Our mining business depends on concessions granted to us by the respective governments in the countries in which our mining operations are located. Loss or impairmentof concessions, as well as material changes to the conditions of these concessions could materially and adversely affect our business, financial condition and results of operations.

Furthermore, we mine phosphate rock from phosphate deposits in the Negev Desert in accordance with three concessions from the State of Israel that are valid up to the end of 2021. In exchange for these concessions, we are required to pay royalties to the Israeli government. For additional information on the concessions, see “Item 4.4 Information on the Company—D. Property, Plants and Equipment—Concessions and Mining Rights.”

Our ability to operate and/or expand our production and operating facilities is dependent on our receipt of, and compliance with, permits issued by governmental authorities, including authorities in Israel, Spain, and the United Kingdom.Kingdom, Ethiopia and China. A decision by a government authority to deny any of our permitspermit applications may impair our business and operations.

Existing permits are subject to challenges with respect to their validity, revocation, modification and non-renewal. Any successful challenges with respect to the validity of our permits or the revocation, modification or non-renewal of our permits could materially adversely impact our operations and financial condition. In addition, a failure to comply with the terms of our permits could result in payment of substantial fines and subject us to criminal sanctions.

Our operations and sales are subject to the volatility of market supply and demand and we face significant competition from some of the world’s largest chemical and mining companies.

In addition to seasonal and cyclical variations (mainly in our Fertilizers segment), some of our businesses are characterized by fluctuations caused, in part, by factors on the supply side, such as entry into the market of new manufacturers and products and expansion of the production capacity of existing manufacturers, as well as changes on the demand side. Some of our products are commodities that are available from multiple sources. Our competitors include some of the world’s largest chemical and mining companies. Some of these companies are state-owned or government-subsidized. The potential production capacity is currently greater than the global demand, which has impacted pricing. The primary competitive factor with respect to our products is the price. Our products prices are impacted by the prices prevailing in the market. For example, at the end of July 2013, Uralkali announced that it was discontinuing its joint marketing with Belaruskali (Uralkali and Belaruskali are the leading potash producers in Russia and Belarus). In addition, Uralkali stated that it will implement a new policy for potash sales of preferring quantity over price. We believe this announcement led to a fall in potash prices. Prices have remained low due to higher supply and weaker demand due to several reasons including low agricultural prices. Additional competitive factors include product quality, customer service and technical assistance. If we are unable to compete effectively with these companies, our results of operations would almost certainly be significantly adversely affected.

Inaccuracies in our estimates of mineral reserves and resource deposits could result in lower than expected sales and/or higher than expected costs.

We base our mineral reserve and resource estimates on engineering, economic and geological data that is compiled and analyzed by our engineers and geologists. However, reserve estimates are necessarily imprecise and depend to some extent on statistical inferences drawn from available drilling data, which may prove unreliable/inaccurate. There are numerous uncertainties inherent in estimating quantities and qualities of reserves and non-reserve deposits and the costs to mine recoverable reserves and economic feasibility, including many factors beyond our control. Estimates of economically feasible commercial reserves necessarily depend on a number of factors and assumptions, all of which may vary considerably from the actual results, such as:

If these factors and assumptions change, we may need to revise our mineral reserves and resources estimates. For example, in 2015, we reduced our reserves estimates for our potash mine in the United Kingdom as a result of depletion due to continuing mining activities, changes in geological interpretation and no new conversion of resources to reserves from ongoing exploration activities.

In China, historically, the Haikou mine and the Baitacun mine reported their reserves pursuant to the Chinese Ordinance for Estimation of Mineral Resources, which does not fully correspond with the methodology in SEC Industry Guide 7. We have hired the services of an independent, international company, which is engaged in mining matters, to perform a more in-depth analysis of the mineral resources in the Haikou mine and the Baitacun mine. However, at the present time, the above-mentioned process has not been completed and, accordingly, as at December 31, 2015, the Haikou mine and the Baitacun mine do not have proven or probable reserves in accordance with SEC Industry Guide 7.

In June 2015, we completed the acquisition of Allana, which holds a concession acquired in October 2013 for the Danakhil mine in Ethiopia’s Afar National Regional State through Allana Afar. We are currently in process of researching the project’s feasibility and technical and operating requirements. As the project progresses, further significant investments may be required. There are currently no mining operations at the Danakhil site, and the exploration process is still ongoing. The proposed development at the Danakhil site is exploratory in nature and the property is without known proven (measured) or probable (indicated) reserves. The Ethiopian government’s provision of natural resources and infrastructure, including water, electricity and roads, is a prerequisite to our development of a large-scale mining project in the Afar region. There are some uncertainties as to whether the results of the research will justify the continuation of the project, in the short or long term. The materialization of the project depends on various factors, including the results of the feasibility study of the Danakhil mining project, adherence to the project's CAPEX planning, provision of the necessary natural resources, infrastructure and services by the Ethiopian government, actual amounts of muriate of potash and water reserves in comparison to our expectations, market fluctuations, especially in our manufacturing locations and target markets and changes in the demand and price environment for potash.

For additional information, see “Item 4 Information on the Company—D. Property, Plants and Equipment—Concessions and Mining Rights.”

Any inaccuracy in our estimates related to our mineral reserves and non-reserve mineral deposits could result in lower than expected sales and/or higher than expected costs.

The locations of some of our mines and facilities expose us to various natural disasters.

We are exposed to natural disasters, such as flooding and earthquakes thatwhich may cause material damage to our business.

In Israel, some of our plants are located on the African SyrianAfrican-Syrian Rift, a seismically active area. Furthermore, in recent years sinkholes and underground cavities have been discovered in the area of the Dead Sea, which could cause harm to our plants. In the area of Sodom, where many of our plants are located, there are occasional flash floods in the stream beds.stream-beds. While we have insurance coverage that covers these types of damage, subject to payment of deductibles, the insurance may not be sufficient to cover all of these damages.

In addition, we have underground mines in the United Kingdom and Spain. Water leakages into these mines might cause disruptions to mining or loss of the mine. We do not have property insurance for the underground property of our mine in the United Kingdom.

As part of the evaporation process, salt in Pond 5 at the Dead Sea (which is the main evaporation pond in our system of solar ponds) is sinking at the rate of about 20 million tons per year. Sinking of the salt causes a reduction of the brine volume in the pond. Our production process requires that a fixed brine volume be preserved in the pond. For this purpose, the water level of the pond is raised by approximately 20 centimeters annually. Failure to raise the water level by this amount will cause a reduction in our production capacity. However, raising the water level of the pond above a certain level may cause structural damage to the foundations andof the hotel buildings situated close to the water’s edge and to other infrastructureinfrastructures on the western shoreline of Pond 5.

We are currently working with the Israeli government to develop various temporary defenses and a permanent solution, which consists of full harvesting of the salt in such a manner that raising the water level in Pond 5 will not be necessary after completion of the harvesting. The temporary defenses are supposed to provide protection pending the implementation of a permanent solution, which is supposed to provide protection until the end of the current concession period in 2030.

According to the Dead Sea Protection Company Ltd., as at October 2010, the total cost of the salt harvestingSalt Harvesting Project was estimated as at October 2010,to be in a nominal amount of about NIS 7 billion (a discounted amount of about NIS 3.8 billion – hereinafter –the “Discounted Amount") (a discounted amount of about $1 billion). TheWe will bear 80% and the government will bear 20% of the cost of the salt harvesting,Salt Harvesting Project, however the government's share will not more thanexceed the discounted amount (20% of NIS 3.8 billion – discounted amount). The government’s maximum commitment isDiscounted Amount, linked to the CPI and bearsbearing interest at the rate of 7%. See “Item 4. Information on the Company—D. Property, Plant and Equipment —Mineral Extraction and Mining Operations” for more information about these temporary defenses and the proposed permanent solution.

There is no assurance that the temporary defenses or the permanent solution will be fully implemented or, if implemented, that they will prevent damage to the surrounding infrastructure or our operations at Pond 5. The failure to develop a solution or any such damage could materially and adversely affect our business, financial condition and results of operations.

As part of our production process in Israel, we pump water from the Dead Sea through a special pumping station and deliver it to the salt and carnallite ponds. Due to the receding water level in the northern basin of the Dead Sea, the water line is receding from the current pumping station and construction of a new pumping station is necessary. We expect that a new pumping station would be able to pump water for 15 years. In order to continue to pump water from the Dead Sea after the end of the 15 years another new pumping station would have to be constructed. Construction of the new station depends mainly on, among other things, receipt of statutory approvals. We have set up a designated team to advance the required processes and to monitor the various developments that could impact receipt of the statutory approvals. In December 2015, the Israeli National Committee for Building and Planning of National Infrastructure approved, as part of its approval of the permanent salt harvesting solution, the construction of a new pumping station (hereinafter “the plan”). The plan, including the construction of the new pumping station is subject to and conditioned upon the Israeli government's approval. Following the approval of the Israeli National Committee for Building and Planning of National Infrastructure, in March 2016, the Israeli government also approved the Plan. A failure to construct the new pumping station on time may impair our ability to pump the required amount of raw material from the Dead Sea.

We use water, energy and various raw materials as inputs and we could be affected by higher costs or shortages of these materials.

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Our phosphate facilities use large quantities of water purchased from the Mekorot Company, Israel’s national water company, at prices set by the government. If these prices rise significantly, our costs will rise as well. In our plants in Sodom, we obtain water from an independent system that is not part of the national water system. A shortage of water in the water sources in proximity to the plants would force our Fertilizers segment to seek water sources located further away at a higher cost.

Our plants consume large amounts of energy. Furthermore, energy is a significant component of the shipping costs of a considerable share of our products. Significant price increases for energy, or energy shortages, would affect shipping costs, production costs and/or quantities. The production processes and facilities at our magnesium plant require a continuous supply of electricity. While our magnesium plant has two power supply sources — our power station in Sodom and the national electricity network in Israel — there is a risk of damage to the power supply from these two sources simultaneously.concurrently. Prolonged damage to the regular supply of electricity may damage the plants and the environment.

In 2015, the Israeli Public Utilities Authority Electricity (hereinafter –the “Electricity Authority") resolved to impose certain electricity system management services charges also on private electricity producers as opposed to only on private consumers, this being retroactively from June 2013. In September 2015, ICL, DSW and Rotem filed a petition against the Electricity Authority's resolution claiming that it suffers from fundamental flaws. During December 2015, DSW and Rotem received charges from the Electric Company relating to the said matter whereby the companies are required to pay about $35 million for the period from June 2013 up to 2015. There is a significant disagreement between DSW, Rotem and the Electric Company with respect to some of the elements in the demand payments provided (about $12.5 million). DSW expressed the arguments before the Electricity Authority which responded that it is reviewing the arguments and that at this time DSW should pay the amount that is not in contention. As at the date of this Annual Report, we recorded a provision for the full amount. See Note 23 to our audited financial statements.

In addition, the current supply of gas to our subsidiaries in Israel is dependent on a single supplier and also on a single gas pipeline with limited transmission capacity. While our plants are prepared for the use of alternative energy (crude oil and/or diesel fuel), an increase in our energy costs, or energy shortages could materially and adversely affect our business, financial condition and results of operations.

In addition,

Furthermore, an increase in price or shortage of raw materials, such as sulfur (which we purchase from a third party) could reduce our margins and adversely impact our results of operations and our business.

We can provide no assurance that we will be able to pass on to our clients increased costs relating to water, energy or other raw materials, such as sulfur, that are supplied from third parties. Our inability to efficiently and effectively pass on cost increases could adversely affect our margins. In addition, shortages in our principal raw materials may disrupt production and adversely affect the performance of our business.

Completion of certain of our major projects may be dependent on third-party contractors

The completion of certain of our major projects may be dependent on third-party contractors. For example, In June 2012, we entered into agreements regarding a project to construct a new cogeneration power station in Sodom, Israel. The power station is expected to have a production capacity of about 230 megawatt hours and about 330 tons of steam, per hour, which will supply electricity and steam requirements for the production plants at the Sodom site. We intend to operate the new power station concurrently with the existing power station, which will be operated on a partial basis in a "hot back-up" format, to produce electricity and steam. The total electricity production in the short term will be 245 megawatt hours. We also intend to utilize our present gas contracts and thereafter to enter into new gas contracts in order to run the power station.

Construction of the project was expected to be completed in the second half of 2015. In 2015, the executing contractor (the Spanish Company "Abengoa") reported that it has experienced difficulties and pursuant to the decision of the Spanish court delivered in November 2015, it was granted protection from its creditors up to the end of the first quarter of 2016. We are examining the possibility of continuing execution of the construction work of the power station and completion thereof. In light of that stated, we expect to complete the project and to commence operation of the power station in the second half of 2016, with additional costs that are not material. However, we can provide no assurances that the construction work will be completed according our expectations. Delay in the completion of the construction work has had and will continue to have an adverse effect on our energy expenses and access to a reliable energy supply at the Sodom site, which may adversely affect our business, financial condition and results of operations.

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The construction of a canal connecting the Red Sea to the Dead Sea could negatively impact the production of our plants.

The World Bank drafted a detailed report evaluating the feasibility of a canal from the Red Sea to the Dead Sea in order to address the receding water level of the northern basin of the Dead Sea. Following the aforesaid report, Israel, the Palestinian Authority and Jordan have signed an agreement in principle to implement stage A of the project, involving construction of a pipeline from the Red Sea. The targets underlying the World Bank’sBank's report on the construction of the canal are desalination of water for countries in the region (mainly Jordan), stabilization of the level of the Dead Sea and contribution to regional peace. Such a canal would likelycould change the composition of the Dead Sea resulting in a lower concentration of sodium chloride in the water, which could negatively impact the production of our plants.

A detailed agreement was recentlyhas been signed by Israel and Jordan, triggering the first stage of the Sea Canal. The project includes construction of a desalination plant in Aqaba and transportation of the desalinated water to Jordan and to Israel. The brine will be pumped tointo the Dead Sea. Under the agreement, water exchanges will take place, and the Jordanians and the Palestinians will be able to receive water from Israel. The facility will initially pump 200 million cubic meters a year from the Red Sea. Eighty80 million cubic meters will be transformed into potable water and the remaining 120 million cubic meters will be pumped into the Dead Sea. About 100 million cubic meters of additional sea water will be extracted and flowed directly into the Dead Sea without desalination. The 180 km long pipeline will be laid in Jordanian territory. Based on the evaluation performed by the World Bank, pumping up to 400 million cubic meters into the Dead Sea will have no adverse environmental effects, as no layering effect will be caused, and the water will evaporate and/or mix with the water of the Dead Sea. For this reason it appears that pumping on such a scale will similarlyalso create no significant damage to our plants, especially since only 100-120about 200 million cubic meters will be pumped in one pipeline in the first stage of the project (assuming they are not discharged nearby our pumping station), although the actual impacts may be different.

We are subject to the risk of labor disputes, slowdowns and strikes.

From time to time we experience labor disputes, slowdowns and strikes. For example, on February 2, 2015, the Workers Council of Bromine Compounds Ltd. of ICL’sICL's industrial Products segment initiatedstarted a full-scale strike at the Bromine Compounds plants in Naot Hovav, and stopped goods’ shipments from the plants.Neot Hovav. The strike isat the plants came, among other things, in response to the efficiency programs the Company is currentlywe are executing in NaotNeot Hovav. Following this, onOn February 19, 2015, the Workers Council of DSW announced a generalfull-scale strike of DSW plantsat DSW's facilities in Sodom. On May 28, 2015, an agreement was signed between the parties ending the strike. For information on implementation of the efficiency programs and the strikes that were initiated in response see “Item 6. Directors, Senior Management and Employees—D. Employees.”

Most For information on the impact of the strike see “Item 3. Key Information-A. Selected Financial Data – adjusted operating and net income table.

Approximately 75% of our employees are subject to collective bargaining agreements. Lengthy slowdowns or strikes at any of our plants could disrupt production and cause the non-delivery of products that had already been ordered, and it takes time to return to full capacity production in all facilities. Furthermore, due to the mutual dependency between ICL plants, labor disputes or a strike in any ICL plant may affect the manufacturing capacity and/or manufacturing costs of other ICL plants. If labor disputes, slowdowns or strikes occur, we could incur significant shutdown and related costs, which could adversely impact our operating results and affect our ability to fully implement future operational changes for efficiency purposes. The collective employment agreement of DSW expired in September 2015. As at the date of this Annual Report, we are holding talks with DSW Workers Council in connection with extension of the agreement for an additional two years. There is no certainty the existing agreement will be extended and what will be the agreements between the parties. The collective employment agreements of Rotem are valid until June 2016 and the collective employment agreements of bromine compounds are valid until July 2017.On January 20, 2016, the DSW Workers Council declared a labor dispute. As at the date of the report, there are declared labor disputes at Bromine Compounds, DSW and Rotem. During these labor disputes, the Workers Council may impose certain sanctions or block the removal of goods through the factory gates, and the disputes may escalate into a strike.

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Some of our employees have pension and health insurance arrangements that are our responsibility.

Some of our employees in Israel and overseas have pension and health insurance arrangements that are our responsibility. Against some of these liabilities, we have monetary reserves that are invested in financial assets. See Note 21 to our audited financial statements for information about our employee benefits liabilities and composition of plan assets. Changes in life expectancy, changes in the capital market or changes in other parameters by which undertakings to employees and retirees are calculated, and statutory amendments could increase our net liability for these arrangements.

The termination, cancellation or expiration of governmental programs or tax benefits; initiation of a new or amended legislation or regulations with respect to additional and/or increased fiscal liabilities to be imposed on us; or introduction of new tax reforms; imposition of new taxes or changes to existing tax rates, could adversely affect our business results.

Any of the following may have a material adverse effect on our operating expenses, effective tax rate and overall business results:

·

Some government programs may be discontinued, expire or be cancelled;

·

The government may initiate new legislation or amend existing legislation in order to impose additional and/or increased fiscal liabilities on our business, such as additional royalties or natural resources taxes, as has occurred recently in Israel;

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The applicable tax rates may increase;

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We may be unable to meet the requirements for continuing to qualify for some programs;

·

These programs and tax benefits may be unavailable at their current levels;

·

Upon the expiration of a particular benefit, we may not be eligible to participate in a new program or qualify for a new tax benefit that would offset the loss of the expiring tax benefit.

Our operationstax liabilities may be higher than expected.

Our tax expenses and salesthe resulting effective tax rate reflected in our consolidated financial statements may increase over time as a result of changes in corporate income tax rates and other changes in tax laws in the various countries in which we operate. We are subject to the volatility of market supplytaxes in many jurisdictions, and demand and we face significant competition from somediscretion is required in determination of the world’s largest chemicalprovisions for our tax liability. Similarly, we are subject to examination by the tax authorities in many different jurisdictions. As part of these examinations, the relevant tax authorities may disagree with the amount of taxable income reported, deriving from our inter-company agreements and mining companies.

Inmay also dispute our interpretation of the applicable tax legislation. For example, in December 2013, an assessment was received from the Israeli Tax Authority (“ITA”) whereby we are required to pay tax in addition to seasonal and cyclical variations (mainlythe amount we have already paid in our Fertilizers segment), some of our businesses are characterized by fluctuations caused, in part, by factors on the supply side, such as entry into the market of new manufacturers and products and expansionrespect of the production capacity of existing manufacturers, as well as changes on the demand side. Some of our products are commodities that are available from multiple sources. Our competitors include some of the world’s largest chemical and mining companies. Some of these companies are state owned or government subsidized. The primary competitive factor with respect to our products is price. Our prices for our products are impacted by the prices prevailingyears 2009-2011, in the market. For example, atamount of about NIS 917 million (about $235 million). We have appealed the end of July 2013, Uralkali announced that itITA's assessment. On January 27, 2015, an Order was discontinuing its joint marketing with Belaruskali (Uralkali and Belaruskali arereceived from the leading potash producers in Russia and Belarus). In addition, Uralkali stated that it will implement a new policy for potash sales of preferring quantity over price. We believe this announcement led to a fall in potash prices.

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Additional competitive factors include product quality, customer service and technical assistance. If we are unable to compete effectively with these companies, our results of operations would almost certainly be significantly adversely affected.

A committee established by the Israeli Finance Minister published its conclusions, which recommend higher taxes and royalties on our operations.

Former Israeli Minister of Finance, Mr. Yair Lapid, established a public committee (the “Committee”), headed by Prof. Eytan Sheshinski, for examination of the policyITA with respect to the royalties received by the State of Israel from private entities, including us, for use of national natural resources such as potash, bromine, and phosphate. The Committee was required, among other things, to examine the royalties policy from a broad perspective, while making reference to the impacts on the present agreements between the various parties engaged in these matters and the State of Israel.

On October 20, 2014, the Committee published the final conclusions regarding the government’s take to be received from use of national resources by private bodies. The highlights of the Committee’s recommendations are as follows:

The mix of taxes on natural resources in Israel will include three taxation elements: royalties, natural resources tax and corporate tax.

The royalty rate for all minerals will be 5% for any extracted amount (currently, the royalty rate for potash is 5% on annual sales of up to 1.5 million tons, and 10% for any sales above that amount. The royalty rate for bromine is 5% and the royalty rate for phosphates is 2%); the calculation of the royalties for phosphates which is made in accordance with the Mines Ordinance, will be changed such that the recognition of refining and processing costs of the mined raw material will be in accordance with normative costs to be established in the law.

A new natural resources tax will be imposed, the main features of which are:

The natural resources tax base will be the amount from which the natural resources tax will be collected every year.

The tax base will be the Company’s operating profit, according to accounting profit and loss statements, after certain adjustments less financing expenses at the rate of 5% of the Company’s working capital, and less an amount that will represent the yield on the remaining depreciated cost of the fixed property used in the production and sale of the mineral (“Yield on the Depreciated Cost”).

A progressive tax will be imposed on the tax base, as described above, at a rate that will be determined in accordance with the level of the yield on the remaining depreciated cost of the fixed property used in the production and sale of the mineral in that year. The first tax bracket for the natural resource tax will be 25% with respect to a Yield on the Depreciated Cost between 14% and 20%, and the second tax bracket will be 42% with respect to a Yield on the Depreciated Cost over 20%.

For the years in which the natural resources tax base is negative, the negative amount will be carried over from year to year, and will serve as a tax shield in the following tax year.

The natural resources tax will only be imposed on the profits derived from the production and the sale of minerals, such as potash and phosphates, and not on profits derived from downstream industrial activity. In addition, the natural resources tax will be calculated separately for each mineral. However, to the extent that there is a synergy between the different resources, and that a particular mineral produces a benefit in the production of a different mineral, the Committee believes that such benefit should be reflected in the calculation of the natural resources tax.

Consequently, the benefit produced by the magnesium plant for the potash plant in the production of sylvinite will be recognized as an expense for the potash plant, and accordingly will be recognized as income for the magnesium plant. Clear rules will be established for this purpose with regard to the calculation of the said savings, with respect to potash and other minerals, if applicable.

A mechanism will be established for determining the market price for transactions involving natural resources between related parties in Israel, as well as a mechanism for calculating the manner in which expenses will be attributed to the production and sale of the natural resource and to the downstream activities.

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Regarding bromine, a natural resources tax will be imposed in the same way it is imposed on other natural resources, other than that the transfer price will be calculated separately for transfers to related parties in Israel, and separately for sales to related parties abroad. The transfer price for elemental bromine to related parties will be the higher of the following:

The actual price – the actual sale price for elemental bromine to related parties in Israel or abroad, whichever is relevant;

The price to a third party – the weighted average of the sale price to unrelated parties, which are manufacturers of bromine compounds, while adjusting the shipping and marketing costs, as needed;

A normative price – the normative price will be linked to the bromine compounds index and determined based on the Netback method, relying on the data from the five previous years for the Bromine Compounds Company in Israel or abroad, as relevant. In each of those years, all bromine compounds production costs will be deducted from the sales turnover for the Bromine Composite Company, except for the cost of purchasing the raw bromine. The operating profit, before the deduction of the cost of purchasing the raw bromine, will also be deducted of a normative profit in the rate of 12% of the sales turnover of the Bromine Compounds Company in Israel or abroad, as the case may be. The amount reached through this calculation, for each of the years that is examined, will be divided by the amount of the bromine thatadditional tax demanded, as stated. We disagree with the Bromine Compounds Company has purchased in eachITA's position and on February 25, 2015 it filed an appeal of the years, and will be weighted into the stated normative price. The mechanism will be examined every 5 years and will be updated if necessary.

The Encouragement of Capital Investments Law – the law will be amended, to clarify that with regard to any tax benefits pursuant to that law, the definition of a “Mineral Extraction Plant” will include all the plant’s activity through the production of the first sellable natural resources, such as potash, bromine and magnesium. Therefore, any activity in the production of the mineral will be subjected to the excess profit tax, and will not be entitled to tax benefits pursuant to the Encouragement of Capital Investments Law. Downstream product activity such as bromine compounds and fertilizers will not be a part of the base used for calculating the excess profits tax and will not be excluded from the application of the Law for Encouragement of Capital Investments.

In addition to the Committee’s recommendations noted above, the Company is subject to corporate tax at a rate of 26.5%.

According to the Committee, the State’s portion from minerals, in the event that natural resources tax is imposed is expected to range between 46% and 55%. The Committee’s recommendations, insofar as they are enacted into legislation, will apply to DSW beginning from January 1, 2017. It should be noted, that attached to the Committee’s Recommendations, were, among other things, a minority statement of the Accountant General of the Ministry of Finance as well as a reservation from the Committee’s recommendations of the representatives of the Ministry of Economy and the Ministry of National Infrastructures, Energy and Water Resources.

On November 10, 2014, the Ministry of Finance published a press release, according to which the Social Economic Cabinet unanimously approved the Committee’s recommendations on November 10, 2014. According to the said press release, the final recommendations will be drafted as legislation and submitted to the Knesset for its approval. There is no certainty that the Knesset will approve the Committee’s recommendations in their current format.

If the Committee’s recommendations as published are legislated into law, the Company’s operations, its financial position, and the results of its operations will be significantly adversely affected.

Inaccuracies in our estimates of mineral reserves and resource deposits could result in lower than expected sales and/or higher than expected costs.

We base our mineral reserve and resource estimates on engineering, economic and geological data that is compiled and analyzed by our engineers and geologists. However, reserve estimates are necessarily imprecise and depend to some extent on statistical inferences drawn from available drilling data, which may prove unreliable/inaccurate. There are numerous uncertainties inherent in estimating quantities and qualities of reserves and non-reserve deposits and costs to mine recoverable reserves and economic feasibility, including many factors beyond our control. Estimates of economically feasible commercial reserves necessarily depend on a number of factors and assumptions, all of which may vary considerably from the actual results, such as:

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·

Geological and mining conditions and/or effects from prior mining that may not be fully identified/assessed by available data or that may differ from experience;

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Assumptions concerning future prices of products, operating costs, mining technology improvements, development costs and reclamation costs; and assumptions concerning future effects of regulation, including the issuance of required permits and taxes by governmental agencies.

Any inaccuracy in our estimates related to our mineral reserves and non-reserve mineral deposits could result in lower than expected sales and/or higher than expected costs.

Order.

We intend to expand our business through mergers and acquisitions or organizational restructuring and various initiatives to increase production and reduce costs of our existing operations. This could result in a diversion of resources and extra expenses, a disruption of our business and an adverse effect on our financial condition and results of operations.

One of the components of our strategy is to pursue mergers and acquisitions of businesses or to enter into joint ventures. Theventures and partnerships. Consistent with this strategy, we regularly evaluate potential opportunities, some of which could be material .The negotiation process with respect to potential acquisitions or joint ventures, as well as the integration of acquired or jointly developed businesses, will require management to invest time and resources, in addition to the necessary financial investments.investments and we may not be able to complete such opportunities. There is no guarantee that businesses or joint ventures that have been or will be acquired will be successfully integrated with our current products and operations and we may not realize the intended benefits of the acquisition or joint venture.

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Future acquisitions could result in:

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Substantial cash expenditures;

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Potentially dilutive issuances of equity securities;

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The incurrence of debt and contingent liabilities, including liabilities for environmental damage caused by acquired businesses before we acquired them;

·

A decrease in our profit margins; and

·

Impairment of intangible assets and goodwill.

If future acquisitions disrupt our operations, our business may be materially and adversely affected.

Some of our partners or potential partners in these business initiatives are governments, governmental bodies or public owned companies. We may face certain risks in connection with our investments in the joint ventures and/or partnerships including, for example, if our partners’ needs, desires or intents change, if the government changes or if the ownership structure of our partners changes.

In addition, we are working on a number of initiatives to improve our existing operations, including initiatives to increase production in Spain and reduce operating costs at our facilities. These initiatives may cost more or take longer than we anticipate and they may not ultimately achieve their goals. If we cannot do so, our competitive position could be adversely affected. See “Item“Item 4. Information on the Company—B. Business Overview—Our Strategy”Strategy”.

As a multinational company, our sales and “Streamline and integrate our global processes”.

Our tax liabilitiesprofits may be higher than expected.

Weadversely affected by currency fluctuations and restrictions as well as credit risks.

Our multinational activities expose us to the impact of currency exchange rate fluctuations. Our financial statements are prepared in U.S. dollars. Our sales are made in a variety of currencies, primarily in U.S. dollars and euros. As a result, we are currently subject to taxessignificant foreign currency risks and may face heightened risks as we enter new markets. We may also be exposed to credit risks in many jurisdictions,some of these markets. The imposition of price controls or restrictions on the conversion of foreign currencies could also have a material adverse effect on our financial results. Part of our operating costs in 2015 were incurred in currencies other than U.S. dollars, particularly in euros, NIS, GBP, BRL and discretion is requiredRMB. As a result, fluctuations in determinationexchange rates between the currencies in which such costs are incurred and the U.S. dollar may have a material adverse effect on our results of operations, the value of the provisions forbalance sheet items denominated in foreign currencies and our tax liability. Similarly,financial condition.

We use derivative financial instruments and “hedging” techniques to manage some of our net exposure to currency exchange rate fluctuations in the major foreign currencies in which we operate. However, not all of our potential exposure is covered, and some elements of our consolidated financial statements, such as our equity positions and operating profit, are not fully protected against foreign currency exposures. Therefore, our exposure to exchange rate fluctuations could have a material adverse effect on our financial results.

See “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Exchange Rate Risk.”

Because some of our liabilities bear interest at variable rates, we are subject to examinationthe risk of interest rate increases.

A portion of our liabilities bear interest at variable rates. We are exposed to the cash flow risk stemming from an increase in interest rates, which would increase our financing expenses and adversely affect our results. Such increase in interest rates may be also as a result of downgrade in our rating. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk.”

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We may be subject to material fines, penalties and other sanctions and other adverse consequences arising out of FCPA investigations and related matters.

We are required to comply with the U.S. Foreign Corrupt Practices Act (the "FCPA"), the UK Bribery Act and similar anti-corruption laws in other jurisdictions around the world where we do business. We operate and sell in countries that may be considered to be of high risk in this regard. Compliance with these laws has been subject to increasing focus and activity by regulatory authorities in recent years. Actions by our employees, or third party intermediaries acting on our behalf, in violation of such laws, whether carried out in the United States or elsewhere in connection with the conduct of our business could expose us to liability for violations of the FCPA or other anti-corruption laws and accordingly may have a material adverse effect on our reputation and our business, financial condition and results of operations.

Significant disruptions of our information technology systems or breaches of our data security could adversely affect our business.

A significant invasion, interruption, destruction or breakdown of our information technology systems and/or infrastructure by persons with authorized access could negatively impact our business and operations. We could also experience business interruption, information theft and/or reputational damage from cyber-attacks, which may compromise our systems and lead to data leakage whether internally or at our third party providers. Our systems have been, and are expected to continue to be, the target of malware and other cyber-attacks. Although we have invested in measures to reduce these risks, we cannot assure that these measures will be successful in preventing compromise and/or disruption of our information technology systems and related data.

The failure to recruit key personnel, or to attract additional executive and managerial talent, could adversely affect our business.

Given our increasing size, complexity and the global reach of our business and multiple areas of focus, each of which could a significant stand-alone company, we are especially reliant upon our ability to recruit and retain highly qualified management and other employees. Much of our competitive advantage is based on the expertise, experience and know-how of our key management personnel. Any loss of service of key members of our organization, or any diminution in our ability to continue to attract high-quality employees may delay or prevent the achievement of major business objectives and may have a material adverse effect on our business, financial condition and results of operations.

We may not be able to improve our working capital, reduce capital expenditure and operating expenses to the extent and during the timeframe intended by our cost reduction program.

In August 2013, we announced a cost reduction program to reduce $350 million by the Tax Authoritiesend of 2016. In March 15, 2016, we announced to target additional cost reduction measures of $50 million per year, which it will implement during 2016. In addition we will target measures that are expected to generate additional $50 million in cash flow through improved working capital and other measures and capital expenditures (excluding acquisitions) are targeted not to exceed $650 million per year over the next several years, which will be lower than the $700 million to $800 million previously targeted. Such targets are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied.

The business environment may cause our sales to deteriorate by more than our ability to reduce our costs. If we are unable to achieve our efficiency initiatives during the expected timeframes, our results of operations will be negatively affected and our ability to execute other aspects of our strategy may be slowed or undermined.

We have significantly increased our leverage in recent years and more frequently engage in refinancing activities, making us increasingly reliant on access to the capital markets at favorable terms.

Our short and long term indebtedness has significantly increased over the past five years. As a result, our principal and interest payment obligations have increased, as well as our costs relating to finance activities. The degree to which we are leveraged could affect our liability to obtain additional financing for acquisitions, refinancing of existing debt, working capital, or other purposes, could adversely affect our credit rating, and could make us more vulnerable to industry downturns and competitive pressures as well as interest rate and other refinancing risks. In addition, capital markets have been more volatile in recent years. Such volatility may adversely affect our ability to obtain financing on favorable terms at a time when we need to access the capital markets regularly. Our ability to refinance existing debt and meet our debt service obligations will be dependent upon our future performance and access to capital markets, which will be subject to financial, business and other factors affecting our operations (including our long term unsecured credit ratings), many different jurisdictions.of which are beyond our control. Our credit rating may be downgraded, inter alia, due our future performance, the degree to which we are leveraged and deteriorating business environment.

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The instruments governing our debt contain covenants and, in some cases, require us to meet certain financial ratios and tests. Any failure to comply with these covenants could result in an event of default under the applicable instrument, which could result in the related debt and the debt issued under other instruments becoming immediately due and payable. In such event, we would need to raise funds from alternative sources, which may not be available to us on favorable terms, on a timely basis or at all. Alternatively, any such default could require us to sell our assets or otherwise curtail operations in order to satisfy our obligations to our creditors.

Risks Related to Our Industry

Sales of our fertilizer products are subject to the situation in the agricultural industry.

Most of our fertilizer products are sold to producers of agricultural products. Fertilizer sales may be adversely impacted as a result of a decline in agricultural produce prices or the availability of credit, or other events that cause farmers to plant less and consequently reduce their use of fertilizers. For example, periods of high demand, increasing profits and high capacity utilization tend to lead to new investment in crops and increased production. This growth increases supply until the market is over-saturated, leading to declining prices and declining capacity utilization until the cycle repeats. As parta result, the prices and quantities of these examinations,fertilizer products sold have been volatile. As potash and phosphate prices and quantities sold have a very significant influence on our business results, low prices and/or low quantities and/or a decrease in prices may cause our results of operations to fluctuate and potentially materially deteriorate.

The price at which we sell our fertilizer products and our sales volumes could fall in the relevant tax authoritiesevent of industry oversupply conditions, which could have a material adverse effect on our business, financial condition and results of operations. Alternatively, high prices may disagree withlead our customers to delay purchasing decisions in anticipation of lower prices in the future, thereby decreasing our sales volumes. These factors could materially and adversely affect our business, financial condition and results of operations.

In addition, government policies, and specifically, subsidy levels, may affect the amount of taxable income,agricultural crops and, as stated, deriving froma result, sales of our inter-company agreementsfertilizer products. Generally, reductions in agricultural subsidies or increases in subsidies to local fertilizer manufacturers in a country where we sell our products are likely to have a negative impact on our fertilizer business.

Finally, the agricultural industry is strongly affected by local weather conditions. Conditions such as heavy storms, long periods of drought, floods, or extreme seasonal temperatures are likely to affect the local crop’s quality and may also disputeyield and cause a reduction in the use of fertilizers. Loss of sales in an agricultural season in a target country as a result of weather-related events can cause a loss of sales for the whole year.

Sales of our interpretationindustrial products are affected by various factors that are not within our control, including developments in the electronics markets and legislative changes impacting the use of our products.

Our industrial products accounted for 20.6% of our sales (before set-offs of inter-segment sales) in 2015. Our sales of these products are dependent on various factors outside our control. For instance, a large proportion of our industrial products are sold for use as flame retardants. This area is subject to government regulation around the world, which can restrict certain uses of flame retardants. In addition, various “green” organizations have been increasing their pressure to reduce the use of bromine-based flame retardants, and various countries are assessing possible limitations on the use of bromine-based flame retardants. For example, the bromine-based flame retardant DECA is banned for use in electrical and electronic applications in the European Union. In addition, due to the definition of DECA as a “substance of very high concern,” the European Chemicals Agency (“ECHA”) is leading a restriction campaign to prohibit most uses of DECA in the European Union by 2017. In 2013, DECA was proposed as a candidate for deliberations at the Stockholm Convention in the United Nations as a substance having persistent organic pollutant (“POP”) characteristics. The deliberations commenced in October 2013 and the decision-making process is expected to be completed in 2017. Imposition of the applicable tax legislation. For example, in December 2013, an assessment was received from the Tax Authorities in Israel, accordingprohibition against use is expected to which the Company was required to pay additional taxes in the amount of approximately $230 million, in addition to the amount that it had paid in respect of the years 2009-2011, The Company appealed the assessment of the Tax Authorities. In January 2015, an order was received from the Tax Authorities, which sets the amount of the additional tax at approximately $200 million. The Company disagrees with the Tax Authorities’ position and on February 25, 2015, filed an appeal against the order. In the estimation of Company Management, based on its legal advisors, the chances that the Company’s contentions will ultimately be acceptedenter into effect at the end of 2018. See “Item 4. Information on the appeal proceeding are greater thanCompany—B. Business Overview—Regulatory and Environmental, Health and Safety Matters.” Sale of oil drilling products depends on the chances that they will be rejected and, therefore, no provision for tax has been includedextent of operations in the financial statementsoil drilling market, mainly in respectdeep drillings in the high seas, which in turn is dependent on fuel prices, and on the decisions of oil companies regarding rates of production and areas of production of oil and gas. The drop in oil prices in 2015 may affect the said assessment. The Tax Authorities’ main argument is that ICL’s subsidiaries, DSWscope of operations in the oil drilling market and Rotem Amfert Negev, are not eligible for benefits underlead to a drop in the Encouragement of Capital Investments Law, from the date on which Amendment No. 60 of this law entered into effect in 2005. Even though we believe our estimates are reasonable, the final outcome of these examinations and any related legal proceedings may be different than the provisions that we record in respectsales of our tax liability and may have a significant impact on our results of operations.products in this sector.

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Risks Related

In addition, a large portion of our industrial products are used as inputs for end-products. For example, a significant portion of our flame retardants are added to plastic components in electronic devices, including personal computers and televisions. The slowdown of the global economy in recent years as well as the increasing use of smart phones and tablets as opposed to personal computers have led to a decline in the demand for personal computers, which in turn has caused a decline in the demand for bromine-based flame retardants sold by our Industrial Products segment. Beginning in late 2012, there was also a slump in demand for bromine-based flame retardants for construction. Our Industry

strategy is to attempt to increase the demand through development of new products and new applications, by introducing bromine products such as flame retardants into new geographic areas where they are not currently used or to develop their use, as well as other bromine derivatives, as part of new applications. A failure to increase demand for our bromine-based products could have a material adverse effect on our business, financial condition and results of operations.

Sales of our performance products are affected by various factors that are outside our control, including a recession or slowdown in the world economy as well as an increase in the euro exchange rate vis-à-vis the U.S. dollar.

Sales of our performance products are affected by various factors that are outside our control, including global economic conditions in the markets in which we operate. For example, our sales may be affected by the slow economic recovery or any reversal thereof in Europe. We have significant manufacturing operations in Europe and a large portion of our European sales are in euros, whereas some of our competitors are manufacturers outside Europe whose operational currency is the U.S. dollar. As a result, a strengthening of the euro exchange rate vis-à-vis the U.S. dollar increases the competitive advantage of these competitors.

Our operations and sales are subject to a crisis in the financial markets.

We are a multi-national company and our financial results are affected by global economic trends, the changes in terms of trade and financing, and fluctuations of currency exchange rates. A crisis in the financial markets could cause a reduction in the international sources of credit available for the purpose of financing commercial operations. The impact of such a crisis might be expressed in terms of availability of credit to us and our customers, and of the price of credit. In addition, the volatility and uncertainty in the European Union affect our activities in this market.

Sales of our fertilizer products are subject to the situation in the agricultural industry.

Most of our fertilizer products are sold to producers of agricultural products. Fertilizer sales may be adversely impacted as a result of a decline in agricultural produce prices or the availability of credit, or other events that cause farmers to plant less and consequently reduce their use of fertilizers. For example, periods of high demand, increasing profits and high capacity utilization tend to lead to new investment in crops and increased production. This growth increases supply until the market is over saturated, leading to declining prices and declining capacity utilization until the cycle repeats. As a result, the prices and quantities of fertilizer products sold have been volatile. This price and quantity volatility may cause our results of operations to fluctuate and potentially deteriorate. The price at which we sell our fertilizer products and our sales volumes could fall in the event of industry oversupply conditions, which could have a material adverse effect on our business, financial condition and results of operations. In contrast, high prices may lead our customers to delay purchasing decisions in anticipation of lower prices in the future, thereby decreasing our sales volumes. These factors could materially and adversely affect our business, financial condition and results of operations.

In addition, government policies, and specifically, subsidy levels, may affect the amount of agricultural crops and, as a result, sales of our fertilizer products. Generally, reductions in agricultural subsidies or increases in subsidies to local fertilizer manufacturers in a country where we sell our products are likely to have a negative impact on our fertilizer business.

Finally, the agricultural industry is strongly affected by local weather conditions. Conditions such as heavy storms, long periods of drought, floods, or extreme seasonal temperatures are likely to affect the local crop’s quality and yield and cause a reduction in the use of fertilizers. Loss of sales in an agricultural season in a target country as a result of weather related events can cause a loss of sales for the whole year.

Sales of our industrial products are affected by various factors that are not within our control, including developments in the electronics markets and legislative changes impacting the use of our products.

Our industrial products accounted for 21.9% of our sales (before set offs of inter segment sales) in 2014. Our sales of these products are dependent on various factors outside our control. For instance, a large proportion of our industrial products are sold for use as flame retardants. This area is subject to government regulation around the world, which can restrict certain uses of flame retardants. In addition, various “green” organizations have been increasing their pressure to reduce the use of bromine based flame retardants, and various countries are assessing possible limitations on the use of bromine based flame retardants. The European Union has already banned the bromine based flame retardant DECA for use in electrical and electronic applications, and it is likely that DECA will be prohibited for all uses in the European Union in 2017 at the earliest. See “Item 4. Information on the Company—B. Business Overview—Regulatory and Environmental, Health and Safety Matters.” Sale of oil drilling products depends on the extent of operations in the oil drilling market, mainly in deep drillings in the high seas, which in turn is dependent on fuel prices, and on the decisions of oil companies regarding rates of production and areas of production of oil and gas. The drop in oil prices in recent months may affect the scope of operations in the oil drilling market and lead to a drop in the sales of our products in this sector.

In addition, a large portion of our industrial products are used as inputs for end products. For example, a significant portion of our flame retardants are added to plastic components in electronic devices, including personal computers and televisions. The slowdown of the global economy in recent years as well as the increasing use of smart phones and tablets as opposed to personal computers have led to a decline in the demand for personal computers, which in turn has caused a decline in the demand for bromine based flame retardants sold by our Industrial Products segment. Beginning in late 2012, there was also a slump in demand for bromine based flame retardants for construction. Our strategy is to attempt to increase the demand through development of new products and new applications, by introducing bromine products such as flame retardants into new geographic areas where they are not currently used or to develop their use as part of new applications. A failure to increase demand for our bromine based products could have a material adverse effect on our business, financial condition and results of operations.

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Sales of our performance products are affected by various factors that are outside our control, including a recession or slowdown in the world economy as well as an increase in the euro exchange rate vis à vis the U.S. dollar.

Sales of our performance products are affected by various factors that are outside our control, including global economic conditions in the markets in which we operate. For example, our sales may be affected by the slow economic recovery or any reversal thereof in Europe. We have significant manufacturing operations in Europe and a large portion of our European sales are in euros, whereas some of our competitors are manufacturers outside Europe whose operational currency is the U.S. dollar. As a result, a strengthening of the euro exchange rate vis à vis the U.S. dollar increases the competitive advantage of these competitors.

As an industrial chemicals company, we are subject to various legislative and licensing restrictions in Israel and throughout the world in the areas of environmental protection and safety. Related compliance costs and hazards inherent to the nature of our business may have a negative effect on our results of operations.

Because we are active in the field of industrial chemicals, we are significantly affected by legal rulings and licensing authorities in the areas of environmental protection and safety. In recent years, there has been a significant increase in the stringency and enforcement of legislative directives and regulatory requirements in these areas, in Israel and throughout the world, and the cost of conformance and compliance has risen significantly. Additionally, legislative changes throughout the world may prohibit or restrict use of our products, due to environmental protection, health or safety considerations. Standards that will be adopted in the future are likely to affect us and change our methods of operation. Furthermore, some of our licenses, including business licenses and mining licenses, are for fixed periods and must be renewed from time to time. Renewal of the licenses is not certain and the renewal may be made contingent on additional conditions. See “Item“Item 4. Information on the Company—B. Business Overview—Regulatory and Environmental, Health and Safety Matters.Matters.”

In addition, although

As an industrial chemicals company, we are inherently subject to hazards relating to materials, processes, production and the overall nature of our business.

Although we take precautions to enhance the safety of our operations and minimize the risk of disruptions, we are subject to hazards inherent in chemical manufacturing and the related storage and transportation of raw materials, products and wastes. These hazards include explosions, fires, mechanical failures, remediation complications, chemical spills and discharges or releases of toxic or hazardous substances. These and other hazards are also inherent in our mining operations, particularly underground mining. These hazards can cause personal injury and loss of life, severe damage to or destruction of property and equipment and environmental damage, and may result in suspension of operations and the imposition of civil or criminal penalties. In addition, our manufacturing facilities contain sophisticated manufacturing equipment. In the event of a major disruption in the operations of any of this equipment, we may not be able to resume manufacturing operations for an extended period of time. The occurrence of material operating problems at our facilities, including, but not limited to, the events described above, may have a material adverse effect on us, during and after the period of such operational difficulties, as we are dependent on the continued operation of our production facilities and we may become subject to substantial liabilities under these circumstances. See “Item 4. Information on the Company—B. Business Overview—Regulatory and Environmental, Health and Safety Matters.”

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Due to the nature of our Company, we are exposed to administrative and legal proceedings, both civil and criminal, including as a result of alleged environmental contamination caused by certain of our facilities.

From time to time we are exposed to administrative and legal proceedings, both civil and criminal, including as a result of alleged environmental contamination caused by certain of our facilities. In addition, from time to time examinations and investigations are conducted by enforcement authorities in and outside Israel.authorities. See “Item“Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings.Proceedings.”

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Furthermore, from time to time we are exposed to claims alleging physical or property damage, which may cause us financial harm. In addition, some of the manufacturing or marketing activities (and sometimes transportation and storage as well) entail safety risks that we attempt to minimize but are not able to eliminate. In various countries, including Israel and the United States, legislation exists that can impose liability on us irrespective of our actual intent or negligence. Other laws place responsibility on defendants jointly and severally, and sometimes retroactively, and therefore can cause us to be liable for activities executed jointly with others and at times by solely by others. We may also be found liable for claims related to land that we mined or activities that we conducted within our premises, even after such activities have ceased.

In addition, over the past several years, there has been an increase in the filing of claims together with a request for their certification as class actions. Due to the nature of class actions, these claims may be for very high amounts and the costs of defending against such actions may be significant even if the claims are without merit. In addition, our insurance policies include coverage limitations, are restricted to certain causes of action and may not cover claims relating to certain types of damages. For example, in August 2013, a request was filed in the District Court of Tel Aviv for certification of a claim as a class action against us, Israel Corporation PotashCorpLtd., Potashcorp Cooperative Agricultural Society Ltd., the members of our Board of Directors and CEO, was filed in the District Court in Tel-Aviv, on the grounds of a misleading detail, deception and non-disclosure of a material detail in our Chief Executive Officer.reports, this allegedly being in violation of the provisions of the Securities Law and the general laws in Israel. The aggregate amount of the damagesdamage claimed is NIS$0.70 billion (NIS 2.75 billion) or $0.84 billion or NIS(NIS 3.28 billionbillion) (the amount of the claim depends on the share price used to calculatefor calculating the alleged damages). We haveIn November 2014, a hearing on the motion to certify a class action was held. In 2015, proceedings took place to advance a compromise agreement that were later discontinued by the parties. As at the date of this Annual Report, a court decision on the request had not made ayet been rendered. In our estimation, the chances that the allegations against us will be dismissed exceed the chances that the allegations will be accepted. Accordingly, no provision for this claimwas included in our auditedthe financial statements. See Note 23 to our audited financial statements and “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings—Securities Law Proceedings” for additional information.

We are exposed to the risk of third partythird-party and product liability claims.

We are also exposed to risk of liability related to damage caused to third parties by our operations or by our products. For example, we are subject to a number of claims alleging bodily injury as a result of discharges to the Kishon River. We are also subject to claims alleging liability for the impacts from the rising water level at one of our evaporation ponds at the Dead Sea. See Note 23 to our audited financial statements. We have third partythird-party liability insurance for damages caused by our operations and for product liability. However, there is no certainty that this insurance will fully cover all damage for such liability. Likewise, sale of faulty products by us might give rise to a recall of products by us or by our customers, thatwho had used the products.

Our insurance policies may not be sufficient to cover all actual losses that we may incur in the future.

We maintain, among others, property, environmental, business interruption and casualty insurance policies, but we are not fully insured against all potential hazards and risks incident to our business. We are subject to various self-retentions and deductibles under these insurance policies. As a result of market conditions, our loss experience and other factors, our premiums, self-retentions and deductibles for insurance policies can increase substantially and, in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage. In addition, significantly increased costs could lead us to decide to reduce, or possibly eliminate, coverage. As a result, a disruption of operations at one of our key facilities or a significant casualty could have a material adverse effect on our financial condition and results of operations. Furthermore, our insurance may not be sufficient to cover our expenses related to claims and law suits that may be filed against us, or expenses related to legislation that is being enacted with adverse impact on us.

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Risks Related to Our Operations in Israel

Due to our location in Israel, our operations may be subject to war or acts of terror.

War or acts of terror in the locations where we operate are likely to negatively impact us. This impact may manifest itself in production delays, distribution delays, loss of property, injury to employees, and appreciation of insurance premiums. In addition, our plants may be targets of terrorist acts due to the chemicals they store. We do not have property insurance against war or acts of terror, other than compensation from the State of Israel pursuant to Israeli law, which covers only physical property damage, without accounting for reinstatement values.

Since the construction of our initial facilities in the 1950s, we have never experienced material business interruptions as a result of war or acts of terror, but we can provide no assurance that we will not be subject to any such interruptions in the future.

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Our computer network, communications, and production technologies constitute a basic platform for operational continuity and are also potential targets for acts of terror. Potential cyber threats can cause damage to systems and plants, data loss, software vulnerability and external and internal access to sensitive and confidential information. We have implemented a plan for safeguarding and backing up the information systems. The activities include: separation of the information networks from the computerized process systems, physical safeguarding of the computer rooms and terminals and training of employees. However, there is no assurance that our plan will successfully accomplish its goals.

We conduct operations in Israel and therefore our business, financial condition and results of operations may be materially and adversely affected by political, economic and military instability in Israel and its region.

Our headquarters, some of our operations, and some of our mining facilities are located in central Israel and many of our key employees, directors and officers are residents of Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly affect our business. Since the establishment of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab neighbors, Hamas (an Islamist militia and political group in the Gaza Strip) and Hezbollah (an Islamist militia and political group in Lebanon). Any hostilities involving Israel or the interruption or curtailment of trade within Israel or between Israel and its trading partners could materially and adversely affect our business, financial condition and results of operations and could also make it more difficult for us to raise capital. Recent political uprisings, social unrest and violence in various countries in the Middle East and North Africa, including Israel’s neighbors Egypt and Syria, are affecting the political stability of those countries. This instability may lead to deterioration of the political relationships that exist between Israel and these countries and havehas raised concerns regarding security in the region and the potential for armed conflict. In addition, Iran has threatened to attack Israel and is widely believed to be developing nuclear weapons. In addition, the assessment is that Iran has a strong influence among parties hostile to Israel in areas that neighbor Israel, such as the Syrian government, Hamas in Gaza and Hezbollah in Lebanon. Any armed conflicts, terrorist activities or political instability in the region could materially and adversely affect our business, financial condition and results of operations. In addition, the political and security situation in Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements.

In addition, because we are an Israeli company, our sales may be subject to economic boycotts or other sanctions on our products.

Our operations may be disrupted as a result of the obligation of Israeli citizens to perform military service.

Many Israeli citizens are obligated to perform one month, and in some cases more, of annual military reserve duty until they reach the age of 45 (or older, for reservists with certain occupations) and, in the event of a military conflict, may be called to active duty. Although periods of significant call upscall-ups of military reservists in the past in response to terrorist activities have had no significant impact on our operations, it is possible that there will be military reserve duty call upscall-ups in the future, which will might disrupt our operations.

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It may be difficult to enforce a U.S. judgment against us and our directors and executive officers named in this Annual Report, in Israel or the United States, or to serve process on our directors and executive officers.

We are incorporated under Israeli law. Many of our directors and executive officers listed in this Annual Report reside outside the United States, and most of our assets are located outside the United States. Therefore, a judgment obtained against us or many of our directors and executive officers in the United States, including one based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States and may not be enforced by an Israeli court. It also may be difficult for you to effect service of process on these persons in the United States or to assert claims under the U.S. securities laws in original actions instituted in Israel.

Your rights and responsibilities as a shareholder will be governed by Israeli law which may differ in some respects from the rights and responsibilities of shareholders of U.S. companies.

We are incorporated under Israeli law. The rights and responsibilities of the holders of our ordinary shares are governed by our Articles of Association and Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith toward the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on matters such as amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and acquisitions and interested party transactions requiring shareholder approval. In addition, a

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shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or to appoint or prevent the appointment of a director or executive officer in the company has a duty of fairness toward the company. There is limited case law available to assist us in understanding the implications of these provisions that govern shareholders’ actions. These provisions may be interpreted to impose additional obligations and liabilities on holders of our ordinary shares that are not typically imposed on shareholders of U.S. corporations.

Risks Related to Our Ordinary Shares

We are controlled by one of our shareholders. This shareholder may make decisions with which other shareholders may disagree.

As of March 19,December 31, 2015, Israel Corporation held approximately 49.2%48.88% of our outstanding ordinary shares and approximately 46.18%46.04% of the voting rights of our shareholders.

The interests of Israel Corporation may differ from your interests. Israel Corporation exercises control over our operations and business strategy and has sufficient voting power to control many matters requiring approval by our shareholders, including:

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The composition of our Board of Directors (other than external directors, as described under “Item“Item 6. Directors, Senior Management and Employees—C. Board Practices—External Directors”Directors”);

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Mergers, acquisitions or other business combinations;

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Certain future issuances of ordinary shares or other securities; and

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Amendments to our Articles of Association, excluding provisions of the Articles of Association that were determined by the Special State Share.

In addition, this concentration of ownership may delay, prevent or deter a change in control, or deprive you of a possible premium for your ordinary shares as part of a sale of our Company. Israel Corporation could also sell its stake and transfer control to another party without your consent. Furthermore, Israel Corporation may conduct material transactions in our shares, such as its existing margin loans that are secured by pledges of ICL shares, and/or in their organizational structure that we will not be able to influence but that may have a material adverse effect on our share price.

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The existence of a Special State Share gives the State of Israel veto power over transfers of certain assets and shares above certain thresholds, and may have an anti-takeover effect.

The State of Israel holds a Special State Share in our Company and in some of our Israeli subsidiaries. The Special State Share entitles the State of Israel, among other things, to restrict the transfer of certain assets and some acquisitions of shares by any person that would become a holder of specified amounts of our share capital. Because the Special State Share restricts the ability of a shareholder to gain control of our Company, the existence of the Special State Share may have an anti-takeover effect and therefore depress the price of our ordinary shares.

Furthermore, the existence of the Special State Share may prevent us from and developing business opportunities that we may come across.

The market price of our ordinary shares is subject to fluctuation, which could result in substantial losses for our investors.

The stock market in general, and the market price of our ordinary shares in particular, is subject to fluctuation, and changes in our share price may be unrelated to our operating performance. The market price of our ordinary shares on the TASE has fluctuated in the past, and we expect it will continue to do so. The market price of our ordinary shares is and will be subject to a number of factors, including:

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Expiration or terminations of licenses or concessions;

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General equity market conditions;

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Decisions by the Israeli government that affect us;

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Variations in our and our competitors’ results of operations;

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Changes in earnings estimates or recommendations by securities analysts; and

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·

General market conditions and other factors, including factors unrelated to our operating performance.

These factors and any corresponding price fluctuations may materially and adversely affect the market price of our ordinary shares and result in substantial losses for our investors.

If equity research analysts issue unfavorable commentary or downgrade our ordinary shares, the price of our ordinary shares could decline.

The trading market for our ordinary shares relies in part on the research and reports that equity research analysts publish about us and our business. The price of our ordinary shares could decline if one or more securities analysts downgrade our ordinary shares or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.

You may be diluted by the future issuance of additional ordinary shares in connection with our incentive plans, acquisitions or otherwise.

As at the publication date of the report, the Company hasthis Annual Report, we have approximately 189NIS 185 million NIS ($47 million)par value shares (not including an issuance of 99,858 restricted shares to directors) authorized but unissued. We may choose to raise substantial equity capital in the future: to acquire or invest in businesses, products or technologies and other strategic relationships and to finance unanticipated working capital requirements and respond to competitive pressures. The issuance of any additional ordinary shares in the future, or any securities that are exercisable for or convertible into our ordinary shares, will have a dilutive effect on our shareholders since by raising additional funds by issuing equity or convertible debt securities, we will reduce the percentage ownership of our then existingthen-existing shareholders, and these securities may have rights, preferences or privileges senior to those of our existing shareholders. For example, on June 22, 2015, we have acquired the balance of Allana’s shares (83.78%) for a total consideration of approximately $112 million, of which approximately $96 million was in cash, and approximately $16 million was by means of issuance of 2,225,337 of our ordinary shares. In addition, 16,353,47323,456,518 options for our ordinary shares that were issued under the Company’sour incentive and remuneration planplans were outstanding as ofat March 19, 2015.15, 2016. See “Item“Item 6. Directors, Senior Management and Employees—E. Share Ownership—Incentive Compensation Plans.” Any ordinary shares that we issue, including under any options plans, would dilute the percentage ownership held by investors.

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If our existing shareholders sell additional ordinary shares, or if these shares are sold by others, either on the TASE or the NYSE, or if the forward counterparties or their affiliates sell additional ordinary shares to adjust their respective hedge positions during the terms of the forward sale agreements, the market price of our ordinary shares could decline.

The sale of substantial amounts of our ordinary shares in the public market, or the perception that such sales could occur, could harm the prevailing market price of our ordinary shares on the TASE or the NYSE. These sales, or the perception that these sales could occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. We have a total of 1,295,943,056 ordinary shares outstanding. All of our outstanding shares are freely tradable without restriction or further registration under the Securities Act, except that any shares held by our affiliates, including Israel Corporation, may be sold only in compliance with the limitations described in “Shares Eligible for Future Sale” in our registration statement on Form F-1 (File no. 333-198711), as filed with the SEC on September 22, 2014.

We, our directors and officers, and Israel Corporation have signed lock up agreements with the underwriters in connection with our initial public offering that, subject to certain exceptions, including with respect to sales by pledgees under margin loans, restrict the sale of ordinary shares held by them for 180 days following the date of our initial public offering on the NYSE. Upon the expiration of the lock up agreements, all of such shares will be eligible for resale in a public market, subject to, in the case of shares held by our affiliates, volume, manner of sale and other limitations under Rule 144. Morgan Stanley & Co. LLC may, in its sole discretion, release all or any portion of the shares subject to lock up agreements.

As of December 31, 2014, Israel Corporation has pledged approximately 383 million ordinary shares, or approximately 65.3% of the total ordinary shares it holds, to secure certain liabilities, almost entirely composed of margin loans with an aggregate outstanding principal amount of $1,035 million. As of that date, the ordinary shares pledged by Israel Corporation represent approximately 30% of the total ordinary shares. Each margin loan secured by shares requires Israel Corporation to pledge additional ordinary shares or cash collateral if certain loan to value ratios are greater than the minimum ratios agreed upon with the lender of the applicable margin loan. In accordance with the loan to value ratios, Israel Corporation would be required to pledge additional ordinary shares or cash collateral if the price of our ordinary shares were to decline to prices ranging from $4.7 to $6.1. One or more of the margin loans also contain provisions that, subject to their terms, effectively require prepayment if certain events or circumstances occur, including any that have a material adverse effect on Israel Corporation, Israel Corporation ceasing to control us, a decline in the price of our ordinary shares below a specified level, Israel Corporation’s failure to comply with specified financial ratios or a requirement of prepayment is triggered under any other material indebtedness. The only liabilities of Israel Corporation that are secured by ordinary shares, and that are not margin loans, relate to cross currency interest rate swaps. At December 31, 2014, Israel Corporation had, on an unconsolidated basis, approximately $2,313 million of total indebtedness, of which approximately $1,035 million is comprised of the margin loan indebtedness described above. If Israel Corporation fails to pledge additional ordinary shares or cash collateral when it is required to do so or otherwise fails to comply with the respective terms of the margin loans and the lender accelerates payment of all amounts outstanding under these loans as a result of this non-compliance, then the lender could sell the ordinary shares pledged thereunder. In addition, certain lenders under the margin loans may elect at any time to hedge their exposure to the ordinary shares in transactions that could directly or indirectly impact the price of ordinary shares.

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Pursuant to the terms of its lock up agreement, Israel Corporation may (1) pledge additional ordinary shares under its existing margin loans and cross currency interest rate swaps, whether required to do so to comply with the respective terms of the margin loans or otherwise, and (2) enter into new pledge agreements and pledge additional shares to refinance existing margin loan indebtedness, so long as in any such case the aggregate principal amount of debt under its margin loans would not be greater (after giving effect to the refinancing or additional pledge) than $1.14 billion. The lock up agreement does not otherwise impose any limitations on the terms of any such refinancing arrangements or on Israel Corporation’s ability to renegotiate any of the terms of its existing margin loan arrangements or cross currency interest rate swaps.

In addition to the above, Israel Corporation has entered into a derivative financial transaction with entities from Goldman Sachs and Morgan Stanley (“the Financial Institutions”), of the” Variable Prepaid Forward” type, based on an ISDA agreement, in connection with approximately 36.2 million additional shares of ICL that were transferred into the name of the Financial Institutions, as detailed in Israel Corporation’s Immediate Report dated September 24, 2014. As part of the financial transaction, the Financial Institutions provided Israel Corporation an initial amount of $191 million, which in is in essence, a loan.

Israel Corporation has the right to elect cash settlement under the forward sale agreements in lieu of delivering ordinary shares. To the extent Israel Corporation elects cash settlement under the forward sale agreements, the forward counterparties will return to Israel Corporation the ordinary shares it previously made available to the forward counterparties. The forward counterparties or their affiliates may make additional sales and purchases of ordinary shares to adjust their respective hedge positions during the terms of the forward sale agreements. Neither we, Israel Corporation nor the forward counterparties make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the ordinary shares, but any selling activities could depress the price of our ordinary shares. In addition, neither we, Israel Corporation nor the forward counterparties make any representation that the forward counterparties or any of their affiliates will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

Upon the expiry of the restrictions on resale, the market price of our ordinary shares could drop significantly if the holders of these restricted shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our ordinary shares or other securities.

We may not be able to fulfillmaintain our dividend policy in the future.

payment.

Our Board of Directors has adopted a dividend policy to pay quarterly dividends of up to 70% of our net income. All dividends must be declared by our Board of Directors, which will take into account various factors including our profits, our investment plan, our financial status and additional factors they deem appropriate. Dividend payments are not guaranteed and our Board of Directors may decide, in its absolute discretion, at any time and for any reason, not to pay dividends, to reduce the amount of dividends paid, to pay dividends on an ad hoc basisspecial dividend, to modify the dividend payout policy or to adopt a share buyback program.

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Directors has decided to re-examine the Company’s current dividend policy, in its next meeting, and may make changes for future periods. Such changes could include either a reduction in the amount or the targeted dividend, or modification of the policy to be based on other metrics. No assurances can be provided that the Board of Directors will make any changes. In addition, dividends will only be paid when, as and if declared by the Board of Directors, and may be discontinued at any time.

Our ordinary shares are traded on different markets and this may result in price variations.

Our ordinary shares have been traded on the TASE since 1992 and have been listed on the NYSE since September 2014. Trading in our ordinary shares on these markets occurs in different currencies (U.S. dollars on the NYSE and NIS on the TASE) and takes place at different times (resulting from different time zones, different trading days and different public holidays in the United States and Israel). The trading prices of our ordinary shares on these two markets may differ due to these and other factors. Any decrease in the price of our ordinary shares on one of these markets could cause a decrease in the trading price of our ordinary shares on the other market.

As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of applicable SEC and NYSE requirements, which may result in less protection than is afforded to investors under rules applicable to domestic issuers.

As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required by the NYSE for domestic issuers. For instance, we have elected to follow home country practices in Israel with respect to, among other things, composition and function of the auditAudit and finance committeeFinance Committee and other committees of our Board of Directors and certain general corporate governance matters. In addition, in certain instances we will follow our home country law, instead of NYSE rules applicable to domestic issuers, which require that we obtain shareholder approval for certain dilutive events, such as an issuance that will result in a change of control of our Company, certain transactions other than a public offering involving issuances of a 20% or more interest in our Company and certain acquisitions of the stock or assets of another company. Following our home country corporate governance practices as opposed to the requirements that would otherwise apply to a U.S. company listed on the NYSE may provide less protection than is afforded to investors under the NYSE rules applicable to domestic issuers.

In addition, as a foreign private issuer, we are exempt from the rules and regulations under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), related to the furnishing and content of proxy statements and the requirements of Regulation FD (Fair Disclosure), and our directors, officers and principal shareholders are exempt from the reporting and short swingshort-swing profit recovery provisions of Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as domestic companies whose securities are registered under the Exchange Act.

We have a history of quarterly fluctuations in our results of operations due to the seasonal nature of the demand for some of our products. We expect these fluctuations to continue. Fluctuations in our results of operations may disappoint investors and result in a decline in our share price.

We have experienced, and expect to continue to experience, fluctuations in our quarterly results of operations. Our sales have historically been stronger in the second and third quarters of each year. This is due to the mix of products we sell in those quarters, as well as the mix of sales in different countries. If, for any reason, our revenues in the second and third quarters are below seasonal norms, we may not be able to recover these sales in subsequent quarters and our annual results of operations may not meet expectations. If this occurs, the market price of our ordinary shares could decline.

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ITEM 4 – INFORMATION ON THE COMPANY

Item 4. Information on the Company

A. HISTORY AND DEVELOPMENT OF THE COMPANY

Our legal name is Israel Chemicals Ltd. and our commercial name is ICL. We are a public company and operate today as a limited liability company under the laws of Israel. Our registered office and principal place of business is located at Millennium Tower, 23 Aranha Street, P.O. Box 20245, Tel Aviv 61202, Israel. The telephone number at our registered office is +972 3 684 4400.+972-3-684-4400. Our website address is www.icl group.com.www.icl-group.com. The reference to our website is intended to be an inactive textual reference and the information on, or accessible through, our website is not intended to be part of this Annual Report.

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We were established in Israel in 1968 as a government-owned and -operated company in Israel and operate today as a limited liability company under the laws of Israel. In 1992, following a decision of the Israeli government to privatize the Company, the State published a sales offer prospectus and our shares were listed for trade on the Tel Aviv Stock Exchange. In September 2014, we listed our shares for trade on the New York Stock Exchange, and they are currently traded in Tel Aviv and in New York. The purpose of the listing was to expand our global base of investors, improve liquidity, increase our access to global financial markets, and improve our capital structure management flexibility. For additional information on the Company’s history and development, see “—“—Business Overview—Our History.”

For information about our principal capital expenditures and divestitures during the last three fiscal years, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Principal Capital Expenditures and Divestitures.”

B. BUSINESS OVERVIEW

Company Overview

We are a leading global specialty minerals company that operates a unique, integrated business model. We extract raw materials and utilize sophisticated processing and product formulation technologies to add value to customers in three attractive end markets:end-markets: agriculture, food and engineered materials. These three end marketsend-markets constitute over 90%98% of our revenue. Our operations are organized into three segments: (1) Fertilizers, which operates the raw material extraction for us and markets potash, phosphates and specialty fertilizers; (2) Industrial Products, which primarily extracts bromine from the Dead Sea and produces and markets bromine and phosphorus compounds for the electronics, construction, oil and gas drilling and automotive industries and (3) Performance Products, which mainly produces, markets and sells a broad range of downstream phosphate basedphosphate-based food additives and advanced industrial intermediates.

Our principal assets include:

·

Access to one of the world’s richest, longest lifelongest-life and lowest  costlowest-cost sources of potash and bromine (the Dead Sea).

·

Access to potash mines in the United Kingdom and Spain.

·

Bromine compounds processing facilities located in Israel, the Netherlands and China.

·

A unique integrated phosphate value chain, from phosphate rock mines in the Negev Desert in Israel and in China to our value addedvalue-added downstream products in Israel, Europe, the United States, Brazil and China.

·

An extensive global logistics and distribution network with operations in over 30 countries.

·

A focused and highly experienced group of technical experts developing production processes, new applications, formulations and products for our three key end markets:end-markets: agriculture, food and engineered materials.

For the year ended December 31, 2014,2015, we generated total sales of approximately $6,110$5,405 million, operating income of approximately $758$765 million and net income of approximately $466$509 million, and Adjusted EBITDA of approximately $1,344 million. For the year ended December 31, 2014, the sales of the Fertilizers segment amounted to approximately $3,402$3,067 million and operating income of approximately $670$529 million, and Adjusted EBITDA of approximately $912 million. For the year ended December 31, 2014, our Industrial Products segment generated sales of approximately $1,337$1,115 million and operating loss of approximately $62$24 million and Adjusted EBITDA of approximately $202 million. Ourour Performance Products segment generated sales of approximately $1,614$1,472 million

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and operating income of approximately $197 million$319 million.

For a breakdown of sales by segment and Adjusted EBITDAgeographic market for each of approximately $241 million. See “Item 3. Key Information—the last three fiscal years, see “Item 5. Operating and Financial Review and Prospects—A. Selected Financial Data” for a definitionOperating Results.”

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Table of Adjusted EBITDA and a reconciliation to the comparable IFRS measure.Contents

Our Industry

The majority of our businesses compete in the global fertilizer and specialty chemicals industries.

Fertilizers

Fertilizers serve an important role in global agriculture by providing vital nutrients that help increase both the yield and the quality of crops. We supply two of the three essential nutrients — potassium, phosphorus and nitrogen — required for plant growth. There are no artificial substitutes for potassium and phosphorous (which are produced by the Company). Although these nutrients are naturally found in soil, they are depleted over time by farming, which could lead to declining crop yields and land productivity. To replenish these nutrients, farmers must apply fertilizers. The demand for fertilizers is volatile and seasonal. In our estimation, the policy of most countries is to ensure an orderly supply of high qualityhigh-quality food to their residents, including by encouraging agricultural production, which should preserve the long termlong-term growth trend of fertilizer consumption.

Potash the salt form of potassium, helps regulate a plant’splant's physiological functions and improves plant resilience, providing crops with protection from drought, disease, parasites and cold weather. Unlike phosphate and nitrogen, potash does not require additional chemical conversion to be used as a fertilizer. Potash is mined either from underground mines or, less frequently, from natural sources,solutions found in nature, such as our operations in the Dead Sea. According to estimates from the United States Geological Survey, six countries accounted for approximately 86.3%86% of the world’sworld's aggregate potash production and the top nine producers (considering China as a single producer even though there are numerous producers in China) operatedaccounted for approximately 90%85% of world production in 2014. Worldwide sales2015. In 2015, the quantities of potash recovered insold worldwide were low compared with 2014, as compared to 2013.which was a record year. The average prices in 20142015 were significantly lower than the average prices in 2013. Nonetheless, commencing from2014. Since the second halfbeginning of 20142015 there has been a trend of a decline in the potash. The main reasons for that stated above are, among others, a decrease in the prices of agricultural commodities, weakening of the currencies of the importing countries, a shortage of rainfall (mainly in India) and limitations on the credit granted to farmers (mainly in Brazil). The beginning of 2016 brought no signs of economic recovery. In the global commodities market, the prices are at multi year lows, due to the high inventory levels in China, which postponed the negotiations with respect to renewal of the contracts to 2016.

Import of potash into China in 2015 totaled 9.4 million tons – an increase of about 18% compared with the corresponding period last year. The significant quantities of potash imported into China during the year caused an accumulation of large inventories in the country. This enabled the Chinese importers to delay signing of contracts for the first half of 2016 and gives them a stronger bargaining position in negotiations with reference to import prices that has continued upin the new contract. In January 2016, ICL signed new framework agreements with its customers in China for the supply of approximately 3.4 million tons of potash over the next three years, compared to 3.3 million tons in the previous framework agreements for the years 2013 to 2015. The selling price will be determined on the basis of the accepted price levels in the Chinese potash market. According to the present time, particularly of granulated potash, mostly in Brazil andframework agreements, which represent a 3% increase in the United States. quantities supplied, compared to the previous three-year framework agreements, the Company will supply 1.1 million tons of potash in 2016, 1.14 million tons in 2017, and 1.16 million tons in 2018.

In 2014,the beginning of 2015, it appeared that the imports of potash into China reached a levelIndia would increase significantly over 2014. This expectation did not materialize, mainly due to the devaluation of 8.03the Indian currency and the shortfall of Monsoon rains. During 2015, India imported 4 million tons – the highest level since 2007 and approximately 21.3% higher thanof potash, constituting a decrease of 7%, compared with 4.3 million tons imported in 2013.2014. In 2015, ICL signed contracts for supply of potash with its customers in India, covering an aggregate quantity of 835 thousand tons, including options. In the Company’s estimation, the trend of increasing imports into China is expected to continuecustomers in 2015India will not utilize the entire quantities covered by the contracts due to an increase in consumption and logistics problemsthe accumulation of the local producers. After several years of low demand for potash in India, which stemmed from, among other things, the government’s subsidy policy that gave preference to nitrogen fertilizers, there was a significant improvement in imports of potash into India in 2014. Potash imports increased from 3.07 million tons in 2013 to 4.29 million tons in 2014. This increase was achieved notwithstanding the fact that there was no change in the subsidy policy and the price to the final farmer remained at the same level as it was during the last two years. inventories.

In the Company’s estimation, an improvement in farmers demand for potash in India is expected in 2016, on the assumption that the price in the annual contract to continue in 2015 as farmers have adaptedbe signed will be lower than the present contract price. However, aside from the price, the demand is also impacted, to a significant extent, by the higher levelsubsidies that will be determined by the government and by the amount of prices, and this is expected to support an increase inthe monsoon rainfall.

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The demand in upcoming years, as well. Demand for potash in Brazil, was highwhich peaked in 2014, dropped significantly in 2015 due to a fall in the prices of the agricultural commodities, weakness of the Brazilian currency and the limitations with respect to credit to farmers. In 2015, potash imports into Brazil totaled 8.3 million tons, compared with imports of fertilizers into Brazil reached record levels. In 2014, 9.1 million tons in 2014 – constituting a decline of potash were imported into Brazil, compared with 7.6 million tons in 2013 – an increase of 19.0%8%.

According to the IFA, the aggregate global demand for potash for agricultural and other uses is projected to grow at an average annual rate of 2.5%3%, from 35.5 million tons of K2O in 2015 up to 2018.

38.5 million tons of K2O in 2019.

Phosphate is essential for plant root development and is required for photosynthesis, seed germination and efficient usage of water. Phosphate fertilizers are produced from phosphate rock and sulfuric acid and occasionally also include ammonia. The principal phosphate fertilizer producing regions have plentiful reserves of high quality, phosphate rock that can be mined at a low cost. TheIn 2015, the vast majority of the world’s phosphate rock production in 2014 was in China, the United States, Morocco and Russia. According to the IFA, global phosphoric acid demand is forecast to grow at an annual rate of 2.2% through 2018. From January2.5%, from a quantity of 43.7 million tons of phosphorous content in 2015 to November 2014,a quantity of 48.2 million tons of phosphorous content up to 2019. During 2015, there was a decrease in prices of phosphate fertilizers. These price decreases stemmed from a combination of supply and demand factors. On the demand side, imports into India (the main importer of DAP) were lowlower than expected in the first three quarterssecond half of the year.year, due to a shortage of rainfall and the continuing erosion of the local currency against the dollar. Regarding demand, in addition to the decrease in demand in India, in 2015 Brazil also imported a quantity that was 24% less than in 2014, due to the decline in the prices of agricultural commodities, weakness of the Brazilian currency and restrictions on credit to farmers. The demand in the United States was also low, mostly due to a fall in crop prices. On the supply side, there was a significant increase in the export of phosphate fertilizers from China, which increased considerably this year and even reached new markets, such as the United States. In addition, the new Saudi producer (Ma’aden) increased its exports this year, and Saudi fertilizers reached Brazil for the first time. Notwithstanding that stated,Moroccan phosphate company (OCP) entered a new plant into production (one of four in the fall in prices came to a halt in December, and a moderate increase in pricesprocesses of phosphate fertilizers commenced beginning in early 2015. This improvement stemmed from the resurgence in

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demand along with limitationgradual construction). Based on the supply side. Regarding demand, commencing from October, India increased the import of fertilizers, and toward the end of the year it became clear that imports in 2014 had increased significantly compared with the prior year. Furthermore, additional customers that had ceased buying in anticipation of further price decreases returnedCRU publications, due to the market with the understanding that additional price decreases are not expected. On the supply side,decline in demand, a number of major producers implemented a policy of contracting production: Mosaic, the U.S. fertilizers producer, announced a curtailment ofMosaic, reduced production, and OCP, the Moroccan phosphateJordanian producer, notified that it intends to focus on production of phosphoric acid and TSP fertilizers (phosphate fertilizers that do not contain ammonia). The situation prevailingJPMC, produced smaller quantities in the market forfinal months of the year, while the Tunisian producer suffered from numerous interruptions due to strikes at the plants, mines and the companies shipping the rock to the plants.

The prices of phosphate fertilizersrock also harmedfell in 2015, however more moderately than the U.S. producer MissPhos, which declared bankruptcyphosphate and discontinued its productionpotash prices. CFR prices fell by about ten percent. Part of fertilizersthe decline was offset by the decline in the beginning of December 2014.

shipping prices, such that the FOB prices were impacted to a lesser extent.

The barriers to entry of new competitors into the potash market are significant, and a long lead time and billions of dollars of capital per operation are required. In potash, forFor example, economically recoverable deposits are scarce, typically deep in the earth and geographically concentrated. In phosphates, the need for access to competitive sources of multiple raw material feedstocks (phosphate rock, sulfuric acid and ammonia) combined with the complexity of developing an economically feasible downstream value chain also acts as a significant barrier to entry barrier.

with respect to new competitors.

The specialty fertilizers market is growing faster than the conventional fertilizers market. Specialty fertilizers are generally used for specialty crops (such as greenhouses and horticulture) but are rapidly expanding into usage for larger specialty field crops. Farmers are looking foruse fertilizers that are customized to meet the needs of specific crops, soil types and specific climates, to maximize yield and quality.quality, mainly when the crop prices are high. The specialty fertilizers allow more precise application of the critical foundations for development of the plant (phosphoric(phosphorus acid, potassium and nitrogen). and micro-nutrients. In addition to reduction of the environmental impacts, the specialty fertilizers permit efficient and effective fertilization of different types of produce (fruits, vegetables, etc.). Increase in the demand for healthier food is expected to give rise to an increase in the use of specialty fertilizers. SpecialtyThese fertilizers such asinclude, among others, “enhanced efficiency fertilizers” which permit greater fertilizing efficiency, including, controlled release fertilizers (CRF) (which allow for the exact release of nutrients over time), delayed/slow release fertilizers (SRF) (which allow for a very slow release of nutrients) (nitrogen and potassium only), liquid fertilizers integrated in irrigation systems as well as in herbicides and fertilizers that are fully soluble in water (that are most commonly used for fertilization by means of drip irrigation systems and foliar spraying).

Specialty Phosphates

Phosphate is also used in a broad range of downstream products in the food, electronics, energy and construction industries. These phosphate basedphosphate-based specialty products deliver additional and attractive margins.value to ICL on top of the commodity phosphates. Main applications are for the food industry as additives for improved texture, stability and shelf life of processed foods in the markets for meat, bakery, dairy products and soft-drinks, and for additional industries for usage in road surfaces, oil and paint additives, flameforest fire retardants and fire extinguishing. Demand for phosphate basedphosphate-based products is driven by global economic and population growth and improved living standards, which promote the adoption of more sophisticated food products.

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Bromine

The largest commercial use of bromine is in the area of brome basedbromine-based flame retardants, which accounts for approximately 40% of the demand for bromine. To meet fire-safety requirements, flame retardants are used as inputs in manufacturing processes and end products such as plastic casesenclosures for consumer electronics, printed circuit boards, insulation materials for construction, furniture, automobiles, and textiles. Additional commercial uses of bromine are in the following industries: rubber production, oil and gas drilling, water purification, intermediate materials for production of medicines and pesticides, and others. The flame retardant market has contracted in the past few years.years, due to a slowdown in the demand for electronic products and in the construction sector, as well as in the market for printed circuits. On the other hand, alternativeadditional uses of bromine have increased considerably, with bromine now used ingrew, although at a number ofslower pace. ICL and its competitors are developing new applications, including water purification, shale gas fracking, oilproducts and gas drilling and other industrial uses. Many new applications are under development by us and our competitors.

uses on an ongoing basis.

Bromine is found naturally in seawater, underground brine deposits and other water reservoirs, such as the Dead Sea, and is extracted by evaporation. The Dead Sea is the world’s premier source of bromine, with concentration levels significantly higher than in regular seawater, and it accounts for about half of the global supply. Because it has the highest concentration of bromine, the Dead Sea is the most economical supply source as the least amount of water must be extracted and evaporated to produce bromine.

The bromine industry is highly concentrated, with three companies accounting for approximately 80% of worldwide capacity in 20142015 (ICL, Albemarle and Chemtura). Lack of access to a low-cost source of supply such as the Dead Sea constitutes a significant barrier to entry barrier for aspiring competitors, as well as the requirement for a sophisticated logistical global supply chainsystem and specialized transport vehicles (isotanks) system.. We estimate that approximately 70% of global elemental bromine production is consumed internally for production of downstream products, asby the bromine manufacturers, since there is a very small market for elemental bromine. To increase the global use of elemental bromine, development of complex production facilities for downstream products is required.

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Over 90%98% of our revenue is derived from three highly attractive end markets:core end-markets: agriculture, food and engineered materialsmaterials.

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Agriculture

Global fertilizer demand is driven by grain demand and prices, which are primarily driven by population growth and dietary changes in the developing world:

·

Population and Income Growth.Growth per Capita. Historically, growth in world fertilizer consumption has been closely correlated with growth in world population, which is expected to increase by over 1.0 billion to reach 8.3 billion by 2030, according to the U.S. Census Bureau. Currently, developed countries use fertilizer more intensively than developing countries and therefore produce crops at much higher yields. Economic growth in emerging markets is increasing food demand and thus fertilizer use. In addition, income per capita growth in developing markets results in a shift to more protein richprotein-rich diets, and specifically, there is an increase in the consumption of meat, which requires larger quantities of grain for their growth, which leadsthus leading to an increased demand for seeds for animal feed. According to the IMF, income per capita in developing countries is expected to grow by 6.0%an average rate of 6.4% annually upfrom 2015 to 2018. 2020.

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Declining Arable Land per Capita.Capita. As the world’s population grows, mainly in cities, farmland per capita decreases and more food production is required from each acre of farmland. This, in turn, requires increased yield on existing farms. According to data from the FAO, the amount of arable land per capita is expected to decrease from 0.218 hectares per person to 0.197 hectares per person between 2012 and 2030. Effectively, new arable land is available only in limited quantities, and is concentrated mainly in Brazil. Therefore, the only viable path to increase crop production is through the yield increase in existing farms in developing countries, mainly in China, India, Russia, Africa and Central America, by increasingoptimizing the use of fertilizers (especially improving the balance in the use of potash and phosphates)phosphates versus the use of nitrogen fertilizers) together with water availability and better seeds.

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Low Grain Stock-to-Use Ratio.Ratio. The pressure on food demand is expected to continue to result in relatively low historical levels of the grain stock to usestock-to-use ratio (a metric indicating the level of carryover stock), as illustrated by the chart below. The grain stock to use ratio was approximately 20.8% for the 2013/2014 season, which represented an increase from a low of 16.6% for the 2006/2007 season but a decrease as compared to the high of 28.9% for the 2000/2001 season, according to data from the USDA. Based on the report published by the USDA in February 2015,2016, the grain stock to usestock-to-use ratio is expected to increase to approximately 21.15%23.3% at the end of the 2015/2016 season, compared with 22.8% at the end of the 2014/2015 season, compared with 20.80%and 21.2% at the end of the 2013/2014 season, and 19.85% inseason. This is higher than the 2012/2013very low levels of 16.6% for 2006/2007 but lower than the level of 28.9% for the 2000/2001 season. Most of the increase that is anticipated in the 2014/20152015/2016 season stems from an increase in corn and wheat stockpiles. The inventory of soybeans, which is not included in the grains’ inventory index, is also on the rise. A declineAn increase in the grain stock to usestock-to-use ratios generally indicates that grain prices will increasemay decline (due to limited stockpileshigher grain supply) and tighter grain supply).during 2015, corn, wheat and soybean prices decreased by 9%, 29% and 15%, respectively. This generally is a positivenegative development for fertilizers, as higherlower grain prices support morereduce the incentive of farmers to use intensive fertilizer use. Conversely the recent increase would suggest lower prices and less fertilizer use. application.

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Food

Consumer demand for different food products in developed countries has changed dramatically over the last several decades, driven by a number of trends and processes including increased per capita incomes, demographic shifts and lifestyle changes. Longer working hours, changing family structures, increased awareness of nutrition and health issues and access to a broader variety of food products result in growing demand for more sophisticated, products with longer shelf livesshelf-lives such as convenience food and processed food products.

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This changing demand includes greater demand for more sophisticated food products and processed food products with enhanced nutritional value and balance and with improved flavor, texture and appearance. An increasingly longer supply chain and consumer awareness of waste of foods also drives the demand for longer shelf lifeshelf-life and food stability. These trends act as long termlong-term drivers of demand for food additives such as phosphate derivatives, phosphate basedand protein containing formulations and hygiene products for the processed meat, bakery, dairy and beverages industries.

Engineered Materials

Demand for engineered materials that we manufacture, which include solutions based on bromine and phosphorus, and phosphate based products, is driven by the increase indemand from the construction and electronics operations, increasingindustries, demand for energy, including renewable energy, and the increase in the demand for potable water and pharmaceutical products. Phosphoric acid is incorporated as a raw material into industrial grade product solutions that serve the needs of the water, cleaning, paints and coatings, and metal treatment industries. Phosphorous Penta Sulphide (p2s5) is manufactured to serve the lubricating oil additives and insecticide markets. Increased standards of living and expanding population in developing countries also increase regulation and growing environmental awareness. These trends result in greater demand for flame retardants bromineincluding next generation and chlorine basedpolymeric flame retardants, mercury emission control solutions, forest fire retardants, bromine-based biocides for water treatment, and bromine, , magnesia and potassium chloride basedchloride-based intermediates for the pharmaceutical industry.

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industry and oil additive solutions.

Our Competitive Strengths

We attribute our successbusiness strength to the following strengths:

competitive advantages:

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Unique portfolio of mineral assets. We benefit from our access to one of the world’s resource-rich, long-life and low-cost raw materials, mainly potash and bromine. Our access to these resources is based upon exclusive concessions and licenses from the State of Israel for extraction of minerals from the Dead Sea and mining potash and salt from local governments in the United Kingdom and Spain. We also have access to phosphate rock in the Negev Desert based on mining concessions from the State of Israel.Israel and we hold a concession for mining phosphates in two mines in China. Access to these assets provides us with a consistent, reliable supply of raw materials, allowing us to produce our products on a large scale and in a cost-effective manner.

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Dead Sea in Israel:Israel. Our potash and bromine production facilities at the Dead Sea enjoy low production costs due to the high concentration and virtually unlimited supply of minerals contained in the Dead Sea, and the low cost of extracting minerals from the Dead Sea, compared to mining potash from underground deposits or extracting bromine from less concentrated sources, especially using solar evaporation to extract potash and bromine, which is a low-cost process, as compared to other energy-intensive alternatives. Furthermore, the hot and dry climate of the Dead Sea allows us to store,, at a low cost, very large amounts of potash (exceeding one full year of production) outdoors. This advantage enables us to operate worldwide potash facilities at full production capacity despite periodic fluctuations in demand. In addition, we benefit from the geographic proximity of our facilities in Israel to seaports and from Israel’s geographic positioning vis-à-vis our main geographical markets (especially the fast growing markets of India, China and Brazil), reducing transportation, logistics costs and logistics costs.time-to-market. While we benefit from these advantages, we expect to incur significant infrastructure-related costs to fully harvest salt from Pond 5 at our Dead Sea complex, which is our central evaporation pond, to avoid the need to continue to raise the water level in the pond. In addition, while the supply in the Dead Sea is virtually unlimited, our access to this supply of potash and bromine pursuant to the concession is subject to the need to construct a new pumping station. There is also a possibility thatMoreover, we will be requiredare scheduled to pay taxes and royalties in the future at a higher rate and specifically following the conclusionspassage of the Second Sheshinski Committee concerningLaw for Taxation of Profits from Natural Resources which entered into effect on January 1, 2016, except with respect to potash sales from ICL Dead Sea where the State's royalties from private entities including the Company, for the use of national natural resources such as potash and phosphate.effective date is January 1, 2017. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business”.

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United Kingdom and Spain mineral assets:assets. In addition to our operations in Israel, we mine potash in the United Kingdom and Spain. Access to these assets provides us with production and logistics flexibility, geographical proximity to European customers,customersand business diversification and additional reserves for future growth. diversification.

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Our integrated phosphate value chain:chain. Due to our access to the phosphate rock in the Negev Desert and in our mine in China, we are the only sizeable downstream fully backward integrated phosphate player. We mine and process phosphate rock from three open-pit mines in the Negev Desert under mining concessions with the State of Israel.Israel and from one open-pit mine in Haikou (China), using conventional methods, under phosphate mining license that was issued in July, 2015 by the Division of Land and Resources of the Yunnan district in China. Approximately three-quarters of the phosphate rock produced isare used internally to manufacture phosphate fertilizers and phosphoric acid, with the balance sold to external producers. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—Our mining operations are dependent on concessions, licenses and permits granted to us by the respective governments in the countries wherewherein they are located.”

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Diversification into higher value-added specialty products leveraging our integrated business model.model. Our integrated production processes are based on a synergistic value chain that allows us to both efficiently convert raw materials into value-added downstream products and utilize by-products. For example, in phosphates we utilize our backward integration to produce higher-margin specialty phosphates used in the food industry and for engineered materials applications.applications which provides us with additional margins on top of the commodity margin. Our food ingredients provide solutions for improved texture and shelf-life for meat, dairy and bakery products. In addition, as a by-product of our potash production at the Dead Sea, we generate brines with the highest bromine concentration globally. Our bromine-based products serve the electronics, construction, oil and gas and other industries. Our potash mine in the United Kingdom also contains another mineral (polysulphate) which can beis mined using the same infrastructure and addresses unmet emerging mineral needs of the global agricultural industry,. like sulfur deficiency.

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Leading positions in markets with high barriers to entry. entry. We are a global leader in many of the key markets in which we operate, including PK fertilizers, specialty fertilizers and phosphates, elemental bromine and phosphate basedphosphate-based food additives. We believe we are generally ranked among the top three leaders in our markets, as shown in the table below:

Product		Rank in international market		End-Markets
Potash		#2 in Western Europe and #6 Worldwide		Agriculture
PK fertilizers (complex fertilizers based on potash and phosphate)		#1 in Western Europe		Agriculture
Specialty fertilizers CRF and MKP		#1 Worldwide in MAP/MKP soluble fertilizers, #2 #1 (tied) in Europe in controlled releasecontrolled-release fertilizers and #1and#2 in the United States in controlled releasecontrolled-release fertilizers		Agriculture
Phosphate-based food additives		Top 3 Worldwide		Food
Specialty phosphates		Top 2 Worldwide		Food and Engineered Materials
Elemental bromine		#1 Worldwide		Engineered Materials
Phosphorus-based flame retardants		#1 Worldwide		Engineered Materials
Forest fire retardants		#1 Worldwide		Engineered Materials

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Most of our businesses rely on natural resources that are scarce and concentrated in the hands of a few market participants, making it difficult for new competitors to enter our businesses.participants. Our exclusive concessions, intellectual property (unique knowledge, technologies and patents for various products and applications), world-wide marketing and distribution network and high industry start-up costs for new market entrants further add significant barriers to entry.

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Strategically located production and logistics assets.assets. We benefit from the proximity of our facilities, both in Israel and Europe, to developed economies (Western Europe) and emerging markets (such as China, India and Brazil). For example, in Israel, we ship from two seaports: the Port of Ashdod (with access to Europe and South America) and the Port of Eilat (with access to Asia, Africa and Oceania). Access to these two ports provides us with two distinctive advantages versus our competitors: (1) we have lower plant gate to portgate-to-port costs and ocean freight costs, and transportation costs from ports to target market, which lowers our overall cost structure and (2) we have faster time to markets due to our proximity to end-markets, allowing us to opportunistically fill short-lead timeshort lead-time orders, strengthening our position with our customers. In 2015, we completed the establishment of the YPH JV with Yunnan Phosphate Chemicals Group, China’s leading phosphate manufacturer, which strengthens our position in China. In addition, we are the sole producer with the ability to transport potash and phosphates from the same port (which we do in Israel). Our sales are balanced between emerging markets (approximately 34%35% of 20142015 sales) and developed economies (approximately 66%65% of 20142015 sales).

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Significant operatingOperating cash flow generation and return on capital. Our businesses generate significant amounts of cash flow. Thus for example, we. We generated $1,127 million and $895 million of operating cash flows of $893 million and $573 million in 20132014 and 2014,2015, respectively. We are able to generate significant levels of cash flow due to the size and scale of our business and our relatively high margins. These cash flows have enabled us to produce high returns on capital, appropriately maintain and expand our production facilities and take advantage of acquisition opportunities. In addition, since 2007, we have a policy of paying a quarterly dividend of up to 70% of our net income. This policy has resulted in an average dividend yield in the past five years of 6.3%6.2% (calculated based on the total dividend per share in NIS distributed from the net income in the years 20102011 through 2014,2015, including a special non-recurring dividendsdividend in the amount of $500 million each distributed in the years 2010 and 2014, divided by the average price per share on the Tel AvivTel-Aviv Stock Exchange during these years). See “Item 8. Dividend policy.”

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Professional expertise and culture of collaboration and determination.determination. Our operations are managed by an international management team with extensive industry experience. We develop leaders with strong experience in their fields and the culture to drive change and innovation in our Company. We also bring in leaders from outside the Company to supplement our expertise. We focus on nurturing and empowering talent through a global platform of qualification, collaboration and communication that reinforces innovation.

Our Strategy

Our “2020—Next Step Forward” corporate strategy is targeted to fulfill essential needs in our three core markets.markets (agriculture, food and engineered materials). We have developed a strategic plan based on three value creatingvalue-creating pillars: (1) Efficiency:Efficiency: improvement of existing operations; (2) Growth:Growth: organic and external expansion of our value chain, from specialty minerals to the agriculture, food and engineered materials markets; and (3) Enablers:Enablers: creating one global ICL, strengthen innovation, provideproviding an empowering environment for our employees and alignaligning management with our external and internal stakeholders to support our growth and efficiency goals. We intend to implement this strategy while maintaining our strong financial position and our current dividend policy of distributing up to 70% of our net income.

Our key strategic initiatives include:

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Continuously improve the cost base of our distinctive mineral asset base. base and initiate G&A cost efficiency initiatives. We have identified, and have started implementing cost reduction initiatives successfully in our potash, bromine and phosphate operations. AtFurther to our facilitydemonstrated ability to create significant actual added value, we have expanded the activity and implemented an accelerated 5 year plan starting in Spain, we are consolidating our activities from two facilities into one facility while maintaining our production capacity. This will help us lower our fixed costs of production. At Cleveland Potash in the United Kingdom, we are upgrading our mining and production facilities to improve utilization rates, which will significantly reduce fixed costs per ton. Finally, at the Dead Sea facilities in Israel, we are2016. The process focused on implementing process efficiencies to maximize our utilization rates and reduce the workforcewhile maintaining our production capacity to further reduce production cost per ton. In phosphates, we created a significant reduction in our cost base by implementington and help ICL lower its costs of production. Over 2015, ICL has also established an efficiency plan at our Rotem site, including headcount reductions and process improvements to increase utilization rates. The program has already delivered almost $30 million in annualized savings due to Rotem's operational excellence and production records in second half of 2014 and the reduction in labor costs as a result of theOperational Excellence activity for implementation of the early retirement plan.most advanced practices in the industry. The contributionICL Operational excellence implementation plan covers transformation of the plan was partial in 2014,all our operations within 3 years while our major Potash and beginning in 2015, we will benefit from the entire contribution of the plan. Regarding the plan for efficiency and integration of the global processes into our Company, as well as the plan for reducing the production cost of our specialty minerals pursuant to the strategic plan described above, wePhosphate sites are commenced transformations since 2014. We estimate that, these activities, the execution of our activities which we have already started and delivered contribution of approximately $100 million in 2014,significant contributions, will increase savings by the end of 2016 in the amount of approximately $350 million annually compared with 2013.Our estimate2013. As at December 31 2015, we successfully achieved a $275 million savings compared to 2013. Furthermore, ICL has initiated and already implemented certain initiatives across the Company to reduce our G&A costs, ICL is continuing to assess additional potential areas of savings and expecting to continue to do that during 2016. On March 15, 2016, we announced, in light of the significant deterioration in the potash business environment and the continued weak outlook for the potash business, that we will adopt a number of additional measures to strengthen the Company's financial position and results. These measures are designed to continue ICL's tradition of sustainable shareholder value creation. Following previous cost improvement measures and ICL's strengthening of its specialty business, it was decided that: (1) In addition to the previously announced efficiency improvements that are targeted to generate cost reductions of $350 million by the end of 2016 on a run-rate basis (compared to 2013 levels), the Company will target additional cost reduction measures of $50 million per year, which it will implement during 2016; (2) the Company will target measures that are expected to generate additional $50 million in cash flow through improved working capital and other measures; (3) Capital expenditures (excluding acquisitions) are targeted not to exceed $650 million per year over the next several years, which will be lower than the $700 million to $800 million previously targeted; and (4) due to the cost savings and cash reductions specified and based on the current outlook for the business environment, the Company intends to target debt levels in an absolute amount that would not exceed current levels. If market conditions continue as currently contemplated, the Company anticipates that a moderate reduction of debt would begin in 2016. In addition to these steps, the Board of Directors has decided to re-examine the Company's current dividend policy, in its next meeting, and may make changes for future periods. Such changes could include either a reduction in the amount or the targeted dividend, or modification of the policy to be based on other metrics. No assurances can be provided that the Board of Directors will make any changes. Our estimates regarding the cost savings is based on a projection made by our management based on the experience we have accumulated and on actual process improvements. While the cost savings and efficiencies to be generated by our strategic plan described above are presented with numerical specificity, and we believe such targets to be reasonable as of the date of this Annual Report, the manner of implementation of the strategic plan and the expected timing thereof and its impact may be different, possibly even significantly different, than that forecasted. It may be difficult to reduce costs due to various factors, including the situation prevailing in the market, competition, labor relations and strikes, regulation and the risk factors characterizing our activities. Accordingly, our actual results may differ from these targets and the differences may be material, particularly if actual events differ significantly, possibly adversely, from one or more of our key assumptions. We caution investors not to place undue reliance on any of these assumptions and targets. See “Special“Special Note Regarding Forward-Looking Statements”Statements” for additional information regarding these forward-looking statements and risk factors.

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·

ExpandBase our future expansions on our existing reserves. After expanding our production capabilitiescapability at the Dead Sea to about 4 million tonnes, the potential for future expansion relies on our reserves at ICL Iberia and reserves base. We planICL Africa (the Danakil project in Ethiopia). At ICL Iberia in Spain we are consolidating our sites into one mine with one processing facility, which will reduce the cost per tonne and create opportunity for additional debottlenecking and expansion. At ICL UK, we are planning to increase our total potash sales by at least 2shift from Potash production to Polysulphate (reaching 1 million tons in the next decade, while reducing costs. This will be achieved through removing bottlenecks2020), and improving utilization rates in Israel, England, and Spain  (where we intend to invest approximately $435 million in growth and efficiency initiatives) and by increasing production capacity. At CPL we are extendingextend the mining area to provide additional reserves and to increase our low cost polysulphate production, a new fertilizer targeting low sulfur soils. Additionally, in Spainresources. In 2015, we have potential to further expand potash capacity by approximately an additional 1 million tons by 2024. In 2014, we signed a strategic agreement withcompleted the acquisition of 100% of Allana Potash, athat was formerly publicly traded company in Toronto, Canada (inat the time of the acquisition, which we have an equity investment of 16.4% with option to increase to 37%)through Allana Afar holds a concession to develop the first potash mine in Ethiopia (andEthiopia. Although our development program is still in Africa). Allana estimatesthe exploratory stage, we estimate that production will commence within less than 5 yearsin 2020. In addition, we intend to develop the mine for production of potassium chloride (MOP) and ICL has secured an off-take agreement for output of the mine.potassium sulfate (SOP). In phosphates, we are increasing ourintend to preserve the yearly production records that were achieved during 2015 in Rotem by approximately 15% by improving utilization rates. In addition, we are seeking governmental and municipal approvals for a new mining site—Barir field—ICL Rotem. Additionally the focus in the Negev Desertcoming years would be on optimizing and improving the capacity utilization in Israel, which, if granted, will provide further cost savings and increased scale through a focused investment program. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business. Our mining operations are dependent on concessions, licenses and permits granted to us by the respective governmentsYPH JV in the countries where they are located”. Furthermore, we are assessing additional phosphate reserves in emerging markets with an intention to develop a full phosphate value chain in key regions in the world. Consistent with this strategy, in December 2014 we entered into a strategic alliance with Yunnan Yuntianhua – a step that almost doubles ICL’s global phosphate market share. ICL will invest up to $500 million for a 50% stake of a newly formed JV controlled by ICL, that will have major global phosphate operations in China with annual capacity of more than 1 million tons of fertilizers and other downstream products, with backward integration into world-scale phosphate rock mines with approximately 100 million tons reserves, in addition to 15% ownership of Yunnan Yuntianhua Co. Ltd. (China’s leading producer of phosphate rock and fertilizers and a public company traded on the Shanghai Stock Exchange). Within five years, JV is expected to deliver revenues of approximately $700 million with high EBITDA margins. Transaction closing is expected in the first quarter of 2016, subject to approvals from the various government and regulatory bodies. China.

With respect to our phosphate reserves, in December 2015, the National Planning and Building Council approved the Policy Document regarding Mining and Quarrying of Industrial Minerals, which includes, among other things, a recommendation to permit phosphate mining, including at Barir field. For further information in that respect see Item 4. Information on the Company—D. Property, Plants and Equipment—Mineral Extraction and Mining Operations”. It should be noted that the residents of Arad are continuing to object to advancement of the mining plan and even to test mining. If mining approval is not received for the Barir field, this will significantly impact the Group’s future mining reserves in the medium and long term. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business— Our mining operations are dependent on concessions, licenses and permits granted to us by the respective governments in the countries where they are located”.

Furthermore, we are assessing additional phosphate reserves in emerging markets and consistent with our strategy to develop a full phosphate value chain in key regions in the world, in October 2015 we completed the formation of a joint venture company (“YPH JV”) with Yunnan Phosphate Chemicals Group Corporation Ltd. (“YPC”), China’s leading phosphate producer – a step that we expect to nearly double our global phosphate market share. We invested approximately $180 million for a 50% stake in YPH JV. YPH JV, is expected to have major global phosphate operations in China with annual capacity of nearly 1 million tons of fertilizers and other downstream products, with backward integration into world-scale phosphate rock mines. As we transform the operations from commodity focused to more balanced operations between commodity and specialty, we expect revenues to increasesignificantlywhile improvingprofitabilityand EBITDA margins to increase to mid-teens. In the fourth quarter of 2015, ICL recorded sales of over $100 million with respect to YPH JV.

In addition, in January 2016 we completed an investment in 15% of the issued and outstanding share capital on a fully diluted basis of the parent company of YPC, Yunnan Yuntianhua Co., Ltd (a public company traded on the Shanghai Stock Exchange) and China’s leading producer of phosphate rock and fertilizers ("YTH"). This investment will grant ICL representation on several of Yunnan Yuntianhua Co. Ltd. governing bodies and will facilitate our efficient management of YPH JV.We paidapproximately $250 million in consideration of 199 million new shares that were issued to us in a private offering, at the price of 8.24 CNY per share. The new shares will be subject to a three-year lock up period as required under the PRC law. This investment is expected to strengthen our strategic alliance with YTH, the parent company of YPC, our partner in YPH JV.

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Expand market demand for our products.products. In potash, we will continue our investment in educating emerging market farmers on the economic benefits of fertilization with optimal levels of potash. In particular, we are focusing on India and Africa due to our current position in these markets, our proximity to them and the currently low use of potash fertilizers in these markets. We launched the “Potash for Life” project in India and to date, we have set up 680thousands of demonstration plots in 9 states and over 4042 districts, and the “Potash for Growth” project in Ethiopia, where we have set up 600hundreds of demonstration plots. We now plan on expanding our program to additional several hundred additional farmersplots at farmers’ fields across the country during 2015. This demand creation is intended to secure above average sales growth in potash for us.2016. We intend to continue to leverage our bromine assets through the development of new products and new applications by increasing our R&D spending andby utilizing our industry expertise, and through collaborations with others and by advocacy, for example, advocating for fire safety and mercury control regulations in emerging markets.

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Grow our value-added downstream products.products. As part of our growth strategy we intend to use our strong cash flow to further expand our specialty and value addedvalue-added products organically and through acquisitions. This will allow us to create strong growth in our businesses and continue to evolve from a product basedproduct-based to a market focusedmarket-focused organization. In the fast growing and high return on assets specialty fertilizers business, we are improving our core technologies and expanding our geographical reach in liquid fertilizers, advanced coated fertilizers and soluble fertilizers. Consistent with this strategy, in August 2014 we acquired AmegA Sciences, an innovative industry leader and developer and manufacturer of specialty products for the agricultural markets, horticulture, grass, and convenience facilities markets, including solutions for water conservation, water retention and enhanced growth. As part of the expansion of the company’s products portfolio in the specialty fertilizers, the company isannounced its examining options to erect athe development of potassium nitrate production plant with a capacity of about 200Kt to enable ICL to increase its production of soluble fertilizers and food-grade phosphoric acid. In food, we intend to expandcontinue expanding our existing phosphate basedphosphate-based texture and stabilitystability solutions to emerging markets. In addition, we are constantly collaborating with our customers to develop new formulations. The next phase of this strategy is to leverage our expertise and technology in enhanced texture and stability solutions beyond additives based solely on phosphates, including through acquisitions, strategic partnerships and joint ventures. In JanuaryMarch 2015, we set a key milestone in ICL’s Food strategy with the acquisition of Prolactal – a leading European producer of dairy proteins for the food and beverage industries (approximately € 100(about $ 140 million revenues, 200 employees). On March 13, 2015, the transaction was closed. This acquisition should increasehas increased ICL’s ability to service its existing clients by offering them a broader selection of texture and stability ingredients, to better meet the growing demand by consumers for food and beverages with higher protein levels. Our deep understanding of the interaction of phosphates with proteins enables us to develop new products that in part fulfil unmet needs of our customers in the beverage and dairy markets and to support the formulation of meatless products that are experiencing strong growth trends for vegetarians as well as flexitarians. Finally, in engineered materials, we intend to utilize our expertise and technology to develop bromine and phosphate basedphosphorous-based solutions for industrial applications. In late 2014,2015, ICL completed an acquisitionthe divestment of Fosbrasil, Latin America’s main producer of purified phosphoric acidthe aluminum, paper, and water businesses (APW), the thermoplastic products for the footwear industry (Rhenoflex), the pharmaceutical and gypsum businesses (PCG), Medentech and hygiene products for the food market and specialty fertilizers. With the Fosbrasil acquisition, ICL will become South America’s market leader in specialty products for food, engineered materials and specialty fertilizers. With respect to our activities that do not constitute our coreindustry (Anti-Germ) businesses divestitures are on track to achieve net proceeds (enterprise value net of taxes) of $300-500 million. The divestitures of ICL’s APW (aluminum, paper, and water) businesses, Rhenoflex, Medentech and Anti-Germ businesses were completed, for the most part, after December 31, 2014 and generated almost $300over $350 million in net proceeds. AdditionalIn March 2016, we successfully completed the sale of Clearon (chlorine-based biocide activities in USA) in accordance with our strategy. An additional divestiture opportunitiesopportunity in our non-core businesses include IDE, Clearon and Pharma/Cosmetics/Gypsum businesses.includes IDE.

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Further develop and enhance our “One ICL” culture and empower our employees.employees. In order to achieve our strategies and continue to carry out our evolution from a natural resources company to an essential needs company, we believe we must continue to enable our employees to thrive within our organization through implementation of our “One ICL”"One ICL" strategy. Under our “One ICL”"One ICL" strategy, we are working to harmonize our systems (for example, by moving to a single global enterprise resource planning system). In 2015, we achieved first successful rollout of the system in ICL UK and ICL EU. In addition, we are optimizing our internal processes and betterin order to, among other things, share best practices across our Company to ensure that we provide the best services in our end markets and to avoid product or divisional silos. We will continue to identify and reward top performing employees and will promote them to the right locations within the organization where they can be most effective, while incentivizing them through appropriate remuneration and performance assessments that will help us achieve our goals.

Our History

ICL was established in 1968 as a government company in Israel and operate today as a limited liability company under the laws of Israel. In 1975, the shares of various development companies (including, among others, ICL Dead Sea, Works, the companies today consolidated as ICL Rotem, the bromine companies and Tami) were transferred to us. In 1992, following a decision by the Israeli government to privatize our Company, Israel published its tender prospectus, 20% of the Company’s shares were sold to the public and its shares were registered for trading on the Tel AvivTel-Aviv Stock Exchange. Prior to our public share issuance, a Special State Share in our Company and our main Israeli subsidiariessubsidiaries. was issued to the State of Israel. In 1995, the State of Israel sold its controlling interest in us (representing approximately 24.9% of our shares) to Israel Corporation, which was controlled at that time by the Eisenberg family. A majority of the ordinary shares held by Israel were sold during the following years. In 2000, the State of Israel ceased to be a stakeholder in terms of holding any ordinary shares in us, but it retained the Special State Share. In 1999, the Ofer Group acquired the Eisenberg family’s shares in Israel Corporation. In September 2014, we listed our shares on the New York Stock Exchange, and they are currently traded in Tel Aviv and in New York.

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As of December 31, 2014,2015, Israel Corporation holds approximately 49.2%48.88% of our outstanding ordinary shares and approximately 46.18%46.04% of the shareholders’ voting rights. With respect to any ordinary shares subject to the forward sale agreements, and made available to the forward counterparties under these agreements, Israel Corporation will cease to have voting rights with respect to these ordinary shares and will, at the relevant settlement dates, regain voting rights with respect to all or a portion of the ordinary shares it makes available to the forward counterparties under these agreements if it elects cash settlement or net physical settlement.

The following is a list of significant acquisitions and joint ventures that have contributed to the growth of our business since 1968:

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Our acquisitionIn October 2015, we completed the formation of Giulini Chemie,YPH JV with YPC. The YPH JV, which includes a world-scale phosphate rock mine producing approximately 2.5 million tonnes of phosphate annually and a large-scale phosphate operation, is expected to be a leading player in China’s phosphate sector, operating an integrated, world-scale phosphate platform across the value chain. It will include upstream mining, bulk fertilizers and downstream businesses in specialty chemicals company basedfertilizers, as well as in Ludwigshafen, Germany,specialty phosphates for the food and engineered materials markets. In January 2016, subsequent to the date of the report, we completed the investment in 1977;15% of the issued and outstanding share capital on a fully diluted basis of YTH. For additional information, see “Segment Information—Fertilizers”;

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Our acquisitionIn April 2015, AkzoNobel Industrial Chemicals and the Company signed an agreement for production of a fertilizer plant in Amsterdam, Holland, in 1982;

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Our acquisitionhigh-quality vacuum salt. The vacuum salt will be manufactured by the Company and will be sold by AkzoNobel by means of Clearon Corp., a manufacturer in the United States of biocidesan “offtake” agreement for water treatment, in 1995;

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Our acquisition of BK Ladenburg, a chemical company based in Ladenburg, Germany, in 1996;

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The commencement in 1997 of our magnesium production operations in Israel in a joint venture with Volkswagen;

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Our acquisition in 1998 of control of Iberpotash, our Spanish mining operation and our subsequent acquisition of the remainder of Iberpotash;

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Our acquisition, primarilypartnership’s products. Pursuant to the agreement, the Company will finance and construct two production facilities on its mining site in 2000, of the publicly held minority interestsSuria, in several of our principal subsidiaries;

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Our acquisition of Cleveland Potash, our mining operation in the United Kingdom, in 2002;

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Our acquisition of a 51% interest in BKGLC in China in 2004;

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Our acquisition of operations and assets for our Performance Products segment from Astaris LLC, a U.S. company, in 2005;

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Our acquisition of Supresta, a manufacturer of phosphorus based flame retardants and other products with plants in the United States and Germany, in 2007;

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Our acquisition of the water treatment unit of the Henkel Group, a Germany company, in 2008;

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Our five acquisitions, mainly in the fields of food hygiene and potable water, in 2009: Medentech (Ireland), Primalab (France), Argochem and Merak (Eastern Europe), Metakorn (China) and Edda, Hyproclean and the cleaning products division of Ukline (Germany);

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Our acquisition of shares in Nutrisi Holdings in 2011, resulting in 100% ownership of Nutrisi Holdings, a Belgian holding company that owns 50% of Nu3, a manufacturer of soluble NPK fertilizer components;

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Our acquisition in February 2011 of the companies, assets and activities of business unit in the specialty fertilizers area owned by the U.S. company, Scotts Miracle Gro Company (subsequently renamed Everris);

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Our acquisition in April 2011 of 100% ownership of A. Fuentes Mendea S.A., a Spanish company engaged in the production and marketing of specialty fertilizers inCatalonia, Spain;

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Our acquisition in December 2011 of 50% of the shares of Tetrabrom Technologies Ltd., raising our shareholdings to 100% of the share capital of Tetrabrom;

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Our acquisition of all of the shares of the Belgian company Nu3 NV and sale of all of our shares in the Dutch company Nu3 BV, due to the liquidation of the Nu3 partnership, at the end of 2012;

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Our acquisition in February 2013 of the assets and production operations of Knapsack, a factory in Germany used for marketing and producing P2S5 phosphates; and

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Our acquisition of Hagesud Group, a German producer of premium spice blends and food ingredients for meat processing, in January 2014.

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In February 2014, we signed a strategic agreement withfor acquisition of the shares of Allana Potash, (“Allana”),a company that focuses on acquisition and development of potash assets, the shares of which arewere traded on the Toronto Stock Exchange, in connection withExchange. In June 2015, the developmentCompany acquired the balance of a potash mine in Ethiopia.Allana’s shares. For additional information, see “—“Item 4. Information on the Company—B. Business Overview—Fertilizers”.Segment Information —Fertilizers”;

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In August 2014,2015, we acquired AmegA Sciences, an innovative developmentcompleted the acquisition of Prolactal, a leading European company that manufacturers milk proteins for the food and industrial leader from England of products for special agricultural markets, landscaping, grass, and convenience installations, including solutions related to water savings, water conservation, and growth enhancement.beverage industry;

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In August 2014, we announced that we reached an agreement with Albermarle to set up a joint venture for the production of polymer combustion inhibitors. The joint venture will operate a plant in Holland, with annual production capacity of 2,400 tons, and a plant in Israel with annual production capacity of 10,000 tons.

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In December 2014, we concluded the acquisition of 100% of Fosbrasil (increasing our holdings from 44.25% to 100%), the leading manufacturer in Latin America of purified phosphoric acid for the food and special fertilizer markets and a manufacturer of secondary products based on phosphates and special fertilizers.fertilizers;

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In 2014, we acquired AmegA Sciences, an innovative development company and industrial leader from England of products for special agricultural markets, landscaping, grass, and convenience installations, including solutions related to water savings, water conservation, and growth enhancement;

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Our acquisition of Hagesud Group, a German producer of premium spice blends and food ingredients for meat processing, in 2014;

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Our acquisition in 2013 of the assets and production operations of Knapsack, a factory in Germany used for marketing and producing P2S5 phosphates;

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Our acquisition of all of the shares of the Belgian company Nu3 NV and sale of all of our shares in the Dutch company Nu3 BV, due to the liquidation of the Nu3 partnership, at the end of 2012;

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Our acquisition in 2011 of 50% of the shares of Tetrabrom Technologies Ltd., raising our shareholdings to 100% of the share capital of Tetrabrom;

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In December 2014, we signedOur acquisition in 2011 of 100% ownership of A. Fuentes Mendea S.A., a strategic partnership agreementSpanish company engaged in the production and marketing of specialty fertilizers in Spain;

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Our acquisition in 2011 of the companies, assets and activities of business unit in the specialty fertilizers area owned by the U.S. company, Scotts Miracle-Gro Company (subsequently renamed Everris);

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Our acquisition of shares in Nutrisi Holdings in 2011, resulting in 100% ownership of Nutrisi Holdings, a Belgian holding company that owns 50% of Nu3, a manufacturer of soluble NPK fertilizer components;

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Our acquisition of Supresta, a manufacturer of phosphorus-based flame retardants and other products with Yunnan Yuntianhua,plants in the second largest chemicals manufacturerUnited States and Germany, in 2007;

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Our acquisition of operations and assets for our Performance Products segment from Astaris LLC, a U.S. company, in 2005;

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Our acquisition of a 51% interest in BKGLC in China in 2004;

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Our acquisition of Cleveland Potash, our mining operation in the United Kingdom, in 2002;

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Our acquisition, primarily in 2000, of the publicly-held minority interests in several of our principal subsidiaries in Israel;

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Our acquisition in 1998 of control of Iberpotash, our Spanish mining operation and our subsequent acquisition of the third largest phosphateremainder of Iberpotash;

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The commencement in 1997 of our magnesium production operations in Israel in a joint venture with Volkswagen;

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Our acquisition of BK Ladenburg, a chemical company based in Ladenburg, Germany, in 1996;

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Our acquisition of Clearon Corp., a manufacturer in the world, to operate a joint venture (50/50), under our control,United States of phosphate operations including full vertical integration, which includes a world-scale phosphate mine and manufacture of secondary products. For additional information, see “—Business Overview—Fertilizers.”biocides for water treatment, in 1995;

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In January 2015, the Company signed an agreement forOur acquisition of Prolactal, a leading European company that manufacturers milk proteins for the food and beverage industry. On March 13, 2015, the transaction was closed.fertilizer plant in Amsterdam, Holland, in 1982;

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Our acquisition of Giulini Chemie, a specialty chemicals company based in Ludwigshafen, Germany, in 1977;

Segment Information

We are a leading multinational company that operates mainly in the areas of fertilizers and specialty chemicals, in three segments: Fertilizers, Industrial Products and Performance Products. In addition, we have other operations that include water desalination and magnesium manufacturing.

Fertilizers

Our Fertilizers segment develops, manufactures, markets and sells fertilizers that are based primarily on potash (potassium chloride) and phosphate. In 2014,2015, the total sales of our Fertilizers segment were approximately $3,402$3,067 million and accounted for approximately 56%57% of our total sales (including sales to other segments of the Company), while the reported operating income for the segment totaled approximately $670$529 million, representing approximately 88%69% of ICL’s total reported operating income.

The adjusted operating income amounted to $740 million or 74% of our total adjusted operating income. See “Item 3. Key Information—A. Selected Financial Data” for a definition of adjusted operating income and a reconciliation to the comparable IFRS measure. Our Fertilizers segment is also a key player in the specialty fertilizers market.

Our Fertilizers segment did not have any single customer that accounted for more than 10% of the Company’s total sales in 2014.

Nitrogen, phosphorus and potassium (N, P and K) constitute the three major nutrients required for plant growth. There are currently no artificial substitutes for phosphorus and potassium (which are supplied by the Company). These three nutrients are present in the ground, however the continued use of the soil for agricultural crops depletes the concentration of these fundamental elements in the ground over time, and could result in a decline in crop yields, and therefore this deficiency must be replenished from external sources through the use of fertilizers. We sell phosphorus basedphosphorus-based and potassium basedpotassium-based products.

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Each of these three nutrients plays a different role in plant development. Potassium and phosphorus are vital for physiological processes of the plant, including strengthening cereal stalks, stimulating root development, leaf and fruit health, and accelerating the growth rate of crops. Without these nutrients, crops cannot achieve their growth potential. Potassium also enhances a plant’s ability to withstand drought and cold, improves the efficient use of nitrogen and other nutrients necessary for plant development, and improves the durability of agricultural produce in storage and transportation, thereby prolonging the shelf life of produce.

In the short term, demand for fertilizers is volatile and seasonal, and is affected by factors such as weather in the world’s key agricultural growing regions, fluctuations in planting main crops, agricultural input costs, agricultural product prices and developments in biotechnology. Some of these factors are influenced by subsidies and lines of credit granted to farmers or to producers of inputs for agriculture in various countries, and by environmental regulations. In addition, currency exchange rates, legislation and international trade policies have an impact on the supply, demand and level of consumption of fertilizer worldwide. In spite of the volatility that may be caused in the short term as a result of these factors, we believe that the policy of most countries is to ensure an orderly and high qualityhigh-quality supply of food to the population and to this end, to encourage agricultural production. Therefore, we expect the long termlong-term growth trend of the fertilizers market will be maintained.

Due to the existing barriers to entry and to the excess of supply over demand, in the long term we expect a reduction in the entry of new players into the market and the expansion of production capacity, until a new breakeven point between the supply and the demand is reached.

Our Products

The main products of our Fertilizers segment are potash, fertilizers and phosphates, including specialty fertilizers. In 2014,2015, potash represented approximately 52% of our Fertilizers segment’s sales (including sales from to other segments in the Company) and 80% of income from ordinary activities (including income from sales to other segments in the Company) while fertilizers and phosphates represented approximately 48%46% of our Fertilizers segment’s sales (including sales to other segments in the Company) and 20%71% of the segment’s operating income (including income from ordinary activitiessales to other Company segments) and 78% of the segment’s adjusted operating income, while phosphates and specialty fertilizers represented approximately 54% of our Fertilizers segment’s sales (including sales to other Company segments), 29% of the segment’s operating income (including income from sales to other segments in the Company).

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the segment’s adjusted operating income. See “Item 3. Key Information—A. Selected Financial Data” for a definition of adjusted operating income and a reconciliation to the comparable IFRS measure.

Potash. Potash is the common name for potassium chloride, which is the most common source of potassium for plants. Our Fertilizers segmentplants, one of the three essential nutrients for plant development, which assists in protection of the plants from diseases and damaging agents, helps them to adapt to the different weather conditions, regulates the water in the plant, strengthens the plant stems and strengthens the plant’s ability to absorb nourishing substances.

ICL sells potash for direct application as a fertilizer and to compound fertilizer manufacturers. Our Fertilizers segment also uses potash for its own production of compound fertilizers, based mainly on phosphate and potash.

Our Fertilizers segment produces potash from the Dead Sea and from underground mines in Spain and the United Kingdom. The potash production process in Israel is based on extracting carnallite in a chemical process. The carnallite, which is a compound of potassium chloride and magnesium chloride, precipitates in some of the largest solar evaporation ponds in the world, which contain brines drawn from the Dead Sea. The carnallite containing salt is transferred to the plants where a chemical process breaks down the carnallite crystal into potash using two distinct parallel technologies (“hot” and “cold” crystallization).

Extraction of potash from underground mines in Spain and the United Kingdom is carried out by mining sylvinite (a mixture of potash and salt with varying potash concentrations. The potash is separated from the salt in production plants situated near the mines.

We also produce polysulphate (also known as polyhalite), which is a mineral used in its natural form as fertilizer for agriculture, fertilizer for organic agriculture and a raw material for production of specialty fertilizers. Polysulphate is composed of sulfur, potash, sulfur, calcium and magnesium, which are essential components for improvement of crops and agricultural products. Our commercial sales of polysulphate started in 2012.

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Fertilizers

Phosphates and Phosphates.Specialty Fertilizers. Phosphorus which is derived from phosphate rock,also one of the three essential nutrients for plant development, which directly contributes to a wide range of physiological processes in a plant, including production of sugars (including starch), photosynthesis and energy transfer. Phosphorus strengthens plant stems, stimulates root development, promotes flower formation and accelerates crop development.

Phosphorus may be found in phosphate rock. The main products in this area are: phosphate rock, phosphoric acid and fertilizers.

The specialty fertilizers are highly-effective fertilizers that allow more precise feeding of the essential foundations for plant development (phosphorous, potassium and nitrogen) as well as micronutrients. These fertilizers allow efficient and effective fertilizing, among other things, through drip irrigation systems and foliar spraying, and help growers to obtain a larger harvest of a higher-quality, despite a shortage of water sources and a limited supply of agricultural lands. These fertilizers include, among others, controlled-release fertilizers (CRF), delayed/slow release fertilizers (SRF), soluble fertilizers, liquid fertilizers and peat used as a bed for various crops that generally also contain CRF and crop-protection products.

During October 2015, ICL completed establishment of the joint venture with Yunnan Phosphate Chemicals, the leading producer of phosphates in China. The joint venture (YPH), which has a world-scale phosphate rock mine producing about 2.5 million tons of phosphate rock per year and wide-ranging activities in the phosphate sector, is expected to be a leading player in the phosphate market in China. The joint manufacturing platform is of global dimensions and includes activities along the entire value chain – commencing from mining of phosphate rock and production of fertilizers in bulk and running up to phosphate-based specialty products for applications in the food and compound materials markets.

The principal raw material used in the production of phosphate products is phosphate rock. Our Fertilizers segment mines phosphate rock from open pitopen-pit mines – three of which are located in the Negev Desert.Desert in Israel while the fourth is situated in the Yunnan district in China. In 2014, 73%2015, 72% of the phosphate rock produced in Israel and all the phosphate rock produced in China was used to manufacture phosphate fertilizers and phosphoric acid. The remaining phosphate rock produced in Israel was sold to external producerscustomers who manufacture phosphoric acid and fertilizers and as a direct application fertilizer. The policy of our Fertilizers segment is to use most of the phosphate rock we produce to manufacture downstream products.

Our Fertilizers segment produces fertilizer gradefertilizer-grade phosphoric acid, phosphate fertilizers, compound fertilizers and specialty fertilizers at its facilities in Israel. OurIsrael and in China. Furthermore, our Fertilizers segment also has facilities for the production of phosphate fertilizers and specialty compound fertilizers in the Netherlands, Germany, the United States, Spain, India and Belgium, as well as animal feed additives facilities in Turkey and in Israel. Shortly before the end of 2015, the Company sold its share in the partnership in India for the production of soluble NPK fertilizers. In addition to phosphate rock, phosphoric acid production also requires significant quantities of sulfur, which our Fertilizers segment purchases from third parties.

Most of the compound fertilizers manufactured by our Fertilizers segment are based on the elements phosphorus and potassium. Some of the compound fertilizers also contain nitrogen, which our Fertilizers segment acquires from third parties and incorporates with the phosphorus and potassium. Our Fertilizers segment is active in developing downstream products based on phosphate rock, including phosphate fertilizers and compound and specialty fertilizers.

Specialty fertilizers allow more accurate application of the essential nutrients for plant development (phosphorus, potassium and nitrogen). These fertilizers include:

·

Controlled releaseControlled-release fertilizers, which allow accurate release of nutrients over time, and slow releaseslow-release fertilizers, which allow very slow release of nutrients (nitrogen and potassium only). These fertilizers have a special coating that allows prolonged release of nutrients (over several weeks to several months, compared to regular fertilizers that dissolve in the soil and are available for up to four weeks);

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Soluble fertilizers, which are fully water soluble,water-soluble, and fully solublefully-soluble NPK compound fertilizers, commonly used for fertilization through drip irrigation systems and foliar spraying to optimize fertilizer efficiency in the root zone and to maximize yields;

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Liquid fertilizers, used for intensive agriculture and integrated in irrigation systems (mainly drip systems);

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Peat, a growing medium for various crops, usually containing controlled releasecontrolled-release fertilizers and crop protectioncrop-protection products.

Since 2011, we have acted to significantly expand our specialty fertilizer operations by completing the acquisition of the following companies:

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Everris (formerly Scotts Global Pro), a multinational company, whose core activity is the manufacture and sale of high qualityhigh-quality specialty fertilizers, including controlled release, slow releasecontrolled-release, slow-release and soluble fertilizers;

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Fuentes Fertilizantes, a leading company in Spain that manufactures and distributes liquid and soluble fertilizers, NPK compounds and conventional fertilizers;

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Nu3, a manufacturer of soluble NPK fertilizer components; and

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AmegA, which develops advanced solutions for saving water, preserving water and improved absorption of the fertilizer by the plant.plant;

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YPH partnership for production of phosphates in China, which also manufactures specialty fertilizers;

Production

Our Fertilizers segment’s principal production facilities include its plants in Israel (potash, phosphate rock, sulfuric acid, phosphoric acid, phosphate fertilizers, special compound fertilizers, liquid fertilizers and soluble NPK fertilizers), Spain (potash, raw salt, soluble fertilizers and NPK basedNPK-based compound fertilizers), the United Kingdom (potash, polysulphate, raw salt, products for preserving water and improving absorption of the fertilizer by the plant, and peat as growing media), China (phosphate rock, sulfuric acid, phosphoric acid, phosphate fertilizers, compound specialty fertilizers and soluble fertilizers), the Netherlands (mainly fertilizers based on phosphate and potash and slow release and controlled releasecontrolled-release fertilizers), Germany (mainly fertilizers based on phosphates and potash), Belgium (soluble NPK fertilizers), India (soluble NPK fertilizers), the United States (slow release and controlled release fertilizers and soluble NPK(controlled-release fertilizers) and Turkey (phosphate based(phosphate-based products used as animal feed additives).

Our Fertilizers segment’s manufacturing plants, distribution centers and sales offices are set forth in the map below.

Our current annual potential potash production capacity is approximately 6.5 million tons, of potash, 4.5 millionpolysulphate approximately 300 thousand tons, of phosphate rock 1.9approximately 7 million tons (including 2.5 million tons of YPH’s production capability), of phosphate fertilizers and compound fertilizers 220approximately 2.7 million tons (including 850 thousand tons of YPH’s production capability), of phosphoric acid approximately 1.3 million tons (including 700 thousand tons of YPH’s production capability), 300 thousand tons of soluble fertilizers (including 110 thousand tons of the YPH J.V’s production capability), 450 thousand tons of liquid fertilizers, 110 thousand tons of controlled releasecontrolled-release fertilizers and 300 thousand tons of peat. The potential production capacity of our various plants is based on the hourly output of the plants, multiplied by potential hours of operation per year. This calculation assumes continuous production over the year, 24 hours a day, with the exception of a few days for planned maintenance and renovations. Actual production is usually lower than potential production capacity, due to unexpected breakdowns, special maintenance operations, availability of raw materials and market conditions. We expect to increase our actual potash production to approximately 6 million tons per year by 2018.

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Our production of potash increased at an average annual growth rate of 1.9%2.1% between 1973 and 2014,2015, and ICL Fertilizers has completed a plan in 20142015 for a further, gradualan increase of between 300,000 and 500,000approximately 500 thousand tons per year in potash production capacity at the Sodom facilities. This investment has effectively created surplus production capacity at our production plants in relation to the production capacity of raw materials at our evaporation ponds, thereby adding flexibility to our production process and optimizing the timing of production and sales over time.

time and already at the present time it permits production of the material that was accumulated in the ponds during the strike that took place in the first half of 2015.

In 2011, our Board of Directors approved the consolidationrestructuring of Iberpotash’sICL Iberia operations from two sites to one site, as part of an efficiency plan with respectplan. According to Iberpotash. As part of this plan, production at the Suria site in Spain, which includes a mine and a plant, will be expanded gradually, and the mining and production activities at the second site will be discontinued. In the first stage of the plan, we have commenced diggingare building an access tunnel to the mine, and expanding potash production at the mine and potash granulation capacity, In addition, the firstcompaction capacity. The second stage will entail establishing a production plant for vacuum salt (salt with high chemical purity) at Suria. At the end of 2014, the Board of Directors approved the second stage, which includesinclude a further expansion of the potash production capacity, to 1.1 million tons, commencinghigher than the production level we have today in 2017,two separate sites, and approximately 50 thousand tons of whichtechnical-grade potash. Furthermore, the third stage of the plan in Spain will include potential additional expansion that is expected to increase the annual potash production at Suria to approximately 50,000 tons would be technical-grade potash, and the Company also plans to reach a potential production capacity of approximately 1.51.3 million tons of vacuum salt. Wein the future. Concurrently, we also expect our granulationpotash compaction capacity to ultimately grow, at the end of the process, to a level of approximately 1 million tons per year. We estimate that implementation of the first stage of the plan, at an estimated investment of approximately €196 million (approximately $238 million), will be completed by the end of 2015. We believe

It is anticipated that implementation of the first stage of the plan will reduce expenses and contribute to streamlining, which will reduce potash production costs and contribute to conformity of production with environmental standards. Implementation of the secondThe first stage will resultalso include establishing a production plant for vacuum salt (salt with high chemical purity) at Suria. The Company plans to reach, in higher potashthe long run, a potential production at one site compared to the present situationcapacity of production at two separate sites. Furthermore, the third stage of the plan in Spain includes additional future expansion that is expected to increase the total potash production at Suria to approximately 1.41.5 million tons in the future.

Toof vacuum salt.

In order to help achieveimplement these expansion plans in Spain, on June 19, 2014, one of our subsidiaries,in April 2015, AkzoNobel (AkzoNobel Industrial Chemicals) and ICL Iberia (“signed an agreement for production and marketing of high quality vacuum salt. The production will be performed by ICL Iberia”), signed a memorandumwhile the marketing will be performed by AkzoNobel. An additional 50 thousand tonnes per year of understanding with the Dutch company Akzo Nobel Chemicals International B.V. (“AkzoNobel”), a leading producer ofwhite potash will be produced and marketed by ICL.

High purity vacuum salt is used in Europe fora variety of applications by the chemicals industry, as well as the food and feed industries, and also for establishment of joint ventures for the processingwater treatment applications. The vacuum salt will be produced by ICL Iberia and packagingsold by AkzoNobel Industrial Chemicals by way of an annual quantityoff-take agreement for acquisition of 1.5 millionthe partnership’s products.

Pursuant to the agreement, ICL will finance and construct two manufacturing facilities on its mining site in Suria, which is located in Catalona in Spain. Each facility will have a production capacity of 750 thousand tons of vacuum salt for various industrial applications and an annual quantity of 50,000 tons of white potash. The entire amountper year. Construction of the vacuum salt willfirst facility is expected to be sold tocompleted in the second quarter of 2016, and marketed exclusively by AkzoNobel to the European market and other markets outside Europe. The entire amountconstruction of the white potash willsecond facility is expected to be sold and marketed exclusively by us. It was agreed thatcompleted in 2018. Construction of the facilities, with an investment of about €150 million (about $164 million), is part of the total investment ICL announced as part of expansion of the activities of ICL Iberia (the “Phoenix” project) for development and AkzoNobel will act to formulate a setexpansion of agreements that will govern the relations between them and betweenproduction capacity in Spain.

In January 2016, after receipt of the new companies that will be incorporated for purposesapproval of the Supervisor of Restrictive Business Practices in Spain, AkzoNoble acquired 51% of the shares of the joint ventures,venture for production of specialty salt. The enterprise is expected to commence production in the second quarter of 2016 upon formulation of the final agreement with AkzoNoble.

During the third quarter of 2015, the Company reassessed the economic viability of the potash reserves in the mine in the United Kingdom, which resulted in a periodreduction of 30 years.the estimates of the reserves. The memorandumreserve estimates were calculated using the same assumptions (including cut-off grade and average market price). This change is the result of understanding was extendeddepletion due to continuing mining activities, changes in geological interpretation and no new conversion of resources into reserves from ongoing exploration activities. In light of the updated reserve estimates, the potash production activities in the United Kingdom are expected to end in 2018. In the Company's mine in the United Kingdom, there are vast resources for the purpose of the continued production of polysulphate (a mineral used in its natural form as a fertilizer for agriculture, a fertilizer for organic agriculture and a raw material for production of specialty fertilizers), the sale of which in commercial quantities began in 2012. In 2016, the Company plans to produce about 300 thousand tons and to increase production of the polysulphate up to March 31, 2015 or until any other date thatabout 1 million tons in 2020. As part of these processes, the parties may mutually agree to. IfCompany has commenced implementation of an efficiency plan whereby in the first quarter of 2016 a definitive setreduction of agreements is not signed by such date, the memorandum of understanding will cease to be effective. However, there is no certainty that this transaction will ultimately be completed, includingabout 330 full time positions was completed. For additional information - see"Item 4. Information on the dates indicated.Company-D. Property, Plants and Equipment-Mineral Extraction and Mining Operations-United Kingdom,"and "-Reserves-United Kingdom."

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We

The Company is also are undertaking other initiatives to expand and diversify ourits potash resources. In June 2015, ICL completed the United Kingdom, we are working to extend our mining area to increase reserves and increase utilizationacquisition of all the polysulphate resources in order to increase our production. In the United Kingdom. we commenced implementationshares of an investment plan, in the overall amount of £38 million, to expand the production and mining capacity of polysulphate, an innovative sulphate fertilizer composed of a number of nutrients, from the present output of approximately 130 thousand tons to approximately 600 thousand tons a year.

In February 2014, ICL signed a strategic agreement with Allana, a company traded on the stock exchange in Toronto, regarding development of a potash mine in Ethiopia. Based on feasibility studies, Allana believes that after the development period, the mine will produce about a million tons of potash per year for a period of 25 years from the end of the development period of the mine. Pursuant to the agreement, the Company acquired units in Allana (including shares and options), in the amount of approximately $23 million.Allana. The Company holds approximately 16%has paid about $112 million for the balance of 83.78% of Allana’s shares with an optionthat it did not yet own, of which approximately $96 million was in cash, and approximately $16 million was by means of issuance of 2,225,337 ordinary shares of the Company that were issued to increase its holdings to approximately 37%Liberty Metals & Mining Holdings LLC (“Liberty”) only, which held 11.77% of Allana’s share capital. After completionshares.

The ordinary shares issued to Liberty constitute about 0.17% of the project,issued shares and voting rights therein. Allana will have access to low costholds a concession for mining potash through Allana Afar as well as know how accumulated over the past several years in a location that provides access to the African market and is located only 400 miles from Djibouti, a port on the Red Sea that has access to the Indian and Southeast Asian markets. In addition, the Company signed an exclusive offtake agreement with Allana whereby the Company will acquire the mine’s output. Under the agreement, the Company will support Allana and will provide it technical and engineering support in connection with development and operation of the mine. The contemplatedDanakhil mine received environmental approval in March 2013, and a mining license in October 2013, and it has won wide support from the Ethiopian authorities due to the opportunity for economic and social development in the Afar region in Northeast Ethiopia. Acquisition of the ownership of Allana provides the Company complete control over the Danakhil project and the ability to accelerate development of the mine. The Company is re evaluating of the project's technical and operating requirements, including the requirements in the areas of logistics, infrastructures and production, and is examining the most efficient ways to execute the mining in the site, in order to increase the development potential and ensure the project's financing. The Company intends to develop the mine for production of potassium chloride (MOP) and potassium sulfate (SOP). The Company's Board of Directors approved the budget for examining the project's feasibility. To the extent the project progresses, additional investments will be required in significant amounts. The support of the Government of Ethiopia with respect to provision of the natural resources and to the development of the infrastructures, including water, electricity and roads infrastructures, is essential for development of the mine on a large scale in Djibouti.

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Tablethe Afar region. Pursuant to the mining agreement, Allana Afar was required to complete the development phase and start the production phase no later than October 8, 2015 (within two years from the effective date of Contents

We arethe mining license). However, Allana Afar has not yet completed the development phase and, therefore, the Government of Ethiopia may revoke the mining license. The Company is holding discussions with the Government of Ethiopia related to the application submitted by the Company for the transfer of the mining license to a newly established company and extending the development period in light of the Company's takeover of Allana, which can result to additional payments. In the Company's estimation, an arrangement will be reached with the Ethiopian authorities for extension of the development period.

Moreover, in 2015, the Company continued investing in educating emerging market farmers regarding the economic advantages of optimizing the use of potash-based fertilizers. In particular, the Company is focusing on India and Ethiopia, in light of our position in those markets, our proximity to them and the current low level of fertilization therein. The Company continued the “Potash for Life” project which began in 2013, conducted in India approximately 2,000 presentations in nine territories, and over 42 provinces and also exploringcontinued the “Potash for Growth” project in Ethiopia, where it conducted 950 presentations since 2013.

In addition, the Company is examining ways to increase ourits phosphate reserves, including throughby means of the Barir field in Israel, – see “Item 4. Information on the Company –Company—B. Business Overview – Overview—Concessions and Mining Rights”. Rights." Furthermore, on October 2015, we completed the formation of YPH JV and in January 2016, we completed the investment of 15% in YTH's equity. YPH JV is expected to transform ICL into the world’s leading specialty phosphate player and to nearly double its global phosphate market share. The YPH JV is also expected to improve the cost competitiveness of ICL’s phosphate operations by providing ICL with access to a low-cost phosphate rock operation with vast reserves.

In addition, we are assessing additional phosphate reservesthe Company is examining options to build or to buy a potassium nitrate production plant to enable an increase in emerging marketsthe production of soluble fertilizers and food-grade phosphoric acid. The Company’s examination is in line with the intentionits ‘Next Step Forward’ growth strategy to meet anticipated increased need for soluble specialty fertilizers, as well as for food-grade phosphoric acid. Potassium nitrate is a major component in liquid and water soluble fertilizers, as well as in several other industrial applications.

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In December 2014,2015, ICL signed a strategic partnership agreementmemorandum of understanding with Yunnan Yuntianhua – the second largest chemical producer in China and the third largest producer of phosphates in the world –LLNP (which belongs to establish a joint venture (50/50), to be controlled by ICL, having fully backward integrated phosphate activities, with a world scale phosphate mine and downstream operations. The valuegroup of the transaction is estimated at approximately $452 million. For purposesbusinessman Lev Leviev) for examination of strengthening the strategic partnership between ICL and Yunnan Yuntianhua, and to create added value for their shareholders, approximately $269 millionfeasibility of ICL’s investment will be used to acquireestablishment of a strategic holdingglobal-scale phosphate production infrastructure in Yunnan Yuntianhua, China’s leading producerNamibia, including marine mining of phosphate rock and fertilizers, which is traded on the Shanghai Stock Exchange (Shanghai: 600096). The new shares to be issued will constitute 15%construction of the capital of Yunnan Yuntianhua, immediately following the issuance to ICL. The balance of the deal value, in the amount of approximately $183 million, is in the joint venturefactories for production of phosphates (plus a net debt of $100 million, our share). Completion of the transaction is expected to take place in the first quarter of 2016, subject to approvals from various government and regulatory bodies. The joint venture will leverage the production expertise, technical capabilities and marketing prowess of the two companies and will include a joint R&D platform for development of newdownstream products and processes. The joint venture will increase ICL’s phosphate platform by more than 50% and will expand the phosphate’s end to end business model, which spansspanning the entire value chain, to additional attractive geographical regions. Together with ICL’s existing specialty phosphate activities, which total approximately $2 billion, in Europe, North America and Brazil, the joint venture will give ICL other important capabilities: the transaction will turn ICL into the largest and most competitive player through expansion of the phosphate platform into the growing Chinese and Asian markets; the acquisition nearly doubles ICL’s global market share in the area of phosphates, and it makes ICL a new central player in the rapidly growing markets in China and Asia for fertilizers, food additives and complex substances, the joint venture will provide ICL diversified and competitive activities on a global scale in its three main markets: China, Southeast Asia and India; strengthen the position of ICL’s specialty phosphate unit as a leading global player having backward integration and the largest basket of specialty products; balancing of ICL’s global supply chain from two integrated sites – one in Israel and one in China – in order to provide better service to its customers in Europe, America and Asia, while taking full advantage of synergies in the supply chain and in the investments; potential for significant expansion and utilization of synergies; upgrading and expansion of the purifiedincluding fertilizer-quality phosphoric acid, production facilities, expansion of the downstream product activities,white phosphoric acid, regular phosphate fertilizers (including MAP and altering the commodities-to-special-products ratios from 90/10 to 50/50 by utilizing ICL’s know-how; offering higher value-added products; expanding bulk fertilizers production via debottlenecking;DAP) and improving utilization and processes; execution of the transaction at the present time will enable us to take advantage of the current low phosphate prices in order to ensure long term reserves and a market share in growing markets.

specialty fertilizers.

Competition

Potash. The potash market is characterized by a relatively small number of manufacturers, some of which export jointly. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—Our operations and sales are subject to the volatility of market supply and demand and we face significant competition from some of the world’s largest chemical and mining companies.” The ability to compete in the market is dependent mainly on production costs and logistics. Moreover, there are high barriers to entry barriers for new players. The barriers to entry in the potash market are high due to the large investments required to establish production plants for basic minerals and the relatively long time required to establish these plants. In addition, this industry requires appropriate concessions and proximity of production facilities to mines.

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The conditions stated above are likely to reduce the competition in the potash market and to impact the potash prices.

The significant competitors of our Fertilizers segment in international trade in the potash sector are Potash Corporation of Saskatchewan (Canada), Belaruskali (Belarus), Mosaic (Canada and the United States), Uralkali (Russia), K+S (Germany), Agrium (Canada), APC (Jordan) and SQM (Chile).

In June 2015, PotashCorp gave notice of its intention to submit an offer for acquisition of shares of K+S. Several months later, in October 2015, PotashCorp decided not to submit such an offer. Reduction of the number of players in the global potash market should have an impact on the competition and the prices therein.

Although there is currently excess capacity in the industry, variousa number of companies have announced plansare continuing to develop new mines and other companies have announced plans to expand theirare expanding the production capacity.capacity of existing plants. There is uncertainty in respect of realization of these plans and the time required for their achievement. In addition, a number of companies have announced that they are examining the possibility of entering into the potash industry. As the actual production over capacity increases or if there is an expectation to increase the production capacity (or the quantity of the potash marketed), this causes pressure on the existing players in the market, in such a way that could lead to an increase in the competition. Despite that stated, PotashCorp announced the shutting down of the Picadily mine in New Brunswick in Canada and the dismissal of about 420 employees which, as a result, will remove 2 million tonnes of production capability from the market. Establishment of the mine was completed in 2014 at a cost of $2 billion. A number of additional companies announced they would eliminate positions, including Mosaic, which announced that it would lay off about 46 workers at the Colonsay mine and cutback the production by 400 thousand tonnes, BPC which announced that it will reduce production from 11.4 million tonnes in 2015 to 10.5 million tonnes in 2016 and Intrepid Potash, which laid off about 40 workers, and stopped producing potash at one of its mines in New Mexico, in the United States. In addition to the production reductions, Canpotex announced it will reduce potash sales in the first half of 2016 by 1.5 million tonnes and BPC announced it will cutoff sales by 5% in 2016 as compared to 2015.

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Fertilizers and Phosphates. The phosphate fertilizer market is extremely competitive and competitors include international companies and government ownedgovernment-owned companies. Relatively, many producers operate in this market. The main competitive factor in the field of phosphate fertilizers is price. The ability to compete in the market is dependent mainly on production costs and logistics. For this reason, companies located in proximity to sources of raw materials, ports, and customers benefit from competitive advantages. An important factor in the area of raw materials (in addition to phosphate rock) is the accessibility to and the price of the sulfur and ammonia required for manufacture of the phosphate fertilizers. Additional factors that affect competition to a certain extent include product quality, range of products, service and the capacity to develop new products that provide unique solutions.

There are phosphate mines and production facilities in many countries, including Morocco, China, Russia, Jordan, the United States, Brazil, Saudi Arabia and Tunisia. The main phosphate producers who compete with us are Mosaic (United States), Potash Corporation of Saskatchewan (Canada)(United States), OCP (Morocco), Group Chimique Tunisienne (Tunisia), Vale (Brazil), the Roullier Group (Europe) and various Russian and Chinese producers. We believe a number of producers are approaching depletion of their higher qualityhigher-quality reserves.

In 2015, China changed its export tax policy with respect to phosphate fertilizers and the local producers significantly increased their presence in the global commerce.

We believe our Fertilizers segment benefits from the following competitive advantages:

·

The relatively low average cost of potash production;production at the Dead Sea;

·

An integrated value chain that allows use of the phosphate rock mined in Israel and China for use in the production of its phosphate fertilizers rather than purchasing phosphate rock from third party suppliers;

·

Logistical advantages due to its geographical location, access to nearby ports in Israel and Europe and relative proximity to its customers;

·

Logistical synergies due to potash operations in Israel, where the hot and dry climate of the Dead Sea enables us to store, at very low cost, a large quantity of potash in an open area thereby allowing us to consistently produce at Sodom at full capacity, independent of fluctuations in global potash demand.

·

Full utilization of the value chain while creating added value for the raw materials (potash and phosphates) in the production of specialty fertilizers.

·

A professional agronomic sales team that focuses on individually-tailored agronomic consulting to customers based on an analysis of the different growing conditions of each particular customer.

Raw Materials and Suppliers

We produce a significant portion of our primary raw materials, including potash and phosphorus, through our mining operations in Israel, China, Spain and the United Kingdom, as discussed further below. See “Item“Item 4. Information on the Company—D. Property, PlantPlants and Equipment—Mineral Extraction and Mining Operations”Operations” for further information on the Company’s mining operations.

The primary raw materials acquired from external sources are mainly sulfur and raw materials used to produce controlled release fertilizers, including ammonia, potassium hydroxide and coating materials. We seek to holdshold inventories of sulfur, phosphate and other auxiliary materials in quantities that take into account the projected level of production based on consumption characteristics, supply dates, distance from suppliers and other logistical considerations. The other primary components we use for production of potash are natural gas, electricity, industrial water and maintenance supplies.

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Sales, Marketing and Distribution

The primary markets of our Fertilizers segment are Brazil, Europe, China, Brazil and India. Our Fertilizers segment sells its fertilizer products primarily via a network of its own sales offices as well as sales agents throughout the world.

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Most of ourthe sales of ICL’s Fertilizers segment’s salessegment are not transactedmade by means of long term contracts or long-term orders but, rather, viathrough current orders closeproximate to the datesupply date. Accordingly, ICL’s Fertilizers segment does not have a significant orders’ backlog. Regarding new contracts with customers of supply. Consequently,ICL Fertilizers in China for supply of Potash over the concept of a backlog has no significance for us.

next three years – see below.

The prices of potash and fertilizers are determined in negotiations between the manufacturers and the customers and are affected mainly by the relationship between the market demand and the available supply at that date as well as the size of the customer and term of the agreement. Prices for relatively long termlong-term contracts are not necessarily similar to spot prices (current/casual sales transactions).

In the Indian and Chinese markets, it is customary to negotiate framework agreements with respect to potash, some of which are with commercial entities connected to the governments of those countries. Our Fertilizers segment has agreements in China with distributors and NPK fertilizer producers. Under these agreements, the agreed price is usually in effect for six months.

As partmonths to a year.

During the second half of framework contracts with its customers2015, upon completion of potash shipments, which were derived from ICL's agreement in China in January – February 2014, ICL Fertilizers signed agreements to supply potash in the first half of 2014the year, potash shipments began to be based on a scale that is  substantially similar to"spot prices". In 2015, the contracts signed with its customers for the first half of 2013. The contracts were signed at a price of $305 per ton CFR, representing a price reduction of approximately $95 per ton CFR compared with the contracts signed in 2013. During the second half of 2014, shipments of potash to the Company’s customers in China continued at “spot” sales prices, albeit at a slower rate than planned due to labor disputes at the Company’s factory in Sodom. In 2014, imports of potash into China reached a levelrecord high of 8.03more than 9.4 million tons –- an increase of about 18% compared with 2014. In the highest level since 2007Company's estimation, the imports of potash into China in 2016 will be lower due to accumulation of large inventories at the end of 2015 along with an increase in production by the local producers.

In January 2016, ICL signed new framework agreements with its customers in China for supply of potash covering a quantity of about 3.4 million tons (including options) over the next three years. The sale price will be determined based on the accepted price levels in the Chinese potash market. Pursuant to the framework agreement, which constitutes an increase of about 3% in the quantities supplied compared with the prior three-year framework agreement the Company signed with its customers in China whereby 3.3 million tons of potash (including options) were supplied. According to the agreements, the Company will supply 1.1 million tons of potash in 2016, 1.14 million tons of potash in 2017 and approximately 21.3% higher than1.16 million tons of potash in 2013.2018.

In the beginning of 2015, it appeared that the imports of potash into India would increase significantly over 2014. This expectation did not materialize, mainly due to the continued devaluation of the Indian currency and a shortfall in the Monsoon rains. During 2015, India imported 4 million tons of potash, constituting a decrease of 7% compared with 4.3 million tons imported in 2014. In 2015, ICL signed contracts for supply of potash with its customers in India, covering an aggregate amount of 835 thousand tons, including options. In the Company’s estimation, the trend of increasing imports into China is expected to continue in 2015 due to an increase in consumption and logistics problems of the local producers.

After several years of low demand for potash in India, which stemmed from, among other things, the government’s subsidy policy that gave preference to nitrogen fertilizers, there was a significant improvement in imports of potash into India in 2014. Potash imports increased from 3.07 million tons in 2013 to 4.29 million tons in 2014. This increase was achieved notwithstanding the fact that there was no change in the subsidy policy and the prices to the end customers remained at the same level as they were during the last two years. In the first quarter of 2014, the potash manufacturers signed contracts for the agricultural year beginning on April 1, 2014 and ending on March 31, 2015 at a price that reflects a decline of $105 per ton compared with the price closed in the prior annual supply contracts in India in the beginning of 2013. In April 2014, ICL also agreed with its customers in India will not utilize the entire quantities covered by the contracts due to supply potash for the 2014/2015 agricultural year in an aggregate quantityaccumulation of approximately 825 thousand tons (including optional quantities). The selling price agreed to is approximately the same as the price set in transactions with other producers supplying potash to the Indian market. In the Company’s estimation, the trend of improvement in the demand for potash in India will continue in 2015 in light of the farmers having adapted to the higher price level, and thus will also support demand in the upcoming years.

inventories.

In other markets, potash is usually imported by a larger number of customers, and the potash price is determined between the suppliers and the customers for shorter periods (quarterly, monthly or even for individual shipments). In these markets, we have trade relations with most of the major customers.

In Sodom, we benefit from being able to store very large amounts of potash outside (exceeding one full year of production) outside.. Due to the hot and dry climate in Sodom, potash can be stored in piles in open areas. Therefore, potash production in the production facilities in Sodom is not necessarily dependent on the rate of sales. Output that is not sold is stored in open areas within the plant in Sodom. This advantage generally affords our Fertilizers segment greater production flexibility in Spain and the United Kingdom as well because we can sell from Europe while maintaining our main potash inventory in Sodom.

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Regarding phosphate fertilizers, our strategy is to maximize profits by choosing whether to sell or store phosphate rock, fertilizer gradefertilizer-grade phosphoric acid, phosphate fertilizers or compound fertilizers or to produce pure phosphoric acid. The inventory policy is set accordingly.

Our Fertilizers segment ships its products from Israel to customers overseas on shipsby ship (mainly in bulk) that it leases in the marketplacemarket and loads using designated facilities in the ports of Ashdod on the Mediterranean Sea and Eilat on the Red Sea. Our Fertilizers segment also has special port facilities for bulk loading in Barcelona (Spain), Amsterdam (the Netherlands), Ludwigshafen (Germany) and Teeside (UK).

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China when it will be necessary to do so.

Our Fertilizers segment did not have any single customer that accounted for more than 10% of the Company’s total sales in 2015.

Our Fertilizers segment grants credit terms to its clients according to customary practices in their locations. The segment’s credit sales are generally covered by trade credit risk insurance or by letters of credit from banks with high credit ratings.

Seasonality

The seasonal nature of demand for our Fertilizers segment’s products gives rise generally to quarterly sales fluctuations, as sales levels in the second and third quarters are generally higher than sales in the first and fourth quarters. In recent years, due to various influences on the timing of sales, primarily price fluctuations and the effects of negotiations in China and India and changes in the timing of fertilizer imports to Brazil, the effects of seasonality explained above have been reduced as compared to earlier periods.

In 2015, due to the strike, the Company postponed sales to the final quarter of the year (mainly to China) and, thus, the seasonal impact was decreased compared with to prior years.

Industrial Products

Our Industrial Products segment develops, manufactures, markets and sells bromine phosphorus and phosphorus basedmagnesium-based flame retardants for the electronics, automotive and construction industries, bromine compounds for industrial and agricultural uses, clear bromine basedbromine-based brine fluids for the oil and gas drilling industry, and biocides for water treatment. These products are principally based upon bromine, magnesia, chlorine and salts from the Dead Sea and phosphorus and chlorine purchased from third parties. In 2014,2015, the total sales of our Industrial Products segment were approximately $1,337$1,115 million and accounted for approximately 21.9%21% of our total sales (including sales to other segments of the Company), while the operating loss for the segment totaled approximately $62$24 million. The adjusted operating profit after eliminating unusual itemsincome totaled approximately $128 million.$145 million or 15% of the Company’s adjusted operating income. See “Item 3. Key Information—A. Selected Financial Data” for a definition of adjusted operating income and a reconciliation to the comparable IFRS measure. For additional information, see “Item“Item 5. Operating and Financial Review and Prospectus.Prospects.” In 2014,2015, our Industrial Products segment used approximately 73%two thirds of the bromine it produced for its own production.

Our Industrial Products segment did not have any single customer that accounted for more than 10% of ourthe Company’s total sales in 2014.

2015.

Bromine is a member of the halogen family that is known for its diverse uses in many industries. Bromine is used in the production of a range of bromine compounds. Bromine is found naturally in seawater, underground brine deposits and the Dead Sea. Its concentration varies depending upon its source. The method for extracting bromine depends on the nature of its source and its concentration. The lower the concentration of bromine in the brines, the more difficult and expensive it is to extract.

The Dead Sea is the world’s major source of bromine and the concentration of salts in the Dead Sea is significantly higher than the concentration in ordinary seawater. Although there are other sources of bromine around the world, about half of the global supply comes from the Dead Sea.

The operations of our Industrial Products segment are largely affected by the level of operationsactivity in the electronics, construction, automotive, oil drilling, furniture, pharmaceutical, agricultural,agro, textile and water treatment markets. In 2014,2015, 41% of worldwide use of bromine was for flame retardants, 29% was for intermediates and industrial uses, 19% was for clear brine solutions, 6% was for water treatment, 18% was for clear brine solutions, 21% was for intermediates, 11% was for industrial uses and 3%5% was for other uses.

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Flame retardants: Pressure is increasingly beingretardants. The trend of pressure exerted by “green” organizations in the area of environmental protection to reduce the use of bromine basedbromine-based flame retardants.retardants is continuing. On the other hand, additional and new uses for bromine and its related compoundssustainable bromine-based flame retardants are being developed, along with regulation in additional countries that increases the use of bromine and bromine compounds.flame retardants. The worldwide economic slowdown, in general, and the worldslowdown in China, in particular, over the past several years triggered a slowdown in the demand for products in the electronics and construction industries. This trend, along with the decline in sales of personal computers due to increased use of tablets and smartphones, caused a decline in the demand for bromine-based flame retardants mainly bromine based flame retardants,in the printed circuits market, and creation of pressure on the prices of these flame retardantflame-retardant products. Nonetheless, in 2014,2015, there was a certain improvement in the demand for bromine basedbromine-based flame retardants for some uses in the electronics sector.

sector, primarily in the automotive area and price increases were recorded.

Phosphorous-based flame retardants were adversely impacted by the weakening of the euro against the dollar as well as by tougher competition from the Chinese manufacturers.

Elemental bromine:bromine. In 2014,2015, elemental bromine prices were relatively stable in the United States, Europe and India whereas in China prices declinedincreased significantly, mainly in Europe, China, and India.

the second half of the year.

Clear brine solutions:solutions. Despite the declinesharp drop in oil prices in the fourth quarter of 2014,2015, the demand continued to be strong in the market for clear brine solutions for oil and gas drilling due to work that had been started before the relatively high number ofdecrease in oil prices.

Biocides. Demand for bromine-based biocides used for water treatment began displaying a mixed trend in 2015.

Demand for biocides used for onshore gas and oil fracking decreased significantly, following the sharp drop in petroleum prices, which led to reduced shale gas drillings in the United States.

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Biocides: In 2014,ICL Industrial Products in the market for chlorine-basedarea of biocides for treatment of swimming pools was impacted by low pricesare expected to decrease commencing from 2016 as a result of a strategy by our competitors to increase their market shares. In the beginningcompletion of 2013, the U.S. DepartmentClearon’s divestiture (chlorine-based biocide activities of Commerce decided to impose anti-dumping taxes on manufacturers of chlorine based biocides from China, at the rate of about 30% to 38%. In the beginning of 2014, the anti-dumping taxes on the Chinese were increased by approximately 20%, and at the beginning of April 2014, the U.S. Department of Commerce gave notice of the imposition of anti-dumping taxes on Japanese manufacturers at a rate of 59% to 109%. The anti-dumping tax on Japanese manufacturers for 2015 was, however, cancelled in the fourth quarter of 2014. Growing demand for bromine based biocides used for water treatment continued in 2014.

The development of technology that allows the production of shale gas and its applicationClearon in the United States creates additional business opportunities for us, among other things by increasingStates) in March 2016. The Company’s activities in this area will focus on bromine-based biocide products.

Inorganic bromides. In 2015, the demand for bromine based biocides for water treatment, although the recent trend of declining energy prices is acting to moderate these business opportunities.

Inorganic bromides: Theincreasing demand in the market for inorganic bromides for neutralizing mercury (Merquel® products) showed an increase incontinued. This trend stemmed mainly from demand in 2014, due to increasing interest on the part of coal-basedby power stations to take advantage of Section 45 of the U.S. Internal Revenue Code of 1986, as amended (which grants a tax credit to stations that reduce mercury emissions). The increase also stems from the entry of new customers as part of the preparations for the entry into effect in 2015 of a new regulatory system in the U.S. that requires reduction of mercury emissions.

In early 2015,

On the other hand, there was solida decline in demand for flame retardants usedadditional bromine-based products as a result of the weakening of the agrochemicals markets and an increase in competition in the area of connectors and televisions, and for clear brines fluids, although there is a high level of uncertainty in the market due to the decline in oil prices. Strong demand is continuing for bromine-based biocides for water treatment, mainly Fuzzicide. Furthermore, the strengthening of the dollar against the shekel is expected to positively affect costs.

Subsequent to the date of the financial statements, onpolyester fibers industry.

On February 2, 2015, the Workers Council of Bromine Compounds Ltd. of the, from ICL’s Industrial Products segment commencedSegment, launched a full-scalefull strike, in the Bromine Compounds production facilities in Naot Hovav and halted all transportation of goods from the factories. The strike at the Bromine production facilities is, among other things,as a response to the efficiency programprograms being implemented by the Company at Neot Hovav, whereby the Company requested that we are implementing in Naot Hovav, as partworkers employed under a collective agreement will be dismissed and/or will leave on early retirement conditions. Pursuant to similar discussions at ICL Dead Sea, the Workers Council of which, asthe ICL Dead Sea announced that it would completely shut down the facilities at the dateSodom plant, including the bromine facility and the power plant.

On May 28, 2015, an agreement was signed between ICL Dead Sea, Ltd. and Bromine Compounds, Ltd., on the one side, and the General Federation of Labour in Israel, the Workers Council of Dead Sea Works Ltd., and the Workers Council of Bromine Compounds Ltd., on the other side, which ended the strike, the labor disputes and all pending legal proceedings between the parties, and allowed the workers to immediately return to full-scale employment.

As a result, in 2015, the Company increased the provision for employee benefits in respect of conclusion of employment by about $42 million.

For more details regarding the highlights of the report, termination letters were sent to tens of employees covered by a collective bargaining agreement. For additional information,signed agreement, see “Item“Item 6. Directors, Senior Management and Employees—D. Employees.”

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Products

The business units in the Industrial Products segment are divided into two main groups:

Flame retardants – bromine, phosphorus and magnesium-based products are used in electronics, building and construction, automotive, mass transportation, textile and furnishing applications throughout the world. Flame retardants are added to plastics, textiles and other combustible material to inhibit, suppress, or delay the production of flames and to prevent the spread of fire.

Industrial solutions – this activity area manufactures and supplies elemental bromine products for a range of uses in the chemical industry, as well as the bromine and phosphorous compounds used in a number of industries worldwide, such as: rubber, pharmaceuticals, agro, polyester fibers (in production of plastic fabrics and bottles) and clear brine solutions used for balancing pressure in the oil and gas drilling industry. In addition, this area includes bromine-based biocides used for treating industrial water, pure potash and minerals from the Dead Sea for the food and pharmaceutical industries, industrial solutions, magnesium products used for the paper industry, cleaning materials and oil additives, catalysts and stabilizers.

The following table sets forth the principal products of our Industrial Products segment, as well as their primary applications and primary end markets:

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end-markets:

Product		Primary Application		Primary End Markets End-Markets
Bromine-Bromine, Phosphorus and Phosphorus-basedMagnesium-based Flame Retardants		Flame retardant additives	Additives used in plastic production	Electronics, Automotive, Mass Transportation, Building and Construction, Furniture and Textiles
Elemental Bromine		ChemicalsChemical reagent, rubber ingredient	component	Tire manufacturing, Pharmaceuticals Agricultureand Agro
Organic Bromine Compounds		Insecticides, solventsSolvents for chemical synthesis and chemicalChemical intermediates		Pharmaceuticals Agricultureand Agro
Clear Brines		Completion fluids	Oil and Gas drillings	Oil and Gas
Merquel		Mercury emission control		Emission control in coal firedcoal-fired power plants
Bromine- and Chlorine-basedChlorine-Based Biocides		Water treatment and disinfectionDisinfection		Swimming Pools, Spas,Spa facilities, Cooling Towers, Paper Sanitationplants and Disinfection, Oil and Gas Drilling and Frackingdrillings.
Calcined and Specialty Magnesia		Magnesia derivatives, temperatureTemperature control, antacidAntacid medication foodand Food additives		Chemical,Chemicals, Rubber, Adhesives, Metallurgy, Food and Pharmaceuticals
Chlorine-basedChlorine-Based Salts (Magnesium, Sodium Chloride and Pure Potash)		De-icing, dustDust control, salt, electrolysis	Salt and Electrolysis	Municipal Authorities, Textiles, Cosmetics, Food, Water Electrochemicalsand Electrochemical

Our Industrial Products segment also develops innovative products and new applications for existing products. In 2014,2015, our Industrial Products segment spentinvested approximately $30$25 million onin new product development and in support and improvement of existing manufacturing processes. Our new products introduced in recent years include, among others, MerquelMerquel® (inorganic bromides for neutralization of mercury), FR122P flame retardant (a polymeric bromine-based polymer flame retardant), TexFRonTexFRon® (a polymeric textile flame retardant product)product for textiles), FR-1410 (a bromine-based flame retardant), new productsFyrol® HF-10 (a phosphorus-based flame retardant for for polyurethane foam), and SaFRonSaFRon® 6605 (a phosphorus- and bromine-based productflame retardant for rigid polyurethane spray flame retardantfoam for insulation systems in the construction industry).

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Merquel.

Merquel^®. Mercury emissions in the atmosphere have been proven to be detrimental to health. In February 2009, the United States announced a change in policy and even initiated an international treaty, which had already been signed by approximately 147152 countries atby the end of 2014,2015, with the goal of reducing mercury emissions. In December 2011, a law was passed by the U.S. Environmental Protection Agency (“EPA”) that requires significant reduction of mercury emissions in the United States beginningstarting from 2015. The legislation was finally completed in December 2015. Concurrently, the United States continuesis continuing to incentivize reductions in mercury emissions by providing tax credit.credits. At the end of 2008, our Industrial Products segment launched a new product line, Merquel®Merquel®, based on inorganic bromides, which togetherwhen integrated with certain technologies is targeteddesigned to enable efficient neutralization of mercury to the limits determined by the authorities (a 90% reduction in mercury emissions). Full application of the standards in all of the coal-fired power stations in the United States is expected by the first half of 2016 and will require use of significant quantities of inorganic bromides. Our Industrial Products segment has invested in an extensive logistics system in the United States to allow ongoingcontinuous supply to the United States market and is making preparations to establish the production and logistics capacity required for stable supply to this market and to other countries that will adopt similar legislation.

In 2014, sales of Merquel® were approximately $28 million. In 2015,2016, sales of this product are expected to show additional growth when application of the EPA regulation commences and additional power plants in the United States that use MerquelMerquel® enter into service.

FR122P

FR-122P Flame Retardant.Retardant. In January 2012, we signed ana licensing agreement with the chemical company Dow Global Technologies LLC a subsidiary of The Dow Chemical Company to use certain of its patents and know-how to produce an innovative polymeric bromine-based polymer flame retardant which is considered especially effective. We expect that thefor expanded (EPS) and extruded (XPS) polystyrene foams. The FR122P flame retardant will be a substitute for the HBCD bromine-based flame retardant that is currently used in the construction insulation industry.industry. The HBCD flame retardant is on the list of materials requiring authorization in accordance with the REACH law, after it was defined as a “Substance of Very High Concern” by the European Union. In November 2015, a decision was made by the European authorities are currently studyingregarding authorization of the deferral of phasing outcontinued use of HBCD beyondin the original date determined –European Union up to August 2015.2017. The use will be limited to polystyrene insulation panels of the EPS type and only to companies that submitted a request for continued use. The companies that continue to use HBCD will be bound by an environmental monitoring plan with respect to HBCD and will be required to file a quarterly report regarding the quantities of the polymer substitute (FR-122P) available in the market and the progress with reference to transition to use of this flame retardant. The other uses of HBCD have been prohibited in Europe since August 2015 (including polystyrene insulation panels of the XPS type). Our Industrial Products segment has initiated production of FR122P at its plants in the Netherlands and in Israel. The plant in Israel has the capacity to produce approximately 10,000 tons and the Netherlands facility currently has the capacity to produce approximately 2,400 tons, or a total of approximately 12,400 tons per year.

At In February 2016, the end of August 2014, anCompany and Albemarle Corporation signed a long-term agreement was signed with Albermarle and its related companies to establish a joint venture to manufacture FR122P. According to this agreement, if certain conditions precedent are fulfilled, including approval of the anti-trust authorities in several countries around the world, a joint venture will be established for the joint productionsupply of FR122P, under which joint companies will be establishedpolymeric flame retardants to Albemarle from ICL plants in Israel and in the Netherlands, to be owned, directly and indirectly, in equal shares, by companies of our Group on the one hand, and by Albermarle, on the other. As part of the joint venture, 50% of the productionNetherland. This innovative product is manufactured at ICL’s facilities of this product in the Netherlands and in Israel using technology licensed by Dow Global Technologies LLC, a subsidiary of the Dow Chemical Company. Under the agreement, Albemarle will supply ICL with the bromine required for the production of GreenCrest®, the next generation of flame retardants, which will be owned, directly or indirectly,marketed by Albermarle,ICL under the brand name FR122P, and our Group companies and Albermarleby Albemarle under the brand name GreenCrest®. The product is a sustainable alternative that will conduct independent and completely separate marketing activities.

TexFRon.help customers in the transition from hexabromocyclododecane (HBCD)-based flame retardants, which is currently being used by the building industry as a flame retardant in extruded polystyrene insulation materials (EPS/XPS). The agreement is subject to certain conditions precedent, including approval by Israel’s Antitrust Authority.

TexFRon^®. In 2012,2015, we began to sell TexFRon,TexFRon® 4002, a polymeric textile flame retardant product. Weproduct for textiles developed the TexFRon product line in-house as part of the R&D activities of our Industrial Products segment. TexFRon products areTexFRon® 4002, which is designed to provide high-level fire retardant solutions for textile and adhesive products, and areis an effective substitute for DECA (likely(which is likely to be prohibited for use in Europe in 2017 at the earliest),2017) and offeroffers enhanced durabilitystability compared to other existing products. During 2015, a decision was made by Company management to discontinue the activities in the DECA facility. In December 2014, the TexFRon® 4002 polymeric product TexFRon 4002 was recognized by Oekotex, a European standard for textile products. This product is the first bromine-based flame retardant that has received such recognition.

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FR 1410

FR-1410. We recently In the past few years, we began to sell FR 1410,selling FR-1410, which is a bromine-based flame retardant, following the expiration of our competitors’ patents.retardant. This flame retardant is primarily used in the electronics, construction and home appliance markets.

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New Products for Polyurethane.Polyurethane. Our new products for polyurethane include the following:

·

Fyrol HF 5,Fyrol® HF-5, which was developed and commercialized specifically in response to IKEA’s most recent update to their finished furniture specifications that imposed bans on specific flame retardants and substantially reduced VOC emissions from the flexible polyurethane components of their finished furniture goods. Ikeaproducts. IKEA has specificallyexpressly approved Fyrol HF 5Fyrol® HF-5 for use in its upholstered furniture products.

·

Fyrol HF 9,Fyrol® HF-9, a Phosphorus-based Flame Retardant, which was developed and commercialized in response to California’s addition of TDCP to the Proposition 65 list of substances designated by the State of California as known carcinogens. Fyrol HF 9Fyrol® HF-9 represents improved resistance of flexible polyurethane foam to open flames compared to the technology currently used in the upholstered furniture industry. Additionally, Fyrol HF 9Fyrol® HF-9 performs well in flexible polyurethane foam upholstered furniture applications from a cost performance and foam discoloration perspective.

·

Fyrol HF 10,Fyrol® HF-10, which was recently developed and commercialized to represent an even greater step forward in terms of volatile organic compounds for flexible polyurethane foam automotive applications. It has been developed specifically to support our Industrial Products segment’s announced exit from TDCP for automotive applications by the end of 2015 and to support the global automotive industry’s gradual shift away from TDCP.

SaFRon 6605. The SaFRon product line represents our Industrial Products segment’s efforts to commercialize the robust synergies of phosphorus and bromine in rigid polyurethane thermal insulation applications. SaFRon6605. SaFRon® 6605 is a phosphorus- and bromine-containing product specifically targeting flame retarding rigid polyurethane spray in-placefoam insulation systems aimed to meet flammability standards and building codes that promote safetythe safe use in the use of sprayfoam in insulation systems. SaFRon 6605 is unique and differentiated because it offers high halogen content, which translates into increased efficiency of SaFRon 6605  in the use of any product commercially offered for this application.

Production

Our Industrial Products segment’s major manufacturing facilities are located in Israel (bromine,(production of bromine, Dead Sea salts, bromine compounds and magnesia), the Netherlands (production of bromine(bromine compounds), Germany (phosphorus compounds), France (specialty magnesia products and calcium compounds used as raw materials in health foods and food additives), the United States (chlorine based(chlorine-based biocides for water treatment and production of phosphorus compounds) and China (bromine compounds).

Our Industrial Products segment’s principal manufacturing plants, distribution centers and sales offices are set forth in the map below.

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* Clearon – In March 2016 the company completed the sale of Contents

Clearon (chlorine-based biocide activities in USA).

In 2014,2015, we produced 174116 thousand tons of bromine and 212156 thousand tons of bromine compounds. In 2014, productionProduction of chlorine basedchlorine-based biocides reached 1922 thousand tons, production of phosphorus compounds reached 9278 thousand tons and production of magnesia products reached 4538 thousand tons.tons in 2015. Our maximum annual capacity is approximately 280 thousand tons of elemental bromine, 410 thousand tons of bromine compounds, 37 thousand tons of chlorine basedchlorine-based biocides, 150 thousand tons of phosphorusphosphorous compounds, 53 thousand tons of magnesia, and 430 thousand tons of Dead Sea salts. In 2015, the quantities produced by the Company declined, mainly as a result of the strike in the Company's facilities in Israel in the first half of the year

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Competition

Our

ICL Industrial Products segment is the world’s leading producerlargest manufacturer of elemental bromine, accounting for approximately a thirdand based on internal estimates, it produces about one-third of the total international productionamount of bromine according to internal assessments.produced worldwide. In 2015, the quantities produced by the Company declined, mainly as a result of the strike that took place in its facilities in Israel during the first half of the year. Our Industrial Products segment estimates that it and its two main competitors, Albemarle and Chemtura, accounted in 2014 for approximately 80%77% of the worldwide consumption of bromine.bromine in 2015. Chinese production accounts for muchmost of the remainder butof the quantity ofglobal consumption from various different sources, including, from brine available for producing bromine in China continues to decline, leading to lower production capacity.produced from wells, sea water and desalinization plants. Chemtura and Albemarle produce bromine primarily from underground brine sources in the United States. Albemarle also has a joint venture with a Jordanian company to produce bromine and bromine compounds which startedbegan its operations in November 2002 and is located on the Jordanian side of the Dead Sea with access to the same source of raw materials that we have. In the beginning of 2013, Albemarle doubled the production capacity of bromine produced by the JV, and expanded its production capacity of the bromine compounds it produces aton the site of its joint venture in Jordan.Jordanian site. Chemtura purchases bromine and some other bromine compounds from our Industrial Products segment under long termlong-term contracts. In January 2010, Chemtura and Albemarle signed a long termlong-term strategic agreement. Under the agreement, Albemarle supplieswill supply Chemtura with a number of principal products, including flame retardants, and organic and inorganic bromine basedbromine-based compounds. We believe that this agreement has no negative effect on our Industrial Products segment.

The main barrier to entry into the bromine and bromine compound market is access to an economically viable source of bromine inat a sufficiently high concentration. In addition, the bromine business requires a complex logistics system based on special containers (isotanks) for transporting the bromine. The need for the logistics system is a barrier to entry of competitors into the global trade in bromine.

The main competitors of our Industrial Products segment in the bromine basedbromine-based flame retardant market are Albemarle and Chemtura, as well as a number of producers in China. The relatively low production cost of elemental bromine affords our Industrial Products segment a competitive advantage. Bromine production requires a complex logistical system based on a fleet of special containers (isotanks) specifically designed to transport bromine. One of the advantages of our Industrial Products segment is having the largest fleet of isotanks in the world,globally, which enables it to transport relatively large quantities of bromine around the world. Our Industrial Products segment has contracted with a supplier of isotanks to expand its existing fleet. During 2013, all of the new isotanks were received from the manufacturer. In addition, our Industrial Products segment has a widespread worldwide marketing network and a range of high qualityhigh-quality products, combined with a technical support system that works closely with customers, providing a good competitive position in its target markets. In China, for example, our Industrial Products segment’s network includes three production facilities, in China,a sales network, a bromine containers farm, and technical support networks.support. In the Netherlands, our Industrial Products segment has a bromine compound production facility, which gives it a competitive advantage in Europe. The phosphorus basedphosphorus-based flame retardant and functional fluids production plants in the United States and Europe are situated in close proximity to our Industrial Products segment’s principal customers.

This set-up helped in reducing the harm caused to the Company’s customers during the months of the strike in 2015.

In the phosphorus basedphosphorus-based flame retardants market, competition is mainly from Chinese manufacturers operating in the local market and in markets outside China, mainly Europe and the United States. AccessThe Chinese manufacturers have access to a source of high quality, low costhigh-quality, low-cost phosphorus which improves thetheir capacity to compete in this market.

There are many competitors in the market for biocides for water treatment, and the barriers to entry barriers are mainly related to the process for obtaining a license to sell.

sell which was manifest in the past year upon entry into effect of new regulations effective in Europe permitting only holders of a biocide license to sell, which acted to remove Chinese producers from the market.

There are several competitors in the magnesium chloride industry. The barriers to entry barrier toin this market isare low, as any company with access to magnesium chloride can produce the solution. Nevertheless, the investment in solidification facilities is not negligible.

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There isare a small number of competitors in the pure potash market. Pure potash is high qualityhigh-quality potash used mainly in the food and pharmaceutical industries. The main barriers to entry barrier isare access to potash and the technological knowledge required for its re crystallization.

re-crystallization, as well as the ability to manufacture under GMP (Good Manufacturing Practice) conditions – both from the standpoint of the manufacturing processes and with respect to the investment.

In part of the biocide industry, the magnesia industry and the industry for other salts, ourICL’s Industrial Products segment has a leading position in certain niche products.

In the magnesium area, there is competition from Chinese manufacturers.

Raw Materials and Suppliers

The principal raw materials used by our Industrial Products segment for manufacture of the end products are bromine, and bromine compounds, magnesia,magnesium, chlorine, based biocides, Dead Sea salts and phosphorus based products.phosphorus. We produce a significant portion of our raw materials through our Dead Sea minerals extraction operations from the Dead Sea. See “Item“Item 4. Information on the Company—D. Property, PlantPlants and Equipment—Mineral Extraction and Mining Operations”Operations” for further information on our extraction operations.

Elemental

The bromine is produced from the end brines (salt solutions) that result as a byproduct from the processes carried out to produce potash from carnallite. The brine is pumped into our Industrial Products segment’s plant in Sodom, where bromine is produced in an oxidation process using chlorine.

Chlorine is produced by electrolysis of sodium chloride and as a by-product of themetal magnesium production process of Dead Sea Magnesium Ltd. (“Dead Sea Magnesium”). The electrolysis facility and the magnesium plant are located next to the bromine facility in Sodom. The sodium chloride used in the electrolysis process is a by-product of the potash production in Sodom.

Our

ICL’s Industrial Products segment uses elemental bromine to manufacture bromine compounds at its facilities in Israel, the Netherlands, and China. Our Industrial Products segment sellsThe rest of the remaining elemental bromine is sold to third parties. Most bromine compounds are manufactured by a chemical processesprocess involving bromine together with a range of other raw materials, of which the largest are Bisphenol A, which is used to manufacture the bromine basedbromine-based flame retardant TBBA, and phosphorus, which is used to manufacture phosphorus basedphosphorus-based flame retardants. Furthermore, our Industrial Products segment purchases many other raw materials required for production of the various products.

The following is a graphic representation of the production process.

One type of brine that remains after the production of potash is rich in magnesium chloride. This brine is pumped to our Industrial Products segment’s facilities at Mishor Rotem. At these facilities, inIn a process utilizing magnesium chloride and other materials, magnesia (magnesium oxide) is produced. The magnesia is further processed into several grades of magnesia.

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Our Industrial Products segment produces chlorine based biocidesderivatives in the United States. ForStates for production of chlorine basedchlorine-based disinfectant products (biocides), our Industrial Products segment purchases chlorine, urea and caustic soda from local manufacturers and cyanuric acid from Chinese manufacturers.

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Table In March 2016 the Company completed the sale of Contents

Clearon (chlorine-based biocide activities in USA).

Dead Sea salts are manufactured at a facility in Sodom. The production starts from materials and brines produced as by-products of potash production. For example, magnesium chloride flakes are derived from brines rich in magnesium chloride that remain after potash is separated from carnallite. Various types of sodium chloride are also extracted from the salt that remains after potash is separated from carnallite.

Elemental phosphorus (P4) is produced in a roasting process from ores originating in Central Asia (Kazakhstan), the United States or China. Products based on phosphorusPhosphorus-based products are produced in our Industrial Products segment’s factories in the United States and Germany. Our Industrial Products segment uses elemental phosphorus to produce phosphorus compounds at its factories. The basic phosphorus compound (POCl3) is manufactured in a chemical process that combines phosphorus, chlorine and oxygen. The reaction of this compound with a variety of other raw materials (such as propylene oxide or epichlorohydrin) creates the commercial phosphorus compounds.

The following is a graphic representation of the production process.

 

Our Industrial Products segment maintains raw material inventories in quantities that take into account the projected level of production based on consumption, supply dates, distance from the supplier, and other operational and logistical considerations.

Sales, Marketing and Distribution

Our Industrial Products segment’s principal markets are Western Europe, the United States, Western Europe, China, Japan, and Taiwan. Our Industrial Products segment sells its products primarily through a network of marketing companies, agents and distributors throughout the world. Commissions are paid to agents as is customary in the sector. Most of our Industrial Products segment’s sales are not transacted by means of long termlong-term contracts or orders, but rather via current orders close to the date of supply. Consequently, the concept of a backlog has no significance for our Industrial Products segment.

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In addition, our Industrial Products segment has framework agreements with specific customers, under which the customer can purchase up to previously agreed maximum quantities of a product during the term, on the basis of which the customer issues purchase orders to our Industrial Products segment from time to time. In some of the agreements, sales prices have been fixed, at times with an update mechanism as well. The price determination mechanism has no significant adverse effect on our results.

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Our

ICL’s Industrial Products segment’s policy is to seek to maintain adequate inventory, which varies from product to product, to ensure orderly supply to customers in light of the customers’ distance from production centers and their demand for inventory availability, and in conjunction with optimization of the inventory storage costs. Therefore, portions of finished product inventories are held in storage facilities in the destination countries.

Our Industrial Products segment extends credit terms to its customers according to customary practices in their locations. The segment’s sales are generally covered by trade credit risk insurance or by letters of credit from banks with high credit ratings.

Seasonality

Our Industrial Products segment’s operations are not characterized by regular seasonal fluctuations. However, amounts sold of some of its products fluctuate between the various seasons. Agricultural products are characterized by relatively high sales in the second and third quarters. Biocides for swimming pools are characterized by relatively lower sales in the fourth quarter. Salts for de-icing are characterized by relatively higher sales in the first and fourth quarters. The aggregate impact of these diverse seasonal differences on our Industrial Products segment is not significant.

The Company’s sales in 2015 were affected by the strike in Israel during the first half of the year.

Performance Products

Our Performance Products segment primarily develops, produces, markets and sells a broad range of phosphate based productsspecialty phosphates for different applications as well as whey proteins for the food ingredient industry. This is part of our strategy of increasing our production of downstream products with higher added value.

In 2014,2015, the total sales of our Performance Products segment were approximately $1,614$1,472 million and accounted for approximately 26.4%27% of our total sales (including sales to other segments of the Company), while the segment’s operating income totaled approximately $197$319 million, representing approximately 26%42% of our total operating income.

During 2015, the segment divested its non-core businesses and recorded a gain of $180 million (net of an impairment charge related to a decline in the value of assets in Germany of $34 million). The adjusted operating income amounted to $139M or 14% of our total adjusted operating income. See “Item 3. Key Information—A. Selected Financial Data” for a definition of adjusted operating income and a reconciliation to the comparable IFRS measure.

Approximately 71%83% of our Performance Products segment’s external sales in 20142015 were of phosphoric acid of various grades (technical, food, electronics and polyphosphoric acid) and its downstream products. These products compared to 71% in 2014. The increase from 2014 derives mainly from the non-core divestitures. Downstream phosphates are produced in part using phosphate rock that is mined by our Fertilizers segment and phosphoric acid manufactured from that phosphate rock, and in part using elemental phosphorus (P4) and phosphoric acid, which are purchased from third parties.

Our Performance Products segment did not have any single customer that accounted for more than 10% of the Company’s total revenue in 2014.

2015.

Most of the products of our Performance Products segment are affected by the global economic situation, competition in our target markets, and price fluctuations in the fertilizer market, which affect the price of the main raw materials of our Performance Products segment, and by fluctuations in energy prices, which mainly affect production costs of thermal phosphoric acid.

Overall demand for downstream phosphate basedour products grew in both Food Specialties and Advanced Additives mainly on the European and U.S. markets declined compared to 2013. This decline is primarily due to competition with exportersstrength of phosphoric acid toacquisitions in both product lines. Food Specialties was favorably impacted by the US, along withacquisition of Prolactal, a whey protein company which balanced the portfolio’s demand by offsetting the decline in demand for phosphate salts deriving from the economic slowdown in Europe. Furthermore, competitors favored a strategy that gives preferenceSouth America, Asia and Russia. Food Specialty markets continue to market share over prices,be receptive to innovative product concepts which had an ongoing negative impact on the Company during the year. Quantities sold suffered from a significant decline in demand in the phosphoric acid market mainly in North America, in which foreignoffer better health and domestic competitors sought to increase their market share by lowering prices.  In addition, theconvenience characteristics while still maintaining favorable texture and stability features. The financial crisis in Russia and political instabilityweak demand in the UkraineCIS region moderated the Company’s growth opportunities in the fieldthis business. Advanced Additives benefited from an acquisition in Brazil and a joint venture investment in China.

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During 20132014 and 20142015, we expanded our Performance Products Segment’s operations by means of acquisition of the following activities and companies:

In March 2013, acquisition was completed of the assets and business operations of Thermphos International B.V. located in Knapsack, Germany. The Knapsack factory is used for marketing and manufacturing P2S5.

In January 2014, acquisition was completed of the Hagesud Group, a German producer of premium spice blends and food additives for meat processing. This transaction includes the acquisition of all the operating assets of the Germany based HemmigenGermany-based Hemmingen company, including Hagesud’s production sites, existing businesses, state of the artstate-of-the-art production technology and warehouse facilities located in Hemmigen,Hemmingen, Dortmund and Ottensoos, Germany with approximately 200 employees.

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the acquisition has been in line with the expectations.

In April 2014, the Company acquired Auxquimia S.A., a Spanish company that produces firefighting foams and fire extinguishment additives. Auxquimia serves markets from its production facility in Asturias, Spain. The acquisition marks the Company’s entry into the Class B foam business. Auxquimia’s Class B foam products, incorporating the latest surfactant technology, are used to fight flammable liquid fires, such as refinery or jet fuel fires, and they are among the world’s safest, most effective and environmentally friendly firefighting products. They are complementing ICL’s Class A foam products which are used to fight structural fires. The acquisition expands our market presence in Southern Europe and also delivers new products to our North American portfolio. Sales growth is ahead of plan. Expected synergies related to the production of Class A foam for the European and Australian markets are proceeding better than expected by reducing costs associated with third party production tolling. The qualification of Class B foam products in North America is on schedule and production is expected to begin in the third quarter of 2016.

During the fourth quarter of 2014, the Company completed acquisition of 100% of Fosbrasil (increase in the rate of holdings from 44.25% to 100%), the leading manufacturer in Latin America of purified phosphoric acid for the food and specialty fertilizer market, and a producer of phosphate basedphosphate-based downstream products and specialty fertilizers.

Subsequent to The acquisition expanded our global WPA portfolio into South America and we realized operational efficiencies from the dateoverall integration. The profitability of the statementproduct portfolio has proven to be incremental to our base margin. Despite the difficult economic environment in Brazil and the competitive nature of financial position, in Januaryimports into Brazil, WPA domestic sales experienced favorable growth.

In March 2015, the Company signed an agreement to purchasecompleted the acquisition of Prolactal GmbH and its subsidiary, Rovita, GmbH (collectively “Prolactal”). Prolactal, whose plants are based in Hartberg, Austria and in Engelsberg, Germany, is a leading European manufacturerproducer of milkwhey proteins and other ingredients for the food and beverage industry. On March 13,Prolactal has approximately 200 employees. The acquisition complements the long term strategy of ICL Food Specialties by contributing whey protein products to the portfolio. Sales grew by 26% over 2014 and profitability has grown by 60% through improved product mix and operational efficiencies.

In October 2015, ICL completed the formation of a joint venture company (“YPH JV”) with Yunnnan Phosphate Chemicals Group Corporation Ltd (“YPC”), China’s leading phosphate producer. The YPH JV, which includes a world scale phosphate rock mine and large scale phosphate operation, is expected to be a leading player in China’s phosphate sector, operating an integrated, world scale phosphate platform across the value chain.

Pursuant to the Company’s strategy, in connection with the divestment of non-core businesses activities, the Company completed during 2015 the transaction was closed.

Concurrently, in the fourth quarter of 2014, according to its strategic plan, the Company signed agreements for sale of a number of its non-core businesses:

In October 2014, the Company signed an agreement for sale ofalumina, paper and water industry (APW), the APW (aluminum, chemicalsthermoplastic products for the paperfootwear industry and water purification) business units located in Ludwigshafen and Dusseldorf, in Germany, along with additional sites of ICL Performance Products in Europe and in China. In January 2015, the transaction was closed (except for an insignificant number of units located in China).

In December 2014, the Company entered into a transaction for sale of the Rhenoflex business unit, located in Ludwigshafen, in Germany, and in China. Rhenoflex is a leading supplier of advanced parts for reinforcing leather shoes and orthopedic components in recognized brand name products in the global footwear industry. In February 2015, the transaction was closed.

In addition, the Company entered into a transaction for sale of(Rhenoflex), the hygiene businesses (detergents and disinfectants)products for various applications in the food industry including disinfectants for dairies, agricultural companies, industrial kitchens(Anti-Germ) and different typesthe pharmaceutical and gypsum businesses (PCG).

In total, sales in 2015 decreased by $355 million (net of food factories. In February 2015,revenue from services in a subsidiary in Germany which is not part of the transaction was closed.

Company’s core businesses), due to the divestitures, and the operating profit decreased by $42 million.

Our Products

Our Performance Products segment’s products are designed for a wide range of uses and industries. The main markets of our Performance Products segment include food, metallurgy, paintpaints and coating, detergents,coatings, electronics, pharmaceuticals, concrete, oil additives and firefighting. The Performance Products segment is part of our strategy to manufacture downstream products with higher added value based on phosphate rock.

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The main products of our Performance Products segment are as follows.

Purified Phosphoric Acid—Technical Grade, Food Grade Acid, Electronics Grade Acid and Polyphosphoric Acid. The acid is used as raw material in the food, metal treatment, detergents, electronics and construction industries. Our Performance Products segment is the world’s leading manufacturer of purified phosphoric acid. Our Performance Products segment manufactures and markets phosphoric acid of varying grades, primarily for the food industry. The product mix of our Performance Products segment also includes unique acids with high added value that are used in the electronics and construction industries.

Phosphate Saltsoperates two business units: Advanced Additives and Food Additives. These products are designed for diverse uses, including food additives, treatment of metals, paints and coating, detergents and toothpastes. Our Performance Products segment manufactures and markets productsSpecialties with high added value, including phosphate salts, producedprimary production locations in Israel, Germany, the United States, Brazil and China, which are primarily based on phosphoric acid. Our Performance Products segment uses much of the phosphate salts that it produces as raw material to manufacture food additives in many countries in the world. The food additives of our

Advanced Additives – this business line supplies mainly phosphate salts and phosphoric acid, which are used as a raw material in the metals treatment and paints and coatings industries. In addition, the Performance Products segment manufactures and markets phosphoric acid of varying grades, primarily for the food industry. The unit supplies P₂S₅, a key ingredient in lubricating oil additives and insecticides. In addition we are one of the world’s leading manufacturers of phosphate-based fire retardant products, which are used primarily to fight forest fires by releasing the product from an aircraft. Advanced Additives sales in 2015 totaled $780 million, an increase of $127 million compared to 2014. The increase stemmed mainly targetfrom additional acid sales associated with the Fosbrasil acquisition and increasedforest fire retardant demand from U.S. government agencies. Demand for Industrial Specialty products declined primarily in the European market related to the ban on use of phosphates in ADW (Auto Dish Wash) detergents.

Food Specialties – ICL Food Specialties is a leader in creative food ingredients and phosphate additives which provide texture and stability solutions to the processed meat, fish, dairy, baked goods and seafood markets,processed food markets. In addition, the cheesebusiness unit produces whey proteins for the food ingredient industry. Sales in 2015 totaled $614 million an increase of $89 million compared to 2014. The increase stemmed mainly from the Prolactal acquisition and milk products marketswas partially offset by lower demand from Russia and the baked goods market.

Other Phosphate-CIS countries and Phosphorus Based Products.

The primary markets for these products are:

·

Hygiene products:  a broad range of disinfectant and cleaning materials for various uses in the foodservice industry, including products for cleaning dairies, agricultural companies, industrial kitchens and other types of food facilities. Our Performance Products segment produces the products in France, Germany and Austria. As noted above, in February 2015, the Company completed the transaction for sale of the business units in this area.

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·

Fire prevention and retardant products (fire safety): fire safety products prevent fires, mainly in forests and open areas, by spraying products from an aircraft. We are one of the world’s leading manufacturers of phosphate based fire retardant products, which are used primarily to fight forest fires. These materials are produced in North America and France.

·

P2S5:  used as a primary ingredient in lubricating oil additives and insecticides.

Other Products. Our Performance Products segment manufactures a wide range of other products that are not phosphate based and require specific competencies. These products are not part of our core businesses. Among these are the following products:

·

Thermoplastic products (Rhenoflex):  thermoplastic materials are plastic materials that can be molded under heat. Our Performance Products segment develops, manufactures and markets unique, environmentally friendly, patent protected thermoplastic products for reinforcing the toes and heels of shoes and for the production of other leather goods such as handbags and suitcases. Among our Performance Products segment customers are some of the leading manufacturers of quality footwear in the world. Production facilities are based in Germany and China. As stated above, the Company entered into a transaction for sale of this business unit. In February 2015, the transaction was concluded.

·

Chemicals for water and paper (APW—alumina compounds, paper and water chemicals):  our Performance Products segment manufactures and markets a wide range of alumina compounds and other chemicals (polymers) for the paper industry and other industries, cement additives and chemicals for treatment of industrial and drinking water. In 2008, our Performance Products segment expanded its water treatment operations by acquiring the water treatment business of the German company Henkel. This business includes the production of performance products for treating water used in cooling towers, power stations, heating systems, drinking water, sewage treatment and purification. Most of the production facilities are in Germany. As noted above, during January 2015, the transaction for sale of the APW business unit (except for a number of insignificant assets located in China) was concluded.

·

Pharma, cosmetics and gypsum (PCG):  our Performance Products segment manufactures and markets active ingredients and other products for the pharmaceutical and cosmetics industries and also manufactures synthetic gypsum, mainly for the medical, dental and hobby industries. Production facilities are based in Germany and China.

weak Brazil economy.

A significant portion of our Performance Products segment products are based on its intellectual property and have well-known brand names in their relevant markets, including Fibrisol, Brifisol, Joha, Tari, Py Ran,Py-Ran, Nutrifos, Levn LiteLevn-Lite and Phos-chek.

Our Performance Product segment’s highly sophisticated technology platform for the development of food texture and stability solutions has allowed it to develop expertise in phosphate based food additives, fire retardantsadditives. In addition, our ability to provide a high level of service and water treatment products andexpand into new markets in the firefighting sector has enabled us to achieve a leadership position in these market segments.

Production

Our

The Performance Products segment manufactures its products in its facilities in Germany, the United States, Israel, Brazil, France, Spain, China, the United Kingdom, Argentina, Austria, Australia and Mexico. In Mishor Rotem in Israel, our Performance Products segment manufactures purified phosphoric acid by purifying fertilizer gradefertilizer-grade phosphoric acid produced by our Fertilizers segment. Our Performance Products segment also manufactures thermal phosphoric acid in the United States and China by utilizing elemental phosphorous and purchasingpurchases of purified phosphoric acid from third parties.

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Our Performance Products segment’s principal manufacturing plants, distribution centers and sales offices are set forth in the map below.

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below:

In 2014,2015, we produced 129,790206,960 tons of purified phosphoric acid (as Phosphorus Pentoxide), 398,440312,415 tons of phosphate salts, and112,908 of food additives 74,680and milk derivatives, and 64,905 tons of other phosphate basedphosphate-based products (P2S5 and 302,190 tons of other products.Firesafety). Our maximum annual capacity is approximately 216,000267,000 tons of purified phosphoric acid (as Phosphorus Pentoxide), 485,550395,755 tons of phosphate salts, and175,620 of food additives 161,260and milk derivatives, and 122,000 tons of other phosphate basedphosphate-based products (P2S5 and 485,800 tons of other productsFiresafety) at our Performance Products segment.

Production and capacity of purified phosphoric acid increased from the prior year due to the acquisition of Fosbrasil. Production and capacity of food additives and milk derivatives increased from the prior year due to the acquisitions of Prolactal and Rovita. Production and capacity of Other Products decreased from the prior year due to the divestitures of the noncore businesses.

Competition

Our Performance Products segment has a leading position in the field of purified phosphoric acid and its downstream products. Our Performance Products segment’s competitors are large and mid-size international chemical companies, which have manufacturing and marketing presences in various countries, as well as local companies that reap the benefits of being local manufacturers in a regional market. In every field, many companies compete with our Performance Products segment by offering similar products or substitutes.

Competition in our Performance Products segment centers on product features, price, quality, service and the ability to address customers’ needs.

·

The primary competitors of our Performance Products segment in each field are set forth below. Phosphate Based Products: · Purified phosphoric acid, phosphate salts and food additives: Our Performance Products segment’s main competitors are Chemische Fabrik Budenheim KG, Innophos Inc., Prayon, PCS, Adithya Birla, Haifa Chemicals Ltd. and various Chinese producers. · P2S5: Our Performance Products segment’s main competitors are ChemTrade Logistics Company in North America, and Italmatch Chemicals in Brazil and Singapore. Singapore and various Chinese producers. Other Products: •      Pharmaceuticals, cosmetics and gypsum: The primary competitors of our Performance Products segment are Reheis Inc. and Summit in the area of antiperspirants, SPI Pharma in the area of pharmaceutical products, and GC Corporation in the field of gypsum. Raw Materials and Suppliers The primary raw material for manufacture of phosphate salts and food additives is purified phosphoric acid, which is produced by purifying fertilizer gradefertilizer-grade phosphoric acid as well as via a thermal process from elemental phosphorus (P4). Our Performance Products segment obtains fertilizer gradefertilizer-grade phosphoric acid from our Fertilizers segment and also purchases P4(P4) and purified phosphoric acid from external manufacturers. 53 Table of Contents Our Performance Products segment has a long termlong-term supply contract with a supplier of phosphoric acid that guarantees regular supply of this raw material through 2018. In addition, we have a long termlong-term supply agreement for P4(P4) with another supplier through 2022. 52 Table of Contents In addition to purified phosphoric acid, our Performance Products segment uses hundreds of other raw materials, which it purchases from many suppliers. Of these, the raw material with the greatest total cost is caustic soda. Our Performance Products segment maintains raw material inventories in quantities that take into account the expected level of production based on consumption characteristics, supply times, distance from suppliers, and other logistical considerations. Sales, Marketing and Distribution Our Performance Products segment sells its products mainly to industrial and commercial customers in Europe, North America, South America and Asia. Our Performance Products segment’s marketing network is based primarily on an extensive internal marketing organization and, to a lesser extent, on external distributors and selling agents. To market and sell many of its performance products effectively, our Performance Products segment’s marketing personnel work closely with customers in order to tailor the products to the customers’ needs. Our Performance Products segment is not dependent on external marketing agents. Most of our Performance Products segment sales are made under agreements with terms of less than one year or through spot orders placed close to the date of supply. In addition, our Performance Products segment has framework agreements with specific customers, through which the customer can purchase up to previously agreed maximum quantities of product during the term, on the basis of which the customer issues purchase orders to our Performance Products segment from time to time. Most sales of Performance Products do not take place according to long termlong-term orders or contracts, but are regularly ordered close to the time of supply. Consequently, the concept of a backlog is of no significance for our Performance Products segment. Our Performance Products segment’s strategy is to maintain adequate inventories to ensure orderly supply to customers in light of the customers’ distance from the manufacturing locations and their demand for inventory availability, and in conjunction with optimization of inventory’s storage costs. Therefore, portions of finished product inventories are held in storage facilities in the destination countries. Our Performance Products segment extends credit terms to its clients according to customary practices in their locations. The segment’s sales are generally covered by trade credit risk insurance or by letters of credit from banks with high credit ratings. Seasonality The target markets of most our Performance Products segment’s products are not characterized by seasonality, except for flame retardants, which have a higher sales volume in the spring and summer due to the many fires in North America during this hot and dry period. First quarter and fourth quarter are weaker due to the lack of fire activity during the cold winter months. Other Activities IDE -– ICL holds 50% of IDE Technology Ltd. IDE operates in the following fields: constructing and selling water desalination plants and treatment of industrial waste water, selling water, operating and maintaining water treatment and desalination plants and developing and producing industrial evaporators and heat pumps.evaporators. IDE has deployed approximately 400 water desalination plants in more than 40 countries worldwide and seeks to address a wide range of the world’s clean water challenges. IDE’s core competencies are in membrane and thermal desalination and/or treatment of industrial evaporators and heat pumps. As part of our strategy to divest operations that are not in core areas, we are considering the possibility of selling our holdings in IDE. 54 Table of Contents waste water. DSM -– DSM produces, markets and sells pure magnesium and magnesium alloys. It also produces dry carnallite and related by-products, including chlorine and sylvinite. DSM is the second largest magnesium producer in the Western world after US Magnesium. 53 Table of Contents Sustainable Development Policy The Company applies an overall policy of sustainable development that integrates social, economic and environmental considerations into all of our business activities. The policy stresses social responsibility, which includes taking responsibility for the safety and well-beingwell being of our employees, reducing environmental impacts, and creating a dialogue and transparent communication channel with the authorities, community service, as well as other matters in the area of sustainability. This policy includes, among other things, the following items: responsible use of natural and land resources; rehabilitation of streams, restoration and preservation of mining and quarrying regions and return thereof to the State after completion of the activities the land was designated for by the State and in accordance with the provisions of law governing the matter. Reduction at the source (in terms of the flow) of the quantity of waste produced in ICL companies and increased recycling of treatable waste. These activities are performed in ongoing cooperation with manufacturers, suppliers, research institutes, customers and other users for purposes of development and application of methods for the safe production and use of products, while reducing or eliminating injury to users and the environment; safe transport –- selection and instruction of responsible transporters, use of an emergency system for handling transport problems, strict care with respect to safe and correct packaging and assurance that only proper and orderly means of shipment are used. ICL has a policy of involvement and investment in the society and the community, which was formulated and approved by our Board of Directors in 2001 and amended in 2014.2014. Pursuant to this policy, an annual budget for community service is approved. Each investment or donation is executed as required by the policy and is reviewed by the relevant parties who have been authorized according to the type and amount of the donation, including the Environment, Safety and Public Affairs Committee and the Board of Directors. ICL focuses on its cooperation with the community and its involvement in the communities in and outside of Israel from which its employees come and in which it operates. ICL’s main activities are in the communities in the State’sIsrael’s southern region, namely: Dimona, Yerucham, Arad, Beer Sheva, and the Bedouin settlements in the South. ICL focuses its activities on children and youthyouths with handicaps, women and children at risk, education and excellence of students in the areas of chemistry, computers, young entrepreneurs and assistance to populations in harsh socio-economic conditions, and populations in need and with special medical needs, as well as on education and promoting outstanding achievements of pupils in the fields of chemistry, computers, entrepreneurship, and acquaintance with the industrial sector. needs. Our charitable contributions in 20142015 totaled approximately $5$6 million (approximately NIS 19 million)24 million NIS). This amount does not include the numerous hours of work that our employees devoted as volunteers, partly at the expense of their work hours. ICL is planning and acting to deepen and broaden its community activities outside of Israel and to bring them to a scope similar to that of its community service in Israel. Regulatory and Environmental, Health and Safety Matters Some of our products are potentially harmful to the environment and the health and safety of the public as a result of the effluents, air emissions and waste that are generated during the production of our products. These substances can cause pollution that necessitates remediation, clean up or other response actions. In addition, some of our products may be hazardous to those who are exposed to them during their production, transportation, storage or use. Consequently, some of our operations and products are subject to environmental, health and safety regulation. There is also a risk of claims in respect of bodily injury or property damage. The Company routinely invests in projects in the areas of environmental protection, health and safety, and also bears current costs in connection with these matters. In 2014,2015, we spent approximately $112$101 million on environmental matters in 2015, of which approximately $27$20 million relating to investments in property, plant and equipment and approximately $85$81 million as a current expense. The Company estimates that in 2015,2016, it will spend approximately $136$120 million on environment protection matters, of which approximately $54$39 million on investments in property, plant and equipment and approximately $82$81 million will be a current expense. We are continuing our investments in the environment while making improvements and reducing our impact on the environment. 55 Table of Contents On December 11, 2013, the Law for Encouragement of Competition and Reduction of Business Concentration, 2013 (“the Business Concentration Law”), was published, which includes, among other things, provisions requiring regulators having authority to issue rights in areas defined as an essential infrastructure in Israel, to take into account considerations for encouraging industry wideindustry-wide competition and reducing business concentration in the economy prior to issuing rights in public assets to private entities defined as high concentrationhigh-concentration entities. The Business Concentration Law sets forth a list of “rights”, including, an authorization, license, concession or permit and a contract, and also includes a list of matters defined as an essential infrastructure, including areas in which the Company is engaged, such as, quarrying, mining, water and etc. A list of the high concentrationhigh-concentration entities was published in accordance with the criteria provided in the Business Concentration Law and ICL and its main subsidiaries in Israel are included in the list, as stated. In the Company’s estimation, inclusion of the Company and its main subsidiaries in Israel in the list of high concentrationhigh-concentration entities is not expected to have a significant adverse impact on the Company and its monetary results. However, in light of the frequent changes in the regulatory environment in Israel and the existing uncertainty regarding the manner of granting rights in natural resources in a way that is different than that provided in the law, among other things, in relation to how the concession for extracting minerals from the Dead Sea will be granted in 2030, and in relation to the granting of licenses for mining phosphates, in accordance with the provisions of the Israeli Mining Ordinance, it is possible that the Company’s estimation will prove to be inaccurate. 54 Table of Contents A number of government regulations addressing environmental and other issues, which have a significant impact on our activities, are described below: Limits on Cadmium in Phosphate Fertilizers Phosphate rock, which our Fertilizers segment mines, contains cadmium in various concentrations. Cadmium is considered to have a harmful effect on the environment. Most countries to which our Fertilizers segment sells phosphate fertilizers do not presently restrict quantities of cadmium in fertilizer. The European Union has been conducting a series of public hearings prior to enacting regulations limiting the maximum concentration of cadmium permitted in phosphate fertilizers anywhere within the European Union. The regulations are expected to be published in 2016 with a transition period of several years, and at the end of the transition period the producers will be required to abide by the restrictions. The cadmium content in the phosphate fertilizer products of our Fertilizers segment does not exceed the permissible quantity compared with the anticipated future restrictions in the European Union. A number of European countries in Scandinavia (Finland, Denmark and Sweden) have already instituted local limitations with respect to the cadmium content in fertilizers; however, these restrictions are not binding on the entire European Union. Salt Accumulation at Mines in Spain Our Fertilizers segment has two potash production centers in Spain, in the towns of Suria and Sallent. As a by-product of the potash production process, salt is produced and heaps up in piles, most of which, at the present time, is not usable. Regarding Pursuant to the permission to pile up salt on the sites: with respect tolicense covering the first site in the town of Suria, there is a license to pile(Suria), salt may be piled up salt on the site that runs up to 2026 at the current production level; with respect to the second site in the town of Sallent, onregarding which the Company intends to discontinue the mining activities prior toby the endmiddle of 2016, an agreement2017, it was made withdecided by the local planning board (CUCC), which permits the continuedthat it is permissible to continue piling up of salt at the current production level up tountil the earlier of June 30, 2017.2017, or when the pile reaches the height of 538 meters. As at the date of this Annual Report, the height of the salt pile is 509 meters. This decision, which relates to the Company’s municipal permit, was approved by the Supreme Court in November 2015. In November 2015, ICL Iberia and the Government of Catalonia signed a cooperation agreement memorandum of understanding that defines ICL Iberia’s activities in the country as preferential activities and the potash industry as a public strategic interest. The purpose of the agreement is to arrange all the mining activities, including environmental protection and support for the matter of regulation, transportation and infrastructures. Furthermore, the agreement relates to the matter of ICL Iberia’s obligation to remove the salt pile on the Sallent site, including completion of the restoration plan of the site, all of which is to be completed no later than 2070 (the removal of the salt pile should be completed by 2065). This agreement requires approval byforesees transitory measures constituting an interim solution to allow ICL Iberia to continue its activities at the Spanish Regional Court.Sallent site during the transition period. ICL Iberia’s estimation, when negotiations on the detailed agreement are concluded, the agreement should advance the procurement of the environmental permit to allow pile up salt after June 30, 2017, which is currently invalid, and will settle ICL Iberia’s obligations to subsequently restore the site. For additionalmore information, see “Item“Item 4. Information on the Company—D. Property, Plants and Equipment—Business Licenses and Other Permits—Spain” and “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings—Proceedings in Connection with Environmental Protection.Proceedings.” 55 Table of Contents Product Regulation and Registration Insecticides (Including Soil Fumigation). In most countries, this material and any product containing this material must be licensed prior to import or sale in that country. Sale is restricted according to the type of the hazard (disease/organism) and the crop or yield for which the permit was granted in that country. The permit is generally for a limited time and needs to be renewed in order to continue selling. Water Treatment (Biocides). In a number of countries, this materialsubstance and any product containing this material,it, must be licensed prior to import or sale in that country. Sale is limited to those commercial uses for which the permit is received in a given country. The licensing is generally for a limited time and needs to be renewed in order to continue selling. Beginning in 2013, the Biocide Law in the European Union, which replaced the Biocide Directive, entered into effect. The Biocide Directive also implemented a process of re licensingre-licensing every existing biocide on the market. Our Industrial Products segment submitted files for renewing licenses for existing biocides for various uses, according to the timetable set in the Law. Under the Directive, during the course of the licensing process, it is permitted to continue selling the products for the uses sold to date, on the condition that a licensing file is submitted for the use and the active substance in the product. The new Biocide Law continues the Biocide Directive with respect to the completion of the licensing process of the substances; however, the responsibility was transferred to European Chemicals Agency (ECHA). In addition, the Biocide Law introduced changes regarding the continued approval of products containing active biocides in the various countries, along with additional changes. 56 Table Enforcement of Contents the law is being executed piecemeal and during 2015 a new regulation entered into effect in Europe permitting only holders of a biocide license to sell, which acted to remove Chinese producers from the market. Chemicals. In some areas of the world (such as the European Union, the United States, Canada, Japan, South Korea and China), chemicals may be sold only after registration and approval by the authorities. Trade restrictions for use also apply to some of the products of our subsidiary Bromine CompoundsICL stemming from the requirements of international treaties. Our Industrial Products segment registers the products that it develops and sells as required under local laws. Chemical Registration in Europe (REACH) A statute covering the framework for licensing and evaluation of chemicals in the European Union (known as “REACH”) became effective as of June 1, 2007. The statute applies to chemicals already on the market, as well as to new chemicals. Pursuant to this legislation, manufacturers in the European Unionunion and importers of chemicals or importers of certain products containing chemicals are required to submit dossiers containing detailed information of every substance or chemical compound manufactured or imported into Europe, in quantities of more than one ton per year (the amount and content of the information depends on the volume of production and/or sales in Europe, and the nature of the product in terms of its effect on health and the environment). Some of the products will undergo risk evaluation based on the information that is submitted, and others will only be able to be sold in the future under an appropriate permit. Such a permit will only be granted on the basis of quantified evidence relating to management of the product with regard to health and environmental aspects, the lack of appropriate alternatives, and a socio economicsocio-economic evaluation. Certain persistent, environmentally toxic substances will require permits based only on a socio economicsocio-economic evaluation and on the condition that an alternative development plan be submitted, in order to encourage a transition to use of less hazardous substances. The statute is being implemented gradually, between 2008 and 2018, under the supervision of ECHA. ECHA (European Chemicals Agency). Apart from higher production and raw material costs following implementation of REACH, under the law our subsidiaries incur costs in the field of licensing, control and implementation of product stewardship programs with customers. Another possible risk caused by REACH legislation is reduction in usage of a product or material, or removal of certain products from the European market. Likewise, there will be products and compounds that require investment in alternative research and development due to the need to remove certain components from use in the European market. All of our segments are implementing REACH and are registering their chemicals as required by law. Likewise, all the chemicals have been reclassified in line with the CLP regulations (classification, labeling and packaging of substances and mixtures), that took effect in Europe in December 2010. All of our segments submitted applications for permits for all the chemicals relevant for their businesses in Europe (production and sale) within the timetables set in the law (2010 and 2013). We have also volunteered to lead and prepare a number of leading files for the entire industry (lead registrant). 56 Table of Contents Under the law, ECHA publishes, and regularly adds to, a list of substances defined as “substances of very high concern.” As of the date of this Annual Report, this list includes several products of our Industrial Products segment, as discussed in this report. Limitations on the Use of Certain of Our Products Various countries are assessing possible limitations on the use of chemicals, and this assessment includes flame retardants. Below are details regarding the main proceedings known to us as of the date of this Annual Report. The flame retardant HBCD is on the list of materials requiring authorization under the REACH regulation, after being defined as a “substance of very high concern” by the European Union. The implication is that manufacture and use of HBCD will be prohibited in the European Union unless, on the basis of a socio economic evaluation, it is proven that the need for the product for a particular use is greater than the risk, and that there are no commercial alternatives to using the product. The results of the preliminary authorization process are expected in the first half of 2015. As of the date of this Annual Report, there is no ban on the use of the substance. In addition, HBCD was classified by two United Nations conventions (Stockholm Convention UNEP and UNECE) as a persistent organic pollutant (“POP”). 57 Table of Contents · The HBCD flame retardant is on the list of materials requiring authorization in accordance with the REACH law, after it was defined as a “Substance of Very High Concern” by the European Union. The decision with respect to the “authorization” was made and, accordingly, the continued use of HBCD in the European Union is permissible up to August 2017. The use is limited to polystyrene insulation panels of the EPS type and to companies that filed a request for the continued use. The companies that will continue using HBCD are bound by an environmental monitoring plan with respect to HBCD and are required to file a quarterly report regarding the quantities of the polymer substitute (FR-122P) available on the market and with reference to the progress of transition to use of this flame retardant. The other uses of HBCD have been prohibited in Europe since August 2015 (including XPS-type polystyrene panels). In addition, HBCD was classified by two United Nations conventions (Stockholm Convention UNEP and UNECE) as a persistent organic pollutant (“POP”). Nonetheless, in light of the fact that there is stillwas no HBCD substitute available in commercial quantities that would fulfill the global requirements, in May 2013 a decision was made by the Stockholm Convention to permit an exemption from the prohibition and to permit use only in polystyrene insulation panels in buildings for an additional period of up to five years. This approval will apply only to countries that are members of the Convention that demonstrate a need in the additional period and that are recorded in the request for exemption from the prohibition. The implications of the classification is that the phasing out of the material from the European market may occur more rapidly unless Europe requests to postpone implementation of the law, and in fact, Europe has applied to postpone implementation for one year so that the implementation schedule correspondswill correspond to the European REACH process. This implies that HBCD will be phased outIn light of usethe decision recently made in Europe only in August 2015, unless authorization is obtained under REACH to continue to useregarding the “authorization” of HBCD, for insulation panels in buildings. As noted, the results of this process are anticipated in the first half of 2015. Our Industrial Products segment has a substitute for HBCD called FR122P, in the commercial stage. The bromine based flame retardant DECA is banned for use in electrical and electronic applications in the European Union. In addition, due to the definition of DECA as a “substance of very high concern,” the ECHA is leading a restriction campaign to prohibit most of uses of DECA induring 2016 the European Union by 2017, at the earliest. In 2013, DECA was proposed as a candidate for deliberations at the Stockholm Convention in the United Nations as a substance having POP characteristics. The deliberations commenced in October 2013 and the decision making process is expected to be completed in May 2017implement the decision made at the earliest. Imposition ofUnited Nations convention. The countries that have registered a request for a temporary exemption from the prohibition against the use of HBCD include Brazil, Saudi Arabia, Turkey, Switzerland (up to March 2016) and the Czech Republic. In Japan and Norway, there has been a prohibition against the use of HBCD since November 2014. In Canada there is expectedapproval for use of HBCD in polystyrene insulation panels up to enter into effect at the end of 2018.2016. In North America, the three largest manufacturers of bromine based flame retardants (Albemarle, Chemtura and our Industrial Products segment) gradually phased out their distribution of DECA in 2013. Furthermore, in 2012, we commenced selling TexFRon, a substitute for DECA in the textile industry. Propyl bromide, produced by our Industrial Products segment, was defined as a substance of very high concern in the European Union in December 2012. Propyl bromide’s use as degradable raw material will not be affected (since it is not included in this process). With respect to other uses,United States there is still no decision regarding prohibition. The definition of propyl bromide asprohibition against use. However HBCD is presently being evaluated by the EPA. These events do not have a substance of very high concern has no significant impact on us.the Company. · In Europe an evaluation process is underway with respect to Tetrabromobisophenol A (TBBPA) flame retardant, as part of the Chemicals Law in Europe (REACH), which is expected to be completed in March 2016. In the United States, an evaluation process of TBBPA has been started by the authorities (EPA) that is expected to continue for several years. In October 2015, it was published in the US Code of Federal Regulation (CFR) that TBBPA is one of the possible candidates for evaluation, which examines inclusion of the material in the Report of Carcinogens (ROC). In February 2016, the International Agency for Research and Cancer (IARC) classified TBBPA as probably carcinogenic to humans. The above-mentioned classification has no regulatory significance in the short run. In addition, the Company currently is not able to estimate the impact, if any, on ICL Industrial Products. · The bromine-based flame retardant DECA is banned for use in electrical and electronic applications in the European Union. In addition, due to the definition of DECA as a “substance of very high concern”, ECHA is leading a restriction campaign to prohibit most uses of DECA in the European Union by 2017. In 2013, DECA was proposed as a candidate for deliberations at the Stockholm Convention in the United Nations as a substance having POP characteristics. The deliberations commenced in October 2013 and the decision-making process is expected to be completed in 2017. Imposition of the prohibition against use is expected to enter into effect at the end of 2018. In North America, the three largest manufacturers of bromine-based flame retardants (Albemarle, Chemtura and our Industrial Products segment) gradually phased out their distribution of DECA in 2013. Furthermore, in 2012, we commenced selling TexFRon, a substitute for DECA in the textile industry. During 2015, a decision was made by Company management to discontinue the production activities of DECA. 57 Table of Contents · Propyl bromide, produced by our Industrial Products segment, was defined as a substance of very high concern in the European Union in December 2012. Nonetheless, Propyl bromide’s use as degradable raw material will not be affected (since it is not included in this process). On July 1, 2015, the European Chemicals Agency (ECHA) published a recommendation to include propyl bromide in Appendix 14 (XIV) under REACH. If the Commission in Europe adopts this recommendation, the use of propyl bromide will be limited to uses approved in the “authorization” process, and for the period of time of the “authorization” until appropriate substitutes are found. This process, even if it ultimately comes about, does not have a significant impact on ICL. · TXP (Tri Xylyl Phosphate), a product used as a softening substance in the plastics industry, has also been defined as a “substance of very high concern” as part of the Chemicals Law in Europe (ECHA). The Company has discontinued selling the product as a softening substance in the plastics industry. An additional use of the product is as a functional fluid in various industries. The Company is in the process of introducing a substitute for this use. That stated above does not have a significant impact on ICL. · The TDCP flame retardant was prohibited for use in furniture and children’s products in a number of states in the United States. In California, the substance is included in the list of materials requiring a warning notice (Proposition 65). In 2013, the Company discontinued sale of the product for use in furniture. Air Quality During the plastics industry, has also been defined as an SVHC in Europe. This definition of TXP as a substance of very high concern has no significant impact on us. In October 2011, the phosphorus based flame retardant TDCPP was classified as a carcinogen in California. In November 2012, our Industrial Products segment announced that it will no longer sell the substance to the furniture industry beginning in 2013, and by the end of 2015 it will no longer produce the substance. Concurrently, we have developed two alternative products that have reached the stage of commercialization. An evaluation will be performed on TBBA in Europe as part of REACH. The evaluation will be performed by Denmark in the period between March 2015 and March 2016. Air Quality—Israel DuringCompany’s production our facilities emitprocesses, pollutants thatare emitted, which could be harmful to people or to the environment if they were to be emitted into the environment in concentrations or amounts exceeding the permitted levels. The materials emitted are volatile organic compounds, inorganic compounds and particles. We are takingThe Company regularly and continuously measures the necessary measures to prevent the uncontrolled emissionsemission of these substances,pollutants in order to monitor and locate uncontrolled emissions, in accordance with the provisions of the law and the conditions set forth in our business licenses, through the use of accepted technologies. A master plan is in place at our Fertilizers segment’s facilities in Israel to reduce point source and fugitive emissions into the atmosphere. In 2013, the upgrading of the absorption systems in the phosphoric acid plant was completed and tested in 2014, and an upgrade was also made to the absorption system in the fertilizer plant. In addition,After a project was completed this year for the installation of two large extraction and filtering systems to reduce emission of particle materials in Zins factories.Zin’s factories, the Company moved into the second stage, for treatment of two additional sites, by means of installing an additional pumping and filtering system and through connection to the existing pumping and filtering system. In DSW’saddition, there is a new absorption system in the fertilizers’ factory at Mishor Rotem in place of the system that was damaged in the fire that occurred in June 2015. In ICL Dead Sea’s facilities, dust extraction and filtering systems were installed in the potash production facility, a central dust extraction and filtering system was installed in the facility for production of granulated potash, and a system was purchased and installed for piling up potash, equipped with dust containment systems. At our Fertilizers segment’sthe fertilizer plants in Israel, a master plan is being implemented to install continuous control and detection measures in the stacks. At the Rotem site inat Mishor Rotem, placementan array of air-quality detection stations is now being set up. In 2015, a detection system on the fences and the stacksproject was completed. Mishor Rotem’s plants are preparing for the establishment of a system of air quality monitoring stations, in coordination with the local council and the environmental authorities. Atsuccessfully completed at the Fertilizers and Chemical Substances (ICL Haifa) facility anfor reduction of ammonia emissions reduction project is underway, bythrough installation of a demister in the stack of the nitrate ammonia manufacturing facility. The main facilities of ICL Fertilizers in Sodom and in Mishor Rotem have been fully converted to run on natural gas and are connected to the gas pipeline. During the upcoming year,Conversion of the rock facilities in Zin will undergo conversionis underway, and when the process is completed, the factory will be connected to the distribution network. In addition, theFurthermore, ICL Haifa factory of Haifa Fertilizers in the North is presently undergoing conversion to use of gas and connection to the distribution contractor in the North. This connection is contingent on, among other things, receipt of a building permit from the City of Kiryat Atta and compliance by the distribution contractor with the timetables. The transition to the use of gas significantly reduces the amount of emissions released into the atmosphere. 58 Table of Contents Our Industrial Products segment operates advanced monitoring and detection methods to identify malfunctions in the plants’ operation and emissionemissions’ treatment systems, such that before a malfunction occurs the facility’s manufacturing activities are halted, and prevent their occurrence and takesthus steps are taken to prevent uncontrolled emissions according to the laws and the conditions set out in its business license, its toxins permit, and its emissions permit, using accepted technologies. Leakagepermit. In addition, integrated pollution prevention and control (IPPC) and leak detection and repair (LDAR) methodologies are also applied. LDAR providesapplied, which provide guidance for monitoring components to detect non-specificdiffused emissions and integrated pollution prevention and control (IPPC)in order to prevent leakage of hazardous substances into the air. BelowSet forth below is a list of principalthe main actions taken by ourICL Industrial Products segment with regard toin the area of air quality: 58 Table of Contents · Investments were made in the production facilities in order to improve recycling and recovery of solvents and other organic materials and adsorptionemitted into the air via activeactivated charcoal systems, in order to achieve reduction of the amount of these materials emitted into the air; · In addition, investments were made in reducing volatile organic compound emissions and compliance with advanced values in accordance with the BAT catalytic oxidizing technology. · Investments were made in monitoringthe absorption stack systems and detection systems, in order to ascertain that there are no deviationssealing of diffused emissions in the plants’ operationloading and emission systems. Furthermore, these systems were connected to the facilities’ production control systems, so that before any deviation occurs, the facility’s production process is halted;unloading areas. · Systems were implemented for the collection and treatment of volatile organic compound emissions from the plants’ stacks. This system performs additional treatment regarding the volatile organic emissions using a catalytic oxidizing technology; · Ongoing work is executed for the control and treatment of diffused emissions with the assistance of a European company; · Continuing joint work by the Mishor Rotem factories, including Periclase, togetherin cooperation with the Ministry of Environmental Protection and the Environmental Unit of the Eastern Negev Council to set up a regional air monitoring system;system. · In 2009, continuous monitoring systems for the stacks of the Periclase plant were purchased, in coordination with the Ministry of Environmental Protection. These systems were installed in 2010. However they have not yet succeeded in operating continuously. Notwithstanding the difficulties, we made efforts in order to bring the system into good working order. The Ministry accepted the plant’s claim that installation of the continuous monitoring systems for these stacks is technically not feasible, and these systems have been removed. The Israeli Clean Air Law—Air Emission Permit On July 31, 2008, the Clean Air Law was enacted to regulate the treatment and control of air pollution in Israel. The law is effective as of 2011. The Clean Air Law addresses, inter alia, fixed sources (including our plants) and is intended to serve as a platform for implementing the IPPC directive that was adopted by the European Union in 1996. 59 Table of Contents The Clean Air Law differentiates between plants defined in the IPPC directive as having significant environmental impact (IPPC plants), which include our plants in Israel, and the other plants. In accordance with the Clean Air Law, operations of IPPC plants are subject to a valid emission permit. The emission permit is expected to include specific instructions based on best available technology (“BAT”(“BAT”). On June 22, 2010, the Ministry of Environmental Protection enacted the Clean Air Regulations (Emission Permits), 2010, which set requirements for applying for and obtaining an emission permit. To determine the BAT, these regulations refer to the European BAT Reference Documents (“BREF”) and require selection of the BAT from known technologies (except in special circumstances that require specific explanations). As of the date of this Annual Report, our magnesium company, and our Industrial Products plant in NaotNeot Hovav (Bromine Compounds Ltd.) and a bromine chloride plant have received air emission permits. The air emission permits include provisions regarding application of the BAT, as well as provisions with respect to monitoring, control and reporting to the Ministry of Environmental Protection. We are taking steps to implement an improvement plan to address the requirements of the air emission permits in coordination with the Ministry of Environmental Protection. The cost of these measures is included in our capital budget for environmental protection matters. The estimated capital investment required in order to comply with the requirements of the NaotNeot Hovav facility’splant’s new air emissionemissions permit, which was received in August 2013, is approximately $15$9 million, until the end of 2017. Our facilityplant in NaotNeot Hovav (Bromine Compounds Ltd.) meets the material conditions in the air emission permit. In January 2015, the Neot Hovav plant submitted a request for update of the emissions permit, including: a request for less stringent emission values in a number of the treatment facilities and update of the emission processes and sources. Our other plants in Israel have submitted applications for air emission permits, as required by law. Report of Pollutant Release to the Environment In accordance with new legislationthe law regarding the duty to report polluting releases into the atmosphere (Pollutant Release and Transfer Register—PRTR), duringsince 2013, our factoriesplants in Israel began to report on an annual basis with respect to the quantities of pollutants released into the environment according to the provisions of the law. This law is based on generally accepted legislation in Europe. Under the law, the data reported is published to the public on the Ministry’s website. In January 2014, theThe Ministry of Environmental Protection publishedpublishes on an annual basis a list of emissions and transfers to the environment in accordance with the reports received from all of the reporting factories, including us. Beginning in 2014, the PRTR report is required to be submitted by March 31 of each year. 59 Table of Contents Greenhouse Gas Issues Climate change is of increasing concern to governments, non-governmental organizations, and the general public. Increasing regulation of greenhouse gases (“GHGs”) could impact our operations by requiring changes to our production processes or increasing raw material, energy, production or transportation costs. We are striving to become a leader in reduction of emissions in general and GHG emissions in particular. Our efforts include reduction of GHG emissions in production processes (including conversion to natural gas, replacement of shielding gas in magnesium production, and energy efficiency improvements) and development of new products that contribute to GHG emissions reductions. We annually measure the balance of GHG emission in all the production facilities that we operate, and have until now measured the carbon footprint of over 60 of our products. We report our GHG emissions annually to the voluntary mechanism of the Ministry of Environmental Protection, and submit to the Carbon Disclosure Project (CDP) a comprehensive report of our GHG emissions and corporate strategy on climate change. The high level of ourthe transparency ICL showed in 2014 in our 2014the 2015 report to the CDP (which also describes the operations in 2013)2014), achieved a score of 9899 (out of 100). This, which constitutes a further improvement over the score of 98 ICL received in 2013-2014. The transparency score for 2015 is among the 120 (or 6%) of the best scores for all the reporting companies and is the second consecutive year in which we have been awarded this highbest score despiteamong the increasingly stringent reporting and implementation requirements. Furthermore, by virtue ofworldwide potash producers. In addition, thanks to our efforts to reduce the emissions we were, forof the first time, awarded the maximum scoreCompany’s greenhouse gases, in 2015 ICL received a mark of A“B” (in a declining scale of A-E) in the performance index, and we were included in the CPLI index, which is a short list of especially outstanding companies in emission reduction and climate change branding. This score place us among the world’s leading 150 companies, and is the highest score for an Israeli company, and the second best score of all fertilizer manufacturers in the world. index. European Plan for Trade in GHG Emissions The European Union as a party that signed the Kyoto Protocol, the framework treaty of the United Nations for dealing with climate changes, agreed on a mandatory target for reducing the emission of greenhouse gases. The main tool for achieving the reduction targets is the EU Emissions Trading Scheme (“ETS”), which was startedlaunched on January 1, 2005. In the first and second stagesphases of the ETS, the European countries agreed that every industrial company that emits GHGs above the agreed minimum threshold is required to report its emissions and to limit the emissions to the gradually decreasing periodic quota. In addition, companies were allowed to realize a monetary gain or benefit by trading and selling unused emission permits.permits (or “carbon credits”). The third phase of the ETS commenced on January 1, 2013 and will run up to December 31, 2020. The thirdThis phase includes additional emission sources on ourhas included a further decrease in the free allocation of carbon credits to all industrial companies. Some of ICL’s sites in Europe that are subjectobligated to participate in the ETSEU-ETS, and accordingly,are therefore obligated to reduce their emissions and/or purchase carbon credits. ICL is continuously following the quantitydevelopments and the emission allocation policies of our GHG emissions subject to the ETS will increase. 60 TableEU-ETS, and is taking it into considerations in establishing/purchasing new sites in Europe and in potential significant expansions of Contents existing sites. The European Energy Efficiency Law Directive (EED) The new Energy Efficiency Directive of the European Union entered into effect on December 4, 2012. Most of the requirements in the Energy Efficiency Directive must be implemented by companies in the European Union in the future. The Energy Efficiency Directive provides a joint framework to advance energy efficiency in the European Union, in order to achieve the European Union’s energy goals by 2020. These goals include the reduction of GHG emissions by 20% compared with the levels in 1990, an increase in the rate of consumption of renewable energy sources to 20% of total energy consumption and an improvement in energy efficiency by 20%. Accordingly, all countries that are members of the European Union are required to increase the efficiency of their energy consumption in all stages of the energy chain — conversion, transportation and final use. The impact of the implementation of this Directive on the regulatory regime in European countries wherein ICL is active is not yet entirely clear. Nonetheless, legislation in this field may, in certain casesfinalized. However, ICL is developing strategies and under certain conditions, temporarily and/or permanently, increase energy consumption costsprocedures at all of part or all ICL’s productionits European plants in Europe.designed to comply with the local interpretations of the Directive. 60 Table of Contents Israeli Bill for Prevention of Land Contamination and Restoration of Contaminated Lands In August 2011, the Bill for Prevention of Land Contamination and Restoration of Contaminated Lands, 2012 passed in the first of three readingscalls by the Israeli parliament (“the Bill”). In May 2013, a hearing with respect to the Bill commenced. The highlights of the Bill in its present version are set forth below. The Bill defines land contamination and contaminated land, among other things, as all that exceeds a concentration of contaminating materials in the land above certain preliminary or specific thresholds. This means that there is no quantitative criterion for defining contamination and there is no exception for negligible contamination. Moreover, the Bill imposes a comprehensive prohibition against land contamination, both in public and private areas. Accordingly, the Bill is expected to apply to industrial plants and to infrastructure facilities. The Bill requires the conduct of an historical survey of plants and sites where there is a risk of land contamination. The Ministry of Environmental Protection will be permitted to order submission of risk surveys and land surveys and may demand filing of a plan for treating the land, provide instructions with reference to the manner of treating contamination events and the way for restoring suspect lands or lands found to be contaminated, cancel or intensify the specific threshold values provided in the risk survey, approve or reject treatment plans, add or change provisions, etc. The Bill will require the owners or possessors of contaminated land to conduct surveys even if they did not cause the contamination. However, the owners or possessors will be entitled to receive indemnification, as part of a civil proceeding, from the contaminators if their identity is known. It also proposes the establishment of assistance fund for a party that is required to treat land contaminated by another party in circumstances where it is not possible to receive indemnification from the contaminating party. The Bill proposes that the financing for the fund shall come from, among other things, a levy imposed on industrial plants and parties in possession of hazardous materials. At this stage, it is not possible to know what will be the rate of the levy if imposed. imposed. It is unclear what will be the final version of the law and when it will be approved. If the Bill is passed in its present version, it will apply to our manufacturing sites. At every such site, an historical land survey will be conducted and according to the decision of the Ministry of Environmental Protection, there may be further requirements and land surveys as a result thereof or instructions to clean up the land, to the extent contamination is found in the land, as defined in the law. At this juncture, since a land survey has not yet been conducted, it is not possible to know the extent of the exposure to obligations under the Bill if adopted and the cost thereof. For the past two years, no action has been taken to update the proposed law and, at this stage, it is not possible to know if the Ministry intends to continue with the legislative processes of the law or to be content with application of its policies in connection with restoration of contaminated lands by means of the policy documents described below, on the basis of the existing legal situation. In April 2014, the Ministry of Environmental Protection published for public comments a draft of policy principles regarding land contamination, which reflects the policy practiced by the Ministry, as expressed both in the business licenses and toxic permits issued by the Ministry. In this context, the policy will make no material change in the current legal situation. The pertinent change that results from the proposed policy in regard to the Company is that all major industrial facilities (including all of our manufacturing sites) will be required by their business licenses to conduct historical surveys. 61 Table Notwithstanding that the law does not so require, all of Contents the Company’s plants in Israel conducted historical land surveys during 2014–2015, based on a demand received as part of the conditions for receipt of a business license regarding an integrated arrangement. The land surveys are being conducted in coordination with the Ministry of Environmental Protection. At the Sodom site, historical crude oil contamination has been found near the operational salt reservoir. Our ICL Dead Sea Works subsidiary submitted a plan to the Ministry of Environmental Protection for treatment at the site and is awaiting the Ministry’s instructions. The Bill for Prevention of Land Contamination and Restoration of Contaminated Lands, which is in the legislative process, as mentioned above may affect the treatment and the solution that is selected. In addition, a groundwater study in ICL Dead Sea Works’Sea’s power stations’ contaminated oil tank farm showed no contamination in groundwater; however, soil rehabilitation is expected in the future. At the old gas station, boreholes were drilled and oil is being pumped from the contaminated soil and groundwater. 61 Table of Contents There Furthermore, there is an ongoing implementation of a multi-year master plan to prevent ground pollution by fuels or oils at our Rotem sites. This year the upgrade of the refueling station for heavy equipment on the Rotem site was completed. Liquid and Solid Waste During the production processes at ICL’s facilities, industrial solid waste and wastewater are produced. According to the discharge permit, wastewater is channeled into water sources or evaporation ponds. In Spain, a multi-year program is underway to restore salt piles while paying close attention to the issue of wastewater drainage and sludge treatment. In late 2015, the Company submitted a restoration plan to the government of Catalonia, which also addressed the restoration of the salt piles at the two sites, which are currently being assessed by the government authorities. At ICL Dead Sea Works,Sea’s, a project was completed for restoring 100% of the runoff of the facility for the treatment of sanitary waste for the production facility. In addition, a detailed plan was approved for restoration of the bulky waste at the plant site. As part of At the manufacturing process in Sodom salt is produced. The Company stores some of the salt produced on a storage site in Sodom. In the opinion of the Ministry of Environmental Protection, the salt storage site in Sodom should be viewed as a salt removal / salt burial site. The Company believes that this position is not justified and the matter is now under discussion with the Ministry. As of the date of this Annual Report, the discussions have not yet been concluded. At theICL Rotem site, a master plan for treating waste is being implemented with the principal aims of reducing effluent quantities, turning part of the effluents into products, recycling wastewater, reducing water consumption, treatment of wastewater at the start of the flow and neutralization and restoration of wastewater reservoirs. At the Fertilizers and Chemical SubstancesICL Haifa facility, a number of biological pilots were conducted to find a solution for compliance by the plant with standards covering treatment of the plant’s wastewater flowing into the Kishon River, as directed by the Inbar Committee. The solutions were presented to and discussed with the Ministry of Environmental Protection. During discussions with the Ministry of Environmental Protection, it was agreed that ICL Haifa will not make an investment in construction of a biological facility but, rather, will take other steps to improve the quality of the wastewater and the matter will be examined by the parties later on. The phosphate plant in China is located in a rural area. The Company must comply with local regulations and regulatory schemes, the purpose of which is strict supervision and control over production and emission of waste, environmental protection and prevention of release of wastewater. The Company has adapted its plants by means of installation of systems monitoring gas emissions, and systems for removal of wastewater and diversion thereof from clean water sources. The Company’s plants in China are tested once every six months by the Center for Environmental Protection regarding gas emissions and gathering of solid waste and hazardous waste. The plant has received a license for unloading contaminating materials and strict environmental licenses and it is in compliance with all the laws and regulations. Our Industrial Products segment operates a special authorized laboratory for monitoring and analyzing wastewater quality. In addition, our Industrial Products segment operates a facility in Naot Hovav for biological treatment of the plant’s wastewater. A sanitary facility at At the Bromine Compounds plant, a sanitary facility for the independent treatment of the sanitary effluents is being operated. Our Industrial Products segment has completed construction of an independentoperated. The treated wastewater removal system atis flowed as input fluid into the cooling towers. In addition, in the Bromine Compounds plant. Theplant, a facility was constructed for treating industrial waste and an independent system for wastewater removal, which includes a piping system and the plant’s own evaporation ponds. The system was built according to a U.S standards,standard, which includes leakage monitoring and air monitoring. In 2013, the construction was completed and beginning in late 2013, all the plant’s wastewater is presently being pumped into the new evaporation ponds. 62 Table of Contents Our Industrial Products segment established a thickening and filtration facility to treat solid waste at the Periclase plant. The facility has completed its test run stages and has commenced operation. Our At our manufacturing facility at NaotNeot Hovav, containsIsrael, there is solid waste. Pursuant to the requirements of the Ministry of Environmental Protection, the Company iswe are required to treat the existing (historical) waste and(historical), which is stored on a special site on the facility's premises in coordination with the Ministry of Environmental Protection, as well as the ongoing waste that is produced in ongoing operations.the facility's present manufacturing processes. The treatment will take place, in part, atbe partly through a restoration facility at Naot Hovav of hydro brominehydro-bromine acid, and inoperated by the subsidiary, while part of the waste will be sent outoutside for external treatment. The Company has aAs part of the treatment processes of the historical waste that began in 2015, it was found that additional costs are required to be incurred, due to, among other things, the need to use higher-cost raw materials. In light of that stated, we recorded an additional provision, in the amount of about $20 million. As at December 31, 2015, the total provision for treatment of waste amounting to, as at December 31, 2014,amounts to about $45$65 million. Management estimates,We estimate that based on the information available to it onhas as at the approval date of our annual financial statements, that the provision included in the financial statements is sufficient to covercovers the estimated cost of treating the historical waste. At this stage, the facility treats the ongoing waste that is created in the production processes at the facility, and the facility is in the test run stages toward commencing treatment 62 Table of the historical waste that is stored in a special site in the site of the facility, in coordination with the Ministry of Environmental Protection, which is planned to be treated by the facility.Contents Hazardous Substances As part of our operations, we produce, store, transport, and use materials that are defined as hazardous materials according to the Israeli Hazardous Substances Law, 1993. Handling such substances requires a special permit (“toxins permit”) that is renewed annually. All our companies have toxin permits as required by law and they operate according to the special conditions defined in these permits, based on the requirements of the toxins permit issued by Ministry of Environmental Protection. These materials include fuels, acids, sulfur, bromine, chlorine, ammonia and various organic compounds. Leakage or loss of control of these materials could cause an environmental incident and cause damage to people and to the environment. We take measures to prevent such occurrences, and, at the same time, prepare for such occurrences by means of emergency teams and appropriate equipment to deal with these types of events. Regulation of Concessions and Mining Activities For information about laws and legal arrangements related to our concessions and mining rights and other related licenses and permits, see “—“Item 4. Information on the Company—D. Property, PlantPlants and Equipment —MineralEquipment—Mineral Extraction and Mining Operations”Operations” and “—D.“Item 4. Information on the Company —D. Property, PlantPlants and Equipment —Other Leases, Licenses and Permits,” respectively. Price Monitoring The prices of fertilizer gradefertilizer-grade phosphoric acid for local Israeli customers are regulated under the Supervision of Prices for Commodities and Services Law 1996. The quantity of these products sold in Israel by our Fertilizers segment is not material to us. We ICL and some of ourits subsidiaries have been declared a monopoly in Israel in the following areas: potash, phosphoric acid, sulfuric acid, ammonia, chemical fertilizers, phosphates, bromine and bromine compounds. Due to their having been declared monopolies, we areICL is subject to limitations set forth in Chapter 4 of the Restrictive Business Practices Law, 1988, most significantly its prohibition on monopolies against abusing their positions as monopolies. In 2014 approximately 5% and in 2013,2015 approximately 5%4% of our revenue derived from Israeli sales and, therefore, in our estimation, the abovementioned declaration does not have a material impact on us. We also have an internal antitrust compliance program. 63 63 Table of Contents C. ORGANIZATIONAL STRUCTURE A list of our subsidiaries, including name and country of incorporation or residence and proportion of ownership interest and voting power is provided in “Item 19. Exhibits—Exhibit 8.1,”an exhibit to our Form 20-F filed with the U.S. Securities Exchange Commission, which is incorporated herein by reference. can be found atwww.sec.gov. D. PROPERTY, PLANTSPLANT AND EQUIPMENT Under the Israeli Dead Sea Concession Law, 1961, as amended in 1986 (the “Concession Law”), we have lease rights until 2030 for the salt and carnallite ponds, pumping facilities and productions plants at Sodom. We have other production facilities in Israel, situated on land with a long termlong-term lease, including the plants at Mishor Rotem (mainly leased until 2028 to 2041), the Oron and Zin sites of our Fertilizers segment (leased until 2017 to 2024), production and transportation facilities at Naot Hovav of our Industrial Products segment (leased until 2024 to 2048), as well as production, storage and transportation facilities and chemicals and research laboratories at Kiryat Ata (leased until 2046 to 2049) that belong to our Fertilizers segment and our Industrial Products segment. We also use warehouses and loading and unloading sites at the Ashdod (leased until 2030) and Eilat ports (negotiations are underway to extend the agreement). 64 Table of Contents We have additional production facilities outside Israel, the main ones being: 64 Table of Contents · Germany: production plants of our Performance Products segment at Ludwigshafen, Ladenburg, Hemmingen, Dortmund (Hagesüd) and LadenburgEngelsberg (Rovita). These plants are owned by the ICL Group. · The Netherlands: production plants of our Industrial Products segment at Terneuzen that are owned, a facility of our Fertilizers segment in Amsterdam held under a lease until 2034 (or under certain conditions up to 2044) and a production facility in the southern Netherlands on land that is partly owned and partly held under a long termlong-term lease. · Spain: the concessions at the potash and salt mines are held under the concession agreements described below. The potash and salt production plant, and the warehouses, as well as the loading and unloading facilities of our Fertilizers segment at Catalonia, are owned by the ICL Group. Our Fertilizers segment also has a liquid fertilizer and soluble fertilizer production plant in Totana, another plant for mixing solid fertilizers in Cartagena and a concession on two ports in Cartagena and Almeria until 2024 and 2017, respectively. · The United Kingdom: the rights to the potash and salt mines are held under the concession agreements described below. The potash and salt and production plants and the warehouses of our Fertilizers segment in Cleveland are owned by the ICL Group. The warehouses and bulk loading and unloading facilities at the port are leased until March 2034. The Company owns three mines and one plant for producing peat of our Fertilizers segment at Everris in the United Kingdom. · The United States: the production plant of our Industrial Products segment in West Virginia is mainly owned by the ICL Group, the packaging facility of that location is leased through 2017, and the production plants of our Performance Products segment in Lawrence, Kansas and St. Louis, Missouri are owned by the ICL Group. The production plants of our Fertilizers segment in South Carolina are operated under leases ending in 2025 and 2017 (with an option to extend through 2022). · China – phosphate rock mining rights in Haikou Mine and Baitacun Mine are derived from mining licenses that are described below. The scrubbing plant is owned by the company and situated on leased land. · Brazil: production plants of our Performance Products segment at Sao Jose dos Campos and Cajati are leased by the ICL Group. · Austria: the whey protein production plant of our Performance Products segment at Hartberg (Prolactal) is owned by ICL Group. The following table sets forth certain information regarding our principal properties as ofat December 31, 2014. 2015. Property Type Location Size (square feet) Products Owned/Leased HeadquartersPlant Tel Aviv,Mishor Rotem, Israel 17,222 square feet27,524,194 Company headquartersFertilizers segment products LeasedOwned on leased land Plant Sodom, Israel 13,099,679 square feet (not (not including ponds and factory) Fertilizers segment products and power station Leased Plant Sodom, Israel 2,326,060 square feet Industrial Products segment products Concession Pumping station Sodom, Israel 920,314 square feet Pumping station for Fertilizers segment Concession Conveyor belt Sodom, Israel 1,970,333 square feet Transportation facility Owned on leased land Plant Mishor Rotem, Israel 27,524,194 square feet Fertilizers segment products Owned on leased land Plant Mishor Rotem, Israel 10,763,910 square feet Industrial Products segment products Owned on leased land Plant Neot Hovav, Israel 3,761,987 square feet9,601,591 Industrial Products segment products Owned on leased land Plant Oron, Israel 4,413,240 square feet (not including phosphate reserve) Fertilizers segment products Owned on leased land 65 Table of Contents Property Type Location Size (square feet) Products Owned/Leased Plant Zin, Israel 8,483,916 square feet Fertilizers segment products Owned on leased land Plant Kiryat Ata, Israel 6,888,903 square feet Fertilizers segment products Leased 65 Table of Contents Property Type  Location  Size (square feet)  Products  Owned/Leased  Plant Oron, Israel 4,413,240 (not including phosphate reserve) Fertilizers segment products Owned on leased land Plant Sodom, Israel 4,088,800 Magnesium Plant Owned on Leased Land Plant Sodom, Israel 2,326,060 Industrial Products segment products Owned on leased land Conveyor belt Sodom, Israel 1,970,333 Transportation facility Owned on leased land Pumping station Sodom, Israel 920,314 Pumping station for Fertilizers segment Owned on leased land Warehouse and loading facility Ashdod, Israel 664,133 square feet Warehouse for Fertilizers segment products with capacity of 412,769 metric tons Leased Power plant Sodom, Israel 645,856 Power and steam production Owned on leased land Office Beer Sheva, Israel 495,883 Industrial Products segment products Owned Warehouse and loading facility Eilat, Israel 152,557 square feet Warehouse for Fertilizers segment products with capacity of 96,162 metric tons Leased Headquarters Tel Aviv, Israel 17,222 Company headquarters Leased Plant Catalonia, Spain 48,491,416 square feet Mines, manufacturing facilities and warehouses for Fertilizers segment products Owned Plant Totana, Spain 2,210,261 square feet Fertilizers segment products Owned Plant Cartagena, Spain 209,853 square feet Warehouse for Fertilizers segment products Owned Port Cartagena, Spain 184,342 square feet Storage for Fertilizers segment products ConcessionLeased Port Almeria, Spain 28,761 square feet Storage for Fertilizers segment products Concession Plant Cleveland, United Kingdom 13,239,609 square feet Fertilizers segment products Owned Office Ipswich, United Kingdom 3,274 square feet Fertilizers segment office Leased Plant Nutberry, United Kingdom 322,917 square feet Fertilizers segment products Owned Peat Moor Nutberry, United Kingdom 12,916,692 square feet Peat mine Owned Peat Moor Douglas Water, United Kingdom 4,843,759 square feet Peat mine Owned Peat Moor Cerca, United Kingdom 4,305,564 square feet Peat mine Leased Plant Bitterfeld, Germany 514,031 square feet Industrial Products segment products with annual productive capacity of 190,000 metric tons Owned 66 66 Table of Contents Property Type Location Size (square feet) Products Owned/Leased Plant Ladenburg, Germany 8,072,933 square feet Performance Products segment products with annual productive capacity of 148,780 metric tons Owned Plant Hemmingen, Germany 175,042 square feet Performance Products segment products with annual productive capacity of 2,500 metric tons Owned Plant Duesseldorf, Germany 1,614,587 square feet Performance Products segment products with annual productive capacity of 224,000 tons Leased Plant Ludwigshafen, Germany 231,263 square feet Performance Products and Fertilizers segments products Owned and leased Plant Terneuzen, the Netherlands 930,271 square feet Industrial Products segment products Owned Plant Amsterdam, the Netherlands 349,827 square feet Fertilizers segment products and logistics center Owned plant on leased land Plant Heerlen, the Netherlands 481,802 square feet Fertilizers segment products Owned and Leased Plant Calais, France 538,196 square feet Industrial Products segment products with annual productive capacity of 22,000 metric tons Owned Plant Wexford, Ireland 88,000 square feet Industrial Products segment products with annual productive capacity of 1.8 billion tablets. Owned Plant Belgium 128,693 square feet Fertilizers segment products Owned Plant Kamloops, British Columbia, Canada 392,040 square feet Performance Products segment products Leased Plant Stugeon County, Alberta, Canada 56,425 square feet Performance Products segment products with annual productive capacity of 305,253 gallons Leased 67 Table of Contents Property Type Location Size (square feet) Products Owned/Leased Plant South Charleston, West Virginia, United States 475,000 square feet Industrial Products segment products with annual productive capacity of 54,431 metric tons Leased Plant South Charleston, West Virginia, United States 871,200 square feet Industrial Products segment products with annual productive capacity of 36,287 metric tons Owned Plant North Charleston, South Carolina, United States 60,000 square feet Fertilizers segment products with annual productive capacity of 13,608 metric tons Leased Plant Summerville, South Carolina, United States 41,000 square feet Fertilizers and Performance Products segments products Leased Plant Lawrence, Kansas, United States 179,689 square feet Performance Products segment products with annual productive capacity of 97,069 metric tons Owned Plant Carondelet, Missouri, United States 172,361 square feet Performance Products segment products with annual productive capacity of 50,953 metric tons Owned Office St. Louis, Missouri, United States 35,000 square feet US headquarters Leased Plant Rancho Cucamonga, California, United States 103,600 square feet Performance Products segment products with annual productive capacity of 11,322 metric tons Leased Plant Gallipolis Ferry, West Virginia, United States 1,742,400 square feet Industrial Products segment products with annual productive capacity of 68,039 metric tons Owned Plant Sao Jose dos Campos, Brazil 79,298 square feet Performance Products segment products with annual productive capacity of 27,000 metric tons Leased Plant Nuevo Leon, Mexico 103,420 square feet Performance Products segment products with annual productive capacity of 41,800 metric tons Owned 68 Table of Contents Property Type Location Size (square feet) Products Owned/Leased Plant Bandırma, Turkey 375,187 square feet Fertilizers segment products with annual productive capacity of 45,359 metric tons Owned Plant Lian Yungang, China 358,665 square feet Industrial Products segment products with annual productive capacity of 4,300 metric tons Owned Plant Shan Dong, China 691,771 square feet Industrial Products segment products Owned Plant Jiangyin, Jaingsu, China 717,770 square feet Performance Products segment products with annual productive capacity of 20,866 metric tons Land Use Right (expires on January 31, 2054) Plant Jiaxing, China 828,017 Industrial Products segment products Owned Plant Cajati, BrazilShan Dong, China 101,375 square feet691,771 PerformanceIndustrial Products Segment with annual  productive capacitysegment products Owned Plant Kunming, Yunnan, China 458,394 Production Plant of 107,000 metric tonsthe fertilizer sector Owned on Leased Land Plant Lian Yungang, China 358,665 Industrial Products segment products Owned Pumping station Kunming, Yunnan, China 2,231 A pumping station for the fertilizer sector Owned on Leased Land Peat Moor Nutberry and Douglas Water, United Kingdom 17,760,451 Peat mine Owned Plant Cleveland, United Kingdom 13,239,609 Fertilizers segment products Owned Peat Moor Cerca, United Kingdom 4,305,564 Peat mine Leased Plant Sodom, IsraelNutberry, United Kingdom 4,088,800 square feet322,917 Magnesium Plant  with annual  productive capacity of 33,000 metric tons Fertilizers segment products Owned Plant Terneuzen, the Netherlands 1,206,527 Industrial Products segment products Owned Plant Heerlen, the Netherlands 481,802 Fertilizers segment products Owned and Leased Plant Amsterdam, the Netherlands 349,827 Fertilizers segment products and logistics center Owned plant on leased land European Headquarters Amsterdam, The Netherlands 24,220 square feet European Company headquarters Leased Plant Gallipolis Ferry, West Virginia, United States 1,742,400 Industrial Products segment products Owned Plant South Charleston, West Virginia, United States 871,200 Industrial Products segment products Owned Plant South Charleston, West Virginia, United States 475,000 Industrial Products segment products Leased Plant Lawrence, Kansas, United States 179,689 Performance Products segment products Owned 67 Table of Contents Property Type  Location  Size (square feet)  Products  Owned/Leased  Plant Carondelet, Missouri, United States 172,361 Performance Products segment products Owned Plant Rancho Cucamonga, California, United States 103,600 Performance Products segment products Leased Office St. Louis, Missouri, United States 45,595 US headquarters Leased Plant Ludwigshafen, Germany 6,996,541 Performance Products and Fertilizers segments products Owned Plant Ladenburg, Germany 1,614,587 Performance Products segment products Owned Plant Bitterfeld, Germany 514,031 Industrial Products segment products Owned Plant Hemmingen, Germany 175,042 Performance Products segment products Owned Plant Cajati, Brazil 413,959 Performance Products  Segment Owned Plant Sao Jose dos Campos, Brazil Phosphate plant: 108,729 Blending plant: 107,639 Performance Products segment products Leased Plant Belgium 128,693 Fertilizers segment products Owned Plant Calais, France 538,196 Industrial Products segment products Owned Plant Nuevo Leon, Mexico 103,420 Performance Products segment products Owned Plant Bandırma, Turkey 375,187 Fertilizers segment products Owned Other Leases, Licenses and Permits Well Production Permits The supply of water to our Fertilizers segmentICL Dead Sea plants, at the Dead Sea, is via a series of wells that we operate, both within and outside the concession area. The Company has lease agreements and production permits for these wells. ICL Dead Sea Works has permits from the Water Authority to draw water from the wells at Ein Ofarim (which is located outside the area of the concession). The lease period from Israel Lands AdministrationAuthority (ILA) for these wells expired in 2009. An application to extend the lease period was submitted to ILA, but after a lengthy procedure, it was rejected. The Company has filed a request with ILA’s Exemptions Committee, which approved the application. This application is now subject to theRecently, approval of the Israeli Minister of Finance. The Company is in close contact with the Ministry of Finance which has not yet signed the approval duewas received and contracts were sent to as far as the Company knows, technical reasons.for signing. 68 69 Table of Contents Business Licenses and Other Permits In November 2013, a reform in the Business Licensing Law, 1968, came into effect which determines, among other things, that business licenses in Israel will no longer be perpetual, but rather each business license will be valid for a term of between one to fifteen years, depending on the type of activity the license covers. In addition, some of the activities requiring a license in accordance with the Business License Ordinance, 2013, shallwill be subject to unified specifications which will be published by the authorities as specified in the Ordinance, including the Ministry of Environmental Protection. Up to now, we have been issued valid business licenses for our sites in Israel in perpetuity, in accordance with the law. Under the abovementioned reform, all of our businesses licenses will expire and will require renewal three years after the applicable “Unified Specifications” are published, except power stations and storage of fertilizers, which will remain in perpetuity. In addition, our Fertilizers segment and our Industrial Products segment have valid toxic substance permits under the Israeli Hazardous Materials Law (1993), issued by the Ministry of Environmental Protection. The term of the toxic substance permits is one year. Renewal of permits is performed on an ongoing basis. Additional conditions were set out in the toxic substances permit received by Bromine Compounds, including requirements for risk management and seismic surveys Bromine Compounds is required to perform in accordance with the Ministry’s guidelines. Our Industrial Products plants at Sodom and Mishor Rotem have valid permits for discharging industrial wastewater into the Dead Sea which require renewal from time to time. The Industrial Products plant in NaotNeot Hovav discharges industrial wastewater into the evaporation ponds in accordance with the plant’s business license requirements. The costs of renewal of these licenses are not material. ICL Dead Sea Works has a valid permit for discharging industrial wastewater into the Dead Sea and into the Mediterranean Sea (Deshanim plant)(ICL Haifa), under the Israeli Prevention of Sea Pollution from Land BasedLand-Based Sources Law (1988), which requires renewal from time to time. The costs of renewal of these licenses are not material. The segment companies operate in accordance with conditions set out in the licenses and permits. If there is any discrepancy in respect of the requirements of these conditions, the companies take immediate action to remedy the discrepancy in coordination with the Ministry of Environmental Protection. The Ministry of Environmental Protection has commenced implementation of the integrated licensing methodology, which is based on the Integrated Pollution Prevention and Control (“IPPC”) directive that was adopted by the European Union in 1996. Pursuant to this directive, large factories are required to make use of the best available techniques (“BAT”) in every environmental aspect on which they have an impact, while addressing all these aspects in an integrated manner. The BAT is provided in reference documents, which are published by the European Union and detail every type of industry to which BAT is relevant for elimination or reduction of environmental damage. However, the Israeli Clean Air Law, 2008 (the “Clean Air Law”) adopted this methodology only partially since it addresses only emissions into the atmosphere. In order to enable integration as required by the directive, the Ministry of Environmental Protection has added requirements for implementation of the IPPC methodology in the business licenses of factories considered to be “emission sources requiring a permit” under the Clean Air Law. The conditions are stipulated by the Ministry prior to submission of the request for an emission permit so that the permit request (concerning emissions into the atmosphere) will be filed together with the information required for determination of the conditions in other areas under the integrated licensing methodology, including, among other things, runoff, waste, treatment of hazardous substances and energy savings. A factory is first required to perform a survey of these differences and to submit such survey to the Ministry. It is anticipated that concurrent with the issuance of an air emission permit, or shortly thereafter, the factory will receive additional conditions, including requirements for implementation of the BAT in these areas. The Ministry of Environmental Protection issued a request for additional information under the integrated methodology for most our plants that are required to obtain an air emissions permit under the Clean Air Law. As at the date of this Annual Report, the plant of the Magnesium Company, and thea plant of a company from the Industrial Products segment in NaotNeot Hovav (Bromine Compounds Ltd.) have received an emissions permit. The Company’s other plants in Israel have filed applications for emissions permits as required by law. 69 70 Table of Contents The Ministry of Environmental Protection has issued additional conditions for the business licenses of some of ICL’s companies in Israel that require submission of additional information, including a historical land survey. The historical surveys for the plants are being conducted in coordinationhave been prepared and filed with the Ministry of Environmental Protection. As of the date of this Annual Report, the report,Ministry of Environmental Protection has not yet formulated legislation regarding the matter of the consequences of the historical land surveys, and as at the date of this Annual Report it is not possible to know what costs are entailedwill be triggered by implementation of these requirements, if any. In March 2016, a draft emissions permit pursuant to the Clean Air Act was received. Application of the requirements of the emissions permit as it is presently worded will impose additional costs on the Company. Nonetheless, at this stage the discussions with the Ministry of Environmental Protection regarding the final language of the permit's requirements have not yet been completed and, accordingly, it is not possible to estimate the actual cost of application of the said requirements. Mineral Extraction and Mining Operations The following is a description of the material properties where we extract minerals and conduct mining. For additional information about the total cost of our property plant and equipment and our intangible assets (including concession and mining rights) see Note 13 and Note 14, respectively, to the Company’s financial statements. The Dead Sea Approximately 40%33% of our sales in 20142015 derived from products that were based on minerals that we extracted from the Dead Sea, including potash, bromine, sodium, magnesia, magnesium chloride and metal magnesium. The concentration of these minerals in the Dead Sea has generally remained steady in recent years with a trend of an increase in the concentration of the potash component, as a result of the diversion of the channel for the brines that are redirected into the Northern Basin. In addition, the salt concentration in the Dead Sea tends to rise in periods wherein the quantity of water flowing into the Sea is less than the quantity of water evaporating from it (which is what has happened in the last fifty years). The Dead Sea contains a supply of these raw materials that is, for all practical purposes, unlimited. Our extraction of minerals from the Dead Sea begins with an evaporation process facilitated by the hot and dry climate of the Dead Sea region. This area is located approximately 1,410 feet430 meters below sea level. The Dead Sea is presently about 430 meters below sea level which is considereddue to bea fixed decline of the lowest place on earth.level of about 1 meter per year. The Dead Sea is divided into two parts: the Northern Basin and an area in the southSouthern Basin that consists of ourartificial evaporation ponds. The production process begins with the pumpingflowing of water from the Northern Basin to our adjacent evaporation ponds. Our pumping station P 88P-88 has a pumping capacity of 100,000 cubic meters per hour. In 2014,2015, we pumpedflowed approximately 370375 million cubic meters of water from the Northern Basin.Basin to the evaporation ponds. Of this quantity, approximately 190225 million cubic meters of brine are reflowedwere rechanneled into the Northern Basin of the Dead Sea at the end of the process. In 2014, we2015, the Company produced from the Dead Sea approximately 3.52.4 million metric tons of potash, 174116 thousand metric tons of bromine, 2619 thousand metric tons of metal magnesium, 259166 thousand metric tons of salt and 13695 thousand metric tons of magnesium chloride solids. We planThe Company plans to build a new pumping station from the Northern Basin to the evaporation ponds, as part of our preparations for the receding level of the Dead Sea in the Northern Basin and the retirement of pumping station P 88P-88 from service. However, we have experiencedare experiencing a delay in receiving approvals from the various government agencies that must approve our statutory plans for our new pumping station. In light of the delay in approval of the statutory plans, we are required to makethe Company is making an additional investment to extend the life of pumping station P 88P-88 for an additional three years. Regarding the pumping of water from the Dead Sea, in June 2015 a petition was filed with the Court for Water Matters in Haifa wherein the Government Water and Sewage Authority (‘the Water Authority’) was requested to take action to regulate and supervise the Company’s use of the water sources. For additional details – see “Item 4. Information on the Company-D. Property, Plant and Equipment-Leases, Licenses and Permits-Well Production Permits.” The evaporation ponds extend over an area of approximately 146150 square kilometers. They include a subsystem of 35 ponds for salt precipitation and ponds for the precipitation of carnallite. The salt pond known as Pond 5 is the largest pond in the complex. It has an area of approximately 80 square kilometers. It was built during the 1960s by construction of a large dam, sealed by a clay core, in the area that was then the southern basin of the Dead Sea on the Israeli side, and permits the continued existence of the Southern Basin due to the system of pumping stations and flowing channels that are operated as part of the industrial operational system of the evaporation ponds. The evaporation processes give rise to concentration of the brines and the sinking of the sodium chloridetable salt to the floor of the pond. The remaining brines are rich in potash, magnesium and bromine. These brines are pumped into the systems of other ponds, and as a result of the continued evaporation a new mineralthe “carnallite” precipitates. Carnallite is the raw material used for production of potash, magnesium, chlorine and magnesium chloride. The carnallite is harvested by floating barges and pumped as a slurry to our production plants. The brine from the edge of the carnallite poolsponds is used as a raw material in the production of bromine. 70 Table of Contents The precipitated sodium chloride, ortable salt precipitates and creates a layer on the pondPond 5 bed of approximately 20 million tons annually. Precipitation of the salt causes a reduction in the volume of the solutions in the pond. As the production process requires maintaining a fixed volume of solutions (brines) in the pond, the water level of the pond is accordingly raised by approximately 20 centimeters annually. 71 Table The Ein Boqeq and Hamei Zohar hotels, the town of Contents TheNeve Zohar and other facilities and infrastructures are located on the western shoreline of this pond. Raising the water level of the pond above a certain level is likely to cause structural damage to the foundations and the hotel buildings situated close to the water’s edge, to the village of Neve Zohar and to other infrastructure on the western shoreline of the pond. This situation described above requires establishment of defenses for the relevant objects. facilities and infrastructures of the hotels located on the shores of Pond 5. The temporary defenses have been underway for a number of years and are characterized by elevating the height of the dike along the west coast of the pond, opposite the relevant hotels, including in some of the places a system to lower the ground water. This defensive dike is raised from time to time, depending on water level of the pond. As of the date of this Annual Report, there is an agreement between ICL Dead Sea Works and the government of Israel regarding financing of the costs of the temporary defenses: ICL Dead Sea Works will bear 39.5% of the financing and the government of Israel will bear the remaining cost. On In July, 8, 2012, we entered into an agreement was signed with the governmentGovernment of Israel, relatingregarding “Execution and Funding of the Dead Sea Protection Project and Increase of the Royalties Paid to the State” (hereinafter – “the Salt Harvesting Project”). The purpose of the Salt Harvesting Project is to constitute a permanent solution for the rising water levels in Pond 5. The permanent solution is to be carried out by meansraising of harvesting all the salt from the floor of the pond. Upon completion of the salt harvesting, the process of production of the raw material will no longer require us to constantly raise the water level in the pond. PlanningPond and stabilizing of the water therein at a fixed level by harvesting of the salt from this pond and transferring it to the Northern Basin of the Dead Sea. The planning and execution of the salt harvesting willis to be performed by us. This project will constituteICL Dead Sea. The Salt Harvesting Project constitutes an Israeli national infrastructure project that will beis being promoted by the Israeli Committee for National Infrastructures. (Transfer of the pumping station from P-88 to P-9 constitutes part of the project recognized as a national infrastructure project). Our agreement with the government requires that, starting January 1, 2017, the water level in Pond 5 will not rise above a level of 15.1 meters. The statutory foundationmeters in the ICL Dead Sea system (about 390 meters below sea level). ICL Dead Sea will be required to pay compensation in respect of any damages caused as a result of a rise of the water level beyond the level determined. If there is a material deviation from the timetables for construction of the salt harvesting project is presently being discussedSalt Harvesting Project as a result of a requirement for changes by the Boardplanning institutions, as a result of National Infrastructures and its approvalwhich the Plan is expectednot approved on time, or due a decision of a judicial tribunal that caused a delay of at least one year in 2015. Concurrently, we are performing additional activities relatingprovision of effect to the salt harvesting project. Salt Harvesting Project by the planning institutions, without the Company having violated its obligations, the Company will be permitted to request raising of the water level above that stated above. According to the Dead Sea Protection Company Ltd., the total cost of the salt harvestingSalt Harvesting Project was estimated, as of October 2010, to be in an undiscounted amount of NIS 7 billion (a discounted amount of NIS 3.8 billion – hereinafter – “the Discounted Amount”) (a discounted amount of about $1 billion). The Israeli governmentCompany will bear 80% and the Government will bear 20% of the cost of the salt harvesting, butSalt Harvesting Project, however the Government’s share will not more than the discounted amount (20% of NIS 3.8 billion, the discounted amount). The maximum liabilityexceed 20% of the government isDiscounted Amount, linked to the Israeli CPI and bearsbearing interest of 7%. The agreement also stipulates an increase in the rate of the royalties from 5% to 10% of sales, for quantities of chloride potash ICL Dead Sea sells in excess of 1.5 million tons annually. This increase applies to sales starting January 1, 2012. In addition, in respect of the period January 1, 2010 through January 1, 2012, the Company agreed to an additional royalty charge, at the rate of 7%. An5%, only on annual sales exceeding 3.0 million tons. The agreement further provides that if legislation is enacted that changes the specific fiscal policy in connection with profits or royalties deriving from mining of quarries from the Dead Sea, the Company’s consent will not apply regarding an increase in the rate of royalties on the surplus quantities referred to above, commencing from the date on which additional plan relatingtax is collected as stated in the legislation. On November 30, 2015, the Economic Efficiency Law was published, including the implementation of the Sheshinski recommendations, which address royalties and taxation of excess profits from Dead Sea minerals. The law entered into effect on January 1, 2016.See Note 23 to our ability to conduct land surveys in the area was also recently approved by the Israeli Committee for National Infrastructures. audited financial. 71 Table of Contents Approval of each of the stages of the plan by the relevant dates set out in the project schedule is essential for continuation of ICL Dead Sea Works’Sea’ production process and delays could have an unfavorable impact on the process and, accordingly, could give rise to damage or losses. In order to advance executionDecember 2015, National Infrastructures Plan 35A (“the Plan”), which includes the statutory infrastructure of the Salt Harvesting project in the evaporation ponds through, among other things, the construction of a new pumping station discussed above andin the salt harvesting set up,northern basin of the Committee forDead Sea, was approved by the plenary National Infrastructures held a hearingCommittee. Following the above approval, in which itMarch 2016, the Government also approved the locationPlan. Construction of the new pumping station, allowing us to proceed with the plan for its construction. Construction of a new partition in the middle of the dike surrounding Pond 5 was completed in 2014. The objective of this project is to minimize seepage from the dike. This project includes raising the dike by an additional meter. The appearance of sinkholes, which is attributed mainly to the lowering of the water level of the Dead Sea, is increasing in the Dead Sea area. The receding level of the Dead Sea is not to be confused with the rise of the water level in Pond 5 discussed above, and the two seemingly contradictory phenomena are occurring simultaneously, as Pond 5 is located in the Southern Basin on a different plane than the main body of the sea lying to its north, necessitating a special pumping station to constantly feed the pond with water. See “Item 3. Key Information—D. Risk Factors—ARisks Related to Our Business-A new pumping station will be required due to the receding water level in the Northern Basin of the Dead Sea.” While the water level of Pond 5 is rising due to the accumulation of salt on its floor and the continuous pumping of water from the Northern Basin of the Dead Sea, the water level of the Northern Basin is receding. Most of the sinkholes caused by the receding level of the Dead Sea develop near the Northern Basin of the Sea, where there is little operation by our Fertilizers segment. MostNonetheless, most of the sinkholes have appeared near the evaporation ponds and in other places in the ICL Dead Sea Works area. Development of a sinkhole under a dike could cause the dike to burst, causing loss of the solutions in the pond. Our Fertilizers segment is working to identify the development of these sinkholes in the area of the plant and along the dikes, and to fill them when they appear. We own and operate a power station with a capacity of 110 megawatt, power station, presently limited to about 60 megawattsmegawatt due to environmental protection restrictions, which provides a significant part of the power used in our production plants at the Dead Sea. The balance is purchased from Israel Electric Company, a state ownedstate-owned utility, and from OPC, a private producer of electricity that is a related party. 72 Table of Contents In June 2012, construction ofthe Company entered into agreements regarding a project to construct a new cogeneration power station in Sodom, fueled by natural gas was approved, having a licenseIsrael (hereinafter—‘‘the Project’’). The power station is expected to produce approximately 290 MW and which will supply the electricity requirements of the production facilities at Sodom. As a practical matter, the Company intends, in this stage, to operate a cogeneration plant withhave a production capacity of about 230 megawatt and about 330 tons of steam per hour, which will supply electricity and steam requirements for the production plants at Sodom site. The Company intends to operate the new power station concurrently with the existing power station, which will be operated on a partial basis in a “hot back-up” format to produce electricity and steam. The total electricity production in the short term will be 245 MW. Operationmegawatt. The Company also intends to utilize its present gas contracts and thereafter to enter into new gas contracts in order to run the power station. Construction of the station is planned forproject was expected to be completed in the second half of 2015. In 2015, the executing contractor (the Spanish Company “Abengoa”) experienced difficulties and pursuant to the decision of the Spanish court delivered in November 2015, it was granted protection from its creditors up to the end of the first quarter of 2016. The Company intends to make useis examining the possibility of its present gas agreements and later on to enter into new gas agreements for purposecontinuing execution of operatingthe construction work of the power station. station and completion thereof. In light of that stated, the Company expects to complete the project and to commence operation of the power station in the second half of 2016, with additional costs that are not material. For details regarding the said contracts – see Note 23 to the Company’sour audited financial statements. Transport from the Company’s plant in the Dead Sea is by means of a conveyor belt from the plant to the railway in the direction of Ashdod port and from Highway 90 in Israel.the direction of Eilat port. 72 Table of Contents The Negev Desert We currently operate large surface phosphate mining sites at Oron, Rotem and Zin in the Negev Desert. In addition, theThe Israeli Minister of National Infrastructures under the Israeli Mines Ordinance, through the Supervisor of Mines in his Office (the “Supervisor”), has decided to extend the area of the Rotem field concession (valid until the end of the 2021) so that it covers the Hatrurim field. The area of the Rotem concession has been so extended, and the matter has been transferred to the Israel Lands AdministrationAuthority (“ILA”) to deal with the extension of the area of the mining permit for the Rotem field, in line with the extension of the concession area. The company is working to promote the plan for mining phosphates in Barir field (which is part of South Zohar) in the Negev Desert. In December, 2015, the National Planning and Building Council approved the Policy Document Regarding Mining and Quarrying of Industrial Minerals (the "Policy Document"), which includes, among other things, a recommendation to permit phosphate mining, including at Barir field. The Policy Document that was approved will set the basis for preparation of a national outline plan (“the National Outline Plan”) for mining and quarrying by the National Planning and Building Council. Along with the approval of the Policy Document, the National Planning and Building Council ordered the Planning Administration to raise the matter of the order to prepare a detailed plan for Barir field (“the Barir Plan”) at one of its upcoming meetings. For a description of certain risks relating to receipt of a license for mining in the Barir Field – see ”Item 3. Key Information-D– Risk Factors”. ICL’s mining activities are dependent on concessions, authorizations and permits granted by the governments of the countries in which the mines are located. Each of these fields has a similar layered structure and geological composition, with the phosphate preserved as relatively narrow elongated bodies along the margins and within the axes of two northeast to southwest trending asymmetrical synclines (basins or trough shapedtrough-shaped folds in the rock layer whose upper components are younger than those below) or monoclines (step like(step-like folds in the rock layer). Oron and Rotem lie within a single syncline to the northwest of the Zin syncline. The three deposits have been proved over extensive distances in terms of length (Rotem 10 kilometers, Oron 16 kilometers and Zin 22 kilometers) and width (4 kilometers each). They are all known to extend further in terms of length but are limited in operational size. The Campanian (Upper Cretaceous period) phosphate rock deposits of Israel are part of the Mediterranean phosphate belt extending from Turkey, through Jordan and Israel, and westward through Egypt, Tunisia and Morocco. We began operations at Oron in the 1950s, and at Rotem and Zin in the 1970s. These sites are accessible by road and rail. We have long termlong-term leases to all the land on which our Israeli facilities are located butand we operate under mining concessions and licenses granted to us by the Israeli Minister of National Infrastructures and by the ILA. See “Item 4. Information on the Company-B. Business Overview- “Concessions and Mining Rights”Rights” below. The plan for If the National Planning and Building Council will approve the mining phosphates in Barir (South Zohar) is in the planning approval stages, and it hasBarir Field, progress is expected with respect to the process of receipt of a mining license. If this situation does not yet been decided whether to filecome about, the plan with the proper authorities. For a description of certain risks relating to Barir field, see “Item 3. Key Information—D. Risk Factors—Our mining operations are dependent on concessions, licenses and permits granted to us by the respective governments in the countries where they are located.” The future of ourthe activities of the ICL Rotem operation potentially restsCompany will depend on ourits ability to mine and producemanufacture the downstream products from resources ofalternative phosphate sources, namely, brown phosphates and bituminous phosphate,phosphates, which are essentially the only resourcesphosphate sources that are likelyexpected to be converted tobecome reserves in the near future. Currently, the reserve of bituminous phosphate (approximately 0.44.0 million metric tons at Zin) is being mined and used in a blending process with other phosphates ofhaving lower organic concentrations to produce fertilizer products. However, due toOver the higher organic content of bituminous phosphate,past several years, the production of phosphoric acid on its own would currently require the use of pyrolysis (decomposing organic material by heat) for processing, which is costly and involves large investments in energy. However, our Rotem subsidiary isCompany has been developing, and has even run a pilot plant testedand a manufacturing test, a process using only beneficiation (the separationwherein after the improvement process (removal of phosphorusthe phosphorous from the surrounding organic material). The results indicate improvements inmaterial combined with it), there is an improvement of the phosphorus gradephosphoric acid content from 25%–26% to 31%–32%, and a 50% reduction inof the organic content, by half. Further pilot plant testingand now it may be used for production of the bituminous phosphatehigh-quality phosphoric acid. Significant progress has also been made in adapting brown phosphates (the adaptation of which for manufacture of acid has been carried outproven in the past by means of a thermal process) for manufacture of phosphoric acid: a successful pilot was held and has produced an acid that hasas a light green color (“green acid”). result a facility test is planned. The method of mining in the Negev is by conventional open pit or quarrying methods, using drilling and blasting, where necessary, hydraulic excavators and rigid dump trucks or dozers with rippers for overburden removal and front-end loaders and trucks for mining phosphate. Each mine site has varying numbers and thicknesses of overburden, inter burdeninter-burden and phosphate rock layers, so that the size of mining equipment is conformed to the sites. At Rotem, the mining of phosphate and stripping of waste is entirely conventional and consists of 190 metric190-metric ton trucks and 18 cubic meter bucket shovel operations. Oron and Zin sites use contractors for all operations, and equipment at these sites is smaller. Typically, the excavator bucket capacities are in the range of 3 to 7 cubic meters and the trucks have capacity of 45 to 65 metric tons. 73 73 Table of Contents Phosphate rock from the Rotem mine is transported by truck to a nearby beneficiation plant at Mishor Rotem. At that plant, we also operate two sulfuric acid plants, three green phosphoric acid plants, one white phosphoric acid plant, three superphosphate plants, two granular fertilizer plants, one MKP (mono potassium phosphate) plant and one oil shale burning plant and production of electricity and steam. We also have beneficiation plants at both Oron and Zin. The product of the process is a high grade,high-grade, multi-purpose phosphate product, most of which is used to produce phosphoric acid and fertilizers. The rest of this material is sold to other phosphoric acid and fertilizer producers and some is sold for direct application as fertilizer. The plant at Mishor Rotem is powered primarily by electricity that we generate at our sulfuric acid plants and by oil shale that we mine in Mishor Rotem. Any surplus power is sold to Israel Electric Company. All of the power utilized by the Oron and Zin beneficiation plants is purchased from OPC, a private, related partyrelated-party producer of electricity. The following table sets forth for the periods indicated the amount of our total mine production of raw ore in our mines in the Negev (and the relevant grade) supplied to our beneficiation plants:       Year Ended December 31,         2014       2013       2012   Millions of metric tons produced     6.9       6.3       6.2   Grade (% P2O5 before/after beneficiation)     31.5/26       31.5/26       31.5/26       Year Ended December 31,     2015   2014   2013 Millions of metric tons produced     9       7       6   Grade (% P2O5 before/after beneficiation)     32/26     32/26     32/26 The following table sets forth (for the three years ended December 31, 2015, 2014, 2013, and 2012)2013) the approximate amounts of product produced after processing by our operations in the Negev Desert:       Year Ended December 31,         2014       2013       2012       thousands of metric tons   Phosphate Rock     3,357       3,578       3,513   Green Phosphoric Acid     475       535       467   Fertilizers     729       897       733   White Phosphoric Acid     121       139       117   MKP     48       47       39       Year Ended December 31,     2015   2014   2013     (thousands of metric tons) Phosphate Rock     3,538       3,357       3,578   Green Phosphoric Acid     600       475       535   Fertilizers     641       729       897   White Phosphoric Acid     153       121       139   MKP     52       48       47   Spain We conduct our The Company’s potash mining operations in Spain through our indirect wholly ownedare carried out by ICL Iberia (IBP) (a wholly-owned subsidiary Iberpotash, and its wholly owned subsidiary,of the Company) through Trafico de Mercancias. ThereMercancias (a wholly-owned subsidiary of ICL Iberia). As at the date of this Annual Report, there are three underground potash mines that make up Iberpotash’sICL Iberia’s complex: Suria, Cabanasas and Vilafruns. The Company operates two mines, the Cabanasas mine, which is located in the town of Suria, approximately 12 kilometers north of the district capital of Manresa in the Cardoner river valley, and the Vilafruns mine, which is located in the town of Sallent, approximately 13 kilometers east of Suria in the Llobregat river valley. The third mine in Suria mine is closed and it is planned thatinactive. In addition, the Vilafruns mine will closeis expected to be closed by the endmiddle of 2016. We may be forced to cease production at Vilafruns earlier than2017. In November 2015, ICL Iberia and the Government of Catalonia signed a cooperation agreement memorandum of understanding that if our appealdefines ICL Iberia’s activities in the country as preferential activities and the potash industry as a public strategic interest. The purpose of the Spanish court’s suspensionagreement is to arrange all the mining activities, including environmental protection and support for the matter of our environmental license for thatregulation, transportation and infrastructures. Furthermore, the agreement relates to the matter of ICL Iberia’s obligation to remove the salt pile on the Sallent site, including completion of the restoration plan of the site, all of which is denied.to be completed no later than 2070 (the removal of the salt pile should be completed by 2065). See “Item“Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings—Spain Mining License Matters.Matters.” ProductionAs part of the expansion plan in Spain on the Suria site, production of potash at the Cabanasas mine is expected to increase up to approximately 800,0000.8 million tons per annum when production at the Vilafruns mine ceases and is expected to reach 1,100,000approximately 1.1 million tons per annum (double current levels)levels produced in the Cabanasas mine) two years after production at Vilafruns ceases, and in the third stage mining of the potash is expected to increase up to about 1.41.3 million tons per year in the future. We own all of the land on which our Spanish surface facilities are located. SeeItem 4. Information on the Company—B. Business Overview—Segment Information—Fertilizers—Production.” The Spanish government owns all of the underground mining rights and has granted to us concessions to conduct mining operations under our land. See “– Concessions and Mining Rights — Spain” below. 74 Table of Contents The Cabanasas and Vilafruns mines are both in the province of Barcelona and are located approximately 530 to 900 meters below ground. Each mine has two access points and mining is by a modified room and pillar method. All of the mine sites are served by roads and are near major highways. 74 Table of Contents Extraction of potash from underground mines in Spain is carried out by mining sylvinite (a mixture of potash and salt found in varying potash concentrations). The potash is separated from the salt in production plants near the mines. For a description of our efficiency plan at Iberpotash,ICL Iberia (IBP), see “Item“Item 4. Information on the Company—B. Business Overview—Segment Information—Fertilizers—Production.Production.” Potash was first discovered in 1912 at Suria and commercial development was started in 1920. We purchased our three Spanish mines in 1998. Potash of late Eocene age occurs in the northeast corner of the Ebro Evaporite Basin which lies along the southern flank of the Pyrenees. Sylvinite and carnallite occurs towards the top of the Cardona Halite at depths which vary considerably as a result of deformations associated with the Pyrenean fold and thrust belt. The potash layers (when seen underground) can, in places, be contorted on a local scale due to this deformation of the area. Two main potash seams are mined in the deposit Capa A and Capa B at both the Vilafruns and Cabanasas mines. Within these seams, sylvinite occurs in the joining of thin layers of halite in each of the seams. The sylvinite is high grade and with very low levels of insolubles. We own and operate two processing plants, one in Suria and one in Sallent. The operations at these plants include crushing, grinding, desliming, froth flotation and drying. All of the power utilized by our Spanish mining operations is purchased from third partythird-party electric companies. The following table sets forth, the quantities and grades of the potash ore extracted from the mines and processed in the plants in Spain, for the three years ended December 31, 2015, 2014 2013 and 2012:       Year Ended December 31,         2014       2013       2012   Sallent                   Ore processed (in millions of metric tons)     2.5       2.3       2.3   Grade (% KCl)     23.4%       23.4 %     22.3%   Suria                         Ore processed (in millions of metric tons)     1.9       1.9       1.9   Grade (% KCl)     25.4%       27.1 %     27.4%   Total                         Ore processed (in millions of metric tons)     4.4       4.2       4.2   2013:     Year Ended December 31,     2015   2014   2013 Sallent                         Ore processed (in millions of metric tons)     2       2       2   Grade (% KCl)     23 %     23 %     23 % Suria                         Ore processed (in millions of metric tons) )     2       2       2   Grade (% KCl)     26 %     25 %     27 % Total                         Ore processed (in millions of metric tons)     4       4       4   United Kingdom Our mining operations in the United Kingdom are conducted by our wholly owned subsidiary, Cleveland Potash.ICL UK. Our mine and processing plant is located approximately 340 kilometers north of London and approximately 40 kilometers east of Middlesbrough, England in the North York Moors National Park. The mine was originally designed, developed and operated by Imperial Chemical Industries and Charter Consolidated and the first potash was extracted in 1973. We purchased the mine, including mining leases and mineral extraction licenses, in 2002 from the then owner,then-owner, Anglo American Corporation. Our mining operations in the United Kingdom are conducted both under land and under the North Sea. Mining operations are conducted at depths of as much as 1,300 meters below ground onshore and 850 meters below the surface of the North Sea. The operations under the North Sea are currently conducted as far as 14.5 kilometers offshore. Although we own the land on which our minehead and related surface operations are conducted, substantially all of our United Kingdom subsurface operations are conducted either under land that we do not own or under the North Sea, which we also do not own. We have the right to conduct our mining operations pursuant to the mining leases and mineral extraction licenses described below. See “ – Item 4 Information on the Company—D. Property, Plants and Equipment—Concessions and Mining Rights”Rights” below. Extraction of potash from underground mines in the United Kingdom is carried out by mining sylvinite (a mixture of potash and salt found in varying potash concentrations). The potash is separated from the salt and from insoluble materials in processing plants located near the mines. 75 Table of Contents Our United Kingdom mining operations are situated close to the western limits of potash and salt deposition in the Zechstein Basin extending inland in the United Kingdom and below the North Sea to Germany. The potash seam is of the Permian Evaporite Series and is overlain by some 800 meters to 1,300 meters of younger sedimentary rocks. The potash seam averages 7 meters in thickness but varies from zero to more than 20 meters in thickness. As part of the same Permian evaporite sequence, anAn approximately 11-meter-thick polysulphate layer exists approximately 150 meters below the potash deposits. Cleveland PotashICL UK has evaluated the potential of this polysulphate as a separate resource, and completed an access decline into the polysulphate bed in 2010 from one of their main salt roadways. Commencing from 2012, the Company sells the product in commercial quantities. 75 Table of Contents Our United Kingdom mine has been extensively explored using a combination of surface (sparse) and underground drilling. The underground long hole (horizontal) drilling and 3 D seismic (offshore) surveys are used to delinate areas of minerals well in advance of mining. The mine is accessed by two vertical shafts. One shaft hoists potash and salt and the other provides service access. Mining currently takes place in two discrete areas. Mining is by continuous miners with shuttle cars and by a modified room and pillar method. The mine has been designated as a “gassy” mine, containing methane gas. Supply of the electricity to the Company’s mining operations in the United Kingdom is powered primarily by electricity purchased by the local electricity company. There is also a power plant on the site thanthat converts gas into electricity and supplements the electricity supply required for execution of the mining operations. Our raw material processing operations include crushing, desliming, grinding, froth flotation and drying. The plant was built in 1971 and is properly maintained on an ongoing basis in order to preserve the existing production capacity. The following table sets forth, the quantities and grades of the potash ore extracted from the mine in the United Kingdom and the insoluble clay minerals, for the three years ended December 31, 2015, 2014 and 2013.     Year Ended December 31,     2015   2014   2013 Potash Ore (millions of metric tons)     3       3       2   Grade (% KCl)     33 %     32 %     31 % Grade (% insoluble)     13 %     15 %     13 % China YPH JV operates a mining site named Haikou (the “Haikou Mine”) that is located alongside the Haikou Town, in the Xishan district, proximate to Kunming. YPH JV also holds a concession for mining phosphates in an additional mine named Baitacun (the “Baitacun Mine”), which is located several kilometers from the Haikou Mine, wherein the mining activities have not yet commenced. As of the date hereof, the access to these mines by means of a network of roads. The production capability of YPH JV is approximately 2.5 million tonnes per year. The Haikou Mine is spread over 9.6 square kilometers and the Baitacun Mine is spread over 3.08 square kilometers. The Haikou Mine is split into 4 areas. The phosphate sources in areas 1 and 2 have been almost fully depleted. The mining in area 3 began in 2015 and the mining activities in area 4 are scheduled to start in 2018. The phosphates are situated in two layers – an upper layer and a lower layer. The thickness of the upper layer is about 7 meters while the thickness of the lower layer is about 4 meters on average. The mining is executed based on layers, in accordance with the quality thereof. In every layer, 3 quality categories are defined, which requires precision mining that is accomplished through use of relatively small mining tools. The phosphate is covered by hard rock layers that require blasting, except for the upper ground level, which is removed and used for restoration of the mined areas. The phosphate layers are also hard and require blasting. 76 Table of Contents The mining in the Haikou Mine is via open mining using conventional methods by means of drilling and blasting, hydraulic cranes, mining trucks and tractors for mining phosphates. In the first stage: mining of the upper ground level is performed, which is then stored or spread out over mined areas for purposes of restoration. In the second stage: the upper overburden level is removed. In the third stage: mining of the phosphate is performed by drilling and blasting of every layer separately (between which an intermediary overburden layer exists having a thickness of 11 meters) and it is loaded on trucks. Based on the topography of the region, the mining is performed through use of small mining tools, trucks with a capacity of 40 tons and cranes have a shovel volume of 3 to 6 cubic meters. Use of large trucks will only be possible if a modern transport road is built. Close to the Haikou Mine there are 2 enrichment plants. These facilities are accessible by road. The output of these facilities is designated for the acid production plants of Yunnan Three Circles Chemical Co. Ltd., a fully owned subsidiary of YPH JV (“3C”). 3C has a production site for acids and fertilizers, including five sulfuric acid factories, three green phosphoric acid factories, one factory for manufacture of technical grade white phosphoric acid and six fertilizer factories of different types. The site is located several kilometers from the Haikou Mine. Access to the site is also by road. Mining activities have not yet commenced on the Baitacun Mine. The geological survey was conducted by the Chinese government and the area is ready for planning of the mining operations. However, since the ratio of the overburden material to the phosphates in this area is high, the mining operations, to the extent they are ultimately commenced, will be postponed to later stages. Ethiopia The Company holds a potash mining license for the Danakhil mine in the Afar region in Northeast Ethiopia, held by Allana Afar through the acquisition of Allana, which was granted on October 8, 2013 by the Ministry of Mines in Ethiopia. The mining license is valid for a period of 20 years and 2012.       Year Ended December 31,         2014       2013       2012   Potash Ore (millions of metric tons)     2.6       2.3       1.8   Grade (% KCl)     31.6%       31.3%       30.4%   Grade (% insols)     15.4%       13.4%       13.8%   may be renewed for an additional period of 10 years each. Pursuant to the mining agreement, Allana Afar was required to complete the development stage and start the production stage no later than October 8, 2015 (within two years from the effective date of the mining license). As at the date of the report, Allana Afar had not yet completed the development stage and, therefore, the Government of Ethiopia related to the application submitted by the Company for the transfer of the mining license. The Company is holding discussions with the Government of Ethiopia for purposes of transferring the mining license to a newly established company and extending the development period in light of the Company's takeover of Allana, which can result to additional payments. In the Company's estimation, an arrangement will be reached with the Ethiopian authorities for extension of the development period. The Company is currently in the early stages of researching the project’s feasibility and technical and operating requirements. There are currently no mining operations at the Danakhil site, and the exploration process is still ongoing. The proposed development at the Danakhil site is exploratory in nature and the property is without known proven (measured) or probably (indicated) reserves. See“Item 4 Information on the Company—B. Business Overview—Segment Information—Production”. Concessions and Mining Rights Israel ICL Dead Sea Works Ltd. Concession. Pursuant to the Dead Sea Concession Law, 1961 (hereinafter – “the Concession Law”), as amended in 1986, and the Concession Deed attached as an addendum to the concession law, ICL Dead Sea Works was granted a concession to utilize the resources of the Dead Sea and to lease the land required for its plants in Sodom for a period endingthat is expected to end on March 31, 2030, accompanied by a priority right to receive the concession after its expiration, ifshould the State will be interested in offeringGovernment wish to offer a new concession. In exchange for the concession, ICL Dead Sea Works pays royalties to the Israeli government, calculated at the rate of about 5% of the value of the products at the factory gate, less certain expenses. In addition, DSWICL Dead Sea pays the Israel Lands Authority (ILA) lease fees for the leased land as such land is defined in the Concession Deed. The amount of the payment and its updating mechanism were stipulated in an agreement signed by the ILA (formerly – the Israel Lands Administration) in 1975. 77 Table of Contents As for the royalties payment by ICL Dead Sea, Works, the State of Israel was permitted to demand a re-evaluation of royalties rate relating to the quantity in excess of three million tons of potash manufactured in any year from 2010 and thereafter, provided the rate of the royalties with respect to such excess does not exceed 10% of the value of the product at the factory gate, less certain expenses. As part of the agreement with the State of Israel signed in July 2012, regarding performance of a harvest of the salt, it was also agreed with the Government to increase the rate of the royalties to 10% (in place of 5%) in respect of sales of potash from the dead sea in excess of 1.5 million tons per year. In addition, according to the Salt Harvesting agreement, if legislation is enacted that changes the specific fiscal policy in connection with profits or royalties deriving from mining of quarries from the Dead Sea, Worksthe Company’s consent will not apply regarding an increase in the rate of royalties on the surplus quantities referred to above, commencing from the date on which additional tax is collected as stated in the legislation. On November 30, 2015, the Economic Efficiency Law was published, including the implementation of the Sheshinski recommendations, which address royalties and taxation of excess profits from Dead Sea minerals. The law entered into effect on January 1, 2016. For further details see Note 23 to the Company’s financial statements. ICL Dead Sea grants a sub concessionsub-concession to Dead Sea Bromine Company Ltd. (“Dead Sea Bromine Company”) to produce bromine and its compounds from the Dead Sea, the expiration date of which is concurrent with ICL Dead Sea Works’Sea’ concession. We pay royalties to the Israeli government on products manufactured by the Dead Sea Bromine Company. In addition, there is an arrangement relating to payment of royalties by Dead Sea Magnesium for production of magnesium metals by virtue of a specific arrangement with the State of Israel provided in the Israeli government’s decision dated September 5, 1993. Pursuant to the arrangement, royalties are paid by Dead Sea Magnesium on the basis of carnallite used for production of magnesium. The arrangement with Dead Sea Magnesium provides that during 2006 the State may demand a reconsideration in connection with the amount of the royalties and the method or their calculation for 2007 and thereafter. The State’s demand for reconsideration, as stated, was first received at the end of 2010, and the matter is presently in an arbitration proceeding, as described below. In 2006, a letter was received from the then Accountant General of the Israeli Ministry of Finance, claiming an underpayment of royalties amounting to hundreds of millions of shekels. Pursuant to the concession, disputes between the parties relating to the concession, including royalties are to be decided by an arbitration panel of three arbitrators (each side appoints an arbitrator and these two appoint the third arbitrator). For additional details regarding the arbitration proceeding and the provision recorded by the Company in the second quarter of 2014 in the amount of approximately $135 million, in respect of prior periods (2000 through 2013) (the total amount of the provision includes, among other things, interest and is net of the tax effect)2015 stemming from the partial arbitration decision – see “Item“Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings.Proceedings.” 76 Table of Contents In 2012, 2013, 2014 and 2014,2015, ICL Dead Sea Works paid royalties to the Israeli government in the amount of approximately $125 million, $110 million, and $84 million, and $97 million, respectively. In addition, during 2015, the Company paid the provision, in the amount of approximately $152 million, in respect of royalties relating to prior periods. Rotem Concession. Concession. ICL Rotem has been mining phosphates in the Negev in Israel for over fifty years. The mining is conducted in accordance with phosphate mining concessions, which are granted from time to time by the Minister for National Infrastructures under the Israeli Mines Ordinance by the Supervisor of Mines in the Ministry, accompanied by mining authorizations issued by the ILA. The Oron concession was first granted in 1952. The Zin concession was first granted in the 1970s1970 as part of the Oron concession and the joint concession was subsequently renamed Zafir. The Zafir concession (consisting of both the Oron and Zin concessions) was renewed every 3 years and in 1995, it was renewed for 10 years and in 2002, it was renewed until 2021. The Rotem concession was first granted in 1970 and it was also renewed in 1995 for 10 years and in 2002, it was renewed until 2021. There is no express tender process under the Mines Ordinance procedure.for every reserve certificate, and up to now no phosphate mining rights have been provided for a competitive process, however a legislative change from the end of 2015 regarding royalties mentions the possibility of providing a mining right for a competitive process. Given the high cost of constructing downstream processing facilities (which any other bidder would need to construct near the fields), we have not faced competition for these concessions in the past. The concessions relate to the quarry (phosphate rock) whereas the other authorizations relate to use of land as active mine sites. Under the terms of these concessions, ICL Rotem is required to pay the State of Israel royalties based on a formula stipulated in the Israeli Mines Ordinance. The formula for the royalties was updated in February 2010 as part of a compromise agreement that settled all the disputes regarding past royalties and formulas for future royalties. On January 1, 2016, a legislative amendment entered into effect that changed the format for calculating the royalties, increased the rates from 2% to 5% of the value of the mineral, and left the Supervisor of Mines the possibility of collecting royalties in a higher amount, if he decided to grant a mining right in a competitive process wherein one of the selection indices is the amount of the royalties. 78 Table of Contents ICL Rotem has the following three mining concessions, which cover a total area of approximately 55,327 acres: 1. Rotem Field — valid up to the end of 2021; 2. Zafir Field — (Oron-Zin) — valid up to the end of 2021; 3. Hatrurim Field — as noted, the Supervisor of mines has decided to extend the area of the Rotem field concession so that it covers the Hatrurim Field. The matter has been transferred to the ILA to deal with the extension of the area of the mining permit for the Rotem Field, in line with the extension of the concession area. Rotem has applied well In September 2012, a committee was set up by the Director General of the Israeli Ministry of Energy and Water, to examine the phosphates sector in advance for land leasesorder to look into the use of the phosphate resource in Israel. The committee published its recommendations and, among other things, recommended to examine the possibility of imposing certain restrictions on the manner of the mining areas and has had little difficulty in renewing those leases in the recent past. The earliest renewal required for anyutilization of the existing relevant leases will bephosphates, and also recommended to approve mining in 2021. In termsadditional fields, such as, the Barir field. As at the date of this Annual Report, no operative decisions had been made based on the process for renewal, we only need to submit an application for renewal with standard geological information and a building permit from the ILA, a requirement which is not stipulated by law. committee’s recommendations. The mining and quarrying activities require zoning approval offor the sitearea based on a plan in accordance with the Israeli Planning and Building Law, 1965. These plans are updated, as needed,necessary, from time to time. As ofat the date of this Annual Report, there are various requests atare in different stages of deliberationsdeliberation before the planning authorities. At the end of 2009, ataccording to the recommendation of a team accompanying preparation of a new site plan for the Oron ZinZin-Oron area in Israel, the Local District Board approved an extension of the execution stages of the site plan from 1991, which zones the ZàfirZafir site (Oron Zin)(Zin-Oron) for mining up to the end of 2013, and in2013. In September 2013, the Local District Board approved the extension of additional stages throughup to the end of 2015. In August 2015, the District Committee decided to deposit a new mining plan for the Zin-Oron area, and also decided to further extend the stages for the plan in effect up to the end of 2016, in order to provide a plan framework for the work being performed on the area for a period of time intended for completion of the required processes for deposit of the new plan and its actual approval. In terms of particular conditions that our ICL Rotem subsidiary must meet in order to retain the concessions, we must comply with various reporting requirements in addition to the payment of royalties. The process of getting these extensions approved consists of an ongoing process with mining execution stages in permitted mining zones. Thecompany is working to promote the plan for mining phosphates in Barir field (South Zohar)(which is part of Zohar South) in planning approval stages,the Negev Desert. In December 2015, the National Planning and it has not yet been decided whetherBuilding Council approved the Policy Document Regarding Mining and Quarrying of Industrial Minerals (the "Policy Document"), which includes, among other things, a recommendation to deposit itpermit phosphate mining, including at Barir field. The Policy Document that was approved will set the basis for preparation of a national outline plan (“the National Outline Plan”) for mining and quarrying to also be approved by the National Planning and Building Council. Along with the competent authorities. Israeliapproval of the Policy Document, the National Planning and Building Council ordered the Planning Administration to raise the matter of the order to prepare a detailed plan for Barir field (“the Barir Plan”) at one of its upcoming meetings. The National Planning and Building Council instructed the Planning Administration to bring up for discussion, at one of its upcoming meetings, the detailed National Site Plan for the Barir field mining site. In addition, in February 2016 the municipality of Arad, together with several other plaintiffs, including, among others, residents of the town Arad, the communities and the surrounding Bedouin villages surrounding the area, filed a motion with the Israeli High Court of Justice against the approval of the Policy Document to authorize phosphate mining in the South Zohar area object to deposit of the plan and continuation of advancement of the planning stages in respect thereof, due to thetheir fear offrom environmental and health dangers they contend will be caused as a result of operation of the mine.dangers. The Company believes that the mining activities in Barir field do not involve any risks to the environment or to people. After an expert appointed byThere is no certainty that the Israeli MinistryNational Outline Plan and the Barir Plan will be approved at all or as will be submitted, in light of the Prime Minister expressed his opinion thatopposing position of the Health Ministry, among others. Moreover, there is no health hazard incertainty regarding the Barir mine,timelines for the Israeli Ministry of Health appointed a committee on its behalf to examine the matter before the Israeli Ministry formulates its position. At the end of 2013, a public health expert was appointed (Prof. Samet from the United States) who delivered his opinion in the beginning of 2014. On April 3, 2014, the Company was informed that the former Minister of Health, Ms. Yael German, contacted the Headsubmission of the Planning Administration inPlans, the Ministryapproval thereof or of the Interior, Ms. Binat Schwartz, and informed her that after she read the opinionfurther developments with respect to Barir field. 79 Table of the expert appointed by the Ministry of Health, she has decided to oppose the mining in the Barir field, including test mining. The Company disagrees with the interpretation of the former Minister of Health of the opinion. In the Company’s estimation and based on its understanding of the said opinion, such opinion does not contradict the Company’s position that the mining activities in the Barir field do not pose any threat at all to the environment or to the residents. On December 2, 2014, the Head of the Planning Administration in the Ministry of the Interior brought up for discussion by the Planning and Building Council a proposal for advancement of the mining plan in the Barir field by the Administration’s authorities. A discussion was held however a decision regarding the matter has not yet been made. The residents of Arad are continuing to object to advancement of the mining plan and even to test mining. Contents If mining approval is not received for the Barir field, this will significantly impact the Group’s future mining reserves in the medium and long term. In 2015, 2014 and 2013, Rotem paid royalties to Israeli government in the amounts of approximately $3.5 million, $3 million and $4 million, respectively. The Law for Taxation of Profits from Natural Resources (Israel) On November 30, 2015, the Knesset passed the Law for Taxation of Profits from Natural Resources (hereinafter – "the Law"), which entered into effect on January 1, 2016, except with respect to ICL Dead Sea where the effective date is January 1, 2017. For the highlights of the Law, see “Item 10. Additional Information—E. Taxation.” 80 77 Table of Contents Sheshinski Committee Report The net impact of the legislation on the Company’s annual profits in future years will depend to a significant extent on the prices of potash that will prevail at the time and their impact on the profitability. In 2012, 2013 and 2014, Rotem paid approximately $6 million, $4 million and $3 million, respectively, in royalties toAugust 2015, the Israeli government. In terms of particular conditions that our Rotem subsidiary must meet in order to retain the concessions, we must comply with various reporting requirements in addition to the payment of royalties. In June 2013, the former Minister of Finance Mr. Yair Lapid, gave notice ofappointed a team for “the establishment of the governmental activities to be conducted towards the end of the concession period”. In September 2015, the team published a request for comments of the public committee, headedregarding positions and viewpoints in connection with the end of the concession, which are to be submitted by Prof. Eitan Sheshinski,the end of March 2016. The team is expected to submit its recommendations to the examineMinister of Finance by May 2016. There is no certainty as to what the policy covering the royalties received by the State from private entities, including the Company, for userecommendations of national natural resources, such as, potash, bromine and phosphate. Thethis committee was required, among other things, to examine the royalties’ policy from a broad perspective, while addressing the impacts on the present agreements between the various parties engaged in these matters and the State of Israel. On October 20, 2014, the Committee published the final conclusions “regarding the government take to be received from use of national resources by private bodies”. The highlights of the Committee’s Recommendations are as follows: The mix of taxes on natural resources in Israel will include three taxation elements: royalties, natural resources tax, and corporate tax. The royalty rate for all minerals will be 5% for any extracted amount (currently, the royalty rate for potash is 5% on annual sales of up to 1.5 million tons, and 10% for any sales above that amount. The royalty rate for bromine is 5% and the royalty rate for phosphates is 2%); calculation of the royalties for phosphates which is made in accordance with the Mines Ordinance, will be changed such that the recognition of refining and processing costs of the mined raw material will be in accordance with normative costs to be established in the law. A new natural resources tax will be imposed. The following are the main aspects of the proposed tax: The natural resources tax base will be the amount from which the natural resources tax will be collected every year. The tax base will be the Company’s operating profit, according to accounting profit and loss statements, after certain adjustments less financing expenses equal to 5% of the Company’s working capital, and less an amount that will represent the yield on the remaining depreciated cost of the fixed assets used in the production and sale of the mineral (hereinafter – “the Yield on the Depreciated Cost”). A progressive tax will be imposed on the tax base, as described above, at a rate that will be determined in accordance with the level of the yield on the remaining depreciated cost of the fixed property used in the production and sale of the mineral in that year. The first tax bracket for the natural resource tax will be 25% with respect to the Yield on the Depreciated Cost between 14% and 20% and the second bracket will be 42% with respect to the Yield on the Depreciated Cost over 20%. 78 Table of Contents For the years in which the natural resources tax base is negative, the negative amount will be carried over from year to year, and will serve as a tax shield in the following tax year. The limits of the natural resources tax – the natural resources tax will only be imposed on the profits derived from the production and the sale of minerals, such as potash and phosphates, and not on profits derived from downstream industrial activity. In addition, the natural resources tax will be calculated separately for each mineral. However, to the extent that there is a synergy between the different resources, and a particular mineral produces a benefit in the production of a different mineral, the Committee believes that such benefit should be reflected in the calculation of the natural resources tax. Consequently, the benefit produced by the magnesium plant for the potash plant in the production of sylvinite will be recognized as an expense for the potash plant, and accordingly will be recognized as income for the magnesium plant. Clear rules will be established for this purpose with regard to the calculation ofprocedures that the said savings,government will undertake in connection with respectthe existing concession and as to potash and other minerals, where applicable. A mechanism will be established for determining the market price for natural resources transactions between related parties in Israel, as well as a mechanism for calculating the manner in which expensesfuture mining rights will be attributedgranted. According to the production and saleConcession Law, ICL has a right of first offer in the event that following the expiration of the natural resource and tocurrent concession, the downstream activities. Regarding bromine, a natural resources tax will be imposed in the same way it is imposed on other natural resources, with the exception than that the transfer price will be calculated separately for transfers to related parties in Israel, and separately for sales to related parties abroad. The transfer price for elemental bromine to related parties will be the higher of the following: The actual price – the actual sale price for elemental bromine to related parties in Israel or abroad, whichever is relevant; The pricegovernment would offer new concession rights to a third party – the weighted average of the sale price to unrelated parties, which are manufacturers of bromine compounds, while adjusting the shipping and marketing costs, as needed;party. 81 The normative price – the normative price will be linked to the bromine compounds index and determined based on the Netback method, relying on the data from the five previous years for the Bromine Compounds Company in Israel or abroad, as relevant. In each of those years, all bromine compounds production costs will be deducted from the sales of the Bromine Composite Company, except for the cost of purchasing the raw bromine. A normative profit of 12% of the sales of the Bromine Compounds Company in Israel or abroad, as the case may be, will also be deducted from the operating profit, before the deduction of the cost of purchasing raw bromine. The amount reached through this calculation, for each of the years that is examined, will be divided by the quantity of  bromine that the Bromine Compounds Company purchased in each of the years, and will be weighted into the stated normative price. The mechanism will be reviewed every 5 years and revised as necessary. The Encouragement of Capital Investments Law – the law will be amended, to clarify that with regard to any tax benefits pursuant to that law, the definition of a “mineral extraction plant” will include all the plant’s activity through the production of the first sellable natural resources, such as potash, bromine and magnesium. Therefore, any activity in the production of the mineral will be subject to the excess profit tax, and will not be entitled to tax benefits pursuant to the Encouragement of Capital Investments Law. Downstream product activity such as bromine compounds and fertilizers will not be a part of the base used for calculating the excess profits tax and will not be excluded from the application of the Law. In addition to the Committee’s recommendations above, corporate tax will apply at the rate of 26.5%. The government take to be received from minerals when a natural resources tax is imposed is expected, according to the Committee, to range from 46% to 55%. The Committee’s recommendations, if they are enacted into legislation, will apply to DSW, as of January 1, 2017. 79 Table of Contents Conclusion of the Dead Sea concession period – a designated team will be established, to be appointed by the Accountant General at the Ministry The Minister of Finance which will workalso appointed a second team designated to establish certainty regarding the manner in which, according to the current Concession, the replacement value of the DSWICL Dead Sea’s tangible assets will be calculated at the end of the concession period in accordance with the Deed of Concession.event such assets are to be returned to the government. The actual calculation will be executed only in 2030. This team willwas expected to submit its recommendations to the Minister of Finance by the end of the first quarter ofMarch 2015. Additionally, the Minister of Finance will appoint a second team which will submit recommendations regarding the government actions that are needed in anticipation of the end of the concession period and will examine the manner in which the concession will be granted in the future. This team will submit its recommendations by the end of the first quarter of 2016. It should be noted, that attached to the Committee’s recommendations were, among others, a minority statement of the Accountant General at the Ministry of Finance as well as a reservation from the Committee’s recommendations by representatives of the Ministry of Economy and the Ministry of National Infrastructures, Energy and Water Resources. On November 10, 2014, the Ministry of Finance issued a press released according to which the Social-Economic Cabinet unanimously approved the Committee’s recommendations on November 10, 2014. According to the press release, the final recommendations will be drafted in contemplation of their legislation and will be brought for the approval of the Knesset. There is no certainty thatas to what the Knessetrecommendations of this team will approvebe with regards to the Committee’s recommendations in their current wording. above mentioned and as to whenever they are expected to be submitted. In August 2014, after publication of the interim conclusions of the Committee, the Company’s Board of Directors examined the economic viability of continuation and expansion of the production of certain products, including potash, metal magnesium, bromine compounds and downstream phosphate products. In light of the Committee’s final recommendations, and their approval by the Social-Economic Cabinet as stated,in November 2014, the Company’s Board of Directors adopted the following decisions, further to decisions it had adopted in August 2014 – briefly: Cancellation and reconsideration of investments – to cancel the Company’s investments in Israel, mainly for the increase of the production capacity of potash, which had been approved as part the long term plan, in the amount of approximately $750 million, and to reexamine the economic expediency of additional investments in the amount of approximately $1 billion; Bromine Compounds – to formulate and implement an efficiency plan designed to significantly improve the profitability of Bromine Compounds Company, which belongs to the Industrial Products segment. This plan is required due to the continuing erosion of profits on bromine compounds as a result of the decline in demand for flame retardants, slow structural growth in the world market, a drop in prices, and strengthening of the shekel, compounded by the significant recent developments related to the partial arbitration decision with respect to royalties on sales of downstream products, including bromine compounds, and the possibility that the Committee’s final recommendations will be adopted and enacted into legislation.legislation (which eventually occurred). Company management formulated a plan, as stated, and has already commenced its implementation. The plan includes reduction of labor and other costs in the Bromine Compounds Company. There is no certainty that the plan will achieve its goals, due to various factors, including the situation of the market, competition, regulation, labor relations and/or any of the risk factors characterizing the Company’s activities, as noted in the “Risk Factors” section of this report. On February 2, 2015, the Workers Council of Bromine Compounds Ltd. from the ICL Industrial Products segment started a strike of the production facilities of Bromine Compounds Ltd. in Naot Hovav and halted all shipments of merchandise from the facilities. The strike at the facilities came in reaction to the efficiency plan the Company is implementing in Naot Hovav, whereby termination letters were sent to tens of employees who are covered by a collective bargaining agreement. Further to that stated above, on February 19, 2015, the Workers Council of DSW started a general strike in DSW’s factories in Sodom. For additional details – see “Item“Item 6. Directors, Senior Management and Employees—D. Employees.Employees.” The Magnesium Plant – to make preparations for closure of our magnesium plant at the Dead Sea, commencing January 1, 2017, to the extent the discussions with the State of Israel regarding the tax and royalties issues will not support the continuation of the activities of the magnesium plant. Company management was instructed to ensure all existing and future customer orders and commitments in order to avoid any interruptions until the final closure of the plant to the extent it is ultimately closed down. The main economic justification for continuation of the activities of the magnesium plant at the Dead Sea stems from the plant’s synergies with our other facilities in Sodom, which provide it with, and receive from it, raw materials (the “Synergies”). The net value of the Synergies has declined due to the increase in the tax burden on production from natural resources in Israel that have already been implemented, and will further decline if the Committee’s final recommendations are enacted into law.implemented. As a result of the increased tax burden, as noted above, the Company stopped all investments in the magnesium plant (that are not investments required by law). Nonetheless, ICL’s management intendsOn November 11, 2015, the Company’s Board of Directors decided to re-examinepostpone for one year the decision of the Board of the Directors regardingwith respect to the continued existenceoperation of the magnesium plant subject to the manner in which the government, by meansuntil final clarification of the Tax on Natural Resources Law memorandum, implementstax effects, royalties, and cost of participation in the decisionmanagement services of the Social-Economic Cabinet, which provided that: “a special mechanism iselectricity system that are expected to be determined that will ensure that Committee’s recommendations will not directly or indirectly impactimposed on the feasibility of the continued existence of the magnesium plant”. To the extent the actual implementation of the Cabinet’s decision does not adversely impact, as a practical matter, the contribution and value of the synergy stemming from the activities of the magnesium plant, Company management will consider recommending to the Board of Directors to continue the existense of the magnesium plant even after January 2017.plant. The sales of magnesium in 20142015 amounted to approximately $148$121 million, the magnesium company incurred an operating loss in this year of approximately $9$8 million, the net property, plant and equipment of the magnesium company as at December 31, 20142015 was approximately $36$40 million and the depreciation expenses in 20142015 amounted to approximately $7 million. 80 Table of Contents Spain The Spanish government owns all of the underground mining rights and has granted us concessions to conduct mining operations under our land pursuant to mining legislation enacted in 1973 and related regulations. Further to this legislation, the government of the Catalonia region issued special mining regulations relating to individual mining areas. The mining permits (or concessions) in Spain are administrated by the regional governments (in Catalonia, the Generalitat), except those special reserved areas that are still administered by the Spanish central government. There are several such areas in Spain, including Reserva Catalana. IberpotashICL Iberia (IBP) owns 126 mining concessions that are not part of the Reserva Catalana and were issued by the Generalitat, and mining concessions for the Reserva Catalana issued by the Spanish central government.concessions. Two separate and independent processes of paying fees and renewals are thus involved. 82 Table of Contents Originally, the concessions were divided among several mining companies in the area. However, as companies were acquired or relinquished their concessions, IberpotashICL Iberia (IBP) obtained these concessions. As a result, IberpotashICL Iberia (IBP) now holds mining concessions for each of 126 different relevant sites for our current and potential future mining activities. As part of the renewal process, we must prepare and present a basic technical report describing the intended use of the mines. The concessions cover a total area of 42,489 hectares in the province of Barcelona and 26,809 hectares in the province of Lerida. The mining royalties in 20142015 amounted to approximately €150€170 thousand. Regarding the Reserva Catalana (the area beyond the 126 sites referred to above)“Reserva Catalana”, an applicationadditional site wherein mining has not yet been commenced, it was filed to extendclarified that in 2007 a process was commenced for extension of the concession period, which ended in 2012, for a period ofan additional 30 years, commencing in October 2012. As at the dateyears. In light of the report, no mining activities are being carried outchangeover of the governments in this area. TheSpain, the administrative activitiesprocesses of the National Mining Authority with respect to extendextending the concession period have not yet been completed bycompleted. As at the National Mining Authority. However, the mining rights are still valid, and Iberpotashdate of this Annual Report, ICL Iberia is currently in the process of renewing these rights before their expiration. Iberpotashthe rights. According to the Spanish authorities, the concession period is valid until a final decision is made regarding renewal of the concession period. ICL Iberia (IBP) has applied well in advance for concessions for the mining areas andareas. As at the date of this Annual Report, ICL Iberia (IBP) has not had any difficultyserious difficulties in renewing those leases in the recent past. The earliest renewal required for any of the 126 existing relevant concessions will be in 2037, and most of the concessions are effective up to 2067. The currentlylength of the planned life of the Cabanasas mine, is 27 years, so renewal of some concessions may be required in order to permit mining forgiven the entire lifefirst stage and the second stage of the mine.expansion plan, is 23 years. As is required by law, the concessions must be renewed prior to the expiration date. If a concession were to expire for some reason, a bidding process would start. United Kingdom United Kingdom Mining Concession. Cleveland Potash’s ICL UK’s (CPL) mining concession in the United Kingdom is based on approximately 114 mining leases and licenses for extracting various minerals, in addition to numerous easements and rights of way from private owners of land under which Cleveland PotashICL UK operates or, in the case of mining underneath the North Sea, granted by the United Kingdom (Crown Estates). These mining rights total approximately 92,340 acres. TheMost of the terms of all of these leases, licenses, easements and rights of way run for a period from the end of 2015are valid up to 2038.2038, with a small part being valid up to 2020. In 2014,2015, mining royalties amounted to about £2.6 million. 81 Table of Contents £3 million ($5 million). All of ourICL UK's older lease agreements (about 74 agreements) were signed for a period of 50 years in the 1970s of the 20th century, so most of these run until the early to mid-2020s, except for the leases with the Crown Commissioners (Crown Estates) for the offshore rights in the North Sea, which waswere recently renewed and expiresexpire in 2034.2035. The lease with the Crown Commissioners includes provisions to explore and exploit the polysulphate mineral. Our recently acquired leases (about 40 agreements) were obtained in the late 1990s and early 2000s, and they all have a 35-year35-year lease period with a 35-year35-year option to extend the lease. For purposes of signing the lease agreements, Cleveland PotashICL UK used local solicitors and contacted the individual landowners. Renewal of the onshore lease currently covering about 18% of reserves area at our mine in the United Kingdom will be required atwas extended to the end of 20152020 (one large lease is involved). Negotiations have begun to extend this lease both geographically and temporally, as this area is important for our underground mining activities at the Boulby mine. Historically, the renewal of leases has not been problematic and we believe that we have or will receive all government approvals and permits necessary for our reserves in the United Kingdom. In the Company’s estimation, there is no competition for mineral leases because Cleveland PotashICL UK has already secured the planning permission (“Planning Permission”) for potash and rock-salt extraction in the area and has all the necessary government approvals and permits for mineral extraction. Planning permission, which is granted by local authorities in the United Kingdom, is the permission required in order to be allowed to build on land or change the use of land or buildings. In the past, when leases expired, there has been no interest from other companies and there is no competitive bidding. Cleveland PotashICL UK has a preferential right to renew the leases as it has the Planning Permission to extract potash-bearing minerals. The entities involved in renewing or obtaining new leases are Cleveland Potash,ICL UK, local solicitors and individual landowners who own the mineral rights, as described above. The particular conditions that must be met in order to retain the leases are payment of annual fees and a royalty payment for minerals extracted from the property to the landowner. Several small areas remain with no mining lease as these are areas where either the mineral owners have refused to grant a lease or mineral ownership is in many small patches having a number of different owners. However, none of these has a significant impact on exploration or development and at the date of the report, there are no plans to pursue them further. Cleveland Potash applies a plan for signing lease agreements in the area in which it has permission to plan and extract minerals. Asfuture. 83 Table of the date of the report, CPLContents ICL UK currently has long-term mineral lease agreements covering more than 70% of the area.area. Based on past experience, we are confident that we will be able to obtain the remainder of the resource and reserve leases,. if necessary. In addition, historically no competition is anticipated in obtaining mineral lease agreements for potash mineral leases and our few failures to obtain leases in the past have been limited to very small leases that can easily be circumvented during mining. The small area of leases that Cleveland PotashICL UK does not have involve situations where the individual landowners have refused to sign mineral leases and no other party has been granted a lease. United Kingdom Concession. A subsidiary in the United Kingdom, in our Fertilizers segment, mines peat, which constitutes a raw material for production of detached platforms for improvement of land and for use as soil substitutes onprofessional grade growing media. Our mines in the United Kingdom (Nutberry and Douglas Water) are owned by the Company, whereas Creca is held under a long termlong-term lease. The mining permits were granted through the year 2024. The mining permits are granted by the local authorities for 14-year periods and are renewed after a review by the local authorities. The last time the mining permit at Creca was renewed was in 2010 (for a period of 14 years up to the end of 2024) while the mining permits in Nutberry and Douglas Water were recently renewed in 2014 (for a period of 10 years up to the end of 2024). China YPH JV holds two phosphate mining licenses that were issued in July 2015 by the Division of Land and Resources of the Yunnan district in China, with reference to the Haikou Mine, which is valid up to January 2043 and the Baitacun Mine, which is valid up to November 2018 (the “Haikou License” and the “Baitacun License”, respectively). Acquisition of the Mining Rights The mining right of Haikou Mine was previously owned by YPC. According to the Mining Concession Grant Contract of Haikou Mine entered into by and between YPC and the Land and Resources Department of Yunnan Province (together with its local equivalents, “Resources Department”) in November 2012, the total price to be paid to the Resources Department in consideration for the mining concession of Haikou mine was RMB 163,378,400 which has been paid in full (not including mineral resources compensation fees and other charges required by applicable PRC laws). The mining right of Baitacun Mine was previously owned by YPC as well. However, YPC did not enter into a concession agreement with respect to the mining concession of Baitacun Mine since the Baitacun mining right was obtained by YPC before the relevant PRC laws requiring the Resources Department to sign such agreements were published. As part of the formation of YPH JV, in October 2015, the mining rights related to Haikou Mine and Baitacun Mine were transferred to YPH JV. Renewal of Mining License To retain the Haikou Mine and Baitacun Mine licenses, YPH JV has to comply with the provisions of the relevant Chinese laws and regulations regarding mining activities. In particular, YPH JV has to conduct annual check with regard to its mining licenses. The items to be examined in the annual check mainly include: whether the taxes, fees, premiums relating to the mining license and mining activities conducted by a company have been paid in full; whether the annual reserve report (as applicable) have been submitted; whether various mining parameters have met the standards required by law; whether land reclamation has been conducted, whether there are any penalties imposed on the company or violation of laws by the company, etc. To renew the Haikou Mine and Baitacun Mine, YPH JV has to submit the renewal application to the Resources Department 30 days prior to the expiry of the applicable mining license. The Resources Department will consider the following factors when reviewing a renewal application: (i) whether YPH JV needs to continue to develop in the area; (ii) whether there is a dispute over the relevant mining right; (iii) whether proper fees and taxes have been paid in full, and whether YPH JV has conducted mining in violation of the law; (iv) whether the original mining right is legally defective; and (v) other conditions as the authorities require. 84 Table of Contents To renew a mining license, among other application documents, it is important to provide two written documents for the Resources Department to approve the renewal application: (i) annual check report for the mining license; (ii) mineral resources reserves verification report or other reports of similar nature to indicate that there are still reserves in the mine. Additional Payments In respect of the mining rights, YPH JV is required to pay the authorities a “Mineral Resources Compensation Fee” at the rate of 2% of YPH JV’s sales revenue of rock phosphate mined from Haikou Mine and the Baitacun Mine. In addition, YPH JV is required to pay a “Resource Tax”, which at the present time stands as 15 yuan per tonne of YPH JV’s sale volume of rock phosphate mined from the Haikou Mine and the Baitacun Mine. Grant of Mining Rights to Lindu According to a statement issued by YPC on February 29 ,2016, YPC entered in 2010 into agreements with the local authority of Jinning County, Yunnan Province and Jinning Lindu Mining Development and Construction Co., Ltd. (“Lindu”), according to which, Lindu can mine up to two million tons of phosphate rock from a certain area of 621 mǔ (equivalent to 0.414 square kilometer), within the area of the Haikou Mine (the “Daqing Area”) and sell such phosphate rock to any third party at its own discretion. However, as of the date of such statement, YPC believes that Lindu has not conducted any mining or sale according to such agreements. Prior to the formation of YPH JV, YPC proposed to the relevant local authority of Jinning County and Lindu Company to swap the rights granted to Lindu in the Daqing Area with another area which is not a part of the Haikou Mine and have Lindu Company mine in that area, so as to ensure that the interest of YPH JV would not be affected by the mining and sale conducted by Lindu Company. However, due to personnel changes in the relevant local authority of Jinning County and Lindu Company, the negotiation is still on-going. YPC undertakes to continue to promote the negotiation, so as to ensure that YPH JV’s mining right in the Haikou Mine will not be adversely affected by the above-mentioned arrangements regarding Lindu’s mining rights within the Daqing Area. Ethiopia The Company holds a potash mining license for the Danakhil mine in the Afar region in Northeast Ethiopia, held by Allana Afar through the acquisition of Allana, which was granted on October 8, 2013 by the Ministry of Mines in Ethiopia. The mining license is valid for a period of 20 years and may be renewed for an additional period of 10 years each. Pursuant to the mining agreement, Allana Afar was required to complete the development stage and start the production stage no later than October 8, 2015 (within two years from the effective date of the mining license). As at the date of this Annual Report, the development stage had not yet been completed and, therefore, the Government of Ethiopia may revoke the mining license. The Company is holding discussions with the Government of Ethiopia related to the application submitted by the Company for the transfer of the mining license to a newly established company and extending the development period in light of the Company's takeover of Allana, which can result to additional payments. In the Company's estimation, an arrangement will be reached with the Ethiopian authorities for extension of the development period. Allana commenced exploration activities in the Danakhil Depression in 2008, having acquired exploration licenses for Potash and Related Salt Minerals from the Ministry of Mines. Based on historical data, available at the archives of the Ministry of Mines in Addis Ababa, a Preliminary Resource Assessment Study (PRAS) was completed. The Company is currently researching the project’s feasibility and technical and operating requirements, and initial work has begun on preparing the site for further construction. Although our development program is still in the exploratory stage, we estimate that production will commence in 2020, and we may focus on SOP with a small amount of MOP. However, there are currently no mining operations at the Danakhil site, and the exploration process and finalization of the development program are still ongoing. The proposed development at the Danakhil site is still in its early stages, and is planned to consist of a potash mining operation and related processing and support facilities. The property is without known proven (measured) or probably (indicated) reserves. See“Item 4. Information on the Company—B. Business Overview Segment Information—Production.”, ”Item 4 Information on the Company—B. Business Overview—Mineral Extraction and Mining Operations” above and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business.” Reserves We believe we have a broad and high qualityhigh-quality mineral reserves base due to our strategically located mines and facilities. “Reserves” are defined by SEC Industry Guide 7 as that part of a mineral deposit that could be economically and legally extracted or produced at the time of the reserves determination. Industry Guide 7 divides reserves between “proven (measured) reserves” and “probable (indicated) reserves,” which are defined as follows: 85 Table of Contents · Proven (measured) reserves. Reserves for which (1) quantity is computed from information received from explorations, channels, wells and drillings; grade and/or quality are computed from the results of detailed sampling and (2) the sites for inspection, sampling and measurement are spaced so closely to each other so that the geologic character is well defined that size, shape, depth and mineral content of reserves can be reliably determined. · Probable (indicated) reserves. Reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for survey, sampling, and measurement are farther apart or are otherwise less efficiently spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation. 82 Table of Contents We categorize our reserves in accordance with these SEC “Guide 7” definitions, as stated above. The quantity, nature of the mineral reserves and estimate of the reserves at each of our properties are estimated by our internal geologists and mining engineers. Israel The following table sets forth information regarding our estimates of our phosphate reserves in Israel (all of which are wholly owned by us) as of December 31, 2014:     Category     White Phosphate       Low Organic Phosphate       High Organic Phosphate       Bituminous Phosphate       Recoverable Reserves       Average Grade   (millions of metric tons)   (millions of metric tons)     (millions of metric tons)     (millions of metric tons)     (millions of metric tons)     (millions of metric tons)       (% P2O5) Rotem Proven     –       15.5       –       –       15.5       26.3 % Zin Proven     –       18       7       4       29       25.0 % Oron Proven     22       -       –       –       22       23.5 % Total (Proven)       22       34       7       4       67           2015:     Category   White Phosphate   Low Organic Phosphate   High Organic Phosphate   Bituminous Phosphate   Recoverable Reserves   Average Grade         (millions of metric tons)   (% P2O5) Rotem     Proven       —         14       —         —         14       26 % Zin     Proven       —         17       15       4       36       25 % Oron     Proven       19       6       —         —         25       24 % Total (Proven )             19       37       15       4       75           In determining these reserves, a cut-off grade of 20% to 25% P2O5P2O5 was applied, depending on the processing characteristics of the phosphate rock and the existing process. The cut-off grade differs for each mine in accordance with the beneficiation process: a cut-off grade of 20% P2O5P2O5 was applied at Oron, a cut-off grade of 23% P2O5P2O5 was applied at Zin, and a cut-off grade of 25% P2O5P2O5 was applied at Rotem. The cut-off grade for Oron is lower because ourICL Rotem subsidiary has the appropriate beneficiation process for chalk phosphate, which characterizes the white phosphate and therefore, the flotation process is extremely efficient. The cut-off grade for the Rotem mine is higher because the beneficiation process there has a limited grinding and flotation system, and only medium to high grade phosphate can be fed (which is appropriate for the existing reserves at Rotem). The cut-off grade for Zin is slightly higher than that of Oron because of the presence of marl and clay that reduces the efficiency of the flotation system at that mine. The parameters used in determining the cut-off grade took into account the geology (continuity, structure), mining method, mining dilution, plant utilization / metallurgical processing factors, technical feasibility, operating costs, and historical and current product prices. The parameters employed in the calculation are as follows: on siteon-site tons (multiplying area by layer thickness and phosphate density); recoverable tons (tons of mineral which can be mined, taking into account mining dilution); mineable tons (recoverable tons from which the tons produced are deducted); stripping ratio (the quantity of waste removed per ton of phosphate rock mined); planned dilution; cost per ton for mining (typically related to transport distance to beneficiation/process plant); cost per ton including reclamation; and unplanned dilution (5% unplanned dilution is taken into account based on the data from the mining in and the data from the problematic areas). Our ICL Rotem subsidiary’s yearly mining plan is not determined by the minimum cut-off grade, and fluctuations in commodity prices rarely affect its cut-off grade. The cut-off grade calculations come from historical yield data and our ICL Rotem subsidiary’s historical experience with mining, adequately calculated and modelled by its geologists, operation engineers and economists. The calculation takes the ore grade in situ,in-site, converts it into extracted ore with our ICL Rotem subsidiary’s mining method and estimates the plant yield depending on the grade. Economic modelling then gives the cut offcut-off figures currently used by our Rotem subsidiary.ICL Rotem. 86 Table of Contents The proven reserves above the cut-off grade were obtained from the calculated on siteon-site resources taking into account the mining method, the rate of mining dilution, and in plantin-plant recovery, based on our ICL Rotem subsidiary’s historical data. In order to convert the resources into reserves, account is taken, separately, of the mining dilution rate, mining method and the geological conditions, including, historical yield data and are based on the previous five years’ experience. The mining dilution rate in the Company’sCompany's mines in Israel’s southern region is 2.5% and takes into account the continuity of the layers and the geological structure. The quantity and grade of the calculated reserves are those that are expected to be transferred to the processing plant and are subject to recovery indices in the utilization plant. The updated utilization in the plant varies between the sites as it consists of historical yield data, and it is currently between 46% (at Oron and Rotem) and 48% (at Zin).These differences in metallurgical recovery rates are due to differences in the beneficiation process at the different mines. Proven reserves have been explored by borehole intersections typically at 50 to 70 meters intervals. Each of the three plants at the mines has been developed over the past few decades for the optimum upgrading of the phosphate rock to concentrate ore containing typically 3131% to 32% P2O5. P2O5.The conversion ratio for most of the phosphate layers is 1.8 tons for every 1 cubic meter, where a conversion ratio of 2.0 tons per cubic meter is used for hard, calcareous beds. These factors are used on the basis of long experience and are considered to be reasonable. 83 Table of Contents In calculating the cut-off grade and reserves, an average of the previous three years’ market prices and operating costs was used as part of the calculations to ensure economic feasibility. The three yearthree-year average market prices used to calculate our reserves in the Negev as of December 31, 20142015 are as follows: $701$709 per ton for MGA (greengreen phosphoric acid), $1,382acid, $1,374 per ton for WPA, (white phosphoric acid), $1,484$1,428 per ton for MKP, (monopotassium phosphate), $1,121$1,083 per ton for soluble MAP, (monoammonium phosphate), $353$364 per ton for GTSP, (granulated triple super phosphate), $176$193 per ton for GSSP, (granulated single super phosphate), and $101$104 per ton for phosphate rock. In calculating the reserves, an average of the previous three years’ currency conversion rates were used to ensure economic feasibility. The three-year average currency conversation rates used to calculate our reserves in the South as of December 31, 20142015 are as follows NIS 3.6813.694 per $1.00, $1.31$1.26 per €1.00 and $1.60$1.58 per £1.00. The life of the mine at Rotem is approximately 87 years based on reserves of 15.514 million metric tons of low organic/low magnesium phosphate. The low-organic, low-magnesium phosphates are suitable for phosphoric acid production. The annual production (mining) rate for the low-organic/low-magnesium phosphate at Rotem is 1.9 million metric tons per year. The life of the mine at Oron is approximately 76 years based on a reserve of 22.019 million metric tons and an average production of 3.0 million metric tons per year of white phosphate. After proof of the feasibility made during the past year, the Company recognized an additional 6 million raw tons of low-organic phosphates were added to the report that may be sold or used to produce acids. The life of the mine at Zin is 10approximately 11 years based on reserves of 29.035.5 million metric tons and a production of 3.1 million metric tons per year as follows: · Low-organic phosphate—1.7 million metric tons per year · High-organic phosphate—1.1 million metric tons per year · Bituminous phosphate—0.3 million metric tons per year Due to the process improvements the Company made and that were completed in 2015, the balances of the reserves were increased by 9 million tons of high-organic phosphates at the Zin plant. These phosphates were defined as reserves, after conducting an assessment and proving that the phosphates can be enriched using the same processes currently in use at the Zin plant. As described under “—“Item 4. Information on the Company—D. Property, Plants and Equipment—Mineral Extraction and Mining Operations — Israel’s Southern Region”—The Negev Desert”, we primarily use white/low organic phosphate rock in our operations, and we blend in bituminous phosphate, in our operations.phosphate. To utilize additional resources after our reserves are utilized, we would be required to modify our processes and add costly technologies. The Company believes that we have all the government approvals and permits necessary for our reserves in Israel. 87 Table of Contents Spain The following table sets forth our estimated potash reserves for our Spanish mining operations (all of which are wholly-owned by us) as of December 31, 20132015 (latest date for which information is available): 84 Table of Contents   Mine   Reserve Category     Millions of metric tons       Average Grade (% KCl)   Cabanasas Proven     15       26     Probable     85       26     Total Proven and Probable     100       26   Vilafruns Proven     8       23     Probable     8       22     Total Proven and Probable     16       22.5   Total(1) Proven and Probable     116       25.5   _____________ (1) Amounts may not sum due to rounding. Mine   Reserve Category   Millions of metric tons   Average Grade (% KCl) Cabanasas     Proven       14       26         Probable       73       25         Total Proven and Probable       87       25   Vilafruns     Proven       9       24         Probable       -       22         Total Proven and Probable       9       23   Total(1)     Proven and Probable       96       25   ____________________ (1) Amounts may not add up due to rounding. In determining these reserves, a cut-off grade of potash ore containing 19% KCl was applied at the Cabanasas mine and a cut-off grade of potash ore containing a concentration of 18% KCl was applied at the Vilafruns mine. The parameters used in determining the cut-off grade took into account the geology (continuity, structure), mining method, mining dilution, plant utilization, technical feasibility, operating costs and historical and current product prices. The parameters employed in the calculation are as follows: on siteon-site tons (multiplying area by layer thickness and mineral density); recovery (takes into account the values obtained historically during the mining of the Cabanasas and Vilafruns mines); recoverable tons (tons of mineral which can be mined, in terms of the recovery factor); mineable tons (recoverable tons from which the tons produced are discounted); planned dilution; unplanned dilution (5% unplanned dilution is taken into account based on the mining data and the data from problematic areas); and selective mining of target layers where possible (separation of the salt within the layer in areas wherein this is possible). IBP’sICL Iberia's (IBP) annual mining program is not defined inaccording to minimum cut-off grades. The cut-off grade calculations come from historical yield data and Iberpotash’sICL Iberia’s (IBP) historical experience with mining, adequately calculated and modelled by its geologists, operation engineers and economists. The calculation takes the ore grade in situ,in-site, converts it into extracted ore with Iberpotash’sbased on ICL Iberia’s (IBP) mining method and estimates the plant yield depending on the grade. Economic modelling further givesLater on, economic models give the cut offcut-off figures currently used by Iberpotash. in use. The proven and probable reserves above the cut-off grade were obtained taking into account the mining method, mining recovery, mining dilution, selective mining, striation, geological conditions and in plantin-plant recovery, based on Iberpotash’sICL Iberia’s (IBP) historical data. The mining recovery and dilution factors, which are required in the conversion of resources to reserves and take into account the particular mining method and the geological conditions at the respective mine, consist of historical yield data and are based on 1617 years of historical data at our Cabanasas and Vilafruns mines and the mining recovery ranges from approximately 65% to 75% by Iberpotash’sICL Iberia’s (IBP) “room and pillar” modified layout. Reserve quantity (in tons) and grade are quoted as those that are expected to be delivered to the treatment plant and are subject to metallurgical recovery factors. Metallurgical recovery factors consist of historical yield data and are based on the previous five years’ experience and current recoveries are 89.0% KCl for the Suria plant (which is adjacent to the Cabanasas mine) and 85.0% KCl for the Sallent plant (which is adjacent to the Vilafruns mine). Information from drillings, mostly at distances of 100 to 200 meter intervals while probable reserves have been explored by boreholes at intervals of up to 1,600 meter intervals.meter. The final product is well over 95% KCl to avoid quality losses. In calculating the cut-off grade and reserves, an average of the previous three years’ market prices and operating costs was used as part of the calculations to ensure economic feasibility. The three yearthree-year average market price used to calculate our reserves for potash per ton of product in Spain as of December 31, 20132015 is €288.6€249.4 per ton. 88 Table of Contents In calculating the reserves, an average of the previous three years’ currency conversion rates were used as part of the calculations to ensure economic feasibility. The three-year average currency conversation rate used to calculate our reserves as ofat December 31, 20132015 is €0.75€0.796 per $1.00. dollar. The Suria plant utilizes ore mined from Cabanasas and has a current capacity to produce approximately 530,000 tons per annum of potash. The Sallent plant utilizes ore mined from Vilafruns and has a current capacity to produce approximately 500,000 tons per annum of product; this plant willis planned to be gradually phased outshutdown as Suria is upgraded. The Company believes that it has all government approvals and permits necessary for our reserves in Spain. 85 Table of Contents United Kingdom The following table sets forth our estimated potash reserves for our United Kingdom mining operations (all of which are wholly ownedwholly-owned by us) as of December 31, 2014:   Reserve Category     Millions of metric tons       Average Grade (% KCl)   Proven     12.6       32.3   Probable     4.3       32.9   Total Proven and Probable     16.9       32.5   2015: Reserve Category   Millions of metric tons   Average Grade (% KCl) Proven     5       34   Probable     1       34   Total Proven and Probable     6       34   In determining these reserves, a cut-off grade of ore containing 30% KCl was applied in both the south (onshore) and the north (offshore), for a seam having a height of 3.8 meters (though thinner sections of potash can be taken, with the inclusion of salt dilution in the floor of the seam) and the maximum distance from the shafts is 15 kilometers. In calculating the cut-off grade and reserves, an average of the previous three years’ market prices and operating costs was used as part of the calculations to ensure economic feasibility. The three yearthree-year average market price used to calculate our reserves for potash per ton of product as of December 31, 20142015 is £203£201 per ton. The cut-off grade calculations were made on the basis of historical yield data and Cleveland Potash’sICL UK’s (CPL) historical experience with mining, adequately calculated and modeled by its geologists, operation engineers and economists. The calculation takes the ore grade in situ,in-site, converts it into extracted ore with Cleveland Potash’sICL UK’s mining method and estimates the plant yield depending on the grade. Economic modeling further gives the cut offcut-off figures currently used by Cleveland Potash. ICL UK. Operating costs and historical and current product prices are taken into account, but the cut-off grade determination is largely influenced by optimization of the beneficiation process, in particular the flotation process, as our calculation is largely based on introducing the right grade of ore into the treatment plant. Cleveland Potash’s ICL UK’s yearly mining plan is not determined by the cut-off grade. Over the last three years, the cut-off grade has remained at 30% and has not changed as a result of market price or operating cost fluctuations or as a result of currency conversion factor changes. The parameters used in determining the cut-off grade took into account the geology (continuity, structure), mining method, mining dilution, and plant utilization. The parameters employed in the calculation are as follows: in situin-site tons (area multiplied by layer thickness and mineral density); mining recovery (based on values obtained historically during mining potash ore); mineable tons (recoverable tons of mineral less produced tons); and mining dilution (based on values obtained historically during mining potash). The proven reserves above the cut-off grade were obtained taking into account losses for mining recovery, mining dilution, mining method and geological conditions based on Cleveland Potash’sICL UK’s historical data. The mining recovery and dilution factors, which are required in the conversion of resources to reserves and take into account the particular mining method and the geological conditions, consist of historical yield data and are based on the previous five years’ experience and generally, the mining dilution factor reduces KCI by 10% to 17% reduction and causes a small increase in the percentage of insoluble material. The reserve quantity and grade are quoted as those that are expected to be delivered to the treatment plant and are subject to metallurgical recovery factors. Metallurgical recovery factors consist of historical yield data and are based on the previous five years’ experience and current recovery is 81%. Proven reserves have been explored by borehole intersections typically at 150 meters intervals or less while probable reserves have been explored by boreholes at 150 to 500 meters intervals. 89 Table of Contents During the third quarter of 2015, the Company made a re-examination of its estimates with respect to the economic viability of the potash reserves in the mine in the United Kingdom, which resulted in a reduction in the ore reserve estimates from 16.9 million tons of ore as at December 31, 2014 to 6 million tons as at December 31, 2015. This change is the result of depletion due to continuing mining activities, changes in geological interpretation and no new conversion of resources to reserves from ongoing exploration activities. In light of the updated reserve estimates and assuming annual potash production of about 600 thousand tons and no conversion of resources into reserves, the potash production activities in the United Kingdom are expected to end in 2018. In the Company’s mine in the United Kingdom, there are vast resources for the purpose of increased production of polysulphate (a mineral used in its natural form as a fertilizer for agriculture, a fertilizer for organic agriculture and a raw material for production of specialty fertilizers), the sale of which in commercial quantities began in 2012. The Company plans to improve the production capabilities and sales to the level of one million tons by 2020. In calculating the reserves, no currency conversion factors were used as Cleveland PotashICL UK works only with the British pound. The potash mined at Boulby has, over the past 15 years, declined in potash grade from about 40% to just over 30% KCl. The NaCl content has risen from 47% to approximately 55%, while the content of insoluble impurities has also risen from approximately 12% to about 15% over this time. The plant capacity at Boulby is approximately 3 million tons of ore per annum. The final product is potash at an average grade of 95.5% KCl. Annual potash production capacity of the production facilities is approximately 700,000 tons per annum. 86 Table of Contents 800 thousand tons. The Company believes that it will obtain renewal of all the government leases and licenses necessary for our reserves in the United Kingdom. China Historically, the Haikou Mine and the Baitacun Mine reported their reserves pursuant to the Chinese Ordinance for Estimation of Mineral Resources. In principle, the classification and coding system of China corresponds, to a large extent, to the method used by United Nations Framework Classification or UNFC (2009) – a three dimensional method that takes into account the geological knowledge regarding the reserve, the socio-economic feasibility and the worthwhileness of the project, and that provides increasing confidence levels until reaching a definition of a commercial project. However, the measurement in China does not fully correspond with the measurement methodology in SEC Industry Guide 7. Specifically, the reported resources of the Haikou Mine and the Baitacun Mine were derived mainly from historical data that was produced in the past at the time when a trench sampling was made and drilling plans were executed in the 1960s and 1970s, when the phosphate reserves were described and defined. ICL completed acquisition of these properties in October 2015. ICL has hired the services of an independent, international company, which is engaged in mining matters, to perform a more in-depth analysis of the mineral resources in the Haikou Mine and the Baitacun Mine, for purposes of obtaining a full calculation of the existing database and building a three dimensional geological model and mining plan that will permit verification and confirmation of the reserves in accordance with SEC Industry Guide 7. As at the date of this Annual Report, the above-mentioned process had not been completed and, accordingly, as at December 31, 2015, the Haikou Mine and the Baitacun Mine do not have proven or probable reserves in accordance with SEC Industry Guide 7. Ethiopia In June 2015 the Company completed the acquisition of Allana Corporation, which holds Allana Potash Afar Plc, which holds a concession granted in October 2013 for the Danakhil mine in Ethiopia’s Afar National Regional State. The Company is currently in the stage of researching the project’s feasibility and technical and operating requirements. There are currently no mining operations at the Danakhil site, and the exploration process and completion of the development program are still ongoing. The proposed development at the Danakhil site is exploratory in nature and the property is without known proven (measured) or probably (indicated) reserves. 90 Table of Contents Logistics Israel Most of the output of our Dead Sea facilities is transported by a conveyor belt that extends for 18.1 kilometers to the railhead located at Tzefa in Mishor Rotem. The Company transports the output from Mishor Rotem to the port of Ashdod, mainly by train. We built, own and operate the conveyor belt. We also transport some of the output from our Dead Sea facilities by truck, mainly to the port of Eilat. Most of our products, whether in solid or liquid state, are transported in bulk from Rotem, Oron and Zin by road or rail to either the port of Ashdod or Eilat. From Eilat, our products are transported by ship to markets in the Far East, and from Ashdod, they are transported by ship to Europe and South America. Within the Rotem site, there is a rail loading facility that typically loads up to 30 wagons for each delivery. Approximately two million tons of products per year are transported by rail from the Rotem site to Ashdod per day.Ashdod. About a half a million tons of products are transported by road from Rotem to the port of Eilat, since there are no rail links between the Rotem site and Eilat. Our wholly owned subsidiary ICL Tovala is responsible for transporting phosphate rock from the Oron and Zin processing facilities in road goingroad-going rigid trucks and trailers. Each trailer has a payload of 40 tons. Approximately 0.4 million200 thousand tons of rock leave Zin by truck for delivery to the port of Eilat each year.Eilat. In addition, 0.3 million300 thousand tons are transported from Zin to Rotem for further processing. About 1 million tons are transported from the Oron mine by truck. truck for additional processing. From Ashdod port, approximately 650,000650 thousand tons of sulfur are transported to Rotem each year. In addition, sulfur arrives at the port of Ashdod from overseas, where it is loaded into road goingroad-going trucks and transported to our sulfur dispatch 5 kilometers away. At the depot, it is loaded into rail cars and then transported to Rotem. The port of Ashdod is located on the Mediterranean coast, approximately 40 kilometers south of Tel Aviv and approximately 120 kilometers northwest of the Rotem site and the Tzefa site. The port of Eilat is located in the far south of Israel on the Red Sea coast. It is approximately 180 kilometers due south of Rotem and about 200 kilometers from Sodom and is accessible by road. Shipments exiting the Eilat port are to the Far East, whereas the sales to Europe and the U.S. exit from the Ashdod and Haifa ports. Sales of fertilizers and potash from Rotem and the Dead Sea are not shipped from the Haifa port since there is no infrastructure there for loading bulk products and the cost of overland transport is more expensive compared with Ashdod. Spain IBP ICL Iberia (IBP) transports the minerals it mines from the Company’s mines to the production plants as well as potash and salt from the factories and the mines to the port. Ore is taken by 25-ton road haulage trucks and conveyor belt from the Cabanasas and Vilafruns mines to the Suria and Sallent plants, respectively. The salt product is transported by articulated truck to an Iberpotash ownedICL Iberia-owned (IBP) terminus in the port of Barcelona. A truck fleet comprises 25 2725-27 ton capacity articulated road trucks is used to transport the salt from the mine. Up to 40 trucks of salt per day are dispatched from the mine road to the port. The mine also uses the port of Tarragona to export specific products. 87 Table A dedicated railway line is used for the transport of Contents Iberpotashpotash from the mines to the Barcelona port. ICL Iberia (IBP) owns and maintains 1.5 kilometers and 3 kilometers of standard gauge railway at CabanasasSuria and Vilafruns,Sallent plants, respectively, that link to the national rail network. Each train set comprises of 850 ton payload comprising approximately 20 freight cars with two trains per working day. The rail route for potash transport from Cabanasas to the terminal in the port of Barcelona comprises an 82 kilometer rail route from Suria to Manresa to the port of Barcelona and 88 kilometers from Vilafruns to the same destination. IberpotashICL Iberia (IBP) owns and operates its own port facilities, which comprise bulk salt and potash storage facilities comprised of freight car and rail truck conveyor unloading facilities and product storage warehouses. 91 Table of Contents The Cabanasas/Suria and Vilafruns/Sallent complexes have one rail load out system each for the rail to port transport systems. The train electric traction engine and part of the bulk freight car rolling stock is operated by the owner and operator FFCC (Ferrocarrils de(Ferrocarrilsde la Generalitat de Cataluña). The port of Barcelona isinstallations are managed by the Port Authority of BarcelonaICL Iberia subsidiary TRAMER and comprises an area of 7.8613 thousands square kilometersmeters divided into three zones. As part of the plan for increasing IBP’sICL Iberia's (IBP) production capacity, an upgrade is being made of the logistical infrastructure at the mine (entrance ramps into the mine), the factoryfactories and the Company’sCompany's berth in the Barcelona port, in such a manner that will permit production, transport and export of about 2.3 million tons of potash per year. United Kingdom The Boulby mine comprisesin the United Kingdom is connected by a network of roads running over 11 kilometers from the mine entrance as well as a network of underground roads extending 15.5 kilometers from the mine entrance in the direction of the North Sea and over 11 kilometers from the mine entrance in the inland area.Sea. The total length of this network of roads is more than 1,000 kilometers. The mine is served with good road, rail, and water linkshas easy access to the national networksroad and is provided withtrain transportation routes. The mine receives good potablequality drinking water and strong,a stable electric power supplies. Roadsupply of electricity. Pursuant to agreements with the North Yorkshire National Parks Authority, the total transport movements by means of the network of roads from site to site are limited to a maximum of 150,000150 thousand tons per annumyear and a maximum of 66 road wagons per day (no road movements are allowed on Sundays or bank holidays) in accordance with the North Yorkshire National Parks agreements.. This limitation is not expected to interfere with the future production due to Cleveland Potash’sof ICL UK in light of its commitment to maintainingmaintain the rail link to Teesdock. Cleveland Potash isICL UK’s roads and trains are in full compliance with all road and railthe requirements. The mine has three separate integrated conveyor load outload-out systems, one for each product. The rail load outload-out products are transported on a Cleveland Potash ownedan ICL UK-owned rail line which extends approximately eight kilometers from the mineheadmine entrance to a junction with the national rail network, from where the products continue to Teesport, Middlesbrough, via the Network Rail Company, the owner and operator of the main rail line. Cleveland Potash ICL UK leases and operates twothree principal storage and loading facilities: the Teesdock facility, which is located on the Tees River, Tees; and two additional storage facilities that are connected to the Aytoniron rail – Cobra and Ayrton Works road depot in Middlesbrough. Eight trains per day take rock salt,transport rock-salt, potash and polysulphate to the Teesdock. Most of the output goes intois used as a component of agricultural fertilizers: a large quantities (aroundquantity of the output (about 50% of production) are) is exported by sea from the Teesdock seaport to European Union countries and other overseas customers. Rock saltcustomers overseas. Rock-salt is taken by train to Teesdock, and mostly senttransported by ship to English and Scottish east coast ports for sale to local authorities for de-icing roads. In addition, the Company has storage and logistics facilities in Ludwigshafen, the Netherlands, Amsterdam and Rouen in France. China The YPH JV includes the Haikou Mine, 3C which is a factory for production of various types of fertilizers located close to the Haikou Mine, two plants for production of performance products – one located close to the Haikou Mine and the fertilizers factory and the other situated in the Kumming airport. The raw materials from the Haikou Mine are currently transported by train to the 3C factory, while in the future they are expected to be transported via pipeline (slurry). Most of the output sold to the local market is transported from 3C directly to the customers by train, as well as through marine shipment, mainly from two exit ports (Beihai and Fangchengang) to customers in North China. These ports are also used for import of sulfur, in the amount of 600 thousand tonnes per year. A small part of the output sold is transported by truck to customers in the Yunnan region (the trucks are owned by the customers). 92 88 Table of Contents According to the agreements between the parties, the logistic services provided to YPH JV will be provided in the first year by YPC, in light of its experience and central position in the Yunnan district. The YPH JV has an option to continue to utilize the services of YPC in the upcoming years. ITEM 4A – UNRESOLVED STAFF COMMENTS Item 4A. Unresolved Staff Comments Not Applicable. ITEM 5 – OPERATING AND FINANCIAL REVIEW AND PROSPECTS Item 5. Operating and Financial Review and Prospects A. OPERATING RESULTS Principal Factors Affecting Our Results of Operations and Financial Condition We are a multinational company, the financial results of which are affected by the demand for basic agricultural products, global economic trends, changes in terms of trade and financing, and fluctuations in currency exchange rates. Together with and as part of our business strategy, we are taking steps to adapt our marketing and production policies to global market conditions. We are also focusing on improving our cash flows and diversifying our financing sources, and we are committed to taking continuous actions to improve efficiency and reduce costs. We are an Israeli corporation, and we have significant production facilities in Israel. Accordingly, we are affected by the political, economic and security conditions prevalent in Israel. See “Item“Item 3. Key Information—D. Risk Factors—Risks Related to Our Operations in Israel—Israel. We conduct operations in Israel and therefore our business, financial condition and results of operations may be materially and adversely affected by political, economic and military instability in Israel and its region.region.” In particular, we have been adversely affected by several recent regulatory and legal developments in Israel that could lead to materially higher costs and lower profitability and cash generation. In 2013,2015, approximately 51%55% of our sales revenue was derived from production activities taking place outside Israel and approximately 11%7% of the cost of sales of products produced outside Israel was attributable to raw materials supplied from Israel. In 2014, approximately 52% of our sales revenue was derived from production activities taking place outside Israel and approximately 9%7% of the cost of sales of products produced outside Israel was attributable to raw materials supplied from Israel. There is no single customer on which we are materially dependent. Our sales are affected by pricing for our products and the quantities we sell. Average prices for certain of our key products were lower in 2014 compared to 2013, but this was partially offset by higher quantities sold. Nonetheless, our margins were adversely affected by the lower prices. Energy expenses accounted for approximately 7% of our total operating costs in 20132015 and  in 2014. Of these energy expenses, the cost of oil and oil products, electricity and natural gas represented approximately 14%7% ($5221 million), 48%approximately 50% ($182153 million) and 25%approximately 26% ($9579 million), respectively, in 20132015 and approximately 9% ($30 million), approximately 49% ($170 million) and approximately 29% ($101 million), respectively, in 2014. Energy costs decreased in 20142015 compared with the prior year by approximately 13%. The said decrease stems mainly from a decrease in production due to increased usethe strike at ICL Dead Sea and ICL Neot Hovav, a change in tariffs of national gas, which leads to savings as a result of the switch from use of expensive fuels, and from the undertaking to purchase electricity from OPC Rotem Lt. at lower costs compared with the price of electricity purchased from Israel Electric Company. We expect that with the gradual increaseCompany commencing from February 2015 and of OPC and a decline in the use of natural gas and the anticipated operation of the new power plant in Sodom, energy expenses as a percentage of total operating costs will decline and the mix of these costs will change. In 2012, our gas supplier in Israel, the Yam Tethys partnership, announced that it was being forced to reduce the quantities of gas it supplied because of the dilution of the gas in its well. prices. On April 1, 2013, the supply of gas from the Tamar Field commenced as a substitute for the quantity previously supplied by the Yam Tethys partnership. Supply of the gas from the Tamar Field fulfills all of our gas needs for the facilities for which we have completed the conversions. In 2012, the Council for Natural Gas Matters published a decision regarding arrangement of use of the natural gas pipeline capacity. The Council for Natural Gas Matters decision stipulates that the gas pipeline capacity is limited and it is not able to supply the entire amount of the anticipated demand in the upcoming years, therefore, the Council for Gas Matters has provided a pro rata mechanism that should, to the best of the Company's knowledge, increase the quantity of gas supplied to the Company at a time when there is a shortage in capacity in the gas pipeline. Increased use of natural gas in our facilities is expected to significantly reduce emissions of pollutants in the area surrounding our facilities, improve the quality of the output, reduce maintenance expenses and lead to a significant monetary savings due to the transition from the use of more expensive fuels. 89 Table Marine transportation expenses were approximately 6% in 2015 and approximately 7% in 2014 of Contents our total operating costs. In 20132015 and 2014, our marine transportation expenses amounted to approximately 7% of our total operating costs. In 2013 and 2014, our shipping costs amounted to approximately $384$282 million and approximately $369 million, respectively. After several years2014 was characterized mainly by a general trend of falling marine bulk transportationshipping prices, transportationwhereas 2015 was characterized by stable prices began to increase beginning in mid-2013 and in mid-December 2013 reached a three-year record high of 2,337 points on the Baltic Dry Index (“BDI”). Beginning in the first half of the year and a sharp increase in prices in the third quarter, of 2014, prices fell to their pre increase level, where the average BDI for 2014 was 8% lower than the average BPI for 2013, and the quarterly average BDI was 40% less than the quarterly average BDIhowever in the fourth quarter the marine transportation price index (Baltic Dry Index – “BDI”) resumed its downward trend and fell below 500 points at the end of 2013, which is partially explained by aDecember 2015. The trend continued into 2016. The average index (BDI) for 2015 was 35% less than the average index for 2014 and the average index for the fourth quarter of 2015 was 43% less than the average index for the fourth quarter 2014. The decline in the marine transportation expenses stems primarily from the decline in fuel prices owing to the drop in this period. The effectthe oil prices that started at the end of 2014 and continued throughout all of 2015, as well as due to a decrease in the quantities sold, as a result of the aforesaid decline in marine shipping prices was partially offset by the increase in marine shipping costs resulting from an increase in quantities sold. strike at ICL Dead Sea and ICL Neot Hovav. 93 Table of Contents Our financial statements are prepared in U.S. dollars. Most of our sales are in U.S. dollars, even though a portion of our sales is in other currencies, mainly euros. Part of our operating expenses in Israel are denominated in NIS; therefore, devaluation of the average NIS exchange rate against the U.S. dollar has a positive impact on our profitability, while appreciation has the opposite effect. Devaluation of the average exchange rate of the euro against the U.S. dollar has a negative impact on our profitability, while appreciation has the opposite impact. On the other hand, devaluation of the euro against the U.S. dollar improves the competitive ability of our subsidiaries whose functional currency is the euro, compared with competitors whose functional currency is the U.S. dollar. We hedge against our exposure to the risks described above, particularly ourin respect of the exposure to the cost of sales and operating expenses that are not denominated in our functional currency, mainly operating expenses denominated in NIS exposure toand other currencies that are not the functional currency of our subsidiaries, and exposure to marine transportation prices and energy prices. Since all of these hedging transactions are treated as economic (non-accounting) hedges, they are not reflected in our operating costs but instead are recorded as finance income or expenses in our statements of income. Our management determines the extent of our hedging activities based on their estimation of our cost of sales and operating expenses, as well as their expectations of developments in the markets in which we operate. See “Item“Item 11. Quantitative and Qualitative Disclosures About Market Risk—Risk Management.Management.” Trends Affecting Our Fertilizers Segment There is mutual dependency among the amount of available arable land, the amount of food needed for the population, and the use of fertilizers. Natural population growth, changes in food consumption habits (a shift to richer nutrition, largely based on animal protein, which increases grain consumption) resulting from the rising standard of living, mainly in developing countries, and environmental qualityenvironmental-quality considerations along with the aspirations of certain advanced economieswestern countries to reduce dependence on oil imports, which have strengthened the trend of shifting to production of fuel from agricultural products (bio fuels)(bio-fuels), affect the increase in global consumption of grains (cereals, rice, soybean, corn, etc.). These trends led to significantly lower grain inventories several years ago and, consequently, higher prices of agricultural produce, increased planting of grain crops worldwide and higher yields per unit of agricultural land, mainly through the increased application of fertilizers. In 2014, there was an2015, the increase in cheap alternative energy sources continued, such as the production of shale gas in the United States. The impact of these alternative energy sources on overall energy prices also impacts the economic feasibility of the production of bio fuelsbio-fuels and the rate of growth of their use. ProductionThe global expansion of ethanol from corn in 2014 was somewhat higher than in 2013 and another increase is expected in 2015 (the ethanol industry in the U.S.production of bio-fuels is expected to consume approximately 30%-40%continue during the next decade, albeit at a slower rate compared with the last half decade. This slowdown partly reflects lower crude oil prices. Nonetheless, the slowdown is also attributable to technical limitations and some withdrawal of the corn crops in the country). This trendgovernment support for bio- fuels. As a result, demand for bio- fuels feedstock also continues to grow more slowly. It is expected despite the drop in fuel prices in recent months. Nonetheless,noted that, the steep rise in ethanol production, which had persisted to 2010, was halted due to moderation of fuel prices, the decision of the U.S. Environmental Protection Agency (“EPA”) not to increase the percentage of ethanol in gasoline (the blending rate) from 10% to 15%, and the decline in gasoline consumption in the U.S. Following stability in the first half The production of 2014,ethanol remained stable. In 2015, prices of crop commodities dropped sharply in the third quarter of the year in response to expectations bythe expectation of the US Department of Agriculture (USDA) of a record harvest as a result of an increase in planted areas, along with favorable weather conditions in the primary growing areas. In December 2014, grain prices increased moderately to low levels compared with the prior year’s prices. In January 2015, the trend reversed, prices once again began to fall, andDuring January–February 2016, the grain prices reachedhit their lowest level since 2010. In early February 2015, this trend reversed, and grain prices began to record moderate increases. in the last 6 years. Based on the new report published by the USDA in February 2015,January 2016, an increase is expected in the ratio of the inventories of grains to annual consumption, up to 21.15%23.0% at the end of the agricultural 2014/20152015/2016 year, compared with 20.80%22.8% at the end of the 2013/20142014/2015 agricultural year, and with 19.85%20.8% in the 2012/2013. Most of the increase expected in the 2014/20152013/2014 agricultural year stems from an increase in the inventory of corn and wheat. In addition, the inventory of soya, which is not included in the inventory of grains, is on the rise. 90 Table of Contents year. In the short term, the demand for fertilizers is volatile and seasonal and is affected by factors such as the weather in the world’s major agricultural growing regions, fluctuations in the scope of the planting of the main crops, agricultural input costs, agricultural product prices and developments in biotechnology. Some of these factors are influenced by subsidies and credit lines granted to farmers or to producers of agricultural inputs in various countries, and by environmental regulation. Changes in currency exchange rates, legislation and international trade policy also affect the supply, demand and level of consumption of fertilizers worldwide. Notwithstanding the fluctuations that may be caused in the short term as a result of these factors, we estimate that the policy of most countries in the world is to ensure an orderly supply of high qualityhigh-quality food to their residents, including by encouraging agricultural production, which should preserve the long termlong-term growth trend of fertilizer consumption. 94 Worldwide sales Table of potash in 2014 recovered compared with 2013. During 2014,Contents In 2015, there was an increasea decline in the demand for potash along an improvement in prices, particularly in granulated potash, primarily in Brazil anddue to the worldwide economic slowdown, the drop in the United States.prices of agricultural products, devaluation of the currency exchange rates and availability of credit. Despite the decline in consumption in 2015, a moderate increase is expected in the upcoming years. According to thean IFA report from May 2015 the aggregate worldwide demand for potash (forfor agricultural and other uses)uses is expected to grow at an average annual rate of 2.5%2.7% from 35.5 million tons of K2O in 2015 up to 38.5 million tons of K2O in 2019. During the second half of 2015, upon completion of potash shipments, which were derived from ICL's agreement in China in the first half of the year, 2018. One of the main challenges causing uncertainty with respectpotash shipments began to the demand for fertilizers is the significant decline in  grain prices to their lowest level in the last four years. be based on "spot prices". In January–February 2014,January 2016, ICL Fertilizers signed new framework agreements with its customers in China for supply of potash in the first halfscope of 2014 covering approximatelyabout 3.4 million tons (including options) over the same amounts asnext three years. The selling price will be determined on the contractsbasis of the accepted price levels in the Chinese potash market. According to the framework agreement, which represents an increase of about 3% in the quantities supplied, compared with the previous three year framework agreement the Company signed with its customers forin China whereby 3.3 million tons of potash were supplied in full (including options), the first halfCompany will supply 1.1 million tons of 2013. The contracts were signed atpotash in 2016, 1.14 million tons in 2017, and 1.16 million tons in 2018. In 2015, the imports of potash into China reached a pricerecord high of $305 per ton CFR, representing a price decreasemore than 9.4 million tons - an increase of approximately $95 per tonabout 18% compared with 2014. In the contracts signed in 2013. During the second half of 2014, the potash shipments continued to the Company’s customers in China at spot prices, albeit at a lower rate than planned due to labor disputes at the Company’s plant in Sodom. In 2014,Company's estimation, the imports into China reached 8.03in 2016 will be lower due to accumulation of large inventories at the end of 2015 and an increase in production by the local producers. In the beginning of 2015, it appeared that the imports of potash into India would increase significantly over 2014. This expectation did not materialize, mainly due to the devaluation of the Indian currency and the shortfall of Monsoon rains. During 2015, India imported 4 million tons an increase of approximately 21.3%potash, constituting a decrease of 7%, compared with the previous year, and it is the highest level4.3 million tons imported in 2014. In 2015, ICL signed contracts for supply of imports since 2007.potash with its customers in India, covering an aggregate quantity of 835 thousand tons, including options. In the Company’s estimation, the trend of increasing imports is expected to continue in 2015 due to an increase in consumption, as well as logistics problems of the local producers. After several years of low demand for potash in India, which stemmed from, among other things, the government’s subsidy policy that gave preference to nitrogen fertilizers, there was a significant improvement in imports of potash into India in 2014. Potash imports increased from 3.07 million tons in 2013 to 4.29 million tons in 2014. This increase was achieved notwithstanding the fact that there was no change in the subsidy policy and the price for the end-consumer remained at the same level as it was during the last two years. In the first quarter of 2014, potash manufacturers signed contracts for the agricultural year beginning on April 1, 2014 and ending on March 31, 2015 at a price that reflects a decline of $105 per ton compared with the price closed in the annual supply contracts with customers in India inwill not utilize the beginning of 2013. In April 2014, ICL agreed with its customers in India to supply potash forentire quantities covered by the 2014/2015  year in an aggregate quantity of approximately 825  thousand tons (including optional quantities). The selling price agreed to is about the same as the price set in transactions with other producers supplying potashcontracts due to the Indian market. In the Company’s estimation, improvement in demand for potash in India is expected to continue in 2015 as farmers have adapted to the higher levelaccumulation of prices, and this is expected to support an increase in demand in upcoming years as well. inventories. Demand for potash in Brazil was highpeaked in 2014, declined significantly in 2015 as a result of a fall in agricultural commodity products, weakness of the Brazilian currency and imports of fertilizers into Brazil reached record levels.limitations on credit to farmers. In 2014, 9.12015, 8.3 million tons of potash were imported into Brazil, compared with 7.69.1 million tons in 20132014 – an increaseconstituting a decrease of 19.0% Early 2014 was eclipsed by8.3% The average prices in 2015 were significantly lower than in 2014. Since the negative impactbeginning of 2015 there has been a trend of a large decline in the potash prices. The main reasons for the above mentioned decline are, among others, a decrease in the prices of agricultural commodities, weakness of the dissolutioncurrencies of the partnershipimporting countries, a shortage of potash producers Uralkalirainfall (mainly in India) and Belaruskali, and Uralkali’s notice that it would implement a new potash sale policy that gives preferencelimitations on credit to quantity over price. This move should leadfarmers (mainly in Brazil). The beginning of 2016 was not accompanied by signs of an economic recovery. In the global commodities market, the prices are at low multi year levels, due to fierce competitionthe high levels of inventory in China, which acts to postpone the negotiations in connection with renewal of the contracts for 2016. In the first three quarters of 2015, the average prices of the phosphate fertilizers were relatively higher than in the market, with producers attempting to maintain their market shares while making significant concessions in their prices. For example, the contracts with the Chinese importers for the first halfthree quarters of 2014, were signed with a price decreasehowever, in the fourth quarter of $95 per ton, while the price in India for the 2014/15 agricultural year dropped by approximately $105 per ton. On the demand side, strong demand was evident in most of the world’s markets. In Brazil, imports totaled 9.1 million tons, constituting an all-time high. India imported more than 4 million tons, following three years of low imports. In 2014, the imports of potash into China reached a level of 8.03 million tons, an increase of 21.3% compared with the previous year, constituting the highest level since 2007. 91 Table of Contents From January to November 2014,2015, there was a decrease in prices of phosphate fertilizers. These price decreases stemmed from a combination of supply and demand factors. On the demand side, imports into India (the main importer of DAP) were lowlower than expected in the first three quarterssecond half of the year due to a shortage of rainfall, a high level of inventory and erosion of the local currency against the dollar. In addition to the decline in demand in India, in 2015 Brazil also imported a quantity that was 24% lower than in the prior year. The demand in the United States was also low. On the supply side, there was a significant increase in the export of phosphate fertilizers from China, which increased considerably this yeardue to imposition of VAT in China that caused a decline in the local consumption and even reached new markets, such asan increase in the United States. In addition,scope of the exports. The new Saudi producer (Ma’aden) increased its exports this year, and Saudi fertilizers reached Brazil for the first time. NotwithstandingMoroccan phosphate company (OCP) placed a new factory into service, one out of four that the fall in prices came to a halt in December, and a moderate increase in prices of phosphate fertilizers commenced. This improvement was evidentare in the resurgenceprocess of gradual construction. Due to the decline in demand, along with limited supply. Regarding demand, commencing from October, India increased the import of fertilizers, and toward the end of the year it became clear that imports in 2014 had increased significantly compared with the previous year. Furthermore, additional customers that had ceased buying in anticipation of further price decreases returned to the market with the understanding that additional price decreases are not expected. On the supply side, a number of major producers implemented a policy of contracting production: Mosaic, the U.S. fertilizer producer, announced a curtailment ofreduced its production and OCP,by an undefined quantity, the Moroccan phosphate producer, notified that it intends to focus onJordanian manufacturer (JPMC) cutback production of phosphoric acid and TSP fertilizers (phosphate fertilizers that do not contain ammonia). The situation prevailing in the market forfinal months of the year, while the production in Tunisia suffered from many interruptions due to strikes at the plants, mines and companies shipping the rock to the factories. 95 Table of Contents The prices of phosphate fertilizersrock also harmeddeclined in 2015, however more moderately than the US producer MissPhos, which declared bankruptcyphosphate Fertilizers and discontinued its productionpotash prices. The CFR prices fell by about ten percent. Part of fertilizersthe decline was offset by the decrease in shipping prices, such that the beginning of December. FOB price was impacted to a smaller extent. The decline in prices of raw materials in the specialty fertilizers products market continued intermittently during 2014,2015, as did the impact of the average selling prices in this year. However, the decline in the selling prices declined at a lowerwas higher than the rate thanof the decline in the raw materials prices. NotwithstandingIn addition, notwithstanding the decline in the selling prices and the changes in the currency exchange rates in the third and fourth quarters of 2014,throughout 2015, the gross profit increased over 2013. Set forth below areremained about the average annual prices per metric tonsame as in 2014 (a decrease of potash, phosphate rock and bromine for the last five years.       Average Annual Price ($ per metric ton)         2014       2013       2012       2011       2010   Potash                               FOB Vancouver     297       380       459       436       331   FOB Middle East     295       389       461       431       352   FOB Baltic     282       375       449       421       328   Phosphate Rock                                         FOB Morocco     110       145       185       185       123   CFR India     141       162       200       201       147   Bromine     2,600       2,726       2,860       3,495       2,665   0.7%). Trends Affecting Our Industrial Products Segment The operations of our Industrial Products segment are largely affected by the level of activities in the electronics, construction, automotive, oil drilling, furniture, pharmaceuticals, agriculture,pharmaceutical, agro, textile and water treatment markets. In 2014,2015, 41% of the worldwide use of bromine was for flame retardants, 29% was for intermediates and industrial uses, 19% was for clear brine solutions, 6% was for water treatment 18% for clear solutions, 21% for intermediate materials, 11% for industrial uses and 3%5% was for other uses. Flame retardants: Pressure is being The trend of pressure exerted by “green” organizations in the area of environmental protection to reduce the use of bromine basedbromine-based flame retardants.retardants is continuing. On the other hand, additional and new uses for bromine and its related compoundssustainable bromine-based flame retardants are being developed, along with regulation in additional countries leading to increasedthat increases the use of bromine and bromine compounds.bromine-based flame retardants. The worldwide economic slowdown, in general, and the worldslowdown in China, in particular, over the past several years triggered a slowdown in the demand for electronic products and in the electronics and construction sector.industries. This trend, along with the decline in sales of personal computers due to increased use of tablets and smartphones, caused a decline in the demand for bromine-based flame retardants mainly bromine based,in the printed circuits market, and creation of price pressure on the prices of these flame retardants.flame-retardant products. Nonetheless, in 2014,2015, there was a certain improvement in the demand for bromine basedbromine-based flame retardants for some of the uses in the electronics sector. sector, primarily in the automotive area. Phosphorous-based flame retardants were adversely impacted by the weakening of the euro against the dollar as well as by competition on the part of Chinese manufacturers. Elemental bromine:bromine. In 2014,2015, elemental bromine prices were relatively stable in the United States, Europe and India whereas there were price declines in Europe, China and India. prices increased significantly, mainly in the second half of the year. Clear solutions:brine solutions. Despite the declinesharp drop in oil prices in the fourth quarter of 2014,2015, the demand continued to be strong in the market for clear brine fluidssolutions for oil and gas drilling completions due to work that had been started before the relatively high number ofdecrease in oil prices. Biocides. Demand for bromine-based biocides used for water treatment began displaying a mixed trend in 2015. Demand for biocides used for onshore gas and oil fracking decreased significantly, following the sharp drop in petroleum prices, which led to reduced shale gas drillings in the United States. 92 Table The activities of Contents Biocides:ICL Industrial Products in the area of biocides are expected to decrease commencing from 2016 as a result of the completion of Clearon’s divestiture (chlorine-based biocide activities in the United States) in March 2016. The market for chlorine based biocides for swimming pools was impacted during 2014 by a low level of prices due to the strategy of competitors aimed at increasing their market shares. In the beginning of 2013, the US Department of Commerce decided to impose an anti dumping taxCompany’s activities in this area will focus on manufacturers of chlorine based biocides from China, at the rate of about 30%–38%bromine-based biocide activities. Inorganic bromides. In the beginning of 2014, the anti dumping tax on the Chinese was increased approximately by a further 20%, and at the beginning of April 2014 the authorities in the US gave notice of an imposition of anti-dumping taxes on Japanese manufacturers at the rate of 59%-109%. However, taxation of Japanese producers for 2015, was cancelled during the fourth quarter of 2014. In the field of bromine-based biocides used for water treatment, the trend of increasing demand continued in 2014. The technological development that enables production of shale gas and applications thereof in the U.S. creates additional business opportunities for the Company and among other things, an increase in demand for bromine-based biocides for treatment of water. Nonetheless, the recent trend of declining energy prices is acting to moderate these business opportunities. Inorganic bromides: The market for inorganic bromides for neutralizing mercury (Merquel® products) showed an increase incontinued. This trend stemmed mainly from demand in 2014 and in the fourth quarter of 2014 due to an increasing interest on the part of coal-basedby power stations to take advantage of Section 45 of the U.S. Internal Revenue Code of 1986, as amended (which grants a tax credit to stations that reduce mercury emissions). The increase also stems from the entry of new customers as part of the preparations for the entry into effect in 2015 of a new regulatory system in the US whichU.S. that requires the reduction of mercury emissions. In On the beginning of 2015, the demand for flame retardants used in the area of connectors and televisions was strong andother hand, there was a strong demand for clear brines fluids, however there is a high level of uncertainty in the market due to the decline in oil prices. Strong demand continues for bromine-based biocides for treatment of water, mainly Fuzzicide. Furthermore, the strengthening of the dollar against the shekel is expected to positively affect the costs. Subsequent to the date of the report, on February 2, 2015, the Workers Council of the Bromine Compounds Ltd., of ICL’s Industrial Products sector, started a full strike at the production facilities of Bromine Compounds Ltd. at Naot Hovav, and halted all shipments of merchandise from the facilities. The strike at the facilities came, among other things, in response to the efficiency plans the Company is executing in Naot Hovav whereby termination letters were sent of tens of employees who are employed under collective bargaining agreements. For additional information – see “Item 6. Directors, Senior Management and Employees—D. Employees.” Trends Affecting Our Performance Products Segment Most of our Performance Products segment’s products are affected by the global economic situation, competition in the target markets and price fluctuations in the fertilizer market, which affect the prices and availability of the main raw materials of our Performance Products segment, and fluctuations in energy prices, which mainly affect production costs of thermal phosphoric acid. In addition, some of our Performance Products segment’s target markets are characterized by seasonality, mainly in the area of wildfire flame retardants. All of these market conditions create a competitive market for our Performance Products segment’s products. During 2014, the demand for downstream phosphate based products in the European and U.S. markets declined compared with the prior year. Furthermore, the increased competition on the part of the Company’s competitors, which implemented a sales strategy that gives preference to market share over prices, continued to have an impact during the year. Although there was only a moderate increase in our prices, the quantities sold by us suffered a significant decline in demand mainly in North America in the phosphoric acid market in which imports and domestic competitors sought to increase their market share by lowering prices. In addition, in the first half of 2014, the Company’s results were hampered by supply constraints resulting from labor interruptions in Israel and other operational issues at a US supplier. These issues were resolved in the second half 2014. The North American P2S5 business experienced unexpected delays in two separate maintenance shutdowns which impacted the ability to meet market demand, particularly shipments to customers in North America. Our acquisition of the Germany based Hagesud Group in January 2014 continued to contribute to the improvement in our Performance Products segment’s results while, on the other hand, the specialty food products area was unfavorably impacted by the Russian financial crisis, which moderated the Company’s growth opportunities in the area of foodfor additional bromine-based products as a result of the increasedweakening of the agrochemicals markets as well as an increase in competition in thisthe polyester fibers industry. 96 Table of Contents Trends Affecting Our Performance Products Segment Food Specialties. During 2015 the demand for phosphate based Food products grew mainly due to the acquisition of a Food Specialties business in Europe which expanded the portfolio offerings to the whey protein markets. The main phosphate defined phosphates business encountered headwinds in the European and Russian markets due to their weak economies. In addition, expectation of higher organic growth was not realized as a result of slower acceptance by our customers, in spite of their favorable perception of these product solutions. The weakness in demand that existed in the first half of 2015 dissipated in the second half of the year however, the improvement came as a result of lower prices. The market is expected to remain sluggish into Q1 2016 as global inventory levels reset and weak economic conditions persist in China, Europe and South America. Advanced Additives. The Advanced Additives business lines benefited from an acquisition in Brazil and a Joint Venture investment in China. These acquisitions, combined with the desirestable North America markets, contributed to an overall 18% growth in the Segment and offset the economic weaknesses in other world markets. In North America, the Segment’s demand in Industrial Specialties was strategically lower as the Segment purposely exited low-profit markets and pursued growth in the paints and coatings markets. Additionally, the Industrial Specialties market in Europe was adversely impacted by the ban to use phosphate based detergents in auto dish washers (effective January 2016) as competitors lowered pricing to maintain market shares at reasonable price levels, along with the ongoing crisisshare in response to anticipated excess capacity in the Ukraine.market. The P2S5 business increased from the prior year primarily due to lower volume in the prior year due to maintenance shutdowns in North America. At the end of the fourth quarter, sales also weakened due to several customers who took inventory control measures in response to weak demand for Zinc-Dithio-Phosphate, an organic phosphate produced by ICL customers using ICL’s P2S5. This weakness has continued into Q1 2016 as the market experiences a temporary slowdown and destocking actions by key customers. General. The impact of the weakening Euro inof the fourth quarter 2014euro during 2015 was mostly offset by the decline in costs in dollar terms in the companies operating in Europe. In lightThe impact of currency fluctuations is expected to normalize in 2016 as the European economies reach a steady state. Finally, throughout the year, the segment pursued the divestment of businesses that were no longer considered to be part of the continuing economic slowdown in Europe, combined withstrategic core businesses. Although these divestments were concluded by the financial crisis in Russia,end of the second quarter 2015, the Company does not expect an improvementcontinues to provide manufacturing and infrastructure services to certain buyers of the divested businesses from its existing facilities in these markets inGermany under the first quarterterms of 2015. On the other hand, the U.S. market remains stable despite the competition from both local suppliers and Chinese imports. 93 Table of Contents sales agreements. Expected Expenses for Equity Compensation Plans Remuneration granted in 2014 and 2015 As at December 31, 2015, we had made the following grants under our 2014 Equity Compensation Plan 2014 Remuneration Plan Plans: Following the approval of ourthe Company’s Board of Directors on August 6, 2014, weunder the 2014 Equity Compensation Plan, ICL issued, 4,360,073 non marketable options, for no consideration, 4,360,073 non-marketable options, exercisable for up to 4,360,073 of our ordinary shares, and 1,007,651 restricted shares, to approximately 450 of our officers and senior employees.employees under the 2014 Equity Compensation Plan. The issuance includes a significant private placement of 367,294 options and 85,907 restricted shares to our CEO,Chief Executive Officer, which was approved by the General Meeting of our shareholders. The fair This grant format of the options plan includes a “cap” for the value of a share where if, as at the exercise date, the closing price of an ordinary share is higher than twice the exercise price (the “Share Value Cap”), the number of the exercised shares will be adjusted so that the product of the exercised shares actually issued to the offeree multiplied by the share closing price will equal the product of the number of exercised options multiplied by the Share Value Cap. The options and restricted shares will vest in three equal tranches: one-third at the end of 24 months from December 1, 2014, one-third at the end of 36 months from December 1, 2014 and one-third at the end of 48 months from December 1, 2014. The expiration date of the options in the first tranche is at the end of 48 months from December 1, 2014, the expiration date of the options in the second tranche is at the end of 60 months from December 1, 2014 and the expiration date of the options in the third tranche is at the end of 72 months from December 1, 2014. On January 25 and 26, 2015, our Remuneration and Human Resources Committee and the Board of Directors, respectively, and on February 26, 2015 the General Meeting of our shareholders, approved the issuance, under the 2014 Equity Compensation Plan, on the award date (including both the non-marketable options and restricted shares) is approximately $16.8 million. The fair value will be expensed in the financial statements over the vesting periods. For a descriptionfor no consideration, of the 2014 Equity Compensation Plan, see “Item 6. Directors, Senior Management and Employees—E. Share Ownership—Incentive Compensation Plans.” The expected expense for the periods ended December 31, 2015, December 31, 2016, December 31, 2017, and December 31, 2018, is approximately, $5.4 million, $5.1 million, $2.9 million, and $1.2 million, respectively. In 2014, the Company recognized an expense, in the amount of about $2.2 million in respect of the said plan. In addition, our Board of Directors approved a long-term remuneration plan for approximately 11,800 of our non-management employees who are not included in the new equity compensation plan in the aggregate scope of up to approximately $17 million (the “2014 Long-Term Incentive Plan”). Pursuant to the 2014 Long-Term Incentive Plan, the cash payment to each employee, if any, will be based on our three-year cumulative net profit from 2015 to 2017. The fair value of the liability must be calculated at each Quarter and Annual report,  and up to December 31, 2017. Any changes in fair value will be recognized in profit or loss for the applicable period. The range of the possible aggregate expense is between zero and approximately $17 million, beginning with the third quarter of 2014 through the fourth quarter of 2017, depending upon the extent to which the Company expects to meet its approved net profit targets for the years 2015 through 2017. As at December 31, 2014, the conditions for the 2014 Long-Term Incentive Plan were not met and therefore no liability in respect of this plan was included in our financial statements. Subsequent to the date of the financial statements, on January 25 and 26, 2015, the Remuneration Committee and the Human Resources Committee of the Company’s Board of Directors, issued 99,858 restricted shares to Company directors (except for the Company’s CEO,(excluding our Chief Executive Officer, Mr. Stefan Borgas), for no consideration, under the 2014. The restricted shares and remuneration plan. The shares are restricted and will vest in three tranches, subject to the directors continuing to serve in their positions on the vesting date, as follows: (1) 50% will vestvested on August 28, 2015,2015; (2) 25% will vest at the end of two years from the date of the General Meeting, on February 26, 2017, and (3) 25% will vest at the end of three years from the date of the General Meeting, on February 26, 2018. 97 Table of Contents The fair value as at On May 10, 2015 and June 1, 2015, and on May 12, 2015 and June 5, 2015, the grant dateCompany’s Compensation Committee and Board of Directors, respectively, under the Equity Compensation Plan, approved the issuance of up to 7,931,500 non-marketable and non-transferrable options, for no consideration, exercisable for up to 7,931,500 of the saidCompany’s ordinary shares, and up to 1,397,302 restricted shares, is about $0.7m million. The valueto approximately 550 of the Company’s officers and senior employees. The said allocation includes a private placement of 404,220 options and 68,270 restricted shares to the Chairman of the Company’s Board of Directors and of 530,356 options and 89,574 restricted shares to ICL’s Chief Executive Officer, which was determined based on the closing price on the stock exchange on the last day preceding the approval date ofapproved by the General Meeting of the Company’s shareholders that is,by special majority on June 29, 2015. The options and restricted shares will vest in three equal tranches: one-third at the end of 12 months after the grant date, one-third at the end of 24 months after the grant date and one-third at the end of 36 months after the grant date. The expiration date of the options in the first and second tranches is at the end of 36 months after the grant date and the expiration date of the options in the third tranche is at the end of 48 months after the grant date. On November 8 and 11, 2015, the Compensation Committee and the Board of Directors, respectively, and on December 23, 2015, the general shareholders meeting, under the 2014 Equity Compensation Plan, approved the issuance, for no consideration, of 120,920 restricted shares to the Company’s directors (excluding the President & CEO, Mr. Stefan Borgas and the Executive Chairman of the Board, Mr. Nir Gilad). The restricted shares will vest in three equal tranches, as follows: (i) 33.33% will vest at the end of 12 months from the date of the annual general shareholders meeting; (ii) 33.33% will vest at the end of 24 months from the date of the annual general shareholders meeting; and (iii) 33.33% will vest at the end of 36 months from the date of the annual general shareholders meeting. Vesting of the Restricted Shares would fully accelerate if the holder thereof ceases to serve as a director of the Company, unless he ceased to hold office due to those certain circumstances regarding early termination of office or imposition of enforcement measures, as set forth in section 231-232a and 233(2) of the Israeli Companies Law. For a description of the 2014 Equity Compensation Plan and additional information about the grants made in 2014 and 2015 under the 2014 Equity Compensation Plan, see “Item 6. Directors, Senior Management and Employees—E. Share Ownership—The 2014 Equity Compensation Plan.” The fair value of the grants under the 2014 Equity Compensation Plan (including both the non-marketable options and the restricted shares) is approximately $36.9 million. The date of approval of the issuance to our CEO by the general meeting of our shareholders will be considered the grant date, and the fair value of the CEO’s grant will be re-measured upon such approval. The fair value will be expensed over the vesting periods (for a description of the vesting periods, see “Item 6. Directors, Senior Management and Employees—E. Share Ownership—The 2014 Equity Compensation Plan”). The expected expense for the periods ending December 31, 2015,ended December 31, 2016, December 31, 2017 and December 31, 2018 is about $0.47$12.6 million, about $0.15 million, about $0.7$6.3 million, and about $0.1$2.0 million, respectively. In addition, In August 2014, ICL’s Board of Directors decided to approve a long-term remuneration plan for approximately 11,800 of the Company’s non-managerial employees in Israel and overseas, who are not managers that participated in the Company’s options and shares plan (that was approved on the same date), in accordance with the terms stipulated in the plan. The maximum cost of the plan is approximately $17 million. As at the date of this Annual Report, the conditions for the aforesaid plan were not met and therefore no liability was included in respect of this plan. Results of Operations We have based the following discussion on our financial statements. You should read the following discussion together with our financial statements. 98 Table of Contents Year Ended December 31, 2015 Compared to Year Ended December 31, 2014 Set forth below are our results of operations for the years ended December 31, 2015 and 2014.     For the Years Ended December 31,   Increase     2015   2014   (Decrease)     (US$ millions)     Sales     5,405       6,111       (12 )% Cost of sales     3,602       3,915       (8 )% Gross profit     1,803       2,196       (18 )% Selling, transport and  marketing expenses     653       839       (22 )% General and administrative expenses     350       306       14 % Research and development expenses     74       87       (15 )% Other expenses     211       259       (19 )% Other income     (250 )     (53 )     372 % Operating income     765       758       1 % Finance expenses, net     108       157       (31 )% Share in earnings of equity-accounted investees     11       31       (65 )% Income before income taxes     668       632       6 % Income taxes     162       166       (2 )% Net income     506       466       9 % Net income attributable to the shareholders of the Company     509       464       10 % Earnings per share attributable to the shareholders of the company:     US $       US $           Basic earnings per share     0.40       0.37           Diluted earnings per share     0.40       0.37           Sales Below is a geographical breakdown of our sales by customer location:     Year Ended December 31,     2015   2014     (USD  millions) Europe     2,068       2,389   North America     1,253       1,374   Asia     1,118       1,299   South America     585       569   Rest of the world     381       480   Total     5,405       6,111   ICL’s sales in the year ended on December 31, 2015 amounted to $5,405 million, compared with $6,111 million in the corresponding period last year. The decrease is attributable mainly to the decrease in the quantities sold as a result of the strike at ICL Dead Sea and at ICL Neot Hovav, in the amount of approximately $452 million, the impact of the change in the currency exchange rates, in the amount of approximately $335 million (mainly from the devaluation of the euro against the dollar), sale of non-core businesses (net of revenue from services in a subsidiary in Germany which is not part of the Company’s core businesses and which is designated for sale), which led to a decrease in sales of approximately $355 million, and a decline in sales as a result of the fire in a fertilizers production facility in Israel, of approximately $51 million. This decrease was partly offset by an increase in the quantities sold, mainly, of potash, phosphates and in the ICL Performance Products segment, including the first-time consolidation of companies acquired, which led to an increase in sales of approximately $461 million and an increase in the selling prices, mainly of phosphate fertilizers, which contributed approximately $26 million to sales. The labor interruptions at ICL Dead Sea and ICL Neot Hovav, which were in response to the efficiency program the Company is currently executing, negatively impacted sales by approximately $452 million, as noted above. The negative impact of the strike on the operating income is approximately $248 million. The Company estimates that it will be able to recover most of the lost potash sales resulting from the strike in future periods, due to the fact that there is excess production capacity in the potash plants while the evaporation activities in the ponds were not interrupted during the strikes. The contribution to the operating income after implementation of the efficiency plan is expected to be higher than the losses caused by the strike. 99 Table of Contents Breakdown of sales by geographical regions The breakdown of sales in the year ended December 31, 2015, shows an increase in the sales in South America mainly from the contribution of the acquisition of Fosbrasil and an increase in quantities of phosphate rock sold. This increase was partly offset as a result of a drop in the quantities of potash sold, among other things, due to the strike at ICL Dead Sea and a decline in the price of the potash sold. The decline in sales in Europe derived mainly from sale of non-core businesses in ICL Performance Products segment, weakness of the euro and the British pound against the U.S. dollar, a decline in the quantities sold of phosphorous-based flame retardants and elemental bromine and a decline in the price of the potash sold. This decline was partly offset by the first-time consolidation of companies acquired. The decline in sales in Asia derived primarily from a decrease in quantities of potash sold in India, mainly due to the strike at ICL Dead Sea, a decline in sales of elemental bromine and bromine-based flame retardants, mainly as a result of the strike, and from sale of non-core businesses in the ICL Performance Products segment. This decrease was partly offset by the impact of the first-time consolidation of the joint venture in China and by an increase in the quantities sold and selling price of the green phosphoric acid in India. In addition, there was a decline in sales in North America, mainly due to a decrease in the quantities and price of the potash sold, which is partly the result of the strike at ICL Dead Sea and a decline in the quantities sold of bromine-based and phosphorous-based flame retardants, bromine-based biocides and magnesium chloride. This decline was partly offset by an increase in sales of fire prevention and flame-retardant products in the ICL Performance Products segment. Cost of Sales The cost of sales in the year ended December 31, 2015 amounted to $3,602 million compared with $3,915 million in the corresponding period last year. The decrease derives primarily from the impact of the change in currency exchange rates, in the amount of approximately $288 million, mainly due to the devaluation of the euro, the shekel and the Brazilian real against the dollar, a decrease in costs resulting from divestitures of non-core businesses )net of costs from provision of services in a subsidiary in Germany which is not part of the Company’s core businesses and which is designated for sale) in the amount of approximately $208 million, the impact of the strike at ICL Dead Sea and at ICL Neot Hovav, in the amount of approximately $147 million, a decrease in the quantities produced and sold deriving from the impact of the fire in a fertilizers production facility in Israel, in the amount of approximately $36 million, compensation received from the Manufacturers Association relating to the strike at ICL Dead Sea and ICL Neot Hovav, in the amount of approximately $17 million, and a drop in the energy prices, in the amount of approximately $9 million. This decrease was partly offset by an increase in the quantities sold (excluding the impact of the strike), including the first-time consolidation of companies acquired, in the amount of approximately $374 million, an increase in the depreciation expenses, in the amount of approximately $14 million, mainly as a result of an increase in the depreciation expenses in ICL Rotem, due to a drop in the scope of the mining activities during the period of the strike last year, together with an increase in the depreciation expenses, in the amount of approximately $6 million, due to acceleration of the depreciation of the facilities of ICL UK stemming from update of the potash reserves, an increase in raw-material prices, in the amount of approximately $5 million, mainly as a result of the increase in sulfur prices, and in the area of specialty fertilizers, and an increase in other operating expenses in the amount of approximately $10 million. The cost of sales in the corresponding period last year included the negative impact of the strike at ICL Rotem, in the amount of approximately $26 million, net of a strike insurance award, in the amount of approximately $9 million. Energy expenses accounted for approximately 7% of our total operating costs in 2014 and 2015. Of these energy expenses, the cost of oil and oil products, electricity and natural gas represented approximately 9% ($30 million), approximately 49% ($170 million) and approximately 29% ($101 million), respectively, in 2014 and approximately 7% ($21 million), approximately 50% ($153 million) and approximately 26% ($79 million), respectively, in 2015. Energy costs decreased in 2015 compared with the prior year by approximately 13%. The decrease stems mainly from a decrease in production due to the strike at ICL Dead Sea and ICL Neot Hovav, a change in tariffs of Israel Electric Company commencing from February 2015 and of OPC and a decline in the gas prices. 100 Table of Contents Selling and marketing expenses Selling and marketing expenses in the year ended December 31, 2015 amounted to $ 653 million, compared with $ 839 million in the corresponding period last year. The decrease in the expenses is attributable mainly to sale of non-core businesses, a decline in the quantities sold due to the strike at ICL Dead Sea and at ICL Neot Hovav, the impact of the change in the currency exchange rates and a decline in shipping prices. Marine transportation expenses were approximately 7% in 2014 and approximately 6% in 2015 of our total operating costs. In 2014 and 2015, our marine transportation expenses amounted to approximately $369 million and approximately $282 million, respectively. 2014 was characterized mainly by a general trend of falling bulk shipping prices, whereas 2015 was characterized by stable prices in the first half of the year and a sharp increase in prices in the third quarter. However in the fourth quarter the marine transportation expenses resumed their downward trend and fell below 500 points at the end of December 2015. This trend continued into 2016. The average index (Baltic Dry Index (“BDI”)) for 2015 was 35% less than the average index for 2014 and the average index for the fourth quarter of 2015 was 43% less than the average index for the fourth quarter 2014. The decline in the marine transportation expenses stems primarily from the decline in fuel prices owing to the drop in the oil prices that started at the end of 2014 and continued throughout all of 2015, as well as due to a decrease in the quantities sold, as a result of the strike at ICL Dead Sea and ICL Neot Hovav. General and administrative expenses General and administrative expenses in the year ended December 31, 2015 amounted to $350 million, compared with $306 million last year. The increase in the general and administrative expenses stems mainly from acquisition of new companies and professional service costs relating to these acquisitions, expenses with respect to the equity compensation plans granted to employees, implementation costs of the global ERP system and other professional service costs in connection with implementation of the Company’s strategy, including establishment of the shared services centers (SHS). Research and development expenses Research and development expenses in the year ended December 31, 2015 amounted to $74 million, a decrease of $13 million compared with last year. The decrease stems, mainly, from a decline in activities as a result of the strike at ICL Dead Sea and at ICL Neot Hovav, as well as a decline in activities relating to the non-core businesses sold during the year. Other income and other expenses, net Other income, net, in the year ended on December 31, 2015 amounted to $39 million. The other income include mainly gains from sale of non-core businesses, in the amount of $215 million, insurance income relating to the fire in the fertilizers production plant in Israel, in the amount of $20 million, and income from the first-time consolidation, in the amount of $7 million, as a result of acquisition of the entire holdings in Allana Potash in June 2015. On the other hand, this income was partly offset by expenses, including an impairment in the value of assets located in Germany, Israel and the United States, in the amount of $90 million, a provision for early retirement in Bromine and in ICL UK as a result of the efficiency plan, in the amount of $48 million, a provision in respect of system-wide electricity costs in Israel, relating to prior periods (June 2013 to December 2014), in the amount of $20 million, update of the provision for removal of historical waste in ICL Industrial Products, in the amount of $20 million, an expense relating to the strike damage caused to external contractors, in the amount of $8 million, update of the provision for arbitration relating to royalties on downstream products in respect of prior years, in the amount of $10 million, and a provision for legal claims, in the amount of $8 million. In the corresponding period last year, the Company recognized an expense, in the amount of $149 million (before interest expenses and the related tax effect) relating to prior periods due to an arbitration decision with respect to royalties relating to downstream products, and a decline in the value of assets of subsidiaries in the United States and Europe, in the amount of $71 million. On the other hand, the Company recognized income from entry into the consolidation, in the amount of $36 million, due to acquisition of the entire holdings in Fosbrasil. 101 Table of Contents Financing expenses, net The net financing expenses in the year ended on December 31, 2015 amounted to $108 million, compared with net financing expenses of $157 million last year – a decrease of $49 million. The decline in the financing expenses compared with last year stems mainly from a decrease, in the amount of about $80 million, in the expense in respect of change in the fair value of foreign-currency hedging transactions, energy and marine transportation, as well as revaluation of short-term financial liabilities. In addition, there was a decrease in the interest expenses in respect of provisions for employee benefits, in the amount of about $4 million, and an increase of about $6 million in the capitalization of credit costs. On the other hand, there was a decline, in the amount of about $39 million, income from exchange rate differences in respect of provisions for employee benefits, compared with expenses last year as a result of the devaluation of the shekel against the dollar approximately 0.3%, compared with a devaluation of about 12% in 2014. Tax expenses The tax expenses in the year ended on December 31, 2015 amounted to $162 million, compared with tax expenses of $166 million last year. The tax rate on the pre-tax income is 24%, compared with a tax rate on pre-tax income of 26% last year. The tax rate in 2015 was favorably impacted by adjustment of the deferred taxes in ICL Rotem to the tax rates in accordance with the Law for Encouragement of Capital Investments, in the amount of about $18 million, which was almost completely offset by tax expenses stemming from the write off of a tax asset in respect of carryforward tax losses in Magnesium, in the amount of about $19 million. In addition, the effective tax rate was favorably impacted by recognition of deferred taxes at high tax rates in respect of losses recognized in connection with the bromine activities in Israel and in the United States, and tax expenses at a rate lower than 26% relating to sale of the Company’s non-core businesses outside of Israel. The tax rate in 2014 was impacted by tax expenses, in the amount of about $62 million, mainly due to assessments agreements of subsidiaries in Europe and the change in the dollar/shekel exchange rate that triggered an increase in the tax rate of the companies operating in Israel the source of which is differences in the measurement bases. Year Ended December 31, 2014 Compared to Year Ended December 31, 2013 Set forth below are our results of operations for the years ended December 31, 2014 and 2013.     For the Years Ended December 31,   Increase     2014   2013   (Decrease)     $ millions     Sales     6,111       6,272       (3 )% Cost of sales     3,915       3,862       1 % Gross profit     2,196       2,410       (9 )% Selling, transport and  marketing expenses     839       850       (1 )% General and administrative expenses     306       282       9 % Research and development expenses     87       83       5 % Other expenses     259       110       135 % Other income     (53 )     (16 )     231 % Operating income     758       1,101       (31 )% Finance expenses, net     157       26       504 % Share in earnings of equity-accounted investees     31       26       19 % Income before income taxes     632       1,101       (43 )% Income taxes     166       281       (41 )% Net income     466       820       (43 )% Net income attributable to the shareholders of the Company     464       819       (43 )% Earnings per share attributable to the shareholders of the company:     US $       US $           Basic earnings per share     0.37       0.64           Diluted earnings per share     0.37       0.64           102 94 Table of Contents     For the Years Ended December 31,             2014       2013     % Increase (Decrease)     US$ millions     US$ millions         Sales     6,111       6,272       (2.6 )% Cost of sales     3,915       3,862       1.4 %                           Gross profit     2,196       2,410       (8.9 )% Selling, transport and marketing expenses     839       850       (1.3 )% General and administrative expenses     306       282       8.5 % Research and development expenses, net     87       83       4.8 % Other expenses     259       110       135.5 % Other income     (53)       (16)       231.3 % Operating income     758       1,101       (31.2 )% Finance expenses     278       158       75.9 % Finance income     (122)       (131)       (6.9 )% Financing expenses, net     156       27       477.8 % Share in earnings of equity accounted investees     30       26       15.4 % Income before income taxes     632       1,100       (42.5 )% Income taxes     166       280       (40.7 )% Net income     466       820       (43.2 )% Attributable to:                         The shareholders of the Company     463       818       (43.4 )% Non-controlling interests     3       2       50.0 % Net income     466       820       (43.2 )% Below is a geographical breakdown of our sales according to customer location:     Year Ended December 31,     2014   2013     $ millions Europe     2,389       2,378   North America     1,374       1,207   Asia     1,299       1,464   South America     569       748   Rest of the world     480       475   Total     6,111       6,272   Sales Our sales in 2014 amounted to approximately $6,111 million, compared with approximately $6,272 million last year. This decrease stems mainly from a decrease in selling prices, which led to a decrease in sales of approximately $431 million. The decrease was partly offset by an increase in quantities sold, including the first timefirst-time consolidation of companies acquired during 2014, which contributed approximately $252 million, and from the impact of changes in currency exchange rates, in the amount of approximately $18 million. As a result of the work interruptions at ICL Dead Sea during the fourth quarter, the Company’s sales were unfavorably impacted, in the amount of approximately $60 million. Below is a geographical breakdown Breakdown of our sales by customer location:     Year Ended December 31,       2014     2013       USD millions   Israel     284       319   North America     1,374       1,207   South America     569       748   Europe     2,389       2,378   Asia     1,299       1,464   Rest of the world     196       156   Total     6,111       6,272   geographical regions The breakdown of sales in 2014 indicates an increase in sales in North America, primarily as a result of a higher sales volumes of potash, bromine basedbromine-based and chlorine basedchlorine-based biocides for water treatment, inorganic bromine products and magnesium products. In addition, there was an increase in sales in Europe deriving from an increase in sales in the Performance Products segment, mainly as a result of the acquisition of Hagesud and an increase in the sales of P2S5. On the other hand, there was a decrease in sales in Asia, mainly due to a decrease in prices of potash compared with the prior year and a decrease in quantities of potash sold in Asia, except for China. The decline in South America stems mainly from a decline in quantities sold and selling prices of fertilizers and potash sold, compared with 2013. The decline in quantities of fertilizer sold in South America, derives, mainly, from the impact of the strike at ICL Rotem and from a decline in the quantities of potash sold deriving from a lack of availability of granulated potash. 95 Table of Contents Cost of Sales Our cost of sales in 2014 amounted to approximately $3,915 million, compared with approximately $3,862 million last year,in 2013, an increase of approximately $53 million. The increase in the cost of sales derives, primarily, from an increase in quantities sold, including the first timefirst-time consolidation of companies acquired during 2014, in the amount of about $116 million, the impact of the change in currency exchange rates in the amount of approximately $35 million, from the impact of the strike at ICL Rotem in the amount of approximately $26 million, net of an amount of strike insurance received of approximately $9 million, and an increase in the royalties expenses in the current period due to the arbitration decision in this matter, in the amount of approximately $12 million. This increase was partly offset by a decline in the raw material and energy prices, in the amount of approximately $56 million, a decrease in salaries expenses in the amount of about $39 million, mainly due to the impact of retirement of employees at ICL Rotem, and from a decrease in other operating expenses in the amount of approximately $32 million, stemming from, among other things, a decrease in the expenses for maintenance and subcontractors and a decline in royalties due to the drop in sales. Energy costs constituted approximately 7% of ICL’s total operating costs in 2014. Energy costs in 2014 decreased compared with 2013 due to the increased use of natural gas which leads to a savings as a result of the switch from the use of expensive fuels, and from the undertaking to purchase electricity from OPC, at lower costs compared with the price of the electricity purchased from the Israel Electric Company, which contributed to a reduction in the energy costs.costs in 2014. 103 Table of Contents Selling and marketing expenses Our selling and marketing expenses amounted to approximately $839 million in 2014, compared with selling and marketing expenses of approximately $850 million in 2013. The selling and marketing expenses include, mainly, costs with respect to marine shipping, overland transport, selling commissions and employee salaries. The decrease in the expenses stems mainly from a decrease in shipping expenses as a result of a decline in marine and overland shipping costs, and a change in the mix of destinations and products. Marine shipping expenses constituted about 7% of ICL’s total operating costs in 2014, totaling approximately $369 million. After several years of falling marine bulk transportation prices, commencing from mid-2013 there has been an increase in shipping prices which reached a level of 2,337 points in the middle of December 2013 (the BDI - Baltic Dry Index- marine shipping index), a record high for the last 3 years. Starting from the first quarter of 2014, prices fell to their level prior to the increase and the average index for 2014 was 8% less than the average index for 2013. The impact of the decline in the marine shipping prices, as stated above, was partly offset by an increase in marine shipping resulting from an increase in quantities sold. General and administrative expenses Our general and administrative expenses amounted to approximately $306 million in 2014, compared with general and administrative expenses of approximately $281 million in 2013. General and administrative expenses increased as a result of, among other things, first timefirst-time consolidation of companies acquired in 2014 as well as due to consultingprofessional service costs and other expenses in connection with updating and implementing the Company’s strategy, issuance of the Company’s shares on the New York Stock Exchange, and additional processes. Research and development expenses Our research and development expenses were approximately $87 million in 2014, an increase of about $4 million compared with the prior year. 2013. Other income and other expenses, net Other expenses, net, in 2014, amounted to about $207$206 million, compared with about $ 94 million last year.in 2013. Other expenses includeincluded mainly unusual items,an expense, in the amount of about $149 million (before interest expenses and tax impact) relating to prior periods, due to the arbitration decision regarding the royalties’ issue, and from an impairment in value of assets in subsidiaries in the US and Europe, in the amount of about $71 million. This increase was partly offset by income of about $36 million resulting from a capital gain following the completion of the acquisition of 100% holdings in Fosbrasil. Other expenses last year included primarily a provision for early retirement at ICL Rotem in the amount of about $60 million, a provision for treatment of waste in the amount of about $25 million, and an impairment in the value of assets in the amount of about $10 million. 96 Table of Contents Financing expenses, net Our net financefinancing expenses amounted to approximately $156$157 million in 2014, compared with net finance expenses of approximately $27$26 million last year.in 2013. Financing expenses include a provision in the amount of about $32 million, mainly in connection with the arbitration decision dated May 19, 2014 regarding the royalties’ issue. After elimination of the above mentionedabove-mentioned provision, the financing expenses amounted to approximately $124 million – an increase of about $97 million, compared with last year.2013. The increase derives mainly from an increase in interest expenses, in the amount of approximately $21 million, expenses in respect of a change in the fair value of hedging, energy, and marine shipping transactions in the period, in the amount of approximately $41 million, compared with revenues of approximately $20 million in 2013, and as a result of expenses in respect of a change in the fair value of currency and interest transactions and the effects of exchange rate differences on provisions for employee benefits in the period, in the amount of approximately $6 million, compared with revenues of approximately $21 million in 2013. On the other hand, there was a decrease in interest expenses in respect of provisions for employee benefits, in the amount of about $3 million. In addition, borrowing costs, in the amount of approximately $16 million, were capitalized during the period.2014. 104 Table of Contents Tax expenses Our tax expenses amounted to approximately $166 million in 2014, compared to approximately $280$281 million last year.in 2013. The tax rate on the pre-tax income is approximately 26.3%, compared with approximately 25.5% last year. The rate of tax expenses 2014 was impacted by unusual tax expenses in the amount of approximately $62 million, mainly as a result of an assessment agreement in subsidiaries in Europe, from the change in the shekel/dollar exchange rate that gave rise to an increase in the tax rate of the companies operating in Israel the source of which are differences in the measurement basis, and an increase in the Israeli Corporate Tax rate to 26.5%. In 2013, tax expenses included unusual tax expenses recognized in respect of the release of trapped earnings, in the amount of approximately $107 million. On December 29, 2013, an assessment was received from the Israeli Tax Authority stating that the Company is required to make an additional tax payment in the amount of $230 million over and above the amount paid Segment Information Segment Information for the years 2009 to 2011. The Company filed an appeal of the assessment with the Tax Authorities. On January 27, 2015, the Company received an order from the Tax Authorities which sets the additional tax amount at approximately $200 million. The Tax Authorities’ main contention is that the ICL subsidiaries, Dead Sea Works and Rotem Amfert Negev, are not entitled to benefits under the Encouragement of Capital Investments Law, as of the effective date of Amendment No. 60 of the said Law in 2005. The Company disagrees with the position of the Tax Authorities, and on February 25, 2015 filed an appeal to the order. In the estimation of Company Management, based on its legal advisors, the chances that the Company’s contentions will ultimately be accepted at the end of the appeal proceeding are greater than the chances that they will be rejected and, therefore, no provision for tax has been included in the financial statements in respect of the said assessment. Year Ended December 31, 20132015 Compared to Year Ended December 31, 2012 Set forth below are our results of operations2014     Year Ended December 31, Sales by segment   2015   2014     ($ millions) ICL Fertilizers     3,067       3,401   ICL Industrial Products     1,115       1,337   ICL Performance Products     1,472       1,614   Others and setoffs     (249 )     (241 ) Total     5,405       6,111   ____________________ Note: The sales data for the years ended December 31, 2013segments are before setoffs of inter-segment sales.     Year Ended December 31, Operating income by segment   2015   2014     ($ millions) ICL Fertilizers     529       670   ICL Industrial Products     (24 )     (62 ) ICL Performance Products     319       197   Other and offsets     (59 )     (47 ) Operating income (consolidated)     765       758   Fertilizers Below is a breakdown of the sales, gross profit and 2012.operating income of our Fertilizers segment in 2015 and 2014, by areas of operation (before setoffs of inter-segment sales):     Year Ended December 31,     2015   2014 Sales*                 Potash     1,450       1,816   Fertilizers and phosphate     1,703       1,678   Gross profit                 Potash     671       865   Fertilizers and phosphate     443       421   Operating income                 Potash     375       536   Fertilizers and phosphate     154       133   Adjusted operating income (1)                 Potash (2)     575       544   Fertilizers and phosphate (3)     165       141   ____________________ * Includes revenues from inter-segment sales 105 97 Table of Contents     For the Years Ended December 31,     % Increase (Decrease)     2013     2012             US$ millions     US$ millions         Sales     6,272       6,471       (3.1 )% Cost of sales     3,862       3,760       2.7 % Gross profit     2,410       2,711       (11.1 )% Selling, transport and marketing expenses     850       797       6.6 % General and administrative expenses     282       249       13.3 % Research and development expenses, net     83       74       12.2 % Other expenses     110       61       80.3 % Other income     (16)       (24)       (33.3 )% Operating income     1,101       1,554       (29.2 )% Finance expenses     158       82       92.7 % Finance income     (131)       (21)       523.8 % Financing expenses, net     27       61       (55.7 )% Share in earnings of equity accounted investees     26       27       (3.7 )% Income before income taxes     1,100       1,520       (27.6 )% Income taxes     280       218       28.4 % Net income     820       1,302       (37.0 )% Attributable to:                         The shareholders of the Company     818       1,300       (37.1 )% Non-controlling interests     2       2       –   Net income     820       1,302       (37.0 )% (1) Adjusted operating income is a non-IFRS number. See “Item 3.Key Information—A. Selected Financial Data” for a definition of adjusted operating income and a reconciliation to the comparable IFRS measure. (2) The adjusted items in 2015 include the impact, of employee strike at ICL Dead Sea in the amount of about $185 million, an update of the provision for arbitration with respect to royalties relating to downstream products in respect of prior years, in the amount of approximately $9 million, a provision for early retirement in ICL UK stemming from implementation of the efficiency plan, in the amount of approximately $6 million, a provision for a legal claim, in the amount of approximately $6 million and income from the first time consolidation of Allana Potash, in the amount of approximately $7 million. The adjusted item in 2014 include a provision for arbitration relating to royalties in respect of prior periods, in the amount of about $ 8 million. (3) The adjusted items in 2015 include a provision for system-wide electricity costs in Israel relating to prior periods in the amount of about $6 million, consulting expenses in connection with closing of the joint venture transaction in China, in the amount of about $6 million and $1 million gains from an equity divestment. The adjusted items in 2014 include the impact of the strike in ICL Rotem, in the amount of about $16 million, offset by strike insurance received, in the amount of about $8 million. Potash – Production, Sales Our and Closing Inventories Production, sales and closing inventory of potash in 2015 and 2014.     Year Ended December 31,     2015   2014     (In thousands of tons) Production     4,195       5,143   Sales to external customers     4,259       5,034   Sales to internal customers     298       321   Total sales (including internal sales)     4,557       5,355   Closing inventory     552       914   Phosphates – Production and Sales Below is a breakdown of production and sales for fertilizers and phosphates in 2015 and 2014.     Year Ended December 31,     2015   2014     (In thousands of tons) Phosphate rock                 Production of rock     4,417       3,357   Sales*     1,624       920   Phosphate rock used for internal purposes     2,767       2,398   Fertilizers                 Production     1,639       1,590   Sales*     1,584       1,695   ____________________ * To external customers. Geographical distribution of external sales in 2013 amounted2015 and 2014:     Year Ended December 31,     2015   2014 Europe     1,146       1,238   Asia     820       798   South America     362       422   North America     213       327   Rest of the world     286       357   Total     2,826       3,142   106 Table of Contents Potash Sales The decrease in sales in the year ended on December 31, 2015 is attributable mainly to approximately $6,272 million, compared with approximately $6,471 million in 2012,the strike at ICL Dead Sea, which led to a decrease in sales, in the amount of approximately 3.1%. This decrease is due$315 million, the impact of the change in currency exchange rates, in the amount of approximately $86 million, mainly tofrom a devaluation of the exchange rates of the euro and the British pound against the dollar, and a decrease in the selling prices, that ledin the amount of approximately $34 million. On the other hand, this decrease was partly offset by an increase in the quantities sold, in the amount of approximately $69 million. Production and Sales The quantity of potash sold to external customers in the year ended December 31, 2015 was approximately 775 thousand tonnes lower than in 2014, mainly due to a decrease in the totalquantities sold to the United States, India, Brazil and China. Production of potash in the year ended December 31, 2015 was approximately 948 thousand tonnes lower than in 2014, due to a decrease in the production in Israel as a result of the strike, which was partly offset by an increase in production in the United Kingdom. Operating income The operating income in the year ended December 31, 2015 was impacted by the strike at ICL Dead Sea, in the amount of approximately $193 million, a decrease in the selling prices, in the amount of approximately $34 million, an increase in the cost of sales, due to, among other things, an increase in the quantities sold (excluding the strike impact), in the amount of approximately $22 million, an increase in expenses in connection with update and implementation of the Company’s strategy and additional processes, in the amount of approximately $30 million, update of the provision for arbitration with respect to royalties relating to downstream products in respect of prior years, in the amount of approximately $10 million, a provision for early retirement in ICL UK stemming from implementation of the efficiency plan, in the amount of approximately $6 million, a provision for a legal claim, in the amount of approximately $6 million, and acceleration of the depreciation of the facilities of ICL UK as a result of an update of the potash reserves, in the amount of approximately $6 million. This decrease was partly offset by an increase in the quantities sold, in the amount of approximately $69 million, a decline in the shipping expenses, in the amount of approximately $18 million, as a result of a decline in the shipping prices, the impact of the changes in the currency exchange rates, in the amount of approximately $9 million, compensation received from the Manufacturers Association of Israel for the strike, in the amount of approximately $8 million, a decrease in the energy prices, in the amount of approximately $6 million, income from the first time consolidation of Allana Potash, in the amount of approximately $7 million, and a decline in other operating expenses, in the amount of approximately $21 million, as a result of, among other things, a drop in the number of employees and a decline in the maintenance expenses. The operating income in 2014 was impacted by a provision for arbitration with reference to royalties relating to prior years, in the amount of approximately $8 million. Fertilizers and Phosphates Sales The increase in sales in the year ended December 31, 2015 stems from an increase in the quantities sold, mainly due to the first time consolidation of the joint venture in China (YPH), which gave rise to an increase in sales, in the amount of approximately $159 million, along with an increase in the selling prices of phosphate fertilizers, which gave rise to an increase in sales of approximately $495$40 million. On the other hand, this increase was partly offset by the impact of the change in the currency exchange rates, in the amount of approximately $123 million, mainly as a result of devaluation of the exchange rate of the euro against the dollar, and a decline in sales as a result of the impact of the fire in a fertilizers production facility in Israel, in the amount of approximately $51 million. Operating income The increase in operating income in the year ended December 31, 2015 derives mainly from an increase in the quantities sold, primarily as a result of the first time consolidation of the joint venture in China (YPH), in the amount of approximately $159 million, an increase in the selling prices, in the amount of approximately $40 million, insurance income relating to the fire in a fertilizers production facility in Israel, in the amount of approximately $19 million, a drop in the energy prices, in the amount of approximately $17 million, a decline in shipping expenses due to a decrease in the shipping prices, in the amount of approximately $15 million, and the impact of the change in the currency exchange rates, in the amount of approximately $11 million. On the other hand, this increase was partly offset by an increase in the cost of sales, as a result of an increase in the quantities produced and sold, net of the impact of the fire in the fertilizers production facility in Israel, in the amount of approximately $144 million, a decrease in the operating income, in the amount of approximately $16 million, due to a decline in the quantities produced and sold as a result of the impact of the fire in the fertilizers production facility in Israel, an increase in the prices of raw materials, in the amount of approximately $15 million, deriving mainly from an increase in the sulfur prices and in the area specialty fertilizers, an increase in expenses in connection with update and implementation of the Company’s strategy and additional processes, in the amount of approximately $19 million, an increase in the depreciation expenses, in the amount of approximately $15 million, mainly as a result of a decline in the scope of the mining during the period of the strike at ICL Rotem last year, a provision for system-wide electricity costs in Israel relating to prior periods (June 2013 through December 2014), in the amount of approximately $6 million, an increase in the shipping costs, in the amount of approximately $3 million, as a result of the increase in the quantities shipped, and an increase in other operating expenses, in the amount of approximately $30 million, stemming from, among other things, a current provision for system-wide electricity costs, in the amount of approximately $4 million, and an increase in consulting expenses in connection with closing of the joint venture transaction in China. The operating income last year was impacted by the strike at ICL Rotem, in the amount of approximately $16 million, net of insurance proceeds relating to the strike, in the amount of approximately $8 million. 107 Table of Contents Production and Sales: The quantity of the fertilizers sold in the year ended December 31, 2015 is lower than in 2014, mainly due to a decrease in the sales in Brazil and Europe. Production of phosphate fertilizers, in the year ended December 31, 2015, was approximately 49 thousand tonnes higher than in 2014 as a result of the first-time consolidation of YPH and net of the impact of the fire in the fertilizers production facility in Israel that took place in the second quarter of 2015. Production of phosphate rock, in the year ended December 31, 2015, was approximately 1,060 thousand tonnes higher than in 2014, as a result of the first-time consolidation of YPH and an increase in production at the rock production facilities. Industrial Products     Year Ended December 31,     2015   2014     ($ millions) Sales(*)     1,115       1,337   Gross profit     310       380   Operating income (loss)     (24 )     (62 ) Adjusted operating income(**)     145       128   ____________________ (*) Includes revenues from inter-segment sales (**) Adjusted operating income is a non-IFRS number. See “Item 3. Key Information—A. Selected Financial Data” for a definition of adjusted operating income and a reconciliation to the comparable IFRS measure. Adjusted items in 2015 include the impact, of employee strike at ICL Dead Sea in the amount of about $49 million, an impairment of the value of assets in Israel and the United States, in the amount of $56 million, a provision for early retirement, in the amount of $42 million, a provision for waste removal in the amount of $20 million, and a provision for a legal claim, in the amount of $2 million. Adjusted items in 2014 include a provision for arbitration relating to royalties in respect of prior periods, in the amount of about $ 141 million, and impairment in the value of assets in the United States and Europe, in the amount of approximately $49 million. Geographical distribution of external sales in 2015 and 2014:     Year Ended December 31,     2015   2014 North America     444       455   Europe     389       464   Asia     194       303   South America     31       34   Rest of the world     40       61   Total     1,098       1,317   108 Table of Contents Sales: Sales of the ICL Industrial Products segment in the year ended December 31, 2015 were $1,115 million – a decrease of $222 million compared with last year. The impact of the strike at ICL Neot Hovav and ICL Dead Sea decreased sales by approximately $112 million, in addition to the decrease in the quantities sold, in the amount of approximately $78 million, mainly of bromine-based and phosphorous-based flame retardants and elemental bromine, which does not derive from the strike, and the impact of currency exchange rates, in the amount of approximately $45 million. This decrease was partly offset by an increase in the selling prices, which contributed approximately $13 million, mainly of bromine-based flame retardants and of elemental bromine. Operating income (loss): The operating loss in the year ended December 31, 2015 totaled $24 million, compared with an operating loss of $62 million last year. The adjusted operating income in the year ended December 31, 2015, amounted to approximately $145 million, as compared with adjusted operating income of $128 million last year. The operating loss in the year ended December 31, 2015 was impacted by the strike at ICL Neot Hovav and ICL Dead Sea, in the amount of approximately $58 million, a provision for impairment of the value of assets in Israel and the United States, in the amount of approximately $56 million, a provision for early retirement, in the amount of approximately $42 million, a provision for waste removal in the amount of approximately $20 million, and a provision for a legal claim, in the amount of approximately $2 million. On the other hand, the Company received compensation from the Manufacturers Association of Israel in respect of the strike, in the amount of approximately $9 million. The operating loss in 2014 was impacted by a provision for arbitration in respect of royalties relating to prior periods, in the amount of approximately $141 million, and from an impairment in the value of assets in the United States and Europe, in the amount of approximately $49 million. The adjusted operating income in the year ended December 31, 2015 was favorably impacted, mainly due to an increase in the selling prices, in the amount of $13 million, primarily of bromine-based flame retardants and elemental bromine, a decline in the energy and raw-material prices, in the amount of approximately $13 million, a decline in the shipping prices, in the amount of approximately $4 million, and a decrease in other operating expenses, in the amount of approximately $11 million, mainly payroll expenses resulting from the implementation of the efficiency plan. This increase was partly offset by the mix of products sold and by a decrease in the quantities produced and sold, in the amount of approximately $14 million, and an increase in the expenses relating to the update and implementation of the Company’s strategy and additional processes, in the amount of approximately $10 million. Performance Products     Year Ended December 31,     2015   2014     ($ millions) Sales*     1,472       1,614   Gross profit     409       536   Operating income     319       197   Adjusted operating income**     139       192   ____________________ (*) Includes revenues from inter-segment sales (**) Adjusted operating income is a non-IFRS number. See “Item 3. Key Information—A. Selected Financial Data” for a definition of adjusted operating income and a reconciliation to the comparable IFRS measure. The adjusted items in 2015 include the impact, of income from sales of non core businesses, in the amount of $214 million and, an impairment in value of assets in Germany, in the amount of $34 million. The adjusted item in 2014 include an income from entry into the consolidation, in the amount of $36 million and, an impairment in value of assets of subsidiaries in Europe, in the amount of $22 million, and an increase in costs due to the strike at ICL Rotem, in the amount of approximately $9 million. 109 Table of Contents Geographical distribution of external sales in 2015 and 2014:     Year Ended December 31,     2015   2014 North America     538       522   Europe     524       671   South America     173       90   Asia     99       191   Rest of the world     54       59   Total     1,388       1,533   Sales The total sales in the year ended on December 31, 2015 amounted to $1,472 million, a decrease of $142 million compared with last year. This decrease stems from a decline in the quantities sold, as a result of sale of non-core businesses (net of revenue from services in a subsidiary in Germany which is not part of the Company’s core businesses and which is designated for sale), in the amount of approximately $355 million, and the impact of the changes in currency exchange rates, in the amount of approximately $79 million, mainly from the devaluation of the euro and the Brazilian real against the dollar. On the other hand, there was an increase in the quantities sold, mainly due to the first-time consolidation of companies acquired, in the amount of approximately $291 million, and an increase in the selling prices, in the amount of approximately $1 million. Operating income The segment’s operating income in the year ended on December 31, 2015 amounted to $319 million, an increase of $122 million compared with last year. Adjusted operating income amounted to $139 million, compared with adjusted operating income of $192 million in 2014. The rate of the adjusted operating income from the sales amounted to 9%, compared with 12% last year The results in the period of the report were impacted by income from sales of non-core businesses, in the amount of approximately $214 million and, on the other hand, by an impairment in value of assets in Germany, in the amount of approximately $34 million. The operating income last year was impacted by income from entry into the consolidation, in the amount of approximately $36 million and, on the other hand, by an impairment in value of assets of subsidiaries in Europe, in the amount of approximately $22 million, and an increase in costs due to the strike at ICL Rotem, in the amount of approximately $10 million (net of insurance proceeds relating to the strike, in the amount of approximately $1 million). The decrease in the adjusted operating income in the year ended on December 31, 2015, is mainly due to a decline stemming mainly from sale of non-core businesses, in the net amount of approximately $42 million, an increase in operating expenses in connection with update and implementation of the Company’s strategy and additional processes, in the amount of approximately $10 million, the impact of the changes in the currency exchange rates, in the amount of approximately $7 million, an increase in the depreciation expenses in the amount of approximately $2 million, an impairment in value of inventory, in the amount of approximately $1 million, an increase in the shipping expenses, in the amount of approximately $1 million, due to an increase in the quantities sold, an increase in other operating expenses, in the amount of approximately $37 million, as a result of, among other things, salaries expenses stemming from expansion of the marketing set-up in the food sector, due to implementation of the Company’s strategy, an increase in personnel in some of the production lines due to an increase in the quantities sold as a result of a shortage of raw materials and acquisition from third parties, as a result of shutdown of the ammonia tank due to the fire in a fertilizers production facility in Israel, consulting costs with respect to improvement of processes with the goal of operational efficiency, and consulting costs with respect to completion of the acquisition of companies in the food sector. On the other hand, this decrease was partly offset by an increase in the quantities sold, including the first timefirst-time consolidation of the financial statements of certain companies acquired, which led to an increase in sales of approximately $230 million and a change in the currency exchange rates, which contributed to an increase in sales of approximately $65 million. Below is a geographical breakdown of our sales according to customer location:     Year Ended December 31,       2013     2012       USD millions   Israel     319       325   North America     1,207       1,252   South America     748       815   Europe     2,378       2,332   Asia     1,464       1,615   Rest of the world     156       132   Total     6,272       6,471   The sales breakdown indicates an increase in sales in Europe, stemming mainly from an increase in the quantities of potash sold. On the other hand, there was a decrease in sales, mainly in Asia, as a result of a decline in the selling prices of potash and fertilizers in India, a decrease in sales in South America, deriving mostly from impact of the decline in the price of potash, and a decrease in sales in North America, mainly due to a decline in sales of bromine based flame retardants, inorganic bromine products, and chlorine based biocides for water treatment. Cost of Sales The cost of sales in 2013 amounted to approximately $3,862 million, compared with approximately $3,760 million in 2012, an increase of approximately $102 million. The increase stems from an expense, in the amount of approximately $133$38 million, resulting from an increasea decline in quantities sold, which includes first time consolidation of the financial statements of companies acquired in 2012 and 2013, the impact of a change in the exchange rates,raw-material prices, in the amount of approximately $85 million, and a decline in value of inventory, in the amount of approximately $10 million. This increase was partly offset by a decline in energy costs and raw material prices (mainly sulfur), in the amount of approximately $98 million, and by a decrease in royalties and selling commissions due to a decrease in total sales, in the amount of approximately $29 million. 98 Table of Contents Selling and marketing expenses Selling and marketing expenses amounted to approximately $850 million in 2013, compared with approximately $797 million in 2012. The selling and marketing expenses include, mainly, costs with respect to marine shipping, overland transport, selling commissions and employee salaries. The increase stems mainly from the increase in quantities sold and, accordingly, the quantities shipped, in the amount of approximately $43 million, a change in the exchange rates, in the amount of approximately $5$8 million, and an increase in the amount of approximately $4 million, from the first time consolidation of the results of companies and operations acquired in 2013 and 2012. General and administrative expenses General and administrative expenses amounted to approximately $281 million in 2013, compared with approximately $249 million in 2012. Our general and administrative expenses include mainly salaries. The salaries in Israel are paid in NIS. The increase stems primarily from the impact of currency exchange rates due to the strengthening of the value of the NIS (on average) against the U.S. dollar during 2013, and an increase in expenses in connection with options granted to employees in 2012. Research and development expenses Research and development expenses were approximately $83 million in 2013, compared with approximately $74 million in 2012. Other expenses (income) Other expenses in 2013 include mainly an expenseselling prices, in the amount of approximately $60 million in respect of an early retirement plan at Rotem, a provision of approximately $25 million for waste evacuation in Bromine, and an impairment of assets in the amount of approximately $10$1 million. Other expenses and income in 2012 included mainly a provision for early retirement in the amount of approximately $55 million in Bromine and Rotem, and income in the amount of approximately $11 million in respect of VAT refunds in foreign subsidiaries. 110 Financing expenses, net Net financing expenses amounted to approximately $27 million in 2013, compared with net financing expenses of approximately $61 million in 2012. The decrease in net financing expenses in 2013 compared with 2012 stems mainly from an increase in finance income in 2013 as a result of change in the fair value of financial derivatives and from revaluation of net short term financial liabilities, in the amount of approximately $60 million. On the other hand, there was an increase in finance expenses due to the impact of exchange rate differences on provisions for employee benefits, in the amount of approximately $13 million, stemming from appreciation of the NIS against the U.S. dollar, at the rate of approximately 7% in 2013, compared with appreciation of the NIS against the U.S. dollar at the rate of approximately 2.3%, in 2012. In addition, there was an increase in interest expenses, which totaled approximately $42 million in 2013, compared with $29 million in 2012. The increase in financing income from the change in fair value of derivative financial instruments from $9 million in 2012 to $123 million in 2013 was a result of the appreciation of the NIS against the U.S. dollar, as described above, and an increase in the fair value of hedges relating to marine shipping prices, which increased approximately 95% in 2013 as compared to prices at the end of 2012. For additional information about our hedging transactions, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk”. Tax expenses Tax expenses amounted to approximately $280 million in 2013, compared to approximately $218 million in 2012. The tax rate on pre-tax income was about 25.5% in 2013 compared with about 14.3% in 2012. The increase in the tax rate in 2013 compared with 2012 is derived mainly from unusual tax expenses, in the amount of approximately $108 million, due to the Company’s decision to release trapped earnings and the impact of updating our deferred taxes as a result of an increase in the corporate rate in Israel to 26.5% commencing from January 2014. 99 Table of Contents This increase was partly offset by the impact of the change in the exchange rate of the U.S. dollar against the NIS in 2013, compared with 2012. We pay Israeli taxes in Israel in NIS but measure such taxes for our accounting purposes in U.S. dollars, so the appreciation of the NIS against the U.S. dollar in 2013 triggered a decline in the tax rate as measured in U.S. dollars. On December 29, 2013, an assessment was received by the Tax Authorities stating that the Company is required to make an additional tax payment in the amount of $230 million over and above the amount paid for the years 2009 to 2011. The Company filed an appeal of the assessment with the Tax Authorities. On January 27, 2015, the Company received an order from the Tax Authorities which puts the additional tax amount at approximately $200 million. The Tax Authorities’ main contention is that the ICL subsidiaries, Dead Sea Works and Rotem Amfert Negev, are not entitled to benefits under the Encouragement of Capital Investments Law, as of the effective date of Amendment No. 60 of the said Law in 2005. The Company disagrees with the position of the Tax Authorities, and on February 25, 2015 with an appeal of the order was file. In the estimation of Company Management, based on its legal advisors, the chances that the Company’s contentions will ultimately be accepted at the end of the appeal proceeding are greater than the chances that they will be rejected and, therefore, no provision for tax has been included in the financial statements in respect of the said assessment. We currently benefit from reduced tax rates in Israel as a result of certain tax laws. These benefits will gradually expire. See “Item 10. Additional Information—E. Taxation—Israeli Tax Considerations—Taxation of the Company—Reform of the Investments Law—2011”. Segment Information Segment Information for Year Ended December 31, 2014 Compared to Year Ended December 31, 2013     Year Ended December 31,       2014     2013       $ millions   Sales by segment             ICL Fertilizers     3,402       3,655   ICL Industrial Products     1,337       1,297   ICL Performance Products     1,614       1,575   Others and setoffs     (242)       (255)   Total     6,111       6,272       Year Ended December 31, Sales by segment   2014   2013     ($ millions) ICL Fertilizers     3,401       3,655   ICL Industrial Products     1,337       1,297   ICL Performance Products     1,614       1,575   Others and setoffs     (241 )     (255 ) Total     6,111       6,272   ____________________ Note: The sales data for the segments are before setoffs of inter segmentinter-segment sales.     Year Ended December 31,       2014     2013       $ millions   Operating income by segment             ICL Fertilizers     670       821   ICL Industrial Products     (62)       115   ICL Performance Products     197       196   Other and offsets     (47)       (31)   Operating income(consolidated)     758       1,101       Year Ended December 31, Operating income by segment   2014   2013     ($ millions) ICL Fertilizers     670       820   ICL Industrial Products     (62 )     115   ICL Performance Products     197       196   Other and offsets     (47 )     (30 ) Operating income(consolidated)     758       1,101   Fertilizers Below is a breakdown of the sales, gross profit and operating income of our Fertilizers segment in 2014 and 2013, by areas of operation (before setoffs of inter segmentinter-segment sales):     Year Ended December 31,     2014   2013 Sales(*)                 Potash     1,816       2,027   Fertilizers and phosphate     1,678       1,754   Gross profit                 Potash     865       1,073   Fertilizers and phosphate     421       424   Operating income                 Potash     536       740   Fertilizers and phosphate     133       79   Adjusted operating income(1)                 Potash(2)     544       740   Fertilizers and phosphate(3)     141       139   ____________________ (*) Includes revenues from inter-segment sales. (1) Adjusted operating income is a non-IFRS number. See “Item 3. Key Information—A. Selected Financial Data” for a definition of adjusted operating income and a reconciliation to the comparable IFRS measure. (2) Adjusted items in 2014 include a provision for arbitration relating to royalties in respect of prior periods, in the amount of about $ 8 million. (3) Adjusted items in 2014 include the impact of the strike at ICL Rotem, in the amount of about $ 16 million, net of receipt of strike insurance reimbursement, in the amount of about $ 8 million. Adjusted items in 2013 include a provision for early retirement at ICL Rotem, in the amount of about $ 60 million. 111     Year Ended December 31,     2014   2013 Sales             Potash     52 %     54 % Phosphate     48 %     46 % Operating income                 Potash     80 %     90 % Phosphate     20 %     10 % 100 Table of Contents Potash Revenues in this segment include sales of potash from Israel, Spain (ICL Iberia) and the United Kingdom (ICL UK). Potash – RevenuesProduction, Sales and Profit Closing Inventories Below is a breakdown of revenueproduction, sales and operating incomeclosing inventories for potash in 2014 and 2013.     Year Ended December 31,     2014   2013     (In thousands of tons) Production     5,143       5,155   Sales to external customers     5,034       4,712   Sales to internal customers     321       323   Total sales (including internal sales)     5,355       5,035   Closing inventory     914       1,126   Phosphates – Production and Sales Below is a breakdown of production and sales for fertilizers and phosphates in 2014 and 2013.     Year Ended December 31,     2014   2013     (In thousands of tons) Phosphate rock                 Production of rock     3,357       3,578   Sales(*)     920       879   Phosphate rock used for internal purposes     2,398       2,577   Fertilizers                 Production     1,590       1,747   Sales(*)     1,695       1,695   ____________________ (*) To external customers. Geographical distribution of external sales in 2014 and 2013.     Year Ended December 31,       2014     2013       $ millions   Revenues*     1,816       2,027   Operating income     536       740   * Includes revenue from inter segment sales.     Year Ended December 31,     2014   2013 Europe     1,238       1,272   Asia     798       959   South America     422       604   North America     327       194   Rest of the world     357       351   Total     3,142       3,381   Potash Sales: The decrease in revenues in 2014, compared with the corresponding period lastprevious year, stems from a decrease in selling prices, which led to a decrease in sales, in the amount of about USD$ 325 million. In contrast, this decrease was partly offset by an increase in quantities sold, which led to an increase in revenues, in the amount of about USD$ 103 million and from the impact of the change in the currency exchange rates, in the amount of about USD$ 12 million. 112 Table of Contents Operating income The decrease in operating income in 2014 stems mainly from a decrease in the selling prices of potash, which led to a decline, in the amount of about USD$ 325 million, an increase in the cost of sales due to an increase in quantities sold, in the amount of about USD$ 19 million, and from a one-timean expense in connection with a provision for arbitration relating to royalties in respect of prior periods, in the amount of about USD$ 8 million. On the other hand, this decrease was partly offset by the impact of the increase in quantities of potash sold, in the amount of about USD$ 103 million, a decline in the energy costs, in the amount of about USD$ 35 million, from a decline in shipping expenses, in the amount of about USD$ 7 million, and from a decline in other operating expenses, in the amount of about USD$ 3 million. Below is a breakdown of production, sales Production and closing inventories for potash in 2014 and 2013. Potash – Production, Sales and Closing Inventories     Year Ended December 31,       2014     2013       In thousands of tons   Production     5,143       5,155   Sales to external customers     5,034       4,712   Sales to internal customers     321       323   Total sales (including internal sales)     5,355       5,035   Closing inventory     914       1,126   The quantity of potash sold to external customers in 2014 is about 322 thousand tonnes higher than in 2013, mainly due to an increase in the quantities sold to China, the United States and Europe, which was partly offset by a decline in the quantities sold to India and South America. Production of potash in 2014 was about 12 thousand tonnes lower, than in 2013, as a result of a decrease in production in Israel, due to, among other things, labor interruptions at ICL Dead Sea, which was partly offset by an increase in production in the United Kingdom and in Spain. 101 Table of Contents Fertilizers and Phosphates Sales: Revenue from fertilizers and phosphates derive from sales in and outside Israel of phosphate rock, fertilizers (including phosphate fertilizers, compound, liquid and fully soluble fertilizers and slow releaseslow-release and controlled releasecontrolled-release fertilizers), phosphoric acid used as a raw material for fertilizer production (“green acid”) and other products. Phosphates – Revenues and Profit Below is a breakdown of revenue and operating income for fertilizers and phosphates in 2014 and 2013.     Year Ended December 31,       2014     2013       $ millions   Revenues*     1,678       1,754   Operating income     133       79   Adjusted operating income(1)     141       139   * Includes revenue from inter segment sales. (1) In 2013 a provision for early retirement at ICL Rotem, in the amount of about USD 60 million was booked. In 2014 the impact of the strike at ICL Rotem, in the amount of about USD 16 million, net of receipt of strike insurance reimbursement, in the amount of about USD 8 million. The decrease in sales in 2014 stems from a decrease in selling prices of phosphate fertilizers, which caused a decrease in the sales of about USD$ 94 million. This decrease was partly offset as a result of the change in the currency exchange rates, in the amount of about USD$ 18 million. Operating income The increase in operating income in 2014 derives mainly from a decrease in the prices of raw materials, in the amount of about USD$ 33 million, from a decline in salaries expenses, in the amount of about USD$ 36 million, mainly as a result of the retirement of employees at ICL Rotem, from changes in currency exchange rates, in the amount of about USD$ 3 million, a drop in shipping expenses due to a fall in the quantities sold in the amount of about USD$ 2 million, and a decline in other operating costs, in the amount of about USD$ 22 million, due to, among other things, a decrease in maintenance costs and costs of contractors. On the other hand, this increase was partially offset by a fall in selling prices, in the amount of about USD$ 94 million, and the impact of the strike at ICL Rotem, in the amount of about USD$ 16 million, net of receipt of strike insurance reimbursement, in the amount of about USD$ 8 million. Operating income last yearin 2013 was impacted by a provision for early retirement at ICL Rotem, in the amount of about USD$ 60 million. Phosphates – Production and Sales Below is a breakdown of production and sales for fertilizers and phosphates in 2014 and 2013.     Year Ended December 31,       2014     2013       In thousands of tons   Phosphate rock             Production of rock     3,357       3,578   Sales *     920       879   Phosphate rock used for internal purposes     2,398       2,577   Fertilizers                 Production     1,590       1,747   Sales *     1,695       1,695   * To external customers. Production of phosphate fertilizers and phosphate rock, in 2014, was 157 thousand tonnes and 221 thousand tonnes lower, respectively, compared to 2013, as a result of the strike at ICL Rotem that took place in the first half of the year2014 and the damage caused to ICL Rotem’s sulfuric acid production facility. Industrial Products     Year Ended December 31,     2014   2013     (In thousands of tons) Sales(*)     1,337       1,297   Gross profit     380       390   Operating income (loss)     (62 )     115   Adjusted operating income(**)     128       150   ____________________ (*) Includes revenues from inter-segment sales (**) Adjusted operating income is a non-IFRS number. See “Item 3. Key Information—A. Selected Financial Data” for a definition of adjusted operating income and a reconciliation to the comparable IFRS measure. 113 102 Table of Contents Industrial Products Adjusted items in 2014 include a provision for arbitration relating to royalties in respect of prior periods, in the amount of about $ 141 million, and impairment in the value of assets in the United States and Europe, in the amount of approximately $49 million. Adjusted items in 2013 include an impairment of the value of assets, in the amount of $10 million, and a provision for waste removal in the amount of $25 million. Geographical distribution of external sales in 2014 and 2013:     Year Ended December 31,     2014   2013 North America     455       384   Europe     464       474   Asia     303       322   South America     34       35   Rest of the world     61       62   Total     1,317       1,277   Sales Sales of ICL-IP in 2014 were about USD 1,337$1,337 million – an increase of about USD 40$40 million compared with 2013. This increase stems from an increase in quantities sold, mainly of bromine basedbromine-based flame retardants, bromine basedbromine-based and chlorine basedchlorine-based biocides used for water treatment, inorganic bromine products and magnesium products, in the amount of about USD 65$65 million. This increase was partly offset by a decline in selling prices, mainly of inorganic bromine products and bromine basedbromine-based flame retardants, which reduced sales by about USD 22$22 million, as well as the impact of the currency exchange rates, in the amount of about USD 3$3 million. Profitability Operating income (loss) The operating loss in 2014 totaled about USD 62$62 million, compared with operating income of about USD 115$115 million in 2013. OperatingAdjusted operating income, after eliminating unusual items, as detailed below, in 2014, amounted to about USD 128$128 million, compared with adjusted operating income last year,in 2013, in the amount of about USD 150$150 million. The rate of adjusted operating income out of the sales amounted to about 9.6% in 2014, compared with an adjusted operating income rate in 2013 of about 11.5% last year. . The decrease in operating income is primarily as a result of unusual items in connection withexpenses incurred due to a provision for royalties arbitration relating to prior periods due to an arbitration decision in the amount of about USD 141$141 million, an impairment of assets in subsidiaries in the US and Europe, in the amount of about USD 49$49 million, a decrease in selling prices, which reduced the operating income by the amountled to a decrease in profitability of about USD 22$22 million, the impact of changes in currency exchange rates, in the amount of about USD 15$15 million, an increase in royalties’royalty expenses relating to the current period as a result of the arbitration decision,ruling, in the amount of about USD 12$12 million, an increase in shipping expenses due mainly to an increase in quantities sold, in the amount of about USD 8$8 million, and an increase in other operating expenses, in the amount of about USD 4$4 million. This decrease was partly offset by an increase in quantities sold and a change in the mix of the quantities of various products sold, which led to an increase in income of about USD 24$24 million, and a decrease in the raw materialraw-material and energy prices, which contributed about USD 15$15 million to the income.profitability. The operating income last yearin 2013 was impacted by a provision for treatment of waste and an impairment of assets, in the amounts of about USD 25$25 million and about USD 10$10 million, respectively. 114 Table of Contents Performance Products     Year Ended December 31,     2014   2013     ($ millions) Sales(*)     1,614       1,575   Gross profit     536       526   Operating income     197       196   Adjusted operating income(**)     192       196   ____________________ (*) Includes revenues from inter-segment sales (**) Adjusted operating income is a non-IFRS number. See “Item 3.Key Information—A. Selected Financial Data” for a definition of adjusted operating income and reconciliation to the comparable IFRS measure. The adjusted item in 2014 include an income from entry into the consolidation, in the amount of $36 million and, an impairment in value of assets of subsidiaries in Europe, in the amount of $22 million, and an increase in costs due to the strike at ICL Rotem, in the amount of approximately $9 million. Geographical distribution of external sales in 2014 and 2013:     Year Ended December 31,     2014   2013 North America     522       559   Europe     671       615   South America     90       87   Asia     191       177   Rest of the world     59       59   Total     1,533       1,497   Sales Total sales in 2014 amounted to approximately USD 1,614$1,614 million, an increase of approximately USD 39$39 million compared with 2013. This increase stems from the first timefirst-time consolidation of companies acquired during 2014, in the amount of approximately USD 56$56 million, and from an increase in selling prices of approximately USD 12$12 million. These impacts were partly offset by a decrease in quantities sold of approximately USD 21$21 million, and the impact of changes in currency exchange rates, in the amount of approximately USD 7$7 million. Profitability Operating income The segment’s operating income in 2014 amounted to approximately USD 197$197 million, an increase of approximately USD 2$2 million compared with 2013. This increase stems mainly from income due to entry into the consolidation, in the amount of USD 36$36 million, resulting from acquisition of the entire holdings in Fosbrasil S.A. (hereinafter – “Fosbrasil”) which led to an increase from a rate of holdings of 44.25% to 100%, resulting in the consolidation of, Fosbrasil in the Company’s financial statements, and from an increase in selling prices, in the amount of approximately USD 12$12 million. This increase was partially offset by an impairment in value of assets in subsidiaries in Europe, in the amount of approximately USD 22$22 million, an increase in costs due to the strike at ICL Rotem in the amount of approximately USD 10$10 million (net of the insurance reimbursement received on account of the strike, in the amount of approximately USD 1$1 million), a decline in quantities sold, net of first timefirst-time consolidation of companies acquired during 2014, in the amount of approximately USD 9$9 million, and an increase in raw materialraw-material prices in the amount of approximately USD 5$5 million. 103 Table of Contents Segment Information for Year Ended December 31, 2013 Compared to Year Ended December 31, 2012     Year Ended December 31,       2013     2012       $ millions   Sales by segment             ICL Fertilizers     3,655       3,806   ICL Industrial Products     1,297       1,417   ICL Performance Products     1,575       1,472   Others and setoffs     (255)       (224)   Total     6,272       6,471   Note: The sales data for the segments are before setoffs of inter-segment sales.     Year Ended December 31,       2013     2012       $ millions   Operating income by segment             ICL Fertilizers     821       1,159   ICL Industrial Products     115       217   ICL Performance Products     196       179   Other and offsets     (31)       (1)   Operating income (consolidated)     1,101       1,554   Fertilizers Below is a breakdown of the sales and operating income of our Fertilizers segment in 2013 and 2012, by areas of operation (before setoffs of inter segment sales):     Year Ended December 31,     2013   2012 Sales             Potash     54 %     56 % Phosphate     46 %     44 % Operating income                 Potash     90 %     86 % Phosphate     10 %     14 % Potash Revenues in this segment include sales of potash from Israel, Spain (ICL Iberia) and the United Kingdom (ICL UK). Potash – Revenues and Profit Below is a breakdown of revenue and operating income for potash sales in 2013 and 2012.     Year Ended December 31,       2013     2012       $ millions   Revenues*     2,027       2,198   Operating income     740       996   * Includes revenue from inter segment sales. The decrease in revenue in 2013 compared with 2012 stems mainly from a decrease in selling prices, which led to a decrease in revenue, in the amount of approximately $359 million. On the other hand, this decrease was partly offset by an increase in quantities sold, which caused an increase in sales of approximately $177 million, and the impact of the change in currency exchange rates, in the amount of approximately $10 million. 104 Table of Contents The decrease in operating income in 2013 compared with 2012 is mainly due to the impact of the decrease in selling prices of potash, which reduced operating income by approximately $359 million, changes in currency exchange rates, in the amount of approximately $10 million, and an increase in other operating expenses, in the amount of approximately $9 million. This decrease was partly offset by improved results of approximately $81 million due to higher quantities sold (due to an increase in sales of $177 million that was partially offset by increases in the cost of sales of $70 million and transportation costs of $26 million due to the increase in quantities sold), a decrease in sales commissions of approximately $18 million (stemming mainly from a decrease in sales) and a decrease in energy prices, in the amount of approximately $24 million. Potash – Production, Sales and Closing Inventories Below is a breakdown of production, sales and closing inventories for potash in 2013 and 2012.     Year Ended December 31,       2013     2012       In thousands of tons   Production     5,155       4,936   Sales to external customers     4,712       4,336   Sales to internal customers     323       293   Total sales (including internal sales)     5,035       4,629   Closing inventory     1,126       1,006   The quantity of potash sold to external customers in 2013 was about 376 thousand tons higher than in 2012, mainly as a result of an increase in quantities sold to China and Brazil. Production of potash in 2013 was about 219 thousand tons higher than in 2012, as a result of an improvement in production in our mines in Europe. Phosphates Revenue from fertilizers and phosphates derive from sales in and outside Israel of phosphate rock, fertilizers (including phosphate fertilizers, compound, liquid and fully soluble fertilizers and slow release and controlled release fertilizers), phosphoric acid used as a raw material for fertilizer production (“green acid”) and other products. Phosphates – Revenues and Profit Below is a breakdown of revenue and operating income for fertilizers and phosphates in 2013 and 2012.     Year Ended December 31,       2013     2012       $ millions   Revenues*     1,754       1,727   Operating income     79       162   Adjusted operating income(1)     139       195   * Includes revenue from inter segment sales. (1) Operating income excluding unusual items. Unusual items in 2013 and 2012 included $60 million and $33 million, respectively, of early retirement expense at Rotem. The increase in revenue in 2013 compared with 2012 is mainly due to an increase in quantities of phosphate fertilizers sold, including the first time consolidation of the financial statements of certain companies acquired, which led to an increase in the total revenue in the amount of approximately $99 million, and the impact of changes in currency exchange rates, in the amount of approximately $39 million. This increase was mostly offset by a decrease in selling prices of fertilizers and phosphates products, which led to a decline in revenue of approximately $109 million. 105 Table of Contents The Operating income in 2013 was $79 million, a decrease of approximately $83 million as compared to operating income of $162 million in 2012. Operating income as a percentage of sales was 4.5% in 2013 as compared to 9.4% in 2012. Operating income in 2013 and 2012, after eliminating unusual items, amounted to approximately $139 million and approximately $195 million, respectively. Adjusted operating income, which reflects the elimination of the unusual items described above, as a percentage of sales, was approximately 7.9%, as opposed to an adjusted operating income rate of approximately 11.3% in 2012. The decrease in operating income in 2013 compared with 2012 stems mainly from a decrease in selling prices, in the amount of approximately $109 million, partially offset by  a decrease in sales commissions, in the amount of approximately $12 million (stemming mainly from a decrease in sales). The decrease in operating income was also due to a provision for early retirement in Rotem, in the amount of approximately $60 million (as compared to a similar provision in 2012 of $33 million), the impact of changes in currency exchange rates, in the amount of approximately $8 million, and impairment in the value of inventory, in the amount of approximately $10 million. This decrease was partly offset by a decrease in raw material prices, in the amount of approximately $52 million, and a decrease in other operating expenses, in the amount of approximately $7 million. In addition, operating income was affected by the sales increase, which was due to the increase in quantities sold of approximately $55 million, offset by the impact of higher cost of sales of approximately $40 million and transportation costs of approximately $16 million due to the increase in quantities sold. Phosphates – Production and Sales Below is a breakdown of production and sales for fertilizers and phosphates in 2013 and 2012.     Year Ended December 31,       2013     2012       In thousands of tons   Phosphate rock             Production of rock     3,578       3,513   Sales *     879       739   Phosphate rock used for internal purposes     2,577       2,491   Fertilizers                 Production     1,747       1,598   Sales *     1,695       1,575   * To external customers. Phosphate rock is produced according to demand, both for internal use and for sales to external customers, while maintaining appropriate inventory levels. Production of phosphate fertilizers in 2013 was higher than in 2012, mainly due to maintenance work in the production facilities performed in the first half of 2012. Industrial Products Sales The total sales of the Industrial Products segment in 2013 reached approximately $1,297 million, a decrease of approximately $120 million compared with 2012. The decrease in sales stems mainly from a decrease in the quantities sold, mainly of bromine based flame retardants, inorganic bromine products and chlorine based biocides for water treatment, which decreased the total sales by approximately $82 million, as well as from a decline in the selling prices in the amount of approximately $42 million. This decrease was offset in part by the impact of changes in currency exchange rates, in the amount of approximately $3 million. Profitability Operating income in 2013 totaled approximately $115 million, compared with operating income of approximately $217 million in 2012. Operating income in 2013 and 2012 amounted to approximately $150 million and approximately $239 million, respectively, after eliminating unusual items (in 2013, $25 million expenses in respect of a provision for waste treatment, and $10 million impairment of assets, and in 2012 $22 million early retirement expense). Operating income as a percentage of sales was approximately 8.9% in 2013 compared to 15.3% in 2012. Adjusted operating income, which reflects the elimination of the unusual items described above, as a percentage of sales, was approximately 11.6%, compared with approximately 16.9% in 2012. 106 Table of Contents Operating income decreased primarily as a result of a decrease in the quantities sold and produced, which caused a decrease in operating income of approximately $49 million (due to a decrease in sales of $82 million that was partially offset by decreases in the cost of sales of $30 million and transportation costs of $3 million due to the decrease in quantities sold), a decrease in the selling prices, which caused a decrease in operating income of approximately $42 million, expenses relating to update of the provision for waste removal in the amount of approximately $25 million, an impairment of assets in the amount of approximately $10 million, and the impact of changes in currency exchange rates in the amount of approximately $9 million. This decrease was partly offset by a decrease in raw material and energy prices by approximately $14 million. Operating income in 2012 was impacted by a provision for early retirement, in the amount of approximately $22 million. Performance Products Sales Sales in our Performance Products segment in 2013 amounted to approximately $1,575 million, an increase of approximately $103 million compared with 2012. The increase in sales stems from an increase in quantities sold, including the first time consolidation of the financial statements of companies acquired during 2013, which led to an increase of approximately $90 million, and from the effect of changes in exchange rates, which gave rise to an increase of approximately $12 million. Profitability The operating income in our Performance Products segment in 2013 amounted to approximately $196 million, an increase of approximately $17 million compared with 2012. The increase stems mainly from a decline in raw material prices, in the amount of approximately $24 million, and improved results of approximately $20 million due to higher quantities sold (due to an increase in sales of $70 million that was partially offset by increases in the cost of sales of approximately $44 million and transportation costs of approximately $6 million due to the increase in quantities sold). This increase was partly offset by an increase in other operating expenses, in the amount of approximately $16 million, and by the impact of unusual income in respect of a VAT refund to an overseas subsidiary, in the amount of approximately $11 million, recognized in 2012. B. LIQUIDITY AND CAPITAL RESOURCES Overview We have As at December 31, 2015, ICL had a balance of $131approximately $161 million in cash and cash equivalents asequivalents. As at December 31, 2014. Our2015, the Company's net financial liabilities were $2,659approximately $3,230 million, as of December 31, 2014, including approximately $2,304$2,805 million of long termlong-term debt (excluding current portion)maturities) and debentures, and approximately $603$673 million of short termshort-term debt (including current portionmaturities of long termlong-term debt). 115 Table of Contents Our The Company’s policy is to secure sources of financing for ourits operating activities and investments, while diversifying the sources of financing among various financial instruments, and between local and international financing entities. OurThe Company’s sources of financing are shortshort- and long termlong-term loans from banks (mainly international banks) and institutional entities in Israel, debentures issued to institutional investors in Israel and the United States, and securitization of customer receivables whereby some of our subsidiaries sell their customer receivables in return for a cash payment. OurThe Company’s policy is to fully utilize the various financing facilities according to our cash flow requirements, alternative costs and market conditions. Our ICL’s management believes ourthat its sources of liquidity and capital resources, including working capital, are adequate for ourits current requirements and business operations and will at leastshould be adequate to satisfy ourits anticipated working-capital requirements during the next twelevetwelve months, for working capital,along with its capital expenditures and other current corporate needs. We expect to incur additional long-term debt during 2016, subject to the market conditions. Distributions of dividends to usICL from ourits subsidiaries and transfers of funds through certain countries may under certain circumstances result in the creation of tax liabilities. However, taxation on dividend distributions and funds transfers have not had and are not expected to have a material impact on ourthe Company’s ability to meet ourits cash obligations. 107 Table of Contents In addition to our normalthe Company’s operating expenses, including its debt service, and our capital expenditures we also needand dividend payments, in 2015, the Company was required to make a significant one-time payment, in the amount of $152 million, to the State of Israel as a result of athe recent partial arbitration award we receivedruling concerning royalties, issued on May 19, 2014. For additional information, see “Item“Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings—Arbitration concerning Royalties.Royalties at ICL Dead Sea Ltd.” Moreover, in March 2015, the Company completed the acquisition of Prolactal, a leading European producer of dairy proteins for the food and beverage industry, for a total consideration of about $90 million. In November 2014, we received an internationalJune 2015, the Company acquired the balance of Allana’s shares (approximately 83.78%) for a total consideration of approximately $112 million, of which approximately $96 million was in cash, and approximately $16 million was by means of issuance of 2,225,337 ordinary shares of the Company, and in October 2015, the Company completed the establishment of the Joint Venture (YPH JV) with Yunnan Phosphate Chemicals Group Corporation Ltd. (“YTH”), China’s leading phosphate producer, for a total consideration of approximately $180 million. In January 2016, the purchase of 15% of the equity of YTH was completed by the Company (this purchase was one of the terms for closing the YPH deal), after the transaction was approved by the PRC Ministry of Commerce and the China Securities Regulatory Commission (CSRC), for a total consideration of approximately $250 million. During 2015, the Company completed the sales of the alumina, paper and water business (APW), the thermoplastic products for the footwear industry (Renoflex), the hygiene products for the food industry (Anti Germ) and the pharmaceutical and gypsum businesses (PCG), for a total consideration of approximately $364 million. On October 29, 2015, the credit rating of BBB with a stablecompany Standard & Poor’s revised its rating outlook issued by twoof the Company’s credit, which is rated BBB (together with the rating of the debentures) from stable to negative. The Company’s local credit rating companies: Standards &in Israel by Standard and Poor’s and Fitch Rating Ltd. The debentures we issued (see Note 17 to the Company’s financial statements) received a rating that was identical to the Company’s rating. The Company also has an Israeli credit rating ofMaalot remained unchanged at ilAA, with a stable rating outlook. Subsequent to the balance sheet date, Fitch Ratings Services revised its rating outlook of the Company's credit, which was issued by Standards & Poor’s Maalot. is rated BBB (together with the rating of the debentures) from stable to negative. Sources and Uses of Cash The following table sets forth our cash flows for the periods indicated:     Year Ended December 31,       2014     2013     2012       $ millions   Net cash provided by operating activities     895       1,127       1,727   Net cash used in investing activities     (996 )     (839 )     (741 ) Net cash provided by (used in) financing  activities     68       (310 )     (1,019 )     Year Ended December 31,     2015   2014   2013     ($ millions) Net cash provided by operating activities     573       893       1,127   Net cash used in investing activities     (547 )     (996 )     (840 ) Net cash provided by (used in) financing activities     15       70       (309 ) Operating Activities Net cash flowflows from operating activities isare a significant source of liquidity for the Company. In 2014,2015, the net cash provided by operationsoperating activities was approximately $895$573 million, compared with approximately $1,127$893 million last year. Most of the decline in cash flows from operating activities derivedderives from the decline in the net income, mainly as a result of the strike at ICL Dead Sea and ICL Neot Hovav, and after eliminating the capital gain in the amount of $364 million from sale of the companies that are not part of the Company’s core businesses which are included in the cash flows from investing activities, an increase in the working capital due to payment of royalties in respect of prior periods, payments relating to retirement of employees, changes in the fair value of derivatives, changes in the balance of the trade receivables stemming from increased sales of potash upon conclusion of the strike, an increase in current interest payments and a payment relating to an operating lease on the concession site acquired in China. The cash flows from operating activities, together with the increase in the financial liabilities, were the source used to fund payment of the dividends, investments in property, plant and equipment, and acquisition of operations. 116 Table of Contents The cash flows from operating activities in 2014 amounted to approximately $893 million, compared with approximately $1,127 million in 2013. Most of the decline in cash flows from operating activities derives from the decline in income, after setting off the change in working capital in accounts receivable item,the “trade payables” category, mainly as a result of the decline in fair value of derivatives (after setting off the effect of changes in trade accounts receivablereceivables and inventory) and from coordinating additionaladjusting non-cash accounting expenses and income in 2014 in respect of impairment of assets and income from entry into consolidation. The Investing Activities In 2015, the net cash flows from operating activities, together with an increaseused in financial liabilities, were the source used to fund dividend payments and acquisition of operations. In 2013, the cash flow from operatinginvesting activities was $1,127approximately $547 million, compared with $1,727approximately $996 million in 2012. Most of the decline2014. The decrease in cash flowsused in investing activities derives mainly from operating activities derived from the declinea drop in incomeinvestments in property, plant and change in working capital,equipment, mainly as a result of the strike at ICL Dead Sea and ICL Neot Hovav (approximately $502 million compared to approximately $752 million) after setting off the effect of payments paid to property, plant, and equipment suppliers in 2015 and business combinations, in the amount of approximately $351 million. These impacts were partially offset by the sale of companies that are not part of the Company’s core businesses, in the amount of approximately $364 million and an increase in trade receivables due to the increaseinvestments in sales in the fourth quarter of 2013 compared with the fourth quarter of 2012. Investing Activities intangible assets. In 2014, net cash used in investing activities was approximately $996 million, compared with approximately $839$840 million in 2013. In 2014, investments in property, plant, and equipment declined, mainly as a result of the completion in 2013 of the major part of the work on the construction of a partition in the dikes that surround Pond 5 inat the Dead Sea. The flow ofcash flows used for investments in property, plant, and equipment in 2014 declined relative to the corresponding period of the previous yearcompared with 2013 (approximately $752 million compared to $827 million) as a result of the decline in said investments after setting off the effect of payments paid to property, plant, and equipment suppliers in 2014.suppliers. Nonetheless, the cash flow used in investing activities increased in 2014, mainly as a result of the increase in payments for business combinations, investments in intangible assets, and investments in investees treated under the equity method. Net cash used in investing activities was $839 million in 2013, compared with $741 million in 2012. The increase in net cash used in investing activities between 2013 and 2012 was due primarily to the performance of work on the dike surrounding the evaporation ponds of our Fertilizers segment at the Dead Sea, construction work with respect to a new power station in Sodom, and the increase of the production capacity in our mines in Europe. 108 Table of Contents Financing Activities Net cash provided by financing activities wasin 2015 amounted to approximately $68$15 million, as compared to $70 million in 2014. The primary reason for the net decrease in cash from financing activities is the reduction in the net amount of the long-term and short-term loans taken out in 2015, in the amount of $363 million, in contrast with $916 million in 2014, mainly due to a special dividend payment in March 2014, in the amount of $500 million, and the decrease in investment activities in 2015, which was partly offset by the decrease in cash flow from current activities, as specified above. Nonetheless, the Company’s net debt increased as a result of first-time consolidation of the net financial liabilities of the YPH JV in China. The net cash provided by financing activities in 2014 amounted to $70 million, compared with approximately $310to $309 million used in financing activities in 2013. The primary reason forfactor causing the increase in net cash provided by financing activities was the increase in the taking out of net long-term loans in 2014 in the amount of approximately $1,056$916 million, compared with approximately $61$325 million in 2013, after deductingas a result of the effects of repayment of short-term creditincrease in investment activities in 2014 and the decrease in the amount of approximately $142 million, compared to short-term credit in the amount of approximately $263 million received in 2013,cash flow from current activities, as specified above, and the increase in dividends paid in the amount of approximately $211 million as a result of a one-timespecial dividend in the amount of approximately $500 million that was paid in March 2014.  Net cash used in financing activities was approximately $310 million in 2013, compared with approximately $1,019 million in 2012. The primary reasons for the decrease in net cash used in financing activities between 2013 and 2012 were dividends paid in the amount of approximately $634 million in 2013 compared with approximately $1,019 million in 2012 and an increase in short term credit in the amount of approximately $263 million in 2013 compared to short term credit paid in the amount of approximately $51 million in 2012. As ofat December 31, 2014, our2015, the Company’s non-current liabilities consisted of loans from financial institutions in the amount of approximately $1,239$1,740 million and debentures in the amount of approximately $1,064$1,065 million. For information about the currencies in which ourthe Company’s liabilities are denominated and their interest rates, see Note 17 to our auditedthe Company’s financial statements included elsewhere in this Annual Report.statements. As ofat December 31, 2014, we2015, the Company had approximately $821$519 million of unutilized long termlong-term credit lines. 117 Table of Contents Subsequent to the balance sheet date, the Company increased its financial liabilities in order to finance the purchase of 15% of the shares of the public company Yunan Yuntianhua, the shares of which are traded on the Chinese stock exchange, in the aggregate amount of approximately $250 million, through the utilization of long-term credit lines, in the amount of approximately $200 million. A portion of ourICL’s loans bear variable interest rates based on short termthe short-term LIBOR rate for a period of one to twelve months, plus a margin as defined in each loan agreement. Therefore, we arethe Company is exposed to changes in the cash flows arising from changes in these interest rates. Some of the loans and debentures issued by usICL bear fixed interest for the entire loan period. We hedgeThe Company hedges part of this exposure using financial instruments to fix the range of the interest rates, in order to adjust ourconform the actual interest rateinterest-rate structure to match ourthe projections regarding the anticipated developments in the interest rate market. rates. For a description of material financial covenants in ourthe Company’s loan agreements and any potential risk relating to compliance with them – see Note 17 to our auditedthe Company’s financial statements included elsewhere in this Annual Report. statements. Credit Agreements In December 2010, wethe Company received a loan from a European bankBank in the amount of approximately €100 million (approximately $121 million).million. The loan is to bewas repaid on December 15, 2015. The interest rate on the loan is Euribor plus 1.14%. In On March 14, 2011, we23, 2015, ICL entered into an agreement with a consortiumgroup of 17eleven international banks, from Europe, the U.S., and Israel, under which these banks granted the Companywill provide ICL a revolving credit facility in the total amount of approximately $675 million. The credit facility is for five years, and is repayable in full at the end of this period.  Graded annual interest is payable$1,705 million, on the utilized amount of credit, according to the actual utilizationfollowing terms: a. The loan agreement is for a term of five full years from the signing date of the credit facility. b. The loan agreement does not include an undertaking for minimum use of the credit facility, as follows: facility. A non-utilization fee will be at the rate of 0.21% per year. ·c. UtilizationAnnual interest will apply to the amount of upthe loan actually used, scaled to the amount of the credit facility actually used, as follows: ·Up to 33% - LIBOR plususe of the credit: Libor + 0.7%. ·From 33% to 66% use of the credit: Libor + 0.8%; (on the entire sum used). ·66% or more use of the credit: · Utilization between 33% and 66% - LIBOR plusLibor + 0.95% (on the entire utilized amount); · Utilization above 66% - LIBOR plus 1.1% (on the entire utilized amount)sum used). The d. ICL has an option to choose between a dollar loan and a euro loan. e. Under the loan agreement, ICL undertook restrictions that include financial covenants (which are identical to the financial covenants applicable to the Company’s prior loans, as detailed in Note 17D), a cross-default mechanism and a negative pledge. This loan agreement replaced credit agreement does not include a commitment to utilize a minimumfacilities taken out in March 2011 and in December 2011 in the aggregate amount of $1,325 million for a period of five years and credit lines in the amount of $125 million that were taken out in the beginning of 2014, all of which were repaid during the period of the report. As of December 31, 2015, this credit facility buthas been utilized in the amount of $1,330 million. Subsequent to the balance sheet date, the loan agreement termination date was extended for a non-utilization commission applies at the rateperiod of 0.28% per year. Asone year, until March 2021. The amount and credit terms of the date of this Annual Report, we utilized approximately $505 million of this credit facility. loan agreement remain unchanged. In March 2014, the second half of 2011, weCompany entered into an agreement with a European bank, under which the bank granted us a credit facility of approximately €100 million (approximately $121 million). The credit facility is for six years, and is to be repaid in full at the end of the period. The interest rate on the loan is LIBOR plus 0.9% to 1.4%, depending on the extent of the credit utilized. As of December 31, 2014, the credit facility was not utilized. In the first half of 2014, the Company entered into an agreement with the same bank, under which the bank granted a credit facility of approximately €100 million and approximately $100 million. This credit facility is for a period of six years and is to be repaidpayable in entirety at the end of the period. The credit facility in euro replaces the unutilized credit facility that the bank had granted the Company in the second half of 2011. The dollar credit facility bears variable interest on the basis of Libor plus a margin of between 0.9% and 1.4%. The euro credit facility bears variable interest on the basis of EuroborEuribor plus a margin of between 0.9% and 1.4%. The non-utilization commission is 0.32% per year. As of December 31, 2014, a total of approximately $100 million ofOn March 23, 2015, the dollar credit facility was decreased to $35 million on the same terms. As at December 31, 2015, both the dollar and the euro credit facilities were not utilized. 118 109 Table of Contents In December 2011, we entered into an agreement with a consortium of seven international banks for a credit facility of approximately $650 million. The credit facility is for five years, and is to be repaid in full in December 2016. Graded annual interest is payable on the utilized amount of credit, according to the actual utilization of the credit facility, as follows: · Utilization of up to 33% - LIBOR plus 1%; · Utilization between 33% and 66% - LIBOR plus 1.2% (on the entire utilized amount); · Utilization above 66% - LIBOR plus 1.4% (on the entire utilized amount). The credit agreement does not include a commitment to utilize a minimum amount of the credit facility, but a non-utilization commission applies at the rate of 0.35% per year. As of the date of this Annual Report, approximately $214 million of this credit facility was utilized. On September 11, 2012, wethe Company received a loan in the amount of approximately $50 million from a third party,party. The loan was repaid on December 11, 2015, and another loan was taken out, in the same amount, bearing interest at three month LIBORthe three-month Libor rate plus a margin of 0.7%0.6%. TheThis loan is extendedwill be renewed every three months on the same terms on which it was received. The last date on which the loan was extended was December 11, 2014. months. In December 2012, wethe Company entered into a credit facility agreement with a European bank for a credit facilityloan of approximately €100 million (approximately $121 million).million. As ofat December 31, 2014, we had2015, the Company utilized $100 millionthe full amount of this facility. The repayment date for thisthe euro facility and the loan was fixed as a dollar loan, in the amount of approximately $129 million. This amount is scheduled for repayment in December 2019. The interest rate on this amountcredit is LIBOR plus 1.4%. The balance of the utilized amount of this credit facility must be repaid six years from the date of utilization but no later than December 2021. In November 2013, we entered intothe Company signed a loan agreement with several institutional entities, in the amount of approximately $170NIS 600 million, bearing fixed interest at a rate of 4.74%. The loan is to be paidpayable in installments until November 2024 (average duration of seven years). In 2014, we received a number of short term loansstarting from Israeli banks.2015 and up to 2024. As ofat December 31, 2014,2015, the total amount of the loans wasloan is approximately $40 million. In May 2014, we signed an agreement with a European bank whereby the bank provided a credit facility in the amount of approximately €50 million. This credit facility is for a period of five years and is to be repaid in full at the end of the period. It bears variable interest based on Euribor plus a margin of 0.95% to 1.25%$148 million (approximately NIS 576 million). A non-utilization commission of 0.33% per year applies. As of December 31, 2014, this credit facility had not been used. In June 2014, wethe Company signed loan agreements with a number of international institutional entities in the aggregate amount of approximately €57 million and approximately $45 million. The proceeds of these loans were received in July 2014. The loans are to be repaid in a period of between five to ten years, where some of the loans bear fixed interest in the range of 2.1% to 3.75%, some bear variable interest based on LIBOR plus 1.55%, and some bear variable interest based on Euribor plus a margin of 1.4% to 1.7%. In December 2014, wethe Company signed a loan agreement in the amount of approximately R$161 million (approximately $60 million)Brazilian reals with a European bank. The loan is payable in installments untilstarting from 2015 and running up to 2021. The loan bears CDI interest (Brazilian Interbank Certificates of Deposits) plus a margin of 1.35%. 110 Table As of Contents Controlling Shareholder Loan On June 26, 2012, weDecember 31, 2015, the total amount of the loan is approximately 149 million Brazilian reals (approximately $38 million). During 2015, the Company received a short term loannumber of short-term loans from Israeli banks. As at December 31, 2015, the total amount of the loans was approximately $30 million. In October 2015, as part of establishment of the YPH JV, the Company consolidated for the first time the short-term loans of the joint venture, in the amount of approximately $501,682 million Chinese yuans (about $259 million), which were received from our controlling shareholder (Israel Corporation Ltd). The loan was granted on terms similar to market terms. The loan was renewed periodically for periodsa Chinese bank and from the partner in the YPH JV. Most of three or six months and borethe loans bear annual interest at a fixed rate of 0.776%. In August 2014, the loan was repaid4.6%-5.89% and they are scheduled for repayment in full. . 2016. Securitization Transaction On In July 2, 2010, we2015, the Company and certain Group subsidiaries ( the “Subsidiaries”(hereinafter – “the Subsidiaries”) entered intosigned a numberseries of agreements regarding a securitization agreementstransaction with Rabobank International and Credit Agricole (the “Lending Banks”)three international banks for the sale of ourtheir customer receivables to a foreign company which was established specifically for this purpose thatand which is neither owned nor controlled by us (the “Acquiringthe ICL Group (hereinafter – “the Acquiring Company”). This agreement replaces the prior securitization agreement, in the amount of $350 million, which came to an end in July 2015. The main structure of the new securitization agreement is the same as the prior securitization agreement. The Company’s policy is to utilize the securitization limit based on its cash-flow needs, alternative financing sources and market conditions. The new securitization agreement will expire in July 2020. In the agreement, ICL undertook to comply with a financial covenant whereby the ratio of net debt to EBITDA will not exceed 4.75. If ICL does not comply with the said ratio, the Acquiring Company is allowed to discontinue acquiring new trade receivables (without affecting the existing acquisitions). As at the date of this Annual Report, ICL is in compliance with the aforementioned financial covenant. The Acquiring Company finances acquisition of the receivablesdebts by means of a loan received from a financial institution, thatwhich is not related to us,ICL, which finances the loan out of the proceeds from the issuance of commercial paper on the U.S. commercial paper market. The repayment of both the commercial paper and the loan are backed by credit lines from the Lending Banks. The amount of cash that will be received in respect of the initial sale of the customer debts in the securitization transaction will be up to approximately $350$405 million. 119 Table of Contents The acquisition isacquisitions are on an ongoing basis, such that the proceeds received by the Acquiring Company from customers whose receivablesdebts were sold are used to acquire new customertrade receivables. The period in which the Subsidiaries are entitled to sell our customertheir trade receivables to the Acquiring Company is five years from the agreement closing date althoughof the transaction, where both parties have the option at the end of each year to give notice of terminationcancellation of the securitization transaction. The securitization agreement will end in July 2015. The selling price of the customertrade receivables is the amount of the debt sold, less the calculated interest cost based on the anticipated period between the sale date of the customer debt and its repayment date. Upon acquisition of a receivable,the debt, the Acquiring Company pays the majority of the saledebt price in cash and the remainder in a deferred liability,subordinated note, which is paid after collection of the receivabledebt sold. The cash portionrate of the cash consideration varies according to the composition and behavior of the customer portfolio. OurThe Subsidiaries handle collection of the customertrade receivables included in the securitization transaction, on behalf of the Acquiring Company. In addition, as part of the agreement,agreements a number of conditions were set in connection with the quality of the customer portfolios, which givegives the Lending Banks the option to terminateend the agreementundertaking or determinedetermining that some of the Subsidiaries, whoseof which the customer portfolios do not meet the conditions provided, will no longer be included in the securitization agreement. The securitization of customertrade receivables does not meet the conditions for disposal of financial assets prescribed in International Standard IAS 39, regarding Financial Instruments—Instruments – Recognition ofand Measurement, since wethe Group did not transfer all of the risks and rewards deriving from customers’ debts.the trade receivables. Therefore, the amountsreceipts received from the Acquiring Company are presented as a financial liability as part of the short termshort-term credit. As ofat December 31, 2014,2015, utilization of the securitization facility and the balance of the trade receivables withinincluded in this framework amounted to $285 million (as at December 31, 2014 – approximately $290 million (approximately $285 million asmillion). Once the Company has transferred its trade receivables, it no longer has the right to sell them to another party. In the case of December 31, 2013). a credit default, the Company bears 30% of the total balance of the trade receivables. 2005 Debentures In 2005, wethe Company issued debentures to institutional investors in a private placementissuance in the United States in the amount of approximately $125 million bearing fixed interest. As ofat December 31, 2014, the outstanding balance of the debentures was approximately $67 million, bearing fixed interest at a fixed rate of 5.72%. TheOn March 3, 2015, the debentures were repaid in full on March 3, 2015. April 2009 Debentures On April 27, 2009, we issued three series of debentures for an amount equal to approximately NIS 695 million (approximately $167 million), of which Series B and C were repaid in full in 2013, and Series A was repaid in full on April 30, 2014 for approximately $147 million. 111 Table of Contents September 2009 Debentures On September 9, 2009, we issued three series of debentures for an amount equal to approximately NIS 898 million (approximately $235 million). The debentures were issued in three series, of which Series B and C were repaid in full during 2013, and Series D was repaid in full on October 31, 2014 for approximately $26 million. full. 2013 Debentures In November 2013, a wholly ownedwholly-owned and controlled subsidiary of oursthe Company entered into an agreement with institutional and international institutional investors to make a private offering in the United States of unlisted debentures. Our subsidiary issued three series ofunregistered debentures in an aggregate principal amount of approximately $275 million,million. The proceeds in respect of the proceeds of whichissuance were received in January 2014. The debentures were issued in three series, as follows: ·A. Approximately $84$84 million of debentures with a repayment date of January 15, 2021 bearing interest at a fixed rate of 4.55%. ·B. Approximately $145$145 million of debentures with a repayment date of January 15, 2024 bearing interest at a fixed rate of 5.16%. ·C. Approximately $46$46 million of debentures with a repayment date of January 15, 2026 bearing interest at a fixed rate of 5.31%. 2014 Debentures On December 2, 2014, the Company completed the private placementissuance of senior notes pursuant to Rule 144A and Regulation S under the U.S. Securities Act of 1933, as amended, to institutional investors in the U.S., Europe, and Israel, in an aggregate principal amount of $800 million, duescheduled for repayment on December 2, 2024. The notes carrybear an annual coupon of 4.5% to be paid in semi-annual installments, on June 2 and December 2 of each year. The notes were issued at a price of 99.285% to yield 4.59%,. The proceeds received by the Company for net total proceeds of approximatelythe debentures amount to about $794 million. The notes have been rated BBB with a stable rating outlook(stable) by Standard and Poor’s and by Fitch Rating Ltd. The notes are listedregistered for tradetrading in the TACT Institutional, by the Tel-Aviv Stock Exchange Ltd. 120 Table of Contents On October 29, 2015, Standard & Poor’s revised its rating outlook of the Company’s credit, which is rated BBB (together with the rating of the debentures) from stable to negative. Subsequent to balance sheet date, Fitch Ratings Services revised its rating outlook of the Company’s credit, which is rated BBB (together with the rating of the debentures) from stable to negative. Critical Accounting Policies and Estimates The following is a description of certain key accounting policies on which our financial condition and results of operations are dependent. The key accounting policies generally involve complex quantitative analyses or are based on subjective judgments or assumptions. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under current circumstances. Actual results may differ from these estimates if assumptions and conditions change. Employee Benefits According to International Standard IAS 19, some of our employee benefit plans constitute a defined benefit plan as defined in IAS 19. Such plans principally include liabilities for pension and severance benefits. In computing pension liability, we use various assessments. These assessments include, among other things, the interest rate for discounting our pension liability and the pension fund assets, assessments regarding the long termlong-term increase in wages and an assessment of the life expectancy of the group of employees entitled to a pension. Assessment of the interest rate for purposes of discounting our pension liability and the pension fund assets is based on the rate of return on bonds of corporations operating in countries where an active market exists for corporate bonds and on the rate of return on government bonds for companies operating in countries where there is no active market for corporate bonds. The rate of return on long termlong-term bonds changes according to market conditions. As a result the discount rate will also change as will the pension liability and the pension fund assets will change accordingly. The assessment regarding the increase in wages is based on our forecasts in accordance with past experience and existing labor agreements. Such assessments may be different than the actual wage increases. The life expectancy assessment is based on actuarial research published in each country. This research is updated every several years, and accordingly the life expectancy assessment may be updated. 112 Table of Contents Measurement of the liability for severance pay is based upon an actuarial assessment, which takes into account various assessments including, among others, the future increase in employee wages and the rate of employee turnover. The measurement is made on the basis of discounting the expected future cash flows according to the interest rate on high ranking highly rated corporate bonds. In addition, the severance pay deposits are measured according to their fair value. Changes in the assumptions used for the calculation of the liability for severance pay and the related plan assets for severance pay could increase or decrease the net liability for severance pay recognized. Environmental and Contingent Liabilities We produce fertilizers and chemical products and, therefore, are exposed in our ordinary course of business to obligations and commitments under environmental and related laws and regulations. We recognize a liability in our books when such liability is expected, is derived from a liability event that has already occurred and can be reliably measured. Assessment of the liability is based mostly on past experience, familiarity with the legal requirements concerning our areas of operation, as well as assessments regarding contingent claims existing against us based on opinions of legal advisors and other experts. As explained in Note 23 to our audited financial statements, a number of lawsuits are pending against us, the results of which may have a material impact on our results of operations. When assessing the possible outcomes of legal claims that were filed against us and our investee companies, we base our assessments on the opinions of our legal advisors. These opinions of the legal advisors are based on their best professional judgment, and take into consideration the current stage of the proceedings and the legal experience accumulated with respect to the various matters. As the results of the claims will ultimately be determined by the courts or as part of a settlement, they may be different from these estimates by us and our legal advisors. 121 Property, Plant and Equipment Property, plant and equipment items are depreciated using the straight line method over their estimated useful lives. We evaluate the estimated useful lives Table of the property, plant and equipment by means of a comparison to the sector in which we operate, the level of upkeep of the facilities and the performance of the facilities over the years. Changes in these estimates in succeeding periods could increase or decrease the rate of depreciation of the facilities.Contents Impairment of Assets IAS 36 We examine at every reporting date whether there have been events or changes in circumstances indicating that there has been an impairment of one or more non-monetary assets. When there are indications of impairment, an examination is made as to whether the carrying amount of the investment can be recovered from the discounted cash flows anticipated to be derived from the asset, and if necessary, we record an impairment provision up to the amount of the recoverable value. Assessment of the impairment of goodwill and of other intangible assets having an indeterminable lifespanindefinite useful is performed once a year or more frequently when indications of impairment exist. The recoverable value of the asset or the cash generating unit is determined based on the higher of the fair value of the asset less realization costs and the present value of the future cash flows expected from the continued use of the asset in its existing state, including the cash flows expected upon removal of the asset from service and its eventual sale (value in use). The future cash flows are discounted to their present value using a discount rate that reflects assessments of the market participants of the time value of money and the risks specific to the asset. The estimates regarding cash flows are based on past experience with respect to this asset or similar assets, and on our best assessments regarding the economic conditions that will exist during the asset’s remaining useful life. The estimates of the future cash flows are based on our forecasts. Since the actual cash flows could be different than our forecasts, the amount of the realizable value determined in the examination of impairment in value may change in succeeding periods, such that in the future an additional reduction of the value of the assets or elimination of a reduction recorded in prior periods may be required. 113 Table of Contents There were no indications of impairment in 2012, 2013, or 2014, except for impairment in one of our cash generating units of approximately $10 million and $40 million, which was recognized as an impairment of property, plant and equipment in 2013 and 2014, respectively. The cash generating unit had no intangible or goodwill assets. Business Combinations We are required to allocate the cost of acquiring companies and operations in business combinations on the basis of the estimated fair value of the assets and liabilities acquired. We use the valuations of external independent appraisers and internal valuations for purposes of determining the fair value. The valuations include assessments and estimates of management concerning forecasts of the expected cash flows from the acquired business, and models for calculating the fair value of the acquired items and their depreciation period. Management’s estimates have an impact on the balance of assets and liabilities acquired and the depreciation and amortization in the statement of income. Management’s estimates of the forecasted cash flows and useful lives of the acquired assets may differ from the actual results. Taxes on Income The Company and the group companies are subject to income taxes in numerous jurisdictions and, therefore, our management is required to exercise considerable judgment in order to determine the aggregate provision for taxes. A provision in respect of uncertain tax positions is recorded where it is more likely than not that a flow of economic resources will be required in order to discharge the obligation. For information on the assessment issued by the Tax Authorities in Israel, according to which we are to pay additional tax of approximately $200 million, beyond the amount already paid in respect of the years 2009-2011details – see Note 20 to the Company’s financial statements. In the estimation of Company Management, based on its legal advisors, the chances that at the end of the appeal process the Company’sCompany’s contentions will be accepted exceed the chances that they will be rejected and, accordingly, no provision for tax has been included in the financial statements as a result of said assessment. The deferred taxes are computed according to the tax rates expected to apply when the timing differences are realized, as stated in Note 3(O)3 to our audited financial statements. The tax rate expected to apply upon the realization of the timing differences applying to Benefited Enterprises in Israel entitled to tax benefits is based on forecasts of future revenues to be earned by such Benefited Enterprises in proportion to our total revenues. For additional information about Benefited Enterprises in Israel, see “Item“Item 10. Additional Information—Taxation.E. Taxation.” Changes in these assessments could lead to changes in the book value of these tax assets, the tax liabilities and the results of operations. Inventories Inventories are measured in the financial statements at the lower of cost or net realizable value. The net realizable value is an estimate of the selling price in the ordinary course of business, less the estimate of the cost of completion and the estimate of the costs needed to effect the sale. The selling price is estimated on the basis of the selling price expected at the time of realization of the inventories. A decrease in the expected selling price could cause a decrease in the book value of the inventories and therefore our results of operations. Raw materials are written down to realizable value, which is based on the realization values of the inventories of the finished products in which they are included, only when the finished products in which they are included are expected to be sold at prices below cost. In cases where the replacement price of raw materials serves as the best available evidence for realizable value, measurement of realizable value is based on the replacement price. A decline in the expected replacement value could give rise to a decline in the value of the inventories of raw materials in the books and our results of operations. 122 Table of Contents Part of the raw materials, work in process and finished goods are in bulk. The quantities are based on estimates made, for the most part, by third parties who measure the volume and density of the inventory. Variances in the estimates used in determining the assessments may cause a change in the value of the inventory in the books. Principal Capital Expenditures and Divestitures We had capital expenditures of approximately $780 million, $947 million, and $958 million and $1,270 million in 2012, 2013, 2014 and 2014,2015, respectively. The above capital expenditures include investments in fixed and intangible assets including such items which were consolidated as part of business combinations in the said years. Our principal capital expenditures since January 1, 20122013 have consisted of work on the dike surrounding the evaporation ponds of our Fertilizers segment at the Dead Sea, construction work with respect to a new power station at Sodom, investments as part of a plan to gradually increase the production capacity of the Sodom plans, investments to increase the production capacity of our mines in Europe and improvements in our logistics setup and the purchase and refurbishing of isotanks for transporting bromine. We are financing our capital expenditures from cash flows from operations and from credit facilities. 114 Table of Contents Our capital expenditures in 20142015 are primarily in Israel and Spain, and include elevation of the dike at Pond 5 in the Dead Sea, construction work in respect of the new power plant in Sodom, investments as part of the program to gradually increase our production capacity at the Sodom plants, expansion of our potash production capacity at the Suria site in Spain (mine, facilities and anlogistics), the new power station in Sodom and continuation of the investment related toin the planningHarmonization project (planning and establishment of one centralized ERP system. We aresystem, for each company). In addition, the Company is the examination, planning and evaluation stages in connection with large projects in Africa and China. The Company is funding these capital expenditures using cash flows from operations and our credit facilities. As ofThe Company is continuing the date of this Annual Report, there is anarrangement stemming from the agreement between Dead Sea Works and the State of Israel regarding financing of the costs of the dike (the temporary defenses stage) pursuant to which Dead Sea Works will bear 39.5% of the financing and the State of Israel will bear the rest. On July 8, 2012, we entered into an agreement with the government of Israel, relating to a permanent solution for the increase in the level of Pond 5. The permanent solution for the rising of the level of the Dead Sea is by means of full harvesting of the salt from Pond 5. Upon completion of the salt harvesting, the process of production of the raw materials will no longer cause or require raising of the water level of Pond 5. Planning and execution of the salt harvesting will be performed by us. This project will constitute an Israeli national infrastructure project that will be promoted by the Israeli Committee for National Infrastructures and starting January 1, 2017, the water level in Pond 5 will not rise above 15.1 meters. The Board of National Infrastructures is currently discussing the preparation of a detailed plan for the salt harvesting project (National Infrastructure Plan 35A) and its approval is expected in late 2015. Concurrently, we are performing additional activities relating to the salt harvesting project. According to the estimates of the Dead Sea Protection Company, the total cost of the salt harvesting was estimated, as of October 2010, to be in the nominal amount of NIS 7 billion (a discounted amount of NIS 3.8 billion). The Israeli government will bear 20% of the cost of the salt harvesting, however not more than the discounted amount (20% of NIS 3.8 billion – the discounted amount). The government’s maximum liability is linked to the Israeli CPI and bears interest at the rate of 7%. For additional details regarding this agreement – see Note 23 to our audited financial statements. According to the Company’s financial statements. Accordingstrategy, from time to our strategy,time various possibilities are examined in connection with the continued integration ofits non-core activities, in our Company are examined, and we are preparing to divest activities that are not synergetic with our activities.including the sale thereof. Accordingly, in 2015 the fourth quarterCompany completed sale of 2014, we signed agreements to sell the APW (Alumina, Paper, Water) businesses,, Rhenoflex, which produces components to reinforce leather shoes,Pharma/Cosmetics/Gypsum, Medentech and the Anti-Germ businesses, and Medentech. Forwhich produced over $350 million positive cash flows. In March 2016 we successfully completed the most part, these transactions were completed subsequent to the datesale of the financial statements and produced after-tax cash flows of about $300 million.Clearon (chlorine-based biocide activities in USA) in accordance with ICL strategy. Additional potential sales ofdivestiture opportunities in our non-core businesses include PCG, Clearon, and IDE. We intend to use these proceeds to reinforce our core businesses. Sodom Power Plant Construction Contract On June 28, 2012, Dead Sea Works entered into agreements regarding a project to construct a new dual fuel cogeneration plant in Sodom with a production capacity of 330 tons of steam per hour and approximately 245 megawatts of electricity that will fulfill all the electricity and steam requirements of the production plants at the Sodom site in the upcoming years. The project is expected to be completed in the second half of 2015. The cost of the project is estimated at approximately $320 million. C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC. Research and development In 2014,2015, we significantly expanded our research activities with outside entitiesthird parties in our core areas: agriculture, food, and industrial materials. Also included withinin these activities are: establishment of an agronomical research collaboration between ICL group and the Volcani Center, whose activities are based in Gilat in the Southern part of Israel, and establishment of a research center in Kunming in China for development of phosphorous-based processes and products as part of the transaction for establishment of the YPH JV (joint venture). The incubator (ICL Innovation) operations, which focus mainly on technologies in the initial stages of development and are high risk in comparison with ordinary research and development projects. Asprojects, include 7 on-going projects and 4 new approved ones. During 2015, two projects were transferred from ICL Innovation to two ICL business units for further development and commercialization. 123 Table of the date of this Annual Report, we have 12 projects approved for work, and research work on 8 of these has commenced.Contents In the first quarter of The cross-segment development teams that were set up in 2014 by the ICL R&D Management Forum, was established, headed by the CTO, on whose decisions several cross-segment development teams were established and whichare continuing to work together according tobased on common areas of interest and operations in order to promote the application of new products and technologies. For example, teams have been established on coatings for diverse applications, storage, energy and other applications. 115 Table of Contents Several of the defined goals of the research and development operations are directed at the expansion of our new products and new technologies portfolio, activities to improve processes in our manufacturing facilities (reducing costs per ton), and cultivating technological human capital. Our R&D expenses, net were $83 million, $87 million and $74 million $83 millionin 2013, 2014 and $87 million in 2012, 2013 and 2014,2015, respectively. Our Fertilizers segment’s R&D activities in 20142015 focused on the following items: · Improvement of processes and reduction of costs in the phosphates and potash plants; · Improvement of the quality of the products being sold; · Research regarding environmental protection, including development of methods for reducing and treating effluents; · Analysis of alternative methods for increasing production capacity of carnallite; · Production of a new fertilizer from wastewater flows; · Further analysis of adaptation of various types of phosphate rock to(bituminous and brown phosphates) for the production of phosphoric acid and its downstream products as part of an effort to exploit and increase existing phosphate reserves; · Development of outside technology for use of bituminous phosphate as a sourcenew process for production of phosphoricwhite acid and downstream products;at the China site; · Development of products having a high acidhigh-acid content allowing diverse applications of soluble fertilizers; · Development of controlled releasecontrolled-release products with coating materials of compositions and thicknesses unlike those currently available in the market with the addition of micro nutrients;micro-nutrients; · Development of controlled releasecontrolled-release fertilizers with improved environmental profile; · Development of applications preserving water and improving availability of the fertilizers around the root; · Geological examination of our concessions in Spain in order to ascertain whether a significant expansion is possible; and · Examination of processestechnologies for improvement of the production of polysulphate on the Company’s site in the UK.UK; and · Development of a manufacturing process for potassium and potassium sulfate in a project of ICL in Ethiopia. Our Fertilizers segment’s total R&D expenses in 20142015 were approximately $22 million. The R&D activities of our Industrial Products segment are part of the segment’sCompany’s strategic plan. Therefore, the expenses in the segment’s five year planThe global research activities are expected to increase in the upcoming years — both due to anbased on internal increaseresearch together with joint activities with a wide range of universities and as a result of cooperative efforts with universities, research institutes along with other long-term innovative activities. The units execute activities directed at the present and other outside research bodies.future needs of the market. The activities will focusbe focused primarily on identifying additional uses for bromine or its derivatives, as well as developments in the area of magnesia and phosphorus-based flame retardants. 124 Table of Contents The R&D activities of our Industrial Products segment are as follows: Environmental: · Brominated polymers: continued development of brominated flame retardants, which are destined to become the generation of environmentally friendly flame retardants, and potential future substitutes of existing products such as DECA and FR 1410. Due to the size (and molecular weight) of polymer molecules, it is unlikely that they will penetrate oily body tissue and remain there. · Textiles: continued development of TexFRon,TexFRon®, a series of textile flame retardantflame-retardant products. TexFRonTexFRon® 4002 is an effective and environmentally friendly solution for diverse textile products, replacing DECA and offering a transparent and laundry durablelaundry-durable solution that is not currently available on the market. We commenced sellingIn the productprior year, nylon-intensive flame-retardant products were developed to satisfy an unmet need in 2012.the market. In addition, unique flame-retardant system solutions were introduced to the market that do not include Antimony Trioxide (ATO)). These green solutions are creating interest among the Company’s customers and are being commercially evaluated. 116 Table of Contents · Energy storage: continued development of bromine basedbromine-based solutions for storing energy using diverse technologies. · Ecological research to improve sewage treatment systems, and to reduce air emissions and solid waste. New Products: · Biocides: continued development of new materials for water treatment and prevention of biofilm (algae) in irrigation systems and refrigerated water coolants for industry. In addition, there is research activity for polymer synthesis with biocidal activity, as well as an examination of meat disinfection applications.activity. · Phosphorus basedPhosphorus-based products: development of new phosphorus basedreactive phosphorus-based products and/or integration of a phosphorus/bromine chemistrychemistries mainly flame-retardants infor the polyurethane fieldfoam (i.e., flexible and rigid foam). A common application of polyurethane flame retardants is in insulation used in the construction, furniture and automobile industries. In addition, new lubricating oils haveclear solutions are been developed. · Improvement of the formulation of a soil disinfectant product including preliminary toxicological testing. Other processes: · Support of production: improving product quality and lowering production costs by changing and improving processes, while using the principles of green chemistry (for example, research on the reduction of use of organic solvents in production processes). There is extensive use of a “sustainability index” model for new products, which includes various parameters relating to product properties. · Engineering: research in the area of building materials in order to overcome problems of accelerated wear and tear of building materials, corrosion prevention, equipment adaptation, and experiments in accelerated aging.obsolescence. Our Industrial Products segment’s total R&D expenses in 20142015 were approximately $30$25 million. The principal R&D activities of our Performance Products segment in 20142015 were as follows: Advanced Additives - Phosphoric acid varieties and its downstream products, phosphate salt specialties: · Process development for improving competitiveness as a global supplier for phosphoric acid specialties; · Flame retardants based on phosphate salts for the automotive industry and for paints & coatings; Food Specialties - Development of innovative formulations for modifying texture and stability of processed food: · New cost effective defoamers were introduced into the EU market to service the Mediterranean region during the 2015 European Coating Show. Downstream polyphosphate and polyacrylate dispersants were introduced into the battery market and interior architectural water-based paints. This also included intellectual property filing for a novel additive which allows customers to eliminate or use less biocides in interior paints as the new biocide labeling regulations were promulgated and began to be enforced in mid-2015; · Voice-of-customer (VOC) efforts led to the approval of two new corrosion inhibitors for the architectural market in the Do-It-Yourself (DIY) segment. Sales of organic corrosion inhibitors began in 2015; · Joint development work with three key customers led to the qualification and approval of our dicalcium phosphate/hydrotalcite corrosion inhibitor for epoxy coatings designed for potable water applications. This patented ICL technology will give us a unique position in this market currently regulated by the National Sanitation Foundation (NSF); 125 Table of Contents · As part of our innovation strategy, several new VOC driven projects entered the stage-gate process and were bucketed into two areas of focus: Coatings & Constructions. The Coatings area was further subdivided into wood, metal and concrete sub-segments which together represent an addressable market of approximately $2.5 billion for additives. Construction is comprised of roads & roofs in which asphalt was the primary construction material; · R&D projects in Coatings and Construction were chosen based on their ability to address VOC-derived unmet needs in Adhesion, Durability, and Fire Protection; · Fire Chemicals: Long-term retardant, fire suppressant foam and water enhancers improve the effectiveness of aerial firefighting. We successfully upgraded three new retardants in 2015 in what was a remarkable year for the Fire Safety business. · Food Specialties - Development of innovative formulations for modifying texture and stability of processed food: · New dairy ingredient-based products partly developed through new process technology in co-operation with subsidiary Prolactal/Rovita, such as whey protein isolates and concentrates for dairy beverages, cheese and bakery applications. · Investigation of properties of vegetable and milk proteins as components for complex formulations, providingincluding fundamental research on process parameters; · Providing a tool box for modifying texture and stability of food products;products, including meatless meat (vegetarian meat substitutes). cheese boosters and beverage fortification. · Development of novel products by exploiting synergies between food phosphates, proteins, starches and fibers; stabilization systems for sauces, dessert and bakery products; · Continued development uses of low sodiumlow-sodium salts based on raw materials from the Dead Sea.Sea and integration of SALONA into spice blends for meat applications and culinary sauces. Other activities: · Environmentally friendly corrosion inhibitors for industrial boilers potentially replacing toxic hydrazine; Our Performance Products segment’s total R&D expenses in 20142015 were approximately $21$14 million. �� 117 Table of Contents In the past, some of our Israeli subsidiaries received grants from the Office of the Chief Scientist in the Israeli Ministry of the Economy (“OCS”) under the Law for the Encouragement of Industrial Research and Development, 1984, and the regulations promulgated thereunder (“the R&D Law”). In general, the grants are required to be repaid in the form of royalties on the revenues, if any, generated by the funded projects, plus interest. Our remaining financial obligations under the grants are minimal. According to the R&D Law, the transfer of OCS funded know howOCS-funded know-how is subject to OCS approval and to possible payments to the OCS in the event of transfer of the know howknow-how outside of Israel. Intellectual property We believe that protecting our intellectual property is one of the methods of protecting and developing our business activities. Our Speciality Fertilizers segmentBusiness has 13 groups of patents, mostly related to derivatives of the Osmocote brand, for specific soluble fertilizers, production technology of coatings (P1, P2)(P1, P2), and for applications of controlled fertilizer compounds and plant protection products. Industrial Products has 264approximately 278 patents that have been registered over the years and approximately 182159 patent applications that are in various stages of review around the world. As at the date of this Annual Report, these patents protect a relatively small portion of our Industrial Products segmentsegment’s products. In 2014, 472015, 44 new patent applications filed by our Industrial Products segment were approved. 126 Table of Contents Our Performance Products segment has, in various countries, approximately 1,4661,012 registered trademarks and approximately 542302 registered patents. We do not believe that the expiration of any patent or violation by any of our entities would have a material effect on our operations or our financial results. D. TREND INFORMATION Trend information is included throughout the other sections of this Item 5. In addition, we expect ourthe fluctuations in the operating results tomay continue to fluctuate in futurethe upcoming quarters. Specific material drivers of these trends are identified in the discussion above with respect to the years ended December 31, 2012, 2013, 2014 and 2014.2015. Seasonality of our business is included inItem 4. Information on the Company—B. Business Overview. Overview. E. OFF-BALANCE SHEET ARRANGEMENTS As of December 31, 2014,2015, we had no off-balance sheet arrangements. 127 Table of Contents F.           TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS The following table presents information related to our contractual obligations, including estimated interest payments, as of December 31, 2014.       As at December 31, 2014         Total amount       12 months or less       1-2 years       3-5 years       More than 5 years       US$ millions   Credit from banks and others (not including current maturities)     402.4       406.6       –       –       –   Trade payables     584.9       584.9       –       –       –   Other payables     519.9       519.9       –       –       –   Operating lease obligations     149.4       28.7       21.7       49.1       49.9   Purchase obligations(1)     1,222.8       573.5       263.6       336.4       49.3   Non-convertible debentures (including current maturities and interest on debentures)     1,131.2       120.6       49.7       149.2       1,317.2   Long-term bank loans (including current maturities and interest on long-term loans)     1,372.8       162.6       759.0       292.1       286.5   Total     5,383.4       2,396.8       1,094.0       826.8       1,702.9   118 Table of Contents 2015.     As at December 31, 2015     Total amount   12 months or less   1-2 years   3-5 years   More than 5 years     ($ millions) Credit from banks and others (not including current maturities)     660       676       —         —         —     Trade payables     716       716       —         —         —     Other payables     387       387       —         —         —     Operating lease obligations     262       41       23       53       145   Purchase obligations(1)     1,233       680 *     157       230       166   Employee Benefits     577       30       82       141       324   Non-convertible debentures     1,065       50       50       149       1,255   Long-term bank loans (including current maturities)     1,753       48       47       1,679       150   Total     6,653       2,628       359       2,252       2,040   ____________________ * Subsequent to the date of the report, the Company financed the purchase of 15% of the shares of the public company Yunan Yuntianhua, the shares of which are traded on the Chinese stock exchange, in the aggregate amount of approximately $250 million. (1) This information excludes ordinary course agreements for purchases within the next twelve months.       As at December 31, 2014         Total amount       12 months or less       1-2 years       3-5 years       More than 5 years       US$ millions   Financial liabilities – derivative instruments utilized for economic hedging                               Interest rate swaps and options     9.5       0.2       1.6       2.8       4.9   Foreign exchange derivatives     71.9       63.0       0.4       1.1       7.4   Derivative instruments on energy and marine transport     28.3       26.6       1.7       –       –         109.7       89.8       3.7       3.9       12.3       As at December 31, 2015     Total amount   12 months or less   1-2 years   3-5 years   More than 5 years     ($ millions) Financial liabilities – derivative instruments utilized for economic hedging                                         Interest rate swaps and  options     10       1       2       1       6   Foreign exchange derivatives     10       6       —         1       3   Derivative instruments on energy and marine transport     10       10       —         —         —           30       17       2       2       9   G. SAFE HARBOR The safe harbor provided in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, or the statutory safe harbors, shall apply to forward lookingforward-looking information provided pursuant to “—“Item 5. Operating and Financial Review and Prospects—F. Tabular disclosure of contractualContractual obligations” above. For our cautionary statement on the forward-looking statements in this Annual Report, see paragraph on forward-looking information,“Special Note Regarding Forward-Looking Statements,” on page 2ii of this Annual Report. ITEM 6 – DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES Item 6. Directors, Senior Management and Employees A. DIRECTORS AND OFFICERS The following table lists the names and ages of our directors as atof the publication date of this Annual Report. The mailing address forof our directors is c/o Israel Chemicals Ltd., 23 Aranha Street, Millennium Tower, Tel Aviv, 61070, Israel. 128 Table of Contents Name Age Position Nir Gilad Gilad** 5859 Executive Chairman of the Board of Directors Avisar Paz 59 Director Aviad Kaufman 45 Director Ron Moskovitz 53 Director Sagi Kabla 39 Director Ovadia Eli 71 Director Yaacov Dior 7172 External Director Ovadia Eli 70 Director Dr. Miriam Haran 6566 External Director Victor Medina Geoffery Merszei 7665 Director Prof. Yair Orgler Shimon Eckhaus 75 External Director Avisar Paz 5865 Director Eran Sarig 41 Director Aviad Kaufman 44 Director Geoffery Merszei 64 Director Shimon Eckhaus 64 Director Stefan Borgas 5051 Director All of our ____________________ * Messrs. Yair Orgler and Victor Medina finished their tenures as Company directors in 2015. ** Mr. Nir Gilad will retire from the company's Board at September 1, 2016. The Board has formed a Search Committee comprised of two board members: Mr. Yaacov Dior, Chairman of the HR and Compensation Committee and Mr. Ron Moskovitz. The Committee will determine its order of work and will identify suitable candidates and propose the nomination to the full Board for election, no later than by May 1, 2016. The company intends to invite a special shareholders meeting in August 2016 to approve appointment of the newly elected candidate as well as his terms of tenure, and by this allow an orderly overlap between the Mr. Gilad and the new elected Chairman. *** Mr. Eran Sarig has retired from our Board of Directors, effective as of March 14, 2016, following his retirement as an executive officer in Israel Corporation Ltd. Messrs. Yaacov Dior, Miriam Haran, Geoffrey Merszei and Shimon Eckhaus are independent directors under the rules applicable to U.S. companies listed on the NYSE, except forNYSE. Messrs. Nir Gilad, Avisar Paz, Eran Sarig,Aviad Kaufman, Ron Moskovitz, Sagi Kabla, Ovadia Eli Aviad Kaufman and Stefan Borgas are not considered independent directors by virtue of the positions they hold with our controlling shareholder or in the Company. TheseCompany; these directors are not considered independent directors also under Israeli law due to a relationship with our controlling shareholder. Threeshareholder or with the Company. Two of our directors are “external directors” and one additional director was designated as an “independent director” under the Israeli Companies Law, 1999 (the “Companies Law”) as described under “Item 6. Directors, Senior Management and Employees—C. Board Practices—External Directors”. The following table lists the names, ages and positions of our officers Nir Gilad. Mr. Gilad serves as chairman of the publication date of this report. The address for sending notices is c/o Israel Chemicals Ltd., 23 Aranha Street, Millennium Tower, Tel Aviv, 61070, Israel. 119 Table of Contents Name Age Position Stefan Borgas 50 Chief Executive Officer Avi Doitchman* 53 Executive Vice President, Chief Financial Officer & Strategy Nissim Adar 63 Chief Executive Officer of our Fertilizers segment Eli Amit** 60 Senior Vice President of Economics Herzel Bar Niv 65 Vice President of International Taxation Amir Benita 41 Vice President Shmuel Daniel*** 63 Internal Auditor Dan (Dani) Chen 63 Executive Vice President Corporate Relations Israel Dreyfuss 34 Controller Eyal Ginzberg 52 Senior Vice President, Chief Technology Officer Asher Grinbaum 65 Executive Vice President & Chief Operating Officer Michael Hazzan 49 Vice President of Finance Lisa Haimovitz 49 Vice President, General Counsel and Corporate Secretary Hezi Israel 47 Vice President of Business Development and Strategy Ofer Lifshitz 56 Senior Vice President for Global Processes Yakir Menashe 43 Senior Vice President of Global Human Resources Mark Volmer 51 Chief Executive Officer of our Performance Products segment Charles M. Weidhas 56 Chief Executive Officer of our Industrial Products segment Ronnie Shushan 47 Senior Vice President for Investments and Project Management _______________ * On October 27, 2014, Avi Doitchman gave notice of his wish to retire from his position. He will retire on April 1, 2015 and on the same day, Mr. Kobi Altman will commence serving as Executive Vice President and CFO. ** On November 11, 2014, Eli Amit gave notice of his wish to retire from his position in 2016. *** On July 31, 2014, Shlomo Ben Shimol ceased serving as the Internal Auditor, and on August 1, 2014, Shmuel Daniel commenced serving as the Internal Auditor. Nir Gilad.  Mr. Gilad has served as Chairman of our Board of Directors since January 2008.2008 and as of May 12, 2015, as Executive Chairman of the Board. He serves as a director in Oil Refineries Ltd. Mr. Gilad has served as President andCEO of Israel Corporation until January 7, 2015. He2015, he served as president and chief executive officer of Israel Corporation. Mr. Gilad also served as Deputy CEOdeputy chief executive officer for Business Developmentbusiness development and Strategy.  strategy in Israel Corporation. He also served as Chairmanchairman of the Boardsboards of Directorsdirectors of ZIM Integrated Shipping Services LTD ,ICLTD., IC Power Israel Ltd., IC Green Energy Ltd., and H.L. Management and Consulting (1986) Ltd. Mr. Gilad served as a Directordirector in companies fully owned by Israel Corporation, Directoras director in Tower Semiconductor Ltd. and Qoros Automotive Co. Ltd. (formerly known as Chery Quantum Auto Co. Ltd. 2007) Ltd. Prior to joining Israel Corp.,Corporation, Mr. Gilad was Senior Vice Presidentsenior vice president of Migdal Insurance Company, CEOchief executive officer of Migdal Investment Management Ltd. and Chairmanchairman of Migdal Capital Markets Ltd. During his term of office as Accountant Generalaccountant general of the Ministry of Finance and the deputy Headhead of the Budget Divisionbudget division of the Ministry of Finance, Mr. Gilad played a role in the negotiations towards the peace accords with Jordan and with the Palestinian authority.Authority. He also served as the CFOchief financial officer of the Israeli Aircraft Industries. He was responsible for the initiation and direction of strategic programs for the Government of Israel, aimed at improving Israel’s Negev and Galilee regions. Mr. Gilad is active in Yedidei Atidim Association, a non-profit organization that integrates peripheral populations into the higher education system. Mr. Gilad is a member of the Executive Committeeexecutive committee of the “South” and “North”, private companies for public benefit (non-profit), established by Israeli and Jewish entrepreneurs and philanthropists in order to lead national strategic planning programs to the Negev and the Galilee. Mr. Gilad holds an MAis chairman of the Friends of the Soroka Medical Center and is a director in Business Administration from Bar Ilan University, andthe Herzliya Interdisciplinary Center. Mr. Gilad holds a BA in Economics, Agricultural Administration and Natural Sciences from the Hebrew University Jerusalem.and an MA in Business Administration from Bar Ilan University. Avisar Paz. Mr. GiladPaz serves as director since April 2001. He is the chief executive officer of Israel Corporation and was previously Israel Corporation’s chief financial officer. Mr. Paz serves as director in various subsidiaries of Israel Corporation. He serves as director in Oil Refineries Ltd. Mr. Paz holds a BA in Economics and Accounting from Tel Aviv University and is a Lieutenant Colonelcertified public accountant in Israel. 129 Table of Contents Aviad Kaufman. Mr. Kaufman serves as director since March 2014. He is the IDF reserves. chief financial officer of Quantum Pacific (UK) LLP, and is also a board member of Israel Corporation Ltd., Kenon Holdings Ltd. and IC Power Pte. Ltd., each of which may be associated with the same ultimate beneficiary, Mr. Idan Ofer. Mr. Kaufman served as chief financial officer of Quantum Pacific Advisory Limited (2008-2012). He served as director of international taxation and fulfilled different senior corporate finance roles at Amdocs Ltd. (2002-2007). Previously, Mr. Kaufman held various consultancy positions with KPMG. Mr. Kaufman is a certified public accountant and holds a BA in Accounting and Economics from the Hebrew University in Jerusalem (with distinction), and an MBA majoring in Finance from Tel Aviv University. Ron Moskovitz. Mr. Moskovitz was appointed as a director of the Company on February 8, 2016. Mr. Moskovitz is the Chief Executive Officer of Quantum Pacific (UK) LLP, and serves as chairman of the Board of Israel Corporation Ltd. and Pacific Drilling S.A. and as director of Kenon Holdings Ltd., each of which may be associated with the same ultimate beneficiary, Mr. Idan Ofer. From July 2008 until December 2012, Mr. Moskovitz served as Chief Executive Officer of Quantum Pacific Advisory Limited. From July 2002 until November 2007, Mr. Moskovitz served as Senior Vice President and Chief Financial Officer of Amdocs Limited. From 1998 until July 2002, he served as Vice President of Finance at Amdocs. Between 1994 and 1998, Mr. Moskovitz held various senior financial positions at Tower Semiconductor Ltd. and served on its board of directors from 2007 to 2011. Mr. Moskovitz is a CPA in Israel and holds a BA in Accounting and Economics from Haifa University and a Master of Business Administration from Tel Aviv University. Sagi Kabla. Mr. Kabla was appointed director on February 8, 2016. He is the chief financial officer of Israel Corporation since December 2015. He serves as director in Bazan Group and previously served as senior director, business development, strategy and IR in Israel Corporation. Prior to joining Israel Corporation, Mr. Kabla held various positions at KPMG Corporate Finance. Mr. Kabla is a qualified CPA in Israel and holds a BA in Accounting and Economics from Bar-Ilan University and an MBA (Finance) from the College of Management Studies. Ovadia Eli. Mr. Eli serves as director since August 2011. He served as chairman of the board of the Israel Airports Authority, Shmanim Basisim Haifa Ltd. and I.C.P.I. He was a member of the boards of directors of Salt Industries Israel Ltd., Shaarei Ribit, Ltd., Zim Integrated Shipping Services Ltd. and OPC Rotem Ltd. Mr. Eli serves as chairman of Oil Refineries Ltd. Mr. Eli holds a BA in Educational Counseling and Bible Studies from the Haifa University and is a graduate of the Lifshitz Teachers Academy, Jerusalem. Yaacov Dior. Mr. Dior has served as external director since October 2011. Mr. Dior2011 and until October 2014 and serves as an external director since February 2015. He is an External Director ofexternal director at Clal Insurance Holdings Ltd. He was CEO of Israel Credit Cards Ltd., of Visa Alfa Ltd., and of IDT Carmel Ltd. He served as Chairmandirector on the boards of Visa Europe and Visa International. He was also chairman of the Board of Directorsboard of Cellarix Mobile Payments Ltd., Chief Executive Officer of IDT Carmel LTD and Chairman of the Board of Kneh HakolHacol Ltd. Mr. Dior is a Member of Friends of Bar-Ilan University and Chairmanmember of the Audit CommitteeFriends Society and is chairman of the audit committee of Bar-Ilan University. In addition, Mr. Dior is also a Membermember of the Public Committeepublic council of Alut—Alut – the National Association for Autistic Children, and a Membermember of the Association of Friends of Meir Hospital. Mr. Dior holds a B.A. in Economics and Political Science from the Hebrew University of Jerusalem and an MBA from Tel Aviv University. Ovadia Eli. Mr. Eli has served as a director since August 2011. Mr. Eli has served as Chairman of the Board of the Israel Airports Authority, Shmanim Basisiim Haifa Ltd. and I.C.P.I. He was a member of the Boards of Directors of Salt Industries Israel Ltd., Shaarei Ribit, Ltd., Zim Integrated Shipping Services Ltd., OPC Rotem Ltd. and is a member of the Board of Directors of Adriel Israel Properties Ltd. Mr. Eli serves as Chairman of Oil Refineries Ltd. as of February 2015. Mr. Eli holds a BA in Educational Counseling and Bible Studies from the University of Haifa and is a graduate of the Lifshitz Teachers Academy, Jerusalem. Dr. Miriam Haran. Dr. Haran has servedserves as external director since September 2009. Dr. Haran hasShe served as Director Generaldirector general of Israel’s Ministry of the Environment. Dr. Haran serves as theShe is currently head of Ono Academic College’s MBA Program in Environmental Management and is a Boardboard member in M.A.I (recycling electrical(Recycling Electrical and electronic waste), a consultant for Ashkelon Eilat Pipeline Ltd. and hasElectronic Waste). Dr. Haran served as a Boardboard member of the Company for Environmental Services (2008-2012). and as Chairmanchairperson of the Consumer Council (2012-2014). Dr. Haran holds a PhD in Organic Chemistry from Brandeis University and a B.Sc. in Natural Sciences from the Hebrew University of Jerusalem. 120 Table of Contents Victor Medina.  Mr. Medina has served as a director since September 2006. Mr. Medina has served as Chief Executive Officer of United Mizrahi Bank Ltd. Between 1990 and 1995, he served as Chairman of our Board of Directors. He previously served as Director General of the Israeli Ministry of Finance. He has held senior positions in the Bank of Israel. Mr. Medina serves as Chairman of the Board of Aptateck Ltd. and served as Chairman of the Board of Directors of Migdal Capital Markets. Mr. Medina holds a BA in Economics and Political Sciences and an MA in Economics, majoring in Finance and Banking, from the Hebrew University of Jerusalem. Prof. Yair Orgler.  Prof. Orgler has served as external director since September 2006. Prof. Orgler has served as Professor of Finance and Banking, Dean of the Faculty of Management and Vice Rector of Tel Aviv University. He has published and edited ten books in his areas of specialization as well as dozens of scientific and professional articles. He served as the Chairman of the Board of the TASE. Prof. Orgler founded and served as an active Chairman of Maalot Israel first Securities Rating Company Ltd. He has served and serves as director of various additional public companies. Prof. Orgler is Chairman of the Finance and Audit Committee of the Israel Cancer Association and Professor Emeritus at Tel Aviv University. Prof. Orgler served as an outside director Itamar Medical Ltd. (2007-2013). He is an outside director in Gazit Globe Ltd. and Ceragon Networks Ltd.Jerusalem and a directorPhD in Atidim High Tech Industrial Park Ltd. Prof. Orgler is a member of the Board of Trustees of the Academic College of Tel Aviv Yaffo, member of the management committee of Secure Future and the Association of Public Companies and member of the Friends of the Reut Medical Center. Prof. Orgler holds a B.Sc. in Industrial Engineering and ManagementOrganic Chemistry from the Technion Israel Institute of Technology in Haifa, an M.Sc. in Industrial Engineering from the University of Southern California (USC) and a Ph.D. in Industrial Administration from Carnegie Mellon University, Pittsburgh. Avisar Paz. Mr. Paz has served as a director since April 2001. Mr. Paz served as the Chief Financial Officer of Israel Corporation and as of January 7, 2015, serves as Chief Executive Officer of Israel Corporation. He serves as a director of various subsidiaries of Israel Corporation. He serves as a director of Oil Refineries Ltd. Mr. Paz holds a BA in Economics and Accounting from Tel Aviv University and is a certified public accountant in Israel. Eran Sarig.  Mr. Sarig has served as a director since October 2010. Mr. Sarig serves as Executive Vice President of Business Development and Strategy of Israel Corporation. He serves as a director of Oil Refineries Ltd. He holds an LLB from Tel Aviv University School of Law, LLM from Duke University School of Law and MBA from the Herzliya Interdisciplinary Center. Aviad Kaufman.  Mr. Kaufman has served as a director since March 2014. He is the Chief Financial Officer of Quantum Pacific (UK) LLP, part of the Quantum Pacific Group, which is related to Mr. Idan Ofer, a position he has held since 2008. He is also a board member of Israel Corporation. Mr. Kaufman is a certified public accountant and holds a BA in Accounting and Economics from the Hebrew University in Jerusalem (with distinction), and a MBA majoring in Finance from Tel AvivBrandeis University. Geoffrey Merszei.  Mr. Merszei was appointed director on February 26, 2015. Mr. Merszei serves as the Chairmandirector since February 2015. He serves as chairman of the Board of Zolentis AG, Switzerland. From 1977 to 2001 and from 2005 to 2013, Mr. Merszei served in a number of positions at The Dow Chemical Company, including as its Executive Vice Presidentexecutive vice president (2005 to 2012) and Chief Financial Officerchief financial officer (2005 to 2009) and as the, during which time he also served on Dow’s Board (2005 to 2009). Mr. Merszei was CEO and Chairmanchairman of the Board of Dow Europe, the Middle East and Africa (2009 to 2012). In 2001 Mr. Merszei alsoleft Dow to be executive vice president and chief financial officer of Alcan Inc. He returned to Dow in July 2005. Mr. Merszei has served as a lead director of the Dow Corning Corporation (2005 to 2010) and as a director of the Chemical Financial Corporation and Chemical Bank (2006 to 2010). Mr. Merszei previously served as an executive committee member of the European Chemical Industry Council (CEFIC) (2009 to 2012). Mr. Merszei holds a BA in Economics from Albion College, Michigan, U.S.A. 130 Table of Contents Shimon Eckhaus.  Mr. Eckhaus was appointed director on February 26, 2015. Mr. Eckhaus serves as director since February 2015. He serves as the Presidentpresident of Worldwide Integrated Network Ltd. Mr. Eckhausand also serves on the board of directors of Orbit Technologies Ltd. and AqWise Ltd. He also serves asMr. Eckhaus is a strategic and marketing advisor to a number of private and public companies. From 2009 to 2011, Mr. Eckhaus served as the Chairmanchairman of the Boardboard of Starling Advanced Communications Ltd. and as a member of the board of directors of Israel Electric Company Ltd. and O.D.F Optronics Ltd. Mr. Eckhaus holds a B.Sc. in Materials and Process Engineering, including a specialization in Nuclear Engineering, and an M.Sc. in Materials and Processing Engineering, both from Ben Gurion UniversityUniversity. The following table lists the names, ages and positions of our Executive Officers as of the Negev, in Beer-Sheva. 121 Tablepublication date of Contents this report. The address for sending notices is c/o Israel Chemicals Ltd., 23 Aranha Street, Millenium Tower, Tel Aviv, 61070, Israel.  Name Age Position Stefan Borgas 51 ICL Chief Executive Officer Asher Grinbaum 66 ICL Chief Operating Officer Kobi Altman 47 ICL Chief Financial Officer  Nissim Adar 64 President, ICL Fertilizers Charles M. Weidhas 57 President, ICL Industrial Products Mark Volmer 52 President, ICL Performance Products Eli Amit*** 61 Senior Vice President, ICL Global Economics Dan Chen*** 64 Executive Vice President, ICL Global Corporate Relations Lisa Haimovitz 50 Senior Vice President, ICL Global General Counsel and Corporate Secretary Hezi Israel 48 Executive Vice President, ICL Corporate Development, M&A and Strategy Yakir Menashe 44 Executive Vice President, ICL Global Human Resources Karl Mielke 64 Executive Vice President, ICL Specialty Fertilizers Lizette Killian 50 Senior Vice President, ICL Global Corporate Relations Ido Lilian 52 Executive Vice President, ICL Global Procurement ____________________ * On November 11, 2015, the Board of Directors decided that only members of the management (the Global Executive Committee) and those who are managers who report directly to the Chief Executive Officer, according to the definition in the Companies Law, 5759-1999, would be considered as officers. During 2015 and until the aforesaid Board decision, the following served as Company officers: Messers. Herzel Bar-Niv (VP International Taxation), Amir Benita (VP), Shmuel Daniel (Internal Auditor), Israel Dreyfuss (Controller), Eyal Ginzberg (SVP, Chief Technology Officer), Michael Hazzan (VP Finance) and Ofer Lifshitz (SVP Global Processes). ** Mr. Avi Doitchman and Mr. Ronnie Shushan retired in 2015. (1) On November 11, 2014, Eli Amit gave notice of his wish to retire from his position during 2016. On November 4, 2015, Mr. Dan Chen gave a notice of his wish to retire from his position during 2016. Stefan Borgas. Mr. Borgas has servedserves in his current position since September 2012. On February 26, 2015, he was appointed2012 and is also a director of the Company. Mr. Borgas previously served as Chief Executive Officerchief executive officer of Lonza GroupLonza-Group (2004 to 2012) and is a director atin the Syngenta Group. Mr. Borgas is a member of the Boardboard of the Israeli-German Chamber of Commerce and serves on the Boardboard of Directorsdirectors of IFA, the International Fertilizers Association. He holds a BA in Business Administration from the University of Saarbrucken (Germany) and an MBA from the University of St. Gallen (Switzerland). Avi Doitchman Asher Grinbaum. Mr. Doitchman has servedGrinbaum serves in his current position since February 2000.January 2008. He is a director ofin Dead Sea Works Ltd., Rotem Amfert Negev Ltd., Dead Sea Bromine Company Ltd. and Bromine Compounds Ltd. – subsidiaries of the Company. He is a member of the management committee of the non-profit “To See” Association and was member of the board of the Israel Chemistry Society and chairman of the Chemistry Society and the Environmental Committee of the Israeli Industry Association. After about 18 years, Mr. Grinbaum recently finished his role as chairman of the management committee of Beer-Sheva Theatre. Mr. Grinbaum holds a BA in Mechanical Engineering and an MBA in Business Management, both from Ben Gurion University. Kobi Altman. Mr. Altman serves in his position since April 2015. He is director in Dead Sea Works Ltd., Rotem Amfert Negev Ltd., Dead Sea Bromine Company Ltd., and Bromine Compounds Ltd., IDE Technologies– subsidiaries of the Company. Mr. Altman previously held several senior financial positions at Teva Pharmaceuticals Industries Ltd., ICL Fine Chemicals Ltd., Ferson Chemicals Ltd. and PAMA (Energy Resources Development) Ltd. and (2006-March 2015). Mr. Altman is a member of the Executive Committee of the Public Companies Association. Mr. Doitchmanqualified CPA in Israel and holds a BA in Accounting and Economics from Bar Ilan University and Accountingan MA from Bar-IlanBar Ilan University. He is a certified public accountant in Israel. 131 Table of Contents Nissim Adar. Mr. Adar has servedserves in his current position since October 2013. Mr. AdarHe previously served as Chief Executive Officerchief executive officer of ourthe Industrial Products segmentSegment (2008 to October 2013). Mr. Adar holds a BA in Chemical Engineering and an MBA in Industrial Management from Ben Gurion UniversityUniversity. Charles M. Weidhas. Mr. Weidhas serves in his position since October 2013 and is currently chairman of Tami IMI R&D Institute. He previously served as the chief executive officer of the Negev. Performance Products Segment (2007 to 2013) and previously held management positions with Monsanto and Solutia. Mr. Weidhas holds a B.Sc. in Chemical Engineering and an MBA from Northeastern University. Mark Volmer. Mr. Volmer serves in his position since November 2013. Previously he served in different business manager roles at BASF in Europe and Asia Pacific. Mr. Volmer holds an M.Sc. in Chemistry from Vrije University Amsterdam and an MBA from the Rotterdam School of Management, Erasmus University. Eli Amit. Mr. Amit has servedserves in his current position since January 2002. He is aserves as director atin Dead Sea Works Ltd., Rotem Amfert Negev Ltd., Dead Sea Bromine Company Ltd. and Bromine Compounds Ltd. Mr. Amit holds a BA in Economics and Philosophy and an MBA from Tel Aviv University, as well as an MA in Economics from Northwestern University. Herzel Bar Niv.  Mr. Bar Niv has served in his current position since January 2008. Mr. Bar Niv has served as the Controller of the Company, and as the chairman of the audit committee at Makefet Fund. Mr. Bar Niv holds a BA in Economics and Accounting from Bar-Ilan University. He is a certified public accountant in Israel. Amir Benita.  Mr. Benita serves since 2012 as Vice President and is the manager of the ICL Harmonization Project. Mr. Benita has served as controller of the Company and as senior lecturer in accounting studies at the College of Management. He serves as a director of Dead Sea Magnesium Ltd. Mr. Benita holds a BA in Business Management and Accounting from the College of Management and is a certified public accountant in Israel. Shmuel Daniel.  Mr. Daniel has served in his current position since August 2014. Mr. Daniel previously served as Chief Financial Officer of our Industrial Products segment (2011 to 2014). He holds a BA in Economy and Statistics, and Accounting and an MA in Industrial Management from Ben Gurion University. He is a certified public accountant in Israel. Dan (Dani) Chen. Mr. Chen has servedserves in his current position since October 2013. Mr. ChenHe was Chief Executive Officer of ourthe Fertilizers segment until October 2013. HeMr. Chen holds a BA in Electrical Engineering from the Technion IsraelTechnion-Israel Institute of Technology in Haifa and an MA in Industrial Management from Ben Gurion University of the Negev. Israel Dreyfuss. Mr. Dreyfuss has served in his current position since June 2012. Mr. Dreyfuss has served as an accountant with Phoenix Insurance Company, and worked as an accountant in the Corporate Department of the Israel Securities Authority. He has also been a lecturer at the Hebrew University. Mr. Dreyfuss holds a BA in Accounting and Law and an MBA from the Hebrew University of Jerusalem. He is a certified public accountant and is a member of the Israel Bar. Eyal Ginzberg. Mr. Ginzberg has served in his current role since June 2013. Mr. Ginzberg has served as Chief Executive Officer of Tami IMI R&D Institute, as well as the Chief Executive Officer of Fertilizers & Chemicals Ltd. Mr. Ginzberg holds a BA in Chemical Engineering from Ben Gurion University of the Negev. Asher Grinbaum. Mr. Grinbaum has served in his current position since January 2008. He is as a director at Dead Sea Works Ltd., Rotem Amfert Negev Ltd., Dead Sea Bromine Company Ltd. and Bromine Compounds Ltd. – subsidiaries of the Company. He is chairman of the management committee of Beersheba Theatre and a member of the management committee of the non-profit “To See” Association. He was a member of the management committee of Israel Chemical Society. He holds a BA in Mechanical Engineering and an MBA in Business Management, both from Ben Gurion University of the Negev. 122 Table of Contents Michael Hazzan. Mr. Hazzan has served in his current position since March 2012. Mr. Hazzan served as the Finance Manager of the Company. He is a director of Ferson Chemical Materials Ltd., ICL Fine Chemicals Ltd. and IDE Technologies Ltd.-subsidiaries of the Company. Mr. Hazzan holds a BA in Economics from Tel Aviv University and an MA in Economics from Bar llan University. Lisa Haimovitz. Ms. Haimovitz has servedserves in her current position since May 2009. Ms. Haimovitz has alsoShe served as the Vice Presidentvice president for Strategystrategy in the Delek Group and has served in a number of positions in the Israel Securities Authority. She holds an LLB and an MBA from Tel Aviv University and is a member of the Israel Bar. Hezi Israel. Mr. Israel has servedserves in his current position since March 2012. Mr. Israel hasHe served as Vice Presidentvice president of Strategystrategy and Business Developmentbusiness development for the Company’s Industrial Products segment.Segment. He holds an MBA majoring in Finance and a BA in Economics and Political Science and an MBA majoring in Finance, both from Tel Aviv University. Ofer Lifshitz. Mr. Lifshitz has served in his current role since June 2013. Mr. Lifshitz serves also as the ICL Integration Manager. Mr. Lifshitz previously served as our Industrial Products segment’s Executive Vice President (2008 to 2013) Yakir Menashe. Mr. Lifshitz holds a BAMenashe serves in Economics and MBA in Industrial Management from Ben Gurion University of the Negev. Yakir Menashe. Mr. Menashe has served in his current position since March 2013. Mr. Menashe hasHe served as a Vice Presidentvice president of Regulatory Affairscompliance ®ulatory affairs and Assistantassistant to the Chief Executive Officerchief executive officer of the Company. Mr. Menashe holds an LLB in Law from the College of Management. HeManagement and is a member of the Israel Bar. Ronnie Shushan. Mr. Shushan has served in his current position since May 2014. Mr. Shushan previously served as CEO ICL Fertilizers Europe (2012 to 2014) and Senior Vice President of Finance and Economics (CFO) ICL Fertilizers (2008 to 2012)Bar. Karl Georg Mielke. Mr. Shushan is a certified public accountantMielke serves in Israel and holds a BA in Economics and Accounting from Ben Gurion University of the Negev. Mark Volmer. Mr. Volmer has served in his current position since November 2013. Mr. Volmer hasHe served as ahead of K+S Aktiengesellschaft Global salt business manager withunit (2009–2013) and previously held various positions in the BASF heading its Construction Chemicals business in Asia Pacific.Group. Mr. VolmerMielke holds an M.Sc. in Chemistry from Vrije University and an MBA from the SchoolUniversity of Management, ErasmusMuenster, Germany. Lizette Killian. Ms. Kilian serves in her position since December 2015. She previously held various strategic communications positions in the International Atomic Energy Agency, OPEC and the OPEC Fund. Ms. Kilian holds a BA degree in International Relations and Political Science from Columbia University, Rotterdam. Charles M. WeidhasNew York. Ido Lilian. Mr. Weidhas has servedLilian serves in his current position since October 2013 and is currently Chairmanthe beginning of Tami IMI R&D Institute.2014. He previously served asin several positions in the Chief Executive OfficerIndustrial Products Segment, among others vice president operations, engineering and procurement (2012-2014), vice president of our Performance Products segment (2007 to 2013)the supply chain and had prior management positions with Monsantoengineering (2011-2012), vice president of the magnesia division (2007-2011), head of the planning and Solutia.purchasing division (2005-2007) and head of the technical department and purchasing division (2003-2007). Mr. WeidhasLilian holds a B.Sc. in Chemical Engineering and an MBAMSc degree in Industrial Engineering and Management, both from NortheasternBen Gurion University. Family Relationships There are no family relationships between any members of our executive management and our directors. Arrangements for Election of Directors and Members of Management There are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which any of our executive management or our directors were selected. 132 Table of Contents B. COMPENSATION External directors compensation is subject to Under the Israeli Companies Law and regulations promulgated underthereunder (collectively, the “Companies Regulations”), the compensation of directors must comply with the company’s compensation policy and requires the approval of the Human Resources & Compensation Committee, Board of Directors and Shareholders, in that order. The Companies Law (“Compensation Regulations”). These regulations permit the paymentRegulations set minimum and maximum amounts of cash compensation, within a specified range, depending on the size of the company, or cash and/or equity compensation that is consistent with theare relative compensation paid to that of other directors who are not controlling shareholders or employed thereby and who are not employed by the Company or by the controlling shareholder and companies under its control.(collectively, “Other Directors”). Until February 26, 2015, all the directors in the Company (excluding directors employed by the controlling shareholder)Israel Corp.), were entitled to receive cash compensation in the maximum amount setpermitted by the Companies Regulations for our external directors in the Compensation Regulations. In 2014, this amount for each director designated “expert director” was approximately NIS 148,575 (currently equivalent to approximately $37,000) per year and NIS 5,715 (currently equivalent to approximately $1,453) per meeting, and for directors not designated “expert director”, approximately NIS 111,345 (currently equivalent to approximately $28,310) per year and NIS 4,285 (currently equivalent to approximately $1,090) per meeting, which amounted to an aggregate amount of approximately $675,000 paid to our Board members in that year.directors. Directors who are employees of Israel CorporationCorp. do not receive additional cash compensation for their services as directors. Instead, thosesuch fees are included in the annual management fees we pay to Israel Corporation. Corp. pursuant to our agreement with them. On January 25 2015 and on January 26, 2015, the Compensation and Human Resources & Compensation Committee and the Board of Directors, respectively, approved, and on February 26, 2015, the General Meeting of Shareholders, approved that the cash compensation to be paid to each of the directors (excluding directors who are employees ofemployed by Israel Corp. and excluding directors), who are Company employees, including Mr. Stefan Borgas),serve from time to time, shall include a fixed annual amountfee component of NIS 200,000 (currently equivalent to approximately $50,850)(approximately $50,850 on the date of the shareholders’ approval), and that the compensation for attending meetings shalla per meeting attendance fee which, as of August 29, 2015, would be paid atreduced to equal the lowest possible amount permitted in the Compensation Regulations forfee payable to external directors of companies of the Company’s size. Thissize of ICL pursuant to the Compensation Regulations, as adjusted from time to time. Such amount currently stands atequaled (on the date of the shareholders’ approval) NIS 2,410 (approximately $613) per meeting for directors who do not meet the qualifications of an expert director and NIS 3,205 (currently equivalent to approximately(approximately $815) per meeting for “expert directors” (directors whomdirectors who meet the Company’s Boardqualifications of Directors has defined as directors with knowledge and expertise in finance or in the business in which the Company operates) and at NIS 2,410 (currently equivalent to approximately $613) for directors not designated “expert directors”. However, such reduced attendance compensation amounts shall be paid froman expert director. Until August 29, 2015, and until that date the Company shall continue payingper meeting attendance compensation according tofee was paid in the maximum amount provided inpermitted by the Compensation Regulations. In addition,It was further approved by the Compensation and Human Resources Committee, the Board of Directors and the General Meeting of Shareholders approved, on the said dates, an allocation ofauthorized bodies in their meetings set forth above, to allocate 9,078 restricted shares to each Company directorof the directors (excluding the Company’s CEO, Mr. Stefan Borgas), for no consideration, in accordance with the Company’s Equity Compensation Plan (2014), as specified in “—below. The aforementioned bodies further approved that the directors employed by Israel Corp. (the “IC Directors”) may assign their restricted shares (or the economic benefit thereof) to Israel Corp., subject to the resolution of the applicable tax ramifications and that Mr. Aviad Kaufman may assign to Millennium Investments Elad Ltd. (“Millennium”) his cash compensation paid by us (including compensation previously paid) and his restricted shares (or the economic benefit thereof). For information on the fair value of the restricted shares, see “E. Share Ownership TheOwnership-The 2014 Equity Compensation Plan”Plan. It should be noted that” On November 8 and 11, 2015, the Compensation and Human Resources & Compensation Committee and the Board of Directors, respectively, and on December 23, 2015, the General Meeting of Shareholders, approved thatthe cash compensation to be paid to each of the directors who are(excluding directors employed by Israel CorporationCorp.), who serve from time to time, shall include a fixed annual fee component of NIS 365,000 (approximately $93,088 on the date of the shareholders’ approval) and a per meeting attendance fee equal to the lowest fee payable to external directors of companies of the size of ICL pursuant to the Compensation Regulations, as adjusted from time to time. Such amount equaled (on the date of the shareholders’ approval) NIS 2,391 (approximately $610) per meeting for directors who do not meet the qualifications of an expert director and NIS 3,180 (approximately $811) per meeting for directors who meet the qualifications of an expert director. It was further approved by the authorized bodies in their meetings set forth above, to allocate 15,115 restricted shares to each of the directors (excluding the Company’s CEO, Mr. Stefan Borgas and the chairman of the Board, Mr. Nir Gilad), for no consideration, in accordance with the Company’s Equity Compensation Plan (2014), as specified below. The aforementioned authorized bodies further approved that the IC Directors and Mr. Aviad Kaufman may transferwill assign their Restricted Shares (or the economic benefit thereof) to Israel Corp. and that Mr. Aviad Kaufman will also assign to Israel Corp. the 9,078 Restricted Shares that were granted pursuant to the February 26, 2015, General Meeting’s approval, as further specified above. Mr. Aviad Kaufman will assign to Millennium his cash compensation paid by the Company. Accordingly, 54,423 shares were allocated to Israel Corp. For information on the fair value of the restricted shares, see “E. Share Ownership-The 2014 Equity Compensation Plan.” On May 12, 2015, Mr. Nir Gilad was appointed as aforementioned,our Executive Chairman of the Board, a role which requires the devotion of 80% of his business hours. Mr. Gilad's compensation terms were approved by our Compensation Committee and Board of Directors on May 10, 2015 and on May 12, 2015, respectively, and on June 29, 2015, by the general meeting of our shareholders, as follows: (1) Mr. Gilad's annual base salary is $800,000, representing devotion of 80% of his business hours; (2) Mr. Gilad is entitled to an annual cash bonus based on the Company's financial performance in the applicable year, as reflected in the applicable annual audited consolidated financial statements of the Company. Mr. Gilad’s Target Bonus in respect of 2015 was $720,000 (representing 80% devotion of his time). Mr. Gilad’s target bonus is calculated, according to the Israel CorporationCompanies Compensation Policy; (3) Mr. Gilad was granted a one-time equity grant of Options exercisable into 404,220 Ordinary Shares and 68,270 Restricted Shares, with a fair value of $485,021 and $461,615, respectively; (4) Mr. Gilad is further entitled to Millennium Investments Elad Ltd., respectively. 123 Tableadvance notice of Contents termination of 12 months in case the notice is given by the Company or to give 6 months if the notice is given by Mr. Gilad. During such advance notice period, Mr. Gilad may be required to continue to work for the Company. During the Advance Notice Period, employer-employee relations would continue to apply and thus Mr. Gilad would be entitled to all of his compensation terms, including annual bonus; (5) upon termination, Mr. Gilad will be entitled to a severance payment equal to two times his last monthly salary multiplied by the number of years that he served as the Company’s Executive Chairman; (6) Mr. Gilad is entitled to all other cash and non-cash benefits payable to our senior executives pursuant to our policies in effect from time to time, including but not limited to, pension, study fund, disability insurance, and Company car etc. Mr. Nir Gilad will retire from the company’s Board at September 1, 2016. The Board has formed a Search Committee comprised of two board members: Mr. Yaacov Dior, Chairman of the HR and Compensation Committee and Mr. Ron Moskovitz. The Committee will determine its order of work and will identify suitable candidates and propose the nomination to the full Board for election, no later than by May 1, 2016. The aggregate compensation paid to all of the members of our senior management (GEC members) (including the officers listed in the table below) was approximately $13$8 million in 2014.2015. The following table and accompanying footnotes describe the compensations given in 20142015 to the five highest earning senior officers in the Company and its subsidiaries. 133 Table of Contents   Details of the Recipient     Payments for services     Name   Position     Scope of position       Holding in equity       Salary       Compensation (1)       Bonus (2)     Share based payment       Total         US$ thousands   Stefan Borgas (3) Chief Executive Officer     100 %     *       1,005       1,419       1,125       1,195 (8)     3,739   Charles Weidhas (4) Chief Executive Officer, Industrial Products     100 %     *       392       529       255       376 (9)     1,160   Asher Grinbaum (5) Executive Vice President and COO     100 %     *       461       663       390       376 (10)     1,429   Dani Chen (6) Executive Vice President-Corporate Relations     100 %     *       392       593       285       376 (11)     1,254   Nissim Adar (7) Chief Executive Officer, ICL Fertilizers     100 %     *       392       584       391       376 (12)     1,351   ________________     Details of the Recipient   Payments for services Name   Position   Scope of position   Holding in equity   Base Salary   Compensation(1)   Bonus(2)   Share based payment   Total                 (US$ thousands) Stefan Borgas(3)     ICL CEO     100 %     *     1,000       1,646       -       1,263 (8)     2,909   Dan Chen(4)     EVP, ICL Global Corporate Relations     100 %     *     361       580       -       641 (9)     1,221   Avner Maimon(5)     General Manager ICL Israel     100 %     *     181       443       258       475 (10)     1,176   Charles Weidhas(6)     President ICL Industrial Products     100 %     *     361       670       -       369 (11)     1,039   Asher Grinbaum(7)     EVP, COO     100 %     *     425       650       -       369 (12)     1,019      ______________ * Less than 1%% (1) The salarycompensation component set out in the above table includes all of the following components: monthly salary, social benefits, customary social and related provisions, company car, relocation expenses, rent and reimbursement of telephone and newspaper expenses. (2) In its meeting dated March 15, 2016 the board decided to further discuss the bonuses payout for 2015 in its upcoming meeting. The bonus that appears in the above table represents the bonus with respectfor Mr. Maimon was fully paid subsequent to 2014, which was set in accordance with the provisions in our Compensation Policy and the officers’ bonus plan that was approved by the Compensation and Human Resources Committee, Board of Directors and General Meeting of Shareholders in August 2013, as amended with the approval of the General Meeting of Shareholders on December 2014.his retirement. (3) Mr. Stefan Borgas has served as our Chief Executive Officer since September 20, 2012. Mr. Borgas’ employment agreement is for an unlimited period and may be terminated by either party at any time. His monthly base salary, as of December 31, 2014,2015, is approximately $83,333. Stefan Borgas’ base salary is paid in NIS at the representative exchange rate on the date of payment. In addition to his monthly base salary, Mr. Borgas is entitled to a monthly participation for the cost of a residence. In addition, Mr. Borgas is entitled to coverage for the cost of airplane tickets for two annual vacations in Europe for himself and for his family, as well as participation in his medical insurance.insurance costs. With respect to severance, other than in cases where the right to compensation is revoked under Israeli law, Mr. Borgas is entitled to a notice period equivalent to 6 months’ salary if his resignation is at his request, and equivalent to 12 months’ salary if his resignation is initiated by the Company. In addition to the amounts provided regularly for pension and compensation, theseverance, additional severance compensation for Mr. Borgas will be calculated and paid based on the seniority he accumulates in our Company and on the basis of his last monthly base salary multiplied by the number of years he is employed by us.the Company. (4) Mr. Dan (Dani) Chen serves as Executive Vice President, ICL Global Corporate Relations, since October 1, 2013; on November 4, 2015, Mr. Chen gave notice of his wish to retire from his position in 2016. The 1978 employment contract with Mr. Chen, as amended to date, states that Mr. Chen’s base salary will be updated twice a year according to the rise in the CPI in the months that passed since the last update. The employment contract is not limited in time and will be in force until it is ended by one of the parties giving prior written notification. Mr. Chen is entitled to a notice period of 6 months. According to the employment contract and the salary updates, as decided by our Board of Directors from time to time, Mr. Chen’s monthly base salary as of December 31, 2015 is approximately NIS 117,056. Mr. Chen is entitled, in addition to the current provisions for pension funds and severance pay, to additional severance pay in the amount of his last salary multiplied by the number of years of his service as President of ICL Fertilizers. The value of the equity component in the table above includes the acceleration of unvested portions. (5) Mr. Avner Maimon has served as General Manager of ICL Israel. on September 16, 2015 Mr. Maimon retired and was appointed as Chief Executive Officer of Oil Refineries Ltd. Mr. Maimon served in ICL since 1991. Mr. Maimon received a notice period of 6 months and his base salary as of September 2015 was approximately NIS 82,700. The value of the equity component in the table above includes the acceleration of unvested portions of the equity grant he received in 2014 and 2015. The compensation in the table above includes redemption of notice period accumulates annual vacation days and a special bonus. Mr. Maimon was not considered as an officer of the Company. 134 124 Table of Contents (4) (6) Mr. Charles Weidhas serves as CEO ofPresident, ICL Industrial Products, as of October 1, October 2013. Mr. Weidhas’ employment agreement is for an unlimited period and may be terminated by either party at any time by written notification. Mr. Weidhas is entitled to a notice period and adjustment period of 6 months each and is entitled to life insurance and health insurance for himself and his family. For a period of 5 years, Mr. Weidhas is entitled to coverage for the costreimbursement of airplane tickets for two annual visits to the United States for himself and his wife.rent. Mr. Weidhas’ monthly base salary as of December 31, 20142015 is approximately NIS 117,056. His employment agreement states that his base salary will be updated twice a year according to the rise in the CPI in the months that passed since the last update. Mr. Weidhas is also entitled to maintain the net amount in respect of all payments made to him as would be obtained in the United States (tax equalization). In addition to the amount provided regularly to the pension fund and/or to the managers insurance,and severance pay, Mr. Weidhas is entitled to severance payment equal to his last salary multiplied by the number of years he serves as Chief Executive OfficerPresident of ourICL Industrial Products segment.Products. (5) (7) Mr. Asher Grinbaum serves as Executive Vice President and Chief Operating Officer.Officer since 2008. The 1994 employment contract with Mr. Grinbaum, as amended to date, states that Mr. Grinbaum’s base salary will be updated twice a year according to the rise in the CPI in the months that passed since the last update. The employment contract is not limited in time and will remain in force until it is ended by one of the parties by means of providing prior written notification. Mr. Grinbaum is entitled to a notice period of 6 months. According to the employment contract and the salary updates, as decided by our Board of Directors from time to time, Mr. Grinbaum’s monthly base salary as of December 31, 20142015 was approximately NIS 137,774. In addition Mr. Grinbaum is entitled, beyondin addition to the current provisions for pension benefits and/or managers’ insurance,and severance, to additional severance pay equal to his last salary times multiplied by the years of his service with us.service. (6) Mr. Dan (Dani) Chen serves as Executive Vice President for our Corporate Relations department since October 1, 2013. The 1978 employment contract with Mr. Chen, as amended to date, states that Mr. Chen’s salary will be updated twice a year according to the rise in the CPI in the months that passed since the last update. The employment contract is not limited in time and will be in force until it is ended by one of the parties giving prior written notification. Mr. Chen is entitled to a notice period of 6 months. According to the employment contract and the salary updates, as decided by our Board of Directors from time to time, Mr. Chen’s salary as of December 31, 2014 is approximately NIS 117,056. In addition, Mr. Chen is entitled, beyond the current provisions for pension funds and/or managers’ insurance, to severance pay in the amount of his last salary multiplied by the number of years of his service as CEO of ICL Fertilizers and as Executive Vice President Corporate Relations. (7) Mr. Nissim Adar serves as Chief Executive Officer of our Fertilizers segment since October 1, 2013. The 2002 employment contract with Mr. Adar as amended to date, states that Mr. Adar’s salary will be updated twice a year according to the rise in the CPI in the months that passed since the last update. The employment contract is not limited in time and will be in force until it is ended by one of the parties giving prior written notification. Mr. Adar is entitled to a notice period of 6 months. According to the employment contract and the salary updates, as decided by decisions of our Board of Directors from time to time, Mr. Adar’s salary as of December 31, 2014 is about NIS 117,056. In addition, Mr. Adar is entitled, beyond the current provisions for pension benefits and/or managers’ insurance, to severance pay equal to the amount of his last salary multiplied by the number of years of his service as CEO of ICL Industrial Products and as CEO of ICL Fertilizers. (8) On November 26, 2012, an allotment of 1,190,000 non-negotiable options, for no consideration, was approved for Mr. Stefan Borgas under our 2012 Option Plan. On December 30, 2012, the options were assigned to a trustee in Mr. Borgas’ favor. The options are exercisable into our ordinary shares at an exercise price of NIS 46.6 (subject to adjustments) and will vest in three equal portions beginning on November 26, 2013, 2014 and 2015. The expiration date for the options vesting within the first and second portions is upon the lapse of 48 months from the date of allocation, and the expiration date for the options vesting within the third portion is upon the lapse of 60 months of the date of allocation. The weighted financial value of each option, on the date of approval, was NIS 11.9 for the first and second portions, and NIS 12.7 for the third portion. For additional information, see “E. Share Ownership -TheOwnership-The 2012 Option Plan”. The amount appearing in the table reflects the aggregate expenditure recorded by us in 20142015 with regard to the allocation of options to Mr. Borgas, based on generally accepted accounting principles. The exercise price for converting the options into shares as of March 15, 2015,14, 2016, is NIS 41.52,40.49, this price is 46.7%139.6% higher than the last share price on this date (meaning, these options are “out of the money”). Yet the table above includes an amount which is 27.4% of the value of all the options allocated to Mr. Borgas (due to generally accepted accounting principles). On August 4, 2014 and August 6, 2014 the Compensation and Human Resources & Compensation Committee and the Board of Directors, respectively, approved, and on December 11, 2014 the General Meeting of Shareholders approved an allocation of 367,294 non-negotiable options for no consideration to Mr. Stefan Borgas, as well as 85,907 restricted shares, under our 2014 Equity Compensation Plan. On December 11, 2014 the options and restricted shares were allocated to a trustee in Mr. Borgas’ favor. The options are exercisable into Company shares at an exercise price of NIS 28.71 (subject to adjustments). The options and restricted shares will vest in three equal portions as follows: one third upon the lapse of 24 months after December 1, 2014 (the “Commencement Date”), one third upon the lapse of 36 months after the Commencement Date, and one third upon the lapse of 48 months after the Commencement Date. The expiration date for the options vesting within the first portion is upon the lapse of 48 months of the Commencement Date, the expiration date for the options vesting within the second portion is upon the lapse of 60 months of the Commencement Date, and the expiration date for the options vesting within the third portion is upon the lapse of 72 months of the Commencement Date. The weighted financial value of each such option, at the date of approval, was NIS 6.57. The fair value of the restricted shares, at the date of approval, was NIS 28.09 (see also “E.“E. Share Ownership - Ownership-The 2014 Equity Compensation Plan”). The amount specified in the table reflects the aggregate expenditure recorded by us in 20142015 with respect to the allocation of options and restricted shares to Mr. Borgas, based on generally accepted accounting principles. The vesting price for converting the options into shares as of March 15, 201514, 2016 is NIS 27.7926.76 (about $7)$6.88), the share price on that day was NIS 28.316.9 (about $7.1)$4.34). On May 10 and May 12, 2015, the Human Resources & Compensation Committee and the Board of Directors, respectively, approved, and on June 29, 2015 the General Meeting of Shareholders approved, an allocation of 530,356 non-negotiable options for no consideration to Mr. Stefan Borgas, as well as 89,574 restricted shares, under our 2014 Equity Compensation Plan. On July 12, 2015, the options and restricted shares were allocated to a trustee in Mr. Borgas’ favor. The options are exercisable into Company shares at an exercise price of NIS 27.76 (subject to adjustments). It should be noted thatThe options and restricted shares will vest in three equal portions as follows: one third upon the lapse of 12 months after July 12, 2015 (the “Commencement Date”), one third upon the lapse of 24 months after the Commencement Date, and one third upon the lapse of 36 months after the Commencement Date. The expiration date for the options vesting within the first and the second portion is upon the lapse of 36 months of the Commencement Date, and the expiration date for the options vesting within the third portion is upon the lapse of 48 months of the Commencement Date. The weighted financial value of each such option, at the date of approval, was NIS 4.55. The fair value of the restricted shares, at the date of approval, was NIS 26.94 (see also“E. Share Ownership-The 2014 Equity Compensation Plan”). The amount specified in the table above includes an amount constituting about 13%reflects the aggregate expenditure recorded by us in 2015 with respect to the allocation of the value of all the options allocatedand restricted shares to Mr. Borgas, (due tobased on generally accepted accounting principles)principles. The vesting price for converting the options into shares as of March 14, 2016 is NIS 27.07 (about $6.96), the share price on that day was NIS 16.9 (about $4.34). 135 125 Table of Contents (9) On November 26, 2012, an allotment of 380,000 non-negotiable options was approved, for no consideration, for Mr. Dan Chen under our 2012 Plan. On December 30, 2012, the options were assigned to a trustee in Mr. Chen’s favor. The options are exercisable into our ordinary shares at an exercise price of NIS 46.6 (subject to adjustments) and will mature in three equal portions beginning on November 26, 2013, 2014 and 2015. The expiration date for the options vesting within the first and second portions is upon the lapse of 48 months from the date of allocation, and the expiration date for the options vesting within the third portion is upon the lapse of 60 months of the date of allocation. The weighted financial value of each option, on the date of approval, was NIS 11.9 for the first and second portions, and NIS 12.7 for the third portion. For additional information, see “E. Share Ownership-The 2012 Option Plan”. The amount appearing in the table reflects the aggregate expenditure recorded by us in 2015 with regard to the allocation of options to Mr. Chen, based on generally accepted accounting principles. The exercise price for converting the options into shares as of March 14, 2016, is NIS 40.49, this price is 139.6% higher than the share price on this date (meaning, these options are “out of the money”). On August 4, 2014 and August 6, 2014 the Human Resources & Compensation Committee and the Board of Directors, respectively, approved an allocation of 95,129 non-negotiable options for no consideration to Mr. Dan Chen, as well as 22,250 restricted shares, under our 2014 Equity Compensation Plan. On September 27, 2014 the options and restricted shares were allocated to a trustee in Mr. Chen's favor. The options are exercisable into Company shares at an exercise price of NIS 28.71 (subject to adjustments). The options and restricted shares will mature in three equal portions as follows: one third upon the lapse of 24 months after December 1, 2014 (the “Commencement Date”), one third upon the lapse of 36 months after the Commencement Date, and one third upon the lapse of 48 months after the Commencement Date. The expiration date for the options vesting within the first portion is upon the lapse of 48 months of the Commencement Date, the expiration date for the options vesting within the second portion is upon the lapse of 60 months of the Commencement Date, and the expiration date for the options vesting within the third portion is upon the lapse of 72 months of the Commencement Date. The weighted financial value of each such option, at the date of approval, was NIS 6.57. The fair value of the restricted shares, at the date of approval, was NIS 28.09 (see also “E. Share Ownership-The 2014 Equity Compensation Plan”). The amount specified in the table reflects the aggregate expenditure recorded by us in 2015 with respect to the allocation of options and restricted shares to Mr. Chen, based on generally accepted accounting principles. The vesting price for converting the options into shares as of March 14, 2016 is NIS 26.76 (about $6.88), the share price on that day was NIS 16.9 (about $4.34). On May 10 and May 12, 2015, the Human Resources & Compensation Committee and the Board of Directors approved an allocation of 137,363 non-negotiable options for no consideration to Mr. Dan Chen, as well as 23,200 restricted shares, under our 2014 Equity Compensation Plan. On July 12, 2015, the options and restricted shares were allocated to a trustee in Mr. Chen's favor. The options are exercisable into Company shares at an exercise price of NIS 27.76 (subject to adjustments). The options and restricted shares will vest in three equal portions as follows: one third upon the lapse of 12 months after July 12, 2015 (the “Commencement Date”), one third upon the lapse of 24 months after the Commencement Date, and one third upon the lapse of 36 months after the Commencement Date. The expiration date for the options vesting within the first and the second portion is upon the lapse of 36 months of the Commencement Date, and the expiration date for the options vesting within the third portion is upon the lapse of 48 months of the Commencement Date. The weighted financial value of each such option, at the date of approval, was NIS 4.55. The fair value of the restricted shares, at the date of approval, was NIS 26.94 (see also“E. Share Ownership-The 2014 Equity Compensation Plan”). The amount specified in the table reflects the aggregate expenditure recorded by us in 2015 with respect to the allocation of options and restricted shares to Mr. Chen, based on generally accepted accounting principles. The vesting price for converting the options into shares as of March 14, 2016 is NIS 27.07 (about $6.96), the share price on that day was NIS 16.9 (about $4.34). 136 Table of Contents (10) On November 26, 2012, an allotment of 220,000 non-negotiable options was approved, for no consideration, for Mr. Avner Maimon under our 2012 Plan. On December 30, 2012 the options were assigned to a trustee in Mr. Maimon’s favor. The options are exercisable into our ordinary shares at an exercise price of NIS 46.6 (subject to adjustments) and will mature in three equal portions beginning on November 26, 2013, 2014 and 2015. The expiration date for the options vesting within the first and second portions is upon the lapse of 48 months from the date of allocation, and the expiration date for the options vesting within the third portion is upon the lapse of 60 months of the date of allocation. The weighted financial value of each option, on the date of approval, was NIS 11.9 for the first and second portions, and NIS 12.7 for the third portion. For additional information, see “E. Share Ownership-The 2012Option Plan”. The amount appearing in the table reflects the aggregate expenditure recorded by us in 2015 with regard to the allocation of options to Mr. Maimon, based on generally accepted accounting principles. The exercise price for converting the options into shares as of March 14, 2016, is NIS 40.49, this price is 139.6% higher than the share price on this date (meaning, these options are “out of the money”). On August 4, 2014 and August 6, 2014 the Human Resources & Compensation Committee and the Board of Directors, respectively, approved an allocation of 64,688 non-negotiable options for no consideration to Mr. Avner Maimon, as well as 15,130 restricted shares, under our 2014 Equity Compensation Plan. On September 27, 2014 the options and restricted shares were allocated to a trustee in Mr. Maimon's favor. The options are exercisable into Company shares at an exercise price of NIS 28.71 (subject to adjustments). The options and restricted shares will mature in three equal portions as follows: one third upon the lapse of 24 months after December 1, 2014 (the “Commencement Date”), one third upon the lapse of 36 months after the Commencement Date, and one third upon the lapse of 48 months after the Commencement Date. The expiration date for the options vesting within the first portion is upon the lapse of 48 months of the Commencement Date, the expiration date for the options vesting within the second portion is upon the lapse of 60 months of the Commencement Date, and the expiration date for the options vesting within the third portion is upon the lapse of 72 months of the Commencement Date. The weighted financial value of each such option, at the date of approval, was NIS 6.57. The fair value of the restricted shares, at the date of approval, was NIS 28.09 (see also“E. Share Ownership-The 2014 Equity Compensation Plan”). The amount specified in the table reflects the aggregate expenditure recorded by us in 2015 with respect to the allocation of options and restricted shares to Mr. Maimon, based on generally accepted accounting principles. The vesting price for converting the options into shares as of March 14, 2016 is NIS 26.76 (about $6.88), the share price on that day was NIS 16.9 (about $4.34). On May 10 and May 12, 2015, the Human Resources & Compensation Committee and the Board of Directors approved an allocation of 109,890 non-negotiable options for no consideration to Mr. Avner Maimon, as well as 18,560 restricted shares, under our 2014 Equity Compensation Plan. On July 12, 2015, the options and restricted shares were allocated to a trustee in Mr. Maimon's favor. The options are exercisable into Company shares at an exercise price of NIS 27.76 (subject to adjustments). The options and restricted shares will vest in three equal portions as follows: one third upon the lapse of 12 months after July 12, 2015 (the “Commencement Date”), one third upon the lapse of 24 months after the Commencement Date, and one third upon the lapse of 36 months after the Commencement Date. The expiration date for the options vesting within the first and the second portion is upon the lapse of 36 months of the Commencement Date, and the expiration date for the options vesting within the third portion is upon the lapse of 48 months of the Commencement Date. The weighted financial value of each such option, at the date of approval, was NIS 4.55. The fair value of the restricted shares, at the date of approval, was NIS 26.94 (see also“E. Share Ownership-The 2014 Equity Compensation Plan”). The amount specified in the table reflects the aggregate expenditure recorded by us in 2015 with respect to the allocation of options and restricted shares to Mr. Maimon, based on generally accepted accounting principles. The vesting price for converting the options into shares as of March 14, 2016 is NIS 27.07 (about $6.96), the share price on that day was NIS 16.9 (about $4.34). 137 Table of Contents (11) On November 26, 2012, an allotment of 380,000 non-negotiable options was approved, for no consideration for Mr. Weidhas under our 2012 Option Plan. On December 30, 2012, the options were assigned to a trustee in behalf of Mr. Weidhas. The options are exercisable into our ordinary shares at an exercise price of NIS 46.6 (subject to adjustments) and will mature in three equal portions beginning on November 26, 2013, 2014 and 2015. The expiration date for the options vesting within the first and second portions is upon the lapse of 48 months from the date of allocation, and the expiration date for the options vesting within the third portion is upon the lapse of 60 months of the date of allocation. The weighted financial value of each option, on the date of approval, was NIS 11.9 for the first and second portions, and NIS 12.7 for the third portion. For additional information, see “E. Share Ownership -The- The 2012 Option Plan”. The amount appearing in the table reflects the aggregate expenditure recorded by us in 20142015 with regard to the allocation of options to Mr. Weidhas, based on generally accepted accounting principles. The exercise price for converting the options into shares as of March 15, 2015,14, 2016, is NIS 41.52,40.49, this price is 46.7%139.6% higher than the share price on this date (meaning, these options are “out of the money”). Yet the table above includes an amount which is 27.4% of the value of all the options allocated to Mr. Weidhas (due to generally accepted accounting principles). On August 4, 2014 and August 6, 2014 the Compensation and Human Resources Committee and the Board of Directors, respectively, approved an allocation of 95,129 non-negotiable options for no consideration to Mr. Charles Weidhas, as well as 22,250 restricted shares, under our 2014 Equity Compensation Plan. On September 29, 11, 2014 the options and restricted shares were allocated to a trustee in Mr. Weidhas’Weidhas' favor. The options are exercisable into Company shares at an exercise price of NIS 28.71 (subject to adjustments). The options and restricted shares will mature in three equal portions as follows: one third upon the lapse of 24 months after December 1, 2014 (the “Commencement Date”), one third upon the lapse of 36 months after the Commencement Date, and one third upon the lapse of 48 months after the Commencement Date. The expiration date for the options vesting within the first portion is upon the lapse of 48 months of the Commencement Date, the expiration date for the options vesting within the second portion is upon the lapse of 60 months of the Commencement Date, and the expiration date for the options vesting within the third portion is upon the lapse of 72 months of the Commencement Date. The weighted financial value of each such option, at the date of approval, was NIS 6.57. The fair value of the restricted shares, at the date of approval, was NIS 28.09 (see also “E. Share Ownership - The 2014 Equity Compensation Plan”). The amount specified in the table reflects the aggregate expenditure recorded by us in 20142015 with respect to the allocation of options and restricted shares to Mr. Weidhas, based on generally accepted accounting principles. The vesting price for converting the options into shares as of March 15, 201514, 2016 is NIS 27.7926.76 (about $7)$6.88), the share price on that day was NIS 28.316.9 (about $7.1)$4.34). On May 10 and May 12, 2015, the Human Resources & Compensation Committee and the Board of Directors approved an allocation of 137,363 non-negotiable options for no consideration to Mr. Charles Weidhas, as well as 23,200 restricted shares, under our 2014 Equity Compensation Plan. On July 12, 2015, the options and restricted shares were allocated to a trustee in Mr. Weidhas favor. The options are exercisable into Company shares at an exercise price of NIS 27.76 (subject to adjustments). It should be noted thatThe options and restricted shares will vest in three equal portions as follows: one third upon the lapse of 12 months after July 12, 2015 (the “Commencement Date”), one third upon the lapse of 24 months after the Commencement Date, and one third upon the lapse of 36 months after the Commencement Date. The expiration date for the options vesting within the first and the second portion is upon the lapse of 36 months of the Commencement Date, and the expiration date for the options vesting within the third portion is upon the lapse of 48 months of the Commencement Date. The weighted financial value of each such option, at the date of approval, was NIS 4.55. The fair value of the restricted shares, at the date of approval, was NIS 26.94 (see also“E. Share Ownership-The 2014 Equity Compensation Plan”). The amount specified in the table above includes an amount constituting about 13%reflects the aggregate expenditure recorded by us in 2015 with respect to the allocation of the value of all the options allocatedand restricted shares to Mr. Weidhas, (due tobased on generally accepted accounting principles)principles. The vesting price for converting the options into shares as of March 14, 2016 is NIS 27.07 (about $6.96), the share price on that day was NIS 16.9 (about $4.34). 138 Table of Contents (10) (12) On November 26, 2012, an allotment of 380,000 non-negotiable options was approved, for no consideration, for Mr. Asher Grinbaum under our 2012 Option Plan. On December 30, 2012 the options were allocated to a trustee in behalf of Mr. Grinbaum. The options are exercisable into our ordinary shares at an exercise price of NIS 46.6 (subject to adjustments) and will mature in three equal portions beginning on November 26, 2013, 2014 and 2015. The expiration date for the options vesting within the first and second portions is upon the lapse of 48 months from the date of allocation, and the expiration date for the options vesting within the third portion is upon the lapse of 60 months of the date of allocation. The weighted financial value of each option, on the date of approval, was NIS 11.9 for the first and second portions, and NIS 12.7 for the third portion. For additional information, see “E. Share Ownership -TheOwnership-The 2012Option Plan”. The amount appearing in the table reflects the aggregate expenditure recorded by us in 20142015 with regard to the allocation of options to Mr. Grinbaum, based on generally accepted accounting principles. The exercise price for converting the options into shares as of March 15, 2015,14, 2016, is NIS 41.52,40.49, this price is 46.7%139.6% higher than the share price on this date (meaning, these options are “out��out of the money”). Yet the table above includes an amount which is 27.4% of the value of all the options allocated to Mr. Grinbaum (due to generally accepted accounting principles). 126 Table of Contents On August 4, 2014 and August 6, 2014 the Compensation and Human Resources & Compensation Committee and the Board of Directors, respectively, approved an allocation of 95,129 non-negotiable options for no consideration to Mr. Asher Grinbaum, as well as 22,250 restricted shares, under our 2014 Equity Compensation Plan. On September 27, 2014 the options and restricted shares were allocated to a trustee in Mr. Grinbaum’s favor. The options are exersizable into Company shares at an exercise price of NIS 28.71 (subject to adjustments). The options and restricted shares will mature in three equal portions as follows: one third upon the lapse of 24 months after December 1, 2014 (the “Commencement Date”), one third upon the lapse of 36 months after the Commencement Date, and one third upon the lapse of 48 months after the Commencement Date. The expiration date for the options vesting within the first portion is upon the lapse of 48 months of the Commencement Date, the expiration date for the options vesting within the second portion is upon the lapse of 60 months of the Commencement Date, and the expiration date for the options vesting within the third portion is upon the lapse of 72 months of the Commencement Date. The weighted financial value of each such option, at the date of approval, was NIS 6.57. The fair value of the restricted shares, at the date of approval, was NIS 28.09 (see also “E. Share Ownership - The 2014 Equity Compensation Plan”). The amount specified in the table reflects the aggregate expenditure recorded by us in 2014 with respect to the allocation of options and restricted shares to Mr. Grinbaum, based on generally accepted accounting principles. The vesting price for converting the options into shares as of March 15, 2015 is NIS 27.79 (about $7), the share price on that day was NIS 28.3 (about $7.1). It should be noted that the table above includes an amount constituting about 13% of the value of all the options allocated to Mr. Grinbaum (due to generally accepted accounting principles). (11) On November 26, 2012, an allotment of 380,000 non-negotiable options was approved, for no consideration, for Mr. Dani Chen under our 2012 Option Plan. On December 30, 2012, the options were assigned to a trustee in Mr. Chen’s favor. The options are exercisable into our ordinary shares at an exercise price of NIS 46.6 (subject to adjustments) and will mature in three equal portions beginning on November 26, 2013, 2014 and 2015. The expiration date for the options vesting within the first and second portions is upon the lapse of 48 months from the date of allocation, and the expiration date for the options vesting within the third portion is upon the lapse of 60 months of the date of allocation. The weighted financial value of each option, on the date of approval, was NIS 11.9 for the first and second portions, and NIS 12.7 for the third portion. For additional information, see “E. Share Ownership -The 2012 Option Plan”. The amount appearing in the table reflects the aggregate expenditure recorded by us in 2014 with regard to the allocation of options to Mr. Chen, based on generally accepted accounting principles. The exercise price for converting the options into shares as of March 15, 2015, is NIS 41.52, this price is 46.7% higher than the share price on this date (meaning, these options are “out of the money”). Yet the table above includes an amount which is 27.4% of the value of all the options allocated to Mr. Chen (due to generally accepted accounting principles). On August 4, 2014 and August 6, 2014 the Compensation and Human Resources Committee and the Board of Directors, respectively, approved an allocation of 95,129 non-negotiable options for no consideration to Mr. Dani Chen, as well as 22,250 restricted shares, under our 2014 Equity Compensation Plan. On September 27, 2014 the options and restricted shares were allocated to a trustee in Mr. Chen’s favor. The options are exercisable into Company shares at an exercise price of NIS 28.71 (subject to adjustments). The options and restricted shares will mature in three equal portions as follows: one third upon the lapse of 24 months after December 1, 2014 (the “Commencement Date”), one third upon the lapse of 36 months after the Commencement Date, and one third upon the lapse of 48 months after the Commencement Date. The expiration date for the options vesting within the first portion is upon the lapse of 48 months of the Commencement Date, the expiration date for the options vesting within the second portion is upon the lapse of 60 months of the Commencement Date, and the expiration date for the options vesting within the third portion is upon the lapse of 72 months of the Commencement Date. The weighted financial value of each such option, at the date of approval, was NIS 6.57. The fair value of the restricted shares, at the date of approval, was NIS 28.09 (see also “E. Share Ownership - The 2014 Equity Compensation Plan”). The amount specified in the table reflects the aggregate expenditure recorded by us in 2014 with respect to the allocation of options and restricted shares to Mr. Chen, based on generally accepted accounting principles. The vesting price for converting the options into shares as of March 15, 2015 is NIS 27.79 (about $7), the share price on that day was NIS 28.3 (about $7.1). It should be noted that the table above includes an amount constituting about 13% of the value of all the options allocated to Mr. Chen (due to generally accepted accounting principles). 127 Table of Contents (12) On November 26, 2012, an allotment of 380,000 non-negotiable options was approved, for no consideration, for Mr. Nissim Adar under our 2012 Option Plan. On December 30, 2012, the options were assigned to a trustee in Mr. Adar’s favor. The options are exercisable into our ordinary shares at an exercise price of NIS 46.6 (subject to adjustments) and will mature in three equal portions beginning on November 26, 2013, 2014 and 2015. The expiration date for the options vesting within the first and second portions is upon the lapse of 48 months from the date of allocation, and the expiration date for the options vesting within the third portion is upon the lapse of 60 months of the date of allocation. The weighted financial value of each option, on the date of approval, was NIS 11.9 for the first and second portions, and NIS 12.7 for the third portion. For additional information, see “E. Share Ownership -The 2012 Option Plan”. The amount appearing in the table reflects the aggregate expenditure recorded by us in 2014 with regard to the allocation of options to Mr. Adar, based on generally accepted accounting principles. The exercise price for converting the options into shares as of March 15, 2015, is NIS 41.52, this price is 46.7% higher than the share price on this date (meaning, these options are “out of the money”). Yet the table above includes an amount which is 27.4% of the value of all the options allocated to Mr. Adar (due to generally accepted accounting principles). On August 4, 2014 and August 6, 2014 the Compensation and Human Resources Committee and the Board of Directors, respectively, approved an allocation of 95,129 non-negotiable options for no consideration to Mr. Nissim Adar, as well as 22,250 restricted shares, under our 2014 Equity Compensation Plan. On September 27, 2014 the options and restricted shares were allocated to a trustee in Mr. Adar’sGrinbaum's favor. The options are exercisable into Company shares at an exercise price of NIS 28.71 (subject to adjustments). The options and restricted shares will mature in three equal portions as follows: one third upon the lapse of 24 months after December 1, 2014 (the “Commencement Date”), one third upon the lapse of 36 months after the Commencement Date, and one third upon the lapse of 48 months after the Commencement Date. The expiration date for the options vesting within the first portion is upon the lapse of 48 months of the Commencement Date, the expiration date for the options vesting within the second portion is upon the lapse of 60 months of the Commencement Date, and the expiration date for the options vesting within the third portion is upon the lapse of 72 months of the Commencement Date. The weighted financial value of each such option, at the date of approval, was NIS 6.57. The fair value of the restricted shares, at the date of approval, was NIS 28.09 (see also “E.“E. Share Ownership - Ownership-The 2014 Equity Compensation Plan”). The amount specified in the table reflects the aggregate expenditure recorded by us in 20142015 with respect to the allocation of options and restricted shares to Mr. Adar,Grinbaum, based on generally accepted accounting principles. The vesting price for converting the options into shares as of March 15, 201514, 2016 is NIS 27.7926.76 (about $7)$6.88), the share price on that day was NIS 28.316.9 (about $7.1)$4.43). It should be noted that On May 10 and May 12, 2015, the table above includes an amount constituting about 13% of the value of all the options allocated to Mr. Adar (due to generally accepted accounting principles). The Annual Bonus Component In December 2012, Amendment 20 to the Companies Law entered into effect, whereby public companies such as us were required to set a compensation policy for their directors and officers. At the same time, we decided to formulate a comprehensive compensation plan (the “Global Compensation Plan”) for our directors and officers and our subsidiaries’ directors and officers, in and outside Israel, to create an orderly system of principles and rules for provision of compensation and incentives to directors and officers. In the view of our management, the Global Compensation Plan is a central tool for administering our senior management personnel resources, which drive our growth. The target of the plan is to recruit, retain and promote experienced and leading managers, in and outside Israel, and to grant them incentives by means of an incentive package that creates a proper balance between fixed and variable compensation components, while implementing our long standing profit sharing policy. 128 Table of Contents The bonus component is determined according to the annual cash bonus formula set forth in the Compensation Policy and in accordance with the bonus plan approved for Mr. Stefan Borgas by the Compensation and Human Resources & Compensation Committee and the Board of Directors approved an allocation of 137,363 non-negotiable options for no consideration to Mr. Asher Grinbaum, as well as 23,200 restricted shares, under our 2014 Equity Compensation Plan. On July 12, 2015, the options and restricted shares were allocated to a trustee in Mr. Grinbaum's favor. The options are exercisable into Company shares at an exercise price of NIS 27.76 (subject to adjustments). The options and restricted shares will vest in three equal portions as follows: one third upon the lapse of 12 months after July 201312, 2015 (the “Commencement Date”), one third upon the lapse of 24 months after the Commencement Date, and byone third upon the General Meetinglapse of Shareholders in August 2013, as amended by approval36 months after the Commencement Date. The expiration date for the options vesting within the first and the second portion is upon the lapse of 36 months of the General MeetingCommencement Date, and the expiration date for the options vesting within the third portion is upon the lapse of Shareholders48 months of the Commencement Date. The weighted financial value of each such option, at the date of approval, was NIS 4.55. The fair value of the restricted shares, at the date of approval, was NIS 26.94 (see also“E. Share Ownership-The 2014 Equity Compensation Plan”). The amount specified in December 2014, andthe table reflects the aggregate expenditure recorded by us in 2015 with respect to the other officers,allocation of options and restricted shares to Mr. Grinbaum, based on generally accepted accounting principles. The vesting price for converting the options into shares as approved byof March 14, 2016 is NIS 27.07 (about $6.96), the Compensation and Human Resources Committee andshare price on that day was NIS 16.9 (about $4.34). 139 Table of Contents The Annual Bonus Component In its meeting dated March 15, 2016 the Boardboard decided to further discuss the bonuses for 2015 in its upcoming meeting. The bonus for Mr. Maimon was fully paid subsequent to his retirement. The formula of Directors in August 2014. For details respecting our Compensation Policy and amendments to that policy, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Approval of Related Party Transactions.” On March 4, 2015 and March 19, 2015 the Compensation and Human Resources Committee and the Board of Directors, respectively, pursuant to the Section 7.1 of our Compensation Policy, approved the adjustment of the Company’s net profit in 2014 for one-time items, for the purpose of calculating the general threshold amount for measurable components included in the annual bonus formula (the threshold amount constituting a condition for receiving bonuses according to the Compensation Policy). The net profit amount for purposes of the said general threshold amount was adjusted by an amount of approximately $274 million, due to a provision for past years as a result of the partial arbitration award respecting the royalties owed by the Company (see “Item 4. Information on the Company—B. Business Overview—Regulatory and Environmental, Health and Safety Matters”); a one-time tax expense mainly due to tax assessment agreements of consolidated subsidiaries in Europe; effects of the strike in Rotem Amfert Negev and a provision for early retirement of employees in Rotem Amfert Negev and DSW; expense due a change in the fair value of energy hedging transactions as a result of accounting principles; expense/income due to gaining/losing control in subsidiaries; expense/income due to impairment/cancellation of impairment, and other one-time expenses. Following the said adjustment of the net profit, the general threshold condition for the annual bonus, as provided in the Compensation Policy is met. It should be noted that, according to the resolution of the Compensation and Human Resources Committee and the Board of Directors, the said adjustment of the net profit was made solely for the purposes of the said general threshold amount; however, for the purpose of calculating the annual bonus granted to the officers, in accordance with the formula provided in the Compensation Policy, no adjustment shall be made to the net and operational profit. The bonus to officers was calculated as follows: Mr. Stefan Borgas – the formula of the bonus to Mr. Borgas and the weights of categories therein is as specified in the Compensation Policy (as amended). In the Company financial indicators category, which include the Company’s compliance with the operational profit target and the net profit target (the “Financial Indicators”), the Company’s results were 56% lower than the target pursuant to the Compensation Policy (average net profit and operational profit compared to these parameters in the last three years). In the category of personal specific performance indicators (“KPIs”), which included strategic indicators, growth indicators, savings and efficiency, Mr. Borgas met with all his targets exceptionally well. Furthermore, performance was measured in the qualitative category of managerial capabilities evaluation (“Managerial Capabilities Evaluation”) as provided in the Compensation Policy. Mr. Charles Weidhas – the formula of the bonus to Mr. WeidhasMaimon is as specified in the Compensation Policy (as amended), while the weights of the various categories are as follows: Financial Indicators categoryCategory – 30%, Segment Financial Indicators category – 30%55%, KPIs – 30%25%, Managerial Capabilities Evaluation – 10% and Manager Discretion – 10%. In the Financial Indicators category the Company’s results were 56% lower than the target pursuant to the Compensation Policy (average in the last three years). In the Segment Financial Indicators category the results of the industrial products segment were negative. In theMr. Maimon’s KPIs category, which included operational indicators, financial indicators,efficiency, one ICL and efficiency indicators,communication indicators. Mr. WeidhasMaimon met his targets. Furthermore, performance was measured in the Managerial Capabilities Evaluation category as provided in the Compensation Policy. Mr. Asher Grinbaum – the formula of the bonus to Mr. Grinbaum is as specified in the Compensation Policy (as amended), while the weights of the various categories are as follows: Financial Indicators category – 60%, KPIs – 30%, Managerial Capabilities Evaluation – 10%. In the Financial Indicators category the Company’s results were 56% lower than the target pursuant to the Compensation Policy (average in the last three years). In the KPIs category, which included safety, ecology, investments, R&D and efficiency indicators, Mr. Grinbaum met his targets. Furthermore, performance was measured in the Managerial Capabilities Evaluation category as provided in the Compensation Policy. 129 Table of Contents Mr. Dani Chen – the formula of the bonus to Mr. Chen is as specified in the Compensation Policy (as amended), while the weights of the various categories are as follows: Financial Indicators category – 60%, KPIs – 30%, Managerial Capabilities Evaluation – 10%. In the Financial Indicators category the Company’s results were 56% lower than the target pursuant to the Compensation Policy (average in the last three years). In the KPIs category, which included improvement of the Company’s image and support of processes and targets indicators. Chen met his targets. Furthermore, performance was measured in the Managerial Capabilities Evaluation category as provided in the Compensation Policy. Mr. Nissim Adar – the formula of the bonus to Mr. Adar is as specified in the Compensation Policy (as amended), while the weights of the various categories are as follows: Financial Indicators category – 30%, Segment Financial Indicators category – 30%, KPIs – 30%, Managerial Capabilities Evaluation – 10%. In the Financial Indicators category the Company’s results were 56% lower than the target pursuant to the Compensation Policy (average in the last three years). In the Segment Financial Indicators category the results of the Fertilizers segment were 41% lower than the target as provided in the Compensation Policy (average operational profit in the last three years). In the KPIs category, which included the following indicators: growth, R&D, operations, safety and ecology and HR, Mr. Adar met his targets. Furthermore, performance was measured in the Managerial Capabilities Evaluation category as provided in the Compensation Policy. Pensions, Retirement and Similar Benefits We set aside approximately $0.8$1.2 million for pension or other retirement benefits for our senior management (GEC) in 2014. 2015. C. BOARD PRACTICES Board of Directors According to our Articles of Association, we must have at least seven and no more than twenty directors. Our directors are normally elected by our shareholders at our annual meeting. Our Board of Directors is also authorized to appoint directors in order to fill vacancies or for any other reason. Each of our directors, other than our external directors, serves from the date of election or appointment until our next annual meeting of shareholders. A majority of the members of our Board of Directors must be both citizens and residents of Israel. The approval of at least a majority of the voting rights represented at a shareholders’ meeting and voting on the matter is generally required to remove any of our directors from office (other than external directors). As of the date of this Annual Report, our Board of Directors consists of twelveeleven directors. In the event of a stalemate in a voteequal votes of our Board of Directors, our Chairman of the Board has the right to cast the deciding vote. All of our directorsMessrs. Yaacov Dior, Miriam Haran, Geoffrey Merszei and Shimon Eckhaus are independent directors under the rules applicable to U.S. companies listed on the NYSE, except forNYSE. Messrs. Nir Gilad, Avisar Paz, Eran Sarig,Aviad Kaufman, Ron Moskovitz, Sagi Kabla, Ovadia Eli Aviad Kaufman and Stefan Borgas are not considered independent directors by virtue of the positions they hold with our controlling shareholder or with the Company. ThreeTwo of our directors are external directors and an additional director was designated as an “independent director” underaccording to the Companies Law. We do not have service contracts with our current directors, excluding the CEO, Mr. Stefan Borgas.Borgas and the Executive Chairman of the Board, Mr. Nir Gilad. 140 Table of Contents External Directors As a public Israeli company, we are required by the Companies Law to have at least two external directors who meet certain independence criteria to ensure that they are not related parties to the Company or to our controlling shareholder. The definition of “external director” under the Companies Law and the definition of “independent director” under the NYSE rules overlap to a significant degree such that we would generally expect a director who qualifies as one to also qualify as the other. Since the definitions are not identical, however, it is possible for a director to qualify as one and not as the other. An external director must also have either financial and accounting expertise or professional qualifications, as defined in regulations promulgated under the Companies Law, and at least one of the external directors is required to have financial and accounting expertise. An external director is entitled to reimbursement of expenses and compensation as provided in regulations promulgated under the Companies Law but is otherwise prohibited from receiving any other compensation from us, directly or indirectly, during his term and for two years thereafter. 130 Table of Contents Under the Companies Law, external directors must be elected at a shareholders’ meeting by a simple majority of the votes cast on the matter, provided that such majority includes a majority of the votes cast by non-controlling shareholders and shareholders who do not have a personal interest in the election (excluding a personal interest that did not result from the shareholder’s relationship with the controlling shareholder), unless the votes cast by such shareholders against the election did not exceed 2% of our aggregate voting rights. External directors serve for up to three terms of three years each, and our Audit and FinanceAccounting Committee and Board of Directors may nominate them for additional terms under certain circumstances. Even if an external director is not nominated by our Board of Directors for reelection for a second or third term, shareholders holding at least 1% of our voting rights have the right to nominate the external director for reelection, and in addition, the external director may nominate himself for reappointment. In such a case, the reelection can be approved without the approval of our controlling shareholder if it is approved by a majority of the votes cast by non-controlling shareholders and shareholders who do not have a personal interest in the election (excluding a personal interest that did not result from the shareholder’s relationship with the controlling shareholder) and the votes cast by such shareholders approving the election exceed 2% of our aggregate voting rights. A term of an external director may be terminated prior to expiration only by a shareholder vote, by the same threshold required for election, or by a court, but in each case only if the external director ceases to meet the statutory qualifications for election or if the external director breaches his duty of loyalty to us. Under the Companies Law, each committee of a company’s board of directors that is authorized to exercise powers of the board of directors is required to include at least one external director, and all external directors must be members of the company’s Audit Committeeaudit committee and Compensation Committee. compensation committee. We currently have threetwo external directors: Prof. Yair Orgler, whose third term commenced on September 5, 2012, Dr. Miriam Haran, whose second term commenced on August 29, 2012, and whose appointment for a third term, commencing on August 29, 2015, was approved by the General Meeting of Shareholders, and Mr. Yaacov Dior, whose second term commenced on February 26, 2015, and Dr. Miriam Haran, whose third term commenced on August 29, 2015. Financial Experts Our Board of Directors has resolved that at least three of its members must have financial and accounting expertise, as defined in regulations promulgated under the Companies Law. Our Board of Directors has determined that ten of our current directors meet such qualifications. In addition, our Board of Directors has determined that all members of our Audit and FinanceAccounting Committee are financially literate as determined in accordance with NYSE rules and that Mr. Dior Prof. Orgler and Mr. Merszei are qualified to serve as “audit committee financial experts” as defined by SEC rules. Alternate Directors Our Articles of Association provide, consistent with Israeli law, that any director may appoint another person who is not a director or an alternate director to serve as his alternate director, subject to the approval of the Board of Directors. The term of an alternate director can be terminated at any time by the appointing director or the Board of Directors and automatically terminates upon the termination of the term of the appointing director. The Companies Law stipulates that an external director may not appoint an alternate director except under very limited circumstances. An alternate director has the same rights and responsibilities as a director, except for the right to appoint an alternate director. As of the date of this Annual Report, no alternate director has appointed any other person as an alternate director.was appointed. 141 Table of Contents Our Committees Our Board of Directors has established the following committees. Each committee operates in accordance with a written charter that sets forth the committee’s structure, operations, membership requirements, responsibilities and authority to engage advisors. 131 Table of Contents Audit and FinanceAccounting Committee Under the Companies Law, the board of directors of a public company must establish an audit committee. The audit committee must consist of at least three directors who meet certain independence criteria and must include all of the company’s external directors. The chairman of the audit committee is required to be an external director. The responsibilities of an audit committee under the Companies Law include identifying and addressing flaws in the business management of the company, reviewing and approving relatedinterested party transactions, establishing whistleblower procedures, overseeing the company’s internal audit system and the performance of its internal auditor, and assessing the scope of the work and recommending the fees of the company’s independent accounting firm. In addition, the audit committee is required to determine whether certain relatedinterested party actions and transactions are “material” or “extraordinary” for the purpose of the requisite approval procedures under the Companies Law and to establish procedures for reviewing proposed transactions with a controlling shareholder. In accordance with U.S. law and NYSE requirements, our Audit and FinanceAccounting Committee is also responsible for the appointment, compensation and oversight of the work of our independent auditors and, according to such rules and to the Companies Law and regulations by virtue thereof, an auditthe Audit and finance committeeAccounting Committee is also responsible for assisting our Board of Directors in monitoring our financial statements, the effectiveness of our internal controls and our compliance with legal and regulatory requirements. Our Audit and FinanceAccounting Committee consists of fivethree directors: Prof. Yair Orgler (Chairman), Mr. Yaacov Dior (Chairman), Dr. Miriam Haran Mr. Victor Medina and Mr. Geoffery Merszei. Our Audit and FinanceAccounting Committee complies with the requirements applicable to U.S. companies that are listed on the NYSE. All of the membersMr. Dior and Dr. Haran are external directors or independent directors as defined in the Companies Law. All ofLaw and all the members are also independent as defined in SEC rules and NYSE listing requirements. Our Board of Directors has determined that all the members of ourthe Audit and FinanceAccounting Committee are financially literate as determined in accordance with NYSE rules and that Prof. Orgler, Mr. Dior and Mr. Merszei are qualified to serve as “audit committee financial experts” as defined by SEC rules. Compensation and  Human Resources and Compensation Committee Under the Companies Law, the board of directors of a public company must establish a compensation committee. The compensation committee must consist of at least three directors who meet certain independence criteria and include all of the company’s external directors, who are required to constitute a majority of its members. The chairman of the compensation committee must be an external director. The remaining members are required to meet certain independence criteria and be paid in accordance with the regulations governing the compensation of external directors. The responsibilities of a compensation committee under the Companies Law include recommending to the board of directors, for ultimate shareholder approval by a special majority, a policy governing the compensation of directors and officers based on specified criteria, reviewing modifications to and implementation of such compensation policy from time to time and approving the actual compensation terms of directors and officers prior to approval by the board of directors. Our Compensation and Human Resources Committee is also charged with oversight of our human resources strategy and key programs, including our “One ICL” program, senior leadership development, bonus and equity plans and top management evaluation and succession planning. Our Compensation and Human Resources Committee consists of fourthree directors, Dr. Miriam Haran (Chairperson), Mr. Yaacov Dior (Chairman), Prof. Yair Orgler, Dr. Miriam Haran and Mr. Shimon Eckhaus. All of the members, exceptDr. Haran and Mr. Eckhaus,Dior are external directors as defined in the Companies Law and all the directorsmembers are also independent as defined in theSEC rules and NYSE listing requirements applicable to U.S. companies. requirements. Environment, Safety and Public Affairs Committee Our Environment, Safety and Public Affairs Committee is designed to assist our Board of Directors to oversee our environment and safety policies and programs and our community outreach, public relations and advocacy programs. Our Environment, Safety and Public Affairs Committee is not authorized to exercise any power of our Board of Directors. It consists of threefour directors, Mr. Eran SarigShimon Eckhaus (Chairman), Dr. Miriam Haran, Mr. Ovadia Eli and Mr. Shimon Eckhaus.Sagi Kabla. 142 Table of Contents Operations Committee The purpose of our Operations Committee is to assist our Board of Directors in fulfilling its responsibilities with respect to our equity management, business operations and strategy implementation, including M&A transactions and research and development strategy. Our Operations Committee is not authorized to exercise any power of our Board of Directors. The committee consists of fivesix members, Mr. Nir Gilad (Chairman), Mr. Avisar Paz, Mr. Sagi Kabla, Mr. Ovadia Eli, Mr. Victor Medina,Geoffrey Merszei and Mr. Shimon Eckhaus.  Financing Committee The purpose of our Financing Committee is to assist our Board of Directors in fulfilling its responsibilities with respect to our financing and equity management and operations, including loans, debt offerings and other financing vehicles. Our Financing Committee is not authorized to exercise any power of our Board of Directors. The committee consists of five members, Mr. Avisar Paz (Chairman), Mr. Yaacov Dior, Mr. Sagi Kabla, Mr. Aviad Kaufman and Mr. Eran Sarig. 132 Table of Contents Geoffery Merszei. Internal Auditor Under the Companies Law, the board of directors is required to appoint an internal auditor recommended by the audit committee. The role of the internal auditor is to examine, among other things, whether the company’s actions comply with applicable law and proper business procedures. The internal auditor may not be an interested party, a director or an officer of the company, or a relative of any of the foregoing, nor may the internal auditor be our independent accountant or a representative thereof. Our chief internal auditor oversees the work of various internal auditors throughout our organization. Our chief internal auditor is Mr. Shmuel Daniel, who is a certified internal auditor and certified public accountant in Israel. The chief internal auditor serves in this position since August 1, 2014 and for a period of three years. Insurance and Indemnification indemnification The Articles of Association of the Company and its Israeli subsidiaries include provisions that permit exemption, indemnification and insurance of the liability of officers, all in accordance with the provisions of the Israeli Companies Law. The Company, with the approval of the Audit Committee, the Board of Directors and the General Meeting of Shareholders, granted its officers an exemption and letters of indemnification, and has also taken out an insurance policy covering directors and officers. The insurance and the compensation do not apply to those cases specified in Section 263 of the Israeli Companies Law. The exemption is for damage caused and/or to be caused by such officers, due to a breach of the duty of care to the Company. The amount of the indemnification payable by the Company under the letter of indemnification, in addition to amounts received from an insurance company, if any, for all of the officers on a cumulative basis, for one or more of the events detailed therein, was limited to $300 million. The insurance is renewed annually. On May 8, 2014 the General Meeting of Shareholders approved an increase of the insurance coverage as determined within the framework resolution approved by the General Meeting of Shareholders in August 2012, from $300 million to $350 million from the date on which our shares were listed for sale on the US stock exchange. In August 25 and 27, 2015, respectively, the Compensation Committee and the Board of Directors approved the renewal of the insurance policy for officers currently serving or that will serve in the Company from time to time, as well as their liability in their capacity as officers of certain companies to which they have been or will be appointed by the ICL Group or on its behalf, for the period of an additional year, commencing on September 1, 2015. Concurrently with the approval of the Compensation Committee and the Board, the policy that was valid until August 31, 2015 was extended for two additional months, until the satisfaction of a condition relating to the joint tier that will enable to engage in the New Policy. On October 13, 2015, following the satisfaction of the aforementioned condition, the policy was renewed, commencing as of September 1, 2015 until August 31, 2016. Pursuant to the New Policy the division of the premium amount in the joint tier was changed so that 70% will be paid by the Company and 30% by the Israel Corporation, in accordance with the authority given to the Compensation Committee and the Board to approve changes, from time to time, in connection with the rate of premium division between the ICL Group and Israel Corp. Group as pertains to the shared tier, up to a deviation at the rate of 25% of the original division, in accordance with the framework resolution. The insurance policy includes a joint tier with Israel Corporation with a joint liability limit up to $20 million per occurrence and in the aggregate, and a separate tier that covers officers' liability in the ICL Group alone for additional up to $200 million per occurrence and in the aggregate (the total policy amounts to $220 million). According to the framework resolution, the officers of the ICL group are beneficiaries of both tiers. As part of the approvals, an annual premium was approved which will be paid by the Company in respect of the aforementioned policy; it does not exceed the maximum premium amount specified in the framework resolution. The terms of the New Policy adhere to the terms of the framework resolution and of the Company's Compensation Policy.The coverage in effect (including a shared tier with the parent company of up to $20 million) stands at an aggregate amount of $220 million. 143 Table of Contents Other Information We do not have any agreement with directors providing for benefits upon termination of employment. D. EMPLOYEES As of December 31, 2014,2015, we had a workforce of 12,45713,558 employees. Of these, 6171 were employed at our headquarters and the balance were employed by our various subsidiaries. Breakdown of Employees by Area of Activity     2014     2013     2012   Production     9,148       9,070       8,981   Marketing and sales     1,453       1,416       1,351   Management & administration     1,401       1,250       1,134   Research and development     455       416       410   Total employees     12,457       12,152       11,876   Breakdown of Employees by Segment     2014     2013     2012   ICL Fertilizers     5,995       6,073       5,920   ICL-IP     2,591       2,637       2,621   ICL-PP     3,324       2,992       2,887   Other (includes employees of DSM and ICL management)     547       450       448   Total employees     12,457       12,152       11,876   133 Table of Contents     2015   2014   2013 ICL Fertilizers     7,660       5,995       6,073   ICL-IP     2,260       2,591       2,637   ICL-PP     2,793       3,324       2,992   Other (includes employees of DSM and ICL management)     845       547       450   Total employees     13,558       12,457       12,152   Geographic Breakdown of Employees     2014     2013     2012   Israel     4,940       5,238       5,198   Germany     1,539       1,317       1,267   Spain     1,270       1,205       1,215   UK     1,203       1,156       1,062   Netherlands     494       462       450   USA     1,123       1,121       1,080   China     614       621       606   France     343       351       350   Brazil     234       132       96   Other     697       549       552   Total employees     12,457       12,152       11,876   On     2015   2014   2013 Israel     4,812       4,940       5,238   China     2,565       614       621   Spain     1,300       1,270       1,205   Germany     1,170       1,539       1,317   UK     1,162       1,203       1,156   USA     1,142       1,123       1,121   Netherlands     576       494       462   Brazil     249       234       132   France     120       343       351   Other     462       697       549   Total employees     13,558       12,457       12,152   As at December 31, 2014,2015, our workforce comprised 12,457of 13,558 employees, compared to 12,15212,457 employees as at December 31, 2013,2014 – an increase of 3051,101 employees. The increase in the number of employees stems from the additional workforce in respect of acquisition of companies, mainly in China (YPH), in Europe (Prolactal) and South America,Allana Ethiopia. This increase was partly offset by the sale of companies, mainly in Europe, in the Performance Products segment. We began to implement an efficiency plan at Rotem at the end of 2012. The purpose of the efficiency plan is to reduce our production costs in order to improve our competitive position. As a result of the efficiency plans formulated in Rotem during the past two years, 190 employees left their employment (72 employees left their employment in the beginning of 2013 pursuant to an efficiency plan formulated at the end of 2012 and 118 employees took early retirement during 2013 and 2014, under a different plan). In 2012 and 2013, we recorded an expense in the amount of approximately $60 million and $33 million, respectively, relating to early retirement at Rotem. In the beginning of 2014, a strike was started at Rotem, against the background of the efficiency plan at Rotem’s factories. The strike lasted 33 days. In most of ICL’s companies in Israel, labor disputes have been declared, partly due to the efficiency plan and the strategy that the Company is implementing, as well as a result of construction of the planned joint service center established in Israel. In some of the ICL’s production facilities in Israel, the employees have started to strike. Subsequent to In the datebeginning of 2014, a strike was started at Rotem, against the background of the statementefficiency plan at Rotem’s factories. The strike lasted 33 days, and on April 11, 2014, an agreement between Rotem and the Rotem Workers Council was signed. The Agreement stated that the downsizing process would be completed, and that efficiency arrangements would be put in place for a number of financial position, onsubjects (consolidation of units, reduction of available positions, not hiring new employees in place of those who terminated their employment under the downsizing arrangement, and more). On February 2, 2015, the Workers Council of Bromine Compounds Ltd. (“Bromine Compounds”), which belongs to ICL’s Industrial Products segment, started a full scalefull-scale strike at the Bromine Compounds’ plants in NaotNeot Hovav and halted all shipments of goods from the plants. The strike at the plants came, among other things, in response to the efficiency programs that the Company is currently executing in NaotNeot Hovav, as part of which termination letters were sent to tenswhereby the Company requested that a number of employees employed under a collective agreement.agreement will be dismissed and/or will leave under early retirement conditions. On February 19, 2015, in response to the said termination letters that were sent to employees of Bromine Compounds, and further to similar efficiency discussions held at Dead Sea Works (“ICL Dead Sea”), the Workers Council of Dead Sea Works (DSW) gave notice of a fullfull-scale strike at DSW’sICL Dead Sea’s facilities in Sodom, including the bromine facility and the power plant. Since shutdownstation. 144 Table of Contents On May 28, 2015, an agreement was signed between ICL Dead Sea and Bromine Compounds and between the bromine facility prevents utilization of the chlorine produced in the production process of metal magnesium, and creates an ecological risk, a danger is posed to the continued operation of the magnesium plant within 72 hours of shutdown of the bromine facility. As a result, the Company’s management petitioned the Labor Court for relief prohibitingGeneral Workers Council (Histadrut), the Workers Council from taking any actionsof ICL Dead Sea and the Bromine Compounds Workers Council, ending the strike, the employment disputes and the legal proceedings pending among the parties, and allowing the immediate return of the employees to full employment (hereinafter – “the Agreement”). The key elements of the Agreement are as follows: a. 210 employees will voluntarily retire under the early retirement route. b. 38 employees will end their employment by December 31, 2015 under the severance pay route (or earlier under certain conditions), and will be entitled to special severance pay in excess of that prescribed by law. c. The parties consent to implementation of the efficiency plans in ICL Dead Sea and Bromine Compounds and to implementation of the plan to establish the regional shared services center (under ICL Israel). d. During the period beginning on the signing date of the Agreement and up to completion of the efficiency plans or until December 31, 2018, whichever occurs first (the “Efficiency Period”), no collective dismissal, including early retirement which could resultis not voluntary, shall take place in ICL Dead Sea and in Bromine Compounds. Despite the aforesaid, up to July 1, 2017, the management of Bromine Compounds may execute an early retirement plan which is not voluntary retirement, wherein up to 45 employees, will retire subject to certain terms specified in the stoppageAgreement. e. During the Efficiency Period it was determined, among other things, that the management may transfer employees and may adjust the number of positions in the proper operation of certain facilitiescompanies, perform structural and organizational changes, and establish and operate new installations and projects. f. Management will be permitted to transfer employees under the existing employment agreements – this being in Sodom, includingaddition to the magnesium facility, the bromine facility and the power plant. The Labor Court accepted the Company’s claims and issued an Order instructingemployee transfer provisions in Section e. above. On September 21, 2015, a labor dispute was declared at Bromine Compounds Ltd., following a claim made by the Workers Council concerning breach of contracts and unilateral actions that contradicted the agreements. On October 7, 2015, a labor dispute was declared at Rotem, in light of a number of general issues. On January 19, 2016, a labor dispute was declared at ICL Dead Sea, following a claim lodged by the Workers Council concerning management’s unwillingness to immediately cease all aforementioned actions. Shoulddiscuss the magnesium plant be closed, it will not be possiblenew employment agreement, and the failure to return it to service, meaning that significant damage may also be causedprovide information pursuant to the production capacity of Bromine Compounds in Naot Hovav. In a hearing held in the National Labor Court on March 11, 2015, it was agreed to continue to carry on intensiveWorkers Council’s request. The Company is conducting negotiations between the Company and the representatives of the employees along with the participation of the Chairman of the National Histadrut (employees’ union). The termination proceedings have been stayed during the period of the negotiations. Each side may exit the negotiations upon provision of advance notice of 48 hours and in such a case the agreements reached will be cancelled. The voluntary early retirement processes are continuing. As at the publication date of the report, the strikes at Bromine Compounds and DSW are continuing. Furthermore, after the strikes come to an end, an additional period of time will be required in order to return to production at full capacity in all the facilities. There is no certainty as to the scope and/or the duration of the strikes. 134 Table of Contents various workers councils. As part of the efficiency plan approved by the Company’s Board of Directors and in order to implement further operating excellence measures in the Company’s factories worldwide, in 2014January 2015, the Company continued the planning of construction of joint service centersinaugurated a new European headquarters in Israel and Europe,Amsterdam, in addition to the joint service center already operating in the United States (St. Louis). During 2015, ICL opened a new European headquarters in Amsterdam intended to, which will manage all of the Company’s activities in Europe.Europe, and in June 2015, the Company operated its joint services center in Israel (in Beer Sheba). The new headquarters will serve as one of ICL’s joint (shared) global service centers (together with the existing service center in the United States and the planned serviceStates). The center established in Israel) andAmsterdam will also operate as the Company’s worldwide procurement (purchasing) center. The joint service centers in Israel and Europe are to provide services to all ICL companies in Europe and Israel. The activities to be included in these service centers include accounting and finance, human resources, information technology, procurement and legal services. The Company expects that establishment of these service centers will contribute to improvement of the quality of service provided, uniform application of processes within the Company, improvement of control and compliance processes, and also to result in cost savings, mainly as a result of savings relating to procurement costs and consolidation of processes. 145 Table of Contents During the reductionfourth quarter of 2015, the Company completed the procurement of the YPH joint venture, together with YPC, China’s leading manufacturer of phosphates. Through this transaction, the Company added about 2,100 employees to its headcount. During the fourth quarter of 2015, as a result of the depletion of potash reserves at the mine in the number of personnel presently existing in such departments. As ofUnited Kingdom, the dateCompany decided to make a gradual transition from extracting and producing potash to producing polysulphate. In the framework of this report, establishmentprocess, the Company has commenced implementation of an efficiency plan whereby in the joint service centers is being discussed by Company management and labor representatives. first quarter of 2016 a reduction of about 330 full time positions was completed. Employment Agreements, Collective Bargaining Agreements and Temporary Employees ICL employees in Israel are employed under collective or individual employment agreements. The collective bargaining agreements are signed for specified terms and are renewed from time to time. By law, in the event that a new collective bargaining agreement is not signed, the terms of the original agreement are extended for an unlimited period, unless one party gives notice to the other of its cancellation. As of the date of this Annual Report, no notice of cancellation had been given for any of the collective bargaining agreements currently in effect at ICL. Dead Sea Works, ICL Rotem, Fertilizers and Chemical Materials Ltd. (“FCM”), Dead Sea Magnesium and Bromine Compounds have collective bargaining agreements with termination dates ranging from September 2015June 2016 to the end of 2018. The work agreement at ICL Dead Sea expired in September 2015. Senior employees in special positions and members of management are employed under individual agreements. These agreements are not limited in time and can be terminated with advance notice of a few months. Local employees of our subsidiaries overseas are employed according to the employment terms prevalent in the countries in which they are employed. Most of our overseas employees, primarily in China, Germany, the Netherlands, the United Kingdom, Spain and the United States, are employed under collective bargaining agreements. A relatively limited number of the employees at our sites in Israel are employed by employment agencies for short terms. In addition, we have contracted in Israel with subcontractors for various outsourcing services such as security, packaging, maintenance, catering, cleaning and other services. In accordance with the decision of the boards of directors of ICL and its Israeli subsidiaries in October 2004, contractors who employ workers at our plants in Israel are required to give employees working on a regular basis for ICL salary terms beyond those required by law. Pursuant to this decision, the employers are obligated to grant these employees, in addition to current salary that must be at least 5% higher than the minimum wage stipulated by law, other benefits such as uniforms and meals. On July 11, 2013, a collective bargaining agreement was signed between the Organization of Cleaning Companies in Israel regulating the salary and employment conditions of the employees of these companies. The agreement applies to employers in the cleaning and maintenance sector in Israel that are members of the Organization of Cleaning Companies. Under PRC labor law, it is a mandatory requirement for employers to enter into individual labor contract with their employees, in light of such, the permanent staff of YPH JV shall be employed under respective individual labor contracts. However, under PRC law, the employees of a company have the right to establish a labor union to represent their interests and protect their legal rights. YPH JV has a labor union. The labor union may represent employees in negotiating with their employer for collective agreements regarding remuneration, working hours, working safety, etc. Such collective agreements are mainly used for providing benchmark to certain working conditions. In addition, 3C, one of the subsidiaries within YPH JV, has entered into a collective agreement with its female employees regarding special protection of female workers. The term of the collective agreement is two years starting from February 2015. Infrastructure, performance management processes and human resources development In 2015, the Company expanded the assimilation of the performance management infrastructure and human resources management. In this context, the Company is assimilating a uniform technological infrastructure for managing and developing human resources within all of its units, worldwide, as well as globally uniform work processes. The assimilated system includes the administration of employees’ data, learning and training processes, and managing the performance of all of the Company’s employees. Since 2015, the upper echelons of the Company’s management (constituting approximately 10% of the Company’s human resources) have been taking part in a performance management based on goals, performance evaluation, and group and individual development plans derived from them. The assimilation of the global processes is expected to expand to include additional processes in the fields of compensation and communications. By the beginning of 2017, it is expected to enhance the relationship between performance and compensation, and to cover about 80% of the Company’s personnel. 146 Table of Contents E. SHARE OWNERSHIP Information with respect to share ownership of members of our Management and Supervisory Boards and our senior management is included in “Item“Item 7. Major Shareholders and Related Party Transactions.Transactions.” 135 Table of Contents Incentive Compensation Plans The 2010 Option2014 Equity Compensation Plan On January 7, 2010, ourNovember 8 and 11, 2015, the Compensation Committee and the Board of Directors, respectively, and on December 23, 2015, the general shareholders meeting, under the 2014 Equity Compensation Plan, approved the issuance, of 10,930,500 non-transferable options for no consideration, to 318 of our officers and senior employees in Israel and overseas. The issue included a significant private placement of 1,100,000 options to our former Chief Executive Officer and 800,000 options to our Chairman of the Board. On February 15, 2010, at an extraordinary general meeting of our shareholders, the issue120,920 restricted shares to the Company’s directors (excluding the President & CEO, Mr. Stefan Borgas and the Executive Chairman of the Board, was approved.Mr. Nir Gilad). The 2010 Plan options vestedrestricted shares will vest in three equal annual installmentstranches, as follows: one third(i) 33.33% will vest at the end of 12 months from the date of approval of the Board of Directors; one thirdannual general shareholders meeting; (ii) 33.33% will vest at the end of 24 months from the date of approval of the Board of Directors;annual general shareholders meeting; and one third(iii) 33.33% will vest at the end of 36 months from the date of the annual general shareholders meeting. Vesting of the Restricted Shares would fully accelerate if the holder thereof ceases to serve as a director of the Company, unless he ceased to hold office due to those certain circumstances regarding early termination of office or imposition of enforcement measures, as set forth in section 231-232a and 233(2) of the Israeli Companies Law. On May 10, 2015 and June 1, 2015, and on May 12, 2015 and June 5, 2015, the Company’s Compensation Committee and Board of Directors, respectively, under the 2014 equity-based compensation plan, approved the issuance of up to 7,931,500 non-marketable and non-transferrable options, for no consideration, exercisable for up to 7,931,500 of the Company’s ordinary shares, and up to 1,397,302 restricted shares, to approximately 550 of the Company’s officers and senior employees. The said allocation includes a private placement of 404,220 options and 68,270 restricted shares to the Chairman of the Company’s Board of Directors and of 530,356 options and 89,574 restricted shares to ICL’s Chief Executive Officer, which was approved by the General Meeting of the Company’s shareholders by special majority on June 29, 2015 .The options and restricted shares will vest in three equal tranches: one-third at the end of 12 months after the grant date, one-third at the end of 24 months after the grant date and one-third at the end of 36 months after the grant date. The expiration date of the options in the first and second tranches is at the end of 36 months after the grant date and the expiration date of the options in the third tranche is at the end of 48 months after the grant date. On January 25 and 26, 2015, our Remuneration and Human Resources Committee and the Board of Directors, respectively, and on February 26, 2015 the General Meeting of our shareholders, approved the issuance, under the 2014 Equity Compensation Plan plan, for no consideration, of 99,858 restricted shares to Company directors (excluding our Chief Executive Officer, Mr. Stefan Borgas). The restricted shares will vest in three tranches, subject to the directors continuing to serve in their positions on the vesting date, as follows: (1) 50% vested on August 28, 2015; (2) 25% will vest at the end of two years from the date of the General Meeting, on February 26, 2017, and (3) 25% at the end of three years from the date of the General Meeting, on February 26, 2018. Following the approval of the Company’s Board of Directors. As at December 31,Directors on August 6, 2014, allunder the 2014 equity-based compensation plan, ICL issued, for no consideration, 4,360,073 non-marketable options, exercisable for up to 4,360,073 of our ordinary shares, and 1,007,651 restricted shares, to approximately 450 of our officers and senior employees. The issuance includes a significant private placement of 367,294 options and 85,907 restricted shares to our Chief Executive Officer, which was approved by the General Meeting of our shareholders. This grant format of the options had expired.plan includes a “cap” for the value of a share where if, as at the exercise date, the closing price of an ordinary share is higher than twice the exercise price (the “Share Value Cap”), the number of the exercised shares will be adjusted so that the product of the exercised shares actually issued to the offeree multiplied by the share closing price will equal the product of the number of exercised options multiplied by the Share Value Cap.The options and restricted shares will vest in three equal tranches: one-third at the end of 24 months from December 1, 2014, one-third at the end of 36 months from December 1, 2014 and one-third at the end of 48 months from December 1, 2014. The expiration date of the options in the first tranche is at the end of 48 months from December 1, 2014, the expiration date of the options in the second tranche is at the end of 60 months from December 1, 2014 and the expiration date of the options in the third tranche is at the end of 72 months from December 1, 2014. 147 Table of Contents The 2012 Option Plan On November 26, 2012, our Board of Directors approved the issue of up to 12,000,000 non marketablenon-marketable options for no consideration to 416 of our officers and senior employees in Israel and overseas. On December 27, 2012, 11,999,400 options were issued. The issuance included a material private placement of 1,190,000 options to our Chief Executive Officer. This grant format of the options plan includes a “cap” for the value of a share where if, as at the exercise date, the closing price of a Company share is higher than twice the exercise price (the “Share Value Cap”), the number of the exercised shares will be reduced so that the product of the exercised shares actually issued to an offeree multiplied by the share closing price will equal the product of the number of exercised options multiplied by the Share Value Cap. The options may be exercised in three equal tranches on November 26, 2013, 2014 and 2015. The expiration date of the options for the first and second tranches is at the end of 48 months from the issuance date, and the expiration date of the options for the third tranche is at the end of 60 months from the issuance date. The 2014 Equity Compensation2010 Option Plan Following the approval of On January 7, 2010, our Board of Directors on August 6, 2014, we issued 4,360,073 non marketableapproved an issuance of 10,930,500 non-marketable options for no consideration exercisable for up to 4,360,073 of our ordinary shares, and 1,007,651 restricted shares, to approximately 450318 of our officers and senior employees.employees in Israel and overseas. The issuance includesincluded a significant private placement of 367,2941,100,000 options and 85,907 restricted shares to our former Chief Executive Officer which was approved byand 800,000 options to our Chairman of the Board. On February 15, 2010, at an extraordinary general meeting of our shareholders. This grant formatshareholders, the issuance to the Chairman of the Board was approved. The 2010 Plan options plan includes a “cap” for the value of a share where if, as at the exercise date, the closing price of an ordinary share is higher than twice the exercise price (the “Share Value Cap”), the number of the exercised shares will be adjusted so that the product of the exercised shares actually issued to the offeree multiplied by the share closing price will equal the product of the number of exercised options multiplied by the Share Value Cap. The options and restricted shares will vestvested in three equal tranches:annual installments as follows: one third at the end of 12 months from the date of approval of the Board of Directors; one third at the end of 24 months from December 1, 2014,the date of approval of the Board of Directors; and one third at the end of 36 months from December 1, 2014 and one third at the end of 48 months from December 1, 2014. The expiration date of the options in the first tranche is at the end of 48 months from December 1, 2014, the expiration date of the options in the second tranche is at the end of 60 months from December 1, 2014 and the expiration date of the options in the third tranche is at the end of 72 months from December 1, 2014. Subsequent to the date of the financial statements, on January 25 and 26, 2015, the Human Resources and Compensation Committeeapproval of the Company’s Board of Directors, approvedDirectors. As at December 31, 2014, all the issue of 99,858 restricted shares to Company directors (except for the Company’s CEO, Mr. Stefan Borgas), for no consideration, under the 2014 shares and remuneration plan. The shares are restricted and will vest in three tranches, subject to the directors continuing to serve in their positions, as follows: (1) 50% will vest on August 28, 2015, (2) 25% will vest at the end of two years from the date of the General Meeting, on February 26, 2017, and (3) 25% will vest at the end of three years from the date of the General Meeting, on February 26, 2018. options had expired. Upon exercise, each option may be converted into one ordinary share of NIS 1 par value of the Company. The ordinary shares issued as a result of exercise of the options have the same rights as the Company’s ordinary shares, immediately upon their issuance. The options issued to the employees in Israel are covered by the provisions of Section 102 of the Israeli Income Tax Ordinance (New Version) and the regulations promulgated thereunder. The Company elected to perform the issuance through a trustee, under the Capital Gains Track. The exercise price is linked to the CPI that is known as of the date of payment, which is the exercise date. In a case of distribution of a dividend by the Company, the exercise price is reduced on the “ex dividend”“ex-dividend” date, by the amount of the dividend per share (gross), based on the amount thereof in NIS on the effective date. The options are not marketable and are not transferable. 136 Table of Contents Fair Value of Options The fair value of the options awardedgranted under the 2010 planEquity Compensation Plan as stated above was estimated by applyingon the basis of the Black & Scholes model for the pricing of option pricing.options. The fair value of the options awardedgranted under the 2012 and 2014 plansEquity Compensation Plan was estimated using the binomial model for option pricing.pricing options. The following factors wereparameters used in applying the models:models are as follows:             2014 Plan     2010 Plan   2012 Plan   Granted 2014   Granted 2015                   Share price (in $)     14.3       12.1       8.2       7.0   CPI-linked exercise price (in $)     14.3       12.1       8.4       7.2   Expected volatility:                                 First tranche     54.98 %     36.70 %     29.40 %     25.40 % Second tranche     54.98 %     36.70 %     31.20 %     25.40 % Third tranche     48.45 %     44.20 %     40.80 %     28.80 % Expected life of options (in years):                                 First tranche     2.5       4.0       4.3       3.0               2014 Plan     2010 Plan   2012 Plan   Granted 2014   Granted 2015                   Second tranche     2.5       4.0       5.3       3.0   Third tranche     3.5       5.0       6.3       4.0   Risk-free interest rate:                                 First tranche     0.59 %     0.22 %     (0.17 )%     (1.00 )% Second tranche     0.59 %     0.22 %     0.05 %     (1.00 )% Third tranche     1.29 %     0.54 %     0.24 %     (0.88 )% Fair value (in $ millions)     54.3       37.7       8.4       9.0   Weighted average grant date fair value per option (in $)     5.0       3.1       1.9       1.2   148 Table of Contents     2010 Plan   2012 Plan   2014 Plan                     Share price (in $)     14.3       12.1       8.2   CPI-linked exercise price (in $)     14.3       12.1       8.4   Expected volatility:                         First tranche     54.98 %     36.70 %     29.40 % Second tranche     54.98 %     36.70 %     31.20 % Third tranche     48.45 %     44.20 %     40.80 % Expected life of options (in years):                         First tranche     2.5       4.0       4.3   Second tranche     2.5       4.0       5.3   Third tranche     3.5       5.0       6.3   Risk-free interest rate:                         First tranche     0.59 %     0.22 %     (0.17 )% Second tranche     0.59 %     0.22 %     0.05 % Third tranche     1.29 %     0.54 %     0.24 % Fair value (in $ millions)     54.3       37.7       8.4   Weighted average grant date fair value per option (in $)     5.0       3.1       1.9   The total fair value on the grant date of the restricted shares issued pursuant to the approval of the Board of Directors on August 6,6. 2014, is about $8.4 million. The value of the restricted shares is determined according to the closing price on the TASE on the most recent trading day preceding the date of the approval of the Board of Directors (with the exception of the restricted shares issued to our CEO, the value of which was determined according to the closing price on the TASE on the most recent trading date preceding the date of the approval of the general meeting, which isGeneral Meeting). The total fair value on the grant date). date of the restricted shares that were allotted to directors (excluding the Company CEO, Mr. Stefan Borgas) pursuant to the approval of the Board of Directors on January 26, 2015, is approximately $0.7 million. The value of the restricted shares offered to offerees was determined according to the closing price on the TASE on the most recent trading day preceding the date of the approval of the General Meeting. The total fair value on the grant date of the restricted shares issued to directors in accordance with the approval of the General MeetingBoard of the Directors on February 26,May 12, 2015, is about $710approximately $9.7 million, of which approximately $0.5 million relates to the Chairman of the Company’s Board of Directors and approximately $0.6 million relates to the Chief Executive Officer. The value of the restricted shares offered to the offerees was determined according to the closing price on the Stock Exchange on the last trading day prior to the date of approval by our Board of Directors, except for the Company’s CEO, Mr. Stefan Borgas and the Chairman of the Board of Directors, Mr. Nir Gilad, where the value of the restricted shares was determined according to the closing price on the TASE on the most recent trading date preceding the date of the approval of the General Meeting). The total fair value on the grant date of the restricted shares that were allotted to Directors (except for the Company’s CEO, Mr. Stefan Borgas, and the Chairman of the Board of Directors, Mr. Nir Gilad) pursuant to the approval of the Board of Directors on November 11, 2015, is approximately $0.5 million. The value of the restricted shares offered to offerees was determined in accordance withaccording to the closing price on the stock exchangeTASE on the lastmost recent trading day beforepreceding the date of the approval byof the General Meeting of the Company’s shareholders, namely, the grant date. Meeting. The cost of the benefit embedded in the aforesaid plans will be recognized in profit and loss over the vesting period. The 2013 and 2014 Cash Incentive Plans On In May 12, 2013, ourICL’s Board of Directors decided to approve a long-term remuneration plan (“the 2013 Plan”) for approximately 11,300 Company employees in Israel and overseas, who are not includedmanagers that participated in the 2012 Plan.Company’s option plans (which were approved in November 2012), in accordance with the terms stipulated in the plan. The maximum cost of the new plan is approximately $45 million. According to criteria defined in the 2013 Plan, an amount of up to $4,050 will be paid to each employee included in the Plan, provided that our net income in each of the years 2013, In August 2014, and 2015 meets the requirements defined in the Plan. Furthermore, on August 6, 2014, ourICL’s Board of Directors approveddecided to approve a long-term benefitremuneration plan of up to approximately $17 million for approximately 11,800 of ourthe Company’s non-managerial employees in Israel and overseas, who are not includedmanagers that participated in the aforesaid 2014 optionCompany’s options and restricted shares plan (that was approved on the same date), in accordance with the terms stipulated in the plan. 137 Table The maximum cost of Contents the plan is approximately $17 million. As at December 31, 2014,the date of this Annual Report, the conditions for the aforesaid plans didwere not obtainmet and therefore no liability was included in respect of the 2013 Cash Incentive Plan and the 2014 Cash Incentive Plan was included in our financial statements.these plans. 149 ITEM 7Table of Contents – Item 7 - MAJOR SHAREHOLDERS AND RELATED (AND INTERESTED) PARTY TRANSACTIONS A. MAJOR SHAREHOLDERS The following table presents as of March 1, 20152016 (unless otherwise noted below) the beneficial ownership of our ordinary shares by each person who is known by us to be the beneficial owner of 5% or more of our outstanding ordinary shares and each of our directors and executive officers. The data presented is based on information provided to us by the holders or disclosed in public regulatory filings.     Ordinary Shares Beneficially Owned (1)   Special State Share Shareholders   Number     %   Number   % Israel Corporation Ltd.(2)     587,055,812       46.17 %     –       –   PotashCorp Agricultural Cooperative Society Ltd.(3)     176,088,630       13.85 %     –       –   State of Israel(4)     –       –       1       100 % Yair Orgler     1,600       *       –       –   Avi Doitchman     285,332       *       –       –   Nissim Adar     253,332       *       –       –   Eli Amit     117,659       *       –       –   Herzel Bar Niv     58,666       *       –       –   Amir Benita     36,666       *       –       –   Shmuel Daniel     93,332       *       –       –   Dan (Dani) Chen     275,132       *       –       –   Israel Dreyfuss     4,000       *       –       –   Eyal Ginzberg     60,000       *       –       –   Asher Grinbaum     253,332       *       –       –   Michael Hazzan     41,966       *       –       –   Lisa Haimovitz     54,666       *       –       –   Hezi Israel     54,666       *       –       –   Ofer Lifshitz     112,000       *       –       –   Yakir Menashe     36,666       *       –       –   Charles Weidhas     253,332       *       –       –   Ronnie Shushan     110,000       *       –       –   Mark Volmer     –       *       –       –       Ordinary Shares Beneficially Owned(1)   Special State Share Shareholders     Number        %        Number        %    Israel Corporation Ltd.(2)     587,128,391       46.04 %**     —         —     PotashCorp Agricultural Cooperative Society Ltd.(3)     176,088,630       13.81 %     —         —     State of Israel(4)     —         —         1       100 % Nir Gilad     472,490       *       —         —     Stefan Borgas     2,263,131       *       —         —     Avisar Paz     —         *       —         —     Aviad Kaufman     —         *       —         —     Ron Moskovitz     —         *       —         —     Sagi Kabla     —         *       —         —     Ovadia Eli     24,193       *       —         —     Yaacov Dior     24,193       *       —         —     Miriam Haran     24,193       *       —         —     Geoffrey Merszei     24,193       *       —         —     Shimon Eckhaus     24,193       *       —         —     Asher Grinbaum     657,942       *       —         —     Kobi Altman     219,954       *       —         —     Eli Amit     171,993       *       —         —     Hezi Israel     159,824       *       —         —     Lisa Haimovitz     148,706       *       —         —     Yakir Menashe     190,224       *       —         —     Karl Mielke     258,580       *       —         —     Mark Volmer     277,942       *       —         —     Charles Weidhas     657,942       *       —         —     Nissim Adar     657,942       *       —         —     Dan Chen     672,742       *       —         —     Lizette Kilian     —         *       —         —     Ido Lilian     176,701       *       —         —     ____________________ * Less than 1% After December 31, 2014, the General Meeting of Shareholders approved an allocation of 9,078 restricted shares for each of the Company directors (except for the CEO, Mr. Stefan Borgas), for no consideration. See “Item 6. Directors, Senior Management and Employees—E. Share Ownership –The 2014 Equity Compensation Plan”. The Company’s Compensation and Human Resources Committee, Board of Directors and General Meeting of Shareholders approved transfer by the directors employed by Israel Corporation of the equity compensation granted to them (a total of 27,234 restricted shares) or the financial benefits by virtue thereof, to the Israel Corporation. ** For additional information, please see section (2) below. On February 26, 2015, the General Meeting of Shareholders approved an allocation of 9,078 restricted shares for each of the Company directors (except for the Chairman of the Board, Mr. Nir Gilad, and the Chief Executive Officer, Mr. Stefan Borgas), for no consideration. On December 23, 2015, the General Meeting of Shareholders approved an allocation of 15,115 for each of the Company directors (except for the Chairman of the Board, Mr. Nir Gilad, and the Chief Executive Officer, Mr. Stefan Borgas), for no consideration. See “Item 6. Directors, Senior Management and Employees—E.Share Ownership –The 2014 Equity Compensation Plan”. The Company’s Human Resources & Compensation Committee, Board of Directors and General Meeting of Shareholders approved transfer by Mr. Aviad Kaufman and by the directors employed by Israel Corporation the equity compensation granted to them (a total of 72,579 restricted shares) or the financial benefits by virtue thereof, to the Israel Corporation. Therefore, the shares were allocated to Israel Corp. (1) The percentages shown are based on 1,271,433,6091,275,217,894 ordinary shares issued and outstanding as of March 1, 20152016 (after excluding shares held by us or our subsidiaries). In accordance with the rules of the SEC, beneficial ownership includes voting or investment power with respect to securities and includes the shares issuable pursuant to options that are exercisable within 60 days from March 1, 2015.2016. Shares issuable pursuant to options are deemed outstanding for computing the percentage of the person holding such options but are not outstanding for computing the percentage of any other person. 150 Table of Contents (2) The Group’s parent company is Israel Corporation Ltd. Israel Corporation LimitedCorp. is a public company listed for trading on the Tel Aviv Stock exchangeExchange (TASE). Based on the information the Company received from Israel Corporation, MillenniumCorp. Millenium Investments Elad Ltd. (hereinafter – “Millennium”(“Millenium”) and Mr. Idan Ofer are considered as controlling shareholders jointly of Israel Corporation,Corp., for purposes of the Securities Law (both Millennium(each of Millenium and Mr. Ofer hold shares in Israel CorporationCorp. directly, and Mr. Idan Ofer serves as a director of MillenniumMillenium and has an indirect interest in it as athe beneficiary of athe foreign discretionary trust that has indirect control of Millennium)Millenium). MillenniumMillenium holds approximatelyapprox. 46.94% of the share capital in Israel Corporation. To the bestCorp. which holds approx. 46.04% of the Company’s knowledge, Millenniumvoting rights and 48.88% of the issued share capital of the Company. Millenium is held by Mashat Investments Ltd (hereinafter, “Mashat”Ltd. (“Mashat”), and by XT Investments Ltd (hereinafter, “XTLtd. (“XT Investments”), with 80% and 20% holdings, respectively. Mashat is a private company, wholly owned by a Dutch company, Ansonia Holdings B. V. (hereinafter – “Ansonia”Singapore B.V. (“Ansonia”). Ansonia is a wholly-owned subsidiary of Jelany Corporation N. V.N.V. (registered in Curaçao), which is a wholly ownedwholly-owned subsidiary of the Liberian company, Court Investments Ltd (hereinafter – “Court”Ltd. (“Court”). Court is wholly owned by a foreign discretionary trust, ofin which Mr. Idan Ofer is athe beneficiary. XT Investments, which directly holds approximately 1.24% of the share capital inof Israel Corporation,Corp., is a shareholder in Millennium,Millenium as stated. XT Investments is a private company, wholly owned by XT Holdings Ltd. (hereinafter – “XT Holdings)(“XT Holdings”), a private company whose ordinary shares are held in equal shares by Orona Investments LtdLtd. (which is indirectly controlled by Mr. Ehud Angel) and by Lynav Holdings Ltd., a company that is controlled by a foreign discretionary trust ofin which Mr. Idan Ofer is a prime beneficiary. Among other things Mr. Ehud Angel holds, among other things, a special share that givesgrants him, inter alia, under certain limitations and for certain issues, an additional vote on the Boardboard of Directorsdirectors of XT Holdings. In addition, Kirby Enterprises Inc., which is indirectly held by a foreign discretionarythe same trust that holds Mashat, in which, as stated, Mr. Idan Ofer is the beneficiary, holds approximately 0.74% of the share capital of Israel Corporation.Corp. Furthermore, Mr. Idan Ofer holds directly approximately 3.85% of the share capital of Israel Corporation.Corp. Furthermore, XT Investments directly holds approximately 0.03% of the Company’s capital (namely, 377,662 Ordinary Shares). 138 Table of Contents On September 24, 2014, we listed our ordinary shares on the NYSE in connection with the initial public offering of our shares. The offering, including the subsequent option exercise, included 42,222,942 of our ordinary shares sold by Israel Corporation and 23,951,015 of our ordinary shares sold by certain forward counterparties. Immediately following the offering, Israel Corporation had voting rights with respect to approximately 46.18% of our outstanding ordinary shares (after excluding shares held by us or our subsidiaries). Even though Israel Corporation has less than 50% of our ordinary shares, it still has a major impact on the General Meeting of Shareholders and will de facto havehas the power to appoint directors and havehas a strong influence upon the composition of our Board of Directors. As of March 1, 2015, 353 million ordinary shares have been pledged by Israel Corporation to secure certain liabilities, almost entirely comprised of margin loans with an aggregate outstanding principal amount of $1,035 million. As of March 1, 2016, 392 million ordinary shares have been pledged by Israel Corporation to secure certain liabilities, almost entirely comprised of margin loans with an aggregate outstanding principal amount of $754 million. (3) PotashCorp Agricultural Cooperative Society Ltd. is an Israeli subsidiary of Potash Corporation of Saskatchewan Inc., a Canadian corporation whose shares are listed for trading on the Toronto Stock Exchange and the NYSE. (4) For a description of the different voting rights held by the holder of the Special State Share, see “Description“Description of Share Capital—The Special State Share”Share” in our registration statement on Form F-1 (File no. 333-198711) filed with the SEC on September 22,2014.22, 2014. To our knowledge, as of March 16, 2015, we had one shareholder of record who was registered with an address in the United States, holding approximately 5.20% of our outstanding ordinary shares. Such numbers are not representative of the portion of our shares held in the United States nor are they representative of the number of beneficial holders residing in the United States, since such ordinary shares were held of record by one U.S. nominee company, CEDE & Co.  In Israel, the nominee company to the TASE in whose name most of our ordinary shares are held of record is Registration Company of Bank Hapoalim Ltd. To our knowledge, as of March 1, 2016, we had one Shareholder of record who was registered with an address in the United States, holding approximately 5.36% of our outstanding ordinary shares. Such numbers are not representative of the portion of our shares held in the United States nor are they representative of the number of beneficial holders residing in the United States, since such ordinary shares were held of record by one U.S. nominee company, CEDE & Co. In Israel, the nominee company to the TASE in whose name most of our ordinary shares are held of record is Registration Company of Bank Hapoalim Ltd. B. RELATED (AND INTERESTED) PARTY TRANSACTIONS Approval of Related (and Interested) Party Transactions Approval of Related (and interested) Party Transactions Under the Companies Law, a relatedan interested party transaction may be approved only if it is for the benefit of the company. A transaction that is not an extraordinary transaction in which a director or officer has a personal interest requires the approval of the Board of Directors, unless the articles of association of the company provide otherwise. Our Articles of Association provide that such a transaction, if it does not relate to a director’s or officer’s compensation terms, may be approved by any of our Board of Directors, our Audit and Finance Committee, a disinterested director or officer or a person authorized for this purpose by our Board of Directors. If the transaction is an extraordinary transaction, it must be approved by the Audit and Finance Committee and the Board of Directors, and, under certain circumstances, by the shareholders of the company. An “extraordinary transaction” is a transaction other than in the ordinary course of business, other than on market terms or that is likely to have a material impact on the company’s profitability, assets or liabilities. 151 Table of Contents Pursuant to the Companies Law, extraordinary transactions with the controlling shareholder and extraordinary transactions in which a controlling shareholder has a personal interest, require the approval of the Audit Committee,audit committee, or the Compensationcompensation and Human Resources Committeehuman resources committee if the transaction is in connection with employment or service with the company, the Boardboard of Directorsdirectors and the shareholders of the company. The shareholder approval must be by a simple majority of all votes cast, provided that (i) such majority includes a simple majority of the votes cast by non-controlling shareholders having no personal interest in the matter or (ii) the total number of votes of shareholders mentioned in clause (i) above who voted against such transaction does not exceed 2% of the total voting rights in the company. The Companies Law prohibits any director who has a personal interest in an extraordinary transaction from being present forat the discussion and voting on such transaction in the audit committee or board of directors. Notwithstanding, a director who has a personal interest may be present at the meeting and vote on the matter if a majority of the directors or members of the audit committee have a personal interest in the approval of such transaction. If a majority of the members of the Board of Directors have a personal interest in the transaction, such transaction also requires shareholder approval. Approval of Director and Officer Compensation Under the Companies Law, we are required to approve, at least once every three years, a compensation policy with respect to our directors and officers. Following the recommendation of our Compensation and Human Resources Committee, the compensation policy must be approved by our Board of Directors and our shareholders.Shareholders. The shareholder approval must be by a simple majority of all votes cast, provided that (i) such majority includes a simple majority of the votes cast by non-controlling shareholders having no personal interest in the matter or (ii) the total number of votes of shareholders mentioned in clause (i) above who voted against such transaction does not exceed 2% of the total voting rights in the company. In general, the compensation terms of directors, the chief executive officer and any employee or service provider who is considered a controlling shareholder, as well as a relative of a controlling shareholder, must be approved separately by the Compensation and Human Resources Committee, the Board of Directors and the shareholders.Shareholders. Generally, shareholder approval is not required for director compensation payable in cash up to the maximum amount set forth in the regulations governing the compensation of external directors. TheGenerally, the compensation terms of other officers who report directly to the chief executive officer require the approval of the Compensation and Human Resources Committee and the Board of Directors. 139 TableDirectors, unless the Compensation and Human Resources Committee approves that there is no material change to the terms of Contents the compensation. On July 17, 2013, our Board of Directors approved the compensation policy for our directors and officers in accordance with the recommendation of our Compensation and Human Resources Committee, which approved the compensation policy on July 16, 2013. Our compensation policy was approved by our shareholdersShareholders on August 26, 2013. In March 2014, our Compensation and Human Resources Committee and our Board of Directors approved certain amendments to our compensation policy including, among other things, with regard to the method of calculating the target bonus for officers who have not served as officers or who have served in another position in the Company in the three years prior to the bonus, the possibility of awarding a special bonus and certain amendments to the equity bonus mechanism (including with regard to minimum permitted vesting period). In August 2014, our Compensation and Human Resources Committee and our Board of Directors approved, and on December 11, 2014, the General Meeting of Shareholders approved additional specific amendments to our compensation policy which, among other things: · add an exception to the criteria for the selection of the comparative companies in relation to which the compensation packages offered to officers will be examined, provided that there is available public information on the compensation packages in such companies; 152 Table of Contents · amend the ranges for the desirable ratios between the fixed and the variable components of the compensation of officers; · amend the ratio between the weights of the different categories in the formula for calculating officers’ compensation; · with respect to ICL and the segments’ financial measures, authorize our Compensation and Human Resources Committee and Board to adjust (upwards or downwards) the net income and/or operating income of the Company or the respective segment for one-time items, for purposes of calculating the annual bonus; · for purposes of the compliant equity bonus mechanism provided in Section 7.7 of the Compensation Policy – for purposes of determining the minimal total shareholder return, which constitutes a prerequisite for the maturity of the matching equity bonus, the foreign comparative companies will be direct business competitors of ICL or companies that operate in similar markets as ICL, for which available public information exists, and that have income and/or a market value within a reasonable range of our income and market value; · amend the way of calculating the target bonus for officers who have not served the Company in the last three years; and · add the possibility of granting special bonuses for special efforts or unique contributions. Transactions with Relatedrelated (and Interested) Parties Registration Rights Agreement We entered into a registration rights agreement with Israel Corporation on September 12, 2014. We obtained shareholderShareholder approval of our entry into this agreement on May 8, 2014. This agreement provides for customary demand, piggyback and shelf registration rights and provides that we will perform various actions and comply with various requirements to facilitate and promote such registrations, as well as cover certain expenses of Israel Corporation in connection with any such registration. 140 Table of Contents Controlling Shareholder As of March 19, 2015,1, 2016, Israel Corporation held approximately 49.02%48.88% of our outstanding ordinary shares and approximately 46.17%46.04% of the voting rights of our shareholders. Shareholders. Israel Corporation exercises control over our operations and business strategy and has sufficient voting power to control many matters requiring approval by our shareholders,Shareholders, including: · The composition of our Board of Directors (other than external directors, as described under “Item“Item 6. Directors, Senior Management and Employees—C. Board Practices—External Directors”Directors”); · Mergers or other business combinations; · Certain future issuances of ordinary shares or other securities; and · Amendments to our Articles of Association, excluding provisions of the Articles of Association that were determined by the Special State Share. However, Israel Corporation does not exercise control with respect to our compensation policy and relatedinterested party transactions, since these must be approved by a majority of our non-related shareholders. Shareholders. Joint Insurance On August 29, 2012, following approval by our Audit and Finance Committee and our Board of Directors, our shareholdersShareholders approved a new framework resolution to purchase an insurance policy for two tiertwo-tier coverage of director and officer liability jointly with Israel Corporation. The first tier, which is shared with Israel Corporation, has a joint liability limit of up to $20 million, and the premiums are paid about 42.5% by us and about 57.5% by Israel Corporation. The second tier covers us alone for up to $200 million. This framework resolution is valid for up to three years. 153 Table of Contents In August 2013, following approval by our Compensation and Human Resources & Compensation Committee and our Board of Directors, our shareholdersShareholders approved an increase of the total insurance cap to $350 million. In connection with our initial public offering, we updated the terms of our insurance policy for directors and officers in accordance with the practice of companies listed in the United States, including with respect to the limit of liability, the premium and the apportioning of the insurance premium to be paid between us and Israel Corporation. The insurance policy includes a joint tier with Israel Corporation with a liability limit of up to $20 million and a separate tier that covers us alone for up to $220 million, with our directors and officers as beneficiaries of both tiers. The new insurance policy was approved by our shareholders,Shareholders, as a three year framework resolution, in May 8, 2014, following approval by our Audit and Finance Committee and Board of Directors. On August 31, 2014, we announced that our Audit and Finance Committee and our Board of Directors had approved the renewal of our insurance policy in accordance with the three yearthree-year framework resolution approved by our shareholdersShareholders in May 2014 and our Compensation Policy. The new insurance policy, which entered into effect as of September 1, 2014, includes a joint tier with Israel Corporation with a joint liability limit up to $20 million (the division of the premium amount was changed in 2014 so that about 60% will be paid by the Company and about 40% by Israel Corporation) and a separate tier that covers us alone with a liability limit up to $200 million. On August 25 and 27, 2015, respectively, the Compensation Committee and the Board of Directors approved the renewal of the insurance policy for officers currently serving or that will serve in the Company from time to time, as well as their liability in their capacity as officers of certain companies to which they have been or will be appointed by the ICL Group or on its behalf, for the period of an additional year, commencing on September 1, 2015. Concurrently with the approval of the Compensation Committee and the Board, the policy that was valid until August 31, 2015 was extended for two additional months, until the satisfaction of a condition relating to the joint tier that will enable us to engage in the New Policy. On October 13, 2015, following the satisfaction of the aforementioned condition, the policy was renewed, commencing as of September 1, 2015 until August 31, 2016. Pursuant to the New Policy the division of the premium amount in the joint tier was changed so that 70% will be paid by the Company and 30% by the Israel Corporation, in accordance with the authority given to the Compensation Committee and the Board to approve changes, from time to time, in connection with the rate of premium division between the ICL Group and the Israel Corp. Group as pertains to the shared tier, up to a deviation at the rate of 25% of the original division, in accordance with the framework resolution. The insurance policy includes a joint tier with Israel Corporation with a joint liability limit up to $20 million per occurrence and in the aggregate, and a separate tier that covers officers' liability in the ICL Group alone for additional up to $200 million per occurrence and in the aggregate (the total policy amounts to $220 million. million). According to the framework resolution, the officers of the ICL group are beneficiaries of both tiers. The Compensation and the Board of Directors further approved the annual premium under the New Policy in accordance with the terms of the framework resolution. The terms of the New Policy adhere to the terms of the framework resolution and of the Company's Compensation Policy. Management Fees to Controlling Shareholder We have paid our parent company, Israel Corporation, annual management fees for management services, since 1996. Management services include ongoing general consultation, such as professional, financial, strategic and managerial consulting, and consulting and representation in regulatory discussions and issues. The parties may agree to expand management services to additional areas. OnIn January 2015 our Compensation and Human Resources & Compensation Committee and our Board of Directors approved, and on February 26, 2015 our General Meeting of Shareholders approved, an extension of the management agreement that expired on December 31, 2014, for the years 2015-2017, under the same terms, except for the following changes: (1) upon approval of the terms of office for the Executive Chairman of the Board, management fees shall be reduced to $1 million plus VAT. In case the Chairman of the Board is appointed Executive Chairman of the Board and thereafter ceases to serve and be compensated as an Executive Chairman of the Board, as of such time management fees shall once more be set at an amount of $3.5 million plus VAT; (2) to allow the Company to grant equity compensation to incumbent and future directors who are employed by the Israel Corporation (such directors do not receive cash compensation for their service); these directors may assign their equity compensation to Israel Corporation. Following Mr. Nir Gilad's appointment as Executive Chairman of the Board, the annual management fees for management services to Israel Corporation amounts to $1 million plus VAT. Mr. Aviad Kaufman (who is a director of Israel Corp.), and the directors employed by Israel Corp., have conveyed their right to 72,579 restricted shares unto Israel Corp. and accordingly, those shares were allocated to Israel Corp. (seeItem 7.Major Shareholders and Interested Party Transactions-A “Major Shareholders”). 154 Table of Contents Relationships with Other Companies A subsidiary in our Performance Products segment entered into a long termlong-term agreement with an interested party of the Company for the acquisition of food gradefood-grade phosphoric acid. The agreement was signed before the subsidiary was acquired by us and is in effect until 2018. On February 28, 2013, our Audit and Finance Committee and our Board of Directors approved certain of our Israeli subsidiaries in our Industrial Products segment to purchase electricity from OPC Rotem Ltd. During 2013 additional subsidiaries from our Fertilizers segment entered into an agreement with OPC Rotem Ltd. toTo purchase electricity in accordance with the amended agreement approved onin February 28, 2013. 141 Table of Contents Short Term Loan On June 26, 2012, we received a short term loan in the amount of approximately $50 million from our controlling shareholder (Israel Corporation Ltd.). The loan was granted on terms similar to market terms and was extended periodically for three or six months, bore interest at a rate of 0.77625% and was repaid in full in August 2014. The table below sets forth certain income statement information with respect to balances of our related party transactions.     For the year ended December 31       2014     2013     2012       US$ thousands   Sales     6,212       9,958       14,693   Cost of sales(1)     173,358       131,845       94,512   Selling, transport and marketing expenses     16,326       18,424       36,019   Management fees to the parent company(2)     3,752       4,002       3,792       For the year ended December 31,     2015   2014   2013     (US$ millions) Sales     7       6       10   Cost of sales     127       173       132   Selling, transport and marketing expenses     9       16       18   Financing expenses (income), net     22     48       (24 ) Management fees to the parent company     2       4       4   The table below sets forth certain balance sheet information with respect to balances of our related party transactions.     As at December 31       2014     2013     2012       US$ thousands   Long-term deposits, net of current maturities     1,512       780       958   Current maturities of long-term deposits     411       260       239   Other current assets     11,063       6,342       6,824   Other current liabilities     28,652       73,558       73,087   transactions     As at December 31     2015   2014     (US$ millions) Long-term deposits, net of current maturities     1       4   Long term loans     —         8   Other current assets     33       34   Other current liabilities     33       63   The Company declares a dollar dividend that is paid in NIS, pursuant to the exchange rate on the effective date. The Company executes a hedging transaction in order to hedge the exposure to changes in the U.S. dollar/NIS exchange rate. The dividend paid to the Company’s controlling shareholder, Israel Corporation, is made partly based on the exchange rate on the effective date and partly based on the exchange rate on the date of distribution. In addition, the dividend paid to an interested party is made pursuant to the exchange rate on the date of distribution. For additional information regarding our related party transactions, see note 29 to our audited financial statements. Option Plans See “Item“Item 6. Directors, Senior Management and Employees—E. Share Ownership”Ownership” for a description of the Option Plans. C. INTERESTS OF EXPERTS AND COUNSEL Not Applicable. 155 Table of Contents ITEM 8 – FINANCIAL INFORMATION Item 8. Financial Information A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION The fixed operating costs for the years 2015, 2014 2013 and 20122013 amounted to approximately $2,335 million, $2,432 million $2,328 million and $2,189$2,328 million, respectively. The variable operating costs for the years 2015, 2014 2013 and 20122013 amounted to approximately $2,305 million, $2,921 million and $2,842 million, and $2,729 million, respectively. respectively. See “Item“Item 18. Financial Statements.” 142 Table of Contents Legal Proceedings Tax Proceedings On December 29, 2013, an assessment was received from the Israeli Tax Authorities whereby the Company is required to pay additional tax beyond the amount we already paid for 2009 to 2011 in the amount of approximately $230 million.NIS 917 million (approximately $235 million). The Company has filed its objections to the assessment. On January 27, 2015, an order was received from the Tax Authorities, setting the amount ofregarding the additional tax at $200 million. The Company disagrees withamount under the position of the Taxes Authority and on February 25, 2015, it filed a notice of appeal against the order with the court.said assessment. The primary contention of the Tax Authorities is that our subsidiaries, ICL Dead Sea Works and ICL Rotem Amfert, Negev, are not entitled to benefits under the Law for Encouragement of Capital Investments commencing from the date on which Amendment No. 60 to this law entered into effect in 2005. 2005 or, alternatively, the mining and water pumping activities, including the activities in the evaporation ponds, are not industrial activities and, accordingly, they are not entitled to benefits under the Law for Encouragement of Capital Investments. The Company disagrees with the position of the Taxes Authority and on February 25, 2015, it filed an appeal of the order. In the Company’s estimation, of Company Management, based on its legal advisors, the chances that the Company’s contentions will ultimately be accepted at the end of the appeal proceeding are greater than the chances that they will be rejected and, therefore, no provision for tax has been included in the financial statements in respect of the said assessment. ICL Dead Sea Works Proceedings Arbitration regarding Royalties at ICL Dead Sea Works Ltd. Pursuant to the Israeli Dead Sea Concession Law, 1961 (hereinafter – “the(hereinafter—“the Concession Law”), as amended in 1986, and the concession indenture attached as an addendum to the Concession Law, Dead Sea Worksthe Company was granted a concession to utilize the resources of the Dead Sea and to lease the land required for its plants in Sodom for a period endingthat is expected to end on March 31, 2030, together withaccompanied by a priority right to receive the concession after its expiration, should the Government wish to offer a new concession. In consideration of the concession, Dead Sea Worksthe Company pays royalties to the Government of Israel, calculated at the rate of approximatelyabout 5% of the value of the products at the factory gate, less certain expenses, where according to the rateSalt Harvesting agreement the royalties in respect of the royalties for an annual quantity of potash sold in excess of 1.5 million tons is 10% (instead(in place of 5%). DSW grantsIn addition, according to the Salt Harvesting agreement, if legislation is enacted that changes the specific fiscal policy in connection with profits or royalties deriving from mining of quarries from the Dead Sea, the Company’s consent will not apply regarding an increase in the rate of royalties on the surplus quantities referred to above, commencing from the date on which additional tax is collected as stated in the legislation. On November 30, 2015, the Economic Efficiency Law was published, including the implementation of the Sheshinski recommendations, which addresses royalties and taxation of excess profits from Dead Sea minerals. The law entered into effect on January 1, 2016. For additional information please see Note 20 to our audited financial statements. ICL Dead Sea granted a sub-concession to Dead Sea Bromine Ltd. to produce bromine and its compounds from the Dead Sea, the expiration date of which is concurrent with the Company’sICL Dead Sea’s concession. The royalties forin respect of the products manufactured by the Bromine Company are received by the Company from the Bromine Company, whichand the Company then pays them over to the State. In addition, there is an arrangement relating to payment of royalties by Dead SeaICL Magnesium for production of metal magnesium metals by virtue of a specific arrangement with the State prescribedprovided in the Government’s decision ofdated September 5, 1993. Pursuant to the arrangement, royalties are paid by Dead Sea Magnesium on the basis of carnallite used for production of magnesium. The arrangement with Dead Sea Magnesium provides that during 2006 the State may demand a reconsideration in connection with the amount of the royalties and the method or their calculation for 2007 and thereafter. The State’s demand for reconsideration, as stated, was first received at the end of 2010, and the matter is presently in an arbitration proceeding, as described below. 156 Table of Contents In 2006,2007, a letter was received from the then Accountant General of the Israeli Ministry of Finance, claiming an underpayment of royalties amounting to hundreds of millions of shekels. Pursuant to the concession, disputes between the parties relating to the concession, including royalties, are to be decided by an arbitration panel of three arbitrators (each side appoints an arbitrator and these two appoint the third arbitrator)third). On January 9, 2011, the State of Israel and DSWICL Dead Sea decided to referturn to arbitration for purposes of deliberating and deciding the issue of how to calculatethe manner of calculation of the royalties under the concession and the royalties to be paid for metal magnesium metals and payment or refunds (if any) resultingdue deriving from the issues above. Each of the parties appointed an arbitrator on its behalf and these arbitrators appointed the third arbitrator. matters. In the statement of claim filed by the State of Israel in the arbitration proceedings, the State of Israel claimsis claiming the amount of $265 million in respect of underpayment of royalties for the years 2000 through 2009, with the addition of interest and linkage differences, and a change in the method of calculating royalty payments from the sale of metal magnesium. After studying the State of Israel’s claims in respect of prior years, the Company believes, on the basis of a legal opinion it received, that the royalties it had paid and their manner of calculation are consistent with the provisions of the concession. The same method of calculation was applied consistently since the time that DSW was a government company, and the method was known to the State of Israel and accepted by it. Accordingly, and on the basis of the legal opinion the Company received, no provision was recorded in the financial statements as of March 31, 2014 with respect to royalties that the State of Israel contends were underpaid. 143 Table of Contents On May 19, 2014, a partial arbitration decision was received regarding the royalties’ issue. Based on the principles of the decision received, DSWICL Dead Sea is also required to pay the State royalties on the sale of downstream products manufactured by companies that are controlled by ICL that have production plants located both in and outside the Dead Sea area, including outside of Israel. The royalties are to be paid according to the value of the downstream products, which will be determined in accordanceset according to the formula described in Section 15(a)(2) of the Concession Deed, based on the selling price of the downstream products to unrelated third parties, less the deductions set forth in subsections (I), (II) and (III) of that Section. Regarding metal magnesium, it was decided that the State of Israel and DSWICL Dead Sea are to exhaust their discussions on the subject of the royalties to be paid by DSWICL Dead Sea on metal magnesium, and if no agreement is reached the matter is to be returned to arbitration. As a result of the partial arbitration decision, in the second quarter of 2014, the Company recorded a provision in 2014, in the amount of approximatelyabout $135 million for the years 2000 through 2013.2013. The amount of this provision includes, among other things, interest and is net of the tax effect (a total(the amount of about $149 million in respect of royalties relating tofor prior periods plus interest in the amount of about $31 million, which was included in the financing expenses and net of the tax effect, in the amount of about $45 million, which was recognized as a tax benefit)million). The arbitrators’ decision is partial and its main decision is primarily directed at making a decision with respect to payment of royalties on downstream products, as notedmentioned above. TheAll the principles have not yet been determined whereby the financial calculations are to be made have not yet been formulated. These principles will be made. Such principles are being discussed in the second and current stage of the arbitration. In 2015, as a result of decisions made as part of the arbitration discussions in connection with the principles for the manner of calculating the royalties, the Company increased the provision by about $10 million. In November 2015, as part of the second stage of the arbitration. Inroyalties arbitration, the second stageState submitted an opinion on its behalf relating, mainly, to the principles whereby the interest to be added to the royalties' payment in the relevant arbitration period is to be calculated. As part of the arbitration proceeding,said opinion, the State presented two optional calculation methods, the results of which yield the amounts of NIS 230 million (about $59 million) and NIS 460 million (about $118 million). The Company disagrees with the State's position and calculations, and in January, 2015, the Company2016, it submitted an interimits position regarding calculation of the royalties. Such interim calculation does not take into account certain issuesinterest. The Company estimates that have not yet been resolved, including, the minimum rate of the mineral in the downstream productchances that creates the liability to pay royalties for the downstream product. The amount of the royalties according to the interim calculation is significantly lower than the provision. The final amount toits position will be ruled by the arbitrators, at the close of the second stage of arbitration proceeding, and after the financial calculation formulas are determined, as stated, may be materially different from the amount of the provision. The Company’s estimate in connection with the provision is based on various assumptionsaccepted regarding the manner of calculationcalculating the royalties, based on the decision of the royalties deriving fromarbitrators in the partial arbitration decision, and reflectsregarding the best estimate ofprinciples for calculating the expenditureinterest, are higher than the chances that they will be required to settle the obligation presently, as at the date of the report. rejected. In 2015, 2014 and 2013, ICL Dead Sea Workspaid current royalties to the Government of Israel in the amounts of about $97 million, about $84 million and about $110 million, respectively. In addition, in 2015, the Company paid an amount of about $152 million, in respect of royalties relating to prior periods. ICL Dead Sea Class Action On September 21, In 2014, weICL received a motionpetition submitted to the District Court in Israel to certifyin respect of a purported class action against ourits subsidiary, ICL Dead Sea Works.Sea. According to the motion,petition, the plaintiff is a farmer who has bought and currently buys potash in Israel, which is produced by ICL Dead Sea, Works, for fertilization purposes and seeks to represent a group of class members that would include all purchasers of potash or products produced withcontaining potash in Israel fromsince 2006, when potash prices were deregulated, through the date of the action. The plaintiff alleges that ICL Dead Sea Works charged an excessive price for potash, contrary to the Israeli anti-trustbusiness practices laws, and seeks damages in the amount of approximately NIS 96.4 million (approximately $24.8$24.7 million). The total sales of potash in Israel in 2014In February 2016, the parties submitted a request to the customers who,court for approval of a compromise arrangement, the results of which are not expected to be significant with respect to the bestfinancial statements. As at the date of our understanding, constitute the group described above, account for  less than 1%Annual Report, the proceedings are continuing with respect to approval of our total sales in that year. In February 2015, DSW filed its response to the motion to certifycompromise arrangement by the class action.court. In the Company's estimation, of the Company and its legal advisors, the chances that approval of the class actioncompromise arrangement will be certified are less than 50% and, accordingly, noconfirmed exceed the chances it will be rejected. The Company has a sufficient provision was recorded in the financial statements. 157 Table of Contents Personal Injury Claims During the 1990s, several claims were made against a claim was filed against somefew of ourthe Group’s subsidiaries byin respect of plaintiffs from various countries, who worked mostly as banana plantation workers, who allegedly werehave been injured by exposure to di bromo chloropropane (“DBCP”Di Bromo Chloropropane (‘‘DBCP’’) produced, many years ago, by a number of manufacturers, including large chemical companies and, according tocompanies. As at the plaintiffs, somedate of our subsidiaries. As of December 31, 2014, ourthis Annual Report, the Group’s subsidiaries are parties to one legal proceeding filed by nine9 plaintiffs who are requesting certification of their claim as a class action. The claim is for bodily injury and therefore the amount of claimed damagesfor the claims has not been stated. In accordance with the opinion ofCompany’s management and our legal advisors,opinion, it is not possible, at this stage, to estimate the resultsoutcome of the above claims. Nonetheless, it is estimated that our overall exposure will not exceed $20 million. No provision was included in our financial statements in respect ofclaims due to their complexity and the aforesaid claim. 144 Table of Contents multiple parties involved. Environmental Claims Kishon River Wastewater Matters The Company’s production site borders the Kishon River. For decades FCM, along with many other entities, municipalities and plants, has diverted wastewater into the Kishon River. Between 2001 and 2005, a number of claims for monetary damages were filed in the Haifa District Court against the Company and a series of other defendants (including the State of Israel) by 50 individuals (or their heirs or dependents), most of them fishermen who had worked, according to the claims, in the Kishon’sKishon's fishing harbor. According toharbor, claiming that the plaintiffs, the flowflowing of sewage tointo the Kishon River by each of the chemical plants operating on the river banks has caused the plaintiffs’plaintiffs' cancer and other illnesses. Dozens of factories, local governments and insurance companies were added as third party defendants. In the course of examining the claims, ten plaintiffs withdrew their claims, which were dismissed. On November 3, 2013, a court judgmentdecision was renderedissued rejecting all the plaintiffs’ claims for damages and on February 9,claims. In 2014, the court charged all the plaintiffs for the defendants’ legal expenses, in the amount of about $1.2 million (about NIS 4.6 million). The Company’s share in the legal fees for which the plaintiffs were charged is about $0.3 million (about NIS 1.1 million). On September 1, 2014, noticesa notice of appeal werewas filed by seven plaintiffs. Basedplaintiffs that were subsequently rejected by the Supreme Court on an opinion of its legal advisors, the Company estimates that the chances that the appeals will succeed are low. September 29, 2015. Between 2000 and 2007, a number of claims were filed in the District Court at Haifa against a list of defendants by former soldiers (and their heirs and dependents). The plaintiffs claim that contact with toxic substances in and around the Kishon River caused them cancer and other diseases (hereinafter – “the Claims of the Soldiers”). Several dozen factories (including the Company), governments, including the State of Israel, and insurance companies were added as third-party defendants. Ondiseases. In June 17, 2013, a court decision was rendered rejecting the claim for damages of 72 former soldiers (and their heirs and dependents) in the consolidated cases, with no order for expenses. The court decision did not includeexpenses, except for one claim ofmade by 17 soldiers that was not consolidated with the said claims (out of the 17 claims, one claim was rejected by consent).soldiers. On September 8, 2013, the plaintiffs filed a notice of appeal in24, 2015, the Supreme Court and on November 18, 2013 somecompletely rejected the appeals of the defendants, includingsoldiers, and also rejected the Company, filed a counter appeal with respect toregarding not charging the court’s decision not to order payment ofsoldiers for expenses. On November 24, 2013, at the court’s request, the plaintiffs filed an amended notice of appeal. On December 9, 2014, a statement of summations was filed by the plaintiffs with reference to the appeal and thereafter a statement of summations was filed by the respondents in the appeal. Then court set a hearing date for oral supplementation of the summations in September 2015. Based on the evaluation of its legal advisors, and in light of the court’s detailed and reasoned decision, the Company estimates that the chances that of appeal succeeding are low. As stated, the above mentioned decision does not include a claim of 16 soldiers that was heard as part of the said claims however that were not consolidated with them. Regarding this claim, the court decided to “stay” the hearing until after the decision of the Supreme Court regarding the claims with respect to which an appeal was filed. Based on the court’s determinations with respect to the claims regarding which a decision has been rendered, as stated, the Company estimates, in reliance on its legal advisors, that the chances that this claim will prevail are low. No provisions have been included in the financial statements in connection with the above mentioned claims. Naot Hovav Pollutant Matters Three claims were filed with the District Court at Beer Sheva in March and June 2007 against the State of Israel and the Industrial Local Council at Naot Hovav, in whose jurisdiction the Naot Hovav plants operate, including the plants of our Industrial Products segment. The plaintiffs argue that various pollutants in the vicinity of Naot Hovav have caused their illnesses, including, among other things, respiratory diseases, spontaneous abortion, birth defects, diseases of the nervous system, cancer, and other illnesses. The claims rely, among other things, on results of an epidemiological study. The claims sue for sums for treatment expenses incurred by the plaintiffs, as well as compensation for pain and suffering, distress, and punitive damages. The plaintiffs are suing for a total sum of approximately $61 million. In 2008, the Local Council and the State of Israel filed a third party notice against a number of plants at Naot Hovav, including factories of our Industrial Products segment. On January 9, 2013, a judgment was rendered dismissing the claim. On February 20, 2013, the plaintiffs filed an appeal with the Supreme Court, which was rejected on September 29, 2014. 145 Table of Contents Spain Mining License Matters Our subsidiary in Spain Iberpotash (IBP),(hereinafter – “ICL Iberia”) has two potash production centers in Spain in the towns of Suria and Sallent. As a by-product of the potash production process, salt is produced and heaps up in piles, most of which, at the present time, is not usable. In order toTo operate in Spain, there is a need for an environmental license and aan urban license. license are required. Regarding the Sallent site, in October 2013, the regional court issued a judgment disqualifying the Company’sICL Iberia’s environmental mining license, (contendingcontending that there were defects in provision of the license by the government) and inGovernment of Catalonia. On September 25, 2015, the Supreme Court affirmed this judgment. In February 2014, the regional court also disqualified the urban license, (contendingcontending that the license does not comply with the required conditions for piling up salt on the site). The court’s determination is not final, andsite. In connection with the Company andvalidity of the governmenturban license after issuance of Catalonia have filed an appeal in the Spanishdecision of the Supreme Court. The Company estimates that the legal process will last more than one year, such that there will be no significant effect on the Spanish mining operations since the Company expects to close the Vilafruns mine at Sallent prior to the end of 2016 as part of our efficiency plan. In addition, an agreement was made withCourt, the local planning board (CUCC), which permits of Catalonia determined new provisions, including limitation of the continuedheight of the salt pile and temporary extension of the salt piling activities up to the earlier of June 30, 2017 or when the salt pile reaches a height of about 538 meters. As at the current production leveldate of this Annual Report, the height of the salt pile is 509 meters. In November 2015, the Regional Court confirmed that the new provisions conform to the provisions of the court’s decision. As at the date of this Annual Report, ICL Iberia’s environmental mining license, from the Government of Catalonia, had not yet been renewed. Nonetheless, in November 2015, ICL Iberia and the Government of Catalonia signed a cooperation agreement memorandum of understanding that defines ICL Iberia’s activities in the country as preferential activities and the potash industry as a public strategic interest. The purpose of the agreement is to arrange all the mining activities, including environmental protection and support for the matter of regulation, transportation and infrastructures. Furthermore, the agreement relates to the matter of ICL Iberia’s obligation to remove the salt pile on the Sallent site, including completion of the restoration plan of the site, all of which is to be completed no later than 2070 (the removal of the salt pile should be completed by 2065). This agreement foresees transitory measures constituting an interim solution to allow ICL Iberia to continue its activities at the Sallent site. In ICL Iberia’s estimation, when negotiations on the detailed agreement are concluded, the agreement should advance the procurement of the environmental permit to allow pile up tosalt after June 30, 2017. This agreement requires approval by2017, which is currently invalid, and will settle ICL Iberia’s obligations to subsequently restore the Spanish Regional Court. If the Spanish Supreme Court does not accept the appeal described above, the Company will be required to enter into an administrative proceeding in order to obtain an environmental license that complies with the new environmental protection regulations in Spain (autoritzacio substantive).site. 158 Table of Contents Regarding the Suria site, in April 2014, after a favorable survey was received from the Environmental Protection Authority in Catalonia, the CompanyICL Iberia received an environmental license that complies with the new environmental protection regulations in Spain (autoritzacio substantive), this being after the Company firstICL Iberia received the urbanmunicipal license. Prior to receipt of In January 2016, following complaints from competitors in the said licenses,salt market in Spain, the European Commission announced that it will investigate whether ICL Iberia received illegal aid from the Spanish authorities regarding two legal proceedings were held againstissues: (1) whether the guarantee amounts related to environmental protection (the guarantees that are supposed to cover the potential cost of rehabilitation of the land), which were originally set at $2 million, are lower than the amount required by the EU and national and regional environmental rules; and (2) whether ICL Iberia should bear the cost of the environmental protection measures, in the amount of about $9 million, which was financed by the Spanish authorities. The Company disagrees with the government of Catalonia, relating to issuance ofabove claims and given the urban and environmental licenses to the efficiency plan with respect to Iberpotash. As partpreliminary stage of these proceedings, it was allegedthe legal measures that the project work requires a significant changeneed to be taken are still being examined. However, in the environmental license and that the government must require the Company to conduct an environmental impact survey. Accordingly, the plaintiffs are requesting termination of the project work. In the Company’s estimation, upon renewal ofbased on its preliminary discussions with the environmental license, continuation ofSpanish authorities, the legal proceedingchances that the above claims will become superfluous. be rejected are higher than the chances that they will be accepted. Securities Law Proceedings On August 29, 2013, a motion to certify a class action against us,the Company, Israel Corporation, Potashcorp Cooperative Agricultural Society Ltd., the members of our Board of Directors and our CEO, was filed in the District Court in Tel Aviv,Tel-Aviv, on the grounds of misleading information, deception and non-disclosure of material information in our reports, allegedly in violation of the provisions of the Israeli Securities Law and the general laws. The aggregate amount of the damage claimed is $0.79$0.7 billion (NIS 2.75 billion) or $0.95$0.84 billion (NIS 3.28 billion). (The amount of the claim depends on the share price used to calculate the claimed damages). In February 2014, a response to the motion was filed. In November 2014, a hearing was held on the motion to certify the claim as a class action. The plaintiffs submitted their summations and defendants will submit their summations inDuring 2015, proceedings took place to advance a compromise agreement that were later discontinued by the case inparties. As at the next several months.date of this Annual Report, a court decision on the request had not yet been rendered. In ourthe Company’s opinion, based on the position of ourits legal advisors, the chances that the claims against it will be rejected exceed the chances that they will be accepted. Accordingly, no provision was included in the financial statements. Commercial Proceedings Haifa Chemicals acquires potash from DSWICL Dead Sea Works Ltd. (hereinafter– "ICL Dead Sea") as part of its manufacturing inputs. Pursuant to the agreement between DSWICL Dead Sea and Haifa Chemicals, the price for which Haifa Chemicals was charged was based on DSW’sthe average price, FOB, price toof ICL Dead Sea for its two largest customers in the preceding quarter. In 2008, an agreement between Haifa Chemicals and ICL Dead Sea Works was cancelled and the parties failed to reachdid not succeed in reaching a new agreement. Haifa Chemicals believedcontends that the price ICL Dead Sea Works demanded in exchange for potash was unfair based on the contentionand that it was unable to operate at that price.this price level. In 2009, Haifa Chemicals notified its employees of a shutdown of the production lines at its factory until purchase of potash could be resumed at prices it deemed acceptable. At the same time, Haifa Chemicals contacted the Israeli Minister of Finance and the Israeli Minister of Industry, Commerce and Labor and requested that they use their authority to subject potash prices to supervision. The parties agreed in principle to appoint an arbitrator to set the price of potash. Arbitration began in May 2009, arbitration proceedings between the parties commenced with respect to the potash price and in March 2014, the arbitration decision was issued. 146 Table of Contents The decision includesissued, which included a price formula on the basis of which the selling price of potash between ICL Dead Sea Works and Haifa Chemicals will be determined for a period of ten years from the date of the decision and with respect to the period from the commencement of arbitration. The price formula provides that the selling price during a quarter will be based on a price equal to the lower of the weighted average of the lowest three FOB selling prices of potash sold by ICL Dead Sea Works in the prior quarter and the average of the two lowest FOB selling prices of potash sold by ICL Dead Sea Works to majorlarge buyers (foreign buyers who purchase 150,000 or more tons per year) in the prior quarter, less certain expenses and a discount of 2% (“(hereinafter – the base price”“Base Price"). InBased on the price formula, the possibility exists that under certain circumstances, this basean adjusted price will be determined that is based on the production cost plus a certain margin. This adjusted price will apply to a quantity of 270 thousand tons of potash, while the base price wouldBase Price will continue to apply to the remainder of the potash howeverbut without the 2% discount. The arbitrator appointed an examiner whose job it is to ascertain whether Haifa Chemicals and ICL Dead Sea are in compliance with a discountnumber of 2%.tests, and in accordance therewith, to determine whether the price will be based on the Base Price or on ICL Dead Sea’s production costs plus a certain margin. Haifa Chemicals gave notice that it is interested in an examination for the years 2011, 2012 and 2013, where the meaning of this is that in respect of 2009 and 2010, the price will be the Base Price, in accordance with that stated above. On May 31, 2015, the examiner published the results of his examination in respect of 2011–2013, regarding which Haifa Chemicals met the threshold test only for the years 2012-2013 and, accordingly, the examination process will continue regarding ICL Dead Sea's costs in respect of these years.  159 Table of Contents Regarding 2011, Haifa Chemicals did not pass the examination of the threshold test and, therefore, for this year the price will be the Base Price. In our2015, Haifa Chemicals gave notice that it is interested in an examination for 2014 and in February  2016, the examiner's decision was issued whereby Haifa Chemicals passed the threshold test with respect to 2014 and, accordingly, the process of examining the costs of ICL Dead Sea for this year will continue. Regarding the decision of the examiner with respect to 2012-2013, a legal proceeding has been submitted by ICL Dead Sea, alleging that the decision of the examiner deviates from the provisions of the arbitration decision, if the legal process is postponed, the price in all or any of those years will be based on the production costs plus a certain margin relating to a quantity of 270,000 tons per year. In the Company’s estimation, based on estimatesits contentions included as part of the legal proceeding and the chances thereof to be accepted and given the production costs in accordance with the arbitration decision and taking into account other claims Haifa Chemicals has raised against us,ICL Dead Sea, the Company will not receivepay and will not payreceive significant amounts in respect of the past (2009-2013)period (2009–2014). As a result,Accordingly, no provisions were included and noor income receivable waswere recorded in the financial statements. Charges from the Israeli Public Utilities Authority Electricity In August 2015, as further updated in September 2015, the Israeli Public Utilities Authority – Electricity (hereinafter – “the Electricity Authority”) resolved to impose certain electricity system management services charges also on private electricity producers as opposed to only on private consumers, this being retroactively from June 2013. On September 13 2015, ICL, ICL Dead Sea and ICL Rotem filed a petition against the Electricity Authority’s resolution claiming that it suffers from fundamental flaws. During December 2015, ICL Dead Sea and ICL Rotem received charges from the Electric Company relating to the said matter whereby the companies are required to pay about $35 million for the period from June 2013 up to 2015. There is a significant disagreement between ICL Dead Sea, ICL Rotem and the Electric Company with respect to some of the elements in the demand payments provided (about $12.5 million). ICL Dead Sea expressed the arguments before the Electricity Authority which responded that it is reviewing the arguments and that at this time ICL Dead Sea should pay the amount that is not in contention. As at the reporting date, the Company recorded a provision for the full amount. Water Matters Petition On June 16, 2015, a petition was filed in the Israeli Court for Water Matters, wherein the Government Water Authority is requested to act to regulate and supervise the use of water sources by DSW, this being, among other things, by means of determining pumping limits as part of the production licenses and imposition of production levies. The Company estimates that the chances that the petition will be accepted are lower than chances its will be rejected. Air pollution in Haifa Bay certification of a claim as a class action On June 7, 2015, a request was filed for its certification of a claim as a class action, in the District Court in Tel Aviv–Jaffa, against eleven defendants, including a subsidiary, Fertilizers and Chemical Ltd (ICL Haifa), in respect of claims relating to air pollution in Haifa Bay and for the harm allegedly caused from it, to the residents of the Haifa Bay area. The amount of the claim is about NIS 14.4 billion (about $3.8 billion). A preliminary hearing was scheduled for June 15, 2016. The Company is studying the request. In light of the complexity of the process and the early stage of the proceeding, as well as the fact that opinions have not yet been received from the various experts, it is difficult to predict the outcome of the proceeding. Nonetheless, in the Company’s estimation, based on the initial factual data provided to it and the relevant court decisions, the chances that the plaintiffs’ contentions will be rejected exceed the chances that they will be accepted. 160 Table of Contents In addition to the specific legal proceedingscontingencies referred to in the above a number of othersections, various claims are pending against the Company and various subsidiaries (including lawsuits), amounting. In respect of claims for an amount of up to about $22$21 million in the aggregate as of December 31, 2014. We2015, we have recorded provisionsa provision as at that date in a totalthe amount of about $2 million on account of such claims.$5 million. In addition, part of thesethe above claims areis covered by insurance policies.insurance. In the opinionestimation of our management,Company Management, based on opinions of its legal advisors, the provisions recorded adequately reflectprovision recognized is sufficient to cover the exposure presented by these claims toin respect of the Company and its relevant subsidiaries. above mentioned claims. Dividend policy On March 27, 2007, our Board of Directors approved the payment of a quarterly dividend at a rate of up to 70% of our net income and reapproved that policy on May 24, 2010 and August 3, 2013.February 11, 2014. Any dividends must be approved by our Board of Directors, which will take into account various factors including, inter alia, our profits, our investment plan, our financial position, the progress relating to our strategy plan, the conditions prevailing in the market and additional factors they deem appropriate. Dividend payments are not guaranteed and our Board of Directors may decide, in its absolute discretion, at any time and for any reason, not to pay dividends, to reduce the rate, to modify the dividend payout policy, to pay a one-timespecial dividend or to a adopt a buy-back plan. The profits distributableavailable for distribution as dividends as of December 31, 20142015 amounted to $ 2,4322,642 million. The terms of certain of our existing indebtedness require us to maintain a minimum level of shareholders’the Company’s equity, which could restrict our ability to pay dividends in the future. See note 17(D)17D to our audited financial statements for additional information regarding covenants in our loan agreements and their impact on our ability to pay dividends. In addition, the distribution of dividends is limited by Israeli law, which permits the distribution of dividends only out of distributable profits and only if there is no reasonable concern that such distribution will prevent us from meeting our existing and future obligations when they become due. Generally, dividends paid by an Israeli company are subject to an Israeli withholding tax.tax. For a discussion of certain tax considerations affecting dividend payments, see “Item“Item 10. Additional Information—E. Taxation.” The following table sets forth On March 15, 2016, the cash dividends we have paidBoard of Directors decided that it will re-examine the Company’s current dividend policy, in its next meeting, and may make changes for future periods. Such changes could include either a reduction in the amount or the targeted dividend, or modification of the policy to be based on our ordinary shares since January 1, 2009. Year Ended December 31,   Dividend per Ordinary Share (in U.S. dollars)     Total Dividends (in millions of U.S. dollars)   2009     0.44       549   2010     0.79       998   2011     0.88       1,131   2012     0.80       1,019   2013     0.50       634   2014     0.67       845   other metrics. No assurances can be provided that the Board of Directors will make any changes. B. SIGNIFICANT CHANGES To the best of our knowledge, no significant changes have occurred since the date of our consolidated financial statements. 161 147 Table of Contents ITEM 9 – THE OFFER AND LISTING Item 9. The Offer and Listing A. OFFER AND LISTING DETAILS New York Stock Exchange The following table sets forth, for the periods indicated since September 24, 2014, which wasannual, quarterly and monthly range of the date on which our ordinary shares began trading onhighest closing price and the New York Stock Exchange,lowest closing price of the high and low sales prices of our ordinaryCompany’s shares as they were reported by the New York Stock Exchange     U.S. Dollar Price per Ordinary Share       High     Low   Year Ended December 31 2014:     7.43       6.47   Year Ended December 31, 2014:                 Fourth Quarter     7.43       6.47   Year Ended December 31, 2015:                 First Quarter (through March 18)     7.65       6.85   Month Ended:                 September 30, 2014     7.23       7.05   October 31, 2014     7.22       6.68   November 30, 2014     7.29       6.76   December 31, 2014     7.43       6.47   January 31, 2015     7.41       7.16   February 28, 2015     7.65       7.05   March 31, 2015 (through March 18)     7.19       6.85       USD price per ordinary share       High        Low    Year Ended December 31:                 2014     7.47       6.33   2015     7.70       4.01                     Year Ended December 31, 2014:                 Fourth Quarter     7.47       6.33   Year Ended December 31, 2015:                 First Quarter     7.70       6.81   Second Quarter     7.49       6.80   Third Quarter     7.10       4.81   Fourth Quarter     5.86       4.01   Year Ended December 31, 2016:                 First Quarter (through March 15)     4.52       3.68                     Month Ended:                 September 30, 2015     6.12       4.81   October 31, 2015     5.86       4.91   November 30, 2015     5.71       4.82   December 31, 2015     5.23       4.01   January 31, 2016     4.30       3.68   February 29, 2016     4.29       3.79   March 31, 2016 (through March 15)     4.52       3.97   On March 18, 2015,15, 2016, the last reported sale price of our ordinary shares on the New York Stock Exchange was $6.85$4.34 per share. 162 Table of Contents Tel Aviv Stock Exchange The following table shows the annual, quarterly and monthly ranges of the high and low per share sales price for our ordinary shares as reported by the TASE in NIS and U.S. dollars. U.S. dollar per ordinary share amounts are calculated using the U.S. dollar representative rate of exchange on the date to which the high or low market price is applicable, as reported by the Bank of Israel.     NIS price per ordinary share     USD price per ordinary share       High     Low     High     Low   Year Ended December 31:                         2010     62.70       40.19       17.43       10.78   2011     64.78       33.91       17.93       8.99   2012     50.10       38.22       12.94       9.85   2013     51.75       24.48       13.87       6.74   2014     30.44       24.68       8.51       6.90   Year Ended December 31, 2013:                                 First Quarter     51.75       44.91       13.87       11.85   Second Quarter     49.16       35.70       13.54       9.90   Third Quarter     36.55       24.48       10.07       6.74   Fourth Quarter     31.35       28.03       8.84       7.95   Year Ended December 31, 2014:                                 First Quarter     31.97       27.01       9.21       7.71   Second Quarter     31.80       28.90       9.20       8.41   Third Quarter     28.96       25.80       8.25       7.35   Fourth Quarter     29.00       24.68       7.56       6.44   Year Ended December 31, 2015:                                 First Quarter (through March 18)     29.43       27.36       7.56       6.86   Month Ended:                                 September 30, 2014     28.96       25.80       7.98       7.11   October 31, 2014     26.35       24.68       7.05       6.61   November 30, 2014     27.38       25.24       7.15       6.59   December 31, 2014     29.00       25.41       7.37       6.46   January 31, 2015     29.18       28.25       7.39       7.16   February 28, 2015     29.43       27.36       7.56       7.03   March 31, 2015 (through March 18)     28.89       27.55       7.20       6.86   148 Table of Contents     NIS price per ordinary share   USD price per ordinary share       High        Low        High        Low    Year Ended December 31:                                 2011     64.78       33.91       18.52       8.98   2012     50.10       38.22       12.94       9.82   2013     51.75       24.48       13.87       6.74   2014     31.97       25.01       9.21       6.36   2015     29.80       15.55       7.68       3.98                                     Year Ended December 31, 2014:                                 First Quarter     31.97       27.01       9.21       7.71   Second Quarter     31.80       28.90       9.20       8.42   Third Quarter     29.60       26.14       8.64       7.09   Fourth Quarter     29.15       25.01       7.42       6.36   Year Ended December 31, 2015:                                 First Quarter     29.80       27.15       7.68       6.81   Second Quarter     29.48       25.41       7.48       6.69   Third Quarter     27.03       19.00       7.12       4.83   Fourth Quarter     22.75       15.55       5.84       3.98   Year Ended December 31, 2016:                                 First Quarter (through March 15)     17.55       14.51       4.50       3.68                                     Month Ended:                                 September 30, 2015     24.02       19.00       6.15       4.83   October 31, 2015     22.75       19.44       5.84       4.96   November 30, 2015     21.94       18.55       5.66       4.78   December 31, 2015     20.08       15.55       5.18       3.98   January 31, 2016     16.93       14.51       4.31       3.68   February 29, 2016     16.81       14.75       4.32       3.78   March 31, 2016 (through March 15)     17.55       15.14       4.50       3.88   On March 18, 2015,15, 2016, the last reported sale price of our ordinary shares on the TASE was NIS 27.5516.90 per share, or $6.85$4.34 per share (based on the exchange rate reported by Bank of Israel on such date, which was NIS 4.023.89 = $1.00). B. PLAN OF DISTRIBUTION Not applicable. C. MARKETS Our ordinary shares are listed on the NYSE and on the TASE under the symbol “ICL.” D. SELLING SHAREHOLDERS Not applicable. E. DILUTION Not applicable. 163 Table of Contents F. EXPENSES OF THE ISSUE Not applicable. ITEM 10 – ADDITIONAL INFORMATION Item 10. Additional Information A. SHARE CAPITAL Regarding As of December 31, 2015, our authorized share capital consisted of 1,484,999,999 ordinary shares, par value NIS 1 per share, of which 1,299,704,303 ordinary shares were issued and outstanding (including shares held by us or our subsidiaries), and 1 Special State Share, par value NIS 1 per share, which was issued and are outstanding. All of our outstanding shares have been validly issued, are fully paid and are non-assessable. As of December 31, 2015, 24,590,041ordinary shares were held by us or our subsidiaries. Shares acquired by our subsidiaries prior to February 2000 have both economic rights and voting rights. However, in accordance with Israeli law, ordinary shares issued to our subsidiaries or purchased by our subsidiaries after February 2000 have economic rights but not voting rights. Shares held by us have no economic rights or voting rights. Therefore, out of the ordinary shares held by us or our subsidiaries, 24,590,041 have no voting rights. As of December 31, 2015, an additional 23,456,518 ordinary shares were issuable upon the exercise of outstanding options granted to our officers and employees at a weighted average exercise price of NIS 33.77 per share. For additional information about the issuance of options and restricted shares to officers and senior employees and their exercise in 2013-2014, and regarding2014-2015, as well as the allocation of restricted shares to Company directors and the approval of the issuance of restricted shares to directors datedon February 26, 2015 and December 23, 2015, see Note 24 to our audited financial statements and “Item 6. Directors, Senior Management and Employees—E. Share Ownership—Incentive Compensation Plans.” In 2013, 6,633,574 options under our equity compensation plans were exercised, resulting in the financial statements. Tosale to certain of our officers and senior employees at a weighted average exercise price of NIS 47.01 of 312,558 ordinary shares. In 2014 and 2015, no options under our equity compensation plans were exercised. In 2015, there was a transfer of 2,225,337 ordinary Company shares that were allocated to Liberty Metals & Mining Holdings ("Liberty") as part of the completion of the acquisition of 100% of Allana Potash Corporation, a Canadian mining company engaged in the development of potash assets in Ethiopia, whose shares are traded on the Toronto Stock Exchange (TSX: AAA). The Company paid approximately $112 million for 83.78% of Allana’s outstanding shares that it did not already own. The payment was made in cash ($96 million, which were paid in Canadian Dollars) and in 2,225,337 ordinary Company shares (with a value of approximately $16 million) that were allocated to Liberty, who owned 11.77% of the common shares of Allana. The Company shares allocated to Liberty represent about 0.17% of the Company’s best knowledgeoutstanding shares and as per reports received from its shareholders,voting rights. In September 2014, we completed the initial public offering of our ordinary shares in the years 2013United States, pursuant to which Israel Corporation sold 36,207,128 ordinary shares and 2014, there were no significant transactions incertain forward counterparties sold 23,951,015 ordinary shares to hedge their positions under forward sale agreements covering up to 36,207,128 ordinary shares owned by Israel Corporation. Subsequent to the Company shares, except for a transfer, for no consideration, of 2,216,131 dormant sharesclosing of the Company held by a subsidiary fully controlled byinitial public offering, the Company, and excluding the sale of Companyunderwriters exercised their option to purchase an additional 6,015,814 ordinary shares in a sale offer and a financial transaction byfrom Israel Corporation (the controlling shareholder), as follows: On September 24, 2014, Israel Corporation issued an immediate report regarding its engagement in transactionsCorporation. We did not issue any ordinary shares in connection with the Company shares by way of an offer for sale and a financial transaction for a total of 78.4 million shares, the completion of the pricing in connection withinitial public offering or receive any proceeds from the sale of Companyour ordinary shares according to a prospectus filed by the Company in the U.S. and its engagement in an  underwriting agreement. On the same day, the Company signed an underwriting agreement with Israel Corporation and withor the underwriters who accompanied the transactions that are subject of Israel’s Corporation Report, which includes, inter alia, representations and indemnification arrangements between the underwriters,forward counterparties. Israel Corporation and the Company, as well as a lock-up undertaking of the Company’s officersceased to have voting rights with regards to its shares for a period of 180 days, subjectrespect to the terms and exceptions agreed upon. On the same day trading in the Company shares began in the New York Stock Exchange (NYSE). On October 12, 2014, Israel Corporation issued an immediate report on the aforementioned underwriters’ announcement that they exercised the option granted to them under the underwriting agreement to acquire 6,015,814 ordinary Company shares at the offering price. After the exercise of the option, Israel Corporation’s holding of the Company stands at 46.17% as of today. It should be noted that Israel Corporation’s voting rights is determined considering the shares involved in the financial transaction. The shares subject to the financial transaction (36,207,128) are borrowed sharesforward sale agreements and made available to the forward counterparties under those agreements. However, Israel Corporation has equitywill regain voting rights inwith respect to all or a portion of these shares. 149 Table of Contents the ordinary shares it makes available to the forward counterparties under the forward sale agreements to the extent it elects a cash settlement or a net physical settlement. Settlement under the forward sale agreements is scheduled to occur on various dates between 2016 and 2019. B. MEMORANDUM, ARTICLES OF ASSOCIATION AND SPECIAL STATE SHARE Our shareholders adopted the Articles of Association filed as Exhibit 3.2 to our registration statement on Form F-1 (File no. 333-198711) with the SEC on September 12, 2014. We incorporate by reference into this Annual Report the description of our Amended and Restated Articles of Association, which became effective upon the closing of our IPO on the NYSE, contained in our F-1 registration statement (File No. 333-198711) originally filed with the SEC on September 12,2014,12, 2014, as amended. Such description sets forth a summary of certain provisions of our articles of association as currently in effect. 164 Table of Contents The State of Israel holds a nontransferable Special State Share in ICL in order to preserve the State’s vital interests. Any change in provisions of our Articles of Association relating to the rights attached to the Special State Share requires approval from the State of Israel. The Special State Share grants its holder the rights described below. Without the approval of the holder of the Special State Share, the sale or transfer of material assets of the Company or granting any other rights in the abovementioned assets, not in the ordinary course of our business, whether in one transaction or in a series of transactions, is invalid. The holder of the Special State Share has the right to oppose the transfer of a material asset as stated above only if, in its opinion, such transfer is likely to harm one of the “State’s vital interests” enumerated below. Restrictions are similarly imposed on voluntary liquidation, mergers and reorganizations, excluding certain exceptional cases enumerated in our Articles of Association. In addition, without the approval of the holder of the Special State Share, any acquisition or holding of 14% or more of our outstanding share capital is not valid. In addition, any acquisition or holding of 25% or more of our outstanding share capital (including an increase of holdings to 25%) is not valid without the approval of the holder of the Special State Share, even if in the past the approval of the holder of the Special State Share had been received for ownership of less than 25%. Our Articles of Association set forth procedures required to be followed by a person who intends to acquire shares in an amount that would require the approval of the holder of the Special State Shares. A pledge over shares is treated like an acquisition of shares. As a condition to voting at any shareholders’ meeting, each interested party in the Company, including a holder of 5% or more of our outstanding shares, will be required to certify in writing that the voting power derived from the holding of shares does not require the approval of the holder of the Special State Share or that such approval has been obtained. In addition to the above, the approval of the holder of the Special State Share is required for the ownership of any shares that grant their holder the right, ability or practical potential to appoint directly or indirectly 50% or more of our directors, and such appointments will not be valid as long as that approval has not been obtained. The holder of the Special State Share has the right to receive information from us, as provided in our Articles of Association. Our Articles of Association also provide that the holder of the Special State Share will use this information only to exercise its rights under the Articles of Association for purposes of protecting the State’s vital interests. Our Articles of Association also impose a periodic reporting obligation on us for the benefit of the holder of the Special State Share, regarding all asset-related transactions approved by our Board of Directors during the three months prior to the date of the report, any changes in share capital ownership and any voting agreements among the Company’s shareholders signed during that period. The following are the “State’s vital interests” as defined in our Articles of Association for purposes of the Special State Share: To preserve the character of the Company and its subsidiaries ICL Dead Sea, Works,ICL Rotem, Dead Sea Bromine Company, Bromine Compounds and Tami as Israeli companies whose centers of business and management are in Israel. In our estimation, this condition is being fulfilled. To monitor the control over minerals and natural resources, for purposes of their efficient development and utilization, including maximum utilization in Israel of the results of investments, research and development. To prevent acquisition of a position of influence in the Company or the foregoing Israeli subsidiaries by hostile entities or entities likely to harm foreign relations or security of the State of Israel. To prevent acquisition of a position of influence in the Company or the foregoing Israeli subsidiaries or management of such companies, whereby such acquisition or management will create a situation of significant conflicts of interest likely to negatively impact one of the vital interests enumerated above. Furthermore, our headquarters and the ongoing management and control over our business activities must be in Israel. The majority of the members of our Board of Directors must be Israeli citizens and residents. In general, meetings of our Board of Directors must take place in Israel. 165 Table of Contents Other than the rights enumerated above, the Special State Share does not grant the holder any voting or equity rights. The State of Israel also holds a Special State Share in the following ICL subsidiaries: ICL Dead Sea, Works, Dead Sea Bromine Company, ICL Rotem, Bromine Compounds, Tami and Dead Sea Magnesium. The rights granted by these shares according to the Articles of Association of these subsidiaries are substantially similar to the rights enumerated above. The full provisions governing the rights of the Special State Share appear in our Articles of Association and in the Articles of Association of ICL Dead Sea, Works,ICL Rotem, Dead Sea Bromine Company, Bromine Compounds, Tami and Dead Sea Magnesium and are available for the public’s review. We report to the State of Israel on an ongoing basis in accordance with the provisions of our Articles of Association. Certain asset transfer or sale transactions that in our opinion require approval, have received the approval of the holder of the Special State Share. C. MATERIAL CONTRACTS Except as otherwise disclosed in this Annual Report, we are not currently, and have not been in the last two years, party to any material contract, other than contracts entered into in the ordinary course of business. D. EXCHANGE CONTROLS There are currently no Israeli currency control restrictions on payments of dividends or other distributions with respect to our ordinary shares or the proceeds from the sale of the shares, except for the obligation of Israeli residents to file reports with the Bank of Israel regarding certain transactions. However, legislation remains in effect pursuant to which currency controls can be imposed by administrative action at any time. E. TAXATION Israeli Tax Considerations ISRAELI TAX CONSIDERATIONS A. Taxation of companies in Israel 1. Measurement of results for tax purposes under the Income Tax (Inflationary Adjustments) Law, 1985 (hereafter – “the Inflationary Adjustments Law”) The Income Tax Law (Adjustments for Inflation) – 1985 (hereinafter – the Law), which is effective as from the 1985 tax year, introduced the concept of measurement of results for tax purposes on a real (net of inflation) basis. On February 26, 2008, the Knesset enacted the Income Tax Law (Adjustments for Inflation) (Amendment No. 20) (Restriction of Commencement Period), 2008, whereby the effective period of the Inflationary Adjustments Law ceased at the end of the 2007 tax year and the depreciation of property, plant and equipment, are adjusted up to the end of the 2007 tax year, and from this time forward their linkage will be discontinued. The Income Tax Regulations (Adjustments for Inflation) (Rates of Depreciation), 1986, which allow depreciation at rates different than those in Section 21 of the Income Tax Ordinance, apply even after the Inflationary Adjustments Law is no longer in effect, and therefore the Company continues to claim accelerated depreciation, in certain-situations, on the basis of these Regulations. 2. Income tax rates Presented hereunder are the tax rates relevant to the Company in the years 2013-2015: 2013 – 25% 2014 – 26.5% 2015 – 26.5% 166 Table of Contents General Corporate On January 4, 2016, the plenary Knesset passed the Law for Amendment of the Income Tax Structure Israeli companiesOrdinance No. 216 which provides, inter alia, for a reduction of the Companies Tax rate commencing from 2016 and thereafter by the rate of 1.5% such that the rate will be 25%. If the legislation had been effectively completed by December 31, 2015, the impact of the change on the financial statements as at December 31, 2015 would have been reflected in a decline in the balance of the liabilities for deferred taxes, in the amount of $ 11.6 million, and a decline in the balance of the deferred taxes assets, in the amount of $ 3.6 million. Update of the balances of the deferred taxes would have been recognized against deferred tax income, in the amount of $ 7.4 million and against other comprehensive income, in the amount of $ 0.6 million. The current taxes for the periods reported are generallycalculated in accordance with the tax rates shown in the table above. 3. Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (hereinafter – “The Encouragement Law”) a) Beneficiary Enterprises The production facilities of some of the Company’s subsidiaries in Israel (hereinafter – “the Subsidiaries”) received “Beneficiary Enterprise” status under the Law of Encouragement for Capital Investments, as worded after Amendment No. 60 to the Law published in April 2005. The benefits granted to the Company are mainly: 1) Reduced tax rates Regarding the “tax exemption” track, the Company chose 2005 as the election year, whereas regarding the “Ireland” track, which is subject to corporate tax on their taxable income at the rate of 25% for11.5%, the 2013 taxCompany chose 2008 as the election year. The benefits deriving from a “Beneficiary Enterprise” under the “tax exemption” track ended in 2014 while the benefits deriving from the “Ireland” track will end in 2017. A company having a “Beneficiary Enterprise” that distributes a dividend out of exempt income, will be subject to Companies Tax in the year and 26.5% forin which the 2014 tax year. Pursuant to an amendmentdividend was distributed on the amount distributed (including the amount of the Companies Tax applicable due to the Israeli Income Tax Ordinance (New Version), 1961 (the “Tax Ordinance”), which came into effect on January 1, 2014,distribution) at the corporate tax rate applicable under the Encouragement Law in the year in which the income was produced, had it not been exempt from tax. The temporary difference related to distribution of a dividend from exempt income as of December 31, 2015, in respect of which deferred taxes were not recognized, is scheduledin the amount of about $750 million (see also Section 3(a)c below). The part of the taxable income entitled to remainbenefits at 26.5% for futurereduced tax years. Israeli companies arerates is calculated on the basis of the ratio of the turnover of the “Benefited Enterprise” to the Company’s total turnover. The turnover attributed to the “Benefited Enterprise” is generally subjectcalculated according to capital gains tax at the corporate tax rate. For information aboutincrease in the new “natural resources tax” proposedturnover compared to a “base” turnover, which is the average turnover in the three years prior to the year of election of the “Benefited Enterprise”. 2) Accelerated depreciation In respect of buildings, machinery and equipment used by the Sheshinski Committee, see “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings.” Tax Benefits underApproved Enterprise, the Company is entitled to claim accelerated depreciation as provided by law, commencing from the year each asset is placed in service. b) Preferred Enterprises On December 29, 2010, the Israeli Knesset approved the Economic Policy Law for 2011 2012, whereby the Law for the Encouragement of Capital Investments, 1959, -was amended (hereinafter – “the Amendment”). The Amendment of the Investments Law 2005 On Aprilis effective from January 1, 2005, an amendment2011 and its provisions will apply to the Law for Encouragement of Capital Investments, 1959 (“the Investments Encouragement Law”) came into effect, which is referred topreferred income derived or accrued by a Preferred Company, as Amendment No. 60. Amendment No. 60 revised the criteria for investments qualified to receive tax benefits. An eligible investment program under the amendment will qualify for benefits as a Benefited Enterprise (rather than the previous terminology of Approved Enterprise). Among other things, the Amendment 60 provides tax benefits to both local and foreign investors and simplifies the approval process. The period of the tax benefits for a new Benefited Enterprise commences in the later of – the election year, wherein the company’s notice regarding its eligibility for benefits was filed with the Assessing Officer, or the first year in which the Benefited Enterprise company has taxable income. Amendment No. 60 applies to Benefited Enterprise programs in which the year of commencement of benefits under the Investments Law is 2004 or later, unless such programs received “Approved Enterprise” approval from the Investment Center on or prior to March 31, 2005, in which case the provisions of the amendment do not apply. Generally, under the amendment a company that is Abundant in Foreign Investment (as defined in the Investments Law) is entitled to an extension of the benefits period by an additional five years, depending on the rate of its income that is derivedAmendment, in foreign currency.2011 and thereafter. 167 150 Table of Contents The Amendment No. 60 changed the definition of “foreign investment” in the Investments Law to require a minimal investment of NIS five million by foreign investors. Furthermore, such definition was also amended to include the purchase of outstanding shares of the company from an existing shareholder, provided that the company’s outstanding and paid up share capital exceeds NIS five million. Such changes to the aforementioned definition are retroactive from 2003. Amendment No. 60 also added a specific taxation package, referred to as the “Ireland Track”. Upon election, the Ireland Track provides for a 10 year term with a corporate tax rate of 11.5% and either a tax rate of 4% on the distribution of dividends to foreign investors (15% to Israeli resident investors), with no further corporate tax implications on the distributing company, or an exemption from tax provided that the company distributes no dividends from this source. As of December 31, 2014, we have trapped earnings of $754 million (2014 was the final year for benefits in the tax-exempt package), The production facilities of several group companies in Israel claimed Benefited Enterprise status under the Investments Law, and specifically under the Ireland Track. We believe our Benefited Enterprises operate in substantial compliance with all applicable conditions and criteria. We cannot assure you that our programs will continue to receive benefits at the current levels, if at all. For further information, see Note 20 to our audited financial statements included elsewhere in this Annual Report. Reform of the Investments Law—2011 On December 29, 2010, the Israeli Parliament approved an amendment to the Investments Law, effective as of January 1, 2011, which constitutes a reform of the incentives regime under such law, or the Investments Law Reform. Its provisionsdoes not apply with respect to “preferred income” (as defined in the Investments Law Reform) produced from or generated by a new type of program called a Preferred Enterprise or Special Preferred Enterprise. The Investments Law Reform replaces the previous regime of Approved Enterprises and Benefitted Enterprises, although pre-existing programs are permitted to continue until the expiration thereof. The Investments Law Reform modifies the objectives of the Investments Law to focus on achieving enhanced growth in the business sector, improving the Israeli industry’s competitiveness in international markets and creating employment and development opportunities in remote areas of Israel. It allows enterprises meeting certain criteria to enjoy grants as well as tax benefits. It also introduces changes to the map of geographic development areas for purposes of entitlement to preferential terms under the Investments Law. The main points of the Investments Law Reform are a standard reduced tax rate on all revenues that are entitled to benefits, which include the following: · A reduced corporate tax rate for industrial enterprises, provided that at least 25% of their annual income is derived from export, which will apply to the enterprise’s entire preferred income, such that in the tax years 2011-2012 the reduced tax rate was 10% for preferred income derived from industrial facilities located in development area A and 15% for those located elsewhere in Israel, in the tax year 2013 the reduced tax rate was 7% for development area A and 12.5% for the rest of Israel, and in the tax year 2014 and onwards the reduced tax rate will be 9% for development area A and 16% for the rest of Israel. · The reduced tax rates will no longer be contingent upon making a minimum qualifying investment in productive assets, as was required prior to the Investments Law Reform. · A definition of “preferred income” was introduced into the Investments Law to include certain types of income that are generated by the Israeli production activity of a Preferred Enterprise. · A reduced dividend withholding tax rate of 15% for the tax year 2013 and 20% for the tax year 2014 and onwards will apply to dividends paid from preferred income to both Israeli and non-Israeli investors, with an exemption from such withholding tax applying to dividends paid to an Israeli company. · A special tax benefits route will be granted to certain industrial enterprises entitling them to a reduced tax rate of 5% for preferred income derived from industrial facilities located in development area A and 8% for those located elsewhere in Israel, provided that certain criteria are met and such enterprise can demonstrate its significant contribution to Israel’s economy and promotion of national market objectives. 151 Table of Contents The Investments Law Reform provides various transition provisions which allow, under certain circumstances, the application of the new regime to investment programs previously approved or elected under the Investments Law. Under the Investments Law Reform, incentives are not available to an industrial enterpriseIndustrial Enterprise that is a mine, another plantother facility for the extractionproduction of minerals or an oila facility for exploration enterprise. Consequently, ourof fuel. Therefore, ICL plants that are defined as mining orplants and mineral extraction operationsproducers will not be unableable to benefit fromtake advantage of the incentives undertax rates proposed as part of the Investments Law Reform. The Investments Law Reform did not affect the incentives under pre-existing Approved Enterprises and Benefitted Enterprises, which are permitted to continue until the expiration thereof under law. Tax Benefits UnderAmendment. In addition, on August 5, 2013, the Law for Change in the EncouragementOrder of Industry (Taxes) AccordingNational Priorities, 2013, was passed by the Knesset, which provides that the tax rate applicable to a Preferred Company in Development Area A will be 9% whereas the tax applicable to companies in the rest of Israel will be 16%. On November 30, 2015, the Economic Efficiency Law was passed by the Knesset, which expanded the exception to all of an Enterprise’s activities up to the time of the first marketable product (for additional details – see Section 5 below). The Company has Preferred Enterprises at the tax rate of 9%. Nonetheless, tax benefits to which a Benefited Plant is entitled will not be cancelled in respect of investments up to December 31, 2012. Therefore, those plants will be able to utilize the tax benefits in respect of qualifying investments made up to December 31, 2012, in accordance with the provisions of the old law. It is further provided in the Amendment that tax will not apply to a dividend distributed out of preferred income to a shareholder that is an Israeli-resident company. A dividend distributed out of preferred income to a shareholder that is an individual or a foreign resident covered by a treaty for prevention of double taxation, will be subject to tax at the rate of 20%. c) Trapped Earnings Law – Temporary Order On November 5, 2012, the Israeli Knesset passed Amendment No. 69 and Temporary Order to the Law for the Encouragement of Industry (Taxes)Capital Investments, 1959 (hereinafter – “the Temporary Order”), 1969, orwhich offers a reduced tax rate arrangement to companies that received an exemption from Companies Tax under the Industry Encouragement Law, an “industrial company” isaforesaid law. The Temporary Order provides that companies that choose to apply the Temporary Order (effective for one year), will be entitled to a company resident in Israel, at least 90%reduced tax rate on the “release” of exempt profits. In November 2013, the Company’s Board of Directors decided to apply the Temporary Order and to release part of the incomeexempt earnings. As a result, the amount of which,about NIS 3.8 billion (about $1.1 billion) of the exempt earnings was released. Accordingly, in a given2013 the Company recognized current tax year, determinedexpenses in respect of payment of the preferred Companies Tax, in the amount of about NIS 377 million (about $108 million). 4. The Law for the Encouragement of Industry (Taxation), 1969 a) Some of the Company’s Israeli currency (exclusive of income from certain government loans, capital gains, interest and dividends)subsidiaries are “Industrial Companies”, is derived from an enterprise whose major activityas defined in a given tax year is industrial production activity. Under the Industry Encouragement Law, industrialabove-mentioned law. As such, these companies are entitled to claim depreciation at increased rates for equipment used in industrial activities, as stipulated in the regulations published under the Inflationary Adjustments Law. b) The industrial enterprises owned by some of the Company’s Israeli subsidiaries have a common line of production and, therefore, they file, together with the Company, a consolidated tax return in accordance with Section 23 of the Law for the Encouragement of Industry. Accordingly, each of the said companies is entitled to offset its tax losses against the taxable income of the other companies. 5. The Law for Taxation of Profits from Natural Resources On November 30, 2015, the Knesset passed the Law for Taxation of Profits from Natural Resources (hereinafter – “the Law”), which entered into effect on January 1, 2016, except with respect to ICL Dead Sea where the effective date is January 1, 2017. The highlights of the Law are set forth below: The total tax on natural resources in Israel will include three tax elements: royalties, Natural Resources Tax and Companies Tax. Royalties The rate of the royalties in connection with resources produced from the quarries, in accordance with the Mines Ordinance will be 5% (with respect to production of the phosphates, the royalty rate will be 5% of the value of the quantity produced – in place of 2%). Pursuant to the salt harvesting agreement signed with the Government on July 8, 2012, the parties agreed, among other things, to an increase in the rate of the royalties from 5% to 10% of the sales, for every quantity of potash chloride sold by the Company in a given year, in excess of a quantity of 1.5 million tons. As part of the agreement, it was provided that if a law is enacted that changes the specific fiscal policy with reference to profits or royalties deriving from quarrying from the Dead Sea, the Company’s consent to the 168 Table of Contents increase of the rate of the royalties, as stated, will not apply. The Law entered into effect on January 1, 2016. For additional details – see Note 23 to our audited financial statements. Imposition of Natural Resources Tax The tax base, which will be calculated for every resource separately, is the Company’s operating income in accordance with the accounting statement of income, to which certain adjustments will be made, less financing expenses at the rate of 5% of the Company’s average working capital, and less an amount that reflects the yield on the balance of the amortized cost of the property, plant and equipment used for production and sale of the quarried material (hereinafter –”the Yield on the Amortized Cost”). On the tax base, as stated, a progressive tax will be imposed at a rate to be determined based on the Yield on the Amortized Cost in that year. For the Yield on the Amortized Cost between 14% and 20%, Natural Resources Tax will be imposed at the rate of 25%, while the yield in excess of 20% will be subject to Natural Resources Tax at the rate of 42%. In years in which the Natural Resources Tax base is negative, the negative amount will be carried forward from year to year and will constitute a tax shield in the succeeding tax year. Limitations on the Natural Resources Tax – the Natural Resources Tax will only apply to profits deriving from the actual production and sale of each of the following preferred corporateresources: potash, bromine, magnesium and phosphates, and not to the profits deriving from the downstream industrial activities. Calculation of the Natural Resources Tax will be made separately for every resource. Nonetheless, regarding Magnesium, it was provided that commencing from 2017, upon sale of carnalite by Dead Sea Works (hereinafter – “ICL Dead Sea”) to Magnesium and reacquisition of a Sylvanite by-product by ICL Dead Sea, Magnesium will charge ICL Dead Sea $100 per ton of potash which is produced from the Sylvanite (linked to the CPI). A mechanism was provided for determination of the market price with respect to transactions in natural resources executed between related parties in Israel, as well as a mechanism for calculation of the manner for allocation of the expenses between the production and sale of the natural resource, on the one hand, and the downstream activities, on the other hand. Regarding the bromine resource, the Natural Resources Tax will apply in the same manner in which it is applies to the other natural resources, except with respect to the manner of determining the transfer price in sales made to related parties in and outside of Israel. For purposes of calculating the total revenues from bromine sold to related parties for purposes of downstream manufacturing activities in every tax benefits:year, a calculation method will be employed (Netback) whereby the price will be determined based on the higher of the following: 1) The price for a unit of bromine (ton) provided in the transaction; 2) The normative price of a unit of bromine. The normative price of a unit of bromine is the total sales of the downstream products produced less the operating expenses attributable to the downstream activities, without the acquisition cost of the bromine, and less an amount equal to 12% of the total revenues of the downstream products produced as part of the downstream activities, where the result is divided by the number of bromine units used to produce the downstream products sold. Regarding the phosphate resource, for purposes of calculating the total revenues from phosphate sold to related parties for purposes of downstream manufacturing activities in every tax year, a calculation method will be employed (Netback) whereby the price will be determined based on the higher of the following: 1) The price for a unit of phosphate (ton) provided in the transaction; 2) The normative price of a unit of phosphate. The “normative price” of a unit of phosphate is the total sales of the downstream products produced less the operating expenses attributable to the downstream activities, without the acquisition cost of the phosphate rock, and less an amount equal to 12% of the total revenues of the downstream products produced as part of the downstream activities, where the result is divided by the number of phosphate units used to produce the downstream products sold. 3) The production and operating costs attributable to a unit of phosphate. 169 Table of Contents · Amortization of purchases of know-how and patents over an eight year period Companies Tax The Law for Encouragement of Capital Investments was revised such that the definition of a “Plant for Production of Quarries” will include all the plant’s activities up to production of the first marketable natural resource, of potash, bromine, magnesium and phosphates. Accordingly, activities involved with production of the resource will not be entitled to tax purposes; · Deductions over a three year period of expenses involved with the issuance and listing of shares on a stock market; · The right to elect, under specified conditions, to file a consolidated tax return with additional related Israeli industrial companies; and · Accelerated depreciation rates on equipment and buildings (subject to the extension of certain regulations). Eligibility for benefits under the Industry Encouragement Law, iswhereas activities relating to downstream products, such as bromine compounds, acids and fertilizers, will not subject to receipt of prior approvalconstitute a base for calculating the Excess Profits Tax and will not be excepted from any governmental authority. We believe that we currently qualify as an industrial company withininclusion in the definition of the Industry Encouragement Law. We cannot assure you that we will continue to qualify as an industrial company or that the benefits described above The Natural Resource Tax will be available to usdeductible from the Company’s taxable income and the Company will pay the Companies Tax on the balance as is customary in the future. Israeli Transfer Pricing Regulations On November 29, 2006, Income Tax Regulations (Determination of Market Terms), 2006, promulgated under Section 85A of the Tax Ordinance, came into effect. Section 85A of the Tax Ordinance and such regulations generally require that all cross border transactions carried out between associated parties, as defined by the Tax Ordinance, will be conducted on an arm’s length basis and will be taxed accordingly. The Company and its Israeli subsidiaries conduct transactions with non-Israeli group companies and believe they are in compliance with Section 85A of the Tax Ordinance and such regulations. However, no assurance can be given that the Israeli tax authorities will not challenge the pricing for any of our related party transactions. Israel. Taxation of Investors The following are material Israeli income tax consequences to the investors described below of owning and disposing of our ordinary shares, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a particular person’s decision to own the ordinary shares. 152 Table of Contents Capital Gains Tax Israeli law generally imposes a capital gains tax on the sale of any capital assets by residents of Israel, as defined for Israeli tax purposes, and on the sale of capital assets located in Israel, including shares of Israeli companies, by non-residents of Israel, unless a specific exemption is available or unless a tax treaty between Israel and the shareholder’s country of residence provides otherwise. The law distinguishes between real gain and inflationary surplus. The inflationary surplus is a portion of the total capital gain that is equivalent to the increase of the relevant asset’s purchase price which is attributable to the increase in the Israeli consumer price index or a foreign currency exchange rate between the date of purchase and the date of sale. The real gain is the excess of the total capital gain over the inflationary surplus. Israeli Residents Generally, as of January 1, 2012, the tax rate applicable to capital gains derived from the sale of shares, whether listed on a stock market or not, is the corporate tax rate in Israel (26.5% and commencing from January 2014)1, 2016, 25%) for Israeli companies and 25% for Israeli individuals, unless such shareholder claims a deduction for finance expenses in connection with such shares, in which case the gain will generally be taxed at a rate of 30%. Additionally, if such shareholder is considered a “significant shareholder” at any time during the 12 month period preceding such sale, the tax rate will be 30%. A “significant shareholder” is defined as one who holds, directly or indirectly, including together with others, at least 10% of any means of control in the company. However, different tax rates will apply to dealers in securities. Israeli companies are subject to the corporate tax rate on capital gains derived from the sale of listed shares. As of January 1, 2013, shareholders who are individuals with taxable income that exceeds NIS 800,000 in a tax year (linked to the Israeli consumer price index each year—NIS 811,560810,720 for 2014)2015) will be subject to an additional tax at the rate of 2% on the portion of their taxable income for such tax year that is in excess such threshold. For this purpose, taxable income includes taxable capital gains from the sale of our shares and taxable income from dividend distributions. Non Israeli Non-Israeli Residents Non Israeli Non-Israeli residents are generally exempt from Israeli capital gains tax on any gains derived from the sale of shares of Israeli companies publicly traded on a recognized stock exchange outside Israel, so long as such shareholders did not acquire their shares prior to the company’s initial public offering and the gains did not derive from a permanent establishment of such shareholders in Israel. However, shareholders that are non-Israeli corporations will not be entitled to such exemption if Israeli residents hold an interest of more than 25% in such non Israelinon-Israeli corporation or are the beneficiaries or are entitled to 25% or more of the revenues or profits of such non Israelinon-Israeli corporation, whether directly or indirectly. In certain instances where our shareholders may be liable to Israeli tax on the sale of their ordinary shares, the payment of the consideration may be subject to the withholding of Israeli tax at the source. 170 Table of Contents In addition, pursuant to the Convention between the Government of the United States of America and the Israeli government with respect to Taxes on Income, as amended, or the U.S. IsraelU.S.-Israel Tax Treaty, the sale, exchange or disposition of ordinary shares by a person who qualifies as a resident of the United States within the meaning of the U.S. IsraelU.S.-Israel Tax Treaty and who is entitled to claim the benefits afforded to such person by the U.S. IsraelU.S.-Israel Tax Treaty generally will not be subject to the Israeli capital gains tax unless such person holds, directly or indirectly, shares representing 10% or more of our voting power during any part of the 12 month12-month period preceding such sale, exchange or disposition, subject to particular conditions, or the capital gains from such sale, exchange or disposition can be allocated to a permanent establishment in Israel or is considered to be derived from or sale of Israeli real property interests for purposes of the U.S. IsraelU.S.-Israel Tax Treaty. If a U.S. investor is not exempt from Israeli taxes under the U.S. IsraelU.S.-Israel Tax Treaty, such U.S. investor may be subject to Israeli tax, to the extent applicable as described above; however, under the U.S. IsraelU.S.-Israel Tax Treaty, such person may be permitted to claim a credit for such taxes against the U.S. federal income tax imposed with respect to such sale, exchange or disposition, subject to the limitations in U.S. laws applicable to foreign tax credits. The U.S. IsraelU.S.-Israel Tax Treaty does not relate to U.S. state or local taxes. 153 Table of Contents Taxation of Dividend Distributions Israeli Residents Israeli resident individuals are generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares, other than bonus shares (share dividends). As of January 1, 2012, theThe tax rate applicable to such dividends is 25% or 30% for a shareholder that is considered a significant shareholder at any time during the 12 month12-month period preceding such distribution. Dividends paid from income derived from Approved Enterprises or Benefited or Preferred Enterprises (accrued up to December 31, 2013) are subject to withholding at the rate of 15%. Dividends paid from income derived from Approved or Preferred Enterprises accrued from January 1, 2014 will beare subject to withholding at the rate of 20%. Israeli resident companies are generally exempt from tax on the receipt of dividends paid on our ordinary shares (excluding dividends paid from income derived from Approved or Benefited Enterprises). We cannot assure you that we will designate the profits that are being distributed in a way that will reduce shareholders’ tax liability. Non Israeli Non-Israeli Residents Non-residents of Israel are subject to income tax on income accrued or derived from sources in Israel, including dividends paid by Israeli companies. On distributions of dividends other than stock dividends, income tax (generally collected by means of withholding) will generally apply at the rate of 25%, or 30% for a shareholder that is considered a significant shareholder (as defined above) at any time during the 12 month12-month period preceding such distribution, unless a different rate is provided in a treaty between Israel and the shareholder’s country of residence. Dividends paid from income derived from Approved or Benefited or Preferred Enterprises (accrued up to December 31, 2013) are subject to withholding at the rate of 15%, or 4% for Benefited Enterprises in the Ireland Track. Dividends paid from income derived from Approved or Preferred Enterprises accrued from January 1, 2014 will be subject to withholding at the rate of 20%. If the dividend is attributable partly to income derived from an Approved, Benefited or Preferred Enterprise, and partly to other sources of income, the withholding rate will be a weighted average rate reflecting the relative portions of the various types of income. Under the U.S. Israel Tax Treaty, the maximum tax on dividends paid to a holder of ordinary shares who qualifies as a resident of the United States within the meaning of the U.S. IsraelU.S.-Israel Tax Treaty is 25%. The treaty provides for reduced tax rates on dividends if (a) the shareholder is a U.S. corporation holding at least 10% of our issued voting power during the part of the tax year that precedes the date of payment of the dividend and held such minimal percentage during the whole of its prior tax year, and (b) not more than 25% of the Israeli company’s gross income consists of interest or dividends, other than dividends or interest received from subsidiary corporations or corporations 50% or more of the outstanding voting shares of which is owned by the Israeli company. The reduced treaty rate, if applicable, is 15% in the case of dividends paid from income derived from Approved, Benefited or Preferred Enterprise or 12.5% otherwise. Material U.S. Federal Income Tax Considerations for U.S. Holders The following are material U.S. federal income tax consequences to the U.S. Holders described below of owning and disposing of our ordinary shares, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a particular person’s decision to hold the ordinary shares. This discussion applies only to a U.S. Holder that holds the ordinary shares as capital assets for U.S. federal income tax purposes. In addition, it does not describe all of the tax consequences that may be relevant in light of a U.S. Holder’s particular circumstances, including alternative minimum tax consequences, any aspect of the provisions of the Internal Revenue Code of 1986, as amended (the “Code”) commonly known as the Medicare tax and tax consequences applicable to U.S. Holders subject to special rules, such as: 171 Table of Contents · certain financial institutions; · dealers or traders in securities that use a mark-to-market method of tax accounting; 154 Table of Contents · persons holding ordinary shares as part of a “straddle” or integrated transaction or persons entering into a constructive sale with respect to the ordinary shares; · persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; · entities classified as partnerships for U.S. federal income tax purposes; · tax exempt entities, “individual retirement accounts” or “Roth IRAs”;: · Persons who acquired our ordinary shares pursuant to the exercise of an employee stock option or otherwise as compensation; · persons that own or are deemed to own 10% or more of our voting stock; or · persons holding our ordinary shares in connection with a trade or business conducted outside of the United States. If an entity that is classified as a partnership for U.S. federal income tax purposes owns ordinary shares, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partnership. Partnerships owning ordinary shares and partners in such partnerships should consult their tax advisers as to the particular U.S. federal tax consequences of owning and disposing of the ordinary shares. This discussion is based on the Code, administrative pronouncements, judicial decisions, and final and proposed Treasury regulations, changes to any of which subsequent to the date of this offeringAnnual Report may affect the tax consequences described herein. For purposes of this discussion, a “U.S. Holder” is a person who, for U.S. federal income tax purposes, is a beneficial owner of ordinary shares and is: · a citizen or individual resident of the United States; · a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any state therein or the District of Columbia; or · an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source. U.S. Holders should consult their tax advisers concerning the U.S. federal, state local tax and foreign taxnon-U.S. consequences of owning and disposing of our ordinary shares in their particular circumstances. This discussion assumes that we are not, and will not become, a passive foreign investment company, as described below. Taxation of Distributions Distributions paid on our ordinary shares, other than certain pro rata distributions of ordinary shares, will be treated as dividends to the extent paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we do not calculate our earnings and profits under U.S. federal income tax principles, it is expected that distributions generally will be reported to U.S. Holders as dividends. Subject to applicable limitations, dividends paid to certain non-corporate U.S. Holders may be taxable at the favorable tax rates applicable to “qualified dividend income”. Non-corporate U.S. Holders should consult their tax advisers regarding the availability of these favorable rates on dividends in their particular circumstances. Dividends will not be eligible for the dividends received deduction generally available to U.S. corporations under the Code. Dividends will generally be included in a U.S. Holder’s income on the date of receipt. Dividend income will include any amounts withheld by us in respect of Israeli taxes, and will be treated as foreign source income for foreign tax credit purposes. If any dividend is paid in NIS, the amount of dividend income will be the dividend’s U.S. dollar amount calculated by reference to the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into U.S. dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend is converted into U.S. dollars after the date of receipt. Such gain or loss would generally be treated as U.S.-source ordinary income or loss. Subject to applicable limitations, some of which vary depending upon the U.S. Holder’s circumstances, Israeli taxes withheld from dividends on our ordinary shares will be creditable against the U.S. Holder’s U.S. federal income tax liability. The rules governing foreign tax credits are complex, and U.S. Holders should consult their tax advisers regarding the creditability of foreign taxes in their particular circumstances. In lieu of claiming a foreign tax credit, U.S. Holders may, at their election, deduct foreign taxes, including Israeli taxes, in computing their taxable income, subject to applicable limitations. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the taxable year. 172 155 Table of Contents Sale or Other Taxable Disposition of Ordinary Shares For U.S. federal income tax purposes, gain or loss realized on the sale or other taxable disposition of our ordinary shares will be capital gain or loss, and will be long term capital gain or loss if the U.S. Holder held the ordinary shares for more than one year. The amount of the gain or loss will equal the difference between the U.S. Holder’s tax basis in the ordinary shares disposed of and the amount realized on the disposition, in each case as determined in U.S. dollars. This gain or loss will generally be U.S. source gain or loss for foreign tax credit purposes. The deductibility of capital losses is subject to limitations. Passive Foreign Investment Company Rules In general, a non U.S.non-U.S. corporation will be a “passive foreign investment company” (a “PFIC”) for any taxable year if (i) 75% or more of its gross income consists of passive income or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income. For purposes of the above calculations, a non U.S.non-U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive income generally includes dividends, interest, rents, royalties and gains from transactions in commodities (other than certain active business gains from the sales of commodities). Based on the manner in which we operate our business, we believe that we were not a PFIC for 2014.2015. However, because PFIC status depends on the composition and character of a company’s income and assets and the value of its assets from time to time, there can be no assurance that we will not be a PFIC for any taxable year. If we were a PFIC for any taxable year during which a U.S. Holder held ordinary shares, gain recognized by a U.S. Holder on a sale or other disposition (including certain pledges) of the ordinary shares would be allocated ratably over the U.S. Holder’s holding period for the ordinary shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed on the resulting tax liability for each such taxable year. Further, any distribution in respect of ordinary shares in excess of 125% of the average of the annual distributions received by a U.S. Holder during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, would be subject to taxation in the same manner. Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment) of the ordinary shares in the case that we were a PFIC for any taxable year. If we were a PFIC for any taxable year during which a U.S. Holder owned ordinary shares, the U.S. Holder generally will be required to file annual reports on Internal Revenue Service Form 8621. In addition, the favorable tax rates described above with respect to dividends paid to certain non-corporate U.S. Holders would not apply if we were a PFIC for the taxable year of distribution or the preceding taxable year. 173 Table of Contents Information Reporting and Backup Withholding Payments of dividends and sales proceeds that are made within the United States or through certain U.S. related financial intermediaries generally are subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is a corporation or other exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification number and certifies that it is not subject to backup withholding. Backup withholding is not an additional tax. 156 Table of Contents The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle it to a refund, provided that the required information is timely furnished to the Internal Revenue Service. Certain U.S. Holders who are individuals (and under proposed regulations, certain entities controlled by individuals) may be required to report information relating to their ownership of securities of non U.S.non-U.S. issuers, such as our ordinary shares, unless the securities are held in accounts at financial institutions (in which case the accounts may be reportable if maintained by non U.S.non-U.S. financial institutions). U.S. Holders should consult their tax advisers regarding their reporting obligations with respect to the ordinary shares. shares F. DIVIDENDS AND PAYING AGENTS Not applicable. G. STATEMENT BY EXPERTS Not applicable. H. DOCUMENTS ON DISPLAY We are subject to the informational requirements of the US Exchange Act. Accordingly, we are required to file or furnish reports and other information with the SEC, including annual reports on Form 20-F and reports on Form 6-K. You may inspect and copy reports and other information filed with or furnished to the SEC at the Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet website that contains reports and other information about issuers, like us, that file electronically with the SEC. The address of that website is www.sec.gov. I. SUBSIDIARY INFORMATION The Company and its subsidiaries do not maintain any direct or indirect connection with Iran or with enemy nations (as defined in the Israel Trade with the Enemy Ordinance - 1939). ITEM 11 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Item 11. Quantitative and Qualitative Disclosures about Market Risk Risk Management In the ordinary course of our business activities, we are exposed to various market risks that are beyond our control, including fluctuations in the prices of certain of our products and inputs, currency exchange rates, interest rates, energy prices and marine shipping prices, that may have an adverse effect on the value of our financial assets and liabilities, future cash flows and profit. As a result of these market risks, we could suffer a loss due to adverse changes in the prices of our products or our inputs, foreign exchange rates, interest rates, energy prices or marine shipping prices. For financial assets and financial liabilities in currencies that are not the functional currency of our subsidiaries, our policy is to minimize this exposure as far as possible by the use of various hedging instruments. We do not hedge against severance pay liabilities or our tax results since the exposure is long term. We do not use hedging instruments to hedge the prices of our products. For hedging against the prices of crude oil, marine shipping prices, projected income and expenses in currencies that are not the functional currency of our subsidiaries, and interest rates, our policy is to hedge, as described below. 174 Table of Contents We regularly monitor the extent of our exposure and the hedging rates for the various risks described below. The hedging policy for all types of exposure is discussed by our Board of Directors as part of the annual budget discussions, and our Board of Directors establishes our maximum exposure according to a value at riskvalue-at-risk model. Together with a report on the quarterly financial results, our auditAudit and finance committeeFinance Committee receives quarterly reports on exposure and hedging rates and determines if our hedging policy should be revised. Management implements our hedging policy with reference to actual developments and expectations in the various markets. 157 Table of Contents We use financial instruments and derivatives for hedging purposes only. These hedging instruments reduce our exposure as described above. These transactions do not meet the hedging conditions provided in IFRS, and therefore they are measured at fair value, and changes in the fair value are charged immediately to profit and loss. The counterparties for our derivatives transactions are banks. We believe the credit risk in respect thereof is negligible. For additional information about our hedging activities, see Note 27 to our audited financial statements. Exchange Rate Risk The U.S. dollar is the principal currency of the business environment in which most of our subsidiaries operate. The majority of our activities—sales, purchase of materials, selling, marketing expenses and financing expenses, as well as the purchase of property, plant and equipment—are executed mainly in U.S. dollars, and so the U.S. dollar is used as the functional currency for measurement and reporting of the Company and the majority of our subsidiaries. We have a number of consolidated subsidiaries overseas and one local subsidiary in Israel, whose functional currencies are their local currency—mainly the euro, the British pound, the Brazilian real, the Israeli shekel and the Chinese yuan. Set forth below is a description of our principal exposures in respect of changes in currency exchange rates. Transactions by our subsidiaries in currencies that are not their functional currency expose us to changes in the exchange rates of those currencies compared with the functional currencies of those companies. Measurement of this type of our exposure is based on the ratio of net income to expenses in each currency that is not the functional currency of that company. Part of the costs of our inputs in Israel are denominated and paid in NIS. Thus, we are exposed to a strengthening of the NIS exchange rate against the U.S. dollar (NIS appreciation). This exposure is similar in substance to the exposure described above for transactions in foreign currencies but is much larger than the other currency exposures. The results for tax purposes of us and our subsidiaries operating in Israel are measured in NIS. As a result, we are exposed to the rate of the change in the U.S. dollar exchange rate and the measurement base for tax purposes (the NIS) in respect of those subsidiaries. Our subsidiaries have severance pay liabilities that are denominated in the local currency, and in Israel they are sometimes also affected by rises in the CPI. Our subsidiaries in Israel have reserves to cover part of these liabilities. The reserves are denominated in NIS and affected by the performance of the funds in which the sums are invested. As a result, we are exposed to changes in the exchange rates of the U.S. dollar against various local currencies in respect of net liabilities for severance pay. Our subsidiaries have financial assets and liabilities that are denominated in or linked to currencies other than their functional currencies. A surplus of assets over liabilities denominated in currencies that are not the functional currency creates exposure for us in respect of exchange rate fluctuations. With respect to investment in subsidiaries whose functional currency is not the U.S. dollar, the end of period balance sheetend-of-period balance-sheet balances of these companies are translated into U.S. dollars based on the exchange rate of the U.S. dollar in relation to the reporting currency of these companies at the end of the relevant period. The beginning of period balance sheetbeginning-of-period balance-sheet balances, as well as capital changes during the period, are translated into U.S. dollars at the exchange rate at the beginning of the period or on the date of the change in capital, respectively. The differences arising from the effect of the change in the exchange rate between the U.S. dollar and the currency in which the companies report create exposure. The effects of this exposure are charged directly to equity. 175 Table of Contents Our Finance Forum (whose members are the senior financial managers of our Company and each of our segments) periodically examines the extent of the hedging implemented for each of the exposures described above, and decides on the required scope of the hedging. We use various financial instruments for our hedging activity, including derivatives. Explanations of the main changes between the periods Dollar–shekel exchange rate The liability in respect of the fair value of derivative instruments for the dollar-shekel exchange rate as at December 31, 2014 amounted to about $67 million, due to the strengthening of the dollar against the shekel in 2014 at the rate of 12%. During 2015, there was no significant change and the dollar strengthened against the shekel at the rate of only about 0.33%. As at December 31, 2015, the liability in respect of the fair value of the derivative instruments was about $5 million. As a result of income was recorded in the amount of about $62 million with reference to open transactions. Energy The liability in respect of the fair value of derivative instruments for energy costs as at December 31, 2014 amounted to about $19 million, due to the decline in the price of crude oil in 2014 at the rate of 29%. As at December 31, 2015, the liability in respect of the fair value of the derivative instruments was about $7 million. As a result of income was recorded in the amount of about $12 million with reference to open transactions. During 2015, there was a decrease of about 40% in the energy prices. Part of the change in the fair-value balance stems from a decline in the total amount of the transactions executed and a fall in the average exercise price of the transactions. Dry bulk marine shipping The liability in respect of the fair value of derivative instruments for dry bulk marine shipping as at December 31, 2014 amounted to about $9 million, due to the decline in the marine shipping prices in 2014 at the rate of 26%. As at December 31, 2015, the liability in respect of the fair value of the derivative instruments was about $5 million. As a result of income was recorded in the amount of about $4 million with reference to open transactions. During 2015, there was a decrease of about 37% in the marine shipping prices. Part of the change in the fair value balance stems from a decline in the total amount of the transactions executed and a fall in the average exercise price of the transactions. The tables below set forth the sensitivity of our derivative instruments and certain balance sheet items to 5% and 10% increases and decreases in the exchange rates as ofat December 31, 2014.2015.     Increase (decrease) in fair value       Increase (decrease) in fair value USD/NIS Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Cash and cash equivalents     (0.2 )     (0.1 )     1.7       0.1       0.2   Short term deposits and loans     (0.1 )     0.0       0.7       0.0       0.1   Trade receivables     (5.2 )     (2.6 )     51.7       2.6       5.2   Receivables and debit balances     (0.7 )     (0.3 )     6.6       0.3       0.7   Long-term deposits and loans     (0.1 )     0.0       0.9       0.0       0.1   Trade payables     20.1       10.0       (200.6 )     (10.0 )     (20.1 ) Other payables     15.4       7.7       (153.8 )     (7.7 )     (15.4 ) Long-term loans     15.1       7.9       (165.8 )     (8.7 )     (18.4 ) Options     (57.8 )     (24.5 )     (0.6 )     25.4       59.5   Forward     (11.9 )     (6.2 )     (0.16 )     6.9       14.6   Swap     (16.7 )     (8.8 )     (4.0 )     9.7       20.4   Total     (42.1 )     (16.9 )     (463.4 )     18.6       46.9   176 158 Table of Contents     Increase (decrease) in fair value       Increase (decrease) in fair value CPI Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Long-term deposits and loans     0.1       0.0       0.9       0.0       (0.1 )     Increase (decrease) in fair value   Fair value   Increase (decrease) in fair value     (USD millions) EUR/USD Type of instrument   Increase of 10%   Increase of 5%       Decrease of 5%   Decrease of 10% Cash and cash equivalents     (2.3 )     (1.1 )     22.6       1.1       2.3   Short term deposits and  loans     (0.4 )     (0.2 )     4.1       0.2       0.4   Trade receivables     (21.9 )     (10.9 )     218.6       10.9       21.9   Receivables and debit balances     (0.1 )     0.0       0.7       0.0       0.1   Long-term deposits and loans     0.0       0.0       0.3       0.0       0.0   Credit from banks and others     9.1       4.5       (90.5 )     (4.5 )     (9.1 ) Trade payables     15.4       7.7       (154.5 )     (7.7 )     (15.4 ) Other payables     11.4       5.7       (114.5 )     (5.7 )     (11.4 ) Long-term loans from banks     3.5       1.8       (36.7 )     (1.8 )     (3.5 ) Options     4.2       1.8       1.1       (1.4 )     (3.4 ) Forward     (26.7 )     (12.6 )     (0.6 )     11.4       21.8   Total     (7.8 )     (3.3 )     (149.4 )     2.5       3.7        Increase (decrease) in fair value       Increase (decrease) in fair value GBP/USD Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Trade receivables     (3.7 )     (1.9 )     37.5       1.9       3.7   Receivables and debit balances     0.0       0.0       0.1       0.0       0.0   Credit from banks and others     1.6       0.8       (16.0 )     (0.8 )     (1.6 ) Trade payables     3.4       1.7       (33.9 )     (1.7 )     (3.4 ) Other payables     3.8       1.9       (37.6 )     (1.9 )     (3.8 ) Options     (0.2 )     (0.1 )     0.0       0.0       0.0   Forward     28.1       13.3       1.7       (12.0 )     (23.0 ) Total     32.5       15.5       (43.2 )     (14.3 )     (27.6 )     Increase (decrease) in fair value       Increase (decrease) in fair value GBP/EUR Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Forward     (18.0 )     (9.4 )     2.9       10.4       21.9   Options     (0.6 )     (0.3 )     0.0       0.3       0.7   Total     (18.6 )     (9.7 )     2.9       10.7       22.6   177     Increase (decrease) in fair value   Fair value   Increase (decrease) in fair value USD/NIS Type of instrument   Increase of 10%   Increase of 5%       Decrease of 5%   Decrease of 10%     (USD millions)   Cash and cash equivalents     (0.7 )     (0.4 )     7.2       0.4       0.7   Short term deposits and loans     (0.1 )     (0.1 )     1.5       0.1       0.1   Trade receivables     (5.5 )     (2.8 )     55.2       2.8       5.5   Receivables and debit balances     (1.1 )     (0.5 )     10.8       0.5       1.1   Long-term deposits and loans     (0.4 )     (0.2 )     3.7       0.2       0.4   Credit from banks and others     0.6       0.3       (6.2 )     (0.3 )     (0.6 ) Trade payables     22.0       11.0       (219.7 )     (11.0 )     (22.0 ) Other payables     13.0       6.5       (129.8 )     (6.5 )     (13.0 ) Long-term loans     14.8       7.4       (148.1 )     (7.4 )     (14.8 ) Options     (50.4 )     (26.9 )     (57.1 )     33.9       61.6   Forward     (17.1 )     (9.0 )     (0.2 )     9.9       20.9   Swap     (17.0 )     (8.9 )     (9.2 )     9.8       20.8   Total     (41.9 )     (23.6 )     (491.9 )     32.4       60.7       Increase (decrease) in fair value   Fair value   Increase (decrease) in fair value CPI Type of instrument   Increase of 10%   Increase of 5%       Decrease of 5%   Decrease of 10%     (USD millions)   Long-term deposits and loans     0.1       0.1       1.3       (0.1 )     (0.1 )     Increase (decrease) in fair value   Fair value     Increase (decrease) in fair value EUR/USD Type of instrument   Increase of 10%   Increase of 5%         Decrease of 5%   Decrease of 10%     (USD millions)   Cash and cash equivalents     (6.9 )     (3.4 )     68.9       3.4       6.9   Short term deposits and loans     (0.7 )     (0.4 )     7.3       0.4       0.7   Trade receivables     (26.4 )     (13.2 )     264.0       13.2       26.4   Receivables and debit balances     0.0       0.0       0.2       0.0       0.0   Long-term deposits and loans     0.0       0.0       0.3       0.0       0.0   Credit from banks and others     22.3       11.2       (223.0 )     (11.2 )     (22.3 ) Trade payables     17.5       8.7       (174.7 )     (8.7 )     (17.5 ) Other payables     11.1       5.6       (111.4 )     (5.6 )     (11.1 ) Long-term loans from banks     7.1       3.6       (71.0 )     (3.6 )     (7.1 ) Options     8.8       4.2       7.2       (3.7 )     (7.1 ) Forward     (26.9 )     (12.7 )     (1.8 )     11.5       22.0   Total     5.9       3.6       (234.0 )     (4.3 )     (9.1 )     Increase (decrease) in fair value   Fair value     Increase (decrease) in fair value GBP/USD Type of instrument   Increase of 10%   Increase of 5%         Decrease of 5%   Decrease of 10%     (USD millions)   Cash and cash equivalents     (0.6 )     (0.3 )     5.8       0.3       0.6   Trade receivables     (3.7 )     (1.9 )     37.1       1.9       3.7   Receivables and debit balances     0.0       0.0       0.2       0.0       0.0   Credit from banks and others     1.6       0.8       (16.4 )     (0.8 )     (1.6 ) Trade payables     2.7       1.4       (27.2 )     (1.4 )     (2.7 ) Other payables     1.7       0.8       (16.7 )     (0.8 )     (1.7 ) Options     (1.5 )     (0.6 )     (0.2 )     0.1       0.4   Forward     (4.6 )     (2.2 )     (0.1 )     2.0       3.8   Total     (4.4 )     (2.0 )     (17.4 )     1.2       2.5   159 Table of Contents     Increase (decrease) in fair value       Increase (decrease) in fair value JPY/USD Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Cash and cash equivalents     (0.4 )     (0.2 )     3.9       0.2       0.4   Trade receivables     (1.0 )     (0.5 )     9.9       0.5       1.0   Long-term deposits and loans     0.0       0.0       0.2       0.0       0.0   Trade payables     0.1       0.0       (0.6 )     0.0       (0.1 ) Other payables     0.0       0.0       (0.3 )     0.0       0.0   Options     0.2       0.1       0.0       (0.2 )     (0.4 ) Forward     0.3       0.2       —         (0.2 )     (0.4 ) Total     (0.8 )     (0.4 )     13.1       0.3       0.5       Increase (decrease) in fair value       Increase (decrease) in fair value BRL/USD Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Cash and cash equivalents     (0.2 )     (0.1 )     2.1       0.1       0.2   Trade receivables     (2.5 )     (1.3 )     25.1       1.3       2.5   Trade payables     1.3       0.7       (13.3 )     (0.7 )     (1.3 ) Other payables     0.1       0.1       (1.4 )     (0.1 )     (0.1 ) Long-term loans from banks     3.1       1.6       (31.2 )     (1.6 )     (3.1 ) Total     1.8       1.0       (18.7 )     (1.0 )     (1.8 )     Increase (decrease) in fair value       Increase (decrease) in fair value CNY/USD Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Cash and cash equivalents     (8.3 )     (4.1 )     82.7       4.1       8.3   Trade receivables     (10.2 )     (5.1 )     102.3       5.1       10.2   Trade payables     12.2       6.1       (122.1 )     (6.1 )     (12.2 ) Other payables     2.2       1.1       (21.7 )     (1.1 )     (2.2 ) Credit from banks and others     28.2       14.1       (282.0 )     (14.1 )     (28.2 ) Options     0.0       0.0       0.0       0.3       5.2   Forward     (19.0 )     (9.9 )     (0.2 )     11.0       23.2   Total     5.1       2.2       (241.0 )     (0.8 )     4.3   178 Table of Contents The tables below set forth the sensitivity of our derivative instruments and certain balance sheet items to 5% and 10% increases and decreases in the exchange rates as at December 31, 2014.     Increase (decrease) in fair value       Increase (decrease) in fair value USD/NIS Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Cash and cash equivalents     (0.7 )     (0.4 )     7.2       0.4       0.7   Short term deposits and  loans     (0.1 )     (0.1 )     1.5       0.1       0.1   Trade receivables     (5.5 )     (2.8 )     55.2       2.8       5.5   Receivables and debit balances     (1.1 )     (0.5 )     10.8       0.5       1.1   Long-term deposits and loans     (0.4 )     (0.2 )     3.7       0.2       0.4   Credit from banks and others     0.6       0.3       (6.2 )     (0.3 )     (0.6 ) Trade payables     22.0       11.0       (219.7 )     (11.0 )     (22.0 ) Other payables     13.0       6.5       (129.8 )     (6.5 )     (13.0 ) Long-term loans     14.8       7.4       (148.1 )     (7.4 )     (14.8 ) Options     (50.4 )     (26.9 )     (57.1 )     33.9       61.6   Forward     (17.1 )     (9.0 )     (0.2 )     9.9       20.9   Swap     (17.0 )     (8.9 )     (9.2 )     9.8       20.8   Total     (41.9 )     (23.6 )     (491.9 )     32.4       60.7       Increase (decrease) in fair value       Increase (decrease) in fair value CPI Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Long-term deposits and loans   0.1     0.1     1.3       (0.1 )     (0.1 )     Increase (decrease) in fair value       Increase (decrease) in fair value EUR/USD Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Cash and cash equivalents     (6.9 )     (3.4 )     68.9       3.4       6.9   Short term deposits and  loans     (0.7 )     (0.4 )     7.3       0.4       0.7   Trade receivables     (26.4 )     (13.2 )     264.0       13.2       26.4   Receivables and debit balances     0.0       0.0       0.2       0.0       0.0   Long-term deposits and loans     0.0       0.0       0.3       0.0       0.0   Credit from banks and others     22.3       11.2       (223.0 )     (11.2 )     (22.3 ) Trade payables     17.5       8.7       (174.7 )     (8.7 )     (17.5 ) Other payables     11.1       5.6       (111.4 )     (5.6 )     (11.1 ) Long-term loans from banks     7.1       3.6       (71.0 )     (3.6 )     (7.1 ) Options     8.8       4.2       7.2       (3.7 )     (7.1 ) Forward     (26.9 )     (12.7 )     (1.8 )     11.5       22.0   Total     5.9       3.6       (234.0 )     (4.3 )     (9.1 ) 179     Increase (decrease) in fair value   Fair value   Increase (decrease) in fair value GBP/EUR Type of instrument   Increase of 10%   Increase of 5%         Decrease of 5%   Decrease of 10%     (USD millions)   Forward     3.4       1.8       (0.1 )     (2.0 )     (4.1 ) Options     (2.5 )     (1.6 )     0.5       2.2       3.3   Total     0.9       0.2       0.4       0.2       (0.8 ) Table of Contents     Increase (decrease) in fair value       Increase (decrease) in fair value GBP/USD Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Cash and cash equivalents     (0.6 )     (0.3 )     5.8       0.3       0.6   Trade receivables     (3.7 )     (1.9 )     37.1       1.9       3.7   Receivables and debit balances     0.0       0.0       0.2       0.0       0.0   Credit from banks and others     1.6       0.8       (16.4 )     (0.8 )     (1.6 ) Trade payables     2.7       1.4       (27.2 )     (1.4 )     (2.7 ) Other payables     1.7       0.8       (16.7 )     (0.8 )     (1.7 ) Options     (1.5 )     (0.6 )     (0.2 )     0.1       0.4   Forward     (4.6 )     (2.2 )     (0.1 )     2.0       3.8   Total     (4.4 )     (2.0 )     (17.4 )     1.2       2.5       Increase (decrease) in fair value       Increase (decrease) in fair value GBP/EUR Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Forward     3.4       1.8       (0.1 )     (2.0 )     (4.1 ) Options     (2.5 )     (1.6 )     0.5       2.2       3.3   Total     0.9       0.2       0.4       0.2       (0.8 )     Increase (decrease) in fair value       Increase (decrease) in fair value JPY/USD Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Cash and cash equivalents     (0.5 )     (0.3 )     5.2       0.3       0.5   Trade receivables     (0.9 )     (0.5 )     9.3       0.5       0.9   Long-term deposits and loans     0.0       0.0       0.2       0.0       0.0   Trade payables     0.1       0.1       (1.0 )     (0.1 )     (0.1 ) Other payables     0.0       0.0       (0.2 )     0.0       0.0   Options     0.6       0.3       1.1       (0.4 )     (0.7 ) Forward     0.7       0.4       0.9       (0.4 )     (0.8 ) Total     0.0       0.0       15.5       (0.1 )     (0.2 )     Increase (decrease) in fair value       Increase (decrease) in fair value BRL/USD Type of instrument   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%     (USD millions) Cash and cash equivalents     (1.3 )     (0.7 )     13.2       0.7       1.3   Trade receivables     (2.0 )     (1.0 )     19.9       1.0       2.0   Trade payables     2.9       1.5       (29.0 )     (1.5 )     (2.9 ) Other payables     0.2       0.1       (1.5 )     (0.1 )     (0.2 ) Total     (0.2 )     (0.1 )     2.6       0.1       0.2   180 Table of Contents     Increase (decrease) in fair value   Fair value   Increase (decrease) in fair value JPY/USD Type of instrument   Increase of 10%   Increase of 5%         Decrease of 5%   Decrease of 10%     (USD millions)   Cash and cash equivalents     (0.5 )     (0.3 )     5.2       0.3       0.5   Trade receivables     (0.9 )     (0.5 )     9.3       0.5       0.9   Long-term deposits and loans     0.0       0.0       0.2       0.0       0.0   Trade payables     0.1       0.1       (1.0 )     (0.1 )     (0.1 ) Other payables     0.0       0.0       (0.2 )     0.0       0.0   Options     0.6       0.3       1.1       (0.4 )     (0.7 ) Forward     0.7       0.4       0.9       (0.4 )     (0.8 ) Total     0.0       0.0       15.5       (0.1 )     (0.2 )     Increase (decrease) in fair value   Fair value   Increase (decrease) in fair value BRL/USD Type of instrument   Increase of 10%   Increase of 5%         Decrease of 5%   Decrease of 10%     (USD millions)   Cash and cash equivalents     (1.3 )     (0.7 )     13.2       0.7       1.3   Trade receivables     (2.0 )     (1.0 )     19.9       1.0       2.0   Trade payables     2.9       1.5       (29.0 )     (1.5 )     (2.9 ) Other payables     0.2       0.1       (1.5 )     (0.1 )     (0.2 ) Total     (0.2 )     (0.1 )     2.6       0.1       0.2     Increase (decrease) in fair value   Fair value   Increase (decrease) in fair value   Increase (decrease) in fair value       Increase (decrease) in fair value CNY/USD Type of instrument   Increase of 10%   Increase of 5%         Decrease of 5%   Decrease of 10%   Increase of 10%   Increase of 5%   Fair value   Decrease of 5%   Decrease of 10%   (USD millions)     (USD millions) Cash and cash equivalents   (1.9 )   (1.0 )   19.4     1.0     1.9       (1.9 )     (1.0 )     19.4       1.0       1.9   Trade receivables   (1.0 )   (0.5 )   10.0     0.5     1.0       (1.0 )     (0.5 )     10.0       0.5       1.0   Trade payables   0.2     0.1     (1.6 )   (0.1 )   (0.2 )     0.2       0.1       (1.6 )     (0.1 )     (0.2 ) Other payables   0.7     0.3     (6.6 )   (0.3 )   (0.7 )     0.7       0.3       (6.6 )     (0.3 )     (0.7 ) Credit from banks and others   0.1     0.0     (0.9 )   0.0     (0.1 )     0.1       0.0       (0.9 )     0.0       (0.1 ) Total     (1.9 )     (1.1 )     20.3       1.1       1.9       (1.9 )     (1.1 )     20.3       1.1       1.9   Interest Rate Risk We have loans bearing variable interest that expose our finance expenses and cash flows to changes in those interest rates. With respect to our fixed  interestfixed-interest loans, there is exposure to changes in the fair value of the loans due to changes in the market interest rate. Our Finance Forum examines the extent of the hedging in order to adjust the structure of the actual interest to our expectations with regard to the anticipated developments in interest rates, taking into account the cost of the hedging. The hedging is implemented by using a fixed interest range and by hedging variable interest. The table below sets forth the sensitivity of certain financial instruments to 0.5% and 1% increases and decreases in the LIBOR rate as ofat December 31, 2015.     Increase (decrease) in fair value       Increase (decrease) in fair value Type of instrument   Increase of 1%   Increase of 0.5%   Fair value   Decrease of 0.5%   Decrease of 1%     (USD millions) Fixed-USD interest debentures     70.4       35.9       (1,087.9 )     (37.5 )     (76.7 ) Collar transactions     0.1       0.1       (0.2 )     (0.1 )     (0.2 ) Swap transactions     16.9       8.6       (9.6 )     (8.9 )     (18.1 ) NIS/USD swap     10.6       5.4       (4.0 )     (5.6 )     (11.5 ) Total     98.0       50.0       (1,101.7 )     (52.1 )     (106.5 ) The table below sets forth the sensitivity of certain financial instruments to 0.5% and 1% increases and decreases in the LIBOR rate as at December 31, 2014.     Increase (decrease) in fair value       Increase (decrease) in fair value Type of instrument   Increase of 1%   Increase of 0.5%   Fair value   Decrease of 0.5%   Decrease of 1%     (USD millions) Fixed-USD interest debentures     78.0       39.9       (1,170.8 )     (41.8 )     (85.7 ) Collar transactions     0.6       0.4       (0.8 )     (0.4 )     (0.5 ) Swap transactions     20.2       10.3       (7.7 )     (10.7 )     (21.9 ) NIS/USD swap     12.2       6.2       (9.2 )     (6.5 )     (13.2 ) Total     111.0       56.8       (1,188.5 )     (59.4 )     (121.3 ) 181 160 Table of Contents     Increase (decrease) in fair value   Fair value   Increase (decrease) in fair value Type of instrument   Increase of 1%   Increase of 0.5%         Decrease of 0.5%   Decrease of 1%     (USD millions)   Fixed-USD interest debentures     78.0       39.9       (1,170.8 )     (41.8 )     (85.7 ) Collar transactions     0.6       0.4       (0.8 )     (0.4 )     (0.5 ) Swap transactions     20.2       10.3       (7.7 )     (10.7 )     (21.9 ) NIS/USD swap     12.2       6.2       (9.2 )     (6.5 )     (13.2 ) Total     111.0       56.8       (1,188.5 )     (59.4 )     (121.3 ) The table below sets forth the sensitivity of certain financial instruments to 0.5% and 1% increases and decreases in the NIS interest rate as ofat December 31, 2015. Sensitivity to changes in the shekel interest rate   Increase (decrease) in fair value       Increase (decrease) in fair value Type of instrument   Increase of 1%   Increase of 0.5%   Fair value   Decrease of 0.5%   Decrease of 1%     (USD millions) Fixed-interest long-term loan     8.9       4.5       (165.8 )     (4.7 )     (9.6 ) NIS/USD swap     (10.4 )     (5.3 )     (4.0 )     5.5       11.3   Total     (1.5 )     (0.8 )     (169.8 )     0.8       1.7   The table below sets forth the sensitivity of certain financial instruments to 0.5% and 1% increases and decreases in the NIS interest rate as at December 31, 2014.     Increase (decrease) in fair value   Fair value   Increase (decrease) in fair value Sensitivity to changes in the shekel interest rate Type of instrument   Increase of 1%   Increase of 0.5%         Decrease of 0.5%   Decrease of 1%     (USD millions)   NIS/USD swap     (11.5 )     (5.9 )     (9.2 )     6.1       12.5   Sensitivity to changes in the shekel interest rate   Increase (decrease) in fair value       Increase (decrease) in fair value Type of instrument   Increase of 1%   Increase of 0.5%   Fair value   Decrease of 0.5%   Decrease of 1%     (USD millions) NIS/USD swap     (11.5 )     (5.9 )     (9.2 )     6.1       12.5   Energy Price Risk Execution of hedging is determined by appropriate personnel after consultation with Israeli and foreign energy advisors. The table below sets forth the sensitivity of instruments hedging energy price risks to 5% and 10% increases and decreases in energy prices as of December 31, 2015.     Increase (decrease) in fair value       Increase (decrease) in fair value Type of instrument   Increase of 10%   Increase of 0.5%   Fair value   Decrease of 0.5%   Decrease of 10%     (USD millions) Energy hedges     1.1       0.5       (6.6 )     (0.5 )     (1.1 ) The table below sets forth the sensitivity of instruments hedging energy price risks to 5% and 10% increases and decreases in energy prices as of December 31, 2014.     Increase (decrease) in fair value   Fair value   Increase (decrease) in fair value Type of instrument   Increase of 10%   Increase of 0.5%         Decrease of 0.5%   Decrease of 10%     (USD millions)   Energy hedges     3.1       1.5       (19.3 )     (1.5 )     (3.0 )     Increase (decrease) in fair value       Increase (decrease) in fair value Type of instrument   Increase of 10%   Increase of 0.5%   Fair value   Decrease of 0.5%   Decrease of 10%     (USD millions) Energy hedges     3.1       1.5       (19.3 )     (1.5 )     (3.0 ) Marine Shipping Price Risk We purchase hedges on part of our exposure to marine bulk shipping prices. Hedging is executed by the appropriate personnel, after consultation with overseas experts. 182 Table of Contents The table below sets forth the sensitivity of instruments hedging marine shipping price risk to 5% and 10% increases and decreases in marine shipping prices as of December 31, 2015.     Increase (decrease) in fair value       Increase (decrease) in fair value Type of instrument   Increase of 10%   Increase of 0.5%   Fair value   Decrease of 0.5%   Decrease of 10%     (USD millions) Marine shipping hedges     0.4       0.2       (4.6 )     (0.2 )     (0.4 ) The table below sets forth the sensitivity of instruments hedging marine shipping price risk to 5% and 10% increases and decreases in marine shipping prices as of December 31, 2014.     Increase (decrease) in fair value   Fair value   Increase (decrease) in fair value Type of instrument   Increase of 10%   Increase of 0.5%         Decrease of 0.5%   Decrease of 10%     (USD millions)   Marine shipping hedges     3.2       1.6       (9.0 )     (1.6 )     (3.2 )     Increase (decrease) in fair value       Increase (decrease) in fair value Type of instrument   Increase of 10%   Increase of 0.5%   Fair value   Decrease of 0.5%   Decrease of 10%     (USD millions) Marine shipping hedges     3.2       1.6       (9.0 )     (1.6 )     (3.2 ) ITEM 12 – DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES Item 12. Description of Securities Other than Equity Securities Not Applicable. PART II ITEM 13 – DEFAULTS, DIVIDEND ARRANGEMENTS AND DELINQUENCIES Item 13. Defaults, Dividend Arrangements and Delinquencies None. 161 TableItem 14. Material Modifications to the Rights of Contents ITEM 14 – MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS Security Holders and Use of Proceeds Not Applicable. ITEM 15 – CONTROLS AND PROCEDURES Item 15. Controls and Procedures A. DISCLOSURE CONTROLS AND PROCEDURES In accordance with Rule 13a-15(b) of the Exchange Act, our management evaluated, with the participation of our ICL’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the design and operation of ourICL’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) under the Exchange Act)13a-15(f)) as of December 31, 2014. Based upon their evaluationthe end of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officerperiod covered by this annual report, have concluded that, theas of such date, ICL’s disclosure controls and procedures were effective as of December 31, 2014 to ensure that the information required to be disclosedin the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periodperiods specified in the SECSEC’s rules and forms, and to ensure thatsuch information required to be disclosed under the Exchange Act is accumulated and communicated to ourits management, including our principalits chief executive officer and principalchief financial officers,officer, as appropriate to allow timely decisions regarding required disclosure. B. MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING This Annual Report does not include a report ICL's board of management’s assessment regardingdirectors and management are responsible for establishing and maintaining adequate internal control over financial reporting. ICL's internal control over financial reporting system was designed by, or an attestation reportunder the supervision of, the Chief Executive Officer and Chief Financial Officer, management and other personnel, to provide reasonable assurance to ICL's management and board of directors regarding the reliability of financial reporting and the preparation and fair presentation of its consolidated financial statements for external reporting purposes, in accordance with generally accepted accounting principles. These include those policies and procedures that: pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our independent registered public accountant dueassets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements, in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorization of our management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a transition period established by rulesmaterial effect on our financial statements. 183 Table of Contents Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, effective control over financial reporting cannot, and does not, provide absolute assurance of achieving our control objectives. Also, projections of, and any evaluation of effectiveness of the Securitiesinternal controls in future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and Exchangewith the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we assessed the effectiveness of ICL's internal control over financial reporting as of December 31, 2015. In making this assessment, we used the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission for newly public companies (IPO)of 2013 (COSO). Based on such assessment, management believes that, as of December 31, 2015, ICL's internal control over financial reporting is effective based on those criteria. C. ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM Not Applicable. Somekh Chaikin, member firm of KPMG International, an independent registered public accounting firm, has audited and reported on the effectiveness of ICL's internal controls over financial reporting as of December 31, 2015. See Somekh Chaikin's attestation report beginning on page F-2 of this annual report. D. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING During the year ended December 31, 2014, there were There has been no changes tochange in our internal controlscontrol over financial reporting identified in connection with the evaluation required by Rules 13a-15 or 15d-15 that haveoccurred during the period covered by this annual report that has materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting. ITEM 16A – AUDIT COMMITTEE FINANCIAL EXPERT Item 16A. Audit Committee Financial Expert Our Board of Directors has determined that Prof. Yair Orgler, Mr. Yaacov Dior and Mr. Geoffery Merszei are audit committee financial experts, as that term is defined in Item 16A(b) of Form 20-F, and that Mr. Dior, Mr. Merszei and Dr. Miriam Haran are independent for the purposes of NYSE corporate governance rules and Rule 10A-3 of the Exchange Act. ITEM 16B – CODE OF ETHICS Item 16B. Code of Ethics Our Board of Directors have adopted a Code of Conduct that applies to Board of Directors, senior management and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller and any other persons who perform similar functions for us. The Code of Conduct is available, free of charge, on our website, www.icl-group.com. ITEM 16C – PRINCIPAL ACCOUNTANT FEES AND SERVICES Item 16C. Principal Accountant Fees and Services Somekh Chaikin, a member firm of KPMG International, was appointedhas served as our independent registered public accounting firm on August 26,for 2014 forand 2015. 184 Table of Contents These accountants billed the audit of the fiscal year ending December 31, 2014, for which audited financial statements appear in this Annual Report. The following is a summary of the fees billed by Somekh Chaikin, respectively, and member firms in their respective networks,to us for professional services rendered forin each of those fiscal years ended December 31, 2013 and 2014: 162 Table of Contents       Year ended December 2014       Year ended December 2013         Somekh Chaikin       Other KPMG network firms       Total       Somekh Chaikin       Other KPMG network firms       Total         US$ thousands       US$ thousands   Audit fees(1)     2,435       2,871       5,306       2,306       3,654       5,960   Audit-related fees(2)     100       79       179       -       868       868   Tax fees(3)     765       1,300       2,065       679       1,733       2,412   All other fees(4)     -       434       434       -       -       -   Total     3,300       4,684       7,984       2,985       6,255       9,240   _______________ years:     2015   2014     (US$ thousands) Audit fees(1)     6,070       5,306   Audit-related fees(2)     400       179   Tax fees(3)     1,600       2,065   All other fees(4)     20       434   Total     8,090       7,984   ____________________ (1) TheAudit Fees are the aggregate audit fees include fees billed or accrued for professional services rendered by the principal accountant for the audit of our annual financial statementsstatements. This category also includes services that generally the independent accountant provides, such as consents and assistance with and review of the interim condensed consolidated financial statements and additional services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements, except for those not required by statute or regulation. The audit fees do not include fees in connectiondocuments filed with the PCAOB audit for the years 2011-2013 as part of filing of the prospectus and registration of ICL with the SEC. The fees for the above-mentioned audit work were about $2,050 thousand. (2) Audit-relatedAudit-Related Fees are the aggregate fees consist of fees billed or accrued services rendered during the fiscal year for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit fees”.Audit Fees. These fees include mainly accounting consultations regarding the accounting treatment of matters that occur in the regular course of business, implications of new accounting pronouncements and other accounting issues that occur from time to time. (3) Tax fees consist ofare the aggregate fees billed for professional services rendered during the fiscal year by the principal accountant for tax compliance, tax advice, and tax planning, assistance with tax audits and appeals. (4) All other fees consisted of fees billed or accrued for products and services provided by the principal accountant, other than the services reported above under other captions in the above table. Audit Committee’s pre-approval policies and procedures All services provided by our auditors are approved in advance by either the Audit and Finance Committee or members thereof, to whom authority has been delegated, in accordance with the Audit and Finance Committee’s pre-approval policy. ITEM 16D – EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES Item 16D. Exemptions from the Listing Standards for Audit Committees None. ITEM 16E – PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. ITEM 16F – CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT Item 16F. Change in Registrant’s Certifying Accountant None. ITEM 16G – CORPORATE GOVERNANCE Item 16G. Corporate Governance Corporate Governance Practices We are incorporated in Israel and therefore subject to various corporate governance requirements under the Companies Law relating to such matters as external directors, the audit committee, the compensation committee and the internal auditor. These are in addition to the requirements of the NYSE and relevant provisions of U.S. securities laws that apply to us. As a foreign private issuer whose shares are listed on the NYSE, we have the option to follow certain Israeli corporate governance practices rather than those of the NYSE, except to the extent that such laws would be contrary to U.S. securities laws and provided that we disclose the practices that we are not following and describe the home country practices we follow instead. We intend to rely on this “foreign private issuer exemption” with respect to the following NYSE requirements: 185 163 Table of Contents · Majority Independent BoardBoard..  Under Section 303A.01 of the NYSE Listed Company Manual (the “LCM”), a U.S. domestic listed company, other than a controlled company, must have a majority of independent directors. SixEight of our twelveeleven directors are not considered independent directors under Israeli law due to either a relationship with the Company, our controlling shareholder or the length of their tenure on our Board of Directors. · Nominating/Corporate Governance Committee. Under Section 303A.04 of the LCM, a U.S. domestic listed company, other than a controlled company, must have a nominating/corporate governance committee composed entirely of independent directors. The Company is a controlled company and thereof is exempt from this requirement according to U.S. law. The Company’s controlling shareholder, Israel Corporation, has significant control over the appointment of our directors. · Equity Compensation Plans. Under Section 303A.08 of the LCM, shareholders must be given the opportunity to vote on all equity compensationequity-compensation plans and material revisions thereto, with certain limited exemptions as described therein. We follow the requirements of the Companies Law, under which approval of equity compensationequity-compensation plans and material revisions thereto is within the authority of the board of directors. However, under the Companies Law, any compensation to directors, the chief executive officer or a controlling shareholder or another person in which a controlling shareholder has a personal interest, including equity basedequity-based compensation, generally requires the approval of the compensation committee, the board of directors and the shareholders, in that order. The compensation of directors and officers is generally required to comply with a shareholder approvedshareholder-approved compensation policy, which is required to include a monetary cap on the value of equity compensation that may be granted to any director or officer. · Shareholder Approval of Securities Issuances. Under Section 312.03 of the LCM, shareholder approval is a prerequisite to (a) issuing common stock, or securities convertible into or exercisable for common stock, to a related party, a subsidiary, affiliate or other closely related person of a related party or any company or entity in which a related party has a substantial interest, if the number of shares of common stock to be issued exceeds either 1% of the number of shares of common shares or 1% of the voting power outstanding before the issuance, and (b) issuing common stock, or securities convertible into or exercisable for common stock, if the common stock has, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding before the issuance or the number of shares of common stock to be issued is equal to or in excess of 20% of the number of shares of common stock before the issuance, in each case subject to certain exceptions. We seek shareholder approval for all corporate actions requiring such approval under the requirements of the Companies Law, which are different from the requirements for seeking shareholder approval under Section 312.03 of the LCM. Under the Companies Law, shareholder approval is a prerequisite to any extraordinary transaction with a controlling shareholder or in which a controlling shareholder has a personal interest. Under the Companies Law, shareholder approval is also a prerequisite to a private placement of securities if it will cause a person to become a controlling shareholder or in case all of the following conditions are met: · the securities issued amount to 20% or more of the company’s outstanding voting rights before the issuance; · some or all of the consideration is other than cash or listed securities or the transaction is not on market terms; and · the transaction will increase the relative holdings of a 5% shareholder or will cause any person to become, as a result of the issuance, a 5% shareholder. Except as stated above, we intend to substantially comply with the rules applicable to U.S. companies listed on the NYSE. We may in the future decide to use other foreign private issuer exemptions with respect to some or all of the other NYSE listing requirements. Following our home country governance practices, as opposed to the requirements that would otherwise apply to a company listed on the NYSE, may provide less protection than is accorded to investors under NYSE listing requirements applicable to domestic issuers. For more information, see “Item“Item 3. Key Information—D. Risk Factors—Risks Related to Our Ordinary Shares—As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of applicable SEC and NYSE requirements, which may result in less protection than is accorded to investors under rules applicable to domestic issuers.issuers.” 186 164 Table of Contents ITEM 16H – MINE SAFETY DISCLOSURE Item 16H. Mine Safety Disclosure Not applicable. PART III ITEM 17 – FINANCIAL STATEMENTS Item 17. Financial Statements See Item“Item 18. Financial Statements.” ITEM 18 – FINANCIAL STATEMENTS Item 18. Financial Statements See page F-1. ITEM 19 –19. EXHIBITS 1.1* Memorandum of Association of Israel Chemicals Ltd. (unofficial translation from original Hebrew). 1.2* Articles of Association of Israel Chemicals Ltd. (unofficial translation from original Hebrew). 4.1* Dead Sea Concession Law, 1961 (and the Deed of Concession, dated as of May 31, 1961, between the State of Israel and Dead Sea Works, Ltd. set out as a schedule thereto) (unofficial translation from original Hebrew). 4.2* Plan for the Private Allocation of Options for Shares of the Company to the CEO of the Company, to Office Holders and Employees of the Company and its Subsidiaries dated January 7, 2010 (unofficial translation from original Hebrew). 4.3* Plan for the Private Allocation of Options for Shares of the Company to the CEO of the Company, to Office Holders and Employees of the Company and its Subsidiaries dated November 27, 2012 (unofficial translation from original Hebrew). 4.4*4.3** Equity Compensation Plan (2014), dated August 20, 2014 (unofficial translation from original Hebrew). 4.5*4.4* Compensation Policy for Directors and Officers, as adopted in July 2013 and approved by shareholders in August 2013. 4.6*4.5* Agreement between the Israeli Ministry of Finance and Dead Sea Works Ltd. dated as of July 8, 2012 relating to salt harvesting at the Dead Sea. 4.7* 2012 related Loan, as amended. 4.8*4.6* Registration Rights Agreement, dated September 12, , 2014 by and among Israel Chemicals Ltd. and Israel Corporation Ltd. 8.1*4.7 Revolving Credit Facility Agreement, dated March 23, 2015, by and among certain financial institutions, ICL Finance B.V., and Israel Chemicals Ltd. 4.8 Amendment toRevolving Credit Facility Agreement, dated April 9, 2015, by and among certain financial institutions, ICL Finance B.V., Israel Chemicals Limited and ICL Finance Inc. 8.1 List of subsidiaries of Israel Chemicals Ltd. 12.1 Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 12.2 Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 13.1 Certification by Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 13.2 Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 15.1 Consent of Somekh Chaikin, a member of KPMG International, independent registered public accounting firm. _______________ * Incorporated by reference to our registration statement on Form F-1 (file no. 333- 198711), as amended. ** Incorporated by reference to our registration statement on Form S-8 (file no. 333-205518), dated July 6, 2015. Other than as listed above, ICL has no instrument with respect to long-term debt under which the total amount of securities authorized exceeds 10% of the total assets of ICL on a consolidated basis.  The Company agrees to furnish to the Securities and Exchange Commission upon request a copy of each instrument with respect to long-term debt not filed as an exhibit to this report.  187 165 Table of Contents SIGNATURES SIGNATURES The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf. ISRAEL CHEMICALS LTD. By: /s/ Lisa Haimovitz   Name: Lisa Haimovitz   Title: SeniorVice President, Global General Counsel and Corporate Secretary By: /s/ Avi Doitchman Name: Avi Doitchman Title: Executive Vice President and Chief Financial Officer Date: March 19, 2015 166 Table of Contents Israel Chemicals Ltd. Consolidated Financial Statements As at December 31, 2014 TABLE OF CONTENTS Page Auditors’ Report F-2     By: /s/ Kobi Altman Name: Kobi Altman Title: Chief Financial Officer Date: March 16, 2016 188 Table of Contents ICL CONSOLIDATED FINANCIAL STATEMENTS As at December 31, 2015 table of contents Page Auditors’ Report F-2 Consolidated Statements of Financial Position F-3F-4 Consolidated Statements of Income F-5 Consolidated Income Statements F-4 Consolidated Statements of Comprehensive Income F-5F-6 Consolidated Statements of Changes in Equity F-6F-7 Consolidated Statements of Cash Flows F-10 Notes to the Consolidated Financial Statements F-11F-12 F-1 F-1 Table of Contents Somekh Chaikin Telephone       972 3  684  8000 KPMG Millennium Tower Fax  972 3  684  8444 17 Ha'arba'a Street, PO Box  609 Internet www.kpmg.co.il Tel Aviv 61006 Israel Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders Israel Chemicals Ltd We have audited the accompanying consolidated statements of financial position of Israel Chemicals Ltd. (hereinafter – “the Company”) and subsidiaries (the Company) as of December 31, 20142015 and 2013,2014, and the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the years in the three year period ended December 31, 2014. These2015. We also have audited the Company’s internal control over financial reporting as of December 31, 2015 based on criteria established inInternal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these consolidated financial statements, are the responsibilityfor maintaining effective internal control over financial reporting, and for its assessment of the Company’s management.effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesmisstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes,statements, assessing the accounting principles used and significant estimates made by management, as well asand evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. F-2 Table of Contents In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company and subsidiaries as of December 31, 20142015 and 2013,2014, and the results of itstheir operations and itstheir cash flows for each of the years in the three-year period ended December 31, 2014,2015, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). /s/ Somekh Chaikin Certified Public Accountants (Isr.) Member Firm of KPMG International Tel Aviv, Israel March 19, 2015 15, 2016 Somekh Chaikin, a partnership registered under the Israeli partnership Ordinance, is the Israeli member firm of KPMG International, a Swiss cooperative. F-3 F-2 Table of Contents Consolidated Statements of Financial Position as at December 31           2014     2013       Note     US$ thousands   Current assets                   Cash and cash equivalents           130,831       188,340   Short-term investments and deposits      6       116,492       96,388   Trade receivables     7       1,039,146       1,057,028   Derivatives and other receivables     27,16,8       154,784       186,317   Current tax assets             139,093       105,270   Inventories     9       1,335,098       1,408,297   Assets held for sale     11A       224,595       —   Total current assets             3,140,039       3,041,640   Non-current assets                         Investments in equity-accounted investees     10       184,549       174,511   Long-term deposits and receivables      12       11,666       15,768   Surplus in defined benefit plan     21       66,063       83,124   Long-term derivative instruments     27,16       —       7,619   Non-current inventories     9       57,035       62,252   Deferred tax assets     20       158,443       111,157   Property, plant and equipment     13       3,926,873       3,686,240   Intangible assets     14       802,920       791,174   Total non-current assets             5,207,549       4,931,845   Total assets             8,347,588       7,973,485   F-3 Table of Contents           2014     2013       Note     US$ thousands   Current liabilities                   Short-term credit and current portion of long-term debt     17       602,749       718,284   Trade payables     18       584,909       669,102   Provisions     22       35,118       38,485   Derivatives and other payables     27,19,16       692,913       500,453   Current tax liabilities             36,461       33,717   Liabilities held for sale      11A       50,702       —   Total current liabilities             2,002,852       1,960,041   Non-current liabilities                         Long-term debt     17       1,239,494       1,243,638   Debentures     17       1,064,222       67,000   Long-term derivative instruments     27,16       19,321       6,582   Deferred taxes     20       259,877       220,877   Employee benefits     21       659,165       702,103   Provisions      22       102,431       94,570   Total non-current liabilities             3,344,510       2,334,770   Total liabilities             5,347,362       4,294,811   Equity     24                   Share capital             543,107       542,853   Share premium             133,633       133,633   Capital reserves             (135,277 )     84,715   Retained earnings             2,692,364       3,152,832   Treasury shares             (260,113 )     (260,113 ) Total shareholders’ equity             2,973,714       3,653,920   Non-controlling interests             26,512       24,754   Total equity             3,000,226       3,678,674   Total liabilities and equity             8,347,588       7,973,485       Note   2015   2014         $ millions Current assets                     Cash and cash equivalents         161       131   Short-term investments and deposits   6     87       116   Trade receivables   7     1,082       1,039   Derivatives and other receivables   27,16,8     207       155   Current tax assets         45       139   Inventories   9     1,364       1,335   Assets held for sale   11     39       225   Total current assets         2,985       3,140   Non-current assets                     Investments in equity-accounted investees   10     159       185   Long-term deposits and receivables   12,16,27     126       12   Surplus in defined benefit plan   21     89       66   Non-current inventories   9     122       57   Deferred tax assets   20     199       158   Property, plant and equipment   13     4,212       3,927   Intangible assets   14     1,185       803   Total non-current assets         6,092       5,208   Total assets         9,077       8,348   Current liabilities                     Short-term credit and current portion of long-term debt   17     673       603   Trade payables   18     716       585   Provisions   22     42       35   Other current liabilities   27,19,16     527       695   Current tax liabilities         62       36   Liabilities held for sale   11     26       51   Total current liabilities         2,046       2,005   Non-current liabilities                     Long-term debt   17     1,740       1,239   Debentures   17     1,065       1,064   Long-term derivative instruments   27,16     13       19   Deferred tax liabilities   20     351       260   Employee benefits   21     547       659   Provisions   22     127       102   Total non-current liabilities         3,843       3,343   Total liabilities         5,889       5,348   Equity   24                 Share capital         544       543   Share premium         149       134   Capital reserves         (307 )     (135 ) Retained earnings         2,902       2,692   Treasury shares         (260 )     (260 ) Total shareholders’ equity         3,028       2,974   Non-controlling interests         160       26   Total equity         3,188       3,000   Total liabilities and equity         9,077       8,348   The accompanying notes are an integral part of these consolidated financial statements. F-4 F-4 Table of Contents Consolidated Income Statements of Income for the Year Ended December 31           2014     2013     2012       Note     US$ thousands   Sales     26A       6,110,710       6,271,542       6,471,433   Cost of sales     26B       3,914,573       3,861,572       3,760,235   Gross profit             2,196,137       2,409,970       2,711,198   Selling, transport and marketing expenses     26D       839,207       850,325       797,291   General and administrative expenses     26E       305,526       281,491       248,782   Research and development expenses, net     26C       86,943       82,870       74,099   Other expenses     26G       259,336       110,194       61,085   Other income     26G       (52,545 )     (16,276 )     (23,691 ) Operating income             757,670       1,101,366       1,553,632   Finance expenses             278,243       158,403       81,595   Finance income             (122,295 )     (131,548 )     (20,701 ) Financing expenses, net     26F       155,948       26,855       60,894   Share in earnings of equity accounted investees     10       30,532       25,685       26,555   Income before income taxes             632,254       1,100,196       1,519,293   Income taxes     20       166,152       280,023       217,561   Net income             466,102       820,173       1,301,732   Attributable to:                                 The shareholders of the Company             463,555       818,573       1,300,076   Non-controlling interests             2,547       1,600       1,656   Net income             466,102       820,173       1,301,732   Earnings per share attributable to           US$     US$     US$   the equity holders of the company:     28                           Basic earnings per share             0.365       0.644       1.024   Diluted earnings per share             0.365       0.644       1.024       Note   2015   2014   2013         $ millions Sales   26     5,405       6,111       6,272   Cost of sales   26     3,602       3,915       3,862   Gross profit         1,803       2,196       2,410   Selling, transport and  marketing expenses   26     653       839       850   General and administrative expenses   26     350       306       282   Research and development expenses   26     74       87       83   Other expenses   26     211       259       110   Other income   26     (250 )     (53 )     (16 ) Operating income         765       758       1,101   Finance expenses         160       279       158   Finance income         (52 )     (122 )     (132 ) Finance expenses, net   26     108       157       26   Share in earnings of equity-accounted investees   10     11       31       26   Income before income taxes         668       632       1,101   Income taxes   20     162       166       281   Net income         506       466       820   Net income (loss) attributable to the non-controlling interests         (3 )     2       1   Net income attributable to the shareholders of the Company         509       464       819   Earnings per share attributable to the shareholders of the company:   28     US $       US $       US $   Basic earnings per share         0.40       0.37       0.64   Diluted earnings per share         0.40       0.37       0.64   Weighted-average number of ordinary shares outstanding:                             Basic (in thousands)         1,271,624       1,270,426       1,270,414   Diluted (in thousands)         1,272,256       1,270,458       1,270,414   The accompanying notes are an integral part of these consolidated financial statements. F-5 F-5 Table of Contents Consolidated Statements of Comprehensive Income for the Year Ended December 31     2014     2013     2012       US$ thousands   Net Income     466,102       820,173       1,301,732   Components of other comprehensive income that may be reclassified subsequently to net income                         Currency translation effects     (220,196 )     49,142       24,674   Gains (losses) on derivatives designated as a cash flow hedge     (11,635 )      1,718       15,634   Income tax relating to items that may be reclassified subsequently to net income     —       (898 )     313   Total     (231,831 )     49,962       40,621   Items that will not be reclassified to net income                         Actuarial gains (losses) from defined benefit plan     (103,174 )     47,282       (43,904 ) Income tax relating to items that will not be reclassified to net income     24,476       (14,172 )     9,018   Total     (78,698 )     33,110       (34,886 ) Total comprehensive income     155,573       903,245       1,307,467   Attributable to:                         The shareholders of the Company     153,163       901,749       1,305,242   Non-controlling interests     2,410       1,496       2,225   Total comprehensive income     155,573       903,245       1,307,467       2015   2014   2013     $ millions Net income     506       466       820   Components of other comprehensive income that  may be reclassified subsequently to net income                         Currency translation effects     (205 )     (221 )     49   Changes in derivatives designated as a cash flow hedge     (2 )     (11 )     1   Income tax relating to items that may be reclassified subsequently to income     —       —       (1 ) Total     (207 )     (232 )     49   Items that will not be reclassified to net income                         Actuarial gains (losses) from defined benefit plan     63       (103 )     48   Income tax relating to items that will not be reclassified to net income     (15 )     24       (14 ) Total     48       (79 )     34   Total comprehensive income     347       155       903   Comprehensive income (loss) attributable to the non-controlling interests     (9 )     2       2   Comprehensive income attributable to the shareholders of the Company     356       153       901   The accompanying notes are an integral part of these consolidated financial statements.statements F-6 F-6 Table of Contents Consolidated Statements of Changes in Equity     Attributable to the shareholders of the Company   Non- controlling interests   Total equity     Share Capital   Share premium   Cumulative translation adjustment   Capital reserves   Treasury shares, at cost   Retained earnings   Total shareholders’ equity             $ millions For the year ended December 31, 2015                                     Balance as at January 1, 2015     543       134       (201 )     66       (260 )     2,692       2,974       26       3,000   Issue of shares     1       15       —       —       —       —       16       —       16   Share-based compensation     — (*)     —       —       15       —       —       15       —       15   Dividends paid     —       —       —       —       —       (347 )     (347 )     (1 )     (348 ) Consolidation of new subsidiary     —       —       —       14       —       —       14       144       158   Comprehensive income     —       —       (199 )     (2 )     —       557       356       (9 )     347   Balance as at December 31, 2015     544       149       (400 )     93       (260 )     2,902       3,028       160       3,188         Attributable to the shareholders of the Company     Non- controlling interests     Total equity       Share capital     Share premium     Cumulative translation adjustment     Capital reserves     Treasury shares, at cost     Retained earnings     Total shareholders' equity                   US$ thousands   For the year ended December 31, 2014                                                                                                               Balance as at January 1, 2014     542,853       133,633       19,183       65,532       (260,113 )     3,152,832       3,653,920       24,754       3,678,674   Share-based compensation     254       —       —       11,790       —       —       12,044       —       12,044   Dividends paid     —       —       —       —       —       (845,325 )     (845,325 )     (652 )     (845,977 ) Tax on share-based compensation     —       —       —       (88 )     —       —       (88 )     —       (88 ) Comprehensive income     —       —       (220,059 )      (11,635 )     —       384,857       153,163       2,410       155,573   Balance as at December 31, 2014     543,107       133,633       (200,876 )      65,599       (260,113 )     2,692,364       2,973,714       26,512       3,000,226   (*) Less than $1 million. The accompanying notes are an integral part of these consolidated financial statements. F-7 F-7 Table of Contents Consolidated Statements of Changes in Equity (cont'd) (cont’d)     Attributable to the equity holders of the Company   Non-controlling interests   Total equity     Share Capital   Share premium   Cumulative translation adjustment   Capital reserves   Treasury shares, at cost   Retained earnings   Total shareholders’ equity             $ millions For the year ended December 31, 2014                                     Balance as at January 1, 2014     543       134       19       65       (260 )     3,153       3,654       25       3,679   Share-based compensation     — (*)     —       —       12       —       —       12       —       12   Dividends paid     —       —       —       —       —       (845 )     (845 )     (1 )     (846 ) Comprehensive income     —       —       (220 )     (11 )     —       384       153       2       155   Balance as at December 31, 2014     543       134       (201 )     66       (260 )     2,692       2,974       26       3,000         Attributable to the equity holders of the Company     Non- controlling interests     Total equity       Share capital     Share premium     Cumulative translation adjustment     Capital reserves     Treasury shares, at cost     Retained earnings     Total shareholders' equity                       US$ thousands   For the year ended December 31, 2013                                                       Balance as at January 1, 2013     542,769       101,501       (30,063 )     75,375       (260,113 )     2,935,537       3,365,006       23,258       3,388,264                                                                             Exercise of options      84       32,132       —       (32,216 )     —       —       —       —       —   Share-based compensation     —       —       —       21,776       —       —       21,776       —       21,776   Dividends paid     —       —       —       —       —       (634,388 )     (634,388 )     —       (634,388 ) Tax on share-based compensation     —       —       —       (223 )     —       —       (223 )     —       (223 ) Comprehensive income     —       —       49,246       820       —       851,683       901,749       1,496       903,245   Balance as at December 31, 2013     542,853       133,633       19,183       65,532       (260,113 )     3,152,832       3,653,920       24,754       3,678,674   (*) Less than $1 million. The accompanying notes are an integral part of these consolidated financial statements. F-8 F-8 Table of Contents Consolidated Statements of Changes in Equity (cont'd) (cont’d)     Attributable to the equity holders of the Company   Non-controlling interests   Total equity     Share Capital   Share premium   Cumulative translation adjustment   Capital reserves   Treasury shares, at cost   Retained earnings   Total shareholders’ equity             $ millions                                                                                                                   For the year ended December 31, 2013                                                                         Balance as at January 1, 2013     543       102       (30 )     74       (260 )     2,936       3,365       23       3,388   Exercise of options     — (1)     32       —       (32 )     —       —       —       —       —   Share-based compensation     — (1)     —       —       22       —       —       22       —       22   Dividends paid     —       —       —       —       —       (634 )     (634 )     —       (634 ) Comprehensive income     —       —       49       1       —       851       901       2       903   Balance as at December 31, 2013     543       134       19       65       (260 )     3,153       3,654       25       3,679         Attributable to the equity holders of the Company     Non- controlling interests     Total equity       Share capital     Share premium     Cumulative translation adjustment     Capital reserves     Treasury shares, at cost     Retained earnings     Total shareholders’ equity                   US$ thousands   For the year ended December 31, 2012                                                       Balance as at January 1, 2012     542,377       94,798       (54,168 )     53,866       (260,113 )     2,689,569       3,066,329       23,922       3,090,251   Exercise of options     392       6,703       —       (3,295 )     —       —       3,800       —       3,800   Share-based compensation     —       —       —       8,668       —       —       8,668       —       8,668   Dividends paid     —       —       —       —       —       (1,019,222 )     (1,019,222 )     (2,889 )     (1,022,111 ) Tax on shares-based compensation     —       —       —       189       —       —       189       —       189   Comprehensive income     —       —       24,105       15,947       —       1,265,190       1,305,242       2,225       1,307,467   Balance as at December 31, 2012     542,769       101,501       (30,063 )     75,375       (260,113 )     2,935,537       3,365,006       23,258       3,388,264   (1) Less than $1 million. The accompanying notes are an integral part of these consolidated financial statements. F-9 F-9 Table of Contents Consolidated Statements of Cash Flows for the Year Ended December 31     2014     2013     2012       US$ thousands   Cash flows from operating activities                   Net Income     466,102       820,173       1,301,732   Adjustments for:                         Depreciation and amortization     427,478       347,741       322,511   Interest expenses, net     73,865       41,951       28,529   Share in earnings of equity-accounted investees      (30,532 )     (25,685 )     (26,555 ) Loss (gain) on sale of property, plant and equipment, net     (5,746 )     (1,958 )     602   Share-based compensation     12,044       21,776       8,668   Revaluation of assets and liabilities denominated in  foreign currencies     (35,976 )     29,541       7,511   Gain on achievement of control of an associated company     (35,740 )     (1,827 )     (1,945 ) Income tax expenses     166,152       280,023       217,561         1,037,647       1,511,735       1,858,614   Change in inventories     (33,333 )     4,061       (54,852 ) Change in trade and other receivables     (25,461 )     19,614       217,118   Change in trade and other payables     55,323       (84,903 )     (71,612 ) Change in provisions and employee benefits     66,126       53,782       30,973         1,100,302       1,504,289       1,980,241   Income taxes paid     (158,772 )     (333,794 )     (220,179 ) Interest received     1,974       2,380       12,207   Interest paid     (48,822 )     (45,966 )     (45,051 ) Net cash provided by operating activities     894,682       1,126,909       1,727,218   Cash flows from investing activities                         Increase in long-term deposits     —       —       (2,397 ) Proceeds from sale of property, plant and equipment     8,618       3,304       924   Short-term loans and deposits, net     (22,861 )     38,770       (16,099 ) Business acquisitions, net of cash acquired     (142,880 )     (63,057 )     (11,875 ) Dividends from equity-accounted investees     16,640       23,168       17,089   Purchases of property, plant and equipment, net     (751,806 )     (826,588 )     (711,721 ) Purchases of intangible assets     (83,114 )     (22,093 )     (11,350 ) Investments and loans to equity-accounted investees     (22,614 )     —       (8,521 ) Proceeds from sale of long-term deposits     1,913       7,164       3,241   Net cash used in investing activities     (996,104 )     (839,332 )     (740,709 ) Cash flows from financing activities                         Proceeds from exercise of share options     —       —       3,800   Dividend paid to the shareholders     (845,325 )     (634,388 )     (1,019,222 ) Dividend paid to non-controlling interests     (652 )     —       (2,889 ) Receipt of long-term debt     2,055,146       674,736       362,001   Repayment of long-term debt     (998,992 )     (613,457 )     (311,415 ) Short-term credit from banks and others, net     (142,253 )     263,119       (50,899 ) Net cash provided by (used in) financing activities     67,924       (309,990 )     (1,018,624 ) Net change in cash and cash equivalents     (33,498 )     (22,413 )     (32,115 ) Cash and cash equivalents as at beginning of the year     188,340       206,067       238,141   Net effect of currency translation on cash and cash equivalents     (16,409 )     4,686       41   Cash and cash equivalents included as part of assets held for sale     (7,602 )     —       —   Cash and cash equivalents as at end of the year     130,831       188,340       206,067       2015   2014   2013     $ millions Cash flows from operating activities                         Net income     506       466       820   Adjustments for:                         Depreciation and amortization     430       427       348   Interest expenses from financial institutions, net     67       74       42   Share in earnings of equity-accounted investees, net     (11 )     (31 )     (26 ) Loss (gain) on sale and disposal of property, plant and equipment, net     12       (6 )     (2 ) Share-based compensation     15       12       22   Revaluation of assets and liabilities denominated in foreign currencies     (23 )     (36 )     30   Gain on achievement over control of an associated company     (7 )     (36 )     (2 ) Gain from divestiture of subsidiaries & equity accounted investees     (215 )     —       —   Income tax expenses     162       166       280         936       1,036       1,512   Change in inventories     25       (33 )     4   Change in trade and other receivables     (86 )     (25 )     20   Change in trade and other payables     (106 )     55       (85 ) Change in provisions and employee benefits     (90 )     66       54         679       1,099       1,505   Income taxes paid, net of refund     (20 )     (159 )     (334 ) Interest received     1       2       2   Interest paid     (87 )     (49 )     (46 ) Net cash provided by operating activities     573       893       1,127                             Cash flows from investing activities                         Proceeds from sale of property, plant and equipment     6       9       3   Proceeds from (investment in) deposits and investments, net     34       (21 )     46   Business combinations, net of cash acquired     (351 )     (143 )     (63 ) Dividends from equity-accounted investees     19       17       23   Purchases of property, plant and equipment, net     (502 )     (752 )     (827 ) Purchases of intangible assets     (117 )     (83 )     (22 ) Proceeds from divestiture of subsidiaries     364       —       —   Investments in equity-accounted investees     —       (23 )     —   Net cash used in investing activities     (547 )     (996 )     (840 )                           Cash flows from financing activities                         Dividend paid to the Company’s shareholders     (347 )     (845 )     (634 ) Dividend paid to non-controlling interests     (1 )     (1 )     —   Receipt of long-term debt     1,201       2,055       675   Repayment of long-term debt     (846 )     (999 )     (613 ) Short-term credit from banks and others, net     8       (140 )     263   Net cash provided by (used in) financing activities     15       70       (309 )                           Net change in cash and cash equivalents     41       (33 )     (22 ) Cash and cash equivalents as at beginning of the year     138       188       206   Net effect of currency translation on cash and cash equivalents     (18 )     (16 )     4   Cash and cash equivalents included as part of assets held for sale     —       (8 )     —   Cash and cash equivalents as at the end of the year     161       131       188   The accompanying notes are an integral part of these consolidated financial statements. F-10 F-10 Table of Contents Consolidated Statements of Cash Flows for the Year Ended December 31 (cont’d) Appendix A - divestiture of subsidiaries 2015 $ millions Cash 7 Inventories 61 Receivables 28 Property, plant and equipment, net 37 Intangible assets, net 76 Payables (29 ) Employee benefits (20 ) Deferred taxes, net (3 ) Capital gain 214 Cash received 371 Less cash (7 ) Net cash 364 The accompanying notes are an integral part of these consolidated financial statements. F-11 Table of Contents Notes to the Consolidated Financial Statements as at December 31, 2014 2015 Note 1 – General A. The reporting entity Israel Chemicals Ltd. (hereinafter – “the Company” or “ICL”), is a company domiciled and incorporated in Israel and the shares of which are traded on the Tel-Aviv Stock Exchange and on the New York Stock Exchange. The address of the Company’s registered office is 23 Aranha St., Tel Aviv, Israel. The Company and its subsidiaries, associated companies and joint ventures (hereinafter – “the Group”) is a leading specialty minerals group that operates a unique, integrated business model. The Company competitively extract raw materials and utilize sophisticated processing and product formulation technologies to add value to customers in three attractive end-markets: agriculture, food and engineered materials. These three end marketsend-markets constitute over 90%98% of the Company’s revenues today. The Company’s operations are organized into three segments: (1) Fertilizers, which operates the raw material extraction for ICL and markets potash, phosphates and specialty fertilizers; (2) Industrial Products, which primarily extracts bromine from the Dead Sea and produces and markets bromine and phosphorus compounds for the electronics, construction, oil & gas and automotive industries and (3) Performance Products, which mainly produces, markets and sells a broad range of downstream phosphate-based food additives and industrial intermediates. The Company is a subsidiary of Israel Corporation Ltd. The CompanyCompany’s principal assets include: One of the world’s richest, longest-life and lowest-cost sources of potash and bromine (the Dead Sea). Additionally, Potash mines in the United Kingdom and Spain. Bromine compounds processing facilities located in Israel, in the Netherlands and in China. A unique integrated phosphate value chain, from phosphate rock mines in the Negev Desert in Israel into production facilities of value-added products in Israel, Europe, US, Brazil and China. An extensive global logistics and distribution network with operations in over 30 countries and a focused and highly experienced staff which develops production processes, new applications, formulations and products for our 3 key end markets – agriculture, food and engineered materials. ICL operates in the markets for potash, bromine, pure phosphoric acid, special phosphates, bromine-based and phosphorus-based flame retardants and chemicals for the prevention of the spreading of fires. ICL’s products are used mainly in the areas of agriculture, electronics, food, fuel and gas exploration, water purification and desalination, detergents, cosmetics, medicines, vehicles and others. The Company’s overseas operations consist mainly of the production of products that are integrated with or based on the activities of the companies in Israel or in closely related fields. About 95% of the Group’s products are sold to customers outside of Israel. B. State share The State of Israel holds a Special State Share in ICL and in some of its subsidiaries, entitling the State the right to safeguard the State of Israel interests (see Note 24). C. Definitions 1.Subsidiary – a company over which the Company has control and the financial statements of which are fully consolidated with the Company'sCompany’s statements as part of the consolidated financial statements. 2. AssociatedInvestee company – Subsidiaries and companies, including a company, which is not a subsidiary, overpartnership or joint venture, the financial and operational policies of which the Company has significant influence, and theCompany’s investment in which is presented on the basis of the equity method of accounting. Significant influence is deemed to exist when the holding percentage in the said company is 20%stated, directly or more, unless there are circumstances that contradict this assumption. 3. Investee company – (a) a subsidiary or (b) a joint venture of which the Company’s direct or indirect investment is included in the financial statement basedindirectly, on the equity method.basis. 3.Related party– Within its meaning in IAS 24 (2009), “Related Party Disclosures”. F-12 4. Joint arrangements – arrangements wherein the Company has joint control that was obtained by means of an agreement that requires unanimous consent with respect to the activities having a significant impact on the arrangement's results. F-11 Table of Contents Note 2 –- Basis of Preparation of the Financial Statements A. Statement of compliance with International Financial Reporting Standards The consolidated financial statements have been prepared by the Group in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Boards (IASB). The consolidated financial statements were authorized for issuance by the Company’s Board of Directors on March 19, 2015. 15, 2016. B. Functional and presentation currency Items included in the consolidated financial statements of the Company and each of its subsidiaries are measured using the currency of the primary economic environment in which the individual entity operates (“the functional currency”). The consolidated financial statements are presented in United States Dollars (“US Dollars”; $), which is the functional currency of the Company and the majority of its subsidiaries. Company. C. Basis of measurement The consolidated financial statements have been prepared on the historical cost basis except for the following assets and liabilities: derivative financial instruments, securities held for tradetrading that are statedmeasured at fair value. Deferredvalue, non-current assets groups held-for-sale, Investments in associates and joint ventures, deferred tax assets and liabilities, are recognized for temporary differences between the carrying amounts of assetsprovisions and liabilities and their value for taxation purposes. The deferred taxes are measured at the tax rates expected to apply to the temporary differences when they reverse, based on the laws that have been enacted or effectively enacted as at the reporting date. Inventories are measured at the lower of cost and net realizable value. Provisions are recognized according to the best estimate at the end of the reporting period of the outflow required to settle the obligation presently. When the value of time is significant, the future cash flows are discounted at a pre tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. For information regarding the measurement basis of assets and liabilities in respect of employee benefits –benefits. For further information regarding the measurement of these assets and liabilities see Note 3J. 3 regarding significant accounting policies. D. Operating cycle The Company’s regular operating cycle is up to one year. As a result, the current assets and the current liabilities include items the realization of which is intended and anticipated to take place within one year. E. Use of estimates and judgment In preparation of the The financial statements in accordanceconformity with IFRS as issued byrequires the IASB, Company Management is requiredmanagement to use judgment when makingmake judgments, estimates assessments and assumptions that affect implementationthe application of the accounting policies and the reported amounts of assets, liabilities, income and expenses. It is clarified that the actualActual results may be differentdiffer from these estimates. At the time The preparation of formulating the accounting estimates used in the preparation of the Company’sGroup’s financial statements requires management of the Company Management is required to make assumptions regarding circumstances and events involving significantthat involve considerable uncertainty. When using its judgment in determiningManagement of the Company prepares the estimates Company Management useson the basis of past experience, various facts, outside expertsexternal circumstances, and reasonable assumptions in accordance withaccording to the pertinent circumstances appropriate toof each estimate. The estimates Estimates and theunderlying assumptions used in preparation of the financial statements are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively. Presented hereunder is informationin the period in which the estimates are revised and in any future periods affected. Information about assumptions made by the Group with respect to the future and other reasons for uncertainty with respect to estimates for which significant value adjustment risk exist,  and were made while implementing the accounting policies that have a significant risk of resulting in a material impact onadjustment to carrying amounts of assets and liabilities in the next financial statements:year are included in the following notes: F-13 F-12 Table of Contents Note 2 –- Basis of Preparation of the Financial Statements (cont'd) 1.      Employee benefits According(cont’d) E. Use of estimates and judgment (cont’d) Estimate Principal assumptions Possible effects Reference Recognition of deferred tax asset Tax rates expected to apply when the timing differences applied to Beneficiary Enterprise are realized is based on forecasts of future revenues to be earned. The reasonability of future revenues to be earned to use future tax benefits. Recognition or reversal of deferred tax asset in profit or loss. See Note 20. Uncertain tax positions The extent of the certainty that the Group’s tax positions will be accepted (uncertain tax positions) and the risk of it incurring any additional tax and interest expenses. This is based on an analysis of a number of matters including interpretations of tax laws and the Group’s past experience. Recognition of additional income tax expenses. See Note 20. Post-employment employee benefits Actuarial assumptions such as the discount rate, future salary increases and the future pension increase. An increase or decrease in the post-employment defined benefit obligation. For information on the effect of a change in actuarial assumptions, see Note 21 regarding employee benefits. Assessment of probability of contingent and environmental liabilities Whether it is more likely than not that an outflow of economic resources will be required in respect of legal claims pending against the Company and its investees. Reversal or creation of a provision for a claim. For information on the Company’s exposure to claims, see Note 23 regarding contingent liabilities. Recoverable amount of cash generating unit containing goodwill The discount rate and a budgeted growth rate. Change in impairment loss. For information on key assumptions used to determined value in use, see Note 15 regarding impairment testing. Assessment of the fair value of the assets and liabilities acquired in a business combination Expected cash-flow forecasts of the acquired business, and models for calculating the fair value of the acquired items and their depreciation and amortization periods. Impact on the balance of assets and liabilities acquired and the depreciation and amortization in the statement of income. For information on fair value of the assets and liabilities acquired, see Note 11. Assessment of the net realizable value of inventory Future selling price and expected replacement price when used as the best available evidence for realizable value. Decrease in the carrying  value of the inventories and the results of operations accordingly F. Changes in accounting policies Improvements to International Standard IAS 19, someIFRSs 2010-2013 and 2011-2013 projects As part of the Group’s employee benefit plans constitute a defined benefit plan as defined inImprovements to IFRSs projects, the IASB published amendments to 8 IFRS. The amendment that is relevant to the Group and has an effect on the financial statements is: An amendment to IAS 19. Such plans include principally, liabilities for pension and severance benefits. In computing the pension liability, the Company uses various assessments. These assessments include, among other things, the interest rate for discounting the Company’s pension liability and the pension fund assets, assessments regarding the long term increase in wages and an assessment24, “Related Party Disclosures”, on definition of the life expectancyterm “related party”. The definition of the group of employees entitledterm was expanded so as to a pension. Assessmentinclude entities that provide key management personnel (KMP) services to the reporting entity, directly or through another entity of the interest rate for purposesGroup. Separate disclosure is to be provided of discounting the Company’s pension liability andamounts recognized as an expense in respect of the pension fund assets is based onmanagement services provided by the rate of return on bonds of corporations operating in countries where an active market exists for corporate bonds and on the rate of return on government bonds for companies operating in countries wheremanagement entity. Nevertheless, there is no active market for corporate bonds. The rate of return on long-term bonds changes accordingrequirement to market conditions. As a resultdisclose the discount rate will also change as willamounts paid to specific people in the pension liability and the pension fund assets. The assessment regarding the increase in wages is based on the Company’s forecasts in accordance with past experience and existing labor agreements. Such assessments may be different than the actual wage increases. The life expectancy assessment is based on actuarial research published in each country. This research is updated every several years, and accordingly the life expectancy assessment may be updated. Measurementmanagement entity who provide such services. Application of the liability for severance pay is based upon an actuarial assessment, which takes into account various assessments, among others,amendment expanded the future increase in employee wages and the ratetypes of employee turnover. The measurement is made on the basis of discounting the expected future cash flows according to the interest rate on highly rated corporate bonds. In addition, the severance pay deposits are measured according to their fair value. Changes in the assumptions used for the calculation of the liability for severance pay and the related plan assets for severance pay could increase or decrease the net liability for severance pay recognized.transactions that require providing disclosures. F-14 2.      Environmental and contingent liabilities The Company produces fertilizers and chemical products and, therefore, is exposed in its ordinary course of business to obligations and commitments under environmental and related laws and regulations. The Company recognizes a liability in its books when such liability is expected, is derived from a liability event that has already occurred and can be reliably measured. Assessment of the liability is based mostly on past experience, familiarity with the legal requirements concerning the Company’s areas of operation, as well as assessments regarding contingent claims existing against the Company based on opinions of legal advisors and other experts. As explained in Note 23 to the financial statements, a number of lawsuits are pending against the Company, the results of which may have a material impact on its results. When assessing the possible outcomes of legal claims that were filed against the Company and its investee companies, the Company bases itself on the opinions of its legal advisors. These opinions of the legal advisors are based on the best of their professional judgment, and take into consideration the current stage of the proceedings and the legal experience accumulated with respect to the various matters. As the results of the claims will ultimately be determined by the courts or as part of a compromise, they may be different from the aforesaid estimates of the Company and its advisors. 3.      Property, plant and equipment Property, plant and equipment items are depreciated using the straight-line method over their estimated useful lives. The Company evaluates the estimated useful lives of the property, plant and equipment by means of a comparison to the sector in which the Group operates, the level of upkeep of the facilities and the performance of the facilities over the years. Changes in these estimates in succeeding periods could increase or decrease the rate of depreciation of the facilities. 4.      Impairment of assets – IAS 36 The Company examines at every reporting date whether there have been events or changes in circumstances indicating that there has been an impairment of one or more non monetary assets. When there are indications of F-13 Table of Contents Note 2 – Basis of Preparation of the Financial Statements (cont'd) impairment, an examination is made as to whether the carrying amount of the investment can be recovered from the discounted cash flows anticipated to be derived from the asset, and if necessary it records an impairment provision up to the amount of the recoverable value. Assessment of the impairment of goodwill and of other intangible assets having an indeterminable lifespan is performed once a year or more frequently when indications of impairment exist. The recoverable value of the asset or the cash generating unit is determined based on the higher of the fair value of the asset less realization costs and the present value of the future cash flows expected from the continued use of the asset in its existing state, including the cash flows expected upon removal of the asset from service and its eventual sale (value in use). The future cash flows are discounted to their present value using a discount rate that reflects assessments of the market participants of the time value of money and the risks specific to the asset. The estimates regarding cash flows are based on past experience with respect to this asset or similar assets, and on the Company’s best assessments regarding the economic conditions that will exist during the asset’s remaining useful life. The estimates of the future cash flows are based on the Company’s forecasts. Since the actual cash flows could be different than the Company’s forecasts, the amount of the realizable value determined in the examination of impairment in value may change in succeeding periods, such that in the future an additional reduction of the value of the assets may be required or elimination of the reduction recorded in prior periods. In 2012, 2013 and 2014, there were no signs of impairment in value, except for a decline in value of one of the Company's cash generating units, in the amounts of about $10 million and about $40 million, which were recognized in 2013 and 2014, respectively. 5.      Business combinations The Company is required to allocate the cost of acquiring companies and operations in business combinations on the basis of the estimated fair value of the assets and liabilities acquired. The Company uses the valuations of external independent appraisers and internal valuations for purposes of determining the fair value. The valuations include assessments and estimates of Management concerning expected cash flow forecasts from the acquired business, and models for calculating the fair value of the acquired items and their depreciation period. Management’s estimate has an impact on the balance of assets and liabilities acquired and the depreciation and amortization in the statement of income. Management’s estimates of the forecasted cash flows and useful lives of the acquired assets may differ from the actual results. 6.      Taxes on Income The Company and the Group companies are assessed for income tax purposes in numerous jurisdictions and, therefore, Company Management is required to exercise considerable judgment in order to determine the aggregate provision for taxes. A provision in respect of uncertain tax positions is recorded where it is more likely than not that a flow of economic resources will be required in order to discharge the obligation. For details in connection with an assessment from the Taxes Authority in Israel whereby the Company is required to pay additional tax beyond the amount it already paid in respect of 2009 2011, in the amount of about $200 million – see Note 20. The deferred taxes are computed according to tax rates expected to apply when the timing differences are realized, as stated in Note 3O. The tax rate expected to apply upon the realization of the timing differences applying to Beneficiary Enterprises in Israel entitled to tax benefits is based on forecasts of future revenues to be earned by such Beneficiary Enterprises in proportion to the Company's total revenues. Changes in these assessments could lead to changes in the book value of these tax assets, the tax liabilities and the results of operations. 7.      Inventories Inventories are measured in the financial statements at the lower of cost or net realizable value. The net realizable value is an estimate of the selling price during the ordinary course of business, less the estimate of the cost of completion and the estimate of the costs needed to effect the sale. The selling price is estimated on the basis of the selling price expected at the time of realization of the inventories; a decrease in the expected selling price could cause a decrease in the book value of the inventories and the results of operations accordingly. Raw materials are written down to realizable value, which are based on the realization values of the inventories of the finished products F-14 Table of Contents Note 2 – Basis of Preparation of the Financial Statements (cont'd) in which they are included, only when the finished products in which they are included are expected to be sold at prices below cost. In cases where the replacement price of raw materials serves as the best available evidence for realizable value, measurement of realizable value is based on the replacement price. A decline in the expected replacement value could give rise to a decline in the value of the inventories of raw materials in the books and the results of operations, respectively. Part of the raw materials, work in process and finished goods are in bulk. The quantities are based on estimates made, for the most part, by third-parties who measure the volume and density of the inventory. Variances in the estimates used in determining the measurements may cause a change in the value of the inventory in the books and in the Company's results. Note 3 –- Significant Accounting Policies The accounting policies in accordance with IFRS are consistently applied by the Group companies for all the periods presented in these consolidated financial statements. A. Basis for Consolidation 1. Subsidiaries Subsidiaries are entities that are controlled byBusiness combinations The Group implements the Group.acquisition method to all business combinations. The acquisition date is the date on which the acquirer obtains control over the acquiree. Control exists when the Group is exposed, or has rights to variable yieldsreturns from its involvement inwith the investee companyacquiree and the Groupit has the ability to impact these yields by means ofaffect those returns through its influencepower over the investee company. When examining control, actualacquiree. Substantive rights held by the Group and by others are taken into account.account when assessing control. The Group recognizes goodwill on acquisition according to the fair value of the consideration transferred including any amounts recognized in respect of non-controlling interest in the acquiree as well as the fair value at the acquisition date of any pre-existing equity right of the Group in the acquiree, less the net amount of the identifiable assets acquired and the liabilities assumed. If the Group pays a bargain price for the acquisition (meaning including negative goodwill), it recognizes the resulting gain in profit or loss on the acquisition date. Furthermore, goodwill is not adjusted in respect of the utilization of carry-forward tax losses that existed on the date of the business combination. The consideration transferred includes the fair value of the assets transferred to the previous owners of the acquiree, the liabilities incurred by the acquirer from the previous owners of the acquiree and equity instruments that were issued by the Group. In a step acquisition, the difference between the acquisition date fair value of the Group’s pre-existing equity rights in the acquiree and the carrying amount at that date is recognized in profit or loss under other income or expenses. In addition, the consideration transferred includes the fair value of any contingent consideration. Costs associated with the acquisition that were incurred by the acquirer in a business combination such as: finder’s fees, advisory, legal, valuation and other professional or consulting fees, other than those associated with an issue of debt or equity instruments connected to the business combination, are expensed in the period the services are received. 2. Subsidiaries Subsidiaries are entities that are controlled by the Group. The financial statements of the subsidiaries are included in the consolidated financial statements from the date control was acquired until the date control ceases to exist/exist. The accounting policies of subsidiaries have been changed when necessary to align them with the accounting policies adopted by the Group. 3. Non-controlling interests Non-controlling interests comprise the equity of a subsidiary that cannot be attributed, directly or indirectly, to the parent company and they include components such as: the equity component of convertible debentures of subsidiaries, share-based payments that will be settled with equity instruments of subsidiaries and share options of subsidiaries. Measurement of non-controlling interests on the date of the business combination: Non-controlling interests that are instruments that give rise to a present ownership interest and entitle the holder to a share of net assets in the event of liquidation (for example: ordinary shares), are measured at the date of the business combination at their proportionate interest in the identifiable assets and liabilities of the acquiree. Allocation of profit or loss and other comprehensive income to the shareholders: Profit or loss and any part of other comprehensive income are allocated to the owners of the Company and the non-controlling interests. Total profit or loss and other comprehensive income is allocated to the owners of the Company and the non-controlling interests even if the result is a negative balance of non-controlling interests. F-15 Table of Contents 2.      Associated companies Associated companies Note 3 - Significant Accounting Policies (cont’d) A. Basis for Consolidation (cont’d) Transactions with non-controlling interests, while retaining control: Transactions with non-controlling interests while retaining control are accounted for as equity transactions. Any difference between the consideration paid or received and the change in non-controlling interests is included in the owners’ share in equity of the Company. The amount of the adjustment to non-controlling interests is calculated as follows: For an increase in the holding rate, according to the proportionate share acquired from the balance of non-controlling interests in the consolidated financial statements prior to the transaction. For a decrease in the holding rate, according to the proportionate share realized by the owners of the subsidiary in the net assets of the subsidiary, including goodwill. Furthermore, when the holding rate of the subsidiary changes, while retaining control, the Company re-attributes the accumulated amounts that were recognized in other comprehensive income to the owners of the Company and the non-controlling interests. 4. Loss of control Upon the loss of control, the Group derecognizes the assets and liabilities of the subsidiary, any non-controlling interests and the other components of equity related to the subsidiary. 5. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with associates and joint ventures are eliminated against the investment to the extent of the Group’s interest in these investments. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment. 6. Investment in associates and joint ventures (equity accounted investees) Associates are those entities regardingin which the Group has significant influence, but not control or joint control, over theirthe financial and operational policy, however control thereofoperating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of another entity. In assessing significant influence, potential voting rights that are currently exercisable or convertible into shares of the investee are taken into account. Joint ventures are joint arrangements in which the Group has not been obtained. Associated companiesrights to the net assets of the arrangement. Associates and joint ventures are accounted for using the equity method (equity accounted investees) and are recognized initially at cost. The cost of accounting.the investment includes transaction costs. Transaction costs that are directly attributable to an expected acquisition of an associate or joint ventures are recognized as an asset as part of the item of deferred expenses in the statement of financial position. These costs are added to the cost of the investment on the acquisition date. The consolidated financial statements include the Group’s share inof the net revenues and expenses of associated companies. 3.      Intercompany balances and transactions eliminated in the consolidation Intercompany balances within the Group and unrealized income and expenses deriving from intercompany transactions are eliminated in preparationprofit or loss and of other comprehensive income of equity accounted investees, after adjustments to align the accounting policies with those of the consolidatedGroup, from the date that significant influence commences until the date that significant influence ceases. 7. Loss of significant influence or joint control The Group discontinues applying the equity method from the date it loses significant influence in an associate or joint control in a joint venture and it accounts for the retained investment as a financial statements. Unrealized net profit deriving from transactions and joint ventures with associated companies was eliminated againstasset or subsidiary, as relevant. On the investment based ondate of losing significant influence, the Group’s rights in these investments. 4.      Non-controlling interests The non-controlling interests represent theGroup measures at fair value any retained interest it has in the net assets of subsidiaries that are allocated to rights not owned by theformer associate or joint venture. The Company whether directlyrecognizes in profit or indirectly through subsidiaries. The non-controlling interests are presented in the consolidated statement of financial position in the equity section, separate from the equity attributable to the Company’s shareholders. The share of the non-controlling interests in the Group’s results is presented in the consolidated statement of income as an allocation of the totalloss under other income or loss for the periodexpenses any difference between the non-controlling interests and the Company’s shareholders. Transactions with non-controlling interests where control is retained, are accounted for as an equity transaction. Differences between the consideration paid and the change in the non-controlling interests is recorded to the sharesum of the Company’s shareholders directly to the retained earnings. 5.      Business combinations The Group implements the “acquisition method” for all business combinations. The acquisition date is the date on which the acquiring entity obtains control over the acquired entity. F-15 Table of Contents Note 3 – Significant Accounting Policies (cont'd) The Group recognizes goodwill as at the acquisition date based on the fair value of the consideration paid lessretained interest and any proceeds received from the net amount attributedpartial disposal of the investment in the acquisitionassociate or joint ventures, and the carrying amount of the investment on that date. F-16 Table of Contents Note 3 - Significant Accounting Policies (cont’d) A. Basis for Consolidation (cont’d) The amounts recognized in equity through other comprehensive income with respect to the identifiable assets acquired and the liabilities undertaken. The consideration paid includes the fair value of contingent consideration. Subsequentsame associate or joint ventures are reclassified to the acquisition date, the Group recognizes changesprofit or loss or to retained earnings in the fair value of contingent consideration classified as a liability insame manner that would have been applicable if the statement of income. Costs related toassociate or joint venture had itself realized the acquisition incurred by the purchaser in respect of the acquisition such as: brokers’ commissions, consultants’ commissions, legal fees and valuations, are recorded as an expense in the period the services are received. same assets or liabilities. B. Foreign Currency 1. Transactions in foreign currency Transactions in foreign currency are translated into the functional currency of the Company and each of its subsidiaries based on the exchange rate in effect on the dates of the transactions. Monetary assets and liabilities denominated in foreign currency on the report date are translated into the functional currency of the Company and each of its subsidiaries based on the exchange rate in effect on that date. Exchange rate differences in respect of monetary items are the difference between the net book value in the functional currency at the beginning of the year plus the payments during the year and the net book value in foreign currency translated based on the rate of exchange at the end of the year. Exchange rate differences deriving from translation into the functional currency are recognized in the statement of income. Non monetaryNon-monetary items denominated in foreign currency and measured in terms of historical cost are translated using the exchange rate in effect on the date of the transaction. 2. Foreign activities operations The assets and liabilities of foreign activities,operations, including goodwill and adjustments to fair value created uponadjustments arising on acquisition, wereare translated into dollars according to USD at exchange rates at the rates of exchange in effect on the date of the report. Incomereporting date. The income and expenses of foreign operations are translated to USD at exchange rates at the foreign activities were translated into dollars according to the rates of exchange that were in effect on the transaction dates. Exchange rate differences in respectdates of the translationtransactions. Foreign currency differences are recordedrecognized in other comprehensive income as partand are presented in equity in the foreign currency translation reserve (hereinafter – “translation reserve”). When the foreign operation is a non-wholly-owned subsidiary of the reserve forCompany, then the relevant proportionate share of the foreign operation translation of foreign activities.difference is allocated to the non-controlling interests. When a foreign activityoperation is realizeddisposed of such that causes a loss of control, significant influence or joint control is lost, the accumulatedcumulative amount in the translation reserve ofrelated to that foreign activitiesoperation is transferredreclassified to the income statementprofit or loss as a part of the gain or loss on realizationdisposal. Furthermore, when the Group’s interest in a subsidiary that includes a foreign operation changes, while retaining control in the subsidiary, a proportionate part of the investment. Gainscumulative amount of the translation difference that was recognized in other comprehensive income is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation, while retaining significant influence or joint control, the proportionate part of the cumulative amount of the translation difference is reclassified to profit or loss. Generally, foreign currency differences from a monetary item receivable from or payable to a foreign operation, including foreign operations that are subsidiaries, are recognized in profit or loss in the consolidated financial statements. Foreign exchange gains and losses arising from exchange rate differences deriving from loans receiveda monetary item receivable from or grantedpayable to a foreign activities,operation, the settlement of which is notneither planned and is not expected to take placenor likely in the foreseeable future, are included asconsidered to part of thea net investment in thea foreign activitiesoperation and are recognized in other comprehensive income, and are presented within equity in a reserve forthe translation of foreign activities. reserve. C. Financial Instruments 1. Non-derivative financial instruments Non-derivativeassets Initial recognition of financial instruments include investments in shares and debt instruments, including trade and other receivables, cash and cash equivalents, loans and credit received, and trade and other payables. With respect to instruments not presented at fair value through the statement of income, the initial recognition is at fair value with the addition of all allocable directly related transaction costs. assets: The Group initially recognizes loans and receivables and deposits on the date that they are created. The rest of theAll other financial assets purchasedacquired in thea regular way purchase, including assets designated at fair value through the statement of income,profit or loss, are recognized initially recognized on the trade date whenat which the Group becomes a party to the instrument's contractual conditions, that is,provisions of the instrument, meaning on the date the Group committedundertook to buypurchase or sell the asset. Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, including service concession receivables and cash and cash equivalents. F-17 Table of Contents Note 3 - Significant Accounting Policies (cont’d) C. Financial Instruments (cont’d) Derecognition of financial assets: Financial assets are eliminatedderecognized when the contractual rights of the Group to the cash flows deriving from the financial assetsasset expire, or when the Group transfers the rights to receive the contractual cash flows on the financial assets to others without retaining control or effectively transfersasset in a transaction in which substantially all of the risks and rewards deriving fromof ownership of the asset. Acquisitions andfinancial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognized as a separate asset or liability. Regular way sales of financial assets made in the usual manner are recognized on the trade date, that is,meaning on the date the Group committedCompany undertook to buy or sell the asset. The Group classifies its financial assets according to the following categories: Financial assets at fair value through profit or loss A financial asset is classified at fair value through profit or loss if it is designated as such upon initial recognition. Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss. Financial assets designated at fair value through profit or loss include equity investments that otherwise would have been classified as available for sale. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables are measured at amortized cost using the effective interest method, less any impairment losses. Cash and cash equivalents Cash and cash equivalents include cash balances available for immediate use and call deposits. Cash equivalents include short-term highly liquid investments (with original maturities of three months or less) that are readily convertible into known amounts of cash and are exposed to insignificant risks of change in value. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale. The Group’s investments in certain equity securities are classified as available-for-sale financial assets. Available-for-sale financial assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, and foreign currency differences, are recognized directly in other comprehensive income and presented within equity in a reserve for financial assets classified as available-for-sale. A dividend received in respect of available-for-sale financial assets is recognized in profit or loss on the date the entity’s right to receive the dividend is established. When an investment is derecognized, the cumulative gain or loss in the reserve for available-for-sale financial assets is transferred to profit or loss. 2. Non-derivative financial Liabilities Non-derivative financial liabilities include bank overdrafts, loans and borrowings from banks and others, marketable debt instruments, finance lease liabilities, and trade and other payables. Initial recognition of financial liabilities: The Group initially recognizes debt securities issued on the date that they originated. All other financial liabilities are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. Financial liabilities (other than financial liabilities at fair value through profit or loss) are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method. Financial liabilities are eliminateddesignated at fair value through profit or loss if the Group manages such liabilities and their performance is assessed based on their fair value in accordance with the Group’s documented risk management strategy, providing that the designation is intended to prevent an accounting mismatch, or the liability is a combined instrument including an embedded derivative. F-18 Table of Contents Note 3 - Significant Accounting Policies (cont’d) C. Financial Instruments (cont’d) Derecognition of financial liabilities: Financial liabilities are derecognized when the Group’s obligation of the Group, as describedspecified in the contractagreement, expires or when it is paiddischarged or cancelled. F-16 Table Change in terms of Contents Note 3 – Significant Accounting Policies (cont'd) Adebt instruments: An exchange of debt instruments having substantially different terms, between an existing borrower and lender is accounted for as an extinguishment of the original financial assetliability and the recognition of a new financial liability at fair value. Furthermore, a substantial modification of the terms of the existing financial liability or part of it, is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. In such cases the entire difference between the amortized cost of the original financial liability and the fair value of the new financial liability is recognized in profit or loss as financing income or expense. The terms are substantially different if the discounted present value of the cash flows according to the new terms, including any commissions paid, less any commissions received and discounted using the original effective interest rate, is different by at least ten percent from the discounted present value of the remaining cash flows of the original financial liability. In addition to the aforesaid quantitative criterion, the Group examines, inter alia, whether there have also been changes in various economic parameters inherent in the exchanged debt instruments, therefore as a rule, exchanges of CPI-linked debt instruments with unlinked instruments are considered exchanges with substantially different terms even if they do not meet the aforementioned quantitative criterion. Offset of financial instruments: Financial assets and liabilities are offset and the amounts arenet amount presented on a net basis in the statement of financial position wherewhen, and only when, the Group currently has a currently enforceable legal right to offset the amounts recognized and the intention isintends either to settle the asset and liability on a net basis or to realize the asset and settle the liability concurrently. Cash and cash equivalents Cash and cash equivalents includes cash balances that are available for immediate use and deposits at call. Cash equivalents include short-term investments, where the period of time from the original deposit and up to the redemption date is up to three months, having high liquidity that can be easily converted into known amounts of cash and that are subject to an insignificant risk in connection with changes in value. Loans and receivables Loans and receivables are non-derivative financial instruments having fixed payments or payments that can be fixed that are not traded on an active market. After the initial recognition, the loans and debit balances are measured based on amortized cost using the effective interest rate method while taking into account transaction costs and net of impairment losses. 2.simultaneously. 3. Derivative financial instruments The Group holds derivative financial instruments for the purpose of economic (non-accounting) hedging against foreign currency risks, risks with respect to commodity prices, marine shipping prices, and interest risks. In addition, for purposes of an accounting hedge, the Company held derivative financial instruments for hedging the exposure to changes in the cash flows of an undertaking for construction of a new cogeneration power plant in Sodom. On the commencement date of the accounting hedge, the Group formally documented the hedge ratio between the hedging instrument and the hedged item, including the risk management target and the Group'sGroup’s strategy with respect to execution of the hedge, as well as the manner in which the Group estimates the effectiveness of the hedge ratio. Derivatives are recognized according to fair value and the attributable transaction costs are recorded in the statement of income as incurred. Changes in the fair value of the derivatives are recorded in the statement of income, except for derivatives used to hedge cash flows, as detailed below. Cash flow hedges Changes in the fair value of derivatives used to hedge cash flows, in respect of the effective portion of the hedge, were recorded through other comprehensive income directly in a capital reserve. With respect to the non effectivenon-effective part, changes in the fair value were recognized in the statement of income. The amount accumulated in the capital reserve was reclassified and included in the statement of income in the same period as the hedged cash flows affected profit or loss under the same line item in the statement of income as the hedged item. F-19 Table of Contents Note 3 - Significant Accounting Policies (cont’d) C. Financial Instruments (cont’d) Where the hedged item is a non-financial asset, the amount recorded in the capital reserve is transferred to the book value of the asset, upon recognition thereof. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, hedge accounting is discontinued. The cumulative gain or loss previously recognized through other comprehensive income and presented in the hedging reserve in equity remains there until the forecasted transaction occurs or is no longer expected to occur. If the forecasted transaction is no longer expected to occur, the cumulative gain or loss previously recognized in the hedging reserve is recognized immediately in profit or loss. Economic hedge that does not meet the conditions of an accounting hedge Changes in the fair value of derivatives that do not meet the conditions of an accounting hedge in accordance with IFRS, after the date of the initial recognition thereof, are recorded in the statement of income as financing income or expenses. F-17 Table of Contents Note 3 – Significant Accounting Policies (cont'd) 3. 4. CPI-linked assets and liabilities not measured at fair value The valuecarrying amount of index-linked financial assets and liabilities, which are not measured based onat fair value, are revalued every period in accordance with the actual rate of increase/ decrease in the CPI. D. Property, plant and equipment 1. Recognition and measurement Property, plant and equipment are presented at cost after deducting the related amounts of government grants and less accumulated depreciation and provision for impairment. The cost includes expenses that can be directly attributed to purchase of the asset. The cost of assets that were constructed independently includes the cost of the materials and direct salary costs, as well as any additional costs that are directly attributable to bringing the asset to the required position and condition so that it will be able to function as management intended, as well as an estimate of the costs to dismantle and remove the items and to restore its location, where there is an obligation to dismantle and remove or to restore the site. The cost of purchased software, which constitutes an inseparable part of operating the related equipment, is recognized as part of the cost of said equipment. Spare parts for facilities are valued at cost determined based on the moving average method, after recording a write down in respect of obsolescence. The portion designated for current consumption is presented in the inventories “category”“inventories” category in the current assets’assets section. Where significant parts of an item of property, plant and equipment (including costs of major periodic inspections) have different life expectancies, they are treated as separate items (significant components) of the property, plant and equipment. Changes in a commitment to dismantle and remove items and to restore their location, except for changes stemming from the passage of time, are added to or deducted from the cost of the asset in the period in which they occur. The amount deducted from the cost of the asset maydoes not exceed its book value. The balance, if any, is recognized immediately in the statement of income. Gains and losses on disposal of a property, plant or equipment item are determined by comparing the proceeds from disposal with the carrying amount of the asset, and are recognized net in the income statement in the “other income” or “other expenses” category, as applicable. 2. Subsequent costs (costs incurred after the initial recognition date) The cost of replacing part of an item of property, plant and equipment and other subsequent costs are recognized as part of the book value of the item if it is expected that the future economic benefit inherent therein will flow to the Group and that its cost can be reliably measured. The book value of the part that was replaced is eliminated.derecognized. Routine maintenance costs are charged to the statement of income as incurred. F-20 Table of Contents Note 3 - Significant Accounting Policies (cont’d) D. Property, plant and equipment (cont’d) 3. Depreciation Depreciation of an item of property, plant and equipment begins when it is available for use, that is, when it has reached the place and condition required in order that it can be used in the manner contemplated for it by Management. Depreciation is recorded in the statement of income according to the straight-line method over the estimated useful life of each significant component of the property, plant and equipment items. Owned land is not depreciated. The estimated useful life for the current period and comparative periods is as follows:   In Years Land development, roads and structures 10–15–30 Facilities, machinery and equipment equipment(1) 8–25 Dams and ponds(2) 20–40 Dams and ponds (1) 6–40 F-18 Table of Contents Note 3 – Significant Accounting Policies (cont'd) Heavy mechanical equipment, train cars and tanks 5–10 15 Office furniture and equipment, motor vehicles, computer equipment and other 3–20 10 (1) Mainly 25 years ( 2) Mainly 40 years Depreciation methods, useful lives and residual values are reviewed at the end of each reporting year and adjusted if appropriate. E. Intangible Assets 1. Goodwill Goodwill is createdrecorded as a result of acquisition of subsidiaries. Acquisition of non controlling interests are transactions with shareholders and goodwill is not recognized on such acquisitions. Subsequent measurement Goodwill is measured at cost less accumulated losses from impairment. 2. Costs of exploration and evaluation of resources Costs incurred in respect of exploration of resources and the evaluation thereof are recognized as intangible assets. The expenditures are recognized on the cost basis less a provision for impairment. The cost includes, among other things, costs of performing research studies, drilling costs and activities in connection with assessing the technical feasibility with respect to the commercial viability of extracting the resources. 3. Research and development Expenditures for research activities are recognized in profit or loss as incurred. Development expenditures are capitalized torecorded as intangible asset only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group has the intention and sufficient resources to complete development and to use or sell the asset. Other development expenditures costs are recognized in profit or loss as incurred. Subsequent to initial recognition, development expenditures are measured at cost less accumulated amortization and any accumulated impairment loss. 4. Other intangible assets Other intangible assets purchased by the Group, with a defined useful life, are measured according to cost less amortization and accumulated losses from impairment. F-21 Table of Contents Note 3 - Significant Accounting Policies (cont’d) E. Intangible Assets (cont’d) Intangible assets with indefinite useful lives are measured according to cost less accumulated losses from impairment. 5. Subsequent costs Subsequent costs are recognized as an intangible asset only when they increase the future economic benefit inherent in the asset for which they were incurred. All other costs, including costs relating to goodwill or trademarks developed independently, are charged to the statement of income as incurred. 6. Amortization Amortization is recorded in the statement of income according to the straight-line method from the date the assets are available for use, over the estimated useful economic life of the intangible assets, except for customer relationships and geological surveys, which are amortized according to the rate of consumption of the economic benefits expected from the asset on the basis of cash flow forecasts. Goodwill and intangible assets having an indefinite lifespan are not amortized on a systematic basis but, rather, are examined at least once a year for purposes of impairment in value. F-19 Table of Contents Note 3 – Significant Accounting Policies (cont'd) The estimated useful life for the current period and comparative periods is as follows:   In Years Concessions – over the balance of the concession granted to the companies   Software costs 3–10 Trademarks 15–20 Trademarks 5–30 Customer relationships 15–25 Agreements with suppliers and non-competition agreement 5 10-15 Patents 7–20 Non-competition agreement 5 Deferred expenses in respect of geological surveys are amortized over their useful life based on a geological estimate of the amount of the material that will be produced from the mining site. The estimates regarding the amortization method and useful life are reviewed, at a minimum, at the end of every reporting year and are adjusted where necessary. The Group assesses the useful life of the customer relationships on an ongoing basis, based on an analysis of all of the relevant factors and evidence, considering the experience the Company has with respect to recurring orders and churn rates and considering the future economic benefits expected to flow to the Company from these customer relationships. The Group periodically examines the estimated useful life of an intangible asset that is not amortized, at least once a year, in order to determine if events and circumstances continue to support the determination that the intangible asset has an indefinite life. F. Leased Assets Leases, where the Group assumes substantially all the risks and rewards of ownership of the asset, are classified as financing leases. Upon initial recognition, the leased assets are measured and a liability is recognized at an amount equal to the lower of its fair value or the present value of the future minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are classified as operating leases where the leased assets are not recognized in the Group’s statement of financial position. Payments under an operating lease are recorded in the statement of income on the straight-line method, over the period of the lease. G. Inventories Inventories are measured at the lower of cost or net realizable value. The cost of the inventories includes the costs of purchasing the inventories and bringing it to its present location and condition. In the case of work in process and finished goods, the cost includes the proportionate part of the manufacturing overhead based on normal capacity. Net realization value is the estimated selling price in the ordinary course of business, after deduction of the estimated cost of completion and the estimated costs required to execute the sale. F-22 Table of Contents Note 3 - Significant Accounting Policies (cont’d) G. Inventories (cont’d) The cost of the inventories of raw and auxiliary materials, maintenance materials, finished goods and goods in process, is determined mainly according to the “moving average” method. If the benefit from stripping costs (costs of removing waste produced as part of a mine'smine’s mining activities during its production stage) is realized in the form of inventories, the Company accounts for these stripping costs as inventories. In a case where the benefit is improved access to the quarry, the Company recognizes the costs as a non currentnon-current addition to the asset, provided the criteria presented in IFRIC 20 are met. Inventories which are expected to be sold in a period of more than 12 months from the reporting date are presented as non-current inventories, as part of non-current assets. H. Capitalization of Borrowing Costs Specific borrowing costs are capitalized to qualifying assets (assets that require a significant period of time to prepare them for their intended use or sale) during the period required for their completion and establishment until the time when they are ready for their intended use. Non-specific borrowing costs are capitalized to the investment F-20 Table of Contents Note 3 – Significant Accounting Policies (cont'd) in qualifying assets using an interest rate that is the weighted-average of the interest rates in respect of those credit sources that were not capitalized specifically. Other borrowing costs are charged to the statement of income as incurred. Income earned on the temporary investment of specific credit received for investing in a qualifying asset is deducted from the borrowing costs eligible for capitalization. I. Impairment 1. Financial assets An impairment of a financial asset not carried at fair value through profit or loss, is examined when there is objective evidence that one or more events have occurred that may have had a negative impact on the estimate of the future cash flows from the asset. Objective evidence that financial assets have been impaired can include a contractual default by a debtor, restructuring of an amount due to the Group on terms that the Group would not otherwise consider, indications that a debtor or issuer will enter into bankruptcy, or the disappearance of an active market for a security. When testing for impairment available-for-sale financial assets that are equity instruments, the Group also examines the difference between the fair value of the asset and its original cost while taking into consideration the standard deviation of the instrument’s price, the length of time the fair value of the asset is lower than its original cost and changes in the technological, economic or legal environment or in the market environment in which the issuer of the instrument operates. In addition, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment. The Group examines evidence of impairment for receivables and loans on a specific basis. The loss from impairment in the value of a financial asset measured according to amortized cost is calculated as the difference between the book value of the asset and the present value of the estimated future cash flows, discounted using the original effective interest rate. ALosses are recognized in profit or loss from impairmentand reflected in valuea provision for loss against the balance of athe financial asset classified as “available for sale” is calculatedmeasured at amortized cost. Impairment losses on the basis of its present fair value. Regarding significantavailable-for-sale financial assets are recognized by transferring the need for ancumulative loss that has been recognized in a capital reserve to profit or loss. The cumulative loss that is classified from other comprehensive income to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortization, and the current fair value, less any impairment loss previously recognized in value is examined for each asset separately. Losses fromprofit or loss. Changes in impairment in value, except for losses relatingprovisions attributable to a financial asset classified as “available for sale”,application of the effective interest method are recordedreflected in the statementitem of financing income. An accumulated loss, which relates to a financial asset classified as “available for sale” that was previously recorded to equity, is transferred to the statement of income where it sustains a significant or continuing decline in its fair value below the original cost. The Group examines evidence of impairment for receivables and loans on a specific basis. An impairment loss is cancelledreversed if the cancellationreversal can be related objectively to an event occurring after the impairment loss was recognized. Cancellation of an impairment loss forrecognized (such as repayment by the debtor). For financial assets measured at amortized cost is recorded in the statement of income, except for cancellation of an impairment loss forand available-for-sale financial assets classified as “available-for-sale”that are debt securities, the reversal is recognized in profit or loss. For available-for-sale financial assets that are equity instruments, which aresecurities, the reversal is recognized directly in other comprehensive income. F-23 Table of Contents Note 3 - Significant Accounting Policies (cont’d) I. Impairment (cont’d) 2. Non-financial assets In every reporting period, an examination is made with respect to whether there are signs indicating impairment in value of the Group’s non-financial assets, other than inventories and deferred tax assets. If such signs exist, the estimated recoverable amount of the asset is calculated. The Group conducts an annual examination of the recoverable amount of goodwill and intangible assets with indefinite useful lives or that are not available for use, or more frequently if there are indications of impairment. The recoverable amount of an asset or a cash-producing unit is the higher of its value in use or the net selling price (fair value less realization costs)cost of disposal). When determining the value in use the Group discounts the anticipated future cash flows according to a pre-tax discount rate that reflects the evaluations of the market'smarket’s participants regarding the time value of money and the specific risks relating to the asset or to a cash-producing unit. For purposes of testing impairment in value, the assets are grouped together into the smallest group of assets that yields cash flows from continuing use, which is essentially independent of the other assets and other groups (“cash generating unit”). Goodwill purchased in Subject to an operating segment ceiling test (before the contextaggregation of business combinations is allocatedsimilar segments), for the purposepurposes of examininggoodwill impairment in valuetesting, cash-generating units to cash-producing unitswhich goodwill has been allocated are aggregated so that are expected to yield benefits from the synergy oflevel at which impairment testing is performed reflects the combination. level at which goodwill is monitored for internal reporting purposes. Assets of the Company'sCompany’s headquarters – assets of the Company'sCompany’s headquarters do not produce separate cash flows and they serve more than one cash-producing unit. Some of theCertain assets of the Company'sCompany’s headquarters are allocated to cash-producing units on a reasonable and consistent basis and are examined for impairment as part of examination of impairment of the cash-producing units to which they are allocated. Losses from An impairment loss is recognized if the carrying amount of valuean asset or cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized when the book valuein profit or loss. Impairment losses recognized in respect of the asset or of the cash-producing unit exceeds the recoverable value and are recorded in the statement of income. Losses from impairment of value that were recognized for cash-producingcash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to reducing the book value of the goodwill attributed to these units and afterwardsthen to reducingreduce the book valuecarrying amounts of the other assets in the cash-producingcash-generating unit proportionately. F-21 Tableon a pro rata basis. An impairment loss is allocated between the owners of Contents Note 3 – Significant Accounting Policies (cont'd) the Company and the non-controlling interests on the same basis that the profit or loss is allocated. Nevertheless, if an impairment loss allocated to non-controlling interests relates to goodwill that was not recognized in the consolidated financial statements, the said impairment is not recognized as an impairment loss on goodwill. In such cases, only an impairment loss relating to goodwill that was allocated to the owners of the Company is recognized as an impairment loss on goodwill. A loss from impairment in value of goodwill is not cancelled. Regarding other assets with respect to which losses from impairments of value were recognized in previous periods, in each reporting period an examination is made as to whether there are signs indicating that these losses have decreased or no longer exist. A loss from impairment of value is cancelled if there has been a change in the estimates used to determine the recoverable value, only if the book value of the asset, after cancellation of the loss from impairment of value, does not exceed the book value, after deduction of depreciation or amortization, that would have been determined if the loss from impairment of value had not been recognized. 3. Investments in associates and joint ventures An investment in an associate or joint ventures is tested for impairment when objective evidence indicates there has been impairment. Goodwill that forms part of the carrying amount of an investment in an associate or joint ventures is not recognized separately, and therefore is not tested for impairment separately. F-24 Table of Contents Note 3 - Significant Accounting Policies (cont’d) I. Impairment (cont’d) If objective evidence indicates that the value of the investment may have been impaired, the Group estimates the recoverable amount of the investment, which is the greater of its value in use and its net selling price. In assessing value in use of an investment in an associate or joint ventures, the Group either estimates its share of the present value of estimated future cash flows that are expected to be generated by the associate or joint ventures, including cash flows from operations of the associate or joint ventures and the consideration from the final disposal of the investment, or estimates the present value of the estimated future cash flows that are expected to be derived from dividends that will be received and from the final disposal. An impairment loss is recognized when the carrying amount of the investment, after applying the equity method, exceeds its recoverable amount, and it is recognized in profit or loss under other expenses. An impairment loss is not allocated to any asset, including goodwill that forms part of the carrying amount of the investment in the associate or in the joint ventures. An impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount of the investment after the impairment loss was recognized, and only to the extent that the investment’s carrying amount, after the reversal of the impairment loss, does not exceed the carrying amount of the investment that would have been determined by the equity method if no impairment loss had been recognized. J. Employee Benefits The Group has several post-employment benefit plans. The plans are funded partly by deposits with insurance companies or funds managed by a trustee, and they are classified as defined contribution plans and as defined benefit plans. 1. Defined contribution plans A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts if the fund does not have sufficient assets to pay all the employee benefits relating to the employee’s service in the current and prior periods. The Group’s obligation to make deposits in a defined contribution plan is recorded as an expense in the statement of income in the periods during which the employees provided the services. 2. Defined benefit plans Defined benefit plans are retirement benefit plans that are not defined contribution plans. The Group’s net obligation, regarding defined benefit plans for post-employment benefits, is calculated for each plan separately by estimating the future amount of the benefit to which an employee will be entitled as compensation for his services in the current and past periods. The benefit is presented at present value after deducting the fair value of the plan assets. The discount rate for the Group companies operating in countries having a “deep” market wherein there is a high level of trading in corporate bonds is in accordance with the yield on the corporate bonds, including Israel. The discount rate for the Group companies operating in countries not having a market wherein there is a high level of trading in corporate bonds, as stated above, is in accordance with the yield on government bonds – the currency and redemption date of which are similar to the terms binding the Group. The calculations are performed by a qualified actuary using the projected unit credit method. When on the basis of the calculations a net asset is created for the Group, the asset is recognized up to the net present value of the available economic benefits in the form of a refund from the plan or by a reduction in future deposits to the plan. An economic benefit in the form of a refund from the plan or a reduction in future deposits will be considered available when it can be realized in the lifetime of the plan or after settlement of the obligation. Costs in respect of past services are recognized immediately and without reference to whether or not the benefits have vested. The movement in the net liability in respect of a defined benefit plan that is recognized in every accounting period in the statement of income is comprised of the following: F-25 Table of Contents Note 3 - Significant Accounting Policies (cont’d) J. Employee Benefits (cont’d) (i) Current service costs – the increase in the present value of the liability deriving from employees’ service in the current period. (ii) The net financing income (expenses) are calculated by multiplying the net defined benefit liability (asset) by the discount rate used for measuring the defined benefit liability, as determined at the beginning of the annual reporting period. (iii) Exchange rate differences; (iv) Past service costs and plan reduction – the change in the present value of the liability in the current period as a result of a change in post-employment benefits attributed to prior periods. F-22 Table of Contents Note 3 – Significant Accounting Policies (cont'd) The difference, as at the date of the report, between the net liability as at the beginning of the period plus the movement in profit and loss as detailed above, and the actuarial liability less the fair value of the fund assets at the end of the period, reflects the balance of the actuarial income or expenses recognized in other comprehensive income and is recorded in retained earnings. The current interest costs and return on plan assets are recognized as expenses and interest income in the respective financing category. 3. Other long-term employee benefits Some of the Company’s employees are entitled to other long-term benefits that do not relate to a post-retirement benefit plan. Actuarial gains and losses are recorded directly to the statement of income in the period in which they arise. In cases where the amount of the benefit is the same for every employee, without taking into account the years of service, the cost of the benefit is recognized when entitlement to the benefit is determined. The amount of these benefits is discounted to its present value in accordance with an actuarial evaluation. 4. Early retirement pay Early retirement pay is recognized as an expense and as a liability when the Group has clearly undertaken to pay it, without any reasonable chance of cancellation, in respect of termination of employees before they reach the customary age of retirement according to a formal, detailed plan. The benefits provided to employees upon voluntary retirement are charged when the Group proposes a plan to the employees encouraging voluntary retirement, it is expected that the proposal will be accepted and it is possible to reliably estimate the number of employees that will accept the proposal. 5. Short termShort-term benefits Obligations for short-term employee benefits are measured on a non-discounted basis, and the expense is recorded at the time the said service is provided. A provision for short-term employee benefits in respect of cash bonuses is recognized when the Group has a current legal or implied obligation to pay the said amount for services provided by the employee in the past and it is possible to reliably estimate the amount. Classification of employee benefits as a short term employee benefit or a long term employee benefit (for measurement purposes) is determined based on the Group'sGroup’s expectation with respect to full utilization of the benefits and not based on the date on which the employee is entitled to utilize the benefit. 6. Share-based compensation The fair value on the grant date of share-based compensation awards granted to employees is recognized as a salary expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognized as an expense in respect of share-based compensation awards that are conditional upon meeting vesting conditions that are service conditions, is adjusted to reflect the number of awards that are expected to vest. F-26 Table of Contents Note 3 - Significant Accounting Policies (cont’d) K. Provisions A provision is recognized when the Group has a present legal or implied obligation as the result of an event that occurred in the past, that can be reliably estimated and when it is expected that a flow of economic benefits will be required in order to settle the obligation. The provisions are made by means of discounting of the future cash flows at a pre-tax interest rate reflecting the current market estimates of the time value of money and the risks specific to the liability, and without taking into account the Company’s credit risk. The book value of the provision is adjusted in every period in order to reflect the amount of time that has elapsed and is recognized as financing expenses. In rare cases where it is not possible to estimate the outcome of a potential liability, no provision is recorded in the financial statements. F-23 Table The Group recognizes a reimbursement asset if, and only if, it is virtually certain that the reimbursement will be received if the Company settles the obligation. The amount recognized in respect of Contents Note 3 – Significant Accounting Policies (cont'd) the reimbursement does not exceed the amount of the provision. 1. Warranty A provision for warranty is recognized when the products or services, in respect of which the warranty is provided, are sold or performed. The provision is based on historical data and on a weighting of all possible expensesoutcomes according to their probability of occurrence. 2. Provision for environmental costs The Group recognizes a provision for an existing obligation for prevention of environmental pollution and anticipated provisions for costs relating to environmental restoration stemming from current or past activities. Costs for preventing environmental pollution that increase the life expectancy or efficiency of a facility or decrease or prevent the environmental pollution are recorded as a provision, are capitalized to the cost of the property, plant and equipment and are depreciated according to the usual depreciation rates used by the Group. 3. Legal claims A provision for legal claims is recognized when the Group has an expressa present legal or implied legalconstructive obligation as a result of an event that occurred in the past, if it is more likely than not that an outflow of economic resources will be required to settle the obligation and it can be reliably estimated. Where the time value is significant, the provision is measured based on its present value. L. Revenue Recognition Sale of goods Revenue from the sale of goods in the ordinary course of business is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. When the credit period is short and constitutes the accepted credit in the industry, the future consideration is not discounted. Revenue is recognized when persuasive evidence exists (usually in the form of an executed sales agreement) that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction of revenue aswhen the sales are recognized. M. Treasury stock Where share capital recognized as equity has been reacquired by the Group, the amount of the consideration paid including direct expenses, is deducted from equity. The reacquired shares are classified as treasury shares and are presented as a deduction from equity. F-27 Table of Contents Note 3 - Significant Accounting Policies (cont’d) N. Financing Income and Expenses Financing income includes income from interest on amounts invested, gains from exchange rate differences, gains from derivative financial instruments recognized in the statement of income, and gains from available for saleavailable-for-sale financial assets. Interest income is recognized as accrued, using the effective interest method. Financing expenses include interest on loans received, changes in the time value of provisions, securitization transaction costs, losses from impairment of available for sale financial assets, losses from derivative financial instruments, changes due to the passage of time in liabilities in respect of defined benefit plans for employees less interest income deriving from plan assets of a defined benefit plan for employees and losses from exchange rate differences. Borrowing costs, which are not capitalized, are recorded in the income statement using the effective interest method. Gains and losses from exchange rate differences and from derivative financial instruments are reported on a net basis, as financing income or financing expenses, based on the fluctuation in the exchange rates and based on their position (net gain or loss). F-24 Table of Contents Note 3 – Significant Accounting Policies (cont'd) In the statements of cash flows, interest received and interest paid are presented as part of cash flows from operating activities. O. Taxes on Income Taxes on income include current and deferred taxes. The current Current tax and deferred tax are recognized in profit or loss except to the extent that they relate to a business combination, or are recognized directly in equity or in other comprehensive income to the extent they relate to items recognized directly in equity or in other comprehensive income. Current tax is the amount ofexpected tax that is expected to be paidpayable (or receivable) on the taxable income for the year, which is calculated according to theusing tax rates in effect based on the law that was finally legislatedenacted or effectively legislated assubstantively enacted at the datereporting date. Current taxes also include taxes in respect of the report, and includes changes in tax payments attributed to prior years and payment ofany tax in respect of distribution ofarising from dividends. Current tax assets and liabilities are offset if there is a dividend. legally enforceable right to offset current tax liabilities and assets, and there is intent to settle current tax liabilities and assets on a net basis or the tax assets and liabilities will be realized simultaneously. Recognition of deferred taxes is according to the balance sheet approach, relating to temporary differences between the book values of the assets and liabilities for purposes of financial reporting and their value for tax purposes. The Company does not recognize deferred taxes for the following temporary differences: initial recognition of goodwill, initial recognition of assets and liabilities for transactions that do not constitute a business combination and do not impact the accounting income and the income for tax purposes, as well as differences deriving from investments in subsidiaries, investee companies and associated companies that are presented according to equity method, if it is not expected that they will reverse in the foreseeable future and if the Group controls the date the provision will reverse, whether via sale or distribution of a dividend. The deferred taxes are measured according to the tax rates expected to apply to the temporary differences at the time they are realized, on the basis of the law that was finally legislated or effectively legislated as at the date of the report. The Company offsetsDeferred tax assets and liabilities are offset if there is a legally enforceable right to offset deferred tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle deferred tax liabilities and assets on a net basis or their deferred tax assets and liabilities if there is an enforceable legal right to offset current tax assets and liabilities and they are attributable to the same taxable income and are taxed by the same tax authority for the same assessed company or for different companies that intend to settle current tax assets and liabilities on a net basis or if the tax assets and liabilities are settled concurrently. will be realized simultaneously. A deferred tax asset is recognized in the books when it is expected that in the future there will be taxable income against which the temporary differences can be utilized. Deferred tax assets are examined at each reporting date, and ifare reduced to the extent that it is not expectedno longer probable that the related tax benefitsbenefit will be realized, they are written down. realized. Deferred taxes that were not recognized are re evaluatedre-evaluated at every reporting date and are recognized if the expectation has changed such that it is expected that in the future there will be taxable income against which it will be possible to utilize them. F-28 Table of Contents Note 3 - Significant Accounting Policies (cont’d) O. Taxes on Income (cont’d) The Group could become liable for additional taxes in the case of distribution of intercompany dividends between the Group companies. These additional taxes are not included in the financial statements in light of the policy of the Group companies not to cause distribution of a dividend that involves additional taxes to the paying company in the foreseeable future. In cases where an investee company is expected to distribute a dividend involving additional tax, the Company records a reserve for taxes in respect of the said additional tax it is expected to incur due to distribution of the dividend. Deferred taxes in respect of intra-company transactions in the consolidated financial statements are recorded according to the tax rate applicable to the buying company. Deferred and current taxes relating to items recognized in shareholders’ equity and/or other comprehensive income are recorded directly in shareholders’ equity or other comprehensive income, respectively. P. Earnings per share The Group presents basic and diluted earnings per share data for its ordinary share capital. The basic earnings per share are calculated by dividing the income or loss attributable to the holders of the Company’s ordinary shares by the weighted-average number of ordinary shares outstanding during the year, after adjustment in respect of treasury shares. The diluted earnings per share are determined by adjusting the income or loss attributable to the holders of the Company’s ordinary shares and the weighted-average number of ordinary shares outstanding for the effect of restricted shares and options for shares granted to employees. F-25 Table of Contents Note 3 – Significant Accounting Policies (cont'd) Q.  Segment Information An operating segment is a component of the Group that meets the following three conditions: 1. It engages in business activities from which it is expected to earn revenues and incur expenses, including revenues and expenses relating to transactions between the Group companies; 2. Its operating results are reviewed regularly by the Group’s chief operating decision maker in order to make decisions about resources to be allocated to the segment and to assess its performance, and 3. Separate financial information is available in respect thereof. Inter-segment pricing is determined based on transaction prices in the ordinary course of business. Segment results, assets and liabilities include items that are directly attributable to the segment and items that can reasonably be attributed to it. Asset and liability items that were not allocated consist primarily of investments, loans and credit, assets of the Company’s headquarters, as well as tax assets and liabilities. Unallocated items of revenue and expense include financing income and expenses on investments, loans and credit, administrative and general costs attributed to the Company’s headquarters and taxes. Capital investments of the segment are the total costs that were incurred during the period for purchasing property, plant and equipment and intangible assets. R. Non-current assets and disposal groups held for sale Non-current assets (or disposal groups composed of assets and liabilities) are classified as held for sale or distribution if it is highly probable that they will be recovered primarily through a sale transaction or a distribution to the owners and not through continuing use. This applies also to when the Company is obligated to a sale plan that involves losing control over a subsidiary, whether or not the Company will retain any non-controlling interests in the subsidiary after the sale. Immediately before classification as held for sale or distribution, the assets (or components of the disposal group) are remeasured in accordance with the Group’s accounting policies. Thereafter, the assets (or components of the disposal group) are measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is initially allocated to goodwill, and then to remaining assets and liabilities on pro rata basis, except that no loss is allocated to assets that are not in the scope of the measurement requirements of IFRS 5 such as: inventories, financial assets, deferred tax assets and employee benefit assets, investment property measured at fair value and biological assets, which continue to be measured in accordance with the Group’s accounting policies. Impairment losses recognized on initial classification as held for sale, and subsequent gains or losses on remeasurement, are recognized in profit or loss. Gains are not recognized in excess of any cumulative impairment loss. In subsequent periods, depreciable assets classified as held for sale or distribution are not depreciated on a periodic basis and investments in associated companies classified as held for sale are not accounted for based on the equity method of accounting. S.basis. R. New Standards and Interpretations not yet Adopted IFRIC Interpretation 21 “Impositions” (hereinafter IFRS 15, Revenue from Contracts with Customers IFRS 15 replaces the current guidance regarding recognition of revenues and presents a new model for recognizing revenue from contracts with customers. IFRS 15 provides two approaches for recognizing revenue: at a point in time or over time. The model includes five steps for analyzing transactions so as to determine when to recognize revenue and at what amount. Furthermore, IFRS 15 provides new and more extensive disclosure requirements than those that exist under current guidance. IFRS 15 is applicable for annual periods beginning on or after January 1, 2018 and earlier application is permitted. The Company is examining the effects of IFRS 15 on the financial statements. IFRS 16, Leases The standard replaces International Accounting Standard 17 – “the Interpretation”).Leases (IAS 17) and its related interpretations. The Interpretation provides guidelines in connection withstandard’s instructions annul the existing requirement from lessees to classify leases as operating or finance leases. Instead of this, for lessees, the new standard presents a unified model for the accounting treatment of aall leases according to which the lessee has to recognize an asset and liability to pay government impositions that are covered by IAS 37 "Provisions", contingent liabilities and contingent assets, and government impositions that are not covered by IAS 37 since the timing and amount of their repayment are certain. An "imposition" is defined as an outflow of resources imposed on an entity by the government by means of legislation and/or regulation. The Interpretation provides that a liability for payment of an imposition will be recognized only upon occurrencein respect of the event that createslease in its financial statements. Similarly, the liability for payment, even in cases where the entity has no practical possibility of avoiding the event.standard determines new and expanded disclosure requirements from those required at present. F-29 F-26 Table of Contents Note 3 –- Significant Accounting Policies (cont'd) Application(cont’d) R. New Standards and Interpretations not yet Adopted (cont’d) The standard will become effective for annual periods as of January 1, 2019, with the possibility of early adoption, so long as the company has also early adopted IFRS 15 – Revenue from contracts with customers. The standard includes a number of alternatives for the implementation of transitional provisions, so that companies can choose one of the Interpretation in 2014 did not have an impactfollowing alternatives at the implementation date: full retrospective implementation or implementation from the effective date while adjusting the balance of retained earnings at that date. The Company is examining the effects of IFRS 16 on the Company's financial statements. T. IFRS 9 (2014), Financial Instruments The Standard includes revised guidance regarding the classification and measurement of financial instruments, and a new model for measuring impairment of financial assets. IFRS 9 (2014) is effective for annual periods beginning on or after January 1, 2018 with early adoption being permitted. The Standard is to be applied retrospectively with some exemptions. The Company is examining the effects of IFRS 9 on the financial statements. Amendment to IAS 19, Employee Benefits The amendment clarifies that the high quality corporate debentures or government debentures used in estimating the discount rate should be denominated in the same currency as the benefits to be paid. Therefore, the market of high quality corporate debentures should be assessed at currency level and not at country level. The amendments are applicable retrospectively for annual periods beginning on or after January 1, 2016 with earlier application being permitted. The Company is examining the effects of the Amendment to IAS 19 on the financial statements. S. Indices and exchange rates Balances in or linked to foreign currency are included in the financial statements at the representative exchange rate on the date of the report. Balances linked to the Consumer Price Index (hereinafter – “the CPI”) are included on the basis of the index relating to each linked asset or liability. Note 4 –- Determination of Fair Values As part of the accounting policies and disclosures, the Group is required to determine the fair value of both financial and non-financial assets and liabilities. The fair values have been determined for measurement and/or disclosure purposes based on the methods described below. Further information about the assumptions made in determining the fair values is disclosed in the notes specific to that asset or liability. A. Property, plant and equipment The fair value of property, plant and equipment recognized in a business combination is based on the cost model or on the market value model. According to the cost model, the fair value of the property, plant and equipment is based on the depreciated replacement price of the item measured. The depreciated replacement price takes into account adjustments in respect of physical wear and tear and obsolescence of the property, plant and equipment item. According to the market value model, the fair value is based on the selling price determined in sale transactions of similar assets, while making adjustments to the asset items sold and the asset item acquired in the business combination combination. B. Intangible assets The fair value of patents and trademarks acquired in a business combination is based on the discounted estimated royalty payments that would be required to be paid if the patent or trademark was not owned. The fair value of customer relationships acquired in a business combination is determined using the multi-period excess earnings method, whereby the fair value of the asset is estimated after deducting a fair return on all other assets that are part of creating the related cash flows. F-30 Table of Contents Note 4 - Determination of Fair Values (cont’d) B. Intangible assets (cont’d) The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the assets assets. C. Inventories The fair value of inventories acquired in a business combination is determined as follows: (1)Finished goods inventories – on the basis of the estimated selling price of the products in the ordinary course of business, less the estimated selling costs as well as a reasonable margin in respect of the efforts required for completion and sale of the inventories. (2)Inventory of work-in-progress – determined on the basis of estimates described in Section 1 above, less costs required for its completion. (3)Inventory of raw materials – based on replacement value. D. Investments in securities The fair value of financial assets classified as available-for-sale and as held-for-trading is determined based on their market price at date of the report. If the an asset or liability measured at fair value has a bid price and an ask price, the price in the range between them that best reflects fair value under the circumstances will be used for measuring fair value. E. Derivatives The fair value of forward contracts on foreign currency is determined by averaging the exchange rate and the appropriate interest coefficient for the period of the transaction and the relevant currency index. F-27 Table of Contents Note 4 – Determination of Fair Values (cont'd) The fair value of currency options is determined based on the Black and Scholes model, taking into account the intrinsic value, standard deviation and the interest rates. The fair value of interest rate swap contracts is determined by discounting the estimated amount of the future cash flows on the basis of the terms and length of period to maturity of each contract, while using market interest rates of similar instruments at the date of measurement. Future contracts on energy prices are presented on the basis of quotes of the prices of products on an ongoing basis. The reasonableness of the market price is examined by comparing it to quotations by banks. For further information regarding the fair value hierarchy – see Note 27 regarding financial instruments. F. Liabilities in respect of debentures The fair value of the liabilities and the debentures is determined for disclosure purposes only. The fair value of marketable debentures is determined based on the stock market prices as at the date of the report. The fair value of the non marketablenon-marketable debentures is calculated based on the present value of future cash flows in respect of the principal and interest components, discounted at the market rate of interest as at the reporting date. G. Share-based compensation The fair value of employee share options and of share appreciation rights is measured using the Black and Scholes model or a binomial model, in accordance with the plan (see Note 24). The model’s assumptions include the share price on the measurement date, exercise price of the instrument, expected volatility (based on the weighted averageweighted-average historic volatility), the weighted averageweighted-average expected life of the instruments (based on historical experience and general option holderoption-holder behavior), expected dividends, and the risk-free interest rate (based on government debentures). F-31 H. Contingent consideration in respect Table of business combinationsContents The fair value of contingent consideration is calculated at the time of the business combination using the income approach based on the expected payment amounts and their associated probabilities. When the contingent consideration is long term in nature, the liability is discounted to present value using the market interest rate as at the reporting date. Note 5 –- Operating Segments A. General 1. Information on business segments: ICL is a multi national enterprise, which operates mainly in the fields of fertilizers and specialty chemicals, in three reporting segments – fertilizers (that includes potash and phosphate), industrial products and performance products. The segments are described below: ICL Fertilizers – ICL Fertilizers extracts potash from the Dead Sea and mines and produces potash and salt from subterranean mines in Spain and the UK. ICL Fertilizers processes the potash into its types and markets it throughout the world. This segment also uses part of the potash to produce compound fertilizers. In addition, ICL Fertilizers mines and processes phosphate rock in open mines in the south of Israel, and produces sulfuric acid in Israel, agricultural phosphoric acid, phosphate fertilizers, compound fertilizers, based mainly on potash and phosphate, liquid fertilizers and soluble fertilizers. ICL Fertilizers also manufactures compound fertilizers in the Netherlands, Germany and Belgium, liquid fertilizers and soluble fertilizers in Spain, slow releaseslow-release fertilizers and controlled releasecontrolled-release fertilizers in the Netherlands and in the United States, and phosphate basedphosphate-based food additives for livestock, in Turkey and in Israel. F-28 Table of Contents Note 5 – Operating Segments (cont'd) ICL Fertilizers markets its products worldwide, mainly in Europe, Brazil, India, China and Israel. The activities of ICL Fertilizers also include the activities of Mifalei Tovala Ltd., which is engaged in the transportation of cargo, mainly of ICL companies in Israel, since a large part of the Company’s activities consists of bulk transport of cargo of the ICL Fertilizers segment. ICL Industrial Products – ICL Industrial Products produces bromine out of a solution that is created as a by productby-product of the potash production process in Sodom, Israel, as well as bromine basedbromine-based compounds. ICL Industrial Products uses most of the bromine it produces for self production of bromine compounds at production sites in Israel, the Netherlands and China. In addition, ICL Industrial Products extracts salt, magnesia and chlorine from Dead Sea brine, and produces chlorine basedchlorine-based products in Israel and the United States. In addition, ICL Industrial Products engages in the production and marketing of flame retardants and additional phosphorus basedphosphorus-based products. ICL Performance Products – ICL Performance Products cleans some of the agricultural phosphoric acid manufactured by ICL Fertilizers, purchases clean phosphoric acid from other sources and also manufactures thermal phosphoric acid. The clean phosphoric acid and the thermal phosphoric acid are used to manufacture downstream products with high added value, phosphate salts, which are also used as a raw material for manufacturing, food additives, hygiene products and flame retardantsflame-retardants and fire extinguishment products. ICL Performance Products also manufactures phosphorous derivatives based on phosphorous acquired from outside sources and manufactures specialty products, based on aluminum acids (hereinafter – “Aluminia”) and other raw materials. The manufacturing of ICL’s performance products is mostly carried out at production sites in Europe, (particularly in Germany), the United States, Brazil, Israel, China, Mexico and other countries. In addition to the segments described above, ICL has other operations, including production and marketing of pure magnesium as well as magnesium alloys. 2. Segment assets and liabilities Segment assets include all the operating assets used by the segment and consist principally of cash and cash equivalents, trade and other receivables, inventories, property, plant and equipment and intangible assets, net of allowances and provisions. Most of these assets can be directly attributed to the individual segments. Segment liabilities include all the operating liabilities and consist principally of trade payables and wages, which are scheduled for current payment, and liabilities for employee benefits. Capital investment Segment capital investments for each of the reporting periods also include property, plant and equipment and intangible assets acquired as part of business combinations. 3. Inter–segment transfers Segment revenues, segment expenses and segment results include transfers between business segments and between geographical segments. Such transfers are accounted for at arm’s length, representing prices charged to external customers for similar goods. These transfers are eliminated as part of consolidation of the statements. F-32 F-29 Table of Contents Note 5 –- Operating Segments (cont'd)(cont’d) B. Operating segment data     Fertilizers   Industrial   Performance   Other         Potash   Phosphate   Eliminations   Total   products   products   activities   Eliminations   Consolidated     $ millions                                       Year 2015                                                                         Sales to external parties     1,292       1,534       —       2,826       1,098       1,388       93       —       5,405   Inter-segment sales     158       169       (86 )     241       17       84       26       (368 )     —   Total sales     1,450       1,703       (86 )     3,067       1,115       1,472       119       (368 )     5,405   Operating income (loss) attributed to segment     375       154       —       529       (24 )     319       (48 )             776   Expenses not allocated to segments and intercompany eliminations                                                                     (11 ) Operating income                                                                     765   Financing expenses                                                                     (160 ) Financing income                                                                     52   Share in earning of  equity-accounted investee                                                                     11   Income before taxes on income                                                                     668   Capital expenditures     460       426       —       886       50       221       10       (7 )     1,160   Capital expenditures not allocated                                                                     110   Total capital expenditures                                                                     1,270   Depreciation and amortization     104       138       —       242       102       78       7       —       429   Depreciation and amortization not allocated                                                                     1   Total depreciation and amortization                                                                     430   F-33     Fertilizers                                     Potash     Phosphate     Eliminations     Total     Industrial products     Performance products     Other activities     Eliminations     Consolidated       US$ thousands   Year 2014:                                                       Sales to external parties     1,620,298       1,521,683       —       3,141,981       1,316,829       1,533,080       118,820       —       6,110,710   Inter-segment sales     195,997       156,533       (92,949 )     259,581       19,962       81,091       29,611       (390,245 )     —   Total sales     1,816,295       1,678,216       (92,949 )      3,401,562       1,336,791       1,614,171       148,431       (390,245 )     6,110,710   Income from ordinary activities     536,491       132,938       656       670,085       (62,281 )     197,300       (9,367 )             795,737   Unallocated expenses and intercompany eliminations                                                                     (38,067 ) Operating income                                                                     757,670   Financing expenses                                                                     (278,243 ) Financing income                                                                     122,295   Share in profits of investee companies accounted for using the equity method of accounting                                                                     30,532   Income before taxes on income                                                                     632,254   Other Data:                                                                         Segment assets     2,951,352       1,669,364       (68,566 )     4,552,150       1,745,235       1,351,244       88,720       (160,877 )     7,576,472   Unallocated assets                                                                     771,116   Consolidated total assets                                                                     8,347,588   Segment liabilities     566,115       484,988       (44,462 )     1,006,641       596,267       364,965       59,840       (52,319 )     1,975,394   Unallocated liabilities                                                                     3,371,968   Consolidated total liabilities                                                                     5,347,362   Capital expenditures     456,272       152,819       —       609,091       108,235       202,956       8,226       —       928,508   Unallocated capital expenditures                                                                     29,203   Total capital expenditures                                                                     957,711   Depreciation and amortization     103,530       121,680       —       225,210       122,992       70,848       6,574       —       425,624   Unallocated depreciation and amortization                                                                     1,854   Total depreciation and amortization                                                                     427,478   F-30 Table of Contents Note 5 –- Operating Segments (cont'd) (cont’d) B. Operating segment data (cont’d)     Fertilizers   Industrial   Performance   Other         Potash   Phosphate   Eliminations   Total   products   products   activities   Eliminations   Consolidated     $ millions Year 2014                                     Sales to external parties     1,620       1,522       —       3,142       1,317       1,533       119       —       6,111   Inter-segment sales     196       156       (93 )     259       20       81       29       (389 )     —   Total sales     1,816       1,678       (93 )     3,401       1,337       1,614       148       (389 )     6,111   Operating income (loss) attributed to segment     536       133       1       670       (62 )     197       (9 )             796   Expenses not allocated to segments and intercompany eliminations                                                                     (38 ) Operating income                                                                     758   Financing expenses                                                                     (279 ) Financing income                                                                     122   Share in earning of equity-accounted investee                                                                     31   Income before taxes on income                                                                     632   Capital expenditures     457       153       —       610       108       203       8       —       929   Capital expenditures not allocated                                                                     29   Total capital expenditures                                                                     958   Depreciation and amortization     103       122       —       225       123       71       7       —       426   Depreciation and amortization not allocated                                                                     1   Total depreciation and amortization                                                                     427   F-34     Fertilizers                                     Potash     Phosphate     Eliminations     Total     Industrial products     Performance products     Other activities     Eliminations     Consolidated       US$ thousands   Year 2013:                                                       Sales to external parties     1,797,360       1,584,420       —       3,381,780       1,277,432       1,496,601       115,729       —       6,271,542   Inter-segment sales     229,237       169,815       (125,567 )     273,485       19,253       78,095       38,980       (409,813 )     —   Total sales     2,026,597       1,754,235       (125,567 )     3,655,265       1,296,685       1,574,696       154,709       (409,813 )     6,271,542   Income from ordinary activities     740,342       79,494       1,235       821,071       114,525       195,797       (16,574 )             1,114,819   Unallocated expenses and intercompany eliminations                                                                     (13,453 ) Operating income                                                                     1,101,366   Financing expenses                                                                     (158,403 ) Financing income                                                                     131,548   Share in profits of investee companies accounted for using the equity method of accounting                                                                     25,685   Income before taxes on income                                                                     1,100,196   Other Data:                                                                         Segment assets     2,712,374       1,660,265       (77,795 )     4,294,844       1,775,407       1,202,911       94,665       (150,455 )     7,217,372   Unallocated assets                                                                     756,113   Consolidated total assets                                                                     7,973,485   Segment liabilities     649,312       563,078       (53,035 )     1,159,355       424,498       352,643       69,179       (48,092 )     1,957,583   Unallocated liabilities                                                                     2,337,228   Consolidated total liabilities                                                                     4,294,811   Capital expenditures     551,508       141,983       —       693,491       141,338       93,394       8,860       —       937,083   Unallocated capital expenditures                                                                     10,180   Total capital expenditures                                                                     947,263   Depreciation and amortization     100,533       117,895       —       218,428       75,071       46,580       6,323       —       346,402   Unallocated depreciation and amortization                                                                     1,339   Total depreciation and amortization                                                                     347,741   F-31 Table of Contents Note 5 –- Operating Segments (cont'd) (cont’d) B. Operating segment data (cont’d)     Fertilizers   Industrial   Performance   Other         Potash   Phosphate   Eliminations   Total   products   products   activities   Eliminations   Consolidated     $ millions Year 2013                                     Sales to external parties     1,797       1,584       —       3,381       1,277       1,497       117       —       6,272   Inter-segment sales     230       170       (126 )     274       20       78       38       (410 )     —   Total sales     2,027       1,754       (126 )     3,655       1,297       1,575       155       (410 )     6,272   Operating income (loss) attributed to segment     740       79       1       820       115       196       (16 )             1,115   Expenses not allocated to segments and intercompany eliminations                                                                     (14 ) Operating income                                                                     1,101   Financing expenses                                                                     (158 ) Financing income                                                                     132   Share in earning of equity-accounted investee                                                                     26   Income before taxes on income                                                                     1,101   Capital expenditures     552       142       —       694       141       93       9       —       937   Capital expenditures not allocated                                                                     10   Total capital expenditures                                                                     947   Depreciation and amortization     100       118       —       218       75       47       6       —       346   Depreciation and amortization not allocated                                                                     2   Total depreciation and amortization                                                                     348   F-35     Fertilizers                                     Potash     Phosphate     Eliminations     Total     Industrial products     Performance products     Other activities     Eliminations     Consolidated       US$ thousands   Year 2012                                                       Sales to external parties     1,964,741       1,568,944       —       3,533,685       1,401,645       1,406,626       129,477       —       6,471,433   Inter-segment sales     233,587       158,151       (119,544 )     272,194       15,778       65,491       49,907       (403,370 )     —   Total sales     2,198,328       1,727,095       (119,544 )      3,805,879       1,417,423       1,472,117       179,384       (403,370 )     6,471,433   Income from ordinary activities     996,491       162,419       (88 )      1,158,822       217,336       179,256       630               1,556,044   Unallocated expenses and intercompany eliminations                                                                     (2,412 ) Operating income                                                                     1,553,632   Financing expenses                                                                     (81,595 ) Financing income                                                                     20,701   Share in profits of investee companies accounted for using the equity method of accounting                                                                     26,555   Income before taxes on income                                                                     1,519,293   Other Data:                                                                         Segment assets     2,230,177       1,690,603       (86,841 )     3,833,939       1,705,510       1,153,942       90,142       (64,908 )     6,718,625   Unallocated assets                                                                     626,286   Consolidated total assets                   ��                                                 7,344,911   Segment liabilities     640,407       522,327       (60,846 )     1,101,888       473,342       338,564       82,383       (68,467 )     1,927,710   Unallocated liabilities                                                                     2,028,937   Consolidated total liabilities                                                                     3,956,647   Capital expenditures     428,474       151,235       —       579,709       138,488       47,727       7,798       —       773,722   Unallocated capital expenditures                                                                     5,894   Total capital expenditures                                                                     779,616   Depreciation and amortization     110,217       101,393       —       211,610       61,998       42,451       5,614       —       321,673   Unallocated depreciation and amortization                                                                     838   Total depreciation and amortization                                                                     322,511   F-32 Table of Contents Note 5 –- Operating Segments (cont'd) (cont’d) C. Information on geographical segments: segments Following is data regarding the distribution of the Group sales by geographical location of the customer:     2015   2014   2013     $ millions   % of sales   $ millions   % of sales   $ millions   % of sales USA     1,176       22       1,299       21       1,121       18   China     550       10       525       9       527       8   Brazil     506       9       516       8       690       11   Germany     487       9       531       9       491       8   United Kingdom     303       6       335       5       359       6   France     295       6       364       6       370       6   Spain     285       5       342       6       332       5   Israel     240       4       284       5       319       5   India     206       4       272       4       364       6   All other     1,357       25       1,643       27       1,699       27   Total     5,405       100       6,111       100       6,272       100   Following is data regarding the distribution of the Group’s sales by geographical location of the customers:     For the year ended December 31       2014     2013     2012       US$ thousands   Europe     2,388,990       2,378,397       2,331,808   Asia     1,299,419       1,463,622       1,615,202   North America     1,374,185       1,207,221       1,252,269   South America     568,752       747,589       815,181   Others     195,403       155,753       132,203         5,826,749       5,952,582       6,146,663   In Israel     283,961       318,960       324,770         6,110,710       6,271,542       6,471,433   Following is data regarding the distribution of the Group's sales by geographical location of the assets:     For the year ended December 31       2014     2013     2012       US$ thousands   Israel     2,958,266       3,095,136       3,438,575   Europe     2,692,359       2,715,573       2,601,443   United States     1,107,397       1,099,152       1,115,106   Others     405,360       382,159       402,792         7,163,382       7,292,020       7,557,916   Intercompany transactions - mainly from Israel     (1,052,672 )     (1,020,478 )     (1,086,483 )       6,110,710       6,271,542       6,471,433       For the year ended December 31     2015   2014   2013     $ millions Israel     2,427       2,958       3,095   Europe     2,296       2,692       2,716   North America     1,148       1,107       1,099   Others     503       407       382         6,374       7,164       7,292   Intercompany transactions     (969 )     (1,053 )     (1,020 )       5,405       6,111       6,272   Following is data regarding the operating income by geographical location of the assets from which the income was produced:     For the year ended December 31       2014     2013     2012       US$ thousands   Israel     527,756       711,222       1,092,348   Europe     129,824       299,127       282,486   United States     71,459       115,764       134,825   Others     68,035       35,167       37,871   Eliminations     (39,404 )     (59,914 )     6,102   Total     757,670       1,101,366       1,553,632       For the year ended December 31     2015   2014   2013     $ millions Israel     376       528       711   Europe     255       130       299   North America     88       71       116   Others     59       68       35   Eliminations     (13 )     (39 )     (60 ) Total     765       758       1,101   Following is data reflecting the carrying value of allocated segmental assets and allocated segmental additions to property, plant and equipment and intangible assets by the geographical location of the assets:     Carrying value of assets as at December 31   Additions to property, plant and equipment, and intangible assets for the year ended December 31     2015   2014   2013   2015   2014   2013     $ millions   $ millions Israel     4,672       4,482       4,159       319       543       671   Europe     2,103       2,188       2,240       285       249       236   Asia     975       239       227       330       9       6   North America     889       931       922       25       22       20   Others     328       217       82       201       106       4   Eliminations     (571 )     (481 )     (413 )     —       —       —   Total     8,396       7,576       7,217       1,160       929       937   F-36     Carrying value of assets as at December 31     Additions to property, plant and equipment, and intangible assets for the year ended December 31       2014     2013     2012     2014     2013     2012       US$ thousands   Israel     4,482,262       4,159,207       3,738,589       543,206       671,087       553,979   Europe     2,188,301       2,240,248       2,064,569       248,972       236,086       176,176   United States     931,193       921,961       971,141       22,054       20,160       31,813   Others     455,362       309,134       315,332       *114,276       9,750       11,754   Eliminations     (480,646 )     (413,178 )     (371,006 )     —       —       —   Total     7,576,472       7,217,372       6,718,625       928,508       937,083       773,722   *In 2014, mainly as a result of acquisition of the entire holdings in Fosbrasil. For additional details – see Note 11B. F-33 Table of Contents Note 5 –- Operating Segments (cont'd) (cont’d) D. Sales by Main Business Lines Set forth below is additional information regarding sales of the Company’s main business lines (before offset of intersegment sales): Potash – potash is the common name for potassium chloride, which is a widely used source for potassium, one of the major nutrients essential for plant development, which helps to protect plants from diseases and pests, to adjust to dynamic weather conditions, regulates the water in a plant, strengthens stalks, and encourages plants to absorb more nutrients. ICL sells potash as a fertilizer for direct application and to manufacturers of compound fertilizers. In addition, ICL uses potash for its own production of compound fertilizers, mainly phosphate-based and potash-based. Phosphate – phosphorous is also one of the three major nutrients essential for plant development and directly contributes to a wide range of physiological plant processes, including production of sugars (including starch), photosynthesis and energy transfer. Phosphate is found in phosphate rock. The ICL phosphate business’ main products are: phosphate rock, phosphoric acid and fertilizers. Specialty Fertilizers (SF) – specialty fertilizers are concentrated fertilizers with high efficiency, allowing a more precise delivery of the essential nutrients for plant development (phosphorous, potassium and nitrogen). ICL Specialty Fertilizers supplies superior-quality, cost-effective products that help growers achieve higher yields and better quality, in spite of scarce water and limited arable land. These fertilizers include: controlled release fertilizers (CRF), slow release fertilizers (SRF), soluble fertilizers, liquid fertilizers and peat used as a growing bed for various crops, usually containing CRF and crop-protection products. Flame Retardants – bromine, phosphorous or magnesia-based chemical compounds are used worldwide in electronic, vehicle, construction and textile products and act mainly to reduce the danger of ignition of a fire or to thwart the spreading of a fire in products wherein they serve as a raw material. Industrial Solutions – this business line produces and supplies elemental bromine for a variety of uses in the chemical industry, as well as bromine and phosphorous compounds used in a number of different industries globally, such as the rubber industry, the pharmaceutical and agronomic industry, polyester fibers (in the production of fabrics and plastic bottles), and clear brine fluids used for balancing pressure in oil and gas drillings. This business line also includes bromine-based biocides used for industrial water treatment, pure potash and Dead Sea minerals for various food, pharma and industrial applications, magnesia products used for the paper industry, detergents and oil additives, catalysts and stabilizers. Advanced Additives – this business line supplies mainly phosphoric acid, which is used as a raw material in the metals treatment, paints and coatings and detergents industries. In addition, the unit supplies P2S5, a primary ingredient in lubricating oil additives and insecticides, as well as fire retardant products used mainly to fight forest fires. Food Specialties – ICL Food Specialties is a leader in creative food ingredients and phosphate additives which provide texture and stability solutions to the processed meat, fish, dairy, baked goods and processed foods markets.     2015   2014   2013     $ millions   % of sales   $ millions   % of sales   $ millions   % of sales Potash     1,450       27       1,816       30       2,027       32   Phosphate     1,079       20       979       16       1,035       16   Advanced Additives     780       14       653       11       662       11   Specialty Fertilizers     693       13       770       12       794       13   Industrial Solutions     671       13       786       13       761       12   Food Specialties     614       11       525       8       494       8   Flame Retardants     366       7       470       8       460       7   All other and setoffs     (248 )     (5 )     112       2       39       1   Total     5,405       100       6,111       100       6,272       100   F-37 Table of Contents Following is data depreciation and amortization by geographical areas:     Year ended December 31       2014     2013     2012       US$ thousands   Israel     197,842       172,112       158,394   Europe     128,652       117,225       116,778   United States     74,267       45,217       34,545   Others     26,717       13,187       12,794   Total     427,478       347,741       322,511   Note 6 – Short-Term Investments, Deposits and Loans     As at December 31       2014     2013       US$ thousands   Trading securities     45,210       36,140   Deposits in banks and financial institutions and short-term loans     70,254       58,954   Current maturities of long-term deposits     1,028       1,294         116,492       96,388       As at December 31     2015   2014     $ millions Trading securities     26       45   Deposits in banks and financial institutions and short-term loans     60       70   Current maturities of long-term deposits     1       1         87       116   Note 7 –- Trade Receivables     As at December 31       2014     2013       US$ thousands   Trade – open accounts:             Non- Israeli     985,666       997,490   Israeli     61,752       70,318         1,047,418       1,067,808   Less – allowance for doubtful debts     8,272       10,780         1,039,146       1,057,028       As at December 31     2015   2014     $ millions Open accounts      1,093       1,047   Less – allowance for doubtful debts     11       8         1,082       1,039   Note 8 –- Other Receivables, including Derivative Instruments     As at December 31       2014     2013       US$ thousands   Israeli government institutions     28,532       17,028   Non-Israeli government institutions     35,030       31,145   Prepaid expenses     24,243       26,193   Advances to suppliers     4,696       7,828   Derivatives     14,595       62,235   Other     47,688       41,888         154,784       186,317       As at December 31     2015   2014     $ millions Israeli government institutions     34       29   Non-Israeli government institutions     31       35   Prepaid expenses     31       24   Advances to suppliers     17       5   Derivatives     9       15   Reimbursement asset     32       -   Other     53       47         207       155   Note 9 – Inventories     As at December 31     2015   2014     $ millions Finished products     824       847   Work in progress     299       202   Raw materials and supplies     235       217   Spare parts and maintenance supplies     128       126         1,486       1,392   Less – non-current inventories (presented in non-current assets)     122 (*)     57         1,364       1,335     (*) The increase in the non-current inventories is mainly due to the establishment of a joint venture (“YPH JV”). See Note 10 for additional details. F-34 F-38 Table of Contents Note 9 – Inventories     As at December 31       2014     2013       US$ thousands   Finished products     846,851       887,377   Work in progress     202,020       248,303   Raw materials and supplies     217,429       214,225   Spare parts and maintenance supplies     125,833       120,644         1,392,133       1,470,549   Less – non-current inventories (presented in non-current assets)      57,035       62,252         1,335,098       1,408,297   Note 10 – Investment- Investments in Subsidiaries and Investee Companies A. Acquisition of subsidiaries Establishment of joint venture (“YPH JV”) In December 2014, ICL signed a strategic partnership agreement with Yunnan Phosphate Chemicals Group Corporation Ltd. (“YTH”), China’s second largest chemicals manufacturer and the third largest phosphate producer in the world, which is traded on the Shanghai stock exchange. The agreement established operation of a 50/50 joint venture company (“YPH JV”), controlled by ICL, having a fully backward integrated phosphate business with a world-scale phosphate rock mine and other downstream operations. For purposes of strengthening the strategic partnership between ICL and YTH, and to create added value for their shareholders, ICL also committed in the agreement to acquire a strategic holding in YTH by means of investing in newly issued shares, such that after the issuance, ICL will hold 15% of YTH’s total issued share capital on a fully diluted basis. Based on the agreement, ICL controls YPH JV mainly in light of its power to direct the relevant activities, which significantly affects YPH JV’s returns and as a result ICL consolidates YPH JV’s financial information commencing from the closing date (see below). The transaction is expected to transform ICL into the world’s leading specialty phosphate player. YPH JV is also targeted to improve the cost competitiveness of ICL’s phosphate operations by providing ICL access to a low-cost phosphate rock operation with extensive reserves, as well as to low-cost phosphoric acid. On October 12, 2015, the Company completed the establishment of YPH JV. The closing occurred following fulfillment of the closing conditions to the parties’ satisfaction, including all necessary approvals and ICL’s net payment of approximately $172 million in consideration of its share of YPH JV. ICL’s 15% investment in YTH (which was initially a closing condition) has been preliminarily approved by the PRC Ministry of Commerce and was pending final approval by the China Securities Regulatory Commission (CSRC). The information relating to revenues and profits of YPH JV for the entire current reporting period was not disclosed due to impracticability. Following the approval from the China Securities Regulatory Commission, On January 16, 2016, the Company completed its investment in 15% of the issued and outstanding share capital on a fully diluted basis of YTH against payment of about US$250 million based on the agreed share price of 8.24 CNY which was determined on December 2014. The share price at the closing date was 9.10 CNY per share. The new shares will be subject to a three-year lock up period as required under the PRC law. This investment will be classified as an “available for sale financial asset”, meaning that the investment will be measured at fair value, and in subsequent periods, fair value updates, other than impairment losses, will be recognized directly in other comprehensive income and presented within equity in a reserve for financial assets classified as available-for-sale. In light of the lock up period mentioned above, the Company is examining the need for a discount to the fair value as at the initial recognition and its impact, if any, on the measurement thereof. Identifiable assets acquired and liabilities assumed Identifiable assets $ millions Cash and cash equivalents 9 Short-term investments and deposits 4 Rights over leases 93 Trade and other receivables 76 Inventory 171 Intangible assets 119 Property, Plant and Equipment 199 Trade and other payables (109 ) Short-term loans and credits (229 ) Deferred tax assets 4 Other long-term liabilities (9 ) Net identifiable assets 328 F-39 Table of Contents A. Acquisition of subsidiaries (cont’d) As at the date of the report, the Company is still in the process of finalizing YPH JV’s Purchase Price Allocation (PPA). Measurement of fair value Presented hereunder is information regarding the techniques the Group used to measure the fair value of the assets and liabilities recognized as a result of the business combination: Buildings and Structures and Machinery and Equipment DRC Method under the cost approach - the principle behind the DRC Method is that a prudent investor will not purchase an asset for more than it will cost him to replace this asset with an asset of comparable utility. The steps for utilizing this method are: (1) estimating the replacement cost new (“RCN”); (2) deriving Rate of Newness (“RN”) based on the estimated economic useful lives (“EUL”) and effective age; and (3) depreciating the replacement cost new over economic life to reflect obsolescence related to effective age. Land Use Rights Market Comparison Method - determines the current market land value by making reference to recent comparable transactions. The valuer may make certain adjustments to those recorded transactions by taking into account factors such as differences in the transaction timing, location, site services and infrastructure available and other matters affecting the land value. However, its application is limited to certain types of land transactions in those well-developed areas and is always subject to the availability of sufficient and reliable public market data. Mining Rights Multi Period Excess Earnings Method - the steps for utilizing this method are: (1) derive cash flows generated by the subject asset: to derive cash flows generated by the subject asset, prospective financial information has to be considered. Prospective financial information might need to be adjusted both on revenues and costs, to eliminate all elements not associated with the asset as well as all synergies which are specific to the acquisition. (2) apply contributory assets charges (“CAC”): cash flows are projected to be realized with the subject asset by using various other assets, also contributing to these cash flows. (3) to derive cash flows attributable to the subject asset to be valued, contributory asset charges based on returns on and returns of FV of contributory assets necessary for realizing the projected cash flows have to be deducted. Thus contributory asset charges are notional lease charges for the use of contributory assets. (4) deduct tax payments: expected tax payments resulting from excessive cash flows attributable to the subject asset have to be taken into account. (5) calculate present values of net excess cash flows attributable to the subject asset: to calculate present values, attributable net excess earnings have to be discounted using a discount rate, which is appropriate for the specific asset to be valued. (6) add tax amortization benefit. Customer relationship Cost Saving Method - An intangible asset may afford its owner a cost savings over the best alternative to the asset. These cost savings represent the value of ownership of the intangible asset. Under the cost saving method, the fair value of the subject intangible asset is measured using the post-tax costs saved by owning the asset. Trademark and Technology Relief-from-Royalty Method - It estimates the value of future forgone royalty payments over the life of the asset by virtue of owning the asset. In arriving at an estimate of value using the relief-from-royalty method, the annual revenues a market participant acquirer investor would expect the subject asset to generate over a discrete projection period are forecast. These forecast annual revenues are then multiplied by a royalty rate that could be expected to be charged if the asset was licensed from a third party in the market place, giving consideration to the characteristics of the asset and its uses. The resulting cash flows for each of the years are then converted to their present value equivalent using a rate of return appropriate for the risk of achieving the asset’s projected cash flows. F-40 Table of Contents Note 10 - Investments in Subsidiaries and Investee Companies (cont’d) A. Acquisition of subsidiaries (cont’d) Inventories Net Realizable Value method - The fair value of inventories is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories. The aggregate cash flows derived for the Group as a result of the acquisition: $ millions Cash and cash equivalents paid, net 172 Cash and cash equivalents of the JV 9 163 Goodwill Goodwill was recognized as a result of the acquisition as follows: $ millions Consideration transferred, net 172 Capital reverses 14 Non-Controlling interests* 142 Less fair value of identifiable net assets 284 Goodwill 44   * The Company has chosen to measure the non-controlling interests, arising from the acquisition of YPH based on their proportionate interest in the identifiable net assets of the acquiree that grant it a present ownership interest (ordinary shares). The goodwill is attributable mainly to ICL’s access to the fast-growing specialty phosphate market in China through the formation of the partnership with YTH, the increased phosphate platform, the secured long-term phosphate reserves as well as the expanded phosphate end-to-end business model focusing on Asia (See Note 15 on intangible assets). None of the goodwill recognized is expected to be deductible for tax purposes. Acquisition-related costs The Group incurred acquisition-related costs of $10 million related to legal fees and due diligence costs. These costs have been included in general and administrative expenses in the statement of income. Acquisition of Allana Potash In March 2015, the Company signed an agreement to acquire the shares of Allana Potash (hereinafter – “Allana”), a company that focuses on acquisition and development of potash assets, the shares of which were traded on the Toronto Stock Exchange. Allana holds a concession to mine potash in Ethiopia, through its subsidiary, Allana Potash Afar Plc. On June 22, 2015, the Company acquired the balance of Allana’s shares (83.78%) for a total consideration of approximately $112 million, of which approximately $96 million was in cash, and approximately $16 million was by means of issuance of 2,225,337 ordinary shares of the Company, the fair value of which was based on the price of ICL’s shares on June 22, 2015 ($7.08 per share). The acquisition consideration reflected a value of about $134 million, which was allocated as follows: $149 million to intangible assets constituting mining rights, $2 million to current assets, $53 million to current liabilities including deferred taxes and an amount of about $36 million, was allocated to goodwill. As at the date of the report, the Company is still in the process of finalizing Allana’s Purchase Price Allocation (PPA). F-41 Table of Contents Note 10 - Investments in Subsidiaries and Investee Companies (cont’d) A. Acquisition of subsidiaries (cont’d) As part of the acquisition, a gain of $7 million was realized, as a result of re measurement of the fair value of 16.22% of the shares of the acquired company that ICL held prior to obtaining control. The gain was recorded under “other income” in the statement of income for 2015. For additional information related to the mining license, see note 23. Acquisition of Prolactal In March 2015, the Company completed the acquisition of Prolactal, a leading European producer of dairy proteins for the food and beverage industry, for a total consideration of about $90 million. Prolactal, a privately-held company with sales of approximately €100 million in 2014, produces a range of functional dairy proteins used by the beverage, dairy and meat industries to stabilize and improve the nutritional value of beverages and foods. The combination of ICL’s backward integrated specialty phosphate capabilities, Prolactal’s protein capabilities and both companies’ advanced know-how will enable ICL Food Specialties to provide a broader selection of innovative, value-added food additives for improvement of texture and stability that outperform other currently available solutions, and to meet the growing demand for healthy foods and beverages containing higher protein levels. The acquisition of Prolactal constitutes a strategic step aimed at strengthening and expanding ICL’s core business activities in the area of specialty-food ingredients. B. Movement during the year in investments in equity-accounted investees     US$ thousands $ millions Balance as at January 1, 2014 2015     174,511185   Changes during the year:         Share in earnings     30,53211   Dividends received     (16,64019 ) Increase in investment 22,614 Increase in rate of holdings in associated company – initial consolidation and  divestiture of equity accounted investees     (15,16816 ) Cumulative translation adjustments     (6,9012 ) Reclassification to assets held for sale (4,399 ) Balance as at December 31, 2014 2015     184,549159   F-42 F-35 Table of Contents Note 10 – Investment- Investments in Subsidiaries and Investee Companies (cont'd) B.(cont’d) C. Condensed data with respect to equity-accounted investees Set forth below is condensed financial data with respect to equity-accounted investees which are individually insignificant without adjustments for the ownership rates held by the Group.     As at December 31, 2014       US$ thousands       Current assets     Non-current assets     Total assets     Current liabilities     Non-current liabilities     Total liabilities     Revenues     Expenses     Profit   Joint arrangements     357,011       711,268       1,068,279       208,045       411,766       619,811       513,008       455,939       57,069       As at December 31, 2013       US$ thousands       Current assets     Non-current assets     Total assets     Current liabilities     Non-current liabilities     Total liabilities     Revenues     Expenses     Profit   Joint arrangements     400,734       662,469       1,063,203       318,837       394,546       713,383       474,311       419,161       55,150   F-36 Table of Contents     As at December 31, 2015     $ millions     Current assets   Non-current assets   Total assets   Current liabilities   Non-current liabilities   Total liabilities   Revenues   Expenses   Profit Joint arrangements     301       565       866       141       411       552       312       303       9       As at December 31, 2014     $ millions     Current assets   Non-current assets   Total assets   Current liabilities   Non-current liabilities   Total liabilities   Revenues   Expenses   Profit Joint arrangements     357       711       1,068       208       412       620       513       456       57   Note 11 –- Assets and Liabilities held for sale and Business Acquisitions A.  Assets held for sale (1)       Pursuant to the Company’s strategy, various alternatives are being considered in connection with the continued inclusionintegration of non core businesses. Accordingly, during the fourth quarter of 2014,non-core businesses activities, the Company signed agreements forcompleted during 2015 the sale of APW (Alumunia, Paper, Water), the Rhenoflex business, which manufactures parts for reinforcing leather shoes, the Anti-Germ business and Medentech. Subsequent to the date of the report, inthese activities: 1. In January 2015, the alumina, paper and water industry (APW) sale of the APW saletransaction was closed (except for a number of insignificant units located in China) and inclosed. In February 2015, the sales of the Rhenoflex, Anti-Germthermoplastic products for the footwear industry (Renoflex) and Medentechthe hygiene products for the food industry (Anti Germ) were closed and in June 2015 the Company completed the sale of the pharmaceutical and gypsum businesses were closed. Further to that stated above,(PCG). As a result of completion of the sale of these activities, in 2015 the Company recognized a gain of about $214 million, which was included under “other income” in the statement of income ($162 million net of tax). 2. During 2015, in light of the process of selling service provider activities in Germany and the Clearon Company of the Industrial Products segment in the United States, the Company reclassified the above mentioned business unitsthese activities as “assets held for sale” as at December 31, 2014.. As a result of re measurementre-measurement of the Anti Germ business and Medentechthese assets, based on the lower of their carrying amountsvalue in the books and their fair value less costs to sell,(less selling expenses), in the fourth quarter of 2014,2015 the Company recognized an impairmenta loss in the amount of about $31$47 million, which was recorded in theincluded under “other expense” categoryexpenses” in the statement of income.  In the first quarterincome ($36 million net of 2015, the Company is expected to record a net gain of approximately $145 million, as a result of the conclusion of sales of the APW and Rhenoflex businesses. (2)      Assets and liabilities of disposal groups classified as held for sale Assets of disposal groups classified as held for sale 2014 US$ thousands Cash and cash equivalents 7,602 Short-term investments and deposits  1,235 Trade receivables 15,692 Derivatives and other receivables 6,040 Current tax assets 97 Inventories 66,904 Investments in equity-accounted investees 4,399 Long-term deposits and receivables  1,301 Non-current inventories 409 Deferred tax assets 1,894 Property, plant and equipment 38,473 Intangible assets 80,549 224,595 Liabilities of disposal groups classified as held for sale 2014 US$ thousands Trade payables 8,784 Provisions 48 Derivatives and other payables 18,244 Current tax liabilities 1,032 Long-term debt 25 Deferred taxes 5,063 Employee benefits 17,506 50,702 (3)      Income and expenses recognized in other comprehensive income The Group has income in the amount of about $8 million that was recognized directly in other comprehensive income and that relates to non-current assets and disposal groups held for sale Fair value measurement of disposal group is classified as level 1 fair value hierarchy. F-37 Table of Contents Note 11 – Assets held for sale and Business Acquisitions (cont'd) B.  Business Acquisitions Atax). In February 2014, ICL signed a strategic agreement with Allana Potash, a company traded on the Toronto stock exchange in connection with development of a potash mine in Ethiopia. Pursuant to the agreement, ICL acquired units of Allana (including shares and options), at a rate of 16% of Allana’s capital. ICL has an option to increase its holdings to about 37%. The investment is accounted for in the financial statements in accordance with the equity method of accounting. B. In August 2014, an agreement was signed with Albermarle and its related companies to establish a joint venture to manufacture FR122P. According to this agreement, if certain conditions precedent are fulfilled, including approval of the anti-trust authorities in several countries around the world, a joint venture will be established for the joint production of FR122P, under which joint companies will be established in Israel and in the Netherlands, to be owned, directly and indirectly, in equal shares, by companies of our Group on the one hand, and by Albermarle, on the other. As part of the joint venture, 50% of the production facilities of this product in the Netherlands and in Israel will be owned by Albermarle, and each of the members of our Group and Albermarle will conduct independent and completely separate marketing activities. C. In December 2014, the Company completed acquisition of 100% of Fosbrasil (increase from a rate of holdings of 44.25% to 100%), the leading manufacturer in Latin America of purified phosphoric acid for the food market and specialty fertilizers, and a producer of phosphate based downstream products and specialty fertilizers. As a result of the increase in the rate of holdings, and achievement of control over Fosbrasil, the Company recognized income, in the amount of about $36 million, which was recorded in the “other income” category. D. In December 2014, ICL signed a strategic partnership agreement with Yunnan Yuntianhua, China’s second largest chemicals manufacturer and the third largest phosphate producer in the world for operation of a 50/50 joint venture company, controlled by ICL, of a fully backward integrated phosphate business with a world-scale phosphate rock mine and downstream operations. The total deal value is estimated at about $452 million. For purposes of strengthening the strategic partnership between ICL and Yunnan Yuntianhua, and to create added value for their shareholders, about $269 million out of ICL's investment will be used to acquire a strategic holding in Yunnan Yuntianhua, China's leading producer of phosphate rock and fertilizers, which is traded on the Shanghai stock exchange. The new shares to be issued will constitute 15% of the share capital of Yunnan Yuntianhua (after the issuance to ICL). The balance of the deal value, in the amount of about $183 million, is in a joint venture for production of phosphate (together with a net debt of $100 million – ICL's share). Completion of the transaction is expected to take place in the first quarter of 2016, subject to various government and regulatory approvals. E. Subsequent to the date of the report, in January 2015, the Company signed an agreement for the acquisition of Prolactal, a leading European company engaged in the production of milk proteins for the food and beverage industry. On March 13, 2015, the transaction was closed. F-38 Table of Contents Note 12 –- Long-Term Deposits and Receivables A.  Composition     As at December 31       2014     2013       US$ thousands   Bank deposits and other     3,323       4,634   Less – current maturities     1,028       1,294         2,295       3,340   Other receivables     9,371       12,428         11,666       15,768   B.  Long-term deposits and receivables classified by currency and interest rates     Weighted average interest rate       As at December 31       2014     2014     2013       %     US$ thousands In Israeli currency     3.0       2,986       4,247   Other     0.1       337       387                 3,323       4,634   C.  The deposits and receivables (net of current maturities) mature in the following years after each reporting date as follows:     As at December 31       2014     2013                 Second year     924       1,162   Third year     766       935   Fourth year     263       735   Fifth year     83       188   Sixth year and thereafter     259       320         2,295       3,340       As at December 31     2015   2014     $ millions Bank deposits and other     3       3   Less – current maturities     1       1         2       2   Other receivables     124 *     10   Total     126       12     * The increase in other receivables is mainly due to the establishment of a joint venture (“YPH JV”). See Note 10 for additional details. F-39 F-43 Table of Contents Note 13 –- Property, Plant and Equipment     Land, land development, roads and buildings   Installations, machinery and equipment   Dikes and evaporating ponds   Heavy mechanical equipment, railroad cars and tanks   Furniture, office equipment, vehicles, computer equipment and other   Plants under construction(1) and spare parts for installations   Total     $ millions Cost                                                         Balance as at January 1, 2015     715       4,915       1,528       157       240       903       8,458   Additions     45       258       140       8       18       74       543   Additions in respect of business combinations     55       150       6       -       6       24       241   Disposals     (2 )     (70 )     (16 )     (7 )     (5 )     -       (100 ) Translation differences     (33 )     (103 )     (24 )     (1 )     (5 )     (25 )     (191 ) Classification to assets held for sale     (20 )     (112 )     -       -       (19 )     -       (151 )                                                           Balance as at December 31, 2015     760       5,038       1,634       157       235       976       8,800                                                             Accumulated depreciation                                                         Balance as at January 1, 2015     365       3,104       791       83       188       -       4,531   Additions     30       180       90       8       11       -       319   Disposals     (2 )     (55 )     (16 )     (6 )     (5 )     -       (84 ) Impairment     37       38       -       -       -       -       75   Translation differences     (14 )     (77 )     (17 )     (1 )     (2 )     -       (111 ) Classification to assets held for sale     (20 )     (105 )     -       -       (17 )     -       (142 )                                                           Balance as at December 31, 2015     396       3,085       848       84       175       -       4,588                                                             Depreciated balance as at December 31, 2015     364       1,953       786       73       60       976       4,212   F-44     Land, land development, roads and buildings     Installations, machinery and equipments     Dikes and evaporating ponds     Heavy mechanical equipment, railroad cars and tanks     Furniture, office equipment, vehicles, computer equipment and other     Plants under construction (2)     Spare parts for installations     Total       US$ thousands   Cost (1)                                                 Balance as at January 1, 2014     741,102       4,842,320       1,429,096       163,983       251,746       660,114       7,603       8,095,964   Additions     22,984       271,328       128,115       8,377       11,399       268,501       362       711,066   Additions in respect of business combinations     22,268       7,702       —       —       6,508       617       —       37,095   Disposals     (6,039 )     (39,494 )     —       (14,438 )     (7,696 )     (716 )     —       (68,383 ) Translation differences     (41,519 )      (111,904 )     (29,098 )     (901 )     (9,515 )     (26,197 )     —       (219,134 ) Reclassification to assets held for sale     (23,663 )     (55,549 )     —       —       (12,142 )     (7,584 )     —       (98,938 ) Balance as at December 31, 2014     715,133       4,914,403       1,528,113       157,021       240,300       894,735       7,965       8,457,670   Accumulated depreciation (1)                                                                 Balance as at January 1, 2014     367,032       3,025,067       738,370       88,962       190,293       —       —       4,409,724   Additions     19,506       193,227       75,099       8,558       16,084       —       —       312,474   Disposals     (5,764 )     (37,448 )     —       (13,400 )     (6,541 )     —       —       (63,153 ) Impairment     20,380       34,220       —       —       3,662       —       —       58,262   Translation differences     (18,563 )     (77,932 )     (22,451 )     (741 )     (6,358 )     —       —       (126,045 ) Reclassification to assets held for sale     (17,770 )     (33,113 )     —       —       (9,582 )     —       —       (60,465 ) Balance as at December 31, 2014     364,821       3,104,021       791,018       83,379       187,558       —       —       4,530,797   Depreciated balance as at December 31, 2014     350,312       1,810,382       737,095       73,642       52,742       894,735       7,965       3,926,873   F-40 Table of Contents Note 13 –- Property, Plant and Equipment (cont'd)     Land, land development, roads and buildings     Installations, machinery and equipments     Dikes and evaporating ponds     Heavy mechanical equipment, railroad cars and tanks     Furniture, office equipment, vehicles, computer equipment and other     Plants under construction (2)     Spare parts for installations     Total       US$ thousands   Cost (1)                                                 Balance as at January 1, 2013     669,934       4,534,314       1,176,122       161,571       232,740       452,572       7,778       7,235,031   Additions     59,646       335,576       242,767       10,765       15,912       200,235       —       864,901   Additions in respect of business combinations     351       3,038       —       3,284       2,254       4       —       8,931   Disposals     (7,237 )     (67,552 )     —       (11,871 )     (3,047 )     —       (175 )     (89,882 ) Translation differences     18,408       36,944       10,207       234       3,887       7,303       —       76,983   Balance as at December 31, 2013     741,102       4,842,320       1,429,096       163,983       251,746       660,114       7,603       8,095,964   Accumulated depreciation (1)                                                                 Balance as at January 1, 2013     342,158       2,866,356       663,898       90,849       174,385       —       —       4,137,646   Additions     18,629       190,039       66,881       7,949       15,494       —       —       298,992   Disposals     (5,636 )      (66,117 )     —       (10,169 )     (2,194 )     —       —       (84,116 ) Impairment     —       10,000       —       —       —       —       —       10,000   Translation differences     11,881       24,789       7,591       333       2,608       —       —       47,202   Balance as at December 31, 2013     367,032       3,025,067       738,370       88,962       190,293       —       —       4,409,724   Depreciated balance as at December 31, 2013     374,070       1,817,253       690,726       75,021       61,453       660,114       7,603       3,686,240   Property, plant and equipment includes assets that have been fully depreciated and which are still in use. The original cost of those assets as of December 31, 2014 is approximately $2,553 million (as of December 31, 2013 $2,484 million). Plants under construction – the changes represent additions during the year, net of transfers to property, plant and equipment. (cont’d)     Land, land development, roads and buildings   Installations, machinery and equipment   Dikes and evaporating ponds   Heavy mechanical equipment, railroad cars and tanks   Furniture, office equipment, vehicles, computer equipment and other   Plants under construction(1) and spare parts for installations   Total     $ millions Cost                                                         Balance as at January 1, 2014     741       4,842       1,429       164       252       668       8,096   Additions     23       272       128       8       11       269       711   Additions in respect of business combinations     22       7       -       -       7       1       37   Disposals     (6 )     (39 )     -       (14 )     (8 )     (1 )     (68 ) Translation differences     (41 )     (112 )     (29 )     (1 )     (10 )     (26 )     (219 ) Classification to assets held for sale     (24 )     (55 )     -       -       (12 )     (8 )     (99 )                                                           Balance as at December 31, 2014     715       4,915       1,528       157       240       903       8,458                                                             Accumulated depreciation                                                         Balance as at January 1, 2014     367       3,026       738       89       190       -       4,410   Additions     20       192       75       9       16       -       312   Disposals     (6 )     (37 )     -       (13 )     (7 )     -       (63 ) Impairment     20       34       -       -       4       -       58   Translation differences     (18 )     (79 )     (22 )     (2 )     (5 )     -       (126 ) Classification to assets held for sale     (18 )     (32 )     -       -       (10 )     -       (60 )                                                           Balance as at December 31, 2014     365       3,104       791       83       188       -       4,531                                                             Depreciated balance as at December 31, 2014     350       1,811       737       74       52       903       3,927     (1) Plants under construction and spare parts for installations – the changes represent additions during the year, net of transfers to property, plant and equipment. F-41 F-45 Table of Contents Note 14 –- Intangible Assets A. Composition     Intangible assets acquired   Intangible assets internally developed   Computer application   Others    Total     Goodwill   Concessions and mining rights(1)   Trademarks    Technology / patents   Customer relationships   Exploration and evaluation assets   Development costs                 $ millions Cost                                                                                 Balance as at January 1, 2015     327       154       89       70       196       25       7       155       64       1,087   Additions     -       -       -       4       -       20       -       107       6       137   Additions in respect of business combinations     90       116       4       15       24       97       -       -       3       349   Translation differences     (47 )     (8 )     (7 )     (7 )     (8 )     1       (1 )     (3 )     (1 )     (81 ) Classification to assets held for sale     -       -       -       -       -       -       -       (4 )     -       (4 )                                                                                   Balance as at December 31, 2015     370       262       86       82       212       143       6       255       72       1,488                                                                                     Amortization and impairment losses                                                                                 Balance as at January 1, 2015     24       48       14       27       67       6       6       58       34       284   Amortization for the year     -       4       4       5       12       1       -       4       6       36   Translation differences     (3 )     -       (2 )     (2 )     (2 )     -       (1 )     (3 )     -       (13 ) Classification to assets held for sale     -       -       -       -       -       -       -       (4 )     -       (4 )                                                                                   Balance as at December 31, 2015     21       52       16       30       77       7       5       55       40       303                                                                                     Amortized Balance as at December 31, 2015     349       210       70       52       135       136       1       200       32       1,185   F-46     Intangible assets acquired     Intangible assets internally developed     Computer application     Others     Total       Goodwill     Concessions and mining rights (1)     Trademarks     Technology / patents     Customer relationships     Exploration and evaluation assets     Technology  / patents     Development costs                         US$ thousands   Cost       Balance as at January 1, 2014     290,840       161,596       112,046       71,986       260,884       23,778       437       7,281       78,722       65,135       1,072,705   Additions     —       —       —       —       —       3,233       —       —       77,107       2,774       83,114   Additions in respect of business combinations     103,639       —       2,231       4,971       11,836       —       —       —       513       4,295       127,485   Translation differences     (24,718 )     (7,463 )     (11,035 )     (2,521 )     (21,494 )     (1,652 )     (49 )     (544 )     (689 )     (5,525 )     (75,690 ) Reclassification to assets held for sale     (42,761 )      —       (14,322 )     (4,364 )     (55,529 )     —       (152 )     —       (681 )     (3,044 )     (120,853 )                                                                                           Balance as at December 31, 2014     327,000       154,133       88,920       70,072       195,697       25,359       236       6,737       154,972       63,635       1,086,761                                                                                             Amortization and impairment losses                                                                                         Balance as at January 1, 2014     23,590       45,094       18,665       25,409       69,571       5,289       281       6,102       53,678       33,852       281,531   Amortization for the year     —       3,297       4,233       4,809       14,692       1,311       17       181       5,670       3,755       37,965   Translation differences     (2,112 )     (173 )     (2,619 )     (1,610 )     (4,872 )     (244 )     (17 )     (517 )     (1,563 )     (521 )     (14,248 ) Impairment     12,445       —       1,365       836       3,506       —       —       —       745       —       18,897   Reclassification to assets held for sale     (9,466 )     —       (7,874 )     (2,636 )     (16,663 )     —       (304 )     —       (518 )     (2,843 )     (40,304 ) Balance as at December 31, 2014     24,457       48,218       13,770       26,808       66,234       6,356       (23 )     5,766       58,012       34,243       283,841                                                                                             Amortized Balance as at December 31, 2014     302,543       105,915       75,150       43,264       129,463       19,003       259       971       96,960       29,392       802,920   F-42 Table of Contents Note 14 –- Intangible Assets (cont'd) (cont’d) A. Composition (cont’d)     Intangible assets acquired   Intangible assets internally developed   Computer application   Others   Total     Goodwill   Concessions and mining rights(1)   Trademarks   Technology / patents   Customer relationships   Exploration and evaluation assets   Development costs                 $ millions Cost                                                                                 Balance as at January 1, 2014     291       162       112       72       261       24       7       79       65       1,073   Additions     -       -       -       -       -       3       -       77       3       83   Additions in respect of business combinations     104       -       2       5       11       -       -       1       4       127   Translation differences     (25 )     (8 )     (11 )     (3 )     (20 )     (2 )     -       (1 )     (5 )     (75 ) Classification to assets held for sale     (43 )     -       (14 )     (4 )     (56 )     -       -       (1 )     (3 )     (121 )                                                                                   Balance as at December 31, 2014     327       154       89       70       196       25       7       155       64       1,087                                                                                     Amortization and impairment losses                                                                                 Balance as at January 1, 2014     24       45       19       25       70       5       6       54       34       282   Amortization for the year     -       3       4       5       15       1       -       6       4       38   Translation differences     (3 )     -       (2 )     (1 )     (6 )     -       -       (2 )     (1 )     (15 ) Impairment     12       -       1       1       4       -       -       1       -       19   Classification to assets held for sale     (9 )     -       (8 )     (3 )     (16 )     -       -       (1 )     (3 )     (40 )                                                                                   Balance as at December 31, 2014     24       48       14       27       67       6       6       58       34       284                                                                                     Amortized Balance as at December 31, 2014     303       106       75       43       129       19       1       97       30       803         Intangible assets acquired     Intangible assets internally developed     Computer application     Others     Total       Goodwill     Concessions and mining rights (1)     Trademarks     Technology / patents     Customer relationships     Exploration and evaluation assets     Technology  / patents     Development costs                         US$ thousands                                                                       Cost                                                                   Balance as at January 1, 2013     281,005       158,398       110,590       68,190       205,008       21,121       368       7,016       61,485       62,692       975,873   Additions     —       469       91       353       —       2,105       62       —       17,097       1,916       22,093   Additions in respect of business combinations     2,907       —       182       —       48,481       —       —       —       19       234       51,823   Disposals     —       —       —       —       —       —       —       —       —       —       —   Translation differences     6,928       2,729       1,183       3,443       7,395       552       7       265       121       293       22,916   Balance as at December 31, 2013     290,840       161,596       112,046       71,986       260,884       23,778       437       7,281       78,722       65,135       1,072,705   Amortization and impairment losses                                                                                         Balance as at January 1, 2013     22,853       41,780       14,474       20,181       53,690       4,132       258       5,698       48,170       29,828       241,064   Amortization for the year     —       3,250       4,837       4,390       14,826       1,091       16       175       5,080       3,879       37,544   Translation differences     737       64       (646 )     838       1,055       66       7       229       428       145       2,923   Balance as at December 31, 2013     23,590       45,094       18,665       25,409       69,571       5,289       281       6,102       53,678       33,852       281,531   Amortized Balance as at December 31, 2013     267,250       116,502       93,381       46,577       191,313       18,489       156       1,179       25,044       31,283       791,174   (1) As at December 31, 2014,Regarding mining rights of a subsidiary in Spain has mining rights intended for future development of new mines for quarrying potash, in the amount of about $54 million. Part of these rights are effective up to 2037 while the balance is effective up to 2067. Development of the new mines has not yet commenced and, accordingly, amortization of the mining rights has not yet commenced.see Note 23. F-47 F-43 Table of Contents Note 14 –- Intangible Assets (cont'd) (cont’d) B. Total book value of intangible assets having defined useful lives and those having indefinite useful lives are as follows:     As at December 31       2014     2013       US$ thousands   Intangible assets having a defined useful life     465,719       488,140   Intangible assets having an indefinite useful life     337,201       303,034         802,920       791,174       As at December 31     2015   2014     $ millions Intangible assets having a defined useful life     803       466   Intangible assets having an indefinite useful life     382       337         1,185       803   Note 15 –- Impairment Testing for Property, Plant and Equipment and Cash-Generating Units Containing Goodwill A. Impairment testing for cash generating units containing goodwill and intangible assets with an indefinite useful life For the purpose of impairment testing, goodwill and intangible assets with an indefinite useful life are allocated to the cash-generating units which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. The aggregate carrying amounts of goodwill and intangible assets with an indefinite useful life allocated to each unit are as follows:     As at December 31     2015   2014     $ millions Goodwill                 Potash *     36       -   Phosphate *     18       -   Performance Products *     46       -   Potash, Spain     4       4   Specialty Fertilizers     64       69   Industrial Products, Europe     28       32   Industrial Products, United States     57       57   Performance Products, United States     11       11   Fertilizers, Israel     23       22   Industrial Products, Israel     5       4   Performance Products, Europe     3       6   Performance Products, South America     54       98         349       303   Trademarks                 Industrial Products, United States     13       13   Industrial Products, Europe     6       7   Performance Products, United States     14       14         33       34         382       337         As at December 31       2014     2013       US$ thousands   Goodwill             Potash, Spain     3,906       4,425   Specialty Fertilizers     67,709       64,383   Industrial Products, Europe     31,675       40,159   Industrial Products, United States     56,826       56,826   Performance Products, United States     11,333       11,489   Fertilizers, Israel     22,484       23,707   Industrial Products, Israel     3,992       3,708   Performance Products, Europe     6,386       51,017   Performance Products, South America     98,232       11,536         302,543       267,250   Trademarks                 Industrial Products, United States     13,000       13,000   Industrial Products, Europe     7,787       8,913   Performance Products, United States     13,871       13,871         34,658       35,784         337,201       303,034   * Goodwill acquired in a business combination starting from 2015, is tested for impairment at the segment level as this is the lowest level at which the goodwill is monitored for internal management purposes. Value in use was determined by discounting the future cash flows generated from the continuing operation of the cash-generating unit and was based on the following key assumptions: F-48     Discount rate     Average annual growth rate (1-5 years)     Long-term growth rate       Period of projected cash flows Industrial Products, United States     9.2 %     5.3 %     2.0 %   5 years Industrial Products, Europe     9.0 %     7.0 %     2.0 %   5 years Performance Products, United States     9.0 %     3.5 %     2.0 %   5 years Performance Products, Europe     9.2 %     6.2 %     1.5 %   5 years Performance Products, South America     9.0 %     4.1 %     1.0 %   5 years Potash, Spain     9.5 %     0.6 %     0.0 %   5 years Specialty Fertilizers     9.0 %     2.5 %     2.0 %   5 years F-44 Table of Contents Note 15 –- Impairment Testing for Property, Plant and Equipment and Cash-Generating Units Containing Goodwill (cont'd) (cont’d) A. Impairment testing for cash generating units containing goodwill and intangible assets with an indefinite useful life (cont’d)     Discount rate   Average annual growth rate (1-5 years)   Long-term growth rate   Period of projected cash flows Industrial Products, United States     7.7 %     4.2 %     2.0 %     5 years   Industrial Products, Europe     9.0 %     7.0 %     2.0 %     5 years   Performance Products, United States     7.8 %     3.4 %     2.0 %     5 years   Performance Products, Europe     9.0 %     7.2 %     1.5 %     5 years   Performance Products, South America     9.0 %     4.0 %     1.0 %     5 years   Potash, Spain     9.5 %     6.0 %     0.0 %     5 years   Specialty Fertilizers     9.0 %     2.5 %     2.0 %     5 years   Fertilizers – Israel     8.0 %     2.1 %     1.5 %     5 years   Fertilizers segment – potash     8.0 %     2.1 %     1.5 %     5 years   Fertilizers segment – phosphate     8.0 %     7.2 %     1.5 %     5 years   Performance Products Segment     8.7 %     6.6 %     1.9 %     5 years   The recoverable value of the above mentioned units is based on their value in use. The value in use of the units examined has been determined by an internal valuation made by the Company. It has been determined in all cases that the stated value of the units in the financial statements is lower than their recoverable value, and accordingly no impairment loss has been recognized in respect of such units. In the period of the report, the Company examined the recoverable value of its assets in the Industrial Products segment in the United States, in view of the decline in the selling prices of the Company's products as a result of its competitors' strategy to increase their market share, and in view of the cancellation of the anti-dumping tax on Japanese chlorine-based biocide manufacturers in the fourth quarter of 2014. The examination included a comparison of the discounted value of the anticipated cash flows in the remaining lifetime of the Company's facilities, using a five-year projected cash flow, where the fifth year was selected as the representative year for the remainder of the lifetime of the plant, property, and equipment, and the value of the assets in the Company's books. The discounted value of the anticipated cash flows were calculated according to an annual after-tax discount rate of 9.2%, and based on the Company's estimates for future sales prices. In these terms, the recoverable value of the subsidiary's assets is lower than their book value, and the Company accordingly included a provision for impairment in the amount of approximately $40 million, recorded in "other expenses". The estimates and assumptions represent Management’s assessment of the future trends in the industry and they are based on both internal and external sourcessources. In the reporting period, the Company examined the recoverable amount of some of its facilities in the Industrial Products segment in Israel, in view of the decision of the Company’s management regarding the continued use of various facilities on the Company’s sites. The recoverable amount is the higher of the fair value less selling costs and internal sources. In addition, asthe value in use. As a result of the reclassificationsaid decision, it was determined that the recoverable amount of assets held for sale,the facilities is their fair value less cost of disposal. Following the Company’s examination, the recoverable amount of the facilities was lower than their carrying amount in 2014the books and, accordingly, the Company recognized an impairment loss, in the amount of about $31$43 million, which was included in the “other expenses” category. In addition, as a result of the classification of assets held for sale, in 2015 the Company recognized an impairment loss, in the amount of about $47 million, which is included in the “other expenses” category in the statement of income ($36 million, net of tax), stemming from re measurement of somere-measurement of the disposal groups (see Note 11)activities designated for sale, from the Performance Products and Industrial Products segments based on the lower of their carrying valueamount in the books and their fair values in business units and companies from the Industrial Products' segment and from the Performance Products' segment in Europe. (see Note 11 above). Note 16 –- Derivative Instruments     As at December 31, 2015   As at December 31, 2014     Assets   Liabilities   Assets   Liabilities     $ millions Included in current assets and liabilities:                                 Foreign currency and derivative instruments     9       (6 )     14       (63 ) Interest derivative instruments     -       (1 )     1       -   Derivative instruments on energy and marine transport     -       (10 )     -       (27 )       9       (17 )     15       (90 ) Included in non-current assets and liabilities:                                 Foreign currency and  derivative instruments     -       (4 )     -       (9 ) Interest derivative instruments     -       (9 )     -       (9 ) Derivative instruments on energy and marine transport     -       -       -       (1 )       -       (13 )     -       (19 ) F-49     As at December 31, 2014     As at December 31, 2013       Assets     Liabilities     Assets     Liabilities       US$ thousands   Included in current assets and liabilities:                         Foreign currency and derivative instruments     13,553       (63,062 )     55,293       (10,016 ) Interest derivative instruments     1,042       (250 )     858       (1,765 ) Derivative instruments on energy and marine transport     —       (27,091 )     6,084       —         14,595       (90,403 )     62,235       (11,781 ) Included in non-current assets and liabilities:                                 Foreign currency and  derivative instruments     —       (8,861 )     3,419       —   Interest derivative instruments     —       (9,299 )     3,072       (6,582 ) Derivative instruments on energy and marine transport     —       (1,161 )     1,128       —         —       (19,321 )     7,619       (6,582 ) F-45 Table of Contents Note 17 –- Credit from Banks and Others A. Composition     As at December 31       2014     2013       US$ thousands   Current liabilities             Short-term credit:             From financial institutions     352,443       438,538   From the parent company (1)     -       50,000   Other liabilities     50,000       50,000         402,443       538,538   Current maturities of long-term loans:                 From financial institutions     133,215       1,792   Non Marketable Debentures     67,000       -   Other long-term loans     91       2,169   From marketable debentures     -       175,785         200,306       179,746         602,749       718,284   Non current liabilities                 Loans from financial institutions*     1,366,159       1,239,705   Other loans     6,641       7,894         1,372,800       1,247,599    Less – current maturities in respect of loans from financial institutions and others     133,306       3,961         1,239,494       1,243,638   Marketable debentures     789,222       175,785   Non-marketable debentures     342,000       67,000         1,131,222       242,785   Less – current maturities     67,000       175,785         1,064,222       67,000   Total non-current liabilities     2,303,716       1,310,638   (1) For details – see Note 29. * The Group has the right to make early repayment of the loans from financial institutions. F-46 Table of Contents Note 17 – Credit from Banks and Others (cont'd)     As at December 31     2015   2014     $ millions Current liabilities                 Short-term credit:                 From financial institutions     443       353   Other liabilities     217       50         660       403   Current maturities of:                 Long term loans from financial institutions     13       133   Non Marketable Debentures     -       67         13       200   Total current liabilities     673       603                     Non current liabilities                 Loans from financial institutions     1,748       1,365   Other loans     5       7         1,753       1,372    Less – current maturities in respect of loans from financial institutions and others     13       133         1,740       1,239   Marketable debentures     790       789   Non-marketable debentures     275       342         1,065       1,131   Less – current maturities     -       67         1,065       1,064   Total non-current liabilities     2,805       2,303   B. Classified by currency and interest rates     Weighted average interest rate as at         December 31   As at December 31     2015   2015   2014     $ millions   $ millions Current liabilities (without current maturities)                         Short-term credit from financial institutions:                         In Dollar (1)     1.0       218       235   In Euro (2)     0.3       91       101   In Renminbi (3)     4.4       115       -   In other currencies     1.4       19       17   Short-term credit from others:                         In Dollar     1.1       50       50   In Renminbi (3)     5.7       167       -                 660       403                             F-50 Table of Contents Note 17 - Credit from Banks and Others (cont’d) B. Classified by currency and interest rates (cont’d)     Weighted average interest rate as at         December 31   As at December 31     2015   2015   2014     $ millions   $ millions               Non-current liabilities (including current  maturities)                         Loans from financial institution:                         In Dollar (1)     1.4       1,497       959   In Israeli currency – unlinked     4.7       148       154   In Euro (2)     2.2       65       191   In Brazilian real (4)     15.7       38       61                 1,748       1,365   Loans from others:                         In Dollar     3.0       3       4   In Euro     4.8       2       2   In other currencies     -       -       1                 5       7                                           1,753       1,372                             Non-marketable debentures – in Dollar (5)     5.0       275       342                             Marketable debentures – in Dollar (5)     4.5       790       789                             Unutilized long-term credit lines (6):             519       821         Weighted average interest rate as at December 31     As at December 31       2014     2014     2013       %     US$ thousands   Current liabilities (without current maturities)                   Short-term credit from financial institutions:                    In dollars (1)     1.1       234,196       313,671    In Euro (2)     0.9       101,448       105,840    In other currencies     1.4       16,799       19,027   Short-term credit from the parent company and others:                          In Dollar     0.9       50,000       100,000                 402,443       538,538                             Non-current liabilities (including current  maturities)                         Loans from financial institution:                           In Dollar (1)     1.3       960,648       914,686     In Israeli currency – unlinked     4.7       154,282       172,860     In Euro (2)     1.6       190,718       152,159   In other currencies     10.1       60,511       -                 1,366,159       1,239,705   Loans from others:                           In Dollar     3.0       3,801       3,590     In Euro     4.8       1,903       2,697     In other currencies     1.6       937       1,607                 6,641       7,894                                           1,372,800       1,247,599                             Non-marketable debentures – in dollar (3)     5.1       342,000       67,000                             Marketable debentures (3):                          In Dollar     4.5       789,222       -    In Israeli currency –unlinked             -       28,773    In Israeli currency – linked to CPI             -       147,012                 789,222       175,785                             Unutilized long-term credit lines (4):             821,000       682,000   (1) The interest in respect of most of the dollar debt is determined based on LIBOR + a margin at a rate of about 1.1%1.0%. (2) The interest in respect of most of the Euro debt is determined based on the Euribor + a margin at a rate of about 1.2%0.8%. (3) The interest in respect of most of the debt in Chinese yuans is a fixed weighted average rate of about 5.5%. (4) The interest in respect of most of the Brazilian real debt is determined based on CDI + a margin at a rate of about 1.35%. (5) See Section F. (4) (6) See Sections H, I, J, M and P.I. F-47 Table of Contents Note 17 – Credit from Banks and Others (cont'd) C. Maturity periods The credit and the loans from banks and others including debentures (net of current maturities) mature in the years after the date of the report, as follows:     As at December 31     2015   2014     $ millions Second year     13       732   Third year     13       16   Fourth year     235       15   Fifth year*     1,347       214   Sixth year and thereafter     1,197       1,326         2,805       2,303   * See Note 17H hereafter for additional information. F-51 Table of Contents     As at December 31       2014     2013       US$ thousands   Second year     732,043       226,049   Third year     15,936       821,543   Fourth year     15,498       7,451   Fifth year     214,248       7,341   Sixth year and thereafter     1,325,991       248,254         2,303,716       1,310,638   Note 17 - Credit from Banks and Others (cont’d) D. Restrictions on the Group relating to the receipt of credit As part of the loan agreements the Group has signed, various restrictions were providedset including financial covenants, a cross default mechanism and a negative pledge. Set forth below is information regarding the financial covenants applicable to the Company as part of the loan agreements and the compliance therewith:     Financial Ratio Required under the Agreement   Financial Ratio December 31,   Financial Ratio December 31, Financial Covenants(1)       2015   2014 Equity   Equity greater than 2,000 million dollar     3,028 million dollars       2,974 million dollars   The ratio of the EBITDA to the net interest expenses   Equal to or greater than 3.5     20.31       18.20   Ratio of the net financial debt EBITDA   Less than 3.5     2.16       1.76   Ratio of the financial liabilities of the subsidiaries to the total assets of the consolidated company   Less than 10%     3.75 %     0.80 %   Financial Covenants (1)   Financial Ratio Required under the Agreement   Financial Ratio December 31,     Financial Ratio December 31,     2014     2013   Equity Equity greater than 2,000     2,974       3,654     million dollar   million dollars     million dollars                       The ratio of the EBITDA to the net interest expenses Equal to or greater than 3.5     18.20       37.38                       Ratio of the net financial debt EBITDA Less than 3.5     1.76       0.93                       Ratio of the financial liabilities of the subsidiaries to the total assets of the consolidated company Less than 10%     0.8 %     0.39 %                     Ratio of the net financial debt to the equity Less than 2.1     0.8       0.40   (1) Examination of compliance with the above mentioned financial covenants is made as required based on the data in the Company'sCompany’s consolidated financial statements. E. Sale of receivables under securitization transaction On In July 2, 2010,2015, the Company and certain Group subsidiaries (hereinafter – “the Subsidiaries”) entered intosigned a numberseries of agreements regarding a securitization agreementstransaction with Rabobank International and Credit Agricolthree international banks (hereinafter – “the Lending Banks”) for the sale of their customer debtsreceivables to a foreign company which was established specifically for this purpose and which is neithernot owned nor controlled by the ICL Group (hereinafter – “the Acquiring Company”). Those agreements replace the prior securitization agreements, in the amount of $350 million, which came to an end in July 2015. The main structure of the new securitization agreement is the same as the prior securitization agreement. The Company’s policy is to utilize the securitization limit based on its cash flow needs, alternative financing sources and market conditions. The new securitization agreement will expire in July 2020. In the agreement, ICL undertook to comply with a financial covenant whereby the ratio of net debt to EBITDA will not exceed 4.75. If ICL does not comply with the said ratio, the Acquiring Company is allowed to discontinue acquiring new trade receivables (without affecting the existing acquisitions). As at the reporting date, ICL is in compliance with the aforementioned financial covenant. The Acquiring Company finances acquisition of the debts by means of a loan received from a financial institution, which is not related to ICL, which finances the loan out of the proceeds from the issuance of commercial paper on the U.S. commercial paper market. The repayment of both the commercial paper and the loan are backed by credit lines from the Lending Banks. The amount of cash that will be received in respect of the initial sale of the customer debts in the securitization transaction will be up to $350$405 million. F-48 Table of Contents Note 17 – Credit from Banks and Others (cont'd) The acquisition isacquisitions are on an ongoing basis, such that the proceeds received from customers whose debts were sold are used to acquire new trade receivables. The period in which the Subsidiaries are entitled to sell their trade receivables to the Acquiring Company is five years from the closing date of the transaction, where both parties have the option at the end of each year to give notice of cancellation of the transaction. The securitization agreement will expire in July 2015. The selling price of the trade receivables is the amount of the debt sold, less the calculated interest cost based on the anticipated period between the sale date of the customer debt and its repayment date. Upon acquisition of the debt, the Acquiring Company pays the majority of the debt price in cash and the remainder in a subordinated note, which is paid after collection of the debt sold. The rate of the cash consideration varies according to the composition and behavior of the customer portfolio. The Subsidiaries handle collection of the trade receivables included in the securitization transaction, on behalf of the Acquiring Company. In addition, as part of the agreements a number of conditions were set in connection with the quality of the customer portfolios, which givesgive the Lending Banks the option to end the undertaking or determiningdetermine that some of the Subsidiaries, the customer portfolios of which do not meet the conditions provided, will no longer be included in the securitization agreement. F-52 Table of Contents Note 17 - Credit from Banks and Others (cont’d) E. Sale of receivables under securitization transaction (cont’d) The securitization of trade receivables does not meet the conditions for disposal of financial assets prescribed in International Standard IAS 39, regarding Financial Instruments – Recognition and Measurement, since the Group did not transfer all of the risks and rewards deriving from the trade receivables. Therefore, the receipts received from the Acquiring Company are presented as a financial liability as part of the short-term credit. As of December 31, 2014,2015, utilization of the securitization facility and trade receivables within this framework amounted to $290$285 million (As(as at December 31, 2013,2014, approximately $285$290 million). Once the Company transferred its trade receivables, it no longer has the right to sell them to another party. In the case of a credit fault, the Company bears 30% of the overall secured trade receivable balance. The value of the transferred assets (which is approximately their fair value), fair value of the associated liabilities and net position are as follows:     Year ended December 31,       2014     2013     2012       US$ thousands   Value of the transferred assets     290,323       285,246       162,681   Fair value of the associated liabilities     290,053       284,978       162,506   Net position     270       268       175       Year ended December 31,     2015   2014   2013     $ millions   $ millions   $ millions Value of the transferred assets     285       290       285   Fair value of the associated liabilities     285       290       285   Net position*     -       -       -   * Less than $1 million. F. Issuance of Debentures 1. In 2005, we issued debentures to institutional investors in a private issuance in the United States in the amount of $125 million bearing fixed interest. As of December 31, 2014, the outstanding balance of the debentures was approximately $67 million, bearing fixed interest at a rate of 5.72%. Subsequent to the date of the report, onOn March 3, 2015, the debentures were repaid in full. 2. On April 27, 2009, we issued three series of debentures for an amount equal to NIS 695 million (approximately $167 million), of which Series B and C were repaid in full in 2013, and Series A was repaid in full on April 30, 2014. 3. On September 9, 2009, we issued three series of debentures for an amount equal to NIS 898 million (approximately $235 million). The debentures were issued in three series, of which Series B and C were repaid in full during 2013, and Series D was repaid in full on October 31, 2014. F-49 Table of Contents Note 17 – Credit from Banks and Others (cont'd) 4. In November 2013, a wholly owned and controlled subsidiary of ours entered into an agreement with institutional and international investors to make a private offering in the United States of unregistered debentures in an amount of $275 million. The proceeds in respect of the issuance were received in January 2014. The debentures were issued in three series, as follows: A. $84 million of debentures with a repayment date of January 15, 2021 bearing interest at a fixed rate of 4.55%. B. $145 million of debentures with a repayment date of January 15, 2024 bearing interest at a fixed rate of 5.16%. C. $46 million of debentures with a repayment date of January 15, 2026 bearing interest at a fixed rate of 5.31%. 5. 3. On December 2, 2014, the Company completed the private issuance of senior notes pursuant to Rule 144A and Regulation S under the U.S. Securities Act of 1933, as amended, to institutional investors in the U.S., Europe, and Israel, in an aggregate principal amount of $800 million, scheduled for repayment on December 2, 2024. The notes bear an annual coupon of 4.5% to be paid in semi annualsemi-annual installments, on June 2 and December 2 of each year. The notes were issued at a price of 99.285% to yield 4.59%. The proceeds received by the Company for the debentures amount to about $794 million. The notes have been rated BBB (stable) by Standard and Poor'sPoor’s and by Fitch Rating Ltd. The notes are registered for trade in the TACT Institutional, by the Tel-Aviv Stock Exchange Ltd. On October 29, 2015, Standard & Poor’s Ratings Services revised its rating outlook of the Company’s credit, which is rated BBB (together with the rating of the debentures) from stable to negative. Subsequent to balance sheet date, Fitch Ratings Services revised its rating outlook of the Company’s credit, which is rated BBB (together with the rating of the debentures) from stable to negative. The local credit Rating of the Company in Israel by Standard & Poor’s Maalot is been unchanged at ilAA with a stable outlook. F-53 Table of Contents Note 17 - Credit from Banks and Others (cont’d) G. In December 2010, the Company received a loan from a European Bank in the amount of €100 million (about $121 million). Repayment of themillion. The loan iswas repaid on December 15, 2015. The interest rate on the loan is Eurobor + 1.14%. H. On March 14, 2011, the Company signed23, 2015, ICL entered into an agreement with a group of 17eleven international banks, which will provide ICL a revolving credit facility in the total amount of $1,705 million, on the following terms: a. The loan agreement is for a term of five full years from Europe, the United States and Israel whereby these banks made availablesigning date of the credit facility. b. The loan agreement does not include an undertaking for minimum use of the credit facility. A non-utilization fee will be at the rate of 0.21% per year. c. Annual interest will apply to the Company credit in the amount of $675 million. The credit line is for a period of 5 years and will be paid in one lump-sum at the end of the period. Onloan actually used, scaled to the amount of the credit facility actually utilized, graduated annual interest will be paid,used, as follows: – •     Up to 33% use of the credit utilized:credit: Libor + 0.8%0.7%. – •    From 33% to 66% use of the credit utilized:credit: Libor + 0.8% (on the entire sum used). •     66% or more use of the credit: Libor + 0.95% (on the full amount utilized). – More than 66% of the credit utilized: Libor + 1.1% (on the full amount utilized)entire sum used). The d. ICL has an option to choose between a dollar loan and a euro loan. e. Under the loan agreement, ICL undertook restrictions that include financial covenants (which are identical to the financial covenants applicable to the Company’s prior loans, see Section D), a cross-default mechanism and a negative pledge. This loan agreement replaces credit agreement does not include a commitment to utilize a minimumfacilities taken out in March 2011 and in December 2011 in the aggregate amount of $1,325 million for a period of five years and credit lines in the credit line. A non utilization commission will apply atamount of $125 million that were taken out in the ratebeginning of 0.28% per year. 2014, all of which were repaid during the period of the report. As of December 31, 2015, this credit facility has been utilized in the amount of $1,330 million. Subsequent to the balance sheet date, the loan agreement termination date has been extended for a period of one year, until March 2021. The amount and credit terms of the financial statements, $505 million of the credit facility had been utilized. loan agreement remain unchanged. I. In In the first half ofMarch 2014, the Company entered into an agreement with a European bank, under which the bank granted a credit facility of €100 million and $100 million. This credit facility is for a period of six years and is payable in entirety at the end of the period. The credit facility in euro replaces the unutilized credit facility that the bank had granted the Company in November 2011.The dollar credit facility bears variable interest on the basis of Libor plus a margin of between 0.9% and 1.4%. The euro credit facility bears variable interest on the basis of Eurobor plus a margin of between 0.9% and 1.4%. The non-utilization commission is 0.32% per year. As at December 31, 2014, a total of approximately $100 million ofOn March 23, 2015, the dollar credit facility was utilized. F-50 Table of Contents Note 17 – Credit from Banksdecreased to $35 million on the same terms. As at December 31, 2015, both the dollar and Others (cont'd) J. In December 2011, the Company entered into an undertaking with 7 international banks whereby the banks will provide the Company aeuro credit line, in the aggregate amount of $650 million. The credit line is for a period of five years and is to be repaid in full at the end of the period. On the amount of the credit actually utilized, graduated annual interest will be paid, as follows: – Up to 33% of the credit is utilized: Libor + 1%. – From 33% up to 66% of the credit is utilized: Libor + 1.2% (on the entire amount utilized). – From 66% and above of the credit is utilized: Libor + 1.4% (on the entire amount utilized). The credit agreement doesfacilities were not include a commitment to utilize a minimum amount of the credit line. A non utilization commission will apply at a rate of 0.35% per year. As of the date of the report, the amount of $214 million had been utilized out of the credit line. K. On June 26, 2012, we received a short term loan in the amount of $50 million from our controlling shareholder (Israel Corporation Ltd). The loan was granted on terms similar to market terms. The loan was renewed periodically for periods of three or six months and bore interest at a rate of 0.776%. In August 2014, the loan was repaid in full. L. utilized. J. On September 11, 2012, the Company received a loan in the amount of $50 million from a third party, bearingparty. At December 11, 2015 the loan has been repaid and the Company received a loan at the same amount, the loan bears interest at the three monththree-month Libor rate plus a margin of 0.7%0.6%. Thethe loan iswill be extended every three months on the same terms on which it was received. The last date on which the loan was extended was December 11, 2014. M. months. K. In December 2012, wethe Company entered into a credit facility agreement with a European bank for a loan of approximately €100 million (approximately $121 million).million. As of December 31, 2014, we had2015, the Company utilized $100 million from this facility. The repayment date for thisthe full amount of the euro facility and the loan was fixed as a dollar loan, in the amount of approximately $129 million. This amount is scheduled for repayment in December 2019. The interest rate on this amountcredit is LIBOR plus 1.4%. The amount that is utilized from this credit facility must be repaid six years from the date of utilization but no later than December 2021. N. L. In November 2013, the Company signed a loan agreement with several institutional entities, in the amount of $170NIS 600 million, bearing a fixed interest at athe rate of 4.74%. The loan is payable in installments starting from 2015 and up to be repaid in increments until November 2024 (average life of seven years). O. In 2014, we received a number of short term loans from Israeli banks.2024. As ofat December 31, 2014,2015, the total amount of the loans wasloan is approximately $40 million.$148 million (approximately NIS 576 million). F-54 P. In May 2014, we signed an agreement with a European bank whereby the bank provided a credit facility in the amount Table of €50 million. This credit facility is for a period of five yearsContents Note 17 - Credit from Banks and is to be repaid in full at the end of the period. It bears variable interest based on Euribor plus a margin of 0.95% to 1.25%. A non utilization commission is chargeable at the rate of 0.33% per year. As of December 31, 2014, this credit facility had not been used. Q. Others (cont’d) M. In June 2014, wethe Company signed loan agreements with a number of international institutional entities in the aggregate amount of approximately €57 million and approximately $45 million. The proceeds of these loans were received in F-51 Table of Contents Note 17 – Credit from Banks and Others (cont'd) July 2014. The loans are to be repaid in a period of between five to ten years, where some of the loans bear fixed interest in the range of 2.1% to 3.75%, some bear variable interest based on LIBOR plus 1.55% and some bear variable interest based on Euribor plus a margin of 1.4% to 1.7%. R. N. In December 2014, wethe Company signed a loan agreement in the amount of R$approximately Brazilian reals 161 million (approximately $60 million) with a European bank. The loan is payable in installments untilstarting from 2015 and running up to 2021. The loan bears CDI interest (Brazilian Interbank Certificates of Deposits) plus a margin of 1.35%. As of December 31, 2015, the total amount of the loan is approximately Brazilian reals 149 million (approximately $38 million). O. During 2015, the Company received a number of short-term loans from Israeli banks. As at December 31, 2015, the total amount of the loans was approximately $30 million. P. In October 2015, as part of establishment of the “YPH” joint venture, the Company consolidated for the first time the short-term loans of the joint venture, in the amount of 1,682 million Chinese yuans (about $259 million), which were received from a Chinese bank and from the Company’s partner in the “YPH” joint venture. Most of the loans bear annual interest at a fixed rate of 4.6%-5.89% and they are scheduled for repayment in 2016. *For further information regarding Financial Liabilities, see Note 27. Note 18 –- Trade Payables     As at December 31       2014     2013       US$ thousands   Open accounts     568,780       657,897   Checks payable     16,129       11,205         584,909       669,102       As at December 31       2015       2014         $ millions   Open accounts     702       569   Checks payable     14       16         716       585   Note 19 – Derivatives and- Other Payables     As at December 31       2014     2013       US$ thousands   Government of Israel – mainly in respect of royalties (1)     245,579       53,941   Employees     217,922       275,692   Accrued expenses     67,591       73,354   Derivative instruments     90,403       11,781   Benefits for early retirement     14,709       19,330   Others     56,709       66,355         692,913       500,453   current Liabilities     As at December 31       2015       2014         $ millions   Government of Israel – mainly in respect of royalties (1)     77       246   Employees     219       218   Accrued expenses     99       68   Derivative instruments     17       90   Benefits for early retirement     30       15   Others     85       58          527       695   ___________________ (1) 1. See Note 23 F-55 Table of Contents Note 20 –- Taxes on Income A. Taxation of companies in Israel 1. Measurement of results for tax purposes under the Income Tax (Inflationary Adjustments) Law, 1985 (hereafter – “the Inflationary Adjustments Law”) The Income Tax Law (Adjustments for Inflation) – 1985 (hereinafter – the Law), which is effective as from the 1985 tax year, introduced the concept of measurement of results for tax purposes on a real (net of inflation) basis. On February 26, 2008, the Knesset enacted the Income Tax Law (Adjustments for Inflation) (Amendment No. 20) (Restriction of Commencement Period), 2008, whereby the effective period of the Inflationary Adjustments Law ceased at the end of the 2007 tax year and the depreciation of property, plant and equipment, are adjusted up to the end of the 2007 tax year, and from this time forward their linkage will be discontinued. The Income Tax Regulations (AdjustmentsAdjustments for Inflation)Inflation (Rates of Depreciation), 1986, which allow depreciation at rates different than those in Section 21 of the Income Tax Ordinance, apply even after the Inflationary Adjustments Law is no longer in effect, and therefore the Company continues to claim accelerated depreciation, in certain situations, on the basis of these Regulations (the regulations apply with respect to accelerated depreciation in an industrial plant or assets that were initially used prior to December 31, 2013). Regulations. 2. Income tax rates Presented hereunder are the tax rates relevant to the Company in the years 2012-2014: F-52 Table of Contents Note 20 – Taxes on Income (cont'd) 2012 – 25% 2013-2015: 2013 – 25% 2014 – 26.5% 2015 – 26.5% On August 5, 2013January 4, 2016, the Israeliplenary Knesset passed the Law for Changes in National Priorities (Legislative Amendments for Achieving Budget Objectives inAmendment of the Years 2013 and 2014) – 2013, byIncome Tax Ordinance No. 216 which provides, inter alia, for a reduction of the corporate taxCompanies Tax rate would be raisedcommencing from 2016 and thereafter by 1.5% to athe rate of 26.5% as from 2014. In addition, the Israeli Law for the Encouragement of Capital Investments was amended1.5% such that the tax rate applicable to a Preferred Company in Development Area A will be 9% whereas25%. If the tax applicable to companies inlegislation had been effectively completed by December 31, 2015, the rest of Israel will be 16%. The impact of the legislationchange on the financial statements as at December 31, 2015 would have been reflected in a decline in the balance of the liabilities for 2013 is recognition of tax expenses,deferred taxes, in the amount of about $11$11.6 million, against adjustment ofand a decline in the balance of the deferred taxes. taxes assets, in the amount of $3.6 million. Update of the balances of the deferred taxes would have been recognized against deferred tax income, in the amount of $7.4 million and against other comprehensive income, in the amount of $0.6 million. The current taxes for the periods reported are calculated in accordance with the tax rates shown in the table above. 3. Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (hereinafter – “The Encouragement Law”) a) Beneficiary Enterprises The production facilities of some of the Company’s subsidiaries in Israel (hereinafter – “the Subsidiaries”) received “Beneficiary Enterprise” status under the Law of Encouragement Law,for Capital Investments, as worded after Amendment No. 60 to the Law published in April 2005. The benefits granted to the Company are mainly: 1) Reduced tax rates During Regarding the “tax exemption” track, the Company chose 2005 as the election year, whereas regarding the “Ireland” track, which is subject to tax at the rate of 11.5%, the Company chose 2008 as the election year. The benefits deriving from a “Beneficiary Enterprise” under the “tax exemption” track ended in 2014 while the benefits period – 10 years commencingderiving from the “Ireland” track will end in 2017. F-56 Table of Contents Note 20 - Taxes on Income (cont’d) A. Taxation of companies in Israel (cont’d) A company having a “Beneficiary Enterprise” that distributes a dividend out of exempt income, will be subject to Companies Tax in the first year in which the companies earn taxable income from the Benefited Enterprises (provided the maximum period to which it is restricted by law has not elapsed) – tax applies to the income of the companies from the Benefited Enterprises they own at the rates of 0% for the Regular Track and 11.5% for the Ireland Track instead of the regular tax rate (see A(2) above). The Company has Benefited Enterprises under the Regular Track (tax rate 0%) and Benefited Enterprises under the Ireland Track (tax rate 11.5%). In the event of distribution of a cash dividend out of income that was exempt from tax, as stated above, the Company will have to pay tax at the grossed up rate of 25% in respect ofdistributed on the amount distributed (see also Sections b and c below). (including the amount of the Companies Tax applicable due to the distribution) at the tax rate applicable under the Encouragement Law in the year in which the income was produced, had it not been exempt from tax. The temporary difference related to distribution of a dividend from exempt income as of December 31, 2014,2015, in respect of which deferred taxes were not recognized, is in the amount of about $190 million. $750 million (see also Section 3(a)c below). The part of the taxable income entitled to benefits at reduced tax rates is calculated on the basis of the ratio of the turnover of the “Benefited Enterprise” to the Company’s total turnover. The turnover attributed to the “Benefited Enterprise” is generally calculated according to the increase in the turnover compared to a “base” turnover, which is the average turnover in the three years prior to the year of election of the “Benefited Enterprise”. 2) Accelerated depreciation In respect of buildings, machinery and equipment used by the Approved Enterprise, the Company is entitled to claim accelerated depreciation as provided by law, commencing from the year each asset is placed in service. b) Preferred Enterprises On December 29, 2010, the Israeli Knesset approved the Economic Policy Law for 2011 2012,2011-2012, whereby the Law for the Encouragement of Capital Investments, 1959, was amended (hereinafter – “the Amendment to the Law”Amendment”). The Amendment to the Law is effective from January 1, 2011 and its provisions will apply to preferred income derived or accrued by a Preferred Enterprise (industrial plant that fulfills the law’s provisions regarding qualifyingCompany, as a competitive plant contributing to the Gross Domestic Product (GDP) or a competitive plantdefined in the area of renewable energy)Amendment, in 2011 and thereafter. A company may choose to not be included in the scope of the F-53 Table of Contents Note 20 – Taxes on Income (cont'd) Amendment of the Law and to remain in the scope of the law before its amendment until the end of the benefits period. The 2012 tax year is the last year the Company may choose a Preferred Enterprise as the election year, provided that the minimum qualifying investment began in 2010. As part of the Amendment, the existing tax benefit tracks were eliminated (the tax exempt track, the “Ireland track” and the “Strategic” track) and two new tax tracks were introduced in their place – a Preferred Enterprise and a Special Preferred Enterprise, which mainly provide a uniform and reduced tax rate for all the Company’s income entitled to benefits, as follows: For a Preferred Enterprise – in 2011-2012 tax years – a tax rate of 10% for Development Area A and of 15% for the rest of the country. In 2013 tax year – a tax rate of 7% for Development Area A and of 12.5% for the rest of the country, and as from the 2014 tax year – 9% for Development Area A and 16% for the rest of the country. A Special Preferred Enterprise – for a period of 10 consecutive years a reduced tax rate of 5% if it is located in Development Area A or of 8% if it is located in the rest of the country. The Amendment to the Law also provides that no tax will apply to a dividend distributed out of preferred income to a shareholder that is a company – both at the level of the distributing company and at the shareholder level. A tax rate of 15% will apply to a dividend distributed out of preferred income to an individual shareholder or foreign resident, subject to treaties for prevention of double taxation. Furthermore, the Amendment to the Law provides relief with respect to tax paid on a dividend received by an Israeli company from profits of an approved/alternative/beneficiary enterprise that accrued in the benefits period according to the provisions of the law before its amendment, if the company distributing the dividend notifies the Tax Authorities by June 30, 2015 that it is applying the provisions of the Amendment to the Law and the dividend is distributed after the date of the notice. The Amendment to the law does not apply to an Industrial Enterprise that is a mine, other facility for production of minerals or a facility for exploration of fuel. Therefore, ICL plants that are defined as mining plants and mineral producers will not be able to take advantage of the tax rates proposed as part of the new law.Amendment. In addition, on August 5, 2013, the Law for Change in the Order of National Priorities, 2013, was passed by the Knesset, which provides that the tax rate applicable to a Preferred Company in Development Area A will be 9% whereas the tax applicable to companies in the rest of Israel will be 16%. On November 30, 2015, the Economic Efficiency Law was passed by the Knesset, which expanded the exception to all of an Enterprise’s activities up to the time of the first marketable product (for additional details – see Section 5 below). The Company has Preferred Enterprises at the tax rate of 9%. Nonetheless, tax benefits to which a Benefited Plant is entitled will not be cancelled in respect of investments up to December 31, 2012. Therefore, those plants will be able to utilize the tax benefits in respect of qualifying investments made up to December 31, 2012, in accordance with the provisions of the old law. As at It is further provided in the approval dateAmendment that tax will not apply to a dividend distributed out of the financial statements, the Companypreferred income to a shareholder that is examining the impactan Israeli-resident company. A dividend distributed out of the law and its application with respectpreferred income to the companies operating in Israel. On July 29, 2013, the Israeli Knesset approved the Budget Law and the Law for Change of National Priorities (Legislative Amendments for Achieving the Budget Targets for 2013 and 2014), 2013. As part of this legislation, it was determineda shareholder that the tax rate foris an individual andor a foreign resident oncovered by a dividend that is distributed commencing from January 1, 2014 andtreaty for prevention of double taxation, will be subject to tax at the source of which is preferred income, will increase to 20% in place of the present rate of 15%20%. c) Trapped Earnings Law – Temporary Order On November 5, 2012, the Israeli Knesset passed Amendment No. 69 and Temporary Order to the Law for the Encouragement of Capital Investments, 1959 (hereinafter – “the Temporary Order”), which offers a reduced tax rate arrangement to companies that received an exemption from Companies Tax under the aforesaid law. The Temporary Order provides that companies that choose to apply the Temporary Order (effective for one year), will be entitled to a reduced tax rate on the “release” of exempt profits (hereinafter – “the Beneficiary Companies Tax Rate”). The release of exempt profits will make it possible to distribute them without additional tax at the company level and will also make it possible to use the profits without the restrictions that applied to the use of the exempt profits. The Beneficiary Companies Tax Rate will be determined according to the rate of exempt profits the company chooses to release from its entire exempt profits, and will be between 40% and 70% of the Companies Tax rate that would have applied to the revenue in the year it was produced if it had not been exempt, but in any event no less than 6%. Furthermore, a company that chooses to pay the Beneficiary Companies Tax Rate will have to invest in an industrial enterprise up to 50% of the tax saving it obtained, within a period of 5 years beginning from the year of notice. Failure to comply with this condition will require the company to pay additional Companies Tax. F-54 Table of Contents Note 20 – Taxes on Income (cont'd) On In November 4, 2013, the Company'sCompany’s Board of Directors decided to apply the Temporary Order and to release part of the exempt earnings. As a result, the amount of about NIS 3.8 billion (about $1.1 billion) of the exempt earnings was released. Accordingly, in 2013 the Company recognized current tax expenses in respect of payment of the preferred Companies Tax, in the amount of about NIS 377 million (about $108 million). F-57 Table of Contents Note 20 - Taxes on Income (cont’d) A. Taxation of companies in Israel (cont’d) 4. The Law for the Encouragement of Industry (Taxation), 1969 a) Some of the Company’s Israeli subsidiaries are “Industrial Companies”, as defined in the above mentionedabove-mentioned law. As such, these companies are entitled to claim depreciation at increased rates for equipment used in industrial activities, as stipulated in the regulations published under the Inflationary Adjustments Law. b) The industrial enterprises heldowned by the Company and some of itsthe Company’s Israeli subsidiaries have a common line of production and, are therefore, entitled tothey file, together with the Company, a consolidated tax returnsreturn in accordance with Section 23 of the Law for the Encouragement of Industry. Accordingly, each of the said companies is entitled to offset its tax losses against the taxable income of the other companies. 5. The Law for Taxation of Profits from Natural Resources On November 30, 2015, the Knesset passed the Law for Taxation of Profits from Natural Resources (hereinafter – “the Law”), which entered into effect on January 1, 2016, except with respect to Dead Sea Works where the effective date is January 1, 2017. The highlights of the Law are set forth below: The total tax on natural resources in Israel will include three tax elements: royalties, Natural Resources Tax and Companies Tax. Royalties: The rate of the royalties in connection with resources produced from the quarries, in accordance with the Mines Ordinance will be 5% (with respect to production of the phosphates, the royalty rate will be 5% of the value of the quantity produced – in place of 2%). Pursuant to the salt harvesting agreement signed with the Government on July 8, 2012, the parties agreed, among other things, to an increase in the rate of the royalties from 5% to 10% of the sales, for every quantity of potash chloride sold by the Company in a given year, in excess of a quantity of 1.5 million tons. As part of the agreement, it was provided that if a law is enacted that changes the specific fiscal policy with reference to profits or royalties deriving from quarrying from the Dead Sea, the Company’s consent to the increase of the rate of the royalties, as stated, will not apply. The Law entered into effect on January 1, 2016. For additional details – see Note 23C. Imposition of Natural Resources Tax: The tax base, which will be calculated for every resource separately, is the Company’s operating income in accordance with the accounting statement of income, to which certain adjustments will be made, less financing expenses at the rate of 5% of the Company’s average working capital, and less an amount that reflects the yield on the balance of the amortized cost of the property, plant and equipment used for production and sale of the quarried material (hereinafter –”the Yield on the Amortized Cost”). On the tax base, as stated, a progressive tax will be imposed at a rate to be determined based on the Yield on the Amortized Cost in that year. For the Yield on the Amortized Cost between 14% and 20%, Natural Resources Tax will be imposed at the rate of 25%, while the yield in excess of 20% will be subject to Natural Resources Tax at the rate of 42%. In years in which the Natural Resources Tax base is negative, the negative amount will be carried forward from year to year and will constitute a tax shield in the succeeding tax year. Limitations on the Natural Resources Tax – the Natural Resources Tax will only apply to profits deriving from the actual production and sale of each of the following resources: potash, bromine, magnesium and phosphates, and not to the profits deriving from the downstream industrial activities. Calculation of the Natural Resources Tax will be made separately for every resource. Nonetheless, regarding Magnesium, it was provided that commencing from 2017, upon sale of carnalite by Dead Sea Works (hereinafter – “DSW”) to Magnesium and reacquisition of a Sylvanite by-product by DSW, Magnesium will charge DSW $100 per ton of potash which is produced from the Sylvanite (linked to the CPI). A mechanism was provided for determination of the market price with respect to transactions in natural resources executed between related parties in Israel, as well as a mechanism for calculation of the manner for allocation of the expenses between the production and sale of the natural resource, on the one hand, and the downstream activities, on the other hand. F-58 Table of Contents Note 20 - Taxes on Income (cont’d) A. Taxation of companies in Israel (cont’d) Regarding the bromine resource, the Natural Resources Tax will apply in the same manner in which it is applies to the other natural resources, except with respect to the manner of determining the transfer price in sales made to related parties in and outside of Israel. For purposes of calculating the total revenues from bromine sold to related parties for purposes of downstream manufacturing activities in every tax year, a calculation method will be employed (Netback) whereby the price will be determined based on the higher of the following: 1) The price for a unit of bromine (ton) provided in the transaction; 2) The normative price of a unit of bromine. The normative price of a unit of bromine is the total sales of the downstream products produced less the operating expenses attributable to the downstream activities, without the acquisition cost of the bromine, and less an amount equal to 12% of the total revenues of the downstream products produced as part of the downstream activities, where the result is divided by the number of bromine units used to produce the downstream products sold. Regarding the phosphate resource, for purposes of calculating the total revenues from phosphate sold to related parties for purposes of downstream manufacturing activities in every tax year, a calculation method will be employed (Netback) whereby the price will be determined based on the higher of the following: 1) The price for a unit of phosphate (ton) provided in the transaction; 2) The normative price of a unit of phosphate. The “normative price” of a unit of phosphate is the total sales of the downstream products produced less the operating expenses attributable to the downstream activities, without the acquisition cost of the phosphate rock, and less an amount equal to 12% of the total revenues of the downstream products produced as part of the downstream activities, where the result is divided by the number of phosphate units used to produce the downstream products sold. 3) The production and operating costs attributable to a unit of phosphate. Companies Tax: The Law for Encouragement of Capital Investments was revised such that the definition of a “Plant for Production of Quarries” will include all the plant’s activities up to production of the first marketable natural resource, of potash, bromine, magnesium and phosphates. Accordingly, activities involved with production of the resource will not be entitled to tax benefits under the Law, whereas activities relating to downstream products, such as bromine compounds, acids and fertilizers, will not constitute a base for calculating the Excess Profits Tax and will not be excepted from inclusion in the Law. The Natural Resource Tax will be deductible from the Company’s taxable income and the Company will pay the Companies Tax on the balance as is customary in Israel. B. Taxation of non-Israeli subsidiaries Subsidiaries incorporated outside of Israel are assessed for tax under the tax laws in their countries of residence. The principal tax rates applicable to the major subsidiaries outside Israel are as follows: Subsidiary incorporated in the Netherlands – tax rate of 25%. Subsidiary incorporated in Germany – tax rate of 29%. Subsidiary incorporated in the United States – tax rate of 40%. Subsidiary incorporated in Spain – tax rate of 30%*28%. Subsidiary incorporated in United Kingdom – tax rate of 21%120%. Subsidiary incorporated in China – tax rate of 25%. * The tax rate in Spain was reduced to 25% commencing from 2016. F-59 Table of Contents Note 20 - Taxes on Income (cont’d) C. Carried forward tax losses As at December 31, 2014,2015, the balances of the carryforward tax losses of subsidiaries, for which deferred taxes were created,recorded, amount to about $351$397 million (December 31, 20132014 – about $94$351 million). The balances of the carryforward tax losses to future losses of subsidiaries, for which deferred taxes were not createdrecorded, is about $121 million (December 31, 2014 – about $25 million. Themillion). As at the date of the report, the capital losses for tax purposes available for carryforward to future years for which deferred taxes were not recorded, amount to about $18$41 million. In accordance with an assessment agreement with the Israeli Tax Authorities, it willabout $14 million of losses out of this amount may be possible to utilize most of these lossesutilized only against capital gains the Group companies have from a sale of shares of companies in which they hold directly at least 30%, to a company they control, directly or indirectly, at the rate of at least 50%. Deferred taxes were not recorded in respect of these capital losses. These losses are linked to the CPI as stated in Paragraph A(1) above. D. Tax assessments The Company and itsthe companies consolidated with it for Israeli subsidiaries that are being consolidated for tax purposes have received final tax assessments up to and including the 2008 tax year. The rest of the Israeli subsidiaries have final tax assessments up to and including the 2009 tax year. Significant subsidiaries outside of Israel have final tax assessments up to and including the 20072010, 2011 and 2012 tax yearyears (for the majority of them). 1 The tax rate in the United Kingdom was reduced to 21% starting April 1, 2014, and to 20% commencing from April 1, 2015. F-55 Table of Contents Note 20 – Taxes on Income (cont'd) On In December 29, 2013, an assessment was received from the Israeli Tax Authority (“ITA”) whereby the Company is required to pay tax in addition to the amount it already paid in respect of the years 2009 2011,2009-2011, in the amount of about $230 million.NIS 917 million (about $235 million). The Company has appealed the ITA'sITA’s assessment. Subsequent to the date of the report, onOn January 27, 2015, an Order was received from the ITA placingwith respect to the amount of the additional tax at about $200 million.demanded, as stated. The main contentions of the ITA isare that ICL'sICL’s subsidiaries: Dead Sea Works and Rotem Amfert Negev, are not entitled to benefits under the Law for Encouragement of Capital Investments – this being from the date of entry into effect of Amendment No. 60 to this Law, in 2005.2005 or, alternatively, the mining and water pumping activities, including the activities in the evaporation ponds, are not industrial activities and, therefore, are not entitled to benefits under the Law for Encouragement of Capital Investments. The Company disagrees with the ITA'sITA’s position and on February 25, 2015 it filed an appeal of the Order. In the Company’s estimation, of Company Management, based on its legal advisors, the chances that the Company'sits claims will be accepted at the end of the appeal process are higher than the chances that they will be rejected and, therefore, there is no provision for tax was included in the financial statements as a result of the said assessment. Pursuant to the assessments agreement signed between subsidiaries in Europe and In connection with the tax authorities,returns for the years 2012-2014, in 2015 the Company includedreceived a provision,refund of advance tax deposits, in the amount of about $51NIS 452 million during the first half(about $117 million). F-60 Table of 2014.Contents Note 20 - Taxes on Income (cont’d) E. Deferred income taxes 1. The composition of the deferred taxes and the changes therein, are as follows:     In respect of financial position                   Depreciable property, plant and equipment     Inventories     Provisions for employee benefits     Other     In respect of carry forward tax losses     Total       US$ thousands   Balance as at January 1, 2013     (333,402 )     46,045       141,977       (19,159 )     61,579       (102,960 ) Changes in 2013:                                                 Amounts recorded to a  capital reserve     —       —       (14,172 )     (223 )     (4,376 )     (18,771 ) Translation differences     1,303       1       (651 )     (473 )     (1,255 )     (1,075 ) Amounts recorded in the statement of income     337       3,506       22,088       (8,491 )     (4,354 )     13,086   Balance as at  December 31, 2013     (331,762 )     49,552       149,242       (28,346 )     51,594       (109,720 ) Changes in 2014:                                                 Additions in respect of business combinations     27       —       —       (507 )     —       (480 ) Amounts recorded to a  capital reserve     —       —       24,478       (88 )     12,165       36,555   Translation differences     6,558       (12 )     (4,647 )     5,579       (1,908 )     5,570   Amounts recorded in the statement of income     (62,857 )     (11,206 )     (21,802 )     23,846       35,491       (36,528 ) Transfer to the group assets held for sale     85       —       —       3,084       —       3,169   Balance as at December 31, 2014     (387,949 )     38,334       147,271       3,568       97,342       (101,434 )     In respect of financial position             Depreciable property, plant and equipment   Inventories   Provisions for employee benefits   Other   In respect of carry forward tax losses   Total     $ millions Balance as at January 1, 2014     (332 )     50       149       (29 )     52       (110 ) Changes in 2014:                                                 Amounts recorded to a capital reserve     –       –       24       1       12       37   Translation differences     7       –       (5 )     5       (2 )     5   Amounts recorded in the statement of income     (63 )     (11 )     (22 )     24       35       (37 ) Transfer to the group assets held for sale     –       –       –       3       –       3   Balance as at December 31, 2014     (388 )     39       146       4       97       (102 ) Changes in 2015:                                                 Additions in respect of business combinations     4       7       –       (53 )     13       (29 ) Amounts recorded to a capital reserve     –       –       (15 )     –       3       (12 ) Translation differences     5       –       (4 )     (3 )     (2 )     (4 ) Amounts recorded in the statement of income     16       –       (21 )     4       (4 )     (5 ) Balance as at December 31, 2015     (363 )     46       106       (48 )     107       (152 ) 2. Deferred taxes are presented in the statement of financial position as follows:     As at December 31     2015   2014     $ millions As part of non-current assets       199       158   As part of non-current liabilities       (351 )     (260 )         (152 )     (102 ) F-61 Table of Contents     As at December 31       2014     2013       US$ thousands   As part of non-current assets     158,443       111,157   As part of non-current liabilities     (259,877 )     (220,877 )       (101,434 )     (109,720 ) Note 20 - Taxes on Income (cont’d) E. Deferred income taxes (cont’d) 3. The currencies in which the deferred taxes are denominated:     As at December 31       2014     2013       US$ thousands                 Dollar     (15,134 )     (17,541 ) Euro     (9,527 )     (16,535 ) Shekels     (96,555 )     (84,510 ) Other     19,782       8,866         (101,434 )     (109,720 ) F-56 Table of Contents Note 20 – Taxes on Income (cont'd)     As at December 31     2015   2014     $ millions Dollar     (3 )     (15 ) Euro     (1 )     (10 ) Shekels     (126 )     (97 ) Other     (22 )     20         (152 )     (102 ) 4. For companies in Israel – the deferred taxes as at December 31, 20142015 are computedcalculated mainly at the weighted-average tax rate of 25.6% (December 31, 20132014 – 23%25.6%). Regarding companies outside of Israel – see B above. F. Taxes on income included in the income statements: statements 1. Composition     For the year ended December 31       2014       *2013       *2012       US$ thousands   Current taxes     76,451       185,230       201,061   Deferred taxes     36,603       (12,631 )     22,543   Taxes in respect of release of trapped earnings     —       108,623       —   Taxes in respect of prior years *     53,098       (1,199 )     (6,043 )       166,152       280,023       217,561       For the year ended December 31       2015       2014(1)     2013(1)       $ millions   Current taxes     159       76       186   Deferred taxes     (7 )     37       (13 ) Taxes in respect of release of trapped earnings     –       –       109   Taxes in respect of prior years(*)     10       53       (1 )       162       166       281   _____________________ * (*) Including deferred taxes in respect of prior years. 2. Following is a reconciliation of the theoretical tax expense, assuming all income is taxed at the regular tax rates in Israel (see A(2) above) and the tax expense presented in the statements of income:     For the year ended December 31     2015   2014   2013     $ millions Income before taxes on income, as reported in the statements of income     668       632       1,101   Statutory tax rate     26.5 %     26.5 %     25.0 % Theoretical tax expense on this income     177       167       275   Less – tax benefits arising from reduced tax rate applicable to an “Preferred Enterprise” and “Benefited Enterprise”     (22 )     (43 )     7         155       124       282   Add (less) – the tax effect of:                         Differences between the basis of measurement for tax purposes and for financial reporting purposes (the dollar)     -       13       (17 ) Differences in respect of foreign subsidiaries     8       8       23   Non–deductible expenses     15       6       8   Additional deduction for tax purposes for foreign subsidiaries and withholding of tax at the source in respect of a dividend from outside of Israel     (23 )     (35 )     (6 ) Taxes in respect of prior years     10       53       (1 ) Elimination of tax calculated in respect of the Company’s share in profits of associated companies     (3 )     (8 )     (6 ) Other differences     –       5       (2 ) Taxes on income included in the income statements     162       166       281   F-62 Table of Contents     For the year ended December 31       2014     2013     2012       US$ thousands   Income before taxes on income, as reported in the statements of income     632,254       1,100,196       1,519,293   Statutory tax rate     26.5 %     25 %     25 % Theoretical tax expense on this income     167,547       275,049       379,823   Less – tax benefits arising from reduced tax rate applicable to an “Preferred Enterprise” and “Benefited Enterprise”     (42,988 )     7,072       (121,266 )       124,559       282,121       258,557   Add (less) – the tax effect of:                         Differences between the basis of measurement for tax purposes and for financial reporting purposes (the dollar)     12,800       (16,557 )     (6,965 ) Differences in respect of foreign subsidiaries     7,649       22,516       24,347   Non–deductible expenses     6,231       7,902       9,130   Additional deduction for tax purposes for foreign subsidiaries and withholding of tax at the source in respect of a dividend from outside of Israel     (34,973 )     (5,903 )     (56,647 ) Taxes in respect of prior years     53,098       (1,199 )     (6,043 ) Elimination of tax calculated in respect of the Company’s share in profits of associated companies     (8,091 )     (6,421 )     (6,639 ) Other differences     4,879       (2,436 )     1,821   Taxes on income included in the income statements     166,152       280,023       217,561   Note 20 - Taxes on Income (cont’d) G. Taxes on income relating to equity items     For the year ended December 31       2014     2013     2012       US$ thousands   Tax recorded in other comprehensive income                   Actuarial gains from defined benefit plan     24,476       (14,172 )     9,018   Change in fair value of derivatives used for hedging cash flows     —       (898 )      313   Taxes in respect of exchange rate differences on equity loan to a subsidiary included in translation adjustment     12,165       (4,376 )     (1,889 )                                 36,641       (19,446 )     7,442   F-57 Table of Contents Note 20 – Taxes on Income (cont'd)     For the year ended December 31       2014     2013     2012       US$ thousands   Tax recorded directly in equity                                       Tax benefits (taxes on income) in respect of issuance of shares to employees     (88 )     (223 )     189       For the year ended December 31     2015   2014   2013     $ millions Tax recorded in other comprehensive income                         Actuarial gains from defined benefit plan     (15 )     24       (14 ) Change in fair value of derivatives used for hedging cash flows     —         —         (1 ) Taxes in respect of exchange rate differences on equity loan to a subsidiary included in translation adjustment     3       12       (4 )     (12 )     36       (19 ) Note 21 –- Employee Benefits A. Composition     As at December 31       2014     2013       US$ thousands   Present value of funded obligations     865,326       784,256   Less – fair value of plan assets     765,546       761,257         99,780       22,999   Present value of unfunded obligations     392,087       452,909   Post-retirement medical benefits     3,341       3,812   Recognized liability for defined benefit obligations plans     495,208       479,720   Liability for severance benefits     112,603       158,589   Total liability for employee benefits recognized in the statement of financial position     607,811       638,309       As at December 31     2015   2014     $ millions Present value of funded obligations     706       865   Less – fair value of plan assets     669       766         37       99   Present value of unfunded obligations     317       392   Post-retirement medical benefits     2       3   Recognized liability for defined benefit obligations plans     356       494   Liability for severance benefits     132       114   Total liability for employee benefits recognized in the statement of financial position     488       608   The liability in respect of employee benefits is presented in the statement of financial position as follows:     As at December 31       2014     2013       US$ thousands   As part of non-current assets     66,063       83,124   As part of non-current liabilities     659,165       702,103   As part of current liabilities     14,709       19,330         607,811       638,309       As at December 31     2015   2014     $ millions As part of non-current assets     89       66   As part of non-current liabilities     547       659   As part of current liabilities     30       15         488       608   Composition of the plans’ assets:     As at December 31     2015   2014     $ millions Equity instruments                 With quoted market price     210       232   Debt instruments                 With quoted market price     175       203   Without quoted market price     138       161         313       364   Deposits with insurance companies     146       170         669       766   F-63     As at December 31       2014     2013       US$ thousands   Equity instruments             With quoted market price     232,436       242,516   Without quoted market price     296       307         232,732       242,823   Debt instruments                 With quoted market price     203,432       192,603   Without quoted market price     160,941       172,490         364,373       365,093   Deposits with insurance companies     168,441       153,341         765,546       761,257   F-58 Table of Contents Note 21 –- Employee Benefits (cont'd) (cont’d) B. Linkage terms     As at December 31       2014     2013       US$ thousands   Dollar     10,525       9,671   Euro     170,969       168,216   Israeli Shekel     361,825       418,057   British pound     62,699       39,780   Other     1,793       2,585         607,811       638,309       As at December 31     2015   2014     $ millions Dollar     3       11   Euro     138       171   Israeli Shekel     288       361   British pound     57       63   Other     2       2         488       608   C. Severance pay 1. Israeli companies Pursuant to Israeli labor laws and the labor contracts in force, the Company and its Israeli subsidiaries are required to pay severance pay to dismissed employees and employees leaving their employment in certain other circumstances. Severance pay is computed based on length of service and generally according to the latest monthly salary and one month’s salary for each year worked. The liabilities relating to employee severance pay rights are covered as follows: a) Under collective labor agreements, the Group companies in Israel make current deposits in outside pension plans for some of the employees. These plans generally provide full severance pay coverage and, in some cases, 72% of the severance pay liability. The severance pay liabilities covered by these plans are not reflected in the financial statements, since all the risks relating to the payment of the severance pay, as described above, have been transferred to the pension funds. b) The Group companies in Israel make current deposits in Managers’ Insurance policies in respect of employees holding management positions. These policies provide coverage for the severance pay liability in respect of the said personnel. Under employment agreements, subject to certain limitations, these insurance policies are subject to certain limitations, the property of the employees. The amounts funded in respect of these policies are not reflected in the balance statements of financial position since they are not under the control and management of the companies. c) As to the balance of the liabilities that are not funded, as mention above, a provision is maderecorded in the financial statements based on an actuarial calculation. d) On February 2, 2015, the Workers Council of a subsidiary started a strike at the production facilities in Naot Havov and stopped all shipments of merchandise from the facilities. Shutting down of the plants comes in reaction to the efficiency plans the Company is implementing in Naot Havov, pursuant to which termination letters were sent to tens of employees employed under collective bargaining agreements. Further to that stated above, on February 19, 2015, the Workers Council of a subsidiary in Sodom announced a general strike of its factories. As at December 31, 2014, the conditions had not been fulfilled for recognizing a provision in respect of employee dismissals, as stated above, and accordingly no provision has been included in the financial statements. F-59 Table of Contents Note 21 – Employee Benefits (cont'd) 2. Certain subsidiaries outside Israel Since the countries wherein these subsidiaries operateoperates have no law requiring payment of severance pay, the Group doeshas not includerecorded a provision in the financial statements for possible eventual future severance payments to employees, except in cases where part of the activities of the enterprise is discontinued and, as a result, the employees are dismissed. F-64 Table of Contents Note 21 - Employee Benefits (cont’d) D. Pension and early retirement 1. Some of the Group’s employees in and outside of Israel (some of whom have already left the Group) have defined benefit pension plans (within(control and management of the Group companies) for their retirement. Generally, the terms of the plans provide that the employees are entitled to receive pension payments based on, among other things, their number of years of service (in certain cases up to 70% of their last base salary) or computed, in certain cases, based on a fixed salary. 2. In addition to the above, some Group companies have entered into an agreement with funds – and with a pension fund for some of the employees – under which such companies make current deposits with that fund which releases them from their liability for making a pension payment under the labor agreements to all of their employees upon reaching a retirement age. The amounts funded are not reflected in the statements of financial position since they are not under the control and management of the Group companies. 3. Employees of a subsidiary in Sodom, Israel are entitled to early retirement if they fulfillmeet certain conditions, including age and seniority at the time of retirement. 4. In December 2013, a plan was approved whereby a number of employees of the Rotem subsidiary may leave on early retirement prior to the retirement age provided by law. As a result, in 2013 the Group recorded an expense in the amount of about $60 million included in "other expenses"“other expenses” in the statement of income. In At the monthsend of November and December 2012, plans were2015, an efficiency plan was approved whereby ait was decided to reduce the number of the Company’s employees in the United Kingdom. As a result of the subsidiaries were permitted to take early retirement prior to the retirement age provided by law. In the statement of income for 2012,that stated, in 2015 an expense was includedrecorded, in the amount of about $55$6 million, in the “other expenses” category in the statement of income. On February 2, 2015, the Workers Council of Bromine Compounds Ltd. (“Bromine Compounds”), which belongs to ICL’s Industrial Products segment, started a full scale strike at Bromine Compounds’ plants in Neot Hovav and halted all shipments of goods from the plants. The strike at the plants came, among other things, in response to the efficiency programs the Company is currently executing in Neot Hovav, whereby the Company requested that a number of employees employed under a collective agreement will be dismissed and/or will leave under early retirement conditions. On February 19, 2015, in response to the termination letters that were sent to employees of Bromine Compounds, and further to similar efficiency discussions held at Dead Sea Works (“DSW”), the Workers Council of DSW gave notice of a full scale strike at DSW’s facilities in Sodom, including the bromine facility and the power station. On May 28, 2015, an agreement was signed between DSW and Bromine Compounds, on the one hand, and between the General Workers Council (Histadrut), the DSW Workers Council and the Bromine Compounds Workers Council, on the other hand, ending the strike, the employment disputes and the legal proceedings pending among the parties, and allowing the immediate return of the employees to full employment (hereinafter: the “Agreement”). The key elements of the Agreement are as follows: 1. 210 employees will voluntarily retire under the early retirement route. 2. 38 employees will end their employment by December 31, 2015 under the severance pay route (or earlier under certain conditions), and will be entitled to special severance pay in excess of that prescribed by law. 3. The parties consent to implementation of the efficiency plans in DSW and Bromine Compounds and to implementation of the plan to establish the regional shared services center (under ICL Israel). 4. During the period beginning on the signing date of the Agreement and up to completion of the efficiency plans or until December 31, 2018, whichever occurs first (the “Efficiency Period”), no collective dismissal, including early retirement which is not voluntary, shall take place in DSW and in Bromine Compounds. Despite the aforesaid, up to July 1, 2017, the management of Bromine Compounds may execute an early retirement plan which is not voluntary retirement, wherein up to 45 employees will retire subject to certain terms specified in the Agreement. F-65 Table of Contents Note 21 - Employee Benefits (cont’d) D. Pension and early retirement (cont’d) 5. During the Efficiency Period it was determined, among other things, that the management may transfer employees and may adjust the number of positions in the companies, perform structural and organizational changes, and establish and operate new installations and projects. 6. Management will be permitted to transfer employees under the existing employment agreements – this being in addition to the employee transfer provisions in Section e. above. In light of the Agreement, in 2015, the Company increased the provision for employee benefits in respect of the said early retirement plans. conclusion of employment by about $42 million. E. Post-employment retirement benefits Some of the retirees of the Group companies receive, aside from the pension payments from a pension fund, benefits that are primarily holiday gifts and weekend trips. The companies’ liability for these costs accrues during the employment period. The Group companies include in their financial statements the projected costs in the post-employment period according to an actuarial calculation. F.(1) 1. Movement in present value of defined benefit plans     For the year ended December 31       2014     2013       US$ thousands   Obligation in respect of defined benefit plan at beginning of the year     1,240,977       1,215,913   Current service costs     37,088       43,166   Interest costs     48,719       48,434   Employee contributions     697       691   Benefits paid     (80,356 )     (82,883 ) Actuarial losses (gains) deriving from changes in financial assumptions     163,509       (32,385 ) Actuarial gains deriving from changes in demographic assumptions     (5,683 )     (1,498 ) Increase in liabilities as part of business combinations     127       1,682   Past service cost     (5,616 )     (8,611 ) Changes in respect of exchange rate differences     (57,793 )     40,364   Changes in respect of translation differences     (63,410 )     16,104   Transfer to the group assets held for sale     (17,505 )     —   Obligation in respect of defined benefit plan  at end of the year     1,260,754       1,240,977   F-60 Table of Contents Note 21 – Employee Benefits (cont'd) (2)     For the year ended December 31     2015   2014     $ millions Obligation in respect of defined benefit plan at beginning of the year     1,260       1,241   Current service costs     36       37   Interest costs     37       49   Employee contributions     1       1   Benefits paid     (138 )     (80 ) Actuarial losses (gains) deriving from changes in financial assumptions     (94 )     164   Actuarial gains deriving from changes in demographic assumptions     9       (6 ) Past service cost     –       (6 ) Changes in respect of exchange rate differences     –       (58 ) Changes in respect of translation differences     (56 )     (64 ) Assets held for sale     (30 )     (18 ) Obligation in respect of defined benefit plan  at end of the year     1,025       1,260   2. Movement in plan assets for defined benefit plans     For the year ended December 31     2015   2014     $ millions Fair value of plan assets at beginning of the  year     766       761   Interest income     21       30   Actuarial gains recognized in equity     (22 )     55   Employer contributions     5       22   Employee contributions     1       1   Benefits paid     (53 )     (33 ) Changes in respect of exchange rate differences     (1 )     (33 ) Changes in respect of translation differences     (31 )     (37 ) Assets held for sale     (17 )     –   Fair value of plan assets at end of the year     669       766   F-66 Table of Contents     For the year ended December 31       2014     2013       US$ thousands   Fair value of plan assets at beginning of the  year     761,257       704,858   Interest income     29,750       26,248   Actuarial gains recognized in equity     54,652       13,399   Employer contributions     22,416       23,868   Employee contributions     852       758   Increase in assets as part of business combinations     —       570   Benefits paid     (33,006 )     (42,150 ) Changes in respect of exchange rate differences     (32,764 )     20,989   Changes in respect of translation differences     (37,202 )     12,717   Transfer to the group assets held for sale     (409 )     —   Fair value of plan assets at end of the year     765,546       761,257   (3) Note 21 - Employee Benefits (cont’d) F. (cont’d) 3. Expenses recognized in the income statement     For the year ended December 31       2014     2013     2012       US$ thousands   Current service costs     37,088       43,166       34,460   Interest costs     48,719       48,434       49,627   Interest income     (29,750 )     (26,248 )     (27,159 ) Past service cost     (5,616 )     (8,611 )     2,009   Exchange rate differences, net     (25,029 )     19,375       6,202         25,412       76,116       65,139   (4)     For the year ended December 31     2015   2014   2013     $ millions Current service costs     36       37       43   Interest costs     37       49       48   Interest income     (21 )     (30 )     (26 ) Past service cost     –       (6 )     (9 ) Exchange rate differences, net     1       (25 )     19         53       25       75   4. Actual and expected return     For the year ended December 31       2014     2013     2012       US$ thousands   Actual return on plan assets     84,402       39,647       69,879   Expected yield on plan assets     29,750       26,248       27,159   (5)     For the year ended December 31     2015   2014   2013     $ millions Actual return (loss) on plan assets     (1 )     85       39   Expected yield on plan assets     21       30       26   5. Actuarial gains and losses recognized directly in equity     For the year ended December 31       2014     2013     2012       US$ thousands   Cumulative amount (before tax) as at  January 1     123,039       170,321       126,417   Actuarial losses (gains) deriving from changes in demographic assumptions     (5,683 )     (1,498 )     (26,173 ) Actuarial losses (gains) deriving from changes in financial assumptions     108,857       (45,784 )     70,077   Cumulative amounts (before tax) as at December 31     226,213       123,039       170,321   Deferred taxes in respect of actuarial gains and losses recognized directly in equity     (52,497 )     (28,021 )     (42,193 )       173,716       95,018       128,128   F-61 Table of Contents Note 21 – Employee Benefits (cont'd) (6) a.     For the year ended December 31     2015   2014   2013     $ millions Cumulative amount (before tax) as at  January 1     226       123       171   Actuarial losses (gains) deriving from changes in demographic assumptions     9       (6 )     (1 ) Actuarial losses (gains) deriving from changes in financial assumptions     (72 )     109       (47 ) Cumulative amounts (before tax) as at December 31     163       226       123   Deferred taxes in respect of actuarial gains and losses recognized directly in equity     (37 )     (52 )     (28 )       126       174       95   6a. Actuarial assumptions Principal actuarial assumptions at the reporting date (expressed as weighted averages):     For the year ended December 31       2014     2013     2012       %      %     %   Discount rate as at December 31     3.2       4.0       4.2   Future salary increases     3.4       4.4       3.8   Future pension increase     2.1       2.4       2.5       For the year ended December 31     2015   2014   2013       %                   Discount rate as at December 31     3.3       3.2       4.0   Future salary increases     2.9       3.4       4.4   Future pension increase     2.2       2.1       2.4   The assumptions regarding the future mortality rate are based on published statistics and accepted mortality tables. A one percentage point change in assumed healthcare cost trend rates does not have a material effect on the Company. In 2014, it was determined that there is a deep market for high quality corporate debentures in Israel. Accordingly, commencing December 31, 2014, athe defined benefit obligation and other long-term benefits that are shekel-denominated or shekel-linked are to be discounted according to an interest rate derived from an interest curve based on the rate of the yields on high-qualityhigh quality corporate debentures in accordance with IAS 19, Employee Benefits. F-67 Table of Contents Note 21 - Employee Benefits. In addition, during 2014 there was a decrease in the risk-free interest rate that reduced the effect of the transition to an interest curve based on yield rates of high quality corporate debentures. The effects of the change in the discount rate as compared with the discount rate determined at the end of last year are an increase in the defined benefit obligation and an adjustment in deferred tax balances as at December 31, 2014, in the amounts of $27 million and $6 million, respectively, which were recognized against other comprehensive income. Of those amounts, a decrease of $27 million and $7 million in the defined benefit obligation and the deferred tax balances, respectively, derives from the change in the discount rate from an end-of-period rate that is based on government debentures to a rate that is based on high quality corporate debentures (the difference at the end of the period between the discount rate based on corporate debentures and the discount rate based on government debentures is 0.5%). The impact of the change in the interest rate on the liability in respect of other long term employee benefits is not material. In addition, the effect of these changes in 2015 on the interest costs in the financing expenses is not expected to be material. (6) b. (cont’d) F. (cont’d) 6b. Sensitivity analysis Assuming all other assumptions remain constant, the following reasonable possible changes effect the defined benefit obligation as of the date of the financial statements in the following manner:     December 2014       Decrease 10%     Decrease 5%     Increase 5%     Increase 10%       US$ millions   Significant actuarial assumptions                         Discount rate     (49,972 )     (21,744 )     22,830       44,953   Salary increase     25,433       12,781       (13,233 )     (26,504 ) Mortality table     (21,399 )     (10,622 )     10,515       20,788       December 2015     Decrease 10%   Decrease 5%   Increase 5%   Increase 10%     $ millions Significant actuarial assumptions                                 Discount rate     (50 )     (25 )     25       45   Salary increase     20       10       (11 )     (21 ) Mortality table     (19 )     (9 )     9       18   G. The expenses recorded in respect of defined contribution plans in 20142015 is about $25.9$23 million (in 2014 and 2013 and 2012 – expenses were declared in the amounts of about $26.4$25.9 million and about $24.1$26.4 million, respectively). The Group’s estimate of the deposits expected to be made in 20152016 in funded defined benefit plans is about $18.2$16 million. The Group’s estimate life of the defined benefit plans (based on a weighted average), as at the end of the period of the report, is about 15.412.2 years (2013–(2014– about 14.412.8 years). F-62 Table of Contents Note 21 – Employee Benefits (cont'd) H. Long-term remuneration plan On In May 12, 2013, ICL'sICL’s Board of Directors decided to approve a long termlong-term remuneration plan for about 11,300 employees of the Company in and outside of Israel who are not managers that participated in the Company's options'Company’s options’ plan (which was approved in November 2012) based on terms defined in the plan. The maximum cost of the plan is about $45 million. As at the date of the report, the said terms were not met and, accordingly, no liability was included in the books in respect of this plan. On In August 6, 2014, ICL'sICL’s Board of Directors decided to approve a long termlong-term remuneration plan for about 11,800 Company employees in and outside of Israel that are not managers, who participated in the Company'sCompany’s options and shares plan (which was approved on the same date) pursuant to the terms provided in the plan. The maximum cost of the plan is about $17 million. As at the reporting date, of the report, the said terms were not met and, accordingly, no liability was included in the books in respect of this plan. these plans. Note 22 – Provisions A. Composition and changes in the provision     Site restoration, removal and dismantling of property, plant and equipment items   Legal claims   Other   Total     $ millions Balance as at January 1, 2015     103       4       30       137   Change in respect of business combinations     10       1       –       11   Provisions made during the period     24       9       1       34   Provisions reversed during the period     –       (1 )     (4 )     (5 ) Effect of the passage of time (due to discounting)     4       –       –       4   Payments during the  period     (4 )     (1 )     (1 )     (6 ) Translation differences     (5 )     (1 )     –       (6 ) Balance as at December 31, 2015     132       11       26       169   F-68 Table of Contents     Warranties     Site restoration, removal and dismantling of property, plant and equipment items     Legal claims     Other     Total       US$ millions   Balance as at January 1, 2014     588       96,973       3,658       31,836       133,055   Change in respect of business combinations     —       —       —       2,678       2,678   Provisions made during the period     555       8,268       1,525       428       10,776   Provisions reversed during the period     (227 )     (575 )     (166 )     (1,934 )     (2,902 ) Effect of the passage of time (due to discounting)     —       5,049       —       —       5,049   Payments during the  period     (314 )     (3,337 )     (1,012 )     (1,432 )     (6,095 ) Translation differences     (116 )     (3,846 )     (330 )     (672 )     (4,964 ) Transfer to the group assets held for sale     (48 )     —       —       —       (48 ) Balance as at December 31, 2014     438       102,532       3,675       30,904       137,549   Note 22 – Provisions (cont’d) A. Composition and changes in the provision (cont’d) Presentation in the statement of financial position:     As at December 31       2014     2013       US$ millions   In current liabilities     35,118       38,485   In non-current liabilities     102,431       94,570         137,549       133,055       As at December 31     2015   2014     $ millions In current liabilities     42       35   In non-current liabilities     127       102         169       137   B. Restoration of mines and mining sites 1. The Group includedrecorded a provision in the books for restoration of mines and mining sites. The provision is based on the discountedpresent value of the cash flows based on an estimate of the future expenses that will be required to close down the mines and to restore the mining sites. The estimated closing date of the mines is based on a geological evaluation of the quantity of potashminerals remaining in the mines and the resources available to the subsidiaries. mines. 2. Pursuant to the provisions of Spanish law covering environmental protection in connection with areas affected by mining activities, in the year 2015, a subsidiary in Spain from the ICL Fertilizers segment (hereinafter – "ICL Iberia") has submitted a plan for restorationto the Catalan Government Restoration Programs of mining sitssites for the subsidiary’sICL Iberia’s two production sites.sites, Suria and Sallent, (hereinafter – “the Restoration Plans”), which includes plans of removing the waste and dismantling of installations. The plan for restorationRestoration of the Suria site is intended to last for a period of about 24 yearsuntil year 2094 and for the Sallent centersite until the end of 2016 (the planned closure date). According to the subsidiary’s estimate, the overall, undiscounted, scope of the plan for restoration of the mining sites will amount to $20 million (€17 million).year 2070. As at December 31, 2014, a2015, based on the Restoration Plans and according to ICL Iberia’s estimation, the total provision in the amount of $12 million (€10 million) was recorded in the F-63 Table of Contents Note 22 – Provisions (cont'd) ICL Iberia’s books of the subsidiary in Spain.amounts to about $11 million. The provision was calculated on the basis of discounteddiscounting the projected costs of restoration. removing the waste and dismantling of installations. Regarding the signing of the agreement of understandings with the Government of Catalonia, which is intended to regulate the obligations of ICL Iberia to restore the site – see Note 23 below. 3. A manufacturing facility of the Group in NaotNeot Hovav, Israel containshas solid waste. Pursuant to the requirements of the Israeli Ministry of Environmental Protection, the facilitysubsidiary is required to treat the existing (past) andwaste (historical), which is stored on a special site on the facility's premises, as well as the ongoing waste.waste that is produced in the facility's present manufacturing processes. The treatment will be partly through a restoration facility of hydro-bromine acid, operated by the subsdiary,subsidiary, while part of the waste will be will sent outside for treatment. TheAs part of the treatment processes of the historical waste that began in 2015, it was found that additional costs are required to be incurred, due to, among other things, the need to use higher-cost raw materials. In light of that stated, the Company has arecorded an additional provision, in the amount of about $20 million, which was recorded in the "other expenses" in the statement of income. As at December 31, 2015, the total provision for treatment of waste which as at December 31, 2014, amounts to about $45$65 million. In Management'sthe Company's estimation, based on the information it has as ofat the approval date of the financial statements, the provision included in the financial statements is sufficient to covercovers the estimated cost of treating the historical waste. At this stage, the facility treats the current waste produced from the plant’s existing production processes and is presently in the test run stages for purposes of commencement of treatment of the stored up historical waste in a special site on the plant’s premises in coordination with the Israeli Ministry of Environmental Protection – which is planned to be treated by the plant. 4. From time to time, one of the Group’s subsidiaries in Israel is required to examine various contentions that soil contamination has been caused due to subterranean penetration of waste water or other waste materialss created during the manufacturing process. The subsidiary may be required to clean up the relevant sites or the subterranean areas if and when it is found that it is responsible for the said contamination as stated. In the past several years, various examinations were performed by various institutions in order to investigate land contamination in this area and in the area surrounding the subsidiary’s site in Be’er Sheva, Israel. Note 23 –- Commitments, Concessions and Contingent Liabilities A. Commitments (1) Several of the Group’s subsidiaries have entered into agreements with suppliers in and outside of Israel for the purchase of raw materials in the ordinary course of business, for various periods ending on December 31, 2019.2022. The total amount of the commitments under the said purchase periods of the agreements is approximately $585$664 million as of December 31, 2014. 2015. (2) Several of the Group’s subsidiaries have entered into agreements with suppliers for acquisition of property, plant and equipment. As at December 31, 2014,2015, the subsidiaries had capital purchase commitments of about $280$230 million. (3) A subsidiary in England has entered into 114 long termlong-term land contracts for the lease of land used to mine potash. The lease fees are generally determined based on the quantity of potash mined in each leased area. The two main lease contracts run up to December 20152020 and 2035. The Company has commenced a process or renewal of the license that expires at the end of 2015. The contracts are usually signed for a term of 35 to 50 years. As ofat the date of this Annual Report,the report, the remaining term covered by the lease contracts range from 15 to 2423 years. F-69 Table of Contents Note 23 - Commitments, Concessions and Contingent Liabilities (cont’d) A. Commitments (cont’d) (4) In September 2003, a long-term (20 year) supply agreement was signed between an Israeli subsidiary and a non-Israeli corporation commencing from January 2004, for the supply of bromine and bromine compounds by the subsidiary. (5) The Articles of Association of the Company and its Israeli subsidiaries include provisions that permit exemption, indemnification and insurance of the liability of officers, all in accordance with the provisions of the Israeli Companies Law. The Company, with the approval of the Audit Committee, the Board of Directors and the General Meeting of the shareholders, granted its officers an exemption and letters of indemnification, and has also taken out an insurance policy covering directors and officers. The insurance and the indemnity do not apply to those cases specified in Section 263 of the Israeli Companies Law. The exemption is for damage caused and/or that will be caused by such officers, due to a breach of the duty of care to the Company. TheCommencing from the date of registration of the Company’s shares for trading in the United States, the amount of the indemnification payable by the Company under the letter of indemnification, in addition to amounts received from an insurance company, if any, for all of the officers on a cumulative basis, for one or more of the events detailed therein, was limited to $300 million.$350 million ($250 million up to the date of registration of the Company’s shares for trading in the United States). The insurance is renewed annually. The coverage in effect (including a joint layer with the parent company in the amount of $20 million) is in the aggregate amount of $220 million. On May 8, 2014, the General Meeting of the Company’s shareholders decided to approve an increase from $300 million to $350 million F-64 Table of Contents Note 23 – Commitments, Concessions and Contingent Liabilities (cont'd) of the insurance coverage that was determined in the framework approved by the General Meeting in August 2012 – this being from the date the Company's shares were listed for trading in the United States.   (6) Several of the Group’s subsidiaries in Israel have entered intosigned agreements with various natural gas vendors for the supply of natural gas to the Group’s manufacturing facilities in Israel. The Company committed to “take or pay’’pay” with respect to a minimum annual quantity of gas in a scope and in accordance with the mechanism provided in the agreements. The total quantities under the currently existing agreements should provide the Group all its gas needs until September 30, 2017, including quantities required to operate the power station the Group intends to construct in Sodom, Israel, which is expected to start in the second half of 2015.2016. The supply of the gas under the currently existing agreements is for a term ending September 30, 2017. Additionally,In 2012, the Council for Natural Gas Matters published a decision regarding arrangement of use of the natural gas pipeline capacity from the Tamar drilling rig up to the exit point of the natural gas from the receiving station in Ashdod (hereinafter – “the Gas Authority Decision” and “the Gas Pipeline”). The Gas Authority Decision stipulates that the gas pipeline capacity is limited and it is not able to supply the entire amount of the anticipated demand in the upcoming years. Accordingly, the Gas Authority Decision provides, among other things, that upon a shortage of capacity in the production of gas, based on a decision of the Israeli Gas Authority, allocation of the supply of gas will be pro rata among all the consumers connected to the national gas transport system, based on the formula provided in the decisionGas Authority Decision. In addition, as part of the Gas Authority.Authority Decision, certain limited exceptions were provided for the pro rata mechanism regarding assurance of capacity for supply of certain quantities of natural gas to the transport network’s consumers and giving priority with respect to utilization of natural gas in the Israel Natural Gas Lines transport pipeline (“linepack”) to consumers that signed an agreement with the Yam Thetys Group and/or with the Tamar Group prior to August 14, 2012. This arrangement of the transport capacity is different than allocation provisions with respect to capacity in the gas pipeline upon a shortage of capacity, which were included in the Tamar agreement. To the best of the Company’s knowledge, the pro rata mechanism in the Gas Authority Decision should increase the amount of gas supplied to the Company upon a shortage of capacity in the gas pipeline in accordance with the Tamar agreement. As at the date of the report, it is not known how the Gas Authority Decision will be implemented and/or its impact on the Yam Thetys agreement and/or on the Tamar agreement. The Company anticipates that the amount of the annual consumption of the gas, after operation of the power station, as is expected to be received based on the Yam Thetys agreement and the Tamar Agreement,agreement, will be about BCM 0.76. (7) OnIn June 28, 2012, the GroupCompany entered into agreements regarding a project to construct a new cogeneration plantpower station in Sodom, Israel (hereinafter—‘‘“the Project’’Project”) with. The power station will have a production capacity of about 230 megawatt hours and about 330 tons of steam per hour, and 245 megawatts of electricity thatwhich will provide all thesupply electricity and steam requirements offor the production plants at the Sodom sitesite. The Company intends to operate the new power station concurrently with the existing power station, which will be operated on a partial basis in a “hot back up” format, to produce electricity and steam. The total electricity production in the upcoming years.short term will be 245 megawatt hours. The Project isCompany also intends to utilize its present gas contracts and thereafter to enter into new gas contracts in order to run the power station.  Construction of the project was expected to be completed in the second half of 2015. The costIn 2015, the executing contractor (the Spanish Company “Abengoa”) experienced difficulties and pursuant to the decision of the Project is estimated at about $320 million. The construction agreements are linkedSpanish court delivered in November 2015, it was granted protection from its creditors up to the exchange rateend of the euro.first quarter of 2016. The Company entered into derivative foreign-currency hedging transactionsis examining the possibility of continuing execution of the construction work of the power station and completion thereof. In light of that stated, the Company expects to hedgecomplete the exposureproject and to changescommence operation of the power station in the Project’s cash flows deriving from changessecond half of 2016, with additional costs that are not material. F-70 Table of Contents Note 23 - Commitments, Concessions and Contingent Liabilities (cont’d) A. Commitments (cont’d) (8) Subsequent to the date of the report, on February 24, 2016, the Company signed a long term agreement with Albemarle for supply of polymer flame retardants, a modern product produced in ICL’s factories in the dollar/euro exchange rate. Netherlands and in Israel. The agreement is subject to preconditions, among others, approval of the Antitrust Authority in Israel. In the framework of the agreement, Albermarle will supply the Company all the bromine it needs to produce GreenCrest® (Albermarle’s brand name). B. Concessions (1) Dead Sea Works Ltd. (DSW) Pursuant to the Israeli Dead Sea Concession Law, 1961 (hereinafter—“”the Concession Law”), as amended in 1986, and the concession indenture attached as an addendum to the Concession Law, the Company was granted a concession to utilize the resources of the Dead Sea and to lease the land required for its plants in Sodom for a period endingthat is expected to end on March 31, 2030, accompanied by a priority right to receive the concession after its expiration, should the Government wish to offer a new concession. In August 2015, the Minister of Finance appointed a team for the establishment of the “governmental activities to be conducted towards the end of the concession period”. In September 2015, the team published a request for comments of the public regarding positions and viewpoints in connection with the end of the concession, which are to be submitted by the end of March 2016. The team is expected to submit its recommendations to the Minister of Finance by May 2016. There is no certainty as to what the recommendations of this committee will be with regard to the procedures that the government will undertake in connection with the existing concession and as to the manner in which future mining rights will be granted. According to the Concession Law, ICL has a right of first offer in the event that following the expiration of the current concession the government would offer new concession rights to a third party. The Minister of Finance also appointed a second team designated to establish certainty regarding the manner in which, according to the current concession, the replacement value of DSW’s tangible assets will be calculated at the end of the concession period in the event such assets are to be returned to the government. The actual calculation will be executed only in 2030. This team was expected to submit its recommendations to the Minister of Finance by March 2015. There is no certainty as to what the recommendations of this team will be with regards to the above mentioned and as to whenever they are expected to be submitted. In addition, there is no certainty as to how the government will interpret the Concession Law, the manner in which this process and methodology will eventually be implemented, as well as how the value of the tangible assets will be calculated. In consideration of the concession, the Company pays royalties to the Government of Israel, calculated at the rate of about 5% of the value of the products at the factory gate, less certain expenses, where according to the Salt Harvesting agreement, the royalties rate in respect of the annual quantity of potash sold in excess of 1.5 million tons is 10% (in place of 5%). (1) In addition, according to the Salt Harvesting agreement, if legislation is enacted that changes the specific fiscal policy in connection with profits or royalties deriving from mining of quarries from the Dead Sea, Works Ltd. (DSW) (cont'd) the Company’s consent will not apply regarding an increase in the rate of royalties on the surplus quantities referred to above, commencing from the date on which additional tax is collected as stated in the legislation. On November 30, 2015, the Economic Efficiency Law was published, including the implementation of the Sheshinski recommendations, which address royalties and taxation of excess profits from Dead Sea minerals. The law entered into effect on January 1, 2016. For further details see – Note 20(5) above. DSW granted a sub concessionsub-concession to Dead Sea Bromine Ltd. to produce bromine and its compounds from the Dead Sea, the expiration date of which is concurrent with the Company'sDSW's concession. The royalties in respect of the products manufactured by the Bromine Company are received by the CompanyDSW from the Bromine Company, and the CompanyDSW then pays them over to the State. In addition, there is an arrangement relating to payment of royalties by Dead Sea Magnesium for production of metal magnesium metals by virtue of a specific arrangement with the State provided in the Government’s decision dated September 5, 1993. Pursuant to the arrangement, royalties are paid by Dead Sea Magnesium on the basis of carnallite used for production of magnesium. F-71 Table of Contents Note 23 - Commitments, Concessions and Contingent Liabilities (cont’d) B. Concessions (cont’d) The arrangement with Dead Sea Magnesium provides that during 2006 the State may demand a reconsideration in connection with the amount of the royalties and the method or their calculation for 2007 and thereafter. The State’s demand for reconsideration, as stated, was first received at the end of 2010, and the matter is presently in an arbitration proceeding, as described below. In 2006,2007, a letter was received from the then Accountant General of the Israeli Ministry of Finance, claiming an underpayment of royalties amounting to hundreds of millions of shekels. Pursuant to the concession, disputes between the parties relating to the concession, including royalties, are to be decided by an arbitration panel of three arbitrators (each side appoints an arbitrator and these two appoint the third). On January 9, 2011, the State of Israel and DSW decided to turn to arbitration for purposes of deliberating and deciding the issue of the manner of F-65 Table of Contents Note 23 – Commitments, Concessions and Contingent Liabilities (cont'd) calculation of the royalties under the concession and royalties to be paid for magnesium metals and payment or refunds (if any) due deriving from these matters. Each of the parties appointed an arbitrator on its behalf and these arbitrators appointed the third arbitrator. In the statement of claim filed by the State of Israel in the arbitration proceedings, the State of Israel is claiming the amount of $265 million in respect of underpayment of royalties for the years 2000 through 2009, with the addition of interest and linkage differences, and a change in the method of calculating royalty payments from the sale of metal magnesium. After studying the State of Israel’s allegations in respect of prior years, the Company believes, on the basis of a legal opinion it received, that the royalties it paid and their manner of calculation are consistent with the provisions of the concession. The same method of calculation has been applied consistently since the time the Company was a government company, and was known to the State of Israel and accepted by it. Accordingly, and on the basis of the legal opinion the Company received, no provision has been recorded in the financial statements as of March 31, 2014 with respect to royalties that the State of Israel contends were underpaid. On May 19, 2014, a partial arbitration decision was received regarding the royalties’ issue. Based on the principles of the decision received, Dead Sea Works Ltd. (‘‘DSW’’)DSW is also required to pay the State royalties on the sale of downstream products manufactured by companies that are controlled by ICL that have production plants located both in and outside the Dead Sea area, including outside of Israel. The royalties are to be paid according to the value of the downstream products, which will be set according to the formula described in Section 15(a)(2) of the Concession Deed, based on the selling price of the downstream products to unrelated third parties less the deductions set forth in subsections (I), (II) and (III) of that Section. Regarding metal magnesium, it was decided that the State of Israel and DSW are to exhaust their discussions on the subject of the royalties to be paid by DSW on metal magnesium, and if no agreement is reached the matter is to be returned to arbitration. As a result of the partial arbitration decision, the Company recorded a provision in the second quarter of 2014, in the amount of about $135 million for the years 2000 through 2013. The amount of this provision includes, among other things, interest and is net of the tax effect (the amount of about $149 million in respect of royalties for prior periods plus interest of about $31 million which is included in the "financing expenses" category and net of the tax effect, in the amount of about $45 million, which was recognized as a tax benefit)million). The arbitrators’ decision is partial and its main decision is with respect to payment of royalties on downstream products, as mentioned above. TheAll the principles have not yet been determined whereby the financial calculations will be made have not yet been determined.made. Such principles will beare being discussed in the second and current stage of the arbitration. AsIn 2015, as a result of decisions made as part of the arbitration discussions in connection with the principles for the manner of calculating the royalties, the Company increased the provision by about $10 million. In November 2015, as part of the second stage of the royalties arbitration, the State submitted an opinion on its behalf relating, mainly, to the principles whereby the interest to be added to the royalties’ payment in the relevant arbitration period is to be calculated. As part of the said opinion, the State presented two optional calculation methods, the results of which yield the amounts of NIS 230 million (about $59 million) and NIS 460 million (about $118 million). The Company disagrees with the State’s position and calculations, and in January, 2015 the Company2016, it submitted an interimits position regarding calculation of the royalties. interest. The said interim calculation does not take into account certain issuesCompany estimates that have not yet been resolved, including, the minimum rate of the mineral in the downstream productchances that creates a requirement to pay royalties in respect of the said downstream product. The correct amount of the royalties according to the interim calculations is significantly lower than the provision. The final amount thatits position will be awarded by the arbitrators at the end of the second stage of the arbitration proceedings, and after they determine the financial calculations, as stated, may be materially different than the amount of the provision. The Company's estimate in connection with the provision is based on various assumptions relating toaccepted regarding the manner of calculating the royalties, deriving frombased on the decision of the arbitrators in the partial arbitration decision, and reflects the best estimate of the expenditure required to settle the obligation presently, as at the date of the report. In June 2013, the former Minister of Finance, Mr. Yair Lapid, gave notice of establishment of a public committee, headed by Prof Eitan Sheshinski, for examination of the policy with respect to the royalties received by the State from private parties, including the Company, for use of national natural resources, such as potash and phosphates. The committee was required, among other things, to examine the royalties' policy from a broad standpoint, while making reference to the impacts on existing agreements between various entities engaged in the said matters and the State of Israel. For additional information regarding the committee's final conclusionsprinciples for calculating the interest, are higher than the chances that were published in Octoberthey will be rejected. In 2015, 2014 – see Section C "Increase in the Water Level of Pond 5". In 2014,and 2013, and 2012, DSW paid current royalties to the Government of Israel in the amounts of approximatelyabout $97 million, about $84 million approximatelyand about $110 million, respectively. In addition, in 2015, the Company paid an amount of about $152 million, in respect of royalties relating to prior periods. F-72 Table of Contents Note 23 - Commitments, Concessions and approximately $125 million, respectively. Contingent Liabilities (cont’d) B. Concessions (cont’d) (2) Rotem Rotem has been mining phosphates in the Negev in Israel for more than fifty years. The mining is conducted in accordance with phosphate mining concessions, which are granted from time to time by the Minister of National F-66 Table of Contents Note 23 – Commitments, Concessions and Contingent Liabilities (cont'd) Infrastructures under the Mines Ordinance, through the Supervisor of Mines in his Office (hereinafter—‘‘“the Supervisor’’Supervisor”), accompanied by mining authorizations issued by the Israel Lands Administration (hereinafter—‘‘“the ILA’’ILA”). The concessions relate to the quarry (phosphate rock) whereas the authorizations relate to use of land as active mine sites. Rotem has the following mining concessions: i. Rotem Field – valid up to the end of 2021; ii. Zafir Field – (Oron Zin) – valid up to the end of 2021; iii. Hatrurim Field – the Supervisor has decided to extend the area of the Rotem field concession so that it will include the Hatrurim Field and the matter has been transferred to the ILA to deal with the extension of the area of the mining permit for the Rotem Field, in accordance with the extension of the concession area. In September 2012, a committee was set up by the Director General of the Israeli Ministry of Energy and Water, to examine the phosphates sector including representatives of the Israeli Ministry of Energy and Water, the Israeli Geological Institute and the Israeli Ministry of Economy, Trade and Industry, in order to look into the use of the phosphate resource in Israel, and to submit recommendations regarding the annual mining quantity of phosphates, the manner of use of the phosphates layers and the stages for restoring the mine areas.Israel. The committee published its recommendations and, among other things, it recommended to examine the possibility of imposing certain restrictions on the manner of the mining and utilization of the phosphates, and also recommended to approve mining in additional fields, such as, the Barir field. As at the reporting date, of the report, no operative decisions had been made based on the committee’s recommendations. Mining royalties In respect of mining of the phosphate, Rotem is required to pay the State of Israel royalties based on a calculation format stipulated in the Israeli Mines Ordinance. The calculation format for the royalties was updated in February 2010 as part of a compromise agreement that settled all the disputes regarding past royalties and formulas for future royalties. Notwithstanding that stated, in June 2013,On November 30, 2015, the former Minister of Finance, Mr. Yair Lapid, gave notice regarding an establishment of a public committee, headed by Professor Eytan Sheshinski, for examinationEconomic Efficiency Law was published, including the implementation of the policy with respect to theSheshinski recommendations, which address royalties received by the Stateand taxation of Israelexcess profits from private entities, including the Company, for use of national natural resources such as potashDead Sea minerals. The law entered into effect on January 1, 2016. For further details see – Note 20(5) above. In 2015, 2014 and phosphate. The committee is required, among other things, to examine the royalties' policy from a broad perspective, while making reference to the impacts on the present agreements between the various parties engaged in these matters and the State of Israel. For additional information regarding the committee's final conclusions that were published in October 2014 – see Section C – "Increase in the Water Level in Pond 5". In 2014, 2013, and 2012, Rotem paid royalties to Israeli government in the amounts of approximately $3.5 million, $3 million and $4 million, and $6 million, respectively. Planning and building. building The mining and quarrying activities require zoning approval of the site based on a plan in accordance with the Israeli Planning and Building Law, 1965. These plans are updated, as needed, from time to time. As at the date of the report, there are various requests at different stages of deliberations pending before the planning authorities. At the end of 2009, ataccording to the recommendation of a team accompanying preparation of a new site plan for the Zin-Oron area in Israel, the Local District Board approved extension of the execution stages of the site plan from 1991, which zones the Zafir site (Zin-Oron) for mining up to the end of 2013, and in2013. In September 2013, the Local District Board approved extension of additional stages up to the end of 2015. In August 2015, the District Committee decided to deposit a new mining plan for the Zin Oron area, and also decided to further extend the stages for the plan in effect up to the end of 2016, in order to provide a plan framework for the work being performed on the area for a period of time intended for completion of the required processes for deposit of the new plan and its actual approval. The Company is working to promote the plan for mining phosphates in Barir field (South Zohar)(which is part of Zohar South) in planning approval stages,the Negev Desert. F-73 Table of Contents Note 23 - Commitments, Concessions and it has not yet been decided whetherContingent Liabilities (cont’d) B. Concessions (cont’d) In December 2015, the National Planning and Building Council approved the Policy Document regarding Mining and Quarrying of Industrial Minerals (the "Policy Document"), which includes, among other things, a recommendation to deposit itpermit phosphates mining including at Barir field. The Policy Document that was approved will set the basis for preparation of a national outline plan (“the National Outline Plan”) for mining and quarrying to also be approved by the National Planning and Building Council. Along with the competent authorities. Israeliapproval of the Policy Document, the National Planning and Building Council ordered the Planning Administration to raise the matter of the order to prepare a detailed plan for Barir field (“the Barir Plan”) at one of its upcoming meetings. In addition, in February 2016 the municipality of Arad, together with several other plaintiffs, including, among others, residents of the town Arad, the communities and the surrounding Bedouin villages surrounding the area, filed a motion with the Israeli Supreme Court of Justice against the approval of the Policy Document to authorize phosphate mining in the Zohar South area object to deposit of the plan and continuation of advancement of the planning stages in respect thereof, due to thetheir fear offrom environmental and health dangers they contend will be caused as a result of operation of the mine.dangers. The Company believes that the mining activities in Barir field do not involve F-67 Table of Contents Note 23 – Commitments, Concessions and Contingent Liabilities (cont'd) any risks to the environment or to people.  After an expert appointed by There is no certainty that the Israeli MinistryNational Outline Plan and the Barir Plan will be approved at all or as will be submitted, in light of the Prime Minister expressed his opinion thatopposing position of the Health Ministry, among other things. Moreover, there is no health hazard incertainty regarding the Barir mine,timelines for the Israeli Ministry of Health appointed a committee on its behalf to examine the matter before the Israeli Ministry formulates its position. At the end of 2013, a public health expert was appointed (Prof. Samet from the United States) who delivered his opinion in the beginning of 2014. On April 3, 2014, the Company was informed that the former Minister of Health, Ms. Yael German, contacted the Headsubmission of the Planning Administration inPlans, the Ministryapproval thereof or of the Interior, Ms. Binat Schwartz, and informed her that after she read the opinion of the expert appointed by the Ministry of Health, she has decidedfurther developments with respect to oppose the mining in the Barir field, including test mining. The Company disagrees with the interpretation of the former Minister of Health of the opinion. In the Company's estimation and based on its understanding of the said opinion, such opinion does not contradict the Company's position that the mining activities in the Barir field do not pose any threat at all to the environment or to the residents. On December 2, 2014, the Head of the Planning Administration in the Ministry of the Interior brought up for discussion by the Planning and Building Council a proposal for advancement of the mining plan in the Barir field by the Administration's authorities. A discussion was held however a decision regarding the matter has not yet been made. The residents of Arad are continuing to object to advancement of the mining plan and even to test mining. field. If mining approval is not received for the Barir field, this will significantly impact the Group’s future mining reserves in the medium and long term. In December 2014, ICL signed a strategic partnership agreement with Yunnan Yuntianhua, China's second largest chemical manufacturer and the third largest phosphate manufacturer in the world, for operation of a joint venture (50/50) controlled by ICL with respect to phosphate activities having full horizontal integration that includes a world scope phosphate mine and production of downstream products. The aggregate amount of the transaction is estimated at about $452 million. Closing of the transaction is expected to take place in the first quarter of 2016, subject to approvals of various government and regulatory entities. (3) A subsidiary in Spain from the ICL Fertilizers segment (hereinafter – “ICL Iberia”) was granted mining rights based on legislation of Spain’s Government from 1973.1973 and the regulations accompanying this legislation. Further to the legislation, as stated, the Government of the Catalonia region issuedpublished special mining regulations whereby the subsidiary, a company from the ICL Fertilizers segment,Iberia received single licenseindividual licenses for each of the 126 different sites that are relevant sites forto the current and possible future mining activities and possibilities for the future.activities. Some of the licenses are valid up to 2037 andwhile the rest are effective up to 2067. The mining royalties in 2014 amounted to about euro €150 thousand. Regarding “Reserva Catalana”, an additional area beyond the areas referred to above, ‘‘Reserva Catalana,’’site wherein mining has not yet been commenced, it was clarified that in 2007 a requestprocess was submitted to extend the periodcommenced for extension of the concession commencing from Octoberperiod, which ended in 2012, for a period ofan additional 30 years. As at the dateIn light of the report, there are still no mining activities being carried outchangeover of the governments in this area. TheSpain, the administrative activitiesprocesses of the National Mining Authority with respect to extending the concession period have not yet been completed howevercompleted. As at the mining rights are still valid and IBPreporting date, ICL Iberia is in the process of renewing the rights before they expire. rights. According to the Spanish authorities, the concession period is valid until a final decision is made regarding renewal of the concession period. (4) The mining rights of a subsidiary in the United Kingdom, from the ICL Fertilizers segment (hereinafter—‘‘CPL’’”ICL UK”) are based on approximately 114 mining leases and licenses for extracting various minerals, in addition to numerous easements and rights of way from private owners of land under which CPLICL UK operates, or,and mining rights in the case of mining underneath the North Sea granted by the British Crown. The termsCrown (“Crown Estates”). As at the date of the report, all of these leases,the lease periods, licenses, easements and rights of way extend until from December 2015 untilare effective – some of the said periods will expire up to 2020 whereas some will continue up to 2038. In 2014,2015, the mining royalties amounted to about £2.6$5 million. (5) A subsidiary in the United Kingdom from the ICL Fertilizers segmentUK has peat mines in the U.K. (Creca, Nutberry and Douglas Water). Peat is used as a raw material for production of detached platformsprofessional grade growing media for improvement of land and for use as soil substitutes on growing platforms. ornamental plants. The Nutberry and Douglas Water mining sites are owned by the Company,ICL UK, while the Creca mine is held under a long termlong-term lease. The mining permits wereare granted up to the end of 2024 and2024. The mining permits are granted by the local authorities for fixed time periods of 14 years and are renewed after being examinedexamination of the local authorities. The last time the mining permit for Creca was renewed was in 2010 (for a period of 14 years up to the end of 2024) whereas the mining permits for Nutberry and Douglas Water were renewed in 2014 (for a period of 10 years up to the end of 2024). (6) YPH JV, which is controlled by ICL UK, holds two phosphate mining licenses that were issued in July, 2015, by the saidDivision of Land and Resources of the Yunnan district in China, with reference to the Haikou Mine (“Haikou”), which is valid up to January, 2043 and the Baitacun Mine (“Baitacun”), which is valid up to November 2018. F-74 Table of Contents Note 23 - Commitments, Concessions and Contingent Liabilities (cont’d) B. Concessions (cont’d) The mining right of Haikou was previously owned by YPC. According to the Mining Concession Grant Contract of Haikou Mine entered into by and between YPC and the Land and Resources Department of Yunnan Province (together with its local equivalents, "Resources Department") in November 2012, the total price to be paid to the Resources Department in consideration for the mining concession of Haikou was about $27 million which has been paid in full (not including mineral resources compensation fees and other charges required by applicable PRC laws). The mining right of Baitacun was previously owned by YPC as well. However, YPC did not enter into a concession agreement since the Baitacun mining right was obtained by YPC before the relevant PRC laws requiring the Resources Department to sign such agreements were published. As part of the formation of YPH JV, in October 2015, the mining rights related to Haikou and Baitacun were transferred to YPH JV. Renewal of Mining License - to retain the Haikou and Baitacun licenses, YPH JV has to comply with the provisions of the relevant Chinese laws and regulations regarding mining activities. In particular, YPH JV has to conduct annual check with regard to its mining licenses. The items to be examined in the annual check mainly include: whether the taxes, fees, premiums relating to the mining license and mining activities conducted by a company have been paid in full; whether the annual reserve report (as applicable) have been submitted; whether various mining parameters have met the standards required by law; whether land reclamation has been conducted and whether there are any penalties imposed on the company or violation of laws by the company. In addition, YPH JV has to submit the renewal application to the Resources Department 30 days prior to the expiry of the applicable mining license. Additional Payments - in respect of the mining rights, YPH JV is required to pay the authorities a “Mineral Resources Compensation Fee” at the rate of 2% of YPH JV’s sales revenue of rock phosphate mined from Haikou and Baitacun. In addition, YPH JV is required to pay a “Resource Tax”, which at the present time stands as 15 yuan per tonne of YPH JV’s sale volume of rock phosphate mined from the Haikou Mine and the Baitacun Mine. Grant of Mining Rights to Lindu - according to a statement issued by YPC on February 29 ,2016, YPC entered in 2010 into agreements with the local authority of Jinning County, Yunnan Province and Jinning Lindu Mining Development and Construction Co., Ltd. (“Lindu”), according to which, Lindu can mine up to two million tons of phosphate rock from a certain area of 621 mu (equivalent to 0.414 km2), within the area of the Haikou (the “Daqing Area”) and sell such phosphate rock to any third party at its own discretion. However, as of the date of such statement, YPC believes that Lindu has not conducted any mining or sale according to such agreements. Prior to the formation of YPH JV, YPC proposed to the relevant local authority of Jinning County and Lindu Company to swap the rights granted to Lindu in the Daqing Area with another area which is not a part of Haikou and have Lindu Company mine in that area, so as to ensure that the interest of YPH JV would not be affected by the mining and sale conducted by Lindu Company. However, due to personnel changes in the relevant local authority of Jinning County and Lindu Company, the negotiation is still on-going. YPC undertakes to continue to promote the negotiation, so as to ensure that YPH JV’s mining right in the Haikou will not be adversely affected by the above-mentioned arrangements regarding Lindu’s mining rights within the Daqing Area. (7) The Company holds a potash mining license for the Danakhil mine in the Afar region in Northeast Ethiopia, through its acquisition of Allana, which was granted on October 8, 2013 by the Ministry of Mines in Ethiopia. The mining license is valid for a period of 20 years and may be renewed for an additional period of 10 years each. Pursuant to the Ethiopian Mining Proclamation and the mining agreement, Allana Potash Afar Plc (a subsidiary of Allana) was required to complete the development stage and start the production stage no later than October 8, 2015 (within two years from the effective date of the mining license).As at the date of the report, the Company had not yet completed the development stage and, therefore, the Government of Ethiopia may revoke the mining license. The Company is holding discussions with the Government of Ethiopia related to the application submitted by the Company for the transfer of the mining license to a newly established company and extending the development period in light of the Company’s takeover of Allana, which can result to additional payments. In the Company’s estimation, an arrangement will be reached with the Ethiopian authorities for extension of the development period. The Company is currently researching the project’s feasibility and technical and operating requirements, and initial work has begun on preparing the site for further construction. Although the development program is still in the exploratory stage, the Company estimates that production will commence in 2020. In addition, The Company intends to develop the mine for production of potassium chloride (MOP) and potassium sulfate (SOP). C. Contingent liabilities (1) As of December 31, 2014,2015, the total guarantees provided by the Group to third parties amount to $83$78 million. The guaranties provided by the Group in respect of loans taken out by the Group’s subsidiaries amount to about $1,673$1,996 million. F-68 Table of Contents Note 23 – Commitments, Concessions and Contingent Liabilities (cont'd) (2) During the 1990s, several claims were made against a few of the Group’s subsidiaries in respect of plaintiffs from various countries, who worked mostly as banana plantation workers, who allegedly have been injured by exposure to Di Bromo Chloropropane (‘‘DBCP’’) produced, many years ago, by a number of manufacturers, including large chemical companies. As at the date of approval of the financial statements,report, the Group’s subsidiaries are parties to one legal proceeding by 9 plaintiffs who are requesting certification of their claim as a class action. The claim is for bodily injury and therefore the amount for the claims has not been stated. The Group believes the quantities of material supplied by the Group to the relevant countries in the relevant periods was, if at all, small comparedIn accordance with the quantities of material sold by other chemical manufacturers. In theCompany’s management opinion, of the Company's management and its legal advisors, it is not possible, at this stage, to estimate the outcome of the above claims. Nonetheless, it is estimated that the overall exposure of ICLclaims due to their complexity and the subsidiaries will not exceed $20 million. No provision has been included in the financial statements in respect of this claim. multiple parties involved. (3) Environmental protection a) The Group companies manufacture, store and sell hazardous chemical products and, therefore, they are exposed to risks deriving from harm caused to the environment. The companies invest significant amounts in order to comply with the environmental rules and regulations. In the estimation of Company Management and on the basis of information in its possession, as at the signing date of the financial statements, the provision existing in the financial statements covers the quantifiable liabilities in respect of costs relating to environmental protection. b) Pending proceedings relating to the Kishon River, Israel The Company's production site borders the Kishon River. For decades FCM, along with many other entities, municipalities and plants, has diverted wastewater into the Kishon River. Between 2001 and 2005, a number of claims for monetary damages were filed in the Haifa District Court against the Company and a series of other defendants (including the State of Israel) by 50 individuals (or their heirs or dependents), most of them fishermen who worked, according to the claims, in the Kishon’s fishing harbor. According toharbor, claiming that the plaintiffs, the flowflowing of sewage tointo the Kishon River by each of the chemical plants operating on the river banks has caused the plaintiffs’ cancer and other illnesses. Dozens of factories, local governments and insurance companies were added as third-party defendants. In the course of examining the claims, ten plaintiffs withdrew their claims, which were dismissed. On November 3, 2013, a court judgmentdecision was renderedissued rejecting all the plaintiffs’ claims for damages and on February 9,claims. In 2014, the court charged all the plaintiffs for the defendants' legal expenses, in the amount of about $1.2 million (about NIS 4.6 million). The Company's share in the legal fees for which the plaintiffs were charged is about $0.3 million (about NIS 1.1 million). On September 1, 2014, noticesa notice of appeal werewas filed by seven plaintiffs. Basedplaintiffs that were subsequently rejected by the Supreme Court on an opinionSeptember 2015. F-75 Table of its legal advisors, the Company estimates that the chances that the appeals will succeed are low.Contents Note 23 - Commitments, Concessions and Contingent Liabilities (cont’d) C. Contingent liabilities (cont’d) Between 2000 and 2007, a number of claims were filed in the District Court at Haifa against a list of defendants by former soldiers (and their heirs and dependents). The plaintiffs claim that contact with toxic substances in and around the Kishon River caused them cancer and other diseases (hereinafter – "the(“the Claims of the Soldiers"Soldiers”). Several dozen factories (including the Company), governments, including the State of Israel, and insurance companies were added as third-party defendants. On In June 17, 2013, a court decision was rendered rejecting the claim for damages of 72 former soldiers (and their heirs and dependents) in the consolidated cases, with no order for expenses. The court decision did not includeexpenses, except for one claim ofmade by 17 soldiers that was not consolidated with the said claims (out of the 17 claims, one claim was rejected by consent).soldiers. On September 8, 2013, the plaintiffs filed a notice of appeal in24, 2015, the Supreme Court and on November 18, 2013 somecompletely rejected the appeals of the soldiers, and also rejected the counter-appeal regarding not charging the soldiers for expenses. c) On June 7, 2015, a request was filed for its certification of a claim as a class action, in the District Court in Tel Aviv–Jaffa, against eleven defendants, including a subsidiary, Fertilizers and Chemical Ltd (ICL Haifa), in respect of claims relating to air pollution in Haifa Bay and for the Company, filed a counter appeal with respectharm allegedly caused from it, to the court's decision not to order payment of expenses. On November 24, 2013, at the court's request, the plaintiffs filed an amended notice of appeal. On December 9, 2014, a statement of summations was filed by the plaintiffs with reference to the appeal and thereafter a statement of summations was filed by the respondents in the appeal. Then court set a hearing date for oral supplementationresidents of the summations in September 2015. Based onHaifa Bay area. The amount of the evaluation of its legal advisors, and inclaim is about NIS 14.4 billion (about $3.8 billion). A preliminary hearing was scheduled for June 15, 2016. The Company is studying the request. In light of the court’s detailedcomplexity of the process and reasoned decision, the Company estimatesearly stage of the proceeding, as well as the fact that opinions have not yet been received from the various experts, it is difficult to predict the outcome of the proceeding. Nonetheless, in the Company’s estimation, based on the initial factual data provided to it and the relevant court decisions, the chances that of appeal succeeding are low. As stated, the above mentioned decision does not include a claim of 16 soldiers that was heard as part of the said claims however that F-69 Table of Contents Note 23 – Commitments, Concessions and Contingent Liabilities (cont'd) were not consolidated with them. Regarding this claim, the court decided to "stay" the hearing until after the decision of the Supreme Court regarding the claims with respect to which an appeal was filed. Based on the court's determinations with respect to the claims regarding which a decision has been rendered, as stated, the Company estimates, in reliance on its legal advisors, thatplaintiffs’ contentions will be rejected exceed the chances that this claimthey will prevail are low. No provisions have been included in the financial statements in connection with the above mentioned claims. c) Three claims were filed with the District Court at Beer Sheva, Israel in March and June 2007 against the State of Israel and the Industrial Local Council at Naot Hovav, Israel, in whose jurisdiction the Naot Hovav plants operate and plants of ICL Industrial Products. The plaintiffs argue that various pollutants in the vicinity of Naot Hovav have caused their illnesses, including, among other things, respiratory diseases, spontaneous abortion, birth defects, diseases of the nervous system, cancer, and other illnesses. The claims rely, among other things, on results of an epidemiological study. The claims sue for sums for treatment expenses incurred by the plaintiffs, as well as compensation for pain and suffering, distress, and punitive damages. The plaintiffs are suing for a total sum of approximately $61 million (NIS 238 million). In 2008, the Local Council and the State of Israel filed a third party notice against a number of plants at Naot Hovav, including factories of ICL Industrial Products. On January 9, 2013, a judgment was rendered rejecting the claim. On February 20, 2013, the plaintiffs filed an appeal with the Supreme Court, which was rejected on September 29, 2014. be accepted. (4) Increase in level of Pond 5, Israel The minerals from the Dead Sea are extracted by way of solar evaporation, whereby salt precipitates onto the bed of one of the evaporation ponds at Sodom, in one of the DSW’s sites.sites of Dead Sea Works (hereinafter – “DSW”). The precipitated salt creates a layer on the pond bed of approximately 20 million tons annually. The process of production of the raw material requires that a fixed brine volume is preserved in the pond. To this end, the water level of the pond is raised by approximately 20 centimeters annually. The Ein Boqeq and Hamei Zohar hotels, the town of Neve Zohar and other facilities and infrastructures are located on the western beach of this pond. Raising the water level of the pond above a certain level is likely to cause structural damage to the foundations and the hotel buildings situated close to the water’s edge, to the settlement of Neve Zohar and to other infrastructure on the western shoreline of the pond, dependingpond. This situation requires establishment of defenses for the facilities and infrastructures of the hotels located on the heightshores of Pond 5. In December 2007, an agreement was signed between the State and the Company and in July 2012 an appendix was added thereto, addressing the urgent shoreline protections the purpose of which is to whichpermit raising the water level is raisedwhile protecting the structures and infrastructures located along the shoreline of Pond 5, this being up to the time of stabilization of the water level in this pond as part of the Salt Harvesting Project (see below). DSW will bear 39.5% of the financing and the locationgovernment of Israel will bear the relevant object. remaining cost. In July 2012, an appendixagreement was signed with the Government of Israel, regarding “Execution and Funding of the Dead Sea Works Protection Project and Increase of the Royalties Paid to the agreement from 2007 was signed relating to additional protections of beachfronts that are to be executed in order to permit strengtheningState” (hereinafter – “the Salt Harvesting Project”). The purpose of the water level. Based onSalt Harvesting Project is to constitute a solution for the appendix to that agreement, the level of the DSW’s participation in the beachfront protection will be 39.5%. On July 8, 2012, the Group entered into an agreement with the government of Israel, relating to a permanent solution to the rising water level in level of Pond 5. This solution is by means of full harvesting of the salt from Pond 5 of DSW (hereinafter—‘‘the Salt Harvesting’’), in such a manner that will no longer require raising of the water level in the Pond after completionand stabilizing of the Salt Harvesting’.water therein at a fixed level by harvesting of the salt from this pond and transferring it to the Northern Basin of the Dead Sea. The highlights of the agreement are set forth below: A. PlanningThe planning and execution of the Salt Harvesting Project will be performed by the Company. DSW. B. The Salt Harvesting Project as well as the project including afor the new pumping station that is to be constructed, constitute an Israeli national infrastructure project that will be promoted by the Israeli Committee for National Infrastructures. C. Starting from January 1, 2017, the water level in Pond 5 will not rise above 15.1 meters in DSW’s network.network (about 390 meters below sea level). DSW will be required to pay compensation in respect of any damages caused as a result of a rise of the water level beyond the level determined. If there is a material deviation from the timetables for construction of the Salt Harvesting projectProject as a result of a requirement for changes by the planning institutions, as a result of which the Plan is not approved on time, or due a decision of a judicial tribunal that caused a delay of at least one year in provision of effect to the Salt Harvesting Project by the planning institutions, without the Company having violated its obligations, the Company will be permitted to request raising of the water level above that level. The Company will be required to pay compensation for any damages caused, as a resultstated above. F-76 Table of Contents Note 23 - Commitments, Concessions and Contingent Liabilities (cont’d) C. Contingent liabilities (cont’d) In December 2015, National Infrastructures Plan 35A (“the rise inPlan”), which includes the water level. The statutory infrastructure of the Salt Harvesting project is presently being discussed byin the Boardevaporation ponds through, among other things, the construction of National Infrastructures and its approval is expected ata new pumping station in the end of 2015. Concurrently, the Group is performing additional activities relating to the harvesting project. D.      Pursuant to estimatesnorthern basin of the Dead Sea, was approved by the plenary National Infrastructures Committee. Following the above approval, in March 2016, the Government also approved the Plan. D. According to the Dead Sea Protection Company Ltd., as at October 2010, the total cost of the Salt Harvesting Project was estimated as at October 2010,to be in an undiscounteda nominal amount of about NIS 7 billion (a discounted amount of about NIS 3.8 billion – hereinafter – “the Discounted Amount”) (a discounted amount of about $1 billion). The Company will bear 80% and the Government will bear 20% of the cost of the Salt Harvesting Project, however the Government’s share will not more thanexceed the F-70 Table of Contents Note 23 – Commitments, Concessions and Contingent Liabilities (cont'd) discounted amount (20% of NIS 3.8 billion – “the discounted amount”). The Government’s maximum commitment is Discounted Amount, linked to the Consumer Price IndexCPI and bearsbearing interest at the rate of 7%. E. Increase in the rate of the royalties from 5% to 10% of sales, for quantities of chloride potash DSW sells in excess of 1.5 million tons annually, thisannually. This increase will applyapplies to sales starting January 1, 2012. The Group also agreed that forIn addition, in respect of the period starting January 1, 2010 and untilthrough January 1, 2012, forthe Company agreed to an additional royalty charge, at the rate of 5%, only on annual sales exceeding 3.0 million tons additional royaltiestons. F. In July 2012, the Government committed that at a rate of 5% will be paid. F.      As part of the agreement, the State of Israel declared that as of that date,this time it sees no need to make additional changes into its then specific fiscal policy regarding mining from the quarries at the Dead Sea, including the commercial utilization thereof and, accordingly, at that presentthis time, it will not initiate and will not object to, as applicable, to proposed laws regarding this matter. The Company’s consent to the increase of the rate of the royalties, as stated in E above, is contingent on implementation of the Government of Israel’s decision, as stated in this Section. The agreement further provides that if legislation is enacted that changes the specific fiscal policy in connection with profits or royalties deriving from mining of quarries from the Dead Sea, the Company’s consent will not apply regarding an increase in the rate of royalties above on the surplus quantities referred to above, commencing from the date theon which additional tax is to be collected as stated in the legislation andlegislation. On November 30, 2015, the matter will be returned to arbitration. If such a situation does occur, the matter of the royalties’ rate on the surplus quantity stated in E above, will be transferred to arbitration and each side will be permitted to raise any contention it could have raised immediately preceding signing of the above-mentioned agreement. (5)      Sheshenski Committee conclusions On June 17, 2013, the former Minister of Finance, Mr. Yair Lapid, gave notice regarding an establishment of a public committee, headed by Prof. Eytan Sheshinski, for examination of the policy with respect to the share of the State received for use by private entities,Economic Efficiency Law was published, including the Company, of national natural resources. Pursuant to the appointment certificate the committee was granted, the committee is required, inter alia, to examine the royalties' policy with a broad perspective, while making reference to the impacts on the present agreements between the various parties engaged in these matters and the State of Israel. In addition, the committee is required to examine application of the principles formulated in connection with the Dead Sea quarries, taking into account, among other things, Government Decision No. 4060 and the detailed agreement signed with DSW in July 2012 as a result of this decision, and while addressing the public debate held regarding the possibility of merging the Company with a foreign company. Pursuant to the Group’s position, as it was presented to the committee, there is no room for imposing any type of additional royalties on the Group. On October 20, 2014, the Sheshinski Committee published the final conclusions "regarding the government take to be received from use of national resources by private bodies". The highlights of the Committee's Recommendations, , are as follows: The mix of taxes on natural resources in Israel will include three taxation elements: royalties, natural resources tax and corporate tax. The royalty rate for all minerals will be 5% for any extracted amount (currently, the royalty rate for potash is 5% on annual sales of up to 1.5 million tons, and 10% for any sales above that amount. The royalty rate for bromine is 5% and the royalty rate for phosphates is 2%); the calculation of the royalties for phosphates which is made in accordance with the Mines Ordinance, will be changed such that the recognition of refining and processing costs of the mined raw material will be in accordance with normative costs to be established in the law. A new natural resources tax will be imposed. The following are the main aspects of the proposed tax: The natural resources tax base will be the amount from which the natural resources tax will be collected every year. The tax base will be the Company’s operating profit, according to accounting profit and loss statements, after certain adjustments less financing expenses in the rate of 5% of the Company’s working capital, and less an amount that will represent the yield on the remaining depreciated cost of the fixed assets used in the production and sale of the mineral (hereafter – “the yield on the depreciated cost”). F-71 Table of Contents Note 23 – Commitments, Concessions and Contingent Liabilities (cont'd) A progressive tax will be imposed on the tax base, as described above, at a rate that will be determined in accordance with the level of the yield on the remaining depreciated cost of the fixed property used in the production and sale of the mineral in that year. The first tax bracket for the natural resource tax will be 25% on the yield on the depreciated cost between 14% 20% and the second tax bracket will be 42% on the yield on the depreciated cost above 20%. For the years in which the natural resources tax base is negative, the negative amount will be carried over from year to year, and will serve as a tax shield in the following tax year. The limits of the natural resources tax – the natural resources tax will only be imposed on the profits derived from the production and the sale of minerals, such as potash and phosphates, and not on profits derived from downstream industrial activity. In addition, the natural resources tax will be calculated separately for each mineral. However, to the extent that there is a synergy between the different resources, and that a particular mineral produces a benefit in the production of a different mineral, the Committee believes that such benefit should be reflected in the calculation of the natural resources tax. Consequently, the benefit produced by the magnesium plant for the potash plant in the production of sylvinite will be recognized as an expense for the potash plant, and accordingly will be recognized as income for the magnesium plant. Clear rules will be established for this purpose with regard to the calculation of the said savings, with respect to potash and other minerals, if applicable. A mechanism will be established for determining the market price for natural resources transactions between related parties in Israel, as well as a mechanism for calculating the manner in which expenses will be attributed to the production and sale of the natural resource and to the downstream activities. Regarding bromine, a natural resources tax will be imposed in the same way it is imposed on other natural resources, other than that the transfer price will be calculated separately for transfers to related parties in Israel, and separately for sales to related parties abroad. The transfer price for elemental bromine to related parties will be the higher of the following: The actual price – the actual sale price for elemental bromine to related parties in Israel or abroad, whichever is relevant; The price to a third party – the weighted average of the sale price to unrelated parties, which are manufacturers of bromine compounds, while adjusting the shipping and marketing costs, as needed; A normative price – the normative price will be linked to the bromine compounds index and determined based on the Netback method, relying on the data from the five previous years for the Bromine Compounds Company in Israel or abroad, as relevant. In each of those years, all bromine compounds production costs will be deducted from the sales turnover for the Bromine Composite Company, except for the cost of purchasing the raw bromine. From the operating profit, before the deduction of the cost of purchasing the raw bromine, will also be deducted of a normative profit in the rate of 12% of the sales turnover of the Bromine Compounds Company in Israel or abroad, as the case may be. The amount reached through this calculation, for each of the years that is examined, will be divided by the amount of the bromine that the Bromine Compounds Company has purchased in each of the years, and will be weighted into the stated normative price. The mechanism will be examined every 5 years and will be updated if necessary. The Encouragement of Capital Investments Law – the law will be amended, to clarify that with regard to any tax benefits pursuant to that law, the definition of a “mineral extraction plant” will include all the plant’s activity through the production of the first sellable natural resources, such as potash, bromine and magnesium. Therefore, any activity in the production of the mineral will be subjected to the excess profit tax, and will not be entitled to tax benefits pursuant to the Encouragement of Capital Investments Law. Downstream product activity such as bromine compounds and fertilizers will not be a part of the base used for calculating the excess profits tax and will not be excluded from the application of the Law. In addition to the Committee's recommendation above, corporate tax will apply at the rate of 26.5%. The government's take to be received from minerals when a natural resources tax is imposed is expected according to the Committee to range from 46%-55%. F-72 Table of Contents Note 23 – Commitments, Concessions and Contingent Liabilities (cont'd) The Committee’s Recommendations, if they are enacted into legislation, will apply to DSW, as of January 1, 2017. The end of the Dead Sea concession period – a designated team will be established, to be appointed by the Accountant General at the Ministry of Finance, which will work to establish certainty regarding the manner in which the value of the DSW assets will be calculated at the end of the concession period, in accordance with the Deed of Concession. This team will submit its recommendations to the Minister of Finance by the end of the first quarter of 2015. Additionally, the Minister of Finance will appoint a second team which will submit recommendations regarding the government actions that are needed in anticipation of the end of the concession period and will examine the manner in which the concession will be granted in the future. This team will submit its recommendations by the end of the first quarter of 2016. It should be noted, that attached to the Committee’s Recommendation’s, were, among others, a minority statement of the Accountant General at the Ministry of Finance as well as a reservation from the Committee’s Recommendations of the representatives of the Ministry of Economy and the Ministry of National Infrastructures, Energy and Water Resources. On November 10, 2014, the Ministry of Finance issued a press released according to which on November 10, 2014, the Social-Economic Cabinet unanimously approved the recommendationsimplementation of the Sheshinski Committee. According to the press release, the final recommendations, will be drafted in contemplationwhich address royalties and taxation of their legislation and will be brought for the approval of the Knesset. There is no certainty that the Knesset will approve the Committee's recommendations in their current wording. In August 2014, after publication of the interim conclusions of the Sheshinski Committee, the Company's Board of Directors examined the economic viability of continuation and expansion of the production of certain products, including potash, metal magnesium, bromine compounds and downstream phosphate products. In light of the Committee's final recommendations, and their approval by the Social-Economic Cabinet, as stated, the Company's Board of Directors made the following decisions, further to decisions it made in August 2014 – briefly: Cancellation and reconsideration of investments – to cancel the Company investments in Israel, mainly increase of the production capacity of potash, which had been approved as part the long term plan, in the amount of about $750 million, and to reconsider whether investments in the amount of about $1 billion are worthwhile; Bromine Compounds – to formulate and implement an efficiency plan designed to significantly improve the profitability of Bromine Compounds Company,excess profits from the Industrial Products segment. This plan is required due to the continuing erosion of profits on bromine compounds as a result of a decline in demand for flame retardants, slow structural growth in the world market, a drop in prices and strengthening of the shekel, compounded by the significant recent developments related to the partial arbitration decision with respect to royalties on sales of downstream products, including bromine compounds and the possibility that the Sheshinski Committee’s final recommendations will be adopted and enacted into legislation. Company management formulated a plan, as stated, and has already commenced its implementation. The plan includes reduction of labor and other costs in the Bromine Compounds Company. There is no certainty that such plan will successfully achieve its goals, as a result of various factors, including the situation of the market, competition, regulation, labor relations and/or any of the risk factors characterizing the Company's activities. The Magnesium Plant – to make preparations for closure of our magnesium plant at the Dead Sea commencingminerals. The law entered into effect on January 1, 2017, to the extent the discussions with the State of Israel regarding the tax and royalties issues will not support the continuation of the activities of the magnesium plant. Company management was instructed to ensure all existing and future customer orders and commitments in order to avoid any interruptions until the final closure of the plant, to the extent it is ultimately closed down. The main economic justification for continuation of the activities of the magnesium plant at the Dead Sea stems from the plant’s synergies with our other facilities in Sodom, which provide it with, and receive from it, raw materials (the “Synergies”). The net value of the Synergies has declined due to the increase in the tax burden on production from natural resources in Israel that have already been implemented, and will2016. For further decline if the Sheshinski Committee’s final recommendations are enacted into law. As a result of the increased tax burden, as noted above, the Company stopped all the investments in the magnesium plant (that are not investments required by law). Nonetheless, ICL's management intends to re examine the decision of the Board of the Directors regarding the continued existence of the magnesium plant, subject to the manner in which the government, by means of the Tax on F-73 Table of Contents details see – Note 23 – Commitments, Concessions and Contingent Liabilities (cont'd) Natural Resources Law memorandum, implements the decision of the Social-Economic Cabinet providing that: “a special mechanism is to be determined that will ensure that Committee’s recommendations will not directly or indirectly impact the feasibility of the continued existence of the magnesium plant”. To the extent the actual implementation of the Cabinet's decision does not adversely impact, as a practical matter, the contribution and value of the synergy stemming from the activities of the magnesium plant, Company management will consider recommending to the Board of Directors to continue the existence of the magnesium plant even after January 2017. The sales of magnesium in 2014 amounted to about $148 million, the magnesium company incurred an operating loss in this year of about $9 million, the net property, plant and equipment of the magnesium company as at December 31, 2014 was about $36 million and the depreciation expenses in 2014 amounted to about $7 million. (6)20(5) above. (5) The subsidiary in Spain (IBP)(hereinafter – "ICL Iberia") has two potash production centers in Spain in the towns of Suria and Sallent. As a by-product of the potash production process, salt is produced and heaps up in piles, most of which, at the present time, is not usable. To operate in Spain, an environmental license and an urban license are required. Regarding the Sallent site, in October 2013, the regional court issued a judgment disqualifying the Company'sICL Iberia's environmental mining license, (contendingcontending that there were defects in provision of the license by the government), and inGovernment of Catalonia. On September 25, 2015, the Supreme Court affirmed this judgment. In February 2014, the regional court also disqualified the urban license, (contendingcontending that the license does not comply with the required conditions for piling up salt on the site). The court's determination is not final, and the Company and the government of Catalonia have filed an appealsite. In connection with the Spanish Supreme Court. The Company estimates that the legal process will last more than one year, such that there will be no significant effect on the Spanish mining operations since the Company expects to close the Vilafruns mine at Sallent prior to the end of 2016 as partvalidity of the efficiency plan. In addition, an agreement was made withurban license after issuance of the decision of the Supreme Court, the local planning board (CUCC), which permits of Catalonia determined new provisions, including limitation of the continuedheight of the salt pile and temporary extension of the salt piling activities up to the earlier of June 30, 2017 or when the salt pile reaches a height of about 538 meters. As at the current production leveldate of the report, the height of the salt pile is 509 meters. In November 2015, the regional court confirmed that the new provisions conform to the provisions of the court's decision. As at the date of the report, ICL Iberia's environmental mining license, from the Government of Catalonia, had not yet been renewed. Nonetheless, in November 2015, ICL Iberia and the Government of Catalonia signed a cooperation agreement memorandum of understanding that defines ICL Iberia’s activities in the country as preferential activities and the potash industry as a public strategic interest. The purpose of the agreement is to arrange all the mining activities, including environmental protection and support for the matter of regulation, transportation and infrastructures. Furthermore, the agreement relates to the matter of ICL Iberia’s obligation to removal the salt pile on the Sallent site, including completion of the restoration plan of the site, all of which is to be completed no later than 2070 (the removal of the salt pile should be completed by 2065). This agreement foresees transitory measures constituting an interim solution to allow ICL Iberia to continue its activities at the Sallent site. ICL Iberia’s estimation, when negotiations on the detailed agreement are concluded, the agreement should advance the procurement of the environmental permit to allow pile up tosalt after June 30, 2017. This agreement requires approval by2017, which is currently invalid, and will settle ICL Iberia’s obligations to subsequently restore the Spanish Regional Court.  If the Spanish Supreme Court does not accept the appeal described above, the Company will be required to enter into an administrative proceeding in order to obtain an environmental license that complies with the new environmental protection regulations in Spain (autoritzacio substantive). site. Regarding the Suria site, in April 2014, after a favorable survey was received from the Environmental Protection Authority in Catalonia, the CompanyICL Iberia received an environmental license that complies with the new environmental protection regulations in Spain (autoritzacio substantive)(autoritzacio substantive), this being after the Company firstICL Iberia received the urbanmunicipal license. Prior to receipt F-77 Table of Contents Note 23 - Commitments, Concessions and Contingent Liabilities (cont’d) C. Contingent liabilities (cont’d) In January 2016, following complaints from competitors in the said licenses,salt market in Spain, the European Commission announced that it will investigate whether ICL Iberia received illegal aid from the Spanish authorities regarding two legal proceedings were held againstissues: (1) whether the guarantee amounts related to environmental protection (the guarantees that are supposed to cover the potential cost of rehabilitation of the land), which were originally set at $2 million, are lower than the amount required by the EU and national and regional environmental rules; and (2) whether ICL Iberia should bear the cost of the environmental protection measures, in the amount of about $9 million, which was financed by the Spanish authorities. The Company disagrees with the government of Catalonia, relating to issuance ofabove claims and given the urban and environmental licenses for the efficiency plan at Iberpotash. As partpreliminary stage of these proceedings, it was allegedthe legal measures that need to be taken are still being examined. However, in the Company’s estimation, based on its preliminary discussions with the Spanish authorities, the chances that the project work requires a significant change inabove claims will be rejected are higher than the environmental license andchances that the government must require the Company to conduct an environmental impact survey. Accordingly, the plaintiffs are requesting termination of the project work. they will be accepted. (6)In the Company's estimation, upon renewal of the environmental license, continuation of the legal proceeding will become superfluous. (7)      On August 29, 2013, a request for certification of a claim as a class action against the Company, Israel Corporation Ltd., Potashcorp Cooperative Agricultural Society Ltd., the members of the Company’s Board of Directors and its CEO, was filed in the District Court in Tel-Aviv, on the grounds of a misleading detail, deception and non-disclosure of a material detail in the Company’s reports, this allegedly being in violation of the provisions of the Securities Law and the general laws in Israel. The aggregate amount of the damage claimed is $0.79$0.70 billion (NIS 2.75 billion) or $0.95$0.84 billion (NIS 3.28 billion) (the amount of the claim depends on the share price used for calculating the alleged damages). In February 2014, a response to the request was submitted. In November 2014, a hearing on the motion to certify a class action was held. The plaintiffs submitted their summation andDuring the defendants will submit their summations inyear 2015, proceedings took place to advance a compromise agreement that were later discontinued by the case inparties. As at the next several months.  date of the report, a court decision on the request had not yet been rendered. In the Company’sCompany's estimation, based on the position of its legal advisors, the chances that the allegations against the Company will be dismissed exceed the chances that the allegations will be accepted. Accordingly, no provision was included in the financial statements. (8)      On September 21, (7) In 2014, weICL received a petition submitted to the District Court in Israel in respect of a purported class action against ourits subsidiary, Dead Sea Works. According to the petition, the plaintiff is a farmer who has bought and currently buys potash in Israel, which is produced by Dead Sea Works, for fertilization purposes and seeks to represent a group of class members that would include all purchasers of potash or products F-74 Table of Contents Note 23 – Commitments, Concessions and Contingent Liabilities (cont'd) produced with containing potash in Israel fromsince 2006, when potash prices were deregulated, through the date of the action. The plaintiff alleges that Dead Sea Works charged an excessive price for potash, contrary to the Israeli anti trustbusiness practices laws, and seeks damages in the amount of approximately NIS 96.4 million (approximately $24.8$24.7 million). In February 2015, DSW filed its response2016, the parties submitted a request to the requestCourt for approval of a compromise arrangement, the results of which are not expected to certify the claim as a class action. The total sales of potash in Israel in 2014be significant with respect to the customers, whichfinancial statements. As at the date of the report, the proceedings are continuing with respect to approval of the best of our understanding iscompromise agreement by the group described above, constitutes less than 1% of our total sales in that year.Court. In the Company’s estimation, of the Company, based on its legal advisors, the chances that approval of the claimcompromise arrangement will be accepted are less than 50% and, accordingly, noconfirmed exceed the chances it will be rejected. The Company has a sufficient provision was recorded in the financial statements. (9) (8) Haifa Chemicals acquires potash from DSWDead Sea Works Ltd. (hereinafter – "DSW") as part of its manufacturing inputs. Pursuant to the agreement between DSW and Haifa Chemicals, the price for which Haifa Chemicals was charged was based on the average price, FOB, of DSW for its two largest customers in the preceding quarter. In 2008, an agreement between Haifa Chemicals and Dead Sea WorksDSW was cancelled and the parties did not succeed in reaching a new agreement. Haifa Chemicals believedcontends that the price Dead Sea WorksDSW demanded in exchange for potash was unfair based on the contentionand that it was unable to operate at that price.this price level. In 2009, Haifa Chemicals notified its employees of a shutdown of the production lines at its factory until purchase of potash could be resumed at prices it deemed acceptable. At the same time, Haifa Chemicals contacted the Israeli Minister of Finance and the Israeli Minister of Industry, Commerce and Labor and requested that they use their authority to subject potash prices to supervision. The parties agreed in principle to appoint an arbitrator to set the price of potash. The arbitration began in May 2009, arbitration proceedings between the parties commenced with respect to the potash price and in March 2014, the arbitration decision was issued, which included a price formula on the basis of which the selling price of potash between Dead Sea Works and Haifa Chemicals will be determined for a period of ten years from the date of the decision and with respect to the period from the commencement of arbitration. The price formula provides that the selling price during a quarter will be based on a price equal to the lower of the weighted average of the lowest three FOB selling prices of potash sold by Dead Sea Works in the prior quarter and the average of the two lowest FOB selling prices of potash sold by Dead Sea Works to large buyers (foreign buyers who purchase 150,000 or more tons per year) in the prior quarter, less certain expenses and a discount of 2% (hereinafter – "the Base Price"). TheBased on the price formula, the possibility exists that under certain circumstances, the basean adjusted price will be determined that is based on the production cost plus a certain margin. Thismargin.This adjusted price will apply to a quantity of 270 thousand tons of potash, while the base price wouldBase Price will continue to apply to the remainder of the potash.potash but without the 2% discount. The arbitrator appointed an examiner whose job it is to ascertain whether Haifa Chemicals and DSW are in compliance with a number of tests, and in accordance therewith, to determine whether the price will be based on the Base Price or on DSW’s production costs plus a certain margin. Haifa Chemicals gave notice that it is interested in an examination for the years 2011, 2012 and 2013, where the meaning of this is that in respect of 2009 and 2010, the price will be the Base Price, in accordance with that stated above. On May 31, 2015, the examiner published the results of his examination in respect of 2011–2013, regarding which Haifa Chemicals met the threshold test only for the years 2012 2013 and, accordingly, the examination process will continue regarding DSW's costs in respect of these years. Regarding 2011, Haifa Chemicals did not pass the examination of the threshold test and, therefore, for this year the price will be the Base Price. In our2015, Haifa Chemicals gave notice that it is interested in an examination for 2014 and in February 2016, the examiner's decision was issued whereby Haifa Chemicals passed the threshold test with respect to 2014 and, accordingly, the process of examining the costs of DSW for this year will continue. Regarding the decision of the examiner with respect to 2012-2013, a legal proceeding has been submitted by DSW, alleging that the decision of the examiner deviates from the provisions of the arbitration decision, if the legal process is postponed, the price in all or any of those years will be based on the production costs plus a certainmargin relating to a quantity of 270,000 tons per year. In the Company’s estimation, based on estimatesits contentions included as part of the legal proceeding and the chances thereof to be accepted and given the production costs in accordance with the arbitration decision and taking into account other claims Haifa Chemicals has raised against us,DSW, the Company will not receivepay and will not payreceive significant amounts in respect of the priorpast period (1999-2014)(2009–2014). Accordingly, no provisions or income receivable have been includedwere recorded in the financial statements. F-78 Table of Contents Note 23 - Commitments, Concessions and Contingent Liabilities (cont’d) C. Contingent liabilities (cont’d) (9) In August 2015, as further updated in September 2015, the Israeli Public Utilities Authority – Electricity (hereinafter – "the Electricity Authority") resolved to impose certain electricity system management services charges also on private electricity producers as opposed to only on private consumers, this being retroactively from June 2013. On September 13 2015, ICL, DSW and Rotem filed a petition against the Electricity Authority's resolution claiming that it suffers from fundamental flaws. During December 2015, DSW and Rotem received charges from the Electric Company relating to the said matter whereby the companies are required to pay about $35 million for the period from June 2013 up to 2015. There is a significant disagreement between DSW, Rotem and the Electric Company with respect to some of the elements in the demand payments provided (about $12.5 million). DSW expressed the arguments before the Electricity Authority which responded that it is reviewing the arguments and that at this time DSW should pay the amount that is not in contention. As at the reporting date, the Company recorded a provision for the full amount, while the amount of $20 million relating to prior periods was recorded in the "other expenses" category while the amount of about $15 million relating to 2015 was recorded in the "cost of sales" category. (10) On June 16, 2015, a petition was filed in the Israeli Court for Water Matters, wherein the Government Water Authority is requested to act to regulate and supervise the use of water sources by DSW, this being, among other things, by means of determining pumping limits as part of the production licenses and imposition of production levies. The Company estimates that the chances that the petition will be accepted are lower than chances its will be rejected. (11) In June 2015, a fire broke out in one of the facilities of the subsidiary, Rotem Amfert, in Israel. The Company has appropriate insurance coverage and, therefore, during 2015, based on its estimates, the Company recognized a net insurance receivable, in the total amount of about $19 million (net of the Company's $10 million deductible, and the disposal of the depreciated cost of the property, plant and equipment appearing in the Company’s books, in the amount of about $9 million). (12) In addition to the contingencies referred to in the above sections, various claims are pending against the Group (including lawsuits). In respect of claims for an amount of up to about $22$21 million as of December 31, 2014,2015, the Group has recorded a provision as at that date in the amount of about $2$5 million. In addition, part of the above claims is covered by insurance. In the estimation of Company Management, based on opinions of its legal advisors, the provision recognized is sufficient to cover the exposure in respect of the above mentionedabove-mentioned claims. Note 24 – Equity A. Composition:     As at December 31, 2014     As at December 31, 2013       Authorized     Issued and paid     Authorized     Issued and paid   Number of Ordinary shares of NIS 1 par value     1,484,999,999       1,295,943,056       1,484,999,999       1,295,015,589   Number of  Special State share of NIS 1 par value     1       1       1       1   Composition     As at December 31, 2015   As at December 31, 2014       Authorized        Issued and paid        Authorized        Issued and paid    Number of Ordinary shares of NIS 1 par value (in millions)     1,485       1,300       1,485       1,296   Number of  Special State share of NIS 1 par value     1       1       1       1   The reconciliation of the number of shares outstanding at the beginning and at the end of the period areis as follows: Period   Number of Outstanding Shares (in millions) As at January 1, 2013 2014     1,294,703,0311,295   Options exercised during the year     312,5581   As at December 31, 2013 1,295,015,589 Private issuance of restricted shares 927,467 As at December 31, 2014     1,295,943,0561,296 Issuance of  shares 4 As at December 31, 2015 1,300   F-79 F-75 Table of Contents Note 24 – Equity (cont'd) (cont’d) A. Composition (cont’d) In March 2015, the Company signed an agreement to acquire the shares of Allana Potash (hereinafter – "Allana"), a company that focuses on acquisition and development of potash assets, the shares of which were traded on the Toronto Stock Exchange. On June 22, 2015, the Company acquired the balance of Allana’s shares (83.78%) for a total consideration of approximately $112 million, of which approximately $96 million was in cash, and approximately $16 million was by means of issuance of 2.2 million ordinary shares of the Company. For additional information – see Note 10 “Investments in Subsidiaries and Investee Companies”. As of December 31, 2014,2015, the number of shares reserved for issuance under the Company’s option plans was 16,353,473. The shares of ICL are listed for trade on the Tel-Aviv Stock Exchange and the New York Stock Exchange. The closing price per share on the Tel-Aviv Stock Exchange on December 31, 2014 was NIS 28.28 and on the New York Stock Exchange was $7.25. Plans were 23.7 million. B. Rights conferred by the shares The ordinary shares confer upon their holders voting rights (including appointment of directors by a simple majority at shareholders’ meetings), the right to participate in shareholders’ meetings, the right to receive profits and the right to a share in excess assets upon liquidation of ICL. The Special State of Israel Share, held by the State of Israel in order to safeguard matters of vital interest of the State of Israel , confers upon it special rights to make decisions among other things on the following matters: ·– Sale or transfer of Company assets, which are “vital” to the State of Israel not in the ordinary course of business. ·– Voluntary liquidation, change or reorganization of the organizational structure of ICL or merger (excluding mergers of entities controlled by ICL that would not impair the rights or power of the Government, as holder of the Special State Share). ·– Any acquisition or holding of 14% or more of the issued share capital of ICL. ·– The acquisition or holding of 25% or more of the issued share capital of ICL (including augmentation of an existing holding up to 25%), even if there was previously an understanding regarding a holding of less than 25%. Any percentage of holding of the Company’s shares, which confers upon its holder the right, ability or actual possibility to appoint, directly or indirectly, such number of the Company’s directors equal to half or more of the Company’s directors actually appointed. – Any percentage of holding of the Company’s shares, which confers upon its holder the right, ability or actual possibility to appoint, directly or indirectly, such number of the Company’s directors equal to half or more of the Company’s directors actually appointed. C. Share-based payments to employees 1. On January 7, 2010, ICL’s Board of Directors approved an issuance of 10,930,500 non marketablenon-marketable options for no consideration to 318 ICL executives and senior employees in Israel and overseas. The issuance included a materialsignificant private placement of 1,100,000 options to former CEO of the CompanyChief Executive Officer and 800,000 options to the Company’s Chairman of the Board. On February 15, 2010, an Extraordinary General Meetingextraordinary general meeting of ICL’s shareholders approved the issuance to the Chairman of the Board. The options from the 2010 plan options vested in three equal portions,annual installments as follows: one thirdone-third at the end of 12 months from the date of the Board’s approval; one thirdone-third at the end of 24 months from the date of the Board’s approval; and one thirdone-third at the end of 36 months from the date of the Board’s approval. As at December 31, 2014, all the options had expired. 2. On November 26, 2012, the Company’s Board of Directors approved an issuanceissue of up to 12,000,000 non-marketable options for no consideration to 416 ICL officers and senior employees in Israel and overseas. On December 27, 2012, 11,999,400 options were issued. The issuance included a material private placement of 1,190,000 options to the Company’s CEO.Chief Executive Officer. This plan includes a “cap” for the value of the shares where if as at the exercise date the closing price of a Companyan ordinary share is higher than twice the exercise price (“the Share(the “Share Value Cap”), the number of the exercised shares will be reduced so that the product of the exercised shares actually issued to thean offeree multiplied by the share closing price will equal to the product of the number of exercised options multiplied by the Share Value Cap. The options may be exercised in three equal portionstranches on November 26, 2013, 2014, and 2015. The expiration date of the options for the first and second portionstranches is at the end of 48 months from the approval of the Boardissuance date, and the expiration date of the options for the third portiontranches is at the end of 60 months from the issuance date. F-80 Table of Contents Note 24 – Equity (cont’d) C. Share-based payments to employees (cont’d) 3. Following the approval of ourthe Company’s Board of Directors on August 6, 2014, we issued, under the 2014 Equity Compensation Plan, ICL issued, for no consideration, 4,360,073 non marketable options, for no consideration, exercisable for up to 4,360,073 of our F-76 Table of Contents Note 24 – Equity (cont'd) the Company’s ordinary shares, and 1,007,651 restricted shares, to approximately 450 of ourthe Company’s officers and senior employees ("the 2014 Plan").employees. The issuance includes a significant private placement of 367,294 options and 85,907 restricted shares to ourthe Company’s Chief Executive Officer, which was approved by the General Meeting of ourthe Company’s shareholders. This grant format of the options plan includes a “cap” for the value of a share where if, as at the exercise date, the closing price of an ordinary share is higher than twice the exercise price (the “Share Value Cap”), the number of the exercised shares will be adjusted so that the product of the exercised shares actually issued to the offeree multiplied by the share closing price will equal the product of the number of exercised options multiplied by the Share Value Cap. The options and restricted shares will vest in three equal tranches: one thirdone-third at the end of 24 months from December 1, 2014, one thirdone-third at the end of 36 months from December 1, 2014 and one thirdone-third at the end of 48 months from December 1, 2014. The expiration date of the options in the first tranche is at the end of 48 months from December 1, 2014, the expiration date of the options in the second tranche is at the end of 60 months from December 1, 2014 and the expiration date of the options in the third tranche is at the end of 72 months from December 1, 2014. 4. Subsequent to the date of the financial report, onOn January 25 and 26, 2015, ourthe Company’s Remuneration and Human Resources Committee and the Board of Directors, respectively, and on February 26, 2015 the General Meeting of ourthe Company’s shareholders, approved the issuance, under the 2014 Equity Compensation Plan, for no consideration, of 99,858 restricted shares to Company directors (excluding ourthe Company’s Chief Executive Officer, Mr. StephanStefan Borgas), for no consideration, under the 2014 remuneration and share plan.. The restricted shares will vest in three tranches, subject to the directors continuing to serve in their positions on the vesting date, as follows: (1) 50% will vestvested on August 28, 2015; (2) 25% will vest at the end of two years from the date of the General Meeting, on February 26, 2017, and (3) 25% at the end of three years from the date of the General Meeting, on February 26, 2018. 5. On May 10, 2015 and June 1, 2015, and on May 12, 2015 and June 5, 2015, the Company’s Compensation Committee and Board of Directors, respectively, under the Equity Compensation Plan 2014, approved the issuance of up to 7,931,500 non-marketable and non-transferrable options, for no consideration, exercisable for up to 7,931,500 of the Company’s ordinary shares, and up to 1,397,302 restricted shares, to approximately 550 of the Company’s officers and senior employees. The said allocation includes a private placement of 404,220 options and 68,270 restricted shares to the Chairman of the Company’s Board of Directors and of 530,356 options and 89,574 restricted shares to the Company’s Chief Executive Officer, which was approved by the General Meeting of the Company’s shareholders by special majority on June 29, 2015. The options and restricted shares will vest in three equal tranches: one-third at the end of 12 months after the grant date, one-third at the end of 24 months after the grant date and one third at the end of 36 months after the grant date. The expiration date of the options in the first and second tranches is at the end of 36 months after the grant date and the expiration date of the options in the third tranche is at the end of 48 months after the grant date. 6. On November 8 and 11, 2015, the Compensation Committee and the Board of Directors, respectively, and on December 23, 2015, the general shareholders meeting, under the 2014 Equity Compensation Plan, approved the issuance, for no consideration, of 120,920 restricted shares to the Company’s directors (excluding the President & CEO, Mr. Stefan Borgas and the Executive Chairman of the Board, Mr. Nir Gilad). The restricted shares will vest in three equal tranches, as follows: (i) 33.33% will vest at the end of 12 months from the date of the annual general shareholders meeting; (ii) 33.33% will vest at the end of 24 months from the date of the annual general shareholders meeting; and (iii) 33.33% will vest at the end of 36 months from the date of the annual general shareholders meeting. Vesting of the Restricted Shares would fully accelerate if the holder thereof ceases to serve as a director of the Company, unless he ceased to hold office due to those certain circumstances regarding early termination of office or imposition of enforcement measures, as set forth in section 231-232a and 233(2) of the Israeli Companies Law. Upon exercise, each option may be converted into one ordinary share of NIS 1 par value of the Company. The ordinary shares issued as a result of exercise of the options have the same rights as the Company’s ordinary shares, immediately upon their issuance. The options issued to the employees in Israel are covered by the provisions of Section 102 of the Israeli Income Tax Ordinance (New Version) and the regulations promulgated thereunder. The Company elected to perform the issuance through a trustee, under the Capital Gains Track. The exercise price is linked to the CPI that is known as of the date of payment, which is the exercise date. In a case of distribution of a dividend by the Company, the exercise price is reduced on the “ex dividend”“ex-dividend” date, by the amount of the dividend per share (gross), based on the amount thereof in NIS on the effective date. The options are not marketable and are not transferable. F-81 Table of Contents Note 24 – Equity (cont’d) C. Share-based payments to employees (cont’d) The fair value of the options granted under the 2010 equity compensation plan as stated above was estimated on the basis of the Black & Scholes model for the pricing of options. The fair value of the option issued inoptions granted under the said 2012 and 2014 planequity compensation plans was valued onestimated using the basis of a binomial model for valuingpricing options. The parameters used in applying the models are as follows:     2010 Plan     2012 Plan     2014 Plan   Share price (in $)     14.3       12.1       8.2   CPI-linked exercise price (in $)     14.3       12.1       8.4   Expected volatility:                         First tranche     54.98 %     36.70 %     29.40 % Second tranche     54.98 %     36.70 %     31.20 % Third tranche     48.45 %     44.20 %     40.80 % Expected life of options (in years):                         First tranche     2.5       4.0       4.3   Second tranche     2.5       4.0       5.3   Third tranche     3.5       5.0       6.3   Risk-free interest rate:                         First tranche     0.59 %     0.22 %     (0.17 )% Second tranche     0.59 %     0.22 %     0.05 % Third tranche     1.29 %     0.54 %     0.24 % Fair value (in $ millions)     54.3       37.7       8.4   Weighted average grant date fair value per option (in $)     5.0       3.1       1.9   F-77 Table of Contents Note 24 – Equity (cont'd)             2014 Plan     2010 Plan   2012 Plan   Granted 2014   Granted 2015 Share price (in $)     14.3       12.1       8.2       7.0   CPI-linked exercise price (in $)     14.3       12.1       8.4       7.2   Expected volatility:                                 First tranche     54.98 %     36.70 %     29.40 %     25.40 % Second tranche     54.98 %     36.70 %     31.20 %     25.40 % Third tranche     48.45 %     44.20 %     40.80 %     28.80 % Expected life of options (in years):                                 First tranche     2.5       4.0       4.3       3.0   Second tranche     2.5       4.0       5.3       3.0   Third tranche     3.5       5.0       6.3       4.0   Risk-free interest rate:                                 First tranche     0.59 %     0.22 %     (0.17 )%     (1.00 )% Second tranche     0.59 %     0.22 %     0.05 %     (1.00 )% Third tranche     1.29 %     0.54 %     0.24 %     (0.88 )% Fair value (in $ millions)     54.3       37.7       8.4       9.0   Weighted average grant date fair value per option (in $)     5.0       3.1       1.9       1.2   The expected volatility was determined on the basis of the historical volatility in the Company’s share prices. For every tranche shown in the above table, the vesting period is different.Sincedifferent. Since the expected life for each tranche is different, the Company used different expected volatility and risk-free interest rates for each tranche. The expected life of the options was determined on the basis of Management’s estimate of the period the employees will hold the options, taking into consideration their position with the Company and the Company’s past experience regarding the turnover of employees. The risk freerisk-free interest rate was determined on the basis of the yield to maturity of shekel denominatedshekel-denominated Israeli Government debentures, with a remaining life equal to the anticipated life of the option. The total fair value of the restricted shares grantedallotted pursuant to the approval of the Board of Directors on August 6, 2014, is approximately $8.4 million as at the grant date. The value of the restricted shares iswas determined according to the closing price on the TASE on the most recent trading day preceding the date of the approval of the Board of Directors, (withwith the exception of the restricted shares issued to our CEO, the value of which was determined according to the closing price on the TASE on the most recent trading date preceding the date of the approval of the general meeting, which is the grant date). General Meeting. The total fair value on the grant date of the said restricted shares that were grantedallotted to directors (excluding the Company CEO, Mr. Stefan Borgas) pursuant to the approval of the general shareholders meetingBoard of Directors on FebruaryJanuary 26, 2015, is approximately $0.7 million. The value of the restricted shares offered to offerees iswas determined according to the closing price on the TASE on the most recent trading day preceding the date of the approval of the General MeetingMeeting. The total fair value on the grant date of the shareholders,restricted shares that were allotted pursuant to the approval of the Board of Directors on May 12, 2015, is approximately $9.7 million, of which isapproximately $0.5 million relates to the Chairman of the Company’s Board of Directors, and approximately $0.6 million relates to the Company’s CEO. The value of the restricted shares offered to offerees was determined according to the closing price on the TASE on the most recent trading day preceding the date of the approval of the Board of Directors, except for the Company’s CEO, Mr. Stefan Borgas, and the Chairman of the Board of Directors, Mr. Nir Gilad, regarding which the value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the date of the approval of the General Meeting. F-82 Table of Contents Note 24 – Equity (cont’d) C. Share-based payments to employees (cont’d) The total fair value on the grant date. date of the restricted shares that were allotted to Directors (except for the Company’s CEO, Mr. Stefan Borgas, and the Chairman of the Board of Directors, Mr. Nir Gilad) pursuant to the approval of the Board of Directors on November 11, 2015, is approximately $0.5 million. The value of the restricted shares offered to offerees was determined according to the closing price on the TASE on the most recent trading day preceding the date of the approval of the General Meeting. The cost of the benefit embedded in the options and shares from the 2010,Equity Compensation Plans (2010, 2012 and 2014 plans2014) is recognized in the statement of income over the vesting period of each portion. Accordingly, in 2015, 2014 2013 and 2012,2013, the Company recorded expenses of about $16 million, $12 million $21.8and $22 million, and about $8.7 million, respectively. The movement in the options during 20142015 and 20132014 are as follows:     Number of options 2010 Plan     Number of options 2012 Plan     Number of options 2014 Plan   Balance as at January 1, 2013     10,844,167       11,999,400       —                             Movement in 2013:                         Exercised during the year     (6,633,574 )     —       —   Forfeited during the year     (463,338 )     (4,000 )     —   Total options outstanding as at December 31, 2013     3,747,255       11,995,400       —                             Movement in 2014:                         Allocated during the year     —       —       4,360,073   Expired during the period     (3,747,255 )     —       —   Forfeited during the year     —       (2,000 )     —   Total options outstanding as at December 31, 2014     —       11,993,400       4,360,073       Number of options (in millions)   Number of options (in millions)   Number of options (in millions)     2010 Plan   2012 Plan   2014 Plan Balance as at January 1, 2014     4       12       –   Movement in 2014:                         Allocated during the year     –       –       4   Expired during the period     (4 )     –       –   Total options outstanding as at December 31, 2014     –       12       4   Movement in 2015:                         Allocated during the year     –       –       8   Forfeited during the year     –       (1 )     – Total options outstanding as at December 31, 2015     –       11       12   The exercise price for options outstanding at the beginning and end of each period are as follows:     December 31 2014     December 31 2013     December 31 2012   2010 Plan US$     N/A       13.16       12.57   2012 Plan US$     10.85       12.85       12.26   2014 Plan US$     7.26       N/A       N/A   F-78 Table of Contents Note 24 – Equity (cont'd)     December 31, 2015   December 31, 2014   December 31, 2013 2010 Plan US$     N/A       N/A       13.16   2012 Plan US$     10.44       10.85       12.85   2014 Plan - Granted 2014 US$     6.90       7.26       N/A   2014 Plan - Granted 2015 US$     6.98       N/A       N/A   The number of options vested at the end of each period and the weighted average exercise price for these options are as follows:     December 31 2014     December 31 2013     December 31 2012   Number of options exercisable     7,995,600       7,745,722       7,229,445   Weighted average exercise price NIS     42.18       45.11       46.92   Weighted average exercise price US$     10.85       13.00       12.57       December 31, 2015   December 31, 2014   December 31, 2013 Number of options exercisable (in millions)     11       8       8   Weighted average exercise price NIS     40.74       42.18       45.11   Weighted average exercise price US$     10.44       10.85       13.00   The range of exercise prices for the options outstanding at the end of each period are as follows:     December 31, 2014 2015     December 31, 2013 2014     December 31, 2012 2013   Range of exercise price in NIS 26.92-40.74     28.24-42.18       44.59-45.66   45.77-46.92 Range of exercise price in US$ 6.9-10.44     7.26-10.85       12.85-13.16   12.26-12.57 The average remaining contractual life for the outstanding vested options at the end of each period are as follows: F-83 Table of Contents     December 31 2014     December 31 2013     December 31 2012   Average remaining contractual life for the outstanding vested options at the end of each period     1.91       1.51       —   Note 24 – Equity (cont’d) C. Share-based payments to employees (cont’d)       December 31, 2015       December 31, 2014       December 31, 2013   Average remaining contractual life for the outstanding vested options at the end of each period     1.24       1.91       1.51   D. Dividends   Date of decision of the Board of Directors to distribute the dividend     Actual date of distribution of the dividend   Gross amount of the dividend distributed (in millions of $)     Net amount of the distribution (net of the subsidiary’s share) (in millions of $)     Amount of the dividend per share   March 26, 2012   April 30, 2012     260       259.5     $0.20   May 22, 2012   June 26, 2012     200       199.7     $0.16   August 14, 2012   September 12, 2012     285       284.5     $0.22   November 20, 2012   December 19, 2012     276       275.5     $0.22   March 12, 2013   April 25, 2013     147       146.7     $0.12   May 12, 2013   June 20, 2013     213       212.6     $0.17   August 6, 2013   September 16, 2013     221       220.6     $0.17   November 12, 2013   December 18, 2013     54.5       54.4     $0.04   February 11, 2014   March 26, 2014     500       499.1     $0.39   March 18, 2014   May 27, 2014     83       82.9     $0.07   May 14, 2014   June 25, 2014     91.5       91.3     $0.07   August 6, 2014   September 17, 2014     47       47     $0.04   November 11, 2014   December 17, 2014     125       125     $0.10   distributed to the Company’s Shareholders Date of decision of the Board of Directors to distribute the dividend   Actual date of distribution of the dividend   Gross amount of the dividend distributed (in millions of $)   Net amount of the distribution (net of the subsidiary’s share) (in millions of $)   Amount of the dividend per share March 12, 2013     April 25, 2013       147       146 .7   $ 0.12   May 12, 2013     June 20, 2013       213       212 .6   $ 0.17   August 6, 2013     September 16, 2013       221       220 .6   $ 0.17   November 12, 2013     December 18, 2013       54 .5     54 .4   $ 0.04   February 11, 2014     March 26, 2014       500       499 .1   $ 0.39   March 18, 2014     May 27, 2014       83       82 .9     $ 0.07   May 14, 2014     June 25, 2014       91 .5     91 .3    $ 0.07   August 6, 2014     September 17, 2014       47       47     $ 0.04   November 11, 2014     December 17, 2014       125       125     $ 0.10   March 19, 2015     April 29, 2015       59 .5     59 .5    $ 0.05   May 12, 2015     June 23, 2015       151       151     $ 0.12   August 11, 2015     September 10, 2015       52 .5     52 .5   $ 0.04   November 11, 2015     December 16, 2015       84       84     $ 0.07   Subsequent to the balance sheet date, on March 19, 2015,15, 2016, the Company’s Board of Directors decided to distribute a dividend in the amount of $59.5$67 million, about $0.05 per share..share. The dividend will be distributed on 2918 April, 2015. 2016. E. Cumulative translation adjustment The translation reserve includes all translation differences arising from translation of financial statements of foreign operations. F. Capital reserves The capital reserves include expenses for share based compensation to employees against a corresponding increase in equity (see C. above). F-79 Table of Contents Note 24 – Equity (cont'd) G.  Reserve for cash flows hedge As at December 31, 2014, the capital reserve for hedging cash flows includes the effective part of the change in the fair value of instruments used to hedge the exposure to changes in the cash flows of construction of the new cogeneration power plant project in Sodom, Israel, in connection with changes in the rates of exchange of the dollar against the euro. H. Treasury shares 1) On August 4, 2014, the Company received 2,216,1312.2 million ordinary shares of NIS 1 par value of the Company, for no consideration, which were held by a wholly controlled subsidiary of the Company. 2) On September 3, 2008, the Company’s Board of Directors decided to authorize the Company, to acquire from time to time, up to June 30, 2009, ordinary shares of the Company up to 5% of the Company’s issued and paid up share capital – out of the Company’s distributable earnings in accordance with the Israeli Companies Law. In total, 22,373,50022.4 million shares were acquired by the Company under this purchase plan, constituting approximately 1.74% of the Company’s issued and paid up share capital, for a total consideration of approximately $258 million. 3) In determining the amount of retained earnings available for distribution as a dividend pursuant to the Israeli Companies Law, a deduction must be made from the balance of the retained earnings the amount of self acquisitionsself-acquisitions (that are presented separately in the “treasury shares” category in the equity section). Note 25 –- Pledges and Restrictions Placed in Respect of Liabilities The Group has undertaken various obligations in respect of loans and credit received from non Israelinon-Israeli banks, including a negative pledge whereby the Group, committed, among other things, in favor of the lenders, to limit guarantees and indemnities to third parties (other than the guarantees in respect to subsidiaries) up to an agreed amount for $550 million. The Group has also undertaken to grant loans only to subsidiaries and to associated companies in which it holds at least 25% of the voting rights – not more than stipulated by the agreement with the banks. ICL has further committed not to grant any credit, other than in the ordinary course of business, and not to register any charges, including rights of lien, except those defined in the agreement as “liens permitted to be registered” on its existing and future assets and income. For details with regards to the covenants in respect of these loans, see Note 17. F-84 Table of Contents Note 26 –- Details of Income Statement Items     For the year ended December 31     2015   2014   2013     $ millions Sales                         Sales     5,405       6,111       6,272                             Cost of sales (1)                         Materials and spare parts     1,576       1,510       1,486   Power and energy     305       348       381   Labor and related expenses     694       823       833   Subcontracted work     306       330       325   Depreciation and amortization     317       304       295   Other production expenses     275       324       333   Logistics and port expenses     63       74       68         3,536       3,713       3,721   Decrease in inventories of finished products and work in progress     66       202       141         3,602       3,915       3,862   (1) Net of amounts capitalized to property, plant and equipment under construction     6       12       17       For the year ended December 31     2015   2014   2013     $ millions Selling, transport and marketing expenses                         Transport and insurance     417       525       543   Salaries and related expenses     113       160       151   Lease and Office expenses     26       25       24   Depreciation and amortization     19       20       18   Agents’ commissions     16       27       27   Other     62       82       87         653       839       850   General and administrative expenses                         Salaries and related expenses     150       146       157   Professional Services     103       73       52   Office expenses     24       18       18   Depreciation and amortization     16       17       17   Travel and Transportation     15       12       10   Doubtful debts     4       -       -   Other     38       40       28         350       306       282   Research and development expenses, net                         Salaries and related expenses     54       62       61   Other     20       25       22         74       87       83   F-85     For the year ended December 31       2014     2013     2012       US$ thousands   Sales                   Sales     6,110,710       6,271,542       6,471,433                             Cost of sales (1)                         Materials and spare parts     1,509,434       1,485,149       1,520,414   Power and energy     348,282       380,807       404,373   Labor and related expenses     823,066       833,256       766,501   Subcontracted work     330,204       325,421       313,593   Depreciation and amortization     304,141       294,759       281,566   Other production expenses     323,676       332,754       330,962   Logistics and port expenses     74,099       68,224       65,833         3,712,902       3,720,370       3,683,242   Decrease (increase) in inventories of finished products and work in progress     201,671       141,202       76,993         3,914,573       3,861,572       3,760,235   (1) Net of amounts capitalized to property, plant and equipment under construction     12,035       16,535       20,970   F-80 Table of Contents Note 26 –- Details of Income Statement Items (cont'd)     For the year ended December 31       2014     2013     2012       US$ thousands   Research and development expenses, net                   Amount of expenses     86,943       82,910       74,303   Less – grants and participations     —       40       204         86,943       82,870       74,099   Selling, transport and marketing expenses                         Transport and insurance     528,276       546,517       510,964   Salaries and related expenses     159,959       151,278       143,944   Agents’ commissions     26,945       27,193       26,174   Other     124,027       125,337       116,209         839,207       850,325       797,291   General and administrative expenses                         Salaries and related expenses     154,991       162,894       141,105   Buildings maintenance     17,416       16,787       14,579   Legal advice     11,443       12,748       10,280   Other*     121,676       89,062       82,818         305,526       281,491       248,782                             * Including movement in provision for doubtful debts     (484 )     112       1,410                             Financing income and expenses                         Financing income recorded in the income statements:                         Interest income from bank deposits     1,974       8,607       12,197   Financing income recorded in relation to employee benefits     3,366       —       —   Net change in fair value of derivative financial instruments     —       122,941       8,504   Net gain from changes in exchange rates     116,955       —       —         122,295       131,548       20,701                             Financing expenses recorded in the income statements:                         Interest expenses to banks and others     102,409       52,116       42,642   Financing expenses in relation to employee benefits     —       43,816       31,604   Bank commissions     2,333       2,654       2,755   Net change in fair value of derivative financial instruments     189,174       —       —   Net loss from changes in exchange rates     —       63,439       8,089                             Financing expenses     293,916       162,025       85,090   Net of borrowing costs capitalized     15,673       3,622       3,495         278,243       158,403       81,595   Net financing expenses recorded in the income statements     155,948       26,855       60,894   F-81 Table of Contents Note 26 – Details of Income Statement Items (cont'd)     For the year ended December 31       2014     2013     2012       US$ thousands   Other income and expenses                   Gain on increase in rate of holdings in investee company     35,740       1,827       1,945   Capital gains from sale of fixed assets, net     5,746       2,687       —   VAT refund and deductions     —       —       15,267   Past service cost     5,618       8,611       —   Other     5,441       3,151       6,479   Other income recorded in the income statements     52,545       16,276       23,691                             Arbitrtaion expenses in respect of prior years' royalties (1)     149,326       —       —   Expenses in respect of early retirement (2)     3,677       60,199       55,332   Other expenses in connection with update of the Company's strategy and various internal processes     10,016       14,103       —   Provision for treatment of waste     7,169       25,000       —   Past service cost     —       —       2,009   Impairment of assets in companies in the U.S. and Europe     71,234       10,658       —   Other     17,914       234       3,744   Other expenses recorded in the income statements     259,336       110,194       61,085   (cont’d)     For the year ended December 31     2015   2014   2013     $ millions Other income and expenses                         Gain on achievement over control of an associated company     7       36       2   Capital gains from sale of fixed assets, net     –       6       3   Capital gain from divestitures of subsidiaries     215       –       –   Past service cost     –       6       9   Other     28       5       2   Other income recorded in the income statements     250       53       16   Arbitrtaion expenses in respect of prior years’ royalties (1)     10       149       –   Expenses in respect of early retirement and dismissal of employees (2)     48       4       60   Expenses in relation to the Company’s strategy update and internal processes     –       10       14   Provision for treatment of waste     20       7       25   Retroactive electricity charges     20       –       –   Impairment of assets     90       71       11   Compensation to  contractors due to the strike     8       –       –   Provision for legal claims     8       –       –   Other     7       18       –   Other expenses recorded in the income statements     211       259       110   ________________________ (1) See Note 23. (2)( 2) See Note 21.     For the year ended December 31     2015   2014   2013     $ millions Financing income and expenses                         Financing income recorded in the income statements:                         Interest income from bank deposits     1       2       9   Financing income recorded in relation to employee benefits     –       3       –   Net change in fair value of derivative financial instruments     –       –       123   Net gain from changes in exchange rates     51       117       –         52       122       132   Financing expenses recorded in the income statements:                         Interest expenses to banks and others     101       102       52   Financing expenses in relation to employee benefits     18       –       44   Bank commissions     5       2       3   Net change in fair value of derivative financial instruments     57       191       –   Net loss from changes in exchange rates     –       –       63                             Financing expenses     181       295       162   Net of borrowing costs capitalized     21       16       4         160       279       158   Net financing expenses recorded in the  income statements     108       157       26   F-86 Table of Contents Note 27 –- Financial Instruments and Risk Management A. General The Group has extensive international operations wherein it is exposed to credit, liquidity and market risks (including currency, interest and other price risks). In order to reduce the exposure to these risks, the Group holds financial derivative instruments, (including forward transactions, SWAP transactions, and options) for purposes of economic (non accounting)(non-accounting) hedging of foreign currency risks, commodity price risks, and interest risks. Furthermore, the Group holds derivative financial instruments to hedge the exposure and changes in the cash flows. The transactions in derivatives are executed with large Israeli and non-Israeli financial institutions, and therefore Group management believes the credit risk in respect thereof is low. This Note presents information about the Group’s exposure to each of the above risks, and the Group’s objectives, policies and processes for measuring and managing risk. The Group companies monitor on a regular basis the extent of the exposures and the hedges in respect thereof. The hedging policies of all the types of exposures are discussed by the Company’s Board of Directors in the framework of the annual budget. The Finance Committee of the Company’s Board of Directors receives a report every quarter in the framework of the discussion of the quarterly results, as a means of controlling implementation of the policies and for purposes of updating the policies, where necessary. The Group’s managmentmanagement implements the policies that are determined, while taking into consideration the actual and anticipated developments in the various markets. F-82 Table of Contents Note 27 – Financial Instruments and Risk Management (cont'd) B. Groups and measurement bases of financial assets and financial liabilities     As at December 31, 2014       Financial assets     Financial liabilities       Measured at fair value through the statement of income     Loans and receivables     Measured at fair value through the statement of income     Measured at amortized cost       US$ thousands                             Cash and cash equivalents     —       130,831       —       —   Short-term investments and deposits     45,210       71,282       —       —   Trade receivables     —       1,039,146       —       —   Derivatives and other receivables     14,595       47,682       —       —   Deposits and other long term receivables     —       5,064       —       —   Total financial assets     59,805       1,294,005       —       —   Short term credit from banks and others     —       —       —       (602,749 ) Trade payables     —       —       —       (584,909 ) Derivatives and other payables     —       —       (90,403 )     (519,865 ) Long-term loans from banks and others     —       —       —       (2,303,716 ) Long term derivatives instruments     —       —       (19,321 )     —   Total financial liabilities     —       —       (109,724 )     (4,011,239 ) Total financial instruments, net     59,805       1,294,005       (109,724 )     (4,011,239 )     As at December 31, 2015     Financial assets   Financial liabilities     Measured at fair value through the statement of income   Loans and receivables   Measured at fair value through the statement of income   Measured at amortized cost     $ millions Cash and cash equivalents     –       161       –       –   Short-term investments and deposits     26       61       –       –   Trade receivables     –       1,082       –       –   Derivatives and other receivables     9       81       –       –   Deposits and other long term receivables     –       4       –       –   Total financial assets     35       1,389       –       –   Short term credit from banks and others     –       –       –       (673 ) Trade payables     –       –       –       (716 ) Derivatives and other payables     –       –       (17 )     (387 ) Long-term loans from banks and others     –       –       –       (2,805 ) Long term derivatives instruments     –       –       (13 )     –   Total financial liabilities     –       –       (30 )     (4,581 ) Total financial instruments, net     35       1,389       (30 )     (4,581 ) C. Credit risk (1) General (a) a) Customer credit risks Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises mainly from the Group’s receivables from customers and from other receivables as well as from investments in securities. F-87 Table of Contents Note 27 - Financial Instruments and Risk Management (cont’d) C. Credit risk (cont’d) The Company sells to a wide range and large number of customers, including customers with material credit balances. On the other hand, the Company does not have a concentration of sales to individual customers. The Company has a regular policy of insuring the credit risk of all its customers by means of purchasing credit insurance with insurance companies, other than sales to government agencies and sales in small amounts. All other sales are executed only after receiving approval of coverage in the necessary amount from an insurance company or other collaterals of a similar level. The use of an insurance company as aforementioned ensures that the credit risk is managed professionally and objectively by an expert external party and transfers most of the credit risk to third parties. Nevertheless, the common deductible in credit insurances is 10% (even higher in a small number of cases) thus the Group is still exposed to part of the risk, out of the total insured amount. In addition, the Group has an additional deductible of a cumulative annual of approximately $5 million through a wholly ownedwholly-owned captive reinsurance Company. In addition the Group has a credit insurance provided by the government of Israel’s foreign trade risks insurance company. Most of the Group’s customers have been trading with the Group for many years and only rarely have credit losses been incurred by the Group. The financial statements include specific allowance for doubtful debts that appropriately reflect, in Management’s opinion, the credit loss in respect of accounts receivables is doubtful. F-83 Table of Contents Note 27 – Financial Instruments and Risk Management (cont'd) (b) b) Credit risks in respect of deposits The Group deposits its balance of liquid financial assets in bank deposits and in securities. All the deposits are with a diversified group of leading banks preferably with banks that provide loans to the Group. (2) Maximum Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:     As at December 31       Carrying amount (US$ thousands)       2014     2013   Cash and cash equivalents     130,831       188,340   Short term investments and deposits     116,492       96,388   Trade receivables     1,039,146       1,057,028   Derivatives and other receivables     62,277       104,117   Long term receivables and deposits     5,064       7,325   Long term derivative instruments     —       7,619         1,353,810       1,460,817       As at December 31     Carrying amount ($ millions)     2015   2014 Cash and cash equivalents     161       131   Short term investments and deposits     87       116   Trade receivables     1,082       1,039   Derivatives and other receivables     90       63   Long term receivables and deposits     4       5         1,424       1,354   The maximum exposure to credit risk for trade receivables, at the reporting date by geographic region was:     As at December 31     Carrying amount ($ millions)     2015   2014 Eastern Europe     36       31   Western Europe     292       322   North America     147       178   South America     101       132   India     72       121   China     280       66   Israel     50       64   Other     104       125         1,082       1,039   F-88 Table of Contents     As at December 31       Carrying amount (US$ thousands)       2014     2013   Eastern Europe     30,735       29,679   Western Europe     322,024       343,793   North America     177,786       149,419   South America     132,179       121,573   India     120,719       85,155   China     65,718       162,785   Israel     63,800       71,247   Other     126,185       93,377         1,039,146       1,057,028   Note 27 - Financial Instruments and Risk Management (cont’d) C. Credit risk (cont’d) (3) Aging of debts and impairment losses The aging of trade receivables at the reporting date was:     As at December 31       2014     2013       Gross     Impairment     Gross     Impairment       US$ thousands   Not past due     954,129       (448 )     928,217       (1,534 ) Past due up to 3 months     78,803       (593 )     107,117       (609 ) Past due 3 to 6 months     5,966       (65 )     20,584       (899 ) Past due 6 to 9 months     2,844       (2,141 )     4,337       (1,193 ) Past due 9 to 12 months     423       (22 )     561       (160 ) Past due over 12 months     5,253       (5,003 )     6,992       (6,385 )       1,047,418       (8,272 )     1,067,808       (10,780 ) F-84 Table of Contents Note 27 – Financial Instruments and Risk Management (cont'd)     As at December 31     2015   2014     Gross   Impairment   Gross   Impairment     $ millions Not past due     961       –       954       –   Past due up to 3 months     110       –       79       (1 ) Past due 3 to 12 months     13       (2 )     9       (2 ) Past due over 12 months     9       (9 )     5       (5 )       1,093       (11 )     1,047       (8 ) The movement in the allowance of doubtful accounts during the year was as follows:     2014     2013       US$ thousands   Balance as at January 1     10,780       11,363   Additional allowance     743       830   Write offs     (124 )     (324 ) Reversals     (844 )     (1,401 ) Changes due to translation differences     (1,203 )     312   Transfer to the group assets held for sale     (1,080 )     —   Balance as at December 31     8,272       10,780       2015   2014     $ millions Balance as at January 1     8       11   Additional allowance     5       1   Reversals     (1 )     (1 ) Changes due to translation differences     (1 )     (2 ) Transfer to the group assets held for sale     –       (1 ) Balance as at December 31     11       8   D. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to timely meet its liabilities, under both normal and stressed conditions, without incurring unwanted losses. The Company manages the liquidity risk by holding cash balances, short-term deposits and secured bank credit facilities. The following are the contractual maturities of financial liabilities, including estimated interest payments:     As at December 31, 2015     Carrying amount   12 months or less   1-2 years   3-5 years   More than 5 years     $ millions Non-derivative financial liabilities                                         Short term credit (not including current maturities)     660       676       –       –       –   Trade payables     716       716       –       –       –   Other payables     387       387       –       –       –   Non-convertible debentures (including current maturities)     1,065       50       50       149       1,255   Long-term bank loans (including current maturities)     1,753       48       47       1,679       150         4,581       1,877       97       1,828       1,405   Financial liabilities – derivative instruments utilized for economic hedging                                         Interest rate swaps and  options     10       1       2       1       6   Foreign exchange derivatives     10       6       –       1       3   Derivative instruments on energy and marine transport     10       10       –       –       –         30       17       2       2       9   F-89     As at December 31, 2014       Carrying amount     12 months or less     1-2 years     3-5 years     More than 5 years       US$ thousands   Non-derivative financial liabilities                               Short term credit (not including current maturities)     402,443       406,644       —       —       —   Trade payables     584,909       584,909       —       —       —   Other payables     519,865       519,865       —       —       —   Non-convertible debentures (including current maturities)     1,131,222       120,579       49,746       149,240       1,317,152   Long-term bank loans (including current maturities)     1,372,800       162,551       759,015       292,147       286,479         4,011,239       1,794,548       808,761       441,387       1,603,631                                             Financial liabilities – derivative instruments utilized for economic hedging                                         Interest rate swaps and  options     9,549       250       1,638       2,771       4,890   Foreign exchange derivatives     71,923       63,062       369       1,108       7,384   Derivative instruments on energy and marine transport     28,252       26,616       1,636       —       —         109,724       89,928       3,643       3,879       12,274   F-85 Table of Contents Note 27 –- Financial Instruments and Risk Management (cont'd)     As at December 31, 2013       Carrying amount     12 months or less     1-2 years     3-5 years     More than 5 years       US$ thousands   Non-derivative financial liabilities                               Short term credit (not including current maturities)     538,538       543,724       —       —       —   Trade payables     669,102       669,102       —       —       —   Other payables     387,046       387,046       —       —       —   Non-convertible debentures (including current maturities)     242,785       185,306       70,832       —       —   Long-term bank loans (including current maturities)     1,247,599       25,003       39,243       1,017,938       260,202         3,085,070       1,810,181       110,075       1,017,938       260,202                                             Financial liabilities – derivative instruments utilized for economic and accounting hedging                                         Interest rate swaps and  options     8,347       1,765       4,000       2,582       —   Foreign exchange derivatives     10,016       10,016       —       —       —         18,363       11,781       4,000       2,582       —   (cont’d) D. Liquidity risk (cont’d)     As at December 31, 2014     Carrying amount   12 months or less   1-2 years   3-5 years   More than 5 years     $ millions Non-derivative financial liabilities                                         Short term credit (not including current maturities)     403       407       –       –       –   Trade payables     585       585       –       –       –   Other payables     520       520       –       –       –   Non-convertible debentures (including current maturities)     1,131       121       50       149       1,317   Long-term bank loans (including current maturities)     1,372       163       759       292       286         4,011       1,796       809       441       1,603   Financial liabilities – derivative instruments utilized for economic and accounting hedging                                         Interest rate swaps and  options     9       –       2       3       4   Foreign exchange derivatives     72       63       –       1       8   Derivative instruments on energy and marine transport     28       27       1       –       –         109       90       3       4       12   E. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the fair value or future cash flows of a financial instrument. 1. Interest risk The Group has loans bearing variable interests and therefore its financial results and cash flows are exposed to fluctuations in the market interest rates. ICL uses financial instruments, including derivatives, in order to hedge this exposure. The Group uses interest rate swap contracts and interest options mainly in order to reduce the exposure to cash flow risk in respect of changes in interest rates. In addition, in 2005 the Company issued debentures in the amount of $125 million, bearing fixed interest, the balance of which as at the date of the report is $67 million. The liability in respect of the debentures, which bears fixed interest, exposes the Company to fair value risk in respect of changes in the market interest rate. The Company has executed swap transactions, in order to change the interest rate whereby it pays variable interest and receives fixed interest. (a) Interest Rate Profile Set forth below is detail regarding the type of interest on the Group’s non-derivative interest bearinginterest-bearing financial instruments: F-90 Table of Contents     As at December 31       2014     2013       US$ thousands   Fixed rate instruments:             Financial assets     61,572       47,644   Financial liabilities     (1,330,201 )     (390,908 )       (1,268,629 )     (343,264 )                   Variable rate instruments:                 Financial assets     190,815       244,409   Financial liabilities     (1,576,264 )     (1,638,014 )       (1,385,449 )     (1,393,605 ) Note 27 - Financial Instruments and Risk Management (cont’d) E. Market risk (cont’d)     As at December 31     2015   2014     $ millions Fixed rate instruments:                 Financial assets     35       61   Financial liabilities     (1,449 )     (1,330 )       (1,414 )     (1,269 ) Variable rate instruments                 Financial assets     217       191   Financial liabilities     (2,029 )     (1,576 )       (1,812 )     (1,385 ) (b) Sensitivity analysis for fixed rate instruments Most of the Group’s instruments bearing fixed interest are not measured at fair value through the statement of income. Therefore, changes in the interest rate as at the date of the report would not be expected to have any impact on the profit or loss in respect of changes in the value of assets and liabilities bearing fixed interest. F-86 Table of Contents Note 27 – Financial Instruments and Risk Management (cont'd) (c) Sensitivity analysis for variable rate instruments The below analysis assumes that all other variables (except for the interest rate), in particular foreign currency rates, remain constant     As at December 31, 2014 Impact on profit (loss)       Decrease of 1% in interest     Decrease of 0.5% in interest     Increase of 0.5% in interest     Increase of 1% in interest       US$ thousands   Changes in Dollar interest                         Non-derivative instruments     11,972       5,986       (5,986 )     (11,972 ) Cylinder instruments     (496 )     (365 )     379       608   Exchange instruments     (21,878 )     (10,725 )     10,315       20,239         (10,402 )     (5,104 )     4,708       8,875                                     Changes in Shekel interest                                 Non-derivative instruments     (124 )     (62 )     62       124                                     Changes in Euro interest                                 Non-derivative instruments     1,829       914       (914 )     (1,829 )                                   Changes in other currencies interest                                 Non-derivative instruments     177       88       (88 )     (177 )     As at December 31, 2015 Impact on profit (loss)     Decrease of 1% in interest   Decrease of 0.5% in interest   Increase of 0.5% in interest   Increase of 1% in interest     $ millions Changes in Dollar interest                                 Non-derivative instruments     (17 )     (8 )     8       17   SWAP instruments     (30 )     (15 )     14       28         (47 )     (23 )     22       45   Changes in Shekel interest                                 SWAP instruments     11       6       (5 )     (10 ) Changes in Euro interest                                 Non-derivative instruments     (1 )     -       -       1   (d) Terms of derivative financial instruments used to hedge interest risk     As at December 31, 2015     Carrying amount (fair value)   Stated amount   Maturity date   Interest rate range Dollar     $ millions        $ millions      Years    %  SWAP contracts from variable interest to fixed interest     (10 )     400     0–9   1.4%–3.4% Cylinder instruments     –       100     0–1   1.0%–3.0%     As at December 31, 2014     Carrying amount (fair value)   Stated amount   Maturity date   Interest rate range     $ millions   $ millions   Years   % Dollar                             SWAP contracts from fixed interest to variable interest     1       48     0-1     4.63% SWAP contracts from variable interest to fixed interest     (9 )     425     0-10     1.4%-3.4%   Cylinder instruments     (1 )     120     0-2     1.0%-3.2%   F-91     As at December 31, 2014       Carrying amount (fair value)     Stated amount     Maturity date     Interest rate range       US$ thousands     US$ thousands     Years     %   Dollar                         SWAP contracts from fixed interest to variable interest     1,042       48,000       0-1       4.63 % SWAP contracts from variable interest to fixed interest     (8,716 )     425,000       0-10       1.4%-3.4 % Cylinder instruments     (833 )     120,000       0-2       1.0%-3.2 %     As at December 31, 2013       Carrying amount (fair value)     Stated amount     Maturity date     Interest rate range       US$ thousands     US$ thousands     Years     %   Dollar                         SWAP contracts from fixed interest to variable interest     3,072       48,000       1-2       4.63 % SWAP contracts from variable interest to fixed interest     (6,422 )     322,000       1-5       1.4%-3.4 % Cylinder instruments     (1,925 )     145,000       1-3       1.0%-3.2 %                                   Shekel                                 SWAP contracts from fixed interest to variable interest     858       57,620       1       3.40 % F-87 Table of Contents Note 27 –- Financial Instruments and Risk Management (cont'd) (cont’d) E. Market risk (cont’d) 2. Currency risk The Group is exposed to currency risk with respect to sales, purchases, assets and liabilities that are denominated in a currency other than the functional currency of the Group. The main exposure is the NIS, Euro, British Sterling, Chinese Yuan, Japanese Yen and Brazilian Real. The Group enters into foreign currency derivatives – forward exchange transactions and currency options – all in order to protect the Group from the risk that the eventual cash flows, resulting from existing assets and liabilities, and sales and purchases of goods within the framework of firm or anticipated commitments (based on a budget of up to one year), denominated in foreign currency, will be affected by changes in the exchange rates. (a) Sensitivity analysis A 10% strengthening at the rate of the US$ against the following currencies would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.     As at December 31       Impact on profit (loss)       2014     2013       US$ thousands   Non-derivative financial instruments             Dollar/Euro     (73,743 )     (31,093 ) Dollar/NIS     42,223       65,887   Dollar/British Pound     1,050       3,092   Dollar/Japanese Yen     (776 )     (545 ) Dollar/Chinese Yuan     (16 )     (141 )     As at December 31  Impact on profit (loss)     2015   2014     $ millions Non-derivative financial instruments                 Dollar/Euro     (134 )     (74 ) Dollar/NIS     42       42   Dollar/British Pound     1       1   Dollar/Japanese Yen     (1 )     (1 ) A 10% weakening of the US$ against the above currencies at December 31 would have the same effect but in the opposite direction. Presented hereunder is a sensitivity analysis of the Group’s foreign currency derivative instruments as at December 31, 2014.2015. Any change in the exchange rates of the principal currencies shown below as at December 31 would have increased (decreased) profit and loss and equity by the amounts shown below (in US $ thousands).below. This analysis assumes that all other variables remain constant.     As at December 31, 2015     Increase 10%   Increase 5%   Decrease 5%   Decrease 10%     $ millions Euro/Dollar                                 Forward transactions     (27 )     (13 )     11       22   Options     4       2       (1 )     (3 )                                   Dollar/NIS                                 Forward transactions     (12 )     (6 )     7       15   Options     (58 )     (24 )     25       60   SWAP     (17 )     (9 )     10       20                                     GBP/Dollar                                 Forward transactions     28       13       (12 )     (23 )                                   GBP/Euro                                 Forward transactions     (18 )     (9 )     10       22   Options     (1 )     –       –       1   F-92     As at December 31, 2014       Increase 10%     Increase 5%     Decrease 5%     Decrease 10%       US$ thousands   Euro/Dollar                         Forward transactions     (26,912 )     (12,736 )     11,524       22,018   Options     8,842       4,166       (3,743 )     (7,063 )                                   Dollar/NIS                                 Forward transactions     (17,124 )     (8,972 )     9,916       20,929   Options     (50,376 )     (26,919 )     33,892       61,589   SWAP     (17,011 )     (8,910 )     9,847       20,791                                     JPY/Dollar                                 Forward transactions     686       359       (397 )     (839 ) Options     626       327       (358 )     (740 )                                   GBP/Dollar                                 Forward transactions     (4,640 )     (2,199 )     1,990       3,797   Options     (1,478 )     (615 )     92       419                                     GBP/Euro                                 Forward transactions     3,369       1,767       (1,953 )     (4,117 ) Options     (2,482 )     (1,640 )     2,153       3,278   F-88 Table of Contents Note 27 –- Financial Instruments and Risk Management (cont'd) (cont’d) E. Market risk (cont’d) (b) Terms of derivative financial instruments used to economically hedge foreign currency risk     As at December 31, 2014       Carrying amount     Stated amount     Average exchange rate       US$ thousands     US$ thousands   Forward contracts                   NIS/Dollar     (159 )     188,585       3.89   Dollar/Euro     (1,795 )     242,252       1.22   Dollar/JPY     871       8,420       107.12   Euro/GBP     (86 )     36,982       0.78   Dollar/GBP     (85 )     41,781       1.56   Other     497       12,002       —                             Currency and interest SWAPs                         Shekel to Dollars     (9,230 )     170,000       —                                                       Put options                         NIS/Dollar     804       592,500       3.50   Dollar/Euro     7,476       80,732       1.33   Dollar/JPY     (7 )     8,000       103.19   Euro/GBP     642       17,615       0.80   Dollar/GBP     (220 )     10,000       1.65                             Call options                         NIS/Dollar     (57,872 )     592,500       3.50   Dollar/Euro     (241 )     80,732       1.33   Dollar/JPY     1,092       8,000       103.19   Euro/GBP     (98 )     17,615       0.80   Dollar/GBP     41       10,000       1.65   F-89 Table of Contents Note 27 – Financial Instruments and Risk Management (cont'd)     As at December 31, 2013       Carrying amount     Stated amount     Average exchange rate       US$ thousands     US$ thousands   Forward contracts                   NIS/Dollar     1,311       223,605       3.50   Dollar/Euro     452       506,101       1.38   Dollar/JPY     400       5,511       97.40   Euro/GBP     (20 )     492       0.87   Dollar/GBP     987       46,555       1.62   Other     (1,953 )     21,325       —   CPI     (1,062 )     57,620       —                             Currency and interest SWAPs                         Shekel and CPI to Dollars     21,870       290,908       —                                                       Put options                         NIS/Dollar     31,667       697,000       3.60   Dollar/Euro     1,183       98,230       1.34   Dollar/JPY     (100 )     10,000       100.00   Euro/GBP     423       20,665       0.84                             Call options                         NIS/Dollar     (3,494 )     697,000       3.60   Dollar/Euro     (3,464 )     98,230       1.34   Dollar/JPY     595       10,000       100.00   Euro/GBP     (99 )     20,665       0.84       As at December 31, 2015     Carrying amount   Stated amount   Average     $ millions   $ millions   exchange rate Forward contracts                         NIS/Dollar     –       229       3.9   Dollar/Euro     (1 )     291       1.1   Dollar/JPY     –       4       120.1   Euro/GBP     3       565       0.7   Dollar/GBP     2       215       1.5   Dollar/CNH     –       209       6.6   Other     –       15       –   Currency and interest SWAPs                         Shekel to Dollars     (4 )     170       –   Put options                         NIS/Dollar     8       621       3.8   Dollar/Euro     1       39       1.1   Dollar/JPY     –       3       123.9   Euro/GBP     –       7       0.7   Dollar/GBP     –       1       1.6   Dollar/CNH     –       100       6.2   Call options                         NIS/Dollar     (10 )     621       3.8   Dollar/Euro     –       39       1.1   Dollar/JPY     –       3       123.9   Euro/GBP     –       7       0.7   Dollar/GBP     –       1       1.6       As at December 31, 2014     Carrying amount   Stated amount   Average     $ millions   $ millions   exchange rate Forward contracts                         NIS/Dollar     –       189       3.9   Dollar/Euro     (2 )     242       1.2   Dollar/JPY     1       8       107.1   Euro/GBP     –       37       0.8   Dollar/GBP     –       42       1.6   Other     –       12       –   Currency and interest SWAPs                         Shekel and CPI to Dollars     (9 )     170       –   Put options                         NIS/Dollar     1       593       3.5   Dollar/Euro     7       81       1.3   Dollar/JPY     –       8       103.2   Euro/GBP     1       18       0.8   Dollar/GBP     –       10       1.7   Call options                         NIS/Dollar     (58 )     593       3.5   Dollar/Euro     –       81       1.3   Dollar/JPY     1       8       103.2   Euro/GBP     –       18       0.8   Dollar/GBP     –       10       1.7   The maturity date of all of the derivatives used to economically hedge foreign currency risk is up to a year. F-93 F-90 Table of Contents Note 27 –- Financial Instruments and Risk Management (cont'd) (cont’d) E. Market risk (cont’d) (c) Linkage terms of monetary balances – in thousandsmillions of Dollars     As at December 31, 2015       US$       Euro       GBP       NIS       RMB       JPY       Others   Non-derivative instruments:                                                         Cash and cash equivalents     33       21       5       2       83       4       13   Short term investments and deposits     75       4       1       1       4       –       2   Trade receivables     610       219       37       52       102       10       52   Other receivables     73       1       –       7       –       –       –   Deposits and other long term receivables     3       –       –       –       –       –       1   Total financial assets     794       245       43       62       189       14       68   Credit from banks and other credit providers     271       91       16       6       282       –       7   Trade payables     185       154       34       201       122       1       19   Other payables     53       114       38       154       22       –       6   Long term loans from banks and others     2,567       66       –       141       –       –       31   Total financial liabilities     3,076       425       88       502       426       1       63   Total non-derivative financial instruments, net     (2,282 )     (180 )     (45 )     (440 )     (237 )     13       5   Derivative instruments:                                                         Forward transactions     –       291       (215 )     229       209       (4 )     580   Cylinder     –       (39 )     1       621       100       (3 )     7   SWAPS – dollar into shekel     –       –       –       170       –       –       –   Total derivative instruments     –       252       (214 )     1,020       309       (7 )     587   Net exposure     (2,282 )     72       (259 )     580       72       6       592   F-94     As at December 31, 2014       US$     Euro     GBP     NIS     CPI     JPY     Others   Non-derivative instruments:                                           Cash and cash equivalents     —       68,917       5,797       7,194       —       5,172       43,751   Short term investments and deposits     102,122       7,257       —       1,484       —       —       5,629   Trade receivables     617,154       264,041       37,136       55,178       —       9,260       56,377   Other receivables     36,452       164       234       10,802       —       30       —   Deposits and other long term receivables     852       301       —       2,402       1,303       202       4   Total financial assets     756,580       340,680       43,167       77,060       1,303       14,664       105,761                                                             Credit from banks and other credit providers     351,196       223,025       16,375       6,178       —       —       5,975   Trade payables     124,893       174,745       27,189       219,693       —       1,023       37,366   Other payables     250,009       111,384       16,748       129,761       —       170       11,793   Long term loans from banks and others     2,028,671       71,044       —       148,110       —       33       55,858   Total financial liabilities     2,754,769       580,198       60,312       503,742       —       1,226       110,992                                                             Total non-derivative financial instruments, net     (1,998,189 )     (239,518 )     (17,145 )     (426,682 )     1,303       13,438       (5,231 )                                                           Derivative instruments:                                                         Forward transactions     —       242,252       41,781       188,585       —       (8,420 )     48,984   Cylinder     —       (80,732 )     10,000       592,500       —       (8,000 )     17,615   SWAPS – dollar into shekel     —       —       —       170,000       —       —       —   Total derivative instruments     —       161,520       51,781       951,085       —       (16,420 )     66,599                                                             Net exposure     (1,998,189 )     (77,998 )     34,636       524,403       1,303       (2,982 )     61,368   F-91 Table of Contents Note 27 –- Financial Instruments and Risk Management (cont'd)(cont’d) E. Market risk (cont’d)     As at December 31, 2014       US$       Euro       GBP       NIS       RMB       JPY       Others   Non-derivative instruments:                                                         Cash and cash equivalents     –       70       6       7       19       5       24   Short term investments and deposits     102       7       –       1       2       –       4   Trade receivables     617       265       37       55       10       9       46   Other receivables     36       –       –       11       (1 )     –       –   Deposits and other long term receivables     1       –       –       3       –       –       1   Total financial assets     756       342       43       77       30       14       75   Credit from banks and other credit providers     351       224       16       6       1       –       5   Trade payables     125       175       27       219       2       1       36   Other payables     250       111       17       130       7       –       5   Long term loans from banks and others     2,028       71       –       148       –       –       56   Total financial liabilities     2,754       581       60       503       10       1       102   Total non-derivative financial instruments, net     (1,998 )     (239 )     (17 )     (426 )     20       13       (27 ) Derivative instruments:                                                         Forward transactions     –       242       42       189       –       (8 )     49   Cylinder     –       (81 )     10       593       –       (8 )     18   SWAPS – dollar into shekel and CPI     –       –       –       170       –       –       –   Total derivative instruments     –       161       52       952       –       (16 )     67   Net exposure     (1,998 )     (78 )     35       526       20       (3 )     40   F-95     As at December 31, 2013       US$     Euro     GBP     NIS     CPI     JPY     Others   Non-derivative instruments:                                           Cash and cash equivalents     29,384       64,862       17,941       32,096       —       4,201       39,856   Short term investments and deposits     84,212       815       —       1,431       —       —       9,930   Trade receivables     591,710       291,257       33,072       61,878       —       7,820       71,291   Other receivables     34,644       1,742       435       4,751       —       47       263   Deposits and other long term receivables     603       474       —       4,094       1,912       230       12   Total financial assets     740,553       359,150       51,448       104,250       1,912       12,298       121,352                                                             Credit from banks and other credit providers     415,240       108,232       15,964       28,549       147,012       703       2,584   Trade payables     134,873       245,307       14,136       251,626       —       961       22,199   Other payables     84,327       129,360       9,441       152,949       —       301       10,668   Long term loans from banks and others     985,276       152,416       —       172,860       —       38       48   Total financial liabilities     1,619,716       635,315       39,541       605,984       147,012       2,003       35,499                                                             Total non-derivative financial instruments, net     (879,163 )     (276,165 )     11,907       (501,734 )     (145,100 )     10,295       85,853                                                             Derivative instruments:                                                         Forward transactions     —       506,101       46,555       223,605       57,620       (5,511 )     21,817   Cylinder     —       (98,230 )     —       697,000       —       (10,000 )     20,665   SWAPS – dollar into shekel and CPI     —       —       —       261,782       29,126       —       —   Total derivative instruments     —       407,871       46,555       1,182,387       86,746       (15,511 )     42,482                                                             Net exposure     (879,163 )     131,706       58,462       680,653       (58,354 )     (5,216 )     128,335   F-92 Table of Contents Note 27 –- Financial Instruments and Risk Management (cont'd) (cont’d) E. Market risk (cont’d) 3. Other price risk A. Investment in securities The Group companies have an investment in marketable securities, in the amount of approximately $45$26 million. The impact of the change in the fair value of this investment will be recorded in the statement of income in “financing expenses” category. B. Hedging of marine shipping and energy transactions The Company is exposed to risk in respect of marine shipping and energy costs. The Company uses marine shipping and energy derivatives to hedge the risk that its cash flows will be affected by changes in marine shipping and energy prices. As at December 31, 2014,2015, the fair value of the marine shipping and energy derivatives was approximately $28.3$9.9 million (liability). F. Fair value of financial instruments The Group’scarrying amounts in the books of certain financial instruments include mostly non-derivative assets:assets and financial liabilities, including cash and cash equivalents, investments, short-term deposits and loans, receivables and other debit balances, long-term investments and receivables; non-derivative financial liabilities:receivables, short-term credit, payables and other current liabilities,credit balances, long-term loans bearing variable interest and other long-term liabilities; as well asliabilities, and derivative financial instruments. Dueinstruments, correspond to or approximate their nature, the fair value of the financial instruments included in the Group’s working capital is generally identical or approximates their carrying value. The fair value of the long-term deposits and receivables and the long-term liabilities also approximates their book value, as these financial instruments bear interest at a rate which approximates the accepted interest market rate. The following table details the book value and the fair value of financial instrument groups presented in the financial statements not in accordance with their fair value:     As at December 31, 2015   As at December 31, 2014     Carrying amount   Fair value   Carrying amount   Fair value     $ millions Loans bearing fixed interest (1)     391       411       199       216   Debentures bearing fixed interest                                 Marketable (2)     793       803       792       815   Non-marketable (3)     281       285       350       356         1,465       1,499       1,341       1,387   (1) The fair value     As at December 31, 2014     As at December 31, 2013       Carrying amount     Fair value     Carrying amount     Fair value       US$ thousands   Debentures bearing fixed interest                         Marketable (1)     792,090       815,231       147,848       148,711   Non-marketable (2)     349,680       355,549       68,342       69,889         1,141,770       1,170,780       216,190       218,600   (1) The fair value of the marketable debentures is based on the quoted stock exchange price and is classified as level 1 under the fair value hierarchy. (2) The fair value of the non-marketable debentures is based on a calculation of the present value of the cash flows based on the customary Libor rate for similar loans having similar characteristics and is classified as level 2 under the fair value hierarchy. The average discount rate as at December 31, 2014 is 4.04% (December 31, 2013– 3.6%). of the shekel, euro, dollar and yuan loans issued bearing fixed interest is based on calculation of the present value of the cash flows in respect of the principal and the interest and is discounted at the market interest rates on the measurement date for similar loans having similar characteristics and is classified as Level 2 in the fair value hierarchy. The average discount interest as at December 31, 2015 for the shekel, euro, dollar and yuan loans was 2.79%, 1.35%, 3.1% and 5.20% respectively (December 31, 2014 for the shekel, euro, and dollar loans – 3.22%, 1.53% and 3.18%, respectively). (2) The fair value of the marketable debentures is based on the quoted stock exchange price and is classified as Level 1 in the fair value hierarchy. (3) The fair value of the non marketable debentures is based on calculation of the present value of the cash flows in respect of the principal and the interest and is discounted at the Libor rate customary in the market for similar loans having similar characteristics and is classified as Level 2 in the fair value hierarchy. The average discount interest as at December 31, 2015 was 4.85% (December 31, 2014 – 4.04%). G. Hierarchy of fair value The following table presents an analysis of the financial instruments measured by fair value, using the valuation method. (See Note 4 for more details regarding the valuation method). The following levels were defined: F-96 Table of Contents Note 27 - Financial Instruments and Risk Management (cont’d) G. Hierarchy of fair value (cont’d) Level 1: Quoted (unadjusted) prices in an active market for identical instruments Level 2: Observed data (directly or indirectly) not included in Level 1 above.     As at December 31, 2015     Level 1   Level 2   Total     $ millions Securities held for trading purposes     26       –       26   Derivatives used for hedging, net     –       (21 )     (21 )       26       (21 )     5   F-97 F-93 Table of Contents Note 27 – Financial Instruments and Risk Management (cont'd)     As at December 31, 2014       Level 1     Level 2     Total       US$ thousands   Securities held for trading purposes     45,210       —       45,210   Derivatives used for hedging, net     —       (95,129 )     (95,129 )       45,210       (95,129 )     (49,919 ) Note 28 –- Earnings per Share Basic earnings per share Calculation of the basic earnings per share for the year ended December 31, 2014,2015, is based on the earnings allocated to the holders of the ordinary shares divided by the weighted-average number of ordinary shares outstanding, calculated as follows:     For the year ended December 31       2014     2013     2012       US$ thousands   Earnings attributed to holders of the  ordinary shares     463,555       818,573       1,300,076       For the year ended December 31     2015   2014   2013     $ millions Earnings attributed to the shareholders of the Company     509       464       819   Weighted-average number of ordinary shares in thousands:     For the year ended December 31     2015   2014   2013     Shares thousands Balance as at January 1     1,270,408       1,270,426       1,270,119   Shares issued during the year     1,174       –       –   Shares vested     42       –       –   Options exercised for shares     –       –       295   Weighted average number of ordinary shares used in computation of the basic earnings per share     1,271,624       1,270,426       1,270,414   F-98 Table of Contents     For the year ended December 31       2014     2013     2012       Shares thousands   Balance as at January 1     1,270,426       1,270,119       1,268,508   Plus – options exercised for shares     —       295       1,501   Weighted average number of ordinary shares used in computation of the basic earnings per share     1,270,426       1,270,414       1,270,009   Note 28 - Earnings per Share (cont’d) Diluted earnings per share Calculation of the diluted earnings per share for the year ended December 31, 2014,2015, is based on the earnings allocated to the holders of the ordinary shares divided by the weighted-average number of ordinary shares outstanding after adjustment for the number of potential diluted ordinary shares, calculated as follows:     For the year ended December 31       2014     2013     2012       US$ thousands   Earnings attributed to the ordinary shareholders (diluted)     463,555       818,573       1,300,076       For the year ended December 31     2015   2014   2013     $ millions Earnings attributed to the shareholders of the Company (diluted)     509       464       819   Weighted average number of ordinary shares (diluted) in thousands:     For the year ended December 31       2014     2013     2012       Shares thousands   Weighted average number of ordinary shares used in the computation of the basic earnings per share     1,270,426       1,270,414       1,270,009   Effect of stock options and restricted shares     32       —       108   Weighted average number of ordinary shares used in the computation of the diluted earnings per share     1,270,458       1,270,414       1,270,117       For the year ended December 31     2015   2014   2013     Shares thousands Weighted average number of ordinary shares used in the computation of the basic earnings per share     1,271,624       1,270,426       1,270,414   Effect of stock options and restricted shares     632       32           Weighted average number of ordinary shares used in the computation of the diluted earnings per share     1,272,256       1,270,458       1,270,414   At December 31, 2014, 16,353 thousand2015, 24 million options (at December 31, 2014 and 2013, and 2012, 15,743 thousand and 22,844 thousand options, respectively)16 million options), were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been anti dilutive. F-94 Table of Contents Note 28 – Earnings per Share (cont'd) anti-dilutive. The average market value of the Company’s shares, for purposes of calculating the dilutive effect of the stock options, is based on the quoted market prices for the period in which the options were outstanding. F-99 Table of Contents Note 29 –- Related and Interested Parties Related parties within theits meaning thereof in IAS 24 (2009), “Related Parties”Parties Disclosure”; Interested parties within thetheir meaning thereof in Paragraph 1 of the definition of an “interested party” in a company, as defined in Section 1 of the Israeli Securities Law, 1968. A. Parent company and subsidiaries The Group’sGroup's parent company is Israel Corporation Ltd. (“Israel Corporation LimitedCorp.”). Israel Corp. is a public company listed for trading on the Tel Aviv Stock exchangeExchange (TASE). Based on the information the Company received from Israel Corporation, MillenniumCorp. Millenium Investments Elad Ltd. (hereinafter – “Millennium”(“Millenium”) and Mr. Idan Ofer are considered as controlling shareholders jointly of Israel Corporation,Corp., for purposes of the Securities Law (both Millennium(each of Millenium and Mr. Ofer hold shares in Israel CorporationCorp. directly, and Mr. Idan Ofer serves as a director of MillenniumMillenium and has an indirect interest in it as athe beneficiary of athe foreign discretionary trust that has indirect control of Millennium)Millenium). MillenniumMillenium holds approximately 46.94%approx. 46.94% of the share capital in Israel Corporation. To the bestCorp. which holds approx. 46.04% of the Company’s knowledge, Millenniumvoting rights and 48.88% of the issued share capital of the Company. Millenium is held by Mashat Investments Ltd (hereinafter, “Mashat”Ltd. (“Mashat”), and by XT Investments Ltd (hereinafter, “XTLtd. (“XT Investments”), with 80% and 20% holdings, respectively. Mashat is a private company, wholly owned by a Dutch company, Ansonia Holdings B. V. (hereinafter – “Ansonia”Singapore B.V. (“Ansonia”). Ansonia is a wholly ownedwholly-owned subsidiary of Jelany Corporation N. V.N.V. (registered in Curaçao), which is a wholly ownedwholly-owned subsidiary of the Liberian company, Court Investments Ltd (hereinafter – “Court”Ltd. (“Court”). Court is wholly owned by a foreign discretionary trust, ofin which Mr. Idan Ofer is athe beneficiary. XT Investments, which directly holds approximately 1.24% of the share capital inof Israel Corporation,Corp., is a shareholder in Millennium,Millenium as stated. XT Investments is a private company, wholly owned by XT Holdings Ltd. (hereinafter – “XT Holdings)(“XT Holdings”), a private company whose ordinary shares are held in equal shares by Orona Investments LtdLtd. (which is indirectly controlled by Mr. Ehud Angel) and by Lynav Holdings Ltd., a company that is controlled by a foreign discretionary trust ofin which Mr. Idan Ofer is a prime beneficiary. Among other things, Mr. Ehud Angel holds, among other things, a special share that givesgrants him, inter alia, under certain limitations and for certain issues, an additional vote on the Boardboard of Directorsdirectors of XT Holdings. In addition, Kirby Enterprises Inc., which is indirectly held by a foreign discretionarythe same trust that holds Mashat, in which, as stated, Mr. Idan Ofer is the beneficiary, holds approximately 0.74% of the share capital of Israel Corporation.Corp. Furthermore, Mr. Idan Ofer holds directly approximately 3.85% of the share capital of Israel Corporation. Corp. Furthermore, XT Investments directly holds approximately 0.03% of the Company's capital (namely, 377,662 Ordinary Shares). Regarding the group subsidiaries – see Note 30, regarding the Group entities. B. Benefits to key management personnel (including directors) The senior managers, in addition to their salaries, are entitled to non-cash benefits (vehicle(such as vehicle and telephone)telephone etc.). The Group contributes to a post-employment defined benefit plan on their behalf. In accordance with the terms of the plan, the retirement age of senior managers is 67. Senior managers and directors also participate in the Company's incentive and equity remuneration plans (options for Company shares and restricted shares (see Note 24 – Share-Based Payments). Benefits for key management personnel (in total 25 and 23 key management personnel including directors, in 2013 – 21 key management personnel)2015 and 2014, respectively) comprised:     For the year ended December 31     2015   2014     $ millions Short-term benefits     8       10   Post-employment benefits     1       1   Share-based payments     6       4   Total*     15       15   * To interested parties employed by the Company     4       4   * To interested parties not employed by the Company     1       1   Subsequent to the balance sheet date, the Company announced that Mr. Nir Gilad will retire from the company’s BOD at September 1, 2016. The BOD has formed a Search Committee that will identify suitable candidates and propose the nomination to the full Board for election, no later than May 1, 2016. The company intends to invite a special shareholders meeting in August 2016 to approve appointment of the newly elected candidate as well as his terms of tenure, and by this allow an orderly overlap between Mr. Gilad and the new elected Chairman. F-100     For the year ended December 31       2014     2013       US$ thousands   Short-term benefits     9,565       9,963   Post-employment benefits     853       1,651   Share-based payments     3,520       6,789   Total *     13,938       16,328                     * To related parties employed by the Company     3,739       5,193                     * To related parties not employed by the Company     675       1,021   F-95 Table of Contents Note 29 –- Related and Interested Parties (cont'd) (cont’d) C. Ordinary transactions that are not exceptional The Company’s Board of Directors, with the agreement of the Audit Committee, decided that a transaction with related and interested parties will be considered an “insignificant”a “Negligible” transaction for public reporting purposes if all the following conditions have been met: (1) It is not an “extraordinary transaction” within the meaning thereof in the Companies Law. (2) The effect of each of the parameters listed hereunder is less than one percent (hereinafter – “the Negligibility Threshold”): For every transaction or arrangement that is tested for the Negligibility Threshold, the parameters will be examined, to the extent they are relevant, on the basis of ICL’s reviewedthe Company’s condensed or audited consolidated financial statements, as applicable, prior to the transaction, as detailed below: · Assets ratio – the amount of the assets in the transaction (acquired(assets acquired or sold assets)sold) divided by total assets. · Equity ratio – the increase or decrease in equity divided by the total equity. · Revenue ratio – estimated revenue from the transaction divided by the annual revenue. · Manufacturing expenses ratio – the amount of the expenses in the transaction divided by the annual cost of sales. · Profit ratio – the profit or loss attributed to the transaction divided by total annual comprehensive income or loss during the period. (3) The transaction is negligible also from a qualitative point of view. For the purpose of this criterion, it shall be examined whether there are special considerations justifying a special report on the transaction, even if it does not meet the quantitative criteria described above. (4) In examining the negligibility of a transaction expected to occur in the future, among other things, the probability of the transaction occurring is to be examined. D. Transactions with related and interested parties     For the year ended December 31       2014     2013       US$ thousands   Sales     6,212       9,958   Cost of sales (1)     173,358       131,845   Selling, transport and marketing expenses     16,326       18,424   Management fees to the parent company (2)     3,752       4,002   (1)     For the year ended December 31     2015   2014   2013     $ millions Sales     7       6       10   Cost of sales(1)     127       173       132   Selling, transport and marketing expenses     9       16       18   Financing expenses (income), net     22     48       (24 ) Management fees to the parent company(2)     2       4       4   (1) A subsidiary in the Performance Products segment entered into a long-term agreement with an interested party of the Company for the acquisition of food quality phosphoric acid. The agreement was signed before the subsidiary was acquired by ICL and is in effect until 2018. Additionally, on February 28, 2013, ICL’s Audit Committee and Board of Directors authorized to the certain of Group subsidiaries in Israel from the Industrial Products segment to purchase electricity from OPC Rotem (a company related to the Company’s controlling F-96 Table of Contents Note 29 – Relatedthe Company for the acquisition of food quality phosphoric acid. The agreement was signed before the subsidiary was acquired by the Company and Interested Parties (cont'd) is in effect until 2018. Additionally, on February 28, 2013, the Company’s Audit Committee and Board of Directors authorized to the certain of Group subsidiaries in Israel from the Industrial Products segment to purchase electricity from OPC Rotem (a company related to the Company’s controlling shareholder). During 2013, additional companies from the Fertilizers segment entered into an agreement with OPC Rotem to purchase electricity in accordance to the amended agreement authorized on February 28, 2013. F-101 Table of Contents (2) In June 2009, following approval by the Audit Committee, the Company’s Board of Directors approved a revision of the management fees payable to Israel Corp. to $ 3.5 million per year, plus VAT as per law, for each of the years from 2009 to 2011. On July 20, 2009, the revision was approved by the General Meeting of the Company’s shareholders. On October 5, 2011 the General Meeting of the Company’s shareholders approved an extension of the management agreement on the same terms for the years 2012 until 2014. In January 2015, the Remuneration Committee and the Board of Directors approved, and on February 26, 2015, the General Meeting of the Company’s shareholders also approved, extension of the management agreement for the years 2015 through 2017, on the same terms, except for the following changes: (1) upon approval of the service conditions of the Chairman of the Company’s Board of Directors, as Acting Chairman, the management fees will be reduced to $1 million, plus VAT as per law. If the Chairman of the Company’s Board of Directors is appointed as Acting Chairman, and thereafter he ceases to serve and to receive remuneration as Acting Chairman, commencing from that time the management fees will return to $3.5 million, plus VAT as per law; and (2) the management agreement was amended such that it permits the Company to provide equity remuneration to directors that serve and/or will serve from time to time and that are employed by Israel Corporation Ltd. (such directors do not receive cash remuneration in respect of their service). It is noted that the Remuneration Committee, the Board of Directors and the General Meeting of the Company’s shareholders approved that equity remuneration that will be granted to directors, as stated, or the economic benefit in respect thereof, shall be transferred to Israel Corporation Ltd. (3) On June 26, 2012, the Company received a short-term loan in the amount of $50 million from the Company’s controlling shareholder (Israel Corporation Ltd.). The loan was granted at market terms. The loan was renewed every period for three or six months, bore interest at the rate of 0.776%. In August 2014 it was repaid in full. Note 29 - Related and Interested Parties (cont’d) D. Transactions with related and interested parties (cont’d) (2) On October 5, 2011, the General Meeting of the Company’s shareholders approved a management agreement between Israel Corporation Ltd. and its subsidiary, on the one hand, and the Company, on the other hand, for the years 2012 until 2014, whereby the Company will pay Israel Corporation annual management fees, in the amount of $3.5 million, plus VAT as per law. In January 2015, the Remuneration Committee and the Board of Directors approved, and on February 26, 2015, the General Meeting of the Company’s shareholders also approved extension of the management agreement for the years 2015 through 2017, on the same terms, except for the following changes: (1) upon approval of the service conditions of the Chairman of the Company’s Board of Directors, as Acting Chairman, the management fees will be reduced to $1 million, plus VAT as per law. If the Chairman of the Company’s Board of Directors is appointed as Acting Chairman, and thereafter he ceases to serve and to receive remuneration as Acting Chairman, commencing from that time the management fees will return to $3.5 million, plus VAT as per law; and (2) the management agreement was amended such that it permits the Company to provide equity remuneration to directors that serve and/or will serve from time to time and that are employed by Israel Corporation (such directors do not receive cash remuneration in respect of their service). It is noted that the Remuneration Committee, the Board of Directors and the General Meeting of the Company’s shareholders approved that equity remuneration that will be granted to directors, as stated, or the economic benefit in respect thereof, shall be transferred to Israel Corporation. E. Balances with interested parties 1) Composition:     As at December 31       2014     2013       US$ thousands   Long-term deposits, net of current maturities     1,512       780   Current maturities of long-term deposits     411       260   Other current assets     11,063       6,342   Other current liabilities     28,652       73,558       As at December 31     2015   2014     $ millions Long-term deposits, net of current maturities     1       4   Long term loans     –       8   Other current assets     33       34   Other current liabilities     33       63   2) The Company declares a dollar dividend that is paid partly in NIS, according to the exchange rate on the effective date. The Company enters hedging transaction in order to hedge the exposure to changes in the dollar/shekel exchange rate. The dividend paid to the Company’s controlling shareholder, Israel Corporation, is made partly based on the exchange rate on the effective date and partly based on the exchange rate on the date of distribution. In addition, the dividend paid to an interested party is made according to the exchange rate on the date of distribution. F-102 F-97 Table of Contents Note 30 –- Group Entities The Group’s ownership interest in its significant subsidiary and investee companies for the year ended December 31 Name of company Principal location of the company’s activity 2015 2014 ICL Israel Ltd. Israel 100.00% 100.00% Dead Sea Works Ltd. Israel 100.00% 100.00% Dead Sea Bromine Company Ltd. Israel 100.00% 100.00% Rotem Amfert Negev Ltd. Israel 100.00% 100.00% Mifalei Tovala Ltd. Israel 100.00% 100.00% Dead Sea Magnesium Ltd. Israel 100.00% 100.00% Ashli Chemicals (Holland) B.V. Israel 100.00% 100.00% Bromine Compounds Ltd. Israel 100.00% 100.00% Tetrabrom Technologies Ltd. Israel 100.00% 100.00% Fertilizers and Chemicals Ltd. Israel 100.00% 100.00% I.D.E. Technologies Ltd.* Israel 50.00% 50.00% Iberpotash S.A. Spain 100.00% 100.00% Fuentes Fertilizantes S.L. Spain 100.00% 100.00% ICL Europe Coöperatief U.A. The Netherlands 100.00% 100.00% ICL-IP Europe B.V The Netherlands 100.00% 100.00% ICL IP Terneuzen B.V The Netherlands 100.00% 100.00% ICL Fertilizers Europe C.V. The Netherlands 100.00% 100.00% ICL Finance B.V The Netherlands 100.00% 100.00% Everris International B.V. The Netherlands 100.00% 100.00% Clearon Corp. United States of America 100.00% 100.00% Phosphorus Derivatives Inc. United States of America 100.00% 100.00% ICL Performance Products LP United States of America 100.00% 100.00% ICL-IP America Inc United States of America 100.00% 100.00% Everris N.A. Inc. United States of America 100.00% 100.00% BK Giulini GmbH Germany 100.00% 100.00% ICL Holding Germany GmbH Germany 100.00% 100.00% ICL IP Bitterfeld GmbH Germany 100.00% 100.00% Prolactal GmbH Germany 100.00% 0.00% ICleveland Potash Ltd. United Kingdom 100.00% 100.00% ICL Brasil, Ltda. Brazil 100.00% 100.00% ICL Performance Products Jiangyin Co., Ltd.   China 0.00% 100.00% ICL (Shanghai) Investment Co. Ltd. China 100.00% 100.00% Yunnan Phosphate Haikou Co. Ltd. China 50.00% 0.00% ICL France S.A.S France 100.00% 100.00% ICL Asia Ltd Hong Kong 100.00% 100.00% Allana Potash Afar PLC Ethiopia 100.00% 0.00% * Investee company F-103         Percentage of   Shareholding   The Holding Company     The Affiliate   Shares conferring rights to profits   Voting shares Israel Chemicals Ltd., Israel   —   —   —             Dead Sea Works Ltd., Israel   100.00   100.00     Dead Sea Bromine Company Ltd., Israel   100.00   100.00     Rotem Amfert Negev Ltd., Israel   100.00   100.00     Dead Sea Periclase ltd., Israel ***   100.00   100.00     Mifalei Tovala Ltd., Israel   100.00   100.00     I.D.E. Technologies Ltd., Israel   50.00   50.00     Ferson Chemicals Ltd., Israel***   100.00   100.00     ICL Israel Ltd., Israel   100.00   100.00     P.A.M.A ( Energy Resources Development) Ltd., Israel***   25.00   25.00     Dead Sea Magnesium Ltd.   100.00   100.00     ICL Finance B.V, The Netherlands   100.00   100.00     ICL Finance Inc., USA   100.00   100.00     Twincap Försäkrings AB, Sweden   100.00   100.00     Hoyermann Chemie GmbH , Germany   100.00   100.00 Hoyermann Chemie GmbH, Germany   —   —   —     ICL-IP Bitterfeld Grundbesitz GmbH & Co KG, Germany*   5.10   5.10     BK Giulini, GmbH , Germany*   5.10   5.10 Dead Sea Works Ltd., Israel   —   —   —     Ashli Chemicals (Holland) B.V., Israel   100.00   100.00                   Cleveland Potash ltd (CPL), U.K*   62.78   62.78 Ashli Chemicals (Holland) B.V., Israel   —   —   —     Cleveland Potash ltd (CPL), U.K*   37.22   37.22     ICL Finance Belgium N.V., Belgium   100.00   100.00 Cleveland Potash ltd (CPL), U.K   —   —   —     Constantine & Company (Export) Limited   50.00   50.00     ICL Iberia Ltd,  UK   100.00   100.00     ICL Iberia Ltd.  SCS,  Spain   100.00   100.00     Everris   Ltd., (UK)   100.00   100.00     Amega Sciences Holdings Ltd., UK   100.00   100.00 Amega Sciences Holdings Ltd., UK   —   —   —     Amega Sciences Plc., UK   100.00   100.00 Amega Sciences Plc., UK   —   —   —     Nutriet Sciences Ltd., UK   100.00   100.00     Service Chemicals Ltd., UK***   100.00   100.00 ICL Iberia Ltd.  SCS,  Spain   —   —   — F-98 Table of Contents Note 30 – Group Entities (cont'd)         Percentage of   Shareholding The Holding Company   The Affiliate   Shares conferring rights to profits   Voting shares     Iberpotash S.A. , Spain   100.00   100.00     Trafico de Mercancias S.A.,Spain   100.00   100.00     Medentech Limited, Ireland   100.00   100.00     Absia SL, Spain   100.00   100.00     ICL Fosfatos Y Adtivos Servicios de Mexico, S.A. de C.V.*   100.00   100.00     ICL Fostfatos Y Aditivos Mexico, S.A. de C.V*   100.00   100.00     Everris Iberica Fertilizers S.L, Spain   100.00   100.00     BK Giulini Iberica S.L, Spain   100.00   100.00     Fomento y Desarrollo Agrícola, S.L, Spain   100.00   100.00     Logística de Fertilizantes Fuentes, S.A. Spain   100.00   100.00     Agrocallejas mediterranea, S.L Unipersonal, Spain   100.00   100.00     Fuentes Fertilizantes S.L., Spain   100.00   100.00     Auxquimia, S.A., Spain   100.00   100.00 Dead Sea Bromine Company Ltd., Israel   —   —   —     Bromine Compounds Ltd., Israel   100.00   100.00     IMI Tami Institute for R&D Ltd. , Israel   100.00   100.00     ICL JAPAN Ltd, Japan   100.00   100.00     Landchem Ltd. ,South Africa   100.00   100.00     Bromine and Chemicals Ltd., UK   100.00   100.00     Dead Sea Periclase Fused products Co., Israel *   99.00   99.00     ICL Management & Trading India Private Limited., India   100.00   100.00     ICL (Shanghai) Investment Co. Ltd; China   100.00   100.00 Bromine Compounds Ltd., Israel   —   —   —     Tetrabrom Technologies Ltd., Israel   100.00   100.00     Chemada Fine Chemicals Ltd., Israel   26.00   26.00     Bromine Compounds Marketing (2002) ltd., Israel   100.00   100.00     Dead Sea Periclase Fused products Co., Israel*   1.00   1.00 IMI Tami Institute for R&D Ltd. , Israel   —   —   —     Potassium Nitrate Ltd., Israel***   50.00   50.00     Novetide Ltd. Israel   50.00   50.00     Magsens Ltd.***   22.20   22.20     ICL Innovation Ltd, Israel   100.00   100.00 Rotem Amfert Negev Ltd. , Israel   —   —   —     Agro-Vant, Israel   100.00   100.00 F-99 Table of Contents Note 30 – Group Entities (cont'd)         Percentage of   Shareholding The Holding Company   The Affiliate   Shares conferring rights to profits   Voting shares     Fertilizers and Chemicals Ltd.   100.00   100.00     Zuari Rotem specialty fertilizers Limited, India   50.00   50.00     ICL Holding The Netherlands Cooperatief U.A., The Netherlands   100.00   100.00     Rotem Manufacturing Private Limited Company, Ethiopa*   99.00   99.00 Fertilizers and Chemicals Ltd., Israel   —   —   —     Industrial Chemical Equipment Ltd., Israel   100.00   100.00     Revivim In The Bay Water and Environment Ltd., Israel   100.00   100.00     Rotem Manufacturing Private Limited Company, Ethiopa*   1.00   1.00 Industrial Chemical Equipment Ltd., Israel   —   —   —     Agripo Management services Ltd. Israel***   50.00   50.00 ICL Holding The Netherlands Cooperatief U.A., The Netherlands   —   —   —     Everris International B.V, The Netherlands   100.00   100.00     Amsterdam Fertilizers B.V., The Netherlands   100.00   58.10     ICL-IP Europe B.V . ,The Netherlands   100.00   100.00     Allana Potash, Corp., Canada   16.50   16.50     ICL GROUP ASIA PACIFIC PTE. LTD   100.00   100.00 ICL-IP Europe B.V., The Netherlands   —   —   —     ICL-IP Terneuzen B.V, The Netherlands   100.00   100.00     Bromisa Industrial e Commercial Ltda, Brasil*   90.95   90.95     Lianyungang Dead Sea Bromine Compounds Co. Ltd, China   60.00   60.00     Sinobrom compounds Co. Ltd, China   75.00   75.00     Amsterdam Fertilizers B.V., The Netherlands*   —   41.90 ICL-IP Terneuzen B.V, The Netherlands   —   —   —     Bromisa Industrial e Commercial Ltda, Brasil*   9.05   9.05 Everris International B.V, The Netherlands   —   —   —     Everris Kenya Ltd*. , Kenya   50.00   50.00     Everris Malaysia Sdn. Bhd , Malaysia   100.00   100.00 Amsterdam Fertilizers B.V., The Netherlands   —   —   —     ICL Holding beschränkt haftende OHG, Germany*   95.00   95.00 Amsterdam Fertilizers B.V., The Netherlands   Finacil EEIG (European Economic Interest Grouping)****   12.50   12.50     BKG Puriphos B.V, The Netherlands   100.00   100.00 F-100 Table of Contents Note 30 – Group Entities (cont'd)         Percentage of   Shareholding The Holding Company   The Affiliate   Shares conferring rights to profits   Voting shares     ICL Fertilizers Europe C.V., The Netherlands*   100.00   100.00     NU3 N.V., Belgium   100.00   100.00     Incap B.V, The Netherlands   100.00   100.00     Pekafert B.V., The Netherlands   100.00   100.00     ICL brasil Ltda.   100.00   100.00     P.M. Chemicals Srl, Italy   100.00   100.00     BK Giulini Kimya Sanayi ve Ticaret A.S,Turkey*   100.00   100.00     Everris Kenya Ltd*, Kenya   50.00   50.00     Eurocil Luxembourg SA, Luxembourg*   1.00   1.00     Rotem Kimyevi Maddeler Sanayi ve Ticaret A.S, Turkey   73.30   73.30 P.M. Chemicals Srl, Italy   —   —   —     Everris Italia Srl , Italy   100.00   100.00 ICL Holding beschränkt haftende OHG, Germany   —   —   —     Stodiek Dunger GmbH, Germany   100.00   100.00     ICL Holding Germany GmbH, Germany   100.00   100.00     Rotem Holding GmbH. , Germany   100.00   100.00     ICL Fertilizers Deutschland GmbH, Germany   100.00   100.00     Eisenbacher Dentalwaren ED GmbH, Germany   100.00   100.00     Adentatec GmbH Competence in Dental, Germany   100.00   100.00     Everris GmbH, Germany   100.00   100.00     Tiami Vattenkemi AB, Sweden   100.00   100.00 ICL Holding Germany GmbH, Germany   —   —   —     ICL Holding beschränkt haftende OHG, Germany*   5.00   5.00 Incap B.V, The Netherlands   —   —   —     Intracap Insurance Ltd., Switzerland   100.00   100.00 ICL Brasil Ltda.   —   —   —     Fosbrasil S.A, brasil   100.00   100.00 Pekafert B.V., The Netherlands   —   —   —     Eurocil Luxembourg SA, Luxembourg*   99.00   99.00     Clearon Corp. , USA.*   2.00   2.00 Eurocil Luxembourg S.A, Luxembourg   —   —   —     Anti-Germ Austria GmbH, Austria   100.00   100.00     Anti-Germ Deutschland GmbH, Germany   100.00   100.00     ICL France S.A.S, France   100.00   100.00 ICL France S.A.S, France   —   —   —     Scora S.A.S, France   100.00   100.00 F-101 Table of Contents Note 30 – Group Entities (cont'd)         Percentage of   Shareholding The Holding Company   The Affiliate   Shares conferring rights to profits         Voting shares Anti-Germ Austria GmbH, Austria   —   —   —     Anti-Germ CZ s.r.o; Czech Republic*   98.00   98.00     Anti-Germ Hungary, Hungary   100.00   100.00     Anti-Germ Slovakia s.r.o., Slovakia   100.00   100.00 Anti-Germ Slovakia s.r.o., Slovakia   —   —   —     Anti-Germ CZ s.r.o; Czech Republic*   2.00   2.00 BKG Puriphos B.V, The Netherlands   —   —   —     ICL ASIA Ltd, Hong Kong   100.00   100.00 Rotem Holding GmbH. , Germany   —   —   —     BK Giulini, GmbH , Germany*   94.90   94.90     Fibrisol Service Ltd. ,UK   100.00   100.00     Fibrisol Service Australia Pty. Ltd., Australia   100.00   100.00     BK Giulini Argentina  S.A, Argentina*   95.00   95.00     Shanghai Tari International Ltd., China   51.00   51.00     Yunnan B.K Giulini Tianchuang Phosphate Co.  Ltd., China   60.00   60.00     Fibrisol Muscalla GmbH,  Germany*   34.65   34.65     ICL Polska Sp.z.o.o, Poland*   95.00   95.00     BK Giulini Leather Chemistry Co. Ltd. Hong Kong   100.00   100.00     BKG Personal Care Co., Ltd.Hong Kong   100.00   100.00     Flexotex GmbH , Germany   100.00   100.00     ICL Performance Products Jiangyin Co., Ltd.  China*   53.05   53.05      ICL North America Inc. USA   100.00   100.00     BK Giulini Specialities Private Limited, India   51.00   51.00     Turris  Versicherungvermittlung GmbH, Germany   100.00   100.00     ICL-IP Bitterfeld GmbH, Germany   100.00   100.00 Fibrisol Service Australia Pty. Ltd., Australia   —   —   —     Everris Australia Pty. Ltd. , Australia   100.00   100.00 BK Giulini Leather Chemistry Co. Ltd. Hong Kong,   —   —   —     ICL Performance Products Jiangyin Co., Ltd.  China*   11.00   11.00 ICL-IP Bitterfeld GmbH, Germany   —   —   —     ICL-IP Bitterfeld Grundbesitz GmbH & Co KG, Germany*   94.90   94.90 Flexotex GmbH , Germany   —   —   —     BKG Finance Gmbh, Germany   100.00   100.00 F-102 Table of Contents Note 30 – Group Entities (cont'd)         Percentage of   Shareholding The Holding Company   The Affiliate   Shares conferring rights to profits   Voting shares     BKG Finance Sup GmbH, Germany   100.00   100.00 ICL North America Inc, USA   —   —   —     Phosphorus Derivatives Inc., USA   100.00   100.00     ICL Performance Products Inc., USA   100.00   100.00     ICL-IP America Inc. USA **   100.00   100.00     Everris NA Inc, USA   100.00   100.00     Clearon Corp. , USA*.   98.00   98.00 ICL Performance Products Inc., USA   —   —   —     ICL Performance Products LP, USA*,**   99.00   99.00     ICL Performance Products LLC, US   100.00   100.00     ICL Performance Products Canada Limited; Canada   100.00   100.00 ICL Performance Products LLC, USA   —   —   —     ICL Performance Products LP, USA*,**   1.00   1.00 BKG Personal Care Co., Ltd.Hong Kong   —   —   —     ICL Performance Products Jiangyin Co., Ltd. China*   35.95   35.95 ICL Performance Products Jiangyin Co., Ltd. China*   Guangzhou Eclean Technology Co., Ltd, China   100.00   100.00 ICL ASIA Ltd, Hong Kong   —   —   —     ARM Ltd., Hong Kong   100.00   100.00     ICL Fertilizers (India) Private Ltd.   100.00   100.00     Jiaxing ICL Chemical Co., Ltd. , China   100.00   100.00     Zhangjiagang FTZ ICL Trading Co. Ltd.   100.00   100.00 ARM Ltd., Hong Kong   —   —   —     ICL Trading (HK) Ltd., Hong Kong   100.00   100.00     DDFR Corporation Ltd , Hong Kong   50.00   50.00     BK Giulini Hong Kong Limited, Hong Kong   100.00   100.00     AUB Storing and Services (Hong Kong) Ltd., Hong Kong   55.00   55.00 BK Giulini Hong Kong Limited, Hong Kong   —   —   —     BK Giulini Hygiene Hong Kong Ltd.   100.00   100.00     Angang BK Giulini Water Treatment Co Ltd, China   50.00   50.00 B.K. Giulini GmbH , Germany   —   —   —     Fibrisol Muscalla GmbH, Germany*   65.35   65.35     BK Mercosur S.A. , Uruguay   100.00   100.00     Rhenoflex GmbH , Germany   100.00   100.00     Rotem do Brasil Ltd. , Brasil   100.00   100.00 F-103 Table of Contents Note 30 – Group Entities (cont'd)         Percentage of   Shareholding The Holding Company   The Affiliate   Shares conferring rights to profits   Voting shares     Tari International N.Z Ltd.,New Zealand   100.00   100.00     ICL Polska Sp.z.o.o, Poland*   5.00   5.00     BK Giulini Argentina S.A*   5.00   5.00     Hagesüd Interspice Gewürzwerke GmbH & Co. KG, Germany   100.00   100.00     Hagesüd Gewürzwerke Beteiligungs GmbH Germany   100.00   100.00     Hagesüd Interspice France S.A.R.L   100.00   100.00 Rhenoflex GmbH , Germany   —   —   —     Gurit Worbla GmbH , Germany   100.00   100.00 Mifalei Tovala Ltd., Israel   —   —   —     Sherut Integrated transportation services 2013 Ltd.   100.00   100.00     Sherut Rail & Road Transportaion Services 1990 Registered Partnership, Israel***   100.00   100.00     M.M.M. Company United Landfill Industries (1998) Ltd., Israel   33.33   33.33 I.D.E. Technologies Ltd. Israel   —   —   —     Ambient Technologies Inc., USA   100.00   100.00     IDE Canaries S.A., Spain   100.00   100.00     Larnaca Water Partners, Cyprus*   95.00   95.00     Pelagos Desalination Services, Cyprus   100.00   100.00     Detelca UTE, Spain   20.00   20.00     Indian Desalination Engineering PVT Ltd., India   50.00   50.00     V.I.D Desalination Company LTD, Israel   50.00   50.00     OTID desalination partnership. Israel   50.00   50.00     West Galile Desalination Company Ltd***, Israel   50.00   50.00     ADOM Ashkelon desalination Ltd., Israel   40.50   40.50     I.D.E.S.B DESALINATION PARTNERSHIP, Israel   50.00   50.00     H2ID Ltd, . Israel   50.00   50.00     OMIS Water Ltd, Israel   60.00   60.00     IDE Technologies India Private Ltd. , India*   99.00   99.00     Sorek Desalination Ltd. Israel   51.00   51.00     Sorek Desalination Partnership. Israel   51.00   51.00     Sorek Operation and maintenance company Ltd. Israel   51.00   51.00     IDE Americas Inc, USA   100.00   100.00     Desalination Plants (Development of Zarchin Process) Limited, Israel ***   86.50   100.00     PCT Protective Coating Technologies Ltd., Israel   88.40   88.40     Idea Desalination Construction Partnership*, Israel   99.00   99.00 F-104 Table of Contents Note 30 – Group Entities (cont'd)         Percentage of   Shareholding The Holding Company   The Affiliate   Shares conferring rights to profits   Voting shares     Idea Desalination Construction Partnership*, Israel   99.00   99.00     IDE SAL WATER Ltd., Israel   100.00   100.00 Ambient Technologies Inc., USA   —   —   —     Larnaca Water Partners, Israel*   5.00   5.00     IDE Technologies India Private Ltd. , India*   1.00   1.00 IDE Canaries S.A., Spain   —   —   —     Idea Desalination Construction Partnership*, Israel   1.00   1.00 Dead Sea Magnesium Ltd.   —   0   —     M.R.I. Research & Development Ltd.,Israel***   100.00   77.78     Dead Sea Magnesium Inc., USA   100.00   100.00     Israeli Light Metal Initiative Ltd. Israel   9.00   9.00 * The investee is also held by other Group companies. ** There are preferred shares. *** In liquidation/inactive. **** The company is held by other group companies, where the holding percentage changes from time to time according to the provisions of the Articles of Association. F-105