We are one of the largest manufacturers and distributors of nitrogen and phosphate
fertilizer products in North America. Our operations are organized into two
business segments: the nitrogen fertilizer business and the phosphate fertilizer
business. Our principal products in the nitrogen fertilizer business are ammonia,
urea and urea ammonium nitrate solution (UAN). Our principal products in the
phosphate fertilizer business are diammonium phosphate (DAP) and monoammonium
phosphate (MAP).
Our principal executive offices are located outside of Chicago, Illinois, at
4 Parkway North, Suite 400, Deerfield, Illinois 60015. Our Internet website
address is www.cfindustries.com.
Our business is divided into two operating segments, the nitrogen fertilizer
business and the phosphate fertilizer business.
Nitrogen Fertilizer Raw Materials
Natural gas is the principal raw material, as well as the primary fuel source,
used in the ammonia production process at both the Donaldsonville and the Medicine
Hat facilities. Donaldsonville is located in close proximity to one of the most
heavily-traded natural gas pricing basis in North America, known as the Henry
Hub. Medicine Hat is located in close proximity to one of the most heavily-traded
natural gas pricing basis in Canada, known as AECO.
Phosphate Raw Materials
Phosphate Rock Supply. Phosphate rock is the basic nutrient source for phosphate
fertilizers. Approximately 3.5 tons of phosphate rock are needed to produce
one ton of P2O5 (the measure of nutrient content of phosphate fertilizers).
Our Plant City phosphate fertilizer complex consumes in excess of three million
tons of rock annually. As of December 31, 2007, our Hardee rock mine had approximately
15 years of fully-permitted recoverable phosphate reserves remaining at current
operating rates. We have initiated the process of applying for authorization
and permits to expand the geographical area at our Hardee property where we
can mine. The expanded area has an estimated 31 million tons of recoverable
phosphate reserves. We estimate that we will be able to conduct mining operations
at our Hardee property for approximately nine additional years at current operating
rates, assuming we secure the authorization and permits to mine in this area.
Sulfur Supply. Sulfur is used to produce sulfuric acid, which is combined
with phosphate rock to produce phosphoric acid. Approximately three-quarters
of a long ton of sulfur is needed to produce one ton of P2O5. Our Plant City
phosphate fertilizer complex uses approximately 800,000 long tons of sulfur
annually when operating at capacity. We obtain molten sulfur from several domestic
and foreign producers under contracts of varied duration.
Nitrogen Fertilizer Distribution
The Donaldsonville nitrogen fertilizer complex, which is located on the Mississippi
River, includes a deep-water docking facility, access to an ammonia shipping
pipeline, and truck and railroad loading capabilities. We ship our share of
ammonia and urea produced at the Medicine Hat nitrogen fertilizer complex by
truck and rail to customers in the United States and Canada and to our storage
facilities in the northern United States.
Ammonia, urea and UAN from Donaldsonville can be loaded into river barges
and ocean-going vessels for direct shipment to domestic customers, for transport
to storage facilities, or for export. We own six ammonia river barges with a
total capacity of approximately 16,400 tons. We contract on a dedicated basis
for tug services and the operation of these barges. We have 20 UAN river barges
contracted on a dedicated basis with a total capacity of approximately 60,000
tons. Additional ammonia and UAN barge capacity is contracted for as needed.
River transportation for urea is provided primarily under an agreement with
one of the major inland river system barge operators.
Phosphate Distribution
We operate a phosphate warehouse located at a deep-water port facility in
Tampa, Florida. Most of the phosphate fertilizer produced at Plant City is shipped
by truck or rail to our Tampa warehouse, where it is loaded onto vessels for
shipment to export customers or for transport across the Gulf of Mexico to the
Mississippi River.
Phosphate fertilizer shipped across the Gulf of Mexico to the Mississippi
River is transferred into river barges near New Orleans. Phosphate fertilizer
in these river barges is transported to our storage facilities or delivered
directly to customers. River transportation is provided primarily under an agreement
with one of the major inland river system barge operators.
Competition
Our markets are intensely competitive, based primarily on delivered price
and to a lesser extent on customer service and product quality. During the peak
demand periods, product availability and delivery time also play a role in the
buying decisions of customers.
In the nitrogen fertilizer business, our primary North American-based competitors
are Agrium, Koch Nitrogen and Terra Industries. There is also significant competition
from product sourced from regions of the world with low natural gas costs. Because
urea is a widely-traded fertilizer product and there are limited barriers to
entry, competition from foreign-sourced product is particularly acute with respect
to urea.
In the phosphate fertilizer business, our primary North American-based competitors
are Agrium, Mosaic, Potash Corp. and Simplot. Historically, imports have not
been a factor, as the United States is a large net exporter of phosphate fertilizers.