Nutrien Ltd. (NTR) Earnings Call Transcript & Summary

Welcome to our Investor Day. Thanks. Obviously, virtual this year, and I'd like to welcome you and online with us today is Mr. Chuck Magro, President and CEO of Nutrien; Mr. Pedro Farah, our CFO; and the heads of our 3 business units. And our goal today is to provide an update on Nutrien's business, our long-term goals and strategies. And as we conduct this webcast, various statements that we make about future expectations, plans and prospects contain forward-looking information. Certain material assumptions were applied in making these forecasts and conclusions, therefore, actual results could differ materially from those contained in our forward-looking information. Additional information about these factors and assumptions are contained in our current quarterly report to our shareholders as well as our most recent annual report, MD&A and annual information form filed with Canadian and U.S. Security Commissions to which we direct you. Our market outlook presentation has been sent and posted to the Investor Relations page this morning as a background for today. The format will be to hear from each of our executive leadership team speakers for an update on the business and outlook and then we will have a fulsome question-and-answer period after all the speakers have finished up as per the agenda. We invite you to submit your questions at any time, and I will be putting them forward to our executives indicating who the question is from during the Q&A session. And with that, I'd like to turn the mic and the video over to our CEO, Chuck Magro.

Thanks, Richard. Hi, everyone. Welcome to Nutrien's 2020 Investor Update. First off, I hope that you and your loved ones are all safe and healthy. We held our first Investor Day back in May 2019, and while, has the world changed since then. In that short period of time, we have experienced everything from trade wars, African swine fever to now the worst pandemic of our lifetimes. With respect to COVID, virtually every sector of the economy has been impacted in some way. But agriculture and demand for fertilizers have been more resilient than most commodities. In fact, looking at 2020, what you will see is that most of the ag industry has actually performed quite well. In fact, global crop inventories haven't been this tight or the outlook for crop prices this strong in a very long time. For Nutrien, some things remain the same. Our strategy and our business model are built to weather market volatility and to take advantage of the strengthening agricultural fundamentals that we are seeing today. We plan to cover a lot of material in a concise format today, including some of the more exciting areas of our growth, including Nutrien Ag Solutions, our digital platform and the exciting new strategic announcement we made just this morning. There are 4 key messages that I'd like to highlight for you. These will be the themes for our next 2 hours or so. First, despite the challenges that the ag economy has faced over the last couple of years, our business model has provided significant value and stability. And we have made good progress towards the 2023 targets we set last year. Second, we are now targeting $1 billion of additional value by 2025 with investments and actions that are within our control. This excludes any impact from higher fertilizer prices. Third, if the market fundamentals continue to improve, as we have seen lately, the value creation could be very significant. It's been 6 years since we've seen this strong of a NAG outlook, with crop prices this high, tighter stocks to use ratios and much improved farmer profitability. Fertilizer supply demand is also improving, especially in potash, where the spot prices are up in the last 6 months in most major markets. And finally, we are committed to becoming a global leader in carbon management and sustainable agriculture. We've made numerous investments over the last few years to develop a climate friendly products and services portfolio and believe the time is right to bring a carbon economy to agriculture. Looking at our strategy. You all know that Nutrien is an integrated crop inputs company. We have some of the best assets in the business, all working together to bring full acre solutions to the farm to help growers produce abundant, healthy and sustainable food. We also have the supply chain capability to bring products and services, but more and more lately, technology and people to the farm quickly, and at a lower cost than anyone else. And now -- and this is the new part for today, we can provide leading sustainability solutions to the ag industry. Our business model provides more stability through the ag cycles, and significant leverage to improving agricultural fundamentals. You have seen the result of this stability through the recent cyclical lows where Nutrien had stronger EBITDA and free cash flow than most of our peers. And with a strong balance sheet, we were able to make capital allocation decisions at the bottom of the cycle that few other companies in our industry can make. In fact, since the merger, Nutrien has increased our dividend by 13%, bought back 12% of our shares outstanding and have grown our Ag Solutions business by 20% as well as having one of the best health and safety records in the industry. Looking back for just a minute, you can see the benefits of the merger and the actions we have taken since then have created a lot of value even in very tough market environment. If you look at the chart, you can see that the premerger pro forma EBITDA was about $3 billion in 2017. This was when most fertilizer prices were higher than they are now. If we normalize the 27 EBITDA for 2020 fertilizer prices, the result would actually be closer to $2.7 billion of EBITDA. And with our 2020 guidance midpoint at $3.6 billion, this means a total value creation of almost $900 million in 3 years. This is a simple way to illustrate that we not only capture the ongoing $650 million in synergies from the merger but we also generated additional earnings at the bottom of the cycle from our investments. Then after we delivered the synergies, we set operational targets at our last Investor Day back in May and have made very good progress since then. You can see we are heading in the right direction on all fronts. In retail, we've increased the EBITDA margins and are making good progress towards our 2023 target of 10.5%. And we were able to grow our EBITDA margins despite low crop prices for the last 2 years and the margin improvement is also impressive when you consider that we are also building out our digital platform right now. The other area in retail, which I will call out is the improvement in working capital. We are already approaching the target levels we set last year. This has come partly from our investments in our hub-and-spoke model as we realize the benefits from our network optimization efforts. Looking at our digital platform targets. There's a lot to talk about here, I'll leave the update to Mike Frank to cover, except to say that we continue to be very pleased with the progress, and we have surpassed even our own high expectations. In our production businesses, our potash cash cost hit record lows this year, and we expect to have our best year ever in 2020. And we continue to invest in new mining automation technology to take us to the next level of performance. Ken Seitz will talk more about this in his section. And in nitrogen, we've increased our nitrogen operating rate significantly over the past 3 years as well as increased our nitrogen sales volumes by about 800,000 tonnes with more volume expected as we finish up the brownfield expansions in 2021, and Raef Sally will discuss this more in his section. Looking forward now at our plans. We now see an opportunity to create an additional $1 billion in value by 2025. We plan to grow the retail business, an additional $300 million to $400 million in EBITDA by 2023, and then another additional by $200 million to $300 million in EBITDA by 2025. Through organic growth, continued network optimization efforts, cost management and, of course, through M&A. In potash, we expect to achieve cash cost of production of $50 to $55 per tonne in 2023, and these are in today's dollars. Now it should be noted that these are all-in costs that include everything, including maintenance turnarounds, carbon taxes and Canadian resource taxes. We also expect to grow our potash volume as global demand continues to grow, and we now expect global potash demand to reach 73 million tonnes by 2023 and somewhere between 77 million and 78 million tonnes by 2025. And in nitrogen, we will continue to improve our reliability and our controllable cash cost position, which is already among the best in the world and sell the higher volumes from our brownfield projects currently underway. Of the 1 million tonnes of total capacity, we expect approximately 300,000 tonnes will be added in 2021. Turning to the market conditions for just a minute. The last 2 years have been at cyclical lows, and you can see that from this chart that we are close to 10-year average lows. Clearly, there is much more upside than downside as we look ahead. Our price sensitivity is very strong. For every $25 a tonne increase in fertilizer prices, Nutrien would generate an additional $650 million in EBITDA. And if you consider that we are currently about $100 a tonne below the 10-year average price, the torque to fertilizer price is very, very significant. But what sets us apart is the volume leverage we have in potash. We are one of a very few companies that have excess volume, about 6 million tonnes to be more exact. And for every 1 million tonnes of sales volume, it's worth about $100 million in EBITDA, and that's at today's prices, much, much more than that as prices improve. So as the market fundamentals improve, Nutrien will be one of the very few companies with excess volumes, adding EBITDA from both higher prices and higher potash volumes. This next chart goes back to my opening comments that agriculture has been more resilient than many other commodities. You can see global grains and oil seeds and fertilizer have all seen growth in demand, while most industrial commodities have seen significant declines. This is because industrial commodities are really driven by economic activity or GDP but agricultural demand is driven by population growth and the need to feed people. The only ag commodity that gets caught in the middle is nitrogen, with approximately 75% of nitrogen demand coming from agriculture, and 25% of demand from industrial, which tends to be directly tied to the global economy. And let's look at the U.S. farmer, the chart on the right, how are they doing? While with today's crop prices, farmer cash margins are now the highest we've seen in many years. In fact, you have to go as far back as 2014 to see cash margins this good. And we expect that this will provide strong support for demand for our products and services as we move into 2021. The last topic I'd like to touch on today is the importance of sustainable agriculture and what we are focused on as a company. This year, we have seen an approximate 20% improvement in our overall ESG ratings, and we are now in the top quartile of our peer group. Today, Nutrien is the world's largest producer of controlled release fertilizer products with our ESN, which can reduce NOx emissions by up to 50%. And and with our Loveland proprietary products portfolio, where we have developed a suite of environmentally friendly products. We are also one of the world's largest producers of so-called blue or low carbon ammonia. With about 1/3 of our net ammonia sales coming from this category. Early next year, we will be coming out with our overall ESG targets, which will include very ambitious environmental commitments, focused on operational scope 1 and scope 2 reductions, which will provide us with a pathway to become Paris compliant. We intend to release this in the first half of next year, so please watch out for that. However, just this morning, we announced an exciting new initiative, the introduction of our carbon program for farmers. We believe this is a first of its kind program to unlock the true potential of agriculture to help address climate change. To set the stage, there are nearly 3.5 billion acres of farmland on the planet today and our population is expected to reach 10 billion people by 2050. And agriculture needs to produce enough food, the feedback population and needs to be part of the solution to tackle climate change. Sustainable agriculture and carbon incentive programs really need to be a big part of the answer as we combine science and technology plus smart government policy to create an efficient carbon economy, one where farmers actually get paid to reduce emissions and sequester carbon. Moving carbon from being just a cost on their expense ledger to becoming a source of revenue. We believe that's our best chance of success. Looking at the carbon market, we expect demand for carbon credits will grow exponentially in the coming decade as the world increasingly focuses on climate action. Agriculture can be a major source of those credits, representing up to 30% of the total carbon market by 2050 and by offsetting up to 85% of the current emissions from producing crops. Some experts have forecasted that the global ag carbon market could reach $100 billion by the year 2050. Nutrien is in a unique position to implement a carbon program, given who we are, what we do and our position in the value chain. We will provide full acre solutions directly to farmers, and use our digital platform to measure and generate the carbon credits, having them verified along the way. And then we will facilitate the purchase of those credits through a carbon marketplace to provide cash back to farmers for these credits. We see the potential in the short-term for farmers to achieve about $50 an acre in margin, $20 from carbon farming, assuming carbon is valued at $10 to $20 a tonne and as much as $30 from higher productivity and yields. This impact will vary, of course, based on crop, soil conditions and weather, but this would be our expectation for growers who embrace these programs. Nutrien benefits from bringing full end-to-end solutions to growers with our agronomists working together directly with farmers to make all of this seamless and efficient. In 2021, we plan to run a series of trials across North America to prove out our technology and our platform, and we expect to roll this out fully in 2022. Finally, this carbon initiative will be an open program, and we invite others across the ag value chain to join us on this journey. Now is the time for the ag industry to come together to solve these big challenges of feeding a growing planet while tackling climate change. And with those comments, I'll hand it over now to Ken Seitz to talk potash. I will be back at the end of the presentation to make a few closing comments and then answer some questions. Go ahead, Ken.

Well, thanks, Chuck, and good afternoon, everyone. We are the largest soft rock miner and potash producer in the world, with a network of 6 mines located here in Canada, one of the limited geographies in the world with abundant and economical potash reserves and a stable geopolitical operating environment. The potash industry has the highest growth expectations of the 3 primary nutrients and is highly consolidated with significant barriers to entry, including the time it takes to bring on new projects as well as significant capital required to do so. Within this industry, Nutrien is best positioned to create value. We expect to produce approximately 12.5 million tonnes this year but more importantly, we have 6 million tonnes of available capacity, we expect to deploy as demand grows. We also have line of sight to an additional 5 million tonnes of low-cost brownfield opportunities beyond that 18 million tonnes of available capacity, giving us both scale and growth optionality that is unmatched in the industry. We operate the most reliable, safe and efficient assets as part of a diverse and flexible mine network that allows us to assess the market and position the right tonnes at the right time. We've seen the long-term historical global potash demand growth of 2% to 3% per year, driven by strong potash consumption trends in all major export markets, and we expect to continue to see that level of long-term growth. We know there is variability from year-to-year. And while temporary pauses can occur in certain countries, the underlying fundamentals of food demand that sorts increased potash application remaining. In 2019, we had a pullback in demand, and we expect the growth we're seeing here in 2020 to continue as the market reverts to historical trend levels over the next few years. We see significant growth coming from the key regions of Brazil, China, India and Southeast Asia, and we provided ranges of expectations in each of these geographies supported by our fundamental views in those areas. I'll note that we could see any combination of regional demand growth within those ranges to occur. Based on these underlying fundamentals and growth expectations, we expect global annual demand to be in the range of 73 million tonnes in 2023, and we see significant potential beyond those levels. Based on our market outlook, we expect to sell 14 million with upside to 16 million tonnes in 2023. Increasing our asset utilization by opportunistically flexing capacity from our lowest cost assets in response to demand growth and volatility. We have an extensive distribution network, to domestic and offshore markets, allowing us to support our mine network and cost effectively, maintain share or opportunistically capture short-term demand surges, while we increase our volumes as the market grows over time. We currently see a number of paths to accelerate the utilization of our excess capacity, as outlined on the right-hand side of the slide. We remain positioned and ready to increase our volumes in the event we see above trend demand growth, continued slower ramp-up of new supply or mine closures. Also, the industry is not immune to supply shocks from sink holes, political unrest or water inflow that has caused an average of 1 million to 2 million lost tonnes over the last decade. When one or any combination of these scenarios occur, we are the beneficiary of not only volume, in which we see $100 million increase to our annual EBITDA for every 1 million tonnes, but we are also the beneficiary in price, where we see a $300 million increase to our annual EBITDA for every $25 per tonne increase. Nutrien is well positioned to leverage our capacity and benefit from any supply or demand scenarios, which impact prices and volumes. At Nutrien, our goal is to operate the safest, most reliable, most efficient, lowest cost potash operations in the world. Last year, we introduced our next-generation potash initiatives, which are focused on achieving just that back by leveraging technology and making improvements from the mine face right through to the mill. We disclosed we are investing to improve safety and efficiency, and while we've deferred some capital over the past 12 months due to COVID-related precautions, and as a result, extended the time horizon for our expected progress. We remain focused and continue to see an immense amount of value and potential as we look to 2021 through to 2023 and beyond. We currently have 100% of our mining fleet at the Rocanville site enabled to run with the operator not present during shifts, and we have 2 of our mining machines at our Lanigan site outfitted with surface remote operation capabilities. And while it's easiest to associate our next gen program with autonomous mining machines or teller remote capabilities that allows you to control the miner from surface, we are advancing much more than that. We're implementing machine vision monitoring to things like our conveyor belts as part of predictive maintenance, which is only 1 example of the progress we're making on a substantial broad predictive maintenance program. We're leveraging advanced process controls to optimize our product quality, recovery and environmental footprint with line of sight to reducing up to 50% of leach water usage per site per year. We are digitizing value-driven planning and scheduling, and we're currently constructing and progressing self-generated heat and power at our Rocanville site, which will improve reliability, reduce CO2 intensity and lower our cost per tonne. We are currently moving these initiatives into the scaling and rollout stage, which will accelerate value delivery, move our network down the cost curve and support our position as one of the lowest cost potash producers in the world. Driven by our next-generation potash initiatives, we expect our cash cost of product manufactured to be $50 to $55 per tonne in 2023 or $53 to $58 per tonne when including inflation. Despite the deferred capital over the past 12 months and adjusted cadence, we see a $3 to $6 per tonne benefit from these initiatives and further savings as we continue to scale, roll out and deliver value to 2025 and into the future. Earlier this year, we took additional steps to further optimize our network by shifting tonnes from our higher cost Vanscoy site to our lower cost operations within our network. These steps have positioned us to run our network more cost effectively without sacrificing flexibility as we ramp up our volume over the next few years. While we believe our all-in definition of cash cost of product manufactured is the most relevant number for your consideration. If we were to exclude turnaround costs, carbon tax, and Canadian resource taxes, our costs would be $40 to $45 per tonne in 2023 before inflation. When we look forward, we expect to be increasing our asset utilization by ramping up our available capacity of 18 million tonnes. But not only that, we continue to evaluate the timing of an additional 5 million tonnes of brownfield expansion opportunities, which would bring our total operational capability to 23 million tonnes to ensure we are positioning ourselves for growth well into the future. New greenfield projects here in Saskatchewan are facing capital costs of $2,500 to $3,000 per tonne in a decade to fully ramp up. To put that into perspective, the shafts alone usually only represent roughly 25% of the required capital to bring a project to completion. In comparison, our expansions can be brought on for $500 to $700 per tonne, significantly cheaper than greenfield projects. Further, as these opportunities are spread across our network of mines, we have the ability to bring on these tonnes in increments as needed. Quicker than any other project currently being discussed and with significantly less risk. Our scale and growth optionality is unmatched in the industry, and we will continue to evaluate the timing of these brownfield opportunities as we increase our sales volumes. In 2019, we saw a pullback in demand and some new supply into the market. This year, we're seeing higher demand and more robust price environment despite additional supply types. I can tell you, with the fall we've had in North America, the market is tight as we close out the year, and we are fully committed for 2020. Looking ahead, we see a balanced S&D outlook next year and tightening dynamics as we move beyond 2021. However, due to our 6 million tonnes of available capacity, we have the unique ability to strategically surge tonnes into the market, similar to 2018, when we sold an additional 1 million tonnes over the previous year. We are the only producer with the excess capacity and flexibility to sustainably capture demand growth, and we intend to continue to strategically utilize our excess capacity to optimize value for Nutrien. I outlined in an earlier slide a number of scenarios, such as above trend demand, slower ramp-up of new supply or an industry supply shock, all of which lead to an increased need for more tonnes in the market. The arrows in this slide represent the potential impact of our additional 6 million tonnes of available capacity could have on global utilization rates under different SNE scenarios, highlighting the capabilities of our network. The scope of -- this scope of capability is unique to Nutrien and Nutrien alone. Finally, to reiterate my key points. We expect demand to revert to historical levels and grow at a long-term rate of 2% to 3% per year. We plan to sell 14 million with upside to 16 million tonnes of potash in 2023 with multiple scenarios in which we would leverage our 6 million tonnes of available capacity to surge volumes into the market and take advantage of opportunities as they arrive. We have line of sight to an additional 5 million tonnes of low-cost brownfield opportunities that can be brought on in increments, giving us both scale and growth optionalities that is unmatched in the industry. Our next-generation potash initiatives will allow us to continue to aggressively drive down our costs, increase our capability and improve our reliability and flexibility leading to cash cost of product manufactured of $53 to $58 per tonne in 2023, with even lower costs in 2025. Overall, we expect our actions to deliver approximately $200 million of value under our control in 2023 and $300 million of value in 2025 with a potential for much more upside considering for every $25 per tonne increase in prices, we see an annual benefit of $300 million. We operate the most reliable, safe and efficient assets as part of a diverse and flexible NYMEX network that allows us to assess the market and position the right tonnes at the right time, cost effectively maintaining market share and opportunistically capturing short-term demand surges while we increase our volumes as the market grows over time. We are well positioned as we continue as the potash industry leader and the largest underground software off miner in the world. And with that, I will pass it over to Raef Sully.

Thanks, Ken. Good afternoon, everyone. Raef Sully here, Executive Vice President and Head of the Nitrogen and Phosphate business units. Let's drive straight in and start with nitrogen. Nutrien has a large and diverse nitrogen portfolio. Our ammonia capacity is fairly evenly split between Canada, the U.S. and Trinidad. Our Canadian operations have one of the lowest cost positions in the world. AECO gas has traded at an average discount to NYMEX of over $1 over the past few years that equates to more than $40 per tonne ammonia cost advantage. The majority of our Canadian product is sold within the Western Canadian market, where we enjoy a logistical advantage, further enhancing our overall margins. In the U.S., our sites are well positioned to supply large agriculture and industrial customers, we have an extensive network of more than 180 terminals and warehouses with over 1.3 million tonnes of storage capacity to help serve our customers across North America. Our operations in Trinidad supply customers in around 30 countries worldwide. [indiscernible] that economic, in September, we made the decision to indefinitely curtail our smallest ammonia plant there. And improving our cost structure and free cash flow during this period of market weakness. We've maintained the flexibility to restart this plant if market conditions improve. Now turning to the fundamentals. Industrial nitrogen demand was impacted this year by the economic slowdown related to COVID-19. We are seeing a recovery in industrial nitrogen demand, although we are not yet back to pre-COVID levels. We expect that the recent increase in ag commodity prices will support higher planted acres and strong nitrogen fertilizer demand in the spring, the recent increases we've seen in nitrogen prices reflect this optimism for a strong spring season. Over the medium term, we expect nitrogen fundamentals to tighten. There is limited new capacity additions in the pipeline, and demand is expected to grow by approximately 1.5% per year. Demand for industrial nitrogen products is expected to increase at the rate of 2% to 3%, and we're well positioned to take advantage of this growth due to the product flexibility at our plants and our proximity to large industrial customers. The second fundamental to discuss is the outlook for energy prices. In 2020, we saw some compression of the cost curve. Oversupply in global LNG led to lower gas prices, and higher-than-expected supply, especially in Europe. This, coupled with lower-than-expected industrial demand from COVID-19 led to lower global ammonia prices. We do not view this as sustainable and in the second half of 2020, we have already started to see an increase in gas prices in Europe and global ammonia prices. Over the medium term, we expect prices for natural gas and coal to increase supporting a steeper cost curve than we've seen in 2020. And as the supply and demand tightens, we expect nitrogen prices will rise from current levels to incent new capacity that will be required over the medium to long term. While we expect a more supportive market environment going forward, our focus is on the factors we can control. Let me talk briefly about our 3 strategic priorities. First, our top priority is ensuring we have safe, reliable operations. We see this as the foundation to everything else we need to do. Second, we're always looking for opportunities to improve our assets that is their output, the flexibility and their efficiency. We will complete our first wave of brownfield projects in 2021. These are low risk, high-return projects that expand our overall capacity, enhance our product mix flexibility and improve energy efficiency. Third, we're expanding our portfolio of sustainable products, including low carbon ammonia and enhanced efficiency fertilizers, while also reducing the carbon footprint of our sites. Let's now go into more details on how we're enhancing the base business. Continuous improvement initiatives across nitrogen operations are expected to deliver approximately $100 million in earnings enhancements between 2018 and 2023. These initiatives are focused on increasing our operating rates, and driving down our controllable costs. Our nitrogen operating rate has increased by 7 percentage points from 86% to 93% since 2017, and we're on a path to achieving a 96% operating rate by 2023. Our operating improvements are being achieved by implementing a best-in-class reliability program and leveraging our larger network to enhance our turnaround execution program. This is one of the key benefits generated by the combination of assets in the merger. We're driving down our controllable cash cost per tonne through higher operating rates, energy efficiency projects and fixed cost optimization initiatives. As you can see from the chart, these measures are more than offsetting the impact of inflation. And on an inflation-adjusted basis, we expect a significant reduction in per cost tonnes -- sorry, in per tonne costs. 2020 will be a record year for our nitrogen sales volumes, driven by higher operating rates and the completion of our brownfield expansion projects. Projects completed between 2018 and 2021 will add nearly 1 million tonnes of gross product capacity, increasing our capability to upgrade ammonia to urea and UAN. We also doubled our ammonium sulfate capacity at Redwater, an opportunity that was facilitated by the closure of a phosphate plant there. These projects have a low CapEx cost per tonne and are expected to generate returns above 15% to 20%. We have completed each of these projects on time and on budget. We're now in the process of evaluating future expansion projects that could add an additional 700,000 tonnes of gross product capacity. Similar to the first phase, the focus will be on high-return projects that increase our product flexibility and energy efficiency. As Chuck mentioned, Nutrien has a unique opportunity to be a leader in sustainability across the ag value chain, and our Nitrogen business plays a big part in that. We have multiple levers to reduce direct emissions, expand the production of low-carbon ammonia and other sustainable products. We're investing $50 million in abatement projects that will reduce our CO2 equivalent emissions by over 1 million tonnes or more than 10% -- or more than a 10% reduction in our nitrogen scope 1 emissions. We're a leader today in production of low-carbon ammonia with over 1 million tonnes of production associated with low carbon capture -- sorry, with carbon capture or low carbon feedstock. This equates to about 1/3 of our total ammonia sales. We're actively working with a number of organizations regarding the evaluation of low-carbon ammonia technologies as one of the world's largest producers and distributors of ammonia, we are well positioned to supply emerging markets in various applications, such as electricity generation and transportation fuel. We continue to grow our share of sustainable nitrogen products. Our focus is on expanding production of enhanced efficiency fertilizers such as our proprietary ESN product. ESN or smart nitrogen is a controlled release nitrogen product design with a flexible polymer coating that releases nitrogen based on soil temperature. ESN gives crops the nitrogen it needs when needed, greatly [indiscernible] are well positioned to grow our share of the diesel exhaust fluid or DEF market in North America, a product that reduces NOx emissions from diesel engines. Let me now touch briefly on our Phosphate business. Our operational focus in phosphate is similar to nitrogen, that is to ensure we have a safe, reliable operation. Since the merger, we've delivered on a number of key initiatives. We've consolidated our primary sites from 3 to 2, we have also eliminated third-party rock purchase. These initiatives have significantly improved our operating costs and reduced our capital requirements. We know our work is done. So we have other initiatives underway to further drive down our rock costs and improve the reliability of our existing plans. Our Phosphate business is unique for most global players due to our capability to produce higher-margin industrial and liquid fertilizer products as well as our map with micronized sulfur content, or MST. We expect to grow volumes of these products by 40% between 2018 and 2023. This year, we also announced an agreement with Arkema to produce anhydrous hydrochloric acid or AHF and Aurora, which will provide a stable earnings stream beginning in quarter 2 of 2022. We expect to grow our nitrogen and phosphate earnings by approximately $200 million over the next 3 years through initiatives under our control. These are our continuous improvement initiatives and brownfield expansions. Market fundamentals are projected to improve over this period, assuming even a modest $25 per tonne increase, our EBITDA would increase by an additional $350 million. We will grow our business while maintaining our focus on safe and reliable operations, and advancing our position as one of the leaders in sustainability across our industry. Thank you very much. And Mike, over to you.

Thanks, Raef, and good afternoon, everyone. Nutrien Ag Solutions is the leading ag retailer globally, and it's a very exciting time in our business. In addition to growing our footprint, we are driving change in agriculture, including the introduction of new technologies, digital tools and sustainability solutions, all of which represent opportunity for us. I'll spend the next few minutes discussing how we are capitalizing on these opportunities to add value for our customers, create efficiencies across our network and ultimately grow our business. Since our last Investor Day, we've significantly grown our business both organically and through strategic and accretive acquisitions. Today, we are more diversified from an earnings, geographic and proprietary products perspective, generating opportunity and adding earnings stability. We've gained significant market share in the U.S., largely through organic growth, and we are hands down the premier ag retailer in Australia, where we expect to generate over 17% of our total earnings this year and where we have a clear line of sight to far exceed our run rate synergies from the Ruralco acquisition. We are growing our presence in Brazil and we've stood up a solid base business and our corporate office to continue our growth trajectory there. And while we remain the largest ag retailer in the U.S., there is still considerable room to consolidate this market. Earnings outside the U.S. this year will represent about 30% of our business. As you know, our Ag Solutions retail business is resilient and delivers through the grain commodity cycles, however, it's always best when grower economics are stronger. And today, grower cash margins are the best we've seen in the past 5-plus years. And likewise, grower sentiment is positive heading into 2021. In fact, as we look ahead to next year, we anticipate growers will be focused on maximizing production in all key regions where we operate our retail business. The last few years in the U.S. have been atypical with record high prevent plant acreage, but with the dry summer and strong commodity prices heading into '21, we believe it's most likely that we'll get back to a normal acre base this coming year. And you can see the significant earnings leverage that is created from higher planted acres in the U.S. Additionally, strong margins for growers creates more demand for high-quality seed, more fertilizer applications and more value-added products added into the tank from adjuvants to specialty nutritional products. And as an indicator, the record number of soil samples we are processing this fall in our Waypoint Analytics business would validate that our customers are planning on investing more in next year's crop. As I mentioned earlier, we've grown organically and through acquisitions. As a result, we are more geographically diverse business than ever before. Earnings diversity is helping our business in 2 ways; first, as we expand into the Southern Hemisphere, we start generating more cash flow in the first and fourth quarter, which are typically slower here in the northern Hemisphere. And secondly, it reduces risk as we are more geographically diversified, especially from a weather impact that are often country specific. So while our markets outside of Brazil are more mature and stable, we still have opportunity to pursue organic and inorganic growth opportunities in North America and Australia that can increase margins and grow EBITDA. So let's take a closer look at a few of these regions where we operate. First, Australia, where we've been operating for over a decade and are recognized as the market leader. We closed the Ruralco acquisition just over a year ago, which demonstrates our ability to drive value, not only from tuck-ins, but also large and transformational acquisitions. Our Australian business is now expected to contribute nearly $250 million in EBITDA in 2020 with significant growth potential as we continue to improve margins from that business and realize synergies. We continue to see great opportunity in Australia, where the original business case for Ruralco was built on $30 million of annual run rate synergies, and we now see a path to $50 million of annualized synergies. We've also been busy in Brazil. Since our last Investor Day, we built out our leadership team and started adding high-quality assets to our business. This year, we've added 2 more strategic retail assets, Tec Agro and Agro Cima. These acquisitions are in line with our strategy of targeted growth in regions that have a high proportion of growers that benefit from whole acre solutions similar to our customer base in North America and Australia. Our business in Brazil is now expected to deliver $500 million in annualized sales and is targeted to contribute about $100 million in annualized EBITDA by 2023. The pipeline of opportunity in Brazil is healthy. And just recently, we received CADE approval on our latest acquisition, a company called BRA Agroquímica. This company owns over 100 crop protection, active ingredient registrations in Brazil. So this acquisition facilitates our ability to build our own high-margin proprietary crop protection business, which we will sell-through our own retail footprint. This opportunity, combined with the Agrochem business that we acquired in Brazil a few years ago, provide the base of our proprietary products business in Latin America, just like we've done in North America and Australia. Looking ahead, we see additional opportunities to increase our market presence in this important, growing and strategic market for Nutrien Ag Solutions. Now in the U.S., we've grown our business through consolidation, optimization, organic growth and building our leading digital platform. Overall, we have approximately 21% share of the U.S. crop inputs market, and we have momentum across the board. Consistent with our targets from the last Investor Day, we expect to grow our U.S. business to approximately 24% share of market by 2023 through organic growth and targeted acquisitions. Now let's take some time to talk about our acquisition strategy, where we have a solid track record of delivering value in consolidating fragmented markets before discussing our organic growth strategy. In the U.S., the tuck-in strategy continues to add value, combining to over $1.25 billion in year 1 EBITDA growth over the past 9 years. The purchase multiple in the U.S. can fluctuate somewhat, but we have averaged approximately 7x EBITDA over that same period before optimization and full synergies. These acquisitions provide access to new customers, but the true benefit come from integrating these acquisitions and driving EBITDA growth through our unique business model, which includes a broad range of proprietary products, a lean supply chain and now digital tools. We are optimizing our network and due to our unique scale, footprint and breadth, we can serve more customers from fewer and strategically located facilities. The fact is that we have approximately 21% share of the U.S. market but represent a much lower portion of total U.S. ag retail locations. This strategy helps us deliver on a key metric that we introduced at the last Investor Day. And you'll see on the left-hand side of this graph that we are increasing our EBITDA per U.S. location by 7% so far in 2020 on a rolling 4-quarter basis, and we have a line of sight on reaching EBITDA of $1.1 million per branch by 2023. On the next few slides, I want to focus on our initiatives that drive organic growth for the Nutrien Ag Solutions retail business. We are transforming ag retail in each of these 5 categories, giving us unparalleled growth opportunity. And we see each of these 5 pillars as critical to how we add value to our customers, become more efficient and also professionalize our industry. These pillars create value individually, but their sum is even bigger than the parts. So first, let me talk about proprietary products. The reach and scale of our business provides a Nutrien with unparalleled opportunity as an ag retailer, and one of our key advantages is our unique proprietary products portfolio. These products not only give us differentiation in front of our customers, they also contribute much higher-margin than traditional third-party products. So as we continue our tuck-in strategy, our proprietary products are accretive to the economics of that underlying business and they drive quick synergies. What's really impressive is that we've diversified our portfolio of proprietary products, and we are now growing fastest in plant nutrition and biologicals, which boost yields, improve soral health and are a key part of our sustainability toolkit. We see strong contributions from this strategy, and we're on track for 29% of our gross margin coming from proprietary products by 2023. Our digital tool set has advanced as the leading platform in ag retail, which facilitates our grower customers and our agronomists to collaborate in a new and unique way that drives efficiency, convenience and a better outcome in the field. The key is that we've purpose-built the platform to work seamlessly across 4 vertical capabilities: field planning, digital agronomy, e-commerce and sustainability. To help demonstrate the benefits and the new functionality, I just -- I'll run a short video, so you can see firsthand how this works. [Presentation] All right. Very cool. Everything you saw on that video is unique and proprietary and only available to customers of Nutrien Ag Solution and, of course, our own sales agronomists. So with more than $1 billion in sales generated through the platform year-to-date, the digital hub has enabled our employees to focus more time on the relationship with the grower and less time writing invoices. Let me remind you that our digital platform can generate the sales cadence and invoicing directly from the field planning stage. So once the plan is created, order entry and administration becomes streamlined and convenient for our customers and our branch operations. That digital connectivity with our customers allows us to serve them more efficiently and effectively. It also provides increased trust between our agronomists and our customers while making doing business with us more convenient, and it's all backed, of course, by our supply chain that's reliably delivers products and services to our customers. So in addition to the $1 billion in sales that we've already seen this year, we're also starting to see a number of other benefits. For example, customers who interact with us digitally are stickier, and they're spending more with us compared to a traditional customer. And even though our investments to date in digital have been largely foundational, we are seeing more and more value created as adoption increases. With all of that said, let's talk about the tangible benefits that we expect to see from both our optimization and digital initiatives. We'll walk through the key financial metrics that we introduced at the last Investor Day, and I'm happy to report that we've improved on all of them across the board. First, we've been able to sell more and gain share with a lower proportion of costs. Excluding the impacts of the Ruralco acquisition, we've reduced our cash operating coverage ratio by 200 basis points in the last year. And as we layer in a full year of run rate synergies that are already achieved in Australia, we expect to see our total results improve from 2019 levels and deliver $100 million per year of benefit by 2023. We've also been hard at work at optimizing our working capital, and we have generated significant efficiencies in our supply chain and as we reported in our last quarterly results that we've already achieved our 2023 target well ahead of schedule. But that work is not done. We'll continue to look for ways to make further improvements, especially as we continue to expand our business. Lastly, and a point that I've already touched on, we see an opportunity in the U.S. to drive growth and create more EBITDA per branch, which we view as a strategic outcome and provides a clear indication of the strength of our business model. Finally, moving to sustainability. And as Chuck described earlier, Nutrien is embarking on an ambitious plan to become a leader in sustainable agriculture. Nutrien is uniquely positioned to offer the industry's most comprehensive end-to-end carbon program, making it easy for growers to adopt sustainable agronomic practices that generate positive carbon outcomes translating into additional earnings for our farmer customers. We've built and acquired the capabilities to do this end-to-end. It starts with our trusted relationship with growers and a focus on full acre solutions to enhance productivity, profitability and sustainability. Leveraging our digital crop planning capabilities we build customized field plans that target agronomic practices and product recommendations that are both proven to generate positive carbon outcomes and drive yield efficiency. With our growers, we'll establish a carbon baseline using soil samples supported by our Waypoint Analytics business and provide season long support, service and advice to execute the crop plan and the carbon recipe. Throughout this season, agronomic data is collected from a variety of sources, including from our Echelon precision ag platform and our extensive custom application fleet, supported by AgBridge, our new fleet managed geospatial tracking tool. Data is aggregated into our digital sustainability platform, which is agrible and integrated with carbon quantification tools to reliably measure carbon outcomes. These outcomes are then verified generating carbon credits available for sale by the grower. For the -- from the grower's perspective, it makes every acre more profitable from the adoption of leading agronomic practices plus the benefit of the carbon program. To give you some ideas of the practices that enable -- enable the farmer to drive yields and also reduce greenhouse gas emissions or improve solar carbon sequestration, they include things like slow controlled release fertilizer, nitrogen inhibitors, yield and soil enhancing products, such as biologicals and micronutrients, variable rate fertilizer application or targeted applications, low or no tail cropping and cover crops. Combined, these practices have the ability to improve, grow our margins by up to $30 per acre. Additionally, carbon credits are generated and become a new source of income for the grower and have the potential to appreciate substantially as the price of carbon increases. Our carbon program will provide growers with an economic advantage and help them to adopt to a rapidly evolving compliance and regulatory landscape. What makes Nutrien's program unique is that we have the products, services and capabilities all in one place and that we utilize science-based measurements and outcomes to create new opportunities for growers to monetize carbonate scale and reward adopters as this landscape evolves. Nutrien will launch this program in 2021 with North American pilots across Western Canada and in several states in the U.S. So there you have it, the Nutrien Ag Solutions retail business we will continue to consolidate and grow in the U.S. and expand in high-growth Brazilian market. We'll be an industry leader with a more diversified business, will become more efficient and demonstrate the opportunity we have to drive growth. Over the next 5 years, we expect to grow our Ag Solutions retail business, targeting $2 billion of EBITDA in that time frame. We are unmatched in size, scale and opportunity with a clear strategy to drive superior growth and lead in agricultural sustainability. With that, I'll turn it over to Pedro.

Thanks, Mike, and good afternoon, everyone. Nutrien's financial strength is based on a strong balance sheet, disciplined capital allocation and significant earnings stork, which I'll talk about today. So first, capital allocation. Our approach works and remains unchanged since Nutrien's formation. And our first priority is to sustain our assets preserving -- and preserving the physical safety of our employees is a key company value, and it is critical we operate safe and reliable assets. Next, we are committed to retaining an investment-grade credit rating to preserve all our financial security. Nutrien has excellent access to capital markets, which funds our long and short-term liquidity needs at very competitive rates. Third, providing our shareholders a sustainable and growing dividend establishing a floor on our returns. The recent crisis tested many company's ability and resolve to keep your dividend policy. Nutrien, never wavered and looking ahead, we remain confident in our ability to return capital to shareholders. Lastly, Nutrien will evaluate potential investments across numerous growth opportunities. We apply a rigorous compete for capital allocation process based upon a minimum 12% risk-adjusted hurdle rate. Opportunities are always evaluated against share buybacks to maximize shareholder value. We believe that this solid framework addresses all company stakeholders and will continue to position Nutrien as a top investment in the ag input space. We are often asked why our depreciation and amortization exceeds sustaining capital expenditures. And the answer is simple, accounting. Largely resulting from the merger, which makes us unique relative to peers. In particular, fair value balance sheet write-ups from the merger and recent acquisitions must be amortized and IFRS now requires that our lease assets be capitalized, further increasing depreciation relative to U.S. GAAP peers. Our core depreciation has been and continues to be in line with our sustained CapEx at around the $1 billion mark. We believe that this is the right level to keep our asset base safe reliable and competitive. Our balance sheet is built on 2 principles: securing reliable access to low-cost debt and preserving sufficient liquidity through the cycle. Our target is to be BBB flat investment grade, which we have maintained since inception. This rating provides us ample financial flexibility and access to commercial paper market, which is important to fund our seasonal retail working capital requirements. Our strategy was tested in the crisis, and we are pleased to see that we are able to preserve and even increase our access to contingent capital, while continuing to reduce our cost of debt. This is a testament of the market's confidence on our capacity, earnings capacity and earnings quality. Now moving to Nutrien Financial. The creation of Nutrien Financial launched late last year is a competitive advantage. And while we have offered short-term financing to our customers for decades, formalizing our credit and collections process through Nutrien Financial has provided 3 key incremental benefits. First, it supports Nutrien AG Solutions revenue growth globally in a trusted brand. This attracts new customers, increase our share of wallet and entices repeat sales. Secondly, it is favorably rated by credit agencies as a finance company, improving our leverage capacity and lowering our cost of debt. And third, it generates incremental interest revenue contributing approximately $30 million to retail earnings. Our U.S. and significant portion of our Australian receivables have already been transitioned into the captive in the last year. We want to grow prudently, and we have many tax and balances to ensure our growth is both profitable and sustainable. We are proud of the fact that we have seen improvements in our key metrics, including a reduction in the 90 days past the receivables to 5%, which is impressive in a difficult market. We know that a sustainable and growing dividend, coupled with share buybacks, is also important to our investors, and so remains a core part of Nutrien's capital allocation strategy. Nutrien dividend provides the highest yield of its peer group, and in aggregate, has comprised 1/4 of the peer group's total dividends paid. Equally important, our investors can rely on this income stream, our dividend is affordable, currently representing just under 60% of our forecast free cash flow. So let me complete our capital allocation session with Nutrien compete for capital approach. Nutrien's vertically integrated business model and comprehensive product and service offering generates a multitude of options that compete for the company's strong cash flow generation. In retail, we have made significant investments rolling out the industry's first end-to-end digital offering to farmers, which has seen a tremendous success in 2020, as Mike just spoke. Currently, over 40% of all of our products and services are being ordered and offered through the platform. We're also continuing to expand our geographic footprint in Brazil, and we have focused on organic growth in Australia. In wholesale, our focus is on opportunities for next-generation technology enhancements to reduce costs and optimize performance and high-return brownfield investments in nitrogen. We understand that we are committed to proactively managing the environmental impacts of our business as this is an important strategic component of our investment decision. Lastly, as discussed in the last slide, Nutrien is committed to total shareholder returns, as evidenced by the $6.6 billion of returns just in the last 3 years. Nutrien is also a leader in controlling our controllables, and in particular, containing SG&A. Relative to our fertilizer peers, Nutrien has consistently outperformed on wholesale and corporate SG&A as a percentage of adjusted EBITDA. We believe this requires constant examination and will not become complacent. As Mike covered in his presentation, we're also committed to improving our retail SG&A and coverage ratios. In an addition to controlling our controllables, Nutrien earnings also have significant leverages to fertilizer prices, as alluded to by Chuck in the beginning of the presentation. For every $25 increase net realized selling prices across our wholesale operations, Nutrien adjusted EBITDA increases by $650 million, and adjusted EPS increased by $0.90 per share. So on a percentage basis, a 10% increase from today's fertilizer prices increases our EBITDA by 20% and EPS by 50%. So simply put, we have a huge start when prices rebound from the lows experienced in 2020. And based on recent fertilizer price recovery and stronger ag fundamentals, we are confidently optimistic in our global benchmark outlook. And finally, increased crop prices not only means upside for our wholesale business, but also for retail. When farmers make money, we make money. We believe now is an attractive entry point to invest in our company. So to summarize before we wrap up, 2020 was marked a period of global volatility not seen since the financial crisis and Nutrien was not deterred. We preserved a strong balance sheet and demonstrated commitment to our dividend. I'm paraphrasing Chuck's opening comments, we look at 2021 with great optimism. Crop prices and cash margins are strong as they have been in many years and fertilizer markets have been solid -- have seen solid demand this year. The future looks bright for our customers, and what is good for our customers, it's always been good for Nutrien and our shareholders. So Nutrien is an outstanding investment opportunity with our retail operations powered by best-in-class digital platform generating consistent earnings through the cycle, our safe, efficient and low-cost wholesale business and have significant leverage, and our strong cash flow supports a stable and growing dividend. We are resilient on the downside, but more importantly, offer great torque on the upside. So thank you for your time, and I'll pass now back to Chuck for his closing comments.

Thanks, Pedro, and thanks to the rest of the team here. I'll wrap up very quickly, so we have time for Q&A. Nutrien is a great business. Hopefully, you've taken that away from the speakers today. We have the right strategy, especially for these volatile and uncertain times. We have created significant value since the merger, and we've made very good progress on the metrics and targets we identified back in 2019. And if you look forward for the next few years, we have a clear pathway to create an additional $1 billion within our control of earnings, and we believe that we are best positioned in the ag sector to capitalize on the improving market fundamentals with significant price and potash volume leverage. And finally, we are committed to becoming a leader in sustainability in carbon management and agriculture and the new program we announced today is an exciting step forward in that ultimate vision. So thank you very much for listening, and I'll turn it over to Richard for Q&A.

Thanks, Mike. We have a lot of Q&A. So why don't I go to the first one, and I think this is for you, Chuck. On the carbon program announcement, Andrew Wan from RBC and a number of other analysts have asked how does Nutrien expect to share in the benefit from a potential $50 per acre increase in farmer cash margin as the program is implemented, and they also want to know about the agronomic practices needed and how does that -- what does that really mean for fertilizer applications?

Good. So look, I'll answer the first part, and then I'll have Mike Frank just talk a little bit about the specifics and the applications. So look, what we tried to do, and we've studied the agricultural carbon market for the last few years. We really wanted to make sure that this was a rallying cry for the industry. We can't do it alone nor would we ever think about that, and we really need the agricultural industry now to step up to tackle climate change. After our extensive studies, what we've determined is the best way to do that is to create a carbon economy. So that's the basis. The other key learning that we have found after looking at this for a couple of years, is that the majority of the value needs to accrue to the farmer. It is very, very important that we change practices on the farm. And the only way to do that is to ensure that they are properly compensated and incented. So that was the basis of the program. How Nutrien will benefit? It's our people, our products and our technology that's going to drive, I think, a lot of the success. So we will naturally benefit by supplying services, products, technology using our platform, all of those things, we will benefit. But the vast majority we want to ensure of that $50 is actually -- so the $50 when I referred to it, that's to the farmer. That's a margin so that we will obviously benefit, but it will be behind that $50. We think that it is so very important that the majority of the benefit accrued to the farm. Now on the specifics on what you can expect for some of our products and services, Mike Frank, why don't you just give a little bit of a view on that, please.

Sure. Thanks, Chuck. So look, I think there's going to be opportunities both for proprietary products of our own, whether they be crop protection products, biologicals, micronutrients as well as working with our key suppliers, whether it be seed, trade, or crop protection products that can also add value in what we're calling the carbon recipe. As I talked about a little bit in my prepared remarks, there's a number of technologies that are here and they now really will drive this outcome that we're talking about. And it starts with things like slow release fertilizer. So for example, our ESN nitrogen fertilizer or nitrogen inhibitors, which we have some in our proprietary products business. There's other value-added products like biologicals and micronutrients that help create a more healthy root structure and create a plant that is more efficient at the uptake on nutrients. There's things like variable rate fertilizer application which today, if you look across North America, there's probably somewhere between 30% and 40% of the acres that are doing some level of variable rate, but there's lots of opportunity to continue to grow that. So those are some of the opportunities, of course, noting planting cover crops are also opportunities to drive more carbon sequestration as well.

So -- yes, yes. Just coming up. Actually, Mike, if you could continue. There's a second question here. One question that's coming in is about U.S. crop expectations for next spring? Vincent Andrews from Morgan Stanley was know why Nutrien only expects a marginal increase in corn planting in 2021 given the strong margins?

Sure. Well, look, I think we're -- so as you saw on Slide 35, we're expecting a more significant bump in soybean acres with soybean prices today over $11 per acre and even on next year's crop, around $10.50 per acre we think there's upside to the soybean plantings. And so I do think we'll get back to that 180 million acres of corn and soybeans. And depending on the price over the next several months we'll determine exactly what the ratio is. But we're expecting upwards of 0.5 million to 1 million more acres of corn, but probably more like 5 million more acres of soybeans next year.

Thanks, Mike. Just give me a second. For Chuck, we have a question from Joel Jackson at BMO. He's wondering with the $1 billion of EBITDA under your control, what is your forecasted EBITDA for 2023? And what are the main differences from your last Investor Day in 2019?

Okay. Thanks, Richard. So look, the major difference, if you go back to the material we put out last May, is just the starting point for fertilizer. So I think the best way to answer that question, if we just look forward and let's talk about a couple of different targets, whether that's $4.5 billion of EBITDA for Nutrien or $5 billion or $6 billion. So the pathway to $4.5 billion, there's multiple paths. The first is we simply just need to get back to 2018 pricing because we've built a better, stronger, more profitable business in this period of time. So 2018 prices if we were to see that now with the business that we have, we would see $4.5 billion. Or we can deliver on the $1 billion that we just outlined in today's session. So either way, it gets us to $4.5 billion. How could Nutrien get to $5 billion of EBITDA? Well, if you think about that baseline of $4.5 billion, mid $300 fertilizer prices would take us just north of $5 billion. And then how about $6 billion of EBITDA, we would need the upper end of the $300 range. So say, $375 fertilizer prices, and that would get us very close to $6 billion of EBITDA. So it goes to the point that we've made today that we have significant torque to fertilizer prices as well as, of course, potash volume leverage. And so that's the journey we see. Could any of that happen by 2023? Absolutely. It's going to have to depend on supply demand and the recovery that we're seeing to sustain itself. But we're feeling better today than we did even last May when we put those original forecasts. So the market fundamentals, as I mentioned, they haven't been this strong in 6 or 7 years. This takes us back to, say, 2014 from an overall farmer health perspective and the supply demand that we're seeing. So I'll leave it there for now.

Thanks, Chuck. And for Mike, there's a lot of interest in organic growth versus M&A growth to 2023 and 2025. I think Joel asked specifically if you could sort of bucket some of the main areas that you can see yourself achieving organic growth from?

Sure. Thanks, Richard. Yes. So look, if you -- let's take it out to 2025 as we've shown in Slide 50, we expect about 40% of that growth to come from acquisitions and of course, 60% coming from organic growth. And so we do believe we have a strong runway of organic growth opportunities. And really, there's -- they're in 4 big buckets, and they're all pretty important, the first 1 is driving our proprietary products business. As I talked about, we believe we can drive that to be about 29% of our gross margins by 2023. We believe we can increase share in all of our mature markets in North America and in Australia. Obviously, the digital tools are a big part of that. And we're seeing that right now that [Audio Gap] taking place in Brazil. So those would be the big buckets of where we see opportunities to significantly grow organically over the next several years.

Thanks, Mike. Just give me. And for Chuck and Ken from Mike Piken, do you have a certain price or global demand target in mind before you would consider restarting some of Nutrien's unused potash capacity? And how do the costs look like if you restart that capacity?

So I can go first here, Richard. So yes, we're obviously watching the market closely with respect to the tons that we're going to deploy into the market. And so what the sign points is really both price and volume. We have an expectation of 2% to 3% growth rates into the foreseeable future. And as we've said, we maintain 18% to 19% market share in that growing market. And we have producing 12.5 million tonnes today, but 18 million tonnes of capacity at the moment. And as we've said, we expect to deploy 14 million to 16 million tonnes into the market in 2023. So we have great line of sight at the moment to increasing our volumes with the capacity that we have and surging tonnes into the market when it's required. Beyond that 18 million tonnes, we have identified 5 million tonnes of brownfield capacity. And so from a capital stewardship perspective, we'll be watching the signposts in the market as volumes and demand continues to grow as we do maintain market share, but the price signals as well, of course. We have said that for us, in this part of the world, we can develop that new brownfield capacity for about $500 to $700 per tonne. And that's in contrast to a greenfield opportunity of $2500 to $3,000 per ton. So significantly more competitively from a cost perspective on those brownfield opportunities, I can tell you we're looking at that today. We're looking at how we would stage capital face capital and deploy that additional 5 million tonnes in a growing market beyond our 18 million tonnes and deploy that much more competitive brownfield capacity prior to greenfield opportunities. The last thing I'll say is we have heard others sites potash costs of $375 to $400 per tonne to incent that new project development in different parts of the world, of course, the potash price is a long way from that today. But again, we'll be watching the evolution of both price and volume and deploying our 18 million tonnes and then efficiently with capital, the additional 5 million tonnes after that.

Yes. So my perspective on this question is our strategy really hasn't changed a whole lot. We're going to match supply with demand. If you look at the -- with 73 million tonnes in 2023, we're going to have another couple of million tonnes into the market. So that's how we think about it. And as we bring on the tons, they're very economic. And they're almost free to bring online when it comes to the capacity because currently, we're running the 6 potash mines. And really, we need 5 to meet today's demand. We do that because of the situation we saw in 2018 when we had a shortage of potash globally and the prices ran up quite a bit. And that may sound attractive in the short term, but the volatility isn't something that we like. It's not good for our farmer customers. As for the sweet spot question, the way Ken has answered that is for brownfield economics is we may start to see once we get about $400, some more brownfield being considered, but they would be multiple years before we would see the tons. Greenfield economics, you would need well north of $450, approaching $500 a ton to make any sense of the economics. And then, of course, with a greenfield plan, any decision that is made today, taken today would be about a decade before we see those tonnes in the market. So that's why we're very constructive about the potash market fundamentals right now. Demand has been growing quite nicely. We expect further demand growth next year. We've done a great job of optimizing our network since the merger. The automation program we have is taking our costs down even more, and I think any price that we do see will drop right to the bottom line. So I think overall, we're very optimistic about the potash business, certainly over the midterm.

The next question is from Jacob Bout in. He's asking about the Nutrien ag Solutions digital platform and he wants to know how much of the increase in use of the digital has been due to COVID, do we think? And if COVID goes away, does that take away some sure or the growth -- expected future growth of the utilization?

Yes. So maybe I'll jump on that one, Richard. Hi, Jacob. So basically, we do believe that COVID accelerated the utilization of the digital tools. It pretty much I would say, forced all of our people and many of our customers to reach out to the tools, but the feedback that we've gotten from both agronomists and our customers, and what we're seeing is once they use the tools, they realize it's a more convenient way to conduct business. And so I actually think that this will accelerate our increase in using the tools, and we'll come out in February and talk about what type of targets are we're going to set for 2021, but we do believe that we're going to continue to see accelerated utilization of our digital tools.

Thanks, Mike. These questions are for Raef. A few questions on nitrogen and more specifically, our Trinidad assets. With the 2023 ammonia cost curve that's shown in the market outlook slides, where would Trinidad reside on the cost curve? And what would it take to bring that indefinitely closed plant back online?

Yes. Thanks, Richard. So look, just a couple of considerations here. When we talk about the cost of production, obviously, we've got the planned efficiencies, and then we've got the cost of the gas. If you look at the 4 plants that we've got in Trinidad , it's quite a range of efficiencies there. One of the plans is very close to first quartile, second quartile, and then we've got some others in the second quarter, or third quartile. So in 1 even that's probably third quarter or fourth quartile, and then when you look at the gas prices, we've seen gas on the island go from first quartile globally to second quartile. And recently, with European gas prices being at Henry Hub, Trinidad gas prices have been third quarter or fourth quartile. So going forward, we should see -- we're starting to see it now. We're certainly seeing European prices head towards Henry Hub plus transportation and handling, which is probably $2.00 to $2.50. If we get to some kind of economic equilibrium around that, where we see European prices in that range and Trinidad gas prices will be between them. And the other combination, the other things we're going to consider here, the length of the contract we've got there and getting that renewed in about 3 years' time. We've got to consider the availability supply recently. In the last 2 years, we haven't seen supply at 100%. We have been curtailed at up to 10% for a lot of the time. We've also got the market price of ammonia. So I guess what I'm signaling is that the plant will remain down while we see problems with availability and price. However, Trinidad's position is moving from third or fourth quartile in terms of ammonia production back into second quartile because of the way gas prices are moving globally. And if we see that plus an increase in global ammonia prices that we expect, then we'll see that production come back online. And I would note that the slide in the 26 is actually global urea production and not ammonia, which is a slightly different and if you look there, you can see a very thin red sliver of Trinidad, slightly past the 20 million tonnes on the x-axis. It's very small, but it's been doing quite well, and we continue to run urea there flat out because we're making some pretty good margins on despite the gas problems and ammonia situation. Richard, back to you, or Chuck, you've got anything to add?

Thanks, Raef. For Chuck, this question is from Ben Isaacson at Scotia. TELUS recently announced its entrance into the digital ag space. Are they a competitor or a customer or a vendor what is the overlap with their offering and your digital ag?

Yes. Thanks, Richard. So what I'd say is that we don't know yet. We've seen this before in the ag industry where you'll have some new incumbents weighed into the agricultural industry with the intent on sort of shaking things up or fixing it. For us, we're not really focused on what others are doing. We've seen this before in the many, many years we've been in our industry. And all I would say right now is that if you look at our carbon program, we wanted to make it an open program. So those that want to collaborate with us. We'd love to talk to you, but we also think that what's most important is that what we build is to help farmers actually move from having carbon as a cost more of a revenue stream. And then if you look at our position in the industry, we are on the farm and agriculture is still very relationship-based. So what we've seen over the last many years is that those that try to enter somehow as an asset-light company and have just the digital offering doesn't usually take a lot of traction in the industry because really what's needed is a full-service delivery of products, technology and having people on the farm working day-to-day with our farmer customers. So our approach is very different. I think what you're going to find is that because it's an end-to-end program, we're going to be able to help our farmer customers go and make every decision that they need to make to, of course, maximize productivity of yields but also to get some benefit from actually using these sustainable practices and get compensated for it and that's what's so exciting about the program that we announced today.

Thanks, Chuck. For Mike, we have a question on the recent Brazilian acquisition that you highlighted in your remarks. Steve Byrne wants to know whether the -- and I'm going to not say this name right, BRA Agroquímica transaction includes the expertise to acquire and develop additional registrations in the country?

Very good. Yes. Thanks, Steve, for the question. And the answer is yes. And so we are acquiring both the registrations and some people that are required to both maintain and apply for new registrations. And so as I said, right now, we've got [indiscernible] approval on the deal. We are now waiting for the registrations to be technically transferred to Nutrien ag solutions, but when we look at the 100 -- the over 100 registrations that we've acquired in this acquisition, they're really -- they contain the products that we're interested in right now in terms of developing formulations and our own proprietary products. And so over time, I'm sure we will be applying for additional registrations, but this really gives us a good head start to now developing the supply chain in order to bring these products to market and through our channel.

And Mike, since we're sort of on that topic. Another question pertaining to the strategy to achieve the optimization metrics that you provided such as operating coverage ratio, working capital to EBITDA per U.S. selling location. To sort of put a couple of questions together, how important is proprietary products, and what are the other strategies, including potentially closing some additional locations in the U.S. to achieving those metrics?

Yes. So driving proprietary products is really critical, driving pure organic growth at the branch, which includes increasing share of wallet or gaining new customers, is critically important. Obviously, the digital tools, and we believe the sustainability strategy will help us do both of those things, but then we also look for opportunities to consolidate branches, not necessarily just low-performing branches if you saw the end of the video that we showed on digital, there was a picture of our branch. That branch is in dyersville, Iowa. We actually consolidated 5 fairly well-performing branches into this 1 mega site, which now serves a radius of about 100 miles from Dyersville. And so this is another way that we also increase incredibly the efficiency of our operation and helps us achieve that metric of getting to $1.1 million of EBITDA per branch.

Thanks, Mike. And this question is for Ken. On the potash optimization, the question is whether there is an opportunity to improve potash margins through the optimization and shifts -- shifting the destination where you sell, how does the China potash contract market evolve over the next couple of years?

Yes. So 2 questions there I heard. Certainly, on shifting the portfolio, I would suggest that to the extent that, that can be done, it's being done today. As the largest supplier of potash in the world, there are limited opportunities to ship portfolio. Certainly, when you see these price disparities in different markets, shifting from lower cost to higher cost -- sorry, lower-priced -- higher-priced markets has some appeal, but like I say, there's limited opportunity to do that and also a reluctance to build inventories in certain corners of the planet artificially. That's one of the reasons that when we see softness in demand, really all over the large suppliers pull back as opposed to artificially building inventory. So to the extent it can be done, I would say it's being done today. I will say that Nutrien has invested heavily over decades now to develop the most sophisticated and low-cost supply chain -- potash supply chains on the plant, both internationally via Canpotex and then domestically ourselves, so that we can serve all of the major and growing markets on the planet in a cost-competitive way. And that would then be on a delivered cost. So again, you will see us competitively delivering potash in the big growth markets around the world and with some ability to shift the portfolio as prices move around the plan with respect to China, I mean, we're seeing a number of things and watching a number of sign-posts in China over the next 2 to 3 years. Certainly, an increased demand on for food and food security and which is playing well into the crop Nutrien story. Beyond that, if we look at consumption in China, we expect demand to grow in China over the coming next few years and into the future. China today is the largest consumer of potash in the world albeit they have some domestic production, but we're watching that domestic production as well as they deplete those mines and the depletion curves make it more expensive to produce domestically in China. And certainly, we would say that some of that production at today's prices is underwater as it's some other international production. So we're watching domestic production in China, and we're watching our competition in China as well. Today, we're optimistic about the China contract. We're heading into the fall with inventories at that sort of 3 million tonne mark, while we expect to come down to about the 2.5 million tonne level by the end of the year. Recall that 1.5 million tonnes of that are in the so-called strategic reserve. And we also are of the view that inland inventories are actually low. And then if we look at what's happening in the world, spot prices and the spot markets, we've seen the U.S. come up dramatically since our summer fill program, about $50. We've seen the same in Brazil. So the spot markets have come up, and we've actually seen domestic prices in China come up as well with the port wholesale price today at about $300 a tonne. So that's come up dramatically. Finally, I'll say that we have not been delivering potash since the close of the Canpotex contract at the end of October and no provisional tons going into China as well. So that as we head into the new year, we expect a negotiation that will lead to a substantial increase in the China contract. And then going forward, those fundamentals in China that we expect will lead to a robust both demand and price environment.

Thanks, Ken. Next question is for Raef. Some of our competitors are assessing opportunities for Blue ammonia as a fuel source in Asia consistent with Japan stated CO2 goals and the shift away from coal, what's Nutrien's own view on its alternative ammonia opportunity in the immediate as well as the long term?

Yes. Thanks, Richard. So look, I mean, we're looking closely at our portfolio. I think both Chuck and I mentioned that we actually have quite an amount of blue ammonia available today. When I talk about blue ammonia, I'm talking about something that has half or less of the carbon footprint of normal ammonia. We produced it at Redwater and Geismar today. And we can call it blue because we sequester the CO2 that comes off the process. We also have a low-carbon product coming out of Geoffrey. Now Geismar is uniquely situated for export. And I guess, like our competitors are doing, we've been talking to potential customers to export some of that blue into Asia, and we'll continue to pursue those opportunities, but we're also looking at other opportunities, augmenting our existing plans to reduce their carbon footprint, looking at electrolysis and pyrolysis to see what are the opportunities there could be for even lower carbon footprint ammonia or green ammonia. We think, though, that blue will be a transition products. So we think we could see blue ammonia being used in marine transportation fuel, for example, in the next 3 to 5 years. We think ammonia being used to carry hydrogen and then used in fuel cells for road transportation is probably longer term, but we certainly think there's an opportunity there. We have blue ammonia available today. We're pursuing some of those opportunities, and we're considering how we would build our capacity for both blue and green ammonia over time.