<CAPTION>
SERVED
NAME AGE SINCE POSITION HELD
- ---- --- ------ -------------
<S> <C> <C> <C>
CHARLES E. CHILDERS.................... 67 1987 Chairman of the Board
WILLIAM J. DOYLE....................... 49 1987 President and Chief Executive Officer
WAYNE R. BROWNLEE...................... 47 1988 Senior Vice President, Finance and Treasurer
and Chief Financial Officer
JOHN GUGULYN........................... 64 1987 Senior Vice President, Administration
JOHN L.M. HAMPTON...................... 46 1988 Senior Vice President, General Counsel and
Secretary
BARRY E. HUMPHREYS..................... 56 1976 Senior Vice President, Chief Information
Officer
BETTY-ANN L. HEGGIE.................... 46 1981 Senior Vice President, Corporate Relations
THOMAS J. REGAN........................ 55 1995 President, PCS Phosphate
GARTH W. MOORE......................... 51 1982 President, PCS Potash
JAMES F. DIETZ......................... 53 1997 President, PCS Nitrogen
G. DAVID DELANEY....................... 39 1997 President, PCS Sales
DENIS A. SIROIS........................ 44 1978 Vice President and Corporate Controller
</TABLE>

I-22
<PAGE> 24

All of the officers have had the principal occupation indicated for the
previous five years except as follows: Mr. Childers retired as Chief Executive
Officer of the Company on June 30, 1999; Mr. Doyle was President and Chief
Operating Officer of the Company from July 1, 1998 to July 1, 1999; was
President PCS Sales from March 1997 to July 1998 and Executive Vice President,
Potash and Sales, of the Company from 1995 until March 1997. On April 27, 1995,
Mr. Hampton, Mr. Brownlee, and Ms. Heggie were promoted from Vice President to
Senior Vice President. Prior to March 1997, Mr. Moore was Senior Vice President,
Technical Services of the Company and prior to April 1995, he was Vice
President, Technical Services. Mr. Dietz was Vice President, Manufacturing of
Arcadian Corporation from 1993 to March 1997 and Executive Vice President of PCS
Nitrogen from March 1997 to July 1998. Mr. Sirois was Controller of the Company
prior to 1997. Mr. Regan was Executive Vice President of PCS Phosphate from
March 1997 to July 1999, and Vice President, Administration from 1995 to 1997.
Prior to 1995, he was Vice President, Phosphate Production -- Aurora and Vice
President International Marketing & Raw Material Purchasing for Texasgulf. On
July 12, 1999, Mr. Brownlee was appointed to Senior Vice President Finance and
Treasurer and Chief Financial Officer. Mr. Brownlee was Senior Vice President
Expansion and Development from May 1995 to July 1999. On July 12, 1999, Mr.
Humphreys was appointed Senior Vice President and Chief Information Officer. Mr.
Humphreys was Senior Vice President Finance and Treasurer and Chief Financial
Officer from December 1989 to July 1999. Mr. Delaney was appointed President,
PCS Sales on March 24, 2000. Mr. Delaney was Vice President, Industrial Sales of
PCS Sales from March 1997 to March 24, 2000 and was Vice President Agricultural
Sales East for Arcadian Corporation prior to March 1997.

The terms and conditions of Mr. Childers' employment with the Company are
governed by an employment agreement, the current term of which expires June 30,
2002 and pursuant to which Mr. Childers served as Chairman of the Board and
Chief Executive Officer of the Company until June 30, 1999 and shall continue to
serve as Chairman of the Board and as a special advisor to the Company to June
30, 2002.

ITEM 3. LEGAL PROCEEDINGS.

AGREEMENT SUSPENDING POTASH DUMPING INVESTIGATION

In March 1987, the U.S. International Trade Commission made a preliminary
determination that there was a reasonable indication that the U.S. potash
producers had been injured by imports of Canadian potash, assuming that Canadian
potash had been "dumped" into the U.S. market at less than "fair value". On
August 26, 1987, the U.S. Department of Commerce ("Commerce") determined on a
preliminary basis that Canadian potash was, or was likely to be, sold in the
United States at less than "fair value".

On January 8, 1988, Commerce signed a suspension agreement with all of the
potash producers in Canada, suspending the dumping investigation by Commerce.
The agreement stipulated that each producer's minimum price for potash sold in
the United States was based upon a formula determined by Commerce for each
producer that was designed to limit any dumping by that producer in the future.
Compliance with the agreement was monitored by Commerce.

In accordance with procedures established by the Uruguay Round Agreements
Act, Commerce and the U.S. International Trade Commission initiated a "sunset"
review of the suspended investigation on April 1, 1999. Since no domestic
interested party filed a notice of intent to participate in the review within
the deadline provided in its regulations, Commerce issued a notice automatically
terminating the suspended dumping investigation effective January 1, 2000. The
suspended investigation and the suspension agreement both terminated on that
date.

CIVIL ANTITRUST COMPLAINTS

In June 1993, PCS and PCS Sales (Canada) Inc. ("PCS Sales (Canada)") were
served with a complaint relating to a suit filed in the United States District
Court for Minnesota against most North American potash producers, including the
Company. The complaint alleged a conspiracy among the defendants to fix the
price of potash purchased by the plaintiffs as well as potash purchased by the
members of a class of certain purchasers proposed by the plaintiffs. Similar
complaints were filed in the United States District Courts for the Northern
District of Illinois and the Western District of Virginia. On motion of the
I-23
<PAGE> 25

defendants, all of the complaints were transferred and consolidated for
pre-trial purposes in the United States District Court for Minnesota. The
complaint sought treble damages and other relief. PCS and PCS Sales filed a
motion for summary judgment on December 22, 1995. On January 2, 1997, Judge
Richard H. Kyle issued an order granting the defendants' motions for summary
judgment and dismissing the lawsuit. The plaintiffs appealed that order to the
United States Court of Appeals for the Eighth Circuit. On February 17, 2000, the
Eighth Circuit, en banc, affirmed Judge Kyle's summary judgment ruling. The
plaintiffs have indicated that they intend to file a petition requesting the
United States Supreme Court to review the decision of the Eighth Circuit. That
petition must be filed by May 17, 2000.

Additional complaints were filed in the California and Illinois state
courts on behalf of purported classes of indirect purchasers of potash in those
states. PCS moved to dismiss the California State Court lawsuits for lack of
personal jurisdiction and the court ruled that it does not have personal
jurisdiction over PCS but that it does have personal jurisdiction over PCS
Sales. Following Judge Kyle's summary judgment decision, the California
litigation was stayed and the case remains at an early stage: no merits
discovery has taken place. The Illinois State Court complaint was dismissed for
failure to state a cause of action and that decision is final and not subject to
appeal.

Insofar as the allegations of wrongdoing in the litigation relate to the
Company, management of the Company, having consulted with legal counsel,
believes that the allegations are without merit, that the Company has valid
legal defenses and that the lawsuit will not have a material adverse effect on
the Company. However, management of the Company cannot predict with certainty
the outcome of the litigation.

FORMER ARCADIAN EXECUTIVE PROCEEDINGS

On May 7, 1997, J. Douglas Campbell, Alfred L. Williams, Peter H. Kesser,
and David Alyea, former officers of Arcadian, filed lawsuits against the Company
in the United States District Court for the Western District of Tennessee. The
complaints allege that the Company breached employment agreements between
Arcadian and the officers and breached the related assumption agreement among
the Company, PCS Nitrogen, and Arcadian. In addition, Mr. Alyea's complaint
names Charles Childers, John Gugulyn, and John Hampton as additional defendants
and alleges that the defendants interfered with and conspired to interfere with
his employment agreement, and did not accurately state their intentions in
entering into the assumption agreement. The complaints of Mr. Campbell, Mr.
Williams, Mr. Kesser, and Mr. Alyea seek damages in excess of $22.2 million,
$6.2 million, $3.7 million, and $4.2 million, respectively. In addition, on
October 14, 1997, Charles Lance, a former officer of Arcadian Corporation, filed
a lawsuit in the same court against the Company also alleging breaches of his
employment agreement and the related assumption agreement. Mr. Lance seeks
damages in an amount exceeding $3.0 million. Each complaint also seeks certain
additional unspecified damages. On August 11, 1998, the Court ruled that the
Company had assumed the obligations of the employment agreements and that
equitable claims and defenses asserted against the executives for breaches of
fiduciary duties, corporate waste, and self-dealing should be asserted by PCS
Nitrogen in the state court action described below. Trial with respect to the
claims of Mr. Campbell, Mr. Williams and Mr. Kesser commenced on August 17, 1998
and concluded on August 25, 1998. On December 1, 1998 the court entered
judgments in the amounts of $12.7 million, $3.2 million, and $2.6 million in
favor of Mr. Campbell, Mr. Williams and Mr. Kesser, subject to additional
amounts sufficient to offset the impact of certain excise taxes, if applicable.
These judgments have been appealed to the United States Court of Appeals for the
Sixth Circuit, where oral argument was heard on March 9, 2000. The Company has
settled the claim of Mr. Alyea for $700,000 and $50,000 of attorneys fees
(subject to the application for additional fees) and the claim of Mr. Lance for
a total amount of $600,000. The District Court, on August 13, 1999, awarded
plaintiffs a total of $2,410,254 for legal expenses.

On September 15, 1997, the Company and PCS Nitrogen filed an action in the
Circuit Court of Tennessee for the Thirtieth Judicial District at Memphis
against J. Douglas Campbell, Peter H. Kesser, Alfred L. Williams, Charles W.
Lance, Jr., and David L. Alyea, for declaratory relief and damages. The Company
and PCS Nitrogen alleged that the defendants, all former executives of Arcadian,
committed breaches of their fiduciary duties in the negotiation of, obtaining
approval for, and execution of the employment agreements each of them had with
Arcadian. In addition, the Company and PCS Nitrogen also
I-24
<PAGE> 26

sought a declaratory judgment with respect to the unenforceability of the
employment agreements. On October 14, 1997, the defendants removed this action
from the Circuit Court of Tennessee to the United States District Court for the
Western District of Tennessee. On October 21, 1997, the five defendants filed
counterclaims: (i) under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), against PCS Nitrogen, (ii) alleging that the Company and PCS
Nitrogen unlawfully interfered with their attainment of benefits under their
employment agreements, and (iii) incorporating by reference all claims asserted
in their individually filed complaints. The damages sought by the defendants in
these counterclaims appear substantially equivalent to the damages sought in
their individually filed suits as plaintiffs. On July 20, 1998 the federal court
dismissed all of the former executives' claims under ERISA and remanded the case
to state court, where it remains pending. Pursuant to the settlements with Mr.
Alyea and Mr. Lance, the claims and counterclaims as they concern these
individuals have been non-suited.

Management of the Company, having consulted with legal counsel, believes
that the lawsuits will not have a material adverse effect on the Company's
financial condition or results of operations.

GEISMAR FACILITY INVESTIGATION

On May 11 and May 12, 1999, representatives of the EPA, Federal Bureau of
Investigation, and other state and local agencies ("governmental agencies")
executed a search warrant issued by the United States District Court for the
Middle District of Louisiana on the Company's Geismar facility ("Geismar
Facility") in connection with a grand jury investigation. In executing the
search warrant, the governmental agencies seized documents and electronic media,
performed environmental sampling, and interviewed Geismar Facility employees and
contract employees. In addition, the governmental agencies have contacted former
Geismar Facility employees in connection with the investigation. The Company has
also been served with grand jury subpoenas requesting documents and other
information from the Geismar Facility and PCS Nitrogen's headquarters in
Memphis, Tennessee. The grand jury investigation is continuing. The Company is
also conducting its own internal investigation. The Company cannot predict at
this time what may result from the governments' investigation or whether any
such result would have a material adverse effect on the Company.

LAKELAND, FLORIDA PROCEEDING

On September 23, 1999, an action was served on PCS Joint Venture and eight
other defendants on behalf of a class of persons living in the vicinity of the
site who claim to have suffered damages as a result of releases from the PCS
Joint Venture facility in Lakeland, Florida and other area properties (the
"Landia Site"). PCS Joint Venture intends to defend itself vigorously in this
action, while also continuing to work to assess and evaluate the nature and
extent of the impacts at the site.

ENVIRONMENTAL PROCEEDINGS

For a description of certain environmental proceedings involving the
Company, see "Environmental Matters".

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.

I-25
<PAGE> 27

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The information under "Common Share Prices and Volumes", "Shareholder
Information -- Ownership" and "10-Year Report" in the registrant's 1999 Annual
Report is incorporated herein by reference.

Dividends paid to U.S. holders of Common Shares, who do not use the shares
in carrying on a business in Canada, will be subject to a Canadian withholding
tax under the Income Tax Act. Under the Canada-U.S. Income Tax Convention (1980)
(the "Convention"), the rate of withholding is generally reduced to 15 percent.
Subject to certain limitations, the Canadian withholding tax will be treated as
a foreign income tax that can generally be claimed as a deduction from income or
as a credit against the U.S. income tax liability of the holder. Holders will
generally not be subject to tax under the Income Tax Act with respect to any
gain realized from a disposition of Common Shares.

ITEM 6. SELECTED FINANCIAL DATA.

The information under "10-Year Report" in the registrant's 1999 Annual
Report is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The information under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the registrant's 1999 Annual Report is
incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The Consolidated Financial Statements contained in the registrant's 1999
Annual Report are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

II-1
<PAGE> 28

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information under "Election of Directors" in the 2000 Proxy Circular is
incorporated herein by reference. Information concerning executive officers is
set forth under "Executive Officers of the Company" in Part I.

ITEM 11. EXECUTIVE COMPENSATION.

The information under "Executive Compensation" in the 2000 Proxy Circular
is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information under "Ownership of Shares" and "Election of Directors" in
the 2000 Proxy Circular is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information under "Election of Directors" and "Executive Compensation"
in the 2000 Proxy Circular is incorporated herein by reference.

III-1
<PAGE> 29

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) List of Documents Filed as Part of this Report

1. Consolidated Financial Statements in Annual Report

<TABLE>
<S> <C>
Auditors' Report............................................ 44
Consolidated Statements of Financial Position............... 45
Consolidated Statements of Income and Retained Earnings..... 46
Consolidated Statements of Cash Flow........................ 47
Notes to the Consolidated Financial Statements.............. 48-63
</TABLE>

2. Schedules

All Schedules are omitted because the required information is inapplicable
or it is presented in the Consolidated Financial Statements.

3. Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
2 Agreement and Plan of Merger dated September 2, 1996, as
amended, by and among the registrant, Arcadian Corporation
and PCS Nitrogen, Inc., incorporated by reference to Exhibit
2(a) to Amendment Number 2 to the registrant's Form S-4
(File No. 333-17841).
3(a) Restated Articles of Incorporation of the registrant dated
October 31, 1989, as amended May 11, 1995, incorporated by
reference to Exhibit 3(i) to the registrant's report on Form
10-K for the year ended December 31, 1995 (the "1995 Form
10-K").
3(b) Bylaws of the registrant dated March 2, 1995, incorporated
by reference to Exhibit 3(ii) to the 1995 Form 10-K.
4(a) Term Credit Agreement between The Bank of Nova Scotia and
other financial institutions and the registrant dated
October 4, 1996, incorporated by reference to Exhibit 4(b)
to the registrant's Form S-4 (File No. 333-17841).
4(b) First Amending Agreement to Term Credit Agreement between
The Bank of Nova Scotia and other financial institutions and
the registrant dated November 6, 1997, incorporated by
reference to Exhibit 4(b) to the registrant's report on Form
10-K for the year ended December 31, 1997 (the "1997 Form
10-K").
4(c) Second Amending Agreement to Term Credit Agreement between
The Bank of Nova Scotia and other financial institutions and
the registrant dated December 15, 1997, incorporated by
reference to Exhibit 4(c) to the 1997 Form 10-K.
4(d) Third Amending Agreement to Term Credit Agreement between
The Bank of Nova Scotia and other financial institutions and
the registrant dated October 2, 1998, incorporated by
reference to Exhibit 4(d) to the registrant's report on Form
10-Q for the quarterly period ended September 30, 1998.
4(e) Fourth Amending Agreement to Term Credit Agreement between
The Bank of Nova Scotia and other financial institutions and
the registrant dated September 30, 1999, incorporated by
reference to exhibit 4(e) to the registrant's report on Form
10-Q for the quarterly period ended September 30, 1999 (the
"Third Quarter 1999 Form 10-Q").
4(f) Indenture dated as of June 16, 1997, between the registrant
and The Bank of Nova Scotia Trust Company of New York,
incorporated by reference to Exhibit 4(a) to the
registrant's report on Form 8-K dated June 18, 1997.
</TABLE>

IV-1
<PAGE> 30

The registrant hereby undertakes to file with the Securities and Exchange
Commission, upon request, copies of any constituent instruments defining the
rights of holders of long-term debt of the registrant or its subsidiaries that
have not been filed herewith because the amounts represented thereby are less
than 10% of the total assets of the registrant and its subsidiaries on a
consolidated basis.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<S> <C>
10(a) Suspension Agreement concerning Potassium Chloride from
Canada dated January 7, 1988, among U.S. Department of
Commerce, the registrant, International Minerals and
Chemical (Canada) Limited, Noranda, Inc. (Central Canada
Potash Co.), Potash Company of America, a Division of Rio
Algom Limited, S & P Canada, II (Kalium Chemicals), Cominco
Ltd., Potash Company of Canada Limited, Agent for
Denison-Potacan Potash Co. and Saskterra Fertilizers Ltd.,
incorporated by reference to Exhibit 10(a) to the
registrant's registration statement on Form F-1 (File No.
33-31303) (the "F-1 Registration Statement").
10(b) Sixth Voting Agreement dated April 22, 1978, between Central
Canada Potash, Division of Noranda, Inc., Cominco Ltd.,
International Minerals and Chemical Corporation (Canada)
Limited, PCS Sales and Texasgulf Inc., incorporated by
reference to Exhibit 10(f) to the F-1 Registration
Statement.
10(c) Canpotex Limited Shareholders Seventh Memorandum of
Agreement effective April 21, 1978, between Central Canada
Potash, Division of Noranda Inc., Cominco Ltd.,
International Minerals and Chemical Corporation (Canada)
Limited, PCS Sales, Texasgulf Inc. and Canpotex Limited as
amended by Canpotex S & P amending agreement dated November
4, 1987, incorporated by reference to Exhibit 10(g) to the
F-1 Registration Statement.
10(d) Producer Agreement dated April 21, 1978, between Canpotex
Limited and PCS Sales, incorporated by reference to Exhibit
10(h) to the F-1 Registration Statement.
10(e) Agreement of Limited Partnership of Arcadian Fertilizer,
L.P. dated as of March 3, 1992 (form), and the related
Certificate of Limited Partnership of Arcadian Fertilizer,
L.P., filed with the Secretary of State of the State of
Delaware on March 3, 1992 (incorporated by reference to
Exhibits 3.1 and 3.2 to Arcadian Partners L.P.'s
Registration Statement on Form S-1 (File No. 33-45828)).
10(f) Amendment to Agreement of Limited Partnership of Arcadian
Fertilizer, L.P. and related Certificates of Limited
Partnership of Arcadian Fertilizer, L.P. filed with the
Secretary of State of the State of Delaware on March 6, 1997
and November 26, 1997, incorporated by reference to Exhibit
10(f) to the registrant's report on Form 10-K for the year
ended December 31, 1998 (the "1998 Form 10-K").
10(g) Geismar Complex Services Agreement dated June 4, 1984,
between Honeywell International, Inc. and Arcadian
Corporation, incorporated by reference to Exhibit 10.4 to
Arcadian Corporation's Registration Statement on Form S-1
(File No. 33-34357).
10(h) Canpotex/PCS Amending Agreement, dated with effect October
1, 1992, incorporated by reference to Exhibit 10(f) to the
1995 Form 10-K.
10(i) Canpotex PCA Collateral Withdrawing/PCS Amending Agreement,
dated with effect October 7, 1993, incorporated by reference
to Exhibit 10(g) to the 1995 Form 10-K.
10(j) Esterhazy Restated Mining and Processing Agreement dated
January 31, 1978, between International Minerals and
Chemical Corporation (Canada) Limited and the registrant's
predecessor, incorporated by reference to Exhibit 10(e) to
the F-1 Registration Statement.
10(k) Agreement dated December 21, 1990, between International
Minerals & Chemical Corporation (Canada) Limited and the
registrant, amending the Esterhazy Restated Mining and
Processing Agreement dated January 31, 1978, incorporated by
reference to Exhibit 10(p) to the registrant's report on
Form 10-K for the year ended December 31, 1990.
</TABLE>

IV-2
<PAGE> 31

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<S> <C>
10(l) Agreement effective August 27, 1998, between International
Minerals & Chemical (Canada) Global Limited and the
registrant, amending the Esterhazy Restated Mining and
Processing Agreement dated January 31, 1978 (as amended),
incorporated by reference to Exhibit 10(l) to the 1998 Form
10-K.
10(m) Agreement effective August 31, 1998, among International
Minerals & Chemical (Canada) Global Limited, International
Minerals & Chemical (Canada) Limited Partnership and the
registrant assigning the interest in the Esterhazy Restated
Mining and Processing Agreement dated January 31, 1978 (as
amended) held by International Minerals & Chemical (Canada)
Global Limited to International Minerals & Chemical (Canada)
Limited Partnership, incorporated by reference to Exhibit
10(m) to the 1998 Form 10-K.
10(n) Operating Agreement dated May 11, 1993, between BP Chemicals
Inc. and Arcadian Ohio, L.P., as amended by the First
Amendment to the Operating Agreement dated as of November
20, 1995, between BP Chemicals Inc. and Arcadian Ohio, L.P.
("First Amendment"), incorporated by reference to Exhibit
10.2 to Arcadian Partners L.P.'s current report on Form 8-K
for the report event dated May 11, 1993, except for the
First Amendment which is incorporated by reference to
Arcadian Corporation's report on Form 10-K for the year
ended December 31, 1995.
10(o) Second Amendment to Operating Agreement between BP
Chemicals, Inc. and Arcadian Ohio, L.P., dated as of
November 25, 1996, incorporated by reference to Exhibit
10(k) to the 1997 Form 10-K.
10(p) Manufacturing Support Agreement dated May 11, 1993, between
BP Chemicals Inc. and Arcadian Ohio, L.P., incorporated by
reference to Exhibit 10.3 to Arcadian Partners L.P.'s
current report on Form 8-K for the report event dated May
11, 1993.
10(q) First Amendment to Manufacturing Support Agreement between
BP Chemicals, Inc. and Arcadian Ohio, L.P., dated as of
November 25, 1996, incorporated by reference to Exhibit
10(l) to the 1997 Form 10-K.
10(r) Amended and Restated Agreement for Lease dated as of May 16,
1997, between Trinidad Ammonia Company, Limited Partnership,
and PCS Nitrogen Fertilizer, L.P., incorporated by reference
to Exhibit 10(n) to the registrant's report on Form 10-Q for
the quarterly period ended June 30, 1997 (the "Second
Quarter 1997 Form 10-Q").
10(s) Amended and Restated Lease Agreement dated as of May 16,
1997, between Trinidad Ammonia Company, Limited Partnership,
and PCS Nitrogen Fertilizer, L.P., incorporated by reference
to Exhibit 10(o) to the Second Quarter 1997 Form 10-Q.
10(t) Amended and Restated Agreement for Lease dated as of May 16,
1997, between Nitrogen Leasing Company, Limited Partnership,
and PCS Nitrogen Fertilizer, L.P., incorporated by reference
to Exhibit 10(p) to the Second Quarter 1997 Form 10-Q.
10(u) Amended and Restated Lease Agreement dated as of May 16,
1997, between Nitrogen Leasing Company, Limited Partnership,
and PCS Nitrogen Fertilizer, L.P., incorporated by reference
to Exhibit 10(q) to the Second Quarter 1997 Form 10-Q.
10(v) Amended and Restated Purchase Option Agreement dated as of
May 16, 1997, between Nitrogen Leasing Company, Limited
Partnership, and PCS Nitrogen Fertilizer Operations, Inc.,
incorporated by reference to Exhibit 10(r) to the Second
Quarter 1997 Form 10-Q.
10(w) Amended and Restated Purchase Option Agreement dated as of
May 16, 1997, between Trinidad Ammonia Company, Limited
Partnership and PCS Nitrogen Fertilizer Operations, Inc.,
incorporated by reference to Exhibit 10(s) to the Second
Quarter 1997 Form 10-Q.
10(x) Agreement dated January 1, 1997 between the registrant and
Charles E. Childers, incorporated by reference to Exhibit
10(s) to the 1997 Form 10-K.
</TABLE>

IV-3
<PAGE> 32

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<S> <C>
10(y) Potash Corporation of Saskatchewan Inc. Stock Option Plan -
Directors, as amended November 3, 1999, incorporated by
reference to Exhibit 10(y) to the Third Quarter 1999 Form
10-Q.
10(z) Potash Corporation of Saskatchewan Inc. Stock Option Plan -
Officers and Key Employees, as amended November 3, 1999,
incorporated by reference to Exhibit 10(z) to the Third
Quarter 1999 Form 10-Q.
10(aa) Short-Term Incentive Plan of the registrant, as amended May
7, 1997, incorporated by reference to Exhibit 10(w) to the
Second Quarter 1997 Form 10-Q.
10(bb) Long-Term Incentive Plan of the registrant, as amended May
7, 1997, incorporated by reference to Exhibit 10(x) to the
Second Quarter 1997 Form 10-Q.
10(cc) Resolution and Forms of Agreement for Supplemental
Retirement Income Plan, for officers and key employees of
the registrant, incorporated by reference to Exhibit 10(o)
to the 1995 Form 10-K.
10(dd) Forms of Agreement dated December 30, 1994, between the
registrant and certain officers of the registrant,
concerning a change in control of the registrant,
incorporated by reference to Exhibit 10(p) to the 1995 Form
10-K.
10(ee) Form of Agreement of Indemnification dated August 8, 1995,
between the registrant and certain officers and directors of
the registrant, incorporated by reference to Exhibit 10(q)
to the 1995 Form 10-K.
10(ff) Supplemental Retirement Benefits Plan, for eligible
employees of PCS Phosphate Company, Inc., incorporated by
reference to Exhibit 10(s) to the 1995 Form 10-K.
10(gg) Second Amended and Restated Membership Agreement dated
January 1, 1995, among Phosphate Chemicals Export
Association, Inc. and members of such association, including
Texasgulf Inc., incorporated by reference to Exhibit 10(t)
to the 1995 Form 10-K.
10(hh) International Agency Agreement dated January 1, 1995,
between Phosphate Chemicals Export Association, Inc. and
Texasgulf Inc. establishing Texasgulf Inc. as exclusive
marketing agent for such association's wet phosphatic
materials, incorporated by reference to Exhibit 10(u) to the
1995 Form 10-K.
10(ii) General Partnership Agreement forming Albright & Wilson
Company, dated July 29, 1988 and amended January 31, 1995,
between Texasgulf Inc. and Albright & Wilson Americas Inc.,
incorporated by reference to Exhibit 10(v) to the 1995 Form
10-K.
10(jj) Amendment to the Albright & Wilson Company General
Partnership agreement dated March 23, 2000.
10(kk) Royalty Agreement dated October 7, 1993, by and between the
registrant and Rio Algom Limited, incorporated by reference
to Exhibit 10(x) to the 1995 Form 10-K.
10(ll) Amending Resolution and revised forms of agreement regarding
Supplemental Retirement Income Plan of the registrant,
incorporated by reference to Exhibit 10(x) to the
registrant's report on Form 10-Q for the quarterly period
ended June 30, 1996.
10(mm) Shareholder Rights Agreement as amended and restated on
March 2, 1998, incorporated by reference to Schedule B to
the registrant's proxy circular for the annual and special
meeting of shareholders held on May 7, 1998.
11 Statement re Computation of Per Share Earnings.
13 1999 Annual Report
21 Subsidiaries of the Registrant
23 Consent of Deloitte & Touche LLP.
27 Financial Data Schedule.
</TABLE>

IV-4
<PAGE> 33

(b) Reports on Form 8-K

On October 22, 1999, the registrant filed a report on Form 8-K regarding a
press release issued on October 21, 1999 announcing certain one-time corporate
charges and plant closures.

Copies of Exhibits to the Form 10-K may be obtained upon request from the
Corporate Secretary, Potash Corporation of Saskatchewan Inc., Suite 500, 122
First Avenue South, Saskatoon, Saskatchewan S7K 7G3, Canada. The Company
reserves the right to recover its reasonable expenses in providing copies of the
Exhibits, such expenses not to exceed $.25 per page.
IV-5
<PAGE> 34

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

POTASH CORPORATION OF SASKATCHEWAN INC.

By: /s/ WILLIAM J. DOYLE
-----------------------------------------
William J. Doyle
President & Chief Executive Officer
March 27, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ CHARLES E. CHILDERS Chairman of the Board March 27, 2000
- ------------------------------------------
Charles E. Childers

/s/ WAYNE R. BROWNLEE Senior Vice President, Finance and March 27, 2000
- ------------------------------------------ Treasurer and Chief Financial Officer
Wayne R. Brownlee

/s/ WILLIAM J. DOYLE President and Chief Executive Officer March 27, 2000
- ------------------------------------------
William J. Doyle

/s/ ISABEL B. ANDERSON Director March 27, 2000
- ------------------------------------------
Isabel B. Anderson

/s/ DOUGLAS J. BOURNE Director March 27, 2000
- ------------------------------------------
Douglas J. Bourne

/s/ HON. WILLARD Z. ESTEY, Q.C. Director March 27, 2000
- ------------------------------------------
Hon. Willard Z. Estey, Q.C

/s/ DALLAS J. HOWE Director March 27, 2000
- ------------------------------------------
Dallas J. Howe

/s/ DONALD E. PHILLIPS Director March 27, 2000
- ------------------------------------------
Donald E. Phillips

/s/ PAUL J. SCHOENHALS Director March 27, 2000
- ------------------------------------------
Paul J. Schoenhals
</TABLE>
<PAGE> 35

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DARYL K. SEAMAN Director March 27, 2000
- ------------------------------------------
Daryl K. Seaman

/s/ E. ROBERT STROMBERG, Q.C. Director March 27, 2000
- ------------------------------------------
E. Robert Stromberg, Q.C

/s/ JACK G. VICQ Director March 27, 2000
- ------------------------------------------
Jack G. Vicq

/s/ BARRIE A. WIGMORE Director March 27, 2000
- ------------------------------------------
Barrie A. Wigmore

/s/ PAUL S. WISE Director March 27, 2000
- ------------------------------------------
Paul S. Wise

/s/ THOMAS J. WRIGHT Director March 27, 2000
- ------------------------------------------
Thomas J. Wright
</TABLE>
<PAGE> 36

<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
<C> <S>
2 Agreement and Plan of Merger dated September 2, 1996, as
amended, by and among the registrant, Arcadian Corporation
and PCS Nitrogen, Inc., incorporated by reference to Exhibit
2(a) to Amendment Number 2 to the registrant's Form S-4
(File No. 333-17841).
3(a) Restated Articles of Incorporation of the registrant dated
October 31, 1989, as amended May 11, 1995, incorporated by
reference to Exhibit 3(i) to the registrant's report on Form
10-K for the year ended December 31, 1995 (the "1995 Form
10-K").
3(b) Bylaws of the registrant dated March 2, 1995, incorporated
by reference to Exhibit 3(ii) to the 1995 Form 10-K.
4(a) Term Credit Agreement between The Bank of Nova Scotia and
other financial institutions and the registrant dated
October 4, 1996, incorporated by reference to Exhibit 4(b)
to the registrant's Form S-4 (File No. 333-17841).
4(b) First Amending Agreement to Term Credit Agreement between
The Bank of Nova Scotia and other financial institutions and
the registrant dated November 6, 1997, incorporated by
reference to Exhibit 4(b) to the registrant's report on Form
10-K for the year ended December 31, 1997 (the "1997 Form
10-K").
4(c) Second Amending Agreement to Term Credit Agreement between
The Bank of Nova Scotia and other financial institutions and
the registrant dated December 15, 1997, incorporated by
reference to Exhibit 4(c) to the 1997 Form 10-K.
4(d) Third Amending Agreement to Term Credit Agreement between
The Bank of Nova Scotia and other financial institutions and
the registrant dated October 2, 1998, incorporated by
reference to Exhibit 4(d) to the registrant's report on Form
10-Q for the quarterly period ended September 30, 1998.
4(e) Fourth Amending Agreement to Term Credit Agreement between
The Bank of Nova Scotia and other financial institutions and
the registrant dated September 30, 1999, incorporated by
reference to exhibit 4(e) to the registrant's report on Form
10-Q for the quarterly period ended September 30, 1999 (the
"Third Quarter 1999 Form 10-Q").
4(f) Indenture dated as of June 16, 1997, between the registrant
and The Bank of Nova Scotia Trust Company of New York,
incorporated by reference to Exhibit 4(a) to the
registrant's report on Form 8-K dated June 18, 1997.
</TABLE>
<PAGE> 37

<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
<S> <C>
10(a) Suspension Agreement concerning Potassium Chloride from
Canada dated January 7, 1988, among U.S. Department of
Commerce, the registrant, International Minerals and
Chemical (Canada) Limited, Noranda, Inc. (Central Canada
Potash Co.), Potash Company of America, a Division of Rio
Algom Limited, S & P Canada, II (Kalium Chemicals), Cominco
Ltd., Potash Company of Canada Limited, Agent for
Denison-Potacan Potash Co. and Saskterra Fertilizers Ltd.,
incorporated by reference to Exhibit 10(a) to the
registrant's registration statement on Form F-1 (File No.
33-31303) (the "F-1 Registration Statement").
10(b) Sixth Voting Agreement dated April 22, 1978, between Central
Canada Potash, Division of Noranda, Inc., Cominco Ltd.,
International Minerals and Chemical Corporation (Canada)
Limited, PCS Sales and Texasgulf Inc., incorporated by
reference to Exhibit 10(f) to the F-1 Registration
Statement.
10(c) Canpotex Limited Shareholders Seventh Memorandum of
Agreement effective April 21, 1978, between Central Canada
Potash, Division of Noranda Inc., Cominco Ltd.,
International Minerals and Chemical Corporation (Canada)
Limited, PCS Sales, Texasgulf Inc. and Canpotex Limited as
amended by Canpotex S & P amending agreement dated November
4, 1987, incorporated by reference to Exhibit 10(g) to the
F-1 Registration Statement.
10(d) Producer Agreement dated April 21, 1978, between Canpotex
Limited and PCS Sales, incorporated by reference to Exhibit
10(h) to the F-1 Registration Statement.
10(e) Agreement of Limited Partnership of Arcadian Fertilizer,
L.P. dated as of March 3, 1992 (form), and the related
Certificate of Limited Partnership of Arcadian Fertilizer,
L.P., filed with the Secretary of State of the State of
Delaware on March 3, 1992 (incorporated by reference to
Exhibits 3.1 and 3.2 to Arcadian Partners L.P.'s
Registration Statement on Form S-1 (File No. 33-45828)).
10(f) Amendment to Agreement of Limited Partnership of Arcadian
Fertilizer, L.P. and related Certificates of Limited
Partnership of Arcadian Fertilizer, L.P. filed with the
Secretary of State of the State of Delaware on March 6, 1997
and November 26, 1997, incorporated by reference to Exhibit
10(f) to the registrant's report on Form 10-K for the year
ended December 31, 1998 (the "1998 Form 10-K").
10(g) Geismar Complex Services Agreement dated June 4, 1984,
between Honeywell International, Inc. and Arcadian
Corporation, incorporated by reference to Exhibit 10.4 to
Arcadian Corporation's Registration Statement on Form S-1
(File No. 33-34357).
10(h) Canpotex/PCS Amending Agreement, dated with effect October
1, 1992, incorporated by reference to Exhibit 10(f) to the
1995 Form 10-K.
10(i) Canpotex PCA Collateral Withdrawing/PCS Amending Agreement,
dated with effect October 7, 1993, incorporated by reference
to Exhibit 10(g) to the 1995 Form 10-K.
10(j) Esterhazy Restated Mining and Processing Agreement dated
January 31, 1978, between International Minerals and
Chemical Corporation (Canada) Limited and the registrant's
predecessor, incorporated by reference to Exhibit 10(e) to
the F-1 Registration Statement.
10(k) Agreement dated December 21, 1990, between International
Minerals & Chemical Corporation (Canada) Limited and the
registrant, amending the Esterhazy Restated Mining and
Processing Agreement dated January 31, 1978, incorporated by
reference to Exhibit 10(p) to the registrant's report on
Form 10-K for the year ended December 31, 1990.
</TABLE>
<PAGE> 38

<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
<S> <C>
10(l) Agreement effective August 27, 1998, between International
Minerals & Chemical (Canada) Global Limited and the
registrant, amending the Esterhazy Restated Mining and
Processing Agreement dated January 31, 1978 (as amended),
incorporated by reference to Exhibit 10(l) to the 1998 Form
10-K.
10(m) Agreement effective August 31, 1998, among International
Minerals & Chemical (Canada) Global Limited, International
Minerals & Chemical (Canada) Limited Partnership and the
registrant assigning the interest in the Esterhazy Restated
Mining and Processing Agreement dated January 31, 1978 (as
amended) held by International Minerals & Chemical (Canada)
Global Limited to International Minerals & Chemical (Canada)
Limited Partnership, incorporated by reference to Exhibit
10(m) to the 1998 Form 10-K.
10(n) Operating Agreement dated May 11, 1993, between BP Chemicals
Inc. and Arcadian Ohio, L.P., as amended by the First
Amendment to the Operating Agreement dated as of November
20, 1995, between BP Chemicals Inc. and Arcadian Ohio, L.P.
("First Amendment"), incorporated by reference to Exhibit
10.2 to Arcadian Partners L.P.'s current report on Form 8-K
for the report event dated May 11, 1993, except for the
First Amendment which is incorporated by reference to
Arcadian Corporation's report on Form 10-K for the year
ended December 31, 1995.
10(o) Second Amendment to Operating Agreement between BP
Chemicals, Inc. and Arcadian Ohio, L.P., dated as of
November 25, 1996, incorporated by reference to Exhibit
10(k) to the 1997 Form 10-K.
10(p) Manufacturing Support Agreement dated May 11, 1993, between
BP Chemicals Inc. and Arcadian Ohio, L.P., incorporated by
reference to Exhibit 10.3 to Arcadian Partners L.P.'s
current report on Form 8-K for the report event dated May
11, 1993.
10(q) First Amendment to Manufacturing Support Agreement between
BP Chemicals, Inc. and Arcadian Ohio, L.P., dated as of
November 25, 1996, incorporated by reference to Exhibit
10(l) to the 1997 Form 10-K.
10(r) Amended and Restated Agreement for Lease dated as of May 16,
1997, between Trinidad Ammonia Company, Limited Partnership,
and PCS Nitrogen Fertilizer, L.P., incorporated by reference
to Exhibit 10(n) to the registrant's report on Form 10-Q for
the quarterly period ended June 30, 1997 (the "Second
Quarter 1997 Form 10-Q").
10(s) Amended and Restated Lease Agreement dated as of May 16,
1997, between Trinidad Ammonia Company, Limited Partnership,
and PCS Nitrogen Fertilizer, L.P., incorporated by reference
to Exhibit 10(o) to the Second Quarter 1997 Form 10-Q.
10(t) Amended and Restated Agreement for Lease dated as of May 16,
1997, between Nitrogen Leasing Company, Limited Partnership,
and PCS Nitrogen Fertilizer, L.P., incorporated by reference
to Exhibit 10(p) to the Second Quarter 1997 Form 10-Q.
10(u) Amended and Restated Lease Agreement dated as of May 16,
1997, between Nitrogen Leasing Company, Limited Partnership,
and PCS Nitrogen Fertilizer, L.P., incorporated by reference
to Exhibit 10(q) to the Second Quarter 1997 Form 10-Q.
10(v) Amended and Restated Purchase Option Agreement dated as of
May 16, 1997, between Nitrogen Leasing Company, Limited
Partnership, and PCS Nitrogen Fertilizer Operations, Inc.,
incorporated by reference to Exhibit 10(r) to the Second
Quarter 1997 Form 10-Q.
10(w) Amended and Restated Purchase Option Agreement dated as of
May 16, 1997, between Trinidad Ammonia Company, Limited
Partnership and PCS Nitrogen Fertilizer Operations, Inc.,
incorporated by reference to Exhibit 10(s) to the Second
Quarter 1997 Form 10-Q.
10(x) Agreement dated January 1, 1997 between the registrant and
Charles E. Childers, incorporated by reference to Exhibit
10(s) to the 1997 Form 10-K.
</TABLE>
<PAGE> 39

<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------
<S> <C>
10(y) Potash Corporation of Saskatchewan Inc. Stock Option Plan -
Directors, as amended November 3, 1999, incorporated by
reference to Exhibit 10(y) to the Third Quarter 1999 Form
10-Q.
10(z) Potash Corporation of Saskatchewan Inc. Stock Option Plan -
Officers and Key Employees, as amended November 3, 1999,
incorporated by reference to Exhibit 10(z) to the Third
Quarter 1999 Form 10-Q.
10(aa) Short-Term Incentive Plan of the registrant, as amended May
7, 1997, incorporated by reference to Exhibit 10(w) to the
Second Quarter 1997 Form 10-Q.
10(bb) Long-Term Incentive Plan of the registrant, as amended May
7, 1997, incorporated by reference to Exhibit 10(x) to the
Second Quarter 1997 Form 10-Q.
10(cc) Resolution and Forms of Agreement for Supplemental
Retirement Income Plan, for officers and key employees of
the registrant, incorporated by reference to Exhibit 10(o)
to the 1995 Form 10-K.
10(dd) Forms of Agreement dated December 30, 1994, between the
registrant and certain officers of the registrant,
concerning a change in control of the registrant,
incorporated by reference to Exhibit 10(p) to the 1995 Form
10-K.
10(ee) Form of Agreement of Indemnification dated August 8, 1995,
between the registrant and certain officers and directors of
the registrant, incorporated by reference to Exhibit 10(q)
to the 1995 Form 10-K.
10(ff) Supplemental Retirement Benefits Plan, for eligible
employees of PCS Phosphate Company, Inc., incorporated by
reference to Exhibit 10(s) to the 1995 Form 10-K.
10(gg) Second Amended and Restated Membership Agreement dated
January 1, 1995, among Phosphate Chemicals Export
Association, Inc. and members of such association, including
Texasgulf Inc., incorporated by reference to Exhibit 10(t)
to the 1995 Form 10-K.
10(hh) International Agency Agreement dated January 1, 1995,
between Phosphate Chemicals Export Association, Inc. and
Texasgulf Inc. establishing Texasgulf Inc. as exclusive
marketing agent for such association's wet phosphatic
materials, incorporated by reference to Exhibit 10(u) to the
1995 Form 10-K.
10(ii) General Partnership Agreement forming Albright & Wilson
Company, dated July 29, 1988 and amended January 31, 1995,
between Texasgulf Inc. and Albright & Wilson Americas Inc.,
incorporated by reference to Exhibit 10(v) to the 1995 Form
10-K.
10(jj) Amendment to the Albright & Wilson Company General
Partnership agreement dated March 23, 2000.
10(kk) Royalty Agreement dated October 7, 1993, by and between the
registrant and Rio Algom Limited, incorporated by reference
to Exhibit 10(x) to the 1995 Form 10-K.
10(ll) Amending Resolution and revised forms of agreement regarding
Supplemental Retirement Income Plan of the registrant,
incorporated by reference to Exhibit 10(x) to the
registrant's report on Form 10-Q for the quarterly period
ended June 30, 1996.
10(mm) Shareholder Rights Agreement as amended and restated on
March 2, 1998, incorporated by reference to Schedule B to
the registrant's proxy circular for the annual and special
meeting of shareholders held on May 7, 1998.
11 Statement re Computation of Per Share Earnings.
13 1999 Annual Report
21 Subsidiaries of the Registrant
23 Consent of Deloitte & Touche LLP.
27 Financial Data Schedule.
</TABLE>

<PAGE> 1

Exhibit 10(jj)

ANNEX A

AMENDMENT TO ALBRIGHT & WILSON COMPANY
GENERAL PARTNERSHIP AGREEMENT

This Agreement amending the Albright & Wilson Company General
Partnership Agreement (as amended, the "PARTNERSHIP AGREEMENT") is entered into
as of March 23, 2000, between Albright & Wilson Americas Inc., a Delaware
corporation ("A&W INC."), PCS Phosphate Company, Inc., a Delaware corporation
("PCSP") and PCS Industrial Products, Inc., a Delaware corporation ("NEW
PARTNER").

WHEREAS, A&W Inc. and PCSP are parties to the Partnership Agreement,
which created Albright & Wilson Company ("A&W CO.") as a Virginia general
partnership;

WHEREAS, A&W Inc. and PCSP believe it is in the best interests of A&W
Co. to admit New Partner as a general partner of A&W Co. with a percentage
interest equal to the percentage interest set forth next to New Partner's name
on Schedule 1 attached hereto;

WHEREAS, the New Partner desires to become a general partner of A&W Co.
and to have all the rights and be subject to all the obligations of a general
partner under the Partnership Agreement;

WHEREAS, A&W Inc. and PCSP desire to make certain amendments to the
Partnership Agreement to provide for the admission of the New Partner as a
general partner;

WHEREAS, A&W Inc. and PCSP wish to amend the Partnership Agreement in
order to establish the rights and obligations of an A&W Co. member after its
partnership interest has been transferred;

WHEREAS, A&W Inc. and PCSP also believe that it is in the best interest
of A&W Co. to provide for distributions by A&W Co. to Partners other than in
accordance with Section 5.02 of the Partnership Agreement, which provides for
distributions on a "pro rata" basis in accordance with the Partner's respective
Shares as of that time, so long as such alternative method of distribution is
agreed to by vote of the Partners;

WHEREAS, A&W Inc. and PCSP wish to amend the Partnership Agreement in
order to provide for agreement among Partners with regard to distributions which
are other than "pro rata" in accordance with Share ownership; and

WHEREAS, A&W Inc. and PCSP desire to change the name of A&W Co.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties agree as follows:

<PAGE> 2

1. Definitions. Unless otherwise defined herein, all defined
terms used in this Agreement shall have the same definitions as contained in the
Partnership Agreement.

2. Amendments to Partnership Agreement.

A. Unless otherwise provided in this Agreement, throughout the
entirety of the Partnership Agreement, each usage of A&W Co. shall be
replaced with "PCS Purified Phosphates."

B. Section 2.02. Section 2.02 (Shares) of the Partnership
Agreement is hereby amended in its entirety to read as follows:

"2.02 Shares. Except as otherwise provided in Article
VIII or IX of this Agreement, the percentage interest of each
Partner in PCS Purified Phosphates shall be as set forth on
Schedule 1 attached hereto."

C. Section 4.01. Section 4.01 (Capital Contributions) of the
Partnership Agreement is hereby amended by adding the following
paragraph (d) to the end of Section 4.01:

"(d) On March 23, 2000, PCS Industrial Products,
Inc. shall contribute to PCS Purified Phosphates the amount of
$450,000 which will represent the capital contribution of PCS
Industrial Products, Inc. to PCS Purified Phosphates and will
entitle PCS Industrial Products, Inc. to the percentage
interest in PCS Purified Phosphates set forth next to PCS
Industrial Product, Inc.'s name on Schedule 1 attached
hereto."

D. Sub-section 1.01(s). Sub-section 1.01(s) (Definitions;
Partner) is hereby amended in its entirety to read as follows:

"(s) "Partner" shall mean PCS Phosphate Company, Inc.,
Albright and Wilson Americas Inc., or PCS Industrial Products,
Inc., as the case may be, and the term "Partners" shall mean
all of the Partners."

E. Section 6.02. Section 6.02 (Distributions) of the
Partnership Agreement is hereby amended by placing the phrase "as
otherwise agreed by unanimous vote of the Partners or" after the word
"Except" in the first sentence.

F. Article VIII. Article VIII (Transfer of Interest) is hereby
amended by adding the following new Section 8.03 after existing Section
8.02:

"8.03 Dissociation.
------------

(a) Upon the transfer by a Partner of its
entire interest in PCS Purified Phosphates pursuant
to Section 8.01 hereof, the

<PAGE> 3

remaining non-transferring Partners (the
"CONTINUING PARTNERS") shall dissociate the
transferring Partner (the "DISSOCIATED PARTNER") from
PCS Purified Phosphates by filing a statement of
dissociation with the Virginia State Corporation
Commission.

(b) Effective upon the filing of the notice
of dissociation pursuant to Section 8.03(a) hereof:

(i) PCS Purified Phosphates shall
not be dissolved under the Act and shall
continue in existence as a Virginia general
partnership;

(ii) The Dissociated Partner will
cease to be a general partner in PCS
Purified Phosphates, and shall have no
further rights, no partnership interests, no
obligations, no liabilities and no duties
under this Agreement, including, but not
limited to, (A) any and all rights in PCS
Purified Phosphates partnership property,
(B) any and all partnership interests in PCS
Purified Phosphates, including, but not
limited to, profits and losses, and (C) any
and all management rights with respect to
PCS Purified Phosphates, including but not
limited to, the right to appoint members to
the PCS Purified Phosphates Management
Committee pursuant to Section 3.01 hereof;

(iii) The Dissociated Partner shall
not be entitled to indemnification as
provided in Section 50-73.112 of the Act;

(iv) The Dissociated Partner shall
not have any duties under the New Chapter,
including the duties of care and loyalty set
forth under Section 50-73.102 of the New
Chapter; and

(v) The Dissociated Partner waives
any entitlement it may have to a buyout
price of its shares under Section 50-73-112
of the New Chapter. In lieu thereof, the
Dissociated Partner and the Continuing
Partners may fix a method or formula for
determining the buyout price and all other
terms and conditions of the buyout right of
the Dissociated Partner's partnership
interest whether in connection with a
transfer under Section 8.01 hereof or
otherwise to the fullest extent permitted
under the law of the Commonwealth of
Virginia.

<PAGE> 4

(c) In connection with any transfer under
Section 8.01 hereof, PCS Purified Phosphates, the
Continuing Partners and the Dissociated Partner shall
agree to all liabilities and obligations of each of
PCS Purified Phosphates, the Continuing Partners and
the Dissociated Partner with respect to one another,
in a written agreement, for the periods prior to and
after the dissociation of the Dissociated Partner
(the "CONTINUING OBLIGATIONS"). Notwithstanding
anything in this Agreement to the contrary, except
for those Continuing Obligations expressly agreed to
by the Partners, (A) the Dissociated Partner shall
not have any other Continuing Obligations, and shall
not have any other liabilities or obligations, to PCS
Purified Phosphates and the Continuing Partners, and
(B) PCS Purified Phosphates and the Continuing
Partners shall have no other Continuing Obligations
to the Dissociated Partner.

3. Acceptance and Acknowledgment of New Partner. New Partner
acknowledges receipt of the Partnership Agreement and all amendments thereto, a
copy of which is attached hereto as Exhibit A, and hereby specifically accepts,
adopts, and agrees to each and every provision of the Partnership Agreement. By
execution of this Amendment, New Partner agrees that it shall be deemed to have
executed the Partnership Agreement.

4. Removal of References to A&W Inc. Effective immediately upon the
dissociation of the Selling Partner (as defined in the Distribution and Sale
Agreement dated as of March 23, 2000 by and among A&W Inc., PCSP, New Partner,
PCS Purified Phosphates and Rhodia Inc., a Delaware corporation), PCSP and New
Partner shall amend and restate the Partnership Agreement in its entirety (the
"AMENDED AND RESTATED PARTNERSHIP AGREEMENT"). PCSP and New Partner hereby
covenant that the Amended and Restated Partnership Agreement shall not contain
any references to A&W Inc. (including, without limitation, all references to
Albright & Wilson Americas Inc.) or any corresponding references to rights,
interests, obligations, liabilities, duties and responsibilities of A&W Inc.

5. Reaffirmation. Except as specifically amended herein, all terms and
conditions of the Partnership Agreement in effect prior to this Agreement
thereto remain in full force and effect.

* * * * *

4
<PAGE> 5

(SIGNATURE PAGE FOR AMENDMENT TO ALBRIGHT & WILSON COMPANY
GENERAL PARTNERSHIP AGREEMENT)

IN WITNESS WHEREOF, the Partners hereto have executed this Agreement as
of the day and year first above written.

ALBRIGHT & WILSON AMERICAS INC.

By: /s/ L. WORK
--------------------------------------
Name: Lyall Work
Title: President

PCS PHOSPHATE COMPANY, INC.

By: /s/ T.J. REGAN, JR.
--------------------------------------
Name: Thomas J. Regan, Jr.
Title: President

PCS INDUSTRIAL PRODUCTS, INC.

By: /s/ T.J. REGAN, JR.
--------------------------------------
Name: Thomas J. Regan, Jr.
Title: President

<PAGE> 6

(SIGNATURE PAGE FOR AMENDMENT TO ALBRIGHT & WILSON COMPANY
GENERAL PARTNERSHIP AGREEMENT, PAGE 2)

ALBRIGHT & WILSON COMPANY

By: ALBRIGHT & WILSON AMERICAS
INC., a General Partner

By: /s/ L. WORK
-------------------------------------
Name: Lyall Work
Title: President

By: PCS PHOSPHATE COMPANY, INC.,
a General Partner

By: /s/ T.J. REGAN, JR.
-------------------------------------
Name: Thomas J. Regan, Jr.
Title: President

By: PCS INDUSTRIAL PRODUCTS, INC.,
a General Partner

By: /s/ T.J. REGAN, JR.
-------------------------------------
Name: Thomas J. Regan, Jr.
Title: President

<PAGE> 7

SCHEDULE 1

NAME PERCENTAGE INTEREST IN PCS PURIFIED
- ---- PHOSPHATES
-----------------------------------

Albright & Wilson Americas, Inc. 49.75%

PCS Phosphate Company, Inc. 49.75%

PCS Industrial Products, Inc. 0.5%

<PAGE> 8

EXHIBIT A

A&W CO. GENERAL PARTNERSHIP AGREEMENT AND AMENDMENTS

[AS SEPARATELY PROVIDED]

<PAGE> 1
Exhibit 11

POTASH CORPORATION OF SASKATCHEWAN INC.
COMPUTATION OF PER SHARE EARNINGS
FOR THE YEAR ENDED DECEMBER, 1999

(Figures and amounts expressed in thousands, except per share and
per option amounts)

<TABLE>
<CAPTION>
1999 1998
-----------------------------------------

<S> <C> <C>
A Net income as reported, Canadian GAAP $ (411,994) $ 261,003
B Items adjusting net income $ (170,588) -
C Net income, US GAAP (A+B) $ (582,582) $ 261,003
D Weighted average number of shares outstanding....................... 54,230 54,177
E Options outstanding to purchase equivalent shares................... 3,804 2,947
F Average exercise price per option................................... $ 43.69 $ 70.35
G Average market price per share...................................... $ 54.37 $ 74.65
H Period end market price per share................................... $ 48.19 $ 63.88
I Rate of Return available on option proceeds 5.00% 5.00%
CANADIAN GAAP
Basic earnings per share (A/D) $(7.60) $4.82
Fully diluted earnings per share
J Imputed earnings on options proceeds (E*F*I) - $7,912
Fully diluted earnings per share ((A+J)/(D+E))...................... $(7.60) $ 4.77
UNITED STATES GAAP
Basic earnings per share (C/D) $(10.74) $4.82
Fully diluted earnings per share
K Net additional shares issuable (E-(E*F/G)) - 170
Fully diluted earnings per share (C/(D+K)).......................... $(10.74) $ 4.80
</TABLE>

<PAGE> 1
[POTASH CORP. LOGO] Exhibit 13

RESOURCEFUL

1999 ANNUAL REPORT

<PAGE> 2

<TABLE>
<S> <C> <C> <C> <C> <C>
BECAME A ACQUIRED BEGAN HANDLING PURCHASED THE
PCS PUBLICLY-TRADED EXPORT-ORIENTED [PHOTO] OFFSHORE POTASH POTASH ASSETS OF
COMPANY IN POTASH PRODUCER SALES FOR NEW POTASH COMPANY
NOVEMBER SASKTERRA MEXICO PRODUCERS OF AMERICA

1989 1990 1991 1992 1993

PERESTROIKA OCCURS, GERMANY REUNIFIES, GULF WAR AFFECTS INDIA SLASHES RECORD MIDWESTERN
INDUSTRY BERLIN WALL FALLS, FIRST CLOSURES OF MIDDLE EAST POTASH FERTILIZER SUBSIDIES, FLOODS CUT US FARM
TIENANMEN SQUARE EAST GERMAN SHIPMENTS; USSR POTASH SALES DROP; PRODUCTION; CHINA
CLAMPDOWN IN CHINA: POTASH MINES DISINTEGRATES, RUSSIAN FOOD CONCERNS GROW, REMOVES SUBSIDIES
ALL PRECIPITATE FIVE- POTASH DISRUPTS LEADING TO SUBSIDY ON FARM INPUTS;
YEAR DECLINE IN WORLD WESTERN MARKETS REINSTATEMENT POTASH CONSUMPTION
FERTILIZER CONSUMPTION IN 1993 BOTTOMS OUT
</TABLE>

RECHARGED
<TABLE>
<CAPTION>

TABLE OF CONTENTS
<S> <C>
Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Report to Shareholders . . . . . . . . . . . . . . . . . . 3
Production . . . . . . . . . . . . . . . . . . . . . . . . . 6
Potash . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Phosphate . . . . . . . . . . . . . . . . . . . . . . . . 9
Nitrogen . . . . . . . . . . . . . . . . . . . . . . . . . 12
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Stewardship . . . . . . . . . . . . . . . . . . . . . . . . 25
Management's Discussion and
Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . 32
10-Year Report . . . . . . . . . . . . . . . . . . . . . . . 43
Management's Responsibility . . . . . . . . . . . . . . . . 44
Auditors' Report . . . . . . . . . . . . . . . . . . . . . . 44
Consolidated Financial Statements . . . . . . . . . . . . . 45
Shareholder Information . . . . . . . . . . . . . . . . . . 64
Corporate Information . . . . . . . . . . . . . . . . . . . back
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . back
</TABLE>

All financial data are stated in US dollars.

<PAGE> 3

<TABLE>
<S> <C> <C> <C> <C> <C>
EXPANDED INTO PHOSPHATE EXPANDED INTO PURCHASED POTASH PURCHASED
[PHOTO] BY PURCHASING TEXASGULF [PHOTO] NITROGEN BY COMPANY OF CANADA POTASSIUM NITRATE
AND THE PHOSPHATE ACQUIRING ARCADIAN PROPERTY IN NEW PROPERTY IN CHILE
BUSINESS OF OCCIDENTAL CORPORATION BRUNSWICK AND SHARES
CHEMICALS IN ISRAEL CHEMICALS

1994 1995 1996 1997 1998 1999

BRAZIL REFORMS EU REFORMS US ELIMINATES CHINA EXITS UREA ECONOMIC PROBLEMS HIGH GRAIN STOCKS,
AGRICULTURE; AGRICULTURE; WORLD SETASIDES, FREES TRADE; FINANCIAL IN LATIN AMERICA; LOW PRICES;
EU PUTS DUTIES ON POTASH AND PHOSPHATE FARMERS; RECORD CRISIS SWEEPS ASIA RUSSIA DEVALUES CYCLONE IN INDIA
RUSSIAN POTASH; CONSUMPTION UP CORN AND WHEAT CURRENCY, MOVES TO POSTPONES NEW
PRICES RISE SHARPLY; GRAIN STOCKS PRICES NON-MARKET PRICING DAP CAPACITY
AT ALL-TIME LOW IN NITROGEN
</TABLE>

REVIEW

IN NOVEMBER 1999, POTASH CORPORATION OF SASKATCHEWAN INC. PASSED ITS 10-YEAR
MILESTONE AS A PUBLICLY-TRADED COMPANY. IN THOSE 10 YEARS OF RESOURCEFUL GROWTH
AND THOUGHTFUL CHANGE, IT HAS REFORGED ITSELF INTO THE WORLD'S LARGEST
MANUFACTURER OF THE THREE PRIMARY NUTRIENTS. DESPITE WEATHER, POLITICS AND
ECONOMIC SPIRALS, AMID CHANGES IN SUBSIDY LEVELS, APPLICATION RATES AND METHODS,
ACREAGE PLANTED AND FARM PROSPECTS, IT HAS RESILIENTLY OUTPERFORMED THE
FERTILIZER SECTOR. IN THE 10 FULL YEARS IT HAS BEEN PUBLICLY TRADED, IT HAS
MATCHED THE PERFORMANCE OF THE DOW, RETURNING A CUMULATIVE 316 PERCENT TO
SHAREHOLDERS.

Potash Corporation of Saskatchewan Inc. (commonly known as PCS or PotashCorp) is
a leading supplier of potash (K), phosphate (P) and nitrogen (N) to three
distinct market categories: agriculture, as the world's largest and lowest-cost
producer of fertilizer products; animal nutrition, as the world's largest
producer of phosphate feed ingredients; and industrial chemicals, as the world's
largest producer of industrial nitrogen products.

PCS is the world's largest potash company by capacity, with vast excess capacity
upon which to draw as markets grow. It is the third largest phosphate company in
the world, with large, low-cost reserves and the industry's most diversified
product line. It ranks in the top three in nitrogen, producing a wide range of
upgraded products.

Products from the 18 PCS facilities spread throughout North America and Trinidad
are sold worldwide. PCS owns 9 percent of Israel Chemicals, and is developing a
facility in Chile producing sodium nitrate and potassium nitrate.

Under the symbol POT, PotashCorp shares trade on the Toronto and New York stock
exchanges. At the end of 1999, 53.7 million shares were outstanding.

<PAGE> 4

POTASH CORPORATION OF SASKATCHEWAN ACHIEVED ITS LEADERSHIP POSITION BY
REDEFINING HOW PROFITS CAN BE OPTIMIZED IN A COMMODITY BUSINESS. IT HAS
CONCENTRATED ON ITS STRENGTHS AND DEVELOPED A STRATEGY FOR LONG-TERM
PROFITABILITY IN EACH OF ITS NUTRIENTS.

REFOCUSED
In potash, PCS matches supply to demand to minimize inventory overhang and grow
earnings. In phosphate, it stresses product diversification to maximize
production of those products with a market premium. In nitrogen, it emphasizes
industrial sales. In every case, the goal is to benefit from the fertilizer
market on the upside and shield earnings on the downside, to generate premium
shareholder value.

The Company is determined to remain a low-cost supplier of potash and phosphate
to global customers and of nitrogen domestically. Reinforcing and strengthening
this goal is its long-term business strategy of focusing on the acquisition of
quality assets that will build on its strengths, complement it logistically and
add strategic value.

In all its products, PotashCorp is striving to become more customer-focused and
responsive to customer needs.

With confidence in these strategies, its quality products and its management
vision, PCS moves resourcefully into its second decade, anticipating continuing
leadership of the world fertilizer industry.

<PAGE> 5

REPORT TO SHAREHOLDERS

[PHOTOGRAPH]

William J. Doyle
PRESIDENT and CEO

It is my privilege to report to you on your Company's assets and our management
of its day-to-day operations in 1999, our tenth year as a publicly-traded
company. In that decade, a fledgling Saskatchewan potash producer built itself
into a world leader in fertilizers, animal nutrition and industrial products.
Its assets, over that 10-year period, have quadrupled and its market
capitalization has almost quintupled. Net income on a sustaining basis has
increased eightfold while sales have multiplied 11 times.

Our tenth year was a difficult one, full of challenges, but your management used
it to address our problems and rejuvenate your Company for the long term. The
pages that follow will give you a detailed report on 1999, so I will touch only
on the major developments.

A YEAR OF MIXED RESULTS

Up front, we must acknowledge that 1999 was a poor year in fertilizer,
principally because of North American markets. The spring season disappointed
us, as farmers cut costs by putting off fertilizer purchases, and high grain
stocks and low grain prices pressured sales throughout the year. Nitrogen was a
poor performer in 1999, phosphate weakened through the second half of the year,
and only potash held its own. Our feed and industrial businesses were relatively
stable, but fertilizer still represents 70 percent of our business. We know
agriculture will recover, but we are using the opportunity provided by this
downturn to reorient the Company.

Our 1999 sales would have produced earnings of $2.49 per share (1998: $4.82)
except for our writedown of our nitrogen assets. Part of that one-time charge
was for closing two high-cost nitrogen plants, but most related to a review of
the nitrogen goodwill. As a result, PotashCorp recorded a loss of $7.60 per
share.

The writedown followed an examination of our nitrogen assets with our auditors.
We had done a thorough analysis before we bought those assets in 1997, and
anticipated lower prices. But we did not anticipate such extreme external events
as China withdrawing from the world urea market and Russian exporters' continued
non-market pricing. Nitrogen prices deteriorated rapidly, and we see no basis to
expect substantial sustained improvement in the near future.

It seemed prudent to address the problem, and we took the writedown in the third
quarter of 1999. We also cut costs by permanently closing two

<PAGE> 6

YOUR COMPANY'S IMMEDIATE GOALS

<TABLE>
<S> <C> <C>
1 INCREASE 2 IMPROVE OUR 3 EXPAND OUR
RETURN ON CAPITAL COST POSITIONS IN PRODUCT LINE AND
ALL THREE NUTRIENTS CUSTOMER BASE
BY BUILDING ON
OUR NEWEST
ACQUISITIONS

4 INCREASE 5 INCREASE THE 6 STEADILY
POTASH PRICES PERCENTAGE OF NON- INCREASE OUR
WHILE BRINGING ON FERTILIZER BUSINESS NITROGEN INDUSTRIAL
EXCESS CAPACITY IN OUR PHOSPHATE SALES
PRODUCT MIX
</TABLE>

nitrogen plants and shutting down some phosphate production. In potash, we took
more inventory control shutdowns, using the downtime at our Allan mine for a
major shaft maintenance project. We continue to look at ways to reduce spending,
and have made this goal part of our permanent approach to business.

Our share price has not performed well this year, and it is small consolation
that our peers suffered similar or greater declines, all as a result of the drop
in fertilizer prices. Shareholders had long urged us to institute a share
repurchase program, and we have begun a 5-percent buyback. By November 18, 2000,
we plan to buy and cancel up to 2.7 million shares. We had bought 630,000 shares
by December 31, 1999, at an average price of US$46.45. You asked us to take this
step to strengthen the value of your PCS holdings, and we responded.

A major highlight in 1999 was the increase in the Company's impressive
collection of safety records, which gives all of us at PCS a real sense of pride
and reaffirms our constant emphasis on safety. We expanded into the specialty
fertilizer area with our purchase of Minera Yolanda in Chile, now called
PCS Yumbes, which produces sodium nitrate and potassium nitrate. Late in the
year, we signed a memo to purchase a feed phosphate plant in Brazil, and we
continue to evaluate acquisition opportunities around the world. In February
2000, we sold our potash mine at Moab, Utah to Intrepid Oil & Gas, LLC of
Denver, Colorado, but PCS will continue to market its potash.

CHANGES IN MANAGEMENT

Changes also took place in senior management. Chuck Childers, whose experience
and wisdom guided PCS for its first decade and made it an industry leader,
retired on June 30, and I was honored to be selected by the Board as the new
CEO. Able support has been provided by the management team that is one of your
Company's most valuable assets, though you won't find it on our balance sheet. I
took up this position on July 1, and our team - .300 hitters and strong
fielders, every one - immediately began the refocusing and cost-cutting demanded
by the difficult fertilizer situation. We have begun to consolidate our US
administrative operations into one office in Chicago, improving efficiency and
effectiveness and ending management duplication. And we have taken steps towards
our goal of having every task dealt with at the lowest possible level of the
Company, to build the strongest group of managers possible throughout
PotashCorp.

We were saddened by the death in November of Denis Cote, a veteran member of our
Board who made an important contribution to the Company over its formative
years. We need to recognize the

<PAGE> 7

YOUR COMPANY'S CONTINUING GOALS

<TABLE>
<S> <C> <C> <C>
1 REMAIN THE 2 CONTINUE TO 3 REINFORCE 4 BE THE
LEADER AND THE OUTPERFORM OUR OUR UNIQUE INDUSTRY'S LOW-COST
PREFERRED SUPPLIER PEER GROUP IN STRENGTHS THROUGH SUPPLIER
IN THE WORLD SHAREHOLDER RETURN ACQUISITIONS
FERTILIZER
INDUSTRY

5 CONSTANTLY 6 TAKE SERIOUSLY 7 ESTABLISH EXPLICIT
STRESS SAFETY AND OUR RESPONSIBILITIES GOVERNANCE PRACTICES
CARE FOR THE TO OUR EMPLOYEES TO SAFEGUARD
ENVIRONMENT AT AND OUR COMMUNITIES SHAREHOLDERS'
OUR OPERATIONS INTERESTS

</TABLE>

contributions of Jim Lardner, who retired at the 1999 annual meeting, and Paul
Wise, who has announced that he will not seek re-election in 2000. Both joined
the Board in 1989 and the Company has benefited from their valuable counsel.

WHAT CAN YOU EXPECT IN 2000?

We think 2000 will continue to offer challenges in fertilizer, though offshore
potash sales should be solid. New capacity in both DAP and nitrogen will
maintain pricing pressure on those businesses. Though the horizon shows few
definite signs of improvement, things can change quickly in fertilizer. Capacity
shutdowns, consolidation and rising grain prices have triggered a rebound in
fertilizer earnings in the past, and we expect them to do so again.

We assure you that PCS will use its many strengths wisely to deal with the
situation. We continue to identify and support new fertilizer demand in
developing nations, where the growth in consumption will come. In 2000, we will
produce our first specialty fertilizers from our Chilean property, for crops
that cannot use chloride-based products. Our operations will continue to develop
and put to work the kind of new technologies that have made us a leader in
potash mining automation. And one of our most important initiatives will be to
keep growing our industrial and animal feed businesses, always more stable than
fertilizer.

My background in sales has taught me that customer service must be our No. 1
driver. We are working to enhance our established ability to meet customer
demand in each of our nutrients with quality products in a timely fashion, with
value-added products, services and relationships that will truly differentiate
us from our competitors worldwide. We have reaffirmed our belief that excellent
customer service is the best link to long-term shareholder value.

Above, you can see our short-term and long-term goals for your Company. We
expect to be held accountable to these goals, which we consider attainable. You
will remember that when the bottom fell out of the market for potash, and then
for other fertilizers, in the wake of perestroika and the collapse of the Soviet
Union, your Company persevered and profited. We are determined to do so now and
in the future, for the benefit of our shareholders, our customers, our employees
and all who depend on PotashCorp.

/s/ William J. Doyle
- --------------------------------------
William J. Doyle
President and Chief Executive Officer
March 1, 2000

<PAGE> 8

RELIABLE
PRODUCTION

<TABLE>
<S> <C> <C>
1 POTASH 2 PHOSPHATE 3 NITROGEN
World Leadership Product Diversification Industrial Strength
Million Tonnes Product Basis Percentage P205 Million Tonnes N
(1999 Estimates) (North America)
[CHART] [CHART] [CHART]
</TABLE>

COMPARED TO ITS COMPETITORS, PCS HAS MORE EXCESS CAPACITY IN POTASH, MORE
PRODUCT DIVERSIFICATION IN PHOSPHATE AND MORE INDUSTRIAL SALES IN NITROGEN.

<PAGE> 9

PRODUCTION REPORT

[PHOTO]
PCS HAS 24% OF ANNUAL WORLD POTASH CAPACITY OF APPROXIMATELY 51 MILLION TONNES.

PRODUCTION COSTS
($/tonne KCI)
ITS ALREADY LOW PRODUCTION COSTS WILL ONLY GO LOWER AS PCS BRINGS ON ITS EXCESS
POTASH CAPACITY.

[CHART]

PCS CAN MINE FOR 100 YEARS FROM ITS CURRENT SHAFTS.
[PHOTO]
POTASH

At seven mines in Canada, six of which it owns and operates, PCS produces
high-quality potash required by farmers around the world. With well over half of
the world's excess capacity, it can increase production as markets grow, further
reducing its already low costs per tonne. It makes more than half its annual
sales offshore and is an important supplier to developing nations where demand
for potash keeps growing. There is no substitute for this vital fertilizer.

PCS produces about 20 grades to suit its many markets. Its agricultural
product, guaranteed to have at least 60 percent K2O (95 percent KCl), is
particularly important for corn, soybeans, rice, cotton, bananas and coffee, but
all crops require potassium for ultimate growth, health and yield.

At Yumbes, the new sodium nitrate mine it is developing in Chile,
PotashCorp will produce specialty nutrients for use on chloride-sensitive crops.
Sodium nitrate is used on cotton, sugar beets and other such specialty crops
and, combined with potash into potassium nitrate, it benefits tobacco and
high-value horticultural and greenhouse crops. PCS Yumbes will begin production
in 2000.
[Photo]

POTASH PRODUCTION
<TABLE>
<CAPTION>

1999 1998
-------------------------- -------------------
<S> <C> <C>
World 41.7 MILLION TONNES (EST.) 41.8 MILLION TONNES
PCS 6.4 MILLION TONNES 7.0 MILLION TONNES
PCS Share 15% 17%
</TABLE>

PCS POTASH STRENGTHS

1 EXCESS CAPACITY
2 LEADING GLOBAL PLAYER
3 CAPABLE OF PRODUCING MORE POTASH THAN OTHER WORLD COMPANIES AT LOWER COST

<PAGE> 10
HOW IS POTASH USED?

<TABLE>
<S> <C>
PRODUCTS PRIMARY END USES

FERTILIZER Agriculture

INDUSTRIAL TV/computer screens, water softeners, soaps, perfumes, de-icers
FEED SUPPLEMENTS Livestock and poultry
</TABLE>

[PHOTO]

POTASH FACT
POTASH IS THE MAJOR SOURCE OF POTASSIUM, NEEDED BY PLANTS TO RAISE YIELDS AND
FOOD VALUE, BUILD DISEASE RESISTANCE AND IMPROVE SHIPPING, HANDLING AND STORAGE
QUALITIES, AND BY ANIMALS TO HELP GROWTH, MAINTENANCE AND MILK PRODUCTION.

1999 IN REVIEW

Entering 1999 with its inventories high, and faced with weak North American
demand but solid world demand and more Russian product on the market, PCS
adhered to its strategy of matching production to demand and produced 9 percent
less potash than in 1998. Its production was 6.388 million tonnes, and its mines
operated at 52 percent of capacity with a combined 58 weeks of shutdown time,
almost twice the 1998 number. This increased production costs, but lowered
inventories going into 2000. Allan extended the shutdown period to replace a
section of concrete shaft lining with ductile iron tubbing backed by 408 tonnes
of high-strength grout.

PotashCorp agreed in February 2000 to sell its only potash mine in the
United States, at Moab, Utah, to Intrepid Oil & Gas, LLC of Denver, Colorado,
but will continue marketing its potash.

In addition to potash, Moab and New Brunswick produced 0.812 million tonnes
of sodium chloride (salt), used to de-ice winter roads and make various
products.

Cory and Patience Lake set productivity records.

[PHOTO]

Caption: ONE BANANA PROVIDES A PERSON'S ENTIRE DAILY NEED FOR POTASSIUM,
WHICH IS ESSENTIAL FOR HEALTHY FUNCTIONING OF THE NERVOUS SYSTEM AND BOOSTS
ENERGY. POTASH NUTRIENTS IMPROVE THE BENEFITS BANANAS PROVIDE TO PEOPLE.

1999 PRODUCTION (million tonnes KCl)

<TABLE>
<CAPTION>
ANNUAL CAPACITY 1999 PRODUCTION 1998 PRODUCTION MINE SITE EMPLOYEES
--------------- --------------- --------------- -------------------
(active)
<S> <C> <C> <C> <C>
Lanigan SK 3.828 1.594 1.656 330
Rocanville SK 2.295 1.709 1.882 320
Allan SK 1.885 .676 1.142 271
Cory SK 1.361 .674 .676 152
Patience Lake SK 1.033 .260 .254 64
Esterhazy SK1 .951 .726 .543 2
New Brunswick .785 .693 .783 322
Moab UT .059 .056 .059 49
------ ----- ----- -----
TOTAL 12.197 6.388 6.995 1,510
</TABLE>

1 Production at Esterhazy is mined from PCS reserves by International Minerals
and Chemical (Canada) Limited Partnership under a long-term agreement. For
calendar year 2000, the PCS allocation is 0.726 million tonnes.

<PAGE> 11
[PHOTO]
PCS HAS AN ESTIMATED 60% OF WORLD EXCESS POTASH CAPACITY.

PCS IS THE POTASH LEADER IN SASKATCHEWAN, WHICH HAS RESERVES FOR ABOUT 1000
YEARS OF PRODUCTION.

IF IT USED ALL ITS CAPACITY, PCS COULD SUPPLY 30% OF ANNUAL WORLD POTASH
CONSUMPTION.
[PHOTO]

POTASH FACT
[PHOTO]
POTASH IS MINED FROM ORE DEEP UNDERGROUND OR EXTRACTED FROM BRINE, AND
MILLED ON THE SURFACE.
POTASH FACT
POTASH PRODUCTION COSTS ARE AFFECTED BY: ORE THICKNESS, CONSISTENCY AND
CONTINUITY; ORE DEPTH, GEOLOGICAL CONDITIONS AND K2O GRADE; MILL RECOVERY
ACHIEVABLE, OPERATIONAL CAPACITY, DEGREE OF AUTOMATION.

PCS Cassidy Lake in New Brunswick has an annual milling capacity of 1.3
million tonnes and a compaction capacity of 1.0 million tonnes of granular
product. In 1999, its 31 employees upgraded and compacted 0.197 million tonnes
of standard potash from Rocanville for markets in the eastern US and Canada.

A small brine inflow continued at PCS New Brunswick throughout 1999,
controlled at 400 gallons per minute. A grout curtain wall is being constructed
above the mine to seal off the inflow. Potash production was maintained without
interruption during the year.

PCS PHOSPHATE STRENGTHS

1 DIVERSIFIED AND LOW-COST PRODUCTION
2 LONG-TERM ROCK RESERVES

PHOSPHATE

From the high-quality phosphoric acid produced at its three US phosphate
facilities, PotashCorp makes solid and liquid fertilizers, industrial phosphoric
acid and feed supplements for livestock and poultry. Great flexibility enables
it to switch production among products to maximize its margins.

Together, its phosphate facilities at Aurora, North Carolina, White
Springs, Florida and Geismar, Louisiana make PCS one of the world's lowest-cost
P2O5 producers. Abundant, high-quality phosphate rock reserves at Aurora and
White Springs mean its average costs will decline while competitors pay to
transport lower-quality rock to their plants. PCS has multi-year permits to
draw on its reserves.

Among its unique strengths in phosphate, PCS produces purer acid than its
competitors to upgrade into high-quality industrial acid. Its production of
superphosphoric acid at all three locations makes it the world's leading
supplier of this fertilizer intermediate geared to the conservation tillage
systems increasingly popular with North American farmers. At six plants
strategically located across the United States, it produces the feed products
Dical and Monocal for swine and cattle, primarily, and DFP for poultry. Its use
of black SPA from White Springs lowered the cost position and increased the
capacity of its feed plants, enabling it to easily grow its feed business.

The convenience to tidewater that has made Aurora the Company's main
phosphate export location also benefits transportation logistics.

1999 IN REVIEW

Demand for phosphate fertilizers fell in 1999 and, in response, PCS cut its
production of phosphoric acid at Aurora and Geismar in the third quarter and
curtailed 18 percent of capacity at White Springs. Its total production of
2.124 million tonnes P2O5 was 10 percent lower than in 1998, and represents 85
percent of total capacity at the three facilities.

In a year of lower domestic demand for the major solid fertilizer DAP, the
phosphoric acid curtailment at White Springs was the equivalent of 22 percent of
PotashCorp's DAP capacity. Total 1999 DAP production was 1.737 million tonnes,
10 percent less than in 1998. Production of the liquids MGA

<PAGE> 12
and SPA was also down, by 8 percent and 6 percent respectively, and 81 percent
and 67 percent of their capacity was used.

[PHOTO]

PCS, THE WORLD'S LARGEST MANUFACTURER OF PHOSPHATE FEED SUPPLEMENTS FOR
LIVESTOCK AND POULTRY, HAS NEARLY 50% OF US CAPACITY.

POTASHCORP IS ONE OF THE LOWEST-COST P2O5 PRODUCERS IN THE WORLD.

PHOSPHATE ROCK COSTS $/MT

PCS AVERAGE ROCK COSTS WILL BE STEADILY LESS THAN THE INCREASING COSTS OF ITS
LARGE FLORIDA COMPETITORS.

[CHART]

SOURCE: TFI, CRU, PCS

PHOSPHATE FACT

PHOSPHATE IS FOUND IN UNDERGROUND ORE DEPOSITS WHICH YIELD PHOSPHATE ROCK TO
MAKE PHOSPHORIC ACID, FEEDSTOCK FOR OTHER PRODUCTS.

Aurora surmounted unique challenges in 1999. It was hit by four hurricanes,
resulting in substantial downtime and close to $1 million in damage. Mining the
western edge of its ore deposit presented difficult conditions and produced less
ore, raising costs significantly.

Mining of this difficult ore body is almost completed and the first steps
were taken in 1999 to develop the NCPC property, Aurora's most attractive
phosphate rock reserve. Beginning in 2001, it will provide the lowest-cost rock
in North America, with the first production occurring late in 2000.

White Springs had record production of phosphate rock in 1999. Its Swift
Creek plant continued to operate as a single product producer of black SPA,
confirming its position as one of the lowest-cost plants in the industry. It
produced 12 percent more P2O5 and 5 percent more black SPA, setting an annual
SPA record, while cutting production costs of black SPA.

Significant freight savings were achieved on inbound sulphur and all
outbound products after the Lake City Transload Facility started up in July,
providing access to the CSX railroad from White Springs. The facility is
designed to transload 0.310 million tonnes of sulphur per year from rail to
truck, and the same amount of superphosphoric acid from truck to rail.

PHOSPHATE FACT

PHOSPHATE IS THE MAJOR SOURCE OF PHOSPHORUS, THE ENERGIZER OF PLANT
PRODUCTION, CRUCIAL TO PHOTOSYNTHESIS AND REPRODUCTION AND OTHER
YIELD-DEVELOPING PROCESSES, AND NEEDED BY ANIMALS FOR GENERAL NUTRITION
AND NORMAL BODY GROWTH, MAINTENANCE AND REPAIR.

[PHOTO]

<PAGE> 13
<TABLE>
<CAPTION>
PRODUCTS PRIMARY END USES

<S> <C> <C>
HOW IS PHOSPHATE USED? MGA Feedstock for other phosphate products
DAP Agriculture

SPA, LOMAG, POLY-N Liquid fertilizers, feed, industrial products
FEED SUPPLEMENTS Livestock and poultry
INDUSTRIAL ACID Soft drinks, food products, industrial detergents, metal treating, water
treatment
</TABLE>

[PHOTO]

With the idling of the PCS export terminal at Jacksonville, Florida, White
Springs now exports through the port facility at Morehead City, North Carolina
used by Aurora. This consolidation helped reduce distribution costs and improve
services.

PHOSPHATE FEED PRODUCTION

The world's largest manufacturer of phosphate feed supplements for
livestock and poultry, PotashCorp produced 0.709 million tonnes of Dical,
Monocal and DFP in 1999, nearly 40 percent of total US feed phosphate
production. Company production was down 3 percent from 1998.

Weeping Water, Kinston, Marseilles, Davenport and one White Springs
facility produced Dical and Monocal. DFP was produced at White Springs and at
Saltville, until the latter was permanently closed on September 1. Saltville had
consistently higher production costs than the White Springs DFP plant, where a
new product processing method increased recovery by 3 to 5 percent.

1999 ROCK AND ACID PRODUCTION

PHOSPHATE ROCK (million tonnes) PHOSPHORIC ACID (million tonnes P2O5)
---------------------------------- ---------------------------------------------------
ANNUAL 1999 1998 ANNUAL 1999 1998 EMPLOYEES
CAPACITY PRODUCTION PRODUCTION CAPACITY PRODUCTION PRODUCTION (active)
-------- ---------- ---------- -------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Aurora NC 6.0 4.451 4.738 1.202 1.070 1.193 1,193
White Springs FL 3.6 3.594 3.393 1.093 .858 .956 1,047
Geismar LA - - - .202 .196 .214 45
--- ----- ----- ----- ----- ----- -----
TOTAL 9.6 8.045 8.131 2.497 2.124 2.363 2,285
</TABLE>

1999 PHOSPHATE PRODUCTION (million tonnes product)
<TABLE>
<CAPTION>
AURORA WHITE SPRINGS GEISMAR
-------------------------------- -------------------------------- ----------------------------------
ANNUAL 1999 1998 ANNUAL 1999 1998 ANNUAL 1999 1998
CAPACITY PRODUCTION PRODUCTION CAPACITY PRODUCTION PRODUCTION CAPACITY PRODUCTION PRODUCTION
-------- ---------- ---------- -------- ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Liquids: MGA1 1.835 1.607 1.789 1.908 1.343 1.456 .337 .356 .357
SPA .676 .398 .437 1.138 .815 .822 .196 .134 .180
Solids DAP 1.247 1.152 1.225 .710 .585 .700 - - -
</TABLE>

1 A substantial portion is consumed internally in the production of downstream
products. The balance is exported to phosphate fertilizer producers and sold
domestically to dealers that custom-mix liquid fertilizer.

1999 PHOSPHATE FEED PRODUCTION (million tonnes)
<TABLE>
<CAPTION>

ANNUAL CAPACITY 1999 PRODUCTION 1998 PRODUCTION EMPLOYEES
--------------- --------------- --------------- ---------
(active)
<S> <C> <C> <C> <C>
Davenport IA .280 .088 .094 25
Marseilles IL .278 .164 .175 36
White Springs FL (D/M) .218 .122 .096 24
Weeping Water NE .209 .149 .154 42
Kinston NC .141 .066 .059 21
White Springs FL (DFP) .100 .079 .086 41
Saltville VA* .078 .041 .068 4
----- ---- ---- ---
TOTAL 1.304 .709 .732 193
</TABLE>

* Ceased production August 31, 1999.

<PAGE> 14

PHOSPHORIC ACID PRODUCTION

<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
World 28.2 MILLION TONNES P2O5 (EST.) 27.9 MILLION TONNES P2O5
PCS 2.1 MILLION TONNES P2O5 2.4 MILLION TONNES P2O5
PCS Share 7% 9%
</TABLE>

[PHOTO]

PCS built a potash storage dome at the Marseilles feed plant, which
receives unit trains of potash for loading into trucks for shipment to
customers. The dome is the first phase of a warehousing complex that could
ultimately offer all three nutrients and produce cost-saving synergies by
reducing overall distribution costs.

PURIFIED ACID
The purified acid plant at Aurora produced 0.117 million tonnes P2O5 for
industrial use, operating at 87 percent of its rated capacity of 0.135 million
tonnes.

PHOSPHATE FACT:

PHOSPHATE ROCK PRODUCTION COSTS ARE AFFECTED BY ORE THICKNESS, CONSISTENCY AND
CONTINUITY, DEPTH, GEOLOGICAL CONDITIONS AND CONCENTRATION RATIO (TONNES OF ORE
REMOVED PER TONNE OF PHOSPHATE ROCK).

PCS NITROGEN STRENGTHS

1 LARGE PERCENTAGE OF INDUSTRIAL SALES
2 AMMONIA PRODUCTION IN TRINIDAD WITH LOWER-COST GAS

NITROGEN

At four plants in the United States and a large complex in Trinidad, PCS makes
upgraded nitrogen products for agriculture and industry. The most diversified
producer, it makes all the nitrogen fertilizers plus industrial products used
in the manufacture of essential and familiar products for home, car, building
and pharmaceuticals. Its micro prilled urea is used as a supplement to help
build protein in beef and dairy cattle, and in horticulture.

Competitive production of nitrogen products depends on adequate supplies of
natural gas. PotashCorp has the advantage of producing much of its ammonia at
low cost in Trinidad, where the natural gas price is indexed to ammonia prices
in the Caribbean; this will become increasingly important as gas prices rise
elsewhere. For its US production, it purchases half its natural gas at fixed
prices and half from the market, often at reduced prices due to its hedging
practice.

Florida DAP producers buy much of the PCS ammonia produced in Trinidad.
Half its US production goes to industrial

<PAGE> 15

[PHOTO]
PCS DIVIDES ITS NITROGEN PRODUCTION ALMOST 50-50 BETWEEN AGRICULTURE AND
INDUSTRY.

WESTERN HEMISPHERE MAJOR AMMONIA PRODUCERS (Million Tonnes Ammonia)

HALF OF THE PCS AMMONIA CAPACITY IS IN TRINIDAD, WHERE IT BENEFITS FROM LOW-COST
NATURAL GAS.

[GRAPH]

PCS BENEFITS FROM ITS STRATEGIC PLANT LOCATIONS IN THE US, WHICH HAVE A $25 PER
TONNE TRANSPORTATION ADVANTAGE OVER GULF COAST COMPETITORS.

<TABLE>
<CAPTION>
AMMONIA PRODUCTION
1999 1998
<S> <C> <C>
World 131.3 MILLION TONNES (EST.) 126.7 MILLION TONNES
PCS 3.8 MILLION TONNES 3.8 MILLION TONNES
PCS Share 3% 3%
</TABLE>

customers as ammonia or upgraded products, and it can use 38 percent of the
remaining ammonia for its own DAP production. Its agricultural nitrogen business
benefits from strategic plant locations in the US Midwest, close to customers
and profiting from a positive price differential with the Gulf.

1999 IN REVIEW

With continued pressure on world nitrogen prices, PotashCorp produced more
of its ammonia - the raw material for value-added nitrogen products - at its
low-cost Trinidad plants and closed two high-cost plants in the United States.
Operating at 93 percent of capacity, the highly efficient Trinidad plants
produced 45 percent of the Company's 3.827 million tonnes of ammonia, up from 37
percent in 1998. In total, PCS produced slightly more ammonia than in 1998,
using 89 percent of capacity.

With its new Train 5 nitric acid plant on stream, Geismar produced record
volumes of that product earmarked for industrial production. Augusta had record
production of nitric acid and ammonium nitrate, and Lima set a record for urea.

Production at Clinton and LaPlatte ceased on August 12, following a
thorough review of current and future market conditions which convinced the
Company that neither plant could be operated competitively.

On December 31, Trinidad's 01 and 02 ammonia plants were shut down by the
Company following expiration of its natural gas supply contract. Two years of
negotiations with the National Gas Company of Trinidad were unable to secure a
new agreement. These two plants represent about half the Company's total
Trinidad ammonia capacity. Negotiations are continuing.

NITROGEN FACT:

NITROGEN IS REQUIRED BY EVERY LIVING CELL AND IS PART OF THE GENETIC BLUEPRINTS
RNA AND DNA.

[PHOTO]

CAPTION: LESS THAN 5 PERCENT OF THE NITROGEN THAT FERTILIZES SOILS COMES FROM
LIGHTNING FLASHING THROUGH MOIST AIR; WORLD FOOD PRODUCTION DEPENDS ON
MANUFACTURED NITROGEN.

<PAGE> 16
\

<TABLE>
<CAPTION>
PRODUCTS PRIMARY END USES
-------- ----------------
<S> <C> <C>
HOW IS AMMONIA Fertilizer for agriculture; feedstock for industrial and other nitrogen products
NITROGEN UREA Agriculture, pharmaceuticals, plastics, resins, adhesives, dyes, pool chemicals,
USED? humulin for diabetics; feed supplements for livestock
NITRIC ACID Carpets, photography, batteries, lacquers and paints, tires, ammonium nitrate
AMMONIUM NITRATE Agriculture, explosives for mining, construction and road work
NITROGEN SOLUTIONS Agriculture
</TABLE>

[PHOTO]

INDUSTRIAL PRODUCTION
Many PCS products have widespread industrial uses. More than 73 percent of
ammonia produced and sold by the Company in the US in 1999 went to industry,
along with 67 percent of urea, 70 percent of ammonium nitrate and all nitric
acid.

PotashCorp also produced 0.109 million tonnes of micro prilled urea for
feed and industrial purposes at Memphis, 18 percent more than in 1998.

NITROGEN FACT:

NITROGEN PRODUCTS ARE MANUFACTURED FROM FEEDSTOCK AMMONIA SYNTHESIZED FROM
NATURAL GAS, STEAM AND AIR; AMMONIA IS ALSO THE MOST CONCENTRATED NITROGEN
FERTILIZER. UREA IS THE MAJOR FERTILIZER SOURCE OF NITROGEN. SOLID FERTILIZER
AMMONIUM NITRATE IS MADE FROM NITRIC ACID. LIQUID FORMS OF UREA AND AMMONIUM
NITRATE ARE COMBINED INTO NITROGEN SOLUTIONS.

1999 PRODUCTION (million tonnes)
<TABLE>
<CAPTION>
AMMONIA 1 NITRIC ACID 1 2 UREA SOLIDS
-------------------------------- -------------------------------- --------------------------------
ANNUAL 1999 1998 ANNUAL 1999 1998 ANNUAL 1999 1998
CAPACITY PRODUCTION PRODUCTION CAPACITY PRODUCTION PRODUCTION CAPACITY PRODUCTION PRODUCTION
-------- ---------- ---------- -------- ---------- ---------- -------- ---------- ----------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Trinidad 1.833 1.705 1.399 - - - .602 .589 .512
Augusta GA .653 .651 .666 .522 .512 .511 .363 .335 .348
Lima OH .542 .550 .481 .097 .098 .103 .370 .327 .260
Geismar LA .483 .396 .473 .844 .566 .517 - - -
Memphis TN .371 .325 .373 - - - .409 .354 .395
Clinton IA4 .238 .107 .226 .126 .038 .122 - - -
LaPlatte NE4 .182 .093 .188 .178 .059 .158 - - -
----- ----- ----- ----- ----- ----- ----- ----- -----
TOTAL 4.302 3.827 3.806 1.767* 1.273 1.411* 1.744 1.605 1.515
</TABLE>

<TABLE>
<CAPTION>
AMMONIUM NITRATE SOLIDS NITROGEN SOLUTIONS 3
- -------------------------------- -------------------------------------------
ANNUAL 1999 1998 ANNUAL 1999 1998 EMPLOYEES
CAPACITY PRODUCTION PRODUCTION CAPACITY PRODUCTION PRODUCTION (ACTIVE)
- -------- ---------- ---------- -------- ---------- ---------- ---------

<S> <C> <C> <C> <C> <C> <C>
- - - - - - 376
.442 .412 .410 .581 .403 .467 125
- - - .227 .131 .157 45
- - - 1.028 .695 .955 144
- - - - - - 137
.079 .030 .078 .163 .026 .081 29
- - - .436 .163 .436 33
---- ---- ---- ----- ----- ----- ---
.521 .442 .488 2.435* 1.418 2.096* 848 6

</TABLE>

* Totals do not include the Wilmington NC plant which closed in June 1998.

1 A substantial portion of ammonia and nitric acid is upgraded to other
products.
2 HNO3 tonnes.
3 Capacity and production are based on 32% N content.
4 Ceased production August 12, 1999.
5 BP Chemicals operates the Lima facility under an operational agreement with
PCS Nitrogen.
6 460 contract employees work at the nitrogen plants, for a total active
workforce of 1,308.

[PHOTO] NITROGEN FACT:

NITROGEN IS NEEDED BY ANIMALS FOR PROPER NUTRITION AND MATURATION, AND IS THE
FUNDAMENTAL BUILDING BLOCK OF PLANT PROTEINS, IMPROVING YIELD AND QUALITY.

[PHOTO]

CAPTION: QUALITY AND CHOICE IN PAINTS HAVE ENCOURAGED THEIR WIDESPREAD USE IN
HOME DECORATING. UPGRADED NITROGEN PRODUCTS ARE NEEDED IN PAINT PRODUCTION.

<PAGE> 17

RESPONSIVE
SALES

<TABLE>
<CAPTION>
1 POTASH 2 PHOSPHATE 3 NITROGEN

<S> <C> <C>
RISING SALES STABLE NON-FERTILIZER PRICES INDUSTRIAL GROWTH
PCS REVENUE $ MILLIONS $/MT PERCENTAGE OF PCS VOLUMES
[CHART] [CHART] [CHART]
</TABLE>

INCREASING WORLD DEMAND IN POTASH, INCREASING SALES IN THE MORE STABLE
PHOSPHATE PRODUCTS AND INCREASING INDUSTRIAL SALES IN NITROGEN WILL CONTRIBUTE
TO THE POTASHCORP SUCCESS.

<PAGE> 18

SALES REPORT

[PHOTO]

WORLD POPULATION, RISING BY 75 MILLION A YEAR, REACHED 6 BILLION IN OCTOBER
1999, AND AN EXTRA 20 MILLION TONNES OF GRAIN ARE NEEDED ANNUALLY TO FEED IT.

[PHOTO]

ALMOST 75% OF CHINA'S CULTIVATED FARMLAND IS DEFICIENT IN PHOSPHORUS, AND IT
NEEDS TO USE 2 TIMES AS MUCH POTASH TO GET BALANCED NUTRITION IN ITS SOILS.

PCS HAS 6 TIMES AS MANY FERTILIZER CUSTOMERS AS WHEN IT PRODUCED ONLY POTASH.

[PHOTO]

In 1999, the world's farmers again used more fertilizer, and total sales of
nitrogen, phosphate and potash exceeded 1998 levels by approximately 2 percent.
Asia, which consumes large quantities of fertilizer, recovered impressively from
its economic problems, with almost the entire region enjoying economic growth.
Domestic sales of all three fertilizers were down because low grain prices
discouraged North American farmers from fertilizer inputs, but export demand
pulled overall sales of nitrogen up by 3 percent, potash by 2 percent and
phosphate by 1 percent.

Through its efficient transportation network of railways, trucks, river
barges and ocean-going bulk carriers, plus its strategically located warehouses,
PCS served its 2,000 customers swiftly and smoothly. It is a reliable supplier
able to provide the just-in-time delivery the markets want.

A 1999 focus group of fertilizer dealers in the US Midwest rated PotashCorp
the most trustworthy of the major fertilizer suppliers, and the most friendly,
modern, helpful, prepared and on-time. Customers for PCS industrial products
found it the most reliable of all industrial suppliers, noting its knowledge and
expertise. PCS was the first fertilizer company to receive the Supplier of the
Year award from The Scotts Company, the world's leading producer and marketer of
products for the do-it-yourself lawn and garden business, professional turf
business and horticulture industry. It is one of the Company's largest urea
customers.

The United States is the major fertilizer market for PCS. In 1999, the
Company supplied about 30 percent of the potash used in this market, which is
the world's largest consumer of potash. The US is also a big user of phosphate
fertilizers and PCS has nearly one-fifth of the DAP market and about half the
growing market for liquid fertilizers, as well as nearly 40 percent of the
market for phosphate feed products for livestock and poultry. PCS is a
significant supplier of ammonia and urea used in agriculture and industry in the
US, which is a major producer and consumer in both areas. It had approximately
30 percent of the US industrial nitrogen market and one-sixth of the total North
American nitrogen market.

PCS is an important supplier of potash and phosphate to offshore markets.
The majority of its offshore potash sales are

PCS MARKET STRENGTHS

1 MULTIPLE PRODUCT LOCATIONS
2 EFFICIENT TRANSPORTATION NETWORK
3 ONE-STOP SHOPPING CONVENIENCE

MARKET FACT:

THE UNITED STATES: MATURE MARKET WITH RELATIVELY STABLE ANNUAL CONSUMPTION
AFFECTED MAINLY BY ACREAGE PLANTED AND APPLICATION RATES PER ACRE.

<PAGE> 19
handled by Canpotex, the export sales agency for Saskatchewan producers.
PhosChem, an association for US exports of phosphate fertilizers, is responsible
for the Company's offshore phosphate sales. PCS Sales handles liquid phosphate
exports for PhosChem, plus offshore sales of the Company's New Brunswick potash
and Mississippi Chemical's potash from New Mexico, and all sales of PCS nitrogen
products.

MARKET FACT:

CHINA: WORLD'S LARGEST CONSUMER OF FERTILIZER, A MAJOR POTASH AND PHOSPHATE
IMPORTER EVOLVING FROM CENTRALIZED PURCHASING TO A MULTIPLE CUSTOMER SYSTEM.

[PHOTO]

MARKET FACT:

INDIA: IMPORTANT POTASH, PHOSPHATE AND UREA MARKET WHERE PURCHASES
ARE AFFECTED BY SUBSIDY LEVELS.

The major offshore fertilizer markets are China, Brazil and India.

[PHOTO]

MARKET FACT:

BRAZIL: LARGEST AGRICULTURAL PRODUCER IN LATIN AMERICA, APPLIES FERTILIZER TO
CASH CROPS IT GROWS FOR EXPORT, PARTICULARLY SOYBEANS, COFFEE AND SUGAR CANE.

China, with limited arable land to feed 22 percent of world population, is
relying on the use of more fertilizer. Its potash consumption has risen by an
average of 9 percent a year over the last decade, and PCS is a major supplier.
China is the world's largest DAP importer, and PhosChem supplies about 60
percent of its imports. China was the world's largest importer of urea until
1997, when it suddenly halted imports, affecting markets for both ammonia and
urea.

As the largest country and the largest agricultural producer in South
America, Brazil is a major potash consumer and an important market for
PotashCorp. It is the largest single market for product from the Company's New
Brunswick facility, which is ideally located to serve Latin America and Europe.

India is not usually a major potash market for PCS, but its purchases
support prices and absorb tonnage that would otherwise compete with the
Company's potash. India is a leading phosphate importer, getting most of its DAP
from the US and its MGA from Morocco. It buys DAP, or it buys MGA to make DAP,
depending on price.

[PHOTO]

CAPTION: 400 BILLION CUPS OF COFFEE ARE ENJOYED EVERY YEAR AROUND THE WORLD, AND
35 PERCENT OF THAT COFFEE IS GROWN IN BRAZIL, A MAJOR POTASH IMPORTER.

17
<PAGE> 20
[PHOTO]

CHINA'S FOREIGN EXCHANGE RESERVES ARE AROUND $155 BILLION, AND RESERVES AND
FERTILIZER IMPORTS USUALLY TRACK EACH OTHER.

POTASH FERTILIZER CONSUMPTION IN LATIN AMERICA
MILLION TONNES K2O

COUNTRIES IN LATIN AMERICA ARE SHARPLY INCREASING THEIR USE OF POTASH.

[GRAPH]

SOURCE: FAO, IFA, FERTECON

1/3 OF US CROP YIELD IS DUE TO APPLICATION OF FERTILIZER.

[PHOTO]

1999 SALES

POTASH

World demand for potash grew by an estimated 2 percent in 1999, but high
inventories and weak domestic demand early in the year encouraged much of the
industry to institute plant shutdowns, easing supply and sustaining prices. No
new supply came on stream. World sales are estimated at 41.5 million tonnes, and
PCS sold almost 16 percent of that, 6.474 million tonnes split 56-44 percent
offshore and domestic. Total sales were 3 percent higher than in 1998 and just 2
percent below the 1997 record.

DOMESTIC

In 1999, PotashCorp sold 2.871 million tonnes of potash domestically,
meeting 31 percent of North American demand. This was 6 percent higher than in
1998 and within 5 percent of the 1997 record; it includes 0.261 million tonnes
from the Cassidy Lake mill in New Brunswick. The United States market took 90
percent of PCS domestic sales, with large agricultural co-ops and national firms
the major customers.

First-quarter sales topped 1998 by 13 percent, setting a new first-quarter
record. Second-quarter sales volumes were 11 percent higher than in 1998.
Third-quarter sales were down, but fourth-quarter sales rose significantly with
good fall application.

Domestic prices in the first half were the strongest in more than a decade,
though an increase planned for March did not go through. Prices fell back
sharply in the third quarter, reflecting aggressive selling by a competitor, but
increases took effect in November.

[PHOTO]

Caption: RICE IS THE STAPLE FOOD OF HALF THE WORLD'S POPULATION, AND USES 13
PERCENT OF MINERAL FERTILIZERS CONSUMED WORLDWIDE.

<PAGE> 21

[PHOTO]

Caption: OIL PALM, WIDELY GROWN IN SOUTHEAST ASIA AND A MAJOR POTASH USER,
PRODUCES 22 PERCENT OF THE WORLD'S VEGETABLE OIL, FOR FOOD, FEEDSTUFFS AND
INDUSTRIAL USES.

WORLD FERTILIZER TRADE

MORE THAN 150 COUNTRIES USE POTASH BUT THERE ARE ONLY 7 MAJOR PRODUCERS; NEARLY
80 PERCENT OF WORLD PRODUCTION MOVES ACROSS BORDERS.

OFFSHORE

Export markets bought 3.603 million tonnes of PCS potash in 1999, 1 percent
more than in 1998 and almost equal to 1997. The Company's biggest markets were
again China, which purchased 24 percent of total offshore sales by PotashCorp,
and Brazil, which made a powerful comeback after a slow start. The emerging
markets of Thailand and Vietnam were strong, and Indonesia increased its imports
after cutting back for financial reasons; together these three markets took 10
percent of total sales.

Canpotex set a sales record of 5.30 million tonnes; much of that success
was due to continued strong sales to improving economies in Southeast Asia,
particularly South Korea, Indonesia and the Philippines. Malaysia, Thailand and
Vietnam were solid purchasers. Though India is not usually a major market for
Canadian potash, it bought 0.25 million tonnes from Canpotex in 1999. Sales to
China were maintained at 1.56 million tonnes despite Former Soviet Union (FSU)
competition, amounting to 29 percent of all potash sold by Canpotex. The export
agency ended the year by announcing the biggest single potash sale in Canadian
history, 1.60 million tonnes to China to be delivered in the first half of 2000.
It means that Canpotex sales to China in the first six months of 2000 will equal
or slightly exceed the previous annual record.

Despite credit and financial problems in the first half of 1999 after its
currency, the real, was devalued in January, Brazil bought 9 percent of the
potash sold by Canpotex. It was the single biggest market for PCS product from
New Brunswick, taking 0.406 million tonnes, or 58 percent of the division's
total sales.

Price increases were achieved with China, Japan, South Korea and Australia
for the first half of 1999, but Canpotex was unable to negotiate higher prices
in the second half. Increases in Malaysia finally brought prices there into line
with other markets in Southeast Asia.

NON-FERTILIZER

More than 7 percent of 1999 potash sales were industrial, sold to customers
who refine it further or use it for manufacture of other products. At 0.471
million tonnes, sales were 7 percent higher than in 1998; two-thirds went
offshore, where Japan, South Korea and China are important customers. Prices
were up by 1 percent.

A small amount of PCS potash is sold for animal feed supplements, 0.034
million tonnes in 1999, 24 percent more than the previous year.

All non-fertilizer sales are included in domestic and offshore totals.

[PHOTO]

Caption: NEARLY 3 MILLION TONNES OF COCOA BEANS ARE GROWN EACH YEAR WITH
SUBSTANTIAL APPLICATION OF POTASH AND NITROGEN FERTILIZERS, AND ONE-QUARTER OF
THOSE ARE USED TO MAKE CHOCOLATES AND CONFECTIONERIES.

<PAGE> 22

[PHOTO]

Caption: ORANGE TREES FERTILIZED WITH PHOSPHATE HAVE SWEETER AND JUICIER FRUIT.

PHOSPHATES

World demand for phosphates, particularly fertilizers, climbed in 1999, despite
sharply-reduced demand in the United States due to weather and low grain prices.
World trade in phosphate fertilizers increased by more than 1 percent, on top of
2 percent the previous year.

The solid fertilizer DAP was the phosphate fertilizer of choice, despite
lower US demand. World DAP production and consumption rose by about 6 percent,
double the 1998 increase. India was a major importer, taking 70 percent more DAP
than in 1998, and China imported about 5.1 million tonnes.

World MGA production and consumption rose by more than 1 percent. Again,
India was the largest single importer of MGA, which it uses to make DAP, and its
purchases in 1999 amounted to more than half of international trade. The second
largest importer was Western Europe, with 30 percent of international trade;
most is used to produce upgraded fertilizer products.

In 1999, PotashCorp sold 4.016 million tonnes of phosphate products, 13
percent below its 1998 record. Two-thirds of sales were domestic, amounting to
22 percent of North American phosphate sales, including one-third of all
non-fertilizer phosphate sales.

[PHOTO]

Caption: THE INCREASING NUMBER OF PETS WORLDWIDE CAN RELY ON PCS ANIMAL FEED
SUPPLEMENTS FOR GOOD NUTRITION.

PHOSPHATE PRODUCTS

Two-thirds of the solid and liquid phosphates sold by PCS went into
fertilizers. Feed supplements for livestock and poultry made up 22 percent, and
industrial and purified product comprised the remainder. The Company's decision
to reduce its phosphate production resulted in lower sales of solid and liquid
phosphates.

WORLD FERTILIZER TRADE

ABOUT 60 COUNTRIES PRODUCE PHOSPHATE PRODUCTS, AND NEARLY 40 PERCENT OF WORLD
PRODUCTION IS TRADED.

SOLID PHOSPHATES: DAP is the most significant solid phosphate fertilizer,
and in 1999 PCS sold 1.673 million tonnes, 15 percent below 1998. More than half
went offshore through PhosChem, whose DAP sales approximately equalled the
4.91 million tonnes of 1998. PCS supplied nearly one-fifth of that total, but
the Company's offshore sales were down 17 percent due to its decision in March
to stress domestic sales and a decline in fourth-quarter purchases by China.
Nonetheless, China was by far the Company's largest purchaser; India was second.
Pakistan and New Zealand were other major purchasers. After a strong first
quarter, offshore prices declined.

Domestic sales totalled 0.775 million tonnes, 46 percent of total DAP sales
and 12 percent below 1998 levels. Prices, strong in the first half, fell
thereafter.

LIQUID PHOSPHATES: Sales of liquid phosphates fell in 1999 to 1.261 million
tonnes, 18 percent below the 1998 record. Domestic sales of 0.948 million tonnes
made up 75 percent of the total. LoMag, a superphosphoric acid used in
conservation tillage systems, was the major domestic product

<PAGE> 23

[PHOTO]

Caption: MORE THAN 30,000 TONNES OF PHOSPHORIC ACID ARE USED EACH YEAR TO MEET
THE WORLD'S DEMAND FOR SOFT DRINKS.

at 41 percent of liquid sales. Domestic prices were changeable but were highest
in the first quarter.

Offshore sales of 0.313 million tonnes were 27 percent less than in 1998;
amber MGA was the major product. PCS sells liquids offshore through PhosChem,
and supplied 81 percent of the association's sales of 0.39 million tonnes. India
was the single biggest market, followed by Australia. Pricing was down
throughout 1999.

FEED SUPPLEMENTS: In 1999, PotashCorp sold 0.721 million tonnes of
phosphate feed supplements, 4 percent less than in 1998. More than half was
Monocal, with Dical comprising 24 percent, DFP 19 percent and MAP/DAP 2 percent.
Domestic sales made up 82 percent.

Offshore sales rose to 18 percent of the total. The first sales were made
to Argentina, Bahamas, Jamaica, Panama and Paraguay, and sales to Brazil,
Thailand and the Dominican Republic were up. Asian markets were stable, with
some growth.

Average prices fell 2 percent on a year-over-year basis.

INDUSTRIAL PRODUCTS: In 1999, Aurora produced food-grade phosphoric acid
and technical grade for industrial processes and products in a joint venture
with Albright & Wilson. Product sales totalled 0.200 million tonnes. Geismar
sold 0.161 million tonnes of phosphoric acid product under contract to Rhodia,
Inc. as a feedstock for its adjacent food-grade acid purification plant.

Sales volumes of all phosphates sold for industrial use were almost
identical to 1998, and all sales were domestic.

Average prices were flat on a year-over-year basis.

WORLD FERTILIZER TRADE

MORE THAN 75 COUNTRIES PRODUCE AMMONIA AND MOST USE THEIR PRODUCTION INTERNALLY,
SO CROSS-BORDER TRADE IS LIMITED, AVERAGING ABOUT 11 PERCENT ANNUALLY.

NITROGEN

In 1999, the world nitrogen industry continued to be plagued by over-capacity
which led to over-production and large inventories that depressed prices. By
early summer, US producers instituted permanent and temporary shutdowns which
cut production. At year-end, with normal producer inventories and low
non-producer inventories, all non-permanent US curtailments had been rescinded.

In these uncertain circumstances, world consumption of ammonia for
agriculture and industry rose by 3 percent. It was up in Russia, India, China,
Ukraine, Egypt, Indonesia, Pakistan and Central Europe, and down in the United
States and Western Europe. Production rose in Russia (where Gazprom continued to
provide producers with low-cost natural gas, a major input into ammonia
production), India, Trinidad, China, Ukraine and Egypt, and fell in Western
Europe and the US.

World sales of nitrogen fertilizer products were up 3 percent, but sales
in the United States were much like 1998. China remained out of the urea market,
while increasing its domestic production.

While the over-supply of ammonia had a detrimental effect on prices, PCS
was aided by its industrial product sales.

NITROGEN PRODUCTS

In 1999, PCS sold 7.951 million tonnes of nitrogen products, manufactured
and purchased; nearly 50 percent were non-fertilizer products. Total sales rose
by 2 percent and domestic markets took 88 percent. Sales of manufactured product
rose 3 percent, while resale of purchased product fell by 22 percent, continuing
the 1998 decline. Most purchased product was ammonia bought from a Russian
producer under contract. PCS decreased ammonia purchases from all sources by 12
percent, compared to 1998, by using its own ammonia.

Sales of ammonia as fertilizer and as feedstock for other nitrogen products
totalled 1.915 million tonnes, 28 percent more than in 1998. Ninety percent was
domestic.

<PAGE> 24

[PHOTO]

Caption: PRODUCING 1 POUND OF BEEF REQUIRES 7 POUNDS OF GRAIN; PORK REQUIRES
4 POUNDS AND CHICKEN 2 POUNDS.

AMMONIA FARM PRICE VS. LDAN PRICE

[GRAPH]

Caption: PRICES FOR LOW DENSITY AMMONIUM NITRATE, USED EXCLUSIVELY FOR
INDUSTRIAL PURPOSES, ARE FAR MORE STABLE THAN AMMONIA PRICES.

SOURCE: USDA, NASS, CRU

Urea sales were up 13 percent, to 1.614 million tonnes. PotashCorp exported
17 percent of its urea, its largest export nitrogen product; all of that was
from Trinidad.

Since it shut down one-quarter of its nitrogen solutions capacity with
closure of its LaPlatte and Clinton plants in August, PCS sold 22 percent less
of this multi-purpose liquid fertilizer. Sales, all domestic, totalled 1.681
million tonnes.

Sales of ammonium nitrate totalled 0.414 million tonnes, 11 percent less
than in 1998, while at 0.647 million tonnes, nitric acid sales were up 55
percent. Other manufactured nitrogen products sold totalled 1.246 million
tonnes. The large majority of these sales were domestic.

Sales to industrial customers are found in the above product categories.
These higher-margin sales are mostly domestic and totalled 3.766 million tonnes
in 1999, up 11 percent. They include sales of carbon dioxide, now classified by
the Company as an industrial product; 1998 figures have been adjusted
accordingly. Industrial sales of ammonia represented 23 percent of the US
industrial market for ammonia, sales of urea were 47 percent, ammonium nitrate
12 percent and nitric acid 41 percent.

Also included in total 1999 sales were nitrogen feed sales of 0.097 million
tonnes, a 30-percent increase over 1998. Ninety-four percent was urea prills and
the rest urea solutions. Almost all sales were domestic.

Average prices for ammonia and urea, the key internationally traded
nitrogen products, were both down 20 percent from 1998 due to the continued
effects of world over-capacity. Fertilizer prices were hardest hit, but moved up
moderately with the seasonal demand peaks at spring and fall planting. Prices
softened after the spring peak, and several world and US producers curtailed
production. After strengthening during the fall season, prices maintained that
position and ended the year close to their 1999 high. Industrial prices were
less affected but also declined, from 12 percent for ammonium nitrate to 19
percent for urea. Feed prices strengthened toward the end of the year.

[PHOTO]

Caption: 60 YEARS AFTER SWIMMING WAS ACCEPTED INTO THE OLYMPICS, THE FIRST
BUTTERFLY COMPETITION WAS HELD. NITROGEN AND POTASH ARE USED IN SWIMMING POOL
CHEMICALS, WHILE PHOSPHATE IS IMPORTANT IN WATER TREATMENT.

<PAGE> 25

WORLD FERTILIZER TRADE

<TABLE>
<CAPTION>
2000 (FORECAST) 1999 (ESTIMATE) 1998
--------------- --------------- ----
<S> <C> <C> <C>
POTASH 33.5 MILLION TONNES 32.6 MILLION TONNES 31.4 MILLION TONNES
PHOSPHORIC ACID 4.4 MILLION TONNES P2O5 4.2 MILLION TONNES P2O5 4.2 MILLION TONNES P2O5
AMMONIA 14.4 MILLION TONNES 13.9 MILLION TONNES 13.9 MILLION TONNES
</TABLE>

[PHOTO]

Bottom Caption: TAIWAN, WITH ITS INTENSIVE AGRICULTURE, PRODUCES 5 CROPS A YEAR.

REFLECTIONS on 2000 AND BEYOND

The long-term fertilizer scenario is richly promising, for rising world
population and economic growth push demand for food, which drives fertilizer
demand. With its wealth of low-cost potash and phosphate reserves and its
efficient nitrogen production, PCS is in an ideal position to provide that
fertilizer. In potash and phosphate, particularly, its accessibility to markets,
reliability and quality of product make it a supplier of choice to developing
nations, the regions of rising population and food requirements, and the engines
of growth in fertilizer demand.

In the short term, uncertainty hangs over fertilizer. In 2000, the industry
could begin to move out of the trough and start up the foothills as demand
continues to rise, but in all three nutrients, supply is the crux. In potash,
most excess capacity is in PotashCorp hands, and no major new capacity is
planned in 2000. New phosphate and nitrogen production is scheduled to come on
stream; its effect will depend on how much comes on and how quickly, and how
efficiently the market restructures to deal with it.

In concert with supply, world trade affects fertilizer prices. In 2000,
trade in both potash and phosphoric acid is expected to continue to increase.
Trade in DAP, the major phosphate fertilizer, may be below 1999 levels as new
plants displace exports. In nitrogen, ammonia trade, which represents a small
percentage of production, is expected to rise somewhat as new export supply
comes on stream. Trade in the upgraded nitrogen product urea, which is easier to
transport and traded extensively, is likely to continue the recovery begun in
1999 after two years of decline.

Nitrogen consumption around the world continues to rise, but 5 million
tonnes of new ammonia capacity is planned worldwide in 2000. This expansion is
really a response to cheap natural gas, as many countries try to monetize their
gas reserves. Plant shutdowns in the United States in 1999 temporarily eased
over-capacity, but most of these plants are back up and running. For inefficient
30-year-old North American plants that use outdated technology and are too small
to benefit from economies of scale, the gas price problem is a looming cloud.

New capacity in South America is expected to come on stream in the second
half of 2000, but Mexico has shut down much of its urea capacity and some
ammonia plants, and could be a market for some of that new product. China has
given no indication of plans to return to the urea market, although its
inventories are down. It continues to support its costly local nitrogen
production. Russian exports could be the wild card in nitrogen; Russia
previously supplied urea to South America and Mexico and, displaced from those
markets by new production, its producers may cut prices to reap other
international sales. Only when world supply realigns with demand will nitrogen
move sustainably into a profitable position.

Phosphate faces a year of adjustment. Demand has risen steadily since 1993
and is expected to rise again. The shutdown of 2.8 million tonnes of North
American DAP capacity in late 1999 helped the supply/demand situation, as will
the expected

<PAGE> 26

PROJECTED WORLD GROWTH IN CONSUMPTION

<S> <C> <C>
FERTILIZER MEAT INDUSTRIAL
MILLION TONNES NUTRIENT MILLION TONNES MILLION TONNES NUTRIENT
[GRAPH] [GRAPH] [GRAPH]
SOURCE: FERTECON SOURCE: IFPRI SOURCE: FERTECON
</TABLE>

OUTSIDE INDUSTRY CONSULTANTS PROJECT 3 PERCENT AVERAGE ANNUAL GROWTH IN
FERTILIZER CONSUMPTION OVER THE NEXT FIVE YEARS, 4 PERCENT ANNUAL GROWTH IN
INDUSTRIAL NITROGEN DEMAND, 2 PERCENT IN INDUSTRIAL PHOSPHATE AND 4 PERCENT IN
FEED PRODUCTS.

INDICATORS TO WATCH

FERTILIZER
o INDUSTRY CONSOLIDATION
o CAPACITY SHUTDOWNS
o CHANGES IN CORN PRICES
o US ACREAGE PLANTED
o FSU FERTILIZER EXPORTS
o RATE AND TIMING OF CAPACITY ADDITIONS

closure of some phosphoric acid capacity in Europe in 2000. Together with rising
demand and expectations for production, these shutdowns should be sufficient to
balance the new DAP production coming on stream in India, Australia and China.

Offshore, China has worked to draw down its DAP inventories and proposes to
import raw materials to make NPK fertilizer rather than import NPKs. Together
with the new DAP production, this will make it hard for phosphate prices to
climb substantially from their current low levels. On the flip side, if India's
new Oswal plant does not begin production as planned - for greenfield plants
often have start-up problems - a tighter DAP market with better prices could
result.

Just as in 1999, potash will likely outperform phosphate and nitrogen in
2000. Production shutdowns have occurred regularly for more than a decade, based
on the premise that the market can absorb only so much potash. Such shutdowns
result in lower inventories, while higher inventories have a downward effect on
price.

Offshore, the new Chinese potash contract could lead to an annual record,
and Brazil's improved financial position is expected to support its imports.

Potash prices are expected to be similar to 1999, driven by continued
strong export demand that helps offset the competitive North American market.

INDICATORS TO WATCH

NON-FERTILIZER
O GDP GROWTH IN THE UNITED STATES
O ASIAN ECONOMIC GROWTH
O GROWTH IN MEAT CONSUMPTION WORLDWIDE
O US MEAT PRODUCTION

In all three nutrients, domestic demand is likely to resemble 1999,
although nitrogen imports could be up slightly. Farmers need to rebuild their
soil nutrients but continue to face low grain prices.

History shows that unexpected events can affect the fertilizer business.
Perestroika turned the Former Soviet Union into a major fertilizer exporter, a
situation that has lasted longer than most in the industry expected. Potash was
hit first and hardest; more recently, DAP exports have increased. The problem is
exacerbated in nitrogen by Russia continuing its non-market pricing. However,
efforts by Gazprom to make a profit and rising transportation costs could be
limiting factors in sustaining these exports.

Such factors are impossible to predict, and underscore the determination of
PotashCorp to continue building its industrial markets and its sales of animal
feed supplements. Outside consultants forecast solid growth over the next five
years in demand for industrial products, which receive a premium compared to
fertilizer products.

With world demand for poultry and dairy products surging, and the
surprising demand for pet foods as pet ownership climbs around the world, demand
for feed products should continue to rise. Forecasts suggest a small decline in
meat production in the important US market in 2000, with declining beef and pork
production offsetting rising poultry production. After 2000, outside consultants
predict, US meat production will reach record highs, increasing demand for feed
supplements.

Pricing for non-fertilizer products should be supported by the healthy US
economy and growing world demand.

<PAGE> 27

RESPONSIBLE

STEWARDSHIP

<TABLE>
<S> <C> <C>
ENVIRONMENTAL EXPENDITURES LONG-SERVICE AWARDS MILLION HOURS WORKED SAFELY
$ MILLIONS NUMBER OF RECIPIENTS NUMBER OF AWARDS
[GRAPH] [GRAPH] [GRAPH]

</TABLE>

Caption: RISING ENVIRONMENTAL EXPENDITURES AND THE PRESENTATION OF MORE LONG-
SERVICE AND SAFETY AWARDS DEMONSTRATE THE COMMITMENT OF PCS AND ITS EMPLOYEES
TO THEIR CONTINUED WELL-BEING.

<PAGE> 28

STEWARDSHIP

215 SCHOLARSHIPS FOR POST-SECONDARY STUDY HAVE BEEN AWARDED BY THE COMPANY IN
THE LAST 5 YEARS TO THE SONS AND DAUGHTERS OF EMPLOYEES, INCLUDING 71 IN 1999.

THERE WERE 74,436 USER SESSIONS ON THE PCS WEBSITE IN 1999, AVERAGING 17+
MINUTES.

PCS FACT

THE PCS PAYROLL WAS APPROXIMATELY $236 MILLION IN 1999.

PCS FACT

THE WIDESPREAD PCS WORKFORCE TOTALLED 5,498 AT DECEMBER 31, 1999, WITH 60
PERCENT IN THE UNITED STATES, 30 PERCENT IN CANADA, 7 PERCENT IN TRINIDAD AND 3
PERCENT IN CHILE.

SUPPORTING ITS COMMUNITY

PCS supports a wide range of causes in the communities in which it operates, and
individual operations support their local communities with money and employee
participation in many activities. Through its Matching Gift Program, the Company
matches employees' personal donations to their favorite charities.

The Company makes financial pledges to a wide range of Saskatoon agencies,
particularly in education and health. Corporate office employees and those at
many PCS divisions contribute significantly to their local United Way. In 1999,
corporate head office, with Allan, Cory and Patience Lake, was the first
recipient of the Saskatoon United Way's new Campaign Superstar Award, specially
created for corporations donating more than CDN$25,000. Operations support
charities from the Salvation Army (Aurora), the Memphis Zoo (Memphis),
MainStreet Hamilton County (White Springs) to school programs (Augusta, Lima,
Geismar), and many more. PCS Phosphate was a supporter sponsor of the 1999
Special Olympics World Summer Games in Raleigh, North Carolina.

After Hurricane Floyd, employees at Aurora pitched into the recovery
effort, volunteering in churches and relief centers and community fire and
rescue departments, and with the Company donated to relief funds. White Springs
partnered with Hamilton County in installing a "ring-down" emergency message
system, and sold the county 29 acres for an industrial park at a nominal price.
It donated 15 acres to the City of White Springs as the site for its new waste-
water treatment plant.

The Salvation Army and the American Cancer Society recognized Aurora
employees with awards, and the Marseilles feed plant was recognized for its
support of the local YMCA's "Partners in Youth" program. White Springs received
a unique Florida MainStreet Award for outstanding support of the MainStreet
program, and the Florida Commissioner of Education Business Recognition Award
for supporting education in its three-county area.

CORPORATE GOVERNANCE

The Board of Directors of PCS is ultimately responsible for the governance
and stewardship of the Company, with the goal of ensuring sustained growth in
shareholder value. As PotashCorp has grown into an important national and
international role in its industry, the Board has developed and widened its
corporate governance practices to ensure they are open, effective and
accountable. It accepts the responsibility of constantly reviewing, evaluating
and, where necessary, altering its governance practices to keep them effective
and pertinent and to fulfil its responsibility to protect shareholders and
ensure they are treated equally and heard within the Company. In 1999, it
reformulated its corporate governance committee with a mandate that includes the
development of policies and procedures for maintaining confidence in the
attention paid to the differing interests of the Company's stakeholders, and for
ensuring effective director and executive performance.

PCS FACT

WHITE SPRINGS' SWIFT CREEK MINE IS RANKED 4TH IN SAFETY IN THE UNITED STATES,
AND THE MINE SAFETY AND HEALTH ADMINISTRATION FILMED A SAFETY VIDEO AT WHITE
SPRINGS.

<PAGE> 29

Its responsibilities to shareholders require the Board to monitor the
principal risks of the Company's business and operations. Each year, it reviews
and approves management's strategic plan for the Company, its corporate budget
and forecast and significant capital investments outside the budget and
forecast. It also reviews management decisions that may significantly affect the
Company and its employees or other stakeholders. It has developed and applies
comprehensive accountability measures of the Company's performance, comparing it
to peers within the industry.

PCS FACT
THE 10 SENIOR MANAGEMENT PERSONNEL AT PCS TOGETHER HAVE 197 YEARS OF EXPERIENCE
IN FERTILIZER AND AGRICULTURE.

Annually, the directors and management meet to review the Company's business
results over the previous year and its plans and expectations for the coming
year. All senior managers review the strategies they follow in their various
sections of the Company, and report to the Board on strategic planning and
risk management and control.

The Board of Directors is made up of 14 members, 12 of whom are outside
directors. No significant shareholders are represented.

BOARD OF DIRECTORS

ISABEL B. ANDERSON, of Calgary, Alberta, a former University of Saskatchewan
economics professor and a specialist in international economics and Canadian
public policy, is President and Chief Executive Officer of A&L Information
Brokers. She joined the PCS Board in 1989.

DOUGLAS J. BOURNE, of Houston, Texas, is former Chairman and CEO of Battle
Mountain Gold Company and of Duval Corporation, the mining subsidiary of
Pennzoil Company, and held many positions in various fertilizer and mining
associations. He was elected to the PCS Board in 1990.

CHARLES E. CHILDERS, of Tucson, Arizona, CEO of Potash Corporation of
Saskatchewan from 1987 until his retirement June 30, 1999, joined its Board in
1989 and became Chairman in 1990. He has held many positions with fertilizer
associations, including the presidency of the International Fertilizer Industry
Association.

WILLIAM J. DOYLE, President and CEO of Potash Corporation of
Saskatchewan Inc., has served on the Board since 1989. He became President of
PCS Sales in 1987, after a career with International Minerals and Chemical
Corporation. Active in fertilizer industry associations, he was elected chairman
of the Potash & Phosphate Institute in 1999.

THE HONOURABLE WILLARD Z. ESTEY, Q.C., of Toronto, Ontario, is a former Chief
Justice of Ontario and Justice of the Supreme Court of Canada and was named
Companion, Order of Canada, in 1991. He is a director of Canwest Global
Communications Corporation and CamVec Corporation. He joined the PCS board in
1990.

DALLAS J. HOWE, of Calgary, Alberta, is President and CEO of Advanced
DataSystems Ltd. and BDM Information Systems Group of Companies. President, CEO
and founder of high technology information and data systems companies over 25
years, he served on the Board of the PCS Crown corporation from 1982 to 1989 and
on the PCS Inc. Board since 1991.

DONALD E. PHILLIPS, of Brandon, Mississippi, former President and CEO of
Pitman-Moore Inc., joined the PCS Board in 1991. He is Chairman of the board of
directors of Synbiotics Inc., San Diego, California, and a director of Great
Lakes REIT Inc., Oak Brook, Illinois.

PAUL J. SCHOENHALS, of Calgary, Alberta, President of Petroleum Industry
Training Service, was Chairman of Potash Corporation of Saskatchewan, the Crown
corporation, from 1987 to 1989. He joined the PCS Inc. Board in 1992. He is a
former Member of the Legislative Assembly and Cabinet Minister in Saskatchewan.

DARYL K. SEAMAN, Chairman and President of Dox Investments Inc. in Calgary,
Alberta, joined the PCS Board in 1989. Former Chairman and CEO of Bow Valley
Industries Ltd., he is a director of many mining and energy companies, and
co-owner and director of the Calgary Flames Hockey Club.

E. ROBERT STROMBERG, Q.C., a Partner in the Saskatchewan law firm Robertson
Stromberg, was elected to the PCS Board in 1991. He is a member of the boards of
NorSask Forest Products Inc. and Hitachi Canadian Industries Ltd., a member of
the Provincial Court Commission and Chairman of the Saskatoon Airport Authority.

JACK G. VICQ, a Professor in the College of Commerce, University of
Saskatchewan, was formerly Associate Dean and responsible for the Centre for
International Business Studies. He sits on committees of the Saskatchewan and
Canadian Institutes of Chartered Accountants. He joined the PCS Board in 1989.

BARRIE A. WIGMORE, a Retired Partner with New York investment banking firm
Goldman, Sachs Group, Inc., headed its corporate finance activities in the
electric, gas, pipelines and telecommunications industries. He writes on
financial history and current financial markets. He joined the PCS Board in
1989.

PAUL S. WISE, of Scottsdale, Arizona, is a past President and CEO of the
Alliance of American Insurers and has been active in many aspects and
associations of the American insurance industry. He became a member of the PCS
Board of Directors in 1989.

THOMAS J. WRIGHT, of Raleigh, North Carolina, was elected to the PCS Board in
May 1999 and retired as President of PCS Phosphate on June 30. Formerly
President and CEO of Texasgulf Inc., the predecessor to PCS Phosphate, he has
been active in many fertilizer industry associations.

<PAGE> 30
COMMITTEES OF THE BOARD OF DIRECTORS

Each of the Board's five committees plays a significant role in the
discharge of Board duties and obligations. With the exception of the executive
committee, each committee is composed entirely of outside directors. Each is
empowered to retain outside advisors, and individual directors may engage
outside advisors at the Company's expense upon authorization of the executive
committee.

The executive committee is currently composed of four directors. Between
meetings of the Board it has such powers as are, from time to time, vested in it
by the Board. Charles Childers (chair), Isabel Anderson, William Doyle and
Robert Stromberg currently comprise the committee.

The audit committee is composed of three directors, none of whom may be an
officer or employee. It meets with the Company's financial management personnel,
internal auditor and external auditor at least once each quarter to review
financial reporting practices and procedures and authorize the release of
unaudited quarterly financial statements, and reviews the annual financial
statements before their submission to the Board for approval. The committee also
recommends to the Board the external auditors to be proposed to the shareholders
for appointment at the annual meeting. Its current members are Jack Vicq
(chair), Willard Estey and Dallas Howe.

The compensation committee, currently composed of three non-employee
directors, formulates and makes recommendations to the Board on compensation
issues relating to directors and senior management of the Company and on
corporate salary and benefits policy. It reviews and approves, annually, the
salary administration program, and is responsible for the annual report on
executive compensation. In consultation with the CEO, the committee considers
and reports to the Board on corporate succession matters. At present, members
are Donald Phillips (chair), Daryl Seaman and Barrie Wigmore.

ENVIRONMENT FACT

WHITE SPRINGS RECLAIMED APPROXIMATELY 850 ACRES IN 1999, MORE THAN IT MINED.

The corporate governance and nominating committee is responsible for
examining and reporting to the Board on matters relating to governance, and for
recommending nominees for election or appointment as directors. Its members are
Willard Estey (chair), Dallas Howe, Daryl Seaman, Barrie Wigmore and Thomas
Wright.

PCS FACT

4 PCS FACILITIES HAVE ACHIEVED THE COVETED STAR SAFETY STATUS, THE PINNACLE OF
SAFETY PERFORMANCE IN THE UNITED STATES: THE DAVENPORT FEED PLANT, THE LIMA
NITROGEN PLANT, THE SAVANNAH AMMONIA TERMINAL AND, NEW IN 1999, THE AURORA
PHOSPHATE COMPLEX.

The environmental affairs committee, composed of four directors, works to
ensure that the Company fulfils its commitment to the protection of the
environment. It routinely receives environmental audit reports for review and
discussion with senior management, and monitors environmental issues in other
areas of corporate activity such as off-site transportation, distribution and
storage of product. Douglas Bourne (chair), Paul Schoenhals, Paul Wise and
Thomas Wright currently comprise this committee.

Shareholder questions, comments and concerns about corporate governance may
be directed to the Senior Vice President, Corporate Relations, who is
responsible for implementing the disclosure policy, the Corporate Secretary or
the Company's transfer agent.

ENVIRONMENT FACT

THE PCS PHOSPHATE FACILITIES IN NORTH CAROLINA AND FLORIDA HAVE RECLAIMED AND
RESTORED 14,000 ACRES OF MINED LAND.

<PAGE> 31

WHEN 1 KG OF NITROGEN FERTILIZER IS APPLIED TO SOIL, UP TO 8 KG OF CARBON - A
KEY COMPONENT OF THE GREENHOUSE GAS CARBON DIOXIDE - CAN BE KEPT IN THE SOIL'S
STRUCTURE.

[PHOTO]

IN A RESEARCH PROJECT IN CHINA, BALANCED FERTILIZATION PRACTICES REDUCED SOIL
EROSION FROM 50 TONNES PER HECTARE PER YEAR TO 15 TONNES.

ENVIRONMENT FACT

A US FEDERAL COURT HAS RULED THAT PHOSPHORIC ACID, AN IMPORTANT AND BENEFICIAL
FERTILIZER, DID NOT MEET THE LISTING STANDARDS OF A TOXIC CHEMICAL AND SHOULD BE
REMOVED FROM THE US ENVIRONMENTAL PROTECTION AGENCY'S LIST OF REPORTABLE TOXIC
CHEMICALS. THIS WOULD REDUCE PCS REPORTED EMISSIONS BY APPROXIMATELY 80 PERCENT.

ENVIRONMENT

About 12 percent of the earth's land surface grows the crops that feed the
world. Much of the rest is inhospitable to humans, buried under cities and
highways, too poor for planting - or devoted to forest, pasture, wetlands and
recreation areas. High-yielding seed, modern farming methods and fertilizer
make it possible for that 12 percent to feed the rising world population. In
the US alone, maintaining crop yields without fertilizer would require much wild
land to be plowed up and seeded.

Wild lands are areas of serenity in a hectic world, and their variety of
plant and animal life helps to maintain vital genetic diversity. The rising
world population can be fed, and fed well, without destroying those vital lands,
thanks to modern knowledge about fertilization and good farming.

The fertilizer industry contributes to that knowledge. The Canadian
Fertilizer Institute has been leading research into the problem of lost soil
organic matter on Saskatchewan fields due to summerfallowing. Agricultural soils
can be rebuilt and made less vulnerable to wind and water erosion, researchers
have found, and provide a major sink for carbon. The Potash & Phosphate
Institute of Canada works with Chinese researchers to demonstrate that balanced
fertilization practices reduce soil erosion there.

In its vital partnership with farmers around the world, the fertilizer
industry is working to keep the earth's limited arable land fertile and conserve
its water resources. Conservation tillage, widely used in the United States, is
being applied in other countries. In Brazil, where soils have generally poor
structure and low organic levels, conservation tillage may soon be the system of
choice. PotashCorp is a major producer of the liquid phosphate fertilizers that
are ideal for these systems, and a strong supporter of the research being done
around the world.

At home, PCS takes very seriously its responsibility to fulfil the terms of
the environmental permits and applicable federal, provincial, state and local
laws governing air emissions, waste water discharges, land use and solid and
hazardous waste management at its operations. Corporate environmental policy
requires it to manage its operations responsibly to safeguard the natural
resources related to or affected by its activities. Each of its production units
must work diligently to minimize potential risks to the environment and to
comply with environmental legislation and regulations. The Company spent $105
million in 1999 on environmental compliance. The Board's environmental affairs
committee reviews all audit reports.

In 1999, PCS faced two environmental issues of particular significance. In
May, representatives of the Federal Bureau of Investigation and the EPA executed
a search warrant at its Geismar facility and interviewed employees in connection
with an environmental investigation. To date, government officials have provided
the Company with only limited details regarding the investigation. PCS is
complying, as required, with requests for information and is also conducting its
own internal investigation.

ENVIRONMENT FACT

ABOUT 1,000 ACRES OF UNTOUCHED NATIVE GRASSLAND AT ROCANVILLE BECAME PART OF
SASKATCHEWAN'S REPRESENTATIVE AREA NETWORK IN 1999, AS AN EXAMPLE OF AN
UNTOUCHED ECOSYSTEM.

PCS Joint Venture, a Florida general partnership, has operated a fertilizer
and distribution center in Lakeland, Florida since 1992. Releases of hazardous
substances from adjoining property have had an impact on the partnership's
property. Federal and state authorities are investigating the condition of soil
and groundwater on the partnership property and surrounding properties. The
Company is co-operating in these investigations and in the search for
appropriate solutions.

Its website at www.potashcorp.com provides in-depth information on PCS
environmental activities.

POTASH AND ITS ENVIRONMENT

All potash divisions were audited in 1999 by the Director, Safety, Health,
Environment and found substantially in compliance with all statutory
environmental requirements. Where areas requiring improvements were noted,
divisions

<PAGE> 32

had addressed them or were doing so before the audit. In the year since Cassidy
Lake became part of the Company, its environmental performance has been brought
up to the high standard of other potash divisions.

As part of the PCS policy of maintaining or creating wildlife habitat on
its properties where this can be done without interfering with production, an
agreement was reached with Ducks Unlimited for it to manage a waterfowl marsh on
the undeveloped Bredenbury property in southeastern Saskatchewan.

The potash industry and the Saskatchewan Department of Environment and
Resource Management agreed in 1999 to establish a joint government-industry task
force to conduct a mutually agreeable cost-benefit analysis of the available
options for decommissioning potash mines. The results will be used to revise the
decommissioning plans filed by producers, and to determine the amount and type
of financial assurance required.

ENVIRONMENTAL ACHIEVEMENT

NEW BRUNSWICK WON THE AWARD FOR LARGE ENERGY USERS IN CANADA'S FIRST NATIONAL
ENERGY EFFICIENCY AWARDS FOR ITS PROJECT TO RECOVER AND RE-USE HEAT FROM ITS
CRYSTALLIZERS, WHICH SUBSTANTIALLY IMPROVED ENERGY EFFICIENCY AND REDUCED ENERGY
CONSUMPTION PER UNIT OF OUTPUT BY 30 PERCENT.

PHOSPHATE AND ITS ENVIRONMENT

Internal audits were conducted at all phosphate facilities, and all
identified issues were addressed. Major capital projects at Aurora and White
Springs upgraded aspects of water management, drainage and spill
prevention/containment.

The Governor's Council for Sustainable Florida recognized White Springs'
work in developing Sustainable Florida standards for business. In January 2000,
the division led a public workshop on implementation of those standards which
used its operations as an example of "best practices." Its Director of
Environment, Health and Safety was a key participant for the phosphate industry
in the development of new state regulations for managing phosphogypsum.

[PHOTO]

Caption: FARMERS IN SOUTHEAST ASIA HABITUALLY BURN CROP RESIDUES TO OBTAIN
NUTRIENT-BEARING ASH, AND SOMETIMES THE SMOKE OBLITERATES THE SUN. THE POTASH &
PHOSPHATE INSTITUTE IS HELPING TO EDUCATE FARMERS ON THE BENEFITS OF USING
FERTILIZER INSTEAD OF THIS ENVIRONMENTALLY DAMAGING PRACTICE.

ENVIRONMENTAL ACHIEVEMENT

WHITE SPRINGS RECEIVED THE FLORIDA DEPARTMENT OF ENVIRONMENTAL PROTECTION'S
OUTSTANDING ECOSYSTEM PROJECT AWARD IN 1999 FOR A 1,100-ACRE RECLAMATION
PROJECT.

White Springs is engaged in an innovative permitting process for long-term
future mining operations in which federal, state and local authorities are
collaborating. Technical studies of environmental impact and mitigation
developed for this process were expected to be complete early in 2000.

Aurora is unique among phosphate plants for blending its byproduct gypsum
and clays into a neutralized solid for land reclamation. In September, the
US Army Corps of Engineers agreed that 944 acres of its restored wetlands had
met the success criteria and could be used for mitigation against future
wetland impacts.

NITROGEN AND ITS ENVIRONMENT

Internal audits were conducted at three facilities in 1999 and all were
found to be in compliance with all applicable environmental requirements. Four
product terminals were audited with no significant deviations found.

Capital projects to improve environmental performance at Geismar included
drainage projects in both nitrogen and phosphate areas, new nitric acid
containment and new 16-inch stormwater tiles. Augusta installed an in-line real
time nitrate monitor for water effluent, the first of its kind in the United
States. It reduced nitrate TRI emissions by 20 percent.

<PAGE> 33

SAFETY

With safety a constant focus at all PCS operations, safety records constantly
improve. In 1999, the nearly 1,200 employees at Aurora achieved 7 million hours
without a lost-time injury; its outside contractors exceeded 1 million hours.
Employees at the Davenport feed plant have worked 20 years without a lost-time
injury. All such major safety achievements are recognized in special ceremonies
with senior management presenting awards.

RECENT PHOSPHATE SAFETY MILESTONES
TIME WITHOUT A LOST-TIME INJURY

<TABLE>
<CAPTION>
<S> <C>
AURORA NC 5 MILLION HOURS ON MARCH 4, 1999;
6 MILLION HOURS ON JULY 29;
7 MILLION HOURS ON DECEMBER 20
WHITE SPRINGS FL 1 MILLION HOURS ON JANUARY 18, 1999;
2 MILLION HOURS ON JUNE 2;
3 MILLION HOURS ON OCTOBER 20
DAVENPORT IA 20 YEARS ON SEPTEMBER 13, 1999
</TABLE>

There is a considerable flow of outside recognition of the PotashCorp
safety standards, too. White Springs achieved an Occupational Safety and Health
Administration (OSHA) incidence rate of 1.24, which placed it well ahead of the
industry in safety performance and equal to the top performers in the overall
chemical industry. Its Swift Creek mine employees received the Sentinels of
Safety Certificate of Achievement from the Mine Safety and Health Administration
(MSHA) for its outstanding safety performance in 1998.

PCS Phosphate as a whole received two prestigious awards for safe shipping.
For 1999, it won its third Burlington Northern Santa Fe Stewardship Award, which
is presented to shippers with an outstanding safety record. It also received the
Thoroughbred Chemical Safety Award from Norfolk Southern Corporation in 1999 for
shipping more than 1,000 carloads of hazardous materials in 1998 without a
shipper-caused incident. White Springs received awards from Norfolk Southern,
Union Pacific and Burlington Northern railroads for shipping hazardous materials
during 1998 without an incident.

RECENT NITROGEN SAFETY MILESTONES
TIME WITHOUT A LOST-TIME INJURY

<TABLE>
<CAPTION>
<S> <C>
TRINIDAD 2 MILLION HOURS ON JANUARY 11, 1999;
3 MILLION HOURS ON FEBRUARY 4, 2000
AUGUSTA GA 1 MILLION HOURS ON JULY 20, 1999
MEMPHIS TN 1 MILLION HOURS ON SEPTEMBER 21, 1999
</TABLE>

The Weeping Water feed plant was recognized for the fourth straight year
with an award of honor with distinction from the Greater Omaha Safety and Health
Council, for safe production in 1998. Its incident rate remains significantly
below the national average.

In potash, New Brunswick received the 1998 John T. Ryan Regional Trophy for
select mines in Eastern Canada for achieving the lowest reportable injury rate.
Cory and Patience Lake came out tops in the Saskatchewan Emergency Response
Competition. Cory achieved its first overall victory for underground soft rock
mines, with Allan as runner-up, and Patience Lake tied for first for surface
mines. Lanigan won the 19th annual PCS Fireman's Rodeo involving all PCS mines
and fire departments in three nearby communities, which competed in six events
demanding a range of firefighting skills. Rocanville was runner-up.

RECENT POTASH SAFETY MILESTONES
TIME WITHOUT A LOST-TIME INJURY

<TABLE>
<CAPTION>
<S> <C>
LANIGAN SK 2 MILLION HOURS ON FEBRUARY 28, 1999
NEW BRUNSWICK 3 MILLION HOURS ON JANUARY 12, 1999
</TABLE>

<PAGE> 34

RESULTS

FINANCIALS

<TABLE>
<CAPTION>
<S> <C> <C>
NET SALES GROSS MARGIN CASH FLOW FROM OPERATIONS
$ MILLIONS $ MILLIONS $ MILLIONS

[GRAPH] [GRAPH] [GRAPH]
</TABLE>

Caption: THE SECOND HIGHEST POTASH SALES VOLUMES ON RECORD WERE MORE THAN OFFSET
BY LOWER PHOSPHATE VOLUMES AND PHOSPHATE AND NITROGEN PRICES, DECREASING 1999
EARNINGS.

<PAGE> 35

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

1999 VS 1998
OVERVIEW ($ Millions)

% OF % OF
NET NET
1999 SALES 1998 SALES % CHANGE
---- ----- ---- ----- --------
<S> <C> <C> <C> <C> <C>
Net Sales
North American $1,463.2 71 $1,641.4 71 (11)
Offshore 597.9 29 666.4 29 (10)
$2,061.1 100 $2,307.8 100 (11)
Gross Margin $ 408.3 20 $ 609.3 26 (33)
Provision for Plant Closures and
Office Consolidation $ 65.0 3 -- -- --
Provision for Asset Impairment $ 526.6 26 -- -- --
Operating (Loss) Income $ (350.7) (17) $ 446.1 19 (179)
Net (Loss) Income $ (412.0) (20) $ 261.0 11 (258)
(Loss) Earnings per Share (dollars) $ (7.60) -- $ 4.82 -- (258)
Gross Margin by Nutrient (1)
Potash $ 301.9 54 $ 316.3 58 (5)
Phosphate $ 127.8 15 $ 228.2 23 (44)
Nitrogen $ (21.4) (3) $ 64.8 9 (133)
</TABLE>

(1) Based on net sales by nutrient.

GROSS MARGIN BY QUARTER
$ MILLIONS

[GRAPH]

Caption: APPROXIMATELY 60 PERCENT OF GROSS MARGIN USUALLY FALLS IN THE FIRST
HALF OF THE YEAR; IN 2000, THAT FIGURE IS LIKELY TO BE HIGHER.

1999 net income was negatively affected by two primary factors. The first
was several charges for goodwill impairment, asset impairment and plant closures
and office consolidation. The second was a reduction in gross margin principally
due to reduced phosphate and nitrogen prices.

PLANT CLOSURES AND OFFICE CONSOLIDATION

In the third quarter of 1999, the Board of Directors of the Company
approved a plan to close nitrogen plants at Clinton, IA and LaPlatte, NE; a
phosphate feed plant at Saltville, VA; and a phosphate terminal at Jacksonville,
FL. The charges associated with these closures totalled $55.7 million, of which
$37.1 million relates to the non-cash writedown of inventory and property, plant
and equipment. The closure of the nitrogen plants will result in an annualized
reduction in production capacity of 420,000 tonnes of ammonia, 79,000 tonnes of
ammonium nitrate and 599,000 tonnes of nitrogen solutions. The annual pre-tax
savings associated with these closures (based on 1999 results) is expected to be
approximately $20.0 million.

The Company is also proceeding with a consolidation of its Raleigh, NC and
Memphis, TN administrative offices with the Company's office in Chicago, IL. As
a result of the consolidation, 115 salaried employees will be terminated, with
termination dates ranging from March 31, 2000 through to September 30, 2000.
Terminated employees are entitled to severance pay equal to two weeks' salary
for each year of service (to a maximum of 52 weeks) and, providing they stay
until their termination date, an additional payment equal to 35 percent of their
annual salary pro-rated for the number of months from October 1, 1999 to their
termination. The Company has contractual commitments relating to current office
leases at all three locations. The charges associated with the office
consolidation are $9.3 million The estimated annual pre-tax savings from the
office consolidation are $5.5 million, which will not be fully realized until
2001 due to transition costs in 2000.

Refer to Note 20 to the Consolidated Financial Statements for more detailed
information on the plant closures and office consolidation.

PROVISION FOR ASSET IMPAIRMENT

In the third quarter of 1999, the Company assessed the recoverability of
the tangible and intangible assets of the nitrogen operations (due to operating
losses primarily caused by reduced product prices and increased gas costs
relative to certain current and expected future competition) and Florida
Favorite Fertilizer operations due to continuing operating losses. Based on
these assessments, the Company recorded a provision for asset impairment
relating to goodwill, property, plant and equipment and other assets in the
amount of $526.6 million. See Note 21 to the consolidated financial statements
for more detailed information on the provision for asset impairment.

<PAGE> 36
POTASH REVENUE

POTASH NET SALES REVENUE BY MARKET
$ MILLIONS

[GRAPH]

Caption: THE MAJORITY OF POTASH EARNINGS TEND TO BE IN THE FIRST HALF OF THE
YEAR BECAUSE OF SPRING SEASON REQUIREMENTS.

Potash performance was highlighted by sales volumes that were the second
highest on record. Net sales revenue from potash increased primarily due to an
increase in North American sales volumes and, to a lesser extent, an increase in
offshore sales prices.

North American potash prices increased in the first half of 1999 (following
price list increases that were introduced in the first quarter of 1999) then
decreased in the third quarter (following disappointing spring season
application rates and lower prices posted by a competitor), ending the year 2
percent lower on a year-over-year basis. North American sales volumes increased
primarily due to a strong fall season (US farmers received government subsidies
and had good fall application weather) and the purchase of the Cassidy Lake mill
with its accessible customer base.

Potash prices in the offshore market rose during the first three quarters
of the year primarily due to higher contract prices with Japan, South Korea and
China. Realized prices fell in the fourth quarter due to product and country mix
and higher ocean freight costs. Canpotex sales volumes to Asia increased by 13
percent from 1998 due to increased sales to India, Indonesia and South Korea.
This increase was partially offset by a 22 percent decrease in sales to Latin
America (primarily Brazil due to the currency devaluation and credit
conditions). Overall, offshore sales volumes ended the year up marginally from
1998. In the offshore market, 82 percent of sales volumes (1998 - 83 percent)
were sold through Canpotex.

Potash gross margin represented 74 percent (1998 - 52 percent) of
consolidated gross margin.

PHOSPHATE REVENUE

<TABLE>
<CAPTION>
1999 SALES 1998 SALES % CHANGE
------------------------------ ---------------------------- ------------------------
REVENUE TONNES AVERAGE REVENUE TONNES AVERAGE REVENUE TONNES AVERAGE
($ MILLIONS) (000'S) PRICE ($ MILLIONS) (000'S) PRICE PRICE
PER MT PER MT PER MT
------------ ------- ------- ------------ ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NORTH AMERICAN
Liquids $219.8 948 $231.83 $ 261.6 1,114 $234.86 (16) (15) (1)
Solids 135.9 775 $175.35 169.0 884 $191.18 (19) (12) (8)
Feed 147.9 588 $251.62 166.5 653 $255.09 (11) (10) (1)
Industrial 114.6 361 $316.69 116.5 369 $315.62 (2) (2) -
------ ----- ------- -------- ----- ------- ---- ---- ---
618.2 2,672 $231.34 713.6 3,020 $236.32 (13) (12) (2)
------ ----- ------- -------- ----- ------- ---- ---- ---
OFFSHORE
Solids 147.6 898 $164.41 206.3 1,087 $189.79 (28) (17) (13)
Other 78.0 446 $174.89 91.1 520 $175.19 (14) (14) -
------ ----- ------- -------- ----- ------- ---- ---- ----
225.6 1,344 $167.92 297.4 1,607 $184.97 (24) (16) (9)
------ ----- ------- -------- ----- ------- ---- ---- ----
TOTAL $843.8 4,016 $210.12 $1,011.0 4,627 $218.48 (17) (13) (4)
====== ===== ======= ======== ===== ======= ==== ==== ====
</TABLE>

PHOSPHATE NET SALES REVENUE BY PRODUCT
$ MILLIONS

[GRAPH]

Caption: PHOSPHATE EARNINGS ARE FAIRLY EVENLY DISTRIBUTED OVER THE YEAR.

Phosphate net sales revenue decreased primarily due to lower volumes in
both North American and offshore markets and, to a lesser extent, to lower
prices.

In the domestic market, weak spring fertilizer demand resulted in higher
than usual North American inventories, which placed downward pressure on
phosphate prices, especially DAP. Feed supplement prices increased in the first
half of the year and then fell in the third quarter (due to increased
competition) to end the year down marginally from 1998. Industrial product
prices were stable in the first half of 1999, fell in the third quarter due to
higher US imports, and then recovered in the fourth quarter to end the year flat
as compared to 1998. Weak domestic demand also led to decreased liquid and solid
phosphate sales volumes. Feed supplement sales volumes were down primarily due
to increased competition in the industry.

In the offshore markets, weak domestic spring fertilizer demand combined
with large North American inventories stimulated additional US exports from
suppliers outside of PhosChem. Prices were also affected by the anticipation of
additional capacity in India and Australia. These factors resulted

34
<PAGE> 37

in lower offshore prices for solid phosphates, and liquids followed, but not to
the same degree. However, North American production cutbacks in the second half
of the year reduced inventories and stabilized prices. The currency devaluation
and credit conditions in Brazil resulted in lower sales volumes of liquid
phosphates there. Offshore feed supplement sales volumes increased in 1999
primarily due to improved sales volumes in Brazil, the Caribbean and Venezuela.

In 1999, 41 percent (1998 - 36 percent) of total phosphate net sales
revenue was earned from non-fertilizer products which represented 33 percent
(1998 - 30 percent) of phosphate sales volumes. Phosphate gross margin
represented 31 percent (1998 - 37 percent) of consolidated gross margin.

NITROGEN REVENUE

<TABLE>
<CAPTION>
1999 SALES 1998 SALES % CHANGE
---------------------------- ----------------------------- --------------------------
REVENUE TONNES AVERAGE REVENUE TONNES AVERAGE REVENUE TONNES AVERAGE
($ MILLIONS) (000'S) PRICE ($ MILLIONS) (000'S) PRICE PRICE
PER MT PER MT PER MT
---------- ------- ------- ----------- ------- ------- ------- ------ -------

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NORTH AMERICAN
Urea $154.8 1,340 $115.50 $168.1 1,167 $144.13 (8) 15 (20)
Ammonia 180.1 1,718 $104.85 176.5 1,337 $132.04 2 29 (21)
Solutions 110.3 1,681 $ 65.64 163.0 2,164 $ 75.32 (32) (22) (13)
Other (1) 115.1 1,833 $ 62.79 127.6 1,708 $ 74.71 (10) 7 (16)
------ ----- ------- ------ ----- ------- ---- ---- ----
560.3 6,572 $ 85.26 635.2 6,376 $ 99.63 (12) 3 (14)
OFFSHORE 46.4 945 $ 49.05 51.1 895 $ 57.07 (9) 6 (14)
PURCHASED 47.3 434 $108.83 65.0 554 $117.35 (27) (22) (7)
------ ----- ------- ------ ----- ------- ---- ---- ----
TOTAL $654.0 7,951 $ 82.25 $751.3 7,825 $ 96.02 (13) 2 (14)
====== ===== ======= ====== ===== ======= ==== ==== ====
</TABLE>

(1) Sales volumes of Other nitrogen products include tonnes for the byproduct
carbon dioxide.

MANUFACTURED NITROGEN NET SALES REVENUE BY PRODUCT
$ MILLIONS

(GRAPH)
Caption: NITROGEN IS MORE HEAVILY WEIGHTED TO THE NORTH AMERICAN MARKET, SO THE
THIRD QUARTER IS SEASONALLY WEAK.

Nitrogen net sales revenue decreased primarily due to lower sales prices in
the North American market which were partially offset by increased sales
volumes.

Weak spring demand combined with non-market pricing from Former Soviet
Union ("FSU") producers and high North American inventories continued to put
pressure on both domestic and offshore prices. North American production
shutdowns in the second half of the year reduced inventories, and prices rose by
year-end.

North American sales volumes for urea and other nitrogen products were up
primarily due to growth in the industrial market. Ammonia sales volumes
increased due to a full year of production from the new plant in Trinidad,
increased industrial demand and increased consumption by the US DAP sector.
Sales volumes for nitrogen solutions were down due primarily to the combination
of fewer acres planted to corn and more to soybeans, favorable weather for use
of other nitrogen products and the permanent shutdown of 25 percent of the
Company's UAN capacity in the second half of the year.

The Company continued to sell a large portion of its North American
nitrogen production to the more stable and higher margin industrial market.
Non-fertilizer products grew to 49 percent (1998 - 44 percent) of nitrogen sales
volumes and 47 percent (1998 - 44 percent) of net sales revenue.

COST OF GOODS SOLD

<TABLE>
<CAPTION>
1999 1998 % CHANGE
---- ---- --------

<S> <C> <C> <C>
Potash production (KCL) tonnage (000's) 6,388 6,995 (9)
Phosphate production (P205) tonnage (000's) 2,124 2,363 (10)
Nitrogen production (N) tonnage (000's) 3,138 3,121 1
Potash unit cost of sales (dollars) $ 40.37 $ 36.49 11
Phosphate unit cost of sales (dollars) $178.31 $169.15 5
Manufactured nitrogen unit cost of sales (dollars) $ 83.97 $ 85.22 (1)
Depreciation and amortization ($ Millions) $ 191.1 $ 190.9 -
</TABLE>

Potash unit cost of sales increased due primarily to lower production
volumes, 25 more shutdown weeks, increased gas costs and a stronger Canadian
dollar.

Phosphate unit cost of sales increased due primarily to lower production
volumes caused by phosphate rock sourcing problems at Aurora and shutdowns in
the second half of the year. The per unit cost of sulphur was flat compared to
1998 while the per unit cost of ammonia decreased by 17 percent.

<PAGE> 38
\

PCS Nitrogen reduced its per unit natural gas cost by 6 percent compared to
1998 primarily due to its natural gas hedging policy in North America and
certain of its natural gas contracts in Trinidad. This decrease was partially
offset by higher per unit production costs due to plant shutdown costs and
reduced production in the third and fourth quarters of 1999.

EXPENSES ($ Millions)

<TABLE>
<CAPTION>
1999 1998 % CHANGE
---- ---- --------
<S> <C> <C> <C>
Selling and Administrative $116.3 $116.0 -
Provincial Mining and Other Taxes 77.1 80.1 (4)
Interest 53.8 67.6 (20)
Income Taxes 7.5 117.5 (94)
</TABLE>

The decrease in provincial mining and other taxes relates to the Potash
Production Tax, which was lower primarily due to higher per unit production
costs and lower Canadian dollar equivalent prices caused in part by a stronger
Canadian dollar. Various other payments to the Province of Saskatchewan in the
form of royalties and taxes totalled $14.6 million in 1999 (1998 - $13.2
million), and are included in cost of goods sold.

Interest expense on long-term debt decreased by $21.4 million due to a
reduction of the weighted average long-term debt outstanding from $980.8 million
in 1998 to $637.2 million in 1999. The weighted average interest rate on the
long-term debt outstanding was 6.0 percent (1998 - 6.2 percent). The reduction
in interest expense on long-term debt was partially offset by an increase in
interest expense on short-term debt of $7.6 million due to borrowing under a
commercial paper program.

The decrease in income taxes was principally due to a deferred tax recovery
of $48.6 million relating to the plant closures and asset impairment charge and
lower income.

PCS and certain subsidiaries are subject to federal income taxes (which
includes the Large Corporations Tax) and provincial income taxes in Canada.
During 1999, the Company began accruing cash income taxes by virtue of having
fully utilized non-capital losses carried forward. The Company's subsidiaries
which operate in the United States are subject to US federal and state income
taxes. These subsidiaries are not currently subject to federal cash income tax
by virtue of net operating losses incurred. The Company's nitrogen subsidiaries
which operate in Trinidad are subject to Trinidad taxes. The effective
consolidated tax rate for 1999 was 30 percent (1998 - 31 percent) of (loss)
income before income taxes (exclusive of the goodwill impairment).

<TABLE>
<CAPTION>
<S> <C> <C>
PCS POTASH PRICES PCS DAP PRICES PCS AMMONIA PRICES
$/MT $/MT $/MT
[GRAPH] [GRAPH] [GRAPH]
</TABLE>

Caption: STRONG OFFSHORE VOLUMES SUPPORTED POTASH PRICES WHILE HIGH INVENTORIES
IN PHOSPHATE AND NITROGEN PLAGUED PRICES FOR THOSE PRODUCTS THROUGHOUT THE YEAR,
THOUGH BOTH ROSE BY YEAR-END.

<PAGE> 39

1998 VS 1997
OVERVIEW ($ Millions)

<TABLE>
<CAPTION>
1998 % OF NET SALES 1997 % OF NET SALES %CHANGE
---- -------------- ---- -------------- -------
<S> <C> <C> <C> <C> <C>
Net Sales
North American $1,641.4 71 $1,665.1 72 (1)
Offshore 666.4 29 660.8 28 1
-------- --- -------- --- ---
$2,307.8 100 $2,325.9 100 (1)
Gross Margin $ 609.3 26 $ 585.2 25 4
Operating Income $ 446.1 19 $ 447.6 19 -
Net Income $ 261.0 11 $ 297.1 13 (12)
Earnings per Share (dollars) $ 4.82 $ 5.68 (15)
Gross Margin by Nutrient (1)
Potash $ 316.3 58 $ 257.6 51 23
Phosphate $ 228.2 23 $ 194.4 20 17
Nitrogen $ 64.8 9 $ 133.2 15 (51)
</TABLE>

(1) Based on net sales by nutrient.

With the exception of purchased product, nitrogen data for 1997 are only
for the period subsequent to the acquisition of Arcadian on March 6, 1997.
Phosphate data for 1997 and 1998 include phosphate produced by the acquired
Geismar operation.

Higher net sales revenue in potash and phosphate was more than offset by
lower nitrogen sales revenue which resulted in reduced net sales revenue on a
consolidated basis. The decrease in net income of $36.1 million compared to 1997
was attributable to: increases in selling and administrative expenses ($16.3
million), provincial mining and other taxes ($9.8 million) and income taxes
($48.4 million) which were partially offset by a $24.2 million increase in gross
margin and a $13.8 million reduction in interest expense.

POTASH REVENUE

In potash, increased sales prices more than offset reductions in sales
volumes resulting in higher net sales revenue.

North American potash prices increased in the last half of 1997 and first
half of 1998 due to tighter supply, then stabilized in the last two quarters.
North American sales volumes declined from 1997 levels, primarily due to
abnormally high sales volumes in the last half of that year.

Potash prices in the offshore market rose early in the year with increased
contract prices, and then stabilized and rose again in the last half. The higher
prices realized were primarily due to higher contract prices with Japan, South
Korea and Australia and increased prices in China and Brazil. The currency
devaluations and financial difficulties in Asian countries did not significantly
affect offshore potash sales volumes. Canpotex sales volumes to Asia decreased
by 6 percent from 1997, which was partially offset by a 21 percent increase in
sales to Latin America (primarily Brazil). Overall, offshore sales volumes ended
the year down only marginally from 1997. In the offshore market, 83 percent of
sales volumes were sold through Canpotex (1997 - 82 percent).

Gross margin for potash products was 52 percent (1997 - 44 percent) of
consolidated gross margin.

PHOSPHATE REVENUE

<TABLE>
<CAPTION>
1998 SALES 1997 SALES % CHANGE
------------------------------ ---------------------------- ------------------------
REVENUE TONNES AVERAGE REVENUE TONNES AVERAGE REVENUE TONNES AVERAGE
($ MILLIONS) (000'S) PRICE ($ MILLIONS) (000'S) PRICE PRICE
PER MT PER MT PER MT
------------ ------- ------- ------------ ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NORTH AMERICAN
Liquids $ 261.6 1,114 $234.86 $216.7 958 $226.20 21 16 4
Solids 169.0 884 $191.18 156.5 814 $192.17 8 9 -
Feed 166.5 653 $255.09 168.2 658 $255.47 (1) (1) -
Industrial 116.5 369 $315.62 115.5 339 $341.00 - 9 (7)
------------ ------- ------- ------------ ------- ------- ------- ------ -------
713.6 3,020 $236.32 656.9 2,769 $237.19 9 9 -
============ ======= ======= ============ ======= ======= ======= ====== =======
OFFSHORE
Solids 206.3 1,087 $189.79 207.5 1,139 $182.17 - (5) 4
Other 91.1 520 $175.19 89.2 526 $169.58 (2) (1) 3
------------ ------- ------- ------------ ------- ------- ------- ------ -------
297.4 1,607 $184.97 296.7 1,665 $178.21 - (3) 4
------------ ------- ------- ------------ ------- ------- ------- ------ -------
TOTAL $1,011.0 4,627 $218.48 $953.6 4,434 $215.05 6 4 2
============ ======= ======= ============ ======= ======= ======= ====== =======
</TABLE>

<PAGE> 40
Phosphate net sales revenue increased primarily due to higher sales volumes
and, to a lesser extent, higher prices.

With the exception of industrial products, phosphate prices in the domestic
market increased or remained constant compared to 1997.

Phosphate prices in the offshore markets (except for feed supplements)
improved during 1998. Liquid phosphate prices were up 7 percent on a
year-over-year basis and solid phosphate prices increased by 4 percent. These
price increases were partially due to higher prices realized in Brazil. The
price of feed supplements, affected by the currency devaluations and financial
difficulties in Asian countries, decreased by 9 percent on a year-over-year
basis. Offshore phosphate sales volumes declined on an overall basis as the
Company chose to orient its P2O5 production to the North American market where
margins were better. PhosChem had good sales volumes in 1998; sales volumes to
Asia increased by 13 percent and to Latin America by 12 percent.

In 1998, 36 percent (1997 - 37 percent) of total phosphate net sales
revenue was earned from non-fertilizer products which represented 30 percent
(1997 - 30 percent) of its phosphate sales volumes. Phosphate gross margin
represented 37 percent (1997 - 33 percent) of consolidated gross margin.

NITROGEN REVENUE

<TABLE>
<CAPTION>
1998 SALES 1997 SALES % CHANGE
---------------------- -------------------------------- ------------------------------------
REVENUE TONNES AVERAGE REVENUE TONNES AVERAGE REVENUE TONNES AVERAGE
($ MILLIONS) (000'S) PRICE ($ MILLIONS) (000'S) PRICE PRICE
PER MT PER MT PER MT
------------ ------- ------- ------------ ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

NORTH AMERICAN
Urea $168.1 1,167 $144.13 $150.0 865 $173.41 12 35 (17)
Ammonia 176.5 1,337 $132.04 169.0 957 $176.63 4 40 (25)
Solutions 163.0 2,164 $ 75.32 159.0 1,690 $ 94.08 3 28 (20)
Other (1) 127.6 1,708 $ 74.71 118.4 1,343 $ 88.16 8 27 (15)
------ ----- ------- ------ ----- ------- --- --- ---
635.2 6,376 $ 99.63 596.4 4,855 $122.84 7 31 (19)
OFFSHORE 51.1 895 $ 57.07 70.1 781 $ 89.76 (27) 15 (36)
PURCHASED 65.0 554 $117.35 201.7 1,139 $177.09 (68) (51) (34)
------ ----- ------- ------ ----- ------- --- --- ---
TOTAL $751.3 7,825 $ 96.02 $868.2 6,775 $128.16 (13) 15 (25)
</TABLE>

(1) Sales volumes of Other nitrogen products include tonnes for the byproduct
carbon dioxide.

Net sales revenue for nitrogen decreased due to lower sales prices which
were partially offset by higher sales volumes.

The continued absence of China from offshore urea markets and reduced cash
production costs for FSU producers due to lower gas prices and currency weakness
in the FSU countries led to significant declines in offshore prices. Overall,
urea prices were down 18 percent and ammonia prices down 22 percent when
compared to 1997. The Company's offshore sales volumes of ammonia increased
primarily due to a full year of operation in 1998 as compared to 10 months in
1997 and the addition of the new plant in Trinidad. Offshore sales volumes of
urea declined as the Company chose to focus its sales on the North American
market where prices were stronger.

Falling offshore nitrogen prices resulted in lower North American prices as
well. In North America, sales of ammonia for fertilizer were slow but the strong
DAP market supported healthy ammonia sales to DAP producers as ammonia is a key
input for DAP. This contributed to an increase in manufactured ammonia sales
volumes. When the new PCS facility in Trinidad came on stream, these tonnes
replaced product purchased by the Company, reducing total ammonia sales volumes
(purchased and manufactured) by 5 percent.

The Company continued to sell a large portion of its North American
nitrogen production to the more stable industrial market. On a year-over-year
basis, nitrogen industrial prices fell by 14 percent compared to a 28 percent
decline for fertilizer. Non-fertilizer products represented 44 percent (1997 -
38 percent) of nitrogen sales volumes and 44 percent (1997 - 34 percent) of net
sales revenue. Gross margin for nitrogen represented 11 percent (1997 - 23
percent) of consolidated gross margin.

COST OF GOODS SOLD

<TABLE>
<CAPTION>
1998 1997 % CHANGE
------- -------- --------

<S> <C> <C> <C>
Potash production (KCL) tonnage (000's) 6,995 6,483 8
Phosphate production (P205) tonnage (000's) 2,363 2,282 4
Nitrogen production (N) tonnage (000's) 3,121 2,349 33
Potash unit cost of sales (dollars) $ 36.49 $ 37.14 (2)
Phosphate unit cost of sales (dollars) $169.15 $171.23 (1)
Manufactured nitrogen unit cost of sales (dollars) $ 85.22 $ 95.04 (10)
Depreciation and amortization ($ Millions) $ 190.9 $ 170.0 12
</TABLE>

<PAGE> 41
Potash unit cost of sales decreased due primarily to higher production
volumes and eight fewer shutdown weeks, which were partially offset by water
management costs at the New Brunswick division and costs to transport
Saskatchewan product to Cassidy Lake for processing.

Overall, phosphate unit cost of sales decreased due primarily to lower
input costs for ammonia. The unit cost of sulphur decreased by 2 percent
compared to 1997.

PCS Nitrogen reduced its per unit natural gas cost by 12 percent compared
to 1997 primarily due to its gas contracts in Trinidad. Overall, the per unit
cost of sales of manufactured product declined primarily due to reduced gas
costs and the opening of an efficient new plant in Trinidad.

The increase in depreciation and amortization expense for 1998 was largely
attributable to $17.7 million additional depreciation and amortization due to a
full year of nitrogen operations.

EXPENSES ($ Millions)

<TABLE>
<CAPTION>
1998 1997 % CHANGE
---- ---- --------
<S> <C> <C> <C>
Selling and Administrative $116.0 $99.7 16
Provincial Mining and Other Taxes 80.1 70.3 14
Interest 67.6 81.4 (17)
Income Taxes 117.5 69.1 70
</TABLE>

The increase in selling and administrative expenses was attributable to
general increases in compensation and benefits, a full year of amortization of
the goodwill relating to the nitrogen acquisition, an increase in bad debt
expense, an increase in franchise taxes and a Revenue Canada employee benefits
assessment.

The increase in Saskatchewan provincial mining and other taxes primarily
relates to the Potash Production Tax. The higher potash prices and the resulting
increased profit per tonne (which was partially due to the strengthening of the
US dollar as compared to the Canadian dollar), combined with the full
utilization of certain provincial resource tax deductions carried forward from
previous years, resulted in most Saskatchewan mines reaching the top marginal
profits tax rate of 35 percent in 1998.

Various other payments to the Province of Saskatchewan in the form of
royalties and taxes totalled $13.2 million in 1998 and $12.4 million in 1997,
and are included in cost of goods sold.

Interest expense decreased due to a reduction of the weighted average
long-term debt outstanding from $1.1 billion in 1997 to $980.8 million in 1998.
The weighted average interest rate on the long-term debt outstanding was 6.2
percent (1997 - 6.1 percent).

The increase in income taxes reflects the impact of prior utilization of
non-capital loss carry-forwards. Provincial taxes and royalties are
non-deductible for federal income tax purposes.

The effective consolidated tax rate for 1998 was 31 percent (1997 - 19
percent) of income before income taxes, of which 5 percentage points (1997 - 13
percentage points) represented cash income taxes and 26 percentage points (1997
- - 6 percentage points) represented deferred income taxes. The reduction in the
cash component of the provision was largely due to a reduction in the amount of
US withholding taxes on certain payments received from the Company's US
subsidiaries.

ANALYSIS OF FINANCIAL CONDITION AND CASH FLOW

The following table summarizes certain of the Company's financial ratios
and cash flow data as calculated from the consolidated financial statements (see
financial terms listed on inside of back cover):

<TABLE>
<CAPTION>
Year Ended December 31
----------------------
1999 1998 % change
---- ---- --------
<S> <C> <C> <C>
Quick Ratio .38 .83 (54)
Current Ratio .87 1.74 (50)
Shareholders' Equity to Total Assets .50 .54 (7)
Return on Shareholders' Equity (21)% 11% (291)
Book Value per Share $36.55 $45.24 (19)
Asset Turnover 53% 51% 4
Return on Investment (11)% 9% (222)
Long-term Debt to Equity .22:1 .38:1 (42)
Return on Capital Employed 5% 8% (38)
Cash Flow Return 8% 13% (38)
Cash provided by operating activities ($ Millions) $343.6 $578.0 (41)
Cash used in investing activities ($ Millions) $177.7 $243.3 (27)
Cash used in financing activities ($ Millions) $189.8 $275.5 (31)
</TABLE>

<PAGE> 42

The decrease in cash provided by operating activities was primarily due to
a reduction of net income, a reduction in deferred income taxes of $104.4
million and a reduction of cash flow from operating working capital of $22.0
million.

Cash used in investing activities decreased as 1999 additions to property,
plant and equipment decreased by $71.3 million (1998 includes the Geismar
expansion and higher sulphur vessel costs) and additions to other assets
decreased by $61.2 million (1998 includes the purchase of shares in Israel
Chemicals Ltd.). These reductions in investing activities were partially offset
by the $36.9 million purchase of Minera Yolanda S.C.M. and reduced proceeds from
the disposal of property, plant and equipment (primarily related to the 1998
sale/leaseback of railcars).

During the year, the Company repaid the Syndicated Credit Facility in the
amount of $488.0 million, substituting net borrowing of $379.6 million under a
commercial paper program in order to lower interest costs. The Company paid
dividends of $53.3 million in 1999 (1998 - $51.7 million) and paid $29.3 million
to repurchase shares under the open market repurchase program. The Company is
authorized to repurchase an additional 2.1 million shares under the open market
repurchase program by November 18, 2000.

The Company has a Syndicated Credit Facility which provides for unsecured
advances of up to $778.0 million (less the amount of commercial paper
outstanding), none of which was outstanding at December 31, 1999. In addition,
the Company has short-term lines of credit for up to $292.0 million in borrowing
(less letters of credit of $26.2 million), of which $70.0 million was
outstanding at December 31, 1999. The Company is authorized to borrow up to a
maximum of $500.0 million under the commercial paper program of which $401.6
million is outstanding at December 31, 1999. The Company may also issue up to an
additional $600.0 million in unsecured debt securities under its existing shelf
registration statement.

The Company believes that internally generated cash flow, as supplemented
by borrowing from existing financing sources, will be sufficient to meet its
anticipated capital expenditures and other cash requirements, exclusive of any
possible acquisitions, in 2000.

RISKS ASSOCIATED WITH FINANCIAL INSTRUMENTS

The Company's nitrogen operations are significantly affected by the price
of natural gas. The Company employs derivative commodity instruments related to
a portion of its natural gas requirements (primarily futures, swaps and options)
for the purpose of managing its exposure to commodity price risk in the purchase
of natural gas. Changes in the market value of these derivative instruments have
a high correlation to changes in the spot price of natural gas. Gains or losses
arising from settled hedging transactions are deferred as a component of
inventory until the product containing the hedged item is sold. Changes in the
market value of open hedging transactions are not recognized as they generally
relate to changes in the spot price of anticipated natural gas purchases.

A sensitivity analysis has been prepared to estimate the Company's market
risk exposure arising from derivative commodity instruments. The fair value of
such instruments is calculated by valuing each position using quoted market
prices. Market risk is estimated as the potential loss in fair value resulting
from a hypothetical 10 percent adverse change in such prices. The results of
this analysis indicate that as of December 31, 1999, the Company's estimated
derivative commodity instruments market risk exposure was $26.6 million (1998 -
$34.7 million). Actual results may differ from the estimate. Changes in the fair
value of such derivative instruments, with maturities in 2000 through 2004, will
generally relate to changes in the spot price of anticipated natural gas
purchases.

The Company also enters into forward foreign exchange contracts for the
sole purpose of limiting its exposure to exchange rate fluctuations relating to
certain trade accounts. Gains or losses resulting from foreign exchange
contracts are recognized at the time the contracts are entered into and are
included in other income.

ENVIRONMENTAL

The Company is subject to various environmental laws and regulations
throughout the United States, Canada, Trinidad and Chile. Expenditures relating
to compliance with these environmental laws are considered to be part of the
normal course of business. Future laws and regulations or changes to existing
laws and their impact cannot be predicted. Capital expenditures in the
environmental area in 1999 totalled $8.2 million (1998 - $14.0 million; 1997 -
$15.4 million) while $90.5 million (1998 - $83.4 million; 1997 - $66.9 million)
was incurred as environmental operating expense. Expenditures in 2000 are
expected to be of a similar magnitude for existing operations.

<PAGE> 43

YEAR 2000

The Company's computer systems and facilities are operating normally. The
Company's business and operations have not been affected to date by any computer
problems related to the date changeover to the year 2000, either internally or
externally.

OUTLOOK

The rising world population and the demand for more food and better diets,
with meat as a protein source, will continue to drive consumption of fertilizers
over the long term. While the consumption trend line is expected to continue to
climb, there will be, at times, fluctuations in demand caused both by economic
factors and political factors in those countries where governments are involved
in importation.

North American fertilizer demand is generally considered mature but is
expected to fluctuate from year to year, as a function of acres planted and
application rates per acre, which are influenced by crop prices and weather.

While world grain stocks are not excessive, North American stocks are up
after three consecutive years of good harvests. This has resulted in the lowest
corn prices in a decade. Historically, fertilizer prices track the US corn price
fairly closely. In potash, prices have been more stable than the corn price as
supply has generally tracked demand. In phosphate, DAP prices appear to be more
tied to the US corn price than potash. Nitrogen prices track the price very
closely. If there should be weather problems, US grain inventories would quickly
diminish. Furthermore, when grain becomes as inexpensive as it is now, farmers
generally use more of it for feed.

In January 2000, the United States Department of Agriculture ("USDA")
lowered its US corn production estimate and raised its forecasts of domestic
corn demand and corn exports. As a result, the USDA is projecting lower US
ending stocks and higher prices for corn.

The Company sells a significant amount of potash and phosphate in offshore
markets, where countries purchase fertilizer to grow cash crops for export and
food for internal use.

The Company also sells product in the non-fertilizer markets which are
affected by North American economic growth, which is expected to be more than
three percent next year. Outside consultants forecast four percent annual growth
in demand for industrial nitrogen products for the next five years and two
percent growth for industrial phosphates.

CORN PRICES VS NUTRIENT EXPENDITURES
[CHART]
SOURCE: USDA, AAPFCO & TFI, PCS

Caption: TOTAL NUTRIENT EXPENDITURES IN THE LAST 30 YEARS HAVE CLOSELY FOLLOWED
CORN PRICES AND INFLUENCED FERTILIZER PRICES.

The positive effect of any increase in demand for fertilizer and
non-fertilizer products may be offset to the degree that additional production
capacity comes on stream.

Domestic potash sales volumes are expected to approximate 1999 levels while
offshore sales volumes are expected to increase modestly, resulting in slightly
larger overall volumes compared to 1999. In late December 1999, Canpotex
announced the largest ever sales contract with China. The contract provides for
sales in the first half of 2000 of 1.6 million tonnes, which is 25 percent
higher than the first half 1999 level. Domestically, the combination of
continued matching of supply to demand and higher export sales is expected to
tighten product availability. Prices in both the domestic and offshore markets
are expected to be flat as compared to 1999.

PCS continues to operate its potash mines by matching production to
anticipated sales demand. Shutdowns at potash mines for inventory correction
will influence potash production costs on a quarter-over-quarter comparative
basis. It is expected that the number of such shutdowns in 2000 will be less
than the 58 weeks of shutdown incurred in 1999. Natural gas costs are increasing
in Western Canada. Higher Canadian gas costs and possible continued
strengthening of the Canadian dollar are expected to more than offset fewer
shutdown weeks. The combination of these factors is expected to increase
production costs somewhat.

Lower sulphur costs are expected to more than offset any increase in
ammonia costs, resulting in phosphate production costs that are similar to 1999.
PCS can use up to one-quarter of the ammonia it produces and sells as ammonia at
its own phosphate plants.

WORLD POTASH OUTLOOK
MILLION TONNES K2O
[CHART]
SOURCE: FAO, IFA, NRCANADA, FERTECON, PCS

Caption: PCS, WITH AN ESTIMATED 60 PERCENT OF WORLD EXCESS CAPACITY, IS IDEALLY
POSITIONED TO MEET THE GROWING DEMAND IN DEVELOPING NATIONS.

<PAGE> 44

WORLD'S LARGEST FERTILIZER COMPANIES
PRIMARY PRODUCT CAPACITY MILLION TONNES
[CHART]
SOURCE: FERTECON, PCS

Caption: PCS EXPECTS CONTINUING CONSOLIDATION WILL RESULT IN JUST A HANDFUL OF
NPK PRODUCERS AROUND THE WORLD AND WILL STRIVE TO BE FIRST AMONG THEM.

In the near term, prices for liquid and solid phosphates are expected to
firm slightly as domestic plant shutdowns and unplanned outages have brought
supply and demand into closer balance. Prices could come under pressure in the
second half of the year depending on how fast and at what rate new capacity
comes on stream. Sales volumes in 2000 are expected to be flat as compared to
1999. Prices for industrial products and feed supplements are also expected to
be flat in comparison to 1999. The impact of substantially lower phosphate
prices for all of 2000 is expected to reduce gross margin for phosphate.

Market prices for nitrogen products in the near term are expected to be
supported by several plant shutdowns, lower inventories and the generally
stronger spring season. These prices are expected to weaken in the second half
of 2000 as new capacity in Venezuela and Argentina comes on stream. Gross margin
in 2000 is expected to improve but still be negative. The urea market is
influenced by China which, early in 1997, stopped importing urea, thereby having
a negative effect on prices. Chinese buyers remain inactive and there are no
indications as to when they will return to the market.

The Company manages its natural gas costs through a combination of fixed
price contracts, hedges and the Trinidad gas contracts. As a flexible producer,
PCS will continue to allocate its nitrogen and phosphate feedstock to production
of the products with the best margins.

On December 31, 1999, the Company indefinitely shut down two of its four
ammonia plants in Trinidad following the expiration of the natural gas supply
contract for those two plants with the National Gas Company ("NGC") of Trinidad.
Discussions with NGC are ongoing as the Company attempts to achieve competitive
gas pricing. Management believes that this interim shutdown will not have a
material adverse effect on the Company's financial condition or results of
operations.

Total capital expenditures in 2000 for property, plant and equipment are
expected to be approximately $150.0 million. This spending includes costs
associated with the development of Aurora's mining block known as the NCPC
property and new capital for PCS Yumbes.

Just as in 1999, potash is expected to outperform phosphate and nitrogen in
2000. New world phosphate and nitrogen capacity is scheduled to come on stream
and the impact may lead to lower profitability for 2000 compared to 1999.
However, lower than expected production from anticipated new capacity in
phosphate and nitrogen or improved demand from key countries such as Brazil,
China or India could improve this outlook.

The effective consolidated income tax rate for 2000 is expected to be
approximately 30 percent. The split between current and deferred taxes is
variable, highly sensitive to the source of income and ultimately affects cash
flow. If most of the Company's income is from potash, the current tax portion
could approach 80 percent of the tax liability. Alternatively, if potash
earnings account for two-thirds of total profitability, the current tax portion
could approximate 50 percent. Stronger nitrogen and phosphate earnings could
reduce this current tax ratio.

The narrative included under this Management's Discussion and Analysis of
Financial Condition and Results of Operations has been prepared on a nutrient
basis (the phosphate products produced at Geismar are included with phosphate
data rather than nitrogen) rather than a subsidiary or business segment basis
and with reference to the consolidated financial statements reported under
accounting principles generally accepted in Canada.

FORWARD-LOOKING STATEMENTS

Certain statements in this annual report and this Management's Discussion
and Analysis of Financial Condition and Results of Operations, including those
in the "Outlook" section, relating to the period after December 31, 1999, are
forward-looking statements subject to significant uncertainties. A number of
factors could cause actual results to differ materially from those expressed in
the forward-looking statements, including, but not limited to: fluctuation in
supply and demand in fertilizer, sulphur and petrochemical markets; changes in
competitive pressures, including pricing pressures; potential higher costs
incurred in connection with restructuring charges as compared to costs estimated
for purposes of calculating such charges; uncertainty and variations in future
discounted and undiscounted net cash flows from use together with residual
values estimated for purposes of calculating asset impairment; changes in
capital markets; changes in currency and exchange rates; unexpected geological
or environmental conditions; imprecision in reserve estimates; the outcome of
legal proceedings; and changes in government policy. The Company sells to a
diverse group of customers both by geography and by end product. Market
conditions will vary on a year-over-year basis and sales can be expected to
shift from one period to another.

<PAGE> 45

10 YEAR REPORT
For the Years Ended December 31

FINANCIAL DATA ($ Millions) 1999 1998 1997(4) 1996 1995(3) 1994(2) 1993(1) 1992 1991 1990
---- ---- ------- ---- ------- ------- ------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales 2,061.1 2,307.8 2,325.9 1,403.9 856.1 363.1 212.2 214.1 206.8 189.9
Operating (Loss) Income (350.7) 446.1 447.6 299.5 224.2 98.5 56.9 50.6 39.1 34.6
Net (Loss) Income (412.0) 261.0 297.1 209.0 159.5 91.2 44.7 39.8 31.3 17.3
Net (Loss) Income per Share
(dollars) (7.60) 4.82 5.68 4.59 3.68 2.12 1.13 1.03 0.81 0.47
Dividends per Share (dollars) 0.99 0.96 1.03 1.06 1.06 0.77 0.53 0.51 0.51 0.51
Cash Provided by Operating
Activities 343.6 578.0 467.8 296.2 233.5 150.7 49.8 57.4 53.8 66.1
Working Capital (104.8) 329.2 281.7 278.8 136.1 103.3 37.0 70.9 47.4 25.7
Total Assets 3,916.8 4,534.3 4,427.6 2,494.4 2,581.8 1,027.8 1,036.4 915.0 898.8 914.8
Total Long-Term Debt 437.0 933.3 1,130.0 620.0 714.5 2.0 20.1 48.9 54.4 62.6
Shareholders' Equity 1,962.4 2,453.8 2,227.9 1,405.5 1,241.9 964.3 903.7 809.5 788.9 777.3

OPERATING DATA (Thousands)
EMPLOYEES AT YEAR-END
(Actual Numbers) 5,498 5,744 5,751 4,490 4,579 1,781 1,818 1,415 1,227 1,242
POTASH PRODUCTION (KCl) Tonnage 6,388 6,995 6,483 5,782 6,071 5,298 3,902 3,850 4,030 3,464
PHOSPHATE PRODUCTION (P2O5) Tonnage 2,124 2,363 2,282 2,096 1,008 - - - - -
NITROGEN PRODUCTION (N) Tonnage 3,138 3,121 2,349 - - - - - - -
POTASH SALES - KCl Tonnes 6,474 6,283 6,640 5,612 5,848 5,569 3,795 3,737 3,909 3,725
PHOSPHATE SALES - Product Tonnes 4,016 4,627 4,434 4,305 2,206 - - - - -
NITROGEN SALES - Product Tonnes 7,951 7,825 6,775 535 115 - - - - -
INTERCOMPANY SALES
Ammonia - Product Tonnes 404 488 120 - - - - - - -
Potash - KCl Tonnes 106 126 129 120 108 99 99 91 - -

NET SALES ($ Millions)
POTASH 563.3 545.5 504.2 403.2 421.0 363.1 212.2 214.1 206.8 189.9
PHOSPHATE 843.8 1,011.0 953.6 892.0 412.1 - - - - -
NITROGEN 654.0 751.3 868.1 108.7 23.0 - - - - -
------- ------- ------- ------- ----- ----- ----- ----- ----- -----
TOTAL NET SALES 2,061.1 2,307.8 2,325.9 1,403.9 856.1 363.1 212.2 214.1 206.8 189.9
======= ======= ======= ======= ===== ===== ===== ===== ===== =====
</TABLE>

(1) Data for 1993 and thereafter reflect the acquisition of Potash Company of
America assets on October 7, 1993.

(2) The financial statements of the Company for 1994 and prior years have been
restated to US dollars in accordance with accounting principles generally
accepted in Canada using the Translation of Convenience Method. The Canadian
dollar amounts for these periods have been converted to US dollars at the
exchange rate of US$1.00 = CDN$1.4028.

(3) Data for 1995 and thereafter reflect the acquisition of Texasgulf Inc. on
April 10, 1995 and the acquisition of White Springs Agricultural Chemicals, Inc.
on October 31, 1995.

(4) Data for 1997 and thereafter reflect the acquisition of Arcadian Corporation
on March 6, 1997.

The consolidated financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in Canada. These
principles differ in some respects from those applicable in the United States
(see Note 32 to the Company's consolidated financial statements).

NOTES TO SELECTED TEN-YEAR DATA:
1. There were no extraordinary items nor were there any discontinued operations
in any of the accounting periods.
2. Fully diluted net (loss) income per share did not differ materially from net
(loss) income per share in any of the accounting periods.

ADDITIONAL INFORMATION
Data for 1999 include the effects of charges for plant closures and office
consolidation and asset impairments of $591.5 million.

<PAGE> 46

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements and related financial
information are the responsibility of PCS management and have been prepared in
accordance with accounting principles generally accepted in Canada and include
amounts based on estimates and judgments. Financial information included
elsewhere in this report is consistent with the consolidated financial
statements.

To meet management's responsibility for financial reporting and to obtain
reasonable assurance for the integrity and reliability of the financial reports,
the Company's accounting and internal control systems are designed to safeguard
assets and to properly record transactions and events. Policies and procedures
are maintained to support the accounting and internal control systems.

Our independent auditors, Deloitte & Touche LLP, provide an objective,
independent audit of the consolidated financial statements. Their report for
1999 is included.

The Board of Directors, through the audit committee composed exclusively of
outside directors, meets regularly with the independent auditors - both jointly
and separately - to review significant accounting, reporting and internal
control matters. The audit committee also recommends to the Board the
independent auditors to be proposed to the shareholders for appointment at the
annual meeting. Interim consolidated financial statements are reviewed by the
audit committee prior to release to shareholders.

The consolidated financial statements are approved by the Board of
Directors on the recommendation of the audit committee.

/s/ W. Doyle /s/ W. Brownlee
- ---------------------- -------------------------
W. Doyle W. Brownlee
President and Senior Vice President and
Chief Executive Officer Chief Financial Officer
February 9, 2000

AUDITORS' REPORT
TO THE SHAREHOLDERS OF POTASH CORPORATION OF SASKATCHEWAN INC.

We have audited the consolidated statements of financial position of Potash
Corporation of Saskatchewan Inc. as at December 31, 1999 and 1998 and the
consolidated statements of income and retained earnings and of cash flow for
each of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in Canada. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.

In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at December 31,
1999 and 1998, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1999 in accordance with
accounting principles generally accepted in Canada.

Saskatoon, Saskatchewan /s/ Deloitte & Touche LLP
February 9, 2000 (except as to Note 33 -------------------------
which is as of February 22, 2000) Chartered Accountants

<PAGE> 47

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31 (in thousands of US dollars)

<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 44,037 $ 67,971
Accounts receivable (Note 5) 269,264 302,974
Inventories (Note 6) 377,232 364,397
Prepaid expenses 35,702 38,839
---------- ----------
726,235 774,181
Property, plant and equipment (Note 7) 2,877,060 3,003,443
Goodwill (Note 8) 109,378 559,621
Other assets (Note 9) 204,157 197,012
---------- ----------
$3,916,830 $4,534,257
========== ==========
LIABILITIES
Current Liabilities
Short-term debt (Note 10) $ 474,504 $ 94,940
Accounts payable and accrued charges (Note 11) 349,062 349,684
Current portion of long-term debt (Note 12) 7,437 386
---------- ----------
831,003 445,010
Long-term debt (Note 12) 437,020 933,294
Deferred income tax liability (Note 23) 409,371 417,853
Accrued post-retirement/post-employment benefits (Note 14) 148,409 131,179
Accrued reclamation costs (Note 15) 112,175 129,399
Other non-current liabilities and deferred credits 16,466 23,761
---------- ----------
1,954,444 2,080,496
========== ==========
CONTINGENCIES (NOTE 27)
SHAREHOLDERS' EQUITY
Share Capital (Note 16) 1,216,533 1,227,599
Unlimited authorization of common shares without par value;
issued and outstanding 53,694,209 and 54,243,795 shares
in 1999 and 1998, respectively
Unlimited authorization of first preferred shares; none outstanding
Contributed Surplus (Note 17) 321,494 336,486
Retained Earnings 424,359 889,676
---------- ----------
1,962,386 2,453,761
---------- ----------
$3,916,830 $4,534,257
========== ==========

</TABLE>
(See Notes to the Consolidated Financial Statements)

Approved by the Board,

/s/ D. Howe /s/ E.R. Stromberg
-------------------- --------------------
Director Director

<PAGE> 48

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Years Ended December 31 (in thousands of US dollars)

1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Net sales (Note 18) $2,061,064 $2,307,763 $2,325,929
Cost of goods sold 1,652,793 1,698,416 1,740,758
---------- ---------- ----------
Gross Margin 408,271 609,347 585,171
---------- ---------- ----------
Selling and administrative 116,294 116,012 99,663
Provincial mining and other taxes (Note 19) 77,085 80,088 70,312
Provision for plant closures and
office consolidation (Note 20 ) 64,950 - -
Provision for asset impairment (Note 21) 526,567 - -
Other income (25,924) (32,809) (32,444)
---------- ---------- ----------
758,972 163,291 137,531
---------- ---------- ----------
OPERATING (LOSS) INCOME (350,701) 446,056 447,640

INTEREST EXPENSE (NOTE 22) 53,824 67,574 81,439
---------- ---------- ----------
(LOSS) INCOME BEFORE INCOME TAXES (404,525) 378,482 366,201

INCOME TAXES (NOTE 23) 7,469 117,479 69,063
---------- ---------- ----------
NET (LOSS) INCOME (411,994) 261,003 297,138

RETAINED EARNINGS, BEGINNING OF YEAR 889,676 680,356 438,526

DIVIDENDS (53,323) (51,683) (55,308)
---------- ---------- ----------
RETAINED EARNINGS, END OF YEAR $ 424,359 $ 889,676 $ 680,356
---------- ---------- ----------
NET (LOSS) INCOME PER SHARE (NOTE 24) $ (7.60) $ 4.82 $ 5.68
---------- ---------- ----------
DIVIDENDS PER SHARE (NOTE 25) $ 0.99 $ 0.96 $ 1.03
---------- ---------- ----------
</TABLE>

(See Notes to the Consolidated Financial Statements)

<PAGE> 49
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Years Ended December 31 (in thousands of US dollars)

1999 1998 1997
---- ---- ----
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net (loss) income $ (411,994) $ 261,003 $ 297,138
Items not affecting cash
Depreciation and amortization 191,106 190,880 170,002
Loss (gain) on disposal of property, plant and equipment 459 (99) (4,739)
Provision for deferred income tax (7,155) 97,203 34,491
Provision for plant closures and office consolidation 37,132 - -
Provision for asset impairment 526,567 - -
Provision for post-retirement/post-employment benefits 7,381 6,848 6,166
---------- --------- ----------
343,496 555,835 503,058
CHANGES IN NON-CASH OPERATING WORKING CAPITAL
Accounts receivable 33,779 48,751 23,470
Inventories (16,067) (7,859) 19,873
Prepaid expenses 3,175 (16,603) 3,736
Accounts payable and accrued charges (5,024) 1,301 (72,006)
Current income taxes 8,107 (3,778) 3,383
Accrued reclamation costs (20,680) (7,436) (7,407)
Other non-current liabilities and deferred credits (3,177) 7,749 (6,286)
---------- --------- ----------
CASH PROVIDED BY OPERATING ACTIVITIES 343,609 577,960 467,821
---------- --------- ----------
INVESTING ACTIVITIES
Additions to property, plant and equipment (118,846) (190,155) (160,337)
Acquisition of Minera Yolanda S.C.M. (Note 4) (36,943) - -
Acquisition of Arcadian Corporation - - (474,985)
Proceeds from disposal of property, plant and equipment 1,873 31,926 15,276
Additions to other assets (23,832) (85,066) (22,091)
---------- --------- ----------
CASH USED IN INVESTING ACTIVITIES (177,748) (243,295) (642,137)
---------- --------- ----------
CASH (DEFICIENCY) BEFORE FINANCING ACTIVITIES 165,861 334,665 (174,316)
---------- --------- ----------
FINANCING ACTIVITIES
Proceeds from long-term obligations - 143,000 1,210,000
Repayment of long-term obligations (489,978) (376,329) (699,979)
Proceeds from short-term debt 379,564 215,000 210,000
Repayment of short-term debt - (221,988) (108,072)
Repayment of Senior Notes - - (374,526)
Dividends (53,323) (51,683) (55,308)
Repurchase of shares (29,262) - -
Issuance of shares 3,204 16,550 7,287
---------- --------- ----------
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (189,795) (275,450) 189,402
---------- --------- ----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (23,934) 59,215 15,086
CASH AND CASH EQUIVALENTS (BANK INDEBTEDNESS), BEGINNING OF YEAR 67,971 8,756 (6,330)
---------- --------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 44,037 $ 67,971 $ 8,756
========== ========= ==========
Supplemental cash flow disclosure
Interest paid $ 57,713 $ 68,419 $ 84,365
Income taxes paid $ 5,767 $ 19,228 $ 41,252
---------- --------- ----------
</TABLE>

(See Notes to the Consolidated Financial Statements)

<PAGE> 50

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

1. DESCRIPTION OF BUSINESS
Potash Corporation of Saskatchewan Inc. ("PCS") and its operating
subsidiaries (the "Company" except to the extent the context otherwise requires)
form an integrated fertilizer and related industrial and feed products company.
The Company's potash producing assets include five mines and mills and mining
rights to potash reserves at a sixth location all in the Province of
Saskatchewan, one mine and two mills located in the Province of New Brunswick
and one mine and mill in the State of Utah. The Company's phosphate producing
assets include a vertically-integrated phosphate mine and processing plant
located in the State of North Carolina, phosphate feed plants in five states,
two industrial phosphoric acid plants owned in a joint venture carrying on
business as Albright & Wilson Company, a mine and processing plant complexes in
the State of Florida and a processing plant complex in the State of Louisiana.
The Company's nitrogen producing assets include four domestic plants located in
the states of Georgia, Louisiana, Ohio and Tennessee and large-scale operations
in Trinidad. The Company has a plant in Chile that will produce sodium nitrate
and potassium nitrate. The Company owns or leases in excess of 130 terminal and
warehouse facilities strategically located in Canada and the United States, and
services customers with a fleet of approximately 5,000 rail cars.

The Company sells potash from its Saskatchewan mines for use outside North
America exclusively to Canpotex Limited ("Canpotex"). Canpotex, a potash export,
sales and marketing company owned in equal shares by the three potash producers
in the Province of Saskatchewan (including the Company), resells potash to
offshore customers. PCS Sales (Canada) Inc. and PCS Sales (USA), Inc., wholly-
owned subsidiaries of PCS, execute marketing and sales for the Company's potash,
phosphate and nitrogen products in North America. PCS Sales (Canada) Inc.
executes offshore marketing and sales for the Company's New Brunswick potash.
PCS Sales (USA), Inc. executes offshore marketing and sales for the Company's
nitrogen products. Phosphate Chemicals Export Association, Inc. ("PhosChem"), an
unrelated phosphate export association established under United States law, is
the principal vehicle through which the Company executes offshore marketing and
sales for its phosphate fertilizers.

2. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION
The Company's accounting policies are in accordance with accounting
principles generally accepted in Canada ("Canadian GAAP"). These policies are
consistent with accounting principles generally accepted in the United States
("US GAAP") in all material respects except as outlined in Note 32. The
preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following policies are
considered to be significant:

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of PCS and its
operating subsidiaries:
o PCS Sales (Canada) Inc.
- PCS Sales (Iowa), Inc.
- PCS Sales (Indiana), Inc.
- PCS Joint Venture, LP
o PCS Sales (USA), Inc.
o Potash Corporation of Saskatchewan Transport Limited
o PCS Phosphate Company, Inc.
- Albright & Wilson Company (proportionately consolidated)
o White Springs Agricultural Chemicals, Inc. ("White Springs")
o PCS Nitrogen, Inc.
- PCS Nitrogen Fertilizer, L.P.
- PCS Nitrogen Ohio, L.P.
- PCS Nitrogen Limited
- PCS Nitrogen Fertilizer Limited
- PCS Nitrogen Trinidad Limited
o PCS Cassidy Lake Company ("PCS Cassidy Lake")
o PCS Yumbes S.C.M.

All significant intercompany balances and transactions have been eliminated.

CASH EQUIVALENTS
Highly liquid investments with an original maturity of three months or less
are considered to be cash equivalents.

INVENTORIES
Inventories of finished product, raw materials and work in process are
valued at the lower of cost and net realizable value. Cost for substantially all
finished product, raw materials and work in process inventories is determined
using the first in, first out (FIFO) method. Certain inventories of materials
and supplies are valued at the lower of average cost and replacement cost and
certain inventories of materials and supplies are valued at the lower of cost
and market.

PREPAID EXPENSES
Prepaid expenses include prepaid freight relating to product inventory
stored at warehouse and terminal facilities which is invoiced to customers at
the time of sale of the inventory.

PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment (which includes mine development costs) are
carried at cost, except for mineral properties, which are carried at the lower
of cost or fair value. Costs of additions, betterments, renewals and interest
during construction are capitalized. The Company periodically reviews property,
plant and equipment for indicators of potential impairment. Impairment would be
measured by comparing book value against the estimated undiscounted future cash
flows and any such impairment loss is included in the statement of income.

Maintenance and repair expenditures which do not improve or extend
productive life are expensed as incurred.

DEPRECIATION AND AMORTIZATION
Depreciation and amortization are provided for on a basis and at rates
calculated to amortize the cost of the property, plant and equipment over their
estimated useful lives. Depreciation and amortization rates for all mine assets
(including mine development costs) and potash mills are determined using the
units of production method based on estimates of proven and probable reserves.
Other asset classes are depreciated or amortized on a straight-line basis as
follows: land improvements 5 to 30 years, buildings and improvements 6 to 30
years and machinery and equipment 5 to 25 years.

GOODWILL
Goodwill represents the excess of the purchase price and related costs over
the value assigned to the net tangible assets of businesses acquired and is
carried at cost. Goodwill is being amortized on a straight-line basis over a
period of forty years. The Company assesses the recoverability of this
intangible asset based on estimated undiscounted future cash flows. Impairment
is measured by comparing book value against the estimated undiscounted future
cash flows and any such impairment is included in the statement of income.

<PAGE> 51

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

OTHER ASSETS
Issue costs of long-term obligations are capitalized to deferred charges
and are amortized to interest expense over the term of the related liability.

Preproduction costs are capitalized to deferred charges and represent costs
incurred prior to obtaining commercial production at new milling facilities, net
of revenue earned, and are amortized on a straight-line basis over ten years.

The costs of constructing bases for gypsum stacks and settling ponds are
capitalized to deferred charges and are amortized on a straight-line basis over
their estimated useful lives of three to five years.

Land held for sale is stated at the lower of cost or net realizable value.

Investments in which the Company exercises significant influence (but does
not control) are accounted for using the equity method. Other investments are
stated at cost.

Rotational plant maintenance costs, which consist primarily of planned
major maintenance projects (also known as "turnarounds"), are capitalized when
incurred and are amortized over the anticipated periods until the next scheduled
rotational plant maintenance which ranges from two to four years.

LEASES
Leases entered into are classified as either capital or operating leases.
Leases that transfer substantially all of the benefits and risks of ownership of
property to the Company are accounted for as capital leases. At the time a
capital lease is entered into, an asset is recorded together with the related
long-term obligation. Equipment acquired under capital leases is being
depreciated on the same basis as other property, plant and equipment. Gains or
losses resulting from sale-leaseback transactions are deferred and amortized in
proportion to the amortization of the leased asset. Rental payments under
operating leases are charged to expense as incurred.

POST-EMPLOYMENT AND POST-RETIREMENT BENEFITS
Accrual of the costs of the Company's defined benefit pension plans are
recorded monthly and adjusted annually based on actuaries' reports. Pension
expense includes the net of management's best estimate of the cost of benefits
provided, interest cost of projected benefits, return on pension plan assets and
amortization of experience gains or losses and plan amendments. Adjustments
arising from plan amendments, experience gains or losses and changes in
assumptions are amortized on a straight-line basis over the expected average
remaining service life of the employee group covered by the plan. Pension fund
assets are valued at market values.

Accrual of the costs of providing certain post-retirement benefits,
including medical and life insurance coverage, during the active service period
of the employee is recorded monthly and adjusted annually as actuaries' reports
become available.

Accrual during periods of active employment, for the expected cost of
certain benefits payable to former or inactive employees, is also recorded
monthly and adjusted annually. These benefits include long-term disability
income payments and related medical and insurance costs.

ENVIRONMENTAL COSTS
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to existing conditions
caused by past operations and that do not contribute to current or future
revenue generation are expensed. Provisions for estimated costs are recorded
when environmental remedial efforts are likely and the costs can be reasonably
estimated. In determining the provisions, the Company uses the most current
information available, including similar past experiences, available
technology, regulations in effect, the timing of remediation and
cost-sharing arrangements.

STOCK-BASED COMPENSATION PLANS
The Company has two stock-based compensation plans which are described in
Note 16. No compensation expense is recognized for these plans when stock
options are issued as the exercise price is the quoted market closing price of
the Company's common shares on the last trading day immediately preceding the
date of the grant. Any consideration paid on exercise of stock options is
credited to share capital.

FOREIGN EXCHANGE TRANSACTIONS
PCS and its operating subsidiaries have the US dollar as their functional
currency.

Canadian dollar operating transactions are translated to US dollars at the
average exchange rate of the previous month. Trinidadian dollar operating
transactions are translated to US dollars at the average exchange rate for the
period. Monetary assets and liabilities are translated at period-end exchange
rates. Non-monetary assets owned at December 31, 1994 have been translated under
the Translation of Convenience Method at the December 31, 1994 year-end exchange
rate of US $1.00 = CDN $1.4028. Additions subsequent to December 31, 1994 are
translated at the exchange rate prevailing at the time of the transaction.

Foreign exchange gains or losses are included in other income.

FINANCIAL INSTRUMENTS
The Company enters into forward exchange contracts and natural gas futures,
swaps and option agreements to manage its exposure to exchange rate and
commodity price fluctuations. These activities have been designated as hedging
activities by the Company.

Gains or losses on foreign currency exchange contracts are recognized at
the time that the contracts are entered into and are included in other income.

Gains or losses resulting from changes in the fair value of natural gas
hedging transactions which have not yet been settled are not recognized as they
generally relate to changes in the spot price of anticipated natural gas
purchases. Gains or losses arising from settled hedging transactions are
deferred as a component of inventory until the product containing the hedged
item is sold, at which time both the natural gas purchase cost and the related
hedging deferral are recorded as cost of sales.

The Company regularly evaluates its unrecognized or deferred gains and
losses on these derivatives from a net realizable value of inventory perspective
and establishes appropriate provisions, if necessary.

REVENUE RECOGNITION
Sales revenue is recognized when the product is shipped or a service is
performed. Revenue is recorded based on the F.O.B. mine, plant, warehouse or
terminal price. Transportation costs are recovered from the customer through
sales pricing.

3. CHANGE IN ACCOUNTING POLICY
The Company has adopted the provisions of section 1540 of the Canadian
Institute of Chartered Accountants Handbook "Cash Flow Statements". Under this
accounting policy, cash flows are classified as either operating, investing or
financing activities. Major classes of gross cash receipts and gross cash
payments arising from investing and financing activities are separately
disclosed. Investing and financing transactions that do not require the use of
cash or cash equivalents are excluded from the cash flow statement and disclosed
supplementally. The effect of this change on the current and prior period cash
flow

<PAGE> 52

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

3. CHANGE IN ACCOUNTING POLICY (CONTINUED)
statements was to reduce the amount reported as an investing activity for the
acquisition of Arcadian Corporation in 1997 and reduce the amount reported as a
financing activity for the issuance of shares related to the acquisition. These
non-cash activities have been disclosed supplementally in Note 29. In addition,
the proceeds from and repayment of long-term obligations and short-term debt
have been disclosed separately rather than as a net amount.

4. ACQUISITION OF MINERA YOLANDA S.C.M. On July 1, 1999, the Company acquired
all of the outstanding shares of Minera Yolanda S.C.M. for cash of $37,000
(which was funded from operations). Minera Yolanda S.C.M. is a Chilean sodium
nitrate and potassium nitrate producer which holds mining concessions on certain
sodium nitrate reserves in the Atacama Desert in northern Chile. Subsequent to
the acquisition, the name Minera Yolanda S.C.M. was changed to PCS Yumbes S.C.M.
("PCS Yumbes").

The acquisition has been accounted for by the purchase method of accounting
and, accordingly, the results of operations of PCS Yumbes have been included in
the consolidated financial statements from July 1, 1999.

<TABLE>
<CAPTION>
<S> <C>
Net assets acquired were:
Working capital $ 282
Property, plant and equipment and other assets 31,990
Deferred tax asset 6,370
-------
38,642
Long-term liabilities 1,642
-------
Net assets acquired 37,000
Less: cash acquired 57
-------
Net cash acquisition cost $36,943
=======
</TABLE>

Due to the fact that PCS Yumbes was not in full commercial production prior
to the acquisition, no pro forma information is being provided.

5. ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Trade accounts - Canpotex $ 37,603 $ 30,738
- Other 215,037 247,956
Non-trade accounts 23,646 30,055
-------- --------
276,286 308,749
Less allowance for doubtful accounts 7,022 5,775
-------- --------
$269,264 $302,974
======== ========
</TABLE>

6. INVENTORIES
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Finished product $165,301 $176,908
Materials and supplies 110,615 106,797
Raw materials 53,329 58,471
Work in process 47,987 22,221
-------- --------
$377,232 $364,397
======== ========
</TABLE>

7. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
1999
------------------------------------------
ACCUMULATED
DEPRECIATION AND NET BOOK
COST AMORTIZATION VALUE
----------- ---------------- ----------
<S> <C> <C> <C>
Land and improvements $ 213,374 $ 26,209 $ 187,165
Buildings and improvements 446,889 127,499 319,390
Machinery and equipment 3,035,816 754,108 2,281,708
Mine development costs 132,018 43,221 88,797
---------- -------- ----------
$3,828,097 $951,037 $2,877,060
========== ======== ==========
</TABLE>

<TABLE>
<CAPTION>
1998
------------------------------------------
ACCUMULATED
DEPRECIATION AND NET BOOK
COST AMORTIZATION VALUE
----------- ---------------- ----------
<S> <C> <C> <C>
Land and improvements $ 206,230 $ 23,318 $ 182,912
Buildings and improvements 449,096 117,037 332,059
Machinery and equipment 3,034,648 631,476 2,403,172
Mine development costs 125,908 40,608 85,300
---------- -------- ----------
$3,815,882 $812,439 $3,003,443
========== ======== ==========
</TABLE>

Depreciation and amortization of property, plant and equipment included in
Cost of Goods Sold and in Selling and Administrative was $161,045 (1998 -
$154,215; 1997 - $141,241). During the year the Company recorded an impairment
charge of $85,862 relating to certain of the assets (see Note 21).

8. GOODWILL

<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Cost $110,718 $586,987
Accumulated amortization 1,340 27,366
-------- --------
$109,378 $559,621
======== ========
</TABLE>

Amortization of goodwill included in Selling and Administrative was $11,745
(1998 - $14,675; 1997 - $12,238). During the year the Company recorded an
impairment charge of $438,498 (see Note 21).

9. OTHER ASSETS

<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Deferred charges - net of accumulated amortization $ 49,723 $ 41,268
Prepaid pension costs 14,399 11,169
Land held for sale 3,490 3,490
Investments, at equity 21,890 23,961
Investment, at cost 92,832 92,151
Rotational plant maintenance costs -- net of
accumulated amortization 16,087 21,103
Other 5,736 3,870
-------- --------
$204,157 $197,012
======== ========
</TABLE>

Amortization of deferred charges and rotational plant maintenance costs
included in Cost of Goods Sold and in Selling and Administrative was $18,316
(1998 - $21,990; 1997 - $16,523).

10. SHORT-TERM DEBT
Short-term debt was $474,504 at December 31, 1999 (1998 -$94,940). The
weighted average interest rate on this debt was 6.02% (1998 - 6.00%). The
Company had available lines of credit for short-term financing (net of letters
of credit of $26,242) in the amount of $195,721 at December 31, 1999 (1998 -
$177,451). The lines of credit are unsecured. In addition, the Company is
authorized to borrow a further $98,407 under the commercial paper program.

<PAGE> 53

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

11. ACCOUNTS PAYABLE AND ACCRUED CHARGES
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Trade accounts $231,767 $265,300
Accrued reclamation 22,707 7,731
Accrued interest 5,436 6,758
Accrued payroll 11,873 14,429
Accrued integration 40,502 42,702
Accrued plant closure and office consolidation 20,603 -
Income taxes 2,511 -
Dividends 13,663 12,764
-------- --------
$349,062 $349,684
======== ========
</TABLE>

During the year the Company paid severance, relocation and other related
costs in the amount of $2,200 (1998 - $1,832) which were charged against accrued
integration.

12. LONG-TERM DEBT

<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
SYNDICATED FACILITIES LED BY THE BANK OF NOVA SCOTIA $ - $488,000
The Credit Facility provides for aggregate unsecured advances of $778 million (less the amount of
commercial paper outstanding) at an interest rate of LIBOR plus a maximum of 0.75% (actual at
December 31, 1998 was 0.40%) or Base Rate Canada Loans, payable throughout the term of the Credit
Facility. The actual weighted average interest rate at December 31, 1998 was 5.66%. The Credit
Facility is renewable every 364 days with the consent of the lenders. No principal payments are
required during the revolving period. If the Credit Facility is not renewed, it converts to a
five-year term facility repayable in twenty quarterly instalments each equal to 1% of the principal
outstanding on the conversion date and a final payment of the remaining principal amount due on
the fifth anniversary of the conversion date.

INDUSTRIAL REVENUE AND POLLUTION CONTROL OBLIGATIONS 43,343 44,266
Adjustable Rate Industrial Revenue and Pollution Control Obligations with varying interest rates
and with maturity dates ranging from 2000 to 2012. No sinking fund requirements prior to maturity.
The Adjustable Rate Industrial Revenue and Pollution Control Obligations bear interest at rates
ranging from 3.75% to 4.30%. The average interest rate on these obligations was 3.53% in 1999
(1998 - 3.67%). These loans are secured by bank letters of credit.

NOTES PAYABLE 400,000 400,000
7.125% notes payable June 15, 2007. No sinking fund requirements prior to maturity. These notes
were issued under a shelf registration statement covering up to $1,000,000 of debt securities.
The notes are unsecured.

OBLIGATIONS UNDER CAPITAL LEASES 911 823
OTHER 203 591
-------- --------
444,457 933,680
Less current maturities 7,437 386
-------- --------
$437,020 $933,294
======== ========

</TABLE>

The fair values of all long-term obligations (except the Notes Payable
whose approximate fair value at December 31, 1999 was $367,112) are approximated
by their face values.

Long-term debt at December 31, 1999 will mature as follows:

<TABLE>
<CAPTION>
<S> <C>
2000 $ 7,437
2001 677
2002 221
2003 2,637
2004 253
Subsequent years 433,232
--------
$444,457
========
</TABLE>

13. COMMITMENTS

LEASE COMMITMENTS
The Company has long-term lease agreements for buildings, port facilities,
certain ammonia plants in Trinidad, equipment, ocean-going transportation
vessels and rail cars, the latest of which expires in 2020 (excluding mineral
leases).

The Company has lease agreements with unaffiliated entities with
respect to two ammonia plants constructed in Trinidad. The minimum annual lease
payments under these agreements are approximately $27,000. The initial terms of
the leases (five years and seven years) are renewable for additional five-year
terms subject to certain conditions. If the leases are not renewed or are
otherwise terminated, the Company may be required to make residual termination
payments of approximately 85% of the estimated $384,000 costs of construction.
The Company has an option to purchase the plants during the terms of the leases
for prices approximating their fair market values at the date of exercise.

<PAGE> 54

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

13. COMMITMENTS (CONTINUED)
Future minimum lease payments under these operating leases will be
approximately as follows:

<TABLE>
<CAPTION>
<S> <C>
2000 $ 93,613
2001 84,842
2002 80,675
2003 53,336
2004 41,397
Subsequent years 248,468
</TABLE>

Rental expense for operating leases for the years ended December 31, 1999,
1998 and 1997 was $94,062, $86,633 and $65,252, respectively.

OTHER COMMITMENTS
The Company has entered into raw material purchase commitments based upon
market rates at the time of delivery through 2008 in the amount of approximately
$122,413, of which approximately $55,984 relates to 2000.

The Company has entered into an agreement for the construction of a vessel
for ocean-going transportation of raw materials and finished products in the
amount of $37,000. In addition, the Company has entered into an agreement for
the construction of six barges for the transportation of raw materials in the
amount of $13,060. The balance of the progress payments of $15,200 relating to
these agreements is required in 2000.

Two of the Company's Trinidad subsidiaries have entered into long-term
natural gas contracts with a gas company in Trinidad. The contracts provide for
prices which vary with ammonia market prices, escalating floor prices and
minimum purchase quantities. The third Trinidad subsidiary is currently
negotiating a long-term natural gas contract.

14. POST-RETIREMENT/POST-EMPLOYMENT BENEFITS AND PENSION PLANS

CANADA
Substantially all employees of the Company are participants in either a
defined contribution or a defined benefit pension plan. The Company's
obligations under the defined contribution plans are limited to making regular
payments to the plan to match contributions made by the employees for current
services (to a maximum of 5.5% of salary).

The Company has established a supplemental retirement income plan for
senior management which is unfunded and non-contributory and provides a
supplementary pension benefit. The plan is provided for by charges to earnings
sufficient to meet the projected benefit obligation.

UNITED STATES
The Company has defined benefit pension plans that cover a substantial
majority of its employees. Benefits are based on a combination of years of
service and compensation levels, depending on the plan. Generally, contributions
to the US plans are made to meet minimum funding requirements of the Employee
Retirement Income Security Act of 1974 ("ERISA"). Assets of both US funded plans
consist mainly of corporate equity, US government and corporate debt securities
and units of participation in a collective short-term investment fund.

TRINIDAD
The Company has contributory defined benefit pension plans that cover a
substantial majority of its employees. Benefits are based on service. The plans'
assets consist mainly of local government and other bonds, local mortgage and
mortgage-backed securities, fixed income deposits and cash.

ALL PENSION PLANS
The components of net pension expense for the Company's pension plans,
computed actuarially, were as follows:

<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Service cost for benefits
earned during the year $ 13,743 $ 11,669 $ 9,827
Interest cost on projected
benefit obligations 23,318 22,019 19,566
Expected return on plan assets (35,928) (29,900) (25,234)
Net amortization and deferral 2,485 1,730 31
------- ------- --------
Net pension expense $ 3,618 $ 5,518 $ 4,190
======= ======= ========
</TABLE>

Significant actuarial assumptions used in calculating the net pension
expense for the Company's funded plans were as follows:

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.75% 6.75% 7.50%
Long-term rate of return on assets 9.00% 9.00% 9.00%
Rate of increase in compensation levels 5.00% 5.00% 5.00%
</TABLE>

OTHER POST-RETIREMENT PLANS
The Company provides certain contributory health care plans and
non-contributory life insurance benefits for retired employees. These plans
contain certain cost-sharing features such as deductibles and coinsurance, and
are unfunded with benefits subject to change.

Although the Company prepares its financial statements under Canadian GAAP,
it has continued to apply the treatment prescribed by SFAS No. 106 under US GAAP
"Employers' Accounting for Postretirement Benefits Other Than Pensions" and SFAS
No. 132 "Employers' Disclosures about Pensions and Other Postretirement
Benefits". These statements require the accrual of the cost of providing other
post-retirement benefits, including medical and life insurance coverage, during
the active service period of the employee, and prescribe certain disclosure
requirements.

The components of this expense, computed actuarially, were as follows:

<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Service cost for benefits
earned during the year $ 3,870 $ 2,903 $ 2,701
Interest cost on projected
benefit obligations 9,334 8,025 7,816
Net amortization and deferral 5 2 -
------- ------- -------
Net post-retirement expense $13,209 $10,930 $10,517
======= ======= =======
</TABLE>

The significant actuarial assumptions used in determining post-retirement
benefit expense were as follows:

<TABLE>
<S> <C> <C> <C>
Discount rate 7.75% 6.80% 7.50%
Health care cost trend rate 6.00% 10.00% 10.80%
</TABLE>

If the health care cost trend rate was increased by 1.0 percent, the
accumulated post-retirement benefit obligation and the aggregate of service and
interest cost would have increased as follows:

<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Accumulated post-retirement
benefit obligation $15,488 $ 6,325 $ 4,722
Aggregate of service and
interest cost 2,910 573 490
</TABLE>

If the health care cost trend rate was decreased by 1.0 percent, the
accumulated post-retirement benefit obligation and the aggregate of service and
interest cost would have decreased as follows:

<PAGE> 55

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

14. POST-RETIREMENT/POST-EMPLOYMENT BENEFITS AND PENSION PLANS (CONTINUED)

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Accumulated post-retirement
benefit obligation $19,389 $2,848 $2,599
Aggregate of service and
interest cost 3,852 263 370
</TABLE>

The Company has applied Canadian GAAP to prepare its financial statements
but continues to apply SFAS No. 112 under US GAAP "Employers' Accounting for
Postemployment Benefits". This statement requires the Company to accrue, during
periods of active employment, the expected cost of certain benefits payable to
former or inactive employees. These benefits include long-term disability income
payments and related medical and insurance costs.

The effect of these costs on income before income taxes and the recorded
liability for these costs was not significant for any of the years presented.

All of the Company's US employees may participate in defined contribution
savings plans. These plans are subject to US federal tax limitations and provide
for voluntary employee salary deduction contributions of up to 15 percent of
salary and Company matching contributions of up to 5 percent of salary. The
Company's matching contributions were $3,506 and $3,844 for 1999 and 1998,
respectively.

All of the Company's Canadian salaried employees participate in
the PCS Inc. Savings Plan which was effective January 1, 1999. The Company
contributes 5 percent of salary to the plan and employees may make voluntary
contributions. The Company's contributions were $1,318 in 1999.

The change in benefit obligations and change in plan assets for the above
pension and post-retirement/post-employment plans were as follows:

<TABLE>
<CAPTION>
POST-RETIREMENT/
PENSION POST-EMPLOYMENT
-------------------------- -------------------------
1999 1998 1999 1998
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Change in Benefit Obligations
Balance, beginning of year $ 360,102 $306,948 $ 136,326 $ 119,701
Acquisitions - 849 - -
Canadian benefit obligations - 11,156 - -
Service cost 13,743 11,669 3,870 2,903
Interest cost 23,318 22,019 9,334 8,025
Participants' contributions 369 384 - 88
Actuarial (loss) gain (35,676) 20,936 (368) 10,421
Amendments - - (9,490) -
Benefits paid (14,637) (13,859) (4,388) (4,812)
-------- -------- --------- ----------
Balance, end of year 347,219 360,102 135,284 136,326
-------- -------- --------- ----------
Change in Plan Assets
Fair value, beginning of year 368,727 333,020 - -
Canadian plan assets - 11,156 - -
Actual return on plan assets 11,737 34,130 - -
Employer contributions 8,438 4,080 3,569 4,092
Participants' contributions 369 1,110 819 720
Valuation allowance (1,634) (910) - -
Benefits paid (14,637) (13,859) (4,388) (4,812)
-------- -------- --------- ----------
Fair value, end of year 373,000 368,727 - -
-------- -------- --------- ----------
Funded Status 25,781 8,625 (135,284) (136,326)
Unrecognized Net (Loss) Gain (26,085) (11,244) 6,867 11,908
Unrecognized Prior Service Cost 1,215 2,270 (10,209) -
-------- -------- --------- ----------
Prepaid (Accrued) Benefit Cost 911 (349) (138,626) (124,418)
Less current portion - 2,187 3,705 3,630
-------- -------- --------- ----------
911 1,838 (134,921) (120,788)
Add SFAS 112 liability - - - (1,060)
-------- -------- --------- ----------
Prepaid (Accrued) Post-retirement/Post-employment Benefits $ 911 $ 1,838 $(134,921) $(121,848)
-------- -------- --------- ----------
Amounts recognized in the statements of financial position consist of:
Long-term liability $ (13,488) $ (9,331) $(134,921) $(121,848)
Prepaid pension costs 14,399 11,169 - -
--------- -------- --------- ----------
$ 911 $ 1,838 $(134,921) $(121,848)
--------- -------- --------- ----------
</TABLE>

The aggregate pension accumulated benefit obligations and aggregate fair value
of plan assets for pension plans with accumulated benefit obligations in excess
of plan assets are as follows:

POST-RETIREMENT/
PENSION POST-EMPLOYMENT
--------------------- --------------------------
1999 1998 1999 1998
--------------------- --------------------------
<S> <C> <C> <C> <C>
Accumulated benefit obligation $84,390 $100,213 $ 134,921 $ 121,848
Fair value of plan assets $72,224 $ 76,698 - -
</TABLE>

15. ENVIRONMENTAL COST
RECLAMATION AND RESTORATION COSTS
Site restoration and reclamation costs have been accrued for various sites.
At December 31, 1999, the Company has accrued $28,524 (1998 - $29,078) for the
Aurora, North Carolina facility, $55,755 (1998 - $66,412) for the White Springs,
Florida facility, $27,377 (1998 - $27,377) for

<PAGE> 56

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

15. ENVIRONMENTAL COST (CONTINUED)
the Moab, Utah facility, $552 (1998 - $9,225) for various sulphur facilities,
$18,401 (1998 - $nil) for certain Florida Favorite Fertilizer facilities and
$4,273 (1998 - $5,038) for the Cassidy Lake facility. The idle sulphur
facilities were part of the acquisition of Texasgulf Inc. and are undergoing
dismantlement and environmental restoration efforts. The current portion of
restoration and reclamation accrued in 1999 totalled $22,707 (1998 - $7,731).
These amounts represent the Company's current estimate of potential site
restoration and reclamation costs which were last assessed in December 1999.
These expenditures are generally incurred over an extended period of time.

Annual environmental expenditures for reclamation and restoration during
the years ended December 31, 1999, 1998 and 1997 were $79,293, $71,887 and
$66,972 respectively. Of the 1999 amount, $70,303 (1998 - $62,958; 1997 -
$51,421) was charged to operations, $3,074 (1998 - $4,059; 1997 - $4,948) was
capitalized and $5,916 (1998 - $4,870; 1997 - $10,603) was charged against
accrued reclamation costs.

Certain reclamation obligations are currently secured by a surety bond of
approximately $13,000.

CAPPING OF BYPRODUCT GYPSUM STACKS
In 1993, the State of Florida passed certain legislation requiring
companies to reduce the potential environmental hazards associated with
accumulations of byproduct gypsum (gypsum stacks). The regulations implementing
this legislation require companies to "cap" the gypsum stacks in order to reduce
seepage into the groundwater, when such stacks reach their design capacity (for
the Company, in approximately 35 years), or after March 25, 2001 if groundwater
standards are not being met. At December 31, 1999, a balance of $35,350 (1998 -
$35,350) was included in accrued reclamation costs for this gypsum stack capping
requirement. The obligation of White Springs regarding the gypsum stacks is
guaranteed by PCS.

In North Carolina, on expiry of the mine's phosphate reserves, capping of
the remaining gypsum stacks must comply with the laws in place at that time.

OTHER ENVIRONMENTAL COSTS
Other than reclamation, restoration and gypsum stack capping costs
discussed above, no significant costs relating to existing conditions caused by
past operations were incurred by the Company during 1999. At December 31, 1999,
environmental provisions recorded by the Company, other than those related to
reclamation, restoration and gypsum stack capping, as discussed above, were
approximately $2,582.

The Company's estimated operating expenses, other than reclamation,
restoration and gypsum stack capping, relating to compliance with environmental
laws and regulations governing ongoing operations were approximately $20,232 for
the year ended December 31, 1999 (1998 - $20,473; 1997 - $15,520). In addition,
capital expenditures for other environmental compliance were approximately
$5,108 for the year ended December 31, 1999 (1998 - $9,926; 1997 - $10,464).

16. SHARE CAPITAL
AUTHORIZED:
The Company is authorized to issue an unlimited number of common shares
without par value and an unlimited number of first preferred shares. The first
preferred shares may be issued in one or more series with rights and conditions
to be determined by the Board of Directors.

ISSUED:
<TABLE>
<CAPTION>
1999 1998 1997
CONSIDERATION CONSIDERATION CONSIDERATION
------------- ------------- -------------
<S> <C> <C> <C>
Issued, beginning of year $1,227,599 $1,211,049 $630,484
Shares issued under option 1,356 15,414 5,826
Shares issued to purchase
Arcadian Corporation - - 573,278
Shares issued for dividend
reinvestment plan 1,848 1,136 1,461
Shares repurchased (14,270) - -
---------- ---------- ----------
Issued, end of year $1,216,533 $1,227,599 $1,211,049
========== ========== ==========

</TABLE>

<TABLE>
<CAPTION>
ISSUED: 1999 1998 1997
NUMBER OF NUMBER OF NUMBER OF
COMMON COMMON COMMON
SHARES SHARES SHARES
---------- --------- ---------
<S> <C> <C> <C>
Issued, beginning of year 54,243,795 53,896,186 45,581,864
Shares issued under option 46,450 332,800 267,350
Shares issued to purchase
Arcadian Corporation - - 8,029,092
Shares issued for dividend
reinvestment plan 33,964 14,809 17,880
Shares repurchased (630,000) - -
---------- ---------- ----------
Issued, end of year 53,694,209 54,243,795 53,896,186
========== ========== ==========
</TABLE>

STOCK OPTIONS
The Company has two option plans. Under the Officers and Key Employees
Plan, the Company may, after February 3, 1998, issue up to 6,926,125 common
shares pursuant to the exercise of options. Under the Directors Plan, the
Company may, after January 24, 1995, issue up to 456,000 common shares pursuant
to the exercise of options. Under both plans, the exercise price is the quoted
market closing price of the Company's common shares on the last trading day
immediately preceding the date of the grant and an option's maximum term is ten
years. All options granted to date have provided that one-half of the options
granted in a year will vest one year from the date of the grant, with the other
half of the options vesting the following year.

A summary of the status of the plans as of December 31, 1999, 1998 and 1997
and changes during the years ending on those dates is presented below:

<TABLE>
<CAPTION>
NUMBER OF SHARES SUBJECT TO OPTION
1999 1998 1997
--------- ---------- ---------
<S> <C> <C> <C>
Outstanding,
beginning of year 2,947,075 2,461,125 1,845,475
Granted 857,100 824,000 889,750
Exercised (46,450) (332,800) (267,350)
Cancelled (11,750) (5,250) (6,750)
--------- --------- ---------
Outstanding, end of year 3,745,975 2,947,075 2,461,125
========= ========= =========
</TABLE>

<TABLE>
<CAPTION>
WEIGHTED AVERAGE EXERCISE PRICE
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Outstanding, beginning of year $70.35 $68.11 $52.90
Granted 43.69 67.88 86.11
Exercised 30.34 47.45 23.12
Cancelled 77.62 82.61 78.44
Outstanding, end of year 64.72 70.35 68.11
</TABLE>

The weighted-average grant-date fair value of options granted during the
year was $11,622 (1998 - $18,665; 1997 -$23,712).

The following table summarizes information about stock options outstanding
at December 31, 1999:

<PAGE> 57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

16. SHARE CAPITAL (CONTINUED)

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
---------------------------------------------------------- ------------------------------------
RANGE OF EXERCISE NUMBER WEIGHTED AVERAGE WEIGHTED AVERAGE WEIGHTED AVERAGE
PRICES OUTSTANDING REMAINING LIFE EXERCISE PRICE NUMBER EXERCISE PRICE
- ----------------- ----------- ---------------- ---------------- -------- ----------------
<S> <C> <C> <C> <C> <C>
$12.00 to $18.38 11,750 2 years $16.88 11,750 $16.88
$20.00 to $25.38 121,850 4 years 21.75 121,850 21.75
$32.25 145,950 5 years 32.25 145,950 32.25
$43.69 857,100 10 years 43.69 - -
$67.88 820,000 9 years 67.88 410,000 67.88
$70.38 to $74.75 914,075 7 years 72.43 914,075 72.43
$81.75 to $86.75 875,250 8 years 86.35 875,250 86.35
</TABLE>

The foregoing options have expiry dates ranging from November 8, 2000 to
November 9, 2009.

SHAREHOLDER RIGHTS PLAN
The Board of Directors of the Company adopted a shareholder rights plan
("the Plan") on November 10, 1994. The Plan was amended by the Board of
Directors on March 28, 1995 and May 4, 1995 and approved by the shareholders on
May 11, 1995. Under the Plan, the Board of Directors declared a dividend
distribution of one right for each common share to holders of record. The rights
are not currently exercisable and only become exercisable upon the occurrence of
certain events as specified in the Plan. The Plan was renewed in 1998 and now
expires following the Company's annual meeting in 2001, unless otherwise renewed
or extended.

SHARE REPURCHASE PLAN
The Board of Directors of the Company approved an open market repurchase
program with respect to the Company's common shares on November 3, 1999. Under
this program, the Company is permitted to repurchase up to 2,700,000 of its
outstanding common shares by November 18, 2000. The Company plans to cancel
shares purchased under the program.

17. CONTRIBUTED SURPLUS

Contributed surplus has been charged with the excess of the cost of
purchasing the common shares under the open market repurchase program over the
stated value of the shares as follows:

<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Balance, beginning of year $336,486 $336,486 $336,486
Excess of cost of common shares repurchased over their stated value (14,992) - -
-------- -------- --------
Balance, end of year $321,494 $336,486 $336,486
-------- -------- --------
</TABLE>

18. SEGMENT INFORMATION
The Company has three reportable business segments: potash, phosphate and
nitrogen. All three segments produce fertilizers for sale to agricultural
customers. In addition, approximately 47 percent of nitrogen and 41 percent of
phosphate net sales revenue is from non-fertilizer products. These business
segments are differentiated by the chemical nutrient contained in the product
that each produces, with the exception of phosphate products produced at
Geismar, which are included in the nitrogen business segment. Inter-segment net
sales are made under terms which approximate market value. Each of the phosphate
and nitrogen business segments was acquired as a unit.

<TABLE>
<CAPTION>
1999
--------------------------------------------------------------------------
POTASH PHOSPHATE NITROGEN ALL OTHERS CONSOLIDATED
---------- ---------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net sales - third party $ 563,296 $ 754,045 $ 743,723 $ - $2,061,064
Inter-segment net sales 8,711 1,591 47,744 - -
Gross margin 301,929 115,810 (9,468) - 408,271
Other income 3,084 5,225 10,480 7,135 25,924
Depreciation and amortization 37,243 61,826 83,486 8,551 191,106
Provision for plant closures 1,254 8,232 55,464 - 64,950
Provision for asset impairment - 7,615 518,952 - 526,567
Operating income (loss) 221,381 94,665 (604,000) (62,747) (350,701)
Assets 1,036,901 1,388,453 1,324,544 166,932 3,916,830
Expenditures for segment capital assets 41,100 41,739 30,276 5,731 118,846
</TABLE>

<TABLE>
<CAPTION>
1998
--------------------------------------------------------------------------
POTASH PHOSPHATE NITROGEN ALL OTHERS CONSOLIDATED
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net sales - third party $ 545,491 $ 914,197 $ 848,075 $ - $2,307,763
Inter-segment net sales 10,342 1,319 66,705 - -
Gross margin 316,267 210,373 82,707 - 609,347
Other income 2,101 6,463 10,610 13,635 32,809
Depreciation and amortization 36,242 59,084 86,708 8,846 190,880
Operating income 231,269 207,503 60,757 (53,473) 446,056
Assets 1,037,328 1,359,288 1,931,326 206,315 4,534,257
Expenditures for segment capital assets 43,158 66,958 80,039 - 190,155
</TABLE>

55
<PAGE> 58

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

18. SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
1997
POTASH PHOSPHATE NITROGEN ALL OTHERS CONSOLIDATED
---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net sales - third party $ 504,167 $ 926,490 $ 895,272 $ - $2,325,929
Inter-segment net sales 9,017 1,460 18,132 - -
Gross margin 257,606 184,199 143,366 - 585,171
Other income 6,010 4,863 9,959 11,612 32,444
Depreciation and amortization 39,605 55,102 68,996 6,299 170,002
Operating income 187,226 181,062 125,651 (46,299) 447,640
Assets 1,005,910 1,406,717 1,957,292 57,673 4,427,592
Expenditures for segment capital assets 42,836 47,979 69,522 - 160,337
</TABLE>

<TABLE>
<CAPTION>
FINANCIAL INFORMATION BY GEOGRAPHIC AREA IS SUMMARIZED IN THE FOLLOWING TABLE:

CANADA UNITED STATES TRINIDAD OTHER CONSOLIDATED
--------- ------------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
1999
Net sales to customers outside the Company
Canada $ 21,429 $ 29,294 $ - $ - $ 50,723
United States 209,693 1,080,696 122,076 - 1,412,465
PhosChem - 186,494 - - 186,494
Canpotex 254,711 - - - 254,711
Other 71,163 39,153 46,355 - 156,671
-------- ---------- -------- ------- ----------
$556,996 $1,335,637 $168,431 $ - $2,061,064
-------- ---------- -------- ------- ----------
Operating income (loss) $179,121 $ (511,852) $(17,970) $ - $ (350,701)
-------- ---------- -------- ------- ----------
Capital assets and goodwill $796,576 $1,871,664 $301,669 $32,616 $3,002,525
-------- ---------- -------- ------- ----------
1998
Net sales to customers outside the Company
Canada $ 21,885 $ 29,808 $ - $ - $ 51,693
United States 199,956 1,279,615 110,112 - 1,589,683
PhosChem - 262,168 - - 262,168
Canpotex 252,464 - - - 252,464
Other 65,441 35,237 51,077 - 151,755
-------- ---------- -------- ------- ----------
$539,746 $1,606,828 $161,189 $ - $2,307,763
-------- ---------- -------- ------- ----------
Operating income $209,783 $ 220,221 $ 16,052 $ - $ 446,056
-------- ---------- -------- ------- ----------
Capital assets and goodwill $823,827 $2,448,587 $316,025 $ - $3,588,439
-------- ---------- -------- ------- ----------
1997
Net sales to customers outside the Company
Canada $ 14,460 $ 27,147 $ - $ - $ 41,607
United States 188,416 1,334,672 100,466 - 1,623,554
PhosChem - 261,502 - - 261,502
Canpotex 229,666 - - - 229,666
Other 64,261 35,097 70,242 - 169,600
-------- ---------- -------- ------- ----------
$496,803 $1,658,418 $170,708 $ - $2,325,929
-------- ---------- -------- ------- ----------
Operating income $163,620 $ 257,528 $ 26,492 $ - $ 447,640
-------- ---------- -------- ------- ----------
Capital assets and goodwill $811,135 $2,463,546 $335,745 $ - $3,610,426
-------- ---------- -------- ------- ----------
</TABLE>

<TABLE>
<CAPTION>
19. PROVINCIAL MINING AND OTHER TAXES
Provincial mining taxes and other taxes consist of:

1999 1998 1997
------- ------- --------
<S> <C> <C> <C>
Potash Production Tax $57,997 $61,639 $53,453
Saskatchewan corporate
capital taxes 19,088 18,449 16,859
------- ------- -------
$77,085 $80,088 $70,312
======= ======= =======
</TABLE>

20. PROVISION FOR PLANT CLOSURES AND OFFICE CONSOLIDATION
In the third quarter of 1999, the Board of Directors of the Company
approved a plan to close nitrogen plants at Clinton, Iowa and LaPlatte,
Nebraska; a phosphate feed plant at Saltville, Virginia; and a phosphate
terminal at Jacksonville, Florida. The Clinton and LaPlatte closures result from
these plants being high-cost producers due to their size and technology
employed. Due to the high production costs, these plants are unprofitable at
both current and projected future prices. The closure of the Saltville plant is
primarily due to higher transportation costs for raw materials and waste
products which make this plant a high-cost production facility. The terminal at
Jacksonville is being closed as the Company intends to solely utilize the more
efficient terminal at Morehead City, North Carolina.

<PAGE> 59

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

20. PROVISION FOR PLANT CLOSURES AND OFFICE CONSOLIDATION (CONTINUED)
The plants at Clinton and LaPlatte were indefinitely shut down effective
August 12, 1999. The decision to permanently close both facilities was made and
announced on August 31, 1999. Substantially all on-site product inventory has
been sold and the Company is now in the process of decommissioning the ammonia
storage tanks, which it expects will be completed in the first quarter of 2000.
The Company plans to contract out the demolition of these facilities. The
demolition activity is expected to start near the end of the first quarter of
2000 and be completed by the end of 2000. Environmental procedures have
commenced but cannot be completed until the dismantling of the plants is
complete. These procedures principally include the cleaning of dismantled
equipment and asbestos removal. Subsequent to the dismantling, the Company will
attempt to sell the plant sites. Annual expenditures for site security and other
maintenance costs will approximate $400 until such time as the sites are
disposed of. There are outstanding contractual commitments that relate to
natural gas and hydrogen purchase contracts and electricity. The number of
employees terminated as a result of these closures will be 155 hourly and
75 salaried, of which 168 have left the Company as of December 31, 1999. The
majority of the remaining employees are expected to leave the Company during the
first quarter of 2000. Eligible hourly employees will receive severance of two
hundred dollars per year of service up to a maximum of 30 years of service and
the salaried employees will receive severance based on number of years of
service. From January 1, 1999 to the date of closure, these plants incurred
operating losses of approximately $12,000 (including depreciation and
amortization of approximately $3,000).

The phosphate feed plant at Saltville was closed effective September 1,
1999. This property may be sold or may be turned over to the municipal
authorities. Annual expenditures for plant security and other maintenance costs
until such time will approximate $154. The number of employees terminated as a
result of this closure will be 49, of which 45 have left the Company as of
December 31, 1999. The remaining 4 employees are expected to leave or transfer
to other facilities in first quarter 2000. The employees were entitled to
severance based on number of years of service. The severance payments ranged
from one to seven months' salary. From January 1, 1999 to the date of closure,
this plant incurred operating losses of approximately $6,000 (including
depreciation and amortization of approximately $400).

The phosphate terminal at Jacksonville was closed effective August 15,
1999. Environmental remediation procedures are expected to be completed in the
first quarter of 2000, at which time the Company will attempt to sell the
terminal. The number of employees affected as a result of this closure will
be nine, of which three have transferred to other facilities as of December 31,
1999. Three employees will transfer to other facilities in February 2000 and
the remaining employees are expected to leave at this time. From January 1,
1999 to the date of closure, this terminal incurred operating losses of
approximately $2,000 (including depreciation and amortization of approximately
$800).

The decision to close these facilities triggered an assessment of the
fair value of these assets, with fair value being determined based on estimated
sales proceeds less costs to sell.

The Company is proceeding with a consolidation of its Raleigh, North
Carolina and Memphis, Tennessee administrative offices with the Company's office
in Chicago, Illinois. As a result of the consolidation, 115 salaried employees
will be terminated, with termination dates ranging from March 31, 2000 through
to September 30, 2000. Terminated employees are entitled to severance pay equal
to two weeks' salary for each completed year of service (to a maximum of 52
weeks) and provided they stay until their termination date, an additional
payment equal to 35 percent of their annual salary pro-rated for the number of
months from October 1, 1999 to their termination. The Company has contractual
commitments relating to current office leases at all three locations.

Charges associated with these closures and office consolidation are as
follows:

<TABLE>
<CAPTION>
AMOUNT RESERVE BALANCE
PROVISION PAID UTILIZED AT DEC. 31
--------- ------ -------- ----------
<S> <C> <C> <C> <C>
PLANT CLOSURES
Severance $ 5,386 $2,652 $ - $ 2,734
Decommissioning 3,629 3,345 - 284
Environmental remediation 2,000 92 - 1,908
Contractual commitments 7,588 1,126 - 6,462
Non-cash parts inventory
writedown 8,198 - 13 8,185
Non-cash writedown of
property, plant and
equipment 28,934 - 1,856 27,078
------ ------ ----- ------
55,735 7,215 1,869 46,651
OFFICE CONSOLIDATION
Severance 6,215 - - 6,215
Contractual commitments 3,000 - - 3,000
------- ------ ------ -------
$64,950 $7,215 $1,869 $55,866
======= ====== ====== =======
</TABLE>

Of the $64,950 provision, $55,464 pertains to the nitrogen business
segment, $8,232 pertains to the phosphate business segment and $1,254 relates to
the potash business segment.

After the writedown of the assets, the carrying amount of the remaining
assets affected by the closures is $5,604.

The plant closures and office consolidation will require cash expenditures
of approximately $27,818, all of which is expected to be funded from operations.
The majority of these expenditures are expected to be made by the end of 2000.

21. PROVISION FOR ASSET IMPAIRMENT
Due to operating losses primarily caused by reduced product prices and
increased gas costs relative to certain current and expected future competition,
the Company assessed the recoverability of the tangible and intangible assets
related to the nitrogen operations. The Company projected the undiscounted
future net cash flows from use together with the residual value of these assets
and determined that in certain cases they were less than the carrying amount.
Third party forecasts of future nitrogen prices indicate that they will not
reach the levels experienced in 1997 when the nitrogen operations were
purchased. These circumstances are the primary cause of a permanent impairment
in the value of certain nitrogen assets. Accordingly, the Company recorded a
provision for asset impairment of $518,952, of which $438,498 relates to
goodwill, $79,489 relates to property, plant and equipment at the Memphis,
Tennessee plant and $965 relates to other assets. The provision for asset
impairment for the nitrogen operations was calculated as the difference between
the carrying amount and the undiscounted future net cash flows from use together
with residual values. Estimates of such undiscounted future net cash flows from
use together with residual values are subject to significant uncertainties and
assumptions. Accordingly, actual results could vary significantly from such
estimates.

Due to a history of operating losses and a projection of continuing
operating losses, the Company assessed the recoverability of the tangible and
intangible assets related to the Florida Favorite Fertilizer ("FFF") operations.
The Company estimated the undiscounted future net cash flows from use together
with the residual value of these assets and determined that in certain cases

57
<PAGE> 60

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

21. PROVISION FOR ASSET IMPAIRMENT (CONTINUED)
they were less than the carrying amount. Accordingly, the Company recorded a
provision for asset impairment of $7,615, of which $6,373 relates to property,
plant and equipment primarily at the Lakeland, Florida and Moultrie, Georgia
locations and $1,242 relates to intangibles. The provision for asset impairment
for the FFF operations was calculated as the difference between third party
sales offers and the carrying amount of the various properties. This provision
relates to the phosphate business segment.

These writedowns will result in a reduction of amortization expense of
approximately $11,700 and a reduction of depreciation expense of approximately
$4,900 on an annualized basis.

22. INTEREST EXPENSE
<TABLE>
<CAPTION>

1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Interest on
Short-term debt $10,591 $ 2,942 $ 2,351
Long-term debt 43,233 64,632 79,088
------- ------- -------
$53,824 $67,574 $81,439
======= ======= =======
</TABLE>

23. INCOME TAXES
As the Company operates in a specialized industry and in several tax
jurisdictions, its income is subject to various rates of taxation.

The provision for income taxes differs from the amount that would have
resulted from applying the Canadian statutory income tax rates to income (loss)
before income taxes as follows:

<TABLE>
<CAPTION>
1999 1998 1997
--------- -------- --------
<S> <C> <C> <C>
Income (loss) before income taxes
Canada $ 126,208 $122,490 $ 67,606
United States (509,038) 243,275 272,520
Trinidad (21,695) 12,717 26,075
--------- -------- --------
$(404,525) $378,482 $366,201
========= ======== ========
Federal and Provincial
Statutory tax rates 46.12% 46.12% 46.12%
Tax at statutory rates $(186,567) $174,556 $168,892
Adjusted for the effect of:
Net non-deductible provincial
taxes and royalties and
resource allowances 20,593 19,327 (7,025)
Additional tax deductions (43,603) (63,330) (73,631)
Difference between Canadian
rate and rates applicable to
subsidiaries in other countries 5,207 (14,071) (24,662)
Goodwill impairment 207,652 - -
Other 4,187 997 5,489
--------- -------- --------
Income tax expense $ 7,469 $117,479 $ 69,063
========= ======== ========
</TABLE>

Details of income tax expense are as follows:
<TABLE>
<CAPTION>

<S> <C> <C> <C>
Canada
Current $ 9,359 $ 2,351 $ 1,024
Deferred 68,446 75,405 2,146
United States - Federal
Current 3,352 6,177 31,888
Deferred (70,761) 10,683 25,063
United States - State
Current 1,137 4,963 -
Deferred 2,741 14,561 (716)
Trinidad
Current 776 5,808 13,564
Deferred (7,581) (2,469) (3,906)
-------- -------- -------
Income tax expense $ 7,469 $117,479 $69,063
======== ======== =======
</TABLE>

The tax effects of temporary differences that give rise to significant
portions of the net deferred income tax liability are:

<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Deferred income tax assets:
Loss and credit carryforwards $246,379 $127,653
Post-retirement/post-employment benefits 50,608 50,161
Accrued reclamation costs 40,349 44,555
Other 2,843 11,312
-------- --------
Total deferred income tax assets 340,179 233,681
======== ========
Deferred income tax liabilities:
Basis difference in fixed assets 724,485 628,551
Other 25,065 22,983
-------- --------
Total deferred income tax liabilities 749,550 651,534
-------- --------
Net deferred income tax liability $409,371 $417,853
======== ========
</TABLE>

At December 31, 1999, the Company has income tax losses carried forward of
approximately $646,000 which will begin to expire in 2010. The benefit relating
to these loss carryforwards has been recognized by reducing deferred income tax
liabilities. In addition, the Company has alternative minimum tax credits of
approximately $20,000 which carry forward indefinitely.

24. NET (LOSS) INCOME PER SHARE
Net (loss) income per share was calculated on the weighted average number
of shares issued and outstanding during the twelve months ended December 31,
1999 of 54,230,000 (1998 -54,177,000; 1997 - 52,275,000). Fully diluted net
(loss) income per share for the year ended December 31, 1999 was $(7.60) (1998
- -$4.77; 1997 - $5.61).

25. DIVIDENDS PER SHARE
Prior to June 30, 1999, the Company declared its dividends in Canadian
dollars. Subsequent to that date, the Company declared its dividends in US
dollars.

26. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company uses financial instruments, including forward exchange
contracts, futures, swaps and option agreements, to hedge foreign exchange and
commodity price risk. The Company does not hold or issue financial instruments
for trading purposes.
At December 31, 1999, the Company had commitments in the form of foreign
exchange contracts to sell US dollars in the amount of $36,000 (1998 - $0).

<PAGE> 61

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

26. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (CONTINUED)
The Company's exposure to interest rate risk is limited to its long-term
debt. The effective interest rate on the long-term debt approximates the stated
rate because there are no significant premiums or discounts.

In addition to physical spot and term purchases, the Company at times
employs futures, swaps and option agreements to establish the cost on a portion
of its natural gas requirements. These instruments are intended to hedge the
future cost of the committed and anticipated natural gas purchases for its US
nitrogen plants. Under these arrangements, the Company receives or makes
payments based on the differential between a specified price and the actual spot
price of natural gas. The Company has certain available lines of credit which
are utilized to reduce cash margin requirements to maintain the derivatives.
Cash margin requirements which have been advanced as at December 31, 1999
totalled $4,382 (1998 - $16,199) and are included in inventory.

As at December 31, 1999, the Company had derivatives qualifying for
deferral in the form of futures and swaps. The futures represented a notional
amount of 13.9 million MMBtus of natural gas with maturities in 2000 through
2002. The swaps represented a notional amount of 86.4 million MMBtus with
maturities in 2000 through 2004. As at December 31, 1999, net gains arising from
settled hedging transactions which are included as a component of finished goods
inventory were not material.

The Company is exposed to credit related losses in the event of
non-performance by counterparties to derivative financial instruments. The
Company anticipates, however, that counterparties will be able to fully satisfy
their obligations under the contracts.

The major concentration of credit risk arises from the Company's
receivables. A majority of the Company's sales are in North America and are
primarily for use in the agricultural industry. The Company seeks to manage the
credit risk relating to these sales through a credit management program.
Internationally, the Company's products are sold primarily through two export
associations whose accounts receivable are either insured or secured by letters
of credit.

The carrying amount of the Company's cash and cash equivalents, accounts
receivable, short-term debt and accounts payable and accrued charges
approximates fair values because of short-term maturities. The carrying amount
of the Company's long-term debt (except the Notes Payable whose approximate fair
value at December 31, 1999 was $367,112) approximates estimated fair value
because the stated interest rates approximate the market rate.

27. CONTINGENCIES

GENERAL
PCS is a shareholder in Canpotex which markets potash offshore. Should any
operating losses or other liabilities be incurred by Canpotex, the shareholders
have contractually agreed to reimburse Canpotex for such losses or liabilities
in proportion to their productive capacity. There were no such operating losses
or other liabilities in 1999.

In common with other companies in the industry, the Company is unable to
acquire insurance for underground assets.

In June 1993, the Company was served with a complaint relating to a suit
filed in the United States District Court for Minnesota against most North
American potash producers, including the Company. The complaint alleged a
conspiracy among the defendants to fix the price of potash purchased by the
plaintiffs as well as potash purchased by the members of a class of certain
purchasers proposed by the plaintiffs. The complaint sought treble damages and
other relief. The complaint was originally dismissed but this decision was
reversed by a three-judge panel on appeal. The defendants were granted a
rehearing of the appeal en banc, which was heard on September 13, 1999 (see Note
33a). Management of the Company, having consulted with legal counsel, believes
that the allegations are without merit, that the Company has valid legal
defences and that the lawsuit will not have a material adverse effect on the
Company. However, management cannot predict with certainty the outcome of the
litigation.

Additional complaints were filed in the California and Illinois State
Courts on behalf of purported classes of indirect purchasers of potash in those
states. The parties in the California lawsuit have agreed to stay proceedings
pending the outcome of the appeal to the United States Court of Appeals for the
Eighth Circuit. The Illinois State Court complaint has been dismissed for
failure to state a cause of action.

In 1997, five former officers of Arcadian Corporation filed lawsuits
against PCS in the United States District Court for the Western District of
Tennessee. The complaints allege that PCS breached employment agreements between
Arcadian and the officers and breached the related assumption agreement among
PCS, PCS Nitrogen and Arcadian. The complainants sought damages in excess of
$39,300. Each complaint also seeks additional unspecified damages. On December
1, 1998, the court entered judgments in the amount of $18,500 with respect to
three of the claims. The Company has filed Notices of Appeal with respect to
these judgments. In 1998, the Company settled the other two claims for the total
amount of $1,400. Management of the Company, having consulted with legal
counsel, believes that the lawsuits will not have a material adverse effect on
the Company's financial condition or results of operations.

On May 11 and 12, 1999, representatives of the United States Environmental
Protection Agency ("EPA"), Federal Bureau of Investigation and other state and
local agencies executed a search warrant on the Company's Geismar facility in
connection with a grand jury investigation. The grand jury investigation is
continuing. The Company cannot predict at this time what may result from the
government's investigation or whether any such result would have a material
adverse effect on the Company.

On October 13, 1999, PCS Joint Venture submitted to the EPA Phase I of a
work plan to conduct a Remedial Investigation and Feasibility Study ("RI/FS") of
certain releases to the soil and groundwater of the PCS Joint Venture facility
in Lakeland, Florida and other area properties. On October 21, 1999, PCS Joint
Venture signed an Administrative Order by Consent under which PCS Joint Venture
agreed to conduct the RI/FS. These soil and groundwater releases have also been
the subject of an investigation by the Florida Department of Environmental
Protection ("FDEP") and the subject of a Complaint filed by the FDEP against PCS
Joint Venture and a number of other defendants. Discovery is still continuing in
that proceeding. On September 23, 1999, an action was served on PCS Joint
Venture and eight other defendants on behalf of a class of persons living in the
vicinity of the site who claim to have suffered damages as a result of releases
from the site. PCS Joint Venture intends to defend itself vigorously in both
actions, while also continuing to work to assess and evaluate the nature and
extent of the impacts at the site. No final determination has yet been made of
the nature, timing or cost of remedial action that may be needed nor to what
extent costs incurred may be recoverable from third parties.

Various other claims and lawsuits are pending against the Company. While it
is not possible to determine the ultimate outcome of such actions at this time,
it is management's opinion that the ultimate resolution of such items, including
those pertaining to environmental matters, will not have a material effect on
the Company's financial condition or results of operations.

<PAGE> 62

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

27. CONTINGENCIES (CONTINUED)

UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. Although the change in date has occurred, it is
not possible to conclude that all aspects of the Year 2000 Issue that may affect
the Company, including those related to the efforts of customers, suppliers or
other third parties, have been fully resolved.

28. RELATED PARTY TRANSACTIONS
The Company has a one-third interest in Canpotex which markets potash
offshore. Sales to Canpotex are at prevailing market prices. Sales for the year
ended December 31, 1999 were $254,711 (1998 - $252,464; 1997 - $229,666).

Account balances resulting from the Canpotex transactions are included in
the Consolidated Statements of Financial Position and settled on normal trade
terms.

29. SUPPLEMENTAL CASH FLOW INFORMATION
In March 1997, the Company issued common shares valued at $573,278 in
exchange for shares of Arcadian Corporation. There have been no other
significant non-cash transactions.

30. QUARTERLY RESULTS (UNAUDITED)
The following quarterly information in management's opinion includes all
adjustments (consisting solely of normal recurring adjustments) necessary for
fair presentation.

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- --------- --------

<S> <C> <C> <C> <C>
1999
Net sales $549,341 $564,483 $ 453,578 $493,662
Gross Margin $122,041 $140,719 $ 66,343 $ 79,168
Provision for
plant closures and
office consolidation $ - $ - $ 55,403 $ 9,547
Provision for
asset impairment $ - $ - $ 525,118 $ 1,449
Operating Income (Loss) $ 74,977 $ 96,903 $(551,926) $ 29,345
Net Income (Loss) $ 39,517 $ 61,790 $(524,244) $ 10,943

Net Income
(Loss) per Share $ 0.73 $ 1.14 $ (9.66) $ 0.20

</TABLE>

<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1998
Net sales $583,812 $660,442 $521,368 $542,141
Gross Margin $150,673 $186,631 $140,188 $131,855
Operating Income $109,790 $146,909 $ 95,575 $ 93,782
Net Income $ 63,009 $ 89,117 $ 54,704 $ 54,173

Net Income per Share $ 1.17 $ 1.64 $ 1.01 $ 1.00

</TABLE>

Net Income (Loss) per Share for each quarter has been computed based on the
weighted average number of shares issued and outstanding during the respective
quarter; therefore, quarterly amounts may not add to the annual total.

31. COMPARATIVE FIGURES
Certain of the prior years' figures have been reclassified to conform with
the current year's presentation.

32. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
A description of certain significant differences between Canadian GAAP and
US GAAP follows:

MARKETABLE SECURITIES: The Company's investment in Israel Chemicals Ltd.
("ICL") is stated at cost. US GAAP would require that this investment be
classified as available-for-sale and be stated at market value.

FOREIGN CURRENCY TRANSLATION ADJUSTMENT: The foreign currency translation
adjustment results from the restatement of prior periods so that all periods
presented are in the same reporting currency. US GAAP requires that the
comparative Consolidated Statements of Income and the Consolidated Statements of
Cash Flow be translated using weighted average exchange rates for the applicable
periods. In contrast, the Consolidated Statements of Financial Position are
translated using the exchange rates at the end of the applicable periods in
accordance with Canadian GAAP. The difference in these exchange rates is what
gives rise to the foreign currency translation adjustment.

NET SALES: Sales are recorded net of freight costs (less related revenues)
and transportation and distribution expenses. US GAAP would require that net
freight costs be included in cost of sales and transportation and distribution
expenses be reported as an operating expense.

COMPREHENSIVE INCOME: Comprehensive income is not recognized under Canadian
GAAP. US GAAP would require the recognition of comprehensive income.

PROVISION FOR ASSET IMPAIRMENT: The provision for asset impairment under
Canadian GAAP is measured based on the undiscounted cash flow from use together
with the residual value of the asset. US GAAP would require that the provision
for asset impairment be measured based on fair value, which resulted in
additional writedowns of property, plant and equipment and goodwill for US GAAP
purposes.

PROVISION FOR PLANT CLOSURES: The provision for plant closures under
Canadian GAAP includes the non-cash parts inventory writedown. US GAAP would
require that this writedown be included in selling and administrative expenses.

PRE-OPERATING COSTS: Operating costs incurred during the start-up phase of
new projects are deferred until commercial production levels are reached, at
which time they are amortized over the estimated life of the project. US GAAP
would require that these costs be expensed as incurred.

STOCK-BASED COMPENSATION: In 1995, the Financial Accounting Standards Board
issued SFAS No.123 "Accounting for Stock-Based Compensation". The Company has
decided to continue to apply APB Opinion 25 ("APB 25") for measurement of
compensation of employees.

THE APPLICATION OF US GAAP, AS DESCRIBED ABOVE, WOULD HAVE HAD THE
FOLLOWING APPROXIMATE EFFECTS ON NET (LOSS) INCOME, NET (LOSS) INCOME PER SHARE,
TOTAL ASSETS AND SHAREHOLDERS' EQUITY:

<PAGE> 63

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

32. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- ------------
<S> <C> <C> <C>
Net (loss) income as reported - Canadian GAAP $ (411,994) $ 261,003 $ 297,138
Items (increasing) decreasing reported net (loss) income
Provision for asset impairment (217,953) - -
Pre-operating costs (4,605) - -
Deferred income taxes 51,970 - 11,382
----------- ----------- ------------
Approximate net (loss) income - US GAAP $ (582,582) $ 261,003 $ 285,756
----------- ----------- ------------
Weighted average shares outstanding - US GAAP 54,230,000 54,177,000 52,275,000
----------- ----------- ------------
Approximate net (loss) income per share - US GAAP $ (10.74) $ 4.82 $ 5.47
----------- ----------- ------------
Total assets as reported - Canadian GAAP $ 3,916,830 $ 4,534,257 $ 4,427,592
Items increasing (decreasing) reported total assets
Available-for-sale security (unrealized holding gain) 26,212 14,906 -
Property, plant and equipment (168,632) - -
Pre-operating costs (4,605) - -
Goodwill (49,321) - -
----------- ----------- ------------
Approximate total assets - US GAAP $ 3,720,484 $ 4,549,163 $ 4,427,592
----------- ----------- ------------
Total shareholders' equity as reported - Canadian GAAP $ 1,962,386 $ 2,453,761 $ 2,227,891
Items increasing (decreasing) reported shareholders' equity
Other comprehensive income, net of tax 16,858 8,944 -
Provision for asset impairment (217,953) - -
Pre-operating costs (4,605) - -
Deferred income taxes 51,970 - -
----------- ----------- ------------
Approximate shareholders' equity - US GAAP $ 1,808,656 $ 2,462,705 $ 2,227,891
----------- ----------- ------------
</TABLE>

SUPPLEMENTAL US GAAP DISCLOSURE
AVAILABLE-FOR-SALE SECURITY
The Company's investment in ICL is classified as available-for-sale. The
fair market value of this investment at December 31, 1999 was $119,044 and the
unrealized holding gain was $26,212.

NEW ACCOUNTING PRONOUNCEMENTS
During 1999, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 134, "Accounting for Mortgage-Backed Securities Retained after the
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise", SFAS No. 135, "Rescission of FASB Statement No. 75 and Technical
Corrections", and SFAS No. 136 "Transfers of Assets to a Not-for-Profit
Organization or Charitable Trust That Raises or Holds Contributions for Others".
None of these pronouncements will have an impact on the Company's consolidated
financial statements. FASB also issued SFAS No. 137 "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No.133". This pronouncement deferred the implementation of SFAS No.
133 for the Company until the first quarter of 2001. The impact of the adoption
of SFAS No. 133 on the Company's consolidated financial statements is not
presently determinable.

STOCK COMPENSATION PLANS
The Company has two stock-based compensation plans which are described in
Note 16. The Company applies APB 25 and related interpretations in accounting
for its plans. No compensation cost has been recognized under APB 25 as the
exercise price is the quoted market closing price of the Company's common shares
on the last trading day immediately preceding the date of the grant. Had
compensation cost for the Company's plans been determined based on the fair
value at the grant dates for awards under the plans consistent with the method
of SFAS No. 123, the Company's net (loss) income and net (loss) income per share
for the years ending December 31, 1999, 1998 and 1997 would have been reduced to
the pro forma amounts indicated below:

<TABLE>
<CAPTION>
1999 1998 1997
--------------------------- ------------------------- ---------------------------
AS REPORTED PRO FORMA AS REPORTED PRO FORMA AS REPORTED PRO FORMA
----------- --------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net (loss) income $(582,582) $(602,509) $261,003 $239,667 $285,756 $271,497
Net (loss) income per share $ (10.74) $ (11.11) $ 4.82 $ 4.42 $ 5.47 $ 5.19
</TABLE>

In calculating the foregoing pro forma amounts, the fair value of each
option grant was estimated as of the date of grant using the Modified
Black-Scholes option-pricing model with the following weighted average
assumptions:

<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Expected dividend $0.99 $0.92 $1.03
Expected volatility 28% 30% 26%
Risk-free interest rate 6.03% 4.83% 5.80%
Expected life of option 8 YEARS 10 years 10 years
Expected forfeitures 10% 26% 26%
</TABLE>

The following supplemental schedules present the Consolidated Financial
Position, Income and Retained Earnings, Cash Flow and Comprehensive Income in
accordance with US GAAP as adjusted for the GAAP differences described in this
note.

61
<PAGE> 64

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

32. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

SUPPLEMENTAL SCHEDULE OF CONSOLIDATED FINANCIAL POSITION
As at December 31

<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 44,037 $ 67,971
Accounts receivable 269,264 302,974
Inventories 377,232 364,397
Prepaid expenses 35,702 38,839
---------- ----------
726,235 774,181
Property, plant and equipment 2,708,428 3,003,443
Goodwill 60,057 559,621
Other assets 225,764 211,918
---------- ----------
$3,720,484 $4,549,163
---------- ----------
LIABILITIES
Current Liabilities
Short-term debt $ 474,504 $ 94,940
Accounts payable and accrued charges 349,062 349,684
Current portion of long-term debt 7,437 386
---------- ----------
831,003 445,010
Long-term debt 437,020 933,294
Deferred income tax liability 366,755 423,815
Accrued post-retirement/post-employment benefits 148,409 131,179
Accrued reclamation costs 112,175 129,399
Other non-current liabilities and deferred credits 16,466 23,761
---------- ----------
1,911,828 2,086,458
---------- ----------
SHAREHOLDERS' EQUITY
Share Capital 1,216,533 1,227,599
Contributed Surplus 321,494 336,486
Retained Earnings 274,700 910,605
Foreign Currency Translation Adjustment (20,929) (20,929)
Other Comprehensive Income 16,858 8,944
---------- ----------
1,808,656 2,462,705
---------- ----------
$3,720,484 $4,549,163
---------- ----------
</TABLE>

<TABLE>
<CAPTION>
SUPPLEMENTAL SCHEDULE OF CONSOLIDATED INCOME AND RETAINED EARNINGS
For the Years Ended December 31
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Net sales $2,350,124 $2,601,697 $2,610,346
Cost of goods sold 1,869,709 1,914,757 1,963,565
---------- ---------- ----------
GROSS MARGIN 480,415 686,940 646,781
---------- ---------- ----------
Selling, distribution and administrative 201,241 193,605 161,273
Provincial mining and other taxes 77,085 80,088 70,312
Provision for plant closures and office consolidation 56,752 - -
Provision for asset impairment 744,520 - -
Other income (25,924) (32,809) (32,444)
---------- ---------- ----------
1,053,674 240,884 199,141
---------- ---------- ----------
OPERATING (LOSS) INCOME (573,259) 446,056 447,640
INTEREST EXPENSE 53,824 67,574 81,439
---------- ---------- ----------
(LOSS) INCOME BEFORE INCOME TAXES (627,083) 378,482 366,201
INCOME TAXES (RECOVERY) (44,501) 117,479 80,445
---------- ---------- ----------
NET (LOSS) INCOME (582,582) 261,003 285,756
RETAINED EARNINGS, BEGINNING OF YEAR 910,605 701,285 470,837
DIVIDENDS (53,323) (51,683) (55,308)
---------- ---------- ----------
RETAINED EARNINGS, END OF YEAR $ 274,700 $ 910,605 $ 701,285
---------- ---------- ----------
NET (LOSS) INCOME PER SHARE - BASIC $ (10.74) $ 4.82 $ 5.47
---------- ---------- ----------
NET (LOSS) INCOME PER SHARE - FULLY DILUTED $ (10.74) $ 4.80 $ 5.42
---------- ---------- ----------
DIVIDENDS PER SHARE $ 0.99 $ 0.96 $ 1.03
---------- ---------- ----------
</TABLE>

<PAGE> 65

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF US DOLLARS

32. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

SUPPLEMENTAL SCHEDULE OF CONSOLIDATED CASH FLOW
For the Years Ended December 31

<TABLE>
<CAPTION>
1999 1998 1997
--------- ---------- ----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net (loss) income $ (582,582) $ 261,003 $ 285,756
Items not affecting cash
Depreciation and amortization 191,106 190,880 170,002
Loss (gain) on disposal of property, plant and equipment 459 (99) (4,739)
Provision for plant closures and office consolidation 37,132 - -
Provision for asset impairment 744,520 - -
Provision for deferred income tax (59,125) 97,203 45,873
Provision for post-retirement/post-employment benefits 7,381 6,848 6,166
CHANGES IN NON-CASH OPERATING WORKING CAPITAL
Accounts receivable 33,779 48,751 23,470
Inventories (16,067) (7,859) 19,873
Prepaid expenses 3,175 (16,603) 3,736
Accounts payable and accrued charges (5,024) 1,301 (72,006)
Current income taxes 8,107 (3,778) 3,383
Accrued reclamation costs (20,680) (7,436) (7,407)
Other non-current liabilities and deferred credits (3,177) 7,749 (6,286)
---------- ---------- ----------
CASH PROVIDED BY OPERATING ACTIVITIES 339,004 577,960 467,821
---------- ---------- ----------
INVESTING ACTIVITIES
Additions to property, plant and equipment (118,846) (190,155) (160,337)
Acquisition of Minera Yolanda S.C.M. (Note 4) (36,943) - -
Acquisition of Arcadian Corporation - - (474,985)
Proceeds from disposal of property, plant and equipment 1,873 31,926 15,276
Additions to other assets (19,227) (85,066) (22,091)
---------- ---------- ----------
CASH USED IN INVESTING ACTIVITIES (173,143) (243,295) (642,137)
---------- ---------- ----------
FINANCING ACTIVITIES
Proceeds from long-term obligations - 143,000 1,210,000
Repayment of long-term obligations (489,978) (376,329) (699,979)
Proceeds from short-term debt 379,564 215,000 210,000
Repayment of short-term debt - (221,988) (108,072)
Repayment of Senior Notes - - (374,526)
Dividends (53,323) (51,683) (55,308)
Repurchase of shares (29,262) - -
Issuance of shares 3,204 16,550 7,287
---------- ---------- ----------
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (189,795) (275,450) 189,402
---------- ---------- ----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (23,934) 59,215 15,086
CASH AND CASH EQUIVALENTS (BANK INDEBTEDNESS), BEGINNING OF YEAR 67,971 8,756 (6,330)
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 44,037 $ 67,971 $ 8,756
---------- ---------- ----------
</TABLE>

<TABLE>
<CAPTION>
SUPPLEMENTAL SCHEDULE OF CONSOLIDATED COMPREHENSIVE INCOME
For the Years Ended December 31
1999 1998 1997
---------- ------- --------
<S> <C> <C> <C>
Net (loss) income $ (582,582) $261,003 $285,756
---------- ---------- ----------
Other comprehensive income
Change in unrealized holding gain on available-for-sale security 11,306 14,906 -
Deferred income tax expense related to other comprehensive income (3,392) (5,962) -
Other comprehensive income, net of tax 7,914 8,944 -
---------- ---------- ----------
Comprehensive (loss) income $ (574,668) $269,947 $285,756
---------- ---------- ----------
</TABLE>

33. SUBSEQUENT EVENTS
a. On February 17, 2000, the decision to dismiss the complaint against the
Company relating to an alleged conspiracy to fix the price of potash was
affirmed on appeal. The plaintiffs have the right to seek review of this opinion
by the US Supreme Court.

b. On February 22, 2000, the Company sold all of the shares of Moab Salt, Inc.
for net proceeds of $2,000 which will result in a gain of approximately $6,000.

<PAGE> 66

POTASH CORPORATION OF SASKATCHEWAN INC.

SHAREHOLDER INFORMATION

ANNUAL MEETING
The Annual Shareholders Meeting will be held at 10:30 a.m. Central Standard
Time May 11, 2000 in the Adam Ballroom, Delta Bessborough Hotel, 601 Spadina
Crescent East, Saskatoon, Saskatchewan.

Holders of common shares as of March 23, 2000 are entitled to vote at the
meeting and are encouraged to participate.

DIVIDEND REINVESTMENT POLICY
Registered shareholders can have dividends reinvested in newly-issued
common shares of PCS at prevailing market rates.

INFORMATION FOR SHAREHOLDERS OUTSIDE CANADA
Dividends paid to residents in countries with which Canada has bilateral
tax treaties are generally subject to the 15-percent Canadian non-resident
withholding tax. There is no Canadian tax on gains from the sale of shares or
debt instruments owned by non-residents not carrying on business in Canada. No
government in Canada levies estate taxes or succession duties.

INVESTOR INQUIRIES
Betty-Ann Heggie, Senior Vice President, Corporate Relations
TOLL-FREE LINES: Canada: (800) 667-0403
US: (800) 667-3930
WEBSITE: www.potashcorp.com

INTERIM REPORTS, NEWS RELEASES AND FORM 10-K
Non-registered shareholders who wish to receive quarterly reports should
contact the Corporate Relations department. News releases are available via fax
and e-mail.

Copies of the Company's most recent Form 10-K are available upon request.

SHARES LISTED
Toronto Stock Exchange
New York Stock Exchange

1999 PCS SHARE PRICE -- NYSE, Average Weekly Price ($ Actual) [CHART]

OWNERSHIP
On March 1, 2000, there were 2,658 holders of record of the Company's
common shares.

COMMON SHARE TRANSFER AGENT
IN CANADA: CIBC Mellon Trust Company 1080 - 2002 Victoria Avenue Regina,
Saskatchewan S4P 0R7 Phone: (306) 751-7550 (800) 387-0825
WEBSITE: www.cibcmellon.com

IN THE UNITED STATES:
ChaseMellon Shareholder Services, L.L.C. 85 Challenger Road, Overpeck Center
Ridgefield Park, New Jersey 07660 Phone: (800) 526-0801
WEBSITE: www.chasemellon.com

Inquiries about shareholdings, share transfer requirements, direct deposit
of dividends, elimination of duplicate mailings, address changes or lost
certificates should be directed to CIBC Mellon Trust or to the Corporate
Secretary, PCS, Suite 500, 122 First Avenue South, Saskatoon, Saskatchewan S7K
7G3.

COMMON SHARE PRICES AND VOLUMES

THE ADJACENT TABLE SETS FORTH THE HIGH AND LOW PRICES, AS WELL AS THE VOLUMES,
OF THE COMPANY'S COMMON SHARES AS TRADED ON THE TORONTO STOCK EXCHANGE AND THE
NEW YORK STOCK EXCHANGE (COMPOSITE TRANSACTIONS) ON A QUARTERLY BASIS. POTASH
CORPORATION OF SASKATCHEWAN INC. IS ON THE S&P/TSE 60 INDEX AND THE TSE 100.

1 TRADING PRICES ARE IN CDN$

<TABLE>
<CAPTION>
TORONTO STOCK EXCHANGE(1) NEW YORK STOCK EXCHANGE
------------------------------ ----------------------------
High Low Volume High Low Volume
------- ------ --------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
1999
First Quarter 112.500 80.250 4,585,148 74.188 53.250 11,222,700
Second Quarter 95.500 73.750 5,915,180 64.188 50.188 8,975,500
Third Quarter 91.000 74.950 7,576,043 61.250 50.000 9,953,400
Fourth Quarter 76.750 62.000 6,459,241 52.125 42.563 8,098,200
------- ------- ---------- ------ ------ ----------
YEAR 1999 112.500 62.000 24,535,612 74.188 42.563 38,249,800
------- ------- ---------- ------ ------ ----------
1998
First Quarter 138.200 112.000 5,456,109 97.188 78.500 13,056,600
Second Quarter 132.000 108.500 3,618,117 92.938 73.250 7,033,200
Third Quarter 114.700 75.000 5,090,801 77.375 48.375 11,262,400
Fourth Quarter 109.000 75.000 4,021,223 70.875 50.563 12,011,600
------- ------- ---------- ------ ------ ----------
YEAR 1998 138.200 75.000 18,186,250 97.188 48.375 43,363,800
------- ------- ---------- ------ ------ ----------
1997
First Quarter 122.700 98.650 3,212,708 89.875 71.500 17,412,400
Second Quarter 117.000 99.850 2,986,406 85.000 71.000 15,201,200
Third Quarter 111.500 98.500 3,854,717 81.125 71.688 17,970,600
Fourth Quarter 122.200 108.750 8,222,508 87.500 78.000 14,982,100
------- ------- ---------- ------ ------ ----------
YEAR 1997 122.700 98.500 18,276,339 89.875 71.000 65,566,300
------- ------- ---------- ------ ------ ----------
</TABLE>

<PAGE> 67

CORPORATE INFORMATION

CORPORATE OFFICERS AND KEY MANAGEMENT
POTASH CORPORATION OF SASKATCHEWAN INC.
WILLIAM J. DOYLE
President and Chief Executive Officer
WAYNE R. BROWNLEE
Senior Vice President, Treasurer and Chief Financial
Officer
JOHN GUGULYN
Senior Vice President, Administration
JOHN L. M. HAMPTON
Senior Vice President, General Counsel and Secretary
BETTY-ANN L. HEGGIE
Senior Vice President, Corporate Relations
BARRY E. HUMPHREYS
Senior Vice President and Chief Information
Officer

PCS SALES
GARY E. CARLSON, President

PCS POTASH
GARTH W. MOORE, President

PCS PHOSPHATE
THOMAS J. REGAN, JR., President

PCS NITROGEN
JAMES F. DIETZ, President

CORPORATE OFFICES
POTASH CORPORATION OF SASKATCHEWAN INC.
Suite 500, 122 - 1st Avenue South
Saskatoon, SK S7K 7G3
Phone: (306) 933-8500

PCS SALES
Suite 440, 5750 Old Orchard Road
Skokie, IL 60077
Phone: (800) 241-6908
(847) 583-4400

EFFECTIVE JUNE 1, 2000
All US subsidiaries, including PCS Sales,
will be located at new offices:
POTASHCorp
1101 SKOKIE BOULEVARD
NORTHBROOK, IL 60062

Glossary

FERTILIZER TONNES
METRIC TONNE 2204.6 pounds, used for offshore sales; to convert to
short tons, multiply by 1.1023
SHORT TON 2000 pounds, used for sales in the United States; to
convert to metric tonnes, divide by 1.1023
K2O TONNE Measures the potassium content of fertilizers having
different chemical analyses; to convert to a KCl tonne,
divide by 0.61
P2O5 TONNE Measures the phosphorus content of fertilizers having
different chemical analyses
N TONNE Measures the nitrogen content of fertilizers having
different chemical analyses
NUTRIENT TONNE Measures the nutrient weight of potassium, phosphate
and nitrogen fertilizers; consists of K2O tonnes, P2O5 tonnes
and N tonnes
PRODUCT TONNE Standard measure of the weights of all types of potash,
phosphate and nitrogen products

SCIENTIFIC TERMS
POTASH KCL potassium chloride
K2O potassium oxide

PHOSPHATE P2O5 phosphoric acid
MGA merchant grade acid, 54% P2O5 (liquid)
DAP diammonium phosphate, 46% P2O5 (solid)
MAP monammonium phosphate, 52% P2O5 (solid)
SPA superphosphoric acid, 70% P2O5 (liquid)

NITROGEN NH3 anhydrous ammonia, 82% N (gas, liquid)
HNO3 nitric acid (liquid)
NH4NO3 ammonium nitrate, 34% N (solid, liquid)
CO(NH2)2 urea, 46% N (solid)
UAN SOLUTION nitrogen solution, 28-32% N (liquid)

NITROGEN PRODUCTION FACTORS
TO PRODUCE
1 SHORT TON OF: REQUIRES:
Ammonia 34.5 million BTU of natural gas
Urea solution 0.58 tons of ammonia
0.78 tons of carbon dioxide (CO2)
Urea prills (46% N) 1.01 tons of urea solution
Nitric acid (22% N) 0.29 tons of ammonia
Ammonium nitrate solution 0.80 tons of nitric acid
0.22 tons of ammonia
UAN solution (32% N) 0.45 tons of ammonium nitrate solution
0.35 tons of urea solution

FINANCIAL TERMS

ASSET TURNOVER = SALES / TOTAL ASSETS

LONG-TERM DEBT TO EQUITY = LONG-TERM DEBT / SHAREHOLDERS' EQUITY

RETURN ON INVESTMENT = NET INCOME PLUS INTEREST EXPENSE / AVERAGE INVESTED
CAPITAL

RETURN ON SHAREHOLDERS' EQUITY = NET INCOME / SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY TO TOTAL ASSETS = SHAREHOLDERS' EQUITY / TOTAL ASSETS

EBITDA represents Earnings (net income) Before Interest, Taxes, Depreciation and
Amortization.

FREE CASH FLOW is the cash, exclusive of the change in working capital, which is
provided by operations less disbursements for sustaining capital, capitalized
turnarounds and dividends.

RETURN ON CAPITAL EMPLOYED = (NET INCOME + AFTER-TAX INTEREST EXPENSE + UNUSUAL
ITEMS [NET OF TAX]) / AVERAGE (LONG-TERM LIABILITIES + SHAREHOLDERS' EQUITY)

CASH FLOW RETURN = (OPERATING INCOME - CASH TAXES + DEPRECIATION AND
AMORTIZATION + UNUSUAL NON-CASH ITEMS) / WEIGHTED AVERAGE (ASSETS + ACCUMULATED
DEPRECIATION AND AMORTIZATION - NON-INTEREST BEARING CURRENT LIABILITIES)

[RECYCLE LOGO]

It is the policy of PCS to manage its operations responsibly in order to
safeguard those natural resources related to or affected by its activities. In
keeping with this policy, the Annual Report uses paper containing at least 10%
post-consumer recycled fiber and is recyclable.

<PAGE> 68

RESPONSIVE
RELIABLE
RESILIENT

PCS VS. REST OF FERTILIZER INDUSTRY
% CUMULATIVE TOTAL SHAREHOLDER RETURN

[CHART]

PCS HAS OUTPERFORMED THE FERTILIZER SECTOR AMID THE CHALLENGES OF WEATHER,
POLITICS, ECONOMIC SPIRALS AND CHANGES IN FARM ACREAGE AND PROSPECTS.

[POTASH CORPORATION OF SASKATCHEWAN INC. LOGO]

Suite 500, 122 - 1st Avenue South Saskatoon Saskatchewan Canada S7K 7G3
www.potashcorp.com

<PAGE> 1
EXHIBIT 21

SUBSIDIARIES OF
POTASH CORPORATION OF SASKATCHEWAN INC.

JURISDICTION OF INCORPORATION
NAME OF ENTITY OR FORMATION
- -------------------------------------------------------------------------------

<S> <C>
Potash Corporation of Saskatchewan Transport Limited..... Saskatchewan
Canpotex Bulk Terminals Ltd.............................. Canada
PCS Sales (Canada) Inc................................... Saskatchewan
Potash Corporation of Saskatchewan (Florida) Inc. ....... Florida
PCS Sales (Iowa), Inc.................................... Iowa
PCS Joint Venture, LP.................................... Florida
PCS Sales (Indiana), Inc................................. Indiana
609430 Saskatchewan Ltd.................................. Saskatchewan
Potash Holding Company, Inc.............................. Delaware
PCS Sales (USA), Inc..................................... Delaware
PCS Administration (USA), Inc............................ Delaware
Phosphate Holding Company, Inc........................... Delaware
White Springs Agricultural Chemicals, Inc................ Delaware
PCS Phosphate Company, Inc............................... Delaware
Texasgulf Export Corporation............................. Delaware
Texasgulf Aircraft Inc................................... Delaware
Tg Corporation........................................... Delaware
PCS Industrial Products Inc. ............................ Delaware
PCS Purified Phosphates.................................. Virginia
PCS Nitrogen, Inc........................................ Delaware
PCS Finance Luxembourg S.a.r.l........................... Luxembourg
PCS Nitrogen Payroll Corporation......................... Delaware
PCS Nitrogen Amm Term Corp II............................ Delaware
PCS Nitrogen Amm Term Corp I............................. Texas
Houston Ammonia Terminal, L.P............................ Delaware
AA Sulfuric Corp......................................... Louisiana
PCS Nitrogen Trinidad Fertilizer Corporation............. Delaware
PCS Nitrogen Fertilizer Limited.......................... Trinidad
</TABLE>
<PAGE> 2

JURISDICTION OF INCORPORATION
NAME OF ENTITY OR FORMATION
- -------------------------------------------------------------------------------

<S> <C>
PCS Nitrogen Holding Company............................. Delaware
PCS Nitrogen Limited..................................... Trinidad
Augusta Service Company Inc.............................. Delaware
PCS L.P. Inc............................................. Delaware
PCS Nitrogen Fertilizer Operations, Inc.................. Delaware
PCS Nitrogen Ohio, L.P................................... Delaware
PCS Nitrogen Fertilizer, L.P............................. Delaware
PCS Nitrogen LCD Corporation............................. Delaware
AC Industries............................................ Delaware
PCS Nitrogen Trinidad Corporation........................ Delaware
PCS Nitrogen Cayman Limited.............................. Cayman
PCS Nitrogen Trinidad Limited............................ Trinidad
PCS Nitrogen Trinidad Finance Ltd........................ United Kingdom
PCS Cassidy Lake Company................................. Ontario
Chilkap Resources Ltd ................................... Yukon
628550 Saskatchewan Ltd. ................................ Saskatchewan
PCS (Barbados) Shipping Ltd. ............................ Barbados
Minera Saskatchewan Limitada ............................ Chile
Inversiones PCS Chile Limitada .......................... Chile
PCS Yumbes S.C.M. ....................................... Chile
PCS Fosfatos do Brasil Ltda. ............................ Brazil
</TABLE>

<PAGE> 1
Exhibit 23

CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS

POTASH CORPORATION OF SASKATCHEWAN INC.

We hereby consent to the incorporation of our report dated February 9, 2000
(except as to Note 33 which is as of February 22, 2000) into this Annual Report
on Form 10-K for the year ended December 31, 1999 and into the following
Registration Statements:

Registration Statement No. 33-37855 on Form S-8
Registration Statement No. 333-19215 on Form S-8
Registration Statement No. 333-93773 on Form S-8
Registration Statement No. 33-57920 on Form S-3DPOS

[signature]

DELOITTE & TOUCHE LLP

CHARTERED ACCOUNTANTS

Saskatoon, Saskatchewan, Canada

March 27, 2000

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 44,037
<SECURITIES> 0
<RECEIVABLES> 276,286
<ALLOWANCES> (7,022)
<INVENTORY> 377,232
<CURRENT-ASSETS> 726,235
<PP&E> 3,828,097
<DEPRECIATION> (951,037)
<TOTAL-ASSETS> 3,916,830
<CURRENT-LIABILITIES> 831,003
<BONDS> 400,000
0
0
<COMMON> 1,216,533
<OTHER-SE> 745,853
<TOTAL-LIABILITY-AND-EQUITY> 3,916,830
<SALES> 2,061,064
<TOTAL-REVENUES> 2,061,064
<CGS> 1,652,793
<TOTAL-COSTS> 1,652,793
<OTHER-EXPENSES> 167,455
<LOSS-PROVISION> 591,517
<INTEREST-EXPENSE> 53,824
<INCOME-PRETAX> (404,525)
<INCOME-TAX> 7,469
<INCOME-CONTINUING> (411,994)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (411,994)
<EPS-BASIC> (7.60)
<EPS-DILUTED> (7.60)

</TABLE>