PHOSPHATE Antnio Eleutrio de Souza - DNPM/Sede - Telephone : (61) 3312-6870 - Fax: (61) 3312-6914 E-mail: antonio.eleuterio@dnpm.gov.

.br Vanessa Rodrigues dos Santos Cardoso - DNPM/Sede - Telephone : (61) 3312-6839 - Fax: (61) 3312-6914 - Email: vanessa.cardoso@dnpm.gov.br I - WORLD SUPPLY - 2006 In 2006 the world production of phosphate rock attained 144 million tonnes, with a reduction of 1.9% vis--vis the previous year. This supply was divided among China (22.2%), the United States (21.3%), Morocco and Western Sahara (17.6%), Russia (7.6%), Tunisia (5.8%), Jordan (4.4%), and other countries 21%. Brazil, with circa 5.8 million tonnes , participated with 4.0% of the volume supplied, occupying the 7 th world position. The United States, which in 2006 reduced by 15.4% their production, as compared to 2005, lost the position of world leader for China, whose supply was of 32 million tonnes . Also in 2006, the United States attained the lowest levels of the last forty years, due to the combination of two factors: the closure of mines and of production plants of fertilisers and the reduction of exports of phosphate fertilisers. It must be highlighted that since 2000 the exports of the United States for the main world consumers of phosphate products, China and India, have significantly diminished. In terms of reserves, practically nothing changed in the base year 2006. Morocco maintained its position as the world leader, with 21 billion tonnes , followed by China, with 13 billion, the United States 3.4 billion, South Africa with 2.5 billion, Jordan with 1.7 billion and Australia 1.2 billion. These countries concentrate 86.1% of the world assets in phosphate rock. Brazil, with circa 261.6 million tonnes occupies 12th world position, with 0.5% of the reserves.

World Reserve and Production

Specifications Countries Brazil Australia China Egypt United States Israel Jordan Morocco and Western Sahara South Africa Russia Syria Tunisia Other Countries Total
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Reserves (103 t P2O5) 2006 (p) (1) 261,620 1,200,000 13,000,000 760,000 3,400,000 800,000 1,700,000 21,000,000 2,500,000 1,000,000 800,000 600,000 2,620,000 49,641,620 % 0.5% 2.4% 26.2% 1.5% 6.8% 1.6% 3.4% 42.3% 5.0% 2.0% 1.6% 1.2% 5.3% 100.0% 2005(r) 5,631 2,050 30,400 2,730 36,300 2,900 6,230 25,200 2,580 11,000 3,500 8,000 10,240 146,761

Production (103 t) 2006(p) 5,801 2,050 32,000 2,740 30,700 3,000 6,400 25,300 2,600 11,000 3,600 8,400 10,400 143,991 % 4.0% 1.4% 22.2% 1.9% 21.3% 2.1% 4.4% 17.6% 1.8% 7.6% 2.5% 5.8% 7.2% 100.0%

Sources: DNPM/DIDEM; Mineral Commodities Summaries 2007; ANDA / IBRAFOS. Notes: (1) nutrients in P2O5; (2) reserves, measured and indicated; (r) reviewed; (p) preliminary data.

II - DOMESTIC PRODUCTION The Brazilian complex of phosphate rock produced circa 5.8 million tonnes of concentrate in 2006, only 3% of increment vis--vis the previous year, which represented the use of 85% of its installed capacity, as informed by ANDA. The production of phosphoric acid (100% P2O5) in 2006 was 16% above that of 2005, that is, 1.229 thousand tonnes, which represents 96% of the installed production capacity of phosphoric acid . The three biggest producing companies in 2006 were FOSFRTIL / ULTRAFERTIL, BUNGE do Brasil and COPEBRS of Grupo Anglo American. Most of the production was in the States of Minas Gerais, Gois and So Paulo. III - IMPORTS In the fiscal year of 2006, the expenditure with imports of phosphate inputs (rock concentrate, phosphoric acid and intermediate products for fertilisers) totalled US$ 911.715 million, 2.7% higher than the US$ 887.794 million of 2005. This increment in expenditure was mostly due to the greater volume of imports of rock concentrate, which was 15.7% higher than that of the previous year, that is, circa 1.4 million tonnes, at an average price US$ FOB 47.62 / t, mostly coming from Morocco (51.0%), Algeria (18.0%), Israel (17.0%) and also from Togo and Tunisia (together with 13.0%). With chemical compounds, the so-called intermediate products for fertilisers, the country spent US$ FOB 844.8, with phosphoric acid , US$ FOB 80,976; with super phosphate (with content > 45% P2O5), US$ FOB 199.670; ammonia hydrogen ortho phosphate, US$ FOB 309.352; other chemical mineral fertilisers US$ FOB 75.563. Chemical compounds came mostly from Russia (24%), the United States (24%), Morocco (21%), Israel (11%) and Tunisia (7%). The country still depends on the subsoil of others in circa 20% for phosphate and nitrogen inputs, and the products of this sector that come from abroad benefit from tax advantages. IV - EXPORTS

Brazilian exports of phosphate raw materials (primary goods) and intermediate products for fertilisers (chemical compounds), were 8.1% higher than the exports recorded in 2005 and generated revenues of US$ FOB 235.9 million. Intermediate products for fertilisers (chemical compounds) accounted for over 90.1% of the total of foreign exchange earned. The main market for Brazilian phosphate chemical compounds in 2006 was MERCOSUL, which consumed 95% of the total exported, and the main buyers were Paraguay, with 73.0% and Argentina, with 22.0%. The main products exported are fertilisers with nitrogen (NCM 31052000) and with phosphorous (NCM 31056000), with an average price of US$ 246.53/t and US$ 223.64/t, respectively. V - CONSUMPTION In 2006, the Brazilian consumption of phosphate raw materials, rock concentrate and phosphoric acid grew 5.3% and 8.8%, respectively, as compared to the previous year. Intermediate products for fertilisers featured lower growth: 1.5% as compared to 2005, reflecting the poor performance of the crops of grains, particularly soybeans, corn and wheat, as a consequence of different factors, such as for example, the indebtedness of producers in the two last years, the weather-related effects, the rate of exchange and the oscillation of international prices of agricultural commodities. According to ANDA, the crops that most consume fertilisers and nutrients P2O5, in 2006, in Brazil were: soybeans with 7.1 million tonnes (34%), corn with 3.7 million (17%), and sugar cane, with 3.1 million (15%). It must be highlighted that soybeans, the biggest consumer of fertilisers, underwent a reduction in its planted area of 5.9% as compared to 2005. Phosphate rock is mostly used in the manufacture of fertilisers, although it is also an input for the manufacture of soaps, detergents, cleaning products and animal fodder . Brazil is the 4th world consumer of fertilisers, after only China, India and the United States.
Salient Statistics Brazil Specifications Concentrate (primary goods) / (P2O5) ** Phosphoric Acid (product) / (P2O5) ** Intermediate products / (P2O5) ** Concentrate (primary goods) Phosphoric Acid (product) Intermediate products (Chemical Compounds) (*) Concentrate (primary goods) Exports: Phosphoric Acid (product) Intermediate products (Chemical Compounds) (*) Apparent Consumption: Concentrate (primary goods) Phosphoric Acid (product)
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2004 (r) (103 t) (103 t) (103 t) (t) (103 US$-FOB) (t) (103 US$-FOB) (t) (103 US$-FOB) (t) (103 US$-FOB) (t) (103 US$-FOB) (t) (103US$-FOB) (103 t) (103 t) 5,689 / 2,044 2,168 / 1,094 7,664 / 1,916 1,563,891 74,754 448,039 82,269 5,053,453 1,013,101 621 67.7 6,140 2,927 693,241 219,179 7,252 2,610

2005 (r) 5,631 / 2,005 2,054 / 1,058 6,283 / 1,712 1,215,085 59,893 445,090 100,544 3,116,689 727,357 162 18.6 9,333 5,618 712,019 212,483 6,846 2,490

2006 (p) 5,801 / 2,065 2,394 / 1,229 6,369 / 1,835 1,405,572 66,933 328,445 80,976 3,160,487 763,806 462 65.00 12,466 6,927 708,549 228,886 7,206 2,710

Production:

Imports:

Intermediate products (Chemical (103 t) 12,024 8,688 8,821 Compounds) (*) Concentrate (rock) ) (2) (US$/t FOB) 94.00 104.00 105.50 Concentrate (rock) (3) (US$/t FOB) 47.80 49.29 47.62 Phosphoric Acid (3) (US$/t FOB) 183.62 225.90 246.54 Prices: Intermediate products(4) (US$/t FOB) 200.48 / 316.17 233.37 / 298.42 241.67 / 323.03 Concentrate Rock/ Phosphoric Acid (5) (US$/t FOB) 109.02 / 476.73 114.81 / 601.95 140.69 / 555.67 Sources: DNPM/DIDEM; ANDA/IBRAFOS/SIACESP/SIMPRIFERT; SECEX/MF (imports and exports); Notes: (1) Production + Imports - Exports; (2) Average price in force, industrial sales; (3) Average base price Brazilian imports; (4) Average price: (base Brazilian imports) / (base Brazilian exports); (5) Average base price Brazilian exports; (*) Intermediary Products: Mono-ammonia phosphate - MAP, Diamonic phosphate - DAP, SS, SD, TSP, ST Thermo-phosphate, NPK, PK and NP and others; (**) Nutrients in P2O5; (p) Preliminary; (r) Reviewed.

VI - ONGOING AND/OR FORECAST PROJECTS FOSFRTIL/ ULTRAFRTIL is studying the alternative of expanding the production of phosphate products, by means of the increase of the capacity of the Industrial Complex of Uberaba-MG and of the development of Mina do Salitre, in the region of Patrocnio-MG, and is trying to build a new production unit of urea and ammonia using natural gas as raw material. COPEBRAS intends to invest 250 million dollars in the expansion of the production of processed phosphate and finished fertilisers in its units of Catalo-GO and Cubato-SP during the period of 2005-2007. The result of this initiative will be an increment of 900 thousand tonnes of phosphate rock of and 630 thousand tonnes of finished fertilisers. VII - OTHER RELEVANT FACTORS

Phosphorous is an essential element to the nutrition of plants and animals. It is part of the group of primary macro nutrients: Nitrogen, Phosphorous and Potassium, which are indispensable for the development of plants. There is no substitute for phosphorous in agriculture, and phosphate rocks are its only source. The Brazilian production grows less than the demand, which forces the country to import. The competitiveness of imported products also has effects on the prices of domestic products. In Brazil, the rates of use of fertilisers per unit of planted area is lower than that of countries having more developed agriculture, which shows an even greater potentiality of growth. Investments in production and in logistics may contribute for the Brazilian complex to be able to meet the needs of domestic consumption.