Nutrien (NTR) 40-F2020 FY Annual report (Canada)

We focus on enhancing our world-class and low-cost potash and nitrogen production network and creating value and efficiencies through the integration of our supply chain. This includes the optimization and growth of the world’s largest Ag retail network. We develop and deliver value-enhancing whole-acre solutions to help growers produce abundant, healthy and sustainable food. These solutions include our comprehensive digital capabilities, agronomic tools and deep portfolio of proprietary products.

Nutrien is focused on being a leader in reducing carbon emissions generated along the ag value chain. Nutrien’s Carbon Program creates the opportunity to financially reward growers who apply best practices and climate smart products, which is expected to drive a step change in agricultural sustainability and improved carbon management. By leveraging our unique relationship with the grower, we can deliver an end-to-end program where we can add value throughout.

At our nitrogen production facilities, we have the capability to produce approximately 1 million tonnes of blue/low carbon ammonia annually, we are planning to expand the production of sustainable products and we are further planning to reduce our carbon footprint through energy use efficiency and abatement projects. At our potash mines, we are planning to reduce our carbon footprint and lower our costs through self-generated electricity and heat, and we are progressing projects to improve water management.

We are committed to reducing the environmental impacts of our operations on air, land and water, and developing products and innovative solutions that help growers tackle the environmental challenges facing the agriculture industry.

Working with growers to apply today’s best practices is key to the sustainability of the agriculture industry. Development of new technologies, practices and programs are required to support this journey, which is why Nutrien launched a comprehensive agriculture carbon program and continues to invest in the development of a portfolio of sustainable products and solutions for growers. We are also helping drive nutrient use efficiency and farm productivity, provide environmentally sustainable soil and plant health solutions, and enable digital agronomic and sustainability analysis.

		LEARN MORE

      Nutrien’s Carbon Program p14

      Blue/low Carbon Ammonia p17

      Next Generation Potash p16

As part of Nutrien’s purpose driven culture, we aim to develop respectful and positive relationships with our employees, contractors, suppliers, customers, and local communities.

We attract and retain our people by investing in the experience and engagement of our employees, developing the best talent, and fostering diversity and inclusion in Nutrien’s culture. In addition, we have an effective succession management process to safeguard the long-term achievement of our strategy.

Nothing is more important to Nutrien than the well-being of our employees, which was emphasized by our response during the COVID-19 pandemic. Ensuring safe operations and delivering on our commitment to keep employees and contractors safe are also essential elements of delivering strong business performance.

We embed strong corporate governance systems and principles in our business through a diverse and independent Board of Directors, strong ethical principles that inform our activities, and rigorous systems for cybersecurity and data privacy.

Nutrien’s corporate governance framework includes policies and processes that define the roles of the Board and Executive Leadership Team. It also ensures that our business practices meet high ethical standards.

		LEARN MORE

      https://www.nutrien.com/       what-we-do/governance

NUTRIEN’S CARBON PROGRAM

Nutrien launched what we expect to be the agricultural industry’s most comprehensive end-to-end carbon program with a goal of making it easier for growers to increase productivity, improve sustainability and boost profitability. The program is designed to increase grower margins per acre and generate verifiable carbon credits that can be monetized.

This revolutionary program begins by targeting 100,000 acres of pilot farmland across North America in 2021 followed by a full roll-out, then a launch in Australia and South America. We are designing scalable programs that facilitate the use of climate smart inputs and sustainable practices to reduce GHG emissions, improve soil carbon sequestration, and measure the positive financial, productivity and environmental impacts.

The active mining face presents the single largest safety risk to our underground workers and we are implementing tele-remote and autonomous operations to remove them from that risk.

We are empowering safety and value-driven decisions with real-time information supported by our digital capabilities, advanced process controls and smart planning to optimize our production process, increase production capabilities and lower production costs per tonne.

We are also extending asset life by monitoring and predicting key equipment parameters and performance.

 REDUCING GHG

 EMISSIONS

For Nutrien, nitrogen production represents more than three-quarters of our total scope 1 & 2 emissions, which is why we are focused on reducing that footprint.

We have several projects underway that are expected to reduce the carbon footprint of our nitrogen operations. Construction began on abatement projects totaling $50 million, that are expected to reduce CO₂ equivalent emissions by over 1 million tonnes by 2023, equating to an approximate 7 percent reduction in our company wide scope 1 & 2 emissions. Further, we have several other projects that will reduce our overall emission intensity.

 BLUE/LOW CARBON

 AMMONIA

Nutrien is one of the world’s largest blue/low carbon ammonia producers. We capture CO₂ at our Redwater and Geismar facilities, and sell it for industrial applications or permanently store it in large-scale carbon capture facilities.

We also produce low carbon ammonia at our Joffre plant which uses hydrogen as a feedstock. This process significantly lowers the GHG intensity per tonne of ammonia compared to a typical steam methane reforming process.

In 2020, we captured approximately 1 million tonnes of CO₂ equivalent with the capability to produce approximately 1 million tonnes of blue/low carbon ammonia.

 ENVIRONMENTALLY

 SMART PRODUCTS

Nutrien produces and sells a wide-portfolio of products that minimize nitrogen loss, maximizes nitrogen utilization and reduces emissions.

We produce and sell over 400,000 tonnes of Environmentally Smart Nitrogen (“ESN”) annually. This urea granule is contained within a flexible polymer coating which reduces nitrogen loss, and releases nitrogen at a rate matched with crop uptake.

We also produce and sell approximately 600,000 tonnes of diesel exhaust fluid (“DEF”) which is a urea liquid solution that, when combined with diesel in larger vehicles and machinery, can improve fuel efficiency and reduce emissions.

Transporting ammonia then extracting its hydrogen can be a lower-risk and lower carbon alternative to transporting hydrogen, which can then be used in applications such as fuel cells. We are pursuing opportunities to leverage our low-cost ammonia production profile and strategically advantaged assets to be at the forefront of this developing market.

2020 MARKET CONDITIONS

Key crop prices surged in the second half of 2020 driven by very tight global supply and demand fundamentals.

Growing conditions in North America improved considerably in 2020 relative to the 2019 season, however, the US had prevented planting of about 10 million acres, which is approximately twice the historic average. In addition, the Derecho windstorm in the MidWest resulted in significantly lower than expected production of US corn and soybeans. These factors and relatively low crop prices resulted in lower than expected crop input spending during the summer period.

The combination of lower than expected production and the record pace of Chinese grain and oilseed imports in 2020 resulted in US ending stocks for corn and soybeans projected to be at their lowest levels in six years, according to the USDA. This caused corn and soybean prices to rally in late 2020 and early 2021 to their highest levels in at least seven years.

Following several seasons of drought, Australian growers received much needed precipitation in 2020, resulting in a 76 percent increase in winter crop production. The increased planted area supported increased demand for crop inputs. While in Brazil, growers responded to strong crop prices by increasing soybean planting in the fall of 2020, despite less than ideal weather.

Our extensive mine network provides for decades of reliable and safe production at a first-quartile cost profile, and places us as the world’s largest potash producer with approximately 21 percent of global potash capacity.

Nutrien’s Potash network is one of the lowest cost, most reliable and highest quality in the world. We have six mines as part of a diverse and flexible network that allows us to optimize our assets to cost-effectively position the right tonnes at the right time.

We have 5 million tonnes of available potash capacity that we expect to deploy over time as global demand grows, a characteristic that is unique to Nutrien.

In addition, we have line of sight to 5 million tonnes of incremental brownfield expansions which can be brought online at a much lower cost and much more quickly than any new greenfield mine being contemplated in the industry today. We have an extensive distribution system to service the North American market, and our stake in Canpotex ensures

efficient and effective marketing and delivery of potash to over 40 international markets.

Safety is of paramount importance to Nutrien’s culture and actions and we are proud to operate one of the safest potash operations in the world. This is made possible by our investment in maintaining our production network, decades of developing best practices in potash mining and the adoption of new technologies.

More than 70 percent of the world’s potash capacity is held by the six largest producers. Our primary competitors are located in Russia, Belarus, Canada, Germany, Israel and Jordan.

Most major potash consuming countries in Asia and Latin America have limited or no indigenous production capability and rely on imports to meet their needs. This

is an important difference between potash and other major crop nutrient industries. Trade typically accounts for approximately three-quarters of demand for potash resulting in a globally diversified marketplace.

The global demand growth rate for potash has outpaced that of other primary nutrients, averaging approximately 2.4 percent cumulative annual growth rate (“CAGR”) since

2015, with the expectation of an additional 5 million tonnes of new demand added by 2023.

This growth is driven by increasing nutrient requirements of higher yielding crops and improving soil fertility practices, particularly in emerging markets where potash has been historically under-applied and crop yields lag.

Incremental capacity: We will use our production platform, which includes 5 million tonnes of additional available capacity, to grow as the leader in the potash industry. We will deploy this capacity as demand grows and serve tonnes into the market when required. In addition, we have line of sight to 5 million tonnes of incremental brownfield capacity that we can develop in half the time, and at a fraction of the cost of a conventional greenfield mine to meet longer-term demand growth.

Next Generation Potash: We are investing in initiatives focused on leveraging automated and tele-remote mining and other digital technologies to continue to improve our safety performance, lower our production costs and reduce emissions. These improvements are being made from the mine face right through to the mill.

		LEARN MORE Next Generation Potash p16

Network optimization: We are focused on achieving the optimal production mix from our world-class platform, which maintains production flexibility while maximizing the benefits of our low-cost position on the cost curve and a leading domestic and offshore distribution network including our own integrated business. At the same time, we will undertake preventative maintenance to ensure the high-quality, reliability and safety of our operations.

Nutrien sold 12.8 million tonnes of potash in 2020, up more than 1 million tonnes over 2019, highlighting the flexibility of our network and ability to move tonnes into the market when needed. We also reduced our cash COPM to $59 per tonne, the lowest level on record for Nutrien. This was despite a fire at our Vanscoy mine loadout facility and navigating the nuances of underground mining during the COVID-19 pandemic. Our strong

network of mines and exceptional commitment from our people ensured that we were able to produce potash at targeted levels without sacrificing quality, value or safety.

We continued to progress our Next Generation Potash program. Rocanville’s mining fleet is now able to run operator-not-present during shift change, and Lanigan has successfully piloted clay seam detection using artificial intelligence which will allow for autonomous

control of mining machines. Predictive maintenance, value driven planning and scheduling and real-time connection of our workforce moved in lockstep to begin to unlock the full value of the program.

We took additional steps earlier this year to optimize our network by shifting production tonnes from our higher-cost Vanscoy site to other lower cost operations within our network.

2020 MARKET CONDITIONS

Demand for potash fertilizers was excellent in 2020 despite the COVID-19 pandemic, largely supported by higher crop prices and improved agricultural fundamentals in key markets.

Deliveries to the North American market increased by about 1.5 million tonnes in 2020, supported by favorable application conditions, particularly during the extended fall application season, and strengthening in crop prices. Brazil imported record volumes of potash in 2020 supported by favorable crop economics. While palm oil prices increased dramatically in the second half of 2020, potash demand growth in Southeast Asia remained relatively limited especially in Malaysia, where plantations continue to struggle with COVID-19 related restrictions and labor shortages.

Import demand in both China and India was strong particularly in the second half of the year following the contract settlements in the second quarter of 2020, underpinned by tightened agricultural fundamentals.

Potash prices were pressured in many key spot markets during the first half of the year, however, prices increased steadily in the second half as the demand outlook continued to improve and outpaced new capacity additions from the Former Soviet Union (“FSU”) region.