Nutrien Ltd. (NTR) Earnings Call Transcript & Summary

Good morning. Thank you for joining our Investor Update Meeting. My name is Jeff Holzman, Vice President of Investor Relations, and I will be the moderator for today's event. Before we begin, I would like to remind everyone that today's meeting may include forward-looking statements. These statements are given as of today's date and involve risks and uncertainties. A number of factors and assumptions were applied in the formulation of such statements, and actual results could differ materially. Certain financial measures referred to today are non-IFRS measures and ratios which may not be comparable to similar measures presented by other companies. For additional information with respect to forward-looking statements, factors and assumptions and financial measures, we direct you to our Investor Day presentation materials and Nutrien's public filings. Now on to today's agenda and the introduction of our speakers. Ken Seitz, Interim President and CEO, will provide opening comments. Mark Thompson, EVP and Chief Strategy and Sustainability Officer will provide an update on the progress we are making on our key sustainability initiatives. Ken will follow with an update on the outlook and opportunities for our potash business. Raef Sully, EVP and CEO of nitrogen and phosphate will speak to our strategy in NMP with a particular focus on our key initiatives in nitrogen. Jeff Tarsi, Interim President, Global Retail will speak to our growth plans for Nutrien Ag Solutions. And Pedro Farah, Executive Vice President and CFO, will wrap up the presentations with a financial update and discussion on capital allocation. Following the presentations, we will take a short 5-minute break prior to the Q&A session. I will now turn it over to Ken.

Well, thank you, Jeff, and good morning, everyone. I'm joined today by members of our leadership team, and we look forward to providing an update on our business and how we are positioned to accelerate our strategic growth initiatives and fortify our business for the future. The challenge of feeding a growing world has never been clear as global supply constraints have contributed to higher commodity prices and escalated concerns for global food security. There's no simple or fast solution to overcome this challenge and we see potential for multiyear strength in global agriculture and crop input market fundamentals. Our purpose is to grow our world. We are the largest producer of crop nutrients around the globe and the largest ag retailer. Our close connection with the grower, our world-class team and our top-tier assets uniquely positions Nutrien to safely and sustainably respond to the growing food security challenge. Today, we will highlight how Nutrien's integrated business is best positioned to respond to these supply challenges and help sustainably feed a growing world by safely bringing on additional low-cost potash and nitrogen production while delivering the products, services and solutions growers need through our leading global retail network. This is at the heart of what we do best. And in doing so, we expect to create significant value for our shareholders. Nutrien has a unique position across the agriculture value chain with distinct advantages in each of our businesses. We operate the largest and most reliable potash mines in the world with an unmatched capability to increase volumes in response to changes in global market fundamentals. Our low-cost nitrogen facilities are generating very strong margins and provide a platform to expand volumes through high-return brownfield growth opportunities. We operate a diversified phosphate business that is delivering strong cash flow in the current market environment. We have the leading global ag retail business with operations in North America, Australia and South America. These are the regions of the world that will be called on to sustainably increase crop production in response to global food and security challenges. Our retail network provides a direct connection to the grower and unique insights into evolving trends at the farm level, providing an opportunity to respond quickly to changing market dynamics and the ability to deliver customer-focused solutions. Our integrated supply chain is a strategic advantage that sets Nutrien apart from its peers, in particular, during this period of unprecedented global supply disruption. It has supported our ability to significantly increase fertilizer sales volumes as well as drive higher retail margins and market share growth. It is through the hard work and dedication of our talented people across the organization that we are able to deliver on the strengths of this integrated platform and position the company for future success. Hopefully, you were able to tune in yesterday to the market outlook session hosted by our Chief Economist, Jason Newton. As he outlined in that session, we expect supply challenges across energy, agriculture and fertilizer markets to persist well beyond 2022. We expect higher natural gas prices in Europe will set the floor for nitrogen products. and support the need for additional capacity in lower-cost regions such as North America. We expect new nitrogen supply to increasingly come from producers that have the ability to reduce the carbon intensity of the product and anticipate new demand sources will emerge for low carbon ammonia across a broad range of sectors. We believe the current tightness in global crop supply and demand balances is unlikely to be resolved in 1 or 2 growing seasons, providing for an extended period of supportive crop prices and margins for the grower. And in the potash market, we believe financial sanctions and other restrictions on Russia and Belarus will create more lasting changes to global trade patterns as customers prioritize reliability of supply. We also see the potential for delays in the development of new potash capacity from this region, which was expected to be the source of approximately 60% of new potash supply, excluding Nutrien over the next 5 years. Given the advantages of our integrated business model, we see an opportunity to accelerate a number of strategic growth initiatives that are consistent with our strategy and provide excellent returns. We will talk in more detail throughout the presentation, but I would like to highlight a few key areas in each of our businesses. In retail, we have a clearly defined strategy and multiple levers to drive earnings growth. Our focus is on expanding our network in Brazil and the U.S. and have a strong pipeline of acquisition opportunities. We are making great progress in digital and have delivered compelling margin growth in our proprietary products business. Jeff Tarsi will provide more details on each of these areas in his presentation. We have met or exceeded many of our 2023 retail financial metrics and plan on disclosing new long-term targets next year. In potash, our team is focused on accelerating the ramp of our existing potash capacity in response to global supply disruptions. And earlier today, we announced our plans to increase potash production capability to 18 million tonnes by 2025. This represents a more than 5 million-tonne or 40% increase compared to our production in 2020. It is flexible, low-cost capacity that simply does not exist anywhere else in the industry. As we safely ramp up production, we remain focused on our next-generation initiatives that will further strengthen the competitive position of our potash business, including autonomous mining and self-generation projects. I will provide more details on these potash initiatives later in the presentation. In nitrogen, you will have seen our announcement in May of our intention to build a 1.2 million tonne clean ammonia facility at our existing site in Geismar, Louisiana. This project provides a tremendous opportunity to leverage existing infrastructure and access to Tidewater, while building on our expertise in producing low carbon and clean ammonia for current and emerging end-use markets. We also have line of sight to additional brownfield expansions in our nitrogen network and are evaluating options to produce more. Raef will walk through the details of this project as well as the opportunities we see to further expand and enhance our nitrogen portfolio. Nutrien has a track record of balanced and disciplined capital allocation and the plans we are discussing today are very consistent with our long-term strategy. Our top priority is to ensure we maintain safe and reliable operations. It is with this focus that we have been able to increase potash and nitrogen sales volumes by more than 2 million tonnes since 2018 and achieve an all-time best safety record last year. We utilized excess cash in 2021 to strengthen and reposition the balance sheet, reducing our long-term debt by $2.1 billion. We believe this will provide us with the flexibility through the cycle and do not foresee a situation where we need to permanently pay down additional long-term debt. I highlighted our investment priorities on the previous slide, which we expect will deliver earnings growth while generating a strong return on investment. And finally, we are committed to returning meaningful capital to shareholders through a sustainable and growing dividend and share repurchases. In February, we announced a 4.4% increase to our dividend and a minimum of $2 billion in share repurchases in 2022. Today, we announced our plans for an additional $2 billion in share repurchases under our existing NCIB program, which increases our total expected return of capital to shareholders to around $5 billion in 2022. This plan reflects our confidence in the near-term earnings for the business as well as the potential for structural market changes that support a more robust long-term outlook. Pedro will speak more to this opportunity in his presentation. As we evolve our long-term plans, we are mindful of the role we play in leading the next wave of transformation in agriculture and have set a number of ESG performance goals and commitments in our Feeding the Future Plan. I will now turn it over to Mark Thompson to speak about our key sustainability initiatives and how we see these enhancing long-term value for all stakeholders.

Thank you, Ken. It's a pleasure to speak with everyone this morning. I'd like to start today by highlighting a few key perspectives to provide context on Nutrien's sustainability efforts. First, as you'll see throughout today's presentations, we've continued to make excellent progress in integrating and embedding sustainability and ESG principles across our operations, our business, our capital deployment as well as our governance and our disclosures. This integration is aimed at ensuring Nutrien is well positioned to deliver value and remain viable over the long term for the benefit of all of our stakeholders. Second, our integrated strategy and unique asset base ideally positions Nutrien to make measurable change in enhancing the resilience and productivity of our grower customers and the broader agri food value chain, which is creating new platforms for growth and transformation across our businesses. And finally, all of our actions on these fronts support meaningful progress towards Nutrien's Feeding the Future Plan. We've accelerated our execution of this plan over the past year, and we're on track to achieve our 2030 sustainability objectives. Integration of sustainability and ESG principles have been a central part of our efforts to take action in areas of importance to our industry and those that are critical for society and the planet. Foremost among these areas is the important and positive impact that Nutrien can continue to have on addressing hunger and food and security in line with SDG 2, Zero Hunger. There's arguably never been a more important moment to engage with growers and our value chains to feed a growing world while also working to accelerate climate action and improve environmental and social outcomes. In addition to understanding our impact on a global scale, we anchor sustainability priorities by focusing on the key ESG risks and opportunities or material topics that are of strong importance for Nutrien. We have a comprehensive ESG governance framework that begins with our Board of Directors, including the Safety and Sustainability Committee of the Board. This is further enhanced by dedicated governance structures and processes across Nutrien's businesses and functions with management compensation and business KPIs directly tied to ESG-related performance factors. In our most recent 2022 ESG report -- we've once again provided our stakeholders with a broad and detailed view of Nutrien's material topics. These have informed our long-term approach to stewarding value preservation and growth, and they form the basis of the actions we've laid out in our Feeding the Future Plan and 2030 commitments. Nutrien's Feeding the Future Plan is focused on 3 key pillars that we are leveraging to transform agriculture, enhance the resilience and prosperity of our stakeholders and create platforms for future growth. Our first pillar is feeding the planet sustainably. In this area, our 2030 commitments are tied to enabling sustainable and productive agriculture products and practices on 75 million acres globally, including the scale-up of a grower-focused carbon program. Our next area of focus is environment and climate action, which is focused on achieving a 30% reduction in our Scope 1 and 2 greenhouse gas emissions intensity by 2030 and accelerating investment in low-carbon fertilizers and clean ammonia. Finally, we're focused on inclusive agriculture with 2030 commitments aimed at leveraging farm-focused partnerships to drive grower innovation and inclusion while also creating new commercial solutions for growers to strengthen ESG outcomes in the field. With our plan launched just over 1 year ago, we've hit the ground running, and we're off to an excellent start. Enabling the adoption of sustainable and productive agriculture on 75 million acres globally requires strong collaboration across the agri food ecosystem. In 2021, we worked with over 20 partners on grower-facing sustainability projects, covering over 0.5 million acres in North America, which is one of the ways we expect to scale our impact significantly in the years ahead. These projects include some of the largest global agri food, consumer products, fuel and apparel companies that are looking to decarbonize and improve environmental outcomes in their own supply chains. Our approach starts with enabling the use of sustainable products as well as the adoption of conservation practices which improve environmental outcomes. We then work to accurately track and measure the resulting outcomes using farm and field level data and our Agrible digital sustainability tool set and where possible, we're also working to advance towards independently verifying those outcomes to enhance validation and value for our growers. For growers, this approach unlocks access to new markets and additional revenue streams through crop premiums and credits for environmental attributes. For downstream partners, Nutrien Ag Solutions is enabling action to build more sustainable supply chains and meet evolving consumer demands for food, fiber, feed and fuel. And for Nutrien, these programs enable us to drive additional organic growth and customer acquisition and the opportunity to enhance our grower relationships and profitability through growth in proprietary products, agronomic services and digital uptake. So across the board, we're creating neutral benefit while also driving a positive impact on food production, in-field emissions and environmental outcomes. As we've continued to lead the scale-up of our sustainability offerings, our core partners have continued to demonstrate their desire to grow alongside Nutrien. A few great examples of this collaboration are our partnerships with Ardent Mills and Maple Leaf Foods. Ardent Mills is a flower milling and ingredients company. And together, we are working towards supporting growers in producing sustainably growing wheat in North America. This partnership began with the goal of targeting 250,000 acres in North America prior to the end of 2022, and we're on track to exceed this goal as well as the potential to generate verified greenhouse gas emissions improvements on a portion of those acres through our carbon program. Maple Leaf Foods is another important partner. It is a leading protein food products company focused on scaling regenerative agriculture practices for sustainable feed grain as part of their pork and poultry production. We embarked on our partnership in 2021, initially on 20,000 acres in Western Canada. And based on the success of the program, we're targeting one that is 5x larger in 2022 at 100,000 acres. In addition to providing incremental revenue and new market segments for growers in the program, Maple Leaf and Nutrien are reducing our respective Scope 3 emissions through the creation of supply chain interventions or Scope 3 insets. And these are just 2 examples of the growing number of partnerships underway, and we see this approach as one of the primary levers we have to drive our long-term sustainability commitments. Now we'll zoom in on our carbon program. Last year, we successfully launched our carbon pilots in North America, where we enrolled roughly 225,000 acres with growers earning up to $15 per acre for the implementation of Climate Smart practices that are proven to reduce greenhouse gas emissions and improve solar carbon sequestration over time. Through our pilots, we saw significant potential for agriculture to play an important role in generating high-quality carbon credits and insets that will be needed as multiple industries pursue decarbonization. And while we reaffirm the significant potential we see ahead, we also saw that there is complexity to navigating the existing protocols available to growers. In our view, this puts Nutrien Ag Solutions in an ideal position to lead our grower customers through this complexity, leveraging our agronomist network, our full suite of products and services, our digital and Agrible platforms and our Waypoint [ soil ] sampling capabilities. While we set out for 2021 to be a learning year to better understand risks and opportunities, we're in the latter stages of verifying some encouraging outcomes that demonstrate our progress. This includes our expectation to generate a group of Scope 1 offsets in the U.S. and Scope 3 insets in Canada, both in the second half of this year. To illustrate the potential value that Nutrien's carbon program can drive for both growers and Nutrien, I'll zoom in on one of our participating pilot growers who planted corn and wheat in Central Kentucky. This grower trusted Nutrien to partner on tens of thousands of acres in 2021 and implemented a range of our whole acre solutions, including ESN, our Loveland and third-party proprietary nutrition products and our Echelon's variable rate nitrogen scripting. We estimate that for the acres where all practices were implemented, total GHG emissions reduction and carbon sequestration performance of about 0.6 metric tonnes of CO2 equivalent per acre was achieved through the year. The grower generated approximately $140,000 in incremental revenue through the carbon program incentives and gained additional benefits through a more than 15% yield increase above their historical average performance, driving a very attractive return on investment. And for Nutrien, we demonstrated that these programs can be a win-win proposition by partnering with the grower to provide targeted high-margin products and services to drive performance in the field which resulted in an incremental $200,000 margin opportunity with this single customer. This example underscores the opportunity for Nutrien to continue growing our position as the partner of choice for sustainability and carbon outcomes. Looking ahead, we're building on the momentum of last year's pilots, targeting at least a 3x increase to over 675,000 program acres in North America during 2022. We believe that leading with nitrogen management and efficiency improvements provides an attractive near-term path to sailing our carbon program and provides a foundation to support broader sustainability benefits over time. In 2022, we'll be driving the scale up of Scope 1 offsets in this area, combined with continued growth of Scope 3 insets across the supply chain. We'll also continue to incubate solar carbon sequestration in our 2022 program portfolio to advance pathways for the industry to refine and address measurement and monitoring of soil carbon at scale. Additionally, as part of our global sustainability focus, we plan to launch pilots in Australia in 2022 and South America in 2023, which will benefit from our learnings in North America. Our commitment to environment and climate action across our production business are directly embedded in our business strategies as well as our execution and growth plans. Today, we're already a leader in the production of low-carbon fertilizers and specifically low-carbon ammonia. And we're taking action on emissions reduction and investment in low carbon fertilizers across the business with a primary focus on nitrogen, which accounts for the majority of our Scope 1 and 2 emissions footprint today. We've already begun deploying $50 million in capital across 9 N2O abatement projects at our nitrogen facilities, which will put us in a position to reach our targeted 1 million-tonne reduction in CO2 equivalent emissions by the end of 2023. Looking out to 2030, we have a pathway to achieve our 30% reduction target by deploying $500 million to $700 million in capital, which is comprised of incremental carbon capture and storage, energy efficiency and abatement initiatives. We also recently announced our intention to build the world's largest clean ammonia facility at our Geismar, Louisiana site, which provides the opportunity to reduce emissions from ammonia production by over 90%. Raef will be providing more detail on our opportunity in clean ammonia, but we see this as a potentially transformational pathway for our industry, providing future growth opportunities to meet demand for low-carbon agricultural inputs. But also potential growth opportunities in low-carbon marine fuel and power generation. In addition to charting our path to 2030, we're also looking well beyond this milestone and leading important work on agriculture and fertilizers role in the world's pursuit of net zero. Nutrien is partnering with industry peers to develop a sectoral decarbonization approach with the science-based target initiative, which is an approved method used to establish a science-based net zero pathway to the nitrogen fertilizer sector. We've also signed an SBTI commitment letter to solidify our engagement in the outcomes of this work. We're driving to provide a voice of leadership across our industry, including participation in the International Fertilizer Association's work to develop pathways to reduce Scope 1, 2 and 3 emissions from the fertilizer sector as well as the World Economic Forum's consultation on an ammonia sector transition strategy. We believe these partnerships and collaborations are critical to long-term success and accelerating collective action on key issues for our sector. I'll finish today by highlighting the work underway in the area of inclusive agriculture. We're focusing on our impact across 3 areas. First, we've launched an exciting initiative in partnership with Radicle Growth. This will bring investment capital and awareness to ag tech entrepreneurs committed to advancing the role of women and BIPOC founders in the industry. Later this year, we'll be holding the event with our finalists where 2 winners will be provided with investment capital and access to the networks of Nutrien and Radicle to scale up their businesses. Second, we continue to advance our work on outcome-based financial solutions for growers to encourage progress on sustainable adoption and practices in the field. and we're working to build new partnerships focused on inclusion in agriculture with farmer-focused groups such as the National Black Growers Council. And finally, we're committed to equity, diversity and inclusion across Nutrien. We've created a global inclusion council that helped steward our efforts in this area, including to elevate and improve female representation across our business and our senior leadership. We continue to steward our commitment to indigenous partnerships and prosperity through our world-leading potash business, including leveraging our supply chains to magnify impact, where 100% of potash suppliers with master supply agreements have local indigenous inclusion commitments. As we look ahead, we'll continue to focus on integrating ESG into all aspects of our business, and we're well positioned to move forward on our key commitments and create value for all of our stakeholders. There are many more steps to take on this journey, but we're pleased with our progress and constructive on the work that lies ahead to sustainably feed the world by delivering on our Feeding the Future Plan and our 2030 commitments. With that, I'll pass it back to Ken.

Well, thanks, Mark, and hello again. Now moving on to potash. There are a few key messages that we would like to highlight today. We are the world's largest potash producer operating premier assets with access to the most reliable and extensive supply chain. We have the team with decades of experience in producing Canadian potash and a proven track record expanding production. Financial sanctions and other restrictions on Russia and Belarus have the potential to create lasting changes to global trade patterns and Nutrien is best positioned to react to these unprecedented market events as customers prioritize reliability of supply. Therefore, we have decided to accelerate our pathway to 18 million tonnes of annual operational capability by 2025. We are also continuing to access and assess our brownfield opportunities to further increase our annual operational capability beyond 18 million tonnes to 23 million tonnes per year. Key to our growth strategy is the advancement of our next-generation initiatives, which combined with higher production volumes and optimized throughput are expected to maintain our first quartile cost position. The quality of our assets and the ability to bring on additional production in a safe, timely and cost-efficient manner will continue to strengthen our position within the industry. Nutrien has unrivaled scale and growth optionality within the industry, and we expect to utilize this capacity to increase production as demonstrated in recent years. For example, in 2018, supply from new projects in Canada and Eastern Europe were slow to ramp up and global demand was strong, which allowed Nutrien to scale capacity and produce an additional 700,000 tonnes that year. In 2021, Nutrien flexed up production by almost 1 million tonnes in response to stronger global demand and tight global supply caused by unexpected industry supply interruptions and growing market uncertainty around sanctions imposed on Belarus. This year, these conditions have continued. And in addition, financial sanctions imposed on Russia have escalated concerns for global potash supply as approximately 40% of production comes from Eastern Europe. In response, we announced in March that we intended to flex our production capability again this year by approximately 1 million tonnes to help supply customers with their fertilizer needs. In the past 2 years, more than 70% of the additional global production brought online has been from Nutrien. Our flexible mine network allows us to optimize our assets to effectively supply the market in response to dynamic conditions. We operate the most reliable, safe and efficient assets as part of a low-cost network of 6 mines located within Canada, one of a few regions in the world with abundant and economical potash reserves as well as a stable geopolitical environment. Nutrien has the most extensive distribution network in North America and through Canpotex has the ability to supply over 40 international markets with access to 4 marine terminals located in Portland, Vancouver, St. John and Thunder Bay. Brazil, China, India, Indonesia and Malaysia account for approximately 70% of our offshore sales. Our wide range of product offerings ensures we are able to meet the needs of customers across the globe. We are therefore well positioned to access and grow along with market fundamentals. We have seen significantly reduced exports from Belarus and Russia over the past few months and also expect delays in the development of new capacity from these regions as access to financing, equipment and other resources becomes more challenging. As we continue to monitor how global potash supply and demand could evolve during these dynamic times, our base case supply forecast assumes that it could take several years for Eastern European production volumes to fully recover to pre-2022 levels. Despite strong potash consumption trends in major markets, we expect to see some demand rationing and below-trend global shipments over the next few years. This is largely due to the constrained Eastern European production, which will result in greater need for supply from other producing regions. Historically, following periods of below-trend global shipments, we have seen a strong recovery in demand, and we see the potential for a period of above-trend demand as additional supply is eventually added. Nutrien is well positioned to react to these unprecedented market events to fill a portion of the near-term supply gap and meet longer-term demand growth. Based on the underlying fundamentals, we intend to safely accelerate the ramp-up of our annual operational capability to approximately 18 million tonnes by 2025 at a very low capital cost of around $150 to $200 per tonne. As we have said before, we have the ability to bring on these volumes and increments to preserve our flexibility should market fundamentals change. As outlined in the top left chart, the focus for the path to 18 million tonnes will be on our Cory, Allan, Lanigan and Vanscoy mines. And as outlined in the right-hand chart, we have provided projections of our expected production capability for each of the next 3 years. Underground mine development, securing additional mining equipment increasing site-based storage and load out and hiring additional employees are all needed to facilitate the increase in production. The site mix and run rates identified are the fastest path to 18 million tonnes for Nutrien bringing online approximately 1 million tonnes of capability per year just as we have done in 2021 and 2022. The majority of the capital spend will be at Cory and Lanigan where significant underground mine development will occur including setting up 5 additional mining faces at Cory. Both sites will also undergo considerable logistics upgrades for loading and storage, which will provide benefits past our 18 million tonnes run rate plan for 2025. Looking beyond 18 million tonnes of operational capability, Nutrien has line of sight into an additional 5 million tonnes of brownfield opportunities, which can also be brought on in increments as needed to fill market demand. Our brownfield capacity could be brought online at a much lower cost and take considerably less time to develop than greenfield investments. We estimate the capital cost to be in the range of $500 to $700 per tonne providing Nutrien with a highly competitive path to ongoing production growth as the world demands more potash. On average, each incremental step will add approximately 1 million tonnes of annual production capability and we estimate it would take about 2 to 4 years to complete each increment. For the overall program, we are at an engineering estimate Class 5 stage. We do have the path of increments identified based on maximizing value and time to complete. Depending on the market conditions and then speed required, there is an opportunity to accelerate some of these steps. The majority of the capital work involved at the sites would relate to mill capacity increases, underground development, procuring mining equipment, expanding site logistics and storage upgrades. To summarize, our scale and growth optionality is unmatched in the industry, and we will continue to evaluate the timing of these brownfield opportunities based on our view of market fundamentals and project returns. Now moving on to our next-generation initiatives, which support our goal to be the safest, most efficient and low-cost potash operator in the world. In late 2018, we began a multiyear innovation journey to enable the long-term growth and sustainability of our potash operations. All of our next generation projects are now well underway. We made remarkable progress in the first years of the program by focusing on the development of technologies, and we are looking to benefit from scaling these technologies across our network. We can clearly see some of the benefits from these key initiatives. At the end of last year, we had deployed a Tele-Remote and automation mining technologies at 3 of our sites, and we'll continue to scale to other sites in 2022. This allowed us to cut 4 million ore tonnes using automation in 2021 with operators removed from the active mining face. We've also been able to improve the reliability of our assets by implementing technology to detect and predict failures and are now monitoring more than 600 of our most critical assets. Our next-generation initiatives, which paired with the increase in production volumes are expected to bring positive impacts to our production costs by helping to offset inflationary pressures while keeping our controllable cash cost in the range of $55 to $60 per tonne in the medium term. We would now like to show a short video that reflects our next-generation initiatives. [Presentation]

Well, as you can see in the video, we are very excited about the progress the team has made on our next-generation initiatives and how it will position our potash business for the long term. In closing, what sets Nutrien apart is our ability to increase volumes over the next few years as we are the only producer with significant excess operational capacity. We expect multiyear tightness in global potash supply and the potential for strong prices and our own sales volume growth. We have provided a scenario of this near-term earnings potential, which is based on volume growth potential over the next few years from 15 million to 18 million tonnes and average benchmark prices in line with the past 12 months. In this scenario, we could generate potash adjusted EBITDA between $6.6 billion to $7.8 billion. Longer term, and what we have labeled as a mid-cycle scenario we expect average benchmark prices to trend above the previous 10-year average due to potash supply constraints. We have assumed 18 million tonnes of potash sales and benchmark prices $50 per tonne above 10-year average levels, which would result in adjusted EBITDA of around $4 billion. This represents a significant increase in earnings potential compared to previous mid-cycle levels and demonstrates the potential for our world-class potash assets. With that, I will pass it over to Raef.

Thanks, Ken, and good morning, everyone. I'm excited to talk to you today about our nitrogen and phosphate businesses. In these times of unprecedented market volatility, both in product prices and input costs, and as potential new markets emerge, we think it's important to focus on 3 areas. First, making sure that the underlying base business remains strong and competitive. This means continually finding ways to improve our safety, our reliability and our efficiency or cost position. When the base business is operating reliably and efficiently, we're going to be able to make -- get the best or the most out of the growth opportunities we invest in. Second, developing the full set of options we have to grow the business as cost effectively and as quickly as we can. And then third, helping to lead the evolution of sustainable nitrogen both for traditional uses of nitrogen products but also for the exciting emerging markets of low carbon or clean ammonia. Let me now give you a little more detail around these 3 important focus areas concentrating on nitrogen to start with. The first is our focus on improving the base business. Since the merger, we've made continuing improvement to our safety, our reliability, our efficiency and our flexibility and the breadth of our product offering. The latter is helping us keep pace with the growing demands of our customers. We believe that we need to continue to work on the base business to make most of the brownfield expansions we have underway. The second is to grow with the market through low-cost, high-return brownfield expansion investments. We've identified opportunities to increase our production volumes across our nitrogen portfolio. The first wave of projects added just under 1 million tonnes of production volume were completed in 2021. Second phase of projects is underway and are expected to add just under 0.5 million tonnes of incremental production. All of these projects also contribute to increased flexibility, improved reliability and reduced energy consumption. And finally, enhancing our position as a global leader in sustainable ammonia production. We're already the world's largest producer of low-carbon ammonia with about 1 million tonnes of production capabilities today. We will be able to more than double that with the recently announced clean ammonia facility at Geismar, Louisiana site, and I'll talk more about that project later in my presentation. We've also undertaken a series of projects designed to reduce our Scope 1 and 2 emissions footprint. These will be largely completed by the end of 2022 and combined with the energy improvement from our brownfield expansions will reduce our total emissions footprint by over 1 million tonnes of CO2 equivalent on an annualized basis. Our focus in phosphate is similar to make improvements to the base business, then look for avenues to expand our portfolio of higher-margin industrial phosphate products. The 2 most recent examples of these have been our anhydrous hydrogen fluoride or AHF project at Aurora that was done in partnership with Arkema and our HFSA project at White Springs in partnership with Univar. From a sustainability perspective, we furthered our environmental stewardship in phosphate having returned nearly 3,000 acres of land back used for phosphate rock mining back to its previous condition or better, we've done that over the last 3 years. As mentioned before, we're investing in short payback projects that reduced production costs helped prevent unplanned downtime and provide a safer working environment for our employees. If you look at the left-hand graph, you can see that we've increased ammonia operating rates from mid-80s prior to the merger to the low 90s today. These improvements have come as we share best practices across the 2 legacy organizations and invested in brownfield expansions and sustaining projects. With nitrogen growth projects in flight, and end-of-life capital projects planned, we are requiring extended turnaround periods that are likely to result in our ammonia operating rate coming in slightly lower than our previous target of 96% in 2023. Longer term, we expect to achieve operating rates consistently between 94% and 95%, which is well above historical levels and would be considered industry-leading rates. I need to make clear here that these rates are based on percentage of best demonstrated production at each of the sites over time, not just a nominal nameplate capacity. So if a plant were to run at its best ever rate for 365 days in a year, it would achieve 100%. So with planned turnarounds required every 4 years, the maximum achievable rate with no unplanned outages is between 96% and 97%. In phosphate, there is renewed attention being given to debottlenecking our purified asset facilities to address our supply shortages in the market and the emerging new market of LFP batteries. Our operations are trending in the right direction and expect -- we expect to see -- you should expect to see further improvements to our P2O5 operating rate this year. We've undertaken our brownfield growth projects across nearly all of our locations, focusing on a variety of products to meet domestic demand growth and to displace existing imports. The majority of projects have been successfully completed with the remaining expected to come online through 2025 and delivering gross product capacity additions of about 1.4 million tonnes at a cost of less than $600 million. Combining our completed and in-flight brownfield expansions with our greenhouse gas projects, we will deliver significant Scope 1 and 2 emissions intensity reductions as well as more than 1.2 million tonnes of absolute reductions in our CO2 equivalent emissions. We have a great track record of execution in these projects, thanks to the quality of the team we have in place, and we fully expect to maintain the team's excellent record of delivering these projects on time and on budget. We increased our sales volumes over the past 5 years with the completion of our first phase of brownfield projects and the higher operating ammonia rates. Our sales volumes next year are likely to come in closer to the bottom end of our previous target. We expect annual volume to grow to around 12 million tonnes with the completion of in-flight brownfield projects in 2025. We've also identified further brownfield projects that could yield an additional 1 million tonnes of gross product capacity with an absolute reduction in GHG footprint of 400,000 tonnes of CO2 equivalent. These projects are currently being evaluated with investment decisions expected over the next 12 months. Nutrien will continue to look for further opportunities to sustainably increase production to meet food security needs -- global food security needs, while reducing our environmental impact. Nitrogen business unit is leading the charge in advancing our emissions reduction commitments in pursuit of our 2030 goal to reach a 30% intensity reduction across all of Nutrien. We're currently well positioned to advance and deliver opportunities in 4 key areas across the nitrogen business in terms -- in support of these long-term emissions reductions. First is in our process improvements. As I mentioned previously, we're implementing enhancements to reduce greenhouse gas emissions at our nitrogen facilities which is expected to result in emissions reduction of 1 million tonnes of CO2 equivalent by the end of 2023. The majority of these reductions are from elimination of nearly all of our N2O emissions from our nitric acid plants. Second is our carbon capture utilization and storage initiatives. We actively capture and sequester CO2 at our Geismar facility today. We are now building the capability to capture CO2 at our Redwater site as well, which will capture an additional 100,000 tonnes per year when completed. Third is our program of energy efficiency projects. We have a number of projects underway in addition to our sustaining capital program to reduce the energy consumption of our plants. These projects lower our costs as well as our carbon footprint. And fourth, we're evaluating deployment of cogeneration and use of renewables at various sites. These will help reduce our Scope 2 emissions from purchased electricity and our exposure to peak electricity pricing surges. We're evaluating electricity and steam generation at our facilities as well as wind and solar. We're confident our focus on these 4 key areas will allow us to not only meet our 2030 Scope 1 and 2 emissions intensity target, but surpass it. Turning now to the future supply and demand picture for nitrogen. We anticipate the existing ammonia production deficit in the conventional merchant market to persist through to 2027, even without the effects of the war in Ukraine. Just to provide more detail on this important point, the global ammonia market is currently about 170 million tonnes per year and growing at a rate of 2.5 million to 3 million tonnes per year. So over the next 5 years, there's likely to be a deficit in the conventional market of 8 million tonnes, and that's before the impact of the current conflict in Eastern Europe and new potential uses of ammonia are added in, doing so takes the deficit to potentially more than 20 million tonnes. Nutrien is well positioned to be first to add incremental capacity to meet demand in both the conventional market and the new and emerging markets. We have the ability to provide clean ammonia in meaningful volumes at a competitive cost. As we look at the potential development of these new markets, we see 3 areas of significant opportunity. The first is for power generation, ammonia can be used to co-fire coal power plants, dramatically reducing the carbon footprint. The Asia Pacific region has put forward noteworthy goals for utilization of ammonia and coal power plants commencing in the late 2020s. Associated closely with power generation is transportation of hydrogen. Outlook today suggests that ammonia may become the method of choice for transporting hydrogen long distances due to its energy density little to zero technology risk and the prohibitively high cost of constructing hydrogen tankers, which have limited volume. This is particularly of interest for countries in Europe and Southeast Asia where clean or low carbon hydrogen production would be difficult given the lack of low-cost natural gas. The second is for marine fuel. The International Maritime Organization or IMO have committed to a 40% reduction in carbon intensity by 2030 and 70% by 2050. This will drive the need for low or zero carbon fuel alternatives and as Nutrien is well positioned to leverage our existing expertise in ammonia transportation and industry-leading development of an ammonia fuel vessel. The third is for agriculture, industrial or biofuel sector as there is potential for a premium to develop for clean ammonia to produce low-carbon food, fuel and fiber. As you may have picked up, we're pretty bullish on the outlook for the merchant ammonia market and see strong emerging demand for clean or low-carbon ammonia into the future. Between the 3 uses I mentioned above, we believe we could see an additional 160 million tonnes of ammonia demand by 2040. One of the most exciting opportunities I get to talk about today is our recent announcement, our intention to build the world's largest single train clean ammonia -- clean ammonia plant. The proposed 1.2 million tonne energy efficiency clean ammonia plant will be located at our existing Geismar, Louisiana site, leveraging infrastructure already in place. Production commencement is forecast for 2027, which will position Nutrien as a first-to-market global leader. And let me outline now some of the key highlights or features of this project. It offers best-in-class CO2 capture in sequestration, which will significantly reduce our CO2 intensity and position Nutrien for participation in the emerging market for clean ammonia. The autothermal reformer technology we're planning to use will start with greater than 90% CO2 capture and provide us the ability to scale that to net zero in the future. The plant will have dedicated scalable geologic CO2 sequestration with our world-class partner, Denbury, who are located adjacent to the plant. We've secured an agreement with Denbury for the transport and permanent sequestration of about 1.8 million tonnes of CO2 per year. The incremental capital and operating expense for CO2 capture and sequestration is derisked by available federal incentives, such as the 45Q tax credit, ensuring competitiveness in both traditional and emerging ammonia markets. The plan is strategically located with direct tidewater access and the ability to accommodate larger vessels, enabling access to offshore markets as well as maintaining access to inland U.S. markets. We have a letter of intent for a sizable offtake of ammonia with Mitsubishi to target Asian markets. We're also engaged with multiple parties for potential sales agreements in fertilizer, chemical and shipping sectors. And of course, we continue to support research and development of ammonia fuel vessels. The plant will be able to take advantage of low-cost natural gas feedstock and we have the ability to leverage existing infrastructure, including utilities, storage and load out. We anticipate making the final investment approval decision in 2023. All of these factors support the future success of this plan, and it's important to think about the role that a project or future projects like this can play in decarbonizing fertilizer production power generation, ocean transportation and other markets. As I mentioned previously, we believe that the merchant ammonia market is structurally undersupplied into 2027. And this project feels an obvious demand gap in existing markets. The project will achieve attractive and stable returns at mid-cycle prices and allow Nutrien to secure our position in emerging clean ammonia markets as well as growing with the existing merchant market. Our brownfield -- nitrogen brownfield projects and Geismar Clean Ammonia project provide an opportunity to increase our earnings potential and position Nutrien as an industry leader, best able to meet the needs of the market. We believe we've seen structural improvements in the nitrogen market and under a pricing scenario consistent with the last 12 months, and based on achievable volumes over the next few years, we could see near-term nitrogen adjusted EBITDA of potentially between $4.4 billion and $4.8 billion. When we consider our inflight brownfield expansions, the next phase of identified growth projects and the announced clean ammonia plant at our existing Geismar facility we see annual sales potential of approximately 13.5 million tonnes by 2027. Now assuming a 10-year historical average benchmark, pricing plus $50 per ton this would result in a potential mid-cycle adjusted EBITDA scenario of around $3 billion, well above where it's been previously. We have a lot of exciting things on the go, and we remain focused on the 3 key areas I highlighted in my opening remarks. The first being to preserve a strong and competitive base business; the second, to develop our investments in high-return brownfield growth projects; and the third, developing our position as a global leader in sustainable low-carbon ammonia. So thanks for taking the time to listen to us this morning. I'm going to pass over now to Jeff Tarsi to come and talk about our retail business. Jeff, over to you.

Thank you, Raef, and good morning. I'm really excited today to talk to you about our retail business. At our last Investor Day, we described why we're the best positioned company in ag input industry. We've set aggressive financial targets with the vision to further expand our network into Brazil as an emerging high-growth market. Since that time, we have executed on our strategy, and we are proud of the exceptional results that we are delivering, both meeting and exceeding our key performance targets. This is a great time for Nutrien Ag Solutions as well as for our industry. Today, I'll discuss how we're delivering long-term sustainable solutions by leveraging the strength of our network, our differentiating proprietary products portfolio and evolving digital capabilities. And lastly, I will showcase how we are successfully executing on our growth strategy in Brazil, which is an increasingly important and rapidly growing region. Our success is deeply rooted in connecting the entire ag value chain to deliver whole-acre solutions for our grower customers. Now let's start with our network that includes approximately 500,000 grower accounts over 2,000 locations and strategic partnerships with the leading ag input suppliers. We are investing in innovation and leveraging our proprietary portfolio of roughly 2,000 products to deliver fertilizer, crop protection and seed inputs, and we're doing this through the trusted relationships with our 3,900 crop consultants in the field. Look, our people are the backbone of our business, and they live our core values of safety and integrity each day. Now we've spoken often about the unparalleled advantage that the scale of our network provides. And that has never been more evident than now as we navigate through the current global supply chain challenges. We've established the Nutrien Ag Solutions brand in 3 of the leading agricultural production regions of the world: North America, Australia and South America. Today, we have the infrastructure and reach to ensure that our growers receive the products they need and more importantly, when they need them. This has enabled us to recognize both share and margin gains. We've achieved a 22% market share in the U.S. and positioned ourselves as an industry leader, and we remain committed to our U.S. tuck-in acquisition strategy to further grow our footprint. Having successfully integrated the Ruralco acquisition into our Australian business, we surpassed $350 million of EBITDA from this region last year, more than doubling our earnings since 2019. We offer a wide and diversified portfolio of products and services to meet the needs of the local marketplace, including the wool and livestock brokerage business. And now we're building a substantial presence in the South American market. Nutrien Ag Solutions is further investing in our network to drive growth through 6 key strategic priorities, all of which are aimed at providing the most customer-focused agronomic solutions to our growers. These priorities in addition to always ensuring safe and reliable operations are the very foundation for our capital allocation approach within the retail business segment and are driving profitable organic and inorganic growth. Now Mark spoke earlier about the advancements we're making to help our growers adopt more sustainable ag solutions, I'll now take the opportunity to share more about the growth we're driving through network expansion, our portfolio of proprietary products and digital engagement. At our 2020 Investor Day, we set a number of financial targets to measure the quality of our earnings. Our business is performing very well and I'm pleased to report that we have outperformed on a number of our KPIs, including delivering increased gross margin and lower operating coverage ratio, reducing our working capital to sales ratio and we're earning well over $1.1 million of EBITDA per U.S. selling location. We plan on setting new long-term retail financial targets in 2023, as you heard earlier. Now I've often said that the centerpiece of our platform is our proprietary products business while delivering strong value to our grower customers, our proprietary products generate meaningfully higher margins relative to third-party branded products. Investments in our proprietary products portfolio are generating excellent returns with gross margins increasing 38% since 2018. We also surpassed $1 billion of global proprietary gross margin last year and believe this will continue to be a driver of organic growth in all the regions that we participate in. Our nutritional fertilizer portfolio has performed exceptionally well and has been a key contributor to this margin growth we're experiencing. In these current market conditions, our growers are eager to invest in these high-value products to optimize their yields. We are investing to further develop our proprietary product offering and manufacturing capacity in all regions with innovations in fertilizer, nature-based biologicals, crop protection and seed. Now as it relates to digital, we began a journey in 2018 to develop an industry-leading digital platform that would provide a digital e-commerce experience for our customers as well as create a [ toolkit for writing ] better crop plans and input recommendations and enable high-value precision ag practices. I'm really excited about the progress that we're making in building out the platform's capabilities, which will also be critical for achieving our sustainability objectives. Through our digital hub to date, growers can efficiently work with our crop consultants to develop seed, fertilizer and crop protection recommendations that are based upon both science and data. Growers have access to accurate and up-to-date weather forecast. And through satellite map field boundaries and geospatial imaging, we can ensure that most precise crop input applications are made. More importantly, this data is being delivered today by a wireless data transfer. This separates us from many other digital platforms in our industry to date. Look, agriculture is an incredibly complex business today. These tools are further equipping our agronomists and crop consultants to provide the most efficient and accurate advice. Therefore, deepening our relationships with our growers, which is delivering increased share of wallet, reduced churn and greater penetration of high-value products and services. We believe that our investment in digital innovation is a competitive advantage. We are the best positioned ag retailer in the industry to capture the opportunity of digital as we have the trusted adviser relationships with our growers, scale network infrastructure and vertical integration to ensure a dependable supply chain necessary to deliver whole-acre solutions. Now I want to shift to Brazil. At our last Investor Day, we spoke about the important role that Brazil will play in increasing global crop production as we strive to feed 10 billion people by 2050. And I can tell you, I'm even more confident today in the vibrant and potential of this region as growers adopt increasingly sophisticated, more intensive and sustainable farming practices. Planet soybean and corn acres in Brazil rivals that of the United States. But today, the industry is highly fragmented. We are well positioned to capture share in this rapidly growing market. And we're doing it differently. We're deliberately targeting midsized growers in very focused geographies, and we're building an asset-light distribution model to serve them. Now for a bit of historical context, we've operated in Latin America since 1995. We entered Brazil initially in 2012. However, it was in 2019 that we set a strategic goal to build our market share and become an industry leader. Since that time, we have closed on 5 successful acquisitions, including expanding our proprietary soybeans seed and nutritional portfolios. Today, we now have 52 retail locations including 11 customer experience centers with plans to open another 20 this year. Through this time, we've delivered attractive EBITDA growth and are well on track to achieve our target of $100 million in EBITDA by 2023 through continued acquisitions and market penetration. We have built a fantastic team and have instituted the same rigorous health and safety standards that we have set across our global network. Now with that introduction, I'm pleased to show you a brief video to demonstrate the incredible progress that we're making in this region. [Presentation]

As shown in the video, look, there are a lot of exciting things happening in the region and in our business within Nutrien Ag Solutions. So in closing, Nutrien Ag Solutions is executing on all of its strategic priorities and is delivering strong earnings growth. Amidst strong market fundamentals, we've successfully captured additional share and margin demonstrate the strength of our network and the reliability of our supply chain. This includes the advantages of sourcing product from our old proprietary products and fertilizer production facilities. We are diversifying and expanding our global presence and now expect to generate 35% of our EBITDA outside of the United States. This is exciting, and we're really proud of this progress. We have exceeded many of our long-term financial targets ahead of schedule, delivering over $1.9 billion in EBITDA in 2021, and we are optimistic for another strong performance in 2022. This is an incredibly exciting time for our growers, customers, our people and our business. I thank you for your time, and I'll now turn it over to Pedro.

Thank you, Jeff, and good morning, everybody. During the presentations today, you've heard about the advantages of our integrated business model, the superior quality of our assets, our strategic initiatives and engage talent throughout the organization to deliver on these opportunities. I'll take the next few minutes to provide a viewpoint from the financial perspective, and we'll cover the following key areas. First, our focus on delivering quality earnings growth and enhancing ROIC. Second, is our continued focus on balanced and disciplined capital allocation that supports future growth and our ability to return significant capital to shareholders. And finally, a view on how structural market changes, create the potential for a meaningful upward shift in earnings through the cycle. Nutrien has delivered significant earnings growth since 2020 due to robust market fundamentals, our excellent operating performance driven by strength of our team and the advantaged position of our assets. As we announced in May, we expect record earnings in 2022 and with the midpoint of our adjusted EBITDA guidance increased to $15.5 billion. The growth in our EPS has been even more impressive outpacing adjusted EBITDA growth by nearly 3x since 2020. This reflects our disciplined management of financial costs, the impact of completed and planned share repurchases. In 2022, we expect to generate between $10.5 billion to $11 billion in cash provided by operating activities, which afford us unconstrained capacity to deliver on our capital allocation priorities. While growth in earnings and EBITDA are recognizable performance metrics, we know return on invested capital, ROIC is a key metric that highly correlates to value creation. As such, and as disclosed in our 2022 circular, ROIC will now be included as a metric in management's long-term compensation. We expect to deliver an average ROIC of 19% compared with a 7% weighted average cost of capital over the 3 periods ending in 2022. While stronger market fundamentals played a role in this result, our focus is on initiatives that are under our control that we believe will deliver a sustained improvement in ROIC. And we think of these in 3 categories. First is delivering quality growth through capital efficiency -- efficient projects. Since 2018, we have increased potash and nitrogen sales volumes by more than 2 million tonnes by expanding the capability of our low-cost asset base. We have also delivered a retail adjusted EBITDA CAGR of 11% over this period, which enhances this stability of our overall earnings profile. We have a disciplined project execution capability in a proven capital project delivery track record. The second area is around margin improvement. We are focused on driving down costs across our business units through continuous improvements and network optimization initiatives and our NextGen initiatives in potash are a good example of this work. And third is asset efficiency. In retail, this is focused on working capital management, which as you saw from Jeff's presentation is an area in which we have made great strides over the past few years. In nitrogen and phosphate, we are focused on enhancing the safety and reliability of our assets and have consequentially -- sequentially delivered high operating rates over the past 5 years. So before we look forward, a few quick comments on our capital allocation performance as it relates to the targets we set the Nutrien's first Investment Day -- Investor Day back in May 2019. At that time, we expect that operating cash flow generation to be $22 billion to $25 billion over the 5-year period through 2023. As we sit here in 2022, we anticipate reaching the bottom end of that target in only 4 years, which projected operating cash flow of around $22 million -- billion between 2019 and 2022. And we have deployed capital over that period following a balanced and consistent allocation framework. We allocated approximately $9 billion to sustain and grow our asset base with approximately 70% of the historical growth capital allocated to retail. While not depicted on this page, we paid down about $2 billion of debt in 2021 to rightsize our balance sheet. And we do not foresee the need to permanently pay down any additional long-term debt. Then, of course, we have distributed capital to shareholders. We provided a sustainable and growing dividend even through very challenging market conditions in 2020 at the height of the pandemic. And we have distributed additional capital through share repurchases, which is projected to total of $7 billion or approximately 14% of our current market capitalization. This will take total shareholder distributions to around $11 billion through 2022. As evidenced by several of our announcements today, we expect to follow a similar balance and disciplined approach as we move forward. Earlier, you heard Ken, Raef and Jeff speak to the compelling investment opportunities in each of their business units. You also heard Mark talk about the focus on ESG factors. This slide helps us give you a bit of a perspective on framework and decision criteria we use when assessing these opportunities. First, we consider the strategic fit of each initiative to confirm the investments are aligned with Nutrien's purpose and strategic objectives. As we have talked a lot today, the 3 key strategic criteria we use are the ability to accelerate growth, fortify our business for the future and optimize integration value. Then we evaluate the economics of the projects, including [ class of ] metrics such as NPV, IRR and payback, but also ensuring that initiatives are accretive to Nutrien's long-term ROIC. Lastly, we evaluated the project's ESG factors to certify that our projects support our ambitious sustainability goals. Our Geismar clean ammonia project is a good illustration of that. NextGen and our ramp-up in potash both help to future-proof our business, improve safety, drive efficiencies and generate attractive returns for shareholders. And in retail, we continue to grow our network and invest in products and solutions that support growers and reduce our environmental footprint. These initiatives are aligned with the future of agriculture and generate strong returns. The strength of our assets and integrated business model provides the opportunity to invest in the growth initiatives I just mentioned and also return significant capital to shareholders. In total, we now plan to distribute approximately $5 billion to shareholders in 2022. Around $1 billion of this is our dividend, which was increased by 4.4% back in February. At that time, we also committed to a minimum $2 billion of share repurchases, and we have been and will continue to actively repurchase shares on a balance cadence this year. Year-to-date, 2022, we have repurchased over 11 million shares at approximately $84 per share. And today, we announced our plans for additional $2 billion of share repurchases under our existing NCIB program. The $5 billion in total shareholder distribution equates to a 50% to 55% of our anticipated free cash flow, including working capital, which we believe represents an appropriate balance of investing prudently in our business while also ensuring shareholders participate in the exceptional current market dynamics. We like the layered and transparent structure to distributions represented on this slide and intend to utilize the same approach in the future, and we'll consider prior year share count reductions in the decision criteria as we target sustainable and growing dividends over time. Quickly to summarize what this means for our capital allocation plans in 2022. We expect to generate $10.5 billion to $11 billion of operating cash flow, converting at approximately 70% of the midpoint of our adjusted EBITDA guidance. From that, we will sustain our assets and invest in our business to the tune of around $3 billion. And as previously mentioned, we plan to distribute around $5 billion to shareholders. Even with the incremental investments and distributions discussed today, we expect to have additional capital to allocate, which leaves us with some room in the second half to take advantage of opportunities such as further retail network expansion as we believe there is high potential for more strategic Brazilian acquisitions and additional U.S. tuck-ins, although we cannot predict the exact timing. As many of you know, our cash flows are seasonal just as they are for our grower customers. So we make our allocations and distribution decisions in a phased approach throughout -- through the year. But of course, we don't think about the next few quarters alone. We plan many years ahead. And because we invest in long-term assets, we must also take a long-term, through-the-cycle view when considering our capital allocation alternatives. Currently, we are investing in strategically aligned high-return projects supported by our belief that there is potential for multiyear strength in agriculture and crop input market. As highlighted yesterday in the presentation by Jason Newton, we expect changes in long-run marginal costs and shifts in supply-demand balance, which support continued near-term strength as well as an upward shift in mid-cycle pricing going forward. Based on our analysis, we believe this could translate into at least a $50 per tonne increase in average benchmark in fertilizer prices compared to the previous 10-year average. We also see potential for Nutrien to sell higher potash and hydrogen volumes compared to previous expectations. In the near term, we expect prices to remain well above historical average levels due to supply side challenges. In this scenario, we could see adjusted EBITDA in the range of $13.4 million to $15.2 billion, assuming last 12 months' average benchmark pricing, and sales volume growth that is achievable over the next few years. Looking longer term and what we define as a mid-cycle scenario, we have assumed 10-year average fertilizer price plus $50 per tonne applied to a full volume growth potential for our nitrogen and potash business. In this scenario, Nutrien could generate over $9 billion of adjusted EBITDA. While there is likely to be variability, this scenario represents a structural step-up when compared to Nutrien's historical average earnings prior to 2022. With the initiatives we have outlined today, we believe that Nutrien's earnings potential creates increased long-term upside for our shareholders. So to wrap, as Ken said at the outset of the meeting today, Nutrien's integrated business is best positioned to respond to global supply challenges to help feeding -- to feed a growing world, and we have a unique capability to significantly increase fertilizer sales volumes while delivering the sustainable products, services and solution growers need through our leading global retail network. We are making great progress on our Feeding the Future commitments and are positioned to lead the next wave of agricultural transformation. We have an unmatched capability to increase potash volumes from our low-cost capacity in response to global supply challenges. Our world-class nitrogen business will be further enhanced through the delivery of low-cost brownfield expansions in our Geismar clean ammonia project. We have multiple pathways to deliver sustainable growth from our leading global ag retail business. And while we invest in our business for the longer term, we ensure the investors participate in the value generation throughout the cycle via our sustainable and growing dividend and share repurchases with $5 billion planned shareholder distributions in 2022 alone. I'll now turn it back over to Jeff Holzman. Jeff?

All right. Thanks, Pedro. So we'll now take a short break before we start the Q&A session. So we'll plan to be back about 5 past the hour for the Q&A session. [Operator Instructions] We will see you shortly. [Break]

Okay. Welcome back. So we'll start off the Q&A session. Operator, I'll turn it over to you for the first 3 questions, please, from the phone line.

First question from Andrew Wong with RBC Capital Markets.

Thank you for taking my questions and for highlighting the business today and yesterday. So just mostly a question on capital allocation. I'm just looking at Slide 59 here, and I think Pedro highlighted as well, there's a little bit of excess cash generation this year of maybe $2 billion to $3 billion. And you mentioned that it might be -- maybe used to deploy on retail transactions, but there's typically not that many retail transactions to be completed in a year. And as you've highlighted, maybe the opportunities may not always be there. So are there other plans for this excess cash, maybe taking out some additional debt, maybe some more share buybacks? And then just with regard to the dividend, there was a modest increase earlier this year. I'm curious about your decision to increase the share buyback today, but not the dividend? And does that have anything to do with where you see your shares trading today?

Well, thank you, Andrew. Maybe the first question is about -- maybe I'll pick up the dividend first, and then maybe you can remind me of the other one, is the share buyback. In terms of the dividend, we obviously try to look for a kind of a stable and growing dividend, and we are -- our dividend, I'd say, symmetrical, so we always try to make sure that we can provide that stability through the cycle. And as you saw today, number one, we think that our future mid-cycle but also the trough is higher. And as we reduce the share count for the future, that share count would allow us to also increase our dividends in the future. So for this year, however, we see significant upside, as you saw from our discussion today and from -- not only from a near term, but also from a longer-term perspective. So we think we are better served with our share buyback program, which has been the most efficient way we thought of distributing to shareholders. Now in regards to your question of the excess capital, yes, we would like to, a, preserve some flexibility for the second half of the year as we have a very robust pipeline, both in the U.S. and in Brazil. We are considering deals of all sizes there, not only small but also larger. And also, there is quite a bit of volatility in the market. So -- but it's -- we're not ruling out if we can come up and distribute more capital in the future. And that is the same approach that we have taken in our first quarter when we announced the first share buyback. And we're kind of layering this share repurchases as we go forward and training that off against some internal investment opportunities as well.

Your next question comes from Joel Jackson with BMO Capital Markets.

I want to talk about your $9 billion mid-cycle EBITDA forecast, and thanks for providing color on that. I wanted to get granular a bit on that, pardon the pun. Could you give us some sensitivity around the $9 billion. So for example, what is every million tonnes of potash worth to that? So if you get 15 million tonnes -- if 70 million tonnes of potash at 18, what would be the extra -- what million tonnes of reduced EBITDA? Then staying with that, how much is the clean ammonia plant contributing to $9 billion? And then third -- sorry, I forgot the question I want to ask, but I want to ask. If you think about your mid-cycle pricing assumptions, what is the $50 a tonne over the 10-year rolling average worth on mid-cycle EBITDA? So you got the 10-year rolling average and not the extra 50, what would that reduce mid-cycle EBIT? Do you understand my question, team?

Yes, I think so, Joel. And so maybe -- and so thank you for the question. I think maybe what we'll do is, Jason, pass it over to you. I know you walked through the assumptions associated with what that mid-cycle looks like. And then we can come back and have a discussion about...

Sensitivities.

Yes, sensitivities, exactly.

Sure. In thinking about the number of different ways we looked at the mid-cycle pricing, the first factor that we believe will support higher mid-cycle pricing over a longer period of time is the fact that supply-demand balances are structurally tight. So both for potash over the medium term, in addition to nitrogen over the medium to potentially long-term basis, we see structurally tight supply-demand balances. And that includes for energy markets and agriculture markets as well. The other factors supportive of that higher mid-cycle pricing include a need to have pricing at or above long-run marginal cost, which is replacement cost levels in order to attract new capacity to meet that structurally tight supply-demand balance. And the final, as shown in my presentation yesterday, is if we look at the long-term trends and enrolling 10-year average pricing, that getting back to the trend lines from where we are currently requires at least a $50 per tonne increase to get to mid-cycle levels. And the final factor, as touched upon earlier, is that through the cycle, because of the higher cost environment driven by energy prices and inflation, short-term marginal cost, the high cost producer is at a higher level today than it has been historically.

No, that's great, Jason. So I think Jason said it, you can say on potash, obviously, with that assumption of the $50 above the 10-year average, Joel, with the increase in volumes, you can do the math on sensitivity for potash and raise on nitrogen.

But sorry, that's the question I'm asking. Sorry to interrupt. I'm being more specific, like it's great Jason gave a general answer, and I listened to his presentation yesterday, but I'm asking as specific as possible, what's the EBITDA sensitivity on each million tonnes of potash? What's the sensitivity around $50 a tonne of higher fertilizer prices? And what's the sensitivity in the green ammonia project as specific as you can get for you? So we understand the specific sensitivity.

Okay. I'll come back to potash. Go ahead, Raef, on nitrogen.

Look, Joel, if I get this wrong, I'm sure that the IR team will follow up to correct my mistake. The clean ammonia project at Geismar is 1.2 million tonnes, and so a little under 10% of the volume growth. And so at those upper prices, you'd expect it to be contributing about $450 million in EBITDA, okay? That's the back of the envelope for you. I don't think it's too far wrong. But if I am, IR guys can do a clean-up after me. And then on the $50 a tonne, I'd have to come back to you, okay? But...

Yes. And then on potash, Joel, about the million tonnes of potash sales equates to a sensitivity of about $500 million. So there's your -- there's the sensitivity on potash.

Okay. And may I have a follow-up question, if that's okay, Jeff?

Go ahead, Joel.

Embedded to your assumption is that Belarus and Russian tonnes will be -- at least Belarussian tonnes will be impaired for 3 years. If that's not the case and you get into 2023 and Belarus is able to ship tonnes through Mykolaiv or [ Klaipeda again ] or, I don't know, through somewhere in Russia, would you slow down your 3 million tonnes here? What kind of milestones or stop dead date -- I don't know the expression is, to stop some of the further expansion or further un-idling?

Yes, you bet, Joel. Yes. So as we talked about yesterday, as Jason talked about, looking at gaming these different scenarios. And the one that you described, Joel, would be our low probability scenario. But still, to your point, a possible one. And so for our part, we looked at our bought and paid for mills and hoists in [ shops or sunk ]. And so that for us, the decision to expand these 3 million tonnes, as we said in the presentation, $150 to $200 per tonne. And so when we looked at it on a probability-weighted basis, the opportunity cost of not doing this versus the risks on the downside that made it a decision that we're very confident in. So today, we are talking about the decision to increase production by 3 million tonnes by 2025. That decision has been made. Now do we have [ off-prem ] on capital? Can we, as we've always done in the past, watch the supply-demand balance? That is all true. But today, we believe that we have a lot of confidence in our decision to increase our production to that 18 million tonnes by 2025.

Your next question comes from Adam Samuelson with Goldman Sachs.

Yes. I was hoping to get a little bit more color what -- a, what does your potash cost of production look like at 18 million metric tonnes? How does that change relative to where it's been over the last 12 months? As you think about the sales mix of that 18 million metric tonnes, where do you -- is it purely just market growth with existing customers and regions? Or do you foresee a scenario or the mix of Canpotex sales tonnes is notably different than it has been over the last couple of years? And then finally, what investments does Canpotex have to make in terms of railcars and port infrastructure to handle this amount of volume, both because you're increasing your production but your partner is as well over the next 18 to 24 months? So is there any capital associated with logistics that has to go to fulfill the incremental volume?

No, absolutely. So all great questions. With respect to our cost of production, we talked about the $55 to $60 per tonne in the controllable cash cost. And I think like many, we're experiencing some inflationary pressures. But the increase in volumes across our fixed asset base, along with -- we talked about our NextGen initiatives are certainly fighting those inflationary costs. So we expect that as we ramp up from 15 million to 18 million tonnes that we'll be able to maintain our costs in that range, and so that $55 to $60 per tonne of controllable cash costs. And again, positioning us on the left hand of the cost curve top quartile and certainly one of the most competitive producers on the planet. With respect to product mix and end markets, we talked a lot about where we see the growth internationally. And while North America we would call a somewhat mature market, if we look to places like Brazil, or Indonesia, certainly China and India, those would be markets that we've watched grow over the last decade and that we expect will continue to grow. Of course, Canpotex has a very strong asset base and customer base across those regions. And so those customers are expecting to grow in those regions and Canpotex will be there to support them. And then finally, with respect to infrastructure investments via Canpotex. We talked about port facilities and access to terminals on the East and West Coast, so that was Vancouver, Portland and then Thunder Bay and Saint John, New Brunswick. Today, we would say that Canpotex has sufficient terminal capacity to ship 18 million tonnes or at least our share of that along with Mosaic's. What I would say is, yes, more railcars are going to be required. And then with ocean freight, we can certainly get ocean transportation. So it's really an investment in railcars with more volume and keeping those cycle times so that we can safely and reliably get that potash overseas. So again, sufficient terminal and port infrastructure, some investment required in railcars.

Operator, it looks like we have a few more questions on the line, so we'll continue with that.

Next question, Stephen Byrne with Bank of America.

Yes. This is [indiscernible] speaking in for Steve. A multiple-part question on nitrogen. Firstly, if I heard you correctly, on the clean ammonia project, you said that probably the EBITDA could generate today would be around $450 million, if I understood correctly. And I wanted to understand a little bit how you're thinking actually about when it comes online about the pricing mechanisms, would you be selling more at market rates? Or would you consider since you're dealing with some Japanese utilities, for example, on doing tolling fees and having a little bit more stable pricing profile? And my second part of the question on nitrogen is, you have this kind of [ lost ] the assumptions you and obviously other trade publications with regard to ammonia demand. And I'm just wondering, when it comes to the fertilizer demand for clean ammonia, how much do you think that -- well, what do you think the cannibalization rate would be? And also, have you done any work on the potential premium you would get for clean ammonia versus gray ammonia fertilizer applications?

Raef?

All right. So look, the project is due to come online about 2027. Now if I go back to overall supply and demand, I mean, I think -- we think that the potential for newer markets is going to be in addition to it, quite a large deficit in the conventional market. So in terms of pricing, we're looking at all of those options today. I think the right answer is probably to have some of that committed on an offtake agreement that may be linked back to gas and some are sold at market. As I mentioned in the presentation, we've got an offtake agreement with Mitsubishi today for up to 40% of the offtake, and we're in active discussions with other potential participants for the other parts of the rest of that production capability. So I'm not going to give a commitment today about how much will be gas plus or versus market. I think the answer is it will be a mix. In terms of the premium, today, it's hard to see a premium playing out for low-carbon ammonia today. I do think in the future, you will start to see a premium for clean ammonia based on its carbon content. I just want to get this point in here at the moment. If you look at the steam methane reforming plant today, you're probably producing about 1.7 tonnes of CO2 equivalent per tonne of ammonia. If I go to low-carbon production today at Geismar, where we capture the process, CO2, and put that on [indiscernible], 1.7 tonnes per tonne drops to about 0.8 tonnes per tonne. This new clean ammonia plant at Geismar will be producing only 0.2 tonnes per tonne, so it will be very low. We think that over time with different levels of taxation being introduced across the globe, you'll start to see the need to be able -- the opportunity to be able to charge a premium for the low-carbon ammonia based on its carbon content, which is what I've said -- Ken on this project. That said, the reality is that the traditional ammonia market will need all of the ammonia we're going to be reducing here anyway. And so I'd like to think that regardless of how quickly these new markets take off, you'll see this ammonia getting absorbed pretty quickly through the next 5 years. What was the other part of the question?

I think -- from a technology standpoint, which I think you can cover. There's actually -- there's a question that came in online that maybe can tack on to. And I know, Raef, you've actually -- you touched on a bit of the supply-demand balances, but maybe I'll just direct this to Jason in terms of if these -- we talked about the demand growth potential longer term for clean ammonia sources. But if that doesn't develop as quickly as some of those projections, how do you see that supply-demand balance playing out both globally, but then maybe more specifically to the U.S. market in terms of how that could impact trade balances?

Yes. As Raef touched on in his presentation, we do see the global supply-demand balance for nitrogen tightening over the medium term and really the slowdown of new projects coming on stream after this year leads to a rapid tightening from even current levels. And that's even without any low-carbon demand, which really won't start to develop until the latter part of this decade. Thinking about the North American market, we still believe that North America is an attractive market to add new nitrogen capacity globally, particularly when you think about the challenges and the growth that we've seen in markets like Russia, which we wouldn't expect to continue in the current environment. And so it's an attractive market to add new capacity. We think it is an import market today and that balance could shrink over time if new projects come on stream. But as I outlined yesterday, there's a number of structural challenges and uncertainty around the color and form of nitrogen long term as well as uncertainty with respect to gas prices and inflation and so on, that could hold up investment.

Our next question is from Josh Spector with UBS.

Just a question on retail. I was wondering if you could kind of characterize the market structure in U.S. versus Brazil. So trying to think about the Brazil market where you're small today, but if you look at Brazil on a percent basis, how much of that would you say is a similar model in a farmer to what you're serving in the U.S. market? And I guess, along with that, do you view the opportunities for proprietary products in both markets, similar or different?

Yes, pass it over to Jeff.

Yes. Good question and good timing. Many of us just returned back from a trip to Brazil and got a good firsthand look at both the farms there as well as our retail organization. And if I had to characterize it today, I would tell you, from a pure retail structure, you'd see a lot more asset-light. We referenced that a lot in our discussions and how we're building our model out there, but you'd see a lot more asset-light model of retail there. Obviously, very little custom application in that business there, which would be kind of the opposite of what we would see in North America, particularly through the Corn Belt with it. When I look at the growers, I see very little difference. I see their growers hungry to adopt new technology, hungry to become more efficient. I see the same thing with our growers in North America and Australia for that purpose as well with it. So we've got the benefit there. Our structure in North America is our structure, and it's been there for some time. We have the benefit in Brazil. We basically started with a blank canvas, which is to me is exciting because you can build it much more akin to what you think that market is going to look like 10 years from now. And that's what we're doing with our experience centers using a lot more centralized warehouses to move products, using a lot more third-party trucking to get product from point A to point B with it as well. And as it relates to proprietary products, and I was having a conversation with Mark on the break, that's the real exciting part I see of going into like Brazil and building our business that we're building there. Number one, you got the base business that you're building. But then equally as important is now you've got a larger base of which to overlay your proprietary business on top of. And that's what makes it so exciting even in North America when we do tuck-in acquisitions. We just extended our base and now we know exactly what portion of that business will be able to move in our proprietary products, whether it's seed, see crop protection, our nutritionals doesn't make any difference. So yes, we see that same opportunity in Brazil as well as what we've exhibited in North America and Australia.

So I'll maybe layer in just a question that we kind of follow up online here is. And I think it's for Jeff and maybe Mark can share some perspective is what's the size of the biologicals business? And what sort of growth expectations do you have? Any specific products you can highlight?

I'll start, Mark, and lay it over to you. The size of the biological -- let me start by this. It's a fascinating market segment. And I truly believe the best is yet to come in that market. There are so many companies today doing R&D and discovery in that area. If you look at it on a pure size basis to date, it's still a very small portion of the crop input market. Today, if you look at biologicals, the biggest use for biological or primarily in your maybe permanent crop, high-value cropping markets where you're making multiple applications of a fungicide or insecticide and you're using these products in a rotation with them. I'm interested today. I mean there's a lot of work being done around nitrogen fixation with the biologicals. And when you talk about products, I won't get product specific here, but [ MarinBio ] would be one of the more earlier entrants into that market. We distribute and sell their products in these high-value markets as well. But I'm equally excited because we do a lot of work around the biologicals as well with some of the companies that we've acquired, like CH Bio, Actagro and Agricen. So we're excited about some pipeline work we're doing there. Mark, do you want to add some other context?

Sure. Thanks, Jeff. Well, look, I agree with everything that Jeff said. And when we look at our specialty nutrition business within retail, I think we've actually got a lot of room to run from a proprietary product standpoint as a percentage of total sales. If you were to look by shelf relative to crop protection chemistry, we've got a lot of room to run because we're still underweighted in specialty nutrition products. And biologicals is obviously one component of the portfolio. We're looking at differentiated micronutrients, synthetic stimulants and all of those products. Our position as part of the total retail offering to add value for growers. So as Jeff said, the market is relatively small today, but it's probably one of the fastest-growing market segments in our retail business. And as Jeff mentioned, we've made it part of our acquisition strategy to invest recently in a platform like Actagro, which has even exceeded fairly aggressive expectations from an acquisition return standpoint for us. I think the second area that I would highlight is around sustainability. So in my prepared remarks today, we talked about our carbon program, and one aspect of the carbon program being nitrogen management and nitrogen efficiency protocols as one pathway for growers to generate carbon credits. And the portfolio of products that Jeff talked about it and that I've highlighted are actually one of the staple products and technologies that we're integrating as part of that program that can enhance the efficiency of nitrogen fertilizers and other fertilizers that growers are using. So I think this is a multipronged platform for us. It's going to be really attractive growth, as Jeff has talked about. It's highly profitable and is a very unique sustainability angle as well. So it's an area we're going to continue to focus on from a growth standpoint.

From Michael Piken with Cleveland Research.

Just wanted to talk a little bit more on retail, your strategy in the upcoming years for the seed business and kind of how you see that evolving over the next couple of years with some of the new technologies out there. And maybe you can talk a little bit about some of your market share goals there and what you can do to maybe catch up. And have you given any thoughts at some point, potentially creating your own germplasm on any crops? Or do you still plan to just license primarily from the seed manufacturers?

Yes, sure, Michael. Yes, when you look at the seed side of the business, and we look at it, and I've said it many times before, our share is uneven in seed, particularly in North America, as you relate it back to crop protection and fertilizer segments of the business, we're about a 10% market share on seed. But we've got a very vigorous initiative going on right now. You've probably heard us talk about our 5-in-5 program where we're trying to grow our seed business in North America by 5 share points over the next 5 years. And this is a pretty aggressive growth plan that we have. We got off to a really good start with it last year. I'm pleased with -- where I'm seeing today, I'm pleased with our seed activity there. Generally, on the big crops, we've stayed away from the germplasm side of it. But Michael, I want to point out that we have our own germplasm today in canola. We have our own germplasm in cotton. We have own germplasm in sorghum, and we just added our own germplasm in rice. And so these obviously are some smaller crops, canola is really not. But some smaller crops but some niche markets where we really have a really nice market share where these crops have grown. And we've had a lot of success with it going forward. We've also made an acquisition down in Brazil, Tec Agro, that came with the proprietary seed business. So we're excited to really get our feet on the ground in Brazil and see if we can duplicate the same things we've done with Dyna-Gro as well. But look, we want to grow our seed share. We're going to grow our seed share in North America. We'll do it with our -- we'll do it with third-party brands and -- but you know an equal part of a lot of importance is our Dyna-Gro and proven brands, proven with canola, and Dyna-Gro with our corn, soybeans, cotton, wheat and those types of crops with it. But that's a major target for us, Michael, and we're putting a lot of effort behind it today.

Okay. We'll shift gears. I got a couple of questions on products that came in online. So if there were no constraints to [ FSC ] potash supply, say, starting tomorrow, would you expect to return to your historic 19% to 20% market share? So can you describe the risks to your 18 million tonne production ramp-up, not in the context of increasing capability but in terms of sales volume?

Yes. And so again, as we look at the way the -- this terrible conflict in Ukraine is unfolding and the duration of it all and of course, everyone, Nutrien and really in many parts of the world, just hoping this comes to an end as quickly as it can, and then in fact, we do return to pre-conflict trade patterns, the reality is that we don't believe that that's going to be the case. And there's a few reasons for that. One is, obviously, sanctions, not necessarily against crop nutrients in Russia, but against the activities that facilitate export. And so we're seeing dramatically reduced shipments out of Russia. But then the unique challenge, I think, out of Belarus is, of course, sanctions against Belarus that were there prior to this conflict. And now with this war in Ukraine and the role that Belarus is playing and the challenge to access the tidewater given that the Belarussians have, can't get to the port in Lithuania, and so we look at all of these factors playing and we say that the probability, we think, in this near term and even in the medium term, of volumes returning to pre-conflict levels is actually quite low and so therefore, giving us the confidence to make this decision to increase our own volumes to 18 million tonnes by 2023. Of course, those risks do exist in the market as we look to deploy those volumes. But what I'll say is that -- and I said it earlier as well, when we look at the opportunity cost of not doing this and the way, in fact, we see the potash market unfolding over the next 3 years and the fact that the world needs these volumes in order to feed people well, with our $150 to $200 per tonne of capital cost investment, we actually see the downside risks as being very low in comparison to the upside potential. And so hence, the decision. The final thing I'll say is that we have always played our role in the market with maintaining market share with the largest potash producer in the world, and we'll continue to watch those balances. But today, with our 3 million tonnes, we feel quite confident in the decisions that we've made.

[indiscernible] given the amounts that we talked about in investment, the payback for those initiatives is very short. So we only need to be right for 1 year, 1.5 years to pay back on all these investments. So even if we are wrong later, we would have already paid for the capital. And these are capacities that we envisage were necessary anyway in the future. So I think that balancing with the probability of the conflict resolving in the short term, I think we are fairly comfortable with the payback of those investments. So a little regret.

So then just to follow up, a couple of questions then on the pathway that we spoke to of 18 to 23 and beyond. And so I think the first part of the question would be, how do you think about those phases that were laid out in the slide you presented, Ken? Is it 5 phases at 2 to 4 years each or the whole thing in 2 to 4 years? So really maybe speak a little more about the phased approach when you think of 18 to 23?

Yes, we sort of laid out what that might look like. And today, I mentioned our engineering Class V estimate. So we have more work to do on refining those steps and what the details look like. But it's exactly as you say, Jeff, we have the time now, 2 to 4 years to put some of these increments in place, the big investments and therefore, volume increases in that 18 million to 23 million tonnes there, it's going to include Vanscoy. It's going to include Allan and Lanigan and then Rocanville and Cory in that order of volume increases across the network. Yes, I'll just say that those capital increments, the increments associated with those brownfield investments, $500 to $700 per tonne as opposed to the $2,000 a tonne that it takes to build a greenfield mine or a greenfield facility, we can pace those with the market. And so if you think about production increases in that sort of 1 million tonnes per year, 18 million to 23 million tonnes, again, we can watch how supply and demand balances unfold and pace the capital accordingly.

So then there's one more follow-on to that. So within that 18 to 23, why the restart of Piccadilly is not in that time line that you discussed? Is the cost of capital too high?

Yes. I mean we look across our opportunities to increase production, and we look at the most efficient way to do that, most cost-effective way to do that, the one that continues to keep us in top quartile cost position -- and as Pedro was describing earlier in his presentation, capital efficiency. And so when we put together sort of the strategic fit, the capital efficiency metrics, the economic metrics, we say what we've identified to date is the most efficient way to get from 15 million to 18 million tonnes and then 18 million to 23 million tonnes. So does that mean that in the future we won't produce potash out of New Brunswick? It doesn't mean that. It just means in the identified path that we have today, we believe we've identified the most efficient path.

Okay. We'll switch gears back to nitrogen and a question for, I think, Raef and Jason. So given that the gas price environment has rapidly shifted both overseas and increasingly domestically, what kind of pricing environment do you believe would be required to justify new investment in greenfield nitrogen?

Yes. So look, I mean, I think the first thing I'd say is that the current gas pricing should not be used to make investment decisions. I think it's well above where it should be from a long-term economic perspective. And I think we'll see it come down. As you're thinking about where Henry Hub has been for the last 10 years, then for urea plants, you're probably wanting to think about unit pricing being over $400, and for ammonia pricing probably in the same range. But Jason, do you want to add anything?

Yes. I think if we assume somewhere between $3.50, $4 gas, you're in that $400, $400-plus per tonne [indiscernible] range. I think for ammonia, it's probably more like $500 per tonne ammonia price is needed to sustain that. And so I mean, for each additional dollar per MMBtu you're assuming, and as Raef mentioned, we wouldn't assume current prices persist long term. But if you assume a dollar incremental, that would be $25 per tonne of urea and around $34 per tonne of ammonia.

I think one more question for Raef and Jason likely. Given a large price discount for North American fertilizer prices versus international, could we see Nutrien focus more sales to offshore markets? And I suppose there's a potash element that, Ken, you might want to chime in, in terms of the flexibility between domestic and what we put through Canpotex? But why don't we start with Raef on that one?

Well, I think the answer is that's what we've been doing over the last 3 years. We've certainly been increasing the amount of nitrogen products that we've sold offshore, and we'll continue to do that. And I think the low carbon project at Geismar is set up perfectly to increase the amount of product we export.

Yes. With respect to potash, the big disconnect today is, of course, the contract markets versus spot markets. And so that would be India, China. It's at $590 a tonne, where spot market's trading at $900 to $1,100 per tonne. And so is it the case that the contract markets will receive fewer volumes this year than maybe they expected or need? We believe that, that's true actually in that where a producer can send standard grade volumes into a place like Indonesia, Malaysia and to those palm oil tenders that are transacting at upwards of $1,100 a tonne, producers are doing that. And so as a result, we're watching inventories in India and China very closely. And therefore, also anticipating the next contract discussions with India and China as those inventories in both places draw down.

So the next one I got a strategic question and maybe I'll turn it to Mark first, and Jeff Tarsi, you can add anything here as well as it relates to retail. But will Nutrien consider adding production assets in Brazil to complement the growing retail business?

Sure. Well, I can start. And then I think the production business presidents can talk about that as well. And look, I think when we look at the Brazilian market, there's a lot of things to be excited about, as Jeff has talked about, and we've built a very attractive business there with the first round of acquisitions that we've completed. I think the fundamental belief when we entered Brazil was that that's going to be a market with extremely high growth that's driven by both the opportunity to increase yields through optimization of crop inputs, increased use of technology but importantly, expanding acreage in the country as well. And so relative to other markets where we're operating, there's really no other market like Brazil. And so we continue to be extremely excited about the investments we're making in Brazil. And we do have a $100 million EBITDA target by the end of 2023 for the retail business. But I wouldn't look at that as a destination or the end point. I think that was really made with the goal of understanding how we could operate in the country, building the critical mass of infrastructure, people proving out the initial acquisitions, all of which I think Jeff explained that we've done. We have an 18.5% hurdle rate for those investments, and we're very pleased that in aggregate, the investments are exceeding our hurdle rates, and we're operating very well. I think with respect to the integration of the company and how we think about production assets relative to Brazil, we actually have a reasonable amount of integration opportunity, some of which we're already pursuing today. So when you think about the possibility for the retail business to be an outlet for production for North American potash production, or nitrogen products from Raef's business, that's already something that we're pursuing. And so the assets don't necessarily need to be co-located in order to extract those integration benefits and benefit from the market fundamentals that are very, very positive in Brazil. As Ken said, and I'll let Ken and Raef comment, I think when we look at production assets, it's really important that, obviously, they're safe and reliable from a starting standpoint. But beyond that, that they're in a low-cost quartile given that we operate in a globally competitive business. And so first and foremost, those will always be the factors we look at when we're assessing production capabilities.

Mark, I'd might add, too. Depending on how you characterize production, we do have production capabilities in Latin America from a crop protection standpoint. So we have a formulated facility where we formulate a lot of our proprietary products. We're also able to formulate our nutritionals through the Agrichem acquisition there. And as we mentioned, seed with Tec Agro, we actually increase, grow and do the production for our seed business there as well. So along with several of our components there, they would mirror what we do in some of these other regions of the world. I'll turn it over to Ken and Raef.

Yes. I'll just maybe very quickly echo what you said, Mark, and that is when we look at crop nutrients production, the focus is where we have described today. And that is we have this investments, this infrastructure, these investments that have been made, whether it's in our nitrogen network, whether it's across our network of 6 potash mines. And so that our best route to increase production is these investments in these brownfield opportunities at our existing facilities. And as Mark said, we have the opportunity now with our integrated model, as we always have, to reach right through that supply chain into places like Brazil, certainly North America, Australia. So we're doing those things today. And so again, from a wholesale crop nutrient production perspective, the focus will continue to be on exactly the things that we're talking about today.

Yes. And look, I mean, from a nitrogen perspective, there isn't a low-cost inputs down in Brazil. So it's actually easier for us and more effective for us to build capacity in the Gulf Coast and maybe even Trinidad and supply Brazil market from those locations. And that's obviously one of the things we're thinking about here as we think about the additional brownfield opportunities that I spoke about earlier.

So a bit of a follow-on for you, Raef. In terms of the Geismar plant, we've talked about a final decision in 2023. What are the milestones between now and that point to come to really a final investment decision?

Yes. So one of the things the team is very good at this stage, getting the development of these projects. So a while back, we set up a 6-stage [indiscernible] process. The team has been very disciplined in working through that. We start with concepts. We move to feasibility for Geismar. Now we've moved into what we call front-end engineering or FEED. That allows us to get a much tighter view of the costs, but also put some long lead time items on order, and the Board gave us approval to do that. And so in the next -- through to February in 2023, we'll continue to do more detailed engineering, put some items or long lead time items on order. And then by the time we get to 2023, we'll be in a position where we can go to the Board and give the Board a cost estimate. It's going to be within 10% of where we end up. That's been the history. On the other projects, we think we'll be able to do the same here. So that's the kind of major steps early 2023, we'll go back to the Board for final approval. At that stage, we'll have a class estimate that we'll be comfortable within 10%. We'll have some of the longer lead items on order, and we will have done some of the front-end engineering work to really to firm up the scope.

And there was a question on the market for diesel exhaust fluid. And I know that's part of some of the expansions that we've talked about in brownfield. So maybe the question is a bit about the market potential there and some reports of current shortages. So maybe, Jason, just talk about what you're seeing in the market for that product and then maybe, Raef, in terms of how we're diversifying our product portfolio, including production of DEF.

Yes. In terms of the market for DEF, and Raef, you can elaborate on this, if I've missed anything. But I think it's in part caught up in a lot of the supply chain issues that we've seen elsewhere and that as markets start moving is the North American market, fuel consumption increases -- continues to increase coming out of COVID-19, demand for DEF has increased along with it. And given the supply chain issues, including moving products into port that come in by import that's created a tightness in the market and strength in that market as a result.

Yes. And look, just to reiterate Jeff's point, increase in DEF production has been one of the drivers of the brownfield production projects. We've increased our DEF production quite dramatically over the last 2 or 3 years. We've gained share in the market, and we'll continue to try and develop this opportunity. We see further additional growth in the DEF market. And the second -- first phase of brownfields helped us develop our DEF capacity in the second phase, we'll do likewise. And in that third phase of brownfield expansion we talked about, we're again looking at even further the expansion opportunities.

So a question, capital allocation. I think, Pedro, you did touch on this in one of the first questions, but there's a couple that have come in online. Maybe just walk through the thought process again on share buybacks versus more aggressive increases in dividends at this point in the cycle?

Yes. I think, number one, we -- our dividends have increased. This year has increased by 4.4%. We have been increasing the dividends over time. We never decrease the dividends, and we see the dividends a bit as an asymmetrical dividend. It never goes down. It has gone up. That's what our stable and growing dividend target actually means. As such, as we look at our regular dividends, we are all looking at the next trough. Can we afford our dividend through the cycle and not only this trough, but the future troughs as well? So that's kind of how I think we think about the dividends. And then the excess capital we have after we deployed the capital in all the other projects that make a lot of sense, many of which were announced today, we look at what's the best alternative to distribute that cash to the shareholder. And we look at that in a layered approach because there is always uncertainty in the future. So this year, as the environment was firming up, we kind of announced the $2 billion and kind of foreshadowed a potential, another $2 million -- billion for share repurchases later in the year, which is just so happens to be what we're still seeing. So we're announcing that today, and we see more opportunity in the future. So the rationale between the share repurchase versus the dividend is we think there's still a lot of headroom for us in the future. If we didn't think about that -- or if you don't think that way, we'll probably kind of choose a different way to distribute there to the shareholders. We think that the share buyback is more tax-efficient for most of our shareholders. But more importantly, we think that there is headroom. So when we talked about -- Jason talk about the structural shifts in the market for the future, that will, at some point in time, reverse to a mean. We think that, that means it's going to be higher than the prior mean, which will lift the floor or kind of the mid-cycle earnings of the market. And then, of course, we have the increased volume of about 3 million tonnes in additional potash and another 1.5 of potential nitrogen and ammonia projects. And that will kind of set the new earnings potential for the company in the future. So we feel very comfortable that the share buybacks at this point is a viable alternatives that we have and offer good return in the future.

Okay. We have time for a couple more questions. And this one is technology front, and I'll maybe pass this to Jeff and Mark to respond to. So the question is at Deere's recent Investor Day, they highlighted how their AI and precision ag technology focuses on doing more with less. A key focus is on reducing and optimizing crop input usage. What are your thoughts on that potential impact?

We find it very interesting. We have a very close working relationship with John Deere as it relates to technology. Our precision agricultural platform has increased in its importance and in growth. And I think we're going to -- that's an exciting part of our business going forward. In July, we'll be releasing the 2.0 version of our Echelon. And I saw a question on the board a little bit earlier that dealt with AI and it dealt with precision ag. We don't even think a precision ag today as a new concept or a new technology. It's an everyday part of our life in retail. There are very few applications we make today that don't involve precision ag. And I think AI is really interesting to us in that because we're constantly trying to strive to make sure we're putting the right product at the right rate, right place, right time. And I think this technology is just going to further expand our opportunities to do that. As I said, we work very closely with John Deere and what they're doing in that area, and we'll look to advance ourselves in those technologies as well, particularly as it relates to the application side of our business.

Yes. I don't have a lot to add to what Jeff said. I think he said it very well. I mean I think one of the fundamental points here is that the retail business has been able to build long term, grow our customer relationships by optimize and use of crop inputs. And so that's right at the heart of the relationship that our agronomists and crop consultants have with the growers, figuring out that optimization equation of how Nutrien should be used on the field. And as Jeff said, that's sort of embedded in the overall philosophy of the business. So I think just to take that concept and look back at some of the sustainability programs we talked about earlier in the specific example that I had highlighted from the carbon program from a zoom-in perspective, that particular grower had used our Echelon variable rate scripting technology to redistribute nutrients in the field and benefit from the impact of those practices on being able to generate greenhouse gas emissions reduction in the field and generate a credit. And so I think, as Jeff said, it's already a core part of the business. And as we sort of start to comprehensively think about where the sustainability space is headed, technologies like we're talking about are going to be of even more importance and opportunity and we'll continue to develop our own solutions. And as Jeff said, work with the suppliers who are developing those solutions and bring whatever is best to the customer.

Okay. I think that's a good segue into the last question we'll take today, and it's on the carbon program, Mark, and where do you see total acres over the next 5 years? And how would you define a successful program?

Sure. Maybe I'll make a few comments, and then, Jeff, I'll let you make a couple of comments as well. So I think, first of all, obviously, we're very pleased with the initial pilots that we ran. And as I mentioned in the prepared remarks, we plan to scale up the program by at least 3 times this year in North America, which could be 675,000 acres and then to expand the program on a pilot basis to our other geographies that Jeff talked about in Australia and South America to make this a global offering. So look, I think there's a couple of things that are within our control that will make this program successful, and things that aren't in our control. I think we're trying to focus on both. I think within our control, the pilots were really meant to develop learnings and build the confidence in the field on how we can integrate this into what we're doing. And I think some initial positive steps, but it's going to be a journey over time on that front. I think externally, the role of protocol providers and verification organizations and independent auditors in this space are supply-constrained today and resource-constrained. And so that's going to be something that we're continuing to work with those organizations to overcome because if we want agriculture to be a meaningful part of the equation on scaling up the availability of carbon credits from our industry, we've got to have that capacity everywhere. I think similarly, we're continuing to work with policymakers as we see compliance-based protocols start to take shape, and we feel really strongly that there should be multiple options for growers that incent them to adopt these practices. And the voluntary market and the compliance market can both play a really important role in that. I think when we look ahead for the future of the program, given where we sit and how nascent the space is, I think it's really difficult to put an exact acreage target on it. I think if we're talking about this 5 years from now, we'll be some multiple higher than where we are today. But I think success for this -- and this is probably what Jeff can talk about is very similar to how we've incubated other offerings in the retail business. So when we think about retail, proprietary products, Nutrien Financial, digital, these all were incubated at one point in our company and then became part of just how we do business and the full service offering to the growers. So much the same way as Nutrien Financial was originally Agrium Financial and was incubated to the point that now it's just a part of the offering. And I think we'll know this is successful when our field is pushing us and our growers are asking for it. And I think we're in the early stages of that journey. So Jeff, I'll just let you comment.

Yes, Mark, I'll start off by saying that we're extremely excited about these programs. We're excited about these pilots, probably more importantly than that, our grower customers are excited about it. They're interested. There's high demand where we run these pilots, and we generally don't have a hard time filling the acreage up on it. As I mentioned much earlier this morning, we're so well positioned across the agricultural value chain and particularly as it relates to this initiative we're talking about because when you think about 3,900 crop agronomists that we have on a global basis and the relationship they have on a "day in, day out" basis with our grower customers, that's going to be the key to making these initiatives successful. It's going to be the key to educate our growers on what it takes to be in compliance with some of these initiatives that Mark talked about just a minute ago. And then really exciting for me is with the work we've done in the last 2 years on these pilots, a lot of the products and usages that we're reducing, we're replacing those with products that are in our proprietary products portfolio today. And that's exciting to me. I think it gives us a real leg up on other competitors in the market because we have this product portfolio, because we have the digital platform that we have today that helps us monitor what we're doing with it. Again, our base of 3,900 agronomists. Mark talked about Nutrien Financial, our platform is just so broad and it just puts us in an excellent position to capture whatever this opportunity is going forward with it. So we feel really confident about that. And Again, we're excited about what we're working on today in that space.

Okay. Great. Thanks, Jeff. And that does conclude our session today. Thank you for joining us. And if you have any follow-up questions, feel free to reach out to Investor Relations. Have a great day.