Essential Minerals for Life Nomura Global Chemical Industry Leaders - - PowerPoint PPT Presentation

Essential Minerals for Life

Nomura Global Chemical Industry Leaders Conference

Rome, March 22, 2012

Disclaimer

The information delivered or to be delivered to you does not constitute an offer or a recommendation to do any The information delivered or to be delivered to you does not constitute an offer or a recommendation to do any transaction in Israel Chemicals Ltd. (ICL) securities. Although our shares may be bought and sold on the Tel Aviv Stock Exchange (TASE) at any trading time, they do not trade out of Israel - neither in the United States, nor EU ,nor elsewhere and this presentation does not constitute an offer or investment advice to any US or other person at this time. If we ever do so, our offer will only be made by a prospectus or a registration statement conforming with all requirements of U.S., EU or any other applicable law. Certain statements in this presentation and other oral and written statements made by ICL from time to time, are forward-looking statements, including, but not limited to, those that discuss strategies, goals, outlook or other non- historical matters; or project revenues, income, returns or other financial measures. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including, among others, the following: (a) Crisis in financial markets;(b) War or terror operations;(c) I t l f f tili ( d t i t li i d th ) (d) S bj ti t l i l ti d Impacts on sales of fertilizers (product prices, government policies and weather); (d) Subjection to legislative and licensing restrictions;(e) Exposure relating to environmental protection and safety;(f) Third party liability and product liability; (g) Volatility in the markets that affects the demand for some of the products; (h) Concessions and permits; (i) Natural disasters; (j) Water level in Pond 150 in Dead Sea;(k) Dependence on seaports, transportation and loading in

• Israel. We caution you that the above list of important factors is not comprehensive. We refer you to filings that we

have made and shall make with the TASE. They may discuss new or different factors that may cause actual results to diff t i ll f thi i f ti differ materially from this information. All information included in this document speaks only as of the date on which they are made, and we do not undertake any obligation to update such information afterwards. Some of the market and industry information is based on independent industry publications or other publicly available y p y p p y information, while other information is based on internal studies. Although we believe that these independent sources and our internal data are reliable as of their respective dates, the information contained in them has not been independently verified and we can not assure you as to the accuracy or completeness of this information. Readers and viewers are cautioned to consider these risks and uncertainties and to not place undue reliance on such information.

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Company Basics

From Basic Minerals to Downstream Products and Performance Solutions

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ICL - A Global Player

A global manufacturer of fertilizers & specialty chemicals Headquartered in Israel worldwide operations

ICL A Global Player

Headquartered in Israel, worldwide operations 2010 revenues: US$ 5.7 billion; Net Income: US$ 1.025 billion 9M 2011 revenues: US$ 5.4 billion; Net Income: US$ 1.142 billion Close to 50% of revenues derived from production activities outside of Israel; ~94% of sales occur outside of Israel 11,965 employees* as of September, 2011 (~5,000 in Israel) Trading: Tel-Aviv Stock Exchange (TASE: ICL)

Potash Corp (POT) 14%

Market cap**:~$14 billion Dividend yield: 2011: 5 5%; Decade average: 4 8%

Israel Corp (ILCO) Public 34%

Dividend yield: 2011: 5.5%; Decade average: 4.8%

(ILCO) 52%

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* Including new acquisitions ** As of March 12, 2012

ICL Shareholders

Integrated Portfolio Across Segments – From Basic Materials to Downstream Products

Potash

Potash, Phosphate Rock, Phosphoric Acid, Phosphate Fertilizers, Compound Fertilizers, Specialty Fertilizers, Feed Additives, Salts

ICL

Potash 34%

Elemental Bromine, Bromine & Organophosphorus Flame Retardants, Various Bromine Compounds, Chlorine based Biocides Magnesia Prod cts

Potash 34% Other 4% ICL Industrial Products 22%

Fertilizers & Phosphates 17%

Chlorine-based Biocides, Magnesia Products Specialty Phosphates: Technical, Food Grade & Electronic Grade Phosphoric Acid, Phosphate Salts,

Fertilizers & Phosphates ICL Performance Products 23% 4%

Electronic Grade Phosphoric Acid, Phosphate Salts, Food Additives, Hygiene Products, Wildfire Safety Products, Water Treatment Chemicals and Services

p 17% 23%

Pure Magnesium, Magnesium Alloys; Water Desalination Solutions (via IDE, 50% JV)

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Note: % based on 2010 sales

Access to Vast, Low Cost Natural Resources ,

Potash Potash

The Dead Sea

Bromine Polyhalite

Sea

Bromine Magnesium S

Iberpotash (Spain) & CPL (England)

(Israel)

Salts Phosphates

3 Peat Mining The Negev Desert 3 Peat Mining Sites (England) (Israel)

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Dead Sea Potash - Unique Low-cost Technology and Open Air Storage and Open Air Storage

Dredging Operation 2 Production Lines Evaporation Process Open Air Storage Capacity Capacity

• Environmentally friendly pond evaporation system,

saves the burning of about 10 million tons of coal or diesel oil each year y

• Use of natural gas in Israel, as of mid 2010, reduces

CO emissions to the atmosphere

2

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Agreement with the Israeli Government Ensures Future Potash De elopment & S stainabilit at the Dead Sea Potash Development & Sustainability at the Dead Sea

• ICL will finance over 80% of the salt dredging costs.
• Dead Sea Works’ royalty rate will increase from 5% to 10% on ex-works (average) price

1 2 3 4 5 6

At th Dead Sea Works royalty rate will increase from 5% to 10% on ex works (average) price

• f potash for annual volumes sold over 1.5 million tons.

Floating dredgers harvest the salt The suspension flows through a floating pipe to a drainage The salt is

• drained. The

solution is filtered and The dry salt is loaded onto a conveyor to transport At the North terminal, the salt is The barges return the salt to the northern basin to a drainage area near the dike. filtered and returned to the pond. transport it to the terminal. loaded onto barges. northern basin

• f the Dead

Sea.

Terminal

Zohar Ein Gedi

Salt transport Terminal Pond No.5

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Ein Bokek Zohar

Bromine: Lowest Cost, Virtually Unlimited Reserves y

0.05 g/l

Sea Water ) China, India, Japan (

0.2 g/l

Underground Wells ) China (

2-6 g/l

Brine Wells ) USA* and Russia ( Most Concentrated Source of Bromine

10 12 g/l

Dead Sea Brine ) USA and Russia ( in the World

10-12 g/l

Dead Sea Brine

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* Arkansas – brine wells of Chemtura & Albemarle

Vertical Integration With High Utilization of By-Products & Waste Products

Raw Materials

Elemental

Source Major Intermediate & Finished Products

Phosphorus ( Penta) Sulfide

Th

Fertilizer Grade Food Grade Phosphoric Acid Phosphate Salts Phosphate Phosphorus Wildfire Extinguishers Food Additives Sulfide

The Negev Desert

Grade Phosphoric Acid Phosphate Rock Special Grade Acid Food Hygiene Alumina & Magnesia Based Phosphate Fertilizers Salt (NaCl) Compound Fertilizers Specialty Potash

The Dead

End Brine Carnallite Pure Magnesium Magnesium Specialty Fertilizers Magnesium Chloride Solution

Dead Sea

Crude Magnesium End Brine Elemental Chlorine Magnesia Magnesium Alloys Salt (NaCl) Potash Chlorine Bromine Compounds Magnesium Chloride

Potash Mines in the UK & S i

Sylvanite Elemental Bromine Magnesia Products (MgO) Polynalite

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Chlorine based Biocides

& Spain

y

Fertilizers Industrial Products Performance Products DSM Product Sold

OPFRs & Others

Strong Global Presence & Logistical Advantages g & g g

) Sales by Geography (1-9/11

Europe 36% North America 20% Asia 27% Israel 5% ROW 2% Mexico South America 10%

Manufacturing plant Logistic center Sales offices Headquarter

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Headquarter

Leading Player in Global Industries Leading Player in Global Industries

#1 in elemental bromine ~40% of global production capacity #1 in organophosphorus flame retardants #1 producer of pure phosphoric acid #1 in specialty phosphates #1 in specialty phosphates #1 in wildfire safety products #1 d f PK f tili ( d t h & h h t f tili ) #1 producer of PK fertilizers (compound potash & phosphate fertilizers) #2 Europe and #6 Worldwide in potash supply #2 Western world magnesium production, and... Major player in specialty fertilizers & specialty chemical niche markets

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Continuous Historical Growth Trend

5 692 6,904

$ millions

Continuous Historical Growth Trend

2 715 2 986 3,258 4,103 4,554 5,692 4,271 5,356 1 346 1 460 1,981 2,271 2,715 2,986 2,336 2,004 770 1,025 1,142 354 561 536 743 938 1,346 1,007 1,460 92 103 251 422 374 553 770 , 779 199 203 354 561 2002 2003 2004 2005 2006 2007 2008 2009 2010 9M10 9M11 2002 2003 2004 2005 2006 2007 2008 2009 2010 9M10 9M11 Net Income Operating Income

Sales

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*2002-2006 figures are based on Israeli GAAP, 2007-2011 are based on IFRS

Strong Returns Strong Returns

94.5% 49 7%*

52.0%

ROE 10 9% 8 1% 10 4% 10.5% 22.4% 31.2% 23.2% 31.4% 29.5% 38.0% 49.7%*

52.0% 32.5%*

10.9% 8.1% 10.4%

5.5% 4.2% 5.5% 5.3% 9.6% 14.4% 12.9% 19.1% 19.4% 21.4%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

ROIC

* LTM (as of September 2011)

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ROE (Return on equity) = net income / shareholders' equity, average ROIC (Return on invested capital ) = (operating income ×(1-0.20)) / ((trade receivables + inventory – trade payables) + PP&E, net), average 2000-2006 figures are based on Israeli GAAP, 2007-2011 based on IFRS LTM (as of September 2011)

10 Years of High Dividend Yields 10 Years of High Dividend Yields

Dividend policy:

Year Dividend Yield*

p y Up to 70% of net income in quarterly payments

2011 Dividend Payments 2001 4.0% 2002 4.8% 2003 4 5% Q1: $195 million announced on May, 2011 Q2: $298 million announced on August, 2011 2003 4.5% 2004 4.5% 2005 3.6% Q3: $300 million announced on November, 2011 2006 6.4% 2007 3.5% 2008 5.9% 2009 3.9% 2010 7 0%

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* Calculated according to market capitalization based on average share price adjusted for dividends

2010 7.0%

Company & Market Updates Updates

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ICL Fertilizers

Meeting the Challenge of Growing Demand for Food

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ICL Fertilizers: A Variety of Commodity & Specialty Fertilizers

Potash Fertilizers & Phospates 34% Potash 66%

$ Segment Sales - 2010: $3,107 Million 1-9/2011: $3,063 Million

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Based on 2010 external sales

Low Levels of World Grain Stocks & Stock-to-Use Ratio Signal a Need for More Crops & Fertilizers

Stocks of Grains and Pulses

B l ill t i d i t i h & h t ( USDA M h 2012)

34% 36% 2.3 2.4

Consumption Production Stock to Use

Barley, corn, millet, mixed grain, oats, rice, rye, sorghum & wheat (source: USDA, March 2012)

30% 32% 2.1 2.2

ne

26% 28% 1.9 2.0

illion Tonn

22% 24% 1.7 1.8

B

20.35%

16% 18% 20% 1 4 1.5 1.6

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16% 1.4

High Farm Commodity Prices May Support High

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Fertilizer Prices

Grain Prices: 1997-2012

Soybean US$/ bushel 13 4 6 8 10 12 Wheat 13.4 6.4

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4 6

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Corn 6.5

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

1400

900 1000

Potash Prices (1997-2012) Phosphate Prices (1997-2012)

US$/t spot, Standard grade KCl US$/t spot

Source: CBOT (March 11, 2012)

600 800 1000 1200

400 500 600 700 800 900

200 400

100 200 300

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Sources: Fertilizer Week (March 9, 2012)

FOB Vancouver TSP N. Africa DAP US Gulf DAP N. Africa

Potential for Increasing Crop Yield in Major Food

12 300

Growing Countries by Improved Fertilizer Application

Example: Corn

10 250

a a

K2O P2O5 N Yield [kg/ha] 8 200

es, per Ha Kg per Ha

4 6 100 150

eld Tonne usage, K

2 4 50 100

Crop Yie Nutrient

• USA

EU-27 China India

N

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Source: USDA, July 2011, IFA

Total Potash Consumption Outlook In Selected Geographies, 2007-2017

15 11 13 es KCl 7 9 illion Tonne 3 5 M

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 CAGR 2007- 17 China PR 10 68 9 00 8 50 10 38 11 17 11 70 12 32 12 85 13 58 14 07 14 76 3 3%

3

China PR 10.68 9.00 8.50 10.38 11.17 11.70 12.32 12.85 13.58 14.07 14.76 3.3% Brazil 6.99 6.18 5.28 6.53 7.46 7.54 7.71 8.05 8.38 8.72 9.05 2.6% India 4.42 5.55 6.08 5.88 4.87 5.03 7.53 7.87 8.20 8.53 8.87 7.2% USA 8.51 6.09 8.03 8.21 8.94 9.29 9.48 9.66 9.76 9.86 9.96 1.6%

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EU 27 6.04 3.49 4.04 5.13 5.02 5.44 5.63 5.69 5.73 5.75 5.77

• 0.4%

Sources: FertEcon Potash Outlook 2011-4 (Feb 2012)

ICL’s Potash Market Share* in 2010 Increasing in h F G i E i M k the Fast Growing Emerging Markets

China (total 5.2Mt) India (total 6Mt) Brazil (total 6.1Mt)

Uralkali +Belaruskali 32% Mosaic 3% PCS 5% SQM 2% K+S 3% APC 6% SQM 3%

Uralkali+ Belaruskali 29% APC 13% K & S 3% SQM 1%

32% K+S 16% Uralkali + Silvinit Canpotex 18%

29% Canpotex 19%

Silvinit 3% ICL Canpotex 42% Belaruskali ICL 15%

Silvinit 15%

ICL 16% 23% Belaruskali 13%

ICL 20%

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* Out of imports in million metric tons (Mt)

Sources: China Fertilizer Weekly Market Report, Sindicaro Da Industria DE Adubose Corretivos Agricolas No Estado De Sao Paulo, Company estimates

* Out of imports in 2010, in million metric tons (MT)

ICL’s Potash Market Share* in 2011 Increasing in h F G i E i M k the Fast Growing Emerging Markets

China (total 6.4Mt) India (total 4.5Mt) Brazil (total 7.5Mt)

Uralkali +Belaruskali 38% K+S PCS 4% SQM 3% BPC K+S 1% APC 11% K+S 3% APC 6% SQM 1% K S 12% 27% Canpotex 18% Uralkali + Silvinit 33% Canpotex 27% Silvinit Canpotex IPC 22% Belaruskali 10% Silvinit 3% ICL 9% Canpotex 31% ICL 21% ICL 20%

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Sources: China Fertilizer Weekly Market Report, Sindicaro Da Industria DE Adubose Corretivos Agricolas No Estado De Sao Paulo, Company estimates

* Out of imports in 2011, in million metric tons (MT)

Potash - ICL Increased Production Capacity Over the Years by Acquisitions & Debottlenecking

Potash: An addition of 1.15 mt (final products) at Sodom since 1998 (+77%) in dditi t th i iti i E

5,600

addition to the acquisitions in Europe.

Production in thousands of mt KCl

Stage 11 – to add up to 500kt by 2015

2 600 3,600 4,600 600 1,600 2,600 2010 2006 2002 1998 1994 1990 1986 1982 1978 1974 1970

2002 1998 Converting salt pond number 3 to Carnallite +180kt 2002 Purchase of CPL-UK Purchase of IPB-Spain Debottlenecking plant capacity expansion +450kt Debottlenecking

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Debottlenecking +300kt +400kt

Rationalization and Expansion Plan Started in 2011 Fi l G l C t i l d ti it at Iberpotash (Spain) Final Goal: Create a single production site based on a high-grade mine (Cabanasas):

1 1M tonnes/yr potash output (1 05M 1.1M tonnes/yr potash output (1.05M fertilizer grade and 50K technical grade) 630K tonnes/yr compacting capacity 630K tonnes/yr compacting capacity 1.5M tonnes/yr vacuum salt 500K tonnes/yr de-icing salt The Suria/Cabanasas center will be expanded and the Vilafruns/Sallent center will be moth-balled

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Polyhailite at Cleveland Potash (England) Polyhailite at Cleveland Potash (England)

• Polyhalite:

A natural mineral considered to be an organic fertilizer with 14% K2O, 50% SO3, 7% MgO & Chlorine<2%

• Vast reserves:
• ver 1 billion tonnes at over 90% purity

(i.e. 140M tonnes of low-chlorine potash) ( p )

• Easy accessibility:

150 meters below the potash seam in the shallowest t f th i part of the mine

• Favorable minerology:

thick ore layer = easy processing easy mining thick ore layer = easy processing, easy mining

• Existing infrastructure: shafts, conveyor belts, railway,

skilled mining labor and downstream processing

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g p g capabilities

Phosphates – Mi d f th N D t i I l Mined from the Negev Desert in Israel

3 Open Pit Mines Restored Mine Potential Production Capacity (bulk products): Phosphate rock: ~4.5 million tonnes Phosphoric acid: ~550 thousand tonnes Phosphate & compound fertilizers (TSP, SSP, NPKs): ~1.9 million tonnes Bulk production sites: Rotem (IS), Amsterdam (ND), Ludwigshafen (GE)

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In addition: Specialty fertilizers, animal feed additives

ICL has Become a Global Leader in Specialty Fertilizers F ll i R t A i iti Following Recent Acquisitions

2011 Acquisitions in Core Businesses WSF (MKP MAP) Everris

(Scotts Global Pro) WSF, CRF, SRF

(MKP, MAP) Liquid & Soluble NPKs

ICL SPECIALTY FERTILIZERS

Business of : ~$650M Sales

Fuentes

WSNPKs, Liquids

Nutrisi (50%) NPKs

~ 700 employees

• ne of the industry’s leading players

Nutrisi (50%)

PG Mix, WSNPKs

Broad portfolio Broad portfolio

• f unique

branded Wide and strong sales force with a global reach Best-in-Class R&D and technology Wide and strong sales force with a global reach Broad portfolio

• f unique

branded products Best-in-Class R&D and technology

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products a global reach technology a global reach branded products technology

* WSF= Water Soluble Fertilizers; WSNPK= Water Soluble compound fertilizers; CRF= Controlled Released Fertilizers; SRF= Slow Released Fertilizers

ICL Global Leadership in Specialty Fertilizers

Contributes to faster growth (est. 5%-8% per annum)

ICL Global Leadership in Specialty Fertilizers

Enriches ICL’s product portfolio with the market’s leading brands Expands ICL’s technological capabilities with unique technologies p g p q g

The Controlled Release

• 1. NPK granules are

partially coated with an elastic polymer

• 2. After application,

water enters through the pores

• 3. The nutrients are dissolved

in the water, resulting in a concentrated nutrient

• 4. Controlled nutrient

release over 3, 6, 9 or 12 mos

Release (CRF) Concept

Extends ICL’s fertilizer business downstream to the end-user Creates a platform for geographical expansion in specialty fertilizers

solutions

Creates a platform for geographical expansion in specialty fertilizers Enables ICL to bring additional environmentally-friendly products to global agricultural markets

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global agricultural markets

ICL Industrial Products

From Minerals of the Dead Sea to New Products and ‘Green’ Applications

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ICL Industrial Products ICL Industrial Products

Organophosphorus flame retardants Other Bromine based flame retardants Water treatment biocides Brominated inorganic & ag chemicals

Segment Sales - 2010: $ 1,313 Million 1-9/2011: $1 178 Million

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1-9/2011: $1,178 Million

Based on 2010 external sales

World's Leader in Elemental Bromine World s Leader in Elemental Bromine

Breakdown of Global Bromine Capacity

ICL is the largest elemental-bromine d i th ld ( it 280kt/ )

China 13% Others 9%

producer in the world (capacity 280kt/y)

ICL is one of the 3 leading players

in the bromine-compounds industry

ICL 40% Chemtura 14% 13%

Largest transportation capacity (fleet of iso-containers) Ad d R&D (I l US)

Albemarle 24%

Advanced R&D (Israel, US) developing eco-friendly products Strong HSE (health, safety, environment )

Global Bromine Market in 2011 ~600Kt

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Sources: US Bureau of Mines, Arkansas Oil & Gas Commission publications, ICL estimates.

in 2011 600Kt

Recent Improvement in the Electronic Industry Might Support Stronger FR Sales Boosted by Lower Chinese Supply Stronger FR Sales Boosted by Lower Chinese Supply

1.01

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Source: IPC Association, Semiconductor Equipment and Materials International (SEMI), March 2012)

Worldwide Oil & Gas Rig Count – A Significant Increase from 2009 Lows

4,000 4,500 3,000 3,500 2 000 2,500 3,000 1,500 2,000

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Source: Baker Hughes Rig Count, February 2012

Growth Driven by Global Megatrends, St i t R l ti & I ti Stricter Regulations & Innovation

Significant potential in mercury Significant potential in mercury emission reduction in coal-fired power plants & cement factories (primarily in the US* & China)

Emissions l Water scarcity Fire safety higher standards Growing population control

Mercury removal: bromine based

scarcity

• Climate change &

increasing demand

• AquatabsTM

higher standards

• The new PolyquelTM

product line

• “Green” construction

population

Intermediates for agro, food and pharma MerquelTM product line

• New regulations

2009 acquisition of Medentech, world leader in end-user drinking water treatment, to serve as a

* A tax credit for burning “Refined Coal” (section 45) for electricity generation is in place (10 years). EPA Federal regulation (to reduce mercury emission by ~91%) expected in 2014/5 Many states have already started

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platform for growth

in 2014/5. Many states have already started implementation.

ICL Performance Products

G

Global Leader in Specialty Phosphates

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ICL Performance Products: Ph h t D t A li ti Phosphate Downstream Applications

Phosphate Salts Other and Food Additives Other Phosphate Phosphoric Acid* Other Phosphate Based Products

75% phosphate & phosphorus-based products 25% other

Segment Sales - 2010: $1,340 Million 1-9/2011: $1,162 Million

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* Food, technical & electronic grade acids Based on 2010 external sales

The Most Vertically Integrated Specialty Ph h C Phosphates Company

From Raw Materials to Downstream Products & Services

Food Additives Food Hygiene

High price

Phosphate Salts Phosphoric Food Grade Phosphoric Acid

• sp o c

Acid (MGA) Commodity Fertilizers Acid Phosphate Rock

#1 in pure phosphoric acid & specialty phosphates

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Services and Solutions Basic Products

Low price

Back-Integrated through Tailored Solutions Back Integrated through Tailored Solutions

Functional Food Ingredients Wildfire Safety Ingredients Phosphate Technical Specialties

Negev Desert

Hygiene Services Phosphate Rock Purified Phosphoric Acid Sp P2S5 Electronic Grade Phosphoric Acid

Israel Back Integration

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Value Added Applications

Summary: W ll P iti d t A hi S t i bl G th Well Positioned to Achieve Sustainable Growth Access to vast, low cost natural resources Proven competencies and execution capabilities G f f Global footprint with strong infrastructure Well-positioned segments with high barriers to entry p g g y Strong fundamentals of our markets

With the salt dredging &

New market drivers and opportunities Dedicated to sustainability and HSE

potash royalties issues resolved, ICL is well positioned for

Dedicated to sustainability and HSE

future development & sustainability

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ICL: Committed to Responsible Value Creation

Thank you

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www.icl-group.com

Solar Evaporation Ponds at the Dead Sea – E ti P d N 5

Carnallite Ponds

Evaporation Pond No.5

Pond no. 5 Salt Ponds Hotels Production Sites

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