Investor Relations

Business overview 2010

Business overview

Company

Yara is a global company converting energy, natural minerals and nitrogen from the air into essential products for the farming community and industrial customers. During 2010, Yara retained its global position as the world’s leading provider of nitrogen-based mineral fertilizers and industrial products, as well as its unrivalled global presence, with operations in more than 50 countries and sales to about 150 countries. The company has developed a unique business model with three operating segments: Downstream, Industrial and Upstream – all supported by the global Supply & Trade organization. At year-end, 7,348 people were employed by Yara worldwide.

Yara International ASA is headquartered in Oslo, Norway, and has been listed on the Oslo Stock Exchange since 2004.

Operations

Yara’s global activities range from phosphate mining and ammonia production through commodity trade and energy arbitrage to building local market knowledge. Delivering our knowledge and premium branded products, Yara develops relationships with customers by providing value-adding solutions. The backbone of the company’s operations has been large-scale ammonia and fertilizer production in Europe.

In recent years, new capacity has been added in regions with low-cost gas supplies, particularly the Middle East, North Africa, Trinidad and Australia. Today, plants in these regions represent about 35 percent of Yara’s production volumes. With recent decreases in natural gas prices in North America, our plant in Canada can also be classified among those with a low-cost gas supply.

Yara’s fertilizer and industrial products share a common platform. They utilize the company’s knowledge and leadership position in the production and distribution of ammonia, urea and nitrates. They also share a common market approach, in which Yara uses its experience and expertise to provide complete solutions that meet the needs of customers and deliver real value to their businesses. Yara offers the industry’s most comprehensive fertilizer product portfolio, supported by large-scale sourcing, production and trading and a local market presence.

Organization - Company structure

There were no significant changes in the overall corporate structure in 2010. The Industrial segment was reorganized into five business units in order to better capture growth opportunities and reflect Yara’s ambition to grow globally from its strong base in Europe. Yara Switzerland, with its head office in Geneva, was defined as the company’s new global commodity optimization center, helping to unleash the potential that exists in the global fertilizer trading market.

Executive management

The President and CEO of Yara International ASA, Jørgen Ole Haslestad, took up his position in October 2008, having previously served on the Board of Directors. In 2010, only one change was made in the Executive management team: Yves Bonte was appointed Head of Industrial, replacing acting head Trond Stangeby in January.

Industry

The mineral fertilizer market is composed of three main crop nutrients: nitrogen (N), phosphorus (P) and potassium (K). Of  these, nitrogen is the most important and by far the largest, accounting for more than 60 percent of global fertilizer consumption. While phosphorus (phosphate) and potassium fertilizers are absorbed and stored in the soil for a longer period, nitrogen must be applied annually to maintain yield and biomass. Consequently, N consumption is less volatile.

The fertilizer industry has historically been divided into nutrient-specific sub-sectors. This is a result of the geographic location of raw material sources and the variety of both nutrient requirements and local market demands. A number of companies serve national markets or sub-regional markets.

However, only a small handful – of which Yara is the largest – operate on a global scale. As nitrogen is produced on all continents from hydrocarbons, the N fertilizer industry is less concentrated and consolidated than the P and K industries. This fragmentation offers growth opportunities not offered by phosphate and potash. Globally, there are few large suppliers of P and K fertilizers, which are located in regions close to natural deposits of phosphate rock and potash ores.

The mineral fertilizer industry has historically been subject to government engagement and ownership as a means of securing national food supplies. However, with state involvement declining and government-owned enterprises becoming more market-oriented, there is a trend toward consolidation and stronger financial discipline across the industry. In recent years, the nitrogen industry has undergone significant restructuring in Europe and North America, a process Yara has been involved in and aims to remain part of.

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