##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-Q


|  |  |                                                                                            
|- |  | -------------------------------------------------------------------------------------------
|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31,
2005

OR

|  |  |                                                                                             
|- |  | --------------------------------------------------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-10351

POTASH CORPORATION OF SASKATCHEWAN
INC.

(Exact name of registrant as specified in its
charter)


|       |  |    
|------ |  | ---
|Canada |  | N/A

|                                |  |                    
|------------------------------- |  | -------------------
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

|                                |  |        
|------------------------------- |  | -------
|122  1st Avenue
    South      |  |        
|Saskatoon, Saskatchewan, Canada |  | S7K 7G3

|                                             |  |           
|-------------------------------------------- |  | ----------
|(Address of principal executive
    offices) |  | (Zip Code)

306-933-8500

(Registrants telephone number, including
area code)


Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past 90 days.

YES x              NO o

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Exchange Act
Rule 12b-2).

YES x              NO o

APPLICABLE ONLY TO CORPORATE
ISSUERS:

Indicate the number
of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.

As at
April 30, 2005, Potash Corporation of Saskatchewan Inc. had
110,564,048 Common Shares outstanding.





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TABLE OF CONTENTS



|                                                                        |                                              |  |  |  |  |  |  | 
|----------------------------------------------------------------------- | -------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                                          
|                                                                        | ITEM 1. FINANCIAL STATEMENTS                
|PART II. OTHER INFORMATION                                             
|                                                                        | ITEM 1. LEGAL PROCEEDINGS                   
|                                                                        | ITEM 2. ISSUER PURCHASE OF EQUITY SECURITIES
|2005 Performance Option Plan and Form of Option Agreement              
|Statement re Computation of Per Share Earnings                         
|Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



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##### Table of Contents






PART I.     FINANCIAL
INFORMATION






|        |                     
|------- | --------------------
|ITEM 1. | FINANCIAL STATEMENTS

Potash Corporation of Saskatchewan
Inc.

Consolidated Statements of Financial
Position

(in millions of US dollars except share
amounts)


(unaudited)


|                                                                 |                                                                                                                                                                              |           |         |              |  |   |         |       | 
|---------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ------- | ------------ |  | - | ------- | ----- | 
|                                                                 |                                                                                                                                                                              | March 31, |         | December 31,
|                                                                 |                                                                                                                                                                              | 2005      |         | 2004        
|                                                                
|                                                                
|Assets                                                           |                                                                                                                                                                              |           |         |              |  |   |         |      
|Current assets                                                   |                                                                                                                                                                              |           |         |              |  |   |         |      
|                                                                 | Cash and cash equivalents                                                                                                                                                    |           | $       | 479.0        |  |   | $       | 458.9 | 
|                                                                 | Accounts receivable                                                                                                                                                          |           |         | 409.2        |  |   |         | 352.6 | 
|                                                                 | Inventories (Note 3)                                                                                                                                                         |           |         | 402.9        |  |   |         | 396.8 | 
|                                                                 | Prepaid expenses and other current assets                                                                                                                                    |           |         | 41.5         |  |   |         | 35.3  | 
|                                                                
|                                                                 |                                                                                                                                                                              |           | 1,332.6 |              |  |   | 1,243.6 |      
|                                                                
|Property, plant and equipment                                    |                                                                                                                                                                              |           | 3,094.5 |              |  |   | 3,098.9 |      
|Other assets                                                     |                                                                                                                                                                              |           | 652.0   |              |  |   | 650.2   |      
|Intangible assets                                                |                                                                                                                                                                              |           | 36.1    |              |  |   | 37.1    |      
|Goodwill                                                         |                                                                                                                                                                              |           | 97.0    |              |  |   | 97.0    |      
|                                                                
|                                                                 |                                                                                                                                                                              | $         | 5,212.2 |              |  | $ | 5,126.8 |      
|                                                                
|                                                                
|Liabilities                                                      |                                                                                                                                                                              |           |         |              |  |   |         |      
|Current liabilities                                              |                                                                                                                                                                              |           |         |              |  |   |         |      
|                                                                 | Short-term debt                                                                                                                                                              |           | $       | 94.3         |  |   | $       | 93.5  | 
|                                                                 | Accounts payable and accrued charges                                                                                                                                         |           |         | 593.7        |  |   |         | 599.9 | 
|                                                                 | Current portion of long-term debt                                                                                                                                            |           |         | 10.2         |  |   |         | 10.3  | 
|                                                                
|                                                                 |                                                                                                                                                                              |           | 698.2   |              |  |   | 703.7   |      
|                                                                
|Long-term debt                                                   |                                                                                                                                                                              |           | 1,258.5 |              |  |   | 1,258.6 |      
|Future income tax liability                                      |                                                                                                                                                                              |           | 504.6   |              |  |   | 499.4   |      
|Accrued post-retirement/post-employment benefits                 |                                                                                                                                                                              |           | 212.1   |              |  |   | 193.4   |      
|Accrued environmental costs and asset retirement
    obligations |                                                                                                                                                                              |           | 82.0    |              |  |   | 81.2    |      
|Other non-current liabilities and deferred credits               |                                                                                                                                                                              |           | 6.6     |              |  |   | 4.9     |      
|                                                                
|                                                                 |                                                                                                                                                                              |           | 2,762.0 |              |  |   | 2,741.2 |      
|                                                                
|Contingencies and Guarantees(Notes 13 and 14,
    respectively)  |                                                                                                                                                                              |           |         |              |  |   |         |      
|Shareholders Equity                                             |                                                                                                                                                                              |           |         |              |  |   |         |      
|Share capital (Note 4)                                           |                                                                                                                                                                              |           | 1,441.6 |              |  |   | 1,408.4 |      
|                                                                 | Unlimited authorization of common shares without
    par value; issued and outstanding 110,748,102 and 110,630,503 at
    March 31, 2005 and December 31, 2004, respectively |           |         |              |  |   |         |       | 
|                                                                 | Unlimited authorization of first preferred
    shares; none outstanding                                                                                                      |           |         |              |  |   |         |       | 
|Contributed surplus                                              |                                                                                                                                                                              |           | 192.6   |              |  |   | 275.7   |      
|Retained earnings                                                |                                                                                                                                                                              |           | 816.0   |              |  |   | 701.5   |      
|                                                                
|                                                                 |                                                                                                                                                                              |           | 2,450.2 |              |  |   | 2,385.6 |      
|                                                                
|                                                                 |                                                                                                                                                                              | $         | 5,212.2 |              |  | $ | 5,126.8 |      
|                                                                

(See Notes to the Consolidated Financial
Statements)

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Potash Corporation of Saskatchewan
Inc.

Consolidated Statements of Operations and
Retained Earnings

(in millions of US dollars except
per-share amounts)


(unaudited)


|                                           |         |                    |       |      |  |   |       |      | 
|------------------------------------------ | ------- | ------------------ | ----- | ---- |  | - | ----- | ---- | 
|                                           |         |                   
|                                           |         | Three Months Ended
|                                           |         | March 31          
|                                           |         | 2005               |       | 2004
|                                          
|                                          
|Sales(Note 8)                              |         | $                  | 921.4 |      |  | $ | 728.4 |     
|Less: Freight                              |         |                    | 67.2  |      |  |   | 58.1  |     
|Transportation
    and distribution        |         |                    | 28.9  |      |  |   | 23.0  |     
|Cost of
    goods sold                     |         |                    | 566.8 |      |  |   | 523.3 |     
|                                          
|Gross Margin                               |         |                    | 258.5 |      |  |   | 124.0 |     
|                                          
|Selling and administrative                 |         |                    | 29.3  |      |  |   | 26.2  |     
|Provincial mining and other taxes          |         |                    | 38.4  |      |  |   | 15.1  |     
|Foreign exchange gain                      |         |                    | (5.9  | )    |  |   | (8.2  | )   
|Other income (Note 11)                     |         |                    | (20.0 | )    |  |   | (6.9  | )   
|                                          
|                                           |         |                    | 41.8  |      |  |   | 26.2  |     
|                                          
|Operating Income                           |         |                    | 216.7 |      |  |   | 97.8  |     
|Interest Expense                           |         |                    | 20.7  |      |  |   | 22.1  |     
|                                          
|Income Before Income Taxes                 |         |                    | 196.0 |      |  |   | 75.7  |     
|Income Taxes(Note 6)                       |         |                    | 64.7  |      |  |   | 25.0  |     
|                                          
|Net Income                                 |         |                    | 131.3 |      |  |   | 50.7  |     
|Retained Earnings, Beginning of
    Period |         |                    | 701.5 |      |  |   | 462.8 |     
|Dividends                                  |         |                    | (16.8 | )    |  |   | (13.5 | )   
|                                          
|Retained Earnings, End of Period           |         | $                  | 816.0 |      |  | $ | 500.0 |     
|                                          
|Net Income Per Share(Note 7)               |         |                    |       |      |  |   |       |     
|                                           | Basic   |                    | $     | 1.18 |  |   | $     | 0.48 | 
|                                           | Diluted |                    | $     | 1.15 |  |   | $     | 0.47 | 
|                                          
|Dividends Per Share                        |         | $                  | 0.15  |      |  | $ | 0.12  |     
|                                          

(See Notes to the Consolidated Financial
Statements)

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Potash Corporation of Saskatchewan
Inc.

Consolidated Statements of Cash Flow

(in millions of US dollars)


(unaudited)


|                                                             |                                                               |                    |       |       |   |   |        |       |  
|------------------------------------------------------------ | ------------------------------------------------------------- | ------------------ | ----- | ----- | - | - | ------ | ----- | -
|                                                             |                                                               |                   
|                                                             |                                                               | Three Months Ended
|                                                             |                                                               | March 31          
|                                                             |                                                               | 2005               |       | 2004 
|                                                            
|                                                            
|Operating Activities                                         |                                                               |                    |       |       |   |   |        |      
|Net income                                                   |                                                               | $                  | 131.3 |       |   | $ | 50.7   |      
|                                                            
|Items not affecting cash                                     |                                                               |                    |       |       |   |   |        |      
|                                                             | Depreciation and amortization                                 |                    |       | 59.6  |   |   |        | 59.7  |  
|                                                             | Stock-based compensation                                      |                    |       | 1.0   |   |   |        | 2.8   |  
|                                                             | Loss on disposal of long-term assets                          |                    |       | 2.0   |   |   |        |      |  
|                                                             | Foreign exchange on future income tax                         |                    |       | (1.2  | ) |   |        | (2.9  | )
|                                                             | Provision for future income tax                               |                    |       | 6.5   |   |   |        | 15.0  |  
|                                                             | Share of earnings of equity investees                         |                    |       | (13.1 | ) |   |        | (3.8  | )
|                                                             | Other long-term liabilities                                   |                    |       | 5.2   |   |   |        | 5.4   |  
|                                                            
|                                                             | Subtotal of items not affecting cash                          |                    |       | 60.0  |   |   |        | 76.2  |  
|                                                            
|Changes in non-cash operating working
    capital            |                                                               |                    |       |       |   |   |        |      
|                                                             | Accounts receivable                                           |                    |       | (63.5 | ) |   |        | 32.9  |  
|                                                             | Inventories                                                   |                    |       | (1.7  | ) |   |        | (26.6 | )
|                                                             | Prepaid expenses and other current assets                     |                    |       | (6.2  | ) |   |        | (11.3 | )
|                                                             | Accounts payable and accrued charges                          |                    |       | 7.4   |   |   |        | 9.5   |  
|                                                             | Current income taxes                                          |                    |       | (11.8 | ) |   |        | 2.9   |  
|                                                            
|                                                             | Subtotal of changes in non-cash operating
    working capital |                    |       | (75.8 | ) |   |        | 7.4   |  
|                                                            
|Cash provided by operating
    activities                    |                                                               |                    | 115.5 |       |   |   | 134.3  |      
|                                                            
|Investing Activities                                         |                                                               |                    |       |       |   |   |        |      
|Additions to property, plant and equipment                   |                                                               |                    | (56.8 | )     |   |   | (16.4  | )    
|Proceeds from disposal of long-term assets                   |                                                               |                    | 7.5   |       |   |   |       |      
|Proceeds from sale of shares of PCS Yumbes
    S.C.M.        |                                                               |                    | 5.2   |       |   |   |       |      
|Other assets and intangible assets                           |                                                               |                    | (0.1  | )     |   |   | 0.8    |      
|                                                            
|Cash used in investing activities                            |                                                               |                    | (44.2 | )     |   |   | (15.6  | )    
|                                                            
|Cash before financing activities                             |                                                               |                    | 71.3  |       |   |   | 118.7  |      
|                                                            
|Financing Activities                                         |                                                               |                    |       |       |   |   |        |      
|Repayment of long-term debt obligations                      |                                                               |                    | (0.2  | )     |   |   | (0.2   | )    
|Proceeds from (repayment of) short-term debt
    obligations |                                                               |                    | 0.8   |       |   |   | (118.3 | )    
|Dividends                                                    |                                                               |                    | (16.5 | )     |   |   | (13.5  | )    
|Repurchase of common shares                                  |                                                               |                    | (82.3 | )     |   |   |       |      
|Issuance of common shares                                    |                                                               |                    | 47.0  |       |   |   | 19.8   |      
|                                                            
|Cash used in financing activities                            |                                                               |                    | (51.2 | )     |   |   | (112.2 | )    
|                                                            
|Increase in Cash and Cash
    Equivalents                    |                                                               |                    | 20.1  |       |   |   | 6.5    |      
|Cash and Cash Equivalents, Beginning of
    Period           |                                                               |                    | 458.9 |       |   |   | 4.7    |      
|                                                            
|Cash and Cash Equivalents, End of
    Period                 |                                                               | $                  | 479.0 |       |   | $ | 11.2   |      
|                                                            
|Supplemental cash flow disclosure                            |                                                               |                    |       |       |   |   |        |      
|                                                             | Interest paid                                                 |                    | $     | 11.2  |   |   | $      | 13.4  |  
|                                                             | Income taxes paid                                             |                    | $     | 75.5  |   |   | $      | 6.2   |  
|                                                            

(See Notes to the Consolidated Financial
Statements)

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Potash Corporation of Saskatchewan
Inc.

Notes to the Consolidated Financial
Statements

For the Three Months Ended March 31,
2005


(in millions of US dollars except share and
per-share amounts)


(unaudited)




|   |                                
|-- | -------------------------------
|1. | Significant Accounting Policies

Basis of Presentation

With its subsidiaries, Potash Corporation of
Saskatchewan Inc. (PCS)  together known
as PotashCorp or the company except to
the extent the context otherwise requires  forms an
integrated fertilizer and related industrial and feed products
company. The companys accounting policies are in
accordance with accounting principles generally accepted in
Canada (Canadian GAAP). These policies are
consistent with accounting principles generally accepted in the
United States (US GAAP) except as outlined in
Note 15. The accounting policies used in preparing these
interim consolidated financial statements are consistent with
those used in the preparation of the 2004 annual consolidated
financial statements, except as disclosed in Note 2.

These interim consolidated financial statements
include the accounts of PCS and its subsidiaries; however, they
do not include all disclosures normally provided in annual
consolidated financial statements and should be read in
conjunction with the 2004 annual consolidated financial
statements. In managements opinion, the unaudited
financial statements include all adjustments (consisting solely
of normal recurring adjustments) necessary to present fairly
such information. Interim results are not necessarily indicative
of the results expected for the fiscal year.

Principles of Consolidation

The consolidated financial statements include the
accounts of the company and its principal operating subsidiaries:

 PCS
Sales (Canada) Inc.

 PCS
Joint Venture, L.P.


 PCS
Sales (USA), Inc.


 PCS
Phosphate Company, Inc.


 PCS
Purified Phosphates


 White
Springs Agricultural Chemicals, Inc. (White Springs)


 PCS
Nitrogen, Inc. (PCS Nitrogen)


 PCS
Nitrogen Fertilizer, L.P.


 PCS
Nitrogen Ohio, L.P.


 PCS
Nitrogen Trinidad Limited


 PCS
Cassidy Lake Company


 PCS
Fosfatos do Brasil Ltda.


Recent Accounting
Pronouncements

In January 2005, the CICA issued
Section 1530, Comprehensive Income,
Section 3251, Equity, Section 3855,
Financial Instruments  Recognition and
Measurement and Section 3865, Hedges. The
new standards increase harmonization with US GAAP and will
require the following:

Financial assets will be classified as either
held-to-maturity, held-for-trading or available-for-sale.
Held-to-maturity classification will be restricted to fixed
maturity instruments that the company intends and is able to
hold to maturity and will be accounted for at amortized cost.
Held-for-trading instruments will be recorded at fair value with
realized and unrealized gains and losses reported in net income.
The remaining financial assets will be classified as
available-for-sale. These will be recorded at fair value with
unrealized gains and losses reported in a new category in
shareholders equity called other comprehensive income
(OCI).

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Derivatives will be classified as
held-for-trading unless designated as hedging instruments. All
derivatives, including embedded derivatives that must be
separately accounted for, will be recorded at fair value on the
Consolidated Statement of Financial Position. For derivatives
that hedge the changes in fair value of an asset or liability,
changes in the derivatives fair value will be reported in
net income and substantially offset by changes in the fair value
of the hedged asset or liability attributable to the risk being
hedged. For derivatives that hedge variability in cash flows,
the effective portion of the changes in the derivatives
fair value will be initially recognized in OCI and the
ineffectiveness will be recorded in net income. The amounts
temporarily recorded in OCI will subsequently be reclassified to
net income in the periods net income is affected by the
variability in the cash flows of the hedged item.

The guidance will apply for interim and annual
financial statements relating to fiscal years beginning on or
after October 1, 2006. Earlier adoption will be permitted
only as of the beginning of a fiscal year. The impact of
implementing these new standards is not yet determinable as it
is highly dependent on fair values, outstanding positions and
hedging strategies at the time of adoption.



|   |                            
|-- | ---------------------------
|2. | Change in Accounting Policy

Consolidation of Variable Interest
Entities

Effective January 1, 2005, the company
adopted revised CICA Accounting Guideline 15
(AcG-15), Consolidation of Variable Interest
Entities. AcG-15 is harmonized in all material respects
with US GAAP and provides guidance for applying consolidation
principles to certain entities (defined as VIEs) that are
subject to control on a basis other than ownership of voting
interests. An entity is a VIE when, by design, one or both of
the following conditions exist: (a) total equity investment
at risk is insufficient to permit that entity to finance its
activities without additional subordinated support from other
parties; (b) as a group, the holders of the equity
investment at risk lack certain essential characteristics of a
controlling financial interest. AcG-15 requires consolidation by
a business of VIEs in which it is the primary beneficiary. The
primary beneficiary is defined as the party that has exposure to
the majority of the expected losses and/or expected residual
returns of the VIE. The adoption of this guideline did not have
a material impact on the consolidated financial statements.



|   |            
|-- | -----------
|3. | Inventories

|                       |  |           |       |              |  |   |       | 
|---------------------- |  | --------- | ----- | ------------ |  | - | ----- | 
|                       |  | March 31, |       | December 31,
|                       |  | 2005      |       | 2004        
|                      
|                      
|Finished product       |  | $         | 196.3 |              |  | $ | 181.8 | 
|Materials and supplies |  |           | 94.5  |              |  |   | 97.7  | 
|Raw materials          |  |           | 41.3  |              |  |   | 50.3  | 
|Work in process        |  |           | 70.8  |              |  |   | 67.0  | 
|                      
|                       |  | $         | 402.9 |              |  | $ | 396.8 | 
|                      



|   |              
|-- | -------------
|4. | Share Capital

On January 25, 2005, the Board of Directors
of PCS authorized a share repurchase program of up to
5.5 million common shares (approximately 5 percent of
the companys issued and outstanding common shares) through
a normal course issuer bid. Shares may be repurchased from time
to time on the open market through February 14, 2006 at
prevailing market prices. The timing and amount of purchases, if
any, under the program will be dependent upon the availability
and alternative uses of capital, market conditions and other
factors.

During the quarter, the company repurchased for
cancellation 1,134,200 common shares under the program, at a net
cost of $97.8 and an average price per share of $86.28. The
repurchases resulted in a reduction of share capital of $14.7,
and the excess net cost over the average book value of the
shares of $83.1 has been recorded as a reduction of contributed
surplus.

6



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|   |                       
|-- | ----------------------
|5. | Plant Shutdowns  2003

In June 2003, the company indefinitely shut down
its Memphis, Tennessee plant and suspended production of ammonia
and nitrogen solutions at its Geismar, Louisiana facilities due
to high US natural gas costs and low product margins. The
operations have not been restarted. The company determined that
all employee positions pertaining to the affected operations
would be eliminated, and recorded $4.8 in connection with costs
of special termination benefits in 2003. No significant payments
relating to the terminations remain to be made. Management
expects to incur other shutdown-related costs of approximately
$12.1 and nominal annual expenditures for site security and
other maintenance costs in relation to these nitrogen
facilities. The other shutdown-related costs have not been
recorded in the consolidated financial statements as of
March 31, 2005. Such costs will be recognized and recorded
in the period in which they are incurred.

The company also ceased operations at its
phosphate feed plant at Kinston, North Carolina in 2003. The
Kinston property was sold in 2004 for nominal proceeds.

No additional significant costs were incurred in
connection with the plant shutdowns in the first three months of
2005. The following table summarizes, by reportable segment, the
total costs incurred to date and the total costs expected to be
incurred in connection with the plant shutdowns described above:

|                                          |  |             |       |             |  |   |       | 
|----------------------------------------- |  | ----------- | ----- | ----------- |  | - | ----- | 
|                                          |  | Cumulative  |       | Total Costs
|                                          |  | Costs       |       | Expected   
|                                          |  | Incurred to |       | to be      
|                                          |  | Date        |       | Incurred   
|                                         
|                                         
|Nitrogen Segment                          |  |             |       |             |  |   |       | 
|Employee termination and related benefits |  | $           | 4.8   |             |  | $ | 4.8   | 
|Writedown of parts inventory              |  |             | 12.4  |             |  |   | 12.4  | 
|Asset impairment charges                  |  |             | 101.6 |             |  |   | 101.6 | 
|Other related exit costs                  |  |             |      |             |  |   | 12.1  | 
|                                         
|                                          |  |             | 118.8 |             |  |   | 130.9 | 
|                                         
|Phosphate Segment                         |  |             |       |             |  |   |       | 
|Employee termination and related benefits |  |             | 0.6   |             |  |   | 0.6   | 
|Writedown of parts inventory              |  |             | 0.3   |             |  |   | 0.3   | 
|Asset impairment charges                  |  |             | 4.0   |             |  |   | 4.0   | 
|                                         
|                                          |  |             | 4.9   |             |  |   | 4.9   | 
|                                         
|                                          |  | $           | 123.7 |             |  | $ | 135.8 | 
|                                         



|   |             
|-- | ------------
|6. | Income Taxes

The companys consolidated income tax rate
for the three month period ended March 31, 2005
approximates 33 percent (2004  33 percent).



|   |                     
|-- | --------------------
|7. | Net Income Per Share

Basic net income per share for the quarter is
calculated on the weighted average number of shares issued and
outstanding for the three months ended March 31, 2005 of
111,110,000 (2004  106,686,000). Diluted net income
per share is calculated based on the weighted average number of
shares issued and outstanding during the period. The denominator
is: (i) increased by the total of the additional common
shares that would have been issued assuming exercise of all
stock options with exercise prices at or below the average
market price for the period; and (ii) decreased by the
number of shares that the company could have repurchased if it
had used the assumed proceeds from the exercise of stock options
to repurchase them on the open market at the average share price
for the period. The weighted average number of shares
outstanding for the diluted net income per share calculation for
the three months ended March 31, 2005 was 114,265,000
(2004  108,046,000).

7



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##### Table of Contents





|   |                    
|-- | -------------------
|8. | Segment Information

The company has three reportable business
segments: potash, phosphate and nitrogen. These business
segments are differentiated by the chemical nutrient contained
in the product that each produces. Inter-segment sales are made
under terms which approximate market value. The accounting
policies of the segments are the same as those described in
Note 1.

|                                |  |                                   |       |           |  |          |       |            |  |              |       |  |  |   |     |  |  |   |       | 
|------------------------------- |  | --------------------------------- | ----- | --------- |  | -------- | ----- | ---------- |  | ------------ | ----- |  |  | - | --- |  |  | - | ----- | 
|                                |  |                                  
|                                |  | Three Months Ended March 31, 2005
|                                |  | Potash                            |       | Phosphate |  | Nitrogen |       | All Others |  | Consolidated
|                               
|                               
|Sales                           |  | $                                 | 352.1 |           |  | $        | 264.5 |            |  | $            | 304.8 |  |  | $ |    |  |  | $ | 921.4 | 
|Freight                         |  |                                   | 37.2  |           |  |          | 19.8  |            |  |              | 10.2  |  |  |   |    |  |  |   | 67.2  | 
|Transportation and distribution |  |                                   | 9.1   |           |  |          | 8.1   |            |  |              | 11.7  |  |  |   |    |  |  |   | 28.9  | 
|Net sales  third party         |  |                                   | 305.8 |           |  |          | 236.6 |            |  |              | 282.9 |  |  |   |    |  |  |   |       | 
|Cost of goods sold              |  |                                   | 129.6 |           |  |          | 219.6 |            |  |              | 217.6 |  |  |   |    |  |  |   | 566.8 | 
|Gross margin                    |  |                                   | 176.2 |           |  |          | 17.0  |            |  |              | 65.3  |  |  |   |    |  |  |   | 258.5 | 
|Depreciation and amortization   |  |                                   | 18.1  |           |  |          | 22.1  |            |  |              | 17.1  |  |  |   | 2.3 |  |  |   | 59.6  | 
|Inter-segment sales             |  |                                   | 2.0   |           |  |          | 4.2   |            |  |              | 19.8  |  |  |   |    |  |  |   |      | 

|                                |  |                                   |       |           |  |          |       |            |  |              |       |  |  |   |     |  |  |   |       | 
|------------------------------- |  | --------------------------------- | ----- | --------- |  | -------- | ----- | ---------- |  | ------------ | ----- |  |  | - | --- |  |  | - | ----- | 
|                                |  |                                  
|                                |  | Three Months Ended March 31, 2004
|                                |  | Potash                            |       | Phosphate |  | Nitrogen |       | All Others |  | Consolidated
|                               
|                               
|Sales                           |  | $                                 | 223.7 |           |  | $        | 217.6 |            |  | $            | 287.1 |  |  | $ |    |  |  | $ | 728.4 | 
|Freight                         |  |                                   | 33.5  |           |  |          | 15.7  |            |  |              | 8.9   |  |  |   |    |  |  |   | 58.1  | 
|Transportation and distribution |  |                                   | 8.7   |           |  |          | 5.3   |            |  |              | 9.0   |  |  |   |    |  |  |   | 23.0  | 
|Net sales  third party         |  |                                   | 181.5 |           |  |          | 196.6 |            |  |              | 269.2 |  |  |   |    |  |  |   |       | 
|Cost of goods sold              |  |                                   | 114.8 |           |  |          | 197.5 |            |  |              | 211.0 |  |  |   |    |  |  |   | 523.3 | 
|Gross margin                    |  |                                   | 66.7  |           |  |          | (0.9  | )          |  |              | 58.2  |  |  |   |    |  |  |   | 124.0 | 
|Depreciation and amortization   |  |                                   | 16.9  |           |  |          | 20.5  |            |  |              | 19.9  |  |  |   | 2.4 |  |  |   | 59.7  | 
|Inter-segment sales             |  |                                   | 2.9   |           |  |          | 3.1   |            |  |              | 21.8  |  |  |   |    |  |  |   |      | 



|   |                         
|-- | ------------------------
|9. | Stock-based Compensation

The company has two stock option plans. Prior to
2003, the company applied the intrinsic value based method of
accounting for the plans.

Effective December 15, 2003, the company
adopted the fair value based method of accounting for stock
options prospectively to all employee awards granted, modified
or settled after January 1, 2003. Since the companys
stock option awards vest over two years, the compensation cost
included in the determination of net income for the first
quarter of 2004 is less than that which would have been
recognized if the fair value based method had been applied to
all awards since the original effective date of CICA
Section 3870, Stock-based Compensation and Other
Stock-based Payments. The following table illustrates the
effect on net income and the related per-share amount if the
fair value based method had been applied to all outstanding and
unvested awards in each period.

|                          |  |                                                                                                                                                    |       |                    |      |      |      |  |      |  
|------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------- | ----- | ------------------ | ---- | ---- | ---- |  | ---- | -
|                          |  |                                                                                                                                                    |       |                   
|                          |  |                                                                                                                                                    |       | Three Months Ended
|                          |  |                                                                                                                                                    |       | March 31          
|                          |  |                                                                                                                                                    |       | 2005               |      | 2004
|                         
|                         
|Net income  as reported  |  | $                                                                                                                                                  | 131.3 |                    |      | $    | 50.7 | 
|Add:                      |  | Stock-based employee compensation expense
    included in reported net income, net of related tax effects                                          |       |                    | 0.7  |      |      |  | 2.2  |  
|Less:                     |  | Total stock-based employee compensation expense
    determined under fair value based method for all option awards,
    net of related tax effects |       |                    | (0.7 | )    |      |  | (3.2 | )
|                         
|Net income  pro forma(1) |  | $                                                                                                                                                  | 131.3 |                    |      | $    | 49.7 | 
|                         

|    |                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Compensation expense under the fair value method
    is recognized over the vesting period of the related stock
    options. Accordingly, the pro forma results of applying this
    method may not be indicative of future results.

8



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##### Table of Contents



|                             |             |                    |   |      |  |  |   |      | 
|---------------------------- | ----------- | ------------------ | - | ---- |  |  | - | ---- | 
|                             |             |                   
|                             |             | Three Months Ended
|                             |             | March 31          
|                             |             | 2005               |   | 2004
|                            
|                            
|Basic net income per share   |             |                    |   |      |  |  |   |     
|                             | As reported |                    | $ | 1.18 |  |  | $ | 0.48 | 
|                             | Pro forma   |                    | $ | 1.18 |  |  | $ | 0.47 | 
|                            
|Diluted net income per share |             |                    |   |      |  |  |   |     
|                             | As reported |                    | $ | 1.15 |  |  | $ | 0.47 | 
|                             | Pro forma   |                    | $ | 1.15 |  |  | $ | 0.46 | 

In calculating the foregoing pro forma amounts,
the fair value of each option grant was estimated as of the date
of grant using the Modified Black-Scholes option-pricing model
with the following weighted average assumptions:

|                         |  |               |          |      |  |   |          | 
|------------------------ |  | ------------- | -------- | ---- |  | - | -------- | 
|                         |  |              
|                         |  | Year of Grant
|                         |  | 2003          |          | 2002
|                        
|                        
|Expected dividend        |  | $             | 0.50     |      |  | $ | 0.50     | 
|Expected volatility      |  |               | 27%      |      |  |   | 32%      | 
|Risk-free interest rate  |  |               | 4.06%    |      |  |   | 4.13%    | 
|Expected life of options |  |               | 8  years |      |  |   | 8  years | 
|Expected forfeitures     |  |               | 16%      |      |  |   | 10%      | 

The company did not grant any stock options
during 2004 or in the first quarter of 2005.



|    |                                              
|--- | ---------------------------------------------
|10. | Post-Retirement/ Post-Employment
    Expenses

Defined Benefit Pension Plans

|                               |  |                    |      |      |  |   |      |  
|------------------------------ |  | ------------------ | ---- | ---- |  | - | ---- | -
|                               |  |                   
|                               |  | Three Months Ended
|                               |  | March 31          
|                               |  | 2005               |      | 2004
|                              
|                              
|Service cost                   |  | $                  | 3.6  |      |  | $ | 3.5  |  
|Interest cost                  |  |                    | 7.8  |      |  |   | 7.5  |  
|Expected return on plan assets |  |                    | (8.9 | )    |  |   | (8.4 | )
|Net amortization               |  |                    | 1.7  |      |  |   | 1.1  |  
|                              
|Net expense                    |  | $                  | 4.2  |      |  | $ | 3.7  |  
|                              

Other Post-Retirement Plans

|                 |  |                    |     |      |  |   |     | 
|---------------- |  | ------------------ | --- | ---- |  | - | --- | 
|                 |  |                   
|                 |  | Three Months Ended
|                 |  | March 31          
|                 |  | 2005               |     | 2004
|                
|                
|Service cost     |  | $                  | 1.4 |      |  | $ | 1.4 | 
|Interest cost    |  |                    | 3.3 |      |  |   | 3.5 | 
|Net amortization |  |                    | 0.4 |      |  |   | 0.4 | 
|                
|Net expense      |  | $                  | 5.1 |      |  | $ | 5.3 | 
|                

For the three months ended March 31, 2005,
the company contributed $2.8 to its defined benefit pension
plans and $2.3 to its other post-retirement plans. Total 2005
contributions to these and the companys defined
contribution savings plans are not expected to differ
significantly from the amounts previously disclosed in the
consolidated financial statements for the year ended
December 31, 2004.

9



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|    |             
|--- | ------------
|11. | Other Income

|                                      |  |                    |      |      |  |   |     | 
|------------------------------------- |  | ------------------ | ---- | ---- |  | - | --- | 
|                                      |  |                   
|                                      |  | Three Months Ended
|                                      |  | March 31          
|                                      |  | 2005               |      | 2004
|                                     
|                                     
|Share of earnings of equity investees |  | $                  | 13.1 |      |  | $ | 3.8 | 
|Dividend income                       |  |                    | 3.1  |      |  |   |    | 
|Other                                 |  |                    | 3.8  |      |  |   | 3.1 | 
|                                     
|                                      |  | $                  | 20.0 |      |  | $ | 6.9 | 
|                                     



|    |            
|--- | -----------
|12. | Seasonality

The companys sales of fertilizer can be
seasonal. Typically, the second quarter of the year is when
fertilizer sales will be highest, due to the North American
spring planting season. However, planting conditions and the
timing of customer purchases will vary each year and sales can
be expected to shift from one quarter to another.



|    |              
|--- | -------------
|13. | Contingencies

Canpotex

PotashCorp is a shareholder in Canpotex which
markets potash offshore. Should any operating losses or other
liabilities be incurred by Canpotex, the shareholders have
contractually agreed to reimburse Canpotex for such losses or
liabilities in proportion to their productive capacity. There
were no such operating losses or other liabilities during the
first three months of 2005.

Mining Risk

In common with other companies in the industry,
the company is unable to acquire insurance for underground
assets.

Investment in APC

The terms of a shareholders agreement with Jordan
Investment Company (JIC) provide that, from
October 17, 2006 to October 16, 2009, JIC may seek to
exercise a put option (the Put) to require the
company to purchase JICs remaining common shares in Arab
Potash Company (APC). If the Put were exercised, the
companys purchase price would be calculated in accordance
with a specified formula based, in part, on future earnings of
APC. The amount, if any, which the company may have to pay for
JICs remaining common shares if there was to be a valid
exercise of the Put is not presently determinable.

Legal and Other Matters

In 1998, the company, along with other parties,
was notified by the US Environmental Protection Agency
(USEPA) of potential liability under the US federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980 (CERCLA) with respect to certain soil
and groundwater conditions at a PCS Joint Venture blending
facility in Lakeland, Florida and certain adjoining property. In
1999, PCS Joint Venture signed an Administrative Order on
Consent with USEPA pursuant to which PCS Joint Venture agreed to
conduct a Remedial Investigation and Feasibility Study
(RI/FS) of these conditions. PCS Joint Venture and
another party are sharing the costs of the RI/FS. The draft
feasibility study has been submitted for review and approval,
and selection of a remedy is projected to occur some time in
2005. No final determination has yet been made of the nature,
timing or cost of remedial action that may be needed, nor to
what extent costs incurred may be recoverable from third parties.

In 1994, PCS Joint Venture responded to
information requests from the USEPA and the Georgia Department
of Natural Resources, Environmental Protection Division
(GEPD), regarding conditions at its Moultrie,
Georgia location. PCS Joint Venture believes that the
lead-contaminated soil and groundwater found at the site is
attributable to former operations at the site prior to PCS Joint
Ventures ownership. PCS Joint Venture initially

10



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##### Table of Contents



submitted a proposed Corrective Action Plan to
GEPD in 1999, which has now been revised several times in
response to GEPD comments. PCS Joint Venture has also conducted
and submitted an assessment of the site. Based on its review of
the assessment and the Corrective Action Plan, GEPD has
expressed its opinion that remediation of the site will require
some excavation and off-site disposal of impacted soil and
installation of a groundwater recovery and treatment system. The
company has continued discussions with GEPD regarding a remedial
plan for the site.


In March 2005, the USEPA released for public
comment a range of remedial alternatives and a proposed remedy
for the Columbia Nitrogen site in Charleston, South Carolina.
PCS Nitrogen will continue to monitor these and other
developments with respect to the Columbia Nitrogen site. In
2003, USEPA notified PCS Nitrogen that it considers PCS Nitrogen
to be a potentially responsible party with respect to this site.
PCS Nitrogen will continue to assert to USEPA and others its
position that it is not a responsible party and to work to
identify former site owners and operators who would be
responsible parties with respect to the site. The company is
also engaged in ongoing site assessment and/or remediation
activities at a number of other facilities and sites. Based on
current information, it believes that its future obligations
with respect to these facilities and sites will not have a
material adverse effect on the companys consolidated
financial position or results of operations.

The breadth of the companys operations and
the global complexity of tax regulations require assessments of
uncertainties and judgments in estimating the ultimate taxes the
company will pay. The final taxes paid are dependent upon many
factors, including negotiations with taxing authorities in
various jurisdictions, outcomes of tax litigation and resolution
of disputes arising from federal, provincial, state and local
tax audits. The resolution of these uncertainties and the
associated final taxes may result in adjustments to the
companys tax assets and tax liabilities.

Various other claims and lawsuits are pending
against the company in the ordinary course of business. While it
is not possible to determine the ultimate outcome of such
actions at this time, and there exist inherent uncertainties in
predicting such outcomes, it is managements belief that
the ultimate resolution of such actions will not have a material
adverse effect on the companys consolidated financial
position or results of operations.



|    |           
|--- | ----------
|14. | Guarantees

In the normal course of operations, the company
provides indemnifications that are often standard contractual
terms to counterparties in transactions such as purchase and
sale contracts, service agreements, director/officer contracts
and leasing transactions. These indemnification agreements may
require the company to compensate the counterparties for costs
incurred as a result of various events, including environmental
liabilities and changes in (or in the interpretation of) laws
and regulations, or as a result of litigation claims or
statutory sanctions that may be suffered by the counterparty as
a consequence of the transaction. The terms of these
indemnification agreements will vary based upon the contract,
the nature of which prevents the company from making a
reasonable estimate of the maximum potential amount that it
could be required to pay to counterparties. Historically, the
company has not made any significant payments under such
indemnifications and no amounts have been accrued in the
accompanying consolidated financial statements with respect to
these indemnification guarantees.

The company enters into agreements in the normal
course of business that may contain features which meet the
definition of a guarantee. Various debt obligations (such as
overdrafts, lines of credit with counterparties for derivatives,
and back-to-back loan arrangements) and other commitments (such
as railcar leases) related to certain subsidiaries have been
directly guaranteed by the company under such agreements with
third parties. The company would be required to perform on these
guarantees in the event of default by the guaranteed parties. No
material loss is anticipated by reason of such agreements and
guarantees. At March 31, 2005, the maximum potential amount
of future (undiscounted) payments under significant guarantees
provided to third parties approximated $208.2, representing the
maximum risk of loss if there were a total default by the
guaranteed parties, without consideration of possible recoveries
under recourse provisions or from collateral held or pledged. At
March 31, 2005, no subsidiary balances subject to
guarantees were outstanding in connection with the
companys cash management facilities, and the company had
no liabilities recorded for other obligations other than
subsidiary bank borrowings of approximately $5.9, which are
reflected in other long-term debt and cash

11



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##### Table of Contents



margins held of approximately $52.7 to maintain
derivatives, which are included in accounts payable and accrued
charges.


The company has guaranteed the gypsum stack
capping, closure and post-closure obligations of White Springs
and PCS Nitrogen, in Florida and Louisiana, respectively,
pursuant to the financial assurance regulatory requirements in
those states. The State of Florida is presently reviewing, and
is expected to revise, its financial assurance requirements to
ensure that responsible parties have sufficient resources to
cover all closure and post-closure costs and liabilities
associated with gypsum stacks. This review may result in the
imposition of more stringent requirements to demonstrate
financial responsibility and/or inclusion of a greater scope of
closure and post-closure costs than under current law.

The environmental regulations of the Province of
Saskatchewan require each potash mine to have decommissioning
and reclamation (D&R) plans. In 2001, agreement
was reached with the provincial government on the financial
assurances for the D&R plan to cover an interim period to
July 1, 2005. In October 2004, this interim period was
extended to July 1, 2006. A government/industry task force
has been established to assess decommissioning options for all
Saskatchewan potash producers and to produce mutually acceptable
revisions to the plan schedules. The company has posted a
Cdn $2.0 letter of credit as collateral that will remain in
effect until the revised plans are accepted.

During the period, the company entered into
various other commercial letters of credit in the normal course
of operations.

The company expects that it will be able to
satisfy all applicable credit support requirements without
disrupting normal business operations.



|    |                                                                                          
|--- | -----------------------------------------------------------------------------------------
|15. | Reconciliation of Canadian and United States
    Generally Accepted Accounting Principles

Canadian GAAP varies in certain significant
respects from US GAAP. As required by the United States
Securities and Exchange Commission (SEC), the effect
of these principal differences on the companys interim
consolidated financial statements is described and quantified
below. For a complete discussion of US and Canadian GAAP
differences, see Note 36 to the consolidated financial
statements for the year ended December 31, 2004 in the
companys 2004 Annual Report.

Long-term
investments:The companys
investment in Israel Chemicals Ltd. (ICL) is stated
at cost. US GAAP requires that this investment be
classified as available-for-sale and be stated at market value
with the difference between market value and cost reported as a
component of OCI.

Property, plant and equipment and
goodwill:The net book value of
property, plant and equipment and goodwill under Canadian GAAP
is higher than under US GAAP, as past provisions for asset
impairment under Canadian GAAP were measured based on the
undiscounted cash flow from use together with the residual value
of the assets. Under US GAAP they were measured based on
fair value, which was lower than the undiscounted cash flow from
use together with the residual value of the assets. Fair value
for this purpose was determined based on discounted expected
future net cash flows.

Depreciation and
amortization:Depreciation and
amortization under Canadian GAAP is higher than under
US GAAP, as a result of differences in the carrying amounts
of property, plant and equipment and goodwill under Canadian and
US GAAP.

Asset retirement
obligations:The company adopted
SFAS No. 143, Accounting for Asset Retirement
Obligations, for US GAAP purposes effective
January 1, 2003. The equivalent Canadian standard was not
adopted until January 1, 2004.

Post-retirement and post-employment
benefits:Under Canadian GAAP, when a
defined benefit plan gives rise to an accrued benefit asset, a
company must recognize a valuation allowance for the excess of
the adjusted benefit asset over the expected future benefit to
be realized from the plan asset. Changes in the pension
valuation allowance are recognized in income. US GAAP does
not specifically address pension valuation allowances, and the
US regulators have interpreted this to be a difference between
Canadian and US GAAP. In

12



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##### Table of Contents



light of these developments, a difference between
Canadian and US GAAP has been recorded for the effects of
recognizing a pension valuation allowance and the changes
therein under Canadian GAAP.


The companys accumulated benefit obligation
for its US pension plans exceeds the fair value of plan assets.
US GAAP requires the recognition of an additional minimum
pension liability in the amount of the excess of the unfunded
accumulated benefit obligation over the recorded pension
benefits liability. An offsetting intangible asset is recorded
equal to the unrecognized prior service costs, with any
difference recorded as a reduction of accumulated OCI. No
similar requirement exists under Canadian GAAP.

Foreign currency translation
adjustment:The company adopted the US
dollar as its functional and reporting currency on
January 1, 1995. At that time, the consolidated financial
statements were translated into US dollars at the
December 31, 1994 year-end exchange rate using the
translation of convenience method under Canadian GAAP. This
translation method was not permitted under US GAAP.
US GAAP required the comparative Consolidated Statements of
Income and Consolidated Statements of Cash Flow to be translated
at applicable weighted-average exchange rates; whereas, the
Consolidated Statements of Financial Position were permitted to
be translated at the December 31, 1994 year-end
exchange rate. The use of disparate exchange rates under
US GAAP gave rise to a foreign currency translation
adjustment. Under US GAAP, this adjustment is reported as a
component of accumulated OCI.

Derivative instruments and hedging
activities:Under Canadian GAAP,
derivatives used for non-trading purposes that do not qualify
for hedge accounting are carried at fair value on the
Consolidated Statements of Financial Position, with changes in
fair value reflected in earnings. Derivatives embedded within
instruments are generally not separately accounted for except
for those related to equity-linked deposit contracts, which are
not applicable to the company. Gains and losses on derivative
instruments held within an effective hedge relationship are
recognized in earnings on the same basis and in the same period
as the underlying hedged items. There is no difference in
accounting between Canadian and US GAAP in respect of
derivatives that do not qualify for hedge accounting. Unlike
Canadian GAAP, however, the company recognizes all of its
derivative instruments (whether designated in hedging
relationships or not, or embedded within hybrid instruments) at
fair value on the Consolidated Statements of Financial Position
for US GAAP purposes. Under US GAAP, the accounting
for changes in the fair value (i.e. gains or losses) of a
derivative instrument depends on whether it has been designated
and qualifies as part of a hedging relationship. For strategies
designated as fair value hedges, the effective portion of the
change in the fair value of the derivative is offset in income
against the change in fair value, attributed to the risk being
hedged, of the underlying hedged asset, liability or firm
commitment. For cash flow hedges, the effective portion of the
changes in the fair value of the derivative is accumulated in
OCI until the variability in cash flows being hedged is
recognized in earnings in future accounting periods. For both
fair value and cash flow hedges, if a derivative instrument is
designated as a hedge and meets the criteria for hedge
effectiveness, earnings offset is available, but only to the
extent that the hedge is effective. Ineffective portions of fair
value or cash flow hedges are recorded in earnings in the
current period.

Comprehensive
income:Comprehensive income is
recognized and measured under US GAAP pursuant to
SFAS No. 130 Reporting Comprehensive
Income. This standard defines comprehensive income as all
changes in equity other than those resulting from investments by
owners and distributions to owners. Comprehensive income is
comprised of two components, net income and OCI. OCI refers to
amounts that are recorded as an element of shareholders
equity but are excluded from net income because these
transactions or events were attributed to changes from non-owner
sources. As described in Note 1, Canadian standards
relating to comprehensive income are not effective until fiscal
years beginning on or after October 1, 2006.

Income taxes:The
income tax adjustment reflects the impact on income taxes of the
US GAAP adjustments described above. Accounting for income
taxes under Canadian and US GAAP is similar, except that
income tax rates of enacted or substantively enacted tax law
must be used to calculate future income tax assets and
liabilities under Canadian GAAP; whereas only income tax rates
of enacted tax law can be used under US GAAP.

Cash flow
statements:US GAAP does not
permit the use of certain subtotals within the classification of
cash provided by operating activities, nor does it permit the
subtotal of cash before financing activities.

13



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##### Table of Contents



The application of US GAAP, as described
above, would have had the following effects on net income, net
income per share, total assets and shareholders equity.
All share and per-share data have been retroactively adjusted to
reflect the stock split described in Note 16.

|                                                   |                                                             |                    |             |      |   |   |             |      |  
|-------------------------------------------------- | ----------------------------------------------------------- | ------------------ | ----------- | ---- | - | - | ----------- | ---- | -
|                                                   |                                                             |                   
|                                                   |                                                             | Three Months Ended
|                                                   |                                                             | March 31          
|                                                   |                                                             | 2005               |             | 2004
|                                                  
|                                                  
|Net income as reported  Canadian GAAP             |                                                             | $                  | 131.3       |      |   | $ | 50.7        |     
|Items increasing or decreasing reported net income |                                                             |                    |             |      |   |   |             |     
|                                                   | Cash flow hedge ineffectiveness                             |                    |             | 0.2  |   |   |             |     |  
|                                                   | Depreciation and amortization                               |                    |             | 2.1  |   |   |             | 2.1  |  
|                                                   | Accretion of asset retirement obligations                   |                    |             |     |   |   |             | 3.3  |  
|                                                   | Deferred income taxes relating to the above
    adjustments |                    |             | (0.7 | ) |   |             | (2.0 | )
|                                                  
|Net income  US GAAP                               |                                                             | $                  | 132.9       |      |   | $ | 54.1        |     
|                                                  
|Weighted average shares outstanding 
    US GAAP  |                                                             |                    | 111,110,000 |      |   |   | 106,686,000 |     
|                                                  
|Basic net income per share  US GAAP               |                                                             | $                  | 1.20        |      |   | $ | 0.51        |     
|                                                  
|Diluted net income per share  US GAAP             |                                                             | $                  | 1.16        |      |   | $ | 0.50        |     
|                                                  

|                                                        |                                                                       |           |         |              |   |   |         |        |  
|------------------------------------------------------- | --------------------------------------------------------------------- | --------- | ------- | ------------ | - | - | ------- | ------ | -
|                                                        |                                                                       | March 31, |         | December 31,
|                                                        |                                                                       | 2005      |         | 2004        
|                                                       
|                                                       
|Total assets as reported  Canadian GAAP                |                                                                       | $         | 5,212.2 |              |   | $ | 5,126.8 |       
|Items increasing (decreasing) reported total
    assets |                                                                       |           |         |              |   |   |         |       
|                                                        | Inventory                                                             |           |         | 4.0          |   |   |         | (3.0   | )
|                                                        | Other current assets                                                  |           |         | 2.8          |   |   |         | 2.6    |  
|                                                        | Available-for-sale securities (unrealized holding
    gain)           |           |         | 204.2        |   |   |         | 161.7  |  
|                                                        | Fair value of derivative instruments                                  |           |         | 143.5        |   |   |         | 66.5   |  
|                                                        | Property, plant and equipment                                         |           |         | (124.4       | ) |   |         | (126.5 | )
|                                                        | Post-retirement and post-employment benefits                          |           |         | 11.7         |   |   |         | 11.7   |  
|                                                        | Intangible asset relating to additional minimum
    pension liability |           |         | 9.6          |   |   |         | 9.6    |  
|                                                        | Goodwill                                                              |           |         | (46.7        | ) |   |         | (46.7  | )
|                                                       
|Total assets  US GAAP                                  |                                                                       | $         | 5,416.9 |              |   | $ | 5,202.7 |       
|                                                       

|                                                                |                                                                         |           |         |              |   |   |         |        |  
|--------------------------------------------------------------- | ----------------------------------------------------------------------- | --------- | ------- | ------------ | - | - | ------- | ------ | -
|                                                                |                                                                         | March 31, |         | December 31,
|                                                                |                                                                         | 2005      |         | 2004        
|                                                               
|                                                               
|Total shareholders equity as
    reported  Canadian GAAP      |                                                                         | $         | 2,450.2 |              |   | $ | 2,385.6 |       
|Items increasing (decreasing) reported
    shareholders equity |                                                                         |           |         |              |   |   |         |       
|                                                                | Accumulated other comprehensive income, net of
    related income taxes |           |         | 182.4        |   |   |         | 96.8   |  
|                                                                | Foreign currency translation adjustment                                 |           |         | 20.9         |   |   |         | 20.9   |  
|                                                                | Provision for asset impairment                                          |           |         | (218.0       | ) |   |         | (218.0 | )
|                                                                | Depreciation and amortization                                           |           |         | 46.9         |   |   |         | 44.8   |  
|                                                                | Cash flow hedge ineffectiveness                                         |           |         | 2.8          |   |   |         | 2.6    |  
|                                                                | Post-retirement and post-employment benefits                            |           |         | 11.7         |   |   |         | 11.7   |  
|                                                                | Deferred income taxes relating to the above
    adjustments             |           |         | 29.7         |   |   |         | 30.4   |  
|                                                               
|Shareholders equity  US GAAP                                  |                                                                         | $         | 2,526.6 |              |   | $ | 2,374.8 |       
|                                                               

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##### Table of Contents



|                               |                                                                              |                    |       |       |   |   |      |       |  
|------------------------------ | ---------------------------------------------------------------------------- | ------------------ | ----- | ----- | - | - | ---- | ----- | -
|                               |                                                                              |                   
|                               |                                                                              | Three Months Ended
|                               |                                                                              | March 31          
|                               |                                                                              | 2005               |       | 2004 
|                              
|                              
|Net income  US GAAP           |                                                                              | $                  | 132.9 |       |   | $ | 54.1 |      
|                              
|Other comprehensive income     |                                                                              |                    |       |       |   |   |      |      
|                               | Change in unrealized holding gain on
    available-for-sale securities       |                    |       | 42.4  |   |   |      | 26.1  |  
|                               | Change in gains and losses on derivatives
    designated as cash flow hedges |                    |       | 94.0  |   |   |      | 23.2  |  
|                               | Reclassification to income of gains and losses on
    cash flow hedges       |                    |       | (8.6  | ) |   |      | (10.5 | )
|                               | Deferred income taxes related to other
    comprehensive income              |                    |       | (42.2 | ) |   |      | (12.8 | )
|                              
|                               | Other comprehensive income, net of related income
    taxes                  |                    |       | 85.6  |   |   |      | 26.0  |  
|                              
|Comprehensive income  US GAAP |                                                                              | $                  | 218.5 |       |   | $ | 80.1 |      
|                              

The balances related to each component of
accumulated other comprehensive income, net of related income
taxes, are as follows:

|                                                                   |  |           |       |              |  |   |       |  
|------------------------------------------------------------------ |  | --------- | ----- | ------------ |  | - | ----- | -
|                                                                   |  | March 31, |       | December 31,
|                                                                   |  | 2005      |       | 2004        
|                                                                  
|                                                                  
|Unrealized gains and losses on available-for-sale
    securities   |  | $         | 135.1 |              |  | $ | 106.7 |  
|Gains and losses on derivatives designated as
    cash flow hedges |  |           | 104.6 |              |  |   | 47.4  |  
|Additional minimum pension liability                               |  |           | (36.4 | )            |  |   | (36.4 | )
|Foreign currency translation adjustment                            |  |           | (20.9 | )            |  |   | (20.9 | )
|                                                                  
|Accumulated other comprehensive
    income  US GAAP               |  | $         | 182.4 |              |  | $ | 96.8  |  
|                                                                  

Supplemental US GAAP
Disclosures

Recent Accounting Pronouncements

In March 2004, the FASB ratified consensuses
reached by the Emerging Issues Task Force (EITF)
with respect to EITF Issue No. 03-1, The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain
Investments. The guidance prescribes a three-step model
for determining whether an investment is other-than-temporarily
impaired and requires disclosures about unrealized losses on
investments. The accounting guidance was effective for reporting
periods beginning after June 15, 2004, while the disclosure
requirements were effective for annual reporting periods ending
after June 15, 2004. In September 2004, the FASB issued FSP
EITF Issue No. 03-1-1, which delayed the effective date for
the measurement and recognition guidance contained in
paragraphs 10-20 of EITF Issue No. 03-1. During the
period of the delay, companies should continue to apply relevant
guidance. The company will assess the impact of
paragraphs 10-20 once the guidance has been finalized.

In November 2004, the FASB issued
SFAS No. 151, Inventory Costs, to clarify
that abnormal amounts of idle facility expense, freight,
handling costs and wasted materials (spoilage) should be
recognized as current-period charges, and to require the
allocation of fixed production overheads to inventory based on
the normal capacity of the production facilities. The guidance
is effective for inventory costs incurred during fiscal years
beginning after June 15, 2005. Earlier application is
permitted. The company is reviewing the guidance to determine
the potential impact, if any, on its consolidated financial
statements.

In December 2004, the FASB issued
SFAS No. 123 (revised 2004), Share-Based
Payment, that will require compensation costs related to
share-based payment transactions to be recognized in financial
statements. With limited exceptions, the amount of compensation
cost will be measured based on the grant-date fair value of the
equity or liability instruments issued. In addition, liability
awards will be remeasured each reporting period. Compensation
cost will be recognized over the period that an employee
provides service in exchange for the award. The standard
replaces SFAS No. 123, Accounting for
Stock-Based Compensation, and supersedes APB Opinion
No. 25, Accounting for Stock Issued to
Employees. In April 2005 the compliance date was amended
such that the standard will be effective for the first fiscal
year beginning after June 15, 2005, meaning that the
company will apply the guidance to all employee awards of
share-based payment granted, modified or settled in

15



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##### Table of Contents



the first quarter of 2006. As of the required
effective date, all public entities will apply this Statement
using a modified version of prospective application. Under that
transition method, compensation cost is recognized on or after
the required effective date for the portion of outstanding
awards for which the requisite service has not yet been
rendered, based on the grant-date fair value of those awards
calculated under SFAS No. 123 for either recognition
or pro forma disclosures. For periods before the required
effective date, entities may elect to apply a modified version
of retrospective application under which financial statements
for prior periods are adjusted on a basis consistent with the
pro forma disclosures required for those periods by
SFAS No. 123. To assist in the implementation of
SFAS No. 123(R), the SEC issued SAB No. 107,
Share-Based Payment. While SAB No. 107
addresses a wide range of issues, the largest area of focus is
valuation methodologies and the selection of assumptions.
Notably, SAB No. 107 lays out simplified methods for
developing certain assumptions. In addition to providing the SEC
staffs interpretive guidance on SFAS No. 123(R),
SAB No. 107 addresses the interaction of
SFAS No. 123(R) with existing SEC guidance (e.g., the
interaction with the SECs guidance dealing with non-GAAP
disclosures). Its intent is to clarify, not change, any of
SFAS No. 123(R)s guidance. The company is
reviewing the standard and guidance to determine the potential
impact, if any, on its consolidated financial statements.


In March 2005, the FASB ratified the consensus
reached by the EITF on Issue No. 04-6, Accounting for
Post-Production Stripping Costs in the Mining Industry,
that stripping costs incurred during production are variable
inventory costs which should be attributed to ore produced in
that period as a component of inventory, and recognized in cost
of sales in the same period as related revenue. The EITF will be
effective for fiscal years beginning after December 15,
2005. The company is reviewing the guidance to determine the
potential impact, if any, on its consolidated financial
statements.

In March 2005, the FASB issued FSP
FIN 46(R)-5, Implicit Variable Interests Under FASB
Interpretation No. 46(R), Consolidation of Variable
Interest Entities to address whether a company has an
implicit variable interest in a VIE or potential VIE when
specific conditions exist. The guidance describes an implicit
variable interest as an implied financial interest in an entity
that changes with changes in the fair value of the entitys
net assets exclusive of variable interests. An implicit variable
interest acts the same as an explicit variable interest except
it involves the absorbing and/or receiving of variability
indirectly from the entity (rather than directly). The FSP will
be effective for the company in the second quarter of 2005.
Restatement to the date of initial application of FIN 46(R)
is permitted but not required. The company is reviewing the
guidance to determine the potential impact, if any, on its
consolidated financial statements.

In March 2005, the FASB issued
FIN No. 47, Accounting for Conditional Asset
Retirement Obligations. FIN No. 47 clarifies
that the term Conditional Asset Retirement Obligation as used in
SFAS No. 143, Accounting for Asset Retirement
Obligations, refers to a legal obligation to perform an
asset retirement activity in which the timing and/or method of
settlement are conditional on a future event that may or may not
be within the control of the entity. Accordingly, an entity is
required to recognize a liability for the fair value of a
Conditional Asset Retirement Obligation if the fair value of the
liability can be reasonably estimated. The Interpretation is
effective no later than the end of fiscal years ending after
December 15, 2005. The company is reviewing the
Interpretation to determine the potential impact, if any, on its
consolidated financial statements.

Available-for-Sale Security

The companys investment in ICL is
classified as available-for-sale. The fair market value of this
investment at March 31, 2005 was $297.0 and the unrealized
holding gain was $204.2.

Stock-based Compensation

Prior to 2003, the company applied the intrinsic
value based method of accounting for its stock option plans
under US GAAP. Effective December 15, 2003, the company
adopted the fair value based method of accounting for stock
options prospectively to all employee awards granted, modified
or settled after January 1, 2003 pursuant to the
transitional provisions of SFAS No. 148
Accounting for Stock-Based Compensation 
Transition and Disclosure. Since the companys stock
option awards vest over two years, the compensation cost
included in the determination of net income for the first
quarter of 2004 is less than that which would have been
recognized if the

16



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##### Table of Contents



fair value based method had been applied to all
awards since the original effective date of
SFAS No. 123 Accounting for Stock-Based
Compensation. The following table illustrates the effect
on net income and net income per share under US GAAP if the fair
value based method had been applied to all outstanding and
unvested awards in each period.


|                                            |  |                                                                                                                                                    |       |                    |      |      |      |  |      |  
|------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------- | ----- | ------------------ | ---- | ---- | ---- |  | ---- | -
|                                            |  |                                                                                                                                                    |       |                   
|                                            |  |                                                                                                                                                    |       | Three Months Ended
|                                            |  |                                                                                                                                                    |       |                   
|                                            |  |                                                                                                                                                    |       | March 31          
|                                            |  |                                                                                                                                                    |       | 2005               |      | 2004
|                                           
|                                           
|Net income  as reported under US GAAP      |  | $                                                                                                                                                  | 132.9 |                    |      | $    | 54.1 | 
|Add:                                        |  | Stock-based employee compensation expense
    included in reported net income, net of related tax
    effects                                      |       |                    | 0.7  |      |      |  | 2.2  |  
|Less:                                       |  | Total stock-based employee compensation expense
    determined under fair value based method for all option awards,
    net of related tax effects |       |                    | (0.7 | )    |      |  | (3.2 | )
|                                           
|Net income  pro forma under US
    GAAP(1) |  | $                                                                                                                                                  | 132.9 |                    |      | $    | 53.1 | 
|                                           

|    |                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Compensation expense under the fair value method
    is recognized over the vesting period of the related stock
    options. Accordingly, the pro forma results of applying this
    method may not be indicative of future results.

|                                           |             |  |   |      |  |  |   |      | 
|------------------------------------------ | ----------- |  | - | ---- |  |  | - | ---- | 
|Basic net income per share under US GAAP   |             |  |   |      |  |  |   |     
|                                           | As reported |  | $ | 1.20 |  |  | $ | 0.51 | 
|                                           | Pro forma   |  | $ | 1.20 |  |  | $ | 0.50 | 
|                                          
|Diluted net income per share under US GAAP |             |  |   |      |  |  |   |     
|                                           | As reported |  | $ | 1.16 |  |  | $ | 0.50 | 
|                                           | Pro forma   |  | $ | 1.16 |  |  | $ | 0.49 | 

Derivative Instruments and Hedging
Activities

Cash
Flow Hedges

The company has designated its natural gas
derivative instruments as cash flow hedges. The portion of gain
or loss on derivative instruments designated as cash flow hedges
that are effective at offsetting changes in the hedged item is
reported as a component of accumulated OCI and then is
reclassified into cost of goods sold when the product containing
the hedged item is sold. Any hedge ineffectiveness is recorded
in cost of goods sold in the current period. During the quarter,
a gain of $8.6 (2004  $10.5) was recognized in cost
of goods sold. Of the deferred gains at quarter-end,
approximately $55.9 will be reclassified to cost of goods sold
within the next 12 months. The fair value of the
companys gas hedging contracts at March 31, 2005 was
$144.8 (2004  $73.5).

Fair
Value Hedges

At March 31, 2005, the company had
receive-fixed, pay-variable interest rate swap agreements
outstanding with total notional amounts of $225.0
(2004  $300.0). The fair value of the swaps
outstanding at March 31, 2005 was a liability of $1.3
(2004  asset of $5.5).



|    |                    
|--- | -------------------
|16. | Comparative Figures

In the third quarter of 2004, the Board of
Directors of PCS approved a split of the companys
outstanding common shares on a two-for-one basis in the form of
a stock dividend. All comparative share and per-share data have
been retroactively adjusted to reflect the stock split.

Certain of the prior periods figures have
been reclassified to conform with the current periods
presentation.

17



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##### Table of Contents





|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS
    OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is the
responsibility of management and is as of May 5, 2005. The
Board of Directors carries out its responsibility for review of
this disclosure principally through its audit committee,
comprised exclusively of independent directors. The audit
committee reviews and, prior to its publication, approves,
pursuant to the authority delegated to it by the Board of
Directors, this disclosure. The term PCS refers to
Potash Corporation of Saskatchewan Inc. and the terms
we, us, our,
PotashCorp and the company refer to PCS
and, as applicable, PCS and its direct and indirect subsidiaries
as a group. Additional information relating to the company,
including our Annual Report on Form 10-K, can be found on
SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.shtml.

POTASHCORP AND OUR BUSINESS
ENVIRONMENT

PotashCorp has built a global business on the
natural nutrients potash, phosphate and nitrogen. Our products
serve three different markets: fertilizer, feed and industrial.
We sell fertilizer to North American retailers, cooperatives and
distributors that provide storage and application services to
farmers, the end users. Our offshore customers are governments
and private importers that tend to buy under contract, while
spot sales are more prevalent in North America. Fertilizers are
sold primarily for spring and fall application in both northern
and southern hemispheres.

Transportation is an important part of the final
purchase price for fertilizer so producers usually sell to the
closest customers. In North America, we sell mainly on a
delivered basis via rail, barge, truck and pipeline. Offshore
customers purchase product either at the port where it is loaded
or with freight included.

Potash, phosphate and nitrogen are also used as
inputs for the production of animal feed and industrial
products. Most feed and industrial sales are by contract and are
more evenly distributed throughout the year than fertilizer
sales.

POTASHCORP VISION

We envision PotashCorp as a long-term business
enterprise providing superior value to all our stakeholders. To
achieve this, we believe we need to be the sustainable gross
margin leader in the products we sell and the markets we serve.
Through our strategy, we attempt to minimize the natural
volatility of our business. Risk rises with volatility and we
believe the capital markets will assign a better earnings
multiple to a growth company with lower risk. We also strive for
increased earnings, and to outperform our peer group and other
basic materials companies in total shareholder return, a key
measure of any companys value.

We link our financial performance with areas of
extended responsibility: the environment, our social and
economic stakeholders. We focus on increased transparency to
improve our relationships with all our stakeholders, believing
this gives us a competitive advantage.

POTASHCORP STRATEGY

Our strategy is based on our commitment to seek
earnings growth and quality. We strive to build value with
reduced volatility and we reduce volatility by doing all we can
to strengthen our potash business, hence our Potash First
strategy. Our goal is to be the low-cost global potash supplier
on a delivered basis into all key world markets. We supplement
this potash strategy by leveraging our strengths in nitrogen
with our lower-cost gas in Trinidad, and our specialty phosphate
products, particularly the industrial product, purified acid,
produced in North Carolina.

In our day-to-day actions, we seek to maximize
gross margin by focusing on the right blend of price, volumes
and asset utilization. Our highest-margin products 
potash, purified phosphoric acid and Trinidad nitrogen
products  drive our strategy, and we strive to grow
the business by enhancing our position as supplier of choice. We
aim to build on our strengths by acquiring and maintaining
low-cost, high-quality capacity that complements our existing
assets and adds strategic value. Our decisions are based on our
cash flow return materially exceeding cost of capital.

18



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##### Table of Contents



KEY PERFORMANCE DRIVERS 
PERFORMANCE COMPARED TO GOALS

Each year we set targets to advance our long-term
goals and drive results. In 2004 we further developed key
performance indicators to monitor our progress and measure
success. As we drill down into the organization with these
metrics, we believe:



|  |                                                                                                                                        
|- | ---------------------------------------------------------------------------------------------------------------------------------------
| | management will focus on the most important
    things, which will be reinforced by having the relevant results
    readily accessible;
| 
| | employees will understand and be able to
    effectively monitor their contribution to the achievement of
    corporate goals; and     
| 
| | we will be even more effective in meeting our
    targets.                                                                             

Our long-term goals and 2005 targets are set out
on pages 9 to 11 of our 2004 Annual Report. A summary of
our progress against selected goals and representative annual
targets is set out below.

|                                                                                                          |  |                                                                                                                                |  |                                                                                                                                                                                                                                                                                                                                                                                                                  |  | 
|--------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|                                                                                                          |  | Representative                                                                                                                 |  | Performance                                                                                                                                                                                                                                                                                                                                                                                                      |  | 
|Goal                                                                                                      |  | 2005 Annual Target                                                                                                             |  | to March 31, 2005                                                                                                                                                                                                                                                                                                                                                                                                |  | 
|                                                                                                         
|                                                                                                         
|To continue to outperform our sector and other
    basic materials companies in total shareholder return. |  | Exceed total shareholder return performance for
    our sector and companies on the DJBMI for 2005 and three-year
    average. |  | PotashCorps total shareholder return for
    the quarter ended March 31, 2005 was 6 percent, which
    exceeded the DJBMI return of 2 percent though not our
    sector average return at 13 percent for the same quarter.
    Our three-year average return at 173 percent significantly
    exceeds the DJBMI three-year average return of 30 percent
    and approximates our sector average of 172 percent. |  | 
|                                                                                                         
|To remain the leader and preferred supplier of
    potash, phosphate and nitrogen products worldwide.     |  | Increase potash sales volumes by 5 percent
    at 25 percent higher realized prices.                                           |  | Potash sales volumes increased by 19 percent
    at 53 percent higher realized prices compared to the
    quarter ended March 31, 2004. Compared to the 2004 annual
    average, realized prices increased 26 percent.                                                                                                                                                                                           |  | 
|                                                                                                         
|To be the low-cost supplier in our industry.                                                              |  | Achieve rock costs at Aurora and White Springs
    5 percent below 2004.                                                       |  | Rock costs at Aurora and White Springs increased
    2 percent and 3 percent, respectively, compared to the
    quarter ended March 31, 2004. Compared to the 2004 annual
    average, Aurora rock costs increased 4 percent whereas
    White Springs rock costs decreased 1 percent.                                                                                                                           |  | 
|                                                                                                         
|To move closer to our goal of no harm to people,
    no accidents, no damage to the environment.          |  | Reduce recordable and lost-time injury rates by
    10 percent.                                                                |  | Recordable and lost time injury rates to
    March 31, 2005 are 0.40 and 2.55, respectively, compared to
    the targets of 0.20 and 1.72. Safety systems are being evaluated
    and improvements are being made each month, and we are confident
    that the targets will be met by year end.                                                                                                                 |  | 
|                                                                                                         
|To have motivated and productive employees
    committed to our long-term goals.                          |  | Complete implementation of a human resources
    administration system enabled by information technology.                      |  | US payrolls are scheduled to be completely live
    by the end of the second quarter of 2005. Phase II Canada
    implementation began in February 2005 and will continue with
    completion scheduled during Fall 2005.                                                                                                                                                                                        |  | 
|                                                                                                         

19



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##### Table of Contents



FINANCIAL OVERVIEW

This discussion and analysis is based on the
companys unaudited interim consolidated financial
statements reported under generally accepted accounting
principles in Canada (Canadian GAAP). These
principles differ in certain significant respects from
accounting principles generally accepted in the United States.
These differences are described and quantified in Note 15
to the unaudited interim consolidated financial statements
included in Item 1 of this Quarterly Report on
Form 10-Q. All references to per-share amounts pertain to
diluted net income or loss per share. All comparative share and
per-share data have been retroactively adjusted to reflect our
two-for-one stock split effected by way of stock dividend in
2004. All amounts in dollars are expressed as US dollars
unless otherwise indicated. Certain of the prior periods
figures have been reclassified to conform with the current
periods presentation.

For an understanding of trends, events,
uncertainties and the effect of critical accounting estimates on
our results and financial condition the entire document should
be read carefully together with our 2004 Annual Report.

Earnings Guidance

The companys guidance for earnings per
share for first-quarter 2005 was in the range of $0.80 to $1.00.
The final result, reflecting strong potash performance, was net
income of $131.3 million, or $1.15 per share.

Overview of Actual Results

Operations

|                                              |  |                             |       |      |  |        |       |        |  |   |       |  |  |  |     | 
|--------------------------------------------- |  | --------------------------- | ----- | ---- |  | ------ | ----- | ------ |  | - | ----- |  |  |  | --- | 
|                                              |  |                            
|                                              |  | Three Months Ended March 31
|                                             
|                                             
|                                              |  | Dollar                      |       | %   
|(Dollars millions  except per-share amounts) |  | 2005                        |       | 2004 |  | Change |       | Change
|                                             
|                                             
|Sales                                         |  | $                           | 921.4 |      |  | $      | 728.4 |        |  | $ | 193.0 |  |  |  | 26  | 
|Freight                                       |  |                             | 67.2  |      |  |        | 58.1  |        |  |   | 9.1   |  |  |  | 16  | 
|Transportation and distribution               |  |                             | 28.9  |      |  |        | 23.0  |        |  |   | 5.9   |  |  |  | 26  | 
|Cost of goods sold                            |  |                             | 566.8 |      |  |        | 523.3 |        |  |   | 43.5  |  |  |  | 8   | 
|                                             
|Gross margin                                  |  | $                           | 258.5 |      |  | $      | 124.0 |        |  | $ | 134.5 |  |  |  | 108 | 
|                                             
|Operating income                              |  | $                           | 216.7 |      |  | $      | 97.8  |        |  | $ | 118.9 |  |  |  | 122 | 
|                                             
|Net income                                    |  | $                           | 131.3 |      |  | $      | 50.7  |        |  | $ | 80.6  |  |  |  | 159 | 
|                                             
|Net income per share  basic                  |  | $                           | 1.18  |      |  | $      | 0.48  |        |  | $ | 0.70  |  |  |  | 146 | 
|                                             
|Net income per share  diluted                |  | $                           | 1.15  |      |  | $      | 0.47  |        |  | $ | 0.68  |  |  |  | 145 | 
|                                             

Tight supply and demand continued in both potash
and nitrogen. Asian countries with accelerating economic growth
continued their above-trend potash demand. Potash prices rose
throughout the quarter, as did nitrogen prices after a brief
downturn in ammonia at the start of the year. Customers reacted
to these tight market conditions and focused their purchases on
potash and nitrogen while solid phosphate fertilizer sales
volumes suffered. Potash supply remained tight, as Canadian
producers inventories were 39 percent below the
five-year average at the end of the quarter based on data
provided by the Potash and Phosphate Institute.

First quarter net income was $131.3 million
or $1.15 per share as compared to $50.7 million or
$0.47 per share in the same period in 2004. The higher
quarterly earnings were a result of improvements in all three
nutrients. Potash contributed 68 percent of the
companys $258.5 million consolidated gross margin
growth quarter over quarter. The company achieved record potash
sales volumes at higher realized prices, as increased
consumption is tightening supply/demand fundamentals after more
than two decades of oversupply in the potash market. With the
rest of the industry now operating at or near capacity, the
company is benefiting by increasing production and capturing a
significant share of global demand growth. The companys
equity investments in other potash companies also generated
additional income, demonstrating that the companys
earnings leverage in

20



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##### Table of Contents



potash extends beyond its unused capacity.
Sociedad Quimica y Minera de Chile S.A. (SQM) in
Chile and Arab Potash Company (APC) in Jordan added
an additional $9.3 million in other income, while Israel
Chemicals Ltd. (ICL) in Israel provided
$3.1 million in dividends ($2.3 million recognized in
the second quarter last year). The strong performance in potash
was supported by larger-than-expected gross margin from the
companys nitrogen operation in Trinidad, as well as
continued strength from industrial phosphate.


Potash gross margin increased $109.5 million
or 164 percent, reflecting an increase in sales volumes and
average realized prices of 19 percent and 53 percent,
respectively, on a quarter-over-quarter basis. Despite higher
operating rates, product costs decreased by only 5 percent
per tonne due to the impact of foreign exchange compared to
first-quarter 2004.

Phosphate performance improved quarter over
quarter due to higher realized prices, lower sulfur and ammonia
input costs, and higher production rates. Gross margin was
$17.0 million compared to a loss of $0.9 million in
first-quarter 2004.

During the quarter, high US natural gas prices
discouraged the startup of previously curtailed nitrogen
capacity in the US. Nitrogen gross margin rose 12 percent
to $65.3 million quarter over quarter, driven by improved
volumes and prices and a 1 percent reduction in cost of
sales. The companys US natural gas hedging activities
contributed $8.6 million to first-quarter gross margin
compared to $10.5 million in last years same quarter.

Expenses increased by $26.4 million for the
quarter principally due to higher provincial mining taxes
associated with the increased potash margins realized during
first-quarter 2005.

The weakening of the Canadian dollar by $0.01
compared to December 31, 2004 contributed to a foreign
exchange gain of $5.9 million for the quarter. This
compares to a gain of $8.2 million for the same quarter
last year during which time the Canadian dollar weakened by
$0.02 compared to December 31, 2003.

Balance Sheet

Total assets were $5,212.2 million at
March 31, 2005, up $85.4 million or 2 percent
compared to December 31, 2004. Liabilities increased
$20.8 million from December 31, 2004, to
$2,762.0 million at March 31, 2005, and equity
increased $64.6 million during the same period to
$2,450.2 million.

The largest contributors to the change in assets
during first-quarter 2005 were accounts receivable, cash,
inventories, and prepaid expenses and other current assets.
Accounts receivable increased 16 percent compared to
December 31, 2004, as a result of the timing of cash
receipts related to the 6 percent increase in sales for
first-quarter 2005 compared to fourth-quarter 2004.

Cash increased $20.1 million relative to
December 31, 2004 predominantly due to very strong
earnings. We also received $47.0 million from the issuance
of common shares (primarily due to the exercise of stock
options), $7.5 million proceeds from the sale of long-term
assets and the remaining $5.2 million of non-contingent
proceeds related to the sale of PCS Yumbes S.C.M. that occurred
in December 2004. These cash inflows were offset in part by a
net decrease in non-cash operating working capital items of
$75.8 million, additions to property plant and equipment of
$56.8 million, dividend payments of $16.5 million and
settlement of $82.3 million in common share repurchases.

Inventories at March 31, 2005 increased
2 percent compared to December 31, 2004. At that time
the company had depleted solid phosphate inventories to zero.
These have been rebuilding during first-quarter 2005 in
preparation for offshore panamax vessel sales, thereby
increasing phosphate finished goods inventory at March 31,
2005 by $10.4 million. Potash finished products inventory,
which are produced in Canada, increased $4.1 million in
part as a result of the stronger Canadian dollar. These
increases were partially offset by decreases in nitrogen raw
materials inventory due to gains deferred from the
companys hedging program, as well as a decrease in potash
materials and supplies inventory.

Timing of insurance and rail car payments were
the principal contributors to a $6.2 million increase in
prepaid expenses and other current assets at March 31, 2005
compared to the balance at December 31, 2004.

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Share capital and retained earnings increased at
March 31, 2005 compared to balances at December 31,
2004, while contributed surplus declined. Share capital at
March 31, 2005 was $33.2 million higher than
December 31, 2004 as a result of the issuance of common
shares arising from stock option exercises and our dividend
reinvestment plan, offset by common share repurchases of
$14.7 million under our normal course issuer bid. Our share
repurchase program also had the effect of decreasing contributed
surplus by $83.1 million compared to December 31,
2004. First-quarter 2005 net earnings of
$131.3 million increased retained earnings while dividends
of $16.8 million reduced the balance, for a net increase of
$114.5 million at March 31, 2005 compared to
December 31, 2004.

Business Segment Review

Note 8 to the unaudited interim consolidated
financial statements provides information pertaining to our
business segments. Management includes net sales in segment
disclosures in the consolidated financial statements pursuant to
Canadian GAAP, which requires segmentation based upon our
internal organization and reporting of revenue and profit
measures derived from internal accounting methods. Net sales
(and the related per-tonne amounts) are primary revenue measures
we use and review in making decisions about operating matters on
a business segment basis. These decisions include assessments
about potash, phosphate and nitrogen performance and the
resources to be allocated to these segments. We also use net
sales (and the related per-tonne amounts) for business planning
and monthly forecasting. Net sales are calculated as sales
revenues less freight, transportation and distribution expenses.
The following is based on selected segment measures as used and
reviewed by management.

Potash

|                                |                |                             |       |                    |  |                          |       |      |  |      |     |        |   |      |       |       |  |        |       |       |  |  |    |    |  |   |        |        |  |   |       |       |  |  |     |    | 
|------------------------------- | -------------- | --------------------------- | ----- | ------------------ |  | ------------------------ | ----- | ---- |  | ---- | --- | ------ | - | ---- | ----- | ----- |  | ------ | ----- | ----- |  |  | -- | -- |  | - | ------ | ------ |  | - | ----- | ----- |  |  | --- | -- | 
|                                |                |                            
|                                |                | Three Months Ended March 31
|                               
|                               
|                                |                |                             |       |                    |  |                         
|                                |                | Dollars (millions)          |       | Tonnes (thousands) |  | Average Price per Tonne1
|                               
|                               
|                                |                | %                           |       |                    |  | %                        |       |      |  | %   
|                                |                | 2005                        |       | 2004               |  | Change                   |       | 2005 |  | 2004 |     | Change |   | 2005 |       | 2004  |  | Change
|                               
|                               
|Sales                           |                | $                           | 352.1 |                    |  | $                        | 223.7 |      |  |      | 57  |        |   |      |       |       |  |        |       |       |  |  |    |    |  |   |        |        |  |   |       |       |  |  |     |   
|Freight                         |                |                             | 37.2  |                    |  |                          | 33.5  |      |  |      | 11  |        |   |      |       |       |  |        |       |       |  |  |    |    |  |   |        |        |  |   |       |       |  |  |     |   
|Transportation and distribution |                |                             | 9.1   |                    |  |                          | 8.7   |      |  |      | 5   |        |   |      |       |       |  |        |       |       |  |  |    |    |  |   |        |        |  |   |       |       |  |  |     |   
|                               
|                                |                | $                           | 305.8 |                    |  | $                        | 181.5 |      |  |      | 68  |        |   |      |       |       |  |        |       |       |  |  |    |    |  |   |        |        |  |   |       |       |  |  |     |   
|                               
|Net Sales                       |                |                             |       |                    |  |                          |       |      |  |      |     |        |   |      |       |       |  |        |       |       |  |  |    |    |  |   |        |        |  |   |       |       |  |  |     |   
|                                | North American |                             | $     | 128.9              |  |                          | $     | 74.1 |  |      |     | 74     |   |      |       | 922   |  |        |       | 782   |  |  |    | 18 |  |   | $      | 139.86 |  |   | $     | 94.76 |  |  |     | 48 | 
|                                | Offshore       |                             |       | 172.8              |  |                          |       | 91.3 |  |      |     | 89     |   |      |       | 1,401 |  |        |       | 1,166 |  |  |    | 20 |  |   | $      | 123.35 |  |   | $     | 78.29 |  |  |     | 58 | 
|                               
|                                |                |                             | 301.7 |                    |  |                          | 165.4 |      |  |      | 82  |        |   |      | 2,323 |       |  |        | 1,948 |       |  |  | 19 |    |  | $ | 129.90 |        |  | $ | 84.91 |       |  |  | 53  |   
|                                | Miscellaneous  |                             |       | 4.1                |  |                          |       | 16.1 |  |      |     | (75    | ) |      |       |      |  |        |       |      |  |  |    |   |  |   |        |       |  |   |       |      |  |  |     |   | 
|                               
|                                |                |                             | 305.8 |                    |  |                          | 181.5 |      |  |      | 68  |        |   |      | 2,323 |       |  |        | 1,948 |       |  |  | 19 |    |  | $ | 131.64 |        |  | $ | 93.17 |       |  |  | 41  |   
|Cost of goods sold              |                |                             | 129.6 |                    |  |                          | 114.8 |      |  |      | 13  |        |   |      |       |       |  |        |       |       |  |  |    |    |  | $ | 55.79  |        |  | $ | 58.93 |       |  |  | (5  | ) 
|                               
|Gross margin                    |                | $                           | 176.2 |                    |  | $                        | 66.7  |      |  |      | 164 |        |   |      |       |       |  |        |       |       |  |  |    |    |  | $ | 75.85  |        |  | $ | 34.24 |       |  |  | 122 |   
|                               

|  |                                                                                              
|- | ---------------------------------------------------------------------------------------------
|1 | Rounding differences may occur due to the use of
    whole dollars in per-tonne calculations.

Rising demand for potash, coupled with tight
supply, resulted in higher prices and increased sales volumes
for PotashCorp. Potash provided $176.2 million, or
68 percent, of total gross margin for the quarter. This was
164 percent higher than the $66.7 million gross margin
in the first quarter of 2004. The higher prices also increased
the gross margin percentage for potash to 58 percent of net
sales from 37 percent, quarter over quarter. Total sales
increased $128.4 million and net sales increased
$124.3 million quarter over quarter.

Canpotex Limited (Canpotex), the
offshore marketing agent for Saskatchewan potash producers,
raised shipment levels in the first quarter of 2005. As the
largest supplier to Canpotex, the companys total offshore
sales volumes rose to 1.4 million tonnes, 20 percent
more than last years first quarter. This was achieved in
spite of reduced shipments to Brazil, as Asian countries such as
India and China increased purchases by 268 percent and
58 percent respectively. China was our largest export
customer accounting for 35 percent of our total shipments,
with Brazil and Malaysia the next closest at 9 percent and
8 percent respectively. Offshore demand was strong

22



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##### Table of Contents



despite drought conditions in parts of southeast
Asia as importers continued to benefit from favorable commodity
prices, increased purchasing power from a weak US dollar and the
easing in ocean freight rates. First-quarter 2005 also saw
double digit percentage increases in sales to Korea, Japan,
Malaysia, and Oceania compared to the same period last year.


Saskatchewan-sourced offshore volumes rose
30 percent at realized prices 61 percent higher than
first-quarter 2004, contributing $22.1 million and
$57.2 million respectively to the increase in net sales.
New Brunswick offshore volumes decreased by 29 percent
though realized prices were up 58 percent, adding
$2.2 million to offshore net sales. Ocean freight rates
eased to rates 13 percent lower in comparison to
first-quarter 2004 since peaking in December 2004. This
combination of increases in offshore potash prices and declining
ocean freight rates resulted in higher offshore net price
realizations for the company.

North American volumes also set a first-quarter
record at 0.9 million tonnes, up 18 percent from last
years first quarter and contributing $15.5 million to
the increase in net sales. As Canpotex increased shipments to
international customers, the domestic market grew even tighter
as our Saskatchewan competitors were product-constrained,
enabling PotashCorp to increase its market share in North
America by 5 percent since the first quarter last year.
Prices climbed 48 percent quarter over quarter as price
increases announced in late 2004 took effect in 2005, favorably
impacting first-quarter net sales by $39.3 million.

The sale of PCS Yumbes in December 2004 was the
primary contributor to a $12.0 million decrease in net
sales of miscellaneous product for the quarter compared to the
same period last year.

The company produced a record 2.4 million
tonnes in the first three months of 2005 as the expansion at
Rocanville and additional shifts at Lanigan and Allan increased
production. This represents an increase of 14 percent over
last years first-quarter production of 2.1 million
tonnes, and the utilization of some of the companys excess
capacity to fill growing demand. The strength of the Canadian
dollar, which averaged 1.2280 in first-quarter 2005 compared to
1.3126 in first-quarter 2004, negatively impacted cost of goods
sold by over $3.50 per tonne; however, this was more than
offset by higher operating rate efficiencies and the elimination
of nitrate operating costs upon disposal of PCS Yumbes.

23



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##### Table of Contents



Phosphate

|                                |                      |                             |       |                    |  |                          |       |       |  |      |     |        |  |      |     |      |  |        |     |     |  |  |    |    |   |   |        |        |  |   |        |        |  |  |     |    |  
|------------------------------- | -------------------- | --------------------------- | ----- | ------------------ |  | ------------------------ | ----- | ----- |  | ---- | --- | ------ |  | ---- | --- | ---- |  | ------ | --- | --- |  |  | -- | -- | - | - | ------ | ------ |  | - | ------ | ------ |  |  | --- | -- | -
|                                |                      |                            
|                                |                      | Three Months Ended March 31
|                               
|                               
|                                |                      |                             |       |                    |  |                         
|                                |                      | Dollars (millions)          |       | Tonnes (thousands) |  | Average Price per Tonne1
|                               
|                               
|                                |                      | %                           |       |                    |  | %                        |       |       |  | %   
|                                |                      | 2005                        |       | 2004               |  | Change                   |       | 2005  |  | 2004 |     | Change |  | 2005 |     | 2004 |  | Change
|                               
|                               
|Sales                           |                      | $                           | 264.5 |                    |  | $                        | 217.6 |       |  |      | 22  |        |  |      |     |      |  |        |     |     |  |  |    |    |   |   |        |        |  |   |        |        |  |  |     |   
|Freight                         |                      |                             | 19.8  |                    |  |                          | 15.7  |       |  |      | 26  |        |  |      |     |      |  |        |     |     |  |  |    |    |   |   |        |        |  |   |        |        |  |  |     |   
|Transportation and distribution |                      |                             | 8.1   |                    |  |                          | 5.3   |       |  |      | 53  |        |  |      |     |      |  |        |     |     |  |  |    |    |   |   |        |        |  |   |        |        |  |  |     |   
|                               
|                                |                      | $                           | 236.6 |                    |  | $                        | 196.6 |       |  |      | 20  |        |  |      |     |      |  |        |     |     |  |  |    |    |   |   |        |        |  |   |        |        |  |  |     |   
|                               
|Net Sales                       |                      |                             |       |                    |  |                          |       |       |  |      |     |        |  |      |     |      |  |        |     |     |  |  |    |    |   |   |        |        |  |   |        |        |  |  |     |   
|                                | Fertilizer  liquids |                             | $     | 52.6               |  |                          | $     | 30.7  |  |      |     | 71     |  |      |     | 250  |  |        |     | 136 |  |  |    | 84 |   |   | $      | 210.61 |  |   | $      | 225.36 |  |  |     | (7 | )
|                                | Fertilizer  solids  |                             |       | 71.3               |  |                          |       | 71.4  |  |      |     |       |  |      |     | 327  |  |        |     | 355 |  |  |    | (8 | ) |   | $      | 217.89 |  |   | $      | 200.91 |  |  |     | 8  |  
|                                | Feed                 |                             |       | 55.1               |  |                          |       | 44.4  |  |      |     | 24     |  |      |     | 230  |  |        |     | 207 |  |  |    | 11 |   |   | $      | 239.25 |  |   | $      | 215.18 |  |  |     | 11 |  
|                                | Industrial           |                             |       | 54.7               |  |                          |       | 47.8  |  |      |     | 14     |  |      |     | 155  |  |        |     | 145 |  |  |    | 7  |   |   | $      | 353.44 |  |   | $      | 329.71 |  |  |     | 7  |  
|                               
|                                |                      |                             | 233.7 |                    |  |                          | 194.3 |       |  |      | 20  |        |  |      | 962 |      |  |        | 843 |     |  |  | 14 |    |   | $ | 242.93 |        |  | $ | 230.49 |        |  |  | 5   |   
|                                | Miscellaneous        |                             |       | 2.9                |  |                          |       | 2.3   |  |      |     | 26     |  |      |     |     |  |        |     |    |  |  |    |   |   |   |        |       |  |   |        |       |  |  |     |   |  
|                               
|                                |                      | $                           | 236.6 |                    |  | $                        | 196.6 |       |  |      | 20  |        |  |      | 962 |      |  |        | 843 |     |  |  | 14 |    |   | $ | 245.87 |        |  | $ | 233.31 |        |  |  | 5   |   
|                               
|                                | North American       |                             | $     | 182.1              |  |                          | $     | 163.6 |  |      |     | 11     |  |      |     | 704  |  |        |     | 669 |  |  |    | 5  |   |   | $      | 254.67 |  |   | $      | 240.96 |  |  |     | 6  |  
|                                | Offshore             |                             |       | 54.5               |  |                          |       | 33.0  |  |      |     | 65     |  |      |     | 258  |  |        |     | 174 |  |  |    | 48 |   |   | $      | 211.04 |  |   | $      | 190.36 |  |  |     | 11 |  
|                               
|                                |                      |                             | 236.6 |                    |  |                          | 196.6 |       |  |      | 20  |        |  |      | 962 |      |  |        | 843 |     |  |  | 14 |    |   | $ | 245.87 |        |  | $ | 233.31 |        |  |  | 5   |   
|Cost of goods sold              |                      |                             | 219.6 |                    |  |                          | 197.5 |       |  |      | 11  |        |  |      |     |      |  |        |     |     |  |  |    |    |   | $ | 228.20 |        |  | $ | 234.38 |        |  |  | (3  | ) 
|                               
|Gross margin                    |                      | $                           | 17.0  |                    |  | $                        | (0.9  | )     |  |      | n/m |        |  |      |     |      |  |        |     |     |  |  |    |    |   | $ | 17.67  |        |  | $ | (1.07  | )      |  |  | n/m |   
|                               

|  |                                                                                              
|- | ---------------------------------------------------------------------------------------------
|1 | Rounding differences may occur due to the use of
    whole dollars in per-tonne calculations.

n/m = not meaningful

Phosphate had its best quarterly performance
since the first quarter of 2002, with $17.0 million in
gross margin compared to a loss of $0.9 million in the
first quarter last year. Phosphate total sales increased
$46.9 million and net sales increased $40.0 million
quarter over quarter. Realized prices were slightly higher in
all categories except for liquid fertilizers compared to
first-quarter 2004, with feed phosphate prices increasing the
most by 11 percent over the comparative quarter.

Liquid fertilizer net sales grew
$21.9 million in the first quarter of 2005 compared to the
same quarter last year. Sales volumes rose significantly,
contributing substantially all of the increase in net sales as
the company sold more phosphoric acid to India. These sales are
lower-priced than other liquid fertilizer products thereby
shifting the product mix and causing a 7 percent decrease
in average price realizations quarter over quarter. Domestic
fertilizer dealers also raised demand for liquid phosphates as
US farmers prepared to plant more corn this year.

Despite China, Japan, India and Mexico being more
active in the DAP market, solid fertilizer sales volumes were
down 8 percent from first-quarter 2004 primarily due to a
decrease in sales of MAP to Brazil, where they worked through
inventory carryover from last year. Sales were also negatively
impacted by the delayed spring season in the south and
southeastern US because of cold, wet weather. Price realizations
were up 8 percent from last year as the industry benefited
from curtailments resulting from high sulfur and ammonia costs.
The combination of the price increase and volume decrease caused
net sales to remain flat quarter over quarter.

The feed business significantly improved quarter
over quarter, resulting in an increase in net sales of
$10.7 million. Both volumes and prices rose 11 percent
from last years first quarter as the company sold more to
Latin America and Asia, and benefited from a $33.00 per
tonne price increase implemented December 2004 for various feed
products. Demand for feed phosphates in the US market has been
negatively affected by improvements in animal genetics, better
use of scientific research in formulating feeds and more
recently the rising use of distillers grain from ethanol
production as a feed alternative. In contrast, demand in the
offshore market has increased due to fewer cases of animal
health problems and an improving global economy, more than

24



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##### Table of Contents



offsetting the US market decline. Volume
increases contributed a total of $5.5 million to net sales
while price increases favorably impacted net sales by
$5.2 million compared to first-quarter 2004.


Industrial products were strong contributors to
the phosphate business, with a 7 percent increase in both
volumes and prices quarter over quarter adding $2.7 and
$4.2 million, respectively, to the higher phosphate net
sales.

Phosphate cost of goods sold declined
$6.18 per tonne or 3 percent quarter over quarter, due
in part to product mix. Lower solid fertilizer sales resulted in
less ammonia being utilized. A 7 percent decline in sulfur
costs and 12 percent decline in ammonia costs positively
impacted margins by $2.3 million and $1.8 million,
respectively. As well, a 13 percent increase in
P2O5 production levels allowed the company
to benefit from operating rate efficiencies. Average phosphate
rock costs per tonne remained relatively flat quarter over
quarter.

Nitrogen

|                                |                                                   |                             |       |                    |  |                          |       |       |  |      |    |        |   |      |       |      |  |        |       |     |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |     |  
|------------------------------- | ------------------------------------------------- | --------------------------- | ----- | ------------------ |  | ------------------------ | ----- | ----- |  | ---- | -- | ------ | - | ---- | ----- | ---- |  | ------ | ----- | --- |  |  | - | --- | - | - | ------ | ------ |  | - | ------ | ------ |  |  | -- | --- | -
|                                |                                                   |                            
|                                |                                                   | Three Months Ended March 31
|                               
|                               
|                                |                                                   |                             |       |                    |  |                         
|                                |                                                   | Dollars (millions)          |       | Tonnes (thousands) |  | Average Price per Tonne1
|                               
|                               
|                                |                                                   | %                           |       |                    |  | %                        |       |       |  | %   
|                                |                                                   | 2005                        |       | 2004               |  | Change                   |       | 2005  |  | 2004 |    | Change |   | 2005 |       | 2004 |  | Change
|                               
|                               
|Sales                           |                                                   | $                           | 304.8 |                    |  | $                        | 287.1 |       |  |      | 6  |        |   |      |       |      |  |        |       |     |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |    
|Freight                         |                                                   |                             | 10.2  |                    |  |                          | 8.9   |       |  |      | 15 |        |   |      |       |      |  |        |       |     |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |    
|Transportation and distribution |                                                   |                             | 11.7  |                    |  |                          | 9.0   |       |  |      | 30 |        |   |      |       |      |  |        |       |     |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |    
|                               
|                                |                                                   | $                           | 282.9 |                    |  | $                        | 269.2 |       |  |      | 5  |        |   |      |       |      |  |        |       |     |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |    
|                               
|Net Sales                       |                                                   |                             |       |                    |  |                          |       |       |  |      |    |        |   |      |       |      |  |        |       |     |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |    
|                                | Ammonia                                           |                             | $     | 98.9               |  |                          | $     | 111.7 |  |      |    | (11    | ) |      |       | 406  |  |        |       | 412 |  |  |   | (1  | ) |   | $      | 243.78 |  |   | $      | 270.77 |  |  |    | (10 | )
|                                | Urea                                              |                             |       | 90.3               |  |                          |       | 55.0  |  |      |    | 64     |   |      |       | 359  |  |        |       | 255 |  |  |   | 41  |   |   | $      | 251.43 |  |   | $      | 215.84 |  |  |    | 16  |  
|                                | Nitrogen solutions/ Nitric acid/ Ammonium nitrate |                             |       | 65.2               |  |                          |       | 57.3  |  |      |    | 14     |   |      |       | 450  |  |        |       | 433 |  |  |   | 4   |   |   | $      | 144.76 |  |   | $      | 132.28 |  |  |    | 9   |  
|                                | Purchased                                         |                             |       | 23.2               |  |                          |       | 40.5  |  |      |    | (43    | ) |      |       | 93   |  |        |       | 153 |  |  |   | (39 | ) |   | $      | 250.68 |  |   | $      | 265.65 |  |  |    | (6  | )
|                               
|                                |                                                   |                             | 277.6 |                    |  |                          | 264.5 |       |  |      | 5  |        |   |      | 1,308 |      |  |        | 1,253 |     |  |  | 4 |     |   | $ | 212.23 |        |  | $ | 211.09 |        |  |  | 1  |    
|                                | Miscellaneous                                     |                             |       | 5.3                |  |                          |       | 4.7   |  |      |    | 13     |   |      |       |     |  |        |       |    |  |  |   |    |   |   |        |       |  |   |        |       |  |  |    |    |  
|                               
|                                |                                                   | $                           | 282.9 |                    |  | $                        | 269.2 |       |  |      | 5  |        |   |      | 1,308 |      |  |        | 1,253 |     |  |  | 4 |     |   | $ | 216.31 |        |  | $ | 214.82 |        |  |  | 1  |    
|                               
|                                | Fertilizer                                        |                             | $     | 105.8              |  |                          | $     | 104.3 |  |      |    | 1      |   |      |       | 463  |  |        |       | 491 |  |  |   | (6  | ) |   | $      | 228.85 |  |   | $      | 212.27 |  |  |    | 8   |  
|                                | Non-fertilizer                                    |                             |       | 177.1              |  |                          |       | 164.9 |  |      |    | 7      |   |      |       | 845  |  |        |       | 762 |  |  |   | 11  |   |   | $      | 209.45 |  |   | $      | 216.46 |  |  |    | (3  | )
|                               
|                                |                                                   |                             | 282.9 |                    |  |                          | 269.2 |       |  |      | 5  |        |   |      | 1,308 |      |  |        | 1,253 |     |  |  | 4 |     |   | $ | 216.31 |        |  | $ | 214.82 |        |  |  | 1  |    
|Cost of goods sold              |                                                   |                             | 217.6 |                    |  |                          | 211.0 |       |  |      | 3  |        |   |      |       |      |  |        |       |     |  |  |   |     |   | $ | 166.39 |        |  | $ | 168.37 |        |  |  | (1 | )  
|                               
|Gross margin                    |                                                   | $                           | 65.3  |                    |  | $                        | 58.2  |       |  |      | 12 |        |   |      |       |      |  |        |       |     |  |  |   |     |   | $ | 49.92  |        |  | $ | 46.45  |        |  |  | 7  |    
|                               

|  |                                                                                              
|- | ---------------------------------------------------------------------------------------------
|1 | Rounding differences may occur due to the use of
    whole dollars in per-tonne calculations.

Total nitrogen sales increased $17.7 million
and net sales increased $13.7 million quarter over quarter.
Sales volumes were up 4 percent quarter over quarter,
although the product mix shifted markedly as urea tonnes rose
41 percent and purchased tonnes (primarily ammonia)
declined 39 percent. Nitrogen generated $65.3 million
in gross margin, 12 percent higher than the
$58.2 million earned in the same quarter last year. With
ammonia prices tracking natural gas prices, our large-scale
facility in Trinidad (where we have long-term, low-cost gas
contracts) continued to be valuable to the company. Trinidad
provided 66 percent of this margin, with US operations
contributing 21 percent and US natural gas hedges the
remaining 13 percent. During the quarter, the company
liquidated its remaining 2005 US gas hedge positions for
approximately $40.0 million, which will be recognized over
the balance of the year when the related inventory is ultimately
sold.

The company shifted its product mix to urea from
ammonia during the quarter to take advantage of higher relative
prices in the urea market. As such, ammonia net sales decreased
$12.8 million. After a short-term drop in ammonia prices in
January, ammonia prices recovered; however, the average price
for the quarter was still down 10 percent from the same
period last year, contributing $9.6 million to the total
decline in net sales. Increased urea sales volumes, mostly from
the companys Trinidad and Lima facilities, contributed an
additional

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$20.6 million to net sales compared to
first-quarter 2004. Urea realizations were up 16 percent
due to strong market fundamentals, which factored
$14.7 million to the increase in net sales.


Nitric acid sales increased 17 percent at
5 percent lower realized prices contributing
$2.4 million to the increase in net sales. Ammonium nitrate
sales decreased 13 percent at realized prices
26 percent higher, favorably impacting net sales by
$2.2 million. Purchased product tonnes and prices both
showed a decrease at 39 percent and 6 percent,
respectively, leading to an overall decrease of
$17.3 million in net sales. Volume reductions negatively
impacted net sales by $16.1 million, with price declines
contributing the remaining $1.2 million variance quarter
over quarter.

On a per-tonne basis, PotashCorps cost of
goods sold was flat compared to last years same quarter,
as was our average cost of natural gas at $3.72 per MMBtu.
The expansion of the No. 3 plant in Trinidad was completed
late in the quarter and will result in increased production for
the remainder of the year. Within the US, our natural gas
hedging activities contributed $8.6 million to gross margin
for the quarter (2004  $10.5 million).

Expenses and Other Income

|                                  |  |                    |      |      |  |        |      |        |  |   |      |   |  |  |     |  
|--------------------------------- |  | ------------------ | ---- | ---- |  | ------ | ---- | ------ |  | - | ---- | - |  |  | --- | -
|                                  |  |                   
|                                  |  | Three Months Ended
|                                  |  | March 31          
|                                 
|                                 
|                                  |  | Dollar             |      | %   
|Dollars (millions)                |  | 2005               |      | 2004 |  | Change |      | Change
|                                 
|                                 
|Selling and administrative        |  | $                  | 29.3 |      |  | $      | 26.2 |        |  | $ | 3.1  |   |  |  | 12  |  
|Provincial mining and other taxes |  |                    | 38.4 |      |  |        | 15.1 |        |  |   | 23.3 |   |  |  | 154 |  
|Foreign exchange gain             |  |                    | 5.9  |      |  |        | 8.2  |        |  |   | (2.3 | ) |  |  | (28 | )
|Other income                      |  |                    | 20.0 |      |  |        | 6.9  |        |  |   | 13.1 |   |  |  | 190 |  
|Interest expense                  |  |                    | 20.7 |      |  |        | 22.1 |        |  |   | (1.4 | ) |  |  | (6  | )
|Income tax expense                |  |                    | 64.7 |      |  |        | 25.0 |        |  |   | 39.7 |   |  |  | 159 |  

Selling and administrative expenses increased
$3.1 million on a quarter-over-quarter basis primarily due
to performance-based compensation and contributions to the
companys defined contribution savings plans which were
reinstated in August 2004. As such, no corresponding amounts
were recorded in first-quarter 2004.

Provincial mining and other taxes increased by
$23.3 million from first-quarter 2004 principally due to
increased Saskatchewan Potash Production Tax and corporate
capital tax. Saskatchewans Potash Production Tax is
comprised of a base tax per tonne of product sold and an
additional tax based on mine profits. The profits tax component
increased significantly, driven by 53 percent higher
realized prices quarter over quarter.

The period-end translation of Canadian-dollar
denominated monetary items on the Consolidated Statement of
Financial Position contributed to net foreign exchange gains of
$5.9 million in first-quarter 2005. The change in the
Canadian dollar relative to the US dollar was not as significant
in first-quarter 2005 as it was in first-quarter 2004. As at
March 31, 2005, the Canadian dollar was $0.01 weaker than
at December 31, 2004. This compares to the weakening of the
Canadian dollar by $0.02 from December 31, 2003 to
March 31, 2004, which contributed to the $8.2 million
foreign exchange gain in that quarter.

Other income increased $13.1 million from
last years same quarter due primarily to an increase in
our share of earnings in our equity investments in APC and SQM,
companies in which we increased our ownership interest during
2004. During first-quarter 2005, $4.0 million was also
recorded on the settlement of an insurance claim and a dividend
of $3.1 million was received on the companys
investment in Israel Chemicals Ltd. No corresponding amounts
were recorded in first-quarter 2004.

Interest expense decreased $1.4 million
quarter over quarter with substantially all of the decrease
attributable to the company having more surplus cash earning a
higher rate of interest income in first-quarter 2005 compared to
first-quarter 2004. Weighted average long-term debt outstanding
in 2005 was $1,268.9 million (2004 
$1,269.9 million) with a weighted average interest rate of
6.9 percent (2004  6.9 percent). The
weighted average interest rate on short-term debt outstanding in
the first quarter of 2005 was 2.7 percent (2004 
1.3 percent).

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The companys effective consolidated income
tax rate for the current period approximated 33 percent, as
it did in the first quarter of 2004. Despite the consistent
effective rate, income tax expense increased substantially
quarter over quarter, driven by the rise in operating income. In
2005, 90 percent of the effective rate pertained to current
income taxes and 10 percent related to future income taxes.
The increase in the current tax provision from 40 percent
in 2004 is primarily due to the increase in potash operating
income in Canada.

Status of Restructuring
Activities

In June 2003, the company indefinitely shut down
its Memphis, Tennessee plant and suspended production of ammonia
and nitrogen solutions at its Geismar, Louisiana facilities due
to high US natural gas costs and low product margins. The
operations have not been restarted. The company determined that
all employee positions pertaining to the affected operations
would be eliminated, and recorded $4.8 million in
connection with costs of special termination benefits in 2003.
No significant payments relating to the terminations remain to
be made. Management expects to incur other shutdown-related
costs of approximately $12.1 million and nominal annual
expenditures for site security and other maintenance costs in
relation to these nitrogen facilities. The other
shutdown-related costs have not been recorded in the
consolidated financial statements as of March 31, 2005.
Such costs will be recognized and recorded in the period in
which they are incurred. The company also ceased operations at
its phosphate feed plant at Kinston, North Carolina in 2003.

No additional significant costs were incurred in
connection with the plant shutdowns in the first three months of
2005. The following table summarizes, by reportable segment, the
total costs incurred to date and the total costs expected to be
incurred in connection with the plant shutdowns described above:

|                                          |  |            |       |             |  |   |       | 
|----------------------------------------- |  | ---------- | ----- | ----------- |  | - | ----- | 
|                                          |  | Cumulative |       | Total Costs
|                                          |  | Costs      |       | Expected   
|                                          |  | Incurred   |       | to be      
|Dollars (millions)                        |  | to Date    |       | Incurred   
|                                         
|                                         
|Nitrogen Segment                          |  |            |       |             |  |   |       | 
|Employee termination and related benefits |  | $          | 4.8   |             |  | $ | 4.8   | 
|Writedown of parts inventory              |  |            | 12.4  |             |  |   | 12.4  | 
|Asset impairment charges                  |  |            | 101.6 |             |  |   | 101.6 | 
|Other related exit costs                  |  |            |      |             |  |   | 12.1  | 
|                                         
|                                          |  |            | 118.8 |             |  |   | 130.9 | 
|                                         
|Phosphate Segment                         |  |            |       |             |  |   |       | 
|Employee termination and related benefits |  |            | 0.6   |             |  |   | 0.6   | 
|Writedown of parts inventory              |  |            | 0.3   |             |  |   | 0.3   | 
|Asset impairment charges                  |  |            | 4.0   |             |  |   | 4.0   | 
|                                         
|                                          |  |            | 4.9   |             |  |   | 4.9   | 
|                                         
|                                          |  | $          | 123.7 |             |  | $ | 135.8 | 
|                                         

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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES

Cash Requirements

The following aggregated information about our
contractual obligations and other commitments aims to provide
insight into our short- and long-term liquidity and capital
resource requirements. The information presented in the table
below does not include obligations that have original maturities
of less than one year, planned capital expenditures or potential
share repurchases.

Contractual Obligations and Other
Commitments

|                                    |  |                        |         |               |  |              |       |              |  |              |       |  |  |   |       |  |  |   |         | 
|----------------------------------- |  | ---------------------- | ------- | ------------- |  | ------------ | ----- | ------------ |  | ------------ | ----- |  |  | - | ----- |  |  | - | ------- | 
|                                    |  |                       
|                                    |  | Payments Due By Period
|                                    |  | Dollars (millions)    
|                                   
|                                   
|                                    |  | Total                  |         | Within 1 year |  | 1 to 3 years |       | 3 to 5 years |  | Over 5 years
|                                   
|                                   
|Long-term debt (including interest) |  | $                      | 1,742.4 |               |  | $            | 97.9  |              |  | $            | 562.5 |  |  | $ | 118.8 |  |  | $ | 963.2   | 
|Operating leases                    |  |                        | 587.8   |               |  |              | 77.8  |              |  |              | 144.0 |  |  |   | 113.2 |  |  |   | 252.8   | 
|Purchase obligations                |  |                        | 886.8   |               |  |              | 104.3 |              |  |              | 188.0 |  |  |   | 161.8 |  |  |   | 432.7   | 
|Other commitments                   |  |                        | 49.9    |               |  |              | 12.7  |              |  |              | 19.3  |  |  |   | 14.7  |  |  |   | 3.2     | 
|Other long-term liabilities         |  |                        | 321.8   |               |  |              | 27.7  |              |  |              | 65.5  |  |  |   | 42.2  |  |  |   | 186.4   | 
|                                   
|Total                               |  | $                      | 3,588.7 |               |  | $            | 320.4 |              |  | $            | 979.3 |  |  | $ | 450.7 |  |  | $ | 1,838.3 | 
|                                   

Long-term Debt

Long-term debt consists of $1,250.0 million
of notes payable that were issued under our US shelf
registration statements, $9.0 million of Industrial Revenue
and Pollution Control Obligations, a net of $5.9 million
under a back-to-back loan arrangement (described in Note 12
to the 2004 annual consolidated financial statements) and other
commitments of $3.8 million payable over the next five
years. The notes payable are unsecured. Of the notes
outstanding, $400.0 million bear interest at
7.125 percent and mature in 2007, $600.0 million bear
interest at 7.750 percent and mature in 2011 and
$250.0 million bear interest at 4.875 percent and
mature in 2013. There are no sinking fund requirements prior to
maturity. The notes payable are not subject to any financial
test covenants but are subject to certain customary covenants
(including limitations on liens and sale and leaseback
transactions) and events of default, including an event of
default for acceleration of other debt in excess of
$50.0 million. The Industrial Revenue and Pollution Control
Obligations and the other long-term debt instruments are subject
to certain customary covenants and events of default.
Non-compliance with any of the covenants could result in
accelerated payment of the related debt. The company was in
compliance with the covenants as at March 31, 2005.

The commitments included in the above table
include our cumulative scheduled interest payments on fixed and
variable rate long-term debt, totaling $473.7 million.
Interest on variable rate debt is based on prevailing interest
rates. At March 31, 2005, the company had receive-fixed,
pay-variable interest rate swap agreements outstanding with
total notional amounts of $225.0 million (2004 
$300.0 million). The company unwound its swap agreements in
the second quarter of 2005.

Operating Leases

The company has various long-term operating lease
agreements for buildings, port facilities, equipment,
ocean-going transportation vessels, mineral leases and railcars,
the latest of which expires in 2025.

The most significant operating leases consist
primarily of three items. The first is the lease of railcars
used to transport finished goods and raw materials, which
extends to approximately 2020. The second is the lease of port
facilities at the Port of Saint John for shipping New Brunswick
potash offshore. This lease runs until 2018. The third is the
lease of three vessels for transporting ammonia from Trinidad.
One vessel agreement runs until 2011; the others terminate in
2016.

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Purchase Obligations

The company has long-term agreements for the
purchase of sulfur for use in the production of phosphoric acid.
These agreements provide for minimum purchase quantities, and
certain prices are based on market rates at the time of
delivery. The commitments included in the above table are based
on contract prices.

The company has entered into long-term natural
gas contracts with the National Gas Company of Trinidad. The
contracts provide for prices that vary with ammonia market
prices, escalating floor prices and minimum purchase quantities.
The commitments included in the above table are based on floor
prices and minimum purchase quantities.

The company also has a long-term agreement for
the purchase of phosphate rock used at the Geismar facility. The
commitments included in the above table are based on the
expected purchase quantity and current net base prices.

Other Commitments

Other operating commitments consist principally
of amounts relating to the companys contracts to purchase
limestone that run through 2007 and various rail freight
contracts, the latest of which expire in 2010.

Other Long-term Liabilities

Other long-term liabilities consist primarily of
accrued post-retirement/post-employment benefits and accrued
environmental costs and asset retirement obligations.

Capital Expenditures

During 2005, we expect to incur capital
expenditures of approximately $265.0 million for
opportunity capital and approximately $135.0 million to
sustain operations at existing levels. The most significant
single project relates to the mill refurbishment at Lanigan
which will expand surface, hoisting and underground facilities
to increase overall annual potash production capacity by
1.5 million tonnes. The company will also increase potash
production capacity at Allan which will contribute an additional
0.4 million tonnes to annual potash production capability.
In addition the company will be adding compacting equipment at
these sites that will increase granular capacity by
1.25 million tonnes per year. The companys total
investment in Lanigan and Allan, including compaction capacity,
will be approximately $380.0 million of which approximately
$96.0 million will be spent during 2005.

We anticipate that all capital spending will be
financed by internally generated cash flows supplemented, if and
as necessary, by borrowing from existing financing sources.

Share Repurchase Program

On January 25, 2005, the Board of Directors
of PCS authorized a share repurchase program of up to
5.5 million common shares (approximately 5 percent of
the companys issued and outstanding common shares) through
a normal course issuer bid. Shares may be repurchased from time
to time on the open market through February 14, 2006 at
prevailing market prices. The timing and amount of purchases, if
any, under the program will be dependent upon the availability
and alternative uses of capital, market conditions and other
factors.

During the quarter, the company repurchased for
cancellation 1,134,200 common shares under the program, at an
average price per share of $86.28. The repurchases resulted in a
reduction of share capital of $14.7 million, and the excess
net cost over the average book value of the shares of
$83.1 million has been recorded as a reduction of
contributed surplus.

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| |                         
| | ------------------------
| | Sources and Uses of Cash

The companys cash flows from operating,
investing and financing activities, as reflected in the
Consolidated Statements of Cash Flow, are summarized in the
following table:

|                                      |  |                    |       |      |  |        |       |  |  |  |     |  
|------------------------------------- |  | ------------------ | ----- | ---- |  | ------ | ----- |  |  |  | --- | -
|                                      |  |                   
|                                      |  | Three Months Ended
|                                      |  | March 31          
|                                     
|                                     
|                                      |  | %                 
|Dollars (millions)                    |  | 2005               |       | 2004 |  | Change
|                                     
|                                     
|Cash provided by operating activities |  | $                  | 115.5 |      |  | $      | 134.3 |  |  |  | (14 | )
|Cash used in investing activities     |  | $                  | 44.2  |      |  | $      | 15.6  |  |  |  | 183 |  
|Cash used in financing activities     |  | $                  | 51.2  |      |  | $      | 112.2 |  |  |  | (54 | )

The following table presents summarized working
capital information as at March 31, 2005 compared to
December 31, 2004:

|                                        |  |           |         |              |  |        |         |   |  |  |    |  
|--------------------------------------- |  | --------- | ------- | ------------ |  | ------ | ------- | - |  |  | -- | -
|                                        |  | March 31, |         | December 31, |  | %     
|Dollars (millions) except ratio amounts |  | 2005      |         | 2004         |  | Change
|                                       
|                                       
|Current assets                          |  | $         | 1,332.6 |              |  | $      | 1,243.6 |   |  |  | 7  |  
|Current liabilities                     |  | $         | (698.2  | )            |  | $      | (703.7  | ) |  |  | (1 | )
|Working capital                         |  | $         | 634.4   |              |  | $      | 539.9   |   |  |  | 18 |  
|Current ratio                           |  |           | 1.91    |              |  |        | 1.77    |   |  |  | 8  |  

Our liquidity needs can be met through a variety
of sources, including: cash generated from operations,
short-term borrowings against our line of credit and commercial
paper program, and long-term debt issued under our US shelf
registration statement and drawn down under our syndicated
credit facility. Our primary uses of funds are operational
expenses, sustaining and opportunity capital spending,
dividends, interest and principal payments on our debt
securities, and the repurchase of common shares.

Cash provided by operating activities for the
first quarter of 2005 was $115.5 million, down
$18.8 million from the first quarter last year. The
stronger gross margin in all three nutrients was offset by
additional working capital requirements, led by an increase in
accounts receivable compared to the balances at December 31
of the respective prior years. Accounts receivable for the
quarter ended March 31, 2005 increased $63.5 million
due to the rise in sales volumes and prices, as compared to a
decrease at March 31, 2004 of $32.9 million. Our
customer credit policies have remained substantially consistent
with 2004.

Cash used in investing activities was
$44.2 million, an increase of $28.6 million over the
same quarter last year. Additions to property, plant and
equipment increased $40.4 million, largely due to planned
spending on the companys announced expansion projects.
Proceeds from disposal of long-term assets increased
$7.5 million, and the remaining non-contingent proceeds of
$5.2 million from the 2004 sale of PCS Yumbes were received.

Cash used in financing activities during the
quarter was $51.2 million, $61.0 million less than the
same quarter last year. In first-quarter 2004 the company paid
down short-term debt by $118.3 million; whereas, in 2005,
$82.3 million was used in the repurchase of common shares
under the share repurchase program. Proceeds from the issuance
of common shares contributed $47.0 million to cash from
financing activities during first-quarter 2005 as compared to
$19.8 million in same quarter of 2004.

PotashCorp believes that internally generated
cash flow, supplemented by borrowing from existing financing
sources if necessary, will be sufficient to meet our anticipated
capital expenditures and other cash requirements in 2005,
exclusive of any possible acquisitions, as was the case in 2004.
At this time, the company does not reasonably expect any
presently known trend or uncertainty to affect our ability to
access our historical sources of cash.

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Debt Instruments

|                           |  |                |         |             |  |           |         |           |  |   |      |  |  |   |       | 
|-------------------------- |  | -------------- | ------- | ----------- |  | --------- | ------- | --------- |  | - | ---- |  |  | - | ----- | 
|                           |  |               
|                           |  | March 31, 2005
|                          
|                          
|                           |  | Total          |         | Amount      |  | Amount    |         | Amount   
|Dollars (millions)         |  | Amount         |         | Outstanding |  | Committed |         | Available
|                          
|                          
|Syndicated credit facility |  | $              | 750.0   |             |  | $         |        |           |  | $ | 94.3 |  |  | $ | 655.7 | 
|Line of credit             |  |                | 75.0    |             |  |           |        |           |  |   | 15.5 |  |  |   | 59.5  | 
|Commercial paper           |  |                | 500.0   |             |  |           | 94.3    |           |  |   |     |  |  |   | 405.7 | 
|US shelf registration      |  |                | 2,000.0 |             |  |           | 1,250.0 |           |  |   |     |  |  |   | 750.0 | 

PotashCorp has a syndicated credit facility,
renewable annually, which provides for unsecured advances. The
amount available is the total facility amount less direct
borrowings and amounts committed in respect of commercial paper
outstanding. No funds were borrowed under the facility as of
March 31, 2005. The line of credit is also renewable
annually and direct borrowings and outstanding letters of credit
committed reduce the amount available. Both the line of credit
and the syndicated credit facility have financial tests and
other covenants with which the company must comply at each
quarter-end. Principal covenants under the credit facility and
line of credit require a debt to capital ratio of less than or
equal to 0.55:1, a long-term debt to EBITDA (defined in the
respective agreements as earnings before interest, income taxes,
provincial mining and other taxes, depreciation, amortization
and other non-cash expenses) ratio of less than or equal to
3.5:1, tangible net worth in an amount greater than or equal to
$1,250.0 million and debt of subsidiaries not to exceed
$590.0 million. The syndicated credit facility and line of
credit are also subject to other customary covenants and events
of default, including for the line of credit an event of default
for non-payment of other debt in excess of
Cdn $40.0 million and for the syndicated credit
facility an event of default for acceleration of other debt in
excess of $50.0 million. Non-compliance with such covenants
could result in accelerated payment of the related debt and
amounts due under the line of credit, and termination of the
line of credit. The company was in compliance with the
above-mentioned covenants as at March 31, 2005.

The commercial paper market is a source of
same day cash for the company, and we have a
commercial paper program of up to $500.0 million. Access to
this source of short-term financing depends primarily on
maintaining our R1 low credit rating by Dominion Bond Rating
Service (DBRS) and conditions in the money markets. Our credit
ratings, as measured by Moodys and Standard &
Poors senior debt ratings, remained unchanged from
December 31, 2004 (Moodys: Baa2 with a positive
outlook; Standard & Poors: BBB+).

We also have a US shelf registration statement
under which we may issue up to an additional $750.0 million
in unsecured debt securities.

At the end of March 2005, our weighted average
cost of capital was 8.6 percent (2004 
7.7 percent), of which 91 percent was equity. The
increase was principally due to a shift in mix to
equity  which carries a higher cost than
debt  as the stock price on a post-split basis closed
110 percent higher this quarter-end compared to the same
quarter last year.

Off-Balance Sheet
Arrangements

In the normal course of operations, PotashCorp
engages in a variety of transactions that, under Canadian GAAP,
are either not recorded on our Consolidated Statements of
Financial Position or are recorded on our Consolidated
Statements of Financial Position in amounts that differ from the
full contract amounts. Principal off-balance sheet activities we
undertake include issuance of guarantee contracts, certain
derivative instruments and long-term fixed price contracts. We
do not reasonably expect any presently known trend or
uncertainty to affect our ability to continue using these
arrangements. These types of arrangements are discussed below.

Guarantee Contracts

In the normal course of operations, the company
provides indemnifications that are often standard contractual
terms to counterparties in transactions such as purchase and
sale contracts, service agreements, director/officer contracts
and leasing transactions. These indemnification agreements may
require the company to compensate the counterparties for costs
incurred as a result of various events, including environmental
liabilities

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and changes in (or in the interpretation of) laws
and regulations, or as a result of litigation claims or
statutory sanctions that may be suffered by the counterparty as
a consequence of the transaction. The terms of these
indemnification agreements will vary based upon the contract,
the nature of which prevents the company from making a
reasonable estimate of the maximum potential amount that it
could be required to pay to counterparties. Historically, the
company has not made any significant payments under such
indemnifications and no amounts have been accrued in the
accompanying consolidated financial statements with respect to
these indemnification guarantees.


The company enters into agreements in the normal
course of business that may contain features which meet the
definition of a guarantee. Various debt obligations (such as
overdrafts, lines of credit with counterparties for derivatives,
and back-to-back loan arrangements) and other commitments (such
as railcar leases) related to certain subsidiaries have been
directly guaranteed by the company under such agreements with
third parties. The company would be required to perform on these
guarantees in the event of default by the guaranteed parties. No
material loss is anticipated by reason of such agreements and
guarantees. At March 31, 2005, the maximum potential amount
of future (undiscounted) payments under significant guarantees
provided to third parties approximated $208.2 million,
representing the maximum risk of loss if there were a total
default by the guaranteed parties, without consideration of
possible recoveries under recourse provisions or from collateral
held or pledged. At March 31, 2005, no subsidiary balances
subject to guarantees were outstanding in connection with the
companys cash management facilities, and the company had
no liabilities recorded for other obligations other than
subsidiary bank borrowings of approximately $5.9 million,
which are reflected in other long-term debt and cash margins
held of approximately $52.7 million to maintain
derivatives, which are included in accounts payable and accrued
charges.

The company has guaranteed the gypsum stack
capping, closure and post-closure obligations of White Springs
and PCS Nitrogen, in Florida and Louisiana, respectively,
pursuant to the financial assurance regulatory requirements in
those states. The State of Florida is presently reviewing, and
is expected to revise, its financial assurance requirements to
ensure that responsible parties have sufficient resources to
cover all closure and post-closure costs and liabilities
associated with gypsum stacks. This review may result in the
imposition of more stringent requirements to demonstrate
financial responsibility and/or inclusion of a greater scope of
closure and post-closure costs than under current law.

The environmental regulations of the Province of
Saskatchewan require each potash mine to have decommissioning
and reclamation (D&R) plans. In 2001, agreement
was reached with the provincial government on the financial
assurances for the D&R plan to cover an interim period to
July 1, 2005. In October 2004, this interim period was
extended to July 1, 2006. A government/industry task force
has been established to assess decommissioning options for all
Saskatchewan potash producers and to produce mutually acceptable
revisions to the plan schedules. The company has posted a
Cdn $2.0 million letter of credit as collateral that
will remain in effect until the revised plans are accepted.

During the period, the company entered into
various other commercial letters of credit in the normal course
of operations.

The company expects that it will be able to
satisfy all applicable credit support requirements without
disrupting normal business operations.

Derivative Instruments

We use derivative financial instruments to manage
exposure to commodity price, interest rate and foreign exchange
rate fluctuations. Under Canadian GAAP, the company does not
record the fair value of derivatives designated (and qualifying)
as effective hedges on its Consolidated Statements of Financial
Position. Only our hedging activities represent off-balance
sheet items.

The companys natural gas purchase strategy
is based on diversification of price for its total gas
requirements. The objective is to acquire a reliable supply of
natural gas feedstock and fuel on a location-adjusted,
cost-competitive basis in a manner that minimizes volatility
without undue risk. In addition to physical spot and term
purchases, the company employs futures, swaps and option
agreements to manage the cost on a

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portion of our natural gas requirements. These
instruments are intended to hedge the future cost of the
committed and anticipated natural gas purchases primarily for
its US nitrogen plants. By policy, the maximum period for these
hedges cannot exceed five years. Exceptions to policy may be
made with the specific approval of our Gas Policy Advisory
Committee. The fair value of the companys gas hedging
contracts at March 31, 2005 was $144.8 million
(2004  $73.5 million), with maturities in 2005
through 2014. The companys futures contracts are
exchange-traded and fair value was determined based on exchange
prices. Swaps and option agreements are traded in the
over-the-counter market and fair value was calculated based on a
price that was converted to an exchange-equivalent price.


The company primarily uses interest rate swaps to
manage the interest rate mix of the total debt portfolio and
related overall cost of borrowing. At March 31, 2005, the
company had receive-fixed, pay-variable interest rate swap
agreements outstanding with total notional amounts of
$225.0 million (2004  $300.0 million). The
fair value of the swaps outstanding at March 31, 2005 was a
liability of $1.3 million (2004  asset of
$5.5 million). The company unwound its swap agreements in
the second quarter of 2005.

Refer to Note 29 of our 2004 Annual Report
for detailed information regarding the nature of our financial
instruments. Other than as described above, there have been no
significant changes to these instruments during the first
quarter of 2005.

Long-term Fixed Price Contracts

Certain of our long-term raw materials agreements
contain fixed price components. Our significant agreements, and
the related obligations under such agreements, are discussed in
Cash Requirements.

QUARTERLY FINANCIAL HIGHLIGHTS

|                                      |  |           |       |              |  |               |       |          |  |           |       |              |  |               |       |          |  |   |       |  |  |   |       |  |  |   |        |   |  |   |       | 
|------------------------------------- |  | --------- | ----- | ------------ |  | ------------- | ----- | -------- |  | --------- | ----- | ------------ |  | ------------- | ----- | -------- |  | - | ----- |  |  | - | ----- |  |  | - | ------ | - |  | - | ----- | 
|                                     
|                                     
|Dollars (millions) except             |  | March 31, |       | December 31, |  | September 30, |       | June 30, |  | March 31, |       | December 31, |  | September 30, |       | June 30,
|per-share amounts                     |  | 2005      |       | 2004         |  | 2004          |       | 2004     |  | 2004      |       | 2003         |  | 2003          |       | 2003    
|                                     
|                                     
|Sales                                 |  | $         | 921.4 |              |  | $             | 866.6 |          |  | $         | 815.7 |              |  | $             | 833.7 |          |  | $ | 728.4 |  |  | $ | 717.6 |  |  | $ | 674.6  |   |  | $ | 745.0 | 
|                                     
|Gross margin                          |  |           | 258.5 |              |  |               | 197.3 |          |  |           | 189.4 |              |  |               | 170.7 |          |  |   | 124.0 |  |  |   | 92.5  |  |  |   | 84.5   |   |  |   | 122.3 | 
|                                     
|Net income (loss)                     |  |           | 131.3 |              |  |               | 100.1 |          |  |           | 75.2  |              |  |               | 72.6  |          |  |   | 50.7  |  |  |   | 26.5  |  |  |   | (185.9 | ) |  |   | 29.9  | 
|                                     
|Net income (loss) per share  basic   |  |           | 1.18  |              |  |               | 0.91  |          |  |           | 0.69  |              |  |               | 0.68  |          |  |   | 0.48  |  |  |   | 0.25  |  |  |   | (1.78  | ) |  |   | 0.29  | 
|                                     
|Net income (loss) per share  diluted |  |           | 1.15  |              |  |               | 0.88  |          |  |           | 0.68  |              |  |               | 0.67  |          |  |   | 0.47  |  |  |   | 0.25  |  |  |   | (1.78  | ) |  |   | 0.29  | 
|                                     

Net income (loss) per share for each quarter has
been computed based on the weighted average number of shares
issued and outstanding during the respective quarter; therefore,
quarterly amounts may not add to the annual total.

The companys sales of fertilizer can be
seasonal. Typically, the second quarter of the year is when
fertilizer sales will be highest, due to the North American
spring planting season. However, planting conditions and the
timing of customer purchases will vary each year and sales can
be expected to shift from one quarter to another.

OUTSTANDING SHARE DATA

The company had, at March 31, 2005,
110,748,102 common shares issued and outstanding, compared to
110,630,503 common shares issued and outstanding at
December 31, 2004. At March 31, 2005, there were
5,113,144 options to purchase common shares outstanding, as
compared to 6,400,730 at December 31, 2004.

RELATED PARTY TRANSACTIONS

The company sells potash from its Saskatchewan
mines for use outside of North America exclusively to Canpotex
Limited, a potash export, sales and marketing company owned in
equal shares by the three potash

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producers in the Province of Saskatchewan. Sales
to Canpotex for the quarter ended March 31, 2005 were
$151.9 million (2004  $72.6 million). Sales
to Canpotex are at prevailing market prices and are settled on
normal trade terms.


In prior periods, PCS Yumbes had agreed to
purchase potash from SQM and to sell to SQM all of its potassium
production at a negotiated price that approximated market value.
Both agreements were in effect until the company sold
100 percent of its shares of PCS Yumbes to SQM in December
2004. Potash purchases from SQM for the first quarter of 2004
were $3.2 million, and potassium nitrate sales to SQM for
that period were $8.6 million. All transactions with SQM
were settled on normal trade terms.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financial
condition and results of operations is based upon our unaudited
interim consolidated financial statements, which have been
prepared in accordance with Canadian GAAP. These principles
differ in certain significant respects from accounting
principles generally accepted in the United States. These
differences are described and quantified in Note 15 to the
unaudited interim consolidated financial statements included in
Item 1 of this Quarterly Report on Form 10-Q.

The accounting policies used in preparing the
unaudited interim consolidated financial statements are
consistent with those used in the preparation of the 2004 annual
consolidated financial statements, except as disclosed in
Note 2 to the unaudited interim consolidated financial
statements. Certain of these policies involve critical
accounting estimates because they require us to make
particularly subjective or complex judgments about matters that
are inherently uncertain and because of the likelihood that
materially different amounts could be reported under different
conditions or using different assumptions.

We have discussed the development, selection and
application of our key accounting policies, and the critical
accounting estimates and assumptions they involve, with the
audit committee of the Board of Directors, and our audit
committee has reviewed the disclosures described in this section.

RECENT ACCOUNTING CHANGES

Change in Accounting Policy

Effective January 1, 2005, the company
adopted revised CICA Accounting Guideline 15
(AcG-15), Consolidation of Variable Interest
Entities. AcG-15 is harmonized in all material respects
with US GAAP and provides guidance for applying consolidation
principles to certain entities (defined as VIEs) that are
subject to control on a basis other than ownership of voting
interests. An entity is a VIE when, by design, one or both of
the following conditions exist: (a) total equity investment
at risk is insufficient to permit that entity to finance its
activities without additional subordinated support from other
parties; (b) as a group, the holders of the equity
investment at risk lack certain essential characteristics of a
controlling financial interest. AcG-15 requires consolidation by
a business of VIEs in which it is the primary beneficiary. The
primary beneficiary is defined as the party that has exposure to
the majority of the expected losses and/or expected residual
returns of the VIE. The adoption of this guideline did not have
a material impact on the consolidated financial statements.

Recent Accounting
Pronouncements

Canada

In January 2005, the CICA issued
Section 1530, Comprehensive Income,
Section 3251, Equity, Section 3855,
Financial Instruments  Recognition and
Measurement and Section 3865, Hedges. The
new standards increase harmonization with US GAAP and will
require the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Financial assets will be classified as either
    held-to-maturity, held-for-trading or available-for-sale.
    Held-to-maturity classification will be restricted to fixed
    maturity instruments that the company intends and is able to
    hold to maturity and will be accounted for at amortized cost.
    Held-for-trading instruments will be recorded at fair value with
    realized and unrealized gains and losses reported in net income.
    The remaining financial assets will be classified as
    available-for-sale. These will be recorded at fair value

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | with unrealized gains and losses reported in a
    new category in shareholders equity called other
    comprehensive income (OCI).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|
| |  | Derivatives will be classified as
    held-for-trading unless designated as hedging instruments. All
    derivatives, including embedded derivatives that must be
    separately accounted for, will be recorded at fair value on the
    Consolidated Statement of Financial Position. For derivatives
    that hedge the changes in fair value of an asset or liability,
    changes in the derivatives fair value will be reported in
    net income and substantially offset by changes in the fair value
    of the hedged asset or liability attributable to the risk being
    hedged. For derivatives that hedge variability in cash flows,
    the effective portion of the changes in the derivatives
    fair value will be initially recognized in OCI and the
    ineffectiveness will be recorded in net income. The amounts
    temporarily recorded in OCI will subsequently be reclassified to
    net income in the periods net income is affected by the
    variability in the cash flows of the hedged item.

The guidance will apply for interim and annual
financial statements relating to fiscal years beginning on or
after October 1, 2006. Earlier adoption will be permitted
only as of the beginning of a fiscal year. The impact of
implementing these new standards is not yet determinable as it
is highly dependent on fair values, outstanding positions and
hedging strategies at the time of adoption.

United States

In March 2004, the FASB ratified consensuses
reached by the Emerging Issues Task Force (EITF)
with respect to EITF Issue No. 03-1, The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain
Investments. The guidance prescribes a three-step model
for determining whether an investment is other-than-temporarily
impaired and requires disclosures about unrealized losses on
investments. The accounting guidance was effective for reporting
periods beginning after June 15, 2004, while the disclosure
requirements were effective for annual reporting periods ending
after June 15, 2004. In September 2004, the FASB issued FSP
EITF Issue No. 03-1-1, which delayed the effective date for
the measurement and recognition guidance contained in
paragraphs 10-20 of EITF Issue No. 03-1. During the
period of the delay, companies should continue to apply relevant
guidance. The company will assess the impact of
paragraphs 10-20 once the guidance has been finalized.

In November 2004, the FASB issued
SFAS No. 151, Inventory Costs, to clarify
that abnormal amounts of idle facility expense, freight,
handling costs and wasted materials (spoilage) should be
recognized as current-period charges, and to require the
allocation of fixed production overheads to inventory based on
the normal capacity of the production facilities. The guidance
is effective for inventory costs incurred during fiscal years
beginning after June 15, 2005. Earlier application is
permitted. The company is reviewing the guidance to determine
the potential impact, if any, on its consolidated financial
statements.

In December 2004, the FASB issued
SFAS No. 123 (revised 2004), Share-Based
Payment, that will require compensation costs related to
share-based payment transactions to be recognized in financial
statements. With limited exceptions, the amount of compensation
cost will be measured based on the grant-date fair value of the
equity or liability instruments issued. In addition, liability
awards will be remeasured each reporting period. Compensation
cost will be recognized over the period that an employee
provides service in exchange for the award. The standard
replaces SFAS No. 123, Accounting for
Stock-Based Compensation, and supersedes APB Opinion
No. 25, Accounting for Stock Issued to
Employees. In April 2005 the compliance date was amended
such that the standard will be effective for the first fiscal
year beginning after June 15, 2005, meaning that the
company will apply the guidance to all employee awards of
share-based payment granted, modified or settled in the first
quarter of 2006. As of the required effective date, all public
entities will apply this Statement using a modified version of
prospective application. Under that transition method,
compensation cost is recognized on or after the required
effective date for the portion of outstanding awards for which
the requisite service has not yet been rendered, based on the
grant-date fair value of those awards calculated under
SFAS No. 123 for either recognition or pro forma
disclosures. For periods before the required effective date,
entities may elect to apply a modified version of retrospective
application under which financial statements for prior periods
are adjusted on a basis consistent with the pro forma
disclosures required for those periods by
SFAS No. 123. To assist in the implementation of
SFAS No. 123(R), the SEC issued SAB No. 107,
Share-Based Payment. While SAB No. 107
addresses a wide range of issues, the largest area of focus is
valuation methodologies and the

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selection of assumptions. Notably,
SAB No. 107 lays out simplified methods for developing
certain assumptions. In addition to providing the SEC
staffs interpretive guidance on SFAS No. 123(R),
SAB No. 107 addresses the interaction of
SFAS No. 123(R) with existing SEC guidance (e.g., the
interaction with the SECs guidance dealing with non-GAAP
disclosures). Its intent is to clarify, not change, any of
SFAS No. 123(R)s guidance. The company is
reviewing the standard and guidance to determine the potential
impact, if any, on our consolidated financial statements.


In March 2005, the FASB ratified the consensus
reached by the EITF on Issue No. 04-6, Accounting for
Post-Production Stripping Costs in the Mining Industry,
that stripping costs incurred during production are variable
inventory costs which should be attributed to ore produced in
that period as a component of inventory, and recognized in cost
of sales in the same period as related revenue. The EITF will be
effective for fiscal years beginning after December 15,
2005. The company is reviewing the guidance to determine the
potential impact, if any, on its consolidated financial
statements.

In March 2005, the FASB issued FSP
FIN 46(R)-5, Implicit Variable Interests Under FASB
Interpretation No. 46(R), Consolidation of Variable
Interest Entities to address whether a company has an
implicit variable interest in a VIE or potential VIE when
specific conditions exist. The guidance describes an implicit
variable interest as an implied financial interest in an entity
that changes with changes in the fair value of the entitys
net assets exclusive of variable interests. An implicit variable
interest acts the same as an explicit variable interest except
it involves the absorbing and/or receiving of variability
indirectly from the entity (rather than directly). The FSP will
be effective for the company in the second quarter of 2005.
Restatement to the date of initial application of FIN 46(R)
is permitted but not required. The company is reviewing the
guidance to determine the potential impact, if any, on its
consolidated financial statements.

In March 2005, the FASB issued
FIN No. 47, Accounting for Conditional Asset
Retirement Obligations. FIN No. 47 clarifies
that the term Conditional Asset Retirement Obligation as used in
SFAS No. 143, Accounting for Asset Retirement
Obligations, refers to a legal obligation to perform an
asset retirement activity in which the timing and/or method of
settlement are conditional on a future event that may or may not
be within the control of the entity. Accordingly, an entity is
required to recognize a liability for the fair value of a
Conditional Asset Retirement Obligation if the fair value of the
liability can be reasonably estimated. The Interpretation is
effective no later than the end of fiscal years ending after
December 15, 2005. The company is reviewing the
Interpretation to determine the potential impact, if any, on its
consolidated financial statements.

RISK MANAGEMENT

Understanding and managing risk are important
parts of PotashCorps strategic planning. In previous
years, we identified and analyzed the risks facing the company,
ranked them by likelihood of occurrence and significance of
consequences, and determined the most effective ways to manage
this risk universe.

In 2004, we introduced a new, integrated
risk-management framework that allowed for a comprehensive
evaluation of the interdependence of the risks across all
segments of the company. We reviewed historical risks,
identified new risks and delineated all risks into categories
that could interfere with successful implementation of our
strategy. We saw those risk categories as markets/business,
distribution, operational, financial/ information technology,
regulatory and integrity/empowerment. Together and separately,
these risks affect our ability to take advantage of
opportunities. The greatest consequence of all risks is a loss
of reputation, for it can threaten our earnings, access to
capital or our brand by creating negative opinions of the
company in the minds of employees, customers, investors or our
communities. As the risk globe turns, a risk to reputation
affects our ability to execute our strategies.

All risks were plotted on a matrix which
recognized that the inherent risks to the company can be reduced
by lowering either the expected frequency or the consequences.
These mitigation activities result in lower residual risk
levels. Management focused on the most significant residual
risks to our strategy, as follows, and reported to the Board on
plans to manage them.

The identification and management of risk is an
ongoing process because circumstances change and risks change
with them. The company continues to monitor our risk management
practices. A discussion of enterprise-

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wide risk management can be found on
pages 44 and 45 of our 2004 Annual Report. There have been
no significant changes to managements assessments during
the first three months of 2005.


OUTLOOK

Supply/demand fundamentals in potash remain tight
as demand continues to grow and the industry, excluding
PotashCorp, is operating at or near its capacity. Record
shipments should continue as offshore customers increase imports
and Brazil plays catch-up on its consumption. With other
companies shipping more of their potash production offshore,
PotashCorp has opportunities to capture higher volumes in North
America, where spring planting is now going strong. To meet this
demand, we plan to increase production accordingly. Previously
announced North American potash price increases should be fully
realized by the end of this years second quarter. Two
further $10 per short ton price increases have been
announced for implementation on June 1 and
September 1, 2005. Offshore prices are also expected to
rise.

In phosphate, solid fertilizers will likely
remain challenged by oversupply in the world market, while
industrial products will continue to provide the majority of
gross margin in this segment. Feed is expected to continue
providing positive gross margin as the Aurora DFP plant is now
operating smoothly. The second quarter should show higher
proportional solid fertilizer sales volumes, which generate
lower margins for the company, and will put pressure on the
overall phosphate gross margin.

In nitrogen, tight supply/demand fundamentals are
expected to continue at least through 2005, which should keep
prices for all nitrogen products firm throughout the rest of the
year. In addition, the expansion of the No. 3 plant in
Trinidad was completed late in the quarter and is expected to
result in increased production of approximately 50,000 tonnes
for the remainder of the year and 75,000 tonnes annually. As a
result, nitrogen 2005 earnings now look set to match or surpass
the record set in 2004.

As previously announced, PotashCorp will be
returning 1.9 million tonnes of its idle capacity to
production at Lanigan and Allan. These projects, along with
expansions at the Aurora purified acid plant and in Trinidad,
will raise 2005 capital expenditures to an estimated
$400.0 million, of which $135.0 million is related to
sustaining capital.

On April 11, 2005, the Government of
Saskatchewan announced new provincial mining tax incentives for
potash capital projects. While the companys announced
plans at Lanigan and Allan will qualify, the benefit relating to
these incentives will not be recognized until the regulations
have been enacted, which is expected to occur in the third
quarter of 2005.

Given the continued positive industry
fundamentals the company is now expecting 2005 net income
to be in the range of $4.00 to $4.50 per diluted share,
with second quarter net income of $1.00 to $1.25 per share,
assuming a continued flat Canadian dollar of 1.20.

FORWARD LOOKING STATEMENTS

Certain statements in this Quarterly Report on
Form 10-Q and this Managements Discussion and
Analysis of Financial Condition and Results of Operations,
including those in the Outlook section relating to
the period after March 31, 2005, are forward-looking
statements subject to risks and uncertainties. A number of
factors could cause actual results to differ materially from
those expressed in the forward-looking statements, including,
but not limited to: fluctuation in supply and demand in
fertilizer, sulfur and petrochemical markets; changes in
competitive pressures, including pricing pressures; risks
associated with natural gas and other hedging activities;
changes in capital markets; changes in currency and exchange
rates; unexpected geological or environmental conditions;
imprecision in reserve estimates; the outcome of legal
proceedings; changes in government policy and regulation; and
acquisitions the company may undertake in the future. The
company sells to a diverse group of customers both by geography
and by end product. Market conditions will vary on a
quarter-over-quarter and year-over-year basis and sales can be
expected to shift from one period to another. The company
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise, except as otherwise
required by applicable law.

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|        |                                                               
|------- | --------------------------------------------------------------
|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES
    ABOUT MARKET RISK

Market risk is the potential for loss from
changes in the value of financial instruments. The following
discussion provides additional detail regarding our exposure to
the risks of changing commodity prices, interest rates and
foreign exchange rates.

Commodity Risk

Our US nitrogen results are significantly
affected by the price of natural gas. We employ derivative
commodity instruments related to a portion of our natural gas
requirements (primarily futures, swaps and options) for the
purpose of managing our exposure to commodity price risk in the
purchase of natural gas, not for speculative or trading
purposes. Changes in the market value of these derivative
instruments have a high correlation to changes in the spot price
of natural gas. Gains or losses arising from settled hedging
transactions are deferred as a component of inventory until the
product containing the hedged item is sold. Changes in the
market value of open hedging transactions are not recognized as
they generally relate to changes in the spot price of
anticipated natural gas purchases.

A sensitivity analysis has been prepared to
estimate our market risk exposure arising from derivative
commodity instruments. The fair value of such instruments is
calculated by valuing each position using quoted market prices.
Market risk is estimated as the potential loss in fair value
resulting from a hypothetical 10-percent adverse change in such
prices. The results of this analysis indicate that as of
March 31, 2005, our estimated derivative commodity
instruments market risk exposure was $41.6 million
(2004  $26.9 million). Actual results may differ
from this estimate.

Foreign Exchange Risk

We also enter into foreign currency forward
contracts for the primary purpose of limiting exposure to
exchange rate fluctuations relating to Canadian dollar operating
and capital expenditures. These contracts are not designated as
hedging instruments for accounting purposes. Gains or losses
resulting from foreign exchange contracts are recognized in
earnings in the period in which changes in fair value occur.

As at March 31, 2005, we had entered into
forward exchange contracts to sell US dollars and receive
Canadian dollars in the notional amount of $24.0 million
(2004  $34.5 million) at an average exchange
rate of 1.2143 (2004  1.3175). We also had small
forward contracts outstanding as at March 31, 2005 to
reduce exposure to the Swiss franc. Maturity dates for all
forward contracts are within fiscal 2005.

Interest Rate Risk

We address interest rate risk by using a
diversified portfolio of fixed and floating rate instruments.
This exposure is also managed by aligning current and long-term
assets with demand and fixed-term debt and by monitoring the
effects of market changes in interest rates.

As at March 31, 2005, our short-term debt
(comprised of commercial paper) was $94.3 million, our
current portion of long-term debt was $10.2 million and our
long-term debt was $1,258.5 million. Long-term debt is
comprised primarily of $1,250.0 million of notes payable
that were issued under our US shelf registration statements at a
fixed interest rate. At March 31, 2005, we had swap
agreements outstanding that exchanged a notional amount of
$225.0 million of our 7.75 percent fixed rate notes
into floating rate debt based on six-month US LIBOR rates.
Theses agreements were terminated in the second quarter of 2005.

Since most of our outstanding borrowings have
fixed interest rates, the primary market risk exposure is to
changes in fair value. It is estimated that, all else constant,
a hypothetical 10-percent change in interest rates would not
materially impact our results of operations or financial
position. If interest rates changed significantly, management
would likely take actions to manage our exposure to the change.
However, due to the uncertainty of the specific actions that
would be taken and their possible effects, the sensitivity
analysis assumes no changes in our financial structure.

38



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##### Table of Contents





|        |                        
|------- | -----------------------
|ITEM 4. | CONTROLS AND PROCEDURES

As of March 31, 2005, we carried out an
evaluation under the supervision and with the participation of
our management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures. There are
inherent limitations to the effectiveness of any system of
disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls
and procedures. Accordingly, even effective disclosure controls
and procedures can only provide reasonable assurance of
achieving their control objectives. Based upon that evaluation
and as of March 31, 2005, the Chief Executive Officer and
Chief Financial Officer concluded that the disclosure controls
and procedures were effective to provide reasonable assurance
that information required to be disclosed in the reports the
company files and submits under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported as and when
required.

There has been no change in our internal control
over financial reporting during the quarter ended March 31,
2005 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

39



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##### Table of Contents






PART II.     OTHER
INFORMATION






|        |                  
|------- | -----------------
|ITEM 1. | LEGAL PROCEEDINGS

Nitrochem

On May 1, 2003, Nitrochem Distribution, Ltd.
(Nitrochem) filed an action in U.S. District
Court for the Southern District of New York against our
subsidiary, PCS Sales (USA), Inc. (Sales (USA)).
Nitrochem alleges that Sales (USA) entered into a contract
for ammonia in 2001 that contained an automatic renewal
provision for 2002. Nitrochem further alleges that Sales
(USA) failed to take delivery of a specified amount of
ammonia in 2002. Sales (USA) has denied all of
Nitrochems substantive allegations. Nitrochem is seeking
damages in the amount of $12 million. The matter proceeded
to trial on March 31 and April 1, 2004. On May 3,
2004, a judgment was issued declaring that Sales (USA) had
no contractual obligation to purchase ammonia from Nitrochem in
2002 and denying Nitrochems claim for breach of contract.
Nitrochem has appealed the judgment. On April 22, 2005 the
Second Circuit Court of Appeals affirmed the judgment of the
trial court in favor of Sales (USA).

Shaw

On February 23, 1999, Shaw Constructors Inc.
(Shaw) filed an action against ICF Kaiser Engineers,
Inc. (Kaiser) and PCS Nitrogen Fertilizer, L.P., PCS
Nitrogen Fertilizer, Inc., PCS Nitrogen, Inc. and Potash
Corporation of Saskatchewan Inc. (collectively PCS)
in the Eighteenth Judicial District Court for the State of
Louisiana seeking to recover the balance allegedly owed to it
under a subcontract with Kaiser. Shaw alleged that PCS is liable
for the unpaid balance allegedly due under the subcontract with
Kaiser based on a lien it filed against PCSs property
pursuant to the Louisiana Private Works Act. PCS had previously
entered into a contract with Kaiser for the construction of a
nitric acid facility at the Geismar plant.

The litigation was subsequently removed to the
United States District Court for the Middle District of
Louisiana. On August 3, 2001, the trial court granted
PCSs motion for summary judgment and denied Shaws
motion holding that Shaw had expressly waived its right in the
subcontract to file any liens or claims against PCS and its
property.

On February 7, 2002, Shaw filed an appeal
with the Fifth Circuit Court of Appeals (the Fifth
Circuit). On December 30, 2004, the Fifth Circuit
reversed the trial courts decision and entered summary
judgment on the issue of liability in favor of Shaw ruling that
Shaw has the right to enforce its lien claim against PCS. The
Fifth Circuit remanded the case to the trial court for a
determination as to the amount of damages that Shaw is entitled
to recover from PCS. Shaw alleges that PCS is liable in the
amount of approximately $2.04 million plus interest. On
January 27, 2005, PCS filed a Petition for Rehearing and
Petition for En Banc Rehearing with the Fifth Circuit, which
were denied. PCS intends to file a Petition for a Writ of
Certiorari with the United States Supreme Court and pursue its
defenses to the amount of damages claimed by Shaw on remand to
the trial court.

Planters Property

In March 2005, USEPA released for public comment
a range of remedial alternatives and a proposed remedy for the
Columbia Nitrogen site in Charleston, South Carolina. PCS
Nitrogen will continue to monitor these and other developments
with respect to the Columbia Nitrogen site. In 2003, USEPA
notified PCS Nitrogen that it considers PCS Nitrogen to be a
potentially responsible party with respect to this site. PCS
Nitrogen will continue to assert to EPA and others its position
that it is not a responsible party and to work to identify
former site owners and operators who would be responsible
parties with respect to the site.

General

In the normal course of business, we are subject
to legal proceedings being brought against us. The amounts that
these proceedings may cost us are not reasonably estimable, due
to uncertainty as to the final outcome. However, we do not
believe these proceedings in the aggregate will have a material
adverse effect on our financial position or results of
operations.

40



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|        |                                         
|------- | ----------------------------------------
|ITEM 2. | ISSUER PURCHASE OF EQUITY
    SECURITIES

The following table provides information about
company purchases of equity securities that are registered by
the company pursuant to Section 12 of the Exchange Act
during the quarter ended March 31, 2005:

|                                          |  |                     |           |                  |  |                  |       |                 |  |  |           |  |  |  |           | 
|----------------------------------------- |  | ------------------- | --------- | ---------------- |  | ---------------- | ----- | --------------- |  |  | --------- |  |  |  | --------- | 
|                                         
|ISSUER PURCHASES OF EQUITY SECURITIES    
|                                         
|                                         
|                                          |  | (c) Total Number of |           | (d) Maximum     
|                                          |  | Shares Purchased as |           | Number of Shares
|                                          |  | (a) Total Number    |           | (b) Average      |  | Part of Publicly |       | that May Yet Be
|                                          |  | of Shares           |           | Price Paid       |  | Announced        |       | Purchased Under
|Period                                    |  | Purchased           |           | per Share1       |  | Programs2        |       | the Programs   
|                                         
|                                         
|February 16, 2005 
    February 28, 2005 |  |                     | 268,500   |                  |  | $                | 86.49 |                 |  |  | 268,500   |  |  |  | 5,231,500 | 
|March 1, 2005  March 31, 2005            |  |                     | 865,700   |                  |  | $                | 85.58 |                 |  |  | 1,134,200 |  |  |  | 4,365,800 | 
|                                         
|Total                                     |  |                     | 1,134,200 |                  |  | $                | 86.28 |                 |  |  | 1,134,200 |  |  |  | 4,365,800 | 
|                                         

|  |                                                                                                                                                                                                                                                                                                                                                                                                    
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1 | Average price paid per share includes cash paid
    for commissions.                                                                                                                                                                                                                                                                                                                               
| 
|2 | On January 25, 2005, the company announced
    that its Board of Directors had approved an open market
    repurchase program of approximately 5 percent of the
    companys outstanding common shares, or approximately
    5.5 million shares, through a normal course issuer bid.
    Purchasing under the program commenced on February 16, 2005
    and may continue until February 14, 2006.



|        |                  
|------- | -----------------
|ITEM 5. | OTHER INFORMATION

The companys 2005 Performance Option Plan
(the 2005 Plan) was adopted by the companys
Board of Directors on February 28, 2005 and approved by
shareholders of the company on May 5, 2005. The 2005 Plan
permits the grant to eligible employees of options to purchase
common shares of the company at an exercise price based on the
market value of the shares on the date of grant. The options
become vested and exercisable, if at all, based upon the extent
that the applicable performance objectives are achieved over the
three-year performance period ending December 31, 2007. A
maximum aggregate of 1,200,000 common shares may be issued
pursuant to stock options granted under the 2005 Plan. A copy of
the 2005 Plan is attached as Exhibit 10(nn) to this
Quarterly Report on Form 10-Q.

On May 5, 2005, the companys Board of
Directors approved the form of option agreement to be used in
connection with grants of options under the 2005 Plan. Also on
May 5, 2005, a total number of 1,186,000 options to
purchase common shares of the company were granted under the
2005 Plan, at an exercise price per share of
Cdn $109.92 for those options denominated in Canadian
dollars and an exercise price per share of US$88.23 for those
options denominated in US dollars, the closing price for a
common share of the company on May 4, 2005 on the Toronto
Stock Exchange and New York Stock Exchange, respectively. A copy
of the form of option agreement is attached hereto as
Exhibit 10(nn).



|        |         
|------- | --------
|ITEM 6. | EXHIBITS

|        |      |                         |  |                                                                                                                                                                                                                                                                                                                                                                         
|------- | ---- | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                        
|Number  |      | Description of Document
|        |      |                        
|        | 3(a) |                         |  | Articles of Continuance of the registrant dated
    May 15, 2002, incorporated by reference to
    Exhibit 3(a) to the registrants report on Form 10-Q
    for the quarterly period ended June 30, 2002 (the
    Second Quarter 2002 Form 10-Q).                                                                                                                     
|       
|        | 3(b) |                         |  | Bylaws of the registrant effective May 15,
    2002, incorporated by reference to Exhibit 3(a) to the
    Second Quarter 2002 Form 10-Q.                                                                                                                                                                                                                                
|       
|        | 4(a) |                         |  | Term Credit Agreement between The Bank of Nova
    Scotia and other financial institutions and the registrant dated
    September 25, 2001, incorporated by reference to
    Exhibit 4(a) to the registrants report on Form 10-Q
    for the quarterly period ended September 30, 2001.                                                                                
|       
|        | 4(b) |                         |  | Syndicated Term Credit Facility Amending
    Agreement between The Bank of Nova Scotia and other financial
    institutions and the registrant dated as of September 23,
    2003, incorporated by reference to Exhibit 4(b) to the
    registrants report on Form 10-Q for the quarterly period
    ended September 30, 2003 (the Third Quarter 2003 Form
    10-Q).

41



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|        |      |                         |  |                                                                                                                                                                                                                                                                                                             
|------- | ---- | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                        
|Number  |      | Description of Document
|        |      |                        
|       
|        | 4(c) |                         |  | Syndicated Term Credit Facility Second Amending
    Agreement between The Bank of Nova Scotia and other financial
    institutions and the registrant dated as of September 21,
    2004, incorporated by reference to Exhibit 4(c) to the
    registrants report on Form 8-K dated September 21,
    2004.
|       
|        | 4(d) |                         |  | Indenture dated as of June 16, 1997, between
    the registrant and The Bank of Nova Scotia Trust Company of New
    York, incorporated by reference to Exhibit 4(a) to the
    registrants report on Form 8-K dated June 18, 1997
    (the 1997 Form 8-K).                                              
|       
|        | 4(e) |                         |  | Indenture dated as of February 27, 2003,
    between the registrant and The Bank of Nova Scotia Trust Company
    of New York, incorporated by reference to Exhibit 4(c) to
    the registrants report on Form 10-K for the year ended
    December 31, 2002 (the 2002 Form 10-K).                       
|       
|        | 4(f) |                         |  | Form of Notes relating to the registrants
    offering of $400,000,000 principal amount of 7.125% Notes
    due June 15, 2007, incorporated by reference to
    Exhibit 4(b) to the 1997 Form 8-K.                                                                                                         
|       
|        | 4(g) |                         |  | Form of Notes relating to the registrants
    offering of $600,000,000 principal amount of 7.75% Notes
    due May 31, 2011, incorporated by reference to
    Exhibit 4 to the registrants report on Form 8-K dated
    May 17, 2001.                                                                     
|       
|        | 4(h) |                         |  | Form of Note relating to the registrants
    offering of $250,000,000 principal amount of 4.875% Notes
    due March 1, 2013, incorporated by reference to
    Exhibit 4 to the registrants report on Form 8-K dated
    February 28, 2003.                                                               

The registrant hereby undertakes to file with the
Securities and Exchange Commission, upon request, copies of any
constituent instruments defining the rights of holders of
long-term debt of the registrant or its subsidiaries that have
not been filed herewith because the amounts represented thereby
are less than 10% of the total assets of the registrant and its
subsidiaries on a consolidated basis.

|        |       |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- | ----- | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                        
|Number  |       | Description of Document
|        |       |                        
|        | 10(a) |                         |  | Sixth Voting Agreement dated April 22, 1978,
    between Central Canada Potash, Division of Noranda, Inc.,
    Cominco Ltd., International Minerals and Chemical Corporation
    (Canada) Limited, PCS Sales and Texasgulf Inc., incorporated by
    reference to Exhibit 10(f) to the registrants
    registration statement on Form F-1 (File No. 33-31303)
    (the F-1 Registration Statement).                                                         
|       
|        | 10(b) |                         |  | Canpotex Limited Shareholders Seventh Memorandum
    of Agreement effective April 21, 1978, between Central
    Canada Potash, Division of Noranda Inc., Cominco Ltd.,
    International Minerals and Chemical Corporation (Canada)
    Limited, PCS Sales, Texasgulf Inc. and Canpotex Limited as
    amended by Canpotex S&P amending agreement dated
    November 4, 1987, incorporated by reference to
    Exhibit 10(g) to the F-1 Registration Statement.
|       
|        | 10(c) |                         |  | Producer Agreement dated April 21, 1978,
    between Canpotex Limited and PCS Sales, incorporated by
    reference to Exhibit 10(h) to the F-1 Registration
    Statement.                                                                                                                                                                                                                                                                                     
|       
|        | 10(d) |                         |  | Canpotex/ PCS Amending Agreement, dated as of
    October 1, 1992, incorporated by reference to
    Exhibit 10(f) to the registrants report on
    Form 10-K for the year ended December 31, 1995 (the
    1995 Form  10-K).                                                                                                                                                                                                                                
|       
|        | 10(e) |                         |  | Canpotex PCA Collateral Withdrawing/ PCS Amending
    Agreement, dated as of October 7, 1993, incorporated by
    reference to Exhibit 10(g) to the 1995 Form 10-K.                                                                                                                                                                                                                                                                                            
|       
|        | 10(f) |                         |  | Canpotex Producer Agreement amending agreement
    dated as of January 1, 1999, incorporated by reference to
    Exhibit 10(f) to the registrants report on
    Form 10-K for the year ended December 31, 2000 (the
    2000 Form 10-K).                                                                                                                                                                                                                    
|       
|        | 10(g) |                         |  | Canpotex Producer Agreement amending agreement
    dated as of July 1, 2002, incorporated by reference to
    Exhibit 10(g) to the registrants report on
    Form 10-Q for the quarterly period ended June 30, 2004
    (the Second Quarter 2004 Form 10-Q).                                                                                                                                                                                                

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|        |       |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------- | ----- | ----------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                        
|Number  |       | Description of Document
|        |       |                        
|       
|        | 10(h) |                         |  | Form of Agreement of Limited Partnership of
    Arcadian Fertilizer, L.P. dated as of March 3, 1992, and
    the related Certificate of Limited Partnership of Arcadian
    Fertilizer, L.P., filed with the Secretary of State of the State
    of Delaware on March 3, 1992, incorporated by reference to
    Exhibits 3.1 and 3.2 to Arcadian Partners L.P.s
    Registration Statement on Form S-1 (File No. 33-45828).                                                                                                                                                                         
|       
|        | 10(i) |                         |  | Amendment to Agreement of Limited Partnership of
    Arcadian Fertilizer, L.P. and related Certificates of Limited
    Partnership of Arcadian Fertilizer, L.P. filed with the
    Secretary of State of the State of Delaware on March 6,
    1997 and November 26, 1997, incorporated by reference to
    Exhibit 10(f) to the registrants report on
    Form 10-K for the year ended December 31, 1998 (the
    1998 Form 10-K).                                                                                                                                                               
|       
|        | 10(j) |                         |  | Second amendment to Agreement of Limited
    Partnership of PCS Nitrogen Fertilizer, L.P. dated
    December 15, 2002, incorporated by reference to
    Exhibit 10(i) to the 2002 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                         
|       
|        | 10(k) |                         |  | Third amendment to Agreement of Limited
    Partnership of PCS Nitrogen Fertilizer, L.P. dated
    December 15, 2003, incorporated by reference to
    Exhibit 10(k) to the Second Quarter 2004 Form 10-Q.                                                                                                                                                                                                                                                                                                                                                                                           
|       
|        | 10(l) |                         |  | Geismar Complex Services Agreement dated
    June 4, 1984, between Honeywell International, Inc. and
    Arcadian Corporation, incorporated by reference to
    Exhibit 10.4 to Arcadian Corporations Registration
    Statement on Form S-1 (File No. 33-34357).                                                                                                                                                                                                                                                                                                                                   
|       
|        | 10(m) |                         |  | Esterhazy Restated Mining and Processing
    Agreement dated January 31, 1978, between International
    Minerals & Chemical Corporation (Canada) Limited and
    the registrants predecessor, incorporated by reference to
    Exhibit 10(e) to the F-1 Registration Statement.                                                                                                                                                                                                                                                                                                                    
|       
|        | 10(n) |                         |  | Agreement dated December 21, 1990, between
    International Minerals & Chemical Corporation (Canada)
    Limited and the registrant, amending the Esterhazy Restated
    Mining and Processing Agreement dated January 31, 1978,
    incorporated by reference to Exhibit 10(p) to the
    registrants report on Form 10-K for the year ended
    December 31, 1990.                                                                                                                                                                                                                               
|       
|        | 10(o) |                         |  | Agreement effective August 27, 1998, between
    International Minerals & Chemical (Canada) Global
    Limited and the registrant, amending the Esterhazy Restated
    Mining and Processing Agreement dated January 31, 1978 (as
    amended), incorporated by reference to Exhibit 10(l) to the
    1998 Form 10-K.                                                                                                                                                                                                                                                                                
|       
|        | 10(p) |                         |  | Agreement effective August 31, 1998, among
    International Minerals & Chemical (Canada) Global
    Limited, International Minerals & Chemical (Canada)
    Limited Partnership and the registrant assigning the interest in
    the Esterhazy Restated Mining and Processing Agreement dated
    January 31, 1978 (as amended) held by International
    Minerals & Chemical (Canada) Global Limited to
    International Minerals & Chemical (Canada) Limited
    Partnership, incorporated by reference to Exhibit 10(m) to
    the 1998 Form 10-K.                                              
|       
|        | 10(q) |                         |  | Operating Agreement dated May 11, 1993,
    between BP Chemicals Inc. and Arcadian Ohio, L.P., as amended by
    the First Amendment to the Operating Agreement dated as of
    November 20, 1995, between BP Chemicals Inc. and Arcadian
    Ohio, L.P. (the First Amendment), incorporated by
    reference to Exhibit 10.2 to Arcadian Partners L.P.s
    current report on Form 8-K for the report event dated
    May 11, 1993, except for the First Amendment which is
    incorporated by reference to Arcadian Corporations report
    on Form 10-K for the year ended December 31, 1995.
|       
|        | 10(r) |                         |  | Second Amendment to Operating Agreement between
    BP Chemicals, Inc. and Arcadian Ohio, L.P., dated as of
    November 25, 1996, incorporated by reference to
    Exhibit 10(k) of the registrants report on
    Form 10-K for the year ended December 31, 1997 (the
    1997 Form 10-K).                                                                                                                                                                                                                                                                                                       
|       
|        | 10(s) |                         |  | Manufacturing Support Agreement dated
    May 11, 1993, between BP Chemicals Inc. and Arcadian Ohio,
    L.P., incorporated by reference to Exhibit 10.3 to Arcadian
    Partners L.P.s current report on Form 8-K for the
    report event dated May 11, 1993.                                                                                                                                                                                                                                                                                                                                     
|       
|        | 10(t) |                         |  | First Amendment to Manufacturing Support
    Agreement dated as of November 25, 1996, between
    BP Chemicals, Inc. and Arcadian Ohio, L.P.,
    incorporated by reference to Exhibit 10(l) to the 1997
    Form 10-K.                                                                                                                                                                                                                                                                                                                                                                              

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|        |        |                         |  |                                                                                                                                                                                                                                                                                                                                                  
|------- | ------ | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |                        
|Number  |        | Description of Document
|        |        |                        
|       
|        | 10(u)  |                         |  | Letter of amendment to the Manufacturing Support
    Agreement and Operating Agreement dated September 8, 2003,
    between BP Chemicals Inc. and PCS Nitrogen Ohio, L.P.,
    incorporated by reference to Exhibit 10(s) to the Third
    Quarter 2003 Form 10-Q.                                                                               
|       
|        | 10(v)  |                         |  | Potash Corporation of Saskatchewan Inc. Stock
    Option Plan  Directors, as amended January 23,
    2001, incorporated by reference to Exhibit 10(bb) to the
    Second Quarter 2001 Form 10-Q.                                                                                                                                                
|       
|        | 10(w)  |                         |  | Potash Corporation of Saskatchewan Inc. Stock
    Option Plan  Officers and Employees, as amended
    January 23, 2001, incorporated by reference to
    Exhibit 10(aa) to the 2000 Form 10-K.                                                                                                                                                  
|       
|        | 10(x)  |                         |  | Short-Term Incentive Plan of the registrant
    effective January 2000, as amended March 10, 2005,
    incorporated by reference to Exhibit 10(x) to the
    registrants report on Form 10-K for the year ended
    December 31, 2004 (the 2004 Form 10-K).                                                                                   
|       
|        | 10(y)  |                         |  | Long-Term Incentive Plan of the registrant
    effective January 2000, incorporated by reference to
    Exhibit 10(aa) to the registrants report on
    Form 10-Q for the quarterly period ended June 30, 2000
    (the Second Quarter 2000 Form 10-Q).                                                                                       
|       
|        | 10(z)  |                         |  | Long-Term Incentive Plan of the registrant
    effective January 2003, incorporated by reference to
    Exhibit 10(y) to the 2002 Form 10-K.                                                                                                                                                                                                     
|       
|        | 10(aa) |                         |  | Resolution and Forms of Agreement for
    Supplemental Retirement Income Plan, for officers and key
    employees of the registrant, incorporated by reference to
    Exhibit 10(o) to the 1995 Form 10-K.                                                                                                                                       
|       
|        | 10(bb) |                         |  | Amending Resolution and revised forms of
    agreement regarding Supplemental Retirement Income Plan of the
    registrant, incorporated by reference to Exhibit 10(x) to
    the registrants report on Form 10-Q for the quarterly
    period ended June 30, 1996.                                                                             
|       
|        | 10(cc) |                         |  | Amended and restated Supplemental Retirement
    Income Plan of the registrant and text of amendment to existing
    supplemental income plan agreements, incorporated by reference
    to Exhibit 10(mm) to the registrants report on
    Form 10-Q for the quarterly period ended September 30,
    2000 (the Third Quarter 2000 Form 10-Q).
|       
|        | 10(dd) |                         |  | Form of Letter of amendment to existing
    supplemental income plan agreements of the registrant dated
    November 4, 2002, incorporated by reference to
    Exhibit 10(cc) to the 2002 Form 10-K.                                                                                                                                             
|       
|        | 10(ee) |                         |  | Supplemental Retirement Benefits Plan for
    U.S. Executives dated effective January 1, 1999,
    incorporated by reference to Exhibit 10(aa) to the Second
    Quarter 2002 Form 10-Q.                                                                                                                                                         
|       
|        | 10(ff) |                         |  | Forms of Agreement dated December 30, 1994,
    between the registrant and certain officers of the registrant,
    concerning a change in control of the registrant, incorporated
    by reference to Exhibit 10(p) to the 1995 Form 10-K.                                                                                                       
|       
|        | 10(gg) |                         |  | Form of Agreement of Indemnification dated
    August 8, 1995, between the registrant and certain officers
    and directors of the registrant, incorporated by reference to
    Exhibit 10(q) to the 1995 Form 10-K.                                                                                                                            
|       
|        | 10(hh) |                         |  | Resolution and Form of Agreement of
    Indemnification dated January 24, 2001, incorporated by
    reference to Exhibit 10(ii) to the 2000
    Form  10-K.                                                                                                                                                                                      
|       
|        | 10(ii) |                         |  | Resolution and Form of Agreement of
    Indemnification  July 21, 2004, incorporated by
    reference to Exhibit 10(ii) to the Second Quarter 2004
    Form 10-Q.                                                                                                                                                                               
|       
|        | 10(jj) |                         |  | Chief Executive Officer Medical and Dental
    Benefits, incorporated by reference to Exhibit 10(jj) to
    the 2004 Form 10-K.                                                                                                                                                                                                                  
|       
|        | 10(kk) |                         |  | Second Amended and Restated Membership Agreement
    dated January 1, 1995, among Phosphate Chemicals Export
    Association, Inc. and members of such association, including
    Texasgulf Inc., incorporated by reference to Exhibit 10(t)
    to the 1995 Form 10-K.                                                                          

44



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|        |        |                         |  |                                                                                                                                                                                                                                                                                                                              
|------- | ------ | ----------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |                        
|Number  |        | Description of Document
|        |        |                        
|       
|        | 10(ll) |                         |  | International Agency Agreement dated
    January 1, 1995, between Phosphate Chemicals Export
    Association, Inc. and Texasgulf Inc. establishing Texasgulf Inc.
    as exclusive marketing agent for such associations wet
    phosphatic materials, incorporated by reference to
    Exhibit 10(u) to the 1995 Form 10-K.
|       
|        | 10(mm) |                         |  | Deferred Share Unit Plan for Non-Employee
    Directors, incorporated by reference to Exhibit 4.1 to the
    registrants Form S-8 (File No. 333-75742) filed
    December 21, 2001.                                                                                                                                         
|       
|        | 10(nn) |                         |  | Potash Corporation of Saskatchewan Inc. 2005
    Performance Option Plan and Form of Option Agreement.                                                                                                                                                                                                                       
|       
|        | 11     |                         |  | Statement re Computation of Per Share Earnings.                                                                                                                                                                                                                                                                              
|       
|        | 31(a)  |                         |  | Certification pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                 
|       
|        | 31(b)  |                         |  | Certification pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                 
|       
|        | 32     |                         |  | Certification pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                 

45



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.



| |                                              
| | ---------------------------------------------
| | POTASH CORPORATION OF 
     SASKATCHEWAN INC.

May 6, 2005



| |     |                   
| | --- | ------------------
| | By: | /s/ JOSEPH PODWIKA

| |                                                  
| | -------------------------------------------------
| |                                                  
| | Joseph Podwika                                   
| | Vice President, General Counsel and
    Secretary

May 6, 2005



| |     |                      
| | --- | ---------------------
| | By: | /s/ WAYNE R. BROWNLEE

| |                                                 
| | ------------------------------------------------
| |                                                 
| | Wayne R. Brownlee                               
| | Senior Vice President, Treasurer,
    and       
| | Chief Financial Officer                         
| | (Principal Financial and Accounting
    Officer)

46



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##### Table of Contents



EXHIBIT INDEX

|        |      |                         |  |                                                                                                                                                                                                                                                                                                                                                                         
|------- | ---- | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                        
|Number  |      | Description of Document
|        |      |                        
|        | 3(a) |                         |  | Articles of Continuance of the registrant dated
    May 15, 2002, incorporated by reference to
    Exhibit 3(a) to the registrants report on Form 10-Q
    for the quarterly period ended June 30, 2002 (the
    Second Quarter 2002 Form 10-Q).                                                                                                                     
|       
|        | 3(b) |                         |  | Bylaws of the registrant effective May 15,
    2002, incorporated by reference to Exhibit 3(a) to the
    Second Quarter 2002 Form 10-Q.                                                                                                                                                                                                                                
|       
|        | 4(a) |                         |  | Term Credit Agreement between The Bank of Nova
    Scotia and other financial institutions and the registrant dated
    September 25, 2001, incorporated by reference to
    Exhibit 4(a) to the registrants report on Form 10-Q
    for the quarterly period ended September 30, 2001.                                                                                
|       
|        | 4(b) |                         |  | Syndicated Term Credit Facility Amending
    Agreement between The Bank of Nova Scotia and other financial
    institutions and the registrant dated as of September 23,
    2003, incorporated by reference to Exhibit 4(b) to the
    registrants report on Form 10-Q for the quarterly period
    ended September 30, 2003 (the Third Quarter 2003 Form
    10-Q).
|       
|        | 4(c) |                         |  | Syndicated Term Credit Facility Second Amending
    Agreement between The Bank of Nova Scotia and other financial
    institutions and the registrant dated as of September 21,
    2004, incorporated by reference to Exhibit 4(c) to the
    registrants report on Form 8-K dated September 21,
    2004.                                                            
|       
|        | 4(d) |                         |  | Indenture dated as of June 16, 1997, between
    the registrant and The Bank of Nova Scotia Trust Company of New
    York, incorporated by reference to Exhibit 4(a) to the
    registrants report on Form 8-K dated June 18, 1997
    (the 1997 Form 8-K).                                                                                                          
|       
|        | 4(e) |                         |  | Indenture dated as of February 27, 2003,
    between the registrant and The Bank of Nova Scotia Trust Company
    of New York, incorporated by reference to Exhibit 4(c) to
    the registrants report on Form 10-K for the year ended
    December 31, 2002 (the 2002 Form 10-K).                                                                                   
|       
|        | 4(f) |                         |  | Form of Notes relating to the registrants
    offering of $400,000,000 principal amount of 7.125% Notes
    due June 15, 2007, incorporated by reference to
    Exhibit 4(b) to the 1997 Form 8-K.                                                                                                                                                                     
|       
|        | 4(g) |                         |  | Form of Notes relating to the registrants
    offering of $600,000,000 principal amount of 7.75% Notes
    due May 31, 2011, incorporated by reference to
    Exhibit 4 to the registrants report on Form 8-K dated
    May 17, 2001.                                                                                                                                 
|       
|        | 4(h) |                         |  | Form of Note relating to the registrants
    offering of $250,000,000 principal amount of 4.875% Notes
    due March 1, 2013, incorporated by reference to
    Exhibit 4 to the registrants report on Form 8-K dated
    February 28, 2003.                                                                                                                           



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##### Table of Contents



The registrant hereby undertakes to file with the
Securities and Exchange Commission, upon request, copies of any
constituent instruments defining the rights of holders of
long-term debt of the registrant or its subsidiaries that have
not been filed herewith because the amounts represented thereby
are less than 10% of the total assets of the registrant and its
subsidiaries on a consolidated basis.

|        |       |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- | ----- | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                        
|Number  |       | Description of Document
|        |       |                        
|        | 10(a) |                         |  | Sixth Voting Agreement dated April 22, 1978,
    between Central Canada Potash, Division of Noranda, Inc.,
    Cominco Ltd., International Minerals and Chemical Corporation
    (Canada) Limited, PCS Sales and Texasgulf Inc., incorporated by
    reference to Exhibit 10(f) to the registrants
    registration statement on Form F-1 (File No. 33-31303)
    (the F-1 Registration Statement).                                                         
|       
|        | 10(b) |                         |  | Canpotex Limited Shareholders Seventh Memorandum
    of Agreement effective April 21, 1978, between Central
    Canada Potash, Division of Noranda Inc., Cominco Ltd.,
    International Minerals and Chemical Corporation (Canada)
    Limited, PCS Sales, Texasgulf Inc. and Canpotex Limited as
    amended by Canpotex S&P amending agreement dated
    November 4, 1987, incorporated by reference to
    Exhibit 10(g) to the F-1 Registration Statement.
|       
|        | 10(c) |                         |  | Producer Agreement dated April 21, 1978,
    between Canpotex Limited and PCS Sales, incorporated by
    reference to Exhibit 10(h) to the F-1 Registration
    Statement.                                                                                                                                                                                                                                                                                     
|       
|        | 10(d) |                         |  | Canpotex/ PCS Amending Agreement, dated as of
    October 1, 1992, incorporated by reference to
    Exhibit 10(f) to the registrants report on
    Form 10-K for the year ended December 31, 1995 (the
    1995 Form  10-K).                                                                                                                                                                                                                                
|       
|        | 10(e) |                         |  | Canpotex PCA Collateral Withdrawing/ PCS Amending
    Agreement, dated as of October 7, 1993, incorporated by
    reference to Exhibit 10(g) to the 1995 Form 10-K.                                                                                                                                                                                                                                                                                            
|       
|        | 10(f) |                         |  | Canpotex Producer Agreement amending agreement
    dated as of January 1, 1999, incorporated by reference to
    Exhibit 10(f) to the registrants report on
    Form 10-K for the year ended December 31, 2000 (the
    2000 Form 10-K).                                                                                                                                                                                                                    
|       
|        | 10(g) |                         |  | Canpotex Producer Agreement amending agreement
    dated as of July 1, 2002, incorporated by reference to
    Exhibit 10(g) to the registrants report on
    Form 10-Q for the quarterly period ended June 30, 2004
    (the Second Quarter 2004 Form 10-Q).                                                                                                                                                                                                
|       
|        | 10(h) |                         |  | Form of Agreement of Limited Partnership of
    Arcadian Fertilizer, L.P. dated as of March 3, 1992, and
    the related Certificate of Limited Partnership of Arcadian
    Fertilizer, L.P., filed with the Secretary of State of the State
    of Delaware on March 3, 1992, incorporated by reference to
    Exhibits 3.1 and 3.2 to Arcadian Partners L.P.s
    Registration Statement on Form S-1 (File No. 33-45828).                                   
|       
|        | 10(i) |                         |  | Amendment to Agreement of Limited Partnership of
    Arcadian Fertilizer, L.P. and related Certificates of Limited
    Partnership of Arcadian Fertilizer, L.P. filed with the
    Secretary of State of the State of Delaware on March 6,
    1997 and November 26, 1997, incorporated by reference to
    Exhibit 10(f) to the registrants report on
    Form 10-K for the year ended December 31, 1998 (the
    1998 Form 10-K).                         
|       
|        | 10(j) |                         |  | Second amendment to Agreement of Limited
    Partnership of PCS Nitrogen Fertilizer, L.P. dated
    December 15, 2002, incorporated by reference to
    Exhibit 10(i) to the 2002 Form 10-K.                                                                                                                                                                                                                                                                   
|       
|        | 10(k) |                         |  | Third amendment to Agreement of Limited
    Partnership of PCS Nitrogen Fertilizer, L.P. dated
    December 15, 2003, incorporated by reference to
    Exhibit 10(k) to the Second Quarter 2004 Form 10-Q.                                                                                                                                                                                                                                                     
|       
|        | 10(l) |                         |  | Geismar Complex Services Agreement dated
    June 4, 1984, between Honeywell International, Inc. and
    Arcadian Corporation, incorporated by reference to
    Exhibit 10.4 to Arcadian Corporations Registration
    Statement on Form S-1 (File No. 33-34357).                                                                                                                                                                                             
|       
|        | 10(m) |                         |  | Esterhazy Restated Mining and Processing
    Agreement dated January 31, 1978, between International
    Minerals & Chemical Corporation (Canada) Limited and
    the registrants predecessor, incorporated by reference to
    Exhibit 10(e) to the F-1 Registration Statement.                                                                                                                                                                              



---



##### Table of Contents



|        |        |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|------- | ------ | ----------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |                        
|Number  |        | Description of Document
|        |        |                        
|       
|        | 10(n)  |                         |  | Agreement dated December 21, 1990, between
    International Minerals & Chemical Corporation (Canada)
    Limited and the registrant, amending the Esterhazy Restated
    Mining and Processing Agreement dated January 31, 1978,
    incorporated by reference to Exhibit 10(p) to the
    registrants report on Form 10-K for the year ended
    December 31, 1990.                                                                                                                                                                                                                               
|       
|        | 10(o)  |                         |  | Agreement effective August 27, 1998, between
    International Minerals & Chemical (Canada) Global
    Limited and the registrant, amending the Esterhazy Restated
    Mining and Processing Agreement dated January 31, 1978 (as
    amended), incorporated by reference to Exhibit 10(l) to the
    1998 Form 10-K.                                                                                                                                                                                                                                                                                
|       
|        | 10(p)  |                         |  | Agreement effective August 31, 1998, among
    International Minerals & Chemical (Canada) Global
    Limited, International Minerals & Chemical (Canada)
    Limited Partnership and the registrant assigning the interest in
    the Esterhazy Restated Mining and Processing Agreement dated
    January 31, 1978 (as amended) held by International
    Minerals & Chemical (Canada) Global Limited to
    International Minerals & Chemical (Canada) Limited
    Partnership, incorporated by reference to Exhibit 10(m) to
    the 1998 Form 10-K.                                              
|       
|        | 10(q)  |                         |  | Operating Agreement dated May 11, 1993,
    between BP Chemicals Inc. and Arcadian Ohio, L.P., as amended by
    the First Amendment to the Operating Agreement dated as of
    November 20, 1995, between BP Chemicals Inc. and Arcadian
    Ohio, L.P. (the First Amendment), incorporated by
    reference to Exhibit 10.2 to Arcadian Partners L.P.s
    current report on Form 8-K for the report event dated
    May 11, 1993, except for the First Amendment which is
    incorporated by reference to Arcadian Corporations report
    on Form 10-K for the year ended December 31, 1995.
|       
|        | 10(r)  |                         |  | Second Amendment to Operating Agreement between
    BP Chemicals, Inc. and Arcadian Ohio, L.P., dated as of
    November 25, 1996, incorporated by reference to
    Exhibit 10(k) of the registrants report on
    Form 10-K for the year ended December 31, 1997 (the
    1997 Form 10-K).                                                                                                                                                                                                                                                                                                       
|       
|        | 10(s)  |                         |  | Manufacturing Support Agreement dated
    May 11, 1993, between BP Chemicals Inc. and Arcadian Ohio,
    L.P., incorporated by reference to Exhibit 10.3 to Arcadian
    Partners L.P.s current report on Form 8-K for the
    report event dated May 11, 1993.                                                                                                                                                                                                                                                                                                                                     
|       
|        | 10(t)  |                         |  | First Amendment to Manufacturing Support
    Agreement dated as of November 25, 1996, between
    BP Chemicals, Inc. and Arcadian Ohio, L.P.,
    incorporated by reference to Exhibit 10(l) to the 1997
    Form 10-K.                                                                                                                                                                                                                                                                                                                                                                              
|       
|        | 10(u)  |                         |  | Letter of amendment to the Manufacturing Support
    Agreement and Operating Agreement dated September 8, 2003,
    between BP Chemicals Inc. and PCS Nitrogen Ohio, L.P.,
    incorporated by reference to Exhibit 10(s) to the Third
    Quarter 2003 Form 10-Q.                                                                                                                                                                                                                                                                                                                                   
|       
|        | 10(v)  |                         |  | Potash Corporation of Saskatchewan Inc. Stock
    Option Plan  Directors, as amended January 23,
    2001, incorporated by reference to Exhibit 10(bb) to the
    Second Quarter 2001 Form 10-Q.                                                                                                                                                                                                                                                                                                                                                                                                    
|       
|        | 10(w)  |                         |  | Potash Corporation of Saskatchewan Inc. Stock
    Option Plan  Officers and Employees, as amended
    January 23, 2001, incorporated by reference to
    Exhibit 10(aa) to the 2000 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                      
|       
|        | 10(x)  |                         |  | Short-Term Incentive Plan of the registrant
    effective January 2000, as amended March 10, 2005,
    incorporated by reference to Exhibit 10(x) to the
    registrants report on Form 10-K for the year ended
    December 31, 2004 (the 2004 Form 10-K).                                                                                                                                                                                                                                                                                                                                       
|       
|        | 10(y)  |                         |  | Long-Term Incentive Plan of the registrant
    effective January 2000, incorporated by reference to
    Exhibit 10(aa) to the registrants report on
    Form 10-Q for the quarterly period ended June 30, 2000
    (the Second Quarter 2000 Form 10-Q).                                                                                                                                                                                                                                                                                                                                           
|       
|        | 10(z)  |                         |  | Long-Term Incentive Plan of the registrant
    effective January 2003, incorporated by reference to
    Exhibit 10(y) to the 2002 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       
|        | 10(aa) |                         |  | Resolution and Forms of Agreement for
    Supplemental Retirement Income Plan, for officers and key
    employees of the registrant, incorporated by reference to
    Exhibit 10(o) to the 1995 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                           



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##### Table of Contents



|        |        |                         |  |                                                                                                                                                                                                                                                                                                                                                  
|------- | ------ | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |                        
|Number  |        | Description of Document
|        |        |                        
|       
|        | 10(bb) |                         |  | Amending Resolution and revised forms of
    agreement regarding Supplemental Retirement Income Plan of the
    registrant, incorporated by reference to Exhibit 10(x) to
    the registrants report on Form 10-Q for the quarterly
    period ended June 30, 1996.                                                                             
|       
|        | 10(cc) |                         |  | Amended and restated Supplemental Retirement
    Income Plan of the registrant and text of amendment to existing
    supplemental income plan agreements, incorporated by reference
    to Exhibit 10(mm) to the registrants report on
    Form 10-Q for the quarterly period ended September 30,
    2000 (the Third Quarter 2000 Form 10-Q).
|       
|        | 10(dd) |                         |  | Form of Letter of amendment to existing
    supplemental income plan agreements of the registrant dated
    November 4, 2002, incorporated by reference to
    Exhibit 10(cc) to the 2002 Form 10-K.                                                                                                                                             
|       
|        | 10(ee) |                         |  | Supplemental Retirement Benefits Plan for
    U.S. Executives dated effective January 1, 1999,
    incorporated by reference to Exhibit 10(aa) to the Second
    Quarter 2002 Form 10-Q.                                                                                                                                                         
|       
|        | 10(ff) |                         |  | Forms of Agreement dated December 30, 1994,
    between the registrant and certain officers of the registrant,
    concerning a change in control of the registrant, incorporated
    by reference to Exhibit 10(p) to the 1995 Form 10-K.                                                                                                       
|       
|        | 10(gg) |                         |  | Form of Agreement of Indemnification dated
    August 8, 1995, between the registrant and certain officers
    and directors of the registrant, incorporated by reference to
    Exhibit 10(q) to the 1995 Form 10-K.                                                                                                                            
|       
|        | 10(hh) |                         |  | Resolution and Form of Agreement of
    Indemnification dated January 24, 2001, incorporated by
    reference to Exhibit 10(ii) to the 2000
    Form  10-K.                                                                                                                                                                                      
|       
|        | 10(ii) |                         |  | Resolution and Form of Agreement of
    Indemnification  July 21, 2004, incorporated by
    reference to Exhibit 10(ii) to the Second Quarter 2004
    Form 10-Q.                                                                                                                                                                               
|       
|        | 10(jj) |                         |  | Chief Executive Officer Medical and Dental
    Benefits, incorporated by reference to Exhibit 10(jj) to
    the 2004 Form 10-K.                                                                                                                                                                                                                  
|       
|        | 10(kk) |                         |  | Second Amended and Restated Membership Agreement
    dated January 1, 1995, among Phosphate Chemicals Export
    Association, Inc. and members of such association, including
    Texasgulf Inc., incorporated by reference to Exhibit 10(t)
    to the 1995 Form 10-K.                                                                          
|       
|        | 10(ll) |                         |  | International Agency Agreement dated
    January 1, 1995, between Phosphate Chemicals Export
    Association, Inc. and Texasgulf Inc. establishing Texasgulf Inc.
    as exclusive marketing agent for such associations wet
    phosphatic materials, incorporated by reference to
    Exhibit 10(u) to the 1995 Form 10-K.                    
|       
|        | 10(mm) |                         |  | Deferred Share Unit Plan for Non-Employee
    Directors, incorporated by reference to Exhibit 4.1 to the
    registrants Form S-8 (File No. 333-75742) filed
    December 21, 2001.                                                                                                                                                             
|       
|        | 10(nn) |                         |  | Potash Corporation of Saskatchewan Inc. 2005
    Performance Option Plan and Form of Option Agreement.                                                                                                                                                                                                                                           
|       
|        | 11     |                         |  | Statement re Computation of Per Share Earnings.                                                                                                                                                                                                                                                                                                  
|       
|        | 31(a)  |                         |  | Certification pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                     
|       
|        | 31(b)  |                         |  | Certification pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                     
|       
|        | 32     |                         |  | Certification pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.