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The Mosaic Company (NYSE:MOS)

Annual Shareholder Meeting Call

October 4, 2012 11:00 AM ET

Executives

Bob Lumpkins – Chairman

Jim Prokopanko – President and CEO

Rich Mark – EVP, General Counsel and Corporate Secretary

Analysts

Jonathan Nash [ph]

Bob Lumpkins

Well good morning ladies and gentlemen. I am Bob Lumpkins, Chairman of the Board of the Mosaic Company. I’d be chairing today’s meeting. It’s a pleasure to take part in this eighth Annual Meeting of Stockholders. A special welcome to stockholders those in the room but also those joining us via the web and first of all, I appreciate your support and interest in the Mosaic since you were able to be with us today.

This Annual Meeting is now called to order. Joining me on the platform is Jim Prokopanko, President and Chief Executive of Mosaic; and Rich Mark, the Executive Vice President and General Counsel and Corporate Secretary who will serve as secretary. In addition, I’d like to take the opportunity (inaudible) Director. I’d ask that each director or director nominee, please stand when I call his or her name, remain standing until all are introduced.

Phyllis E. Cochran, President and Chief Executive of Officer of Navistar Financial; Nancy E. Cooper, Retired, former Executive Vice President, Chief Financial Officer of CA, Inc; William R. Graber, Retired, former Senior Vice President and Chief Financial Officer of McKesson Corporation; Emery N. Koenig, Executive Vice President and Chief Risk Officer and a member of the Corporate Leadership Team of Cargill Incorporated; Harold H. MacKay, Counsel to the law firm of MacPherson Leslie & Tyerman LLP; William T. Monahan, Retired, former Chairman of the Board, President, Chief Executive Officer of Imation Corporation; James L. Popowich, Retired, former Chief Executive of Elk Valley Coal Corporation; and James T. Prokopanko, Mosaic’s President and Chief Executive Officer; David T. Seaton, Chairman and Chief Executive Officer of Fluor Corporation; Steven M. Seibert, Principal of the Sibert Law Firm in Tallahassee, Florida.

I am also pleased to introduce Gregory L. Ebel, President and Chief Executive Officer of Spectra Energy, who is a nominee for election as a Director of Mosaic. This is fair I know how dedicated our Board is and I want to express my clear appreciation to all our directors for the years in Mosaic [ph]. Thank you very much.

Now I’d like to turn the microphone over (inaudible).

Jim Prokopanko

Well thank you, Bob and good morning. It’s my pleasure to introduce Mosaic’s senior leadership team. With these officers please stand as they call their name. Larry Stranghoener, Executive Vice President and Chief Financial Officer; Rich Mark, Executive Vice President, General Counsel and Corporate Secretary; Joc" O’Rourke, Executive Vice President Operations and Chief Operating Officer; Bo Davis, Senior Vice President, Phosphate Operations; Mark Kaplan, Vice President of Public affairs; Rich McLellan, Senior Vice President Commercial; and Corrine Ricard, Senior Vice President, Human Resources.

Bob Lumpkins

Thank you, Jim. We now turn to the formal proceedings of today’s meeting governed by law and our bylaws. Rich, would you please report to us the number of stockholders present in person or by proxy at this meeting?

Rich Mark

Thank you, Bob. Appropriate notice of this meeting and proxy was first mailed on August 23, 2012, stockholders of record of Mosaic’s common stock on August 13, 2012. A list of stockholders eligible to vote has been available for inspection since September 23, 2012 and is available today at the registration table.

As on the record date, there were 308,904,901 shares of our common stock, 128,759,772 shares of our Class A common stock, outstanding entitled to vote. Over 80% of Mosaic’s common stock is represented here today in person or by proxy accordingly a quorum is present. In addition, the necessary affidavit of mailing and the oath of the inspector of the election had been filed.

Bob Lumpkins

Thank you, Rich. Now I would like to briefly review proposals for the meeting today. The first proposal is the election of four directors; Cochran, Mr. Ebel, Monahan, and myself have each been nominated and served for a three year term ending on the date of the Annual Meeting of stockholders to be held in the year 2015. All four of these nominations were recommended by the Board of Directors.

Second proposal is the ratification of the election of Mr. Mackay to serve a one year term ending on the date of the Annual Meeting of stockholders held in the year 2013 which ratification has been recommended by the Board of Directors. Third proposal is the ratification of the appointment of KPMG LLP as the Mosaic Company’s independent registered public accounting firm in 2013 fiscal year as recommended by the Board of Directors. Tom Leyden, Mike Russo [ph] of KPMG are present with us today. Tom and Mike would (inaudible) section of the meeting.

Fourth and final proposal is an advisory Say-on-Pay vote on executive compensation. Board of Directors has recommended our Board to approve on an advisory basis compensation of Mosaic named executive officers as described in the Compensation Discussion and Analysis section, the compensation tables and related narrative disclosures and the proxy statement for this Annual Meeting.

We have now reviewed the four proposals before the meeting. May I have a motion to approve proposal number one, the election of four directors?

Unidentified Company Representative

So moved.

Bob Lumpkins

Is there a second?

Unidentified Company Representative

Second.

Bob Lumpkins

Is there any discussion on this proposal? May I now have a motion to approve proposal number two, the ratification of the election of Mr. Mackay?

Unidentified Company Representative

So Moved.

Bob Lumpkins

Is there a second?

Unidentified Company Representative

Second.

Bob Lumpkins

Any discussion on this proposal? May I have a motion to approve third proposal, the ratification of the appointment of KPMG as Mosaic’s independent registered public accounting firm?

Unidentified Company Representative

So Moved.

Bob Lumpkins

Is there a second?

Unidentified Company Representative

Second.

Bob Lumpkins

Any discussion on proposal number three? May I now have a motion to approve proposal number four, the advisory vote on the compensation of Say-on-Pay [ph] executive option?

Unidentified Company Representative

So Moved.

Bob Lumpkins

Second?

Unidentified Company Representative

Second.

Bob Lumpkins

Is there any discussion on this proposal? Most of you have returned proxies authorized in the person’s names on the proxy card to vote on your behalf but if you wish now to revoke that proxy and to vote by ballot or if you wish to vote and did not return, please raise your hand so that our representatives may bring a ballot to you or stockholders who are participating in the virtual shareholder meeting, you may now cast your vote electronically if you wish to do so.

I now declare the polls open. Those of you who wish ballots should cast your votes now. Polls will remain open for five minutes. As we’re collecting these ballots, I’d like to turn to Jim Prokopanko, who’ll give us a recap of Mosaic’s key milestones as well as the outlook for both Mosaic and the crop nutrient industry. Before Jim takes the podium, moment here I want to say that statements made during our meeting today will contain forward-looking statements about, among other things, future, financial and operating results. These are based upon management’s beliefs and expectations, as of today are subject to significant risks and uncertainties.

Mosaic’s actual results may differ materially from those projected in forward-looking statements. Additional information, concerning factors that could cause actual results to differ materially from those shared today is included in our reports filed with (inaudible).

Jim Prokopanko

Good morning and welcome. Thank you for being here and for your support of the Mosaic Company. This morning I am going to briefly review the progress we made in fiscal 2012 and in the first quarter of fiscal 2013. Along the way, I’ll discuss the factors that have impacted our business. And finally, I’ll share our outlook on Mosaic’s bright future.

Last year at this gathering, I talked about the critical issue of global food security and how innovation in agriculture and the crop nutrient sector in particular plays a role, vital role in taking on this challenge. This fact is coming to even sharper focus in recent months as drought, rising food prices and food security concerns dominating the news. Indeed, within the world sustainable widely recognized one of the greatest tests we’ll face in our life time.

What’s compelling here isn’t just that Mosaic is in a position to tackle food security challenge, it’s that our 8,000 talented dedicated employees worldwide are actually motivated and personally challenged by our mission to help the world grow the food it needs. Food security issue presents us and our stakeholders with opportunity so we continue performing our work with a laser focus on innovation, sustainability and excellence.

Let’s review some of the tremendous strides we made in fiscal 2012. We resolved litigation that limited production at our South Fort Meade phosphate mine in Florida. We now have access to our South Fort Meade resources which should result over phosphate production costs. We settled a dispute over a potash tolling agreement at our Esterhazy, Saskatchewan mine. Beginning in 2013, we will have an additional 1.3 million tonnes of potash peaking capacity to help meet our customers’ need.

We made important headway with our $6 billion potash expansion project. We’ve completed the K2 facility expansion at our Esterhazy mines and our Belle Plaine Phase I expansion. Our mill expansion at Colonsay is almost complete and K3 now bodes the tallest structure in Saskatchewan with the completion of our new headframe. We expect expansion process would generate over one million tonnes of new operational capacity in fiscal 2013.

We continued to operate with excellence, reducing production costs and increasing operating efficiency. As a result, we’re maintaining our low cost position in global phosphate manufacturing, improving potash recovery rates. We delivered our best safety year ever as we continued our relentless pursuit of an injury-free workplace. We made further advances in our steadfast commitments to sustainability and corporate responsibility. We were named to the S&P 500 Index, reflecting our position as one of the world’s largest company. And we continued to support our communities with target corporate giving, employee donations and volunteer work.

Mosaic’s progress in 2012 was bolstered by an increasingly strong financial foundation. We generated net sales of $11.1 billion, compared with $9.9 billion in 2011. Net earnings for the year were $1.9 billion compared with $2.5 billion in the previous year. And the earnings per share were $4.42 compared with $5.62 in 2011. While volatile markets can impact our business for short periods of time, our financials stream provides you resilience and flexibility. In the midst of our major investments to grow for the long-term, we were able to return significant capital to shareholders. The company purchased 21.3 million shares and increased its divided by 150% during fiscal 2012.

Mosaic announced additional dividend increase of $0.50 per share making a 400% total change since the beginning of calendar of 2012. Even after these investments in the business and shareholder distribution, our cash positions remains a source of strength with $3.6 billion as of August 31, 2012. Our successes were recognized externally in fiscal 2012. For the first time, Mosaic was included in the Ethisphere Institute’s list of World’s Most Ethical Companies. We’re the only crop nutrition company on that list. Ethisphere honors companies that promote ethical business standards and practices internally. Exceeds legal compliance minimums and shapes future industry standards.

In addition, for the third year in a row, Mosaic was named Corporate Responsibility Magazine list of the 100 Best Corporate Citizens. Mosaic was ranked number 28, up from 67 in 2011 in recognition of its conservation and environmental stewardship efforts as well as its financial and governance transparency. On Tuesday, we reported our first quarter results which were impacted by significant external challenges. Let’s just review a few of those numbers.

We reported operating earnings of $610 million, a net sales of $2.5 billion for the quarter. Potash business contributed $416 million, and the phosphate unit generated $208 million in operating earnings. In total, we reported earnings per share of $1.01. Again, we anticipate strong demand for our products in the remainder of fiscal 2013 and we feel great about the foundation we’ve built in eight years as a public company.

Our outlook for fiscal 2013 is positive. With this year smaller than expected global harvest driving commodity prices up and delivering strong economics for farmers. Ultimately these conditions will also drive demand for crop nutrients in. This is of course positive news for our industry and our stakeholders but it is not good news for global food security. This summer reminds us yet again that food security if very fragile. I’ll sum up with this because I believe the bear is repeating.

The world’s population, now just over seven billion people is expected to grow to nine billion people by 2050. Over the same period, globe’s farmland is expected to increase by only one percent, yet it must yield as much food in that time as it has over the last 8,000 years. The world’s farmers simply cannot meet the demand to outbalanced crop nutrition. Will they brings it to unique strength, a global reach, our innovation, our capital, our assets, to help farmers like the important challenge [ph].

Together we will make an important contribution to the world while delivering value to shareholder. Thank you.

Bob Lumpkins

Thanks very much, Jim. And now to the announcement of voting results. The polls have closed and the votes on the proposals have been calculated. Rich – Secretary, would you please go through results?

Rich Mark

Thank you Mr. Chairman. I have been informed by the inspector of the election that with respect to proposal number one, each of the Board nominees has received over 97% of the total votes cast in favor of his or her election to Mosaic’s Board. With respect to proposal number two, the ratification of the election of Mr. Mackay has been approved by more than 99% of the total shares voted. With respect to proposal number three, ratification of KPMG as Mosaic’s independent registered public accounting firm has been adopted by more than 99% of the total shares voted and that with respect to proposal number four, the advisory votes on executive compensation of Mosaic’s named executive officers as described in Mosaic’s proxy statement for this meeting has been approved by more than 97% of the total shares voted.

Bob Lumpkins

Thanks Rich. Based on the results, pleased to declare that each of myself, Mr. Cochran, Mr. Ebel, Mr. Monahan has been elected to the Board for a three year term. Ratification of Mr. MacKay’s election to the Board for one year has been approved. Appointment of KPMG as our independent registered accounting firm has been approved and the advisory vote on executive compensation. Final results will be recorded in the minutes of this meeting and the final calculation will also here in our Form 8K to be (inaudible).

Now that concludes the formal business for today, voting process. At this time, Jim and I would be pleased to respond to questions or comments, please ask to be recognized. Those who are webcasting this meeting coordinate with the microphone asking questions (inaudible) will bring a microphone to you. Is there any question?

Question-and-Answer Session

Unidentified Analyst

Question on how does the (inaudible).

Jim Prokopanko

Thank you, a good question, first one, easier than the second one. First is how is the growth going to impact Mosaic the year ahead. This was a searing drought, farmers were in drought central as well as Illinois, Indiana were really some places that devastated by the drought. With comes with drought, its higher grain prices, so we see first of all in general the average farm economy is pretty darn good in the U.S. and in Canada.

There are farmers that were really punished but overall we haven’t seen the USDA forecast is with strong farm income probably record farm income, also lot of meant it with high grain prices, oilseed prices and insurance payments in any cases. So the farmers do have capacity to invest in growing maximum yields next year. And at these grain prices when you have next year’s corn at $6 and beans around $13 farmers are going to be heavily intended to grow a big crop.

The question is how much nutrient is left in this soil and that those drought affected areas where there is limited crop, not much taken off. There was slightly some potash and phosphate left in the soil. Our belief is that farmers should do the soil test, understand what they have but our general assessment is that most of U.S. farm fields went into the year with deficit positions on phosphate and potash even with the reduced uptake, the drought affected areas, we think there is still economics and justification will increase and potash and phosphate sales.

Bottom line, we’ve been building areas of the country that are negatively impacted with fertilizer consumption Illinois, Indiana, parts of Iowa, Missouri definitely, but there is other parts of irrigated Nebraska, the Northwest Minnesota, North Dakota just kind of wonderful crops to the most part not everybody. So there is going to be – we expect that next year that it will be about a wash, demand will equal for this coming year what it was last year. Another element of that is going into spring of this year, it’s important to planting season.

Dealers emptied their warehouses. They didn’t want to take the risk of having fertilizer that might drop in value and if you recall in April and May, again a point drop 96, 97 million acres will be planting expectations to high yield. We saw grain prices and we’re prepared for corn prices $74 [ph]. Well that never emerged and what happened was the distribution pipeline in the U.S. was emptied.

The dealers have to reload, we have to ship. Even a farmer demand is a little less, we expect our sales to be little less than they were in the past. I hope that answered that question. On to the other of managing our areas of stakeholders, our principal stakeholder is our shareholder. We are responsible for investing our capital, generating maximum sustainable returns and then become sustainable with the various stakeholders who don’t want to take prices to a point that feels demand and reduces the sales at the same time we are making materials capital investment this year in between $1.5 billion and $1.7 billion, we need a return on that.

That will be about two years where we have over $1.5 billion being invested in our potash operations and our phosphate operations. We have to get a return on that. So the marketplace, if you can tell us what the price is going to be when we sell our products, that we have some influence but not a lot of influence that competition. And on the other side, how we deployed our capital, gets a lot of our attention. We are looking to returns that cover our cost to capital plus the risk premium and that risk premium will vary based on the risk factor of the project, the geography, the technology, the length of time to make that investments.

So it’s a number of elements coming and say this is the best place to do investor capital and we rank those investment alternatives and look to those that have the highest returns with the least risk and you just try to find that balance. It’s not a very precise start we don’t have an algorithm to say project rank order A, B and C. There is analysis that goes into it and then you’ve got (inaudible) end but we look at it beyond just this season or next year. If you are not aware, you should know that these potash investments we’re making the K3 shaft, we’re not going to get the first ton of oil with that shaft for five year. So here we’re going to invest, that project, it’s going to be approaching over $2 billion and its going to be five years before we start getting a return, so we have to look very long-term on our investment wide.

I hope this is not very maybe a very precise answer, but it’s best we can provide you.

Unidentified Analyst

Thanks.

Bob Lumpkins

Other questions? Over here to his right.

Jonathan Nash [ph]

The new fertilizer facility is going to be opened in North Dakota. What effect will that have on the nitrogen [ph]?

Jim Prokopanko

Jonathan, are you referring to the nitrogen plant?

Jonathan Nash

Right.

Jim Prokopanko

That’s being built?

Jonathan Nash

Yes.

Jim Prokopanko

Well that’s one of what’s now totaling about 13 announced nitrogen plant with capacity exceeding 10 million tonnes. That is – we’ll see what gets built. There is a bit of a gold rush mentality now. Tremendous returns, tremendous margins to producing anhydrous ammonia nitrogen products and the reason for that is you have very low natural gas prices relative to the next alternative which is Eastern European gas prices that’s about $8 in MMBTU, gas shale is $3.50 range. And the U.S. imports about half its nitrogen. Seven million tonnes of anhydrous ammonia is imported so that comes from, so that price is set by the highest price Eastern European.

Once we build more nitrogen plants in the U.S., once demand for natural gas builds at these prices, it will coal energy plants being converted to gas energy plants all sorts of energy dependent projects going to natural gas. We’re going to see – our belief gas prices are going to rise, that’s going to take five and seven years. You’re going to see many more nitrogen plants being build which is going to push gas prices up, so that one plant, that was the only plant that was going to be build, it had no impact.

One million tonnes is based on the seven million tonnes imports. We build 10 million tonnes of natural gas ammonia plants in this country, replaces seven million tonnes of imports. You’re going to see ammonia and nitrogen products, fertilizer products come down appreciably. There was just a huge margins in it. So Mosaic is looking at an opportunity to ourselves build an ammonia plant in the U.S., Southern U.S. to feed our phosphate manufacturing.

We consume about 1.5 million tonnes of ammonia a year, 500,000 we produce internally in our Louisiana facility. We buy a million tonnes on the market. So we are one of the announced ended 13 plants that are out there. So you could see that supply is going to catch up with demand and potentially exceed demand so it might feel good the first couple of years but we’re going to be in an oversupply situation I think would be very cheap nitrogen prices going forward. Other questions? Well, thank you.

Bob Lumpkins

Well this concludes Mosaic’s eighth Annual Meeting of Stockholders. Before we adjourn, I want to express my appreciation to all of you, whether here in person or via webcast for your continuing support and for joining us for today’s meeting. Also I’d like to thank Mosaic’s dedicated employees and Board members. Is there a motion to adjourn?

Unidentified Company Representative

So moved.

Bob Lumpkins

And is there a second?

Unidentified Company Representative

Second.

Bob Lumpkins

This meeting is now adjourned. Thank you very much.

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