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                                                                    EXHIBIT 4.12


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                          REGISTRATION RIGHTS AGREEMENT

                                     among

                             TERRA INDUSTRIES INC.

                                      and

                           TAURUS INTERNATIONAL S.A.

                                      and

                            TAURUS INVESTMENTS S.A.


                           Dated as of July 2, 2001



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                                REGISTRATION RIGHTS AGREEMENT

         REGISTRATION RIGHTS AGREEMENT, dated as of July 2, 2001 (the
"Agreement"), among TERRA INDUSTRIES INC., a Maryland corporation (the
"Company"), and TAURUS INTERNATIONAL S.A. and TAURUS INVESTMENTS S.A., each a
company incorporated in the Grand Duchy of Luxembourg (each a "Shareholder" and
together the "Shareholders").

         WHEREAS the Shareholders have requested the Company to file a
registration statement and to take other steps required by law to facilitate the
sale to the public of certain common shares, without par value, of the Company
("Shares") and the Company believes that it is consistent with the Company's
commercial objectives to do so.

         NOW, THEREFORE, in consideration of the premises, representations and
agreements contained herein, the parties agree as follows:

         1.       Shelf Registration Statement.

                  (a)      Filing; Effectiveness; Expenses. The Company shall:

                           (i) file no later than 60 days following the date of
this Agreement an "evergreen" shelf registration statement on Form S-3 (the
"Shelf Registration") pursuant to Rule 415 under the United States Securities
Act of 1933, as amended (the "Securities Act"), providing for an offering to be
made on a continuous basis of the 5,000,000 Shares (the "Registrable
Securities") purchased by Credit Agricole Lazard Financial Products Bank and
Tokyo-Mitsubishi International plc (each a "Purchaser", and together the
"Purchasers") pursuant to the Purchase Agreement, dated as of March 13, 2000
(the "Purchase Agreement"), among the Shareholders and the Purchasers;

                           (ii) use commercially reasonable efforts to cause the
Shelf Registration to become effective as soon as practicable after such filing;

                           (iii) use commercially  reasonable  efforts to
maintain in effect, supplement and amend, if necessary, the Shelf Registration,
as required by the instructions applicable to such registration form or by the
Securities Act or as reasonably requested by a Shareholder; and

                           (iv) furnish to the Shareholders copies of any
supplement or amendment to such Shelf Registration prior to such supplement,
amendment or document being used and/or filed with the United States Securities
and Exchange Commission (the "Commission").

                  (b) Effective Shelf Registration Statement. (i) If at any time
the Shelf Registration ceases to be effective, then the Company shall use its
best efforts to file and use its
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commercially reasonable efforts to cause to become effective a new "evergreen"
shelf registration statement providing for an offering to be made on a
continuous basis of the Registrable Securities.

                           (ii) If, after the Shelf Registration has become
effective, it is affected by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or authority, then
the Company shall use its commercially reasonable efforts to prevent the
issuance of any stop order suspending the effectiveness of the registration
statement or of any order preventing or suspending the use of any preliminary
prospectus and, if any such order is issued, to obtain the withdrawal of any
such order as soon as reasonably practicable.

                  (c) (i) The Company may at any time furnish to the
Shareholders and the Purchasers a certificate signed by its chairman of the
board, president, chief executive officer, chief financial officer or general
counsel (a "Suspension Notice") stating that (A) in the good faith judgment of
the board of directors of the Company following consultation with the Company's
outside securities counsel, the Company has pending or in process a material
transaction, the disclosure of which would materially and adversely affect the
Company or the market for its securities, (B) in his or her good faith judgment
following consultation with the Company's outside securities counsel, the filing
of an amendment or supplement to the Shelf Registration or a document
incorporated by reference therein is necessary in order to ensure that the Shelf
Registration conforms in all material respects to the requirements of the
Securities Act and does not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, including cases in which such filing
would require disclosure of material information that the Company has a bona
fide business purpose for preserving as confidential or (C) the Company has been
advised in writing by a nationally recognized investment banking firm that a
sale of Registrable Securities would adversely affect a registered offering in
respect of which the Company has commenced preparations.

                  (ii) If at any time prior to the initial filing of the Shelf
Registration the Company shall furnish a Suspension Notice to the Shareholders
and the Purchasers pursuant to clause (A) of Section 1(c)(i), the Company may
postpone the filing (but not the preparation) of the Shelf Registration for not
more than 45 days upon prior notice of such postponement to the Shareholders and
the Purchasers; provided, however, that the Company shall not be permitted to
postpone registration pursuant to this clause (ii) more than once.

                  (iii) No later than three Business Days prior to the exercise
by a Shareholder of a Call Option pursuant to the Call Option Agreement, dated
as of March 13, 2000, between Taurus International S.A. and Credit Agricole
Lazard Financial Products, such Shareholder shall notify the Company of such
Shareholder's intention to exercise such Call


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Option (such notification, a "Confirmation Request"). Within two Business Days
following receipt of such Confirmation Request the Company shall confirm to the
Shareholders in writing whether or not the Company intends to deliver a
Suspension Notice in accordance with Section 1(c)(i). For purposes of this
Agreement "Business Day" shall mean any day on which banks are generally open
for business in New York, New York.

                  (iv) During any 10 Business Day-day period following the
receipt of a Confirmation Request, the Company shall be obligated to deliver to
the Shareholders and the Purchasers a Suspension Notice immediately upon
discovery by the Company of the condition specified in clause (B) of Section
1(c)(i) and shall be obligated to notify the Shareholders and the Purchasers in
writing (such notice, a "Suspension Withdrawal") once the Shelf Registration has
been supplemented or amended, including by the filing of a document incorporated
therein by reference, in a manner that has corrected the condition that was the
subject of such Suspension Notice.

                  (v) Notwithstanding anything in this Agreement to the
contrary, the Company shall be entitled to deliver only one Suspension Notice
pursuant to clause (B) of Section 1(c)(i) within any period of 180 consecutive
days or with respect to any two consecutive resales for which a Shareholder
delivers Confirmation Requests.

         2.       Registration Expenses.

                  The Shareholders agree to reimburse and to pay or cause to be
paid promptly upon request being made thereof all reasonable and documented
"out-of-pocket" expenses of the Company arising from the preparation and initial
filing of the Shelf Registration and all amendments or commitments thereto
required for effectiveness, including without limitation (a) all Commission and
any National Association of Securities Dealers registration and filing fees and
expenses, (b) all fees and expenses in connection with the qualification of the
Registrable Securities for offering and sale under the State securities and blue
sky laws, including reasonable fees and qualifications, (c) all expenses
relating to the preparation, printing, distribution and reproduction of the
Shelf Registration, each prospectus included therein or prepared for
distribution pursuant hereto, each amendment or supplement to the foregoing, the
certificates representing the Common Shares or other equity securities to be
sold and all other documents relating hereto, (d) fees and expenses of any
escrow agent or custodian, (e) fees, disbursements and expenses of counsel and
independent certified public accountants of the Company and (f) all fees and
expenses (including listing and qualification fees) in connection with the
listing or admission to quotation of the Registrable Securities.


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         3.       Representations and Warranties by the Company.

                  The Company represents and warrants to, and agrees with, each
                  Shareholder that:

                  (a) each registration statement covering Registrable
Securities and each prospectus (including any preliminary prospectus) and any
further amendments of supplements to any such registration statement or in the
case of an underwritten offering of Registrable Securities, at the time of the
closing under the underwriting agreement relating thereto, will conform in all
material respects to the requirements of the Securities Act and will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading;
and at all times subsequent to the effective date of such registration statement
when a prospectus would be required to be delivered under the Securities Act,
other than from such time as the Company has delivered a Suspension Notice to
the Shareholders and the Purchasers pursuant to clause (B) of Section 1(c)(i)
until such time as the Company has delivered a Suspension Withdrawal to the
Shareholders and the Purchasers, each such registration statement and each
prospectus contained therein, as then amended or supplemented, will conform in
all material respects to the requirements of the Securities Act and will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by a Purchaser or the
Shareholders expressly for use therein;

                  (b) any documents incorporated by reference in any prospectus
referred to in Section 3, when they become or became effective or are or were
filed with the Commission, as the case may be, as then amended or supplemented,
will conform or conformed in all material respects to the requirements of the
Securities Act or the United States Securities Exchange Act of 1934, as amended,
as applicable, and none of such documents will contain an untrue statement of a
material fact or will omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information furnished
in writing to the Company by a Purchaser or the Shareholders expressly for use
therein;

                  (c) the compliance by the Company with all of the provisions
of this Agreement and the consummation of the transactions herein contemplated
will not (i) conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any subsidiary is a party or by which the Company or any subsidiary is bound or
to which any of the property or assets of the Company or any subsidiary is
subject, or (ii) result in any violation of the provisions of the Articles of
Incorporation or By-Laws of the Company as


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currently in effect or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Company or any
subsidiary or any of their properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or governmental
agency or body is required for the consummation by the Company of the
transactions contemplated by this Agreement, except the registration under the
Securities Act of the Registrable Securities and such consents, approvals,
authorizations, registrations or qualifications as may be required under State
Securities or blue sky laws in connection with the offering and distribution of
the Registrable Securities.

         4.       Termination.

                  (a) This Agreement may be terminated at any time by written
consent by each of the Shareholders and the Company. This Agreement shall be
terminated automatically upon the sale, transfer, assignment or other disposal
by the Purchasers to unrelated third parties of all of the Registrable
Securities pursuant to the Shelf Registration or otherwise.

                  (b) Upon termination of this Agreement none of the parties
shall have any further liability hereunder.

         5.       Miscellaneous.

                  (a) No Inconsistent Agreements. The Company represents,
warrants, covenants and agrees that it has not granted, and shall not grant,
registration rights with respect to any Shares, Registrable Securities or any
other securities that would be inconsistent with the terms contained in this
Agreement.

                  (b) Specific Performance. The parties hereto acknowledge that
there would be no determinable amount of damages and no adequate remedy at law
if the Company breached any of the provisions and obligations of the Agreement
and that the Shareholders from time to time may be irreparably harmed. The
parties hereto agree that the Shareholders, in addition to any other remedy to
which they may be entitled at law or in equity, shall be entitled to compel
specific performance of the obligations of the Company under this Agreement in
any court having jurisdiction.

                  (c) Notices. All notices, requests, claims or demands, waivers
and other communications hereunder shall be in writing and shall be deemed to
have been duly given when delivered by hand, when delivered personally or by
courier, three days after being dispatched by express courier, or when received
by facsimile transmission if promptly confirmed by foregoing means to the
following address

                  to Taurus International S.A. and Taurus Investments S.A. at:


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                 9 rue Sainte Zithe, L-2763, Luxembourg
                 Facsimile: +352 404 110 10
                 Attention: Company Secretary

                 with a copy to Anglo American plc at:
                 20 Carlton House Terrace, London SW1Y 5AN, U.K.
                 Facsimile: +44 207 698 8755
                 Attention: Company Secretary

                 to the Company at:
                 Terra Centre, 600 Fourth Street,
                 Sioux City, Iowa 51102, U.S.A.
                 Facsimile: +1 712 279 8719 Attention:
                 General Counsel

                 with a copy to Kirkland & Ellis at:
                 200 East Randolph Drive, Chicago, Illinois 60601, U.S.A.
                 Facsimile: +1 312 861 2200 Attention:
                 Carter W. Emerson, Esq.

                 (d) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                 (e) Arbitration. The parties irrevocably agree that any
dispute arising out of or relating to this Agreement shall be settled by
arbitration between the parties in accordance with the arbitration rules of the
International Chamber of Commerce ("ICC") as in effect at the time of submission
of the dispute to such arbitration. Such arbitration shall be the exclusive
method for resolution of the dispute, and the determination of the arbitrators
shall be final and binding. The costs of the arbitration, and the reasonable and
related legal and other costs of the party prevailing in the arbitration, shall
be borne by the party who does not prevail. The arbitral award shall specify
which such party or parties is the "prevailing party" for this purpose. The
number of arbitrators shall be three. The Shareholders on the one hand and the
Company on the other hand shall each act as one party for purposes of appointing
arbitrators under the ICC arbitration rules. The place of arbitration shall be
Toronto, Canada and the arbitration shall be conducted in the English language.
The arbitrators shall decide the merits of such dispute in accordance with the
laws of the State of New York.

                 (f) Assignment. Each of the Shareholders may assign its rights
or obligations hereunder in whole or in part to an affiliate thereof following
prior notice of such assignment to the Company.


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                  (g) Headings. The descriptive headings of the several Sections
and paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.

                  (h) Entire Agreement; Amendments.

This Agreement and the other writings referred to herein or delivered pursuant
hereto which form a part hereof contain the entire understanding of the parties
with respect to its subject matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter. This Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) only by a written instrument duly executed by
the Company and the Shareholders.

                  (i) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


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         IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
duly executed as of the date first written above.


                                          TERRA INDUSTRIES INC.


                                          By:________________________
                                             Name:
                                             Title:


                                          TAURUS INTERNATIONAL S.A.


                                          By:________________________
                                             Name:
                                             Title:


                                          TAURUS INVESTMENTS S.A.


                                          By:________________________
                                             Name:
                                             Title:

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                               LETTER AGREEMENT

                                                                   July 2, 2001

Terra Industries Inc.
Terra Centre, 600 Fourth Street
Sioux City, Iowa 51102

Dear Sirs:

          Reference is made to the Registration Rights Agreement, dated as of
the date hereof (the "Registration Rights Agreement"), among Terra Industries
Inc. (the "Company"), Taurus International S.A. and Taurus Investments S.A. in
relation to the Common Shares, without par value, of the Company, a copy of
which is attached hereto as Exhibit A. Capitalized terms not otherwise defined
herein have the same meaning as set forth in the Registration Rights Agreement.

          In consideration of the execution by the Company of the Registration
Rights Agreement, the sufficiency of which is hereby acknowledged, each of
Credit Agricole Lazard Financial Products Bank ("CAL FP") and Tokyo-Mitsubishi
International plc ("TMI" ) hereby agrees that it shall not (i) sell, transfer,
assign, pledge, encumber or otherwise dispose of, whether for value, and whether
directly or indirectly, any of the Registrable Securities or (ii) enter into any
agreements, option contracts, futures contracts, options on futures contracts,
spot or forward contracts, caps, floors, collars or other agreements to purchase
or dispose of, whether directly or indirectly, the economic or other risks of
ownership of the Registrable Securities, or enter into any other hedging
arrangements in respect of its holding of the Registrable Securities (each of
(i) and (ii) a "Transfer"), in each case pursuant to the Registration Statement,
without giving written notice (a "Transfer Notice") to the Company not less than
three Business Days prior to such intended Transfer; provided, however, that it
is understood that no Transfer Notice shall be required in circumstances where
such Transfer is being made in connection with an exercise by a Shareholder of a
Call Option and such Shareholder has delivered to the Company a Confirmation
Request pursuant to Section 1(c)(iii) of the Registration Rights Agreement.
Within two Business Days following receipt of such Transfer Notice the Company
shall confirm to CAL FP and TMI in writing whether or not the Company intends to
deliver a Suspension Notice in accordance with Section 1(c)(i) of the
Registration Rights Agreement. During any 10 Business Day-day period following
the receipt of such Transfer Notice, the Company shall be obligated to
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deliver to CAL FP and TMI a Suspension Notice immediately upon discovery by the
Company of the condition specified in clause (B) of Section 1(c)(i) of the
Registration Rights Agreement. Each of CAL FP and TMI further agrees that upon
receipt by CAL FP or TMI, as the case may be, of a Suspension Notice delivered
by the Company pursuant to clause (B) or (C) of Section 1(c)(i) of the
Registration Rights Agreement, CAL FP or TMI, as the case may be, shall not
Transfer any of the Registrable Securities or any other Shares then held by it,
in each case pursuant to the Shelf Registration or otherwise, until receipt by
it from the Company of a Suspension Withdrawal delivered in accordance with
Section 1(c)(iv) of the Registration Rights Agreement.

          Following the delivery of a Suspension Notice in response to receipt
from CAL FP or TMI of a Transfer Notice, the Company shall be obligated to
deliver to CAL FP and TMI a Suspension Withdrawal once the Shelf Registration
has been supplemented or amended, including by the filing of a document
incorporated therein by reference, in a manner that has corrected the condition
that was the subject of such Suspension Notice.

          Each of CAL FP and TMI agrees that if it commences one or more
Transfers of Registrable Securities in connection with an exercise by a
Shareholder of a Call Option it shall notify the Company within one Business Day
following completion of such Transfer or series of Transfers.

          None of the parties shall, without the prior written consent of the
other, directly or indirectly, make any disclosure with respect to this letter
agreement, except as may be required by applicable law or any order, rule or
regulation of any governmental authority.

          All notices and other communications in relation to this letter
agreement shall be given in the manner contemplated by Section 5(c) of the
Registration Rights Agreement and shall be sent to the following addresses:

          to Credit Agricole Lazard Financial Products Bank at:
          11 Moorfields Highwalk, London EC2Y 9DY, U.K.
          Facsimile: +44 207 815 1966
          Attention: Settlements

          to Tokyo-Mitsubishi International plc at:
          6 Broadgate, London EC2M 2AA, U.K.
          Facsimile: +44 207 577 2872 or + 44 207 577 2894
          Attention: Legal Department/Capital Markets

          to the Company at:
          Terra Centre, 600 Fourth Street, Sioux City, Iowa 51102, U.S.A.


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          Facsimile: +1 712 279 8719
          Attention: General Counsel

          with a copy to Kirkland & Ellis at:
          200 East Randolph Drive, Chicago, Illinois 60601, U.S.A.
          Facsimile: +1 312 861 2200
          Attention: Carter W. Emerson, Esq.

          This letter agreement shall be governed by and construed in accordance
with the laws of the State of New York. Section 5(e) of the Registration Rights
Agreement is hereby incorporated by reference with full effect as if set forth
in full in this letter agreement, mutatis mutandis.

          If you are in agreement with the foregoing, please so indicate by
signing in the space provided below.

Very truly yours,

CREDIT AGRICOLE LAZARD FINANCIAL PRODUCTS BANK

By:________________________________
Name:
Title:

TOKYO-MITSUBISHI INTERNATIONAL PLC

By:________________________________
Name:
Title:

ACCEPTED AND AGREED:

TERRA INDUSTRIES INC.

By:________________________________
Name:
Title:
(Attachment)

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