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: agriculture, food and engineered materials. These three end-markets constitute over 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-based food additives and advanced industrial intermediates.

Our principal assets include:

For the year ended December 31, 2015, we generated total sales of approximately $5,405 million, operating income of approximately $765 million and net income of approximately $509 million, the sales of the Fertilizers segment amounted to approximately $3,067 million and operating income of approximately $529 million, our Industrial Products segment generated sales of approximately $1,115 million and operating loss of approximately $24 million and our Performance Products segment generated sales of approximately $1,472 million and operating income of approximately $319 million.

For a breakdown of sales by segment and geographic market for each of the last three fiscal years, see “Item 5. Operating and Financial Review and Prospects—A. Operating Results.”

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-quality food to their residents, including by encouraging agricultural production, which should preserve the long-term growth trend of fertilizer consumption.

Potash helps regulate a plant'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 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% of the world's aggregate potash production and the top nine producers (considering China as a single producer even though there are numerous producers in China) accounted for approximately 85% of world production in 2015. In 2015, the quantities of potash sold worldwide were low compared with 2014, which was a record year. The average prices in 2015 were significantly lower than the prices in 2014. Since the beginning of 2015 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 in 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 framework agreements, which represent a 3% increase in the 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 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 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 quantity of 835 thousand tons, including options. In the Company’s estimation, the customers in India will not utilize the entire quantities covered by the contracts due to the accumulation of 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 be 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 subsidies that will be determined by the government and by the amount of the monsoon rainfall.

The demand for potash in Brazil, which 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 9.1 million tons in 2014 – constituting a decline of 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 3%, from 35.5 million tons of K2O in 2015 up to 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. In 2015, the vast majority of the world’s phosphate rock production 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 2.5%, from a quantity of 43.7 million tons of phosphorous content in 2015 to 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 lower than expected in the second half of the 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, the new Saudi producer (Ma’aden) increased its exports this year, and the Moroccan phosphate company (OCP) entered a new plant into production (one of four in the processes of gradual construction). Based on CRU publications, due to the decline in demand, a number of major producers implemented a policy of contracting production: the U.S. fertilizers producer, Mosaic, reduced production, the Jordanian producer, JPMC, produced smaller quantities in the final 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 rock also fell in 2015, however more moderately than the phosphate and potash prices. CFR prices fell by about ten percent. Part of the decline was offset by the decline in the 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. For 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 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 expanding into usage for larger specialty field crops. Farmers use fertilizers that are customized to meet the needs of specific crops, soil types and specific climates, to maximize yield and quality, mainly when the crop prices are high. The specialty fertilizers allow more precise application of the critical foundations for development of the plant (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. These fertilizers include, 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-based specialty products deliver additional 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, forest fire retardants and fire extinguishing. Demand for phosphate-based products is driven by global economic and population growth and improved living standards, which promote the adoption of more sophisticated food products.

Bromine

The largest commercial use of bromine is in the area of bromine-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 enclosures 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, 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, additional uses grew, although at a slower pace. ICL and its competitors are developing new products and 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 2015 (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 for aspiring competitors, as well as the requirement for a logistical supply system and specialized transport vehicles (isotanks). We estimate that approximately 70% of global elemental bromine production is consumed internally by 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.

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

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:

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-lives such as convenience food and processed food products.

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-life and food stability. These trends act as long-term drivers of demand for food additives such as phosphate derivatives, phosphate and 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, is driven by the demand from the construction and electronics industries, 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 including next generation and polymeric flame retardants, mercury emission control solutions, forest fire retardants, bromine-based biocides for water treatment, bromine, magnesia and potassium chloride-based intermediates for the pharmaceutical industry and oil additive solutions.

Our Competitive Strengths

We attribute our business strength to the following competitive advantages:

Our Strategy

Our “2020—Next Step Forward” corporate strategy is targeted to fulfill essential needs in our three core markets (agriculture, food and engineered materials). We have developed a strategic plan based on three value-creating pillars: (1) Efficiency: improvement of existing operations; (2) Growth: organic and external expansion of our value chain, from specialty minerals to the agriculture, food and engineered materials markets; and (3) Enablers: creating one global ICL, strengthen innovation, providing an empowering environment for our employees and aligning management with our external and internal stakeholders to support our growth and efficiency goals.

Our key strategic initiatives include:

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.

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 developmentcertain companies (including, among others, ICL Dead Sea, the companies today consolidated ascompanies ICL Rotem, the bromine companies and Tami) were transferred to us.ICL. In 1992, following a decision byof the Israeli government to privatize our Company, IsraelICL, the State published its tender prospectus, 20% of the Company’sCompany'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 subsidiaries.subsidiaries was issued to the State of Israel.Israel (for additional details regarding the terms of the Special State Share, see “Item 10 - Additional Information— B. Memorandum, Articles of Association and Special State Share”). In 1995, the State of Israel sold its controlling interest in usthe Company (representing approximately 24.9% of our shares) to Israel Corporation Ltd., a public traded Company on the TASE (ILCO), which was controlled at that time by the Eisenberg family. A majority of the ordinary shares held by the state of Israel were sold during the following years. In 2000, the State of Israel ceased to be a stakeholder in terms of holding any of our 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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Our acquisition in 2011Production of 50%tailor-made, highly-effective specialty fertilizers offering both improved value to the grower and precise nutrition which is essential for plant development, optimization of the shares of Tetrabrom Technologies Ltd., raising our shareholdings to 100% of the share capital of Tetrabrom;crop yields and reduced environmental impacts.

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Our acquisition in 2011A focused and highly experienced group of 100% ownership of A. Fuentes Mendea S.A., a Spanish company engaged in thetechnical experts developing production processes, new applications, formulations and marketing of specialty fertilizers in Spain;products for our agricultural and industrial markets.

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Our acquisition in 2011 of the companies, assetsAn extensive global logistics 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 productsdistribution network with plants in the United 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 remainder of Iberpotash;

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The commencement in 1997 of our magnesium production operations in Israel in a joint venture with Volkswagen;over 30 countries.

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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 United States of biocides for water treatment, in 1995;

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Our acquisition of a 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

In the year ended December 31, 2018, we generated total sales of $5,556 million, operating income of $1,519 million, adjusted operating income of $753 million, net income attributable to the shareholders of the company of $1,240 million and adjusted net income attributable to the shareholders of the company of $477 million. See "Item 5 – Operating and Financial Review and Prospects – A. Operating Results – Adjustments to reported operating and net income (Non-GAAP financial measures)".

Sales of the Industrial Products segment amounted to $1,296 million and the operating income attributable to the segment amounted to $350 million, sales of the Potash segment amounted to $1,623 million and the operating income attributable to the segment amounted to $393 million, sales of the Phosphate Solutions segment amounted to $2,099 million and the operating income attributable to the segment amounted to $208 million, and sales of the Innovative Ag Solutions segment amounted to $741 million and the operating income attributable to the segment amounted to $57 million.

For a leading multinational company that operates mainlybreakdown of sales and a geographic market by segments for each of the last three fiscal years, see “Item 5 - Operating and Financial Review and Prospects— A. Operating Results”.

Our Industries

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

Fertilizers

Fertilizers serve an important role in three segments: Fertilizers, Industrial Productsglobal agriculture by providing vital nutrients that help increase both the yield 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 2015, the total salesquality of our Fertilizers segment were approximately $3,067 million and accounted for approximately 57% of our total sales (including sales to other segments of the Company), while the reported operating income for the segment totaled approximately $529 million, representing approximately 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.

crops. Nitrogen, phosphorus and potassium (N, P and K) constitute the three major nutrients required for plant growth. ICL sells phosphorus‑based and potassium‑based products. There are currently no artificial substitutes for phosphoruspotassium and potassium (which are supplied by the Company). These threephosphorous. Although these nutrients are presentnaturally found in the ground, however the continued use of the soil, for agricultural crops depletes the concentration of these fundamental elements in the groundthey are depleted over time andby farming, which could result in a decline inlead to declining crop yields and therefore this deficiencyland productivity. To replenish these nutrients, farmers must be replenished from external sources through the use ofapply fertilizers. We sell phosphorus-based and potassium-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.

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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 agriculture 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 fertilizerfertilizers 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 willto be maintained. Due to the existing entry 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

Potash helps regulate a plant’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 nutrient fertilizer. Potash is mined either from underground mines or, less frequently, from solutions found in nature, such as the Company’s operations in the Dead Sea. According to estimates of the United States Geological Survey, nine countries account for approximately 94% of the world’s potash natural reserves and according to the Fertecon Potash Outlook December 2018 report, worldwide sales of potash in 2018 were higher than in 2017 due to increased demand, mainly in China and Brazil.

The entry barriers facing new competitors into the potash market are significant, and include a long period of time and an investment of billions of dollars of capital per operation. For example, economically recoverable potash deposits are scarce, typically deep in the earth and geographically concentrated. Nonetheless, several fertilizer companies are in the process of commissioning new potash mines.

Phosphate is essential for the development of the plant’s root, and is required for photosynthesis, seed germination and efficient usage of water. The main raw materials for phosphate fertilizers are phosphate rock and sulphuric acid, as well as ammonia. The principal phosphate fertilizer producing regions have plentiful reserves of high quality phosphate rock that can be mined at a low cost. In 2018, the vast majority of the world’s phosphate rock production was in China, Morocco, the United States and Russia. In the phosphate market, the need for access to competitive sources of multiple raw material feedstocks (phosphate rock, sulphuric acid and ammonia), combined with the complexity of developing an economically feasible downstream value chain, constitute a significant entry barrier with respect to new competitors.

The specialty fertilizers market is growing faster than the markets for conventional fertilizers. Specialty fertilizers are generally used for specialty crops (such as greenhouses and horticulture) but are also expanding into usage for larger specialty field crops. Farmers use fertilizers that are customized to meet the needs of specific crops, soil types and climates, to maximize yield and quality. The specialty fertilizers allow more precise application of the critical foundations for development of the plant (phosphorus acid, potassium and nitrogen) and micro‑nutrients. In addition to reduction of the environmental impacts, the specialty fertilizers contribute to a more efficient and effective fertilization of different types of agriculture products (fruits, vegetables, etc.). Increase in the demand for food is expected to give rise to an increase in the use of specialty fertilizers. These fertilizers include, among others, “enhanced efficiency fertilizers” which include controlled release fertilizers (CRF), which allow for precision in the release of nutrients over time, and delayed/slow release fertilizers (SRF), which allow for a very slow release of nutrients (nitrogen and potassium only), liquid fertilizers integrated in irrigation systems and in herbicides and fully water soluble fertilizers, which are most commonly used for fertilization by means of drip irrigation systems and foliar spraying.

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FertilizerpluS is ICL's premium fertilizers line, based mainly on polyhalite (marketed by the Company as Polysulphate™) and other products. FertilizerpluS products, which include different compounds of phosphorus, sulphur, potassium, magnesium and calcium, are tailored for various types of soil and wide range of crops, intended to enhance crops, improve yields and increase fertilizer efficiency. FertilizerpluS includes, among others, the following products:

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Polysulphate™ – polyhalite is a mineral that is exclusively mined by ICL through the Potash segment in an underground mine in the UK and is marketed under the brand name Polysulphate™. Polysulphate™ is used in its natural form as a fully soluble and natural fertilizer, which is also used for organic agriculture and as a raw material for production of fertilizers. Polysulphate™ is composed of sulphur (SO3 48%), potash (K2O 14%), calcium (CaO 17%) and magnesium (MgO 6%), which are essential components for improvement of crops and agricultural products.

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PotashpluS – a compressed mixture of Polysulphate™ and potash. The product includes potassium, sulphur, calcium and magnesium.

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PKPlus – a unique combination of phosphate, potash and Polysulphate™.

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NovaPhos – ensures an effective supply of slow-release phosphorus, calcium, magnesium and micronutrients for crops, specifically tailored for use in acidic soil.

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NPS – a nitrogen-phosphate fertilizer compounded with sulphur, which provides exceptional effectiveness for the enhancement of a wide range of crops through the combination of these three nutrients in one product.

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PK+Micronutrients – a tailor-made fertilizer, with precise micronutrient composition for the specific type of crop.

PKPlus, NovaPhos, NPS and PK+Micronutrients are marketed by the Phosphate Solutions segment.

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Specialty Chemicals Industries

Specialty phosphates - ICL’s specialty phosphates products are based on ICL's backward integrated value chain, which uses phosphate rock and fertilizer-grade phosphoric acid (“green phosphoric acid”), for the production of specialty phosphates products with higher added value, such as pure phosphoric acid and salts for various applications. These products provide ICL with additional value on top of commodity phosphates. One of the major applications for specialty phosphates provides solutions based on specialty phosphate salts and acids for the diversified industrial end markets, such as oral care, cleaning products, paints and coatings, water treatment, asphalt modification, construction and metal treatment. Another major application is for the food industry, as functional food ingredients and phosphate additives, which provide texture and stability solutions for the processed meat, poultry, seafood, dairy, beverage and baked goods markets. Demand for specialty phosphates is driven by global economic and population growth and improved living standards, which promote the adoption of more sophisticated food products as well as improved industrial products and production technologies.

Bromine is a member of the halogen family and known for its diverse uses in many industries. Based on a study conducted in 2014 at Vanderbilt University, among 92 naturally occurring chemical elements, bromine falls within a class of 28 chemical elements that are essential for human life. Bromine is used in the production of a range of bromine compounds.

The largest commercial use of bromine is in the area of bromine‑based flame retardants, which, based on ICL’s internal estimations, accounts for approximately 40% of the demand for bromine. In order to meet fire-safety requirements, flame retardants are used as inputs in manufacturing processes and end products, such as, plastic enclosures 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. ICL and its competitors focus on R&D to introduce new products and uses for bromine on an ongoing basis.

Bromine is found naturally in seawater, underground brine deposits and other water reservoirs, such as the Dead Sea. The concentration of bromine 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 premier source of bromine, with concentration levels significantly higher than in regular seawater, and it accounts for about half of the global supply (together with the production on the Jordanian side of the Dead Sea). The Dead Sea operation is the most competitive supply source of bromine as it has the highest concentration, and as a result, the least amount of water must be extracted and evaporated to produce bromine, which minimizes the energy costs.

The bromine industry is highly concentrated, with three companies accounting for the majority of the worldwide capacity in 2018 (ICL, Albemarle and Lanxess). Lack of access to a low-cost source of supply, such as the Dead Sea, constitutes a significant barrier to entry for aspiring competitors, as well as the requirement for a logistical supply system and specialized transport containers (isotanks). The Company estimates that the majority of the global elemental bromine production is consumed internally by the bromine manufacturers, since there is a very small market for elemental bromine. Development of complex production facilities for downstream products is required in order to increase the global use of elemental bromine.

Magnesium is considered to be the lightest structural metal. One of the main characteristics of magnesium is a higher strength‑to‑weight ratio compared with other metals – mainly steel and aluminum. The magnesium market is characterized by concentration of production, where about 85% of the production is in China.There are a small number of western producers, including US Magnesium in the United States, ICL Magnesium in Israel and RIMA in Brazil.

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Markets

ICL is built around three main minerals – potash, phosphate and bromine, which are the main raw materials for most of the downstream products along the integrated value chains that we have developed throughout the years. ICL is organized in four segments: Industrial Products, Potash, Phosphate Solutions and Innovative Ag Solutions (IAS). Three of the four segments represent a specific value chain: The Industrial Products segment includes mainly the bromine value chain (elemental bromine and bromine compounds for various industrial applications) as well as several complementary businesses, mainly phosphorous based compounds (mostly flame retardants) and additional Dead Sea minerals for the pharma, food, oil & gas and de-icing industries. The Potash segment is based on our potash value chain and includes mainly potash fertilizers, as well as polysulphate-based fertilizers for the agriculture market. The segments also includes the magnesium activity. The Phosphate Solutions segment is mostly based on ICL's phosphate value chain. It includes specialty phosphate salts and acids for various industrial applications as well as commodity phosphates, used mostly as fertilizers. In each of the segments ICL benefits from leadership position, whether it is in market share or in cost competitiveness. The fourth segment, IAS, currently includes the specialty fertilizers business but also functions as ICL's innovative arm, focusing on R&D and digital innovation. ICL aims to achieve leadership position in specialty fertilizers through portfolio enhancement and geographic expansion, potentially including bolt-on M&A.

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Industrial Markets

ICL’s Industrial Products segment and ICL's specialty phosphates business serve various industrial markets, benefitting from its integrated phosphate and bromine value chains.

Industrial Products

ICL's bromine solutions are embedded in numerous products, making consumer goods safer and industrial production more efficient and sustainable. Demand for the products manufactured by ICL Industrial Products, which mainly include solutions based on bromine and phosphorus, is driven by population growth, increased standards of living, higher environmental awareness and increased focus on cost effective production. These trends drive demand for more environmentally friendly and safer industrial products, as well as efficient and reliable service suppliers. ICL’s products serve a diverse number of industries, such as, construction, electronics, automotive, energy (including renewable energy), water and pharma & nutraceutical. Increased regulation and environmental awareness also drive demand for flame retardants including polymeric and reactive flame retardants, bromine‑based biocides for water treatment, bromine, magnesia and potassium chloride‑based intermediates for the pharmaceutical industry and oil additive solutions. ICL estimates that bromine demand is relatively stable and market growth is linked to global population growth. On the supply side, Chinese supply is in a downward trend due to resource depletion and increased environmental-related regulatory pressure in China. This, together with shortage of economically viable bromine resources globally, result in a tight supply‑demand balance and price increases.

Specialty Phosphates

ICL’s specialty phosphates business is based on ICL's backward integration into phosphate rock and fertilizer grade phosphoric acid which is cleaned to reach purified phosphoric acid (also referred to as food grade or technical grade acid). ICL markets purified acids and also produces phosphate salts based on it. ICL's phosphoric acids and salts serve many industries such as cola beverages, water treatment, cleaning materials, paints and coatings, metal treatment, oral care, construction and more. Phosphate salts used as food additives serve the dairy, bakery, meat, poultry and seafood industries.

In March 2018, the Company completed the sale transaction of the fire safety and oil additives businesses, for a total consideration of $1,010 million, of which $953 million is in cash and $57 million is in the form of a long-term loan to a subsidiary of the buyer.

According to ICL's estimates, the Company has a leading position in specialty phosphates in Europe, North America and Latin America. According to CRU's estimates from September 2018, demand for purified phosphoric acid is expected to grow by a CAGR of 1.5% between 2018 to 2023 while supply is expected to grow by less than 0.5%. According to CRU, demand for water soluble fertilizers, of which purified phosphoric acid is a major raw material, has been growing sharply, driven by rapid growth in fruit & vegetable consumption and changing agricultural production systems. Phosphate salts used in processed meats, cheeses and baking goods, have seen strong consumption growth in developing countries. At the same time, there are several capacity expansions on the horizon, these are likely to be almost entirely offset by expected closures of TPA (thermal phosphoric acid) plants in China.

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Consumer demand for different food products has changed dramatically over the last several decades, driven by increased income per capita, 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, protein-enriched, unprocessed (“clean label”) and non-allergenic (“free from”) food products with longer shelf lives along with improved flavor, texture and appearance. An increasingly longer supply chain and consumer awareness of food waste also drives the demand for longer shelf‑life and food stability. These trends act as long‑term drivers of demand for food additives, such as phosphate derivatives, phosphate and protein containing formulations and hygiene products for the processed meat, bakery, dairy and beverages industries.

Agriculture Markets

ICL's potash, commodity fertilizers, FertilizerpluS and specialty fertilizers businesses serve agriculture markets worldwide. Global fertilizer demand is driven mainly by the supply/demand balance in respect of grains and other agriculture products, which impacts their prices. Supply of agriculture products is influenced by weather, planted areas and input usage, while demand is primarily influenced by population growth and dietary changes in the developing world:

Population and Income Growth per Capita. Historically, growth in fertilizer consumption globally has been closely correlated with growth in the world’s population, which is expected to increase by over 2.0 billion and to reach 9.8 billion by 2050, according to the FAO (Food and Agriculture Organization of the UN). Currently, developed countries use fertilizers more intensively than developing countries and, therefore, produce crops at much higher yields. Economic growth in emerging markets supports food demand and thus fertilizer use. In addition, growth in income per capita in developing markets results in a shift to more protein‑rich diets through higher meat consumption, which requires larger quantities of grain for their growth, thus leading to an increased demand for seeds used in animal feed. According to estimates published by the IMF (International Monetary Fund), GDP per capita in emerging markets and developing economies is expected to grow by 3.3% and 6.5% in 2019 and 2020, respectively.

Declining Arable Land per 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 per planted area. According to the FAO, the amount of arable land per capita is expected to decrease from 0.22 hectares per person to 0.17 hectares per person between 2014 and 2050. 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 a yield increase in existing farms in developing countries, mainly in China, India, Russia, Africa and Central America, by optimizing the use of fertilizers (especially improving the balance in the use of potash, which is underutilized versus the use of nitrogen fertilizers), together with water availability and better seeds. According to the FAO, world crop production will double between 2007 and 2050. 77% of the growth is expected to be attributed to increase in yields.

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Grain Stock‑to‑Use Ratio. As illustrated by the chart below, starting from the year 2000 and until the 2012/3 agriculture season, pressure on food demand and unfavorable weather in the main growing areas resulted in low levels of the grain stock‑to‑use ratio (a metric index of the level of carryover stock). Since then, several years of favorable weather led to a trend of increasing yields, resulting in an increase in the grain stock-to-use ratio. An increase in the grain stock-to-use ratio generally indicates that grain prices may decline (due to higher grain supply) and vice versa. During 2018, corn and wheat prices increased by 8.4% and 19.3%, respectively, while soybean and rice prices decreased by 4.8% and 9.9%, respectively. WASDE report published by the USDA in February 2019 showed a decrease in the expected ratio of the global inventories of grains to annual consumption, to 29.2% at the end of the 2018/19 agriculture year, compared to 31.3% at the 2017/18 agriculture year, and 30.6% in the 2016/17 agriculture year. The decrease in the global stock-to-use ratio is mainly a result of a decrease in the ratio for wheat and corn compared to the previous agricultural year, due to a decrease in wheat production in Australia which is facing a drought and in Argentina due to a smaller crop on the background of an increased consumption and due to higher consumption of corn.

Specialty Agriculture

Specialty Agriculture markets are estimated to be growing at a rate of 5-15% a year, depending on the market segment (IFA, 2017). The decrease in arable land per capita due to population growth and the increasing pursuit of an improved quality of life are leading to a higher consumption of fruits and vegetables, which are considered specialty crops, and support the use of more sophisticated fertilizers that will enable higher yields. Increased environmental awareness is also contributing to the use of specialty fertilizers (since they result in higher nutrient efficiency).

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The expected market growth is supported by the following global trends:

The need for an increase in yield and crop quality

Enhanced Efficient Fertilizers, which include controlled release fertilizers (CRF), increase the quality and yield of crops through a more efficient crop uptake of the nutrients. Many specialty-fertilizers field trials in specific growing regions have already demonstrated the benefits of using new fertilizer technologies. The Enhanced Efficiency Fertilizers category is rapidly growing globally.

Regulatory pressure and environmental trends

Environmental regulations impose restrictions on the level of nutrient usage. This results in a movement towards more efficient nutrient solutions, such as Controlled Release Fertilizers (CRFs) or Water Soluble Fertilizers.

China’s Zero Growth Fertilizers 2020 is one example of such a regulation. In order to achieve the goal of a zero increase in fertilizer consumption by 2020, China is promoting new fertilization technologies including Controlled Release Fertilizers and fertigation; raising customized fertilizer application; promoting new fertilizers and new technologies; promoting organic fertilizer application and strengthening of high-standard ploughing (Agronews, 2015). CRFs are representative of new fertilizers, so hastening their adoption will play a pivotal role in reducing the consumption volume of chemical fertilizers and improving their utilization rates (CCM, Data & Business Intelligence, 2016). Another example is the EU Nitrate Directive, which sets a limit to the amount of nitrates in the water. Specialty Fertilizers, such as CRFs, can optimize the availability of nitrogen to the crop. (EU Nitrate Directive, European Commission, 2014). In recent years, there has been a growing trend among commercial companies, such as supermarket chains and other retailers, of setting their own internal rules related to growers’ practices. For instance, some supermarket chains are demonstrating their commitment to reduce environmental impacts by setting specific rules regarding fertilizer usage by their fruits and vegetables suppliers. Other voluntary organizations, such as “GAP - Good Agriculture Practice”, publish guidelines and issue certificates to farmers who comply with their regulations. Many food processing companies and retailers adopt these guidelines as a standard their suppliers should comply with.

New Grower Practices

Grower practices have a substantial impact on the growth of the Specialty Fertilizers market. Fertigation usage is growing since applying fertilizers via fertigation systems is much more efficient when using specialty fertilizers, thus increasing the demand for soluble fertilizers such as Water Soluble NPKs.

The ongoing improvements in agricultural technology have resulted in a significant increase in the usage of drip irrigation (more than 10% per year) and an increase in demand for liquid and water soluble fertilizers.

All of the above are expected to contribute to a higher long-term demand for specialty fertilizer solutions.

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Our Competitive Strengths

ICL attributes its business strength to the following competitive advantages:

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Unique portfolio of mineral assets. ICL benefits from access to one of the world’s richest, longest‑life and lowest‑cost resources of potash and bromine. ICL’s access to these resources is based on an exclusive concession from the State of Israel for extraction of minerals from the Dead Sea. ICL also holds licenses to mine potash and salts from underground mines in Spain, with vast resources. ICL is the only global producer of polyhalite, a mineral used as fertilizer and consisting potassium, Sulphur, calcium and magnesium. In addition, ICL has access to phosphate rock in the Negev Desert based on mining licenses from the State of Israel and it holds a license for mining phosphates in China. Access to these assets provides ICL with a consistent, reliable supply of raw materials, allowing for large scale-production and supporting ICL’s integrated value chain of specialty, value added products.

Dead Sea in Israel:  ICL’s potash and bromine production facilities at the Dead Sea enjoy lower production costs compared to mining potash from underground deposits or extracting bromine from less concentrated sources. This is attributed to the high concentration and virtually unlimited supply of minerals in the Dead Sea and to the unique solar evaporation production process which is less energy intensive. Furthermore, the Dead Sea’s hot and dry climate allows ICL to store outdoors very large amounts of potash (exceeding annual production) at a low cost. This advantage enables ICL to operate its potash facilities at full production capacity despite periodic fluctuations in demand, and to react faster in periods of higher demand. In addition, ICL benefits from lower transportation and logistics costs compared to its competitors and faster time to market due to the geographic proximity of its facilities in Israel to seaports and due to Israel’s geographic positioning vis‑à‑vis its main geographical markets (especially the fast‑growing markets of India, China and Brazil). While ICL benefits from these advantages, it incurs infrastructure‑related costs in connection with harvesting salt from Pond 5 at its Dead Sea complex, which is its 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, ICL’s access to this supply of potash and bromine pursuant to the concession is subject to the need to construct a new pumping station (P-9). Moreover, the Law for Taxation of Profits from Natural Resources in Israel which entered into effect on January 1, 2016, will impact the Company's net profit if the mineral's price environment will increase to a level that its effect on the profitability of the subsidiaries resulted to a natural resources tax liabilities. See “Item 3 - Key Information— D. Risk Factors— Risks Related to Our Business”.

United Kingdom and Spain mineral assets:  In addition to its operations in Israel, ICL mines potash in Spain and Polysulphate in the United Kingdom (potash production in the United Kingdom halted completely in mid-2018). The geographical proximity to Europe, the primary market of these assets, provides ICL with logistical advantages reflected in lower transportation costs, faster time-to‑market and higher net-back prices. In Spain, ICL is progressing with its project to consolidate the two existing mines and processing facilities into one complex which operates a ramp instead of a shaft, thus aiming to increase the mine’s capacity and contributing to lower costs. The project also consists of expanding the above-mentioned processing facility’s capacity, logistics adjustments and improvements and construction of a new terminal in the Port of Barcelona. In the UK, the Company is ramping up the production of Polysulphate,a unique mineral containing four nutrients (potassium, sulphur, calcium and magnesium) which can be used as a natural fertilizer and provides a very cost effective solution, as its production does not require chemical processing.

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Integrated phosphate value chain: ICL’s access to phosphate rock in the Negev Desert and in China is the foundation for the Company's sizeable downstream, fully backward integrated specialty phosphate business. ICL mines and processes phosphate rock from three open‑pit mines in the Negev Desert under mining licenses from the State of Israel and from an open-pit mine in Haikou (China), using conventional methods, under a phosphate mining license that was issued in July 2015 by the Division of Land and Resources of the Yunnan district in China. About 90% of the phosphate rock produced is used internally to manufacture phosphate fertilizers, fertilizer-grade and pure phosphoric acid, with the balance being sold to third parties. ICL’s phosphate assets are the base for its vast and diversified specialty phosphates product portfolio used in industrial applications as well as food additives and specialty fertilizers, adding additional value to the commodity business while reducing ICL’s exposure to the volatility in the commodity markets. 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 wherein they are located”.

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Diversification into higher value‑added specialty products leveraging ICL’s integrated business model. ICL’s integrated production processes are based on a synergistic value chain that allows it to both efficiently convert raw materials into value‑added downstream products and to utilize the by‑products. For example, in phosphates, ICL utilizes its backward integration to produce specialty phosphates used in the food industry and for industrial applications. These businesses benefit from higher growth rates, higher margins and lower volatility compared to commodity phosphates. In addition, as a by‑product of the potash production at the Dead Sea, ICL generates brines with the highest bromine concentration globally. ICL’s bromine‑based products serve various industries such as the electronics, construction, oil and gas and automotive industries.

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Leading positions in markets with high entry barriers.  ICL obtains leadership positions in many of the key markets in which it operates. It is the clear leader in the bromine market, with 40% of market capacity and about third of production and in the potash market the Dead Sea operations has a leading competitive positions. ICL also has the largest market share in specialty phosphates in the combined markets of North America, Europe and Latin America and is the sole producer of polysulphate. ICL has leadership positions in additional product lines such as phosphorous-based flame retardants, PK fertilizers in Europe and soluble phosphate‑based fertilizers.

Most of ICL’s businesses rely on natural resources that are scarce and concentrated in the hands of a few market participants. ICL’s 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 add further significant barriers to entry.

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Strategically located production and logistics assets.  ICL benefits from the proximity of its facilities, both in Israel and Europe, to developed economies (Western Europe) and emerging markets (such as China, India and Brazil). For example, in Israel, ICL ships 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). As a result of their geographical positions, access to these two ports provides ICL with two distinctive advantages versus its competitors: (1) it has lower plant gate‑to‑port, ocean freight, and transportation costs from ports to target markets, which lower its overall cost structure; and (2) it has faster time to markets due to its proximity to end‑markets, allowing it to opportunistically fill short lead‑time orders, strengthening its position with its customers. In addition, ICL is the sole producer with the ability to transport potash and phosphates from the same port (which it does in Israel). ICL’s sales are balanced between emerging markets (approximately 39% of 2018 sales) and developed economies (approximately 61% of 2018 sales).

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Available cash flows from operating activities and closely monitored capital allocation approach. Continuous focus on cash flow generation, optimization of the capital expenditures (CAPEX) and working capital as well as the implementation of efficiency measures enabled the Company to generate operating cash flow of $620 million in 2018. These cash flows were used in accordance with the Company’s strict approach in connection with allotment of equity, whereby the Company examines, on an ongoing basis, the work plan and its investments. ICL's capital allocation approach balances between driving its long‑term value creation through investments in its growth, providing a solid dividend yield while aiming to maintain an investment grade rating (BBB- by S&P and Fitch). On March 6, 2018, the Company’s Board of Directors revisited the dividend distribution policy and decided that for 2018 and 2019 calendar years the Company’s dividend payment rate will continue to be up to 50% of the adjusted net income. In 2018, the Company declared and paid total dividends of $244 million, in respect of the fourth quarter of 2017 as well as the first, second and third quarters of 2018. Dividend payments in 2018 reflects a dividend yield rate of 3.8% (based on the average share price for the year). See “Item 8 - Financial Information— A. Consolidated Statements and Other Financial Information— Dividend policy”.

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Professional expertise and culture of collaboration and determination. ICL’s operations are managed by an international management team with extensive industry experience. ICL develops leaders with strong experience in their fields in order to drive change and innovation within the Company. ICL focuses on nurturing and empowering talent through a global platform of qualification, collaboration and communication that reinforces innovation.

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Our Strategy

ICL’s integrated business model is based on its unique access to essential minerals that support its specialty downstream activities – with the focus on crop nutrition and industrial markets. Our model creates significant operational synergies, which derive from the combination of our attractive assets and broad value‑added solutions. Over the years, we have developed a balanced portfolio that supports long‑term stability and growth.

In 2018 ICL launched its “Business Culture of Leadership” strategy, focused on enhancing market leadership across its three core mineral value chains of bromine, potash and phosphate, as well as realizing the growth potential of Innovative Ag Solutions. To better align the organization with this strategy, ICL Realigned the company into four business divisions: Industrial Products (bromine), Potash, Phosphate Solutions and Innovative Ag Solutions.

Industrial Products

ICL’s global leadership in the bromine industry is driven by its focus on delivering value to its customers rather than increasing volume. ICL is able to generate more value by leveraging its unique assets and know-how and by fostering innovation through the development of new applications, such as new bromine and phosphorus-based flame retardants, magnesia and salt products, as well as other solutions. ICL continues to leverage its unique logistical advantages and unparalleled experience related to the safety and environmental aspects of its bromine business.

Potash

ICL leverages its well-positioned and unique potash assets, as well as its logistical advantages, to be among the three most competitive suppliers in its key target markets, including Brazil, Europe, India, South-East Asia and China. ICL’s cost competitiveness is driven by its lower logistics costs due to its facilities’ proximity to ports and customers, as well as by continuous optimization of its potash production processes at ICL Dead Sea and ICL Iberia, reducing costs and efficiently utilizing its capacity potential. At ICL Boulby, the Company has shifted towards production of Polysulphate, becoming the first and sole supplier of this new and unique fertilizer. ICL also continues to enhance its competitive production of Magnesium and to optimize synergies with its potash operations at the Dead Sea.

Phosphate Solutions

ICL is a global leader in providing phosphate based solutions to the Industrial, Food and Agriculture end markets. ICL’s strategy is to continue to outgrow these markets by increasingly focusing on specialty phosphate solutions and further promoting commercial excellence and value-based product positioning, while enhancing customer relationships. Leveraging on its backward integration to the phosphate resources of ICL Rotem in Israel and YPH in China, ICL will continue optimizing its capabilities to support growth and margin expansion of its specialty phosphate products and solutions.

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Innovative Ag Solutions

ICL is striving to create global leadership for Innovative Ag solutions by enhancing its global positions in its core markets of Specialty Agriculture, Ornamental Horticulture, Turf and Landscaping, targeting high growth markets such as Latin America, India and China. By leveraging its unique R&D capabilities, as well as seeking M&A opportunities, ICL is working to expand its broad product portfolio of Controlled Release Fertilizers segment(CRF), Water Soluble Fertilizers (WSF), Liquid Fertilizers, Slow Release Fertilizers (SRF) and Straights (MAP/MKP/Pekacid), to further boost growth. ICL is also developing a service portfolio focused on creating global and regional Agro-professional based solutions, leveraging digital innovation.

Culture 

ICL fosters a “Business Culture of Leadership”, which focuses on business leadership, by creating a leading and sustainable work environment, with strong commitment to all stakeholders. Culture at ICL, means placing safety as the company’s top priority and making every effort and investment to achieve top safety results. Culture at ICL, also means operating with a clear commitment to the environment, even beyond regulatory compliance. ICL strives to be an “employer of choice” by strengthening the company’s value proposition to employees and by promoting ICL’s core values. ICL also fosters an innovation-driven culture that leverages its technology and know-how, to better serve its customers and increase their loyalty. To ensure we live up to our values, culture at ICL also means accountability, transparency and top-tier corporate governance.

Capital Structure

ICL’s growth initiatives will be supported by our strong financial position. ICL has taken several steps to solidify its capital structure and generate funds for future growth, by reducing debt and improving the maturity profile, optimizing capital expenditures and working capital, implementing cost reductions and divesting low‑synergy assets.

As part of this strategy, in March 2018, the Company completed the sale transaction of the Fire Safety and Oil Additives businesses, for a total consideration of $1,010 million, of which $953 million is in cash and $57 million is in the form of a long-term loan to a subsidiary of the buyer.

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Segment Information

We are potash,a leading multinational company that operates mainly in the areas of fertilizers and phosphates, including specialty fertilizers.chemicals, through four segments – Industrial Products, Potash, Phosphate Solutions and Innovative Ag Solutions.

Industrial Products Segment

The Industrial Products segment produces bromine out of a solution that is a by‑product of the potash production process in Sodom, Israel, as well as bromine‑based compounds. Industrial Products uses most of the bromine it produces for self‑production of bromine compounds at its production sites in Israel, the Netherlands and China. In 2015,addition, the Industrial Products segment produces several grades of potash, representedsalt, magnesium chloride and magnesia products. Industrial Products is also engaged in the production and marketing of phosphorous-based flame retardants and additional phosphorus‑based products.

In 2018, the total sales of the Industrial Products segment totaled $1,296 million, constituting approximately 46%23% of our Fertilizers segment’sICL’s total sales (including sales to other segmentssegments), an increase of 9% compared to 2017 Sales. The segment operating profit totaled $350 million, constituting 35% of the total operating profit attributable to the segments. For additional information see “Item 5 - Operating and Financial Review and Prospects— A. Operating Results— Results of Operations”.

Products

Industrial Products focuses on three main sub-business lines:

Flame retardants – bromine, phosphorus and magnesium-based flame retardants are used in electronics, building and construction, automotive, textile and furnishing applications. Flame retardants are added to plastics, textiles and other combustible materials to inhibit or delay fire or flames and to prevent the spread of fire.

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Industrial solutions – elemental bromine has a range of uses in the Company) 71%chemical industry, while bromine and phosphorous compounds are used in a number of industries worldwide, such as: rubber, pharmaceuticals, electricity, agro and polyester (in production of plastic fabrics and bottles). Clear brine fluids are used for balancing pressure in the oil and gas drilling industry. In addition, this sub-business line includes bromine‑based biocides used for treating industrial water.

Specialty minerals – specialty minerals include magnesia and salt products. The main applications of magnesia products are food and pharma, oil and fuel additives, catalysts and many other small applications. The salts include sodium chloride, magnesium chloride and KCl which are mainly used for the food industry, deicing (MgCl₂) and various industrial applications. Due to the uniqueness and high quality/purity of our products, most of our sales are to niche markets.

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

Sub-business line	Product	Primary Applications	Primary End‑Markets
Flame retardants	Bromine-, Phosphorus- and magnesium Based Flame Retardants	Additives used in plastic, building materials and textile production	Electronics, automotive, building and construction, furniture and textiles
Industrial solutions	Elemental Bromine	Chemical reagent	Tire manufacturing, pharmaceuticals and agro
	Phosphorus-Based Industrial Compounds	Fire resistant fluids in turbines & power generation hydraulic systems and phosphorous-based inorganic intermediates	Power plants and agro
	Organic Bromine Compounds	Insecticides, solvents for chemical synthesis and chemical intermediates	Pharmaceuticals and agro
	Clear Brines	Oil and gas drillings	Oil and gas
	Merquel	Mercury emission control	Emission control in coal‑fired power plants
	Bromine‑Based Biocides	Water treatment and disinfection	Swimming pools, cooling towers, paper plants and oil and gas drillings
Specialty minerals	Magnesia Products	Pharma and food, transformer steel, catalysts fuel and oil additives.	Food additives, multivitamins, transformer steel, automotive rubber and plastic, health care
	Solid MgCl2, KCl	Deicing, food, oil drilling, pharma	Deicing, sodium replacement, KCl for drugs. multivitamins, oil drilling companies, small industrial niche markets

Industrial Products also develops innovative products and new applications for existing products. The new products introduced in recent years include, among others FR122P flame retardant (a polymeric bromine‑based flame retardant used in insulation material in the construction industry), TexFRon^® 4002 (a polymeric flame retardant product for textiles), bromine compounds for energy storage (a wide range of products use in bromine-based flow batteries), VeriQuel™R100 (a phosphorus-based reactive flame retardant for rigid polyisocyanurate and polyurethane spray foam) and PolyQuel® P100 (polymeric phosphorous flame retardant for high end epoxy printed circuit boards).

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FR-122P Flame Retardant: Industrial Products has successfully introduced FR-122P as a sustainable polymeric flame retardant alternative to HBCD (hexabromocyclododecane) in the EU and Americas for expanded (EPS) and extruded (XPS) polystyrene foams used as insulation materials in the construction industry. Industrial Products is now focused on providing the same value chain support for the upcoming ban of HBCD in China expected in December 2021. For additional information, see “Item 4 - Information on the Company— B. Business Overview— Regulatory and Environmental, Health and Safety Matters - Limitations on the use of flame retardants and other products”.

TexFRon® flame retardant products for textiles:  In 2015, ICL began selling TexFRon^® 4002, a polymeric flame retardant product for textiles developed as part of the segment’s operating income (including incomeR&D activities of the Industrial Products segment. TexFRon^® 4002, which is designed to provide high‑level fire retardant solutions for textile and adhesive products, is an effective substitute for DECA, which the Company discontinued the production and marketing thereof, following a regulation prohibiting its use, which is expected to take effect in Europe in 2019. In December 2014, the TexFRon^® 4002 polymeric product was recognized by Oekotex, a European standard for textile products. This product is the first bromine-based flame retardant that has received such recognition.

Energy storage: Bromine-based flow batteries are highly effective for storing large amounts of energy and offer important advantages compared to alternatives. ICL provides a high‑purity, tailor-made electrolyte solution together with a recycling process to assure that this technology is fully sustainable (in its post-use phase as well). Bromine-based flow batteries can be produced at lower cost, last longer and have greater capacity. ICL’s energy storage products were developed in order to address the developing needs deriving from salesthe increased use of renewable energy. ICL supports technology developers with its world class experts and advanced laboratories, and its bromine-based energy storage technology provides environmental benefits.

VeriQuel™ R100 - Reactive flame retardant alternative to a legacy additive flame retardant (TCPP) in rigid polyurethane insulation applications.  VeriQuel™ R100 provides a timely drop-in replacement for TCPP due to the increased regulatory pressure against TCPP for its reported ubiquity in living environments. The strength of VeriQuel™ R100 is that it is reactive and thus helps avoid leaching or migration from the polymer into living environments as is reported with TCPP.  

PolyQuel® P100 - ICL has recently launched a new proprietary flame retardant PolyQuel® P100 targeting the high end printed circuit board market. PolyQuel® P100 offers a high performance solution for printed circuit boards. Being an active ester curing agent, this polymeric, non-halogen flame retardant provides higher flame-retardant efficiency, and lower dielectric values than other Company segments)commercial phosphorus-based flame retardants. With this unique performance PolyQuel® P100 can be a high end solution for the telecommunication, server and 78%transportation growing markets. This product was developed independently by ICL and is manufactured solely by ICL.

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Production

The Industrial Products segment's major manufacturing facilities are located in Israel (production of bromine, bromine compounds, magnesia and salts products), the Netherlands (bromine compounds), Germany (phosphorus compounds), France (magnesia and calcium carbonate based products), the United States (phosphorus compounds) and China (bromine compounds).

The Industrial Products segment's principal manufacturing plants and marketing companies are set forth in the map below:

In 2018, ICL produced approximately 175 thousand tonnes of elemental bromine out of potential annual maximum production capacity of approximately 280 thousand tonnes. Approximately 75% of the segment’s adjustedelemental bromine produced is used internally for the production of bromine compounds.

In January 2018, a Central Control Room (CCR) was launched in Neot Hovav site. The CCR aligns Neot Hovav site with the industry's best practices in a way that supports information flow and allows remote control over the entire site. The new approach is based on centralized operational management which brings opportunities for innovation, economic of scale, benefits of safety, emergency response and management.

Competition

ICL Industrial Products is the world's largest manufacturer of elemental bromine. Based on internal estimates, ICL and its two main competitors, Albemarle and Lanxess, accounted for the majority of the worldwide production of bromine in 2018. Chinese and Indian production accounted for most of the remainder of the global production from various different sources, including, from brine produced from wells, seawater and desalinization plants. In recent years, Chinese authorities have been gearing-up their enforcement of regulations regarding safety and ecology in the local bromine industry. During 2017-2018, the MEP (Ministry of Environmental Protection) performed inspections in the province of Shandong (main Bromine production area in China). As a result of the inspections, producers are required to execute large investments in order to meet the ecological requirements. Due to these regulations, favorable conditions were developed in the Chinese bromine and bromine compounds market.

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Lanxess and Albemarle produce bromine primarily from underground brine sources in the United States. Albemarle also has a joint venture with a Jordanian company for the production of bromine and bromine compounds which is located on the Jordanian side of the Dead Sea sharing the same source of raw materials with ICL. Lanxess purchases bromine and some other bromine compounds from the Industrial Products segment under a long‑term contract.

The main barrier to entry into the bromine and bromine compound market is access to an economically viable source of bromine having 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 bromine trade.

The Dead Sea operations offer the world’s highest bromine concentration. As a result, the segment's relatively low production cost of elemental bromine gives it a competitive advantage. An additional competitive advantage derives from ICL’s isotanks fleet, which is the largest in the world. In addition, the segment has a widespread worldwide marketing, sales and supply chain network and a range of high‑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, the segment's network includes three production facilities, a sales network and technical support. In the Netherlands, the segment has a bromine compound production facility, which gives it a competitive advantage over materials imported into Europe. The phosphorous‑based flame retardant and functional fluids production plants in the United States and Europe are situated in close proximity to the Industrial Products’ principal customers.

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

There are many competitors in the biocides market for water treatment. The major barrier to entry into the market is related to the process of obtaining approval from the regulatory authorities to supply the biocide. During 2015, a new regulation (BPR Art. 95) entered into effect in Europe permitting only holders of the biocide approvals to sell. This acted to remove Chinese producers from supplying directly to the market. ICL is a registered and approved biocide producer.

In the magnesia field, as well as in fields of the solid MgCl₂, packed KCl and salts, there are many competitors that have a cost advantage compared to us, which forces us to look for niche markets where our uniqueness and our high quality products are important.   

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Raw Materials and Suppliers

The principal raw materials used by the Industrial Products segment for manufacture of the end products are bromine, chlorine, phosphorus and magnesia. The production process also uses significant amounts of water and energy. The Company produces a significant portion of its raw materials through the Dead Sea minerals extraction operations. For further information on the extraction operations, see “Item 4 - Information on the Company— D. Property, Plant and Equipment— Mineral Extraction and Mining Operations”.

Bromine is produced from the end brines (salt solutions) that are a by‑product of the process of production of potash from carnallite. The brine is pumped into ICL Industrial Products’ 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 the metal 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 also a by‑product of the potash production in Sodom.

Industrial Products’ uses elemental bromine to manufacture bromine compounds at its facilities in Israel, the Netherlands, and China. The rest of the bromine is sold to third parties. Most bromine compounds are manufactured by a chemical process involving bromine together with a range of other raw materials, of which the largest are Bisphenol A, which is used to manufacture the bromine‑based flame retardant TBBA. Furthermore, the Industrial Products segment purchases many other raw materials that are required for production of its various products.

The following is a graphic representation of the production process.

Elemental phosphorus (P₄) is produced in a roasting process from ores originating in Central Asia (Kazakhstan), the United States and China. The Industrial Products segment uses elemental phosphorus to produce phosphorus compounds at its factories (mainly phosphorous-based flame retardants). 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) creates the commercial phosphorus compounds.

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Following is a graphic representation of the production process:

Industrial Products uses magnesium chloride to manufacture magnesia products and MgCl₂ flakes and pellets at its facilities in Israel. In addition, The Industrial Products segment uses KCl from the Potash segment to manufacture pure and industrial grades of KCl.

Following is a graphic representation of the production process:

Industrial Products 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.

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Sales, Marketing and Distribution

Industrial Products’ principal markets are the United States, western Europe, China, Japan, and Taiwan. Industrial Products sells its products primarily through a network of marketing companies, while phosphatesa smaller part of sales is conducted through agents and specialtydistributors throughout the world. Commissions are paid to agents as is customary in the sector. Most of the sales are not executed under long‑term contracts or orders, but rather via current orders close to the date of supply. Nevertheless, the Industrial Products segment has several longer-term contracts (a year or more) and working to achieve additional long-term agreements.

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

Industrial Products extends credit terms to its customers according to its credit policy. Sales are generally covered by trade credit risk insurance or by letters of credit from banks with high credit ratings.

Seasonality

Industrial Products’ operations are not characterized by seasonal fluctuations. However, sales 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. MgCl₂ for de‑icing are characterized by relatively higher sales in the first and fourth quarters. The aggregate impact of these diverse seasonal differences on the Industrial Products segment is not significant.

Natural Resources Tax

The Law for Taxation of Profits from Natural Resources entered into effect on January 1, 2016. For additional information, see Note 17 to our Audited Financial Statements.

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Potash Segment

The Potash segment uses an evaporation process to extract potash from the Dead Sea and uses conventional mining to produce potash and salt from an underground mine in Spain. The segment markets its potash fertilizers represented approximately 54%globally and also carries on certain other operations not solely related to the potash activities. At the end of our Fertilizers segment’sthe second quarter of 2018, the Company ceased the production of potash in the ICL Boulby mine in the UK and shifted to sole production of Polysulphate™. The Polysulphate™ is produced in an underground mine at ICL Boulby in the UK, and is the basis for a significant part of the Company's FertilizerpluS product line. The segment also includes magnesium activities under which it produces, markets and sells pure magnesium and magnesium alloys, and also produces related by-products, including chlorine and sylvinite. In addition, the Potash segment sells salt that produced in its underground mines in Spain and UK.

In 2018, the total sales of the Potash segment were $1,623 million, constituting 29% of ICL's total sales (including sales to other Company segments), 29%while the operating income of the segment’ssegment totaled $393 million, constituting 39% of the operating income (including income from sales to other segments in the Company) and 22% of the segment’s adjusted operating income. See “Item 3. Key Information—A. Selected Financial Data” for a definition of adjusted operating income and a reconciliationattributable to the comparable IFRS measure.

segments. For additional information, see “Item 5 - Operating and Financial Review and Prospects— A. Operating Results— Results of Operations”.

Potash.

Products

Potash is the common name for potassium chloride, which is the most common source of potassium for plants, 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 level in the plant, strengthens the plant stems and strengthens the plant’splant'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

Potash is produced from the Dead Sea and from underground mines in Spain and the United Kingdom.Spain. The potash production process in Israel is based on extracting carnallite in a chemical process.carnallite. The carnallite, which is a compound of potassium chloride and magnesium chloride mixed with table salt, 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 and physical process breaks down the carnallite crystal into potash using two distinct parallel technologies, (“hot”cold crystallization and “cold” crystallization).

Extraction of potash from underground mineshot leach. Potash production in Spain and the United Kingdom is carried out by miningin underground mines extracting sylvinite, (aa mixture of potash (KCl) and salt (NaCl) with varying potash concentrations. The potash is separated from the salt by a flotation process in the 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

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Production

The principal production of specialty fertilizers. Polysulphate is composed of sulfur, potash, 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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Phosphates and Specialty Fertilizers. Phosphorus is also onefacilities 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-pit mines – three of which are located in the Negev Desert in Israel while the fourth is situated in the Yunnan district in China. In 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 customers 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-grade phosphoric acid, phosphate fertilizers, compound fertilizers and specialty fertilizers at its facilities in Israel 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-release fertilizers, which allow accurate release of nutrients over time, and slow-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);

·

Soluble fertilizers, which are fully water-soluble, and fully-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);

·

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

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

·

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

·

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

·

Nu3, a manufacturer of soluble NPK fertilizer components;

·

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

·

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

Production

Our Fertilizers segment’s principal production facilitiesPotash business 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-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 controlled-release fertilizers), Germany (mainly fertilizers based on phosphates and potash), Belgium (soluble NPK fertilizers), the United States (controlled-release fertilizers) and Turkey (phosphate-based products used as animal feed additives).

Our Fertilizers segment’sSpain.

The manufacturing plants, distribution centers and sales officesmarketing companies of the Potash business are set forth in the map below:

*The facilities in ICL Boulby were used for potash, in addition to Polysulphate, until the end of the second quarter of 2018. For more information, see "United Kingdom" below.

Our current

In 2018, the Potash business produced approximately 4.9 million tonnes of potash and reached an annual production record level of approximately 3.8 million tonnes in Israel which derived mainly from efficiency activity in planning, maintenance and operational excellence.

The potential potashannual production capacity of potash is approximately 6.5about 5 million tons, of polysulphate approximately 300 thousand tons, of phosphate rock approximately 7 million tons (including 2.5 million tons of YPH’s production capability), of phosphate fertilizers and compound fertilizers approximately 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-release fertilizers and 300 thousand tons of peat.tonnes. 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 the potential production capacity due to unexpected breakdowns, special maintenance operations, non‑availability of raw materials and market conditions.

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The Potash business is focusing on improving the efficiency of Contents

its operations and streamlining its cost structure in order to improve its competitive position in the market and to develop new, specialized products based on the main raw materials of the segment by utilizing the existing production facilities and sales and logistics array. Under this framework, the following actions were taken:

Our

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Israel

During the third quarter of 2018, the new power plant in Sodom, Israel became operational. The power plant is expected to reduce energy costs and support production of potash increased at an average annual growth rate of 2.1% between 1973 and 2015, and ICL Fertilizers completed a planICL's plants in 2015 for an increase of approximately 500 thousand tons per year in potash production capacity atIsrael. The power plant produces steam that satisfies the Sodom facilities. This investment has effectively createdsite consumption and sells surplus production capacity at our production plants in relationelectricity to other ICL companies and external customers. In 2018, the production capacitypower plant contributed to ICL an operating income of raw materials at our evaporation ponds, thereby adding flexibilityabout $10 million. For additional information, see Note 20 to our production process and optimizing the timing of production and sales over 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.

Audited Financial Statements.

Spain

In 2011, ourICL’s Board of Directors approved the restructuring of ICL IberiaIberia’s operations from two sites to one site, as part of an efficiency plan.plan, while maintaining the current level of production. According to this plan, production at the Suria site in Spain, which includes a mine and a plant, will be expanded gradually, andwhereas the mining and production activities at the second site (Sallent) will be discontinued. In the first stage

As part of the above-mentioned plan, we arethe Company is building an access tunnel to the Cabanasses mine (Suria), expanding potashthe production capacity and compaction capacity.of potash, and constructed a plant for production of vacuum salt. The second stage will include a further expansion to 1.1 million tons, higher than the production level we have today in two separate sites, and approximately 50 thousand tons of technical-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 1.3 million tons in the future. Concurrently, we also expect our potash compaction capacity to ultimately grow, at the end of the process, to a level of approximately 1 million tons per year.

It is anticipatedCompany estimates that implementation of the first stage of the planthese actions will reduce expenses and contribute to streamlining, which will reduce potash production costs and contribute to conformityalignment of the production activities with the environmental standards. The first stage will also include establishing a production plant for

At the end of 2016, the compaction and flotation plants were operated. Towards the third quarter of 2018 the commissioning of the vacuum salt (salt with high chemical purity)plant was completed and the plant became operational. Construction of the new access tunnel to the mine, which is designed to significantly reduce production costs and improve production capacity at Suria. The Company plansthe Suria site in Spain, is progressing and the completion is expected to reach,take place at the end of 2019, the operation is expected to begin in the long run, a potential production capacityfirst quarter of approximately 1.5 million tons of vacuum salt.

2020. 

In order to help implement these expansion plans in Spain, 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 while the marketing will be performed by AkzoNobel. An additional 50 thousand tonnes per year of white potash will be producedsalt and marketed by ICL.

pure potash. High purity vacuum salt is used in a variety of applications by thein various industries, such as the: chemicals industry as well as(for instance in electrochemical companies), the leather and textile industries, the food and feed industries, and also for water treatment applications. The

All of the production and pure potash marketing was planned to be performed by ICL and the vacuum salt willmarketing was planned to be producedperformed by ICL Iberia and sold by AkzoNobel Industrial Chemicals by way of an off-take agreement for acquisition of the partnership’s products.

Pursuant to the agreement mentioned above, subject to certain conditions, ICL willagreed to finance and construct two manufacturing facilities on its mining site in Suria which is located in Catalona in Spain. Each vacuum facility willplanned to have a production capacity of 750 thousand tonstonnes of vacuum salt per year. ConstructionThe commissioning of the first facility was completed towards the third quarter of 2018.

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The agreement provides a specific deadline (July 1, 2018) by which certain condition precedent had to be fulfilled. Since such condition precedent was not met by the agreed deadline, the Company formally informed AkzoNobel that, the agreement had to be deemed automatically terminated once that deadline passed. The Company will continue to supply salt to AkzoNobel during the next two years pursuant to the supply agreements, which remain in force. Following correspondence between AkzoNobel and the Company, in which AkzoNobel challenged the automatic termination of the agreement, on August 2018, AkzoNobel commenced arbitration proceedings according to the agreement between the parties. The Company filed its response on October 2018. On January 2019, three arbitrators were appointed to follow the proceeding.

In September 2018, a definitive Urban Master Plan (PDU) was approved, constituting the next stage in the Suria site expansion. The PDU allows, among other things, to expand the industrial area to new facilities in Suria needed for increasing the capacity.

The production of potash in Spain is expected to be about 1 million tonnes per year and to reach a level of up to about 1.3 million tonnes per year after completion of the necessary adjustments. In order to support the expected operational expansion in Spain, the Company is in the process of setting up a new designated facility in the Barcelona port that will replace the current facility and is making preparations for transition to use thereof. The new facility is expected to be completedconstructed and operative towards the end of 2019.

In 2015, Generalitat Catalunya launched a new project to renovate and duplicate the existing brine collector from Abrera up to Suria and Sallent. The new trench will allow to increase the capacity and improve the existing salt treatment of ICL. The Company is negotiating with the authorities regards the new collector from the production site, in order to secure the future operation.

United Kingdom

Further to the Company’s decision to accelerate the transition from extraction and production of potash to production of Polysulphate™ in the ICL Boulby mine in the UK, at the end of the second quarter of 2016,2018 the Company ceased the production of potash and constructionshifted to sole production of Polysulphate. The workforce reduction as a result of the second facilitytransition to production of Polysulphate was about 180 positions. Further to the losses recorded in 2017, ICL Boulby recorded notable losses during 2018 and is expected to be completed in 2018. Construction ofcontinue to record losses throughout 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 expansion of the production capacity in Spain.

In January 2016, after receipt of the approval of the Supervisor of Restrictive Business Practices in Spain, AkzoNoble acquired 51% of the shares of the joint venture for production of specialty salt. The enterprise is expectedtransition process from potash 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 reduction of the estimates of the reserves. The reserve estimates were calculated using the same assumptions (including cut-off grade and average market price). This change is the result of depletion 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 about 1 million tons in 2020. As part of these processes, the Company has commenced implementation of an efficiency plan whereby in the first quarter of 2016 a reduction of about 330 full time positions was completed.Polysulphate. For additional information, see “Item 4 - see"Item 4. Information on the Company-D.Company— D. Property, PlantsPlant and Equipment-MineralEquipment— Mineral Extraction and Mining Operations-United Kingdom,"Operations” and "-Reserves-United Kingdom."

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The Company is also undertaking other initiatives to expand and diversify its potash resources. In June 2015, ICL completed the acquisition of all the shares of Allana. The Company has paid about $112 million for the balance of 83.78% of Allana’s shares that 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 Liberty Metals & Mining Holdings LLC (“Liberty”) only, which held 11.77% of Allana’s shares.

The ordinary shares issued to Liberty constitute about 0.17% of the issued shares and voting rights therein. Allana holds a concession for mining potash through Allana Afar as well as know how accumulated over the past several years in the Danakhil mine 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 the 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 the 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 continued the “Potash for Growth” project in Ethiopia, where it conducted 950 presentations since 2013.

In addition, the Company is examining ways to increase its phosphate reserves, including by means of the Barir field in Israel, – see “Item 4. Information on the Company—B. Business Overview—Concessions and Mining 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, the Company is examining options to build or to buy a potassium nitrate production plant to enable an increase in the production of soluble fertilizers and food-grade phosphoric acid. The Company’s examination is in line with its ‘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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Competition

In December 2015, ICL signed a memorandum of understanding with LLNP (which belongs to a group of the businessman Lev Leviev) for examination of the feasibility of establishment of a global-scale phosphate production infrastructure in Namibia, including marine mining of phosphate and construction of factories for production of downstream products spanning the entire value chain, including fertilizer-quality phosphoric acid, white phosphoric acid, regular phosphate fertilizers (including MAP and DAP) and specialty fertilizers.

Competition

Potash.

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

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During 2018, the new (Greenfield) mines experienced slower than expected ramp-up, partly due to operational challenges. According to market observers, K+S experiences some difficulties with the granulation stage production process in its Bethune mine in Saskatchewan (Canada), which started producing potash in June 2017, led it to deliver standard MOP to the Far East including China. In addition, K+S, closed its Sigmundshall site in Germany (capacity of 0.75 million tonnes per year in 2017). EuroChem, has cut its forecast for 2018 output from its new mines in Russia, Usolskiy (expected nameplate capacity of 3.7 million tonnes per year in 2024) and Volgakaliy (expected nameplate capacity of 4.6 million tonnes per year in 2024) to a total of about 0.3 million tonnes. Turkmenhimiya's new potash mine (Garlyk) in Turkmenistan, which was inaugurated in March 2017 (nameplate capacity of 1.4 million tonnes per year), is believed to be inoperable. Slavkaliy's Nezhinsky potash project in Belarus (expected nameplate capacity of 2 million tonnes per year) ramp-up is expected to be delayed from 2020 to 2022. Belaruskali's Petrikov project (expected nameplate capacity of 1.5 million tonnes per year in 2022) ramp-up is expected in 2020. 

Mosaic commissioned the new production skip at its Esterhazy K3 mine in Saskatchewan (Canada) in December 2018. This Brownfield project is expected to reach its full operational capacity (7.35 million tonnes per year) by 2024. In Russia, there were reports of flooding at Uralkali's Solikamsk 2 mine, although it seems like there was not a significant impact on the Uralkali's production as it continued its production from the adjacent Solikamsk 1 mine. Lao Kaiyuan is expected to expand the nameplate capacity of its Khammouans site in Laos from 0.5 to 1.5 million tonnes per year until 2021. It should be mentioned that nameplate capacities are in accordance with Informa (Fertecon) Potash Outlook Report - December 2018. Other information is in accordance with CRU Fertilizer Week.  

The conditions stated above are likely to reducecurrent significant competitors of ICL in the competition ininternational trade of 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 SaskatchewanNutrien (Canada), Uralkali (Russia), Mosaic (USA), Belaruskali (Belarus), Mosaic (Canada and the United States), Uralkali (Russia), K+S (Germany), Agrium (Canada)QSL (China), APC (Jordan), EuroChem (Russia) and SQM (Chile).

In June 2015, PotashCorp gave notice of

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The Company believes 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, a number of companies are continuing to develop new mines and other companies are expanding the production 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-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 (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-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 segmentbusiness benefits from the following competitive advantages:

·

The relatively low average cost of potash production at the Dead Sea;Sea by using the sun as a solar energy source in the evaporation process.

·

An integrated value chain that allows use of the phosphate rock mined in Israel and China for 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;customers, which are reflected in particularly competitive marine and overland shipping costs and delivery times.

·

Logistical synergiesClimate advantages due to potash operations in Israel, where the hot and dry climate of the Dead Sea enables usthat enable the Company to store, at very low cost, a large quantity of potash in an open area thereby allowing usit to consistentlyconstantly 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-tailoredindividually‑tailored agronomic consulting to customers based on an analysis of the different growing conditions of each particular customer.

·

A leading R&D set‑up in the area of potash production.

·

Synergies between the various production plants in Sodom site.

Raw Materials and Suppliers

We produce a significant portion of our primary raw materials, including

The Potash segment produces potash and phosphorus, through our mining operations in Israel China, Spain and the United Kingdom,Spain. Potash does not require additional chemical conversion to be used as discussed further below. See “Item 4. Information on the Company—D. Property, Plants and Equipment—Mineral Extraction and Mining 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 hold 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. a plant‑nutrient fertilizer.

The other primary components we use forutilities used by ICL in order to support the potash 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 segmentthe Potash business are Europe, China, Brazil and India. Our Fertilizers segmentThe Potash business sells its fertilizerfertilizers products primarily via a network of its own sales offices as well as sales through agents throughout the world.

Most of the potash sales of ICL’s Fertilizers segment are not made by means of contracts or long-termlong‑term orders but, rather, through current orders proximate to the supply date.date (except for annual agreements with customers in India and China, see below). Accordingly, ICL’s Fertilizersthe Potash segment does not have a significant orders’orders' backlog. Regarding new contracts with customers of ICL Fertilizers in China for supply of Potash over the 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 termperiod of the agreement. Prices for relatively long-termlong‑term contracts are not necessarily similar to spotthe “SPOT” prices (current/casual salessale transactions).

In the Indian and Chinese markets, it is customary to negotiate framework agreements with respect tocarry on concentrated negotiations regarding the potash somecontracts – part of which are with commercial entities connectedrelated to the governments of those countries. Our Fertilizers segment has agreements

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In August 2018, ICL signed a potash supply contract with its Indian customers, in China with distributorsthe total amount of 775 thousand tonnes (including optional quantities), for delivery between September 2018 and NPK fertilizer producers. Under these agreements, the agreedJune 2019. The contract price is usually in effect for six months to$290 per tonne CFR (an increase of $50 per tonne compared with the 2017 contract price).

In September 2018, ICL signed a year.

During the second half of 2015, upon completion of potash shipments, which were derived from ICL's agreement in Chinasupply contract with its Chinese customers, in the first halftotal amount of the year, potash shipments began905 thousand tonnes (not including additional optional quantities), for delivery up to be based on "spot prices". In 2015, the imports of potash into China reached a record high of more than 9.4 million tons - anJune 2019. The contract price is $290 per tonne CFR (an increase of about 18%$60 per tonne compared with 2014. the 2017 contract price).

In the Company'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,November 2018, ICL has signed new framework agreements with its customers in China for 2019-2021, to supply 3 million tonnes of potash, coveringwith additional options for 750 thousand tonnes. Prices for the quantities to be supplied are subject to the prevailing market prices in China at the relevant date of supply.

In December 2018, ICL signed for the first time a quantityfive-year potash supply agreement with Indian Potash Limited ("IPL"), India's largest importer of about 3.4 million tonspotash. According to the agreement, ICL is expected to supply IPL with 600 thousand tonnes per year in 2019 and 2020, increasing to 650 thousand tonnes per year in 2021-2023 (including options) over the next three years. The sale priceoptional quantities). Prices 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 comparedaccordance 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 1.16 million tons of potash in 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 customersprevailing market prices in India covering an aggregate amountat the relevant date of 835 thousand tons, including options. In the Company’s estimation, the customers in India will not utilize the entire quantities covered by the contracts due to accumulation of inventories.

supply.

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 havethe Company has trade relations with most of the major customers.

In Sodom, we benefit from being able to store very large amounts of

The Potash business transports potash outside (exceeding one full year of production). 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-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 by shipships (mainly in bulk) that it leases in the market and loads using designated facilities in the ports of Ashdod on the Mediterranean Sea and Eilat on the Red Sea. Our Fertilizers segmentThe Potash business also has special portdesignated facilities for bulk loading at ports in Barcelona (Spain), Amsterdam (the Netherlands), Ludwigshafen (Germany) and TeesideTeesside (UK). In China,Israel, short mine-to-port distances and shorter shipping routes to emerging markets grants the Potash business a significant and a unique advantage over its main competitors. In order to support the expected operational expansion in Spain, the Company is preparingin the process of setting up a new designated facility in the Barcelona port that will replace the current facility and is making preparations for transition to provide a logistical solutionuse thereof. The new facility is expected to marine shipping outsidebe constructed and operative towards the end of 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 Fertilizers2019.

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

ICL involved in number of activities dealing with the need for increasing food quality, as well as for increased efficiency in the agriculture sector, to respond to the world’s growing population, decreasing agricultural land and the urgent need for greater environmental stewardship:

Potash for Life (India) - In 2018, the Company continued the “Potash for Life” project in India, in light of its position in this market and the relatively low use of potassium fertilization in this country. About 1,000 demonstration plots were conducted in farmers' fields in ten states and more than 42 districts. Other educative activities, like farmers' field days, potash campaigns and crop seminars were also conducted.

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Feed the Future (Tanzania) - In May 2017, the United States Agency for international development (USAID) sent out a call for proposal of funding under the Feed the Future Tanzania Mboga na Matunda (Fruit and Vegetables) program. Over 70 agricultural companies applied, ICL was one of the few companies that won the co-funding award. Through the USAID funded project, ICL seeks to strengthen the fertilizer input supply system by providing high quality and innovative products through demonstrations and training on balanced fertilization. It will also create awareness of ICL's fertilizers products and the adoption of sustainable fertilization practices.

Research Center for Fertilizers & Plant Nutrition – Global Knowledge - In 2015, ICL established a Center for Fertilization and Plant Nutrition (CFPN). The CFPN is a global center for research and knowledge in the field of fertilizers and plant nutrition in conjunction with Israel’s Agricultural Research Organization (ARO). Research is conducted by ARO scientists in partnership with colleagues from other research institutions. The CFPN offers scholarships and research grants to graduate and Ph.D. students in Israel and from abroad. CFPN trains and works with foreign students from Asia and East Africa. Training courses and workshops are conducted for Israeli farmers and agronomists from the world.

International Potash Institute (IPI) - ICL is part of IPI, a non-governmental and non-profit organization whose mission is to develop and promote balanced fertilization for the production of higher yields and more nutritious food, together with ensuring sustainability of production through conservation of soil fertility for future generations. IPI conducted in 2018 dozens of field experiments and research projects worldwide. In addition, several farmers' days and workshops were conducted in Asia, Africa, Europe and Latin America.

Seasonality

The seasonal nature of the demand for our Fertilizers segment’sthe Potash business’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, duethe years 2016 to 2018, the strike,delay in signing of the Company postponedcontracts with the Chinese and Indian customers caused a situation wherein the total sales toin the final quartersecond half of the year (mainlywere higher than in the first half of the year.

Natural Resources Tax

The Law for Taxation of Profits from Natural Resources, entered into effect on January 1, 2016, except with respect to China)ICL Dead Sea (potash operation) regarding which the effective date was January 1, 2017. For additional information, see Note 17 to our Audited Financial Statements.

Additional products

The Potash segment produces and thus,sells additional products, including Polysulphate™, magnesium-based products, salt produced in underground mines in UK and Spain, electricity surplus produced in Israel and others.

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FertilizerpluS

FertilizerpluS is ICL's premium fertilizers line, based mainly on polyhalite (marketed by the seasonal impact was decreased comparedCompany as Polysulphate™) and other products. FertilizerpluS products, which include different compounds of phosphorus, sulphur, potassium, magnesium and calcium, are tailored for various types of soil and wide range of crops, intended to enhance crops, improve yields and increase fertilizer efficiency.

Polyhalite is a mineral that is exclusively mined by ICL through the Potash segment in a underground mine in the UK and is marketed under the brand name Polysulphate™. Polysulphate™ is used in its natural form as a fully soluble and natural fertilizer, which is also used for organic agriculture and as a raw material for production of fertilizers. Polysulphate™ is composed of sulphur (SO₃ 48%), potash (K₂O 14%), calcium (CaO 17%) and magnesium (MgO 6%), which are essential components for improvement of crops and agricultural products. Polysulphate™ is the basis for many of the Company's FertilizerpluS products.

The Company sees the Polysulphate™ as a unique product for ICL and is synergistic with the Company’s other raw materials for purposes of development of downstream products. In order to prior years.

Industrial Products

Our Industrial Productsdevelop downstream products, the Company is acting to expand the Polysulphate™ market by means of, among other things, development of a wide variety of innovative Polysulphate™-based products. In addition, in order to develop the Polysulphate™ market for both existing and new uses, the Potash segment develops, manufactures,has set up a team of agronomists that are performing dozens of tests on various crops in different countries. The favorable results of these tests are the basis for expansion of the sales to new customers and markets.

The Company believes that the FertilizerpluS product line benefits from the following competitive advantages:

·

ICL is the sole producer of Polysulphate™ worldwide.

·

ICL Boulby's infrastructure supporting Polysulphate production (previously used for potash production) is already in place, including mine, shaft and transportation logistics.

·

The ability to increase production at a relatively low capital expenditure.

·

The Polysulphate™ and Polysulphate™-based fertilizers, which include different compounds of phosphorus, sulphur, magnesium and calcium, are tailored for various types of soil and a wide range of crops, achieved high performance in enhancing crops, improving yields and increasing fertilizer efficiency.

·

Polysulphate™ contributes to and follows the main market trends in the fields of increased nutrient-use efficiency, low carbon footprint and organic fertilizers.

·

The FertilizerpluS product line is part of ICL’s strong market position in fertilizers.

·

The FertilizerpluS product line has an inherent potential for the development of new products and applications.

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Following are several examples of Polysulphate™-based products included in the FertilizerpluS line:

·

PotashpluS – a compressed mixture of Polysulphate™ and potash. The product includes potassium, sulphur, calcium and magnesium and is marketed by the Potash segment. In the third quarter of 2018, the segment finalized the industrialization process for the production of PotashpluS and in 2019 plans to increase significantly the production and the sales quantities of the product.

·

PKpluS – a unique combination of phosphate, potash and Polysulphate™. In 2018, the Company, through the Phosphate Solutions segment, sold the product in commercial quantities and in 2019 plans to increase the production and the sales quantities of the product.

At the end of the second quarter of 2018, the Company ceased the production of potash in ICL Boulby mine in the UK and shifted to sole production of Polysulphate™ and salt.

In 2018, the Company produced approximately 350 thousand tonnes of Polysulphate. The production of Polysulphate in UK is in the ramp-up stages and is expected to reach full production capacity towards the end of 2020. The current annual potential production capacity of Polysulphate™ is above 1 million tonnes. The potential production capacity 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 the potential production capacity due to unexpected breakdowns, special maintenance operations, non‑availability of raw materials and market conditions.

As of the date of this report, ICL's Boulby mine is the sole producer of Polysulphate worldwide. However, in North Yorkshire in the UK, where ICL's Polysulphate operations are located, there is an additional concession owned by another potential producer, which, according to its formal publications, plans to develop a polyhalite mine with a production capacity of up to 10 million tonnes, subject to its ability to raise several billions of dollars for the mine development. If successful in raising the funds and build the mine and operations, ICL will cease to be the sole producer of Polysulphate, and will not be the market leader, which is inconsistent with the Company's strategy to obtain leadership positions in all its activities. ICL is constantly monitoring the competitive environment and will continue to seek ways to adhere with its strategy.  

Magnesium

The Potash segment includes magnesium activities, operated by Dead Sea Magnesium Ltd., which is the second largest magnesium producer in the western world after the US magnesium producer “US Magnesium LLC”. The magnesium business produces, markets and sells bromine phosphoruspure magnesium and magnesium-based flame retardants for the electronics, automotivemagnesium alloys, and construction industries, bromine compounds for industrialalso produces dry carnallite and agricultural uses, clear bromine-based brine fluids for the oil and gas drilling industry, and biocides for water treatment. These related by‑products, are principally based upon bromine, magnesia,including chlorine and saltssylvinite.

Magnesium is considered to be the lightest structural metal. One of the main characteristics of magnesium is a higher strength-to‑weight ratio compared with other metals – mainly steel and aluminum. The main uses of magnesium are in the following industrial sectors: the aluminum sector, steel sector, and the casting sector of parts made of magnesium alloys (mainly for uses in the vehicle industry).

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Production of the magnesium is based on the carnallite gathered from the Dead Sea and phosphorusacquired from ICL Dead Sea. During the electrolysis process, the magnesium chloride present in the carnallite is separated into metal magnesium and chlorine purchasedgas.

In 2018, the Potash segment produced approximately 21 thousand tonnes of magnesium.

The current annual potential production capacity of the magnesium facilities is 33 thousand tonnes of metal magnesium. The actual quantity of the magnesium produced depends on the demand for chlorine (used in the production of bromine) and, therefore, it is possible that the actual production will be lower than the production capacity. Additional factors that can reduce the actual production are unexpected breakdowns, special maintenance operations, non‑availability of raw materials and market conditions. 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.

About 85% of the production in the magnesium market is in China. There are a small number of western producers, including in the United States, Brazil and Russia. In the United States and Brazil, import of magnesium and magnesium alloys from third parties. China is subject to anti-dumping duties that are imposed in order to protect the local producer in these countries.

In 2015,October 2018, a petition was filed to the International Trade Administration of the US Department of Commerce and the US International Trade Commission by a US magnesium competitor (hereinafter - US Magnesium), to impose antidumping and countervailing duties on imports of magnesium from Israel. US Magnesium claims that imports of magnesium produced in Israel by Dead Sea Magnesium Ltd. are being subsidized and sold at less than fair value in the US market. The US Department of Commerce is expected to issue its preliminary determination with respect to subsidies on May 2, 2019. As at the date of the report, considering the early stage of the proceedings, there is a difficulty in estimating the chances the petition will be accepted or whether tariffs will be imposed in the future. Market reaction has seen impact through increased prices coupled with future supply concerns by consumers. For additional information, see “Item 3 - Key Information— D. Risk Factors— Risks Related to Our Business— Our magnesium sales in the Unites States are under investigation by the International Trade Administration of the U.S. Department of Commerce and the U.S. International Trade Commission.”

The Company believes that the magnesium business benefits from the following competitive advantages: the level of the magnesium cleanliness and quality that permits its use in sensitive and unique industries, the Company's developed magnesium alloys and intellectual property that allows the production of advanced magnesium applications and the utilization of by-product produced during the magnesium production for other activities in ICL (e.g. chlorine, etc.).

The global magnesium markets can be divided in two in terms of prices: regulated markets (based on prices of the local producers in US and Brazil) and ROW markets (Rest of the World - based on Chinese magnesium prices). Chinese magnesium prices have increased during 2018 mainly due to tightness of environmental regulations imposed in China. However, they are still significantly lower than the prices in the regulated markets. Most of DSM's sales are designated for the regulated markets and specific niche markets. The price levels in the regulated markets has slightly increased during 2018, despite this increase, their relatively low level resulted in DSM's negative results over the last few years as well as in 2018.

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Phosphate Solutions Segment

The strategy of the Phosphate Solutions segment is to be a leading provider of value added specialty solutions based on phosphate for the industrial, food and agriculture markets. The segment’s goal is to outgrow the market by enhancing its customer relationships and at the same time optimizing its upstream capabilities directed towards specialties products. The segment operates in two main streams: Phosphate Specialties and Phosphate Commodities. The diversification into higher value-added specialty products leverages ICL's integrated business model and provides it with additional margins on top of the commodity margin.

The Phosphate Solutions segment is based on a phosphate value chain which uses phosphate commodity products, such as phosphate rock and fertilizer-grade phosphoric acid (“green phosphoric acid”), to produce specialty products with higher added value. The segment also produces and markets phosphate-based fertilizers.

Phosphate rock is mined and processed from open pit mines, three of which are located in the Negev Desert in Israel while the fourth is located in Yunnan province in China. Sulphuric acid, green phosphoric acid and phosphate fertilizers are produced in facilities in Israel, China and Europe.

The Phosphate Solutions segment purifies some of its green phosphoric acid and manufactures thermal phosphoric acid to provide solutions based on specialty phosphate salts and acids for diversified industrial end markets, such as oral care, cleaning products, paints and coatings, water treatment, asphalt modification, construction and metal treatment. The specialty phosphate salts and acids are mainly produced in the Company’s facilities in US, Brazil, Germany and China. The segment is also a leader in developing and producing functional food ingredients and phosphate additives, which provide texture and stability solutions for the processed meat, poultry, seafood, dairy, beverage and baked goods markets. In addition, the segment supplies pure phosphoric acid to ICL’s specialty fertilizers business and produces milk and whey proteins for the food ingredients industry.

Phosphate Solutions: Backward Integrated Value Chain

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In 2018, the total sales of our Industrial Productsthe Phosphate Solutions segment were approximately $1,115$2,099 million, and accounted for approximately 21%constituting 38% of ourICL's total sales (including sales to other segments of the Company)segments), while the operating loss forincome of Phosphate Solutions totaled $208 million, constituting 21% of the segment totaled approximately $24 million. The adjusted operating income totaled approximately $145attributable to the segments.

In 2018, total sales of Phosphate Specialties, were $1,197 million (constituting 57% of the Phosphate Solutions segment’s sales), reflecting an increase of $71 million or 15%6% compared to 2017. The operating income of Phosphate Specialties, in 2018 totaled $171 million, reflecting an increase of $45 million or 36% compared to 2017.

In 2018, total sales of Phosphate Commodities, were $1,069 million (constituting 51% of the Company’s adjusted operating income. See “Item 3. Key Information—A. Selected Financial Data” for a definitionPhosphate Solutions segment’s sales and including sales to Phosphate Specialties), reflecting an increase of adjusted$17 million or 2% compared to 2017. The operating income and a reconciliationof Phosphate Commodities in 2018 totaled $37 million, reflecting an increase of $14 million or 61% compared to the comparable IFRS measure.2017. For additional information, see “Item 5.“Item 5 - Operating and Financial Review and ProspectsProspects— A. Operating Results— Results of Operations”.” In 2015, our Industrial

Products

The Phosphate Solutions segment used approximately two thirdsproduces a variety of products based on its backward integrated value chain.

Phosphate rock contains phosphorus, one of the bromine it producedthree essential nutrients for its own production.

Our Industrial Products segment did not have any single customer that accountedplant 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. Phosphate rock can be utilized for more than 10% of the Company’s total sales in 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 phosphoric acid and can be sold as a raw material to other fertilizer producers. Our phosphate rock is mined and processed from open pit mines and undergoes a beneficiation process, after which high‑grade, multi‑purpose phosphate products are received.

Green phosphoric acid (fertilizer-grade phosphoric acid) is produced by using beneficiated rock and sulphuric acid (produced by the segment, by using sulphur acquired from third parties). Most of the green phosphoric acid is used to produce phosphate-based fertilizers and pure phosphoric acid, and in some cases is sold to external costumers.

Phosphate fertilizers are produced by using green phosphoric acid or sulphuric acid, depending on the fertilizer type. The segment manufactures various types of fertilizers (TSP, SSP, GTSP and others) for different uses.

The segment manufactures pure phosphoric acid in Israel by purifying green phosphoric acid and also manufactures technical-grade purified phosphoric acid and green phosphoric acid in China, pure phosphoric acid in Brazil, and food grade and industrial phosphate salts in Israel, Germany, Brazil, the US and Mexico. Pure phosphoric acid and green phosphoric acid are used to manufacture downstream products with high added value, such as phosphate salts and acids for a wide 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 activity in the electronics, construction, automotive, oil drilling, furniture, pharmaceutical, agro, textile and water treatment markets. In 2015, 41% of worldwide use of bromine was for flame retardants, 29% was for intermediatesfood and industrial uses, 19% was for clear brine solutions, 6% was for water treatment,applications. In addition, the segment supplies pure phosphoric acid to ICL’s specialty fertilizers business.

Phosphate salts and 5% was for other uses.

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Flame retardants. The trend of pressure exerted by “green” organizations in the area of environmental protection to reduce the use of bromine-based flame retardants is continuing. On the other hand, new sustainable bromine-based flame retardants are being developed, along with regulation in additional countries that increases the use of flame retardants. The worldwide economic slowdown, in general, and the slowdown 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 in the printed circuits market, and creation of pressure on the prices of these flame-retardant products. Nonetheless, in 2015, there was a certain improvement in the demand for bromine-based flame retardants for some uses in the electronics 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. In 2015, elemental bromine prices were relatively stable in the United States, Europe and India whereas in China prices increased significantly, mainly in the second half of the year.

Clear brine solutions. Despite the sharp drop in oil prices in 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 decrease 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.

The activities of 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 of Clearon in the United States) in March 2016. The Company’s activities in this area will focus on bromine-based biocide products.

Inorganic bromides. In 2015, the trend of increasing demand in the market for inorganic bromides for neutralizing mercury (Merquel® products) continued. This trend stemmed mainly from demand by power stations 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.

On the other hand, there was a decline in demand for additional bromine-based products as a result of the weakening of the agrochemicals markets and an increase in competition in the polyester fibers industry.

On February 2, 2015, the Workers Council of Bromine Compounds Ltd., from ICL’s Industrial Products Segment, launched a full strike, as a response to the efficiency programs being implemented by the Company at Neot Hovav, whereby the Company requested that workers 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 the ICL Dead Sea announced that it would completely shut down the facilities at the Sodom 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 signed agreement, see “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 productsacids are used in electronics, buildingvarious industrial end markets, such as oral care, cleaning products, paints and coatings, water treatment, asphalt modification, construction, automotive, mass transportation, textilemetal treatment and furnishing applications throughouta variety of other industries.

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The segment's products for the food industry include functional food ingredients and phosphate additives, which provide texture and stability solutions for the processed meat, poultry, seafood, dairy, beverage and baked goods markets. In addition, the segment produces milk proteins and whey proteins for the food ingredients industry and offers spices and spice blends for the processed meat and poultry industries.

Some of ICL's products for the chemical and the food industries are based on its intellectual property and have well-known brand names in their relevant markets.

Production

Phosphate Solutions segment has a developed production setup from phosphate rock mining, along with production and purchase of different grades of phosphoric acid, and up to production of commodities and specialties products in different facilities around the world. Flame retardants

Phosphate rock is mined and processed from open pit mines, three of which are added to plastics, textileslocated in the Negev Desert in Israel while the fourth is situated in Yunnan province in China. Phosphate Solutions segment produces sulphuric acid, green phosphoric acid and other combustible material to inhibit, suppress, or delayphosphate fertilizers at its facilities in Israel and in China. The segment also operates facilities for 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:

Product	Primary Application	Primary End-Markets
Bromine, Phosphorus and Magnesium-based Flame Retardants	Additives used in plastic production	Electronics, Automotive, Mass Transportation, Building and Construction, Furniture and Textiles
Elemental Bromine	Chemical reagent, rubber component	Tire manufacturing, Pharmaceuticals and Agro
Organic Bromine Compounds	Insecticides, Solvents for chemical synthesis and Chemical intermediates	Pharmaceuticals and Agro
Clear Brines	Oil and Gas drillings	Oil and Gas
Merquel	Mercury emission control	Emission control in coal-fired power plants
Bromine- and Chlorine-Based Biocides	Water treatment and Disinfection	Swimming Pools, Spa facilities, Cooling Towers, Paper plants and Oil and Gas drillings.
Calcined and Specialty Magnesia	Magnesia derivatives, Temperature control, Antacid medication and Food additives	Chemicals, Rubber, Adhesives, Metallurgy, Food and Pharmaceuticals
Chlorine-Based Salts (Magnesium, Sodium Chloride and Pure Potash)	De-icing, Dust control, Salt and Electrolysis	Municipal Authorities, Textiles, Cosmetics, Food, Water and Electrochemical

Our Industrial Products segment also develops innovative products and new applications for existing products. In 2015, our Industrial Products segment invested approximately $25 million in new product development and in support and improvement of existing manufacturing processes. Our new products introduced in recent years include, among others, Merquel® (inorganic bromides for neutralization of mercury), FR122P flame retardant (a polymeric bromine-based flame retardant), TexFRon® (a polymeric flame retardant product for textiles), FR-1410 (a bromine-based flame retardant), Fyrol® HF-10 (a phosphorus-based flame retardant for for polyurethane foam), and SaFRon® 6605 (a phosphorus- and bromine-based flame retardant for rigid polyurethane spray foam for insulation systems in the construction industry).

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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 152 countries by the end of 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 starting from 2015. The legislation was finally completed in December 2015. Concurrently, the United States is continuing to incentivize reductions in mercury emissions by providing tax credits. At the end of 2008, our Industrial Products segment launched a new product line, Merquel®, based on inorganic bromides, which when integrated with certain technologies is designed 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 continuous 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 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 Merquel® enter into service.

FR-122P Flame Retardant. In January 2012, we signed a licensing agreement with the 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 flame retardant for 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. 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 regarding authorization of the continued use of HBCD in the European Union up to August 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 plantsphosphate fertilizers 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. In February 2016, the Company and Albemarle Corporation signed a long-term agreement for the supply of polymeric flame retardants to Albemarle from ICL plants in Israel and the Netherland. This innovative product is manufactured at ICL’sGermany, as well as animal‑feed additives facilities in the Netherlands andTurkey. The segment's specialty products are manufactured 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 marketed by ICL under the brand name FR122P, and by Albemarle under the brand name GreenCrest®. The product is a sustainable alternative that will help customersits facilities 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 2015, we began to sell TexFRon® 4002, a polymeric flame retardant product for textiles developed as part of the R&D activities of our Industrial Products segment. TexFRon® 4002, which is designed to provide high-level fire retardant solutions for textile and adhesive products, is an effective substitute for DECA (which is likely to be prohibited for use in Europe in 2017) and offers enhanced stability 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 was recognized by Oekotex, a European standard for textile products. This product is the first bromine-based flame retardant that has received such recognition.

FR-1410. In the past few years, we began selling FR-1410, which is a bromine-based flame retardant. This flame retardant is primarily used in the electronics, construction and home appliance markets.

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

·

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 furniture products. IKEA has expressly approved Fyrol® HF-5 for use in its upholstered furniture products.

·

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-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-9 performs well in flexible polyurethane foam upholstered furniture applications from a cost performance and foam discoloration perspective.

·

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 the global automotive industry’s gradual shift away from TDCP.

SaFRon 6605. SaFRon® 6605 is a phosphorus- and bromine-containing product specifically targeting flame retarding rigid polyurethane spray foam insulation systems aimed to meet flammability standards and building codes that promote the safe use in the use of foam in insulation systems.

Production

Our Industrial Products segment’s major manufacturing facilities are located in Israel (production of bromine, Dead Sea salts, bromine compounds and magnesia), the Netherlands (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 biocidesIsrael, Brazil, China, UK, Argentina, Australia and Mexico. These facilities enable the segment to produce customer-specific solutions meeting the requirement of the different markets. Additionally, the segment produces milk and whey proteins for water treatment and production of phosphorus compounds) and China (bromine compounds).

Our Industrial Products segment’sthe food ingredients industry in its facility in Austria.

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The Phosphate Solutions segment's principal manufacturing plants, distribution centers and sales officesmarketing companies are set forth in the map below.

 

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* Clearon – below:

The current annual potential production capacity is as follows: approximately 7 million tonnes of phosphate rock, approximately 2.7 million tonnes of phosphate fertilizers, approximately 1.3 million tonnes of green phosphoric acid, approximately 345 thousand tonnes of purified phosphoric acid (as Phosphorus Pentoxide), approximately 385 thousand tonnes of phosphate salts. The potential production capacity of the various plants is based on the hourly output of the plants multiplied by the potential hours of operation per year. This calculation assumes continuous production over the year, 24 hours per 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.

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In March 20162018, Phosphate Solutions segment produced approximately: 5,006 thousand tonnes of phosphate rock, 1,195 thousand tonnes of green phosphoric acid, 2,304 thousand tonnes of phosphate fertilizers, 289 thousand tonnes of pure phosphoric acid (as Phosphorus Pentoxide), 269 thousand tonnes of phosphate salts, 71 thousand tonnes of food multi-blends.

In the company completedsecond half of 2018, green phosphoric acid production at ICL Rotem was unfavorably impacted by technical operation challenges. During the salethird quarter of Clearon (chlorine-based biocide2018, activities at ICL Rotem's Zin plant stopped for 2 months in USA).

order to adjust phosphate rock production volumes to the business environment. In 2015, we produced 116 thousand tonsNovember 2018, the Company signed an agreement with the worker's council which regulates the transition to a five-day workweek at ICL Rotem's Zin plant.

YPH, the joint venture in China, improves the competitiveness and flexibility of bromineICL’s phosphate activities, as a result of access to phosphate rock with extensive reserves.  The joint manufacturing platform includes activities over the entire value chain. The performance of YPH JV significantly improved and 156 thousand tonsshifted to profitability during 2018, mainly due to reduction in costs, increased production and sales and an increase in phosphate products prices.

Competition

The competitive characteristics of bromine compounds. Productionthe segment vary according to the type of chlorine-based biocides reached 22 thousand tons,products it manufactures and the markets in which they are sold.

The commodity phosphates market is extremely competitive, and the competitors include multi‑national companies and government‑owned companies. Many producers operate in this market and the main competitive factor is price. The ability to compete in the market is dependent mainly on raw material costs, production costs and logistics. For this reason, companies located in proximity to sources of phosphorus compounds reached 78 thousand tonsraw materials, ports, and customers, benefit from competitive advantages. A key factor in the area of raw materials (in addition to phosphate rock) is the accessibility to and the price of the sulphur and ammonia required to manufacture the main phosphate fertilizers. Additional factors that affect competition to a certain extent include product quality, range of products, service and the capability to develop new products that provide unique solutions.

Phosphate mines and production facilities are located in many countries, including Morocco, China, Russia, Jordan, the United States, Brazil, Saudi Arabia, Tunisia and others. The main phosphate producers who compete with ICL are Office Chérifien des Phosphates (OCP, from Morocco), Ma’aden (Saudi Arabia), Mosaic (United States and Saudi Arabia via JV with Ma'aden), Jordan Phosphate Mines Co. (Jordan), Nutrien (Canada), Group Chimique Tunisienne (GCT, from Tunisia), the Roullier Group (Europe) and other various Russian and Chinese producers.

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The planned production expansion during 2018 of magnesia products reached 38 thousand tonsworld's major phosphates' fertilizers producers was slower than expected: although first exports of phosphate fertilizers were executed in 2015. Our maximum annualJuly 2017 from Ma'aden, Sabic and Mosaic owned project of Wa'ad Al Shamal (Saudi Arabia), its ramp–up rate during 2018 was lower than planned. Moreover, during 2018 Mosaic had shut down its Plant City (US) operations which had a capacity is approximately 280 thousand tons of elemental bromine, 410 thousand tonsabout 1.2 million tonnes P₂O₅, due to its partnership in the Wa'ad Al Shamal project. Following that, Mosaic idled all its South Pasture mine operations in Hardee County, Florida, during September 2018. OCP (Morocco) had commissioned its fourth granular phosphate hub at Jorf Lasfar (JPH-4) during the first half of bromine compounds, 37 thousand tons of chlorine-based biocides, 150 thousand tons of phosphorous compounds, 53 thousand tons of magnesia,2018, bringing its overall granular phosphates capacity to around 12 million tonnes per year. However, according to CRU Fertilizer Week, OCP adjusted its planned development strategy at this site in November 2018, and 430 thousand tons of Dead Sea salts. In 2015, the quantities producedit now plans to reach 15 million tonnes per year granular phosphate capacity by the Company declined,end of 2020, rather than the end of 2019. The increase includes the addition of three new granulation units of 1 million tonnes per year capacity each and are expected to have flexibility to produce SSP and TSP. OCP is also set to start up a new sulphuric acid unit in the first quarter of 2019 with a further two sulphuric acid plants, also planned to start by mid‑2020. In addition, Nutrien (Canada) closed in December 2018 its 0.2 million tonnes per year phosphoric acid production plant in Geismar (US). This shutdown, together with the conversion of Nutrien's Redwater (Canada) MAP unit to ammonium sulfate production, have led for its being fully self-sufficient in phosphate rock.

China is a significant player in the commodity phosphate market. Its industry is fully integrated based on its local phosphate rock reserves, and it is a net exporter of phosphate rock, although it may import phosphate rock due to both economic as well as to quality considerations. China is a major phosphate fertilizer exporter. DAP export during 2018 was 7.49 million tonnes, an increase of 17% year on year, mainly due to an increase of 51% in exports to India to 3.04 million tonnes. MAP export during 2018 was 2.49 million tonnes, a decrease of 8.2% year on year, mainly as a result of a decrease of 19% in exports to Brazil to 815 thousand tonnes, while exports to India increased by 20% to 154 thousand tonnes, according to China's General Administration of Customs. These figures were supported by higher than expected prices as a consequence of high import demand, mainly in India as the strikeresult of on Indian rupee depreciation against the US dollar, the Indian domestic fertilizers subsidy policy and in the Company's facilities in Israel in the first halflight of the year

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Competition

ICL Industrial Products is the world’s largest manufacturer of elemental bromine, and based on internal estimates, it produces about one-third of the total amount of bromine 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 for approximately 77% of the worldwide consumption of bromine in 2015. Chinese production accounts for most of the remainder of the global consumption from various different sources, including, from brine 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 began 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 on the Jordanian site. Chemtura purchases bromine and some other bromine compounds from our Industrial Products segment under long-term contracts. In January 2010, Chemtura and Albemarle signed a long-term strategic agreement. Under the agreement, Albemarle will supply Chemtura with a number of principal products, including flame retardants, and organic and inorganic bromine-based compounds.

The main barrier to entry into the bromine and bromine compound market is access to an economically viable source of bromine at 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-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 globally, which enables it to transport relatively large quantities of bromine around the world. In addition, our Industrial Products segment has a widespread worldwide marketing network and a range of high-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, a sales network, a bromine containers farm, and technical support. In the Netherlands, our Industrial Products segment has a bromine compound production facility, which gives it a competitive advantage in Europe. The phosphorus-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-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. The Chinese manufacturers have access to a source of high-quality, low-cost phosphorus which improves their capacity to compete in this market.

There are many competitors in the market for biocides for water treatment, and the barriers to entry are mainly related to the process for obtaining a license to 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 in this market are 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 are a small number of competitors in the pure potash market. Pure potash is high-quality potash used mainly in the food and pharmaceutical industries. The main barriers to entry are access to potash and the technological knowledge required for its 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 and the industry for other salts, ICL’s Industrial ProductsPhosphate Solutions segment has a leading position in certain niche products.

In the magnesium area, therefield of pure phosphoric acid and its downstream products, as well as in the field of food grade phosphate and dairy proteins area.

The segment's competitors are large and mid-sized international companies serving the chemical and food industries, which carry on manufacturing and marketing activities in various countries, as well as local companies serving local markets.

ICL's competitive advantage in specialty phosphates field derives from product features, quality, service and the ability to meet the customers’ needs.

The primary competitors of the segment in the chemical and food fields are Chemische Fabrik Budenheim KG, Innophos Inc., Prayon S.A, Nutrien, Adithya Birla, Haifa Chemicals Ltd., FOSFA and various Chinese producers.

Significant competitors exist in the dairy protein field, including Bayrische Milchindustrie, Arla, Fonterra, Milei, Lactoprot and Sachsenmilch. Competitiveness is competitionprimarily determined by access to raw materials, supply chains and technologic know‑how.

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Phosphate Solutions segment benefits from Chinese manufacturers.

the following competitive advantages:

·

An integrated value chain uses the phosphate rock mined in Israel (ICL Rotem) as well as in China (YPH) for the production of its green phosphoric acid, which serves mainly as a raw material for the production of the segment's products and for the production of ICL's specialty fertilizers business products.

·

Logistical advantages due to its geographical location, close proximity to ports in Israel and Europe and relative proximity to its customers. In addition, ICL is a unique global fertilizer producer that is able to combine potash and phosphate fertilizers in the same shipment, which enables it to service smaller customers, particularly in Brazil and the United States.

·

A professional agronomic sales team that focuses on individually‑tailored agronomic consulting to customers based on analysis of their specific combination of agricultural products and growing conditions.

·

Phosphate Solutions segment is the only fully integrated global producer of downstream phosphate-based products and its geographical diversification provides a competitive advantage in logistics, as a supplier to global food companies.

·

As a result of the acquisition of YPH, the JV in China, ICL has an integrative phosphate platform in China with better access to the Chinese market. In addition, Phosphate Solutions segment enjoys a competitive cost advantage with respect to its phosphate activities due to access to low‑cost phosphate rock with long‑term reserves, as well as low‑cost green phosphoric acid.

Raw Materials and Suppliers

The principal

Phosphate Solutions segment produces most of the raw materials used by our Industrial Products segmentit uses for manufacture of the end products are bromine, magnesium, chlorine, Dead Sea salts and phosphorus. We produce a significant portion of our raw materials through our Dead Sea minerals extraction operations from the Dead Sea. See “Item 4. Information on the Company—D. Property, Plants and Equipment—Mineral Extraction and Mining Operations” for further information on our extraction operations.

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 metal 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.

ICL’s Industrial Products segment uses elemental bromine to manufacture bromine compounds at its facilities in Israel, the Netherlands, and China. The rest of the bromine is sold to third parties. Most bromine compounds are manufactured by a chemical process involving bromine together with a range of other raw materials, of which the largest are Bisphenol A, which is used to manufacture the bromine-based flame retardant TBBA, and phosphorus, which is used to manufacture phosphorus-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 potashits commodities and specialties products.

The segment produces phosphate rock as the primary raw material for its backward integrated value chain, commencing from mining of phosphate rock in Israel and China, through production of green phosphoric acid and up to the production of phosphate-based fertilizers, pure phosphoric acid and specialty phosphate.

The primary raw materials acquired from external sources are mainly sulphur, ammonia, different grades of pure phosphoric acid and caustic soda.

Sulphur prices increased during most of 2018 but started to moderate from November 2018. Average sulphur prices in 2018 (bulk crushed lump and gran CFR price China) were $154 per tonne, compared to $122 per tonne in 2017 and compared to $126 currently (according to CRU - Fertilizer Week Historical Prices, February 7, 2019). Market observers are forecasting that the downward trend will continue during the first half of 2019, mainly due to the weakening of the phosphates market.    

During the fourth quarter of 2017, towards the expected termination of the long-term contract for the supply of pure phosphoric acid with the supplier Nutrien at the end of 2018, the Company signed a new contract with Nutrien which guarantees regular supply of this raw material through December 31, 2025. The terms of the new contract will result in a modest margin reduction; however, ICL expects that most of the margin reduction will be recovered via market pricing actions and/or cost reductions in other areas.

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For the dairy protein business, securing organic quality raw materials (whole milk, skimmed milk and whey) is richa key element of the operations. In order to secure the supply, there are long term agreements in magnesium chloride. This brine is pumped to our Industrial Products segment’s facilities at Mishor Rotem. In a process utilizing magnesium chlorideplace with all major suppliers, which are valid for the next 1–3 years.

Phosphate Solutions segment maintains inventories of sulphur, phosphate rock, green phosphoric acid 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 derivatives in the United States for production of chlorine-based disinfectant products (biocides), our Industrial Products segment purchases chlorine, urea and caustic soda from local manufacturers and cyanuric acid from Chinese manufacturers. In March 2016 the Company completed the sale of 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. Phosphorus-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 characteristics, supply dates,times, distance from the supplier,suppliers and other operational and logistical considerations.

Sales, Marketing and Distribution

Our Industrial Products segment’s principal

The Phosphate Solutions segment sells and markets its products worldwide. The primary markets of phosphate commodities products are Europe, China, Brazil, India, the United States Western Europe, China, Japan, and Taiwan. Our Industrial Products segment sells itsTurkey. Phosphate specialties products are primarily through a network of marketing companies, agentsmarketed to industrial, food 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-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.

ICL’s Industrial Products segment’s policy is to seek to maintain adequate inventory, which varies from product to product, to ensure orderly supply tocommercial customers in light of the customers’ distance from production centersEurope, North America, South America and their demand for inventory availability,Asia. The marketing network is based mainly on an extensive internal marketing 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 Productssales organization and, to a lesser extent, on external distributors and sales agents. 

The Phosphate Solutions segment extends credit terms to its customers according to the customary practicespractice in their locations. The segment’ssegment'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

Most of the segment's sales do not take place according to long‑term orders or contracts but are not characterizedregularly ordered close to the time of supply. Accordingly, there is no significant orders' backlog.

The Phosphate Solutions segment ships its products from Israel to customers overseas by regular seasonal fluctuations. However, amounts soldships (mainly in bulk) that it leases in the global marine transportation market, which are loaded by using designated facilities in the ports of someAshdod on the Mediterranean Sea and Eilat on the Red Sea. The segment also has special port facilities for bulk loading in Amsterdam (the Netherlands) and Ludwigshafen (Germany). YPH JV sells most of its products fluctuatein China and is preparing to provide a logistical solution to marine shipping outside China when it will be required.

The prices of phosphate-based fertilizers are determined in negotiations between the various seasons. Agricultural productsmanufacturers and the customers and 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 mainly by the strike in Israel duringrelationship between the first half ofmarket demand and the year.

Performance Products

Our Performance Products segment primarily develops, produces, markets and sells a broad range of specialty phosphates for different applicationsavailable supply at that date 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 2015, the total sales of our Performance Products segment were approximately $1,472 million and accounted for approximately 27% of our total sales (including sales to other segmentssize of the Company), whilecustomer and the segment’s operating income totaled approximately $319 million, representing approximately 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 83% of our Performance Products segment’s external sales in 2015 were of phosphoric acid of various grades (technical, food, electronics and polyphosphoric acid) and its downstream 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%period of the Company’s total revenue in 2015.

agreement. Prices for relatively long‑term contracts are not necessarily similar to spot prices (current/casual sales transactions).

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 our products grew in both Food Specialties and Advanced Additives mainly on the strength of acquisitions in both product lines. Food Specialties was favorably impacted by the acquisition of Prolactal, a whey protein company which balanced the portfolio’s demand by offsetting the decline in South America, Asia and Russia. Food Specialty markets continue to be receptive to innovative product concepts which offer better health and convenience characteristics while still maintaining favorable texture and stability features. The financial crisis in Russia and weak demand in the CIS region moderated the Company’s growth opportunities in this business. Advanced Additives benefited from an acquisition in Brazil and a joint venture investment in China.

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During 2014 and 2015, we expanded our Performance Products Segment’s operations by means of acquisition of the following activities and companies:

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 Hemmingen company, including Hagesud’s production sites, existing businesses, state-of-the-art production technology and warehouse facilities located in Hemmingen, Dortmund and Ottensoos, Germany with approximately 200 employees. The acquisition is being integrated with our legacy spice business with moderate success as the anticipated synergies are still being realized. The profitability of 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-based downstream products and specialty fertilizers. The acquisition expanded our global WPA portfolio into South America and we realized operational efficiencies from the overall integration. The profitability of the product portfolio has proven to be incremental to our base margin. Despite the difficult economic environment in Brazil and the competitive nature of imports into Brazil, WPA domestic sales experienced favorable growth.

In March 2015, the Company completed 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 producer of whey proteins and other ingredients for the food and beverage industry. 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 sale of number of its non-core businesses: the alumina, paper and water industry (APW), the thermoplastic products for the footwear industry (Rhenoflex), the hygiene products for the food industry (Anti-Germ) and the pharmaceutical and gypsum businesses (PCG).

In total, sales in 2015 decreased by $355 million (net of revenue from services in a subsidiary in Germany which is not part of the 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, paints and coatings, electronics, 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 segment operates two business units: Advanced Additives and Food Specialties with primary 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 materialspecialties products are made under agreements with terms of one or two years, or through “spot” orders placed close to manufacture food additives in many countries in the world.

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.date of supply. In addition, for these products framework agreements with specific customers exist, through which the Performance Products segment manufactures and markets phosphoric acidcustomer may purchase up to an agreed maximum quantities of varying grades, primarily forproducts during the food industry. The unit supplies P₂S₅, a key ingredient in lubricating oil additives and insecticides. In addition we are oneterm, on the basis of which the world’s leading manufacturerscustomer issues purchase orders from time to time.

For purposes 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 from 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 processed food markets. In addition, the business 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 was partially offset by lower demand from Russia and the CIS countries and the 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, Nutrifos, Levn-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. In addition, our ability to provide a high level of service and expand into new markets in the firefighting sector has enabled us to achieve a leadership position in these market segments.

Production

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-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 purchases 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:

In 2015, we produced 206,960 tons of purified phosphoric acid (as Phosphorus Pentoxide), 312,415 tons of phosphate salts, 112,908 of food additives and milk derivatives, and 64,905 tons of other phosphate-based products (P2S5 and Firesafety). Our maximum annual capacity is approximately 267,000 tons of purified phosphoric acid (as Phosphorus Pentoxide), 395,755 tons of phosphate salts, 175,620 of food additives and milk derivatives, and 122,000 tons of other phosphate-based products (P2S5 and Firesafety) 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.

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The primary competitors of our Performance Products segment are Chemische Fabrik Budenheim KG, Innophos Inc., Prayon, PCS, Adithya Birla, Haifa Chemicals Ltd. ChemTrade Logistics Company in North America, Italmatch Chemicals in Brazil and Singapore and various Chinese producers.

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-grade phosphoric acid as well as via a thermal process from elemental phosphorus (P4). Our Performance Products segment obtains fertilizer-grade phosphoric acid from our Fertilizers segment and also purchases (P4) and purified phosphoric acid from external manufacturers.

Our Performance Products segment has a long-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-term supply agreement for (P4) with another supplier through 2022.

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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 marketingespecially food products, Technical Sales and Applications 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-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

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The strategy regarding phosphate specialties products 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’sinventory storage costs. Therefore, portions of the finished product inventories are held in storage facilities in the destination countries.

Our Performance Products

Seasonality

The seasonal nature of demand for phosphate commodities products is usually characterized by higher sales in the second and third quarters than sales in the first and fourth quarters. In recent years, due to various influences on the timing of sales, primarily price fluctuations, the effects of seasonality have been reduced as compared to earlier periods.

The target markets of phosphate specialties products are not characterized by significant seasonality. However, the fourth quarter of the year is relatively weak due to the holiday season and customers’ destocking towards the end of the year.

Natural Resources Tax

The Law for Taxation of Profits from Natural Resources, which entered into effect on January 1, 2016. For additional information, see Note 17 to our Audited Financial Statements.

Innovative Ag Solutions Segment

The Innovative Ag Solutions segment extendswas established on the foundations of ICL’s specialty fertilizers business. The segment aims to achieve global leadership by enhancing its global positions in its core markets of specialty agriculture, ornamental horticulture, turf and landscaping, targeting high-growth markets such as Latin America, India and China, by leveraging its unique R&D capabilities, vast agronomic experience, global footprint, backward integration to potash and phosphate and chemistry know-how, as well as seeking M&A opportunities. ICL is working to expand its broad product portfolio of controlled release fertilizers (CRF), water soluble fertilizers (WSF), liquid fertilizers, slow release fertilizers (SRF) and straights (MKP/MAP/Pekacid).

The Innovative Ag Solutions segment develops, manufactures, markets and sells fertilizers that are based primarily on nitrogen, potash (potassium chloride) and phosphate. It produces water soluble specialty fertilizers in Belgium and the US, liquid fertilizers and soluble fertilizers in Israel and Spain, and controlled‑release fertilizers in the Netherlands and the United States. ICL's specialty fertilizers business markets its products worldwide, mainly in Europe, Asia, North America and Israel.

The segment will also function as ICL’s innovative arm, which will seek to focus on R&D, as well as implementing digital innovation.

In 2018, the sales of the Innovative Ag Solutions segment totaled $741 million, constituting approximately 13% of ICL's total sales (including sales to other segments), an increase of 7% compared to 2017 sales. The segment operating profit totaled $57 million, constituting 6% of the total operating profit attributable to the segments. For additional information, see “Item 5 - Operating and Financial Review and Prospects— A. Operating Results— Results of Operations”.

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Specialty fertilizers offer improved value to the grower compared to the use of regular fertilizers as they are more efficient, maximize yield and quality and require lower labor costs. The following pyramid presents the different fertilizer product lines – the high‑value products are usually accompanied by a higher price per tonne. ICL's Innovative Ag Solutions segment produces most of the high value products, except for potassium nitrate and calcium nitrate.

The Specialty Fertilizers business operates in 2 main markets:

Specialty Agriculture

This market includes high-value agricultural crops such as fruits and vegetables. Enhanced efficiency fertilizers are used and applied mainly in these crops. The use of specialty fertilizers in crops such as sugar cane can also be beneficial – subject to climate and soil conditions. The main market for ICL is related to the drip irrigation/fertigation market. This market is growing as the use of drip irrigation systems is growing across the globe. The use of enhanced efficiency fertilizers is growing due to their environmental and economic advantages, although such growth is still dependent on the price levels of crops and raw-material prices (e.g. urea, potassium and phosphorous).

Turf & Ornamental (T&O)

Ornamental Horticulture

The Ornamental Horticulture market consists of growers of outdoor ornamental plants (nurseries) and pot and bedding plants (greenhouses). The growers require high quality fertilization programs to grow plants at the quality level required by the garden centers, DIY (Do‑It‑Yourself) outlets and retail chains. The IAS segment has a large specialized sales force, advising growers on the optimal nutrition of the plants. ICL has a specialized distributor network in the Ornamental Horticulture market, and its main product lines for this market are specialty fertilizers such as CRFs (controlled release fertilizers) and WSFs (water soluble fertilizers) with well-known brand names such as Osmocote, Peters & Universol. In specific markets, such as North America and the UK, a range of unique plant protection products is also included in the proposals for growing healthy plants. In the UK, ICL is a leading company providing a total solution for the ornamental growers as it produces and markets unique, high-quality peat and growing media products under the brand name Levington Advance.

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Turf & Landscape

The professional turf market includes the following user groups: golf courses green keepers, sport field grounds men, landscapers, contractors & lawn service

These groups demand high-quality inputs to secure strong, high-quality turf. The users require an integrated approach for keeping the turf strong and maintaining its health, without creating an environment that is conducive to the development of disease. There is an environmental need to limit the inputs and, therefore, an integrated approach of unique, high-quality products is needed. The most important inputs are (specialty) fertilizers (controlled release- and slow release fertilizers), grass seeds and plant protection products. ICL offers all three product lines in an integrated program. ICL has a dedicated and experienced team of unique professional grass experts, along with a distribution network serving its key markets, mainly in Europe and Asia.

Innovation

The IAS segment will function as ICL’s innovative arm, promoting innovation, developing new products and services as well as digital platforms and technological solutions for farmers and agronomists. The segment will drive collaborations with innovative technologies and its goal is to introduce and integrate new digital solutions for the agricultural world by utilizing, among other things, external knowledge and platforms.

The ICL specialty fertilizers business has grown substantially through both organic growth and M&A. Over the past few years, the business has proven its ability to successfully integrate businesses into its existing platforms (R&D, sales & marketing, distribution channels), such as:

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Everris, a company that manufactures and sells high‑quality controlled‑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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ICL Belgium, a manufacturer of soluble NPK fertilizer components,

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AmegA, which develops advanced solutions for water conservation.

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YPH in China also manufactures specialty fertilizers, contributing to the business line’s growth in Asia.

Products

Specialty fertilizers are highly effective fertilizers that allow more precise feeding of plants for their major nutrients needs (nitrogen phosphorous and potassium) as well as secondary nutrients and micronutrients. These fertilizers allow efficient fertilizing through among others drip irrigation systems and foliar spraying, and help growers obtain higher yields and quality. These fertilizers include, among others, controlled release fertilizers (CRF), slow release fertilizers (SRF), soluble fertilizers and liquid fertilizers as follows:

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Controlled‑release fertilizers (CRF) allow accurate release of nutrients over time. CRF’s have a special coating that allows prolonged release of nutrients over several weeks and up to 18 months - compared to regular fertilizers that dissolve in the soil and are immediately available. ICL Innovative Ag Solutions has leading global brand-name products such as, Osmocote, Agroblen and Agrocote. Osmocote is the most used controlled‑release fertilizers by ornamental growers worldwide. The brand is known to deliver high quality ornamental plants due to its consistent release of nutrients and unique patterned and programmed release technologies. ICL continues to invest in new technologies as well as field trials to test and confirm the high reliability of the release. During the past few years, ICL developed several new technologies such as the “Dual Coating Technology” (which optimizes the release to ornamental plants) and the “E-Max Release Technology” (a new coating technology with improved release characteristics, mainly for urea). Furthermore, ICL is also selling slow‑release fertilizers (SRF) which, due to their low solubility and hydrolysis, release nutrients slowly (generally up to a period of 2 months). Main market for this is in the Turf and Amenity market.

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Soluble fertilizers, which are fully water‑soluble, and fully‑soluble NPK compound fertilizers, are commonly used for fertilization through drip irrigation systems to optimize fertilizer efficiency in the root zone and to maximize yields. These fully soluble fertilizers are also sometimes used for foliar applications. ICL's well-known brands for fertigation are Peters, Universol, Agrolution, NovaNPK and Novacid. ICL develops specific formulations for different applications and circumstances. There are specific formulations for specific crops, greenhouses and/or open fields, as well as for different water types.

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ICL is also selling ‘Straight fertilizers’ which are crystalline, free‑flowing and high purity phosphorus soluble fertilizers such as MKP, MAP and PeKacid. PeKacid is the only solid highly acidifying, water soluble fertigation product that contains both phosphorus and potassium. The product is ideal for specific water conditions where an acidifying effect is required as well as keeping the dripping lines clean.

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Liquid fertilizers are used for intensive agriculture and are integrated in irrigation systems (mainly drip systems). The product line includes mostly tailor‑made formulations designed for specific soil & water/climate conditions and crop needs.

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Peat, a growing medium for various crops, where generally controlled‑release fertilizers and plant‑protection products are added too. Specific formulations of growing media are designed for specific plant needs, such as greenhouse bedding plants and outdoor nurseries. A well-known ICL brand is the “Levington” brand. Inclusion of growing media products in the portfolio in the UK allows ICL to offer an effective total solution to bedding and pot plant growers and nurseries.

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Water conservation and soil conditioning products is a new product line developed by ICL's IAS segment. Water conservation products are used in professional turf to keep water in the root-zone. A key brand is H2Pro. These products significantly reduce irrigation requirements. This new technology is also used in agriculture to allow better water availability around the root-zone of the crops.

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Production

ICL Innovative Ag Solutions’ principal production facilities include its plants in Israel (special compound fertilizers, liquid fertilizers and soluble NPK fertilizers), Spain (liquid fertilizers, and soluble NPK fertilizers), the United Kingdom (products for water conservation and peat incorporated in growing media), China (compound specialty fertilizers and soluble fertilizers), the Netherlands (controlled‑release fertilizers and fertilizer blends), Belgium (soluble NPK fertilizers) and the United States (controlled‑release fertilizers).

ICL Innovative Ag Solutions’ main manufacturing plants and marketing companies are set forth in the map below:

ICL Innovative Ag Solutions’ annual potential production capacity is approximately 300 thousand tonnes of soluble fertilizers, 450 thousand tonnes of liquid fertilizers, 110 thousand tonnes of controlled‑release fertilizers and 400 thousand M3 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, lack of availability of raw materials, market conditions and seasonality in demand.

Competition

The Specialty Fertilizers’ market size is estimated at approximately $13 billion per year, accounting for about 4% of the total fertilizers market. According to the Company's estimation the market is growing at an average rate of about 6% per year.

The Specialty Fertilizers market is diversified, with a few global companies and many small to medium-size local producers. The market operates mainly on a local basis and most producers sell their products in nearby territories rather than globally. ICL’s specialty fertilizers business may be considered one of the largest global players in the specialty fertilizers market with production plants in Israel, Netherlands, Belgium, Spain, the UK, the USA and China.

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The Capex needed for new production capacities is not considered high compared to the commodity fertilizers market. Nevertheless, in order for a new player to enter this market with different product groups, extensive knowledge is needed – both of chemical production and of agronomical know-how, as well as customer support capabilities. ICL focuses and relies on a worldwide experienced R&D team, allowing it to stay significantly ahead of the competition in many of the specialty-fertilizers product lines, especially in the controlled-release, water soluble and liquid fertilizers markets. ICL provides high-level professional support to customers by means of experienced and professional marketing and agronomist teams with strong customer relationships that have been developed over decades of service, and through the offer of an extensive product portfolio.

Besides ICL, other companies globally active in the specialty fertilizers market are: SQM, Yara, Haifa Chemicals and Compo. Other companies such as Nutrien and Koch (USA), Produquimica (Brazil) and Kingenta (China) are regional players. 

ICL specialty fertilizers business benefits from the following competitive advantages:

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A strong, efficient and integrated supply chain with in-house access to high quality raw materials, such as phosphate and potash, which is based on an extensive product portfolio and multi-location production.

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Unique R&D and product development activities, creating a strong platform for future growth in controlled-release fertilizers, fertigation, foliar soluble fertilizers, enhanced nutrients, water efficiency and innovative next generation products.

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Added value production process technology – custom-made formulations to meet our customers’ unique needs.

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Highly skilled global agronomic sales team providing professional advice and consultation and Distributor loyalty.

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Full product portfolio (one-stop shop).

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ICL’s well-known and leading brands.

Raw Materials and Suppliers

The primary raw materials acquired from external sources are mainly KNO₃, SOP, ammonia, NPK granules, Urea, KOH and coating materials.

On March 1, 2017, the District Court in Haifa (Israel) decided that the ammonia tank operated by Haifa Chemicals must be emptied no later than April 1, 2017, and that ships transporting ammonia are forbidden to enter Israel’s seaports. Ammonia is a raw material used for various purposes by ICL’s Innovative Ag Solutions, and is also sold to external customers as an end product and/or as ammonia derivatives. During 2017, the Company started to import ammonia in tanks and other nitric raw materials as alternative for ammonia imports in vessels until better alternatives will be approved by the Israeli Authorities. Where needed, ICL Innovative Ag Solutions is examining the production alternatives of the business-line in order to ensure continuous supply to the end customers. The total impact on the Company’s business results is not material. During 2018, the Company used isotanks to import ammonia for the production of all the required products and ammonia derivatives. During the year, imported ammonia costs decreased, mainly by optimizing supplier portfolio.

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ICL specialty fertilizers business endeavors to hold inventories of the above raw 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.

Sales, Marketing and Distribution

The primary markets of the Specialty Fertilizers business line are the USA and Europe, particularly Spain and Israel, Asia, Australia and Brazil. The Specialty Fertilizers business line sells its fertilizer products primarily via a network of its own sales offices as well as sales agents throughout the world.

In general, the business model relies on brand-name, premium specialty products which are marketed by a strong agronomist sales network at the end‑user level, while sales are invoiced through distributor-partners which distribute the products exclusively or semi-exclusively. The technical sales force emphasizes the agronomic advantages of the specialty products to the end users (farmers, growers of containerized plants, golf courses, etc.) and provides advice to and training of distributor sales representatives.

Most of the specialty fertilizers business sales are not made by means of contracts or long‑term orders but, rather, through current orders made close to the supply date. Accordingly, there is no significant orders’ backlog.

Prices are determined via negotiations between ICL and its customers and are affected mainly by the relationship between market demand and the business line’s production cost, as well as by the size of the customer and terms of the agreement.

ICL Innovative Ag Solutions grants credit terms to its clientscustomers according to customary practices in their respective locations. The segment’sICL Innovative Ag Solutions credit sales are generally covered by trade credit risk insurance or by letters of credit from banks with high credit ratings.

Seasonality

The target marketsstronger sales season for Specialty Fertilizers is the first half of most our Performance Products segment’sthe year. The use and application of the fertilizers is related to the main growing seasons of the specialty crops around the globe. The main factors impacting seasonality are geographical location, type of crop, product and market.

As an example, some specialty products, are not characterized by seasonality, except for flame retardants, which have a higher sales volumesuch as soluble fertilizers in the springOrnamental Horticulture market are sold and summer due toapplied throughout the many fires in North America during this hot and dry period. First quarter and fourth quarterentire year with limited seasonality, whereas controlled release fertilizers are weaker due to the lack of fire activitysold during the cold winter months.

Other Activities

IDE – ICL holds 50%potting season of IDE Technology Ltd. IDE operates in the following fields: constructingcontainer nursery stock and selling water desalination pot‑plants (before spring time).

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Corporate Responsibility, Sustainability and treatment of industrial waste water, selling water, operating and maintaining water treatment and desalination plants and developing and producing industrial 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 water challenges. IDE’s core competencies are in membrane and thermal desalination and/or treatment of industrial 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.

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Sustainable Development Policy

The Company applies an overall policy of sustainable developmentcorporate responsibility and sustainability that integratesseeks to integrate 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 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,responsible management and continues improvement in all sustainability fields: reducing environmental impacts; health and safety; product stewardship throughout the following items:entire product life cycle; responsible use of natural and land resources; rehabilitation of streams, restorationadvanced mine reclamation; fair employment; business ethics; community contribution; transparency and preservation of miningadditional fields. For additional details on our practices and quarrying regions and return thereofperformance in all sustainability fields, see “ICL Corporate Responsibility Report 2017” in our current report on Form 6-K (File no. 001-13742) furnished to the State after completion ofSEC on December 31, 2018. In addition, the activitiesCorporate Responsibility web-report (which constitutes the land was designated foraforementioned report), is available on ICL's website. Neither this current report on Form 6-K nor our website is incorporated 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.

reference into this Annual Report.

ICL has a policy of involvement and investment in the society and the community, which was formulated and approved by ourits Board of Directors in 2001 and amendedwas revised in 2014. Pursuant to this policy, an annual budget for community service is approved. Each investment oractivity and donation is executed as required byin accordance with the policy and is reviewed by the relevant authorized 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.

donation.

ICL focuses on its cooperation with the community and its involvement inon the communities in and outside of Israel from which its employees come and inwithin which it operates. ICL’sICL's main activities are in the communities in Israel’sIsrael's southern region, namely: Dimona, Yerucham, Arad, Beer Sheva, and the Bedouin settlements in the South. ICL focuses its activities on childrenlife sustenance areas (e.g., the society, economy and youths with handicaps, women and children at risk,environment), education and excellence of students in the areasscience area (with emphasis on chemistry), strengthening of chemistry, computers, young entrepreneursthe local communities through performance of various social projects for the benefit of the local residents and assistance tosupport of underprivileged populations in harsh socio-economic conditions, and populations in need and withthose having special medical needs.

Our

ICL’s charitable contributions in 20152018 totaled approximately $6 million (approximately 24 million NIS).$5 million. This amount does not include the numerous volunteer hours of work that ourthe employees, devoted as volunteers, partly at the expense of their work hours.

employer’s expense.

Regulatory and Environmental, Health and Safety Matters

ICL is a mining and chemical company. Some of ourits products are defined as hazardous substances and are potentially harmful to the environment and to the health and safety of the public as a result of theif not managed properly. This applies also to effluents, air emissions and waste that are generated during the production of oursome of the products. These substances can cause pollution that necessitates remediation, clean up or other responseresponsive actions. In addition, some of ourICL’s 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 toThe Company operates in accordance with 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 capital projects in the areas of environmental protection, health and safety, and also bearsincurs current costs in connection with these matters. In 2015, we2018, ICL spent approximately $101$121 million on environmental matters, in 2015, of which approximately $20$47 million relating to investmentswere capital projects in property, plant and equipment and approximately $81$74 million as awere current expense.expenses. ICL is continuing to invest in order to reduce its impact on the environment. In order to comply with the Israeli Clean Air Law and the emission permits, over the next few years the Company will make significant capital investments in the areas of environmental protection. For more information, see "Air Monitoring and Treatment— Rotem” below. The Company estimates that in 2016,2019, it will spend approximately $120$171 million on environmentenvironmental protection matters, of which approximately $39$101 million on investmentswill be capital projects in property, plant and equipment while approximately $70 million on current expenses.

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Industrial production in general, and approximately $81 million will bethe chemicals industry in particular, requires taking special precautionary measures to maintain a current expense. We are continuing our investments insafe and healthy work environment. Some of ICL’s products, raw materials and production processes represent a potentially high risk to anyone who deviates from the environment while making improvements and reducing our impact onrequired professional safety standards or from the environment.

On December 11, 2013,mandatory means of safety. ICL invests considerable efforts to ensure that it complies with 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-wide competition and reducing business concentration in the economy prior to issuing rights in public assets to private entities defined as high-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 listrequirements of the high-concentration entities was publishedauthorities and acts in accordance with their instructions.

To ensure the criteria providedsafety of workers and others in the Business Concentration Lawits plants, ICL seeks to comply with strict occupational safety and health standards prescribed by local and international laws and standards. 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-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 naturalinvests extensive resources in training and mentoring, as well as other safety measures, in order to continually improve occupational safety and health and prevent accidents. ICL is continuing to enhance its procedures and measures and aims to become a way that is different than that providedleader in the law, among other things, in relation to how the concession for extracting minerals from the Dead Sea will be granted in 2030,safety 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.

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environmental performance.

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A number of government regulations

Regulations addressing environmental and other issues, which may have a significantan 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 onICL’s activities:

The Company makes an ongoing and consistent assessment of the environment. Most countries to which our Fertilizers segment sells phosphate fertilizers do not presently restrict quantitiesrisks of cadmium in fertilizer. The European Union has been conducting a series of public hearingsits new products prior to enacting regulations limiting the maximum concentration of cadmium permittedentering them into commerce. In addition, existing products undergo an evaluation process at every stage in phosphate fertilizers anywhere within the European Union. The regulations are expectedtheir production process and supply chain. ICL invests resources to be published in 2016 with a transition period of several years,develop sufficient information 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 limitationsdata with respect to its products in order to create a full characterization of their safety features with reference to human health hazards and environmental threats.

New Fertilizer Regulation

The new future European Fertilizers Regulation, which is still in progress, will require fertilizer producers to monitor new contaminating elements in fertilizer products and for this purpose, additional analytical and monitoring methods will be incorporated to comply. In addition, pursuant to the new Law, fertilizer producers will have to demonstrate the ability to track their products to ensure the quality thereof in the production and supply chain.

In Europe the legislative process for the New Fertilizer Regulation ("NFR") is still in progress. The negotiators of the EU Parliament, Council and EU commission have made a compromise text which was approved by the Coreper (Committee of the Permanent Representatives of the Governments of the Member States to the European Union). Further approvals are needed (e.g. from the Parliament) before it is finalized. Fertilizers Europe (the branch organization of major fertilizer manufacturers in Europe), of which ICL is a member, expects that the NFR could be implemented from September 2019.

The NFR has a broad scope from all types of fertilizers, liming materials, biostimulants, growing media, soil improvers, inhibitors and blends of these materials. The impact to ICL will be considerable. Not only the labelling of products will need to change and the way to assess conformity, but also new tolerances and levels of contaminants are included in the NFR. Especially the level of cadmium contentfor phosphate containing fertilizers was a point of long discussions. The current version is requiring a maximum cadmium level of 60 mg/kg P₂O₅ which was the level supported by the majority of the European fertilizer industry. Also for the polymer coatings on controlled release fertilizers very challenging biodegradation requirements are included in fertilizers; however, these restrictionsthe NFR. If the criteria are not bindingmet in 7 years, it will not be possible to sell controlled release fertilizers using today's coatings as EC fertilizers. In addition, proposal requested by the EU commission to ECHA will likely influence the polymer coating for controlled release fertilizers. This proposed restriction was published in January 2019 by ECHA and will be open for public consultation.

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Limitations, regulation and registration on the entire European Union.

Salt Accumulation at Mines in Spain

Our Fertilizersuse of products under the Industrial Products segment has two potash production centers in Spain, in

Various countries are assessing possible limitations on the townsuse of Suria and Sallent. As a by-product ofspecific chemicals. Below are details regarding the potash production process, salt is produced and heaps up in piles, most of which, at the present time, is not usable.

Pursuantmain proceedings known to the license covering the first site (Suria), salt may be piled up on the site up to 2026 at the current production level; with respect to the second site in the townCompany as of Sallent, regarding which the Company intends to discontinue the mining activities by the middle of 2017, it was decided by the local planning board (CUCC), that it is permissible to continue piling up salt at the current production level until the earlier of June 30, 2017, or when the pile reaches the height of 538 meters. As at the date of this Annual Report,Report.

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Tetrabromobisphenol A (TBBPA) flame retardant, is under review as part of the Chemicals Regulation in Europe (REACH). The results of the review are expected in 2021. During 2018, TBBPA was nominated for review under the European directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment (RoHS). The assessment is expected to be completed by the end of 2019. In October 2018, the California Office of Environmental Health and Hazard Assessment (OEHHA) added TBBPA to the Proposition 65 list, this process does not have a significant impact on the Industrial Products segment.

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Hypobromous Acid (HOBr): The Netherlands has filed a Registry of Intent (ROI) to the European Chemicals Agency (ECHA), with a proposed classification of HOBr as a reproductive toxin category 1B under the Classification, Labelling & Packaging (CLP) EU Regulation. HOBr is the active biocide formed from a few products of the Industrial Products segment. If this proposal will be accepted and becomes officially binding, it may have significant implications on the bromine-based biocidal products in the EU.

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Ammonium Bromide: Sweden has filed a dossier supporting proposed classification as reproductive toxin category 1B under the Classification, Labelling & Packaging (CLP) EU Regulation. If this proposal will be accepted and becomes officially binding, it may have significant implications on the bromides use in the EU (biocides and as chemicals).

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Biocides: in a number of countries, a biocidal substance and any product containing it must be registered prior to import or sale in those countries. Sale is limited to those commercial uses for which registration has been granted in a given country. The registration is generally for a limited time and needs to be renewed in order to continue selling. In the EU, biocides are regulated by the Biocides Products Regulation (BPR) under the EU Chemicals Agency (ECHA). All of the Industrial Products segment's biocide registration submissions under the BPR are currently in the stage of evaluation by the relevant Member State performing the review.

On November 29, 2017, the height ofEuropean Commission published its delegated regulation, setting out the salt pile is 509 meters. This decision, which relates tocriteria for identifying endocrine disrupting chemicals (EDCs) under 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 activitiesEU Biocides Products Regulation (BPR) in the countryEU Official Journal, and it entered in to force on June 7, 2018. BPR is the first regime to apply the ED criteria, however, it will become applicable across sectors of EU law, such as preferential activitiesREACH, cosmetics, 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 whichfood contact materials. It is to be completed no later than 2070 (the removalexpected that some of the salt pile shouldICL's biocides and other chemicals might be completedidentified as ED, and as a result might be affected by 2065). This agreement foresees transitory measures constituting an interim solution to allow ICL Iberia to continue its activities at the Sallent site during the transition period. ICL Iberia’s estimation, when negotiationsvarious regulatory restrictions.

Biocides have also specific regulatory requirements, depending on the detailed agreement are concluded,specific use, in many other countries. ICL has registered all its biocides under the agreement should advanceUSA FIFRA (Federal Insecticide, Fungicide and Rodenticide Act) and in all relevant states in the procurement ofUS and maintains full compliance under this law. ICL also registers its biocides as needed in all target markets as required by 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 more information, see “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.”

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local regulations.

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Product

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Additional specific products of the Industrial Products segment are in the process of evaluation under the Chemical Regulation in the EU (REACH), For some products, there are draft or final decisions by ECHA to perform more studies, a process that will take a few years until the evaluation is completed.

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Chemicals Regulation and Registration

Water Treatment (Biocides). In

Europe

REACH

A regulation setting up a number of countries, this substance and any product containing 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-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. Enforcement of 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 ICL 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 licensingregistration, evaluation, authorization and evaluationrestriction (REACH) of chemicals in the European Union (known as “REACH”) became effective as of June 1, 2007. The statuteregulation applies to both chemicals already on the market, as well as to new chemicals. The regulation is being implemented gradually, between 2008 and 2018, under the authority of the ECHA (European Chemicals Agency). The regulation covers chemicals not regulated under other specific regulations in the EU (e.g. pesticides, biocides, food, pharma, etc.).

Pursuant to this legislation, manufacturers in the European union and importers of chemicals or importers of certain products containing chemicalsin the European Union are required to submit dossiers containing detailed information of every substance orregister each chemical compound manufactured or imported into Europe, in quantities of more thanabove one ton per year (theyear. For each chemical a Lead Registrant is assigned, who produces a joint dossier with data on the chemical. Other registrants are co-registrants, who are required to produce a short dossier with company‑specific information and share the cost of the joint dossier. The amount and content of the information submitted in the dossier depends on the volume of production and/or sales in Europe,the EU, and the nature of the product in terms of its effect on health and the environment).environment. Some of the products will undergo riska thorough chemical evaluation by the ECHA and by a Member State based on the information that is submitted,has been submitted. As part of the process, ECHA regularly publishes and others will only be able to be sold in the future under an appropriate permit.updates a list of substances defined as “Substances of Very High Concern” (SVHC). The process defines, later on, substances which are candidates for authorization. Such a permitauthorization will only be granted on the basis of quantified evidence relating to management of the product with regard to health and environmental aspects, thea lack of appropriate alternatives, and a socio-economicsocio‑economic evaluation. Certain persistent, environmentally toxicAn authorization will be granted to a substance defined as SVHC for a specific use(s) and for a limited period of time. It is expected that for such substances, alternatives will require permits based only on a socio-economic evaluationbe developed and onintroduced to 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 (European Chemicals Agency).

EU market.

Apart from higher production and raw material costs following implementation of REACH, under the law our subsidiaries incur costs in the field of licensing,registration, control and implementation of product stewardship programs with customers. Another possible risk caused by the REACH legislation is reduction in usage of a product or material, or removal of certain productssubstances from the European market. Likewise,Union markets or prohibition of certain uses of a substance in the EU. However, there will be opportunities to introduce newly developed substances as alternatives to substances in products and compounds that require investment in alternative research and development due to the need to remove certain componentswill be restricted or removed from use in the European market.

Union markets.

All of ourICL 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 ICL has submitted applications for permitsregistrations for all the chemicals relevant for theirits businesses in EuropeEU (production and sale) within the timetables set in the law (2010 and 2013). We havelaw. ICL has also volunteered to lead and prepare a large number of leading filesjoint dossiers for the entire industry (lead registrant)(as a Lead Registrant).

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As at the date of Contents

Underthis Annual Report, there are several substances which are under evaluation by the law, ECHA publishes,Authorities, some of which have been listed as Substances of Very High Concern (SVHCs). For more details, see “Item 4 - Information on the Company— B. Business Overview—Regulatory and regularly adds to, a listEnvironmental, Health and Safety Matters — Limitations on the Use of Flame Retardants and Other Products”.

CLP Regulation

Another important regulation in the EU is the CLP regulation (Classification, Labeling and Packaging of substances and mixtures), that entered into effect in the European Union in December 2010. Under this regulation the European Chemicals Agency (ECHA) is reviewing classifications of substances and mixtures. An outcome of a severe classification may have an impact on a specific product's market in the EU and even lead to additional implications outside of Europe.

USA

The Toxic Substances Control Act of 1976 (TSCA), addresses the production, importation, use, and disposal of specific chemicals in the USA. The TSCA is administered by the US Environmental Protection Agency (EPA) that regulates the introduction of new and existing chemicals.

During 2016, the TSCA was reformed and some new requirements were implemented. One of the significant changes is the inventory reset rule, which required all manufacturers and importers to the USA to submit a report of all non-exempt substances imported or manufactured for commercial use during the years 2006-2016. This report is in order to ascertain the substances which will be classified as "Active" or "Inactive" in the TSCA inventory. ICL completed the submission prior to the deadline of February 2018.

Asia

K-REACH

On March 20, 2018, Korea’s Ministry of Environment (MoE) announced amendments to Act on Registration and Evaluation etc. of Chemicals (known as K-REACH), which has entered into force on January 1, 2019 and is similar to the EU REACH.

K-REACH includes registration requirements for all substances manufactured or imported into Korea above defined thresholds, at defined timelines, similarly to EU REACH. Basically, registration timelines for K-REACH are volume based, starting December 31, 2021, and ending December 31, 2030 (registration grace period for existing substances above 1 ton).  Some substances or uses (e.g. R&D substances, export only, polymer of low concern) are exempt from registration. However, a confirmation on exemption must be applied for.

Strict penalties are to be imposed on the manufacture, import, or sale of hazardous chemicals without registration.

ICL is getting prepared by collecting information towards the incoming pre-registration step, which is the first stage of K-REACH regulation, that starts on January 2019 and ends on June 2019. Completion of this step will allow continuation of ICL sales to Korea, to be subsequently followed by full registration processes.

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Air Quality

Climate Change and 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 ICL’s operations by requiring changes to its production processes or increasing raw‑material, energy, production and transportation costs. ICL is striving to become a leader in reduction of emissions, in general, and GHG emissions, in particular. The Company has therefore set a target of reducing 30% of the base year 2008 emissions, by 2020.

ICL’s reduction efforts include a strategic conversion of its main plants to the use of natural gas, utilization of new technologies to reduce production emissions, and comprehensive energy efficiency initiatives. The combined result of these efforts has resulted in a 23% reduction in the GHG emissions of ICL between 2008 and 2017. This reduction constitutes 77% of our planned reduction target by 2020. It should be noted that excluding ICL’s acquisition of YPH JV, the Company has already surpassed it’s 30% reduction target.

The total ICL global GHG emissions for 2017 are 3,225,551 tonnes CO₂e (Scope 1‑ 1,908,948 tonnes CO₂e, Scope 2- 1,138,502 tonnes CO₂e, Scope 3- 178,101 tonnes CO₂e). The 2018 emissions will be finalized after the publication of this annual report. The Company currently expects a decrease in total emissions in 2018, with the full operation of the new Sodom power plant, supplying less-carbon intense electricity to ICL's sites in Israel.

In addition, ICL promotes the development of new products that contribute to reduction of GHG emissions and up to now has analyzed the carbon footprint of over 60 of its products.

ICL annually reports its emissions data and its efforts in the climate change field to the CDP (Carbon Disclosure Project), a non-profit leading organization in the greenhouse gas (GHG) emissions reporting field. For its 2018 report, ICL has received a general CDP ranking of "B", which is tied for second place among global fertilizer companies. Also in 2018, for the CDP's new second sub-score, the Supplier Engagement Rating (SER), ICL has received the maximum score of "A". Only 120 of 5000  (2.5%) reporting companies achieved this score. ICL is the only fertilizer company and the only Israeli company, to make this "A" list.

This achievement reflects the enhancement of ICL's sustainable procurement practices in recent years. In October 2018, ICL has also joined the TFS (Together For Sustainability) initiative, a global supplier sustainability initiative which will enable our global procurement organization to enhance its engagement with the supply chain and increase ICL's confidence in the good practices of its suppliers.

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Israel

The Israeli Clean Air Law – Air Emission Permit

The Clean Air Law addresses, inter alia, fixed sources (including the Company’s plants) and is intended to serve as “substances of very high concern.” a platform for implementing the IPPC directive that was adopted by the European Union in 1996.

As of the date of this Annual Report, this list includes several products of our Industrial Products segment, as discussedall ICL’s plants 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 detailsIsrael have received air emission permits. The air emission permits include provisions regarding the main proceedings knownapplication of the Best Available Technologies (BAT), as well as provisions with respect to us asmonitoring, control and reporting to the Ministry of Environmental Protection. The Company is taking steps to implement a plan to address the requirements of the air emission permits in coordination with the Ministry of Environmental Protection.

Examinations made by the Ministry of Environmental Protection in ICL Magnesium’s plant indicated that there are alleged discrepancies between the values measured in a number of stacks compared with the requirements provided in the emission permit. The plant was summoned to a hearing and clarification of the matter. As at the date of this Annual Report.

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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,the report, it is not clear whether the findings relating to the plant are reliable and the matter was addressed with the Ministry’s personnel during the hearing. Notwithstanding the said uncertainty, in lightorder to ensure compliance with the required values, the plant has initiated three projects for dealing with emissions. All were completed by December 31, 2018. Furthermore, ICL Magnesium initiated the installation of additional system to reduce the level of emissions in the plant's main stack, the completion of which is expected in the coming years.

In 2016, ICL Rotem received a new emission permit, as part of the fact that thereClean Air Law, requiring compliance with more strict conditions than the ones in the previous permit. In order to meet the requirements set in the new emission permit, ICL Rotem began implementing a multi-year plan for several projects. During 2017 and 2018, ICL Rotem was summoned to an administrative hearings in the Ministry of Environmental Protection, in connection with alleged violations of its emission permit. At the publication date of this report, no HBCD substitute available in commercial quantities that would fulfill the global requirements, in May 2013 a decision was madeadditional enforcement steps had been taken by the Stockholm ConventionMinistry. Nevertheless, ICL Rotem is taking action to permit an exemption fromaddress 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 membersabove mentioned deviations as part of the Convention that demonstrate a need inmulti-year plan, including 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 will correspond to the European REACH process. In lightprovisions of the decision recently madeClean Air Law, in Europeaccordance with disscussions with the Ministry of Environmental Protection regarding the “authorization”implementation of HBCD, during 2016 the European Union is expectedlaw.

Over the next few years, the Company will make significant capital investments in order to implementcomply with the decision made at United 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 approval for use of HBCD in polystyrene insulation panels up to the end of 2016. In the United States there is no prohibition against use. However HBCD is presently being evaluated by the EPA. These events do not have a significant impact on the Company.

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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.

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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.

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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.

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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.

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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

– Monitoring and Treatment

During the Company’s production processes, pollutants are 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,mainly inorganic compounds and particles.particles and a minority of volatile organic compounds. The Company regularly and continuously measures the emission of these pollutants in order to monitor and locate uncontrolled emissions, in accordance with the provisions of the law and the conditions set forth in ourthe business licenses through the useand emission permits. The Company is advancing execution of accepted technologies.

A master plan is in place at our Fertilizers segment’s facilities in Israelprojects to reduce point source and fugitive emissions into the atmosphere. After a project was completed for installation of two large extraction and filtering systems to reduce emission of particle materialsatmosphere in Zin’s factories,accordance with 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 addition, there is a new absorption system in the fertilizers’ factory at Mishor Rotem in placeterms of the system that was damaged in the fire that occurred in June 2015.emission permits.

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Rotem - 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 the fertilizerSeptember 2016, plants at Mishor Rotem received an arrayemission permit pursuant to the Israeli Clean Air Law. The Company is striving to implement the requirements of air-quality detection stations is now being set up.the permit. During 2017, the Company filed an appeal for changing 46 permit tasks. The Ministry of Environmental Protection (MOE) agreed to change 43 of them and a final permit was received in July 2018.

Until December 2018, the Company has completed 50 of the 180 specific tasks required by the Clean Air permit. In 2015, a project was successfully completed at the Fertilizerssecond half of 2018 the Company conducted two risk assessments by external experts regarding the ability to execute all of the Clean Air tasks on time. The risk assessments focused on the safety and Chemical Substances (ICL Haifa) facility for reductiontechnical issues of ammonia emissions through installationimplementing the large number of a demistertasks according to the timetable. The risk assessments show that Rotem cannot implement the Clean Air requirements safely and with reasonable quality in the stackpermit defined time line. After the risk assessments were completed the Company started a new negotiation, now ongoing, with the MOE in order to reschedule the implementation period.

During 2018, the sulphuric acid plant replaced and upgraded a catalyst system in order to reduce specific emissions by more than 30%.

In Rotem, there are on-fence monitoring systems that report on-line parameters to the environmental authorities. The monitoring systems are in the final stage of receiving ISO 17025 permit.

Fertilizers & Chemicals (F&C) - ICL’s Haifa factory in Israel was converted to natural gas during 2018. This is conducted as part of ICL’s shift to environmentally-friendly energy sources throughout its facilities.

DSW - In the area of the nitrate ammonia manufacturing facility.Sodom Industrial Zone, Dead Sea Works operates three air quality monitoring stations, pursuant to the Clean Air Law. The data, which is measured on a continuous basis, is automatically sent to the Internet site of the National Monitoring Center of the Ministry of Environmental Protection, which is accessible to the general public. The main production facilities of ICL FertilizersDead Sea Works in Sodom and in Mishor Rotem have been fully converted to run on natural gas and are connected to the gas pipeline. Conversiontransport network.

During the third quarter of 2018, the new power plant in Sodom became operational. The power plant is expected to reduce energy costs and is more environmental friendly.

DSM - The production facilities of the rock facilitiesDead Sea Magnesium plant produce mainly inorganic emissions. Some of the exhaust stacks are monitored in Zin is underway, and whenaccordance with the process is completed,directives in the factory will be connectedemission permits issued to the distribution network. Furthermore, ICL Haifa factory inCompany. In the North is presently undergoing conversion and connectionDead Sea Magnesium plant, detectors were installed that send on‑line computerized warnings to the distribution contractor in environmental authorities.

Neot Hovav - 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.

Our Industrial Products segment operates advanced monitoring and detection methods to identify malfunctions in theits plants’ operation and emissions’ treatment systems,, such that before a malfunction occurs the facility’sfacility's manufacturing activities are halted, and thus steps are taken to preventminimize uncontrolled emissions according to the laws and the conditions set out in its business license, its toxinspoisons permit, and its emissions permit. In addition, integrated pollution prevention and control (IPPC) and leak detection and repair (LDAR) methodologies are also applied, which provide guidance regarding all of the techniques for preventing and monitoring components to detect diffused emissions in order to prevent leakage of hazardous substances into the air. Set forth below is a list of theenvironment. The main actions taken by ICLthe Industrial Products segment in the area of air quality:

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·

Investments were made in the production facilities in order to improve recycling and recovery of solvents and other organic materials emitted into the air via activated 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 compliancesolvents and other organic materials emitted into the air via activated charcoal systems, in order to achieve reduction of the amount of these materials emitted into the air; investments were made in catalytic oxidizing technologies that reduce volatile organic compound emissions and comply with advanced values in accordance with the BAT catalytic oxidizing technology.

·

Investments were made in the absorption stack systems and sealing of diffused emissions in the loading and unloading areas.

·

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, in cooperation with the Ministry of Environmental Protection and the Environmental Unit of the Eastern Negev Council to set up a regional air monitoring system.

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.

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”).

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, Industrial Products plant in Neot 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 estimated capital investment required in order to comply with the requirements of the Neot Hovav plant’s new air emissions permit, which was received in August 2013, is approximately $9 million, until the end of 2017. Our plant in Neot 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 the law regarding the duty to report polluting releases into the atmosphere (Pollutant Release and Transfer Register—PRTR), since 2013, our plants in Israel 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. The Ministry of Environmental Protection publishes on an annual basis a list of emissions and transfers to the environment in accordance with the reports receivedBAT (Best Available Technique); investments were made in the installation and upgrading of absorption systems in the inorganic systems; investments were made in the installation and upgrading of filters to prevent emissions of particles from allthe solids’ handling systems; sealing of diffused emissions in the reporting factories, including us. Beginningloading and unloading areas was made; ongoing work is being executed for the LDAR (Leak Detection and Repair) program – control and treatment of fugitive emissions with the assistance of a European company.

During 2018, Periclase installed an air emissions treatment facility for the Magnesia manufacturing process.

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Europe

AirEmission

In Europe, emissions are regulated under the EU IED – Industrial Emission Directive. Preventive measures and Best Available Technologies (BAT) are applied. Emission limit values for relevant substances are included as part of our authority approvals. There are rules guaranteeing protection of air, soil and water. In Europe, relevant emissions control is conducted by authority inspection, through independent technical supervisory associations and by self-inspection. ICL plants falling under the European SEVESO directive conduct regular safety inspections and prepare reports.

Relevant potential sources for emissions are registered and controlled also by the authorities on a regular basis. If required, on-line-monitoring systems are installed. In addition, investments were made in 2014, the PRTR report is requiredinstallation and upgrading of filter, separation and absorption systems in order to be submittedkeep the air emission limits.

ICL Boulby’s air emissions are permitted under the Environmental Permitting Regulations (England and Wales) 2010 (as amended), and regulated by March 31 of each year.

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Greenhouse Gas Issues

Climate change is of increasing concern to governments, non-governmental organizations,the Local Authority and the general public. Increasing regulation of greenhouse gases (“GHGs”) could impact our operationsEnvironment Agency. As required within these permits, the emission sources are monitored both periodically and continuously, and results are reported as required 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 the transparency ICL showed in the 2015 report to the CDP (which also describes the operations in 2014), achieved a score of 99 (out of 100), 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 best score among the worldwide potash producers. In addition, thanks to our efforts to reduce the emissions of the Company’s greenhouse gases, in 2015 ICL received a mark of “B” (in a declining scale of A-E) in the performance index.

regulators.

European Plan for Trade in GHG Emissions

The European Union, as a party that signed the Kyoto Protocol the(the framework treaty of the United Nations for dealing with climate changes,changes), has agreed on a mandatory target for reducing the emissionemissions of greenhouse gases. The main tool for achieving the reduction targets is the EU Emissions Trading Scheme (“ETS”), which was launched on January 1, 2005. In the first and second phases 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 emissionsthem 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 (or “carbon credits”‘carbon allowances’). The third phase of the ETS commenced on January 1, 2013 and will run up to December 31, 2020. This phase has includedincludes a further decrease in the free allocation of carbon creditsallowances to all industrial companies. Some of ICL’sICL's largest sites in Europe are participants in the ETS, and therefore receive annual carbon allowances ("EUA's") and are then obligated to participate inemit up to the EU-ETS, and are therefore obligated to reduce their emissionsannual allowances and/or purchase carbon credits.extra EUA's. Unused allocated EUA's can be sold. In 2018, ICL sold some surplus EUA's from its UK Boulby site. ICL is continuously followingclosely monitoring the developments and the emission allocation policies of the EU-ETS,ETS and is taking itthem into considerations inaccount when establishing/purchasing new sites in Europe and inwhen considering potential significant expansions of existing sites.

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Americas

Air emissions in the Americas are managed through operating permits issued by the relevant agency responsible for each individual site. In the United States, air permits are issued under the authority of the US EPA’s Clean Air Act. In Mexico, air emissions are managed through the site’s single environmental license or the LAU issued by SEMARNAT. In Brazil, air emissions are managed under the site’s operation license issued by the Sao Paulo State environmental agency – CETESB.

Air pollution control equipment is employed throughout the region to ensure that ICL’s facilities comply with the emission parameters established by the regulators. Continued maintenance of pollution control equipment and improvement of control efficiencies is the focus.

China

The phosphate plant in China is tested once every six months by the Center for Environmental Protection regarding gas emissions. In the phosphate plant, the Company has adapted its facilities by means of installation of systems monitoring gas emissions in order to comply with local regulations and regulatory schemes. The plant is in compliance with all the laws and regulations. In 2017, the ammonia complex, which was located near the residential area proximate to the plant, was moved to the plant’s premises.

Energy

The European Energy Efficiency Directive (EED)

The newlatest Energy Efficiency Directive of the European Union enteredcame into effect on December 4, 2012. Most of theThe requirements in the Energy Efficiency Directive must be implemented by companies operating in the European Union in the future.Union. 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 the 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 finalized. However, ICL is developing and adopting strategies and procedures at all of its European plants designed to comply with the local interpretations of the Directive.

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Natural Gas

In 2012 the Company signed agreements for supply of Contents

Israeli Billnatural gas to the Group’s manufacturing facilities in Israel with the “Tamar” reservoir. On December 5, 2017, ICL signed an agreement with Energean Israel Ltd. for Preventionthe supply of up to 13 BCM of natural gas over a period of 15 years, amounting to approximately $1.9 billion. On November 2018, all conditions precedent to the agreement with Energean have been met. The signing of this agreement marked an important milestone for securing a consistent supply of gas to the Company’s facilities in Israel at a competitive price in relation to current gas supply agreements. 

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In February 2018, the Company entered into two supply agreements with the “Tamar" and “Leviathan” reservoirs to secure the gas supply needs of the Company until the end of 2025 or until the entry of the “Karish” and “Tanin” reservoirs into service (Energean) ‑ whichever occurs first.

The increased use of natural gas in ICL’s facilities has significantly reduced emissions of air pollutants in the area surrounding our facilities, improved the quality of the output, reduced maintenance expenses and has led to a significant monetary savings due to the transition from the use of more expensive fuels.

For more information, see “Item 5 - Operating and Financial Review and Prospects— A. Operating Results— Principal Factors Affecting our Results of Operations and Financial Condition”.

Liquid, Solid Waste and 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 calls 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.

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.

Notwithstanding that the law does not so require, all of 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 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’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.

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Furthermore, there is an ongoing implementation of a multi-year master plan to prevent ground pollution by fuels or oils at our Rotem sites.

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.

The various production sites have adapted their treatment systems to the standards applicable to them.

Israel

Rotem – At the Rotem site, a master plan for treating waste is being implemented with the principal goal to reduce the effluent quantities, turning part of the effluents into products, recycling the wastewater, reducing the water consumption, treatment of wastewater and neutralization and restoration of the wastewater ponds, including the wastewater caused by the air emmision purificatio process required by the Israeli Clean Air Law.

As part of the liquid and solid waste treatment, Rotem site is treating the gypsum waste by ponds and storage. In June 2018, the new Pond 5 started to operate. The Company started reclamation planning for gypsum ponds 1 through 4 that were used by Rotem in the past. In October 2018, the Court approved a settlement agreement between ATD (Adam Teva V’Din - Israeli Association for Environmental Protection) and the Company. Based on the agreement, Rotem will submit a plan for building a future gypsum pond on the west side of road 258. In addition, to the authorities' request, Rotem will submit an alternative location. The final location will be determined based on a full environmental survey, that will be held in the first half of 2019. For additional information, see Note 20 to our Audited Financial Statements.

The Company has conducted several pilots for wastewater recovery for the plants of WPA, MGA and fertilizers.

In 2017, as a result of a partial collapse of a dyke in Pond 3 in the plants of Rotem Amfert Israel, a leak occurred into Ashalim stream. Rotem Amfert Israel takes intensive action to restore the stream, in full cooperation with the relevant authorities. For additional information, see Note 20 to our Audited Financial Statements.

Fertilizers & Chemicals (F&C) – In ICL Haifa facility, several biological pilots and other pilots were conducted to find possible solutions for compliance with the standards covering treatment of the facility’s wastewater flowing into the Kishon River, as directed by the Inbar Committee. After careful considerations, the solution that was chosen and approved by the authorities is to drill to the underground water zone in order to channel the treated wastewater into the underground water. The investment expected to be carried out during 2019.

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Neot Hovav - At the Bromine Compounds plant a sanitary facility for independent treatment of the sanitary effluents is operated. The treated wastewater is sent as an input feed into the cooling towers. In addition, a facility was constructed for treating industrial wastewater, which includes a transmission system, physicochemical unit, MBR (Membrane Bio Reactor) unit and evaporation ponds. The system was built according to a US standard, which includes leakage monitoring and air monitoring. In 2013, construction of the evaporation ponds was completed, and all the plant’s wastewater is presently being pumped into these evaporation ponds.

Pursuant to the requirements of the Ministry of Environmental Protection, in the coming years ICL is required to treat the existing hazardous waste (historical), which is stored on a special site on the facility's premises (Area 14) in coordination with the Ministry of Environmental Protection, as well as the ongoing waste that is produced in the facility's present manufacturing processes. The treatment is partly through a combustion facility, which recovers hydro-bromine acid, while part of the waste will be sent to an outside source for treatment. The total provision for waste treatment amounts to about $56 million.

Industrial Products operates a special authorized laboratory for monitoring and analyzing wastewater quality.

ICL established a thickening and filtration facility to treat waste at the Periclase plant in Mishor Rotem. 

Europe

Liquid and solid waste and emissions are regulated under the European IED – Industrial Emission Directive. The Company implements waste monitoring and management measures, and is obligated to inform the authorities of the results. Wastewater regulations, including effluent limits, are regulated by states and partly by communities. ICL has provisions regarding the avoidance of pollution and conditions for assessing compliance with the emission limit values.

Wastewater is partly pretreated and sent to municipalities and third parties for final treatment before discharging. The production processes, in general, are not generating significant volumes of direct solid waste. In case solid waste needs to be disposed of, the required documentation and approvals under the European regulations are fulfilled.

Due to phosphate pollution in the subsoil of the Ladenburg site, the phosphate concentration is monitored at several wells and reported regularly to the authorities.

In Spain, a multi-yearmulti‑year program is underway to restore salt piles while paying close attention to the issue of wastewater drainage and sludge treatment. In late 2015, in accordance with the Companyprovisions of the Spanish Waste Management regulation, ICL Iberia submitted to the Government of Catalonia a mining site restoration plan tofor the government of Catalonia,two production sites Suria and Sallent, which also addressed the restoration ofincludes a plan for handling the salt piles atand dismantling of facilities. The restoration plan for the twoSuria site is scheduled to run up to 2094, whereas for the Sallent site up to 2070. In June 2018, the new restoration plan was approved. For additional information, see Note 20 to our Audited Financial Statements. 

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Americas

The liquid and solid wastes in the Americas sites which are currently being assessedmanaged under country and state specific regulatory requirements. In the USA, solid and hazardous wastes are regulated under the US EPA’s Resource Conservation and Recovery Act. In Mexico, waste is managed through the site’s single environmental license or the LAU issued by SEMARNAT. In Brazil, waste is managed under the site’s operation license issued by the government authorities.

At Sao Paulo State environmental agency – CETESB.

ICL Dead Sea’s,follows a project was completedqualification process 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.

At the ICL Rotem site, a master plan for treatingvendors, which assists in ensuring that waste is being implemented with the principal aims of reducing effluent quantities, turning part of the effluents into products, recyclingproperly profiled, treatment standards are followed and disposal processes meet regulatory requirements. Wastewater is managed through site industrial discharge permits that are managed through federal, state or local agencies. Waste water treatment is mainly focused on chemical treatment. The wastewater reducing water consumption, treatment of wastewater at the start of the flow and neutralization and restoration of wastewater reservoirs.

At the ICL Haifa facility,systems are maintained on 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.

regular basis.

China

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 plantsfacilities 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. In order to comply with the local regulations, the Company has adapted its plant by means of installation of systems for removal of wastewater and diversion thereof from clean water sources, including transferring phosphogypsum water (which is created as a by-product of the production processes) into designated ponds for further treatment. 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.

At Furthermore, annual land examinations are conducted in accordance with the Bromine Compounds plant, a sanitary facility for the independent treatmentregulatory requirements.

Land contamination

All of the sanitary effluents is being operated. The treated wastewater is flowedCompany's plants in Israel have conducted historical land surveys, based on a demand received as input fluid intopart of the cooling towers. In addition, in the Bromine Compounds plant,conditions for receipt of a facility was constructed for treating industrial waste andbusiness license regarding an independent system for wastewater removal, which includes a piping system and the plant’s own evaporation ponds. The system was built accordingintegrated arrangement, submitted them to a U.S 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.

Our Industrial Products segment established a thickening and filtration facility to treat solid waste at the Periclase plant.

At our manufacturing facility at Neot Hovav, Israel, there is solid waste. Pursuant to the requirements of the Ministry of Environmental Protection weand are requiredawaiting the Ministry's instructions.

At the Sodom site, historical crude oil contamination has been found near the operational salt reservoir. ICL Dead Sea submitted a plan to treat the existing waste (historical), which is stored on a special site on the facility's premises in coordination with the Ministry of Environmental Protection as well asfor treatment at the ongoing waste thatsite and is producedawaiting the Ministry's instructions.

In addition, a groundwater study in ICL Dead Sea’s old power stations’ contaminated fuel tank farm showed no groundwater contamination; however, soil rehabilitation is expected in the facility's present manufacturing processes. The treatment will be partly throughfuture. At the old gas station, boreholes were drilled and diesel fuel is being pumped from the contaminated groundwater.

Furthermore, the implementation of a restoration facility of hydro-bromine acid, operatedmulti‑year master plan to prevent ground pollution by the subsidiary, while part of the waste will be sent outside for treatment. fuels or oils at our Rotem sites was completed.

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Hazardous Substances

Israel

As part of the treatment processes of the historical waste that began in 2015,ICL’s operations, 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 amounts to about $65 million. We estimate that based on the information it has as at the approval date our annual financial statements, the provision covers the estimated cost of treating the historical waste.

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Hazardous Substances

As part of our operations, we produce, store, transport,produces, stores, transports, and useuses materials that are defined as hazardous materials according to the Israeli Hazardous Substances Law, 1993. Handling such substances requires a special permit (“toxins permit”("poisons permit") that is renewed annually. All ourICL companies have toxinpoisons 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.permits. Leakage or loss of control of these materials could cause an environmental incident and cause damage to people andand/or to the environment. We takeICL takes measures to prevent such occurrences, and, at the same time, prepareit prepares for such occurrences by means of emergency teams and appropriate equipment to dealfor dealing with these types of events.

Regulation

Europe

Some of Concessionsthe substances used in ICL’s facilities in Europe (such as raw materials, etc.) are considered to be hazardous substances. Required approvals and Mining Activities

For information about lawsregistrations for these substances are acquired and legal arrangements relatedmaintained. Relevant safety measures and procedures for storage and handling are implemented and maintained. In addition to our concessionsthese measures, only qualified suppliers and mining rightstransport companies are used, and other related licensesqualification and permits, see “Item 4. Informationtraining of employees are conducted on a regular basis. All requirements based on the Company—D. Property, PlantsGHS (Globally Harmonized System of Classification, Labelling and Equipment—Mineral ExtractionPackaging of Chemicals) are acquired and Mining Operations”maintained.

Americas

Hazardous substances are utilized at ICL’s facilities in Americas as raw materials and “Item 4. Informationcan also be found as finished products. Where required, registrations for the storage, handling and transportation of these materials are acquired and maintained. Measures are taken to reduce the likelihood of releases of hazardous materials by way of supplier and transporter qualification, training of employees, contractors and vendors on the Company —D. Property, Plants and Equipment —Other Leases, Licenses and Permits,” respectively.

Price Monitoring

The prices of fertilizer-grade phosphoric acid for local Israeli customers are regulated under the Supervision of Prices for Commodities and Services Law 1996. The quantityproper handling of these products sold in Israel by our Fertilizers segment is not material to us.

ICL and some of its 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, ICL 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 2015 approximately 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.

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C. ORGANIZATIONAL STRUCTURE

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C. ORGANIZATIONAL STRUCTURE

* A list of our subsidiaries, including name and country of incorporation or residence is provided in an exhibit to our Form 20-F filed with the U.S. Securities Exchange Commission, which can be found at www.sec.govwww.sec.gov..

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D. PROPERTY, PLANT 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

The Company operates production facilities in Israel, situated on land with a long-term lease,its worldwide locations, 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).

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following:

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We have additional production facilities outside Israel, the main ones being:

·

Germany: Israel: 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‑term lease, including the plants at Mishor Rotem, the Oron and Zin sites of our PerformancePhosphate Solutions segment (Oron is under an extension process), production facilities at Naot Hovav of Industrial Products segment (leased until 2024-2048), as well as production, storage and transportation facilities together with chemicals and research laboratories at Ludwigshafen, Ladenburg, Hemmingen, Dortmund (Hagesüd)Kiryat Ata that belong to Innovative Ag Solutions segment (leased until 2046-2049). We also use warehouses and Engelsberg (Rovita). These plantsloading and unloading sites at the Ashdod (leased until 2030) and Eilat ports (negotiations are owned byunderway to extend the ICL Group.agreement).

·

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-term lease.Europe:

Germany: the production plants of Phosphate Solutions segment are at Ludwigshafen, Ladenburg and Hemmingen (Hagesüd). The production plants of Industrial Products segment are at Bitterfeld. All the plants are owned by the Company.

The Netherlands: the production plants of Industrial Products segment at Terneuzen are owned by the Company. A facility of Phosphate Solutions segment in Amsterdam held under a lease until 2034 (or under certain conditions up to 2044) and a production facility in the southern Netherlands is located on land that is partly owned by the Company and partly held under a long‑term lease.

Spain: the concessions at the potash and salt mines are held under the concession agreements described below. The potash and salt production plants, and the warehouses, as well as the loading and unloading facilities of the Potash segment at Catalonia, are owned by the Company. Innovative Ag Solutions segment also owns a liquid fertilizer and soluble fertilizer production plant in Totana, owns another plant for mixing solid fertilizers in Cartagena and has a concession in Cartagena port until 2024.

The United Kingdom: the rights to the polyhalite and salt mines are held under the concession agreements described below. The polyhalite and salt production plants and the warehouses of the Potash segment in Cleveland are owned by the Company. The warehouses and bulk loading and unloading facilities at the port are leased until March 2034. Two peat moors of Innovative Ag Solutions segment are owned by the Company and one is leased. In addition, Innovative Ag Solutions segment owns a plant for producing growing media in the north of the United Kingdom and another plant in Daventry for producing liquid plant nutrition products.

Belgium: Innovative Ag Solutions segment owns a production facility in Grobbendonk for producing water soluble fertilizers.

Austria: the dairy protein production plant of Phosphate Solutions segment at Hartberg (Prolactal) is owned by the Company.

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·

Spain: the concessions at the potashNorth 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.South America:

United States: the production plants of Industrial Products segment in West Virginia are mainly owned by the Company. The production plants of Phosphate Solutions segment in Lawrence, Kansas and St. Louis, Missouri are owned by the Company. The production plants of Innovative Ag Solutions segment in South Carolina are operated under leases ending in 2025.

Mexico: the production plant of Phosphate Solutions segment at Nuevo León is owned by ICL.

Brazil: the production plants of Phosphate Solutions segment at Sao Jose dos Campos and Cajati are leased by the Company.

·

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.Asia:

·

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.

China – phosphate rock mining rights in Haikou Mine are derived from mining licenses that are described below. The scrubbing plant is owned by the Company and situated on leased land.

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The following table sets forth certain additional information regarding ourICL’s principal properties as at December 31, 2015.

2018.

Property Type

Location

Size (square feet)

Products

Owned/Leased

Plant	Mishor Rotem, Israel	27,524,19427,094,510	Fertilizers segmentPhosphate Solutions products	Owned on leased land
Plant	Sodom, Israel	13,099,679 (not including ponds and factory)	Fertilizers segment products and power station	Owned on leased land
Plant	Mishor Rotem, Israel	10,763,910	Industrial Products segment products	Owned on leased land
Plant	Neot Hovav, Israel	9,601,591	Industrial Products segmentproducts	Owned on leased land
Plant	Zin, Israel	8,484,123	Phosphate Solutions products	Owned on leased land
Plant	Zin, Israel	8,483,916	Fertilizers segment products	Owned on leased land
Plant	Kiryat Ata, Israel	6,888,903	Fertilizers segmentInnovative Ag Solutions products	Leased

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Property Type	Location	Size (square feet)	Products	Owned/Leased
Plant	Oron, Israel	4,413,240 (not4,413,348 (not including phosphate reserve)	Fertilizers segmentPhosphate Solutions products	Owned on leased land
Plant	Sodom, Israel	4,088,800	Magnesium Plant	Owned on Leased Land
Plant	Sodom, Israel	2,326,06013,099,679 (not including ponds and Magnesium factory)	Industrial Products segmentPotash products	Owned on leased land
Conveyor belt		Sodom, Israel	1,970,333	Transportation facility
Plant		4,088,800	Magnesium products (Potash segment)	Owned on leased land
Plant		2,326,060	Industrial Products products	Owned on leased land
Conveyor belt		1,970,333	Transportation facility for Potash	Owned on leased land
Pumping station		Sodom, Israel	920,314	Pumping station for FertilizersPotash segment	Owned on leased land
Plant		667,362	Industrial Products products	Owned on leased land
Power plant		645,856	Power and steam production for Potash segment	Owned on leased land
Warehouse and loading facility	Ashdod, Israel	664,133	Warehouse for Fertilizers segmentPotash and Phosphate Solutions products	Leased
Power plant	Sodom, Israel	645,856	Power and steam production	Owned on leased land
Office	Beer Sheva, Israel	495,883	Industrial Products segment	Owned
Plant	Mishor Rotem, Israel	430,355	Phosphate Solutions products	Owned on leased land

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Warehouse and loading facility	Eilat, Israel	152,557	Warehouse for Fertilizers segmentPotash and Phosphate Solutions products	Leased
Headquarters	Tel Aviv, Israel	17,22225,318	Company headquarters	Leased
Plant	Catalonia, Spain	48,491,416	Mines, manufacturing facilities and warehouses for Fertilizers segment productsPotash	Owned
Plant	Totana, Spain	2,210,261	Fertilizers segmentInnovative Ag Solutions products	Owned
Plant	Cartagena, Spain	209,853	Warehouse for Fertilizers segmentInnovative Ag Solutions products	Owned
Port
Warehouse and loading facility	Cartagena, Spain	184,342	Storage for Fertilizers segmentInnovative Ag Solutions products	Leased
Port	Almeria, Spain	28,761	Storage for Fertilizers segment products	Leased

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Property Type	Location	Size (square feet)	Products	Owned/Leased
Plant	Jiaxing, China	828,017	Industrial Products segment products	Owned on leased land
Plant	Shan Dong, China	691,771692,045	Industrial Products segment products	Owned on leased land
Plant	Kunming, Yunnan, China	458,394	Production Plant of the fertilizer sectorPhosphate Solutions	Owned on Leased Landleased land
Plant	Lian Yungang, China	358,665358,793	Industrial Products segment products	Owned on leased land
Plant	Kunming, Yunnan, China	290,420	Phosphate Solutions products	Owned on leased land
Pumping station	Kunming, Yunnan, China	2,231	A pumping station for the fertilizer sectorPhosphate Solutions	Owned on Leased Landleased land
Peat Moor	Nutberry and Douglas Water, United Kingdom	17,760,451	Peat mine -Innovative Ag Solutions	Owned
Plant	Cleveland, United Kingdom	13,239,609	Fertilizers segmentPolysulphate products (Potash segment)	Owned
Peat Moor	Cerca,Creca, United Kingdom	4,305,564	Peat mine - Innovative Ag Solutions	Leased
Plant	Nutberry, United Kingdom	322,917	Fertilizers segmentInnovative Ag Solutions products	Owned
Plant	Daventry, United Kingdom	81,539	Innovative Ag solutions products	Owned and leased
Plant	Terneuzen, the Netherlands	1,206,527	Industrial Products segment products	Owned
Plant	Heerlen, the Netherlands	481,802	Fertilizers segmentInnovative Ag solutions products	Owned and Leasedleased
Plant	Amsterdam, the Netherlands	349,827	Fertilizers segmentPhosphate Solutions products and logistics center	Owned plant on leased land
European Headquarters	Amsterdam, Thethe Netherlands	24,22059,055	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 segmentPhosphate Solutions products	Owned

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Property Type	Location	Size (square feet)	Products	Owned/Leased
Plant	Carondelet, Missouri, United States	172,361	Performance Products segmentPhosphate Solutions products	Owned
Plant	Rancho Cucamonga, California,North Charleston, South Carolina, United States	103,600100,000	Performance Products segmentInnovative Ag solutions products	Leased

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Plant	Summerville, South Carolina, United States	40,000	Innovative Ag solutions products	Leased
Office
US headquarters	St. Louis, Missouri, United States	45,595	US Company headquarters	Leased
Plant	Ludwigshafen, Germany	6,996,541	Performance ProductsPhosphate Solutions products and Fertilizers segments productsInfrastructure	Owned
Plant	Ladenburg, Germany	1,614,5871,569,764	Performance Products segmentPhosphate Solutions products	Owned
Plant	Bitterfeld, Germany	514,031	Industrial Products segment products	Owned
Plant	Hemmingen, Germany	175,042	Performance Products segmentPhosphate Solutions products	Owned
Plant	Cajati, Brazil	413,959	Performance Products  SegmentPhosphate Solutions  products	Owned
Plant	Sao Jose dos Campos, Brazil	Phosphate plant: 108,729137,573 Blending plant: 107,63980,729	Performance Products segmentPhosphate Solutions products	LeasedOwned on (free of charge) leased land
Plant	Belgium	128,693	Fertilizers segmentInnovative Ag solutions products	Owned
Plant	Calais, France	538,196546,290	Industrial Products segment products	Owned
Plant	Nuevo Leon, Mexico	103,420152,408	Performance Products segmentPhosphate Solutions  products	Owned
Plant	Bandırma, Turkey	375,187	Fertilizers segmentPhosphate Solutions products	Owned
Plant	Hartberg, Austria	692,937	Phosphate Solutions products	Owned
Plant	Heatherton, Australia	64,583	Phosphate Solutions products	Leased

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Other Leases, Licenses and Permits

Well Production Permits

The water supply of water to ICL Dead Sea plants, atis executed via approximately 40 drillings, most of which are located within the concession area. Seven drillings - the Ein Ofarim drillings - are located outside the concession area, and ICL Dead Sea is viatherefore required to sign, from time to time, lease contracts for limited periods with the Israel Land Authority (ILA).

Renewal of the contracts is a series of wells that we operate, both withinlengthy process and outside the concession area. The Company has lease agreements and production permits for these wells. ICL Dead Sea has permits frombeen working for several years to renew the contracts, which expired in 2016.

In addition, every new drilling requires a drilling license issued by the Water Authority, and at the beginning of every year the Water Authority issues ICL Dead Sea with a water production license that defines the production capacity of each drilling. There is no guarantee that the Water Authority will issue ICL Dead Sea a water production license or that the Water Authority will amend the production license if ICL Dead Sea will exceed the production capacity for such drilling.

During 2017, a revision was made to drawthe Water Law whereby monetary charges will be imposed on private water producers in respect of water drawn from the wells, at Ein Ofarim (which is located outsidesubject to the areaquality of the concession).water and other factors. The lease periodmeaning of the legislative revision for ICL Dead Sea is imposition of costs for the wells, from Israel Lands Authority (ILA) for these wells expired in 2009. An applicationwhich ICL Dead Sea has drawn water up to extendnow with no additional charge beyond its actual costs of drawing the lease period was submitted to ILA, but after a lengthy procedure, it was rejected.water. The Company filed a request with ILA’s Exemptions Committee, which approved the application. Recently, approvalis examining application of the Ministerrevision on ICL Dead Sea, in light of Finance was received and contracts were sentthe Concession Law that applies to the Company and relevant for signing.

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the wells located in the concession area. If the revision to the Law does apply to wells located in the concession area, in the Company’s estimation, the monetary impact on the Company is not expected to be material. 

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Business Licenses and Other Permits

In November 2013 a reform in the Business Licensing Law, 1968 came into effect, which determines,providing, 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 toand fifteen years, depending on the type of activity covered by the license covers.license. In addition, some of thelicensable activities requiring a license in accordance with the Business License Ordinance (Licensable Businesses), 2013, will be subject to unified specifications which willto be publishedissued 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 businessesbusiness licenses will expire and will require renewal three years after the applicable “Unified Specifications” are published, and after receiving a notification from the Licensing Authority, except those issued to power stations and fertilizer storage of fertilizers,facilities that currently hold a permanent business license, and which will remain in perpetuity.

In addition, our Fertilizers segment and our Industrial Products segmentsites in Israel have valid toxic substance permits under the Israeli Hazardous Materials Law, (1993),1993. These permits were issued by the Ministry of Environmental Protection. The termProtection for a period of the toxic substance permits is one year. Renewal of these permits is performed on an ongoing basis. Additional conditions were set out in theThe toxic substances permit received byissued to Bromine Compounds sets forth additional conditions, including requirements forof 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 Neot Hovav discharges industrial wastewater into the evaporation ponds in accordance with the requirements of the plant’s business license requirements. The costslicenses.

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Periclase plant in Mishor Rotem has a valid permit for discharging brine into the Dead Sea (valid up to 2021).

ICL Haifa has a valid permit for discharging industrial wastewater into the Kishon River. At the end of renewal of these licenses are not material.

November 2018, ICL Haifa received a permission to drill to the underground water in order to channel the treated wastewater into the underground water, a solution which is accepted by the authorities.

ICL Dead Sea has a valid permit for discharging industrial wastewater into the Dead Sea and into the Mediterranean Sea (ICL Haifa)(valid up to 2020), under the Israeli Prevention of Sea Pollution from Land-BasedLand‑Based Sources Law, (1988),1988.

Commencing from December 2017, discharging of wastewater from the magnesium plant into the Dead Sea was discontinued and, thus, the permit for discharging of wastewater into the Sea, which requires renewal from timehad been issued by the Ministry of Environmental Protection, became superfluous.

The Ministry of Environmental Protection is expected to time. add further conditions regarding discharge of wastewater, as part of the terms of the business license. At this stage, it is not possible to estimate what the additional conditions will be or the impact thereof.

The costscompanies also hold emissions permits under the Israeli Clean Air Law, 2008 (the “Clean Air Law”).

As part of renewal of these licenses are not material.

The segment companies operatethe production process in Rotem Amfert Israel, the Company builds and operates ponds that accumulate phosphogypsum water created in the production processes. For additional information relating the ponds’ permits for construction and operation, see Note 20 to our Audited Financial Statements, “Item 3 - Key Information— D. Risk Factors”.

ICL operates 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 immediateCompany takes 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, a plant of a company from the Industrial Products segment in Neot 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.

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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 have been prepared and filed with the Ministry of Environmental Protection.

As of the date of this Annual Report, the 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 will 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

ICL’s mining activities are dependent on concessions, authorizations and permits granted by the governments of the countries in which the mines are located.

In consideration of the concessions, ICL pays royalties and taxes to the governments of Israel, China, UK and Spain. Below are the royalties amounts paid in 2018, 2017 and 2016: 

	Israel	Total in Israel	Out of Israel	Total
Year Ended December 31,	$ millions

2018	71	*62	133	4	137
2017	64	*68	132	4	136
2016	58	-	58	9	67

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*In 2018 and 2017, the Company paid additional amounts of $62 million and $68 million, respectively in respect of royalties in Israel relating to prior periods. For additional information regarding royalties paid for prior periods, see Note 20 to our Audited Financial Statements.

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Following is a description of the material properties where we extractfrom which ICL extracts minerals and conductconducts mining. For additional information aboutregarding the total cost of ourthe Company’s property, plant and equipment and ourits intangible assets (including concession and mining rights) see Note 1311 and Note 14,12, respectively, to the Company’s financial statements.

our Audited Financial Statements.

The Dead Sea

Approximately 33%

The concentration of our sales in 2015 derived from products that were based onthe minerals that we extracted from the Dead Sea including(including potash bromine, sodium, magnesia, magnesium chloride and metal magnesium. The concentration of these minerals inbromide), constituting the raw materials for production, is on the rise due to the hydrological deficit the Dead Sea has generally remained steady in recent years with a trend of an increase inbeen experiencing during 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.

Ourpast 40 years.

ICL’s extraction of minerals from the Dead Sea begins with an evaporation process facilitated by the hot and dry desert climate of the Dead Sea region. This arearegion, which is located approximatelythe lowest point on the earth’s surface. Due to the hydrological deficit, the sea is declining at the rate of 1.1 meters per year and is now about 430 meters below sea level. The Dead Sea is presently about 430 meters below sea level due toAs a fixed declineresult of the level of about 1 meter per year. Thesaid decline, the Dead Sea is divided into two parts: the natural Northern Basin and the Southern Basin, that consistson the basis of which dams were installed and artificial evaporation ponds.

ponds were constructed.

The production process begins with the flowing of water from the Northern Basin to our adjacentinto the evaporation ponds. Ourponds (a distance of about 12 kilometers). The Company’s pumping station P-88P‑88 has a pumping capacity of 100,000 cubic meters per hour. In 2015, we2018, ICL flowed approximately 375420 million cubic meters of water from the Northern Basin tointo the evaporation ponds. Ofponds, of this quantity, approximately 225260 million cubic meters of brine were rechanneled into the Northern Basin of the Dead Sea at the end of the process. In 2015,2018, the Company produced from the Dead Sea approximately 2.43.8 million metric tonstonnes of potash, 116approximately 175 thousand metric tonstonnes of bromine, 1921 thousand metric tonstonnes of metal magnesium, 166187 thousand metric tonstonnes of salt and 95132 thousand metric tonstonnes of solid magnesium chloride solids.chloride. The Company plans to buildbuilt a new pumping station (hereinafter – the P‑9 Pumping Station) from the Northern Basin to the evaporation ponds, as partthis being in light 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 are experiencing a delay in receiving approvals fromservice due to 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, thereceding water level. The Company is makingmade an additional investment to extendand extended the life of the present pumping station P-88(P‑88) so that it will be able to function up to 2021. In 2017, the Board of Directors approved the investment in construction of the P‑9 Pumping Station. In 2017 and 2018, DSW signed agreements with several execution and infrastructure companies, in a total amount of $160 million (out of the total project cost of about $250 million), for construction of the P-9 Pumping Station. The P-9 Pumping Station is expected to commence its operation during the year 2020.

In 2015, an additional three years.

Regarding the pumping of water from the Dead Sea, in June 2015 a petitionappeal was filed within the Israeli Court for Water Matters in Haifaby Adam Teva V’Din - Israeli Association for Environmental Protection (ATD) wherein the Court was requested to order the Government Water and Sewage Authority (‘to issue a production license to DSW pursuant to the Water Authority’) was requestedLaw with respect to take actionthe transfer of water from the North Basin of the Dead Sea to the evaporation ponds in the Sea’s South Basin in order to regulate and supervise, within the Company’s useframework of the production license, transfer of the water, sources.as stated, in connection with certain aspects, including limitation of the quantities transferred. In August 2016, the Government Water and Sewage Authority issued directives to DSW (not in the framework of the production license), after hearing the latter’s position, which included limitations on the quantities of water transferred, as well as mechanisms for reporting of pumping volume. As at the reporting date, summaries have been filed by all the parties and the case is waiting for the Court's judgement. In the Company’s estimation, the legal proceedings in this matter will end without material influence on its operations. For additional details –information, see “Item 4. Information on the Company-D. Property, Plant and Equipment-Leases, Licenses and Permits-Well Production Permits.”

Note 20 to our Audited Financial Statements.

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The evaporation ponds extend over an area of approximately 150 square kilometers. They include a subsystemkilometers and are divided into two sub‑systems – an array of 35 ponds for sinking salt precipitation(mineral waste from the production process), and a series of ponds for the precipitationsinking carnallite (the target mineral constituting a raw material for production of carnallite.

potash).

The salt pond known as Pond 5 is the largest pond in the complex. It hasseries of ponds, having an area of approximately 80 square kilometers. ItPond 5 was built during the 1960s by construction of a large dam, sealed by a clay core,where in the area thatcenter of the dyke surrounding it a partition (separation clay core) was theninstalled for sealing and prevention of potential leakage of solutions. This dam demarks the southernSouthern basin of the Dead Sea on the Israeli side and permitsallowed 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. In order to continue and operate Pond 5, the dyke was raised several times during the last 50 years. In 2013 ICL Dead Sea completed the cut off project that aimed to minimize the seepage from the Northern pond. As part of the project sheet piles were inserted up to the depth of 33 meters to the ground along the length of 18.6 km. The evaporation processes give rise to concentration of the brines and the sinking of the table salt to the floor of the pond. The remaining brines are rich in potash, magnesium and bromine.bromide. These brines are pumped into the systems of other ponds, and as a result of the continued evaporation, the “carnallite”"carnallite" precipitates. Carnallite is the raw material used for production of potash, metal magnesium chlorine and magnesium chloride.chlorine. The carnallite is harvested by floating barges and pumpedis sent as slurry to our production plants. The brine from the edge of the carnallite ponds is used as a raw material in the production of bromine.

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bromine and magnesium chloride.

Table

About 20 million tonnes of Contents

The precipitated tablesea salt precipitates every year and creates a layer on Pond 5 bed of approximately 20 million tons annually.centimeters on the floor of Pond 5. 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 solutions in the pond is accordingly raised by approximately 20 centimeters annually.

each year according to the rate at which the pool floor rises.

The Ein Boqeq and Hamei Zohar hotels, the townsettlement of Neve Zohar and other facilities and infrastructures are located on the western shorelinebeach of this pond.the Pond. Raising the water level of the pondPond 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 villagesettlement of Neve Zohar and to other infrastructure oninfrastructures located along the western shoreline of the pond.Pond. This situation requires establishment of defenses for the facilities and infrastructures of the hotels located on the shores of the Pond.

The project for construction of the coastline defenses with respect to the hotels and infrastructures on the coastline of the Pond 5.

The temporary defenses havehas been underway for a numberseveral years. As part 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 raisedsuch defenses, from time to time, depending on water levelthe dyke along the western beachfront of the pond.Pond, across from the hotels, is raised, together with, in many places, a system for lowering subterranean water. As ofat the date of this Annual Report,the report, the construction work with respect to the hotels coastline is complete, and the related dykes have been raised to accommodate the maximal brine level (15.1 meters). The current brine level is 14.6 meters. Nevertheless, there is additional ongoing work on raising the roads level along pond 5.

There is an agreement between ICL Dead SeaDSW and the governmentGovernment of Israel regarding financing ofthat the costs of the temporary defenses: ICL Dead SeaCompany will bear 39.5% of the costs of financing the coastline defenses and the government of IsraelGovernment will bearfinance the remaining cost.

balance thereof. In July 2012, an agreement was signed with the Government of Israel, regarding “Execution"Execution and Funding of the Dead Sea Protection Project and Increase of the Royalties Paid to the State”State" (hereinafter – “thethe Salt Harvesting Project”)Project). The purpose of the Salt Harvesting Project is to constituteprovide a permanent solution for the raising of the water level in the Pond 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.

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The highlights of the agreement are set forth below:

A.     The planning and execution of the salt harvesting is toSalt Harvesting Project will be performed by ICL Dead Sea.DSW.

B.    The Salt Harvesting Project constitutesas well as the project for the new pumping station that is to be constructed (hereinafter – the P-9 Pumping Station), constitute an Israeli national infrastructure project that is beingwill be promoted by the Israeli Committee for National Infrastructures. (Transfer of the pumping station

C.    Starting 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 5the pond will not rise above a level of 15.1 meters in the ICL Dead Sea systemDSW’s network (about 390 meters below sea level).

ICL Dead Sea DSW will be required to pay compensation in respect of any damages caused, if at all, as a result of a rise of the water level beyond the level determined. If there isIn the case of a material deviation from the timetables for constructionthe execution of the Salt Harvesting Project 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 to 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 stated above.

According to the Dead Sea Protection Company Ltd., the total cost of the Salt 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 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 exceed 20% of the Discounted Amount, linked to the CPI and bearing interest of 7%.

The agreement also stipulates an increase

D.    Increase in the rate of the royalties from 5% to 10% of sales, for quantities of chloride potash ICL Dead SeaDSW sells in excess of 1.5 million tonstonnes annually. This increase applies to sales starting January 1, 2012. In addition, in respectJuly 2012, as part of the period January 1, 2010 through January 1, 2012,agreement, the Company agreedGovernment committed that at this time it sees no need to anmake additional royalty charge,changes to its specific fiscal policy regarding mining from the quarries at the Dead Sea, including the commercial utilization thereof and, accordingly, at this time, it will not initiate and will even object to, as applicable, proposed laws regarding this matter. The Company’s consent to the increase of the rate of 5%, onlythe royalties is contingent on annual sales exceeding 3.0 million tons. implementation of the Government of Israel’s decision.

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 anto the increase in theof royalties' rate of royalties on the surplus quantities referred to above commencing fromwill not apply, after the date onenactment of the legislation, to the period in which such additional tax is collected as stated in the said legislation. On November 30, 2015,In January 2016, the Economic Efficiency Law was published, including the implementationfor Taxation of Profits from Natural Resources, which includes the Sheshinski Committee’s recommendations whichthat address royalties and taxation of excess profits from Dead Sea minerals. The lawminerals (hereinafter – the Law), entered into effect on January 1, 2016.See Note 23 to our audited financial.

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Approval of eacheffect. Accordingly, the rate of the stagesroyalties' provision was update to 5%.

The Company will bear 80% and the Government will bear 20% of the plan bycost of the relevant dates set outSalt Harvesting Project, however the Government's share will not exceed NIS 1.4 billion.

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In 2015 and in 2016, the project schedule is essential for continuation of ICL Dead Sea’ production processNational Infrastructures Committee and delays could have an unfavorable impact on the process and, accordingly, could give rise to damage or losses.

In December 2015,Israeli Government, respectively, approved National Infrastructures Plan 35A (“(hereinafter – the Plan”)Plan), which includes the statutory infrastructure for establishment of the Salt Harvesting projectProject in the evaporation ponds through, among other things, thePond 5, and construction of a new the P-9 pumping station in the northern basin of the Dead Sea, was approved bySea. As at the plenary National Infrastructures Committee. Followingdate of the report, the building permits for the Salt Harvesting Project and the P-9 pumping station have been received and the construction work has commenced. The P-9 pumping station is expected to commence its operations during 2020. For further information see item A above approval, in March 2016,relating commitments.

In April 2017, after receiving all the permits for execution of the Salt Harvesting with the Government alsoof Israel, ICL’s Board of Directors approved a budget of about $280 million to further proceed with the Plan.

Constructionexecution of the 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 increasingSalt Harvesting in the Dead Sea area. Sea. This budget will be executed over the next 12 years and constitutes ICL’s share (80%) in the cost of performing this part. In October 2017, DSW signed an agreement, the cost of which for ICL is $280 million, for the execution of the first stage of the Salt Harvesting Project, with a contracting company Holland Shallow Seas Dredging Ltd., which includes, among others, the construction of a special dredger that is designed to execute the salt harvesting. The dredger is expected to enter into service towards the end of 2019. By then, the engineering and operational preparations and the extensive infrastructure works that have been underway during the past few years are planned to be completed and the salt harvesting operations are expected to begin.

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 3.3 - Key Information—D. Risk Factors—Risks Related to Our Business-A Construction of a new pumping station will beis required due to the receding water level in the Northern Basinnorthern basin of the Dead Sea.”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. As a result of the decline of the Dead Sea level, sinkholes appear. The appearance of sinkholes in the Dead Sea area is increasing over the years. Most of the sinkholes caused by the receding level of the Dead Sea develop nearin the Northern Basin of the Sea, where there is little operation by our Fertilizers segment. Nonetheless, mostICL Dead Sea. However, the development of the sinkholes have appeared near the evaporation ponds and in other places in theareas where ICL Dead Sea area. Development offacilities exist can cause significant damage. In recent years there has been 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 thesteady development of these sinkholes in the area of the plant and alongfeeding channel, through which water is pumped from the dikes,Northern Basin to the Southern Basin. ICL Dead Sea takes actions to monitor the development of these sinkholes and to fill them when they appear.

We own

Additional risk factor is the erosion of Nahal Arava, which flows along the international border between Israel and operate a power station with a capacity of 110 megawatt, presently limited to about 60 megawatt due to environmental protection restrictions, which provides a significant partJordan. This erosion could endanger the stability of the power usedeastern dykes in our production plants at the Dead Sea.future in the array of salt and carnallite ponds. The balanceCompany is purchased from Israel Electricendeavoring to analyze the matter and to find solutions for preventing or retarding this occurrence in the long term. The Company is carrying on ongoing monitoring and taking action on the site in order to protect the dykes. In addition, ICL Potash intends to execute a state-owned utility,preliminary project, in order to examine possible solutions and from OPC, a private producer of electricity that is a related party.

alternatives

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In June 2012, the Company entered into agreements regarding a project to constructstarted the construction of a new cogeneration power station (EPC) in Sodom, Israel (hereinafter—‘‘(hereinafter – the Project’’)Station). The power station is expected to haveStation has a production capacity of about 230 megawatt and about 330 tonstonnes of steam per hour and about 230 MW, which will supply electricity and steam requirements for the production plants at the Sodom site.site and for third party customers. In August 2018, the process of certification approval was completed, and the Power Station started operating in full. The Company intends to operate the new power stationStation concurrently with the existing power station, which will be operatedcontinue operating on a partial basis in a “hot back-up”"hot back‑up" format, to producefor production of electricity and steam. The total power produced at both stations can reach up to 245 MW. The Plant is producing as designed and exporting surplus electricity production insold to third parties via the short term will be 245 megawatt. The Company also intendsNational Grid. Regarding to utilize its present gas contracts and thereafter to enter into new gas contracts in order to run the power station.

Constructionconstruction agreement of the project was expected to be completedStation, in light of the second half of 2015. In 2015,continued violations by the executing contractor (the Spanish Company “Abengoa”) experienced difficulties and pursuant to- Abengoa), in September 2017, the decisionCompany notified of the Spanish court deliveredcancellation of the agreement. Due to financial disputes between the Company and Abengoa, in November 2015, it was granted protection from its creditors up to2018, the endCompany announced the initiation of an arbitration proceeding, in accordance with the provisions of the first quarteragreement.

In the Company's estimate, the damages caused by Abengoa amounted to about euro 77 million (about $ 84 million). On January 30, 2019, Abengoa submitted its response, denying ICL's claims, and claiming a payment of 2016. The Company is examiningeuro 15 million ($17 million) for the possibility of continuing executioncontract's termination, which was, allegedly, done unlawfully and for convenience. As at the date of the construction workreport, considering the early stages of the power station and completion thereof. In light of that stated,proceedings, there is a difficulty in estimating the Company expects to complete the project and to commence operationchances 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 our audited financial statements.

outcome.

Transport from the Company’sCompany's plant in the Dead Sea is by means of a conveyor belt from the plant to the railway in the direction of the Ashdod port and from Highway 90 in the direction of the Eilat port.

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The Negev Desert

We

ICL currently operateoperates large surface phosphate mining sites at Oron, Rotem and Zin, which are located in the southern part of the State of Israel in the Negev Desert.region. The Israeli Minister of National InfrastructuresEnergy under the Israeli Mines Ordinance, through the Supervisor of Mines in his Office (the “Supervisor”(“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 LandsLand Authority (“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 companyCompany is working to promote the plan for mining phosphates in Barir field (which is located in the southern part of South Zohar)Zohar field) in the Negev Desert.

In December, 2015, the National Planning and Building Council (hereinafter – the National Council) approved the Policy Document Regardingregarding Mining and Quarrying of Industrial Minerals, (the "Policy Document"), which includes, among other things,included a recommendation to permit phosphate mining including atin the Barir field. The Policy DocumentIn February 2017, the Committee for Principle Planning Matters, decided to continue advancement of the mining in the South Zohar field. Concurrently, and based on a decision of the National Council, instructions were prepared by the competent authorities with respect to the performance of an environmental survey of the Barir field for purposes of its further advancement. In April 2017, the National Council recommended to the government to approve National Outline Plan (hereinafter – NOP 14B), which includes South Zohar field, and determined that Barir field will be advanced as part of a detailed National Outline Plan, which was approved will setby the basis for preparationgovernment’s Housing Cabinet in January 2018.

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In January 2018, the Minister of Health filed an appeal of the said approval, requiring compliance with the Ministry of Health’s recommendation to conduct a survey regarding the health impact in each site included in NOP 14B. As part of a national outline plan (“discussion regarding the National Outline Plan”)appeal, which was held in the Housing Cabinet, it was decided, with the consent of the Ministries of Health, Finance and Energy, to remove the appeal and to approve the NOP 14B. In addition, it was decided to establish a team with representatives of the ministries of Treasury, Health, Transportation, Environmental Protection and Energy, which will present to the Housing Cabinet a report that includes health aspects for mining and quarryingNOP 14B. In April 2018, the NOP 14B was formally published.

In July 2018, a petition was submitted to the Israeli Supreme Court of Justice by the National Planning and Building Council. Along with the approvalmunicipality of the Policy Document,Arad against the National Planning and Building Council, ordered the Planning AdministrationMinistry of Health, the Ministry of Environmental Protection and Rotem, to raiserevoke the matterapproval of NOP 14B. In January 2019, residents of the orderBedouin diaspora in the "Arad Valley" submitted a petition to preparethe High Court of Justice (hereinafter – the Court) against the National Council, the Government of Israel and Rotem, in which the Court was requested to cancel the provisions of NOP 14B and the decision of the National Council from December 5, 2017, regarding to the advancement of a detailed plan for Barir field (“phosphate mining in the Barir Plan”)South Zohar field. In addition, the Court was requested to issue an interim injunction preventing the implementation of the NOP 14B instructions and the National Council's said decision until a final resolution. On January 22, 2019, the Supreme Court consolidated the hearing of the petition together with the other petition filed against NOP 14B and decided that at one ofthis stage there is no basis for granting the interim injunction. On February 5, 2019, the Company filed its upcoming meetings. response.

For a description of certain risks relating to receipt of a license for mining in the Barir Field, – see ”Item 3.“Item 3 - Key Information-D–Information— D. Risk Factors”.

ICL’s mining activities are dependent on concessions, authorizations and permits granted by the governments

Each of the countriessaid fields in which the mines are located.

Each of these fieldsIsrael has a similar layered structure and geological composition, with the phosphate preserved as relatively narrow elongated bodiesthin layers along the margins and within the axes of two northeast to southwest trending asymmetrical synclines (basins or trough-shaped folds in the rock layer whose upper components are younger than those below) or monoclines (step-like folds in the rock layer)trough‑shaped folds). Oron and Rotem lie within a single syncline to thelocated 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. WeThe Company 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-termICL has long‑term leases tocovering all the land on which ourits Israeli facilities are located, and we operateit operates under mining concessions and licenses granted to usit by the Israeli Minister of National InfrastructuresEnergy and by the ILA. Regarding Oron, its long-term lease is under a renewal process. See “Item 4.“Item 4 - Information on the Company-B. Business Overview- “ConcessionsCompany— D. Property, Plant and Equipment— Concessions and Mining Rights” below.

IfRights”.

In November 2016, the National Planning and Building Council will approveDistrict Board for the Southern District approved a detailed site plan for mining phosphate in the Barir Field, progress is expected with respectZin‑Oron area. This plan, which covers an area of about 350 square kilometers, will permit the continued mining of phosphate located in the Zin valley and in the Oron valley for a period of 25 years or up to the process of receipt of a mining license. If this situation does not come about, the futureexhaustion of the activitiesraw material – whichever occurs first, with the possibility for extension (under the authority of the ICL Rotem Company will depend on its ability to mine and manufacture the downstream products from alternative phosphate sources, namely, brown phosphates and bituminous phosphates, which are essentially the only phosphate sources that are expected to become reserves in the near future. Currently, the reserve of bituminous phosphate (approximately 4.0 million tons at Zin) is being mined and used in a blending process with other phosphates having lower organic concentrations to produce fertilizer products. Over the past several years, the Company has been developing, and has even run a pilot and a manufacturing test, a process wherein after the improvement process (removal of the phosphorous from the material combined with it), there is an improvement of the phosphoric acid content from 25%–26% to 31%–32%, and a 50% reduction of the organic content, and now it may be used for production of high-quality phosphoric acid. Significant progress has also been made in adapting brown phosphates (the adaptation of which for manufacture of acid has been proven in the past by means of a thermal process) for manufacture of phosphoric acid: a successful pilot was held and as a result a facility test is planned.

District Planning Board).

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The method of mining in the Negev is by the conventional open pit or quarrying methods,method, using drilling and blasting, 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-burdenover‑burden, inter‑burden and phosphate rock layers, so that the size of the mining equipment is conformed to the sites. At Rotem,mining sites and the operating requirements. In all of the mines, stripping of the waste material and mining of the phosphate and stripping of waste isare performed by entirely conventional and consists of 190-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.

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Phosphate rock from the Rotem mine is transported by truck to a nearby beneficiation plant at Mishor Rotem. At that plant,In addition, on this site, we also operate two sulfuricsulphuric acid plants, three  green phosphoric acid plants, one white phosphoric acid plant, three superphosphate plants, two granular fertilizer plants, one MKP plant and one oil shale burning plant andfor production of electricity and steam. We also have beneficiation plants at both Oron and Zin. The product of the process is a high-grade, multi-purposehigh‑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.

producers.

The plant at Mishor Rotem is powered primarily by electricity that we generategenerated by the Company at our sulfuricits sulphuric acid plants and by oil shale that we minethe Company mines 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-party producer of electricity.

the grid.

The following table sets forth for the periods indicated the amount of our total mine production of raw ore in ourthe Company’s mines in the Negev (and the relevant grade) supplied to our beneficiation plants:

		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 (forplants, for the three years ended December 31, 2015, 2014,2018, 2017 and 2013)2016:

	Year Ended December 31,
	2018	2017	2016

Millions of metric tonnes produced	8	7	9
Grade (% P2O5 before/after beneficiation)	26/32	26/32	26/32

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The following table sets forth the approximate amounts of product produced after processing by our operations in the Negev Desert:

		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

Desert, for the three years ended December 31, 2018, 2017 and 2016:

	Year Ended December 31,
	2018	2017	2016
	thousands of metric tonnes	thousands of metric tonnes	thousands of metric tonnes

Phosphate Rock	3,550	3,332	3,947
Green Phosphoric Acid	560	575	602
Fertilizers	988	957	890
White Phosphoric Acid	162	148	161
MKP	70	68	47

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Spain

The Company’sCompany's potash mining operations in Spain are carried out by ICL Iberia (IBP) (a wholly-ownedwholly‑owned subsidiary of the Company) through Trafico de Mercancias (a wholly-ownedwholly‑owned subsidiary of ICL Iberia). As at the date of this Annual Report, there are three underground potash mines that make up ICL Iberia’s complex: Suria, CabanasasCabanasses and Vilafruns. TheCurrently, the Company operates two mines, the CabanasasCabanasses mine, which is located in the town of Suria, approximately 12 kilometers north of the district capital of Manresa in the CardonerCardener 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 is inactive. In addition, the Vilafruns mine is expected to be closed by the middle

Potash was first discovered in 1912 at Suria and commercial development was started in 1920. ICL purchased its three Spanish mines in 1998. Potash of 2017. In November 2015, ICL Iberia and the Government of Catalonia signed a cooperation agreement memorandum of understanding that defines ICL Iberia’s activitieslate Eocene age occurs in the country as preferential activitiesnortheast corner of the Ebro Evaporite Basin which lies along the southern flank of the Pyrenees. Sylvinite and carnallite are found towards the potash industrytop of the Cardona Halite at depths which vary considerably as a public strategic interest. result of deformations associated with the Pyrenean fold and thrust belt.

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). See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal Proceedings—Spain Mining License Matters.” As 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 0.8 million tons per annum when production at the Vilafruns mine ceases and is expected to reach approximately 1.1 million tons per annum (double current 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 1.3 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.

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The CabanasasCabanasses and Vilafruns mines are both in the province of Barcelona and are located approximately 530 to 9001000 meters below ground. Each mine has two access points and the mining is by a modified room and pillar method. All of the mine sites are served by roadsroads/railways and are near major highways.

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 ICL Iberia (IBP), see “Item 4. Information on the Company—B. Business Overview—Segment Information—Fertilizers—Production.”

Potash was first discovered in 1912 at Suria

The Company owns 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 operateoperates two processing plants – one in Suria and one in Sallent. The operationsprocessing at these plants includeincludes crushing, grinding, desliming, froth flotation, drying and drying.compacting. In addition, in Suria plant there is a process for crystallization of vacuum salt and pure potash. All of the power utilized by our Spanish mining operations is purchased from third-partythird‑party electric companies.

ICL owns all the land on which the Spanish surface facilities are located. The Spanish government owns all the underground mining rights and has granted ICL concessions to conduct mining operations under the land. See “Item 4 - Information on the Company— D. Property, Plant and Equipment— Concessions and Mining Rights”.

In 2011, ICL’s Board of Directors approved the restructuring of ICL Iberia’s operations from two sites to one site. According to this plan, production at the Suria site (Cabanasses mine) will be expanded gradually, whereas the mining and production activities at the Sallent site (Vilafruns mine) will be discontinued. Sallent site is expected to be closed at the end of 2020.

The production of potash in Spain is expected to be about 1 million tonnes per year and to reach a level of up to about 1.3 million tonnes per year after completion of the necessary adjustments.

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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, 20142018, 2017 and 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

2016:

	Year Ended December 31,
	2018	2017	2016

Sallent
Ore processed (in millions of metric tonnes)	2	2	2
Grade (% KCl)	23%	23%	23%
Suria
Ore processed (in millions of metric tonnes)	2	2	2
Grade (% KCl)	25%	24%	26%
Total
Ore processed (in millions of metric tonnes)	4	4	4

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United Kingdom

Our

ICL’s mining operations in the United Kingdom are conducted by ourits wholly owned subsidiary, ICL UK. OurBoulby. ICL’s mine and processing plant isare 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. WeICL purchased the mine, including mining leases and mineral extraction licenses, in 2002 from the then-owner,then‑owner, Anglo American Corporation.

Our

ICL’s mining operations in the United Kingdom are conducted both under land and under the North Sea. Mining operations are conducted at depths of asup to much as 1,300 meters below ground onshore and 8501,000 meters below the surface of the North Sea. The operations under the North Sea are currently conducted as far as 14.517.5 kilometers offshore. Although we ownICL owns the land on which ourthe minehead and the related surface operations are conducted, substantially all of ourthe United Kingdom subsurface operations are conducted either under land that we doit does not own or under the North Sea, which weit also dodoes not own. We haveICL has the right to conduct our mining operations pursuant to the mining leases and mineral extraction licenses described below. See “ItemSee “Item 4 - Information on the Company—D. Property, PlantsPlant and Equipment—Concessions and Mining 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)Rights”. The potash is separated from the salt and from insoluble materials in processing plants located near the mines.

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Our

ICL’s United Kingdom mining operations are situated close to the western limits of polyhalite, potash and salt deposition in the Zechstein Basin extending inland in the United Kingdom and below the North Sea tointo Germany. The potashpolyhalite seam is of the Permian Evaporite Series and is overlain by some 800 meters to 1,300 meters of younger sedimentary rocks. The potashpolyhalite seam averages 74 meters in mineable thickness but varies from zero to more than 2011 meters in thickness. An approximately 11-meter-thick polysulphate layer exists approximately 150 meters below the potash deposits. ICL UK has evaluated the potential of this polysulphate as a separate resource, and completed anThe access decline into the polysulphatepolyhalite bed was built in 2010 from one of theirits main salt roadways. CommencingAs described below, Polysulphate™ production at ICL has increased in recent years and is now the focus of mining activities at ICL Boulby as it transitioned away from 2012, the Company sells the product in commercial quantities.

Our United Kingdom mine has been extensively explored using a combination of surface (sparse) and underground drilling. potash production due to fully depleted reserves.

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The underground long hole (horizontal) drilling and 3 D seismic (offshore) surveys are used to delinate areas of minerals well in advance of mining. TheBoulby mine is accessed by two vertical shafts. One shaft hoists potashPolysulphate™ and salt and the other provides man-riding and service access. Mining currently takes place in two discrete areas. Mining is by continuous minersmining 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 KingdomBoulby mine is powered primarily bymainly through electricity purchased byfrom the local electricity company. There is also a power plant on the site that converts gas into electricity and supplements the electricity supply required for execution of the mining operations.

Our raw material

A new processing operations includeplant for Polysulphate™ was established in 2016.  This plant uses simple crushing desliming, grinding, froth flotation and drying. Thescreening processes to produce standard and granular products in approximately 50:50 ratio. Research is currently underway regarding methods to further enhance these products through compaction, granulation, blending and micronutrient addition which, in combination, is anticipated to deliver high value new fertilizer products into the market. In addition, the former potash processing plant in the second quarter of 2018 was built in 1971modified and is properly maintained on an ongoing basis in order to preservesections of the existingdrying and compacting circuit were adjusted for the production capacity.

of PotashpluS, a compacted blend of Potash Standard (SMOP) and Poly Standard.

The following table sets forth, the quantities and grades of the potash ore extracted from the Boulby mine in the United Kingdom and the insoluble clay minerals, for the three years ended December 31, 2015, 20142018, 2017 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	%

2016:

	Year Ended December 31,
	2018*	2017	2016

Potash Ore (millions of metric tonnes)	1	1	2
Grade (% KCl)	35%	36%	36%
Grade (% insoluble)	9%	11%	11%

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*Potash was extracted until the end of the second quarter of 2018.

The Company ceased the production of potash at its ICL Boulby mine at the end of the second quarter of 2018, due to fully depleted reserves and shifted to sole production of Polysulphate™.

The following table sets forth, the quantities of the polyhalite ore extracted from the mine in the United Kingdom, for the three years ended December 31, 2018, 2017 and 2016:

	Year Ended December 31,
	2018	2017	2016

Polyhalite Ore (millions of metric tonnes)

0.4

0.5

0.2

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Beginning in 2016, the Company accelerated the transition from extracting and producing potash to producing Polysulphate™ at its ICL Boulby mine. ICL is acting to expand the Polysulphate™ market by means of, among other things, development of a wide range of innovative Polysulphate™-based products. In 2018, ICL produced about 350 thousand tonnes of Polysulphate™.

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China

YPH JV, a joint venture with Yunnan Phosphate Chemicals Group Corporation Ltd. (“YTH”), operates aan open-pit mining site named Haikou (the “Haikou Mine”"Haikou mine") that is located alongside the Haikou Town, in the Xishan district, proximate to the city of Kunming. YPH JV also holds a concession for the Haikou mine that expires in 2043 and an additional concession for mining phosphates ended at November 2018 in an additionalthe mine namedof Baitacun (the “Baitacun Mine”"Baitacun mine"), which is located several kilometers from the Haikou Mine,mine, wherein the mining activities have not yet commenced. As at the date of the date hereof,report, the Company is examining the option to renew Baitacun's concession, subject to the phosphate reserves soil survey results, as well as achieving the required understanding with the authorities.

The access to these minesHaikou mine is by means of a network of roads. Theroads, as well as an accessible rail network that links to the state rail lines. In light of the current operations at the Haikou mine, the production capabilitycapacity of YPH JV is approximately 2.5 million tonnes per year.

The Haikou Minemine has been in operation since 1966 and the concession area is spread over 9.6 square kilometers and the Baitacun Mine is spread over 3.08 square kilometers.

The Haikou Minemine is splitdivided into 4four 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 started at the end of 2017.

The phosphate deposits at both mines are scheduled to startpart of an extensive marine sedimentary basin in 2018.

The phosphates arewhich the phosphate is situated in two layers – an upper layer and a lower layer. The thickness of the upper layer varies from 2.5 to 11 meters and is about 77.6 meters whileon average, whereas the thickness of the lower layer varies from 2 to 9 meters and is about 46.1 meters on average. The mining is executed based on layers in accordance with theand quality thereof. In everyEach layer has 3 quality categories are defined,categories: Grade I (highest grade) > 30% P₂O₅, Grade II- 24-30% P₂O₅ and Grade III- 15-24% P₂O₅. Structurally, the Haikou mine is moderately complex, 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 restorationreclamation of the mined areas. The phosphate layers are also partially hard and require blasting.

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The phosphate is low organic type, and as such it is suitable for phosphoric acid production.

The mining in the Haikou Mine is via open mining using conventional methods by means of drilling and blasting, hydraulic cranes,excavators, mining trucks and tractors for mining phosphates.

In the first stage: mining of the upper ground level is performed, which is thenbeing stripped, and stored or spread out over mined areas for purposes of restoration.reclamation. In the second stage: drilling, blasting and stripping of the upper overburden level is removed.executed. In the third stage: mining of the phosphate is performed by drilling and blasting of every layer separately (between which an intermediary overburdeninterburden layer exists having a thickness of 11 meters)meters, which is also drilled, blasted and itstripped) and the phosphate is then loaded on trucks.

truck and being transported to the beneficiation plants.

Based on the topographypatches appearance of the region,medium and high-grade phosphate, the mining is performed through use of small mining tools, trucks with a capacity of 40 tonstonnes and cranes haveexcavators having a shovel volumebucket capacity of 3 to 6 cubic meters. Use of large trucks will only be possible if a modern transport road is built.

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Close to the Haikou Minemine, there are 2 enrichment plants.two beneficiation plants: flotation and scrubbing. These facilities are accessible by road.roads, and the scrubbing plant is accessible by roads and train. 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 sulfuriclocated several kilometers from the Haikou mine, which include four sulphuric acid factories, three green phosphoric acid factories, one factory for manufacture of technical grade white phosphoric acid and six fertilizer factories. These factories of different types. The site is located several kilometersare powered by electricity generated from the Haikou Mine. Accesssulphuric acid production process as well as from the national power network. These facilities have been continuously developed and maintained for the last 40 years and are in a good condition. The access to the production site is also by road.

Mining activities have not yet commenced onroad and train.

The following table sets forth the Baitacun Mine. The geological survey was conducted byamount of our total mine production of raw ore in the Chinese government andHaikou mine (and the area is ready for planning of the mining operations. However, since the ratio of the overburden materialrelevant grade) supplied 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 licenseour beneficiation plants, for the Danakhilthree years ended December 31, 2018, 2017 and 2016:

	Year Ended December 31,
	2018	2017	2016

Millions of metric tonnes produced	2.15	1.95	2.20
Grade (% P2O5 before/after beneficiation)	20.7/28.98	21.3/29.6	20.4/29.2

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The following table sets forth the approximate amounts of product produced after processing by our operations in Haikou 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 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 companythree years ended December 31, 2018, 2017 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”.

2016:

	Year Ended December 31,
	2018	2017	2016
	thousands of metric tonnes	thousands of metric tonnes	thousands of metric tonnes

Phosphate Rock	1,725	1,545	1,798
Green Phosphoric Acid	635	572	617
Fertilizers	621	335	790
White Phosphoric Acid (TG)	65	61	37

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Concessions and Mining Rights

Israel

ICL Dead Sea Ltd. Concession.

Pursuant to the Israeli Dead Sea Concession Law, 1961 (hereinafter – “thethe Concession Law”)Law), as amended in 1986, and the Concession Deedconcession deed attached as an addendum to the concession law, ICL Dead SeaConcession Law, DSW 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 that 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. concession to a third party.

In exchange2015, the Minister of Finance appointed a team to determine the “governmental activities to be conducted towards the end of the concession period”. The public’s comments in this matter were submitted to the team. Based on the interim report and its recommendations published in May 2018, and following a public hearing, on January 21, 2019, the Israeli Ministry of Finance released the final report of the inter-ministry team headed by Mr. Yoel Naveh, former Chief Economist, which includes a series of guidelines and recommendations regarding the actions that the government should take towards the end of the concession period. As at the date of the report, since the report includes guiding principles and a recommendation to establish sub-teams to implement such principles, the Company is unable to assess, at this stage, the concrete implications, manner in which the recommendations would be implemented in practice and on which schedules. In addition, there is no certainty as to how the Government would interpret the Concession Law and the manner in which this process and methodology would ultimately be implemented.

The Financial Statements were prepared under the assumption that DSW will continue to operate the relevant assets for at least their remaining useful lives. In addition, the Financial Statements were prepared under the assumption that it is more likely than not that ICL will not sell DSW.

In addition, in 2015, the Minister of Finance appointed a team headed by the (former) Accountant General to evaluate the manner in which, according to the current concession, the replacement value of DSW’s tangible assets would be calculated assuming that these assets would be returned to the government at the end of the concession period. The determination date of the actual calculation is only in 2030. As far as the Company is aware, this work has not yet been completed.

In December 2018, the Company received an opinion from an independent appraiser regarding the fair value of the property, plant and equipment of the subsidiaries Dead Sea Works, Dead Sea Bromine and Dead Sea Magnesium in Israel (hereinafter – the Subsidiaries). The Opinion was prepared mainly for the Subsidiaries’ financial statements for 2016 and onward, which serve as a basis for the reports filed pursuant to the provisions of the Taxation of Natural Resources Law. The Property, Plant and Equipment value provided in the opinion is based on the Replacement Cost methodology and is estimated at about $6 billion, as at December 31, 2015, and at December 31, 2016.

Though the assets assessed for tax purposes and the assets that may be valuated under the Concession Law are highly correlated, there is no complete identity between them. The Company believes that the applied Replacement Cost Methodology used in the opinion for estimating the fair value coincides with the methodology mentioned in the Concession Law for future valuation of the Property, Plant and Equipment upon termination of the concession ICL Dead Seaperiod. Nevertheless, there could be other interpretations to the manner of implementation of the Concession Law’s provisions with respect to the valuation methodology, hence, the estimated value with respect to the Concession Law could materially differ from the value provided in the said opinion, even with respect to the same assets and dates. It is expected that the value of the Property, Plant and Equipment, at the end of the concession period, will change as time passes and as a result of purchase and disposal of assets included in the future valuation.

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In consideration of the concession, DSW pays royalties to the Israeli government,Government of Israel, calculated at the rate of about 5% of the value of the products at the factory gate, less certain expenses. In addition, ICL 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.

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As for the royalties payment by ICL Dead Sea, the State of Israel was permitted to demand a re-evaluation of royalties rate relatingAccording 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 IsraelSalt Harvesting Agreement signed in July 2012 regarding performance(hereinafter – the SLA), in case the annual quantity 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 ofchloride potash from the dead seasold is in excess of 1.5 million tons per year.tonnes, the royalties rate would be 10%. In addition, according to the Salt Harvesting agreement,SLA states that if legislation is enacted that changes the specific fiscal policy in connection with profits or royalties deriving from the mining of quarries from the Dead Sea, the Company’s consent will not apply regarding anto the increase inof the royalties' rate of royalties on the surplus quantities referred to above commencing fromwill not apply, after the date onenactment of the legislation, to the period in which such additional tax is collected as stated in the said legislation. On November 30, 2015,

In January 2016, the Economic Efficiency Law was published,for Taxation of Profits from Natural Resources, including the implementation of the Sheshinski Committee’s recommendations, which address royalties and taxation of excess profits from Dead Sea minerals. The lawminerals (hereinafter – the Law), entered into effect on January 1, 2016. For further details see Note 23effect. Accordingly, the rate of the royalties' provision was updated to 5%. The Company's position, pursuant to the Company’s financial statements.

ICL Dead Sea grantsSLA and its arguments in the royalties' arbitration, is that increasing royalties at a sub-concessionrate exceeding 5% requires the Company's consent, which expired with the enactment of the Law. The State holds a different position regarding the royalties' rate in 2016. Nevertheless, in the Company's estimation, in the event this matter would be challenged in arbitration, it is more likely than not that its claims regarding the royalties' rate increase, following the enactment of the Law in 2016, will be accepted.

DSW granted a sub‑concession to Dead Sea Bromine Company Ltd. (“Dead Sea(hereinafter –the Bromine Company”)Company) to produce bromine and its compounds from the Dead Sea, the expiration date of which is concurrent with ICL Dead Sea’the DSW's concession. We payThe royalties toin respect of the Israeli government on products manufactured by the Dead Sea Bromine Company. In addition, thereCompany are received by DSW from the Bromine Company, and DSW then pays them over to the State.

There is an arrangement relating to payment of royalties by Dead Sea Magnesium (hereinafter – DSM) for the production of metal magnesium metals by virtue of a specific arrangement with the State of Israel provided in the Israeli government’sGovernment’s decision dated September 5, 1993. Pursuant to thethis arrangement, royalties are paid by Dead Sea MagnesiumDSM on the basis of carnallite used for production of magnesium. The arrangement with Dead Sea MagnesiumDSM provides that during 2006 the State may demand a reconsideration in connection with the amount of the royalties and the method orof their calculation for 2007 and thereafter. The State’s demand for reconsideration, as stated, was firstinitially 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 thenformer 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 thesecomprising of two arbitrators appointed by each party, who in turn jointly appoint thea third arbitrator).arbitrator. For additional details regarding the arbitration proceeding and the provision recorded by the Company in 2014 and 2015 stemming from the partial arbitration decision – see “Item 8.Note 20 to our Audited Financial Information—A. Consolidated StatementsStatements.

In 2018, 2017 and Other Financial Information—Legal Proceedings.”

In 2013, 2014 and 2015, ICL Dead Sea2016, DSW paid current royalties to the Israeli governmentGovernment of Israel in the amountamounts of approximately $110$66 million, $84$60 million, and $97$53 million, respectively. In addition, during 2015,in 2018, the Company paid the provision, in thean amount of approximately $152$62 million, in respect of royalties relating to prior periods.

In addition, ICL Dead Sea pays the Israel Land Authority lease rentals in respect of the leases as defined in the concession certificate. The amount of the payment and the related update mechanism is provided in the agreement signed with the Israel Land Authority (formerly the Israel Land Administration) in 1975. The amount is updated from time to time.

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Rotem Concession. ICL Concession.

Rotem has been mining phosphates in the Negev in Israel for over fiftymore than sixty years. The mining is conducted in accordance with the phosphate mining concessions, which are granted from time to time by the Minister forof National Infrastructures, Energy and Water under the Israeli Mines Ordinance, by the Supervisor of Mines in his Office, as well as the Ministry, accompanied by mining authorizations issued by the ILA. Israel Lands Authority. The concessions relate to quarries (phosphate rock) whereas the authorizations cover use of land as active mining areas.

The Oron concession was first granted in 1952. The Zin concession was first granted in 1970 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)sites) was renewed every 3 years, and in 1995 it was renewedgranted for 10 years and thereafter in 2002 it was renewed untilgranted up to 2021. The Rotem concession was first granted in 1970 and, similar to the Zafir concession it was also renewedgranted in 1995 for 10 years and in 2002 it was renewed until 2021. There is no express tender process under the Mines Ordinance for every reserve certificate, andgranted up to now no phosphate2021. In 2011, the Supervisor of Mines expanded the area of the Rotem concession by joining the Hatrurim site to the area of this concession, and the matter was transferred to Israel Lands Authority for handling of expansion of the permissible mining rights have been provided for a competitive process, however a legislative change fromarea to the endRotem field, in accordance with expansion 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. concession area.

The concessions relate to the quarry (phosphate rock) whereas the other authorizations relate to use of land as active mine sites.

Under

ICL Rotem has the following two mining concessions, which cover a total area of approximately 224 square kilometers:

1.   Rotem Field (including the Hatrurim Field) – valid up to the end of 2021;

2.   Zafir Field (Oron‑Zin) – valid up to the end of 2021;

As at the date of this report, the company is working to extend the said concessions with the relevant authorities.

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Mining Royalties

As part of the terms of thesethe concessions ICLin respect of mining of the phosphate, Rotem is required to pay the State of Israel royalties based on a formulacalculation as 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. OnIn January 1, 2016, a legislative amendment entered into effect covering implementation of the recommendations of the Sheshinski Committee that changed the formatformula for calculatingthe calculation of the royalties, increasedby increasing the rates from 2% to 5% of the value of the mineral,quarried material and left the Supervisor of Mines the possibility of collecting royalties inat a higher amount,rate if he decided to grant a mining right in a competitive process wherein one of the selection indices is the amount of the royalties.

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ICL

In 2018, 2017 and 2016, Rotem has the following three mining concessions, which cover a total area of approximately 55,327 acres:

1. Rotem Field — valid uppaid royalties to the endState of 2021;

2. Zafir Field — (Oron-Zin) — valid up toIsrael in the endamounts 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.

In September 2012, a committee was set up by the Director General of the Israeli Ministry of Energy$5 million, $4 million, and Water, to examine the phosphates sector in order to look into the use of the phosphate resource in Israel.

The committee published its recommendations$5 million, respectively.

Planning and among other things, 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 date of this Annual Report, no operative decisions had been made based on the committee’s recommendations.

Building

The mining and quarrying activities require a zoning approval forof the areasite based on a plan in accordance with the Israeli Planning and Building Law, 1965. These plans are updated, as necessary,needed, from time to time. As at the date of Annual Report,this report, there are various requests are inat different stages of deliberationdeliberations pending before the planning authorities.

At

In November 2016, the end of 2009, according toDistrict Board for the recommendation ofSouthern District approved a team accompanying preparation of a newdetailed site plan for mining phosphate in the Zin-OronZin‑Oron area. This plan, which covers an area of about 350 square kilometers, will permit the continued mining of phosphate located in Israel, the Local District Board approved extension ofZin valley and in the execution stages of the site plan from 1991, which zones the Zafir site (Zin-Oron) for mining up to the end of 2013. 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 areaOron valley for a period of time intended for completion25 years or up to exhaustion of the required processesraw material – whichever occurs first, with the possibility for depositextension (under the authority 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.

District Planning Board).

The companyCompany is working to promote the plan for mining phosphates in Barir field (which is located in the southern part of South Zohar South)field) in the Negev Desert.

In December 2015, the National Planning and Building Council (hereinafter – the National Council) approved the Policy Document Regardingregarding Mining and Quarrying of Industrial Minerals, (the "Policy Document"), which includes, among other things,included a recommendation to permit phosphate mining including atin the Barir field. The Policy DocumentIn February 2017, the Committee for Principle Planning Matters, decided to continue advancement of the mining in the South Zohar field. Concurrently, and based on a decision of the National Council, instructions were prepared by the competent authorities with respect to the performance of an environmental survey of the Barir field for purposes of its further advancement. In April 2017, the National Council recommended to the government to approve National Outline Plan (hereinafter – NOP 14B), which includes South Zohar field, and determined that was approvedBarir field will set the basis for preparationbe advanced as part of a national outline plan (“thedetailed National Outline Plan”) for mining and quarrying to also bePlan, which was approved by the National Planning and Building Council. Alonggovernment’s Housing Cabinet in January 2018.

In January 2018, the Minister of Health filed an appeal of the said approval, requiring compliance with the approvalMinistry of Health’s recommendation to conduct a survey regarding the health impact in each site included in NOP 14B. As part of a discussion regarding the appeal, which was held in the Housing Cabinet, it was decided, with the consent of the Policy Document,Ministries of Health, Finance and Energy, to remove the appeal and to approve the NOP 14B. In addition, it was decided to establish a team with representatives of the ministries of Treasury, Health, Transportation, Environmental Protection and Energy, which will present to the Housing Cabinet a report that includes health aspects for NOP 14B. In April 2018, the NOP 14B was formally published.

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In July 2018, a petition was submitted to the Israeli Supreme Court of Justice by the municipality of Arad against the National Planning and Building Council, ordered the Planning AdministrationMinistry of Health, the Ministry of Environmental Protection and Rotem, to raiserevoke the matterapproval of NOP 14B. In January 2019, residents of the orderBedouin diaspora in the "Arad Valley" submitted a petition to preparethe High Court of Justice (hereinafter – the Court) against the National Council, the Government of Israel and Rotem, in which the Court was requested to cancel the provisions of NOP 14B and the decision of the National Council from December 5, 2017, regarding to the advancement of 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 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 duefield. In addition, the Court was requested to their fear from environmentalissue an interim injunction preventing the implementation of the NOP 14B instructions and health dangers. The Company believes that the mining activities in Barir field do not involve any risks to the environment or to people. There is no certainty that the National Outline Plan andCouncil's said decision until a final resolution. On January 22, 2019, the Barir Plan will be approved at all or as will be submitted, in lightSupreme Court consolidated the hearing of the opposing position ofpetition together with the Health Ministry, among others. Moreover,other petition filed against NOP 14B and decided that at this stage there is no certainty regardingbasis for granting the timelinesinterim injunction. On February 5, 2019, the Company filed its response.

Under the terms of the concessions and in order to continue to hold the concession rights, ICL Rotem is required to comply with additional reporting requirements, in addition to the payment of royalties.

Spain

A subsidiary in Spain (hereinafter – ICL Iberia) was granted mining rights based on legislation of Spain’s Government from 1973 and the regulations accompanying this legislation. Further to the legislation, as stated, the Government of the Catalonia region published special mining regulations whereby ICL Iberia received individual licenses for each of the 126 different sites that are relevant to the current and possible future mining activities. Some of the licenses are valid up to 2037 and the rest are effective up to 2067. The concession for the submission"Reserva Catalana", an additional site wherein mining has not yet been commenced, expired in 2012. The Company is acting in cooperation with the Spanish Government to obtain a renewal of the Plans, the approval thereof or of further developments with respect to Barir field.

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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.”

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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 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.

concession. 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.

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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 ICL Dead Sea’s tangible assets will be calculated at the end ofSpanish authorities, 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 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’svalid until a final recommendations, and their approval by the Social-Economic Cabinet 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 plandecision 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 (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. For additional details – see “Item 6. Directors, Senior Management and Employees—D. 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 Israelmade regarding the tax and royalties issues will not support the continuation of the activities of the magnesium plant. 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. 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). On November 11, 2015, the Company’s Board of Directors decided to postpone for one year the decision with respect to the continued operation of the magnesium plant until final clarification of the tax effects, royalties, and cost of participation in the management services of the electricity system that are expected to be imposed on the plant. The sales of magnesium in 2015 amounted to approximately $121 million, the magnesium company incurred an operating loss in this year of approximately $8 million, the net property, plant and equipment of the magnesium company as at December 31, 2015 was approximately $40 million and the depreciation expenses in 2015 amounted to approximately $7 million.

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. 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. ICL Iberia (IBP) owns 126 mining concessions. Two separate and independent processes of paying fees and renewals are thus involved.

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Originally, the concessions were divided among several mining companies in the area. However, as companies were acquired or relinquished their concessions, ICL Iberia (IBP) obtained these concessions. As a result, ICL 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 2015 amounted to approximately €170 thousand.

Regarding “Reserva Catalana”, an additional site wherein mining has not yet been commenced, it was clarified that in 2007As part of a renewal process, was commenced for extensionthe Company must prepare and present a basic technical report describing the intended use of the concession period, which ended in 2012, for an additional 30 years. In light of the changeover of the governments in Spain, the administrative processes of the National Mining Authority with respect to extending the concession period have not yet been completed.mines. As at the date of this Annual Report, ICL Iberia is in the process of renewing the 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. As at the date of this Annual Report, ICL Iberia (IBP) has not had any serious difficulties in renewing those leases in the 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 length of the planned life of the Cabanasas mine, given the first stage and the second stage of the 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,expires, a bidding process would start.

will be initiated. ICL Iberia (IBP) applies in advance for the renewal of mining concessions and until now, had no difficulties in renewing them.

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United Kingdom

United Kingdom Mining Concession. – ICL UK’s (CPL)Boulby

The mining concessionrights of a subsidiary in the United Kingdom is(hereinafter – ICL Boulby), 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 ICL UKBoulby operates, or, in the case ofand mining underneathrights under the North Sea granted by the United KingdomBritish Crown (Crown Estates). These, which includes provisions to explore and exploit the resources of the Polysulphate mineral. The said mining rights cover a total approximately 92,340 acres. Mostarea of about 374 square kilometers. As at the termsdate of this report, all of these leases,the lease periods, licenses, easements and rights of way are valid up to 2038, with a small part being valid up to 2020.effective until 2038. In 2015,2018 and 2017, the mining royalties amounted to about £3$1.3 million ($5 million).

All of ICL UK's older lease agreements (about 74 agreements) were signed for a period of 50 years in the 1970s of the 20^th 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 were recently renewed and expire in 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-year lease period with a 35-year option to extend the lease. For purposes of signing the lease agreements, ICL 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 was extended to the end of 2020 (one large lease is involved). $2 million, respectively.

Historically, the renewal of leases has not been problematic, and we believe that we have orthe Company is confident in the renewal of all land leases as required and will receive all government approvals and permits necessary for our reserves inexploiting all targeted mineral resources.

The current planning permit, relevant to mineral exploitation, processing and land usage, is valid up to 2023. Accordingly, a new permission must be issued by the United Kingdom. In the Company’s estimation, thereNorth York Moors National Park Authority no later than 2020. ICL Boulby is no competition for mineral leases because ICL UK has already securedtaking action to extend the planning permission (“permit by twenty‑five years.

ICL Boulby has a preferential right to renew some of its leases as it has the Planning Permission”) for potash and rock-salt extractionPermission to extract minerals. In addition, 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. ICL UK has a preferential right to renew the leases as it has the Planning Permission to extract potash-bearing minerals. bidding process.

The entities involved in renewing or obtaining new leases are ICL UK,Boulby, 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

United Kingdom Concession - Everris

A UK subsidiary from ICL Innovative Ag Solutions segment (hereinafter – Everris UK), has a significant impact on exploration or development and at the date of the report, there are no plans to pursue thempeat mines in the future.

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ICL UK currently has long-term mineral lease agreements covering more than 70% of the area. Based on past experience, we are confident that we will be able to obtain the remainder of the resource(Creca, Nutberry and reserve leases, if necessary. In addition, historically no competitionDouglas Water). Peat 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 ICL 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 constitutesused as a raw material for production of professional gradedetached beds for soil improvement and use as soil substitutes in growing media. Our mines in the United Kingdom (NutberryThe Nutberry and Douglas Water)Water mining sites are owned by Everris UK, while the Company, whereas Creca mine 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 and are renewed after a review byexamination of the local authorities. The last time the mining permit at Creca was renewed was in 2010 (for a period of 14 yearspermits were granted 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).

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, withChina. With reference to the Haikou Mine which(hereinafter – Haikou), the mining license is valid up to January 2043, andwhereas regarding the Baitacun Mine which is valid up to(hereinafter – Baitacun), the mining license expired in November 2018 (the “Haikou License” and the “Baitacun License”, respectively).

Acquisition of the Mining Rights

2018. The mining right ofactivities at Haikou Mine was previously owned by YPC. Accordingare carried out in accordance with the above‑mentioned license. Regarding Baitacun, the Company is examining the option to renew the concession, subject to the Mining Concession Grant Contract of Haikou Mine entered into byphosphate reserves soil survey results and between YPC andachieving the Land andrequired understanding with the authorities.

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Natural 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 withRoyalties

With respect to the mining concessionrights, in accordance with the "Natural Resources Tax Law", YPH JV will pay royalties of Baitacun Mine since8% on the Baitacun mining right was obtained by YPC beforeselling price based on the relevant PRC laws requiring the Resources Department to sign such agreements were published.

As partmarket price of the formation ofrock prior to its processing. In 2018 and 2017, 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 examinedpaid royalties in the annual check mainly include: whether the taxes, fees, premiums relating to the mining licenseamount of $3 million 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.

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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

In 2016, YPC issued a statement issued bywhereby in 2010 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”)(hereinafter - Lindu Company), according to which Lindu canCompany is permitted to mine up to two million tonstonnes of phosphate rock from a certain area of 621 mǔ (equivalent tomeasuring 0.414 square kilometer),kilometers within the area of the Haikou Mine (the “Daqing Area”)mine (hereinafter – the Daqing Area) and to sell such phosphate rock to any third party atin 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 formationestablishment of YPH JV, YPC proposed to the relevant local authority of Jinning County and Lindu Company to swap the rights granted to Lindu Company in the Daqing Area with another area whichthat is not a part of the Haikou Mine and havemine, where Lindu Company minewould mine. In March 2016, in a meeting held between YPC, ICL and other relevant parties, YPC stated that area, so asit could not exchange its other mines to ensure thatreplace the interest of YPH JV would not be affected byDaqing Area since Lindu Company’s benefit is connected to the mining and sale conducted by Lindu Company. However, due to personnel changes inDaqing Area. Under the relevant local authority of Jinning County and Lindu Company, the negotiation is still on-going.above‑mentioned statement, YPC undertakes to continue to promote the negotiation, so as to ensurehas undertaken that YPH JV’s mining right in the Haikou Minemine 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, whicharrangements. It was granted on October 8, 2013 by the Ministry of Mines in Ethiopia. The mining license is valid for a period of 20 yearsdecided that YPH should conduct further communications with YPC 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 theLindu Company, for the transferpurpose of protecting its legal rights and to urge the mining licenseparties to reach a newly established companyfair, just, and extending the development period inreasonable solution to this issue, as soon as possible. In light of the Company's takeoverabove, ICL didn’t include this area as part 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. YPH reserves.

Reserves

The Company is currently researching the project’s feasibility and technical and operating requirements, and initial workbelieves it 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 its 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:

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·

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 thatso the 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 fartherfurther 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.

We categorize our

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ICL categorizes its reserves in accordance with these SEC “Guide 7”Industry Guide 7 definitions, as stated above. The quantity, nature of the mineral reserves and estimate of the reserves at each of ourthe Company’s properties are estimated by ourits internal geologists and mining engineers.

In October 2018, the SEC adopted a final rule that will replace SEC Industry Guide 7 with new disclosure requirements that are more closely aligned with current industry and global regulatory practices and standards. We must comply with these new disclosure requirements beginning with our fiscal year ended December 31, 2021, although early voluntary compliance is permitted. As at the date of this report, we have not adopted these new disclosure requirements and have not determined when we will elect to adopt them. When we implement the new methodology in connection with adoption of these disclosure requirements, we will present resource and reserve estimates, and the information presented may differ materially from the reserve estimates to those presented historically and in this Annual Report under the existing SEC rules.

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, 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

2018:

	Category	White Phosphate	Low Organic Phosphate	High Organic Phosphate	Bituminous Phosphate	Recoverable Reserves	Average Grade
		(millions of metric tonnes)					(%P2O5)

Rotem	Proven	-	10	-	-	10	26%
Zin	Proven	-	16	15	3	34	25%
Oron	Proven	14	4	-	-	18	23%
Total (Proven) (1)		14	30	15	3	62

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(1)          Amounts may not add up due to rounding.

The Company continues to check the adaptation of various potential types of phosphate rock (bituminous and brown phosphates) for the production of phosphoric acid and its downstream products as part of an effort to utilize and increase existing phosphate reserves. In 2019, the Company will further analyze these types of phosphate including R&D, pilots, plant testing activities and its economic feasibility. If this analysis is able to establish economic feasibility, we would expect to add a portion of this phosphate rock resources to our resource and reserve bases.

In determining these reserves, a cut-offcut‑off grade of 20% to 25% P₂O₅ was applied, depending on the processing characteristics of the phosphate rock and the existing process.processes. The cut-offcut‑off grade differs for each mine in accordance with the beneficiation process:process and enrichment capacity: a cut-offcut‑off grade of 20% P₂O₅ was applied at Oron, a cut-offcut‑off grade of 23% P₂O₅ was applied at Zin, and a cut-offcut‑off grade of 25% P₂O₅ was applied at Rotem. The cut-offcut‑off grade for Oron is lower because ICL Rotem has the appropriate beneficiation process for chalk phosphate rock with limestone, which characterizes the white phosphate and, therefore, the beneficiation process, through the flotation process, is extremely efficient. The cut-offcut‑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-offcut‑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 inenrichment process. For purposes of determining the cut-offcut‑off grade, took intoutilization and quantities parameters account was taken of the geology factors (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-site tonson‑site tonnes (multiplying area by layer thickness and phosphate density); recoverable tons (tonstonnes (tonnes of mineral which can be mined, taking into account mining dilution); mineable tonstonnes (recoverable tonstonnes from which the tonstonnes produced are deducted); stripping ratio (the quantity of waste removed per tontonne of phosphate rock mined); planned dilution; cost per tontonne for mining (typically related to transport distance to beneficiation/processbeneficiation plant); cost per tontonne 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 RotemRotem’s yearly mining plan is not determined by the minimum cut-offcut‑off grade, and fluctuations in commodity prices rarely affect its cut-offcut‑off grade.

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The cut-offcut‑off grade calculations come from historical yield data and our ICL RotemRotem’s historical experience with mining, and are adequately calculated and modelled by its geologists, operation engineers and economists. The calculation takes the ore grade in-site,in‑situ, converts it into extracted ore with our ICL Rotem mining method and estimates the plant yield depending on the grade. Economic modelling then gives the cut-offcut‑off figures currently used by our ICL Rotem.

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The proven reserves above the cut-offcut‑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 RotemRotem’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'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 itwhich is currently between45% for Oron, 46% (at Oronfor Rotem, and Rotem) and 48% (at Zin)40-46%  for 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 31% to 32% P₂O₅.The conversion ratio for most of the phosphate layers is 1.8 tonstonnes for every 1 cubic meter, where a conversion ratio of 2.0 tonstonnes 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.

In calculating the cut-offcut‑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, 20152018 are as follows: $709$651 per tontonne for green phosphoric acid, $1,374$1,286 per tontonne for WPA, $1,428$1,186 per tontonne for MKP, $1,083$290 per ton for soluble MAP, $364 per tontonne for GTSP, $193$153 per tontonne for GSSP, and $104$79 per tontonne for phosphate rock.

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In calculating the reserves, an average of the previous three years’ currency conversionexchange rates were used to ensure economic feasibility. The three-year average currency conversation rates used to calculate our reserves in the Southsouth as ofat December 31, 20152018 are as follows NIS 3.6943.68 per $1.00, $1.26$1.14 per €1.00 and $1.58$1.33 per £1.00.

The life of the mine at Rotem is approximately 75 years based on reserves of 1410 million metric tonstonnes of low organic/low magnesium phosphate.phosphate (given the current annual mining volume). 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 tonstonnes per year.

The life of the mine at Oron is approximately 64.5 years based on a reserve of 1914 million metric tonstonnes and an average production of 3.03 million metric tonstonnes per year of white phosphate. After proof ofphosphate (given 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.

current annual mining volume).

The life of the mine at Zin is approximately 11 years based on reserves of 35.534 million metric tonstonnes and a production of 3.1 million metric tonstonnes per year as follows:

follows (given the current annual mining volume): 

·

Low-organic phosphate—1.7 million metric tonstonnes per year

·

High-organic phosphate—1.1 million metric tonstonnes per year

·

Bituminous phosphate—0.3 million metric tonstonnes 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 —The Negev Desert”, we primarily use white/low organic phosphate rock in our operations, and we blend in bituminous 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 haveit has all the government approvals and permits necessary for ourits reserves in Israel.

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Spain

We are currently in the process of Contents

Spain

The following table sets forthpreparing our estimated potash reserves calculation for our Spanish mining operations, (all of which are wholly-owned by us) as of December 31, 2015 (latest date for which information is available):

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

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(1)

Amounts may not add upin part 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 usednew pending SEC regulations effective 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-site tons (multiplying area by layer thickness and mineral density); recovery (takes into account the values obtained historically during the mining2021. As of the Cabanasasdate of this report, we have not completed this work and, accordingly, current reserve estimates for our mining operations at our Cabanasses 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 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). ICL Iberia's (IBP) annual mining program is not defined according to minimum cut-off grades.

The cut-off grade calculations come from historical yield data and ICL 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-site, converts it into extracted ore based on ICL Iberia’s (IBP) mining method and estimates the plant yield depending on the grade. Later on, economic models give the cut-off figures currently 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-plant recovery, based on ICL 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 17 years of historical data at our Cabanasas and Vilafruns mines and the mining recovery ranges from approximately 65% to 75% by ICL 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. 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-year average market price used to calculate our reserves for potash per ton of productoperations in Spain as of December 31, 2015 is €249.4 per ton.

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2018 were not available and are not presented herein. See “Item 3 - Key Information— D. Risk Factors— Overestimation of mineral and resource reserves could result in lower than expected sales and/or higher than expected costs and may have a material adverse effect on our business, financial condition and results of operations".

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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 at December 31, 2015 is €0.796 per dollar.

The Suria plant utilizes ore mined from CabanasasCabanasses and Vilafruns and has a current capacity to produce approximately 530,000 tons850 thousand tonnes per annum of potash. The Sallent plant utilizes ore mined from Vilafruns and has a current capacity to produce approximately 500,000 tons500 thousand tonnes per annum of product; this plant is planned to be gradually shutdown as Suria is upgraded.

product.

The Company believes that it has all government approvals and permits necessary for ourthe reserves in Spain.

United Kingdom

The following table sets forth our estimated potash reserves for our United Kingdom mining operations (all

At the end of which are wholly-owned by us) asthe second quarter of December 31, 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 both2018, the south (onshore) andCompany ceased the north (offshore), for a seam having a height of 3.8 meters (though thinner sectionsproduction 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-year average market price used to calculate our reserves for potash per ton of product as of December 31, 2015 is £201 per ton.

The cut-off grade calculations were made on the basis of historical yield data and ICL 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-site, converts it into extracted ore with ICL UK’s mining method and estimates the plant yield depending on the grade. Economic modeling further gives the cut-off figures currently used by 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.

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-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 ICL 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% 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.

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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 theBoulby 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 depletionUK, due to continuing mining activities, changesfully depleted potash reserves and shifted to sole production Polysulphate™. As a result, we are no longer presenting reserve information for potash at ICL Boulby mine in geological interpretation and no new conversion of resources to reserves from ongoing exploration activities. In light ofaccordance with 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.

SEC Guide 7 rules.

In the Company’s mine in the United Kingdom, we believe there are vastsizable resources for the purpose of increasedcontinued production of polysulphatePolysulphate™ (a mineral used in its natural form as a fully soluble and natural fertilizer, for agriculture, a fertilizeralso used for organic agriculture and as a raw material for production of specialty fertilizers), the sale of which in commercial quantities began in 2012. Beginning in 2016, the Company has been in the process of transitioning from potash extraction and production to Polysulphate™ at its ICL Boulby mine. In 2018, ICL produced about 350 thousand tonnes of Polysulphate™ and sold about 330 thousand tonnes, for the total amount of about $40 million. The Company plans to improveis tracking this initiative and will obtain and provide reserve information in accordance with the SEC Guide 7 rules when this product becomes significant for the Company’s top line sales. As at the date of this Annual Report, our Polysulphate™ production capabilitiesat the ICL Boulby mine has generated about $40 million in sales and salescurrently is not considered material to the level of one million tons by 2020.

In calculatingCompany’s operations or financial results. Accordingly, the reserves, no currency conversion factors were used asCompany has not presented reserve information for Polysulphate™ at ICL 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 800 thousand tons.

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The Company believes that it will obtain renewal of all the government leases and licenses necessary for ourthe reserves in the United Kingdom.

China

Historically,

Haikou mine has 55 million tonnes (after deduction of 5%: losses 3% and dilution 2%) of proven reserves of phosphate rock which located in 4 separated blocks (blocks 1-4). The annual production capacity is around 2.5 million tonnes (in 2018 2.15 million tonnes were mined). The proven reserves are sufficient for almost 22 years at such rate. Another 4.4 million tonnes of phosphate is placed in several piles around the mine and this reserve will be fed to the flotation plant in the next few years.

The following table sets forth our estimated phosphate reserves in Haikou Mine as of December 31, 2018:

	Category	Low Organic Phosphate	Average Grade
		(millions of metric tonnes)	(% P2O5)

Block 1	Proven	3	21%
Block 2	Proven	5	21%
Block 3	Proven	30	22%
Block 4	Proven	17	22%
Total (Proven)		55

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The average quality of the phosphate is around 21.4% P₂O₅, and is divided into 3 grades: Grade I (highest grade) > 30% P₂O₅, Grade II- 24-30% P₂O₅ and Grade III- 15-24% P₂O₅. Around 20% of the phosphate has >27% P₂O₅ and is usually beneficiated in the scrubbing facility or in the flotation plant or in the grinding facility.

In determining these reserves, a cut-off grade of 15% P₂O₅ was applied in accordance with the flotation ability to produce usable concentrate rock (28.5% P₂O₅) which is the average quality required for the production of phosphoric acid in the Yunnan region. In practice, the Haikou Minemine is able to process and use all the phosphate that exists in the deposit. The phosphate layers’ borders are physically well defined, also has very low P₂O₅ content (usually around 5%), 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 Chinamining process 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 theleave any unmined 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,behind.

The three-year average market prices used to perform a more in-depth analysis of the mineral resourcescalculate our reserves in the Haikou Mine andmine as of December 31, 2018 are as follows: $394 per tonne for green phosphoric acid (MGA), $693 per tonne for white phosphoric acid (WPA), $906 per tonne for MKP, $223 per tonne for GTSP. 

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In calculating the Baitacun Mine, for purposes of obtaining a full calculationreserves, an average of the existing database and building aprevious three dimensional geological model and mining plan that will permit verification and confirmation of theyears’ currency exchange rates were used to ensure economic feasibility. The three-year average currency conversation rates used to calculate our 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, 2015,2018 are as follows NIS 3.68 per $1.00, $1.33 per £1.00 and 6.67 RMB per $1.00. 

The life of the mine at Haikou Mineis approximately 22 years based on reserves of 55 million tonnes (given the annual production (mining) capacity of around 2.5 million tonnes); this phosphate is suitable for phosphoric acid production.

The Company believes that we have all the government approvals and the Baitacun Mine do not have proven or probablepermits necessary for our 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.

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Logistics

Israel

Most

Part of the output of ourICL’s Dead Sea facilities is transported by a conveyor belt that extends forwas built over 18.1 kilometers to the railhead located at Tzefa in Mishor Rotem. TheRotem, and from there the output is transported to the Ashdod port. In addition, the Company also transports the output from Mishor Rotem toproduced at 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 portEilat port. Metal magnesium is transported by means of Eilat.

containers that are loaded on trucks from the Company's site in Sodom to the railhead at the Tzefa site. Thereafter, the Company transports the containers to the Haifa / Ashdod ports by means of train.

Most of ourICL’s products, whether in solid or liquid state, are transported in bulk from Rotem, Oron and Zin by road orand rail to either the Ashdod port of Ashdod or Eilat.by road to the Eilat port. From Eilat, ourICL’s 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 two1.8 million tonstonnes of products per year are transported by rail from the Rotem site to Ashdod. About a half a million tons150 thousand tonnes 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.tonnes. Approximately 200100 thousand tons of rock leave Zin by truck for delivery to the port of Eilat. In addition, 300 thousand tonstonnes are transported from Zin to Rotem for further processing. About 1processing, and about 1.1 million tonstonnes are transported from the Oron mine by truck for additional processing.

From Ashdod port, approximately 650 thousand tonstonnes of sulfursulphur are transported to Rotem each year. In addition, sulfurSulphur arrives at the port of Ashdod from overseas, where it is loaded into road-goingroad‑going trucks and transported to our sulfurthe Company’s sulphur 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.port. Sales of fertilizers and potash from Rotem and the Dead Sea are not shipped from the Haifa port since there isit has no infrastructure there for loading bulk products and the cost of overland transport is more expensive compared withthan transport to Ashdod.

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Spain

ICL Iberia (IBP) transports the minerals it mines from the Company’sCompany's mines to the production plants as well as potash and salt from the factories and the mines to its customers and the port.

Ore is taken by 25-ton25-tonne road haulage trucks from Cabanasses to Suria plant and a conveyor belt from Vilafruns mine to Sallent plant. After the Cabanasasprocessing is completed, various quantities of potash and Vilafruns minesdifferent types of salt are produced. The final product is transferred directly to the Suria and Sallent plants, respectively. The salt product is transportedcustomer by articulated truck, to an ICL Iberia-owned (IBP) terminus in the port of Barcelona. A or train/truck fleet comprises 25-27 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 tothrough the port. The mine also uses the port of Tarragona to export specific products.

A dedicateddesignated railway line is used for the transport of potash from the mines to the Barcelona port.

Most of the shipments of ICL Iberia (IBP) are made through a terminal it owns at the port of Barcelona (Trafico de Mercancias – Tramer).

A truck fleet with towing equipment having 25‑27 tonnes capacity each is used to transport the salt from the mine. Up to 120 trucks of salt per day are dispatched from the mine to the port.

ICL Iberia (IBP) owns and maintains approximately 1.5 kilometers and 3 kilometers of standard gauge railway at Suria and Sallent plants, respectively, that linkconnect to the nationalregional rail network. Each train set comprisesUntil now, up to three trains leave on a daily basis having a total payload capacity of 850 ton payload comprising approximately 20800 tonnes, spread out over about 21 freight cars. In the coming years, it is expected to increase to 24 freight cars, with two trains per working day.1,000 tonnes and up to seven daily trains. The rail route for potash transport from CabanasasSuria and Sallent to the terminal in the port of Barcelona comprises an 82about 80 kilometer rail route from(from Suria and Sallent to Manresa to the port of Barcelona and 88 kilometers from Vilafruns to the same destination.Barcelona). ICL Iberia (IBP) owns and operates its own port facilities, which compriseconsist of bulk saltpotash and potashsalt storage facilities, comprised of freight freight‑car and rail rail‑truck conveyor unloading facilities and product storage warehouses.

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The Cabanasas/the production sites, Suria (the Cabanasses mine) and Vilafruns/Sallent complexes(the Vilafruns mine), have one rail load out system each for the rail to port transport systems. The train traction engine and part of the bulk freight car rolling stock is operated by the owner and operator FFCC (FerrocarrilsdeFGC (Ferrocarrils de la Generalitat de Cataluña)Catalunya).

The From time to time, Tarragona port ofis also used for storage and loading when Barcelona installations are managed by ICL Iberia subsidiary TRAMER and comprises an area of 13 thousands square meters divided into three zones. port is unavailable.

As part of the plan for increasing ICL Iberia's (IBP) production capacity, an upgrade is being made of the logistical infrastructure at the Suria Site and in Cabanasses mine (entrance ramps into the mine), the factories and the Company's berth in the Barcelona port, in such a manner that will permit production, transport and export of about 2.3 million tonstonnes of potash and salt per year.

The facilities of the port of Barcelona are managed by ICL Iberia’s subsidiary Tramer and comprise an area of 13 thousand square meters divided into three zones. In order to support the expected operational expansion, the Company is in the process of setting up a new designed facility in the Barcelona port that will replace the current facility, and is making preparations for transition to use thereof. The new facility is expected to be constructed and operative towards the end of 2019 and has 56 thousand square meters and two storages. The new facilities allow to increase the train freight transport of salt and potash up to 2.3 million tonnes.

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United Kingdom

The Boulby mine in the United Kingdom is connected by a network of roads running over 11 kilometers southward from the mine entrance, as well as a network of underground roads extending 15.517.5 kilometers from the mine entrance in the direction of the North Sea. The total lengthCirca 80 kilometers of this network of roads is more than 1,000 kilometers.underground tunnels are still open to support present production. The mine has easy access to the national road and train transportation routes. The mine receives good quality drinking water and a stable supply 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 thousand tonstonnes per year and a maximum of 66 road wagons per day (no road movements are allowed on Sundays or bank holidays). This limitation is not expected to interfere with the future production of ICL UKBoulby in light of its commitment to maintain the rail link to Teesdock. ICL UK’sBoulby's roads and trains are in full compliance with all the requirements.

The mine has three separate integrated conveyor load-out systems, one for each product.

The rail load-outload‑out products are transported on an ICL UK-ownedBoulby‑owned rail line which extends approximately eight kilometers from the mine entrance to a junction with the national rail network, and from wherethere the products continue to Teesport, Middlesbrough, via the Network Rail Company, the owner and operator of the main rail line.

Eight trains per day transport Polysulphate™ and rock‑salt to the Teesdock. Most of the Polysulphate™ output is used as a component of agricultural fertilizers, where most of the quantity is exported by sea from the Teesdock seaport to customers overseas.

Rock‑salt is taken by train to Teesdock, and transported by ship to English and Scottish east coast ports for sale to local authorities for de‑icing roads.

ICL UKBoulby leases and operates three principal storage and loading facilities: the Teesdock facility, which is located on the Tees River, and two additional storage facilities that are connected to the iron rail – Cobra and Ayrton Works in Middlesbrough.

Eight trains per day transport rock-salt, potash and polysulphate to the Teesdock. Most of the output is used as a component of agricultural fertilizers: a large quantity of the output (about 50%) is exported by sea from the Teesdock seaport to European Union countries and other customers overseas.

Rock-salt is taken by train to Teesdock, and transported 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 factorymine, several factories for production of various types of fertilizers located close to the Haikou Mine,mine and two plants for production of performancedownstream products – one located close to the Haikou Minemine and the fertilizers factory and the other situated inproximate to the KummingKunming airport.

The

Most of the transport of the raw materials from the Haikou Mine are currentlymine to the acid factories is executed via pipeline (slurry), whereas a small part of the raw rock is transported by train to the 3C factory, while in the future they are expected to be transported via pipeline (slurry).

trucks.

Most of the output sold to the local market is transported from 3Cthe fertilizers factory directly to the customers in North China 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,sulphur, 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).

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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.

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Item 4A. Unresolved Staff Comments

4A – UNRESOLVED STAFF COMMENTS

Not Applicable.

Item 5. Operating and Financial Review and Prospects

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 changes in 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 partIn the execution of our business strategy, we are takingtake steps to adapt our marketing and production policies to evolving global market conditions. We are also focusing on improving ourconditions, improve cash flows, diversify sources of finance, strengthen our financial position and diversifying our financing sources, and we are committed to taking continuous actions to improveoptimize efficiency and reduceminimize costs.

We are an Israeli corporation,

In 2018 and we have significant production facilities in Israel. Accordingly, we are affected by the political, economic2017, approximately 49% and security conditions prevalent in Israel. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Operations in 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.” 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 2015, approximately 55%53%, respectively, of our sales revenue was derived from production activities taking place outside Israel and approximately 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 7%8%, respectively, 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.

dependent, or a single customer that accounted for more than 10% of the Company’s total sales revenue in 2018.

Energy expenses accounted for approximately 7% of our total operating costs in 20152018 and 2014. Of these2017, increased year over year by approximately 2%. Electricity expenses in 2018 and 2017 amounted to $163 million and $190 million, respectively, comprising 47% and 56%, respectively, of the total energy expenses. Natural gas expenses in 2018 and 2017 amounted to $123 million and $87 million, respectively, comprising 35% and 25%, respectively, of the cost of oiltotal energy expenses. Oil and oil products electricityexpenses in 2018 and 2017 amounted to $15 million and $16 million, respectively, comprising 4% and 5%, respectively, of the total energy expenses.

ICL is one of the largest natural gas represented approximately 7% ($21 million), approximately 50% ($153 million)consumers in Israel and approximately 26% ($79 million), respectively, in 2015 and approximately 9% ($30 million), approximately 49% ($170 million) and approximately 29% ($101 million), respectively, in 2014. Energy costs decreased in 2015 compared with the prior year by approximately 13%. The said decrease stems mainly from a decrease in production dueis taking measures 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.

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 ourits facilities is expectedin order to significantly reduce emissions of pollutants in the area surrounding ourits 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.

Marine transportation expenses were approximately 6%

(1)

In February 2018, the Company entered into two supply agreements with Tamar and “Leviathan” reservoir (hereinafter – the Agreements), to secure its gas supply needs until the end of 2025 or until the entry of the “Karish” and “Tanin” reservoirs into service, whichever occurs first. The gas price in the Agreements is in accordance with the gas price formulas stipulated under the government’s gas outline. The Company anticipates that the scope of the annual gas consumption will be about 0.75 BCM.

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The Company is entitled to terminate the Agreements in 2015order to start the new agreement with Energean Israel Ltd. (hereinafter – “Energean”), which was signed in December 2017. According to the new agreement, Energean will supply up to 13 BCM of natural gas over a period of 15 years, amounting to about $1.9 billion. Energean holds licenses for development of the Karish and approximately 7%Tanin gas reservoirs, which are located in 2014Israel’s territorial waters. Supply of our total operating costs. In 2015 and 2014, our marine transportation expenses amountedthe natural gas is expected to approximately $282 million and approximately $369 million, respectively. 2014 was characterized mainly by a general trend of falling bulk shipping prices, whereas 2015 was characterized by stable pricescommence, at the earliest, in the first half of 2021, depending on completion of the yeardevelopment and commencement of production of natural gas from the reservoirs, and will be used for running ICL’s factories and power stations in Israel. In November 2018, following the completion of Energean's Financial Closing, all precedent conditions for the closing of the agreement have been met. In November 2018, all conditions precedent to the agreement with Energean have been met. Signing of the above-mentioned agreement marked an important milestone for securing a sharpconsistent supply of gas to the Company’s facilities in Israel, at a competitive price in relation to current gas supply agreements.

Marine transportation expenses in 2018 and 2017 were approximately 7% and 6% of our total operating costs, respectively, and amounted to approximately $355 million and $306 million, respectively. The increase in marine transportation expenses is primarily attributed to the increase in marine transportation prices incompared to last year, as the third quarter, however in the fourth quarter themonthly average marine transportation price index (Baltic Dry Index – “BDI”) resumed its downward trend and fell below 500 points atfor 2018 was 17% higher than the end of December 2015. The trend continued into 2016. The average index (BDI) for 2015 was 35% less than themonthly 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.

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Our financial statements are preparedpresented 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,NIS and, consequently, 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.

In 2018, the Company's operational results were positively impacted by the upward revaluation of the dollar, mainly against the shekel. For further information see "Results of Operation" chapter below.

We hedge againstpart of our exposure to the risks described above, in respect of thewhich include exposure to sales and operating expenses that are not denominated in our functional currency, mainly operating expenses denominated in NIS and 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)(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 determinesdetermine the extent of our hedging activities, based on their estimation of our sales and operating expenses, as well as their expectations of the developments in the markets in which we operate. See “Item 11.“Item 11 - Quantitative and Qualitative Disclosures Aboutabout Market Risk—Risk ManagementManagement”.”

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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-quality considerations along with the aspirations of certain western countries to reduce dependence on oil imports, which have strengthened the trend of shifting to production of fuel from agricultural products (bio-fuels), affect the increase in global consumption of grains (cereals, rice, soybean, corn, etc.). These trends led to increased planting of grain crops worldwide and higher yields per unit of agricultural land, mainly through the increased application of fertilizers. In 2015, 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-fuels and the rate of growth of their use. The global expansion of production of bio-fuels is expected to 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 government support for bio- fuels. As a result, demand for bio- fuels feedstock also continues to grow more slowly. It is 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. The production of ethanol remained stable.

In 2015, prices of crop commodities dropped sharply in response to the 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. During January–February 2016, the grain prices hit their lowest level in the last 6 years.

Based on the new report published by the USDA in January 2016, an increase is expected in the ratio of the inventories of grains to annual consumption, to 23.0% at the end of the agricultural 2015/2016 year, compared with 22.8% at the end of the 2014/2015 agricultural year, and with 20.8% in the 2013/2014 agricultural 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-quality food to their residents, including by encouraging agricultural production, which should preserve the long-term growth trend of fertilizer consumption.

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In 2015, there was a decline in the demand for potash due to the worldwide economic slowdown, the drop in the 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 an IFA report from May 2015 the aggregate worldwide demand for potash for agricultural and other uses is expected to grow at an average annual rate of 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, potash shipments began to be based on "spot prices". In January 2016, ICL signed new framework agreements with its customers in China for supply of potash in the scope of about 3.4 million tons (including options) over the next three years. The selling price will be determined on the basis 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 in China whereby 3.3 million tons of potash were supplied in full (including options), 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 2015, the imports of potash into China reached a record high of more than 9.4 million tons - an increase of about 18% compared with 2014. In the Company's estimation, the imports into China in 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 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 quantity of 835 thousand tons, including options. In the Company’s estimation, the customers in India will not utilize the entire quantities covered by the contracts due to the accumulation of inventories.

Demand for potash in Brazil peaked in 2014, declined significantly in 2015 as a result of a fall in agricultural commodity products, weakness of the Brazilian currency and limitations on credit to farmers. In 2015, 8.3 million tons of potash were imported into Brazil, compared with 9.1 million tons in 2014 – constituting a decrease of 8.3%

The average prices in 2015 were significantly lower than in 2014. Since the beginning 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 currencies of the importing countries, a shortage of rainfall (mainly in India) and limitations on credit to farmers (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 the 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 first three quarters of 2014, however, in the fourth quarter of 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 lower than expected in the second 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, due to imposition of VAT in China that caused a decline in the local consumption and an increase in the scope of the exports. The new Saudi producer (Ma’aden) increased its exports this year, and the Moroccan phosphate company (OCP) placed a new factory into service, one out of four that are in the process of gradual construction. Due to the decline in demand, a number of major producers implemented a policy of contracting production: Mosaic, the U.S. fertilizer producer, reduced its production by an undefined quantity, the Jordanian manufacturer (JPMC) cutback production in the final 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.

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The prices of phosphate rock also declined in 2015, however more moderately than the phosphate Fertilizers and potash prices. The CFR prices fell by about ten percent. Part of the decline was offset by the decrease in shipping prices, such that the FOB price was impacted to a smaller extent.

The decline in prices of raw materials in the specialty fertilizers products market continued intermittently during 2015, as did the impact of the average selling prices in this year. However, the decline in the selling prices was higher than the rate of the decline in the raw materials prices. In addition, notwithstanding the decline in the selling prices and the changes in the currency exchange rates throughout 2015, the gross profit remained about the same as in 2014 (a decrease of 0.7%).

Trends Affecting Our Industrial Products Segment

segment

The operations of ourICL's Industrial Products segment are largely affected by the level of activitiesactivity in the electronics, construction, automotive, oil drilling, furniture, pharmaceutical, agro, textile and water treatment markets. In 2015, 41%2018, about 40% of the worldwide use of bromine was for flame retardants, 29%about 30% was for intermediates and industrial uses, 19%the rest was for clear brine solutions, 6% was forfluids, water treatment and 5% was for other uses.

In 2018, ICL sold approximately 240 thousand tonnes of Bromine compounds, 90 thousand tonnes of Phosphorous compounds, 40 thousand tonnes of Magnesia and Calcium products and 350 thousand tonnes of Dead Sea Salts.

Below are the trends of the business line main activities - 

Flame retardants: The trend of pressure exerted by “green” organizations in the area of environmental protection to reduce the use of bromine-based flame retardants is continuing. On the other hand, development and commercialization of new sustainable polymeric or reactive bromine-based flame retardants are being developed, along with regulationnew fire safety regulations in additionaldeveloping countries that increasesare serving to increase the use of bromine-based flame retardants. The worldwide economic slowdown, in general, and the slowdown in China, in particular, over the past several years triggered a slowdown inthese products.

In 2018, the demand for productsflame retardants used in the electronicsautomotive, enclosures and construction industries. This trend, along withTV industries as well as the declinetelecommunication market has increased. Another growth engine is the Internet of Things trend. In addition, 2018 was characterized by continuation of stricter environmental pressure in salesChina which had a very significant impact on availability of personal computers due to increased use of tablets and smartphones, caused a declinechemicals in the demand formarket and led to an increase in prices. Prices of bromine-based flame retardants in the printed circuits market, and creation of pressure on the prices of these flame-retardant products. Nonetheless, in 2015, there was a certain improvement in the demand for bromine-based flame retardants for some uses in the electronics sector, primarily in the automotive area. Phosphorous-based flame retardants were adversely impactedalso supported by the weakening of the euro against the dollar as well as by competition on the part of Chinese manufacturers.

Elemental bromine. In 2015,an increase in elemental bromine prices were relativelyin China.

Demand for phosphorous‑based flame retardants was stable and competitive pressure coming from China still exists. However, Chinese regulatory authorities continue to enforce stricter emissions standards during 2018, and marginal suppliers exited production when emissions standards could not be met. As a result, demand for some of ICL's products was higher during 2018 and prices increased. Chinese competitors resumed more of normal operations in the fourth quarter of 2018.

Elemental bromine: In 2018, continuing the trend from recent years, elemental bromine prices in China continued to increase, supported mainly by environmentally related regulation enforcement and resource depletion. Prices in the United States, Europe and India whereasincreased as well.

Clear brine fluids: The demand for clear brine fluids for the oil and gas drilling market was back to its previous level as the price of the Oil and Gas went up. There was relatively high level of activity in the Gulf of Mexico, as well as in South America and Israel.

Biocides: The global supply was affected by the environmental constraints on production set in China. As a result, demand for some of ICL’s products was higher during 2018 and prices increased.

Inorganic bromides: As of April 2016, the new regulations for mercury emission control in the US are fully effective, meaning that all coal power plants are required to comply with the emission reduction rules. Nevertheless, low natural gas prices and retirements of old coal power plants which doubled in 2018 compared to 2017, negatively impacted demand. In addition, there was a moderate increase in demand for additional bromine‑based products as a result of improving demand in the agrochemicals markets.

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Phosphorous-based industrial compounds: overall stable demand correlated to GDP growth. In developing countries, demand growth is more significant due to higher rates of establishment of new power stations.

Organic bromine compounds: Overall stable demand correlated to GDP growth and driven by an improvement in the demand for agrochemical inputs.  In addition, due to the environmentally related regulation pressure in China, the demand for ICL's products increased during 2018.

Magnesia Products: The demand for magnesia products showed a slight increase due to increased global demand for healthy food and mineral supplements. On top of that there is also high demand for pure Magnesium for industrial use such as fuel additive and glass application.

Solid MgCl₂, Pure and packed KCl: 2018 was characterized by "average" winter in the eastern parts of USA which increased sales of deicing MgCl2 compared to last year. There was a slight growth in the demand for technical grade KCl for the oil drilling market and higher sales of new product launched this year for animal feed with GMP+ certification. For the pure KCl we witness strong competition with new companies that established new plants and the worldwide capacity increased significantly which increased the competition in this market.

Trends Affecting Potash Segment

Potash prices increased significantly,throughout 2018 supported by record potash demand of 66.8 million tonnes, growth of 0.3% compared to 2017 (according to CRU August 2018 and Fertecon December 2018), as well as low availability of potash due to, among other things, slower than expected ramp-up of new capacity. Prices remained firm into the off-season period of 2018 year-end and early 2019, which may be considered as a positive indication going forward. According to CRU (Fertilizer Week Historical Prices, January 2019) the average spot price of granular potash imported to Brazil during 2018 was $320 per tonne (CFR), up by approximately 22% compared to 2017.The average spot price of standard potash exported from Vancouver during 2018 was $241 per tonne (FOB), up by approximately11% compared to 2017.

The Grain price index, which peaked during the second quarter of 2018, decreased during the third quarter mainly due to the trade dispute between the US and China and remained stable during the fourth quarter of 2018. On an annual basis, corn and wheat prices ended the year higher compared to 2017, year-end while soybean and rice prices decreased. According to the USDA's WASDE report (World Agricultural Supply and Demand Estimates) from February 2019, the grains stock-to-use ratio for the 2018/2019 agricultural year is expected to decrease to 29.2%, compared with 31.3% at the end of the 2017/2018 agricultural year and compared with 30.6% in the 2016/2017 agricultural year. This trend of lower stock‑to‑use ratio may be supportive for fertilizer demand.

The FAO (Food and Agriculture Organization of the UN) published in December its updated forecast for the global cereal production in 2018 to 2,595 million tonnes, which is 62.5 million tonnes (2.4%) below last year’s record high.

According to official Chinese customs statistics via China Fertilizer, potash imports to China in 2018 reached 7.49 million tonnes, a 1% decrease compared to last year.

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According to the FAI (Fertilizer Association of India), potash imports during 2018 amounted to 4.37 million tonnes, a 1% increase over the imports during 2017.

According to ANDA (Brazilian National Fertilizer Association), potash imports to Brazil during 2018 were over 10.0 million tonnes, surpassing last year's record by 9%.

During 2018, the new (Greenfield) mines experienced slower than expected ramp-up, partly due to operational challenges. According to market observers K+S experiences some difficulties with the granulation stage production process in its Bethune mine in Saskatchewan (Canada), which started producing potash in June 2017, led it to deliver standard MOP to the Far East including China. In addition, K+S, closed its Sigmundshall site in Germany (capacity of 0.75 million tonnes per year in 2017). EuroChem, has cut its forecast for 2018 output from its new mines in Russia, Usolskiy (expected nameplate capacity of 3.7 million tonnes per year in 2024) and Volgakaliy (expected nameplate capacity of 4.6 million tonnes per year in 2024) to a total of about 0.3 million tonnes. Turkmenhimiya's new potash mine (Garlyk) in Turkmenistan, which was inaugurated in March 2017 (nameplate capacity of 1.4 million tonnes per year), is believed to be inoperable. Slavkaliy's Nezhinsky potash project in Belarus (expected nameplate capacity of 2 million tonnes per year) ramp-up is expected to be delayed from 2020 to 2022. Belaruskali's Petrikov project (expected nameplate capacity of 1.5 million tonnes per year in 2022) ramp-up is expected in 2020. 

Mosaic commissioned the new production skip at its Esterhazy K3 mine in Saskatchewan (Canada) in December 2018. This Brownfield project is expected to reach its full operational capacity (7.35 million tonnes per year) by 2024. In Russia, there were reports of flooding at Uralkali's Solikamsk 2 mine, although it seems like there was not a significant impact on the Uralkali's production as it continued its production from the adjacent Solikamsk 1 mine. Lao Kaiyuan is expected to expand the nameplate capacity of its Khammouans site in Laos from 0.5 to 1.5 million tonnes per year until 2021. It should be mentioned that nameplate capacities are in accordance with Informa (Fertecon) Potash Outlook Report - December 2018. Other information is in accordance with CRU Fertilizer Week.  

Global demand for magnesium remains constrained in China, Brazil and Europe. This was partly offset by trade actions by US that have pushed up prices in the steel, aluminum and automotive sectors, which in turn has caused a resumption of domestic production, and consequent demand for raw materials, including magnesium.

Part of the Company's strategy is to grow the FertilizerpluS platform, mainly by utilizing Polysulphate as a base for a product portfolio which includes PotashpluS, PKpluS and other products. PotashpluS commercial launch took place in the fourth quarter of 2018. In addition, NPS fertilizer was launched in the YPH JV in China and the product is marketed in China and other markets. The favorable quality of ICL’s NPS compared to other NPS products contributes to solid demand. Sales of FertilizerpluS in 2018 totaled $114 million. Towards the end of 2018, ICL has signed a new agreement of Polysulphate and its derivatives with its customers in China for 2019 in a total quantity of 89 thousand tonnes.

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Trends Affecting Phosphate Solutions Segment

The phosphate fertilizers market was firm during the first three quarters of 2018 and weakened during the fourth quarter, as prices softened in light of the agricultural season ending at the major phosphate fertilizers importing countries, mainly in India (DAP) and in Brazil (MAP). Prices continued to moderate in the beginning of 2019 and market observers are forecasting that this trend will continue during the first half of 2019, followed by a stabilization in the second half of the year.

Clear brine solutions. Despite the sharp drop in oil prices in 2015, the demand Demand for phosphate rock and green phosphoric acid continued to be strongfirm during the fourth quarter of 2018. 

Average prices (according to CRU - Fertilizer Week Historical Prices, January 2019):

$ per tonne	1-12/2018	1-12/2017	% vs 2017
DAP (Bulk CFR India Spot)	423	363	17%
TSP (Granular Bulk FOB Morocco Spot)	338	277	22%
MAP (Granular Bulk CFR Brazil Spot)	438	369	19%
Phosphate Rock (68-72% BPL) (FOB Morocco Contract)	91	90	1%

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Sulphur prices increased during most of 2018 but started to moderate from November 2018. Average sulphur prices in 2018 (Bulk crushed lump and gran CFR price China) were $154 per tonne, compared to $122 per tonne in 2017 and compared to $126 currently (according to CRU - Fertilizer Week Historical Prices, February 7, 2019). Market observers are forecasting that the downward trend will continue during the first half of 2019, mainly due to the weakening of the phosphates market.    

According to IFA's (International Fertilizer Association) Short-Term Fertilizer Outlook 2018–2019, global phosphate fertilizers demand in 2017/2018 increased by 2% compared with 2016/2017. The ramp-up of Wa'ad Al Shamal (Saudi Arabia) project of Ma'aden, Sabic and Mosaic is slower than expected. Furthermore, Mosaic has shut down its Plant City phosphate facility (US). In addition, OCP's (Morocco) maintenance work as well as Chinese export reduction in the market for clear brine solutions for oil and gas drillingfourth quarter of 2018 have contributed to the above.          

According to IHS Markit data, Brazil imported 9 million tonnes of granular phosphate during 2018, a 0.9% increase compared to 2017. This is due to workincreases in SSP, TSP and NPK, which were offset by lower MAP, DAP and NP/NPS imports.

The Moroccan producer, OCP, secured 2019 first-quarter phosphoric acid contracts with its Indian partners at $750 per tonne P₂O₅ CFR, a decrease of $18 per tonne compared to the fourth-quarter of 2018.

According to the FAI (Fertilizer Association of India), DAP imports during 2018 increased by 49.7% to 5.99 million tonnes compared to 2017. On the other hand, domestic DAP production, decreased by 26.7% respectively to 3.55 million tonnes, mainly due to the increase in phosphoric acid contract price, but also due to the Indian rupee recovery against the US dollar during the fourth quarter of 2018, which together with a DAP domestic subsidy policy, have formed an economic preference for DAP import to India over its local production.

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ICL's Phosphate Specialties business benefited from strong performance despite increasing global competitive pressure in certain regions. The business was successful in executing value oriented pricing approach in all regions. The pricing strategy over-compensated increased costs of major raw materials.

The business benefited from increased demand for acids from existing customers as well as new customers that had been started beforeused to import previously from Asia, especially in Europe.

Sales volumes of phosphate-based food additives in Europe decreased due to increased competition and the decreasetransition to a new distributor in oil prices.

Biocides. Demand for bromine-based biocides used forRussia.

The salts business was impacted by higher transportation expenses caused by the low water treatment began displaying a mixed trendlevel of Rhine River in 2015. Demand for biocides used for onshore gasQ4 2018, but this has normalized during December.

In North America, industrial salts and oil fracking decreased significantly, following the sharp drop in petroleumacids benefited from favorable market conditions with increased prices which led to reduced shale gas drillingsand improved volumes while food salts experienced volume losses in the United States.

lower value-added product lines.

In South America the phosphate salts and acids performance was stable through 2018, however market conditions were negatively impacted at the end of the year by increased low priced Chinese imports. These volume losses could be offset with the pricing strategy.

Continued growth of the P₂O₅ business in China was driven by increased local market share of the YPH JV as well as diversification of the acid customer base. The activities of ICL Industrial Productsgroundbreaking ceremony for the new food grade white phosphoric acid plant 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 activitiesYPH JV took place in the United States) in March 2016. The Company’s activities in this area will focus on bromine-based biocide activities.

Inorganic bromides. In 2015, the trend of increasing demand in the market for inorganic bromides for neutralizing mercury (Merquel® products) continued. This trend stemmed mainly from demand by power stationsAugust, as part of the preparationsCompany's strategy to increase specialty products production and sales. The 70 thousands tonnes P₂O₅ capacity plant is expected to be completed during the fourth quarter of 2019. 

The Paints and Coatings business experienced strong performance during the year benefiting from continuing R&D efforts.

The vegetarian and flexitarian consumer behavior still shows an increasing demand for healthier food, which led, in response, to new developments in food salts and additives product portfolio. Phosphate Specialties business has further developed its ROVITARIS® line for meat replacements and is continuously working on strategic partnerships to extend the market activities.

The Dairy protein business experienced improved demand of a key account in the Chinese market and benefited from the ongoing customer base diversification and continuous focus on developing organic dairy solutions for the entryinfant food industry. In July 2018, ICL divested and transferred the assets and business of Rovita GmbH which produces a commodity milk protein. In 2018 the business reported sales of $16 million and operating loss of approximately $3 million compared to $32 million in sales and $4 million in operating loss in 2017.

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Trends affecting Innovative Ag Solutions segment

Innovative Ag Solutions segment is active in two main markets: agriculture and turf & ornamental markets. The specialty fertilizers business is characterized by higher efficiency resulting in higher prices and lower quantities compared to the traditional commodity fertilizers.

Traditional Commodity producers continue to step into effect in 2015the specialty fertilizers markets, offering specialized, higher value and higher price products. Consolidation is another global trend, characterized by mergers of a new regulatory system in the U.S. that requires reduction of mercury emissions.

On the other hand, there was a decline in demand for additional bromine-based products as a result of the weakening of the agrochemicals marketslarge fertilizer suppliers as well as an increaseacquisition of small specialty fertilizer players by the large input players.

Specialty Agriculture markets

The specialty agriculture markets include all open field crops (rice, maize, potatoes etc.), orchards and greenhouses.

ICL's offerings for the specialty agriculture sector include three main product groups: (1) Soluble fertilizers, which includes water-soluble straights (such as MKP, MAP and Pekacid), and water‑soluble NPK; (2) controlled release fertilizers (CRF), and; (3) liquids NPKs.

Specialty agriculture markets are constantly growing, driven by global population growth, lack of arable land and regulation. New regulations, both local and national, requires limiting the amount of fertilizers applied, thus increasing the usage of efficient fertilizers application. An example for such regulation can be found in competitionlimiting the nitrogen usage in China, and controlling the nitrogen leaching in some countries in Europe. demand growth is significant in China, India and Brazil while in Europe growth is more moderate. This growth was inhibited by economic crises in Turkey, but this market is gradually recovering since early 2019.

The competitive landscape in the polyester fibers industry.

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soluble fertilizer markets continues to develop, with commodity players, such as Eurochem, strengthening their position in the specialty markets with full range offer of water soluble MAP, water soluble NPK and NOP.

Table

The CRF markets are under pressure in China – which shows the highest growth alongside increased production capacity (mainly from Kingenta), as well as in the US, although the main capacity increase can be found in the lower quality CRF type (e.g. Pursell in Alabama).

Turf and Ornamental Horticulture

Turf and Landscape

The Turf and Landscape market is the market for professional turf (i.e. golf & sport fields) and the landscape & lawn service market.

The market for specialty fertilizers in Europe in 2018 was mainly impacted by the late Spring and the severe drought during the Summer of Contents

Trends Affecting Our Performance Products Segment

Food Specialties. During 20152018. This limited the number of applications of granular fertilizers during the season in golf and sport fields. However, the drought drove demand for phosphate based Food products grew mainlyliquids & wetting agents. Usually after a drought demand for seeds increase due to the acquisition of a Food Specialties businessneed to renovate the turf.

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The Landscape market is growing fast in Europe which expanded the portfolio offeringsdue to the whey protein markets. The main phosphate defined phosphates business encountered headwindsfact that more consumers use professional landscapers.

Prices of raw materials and end products remained relatively flat during 2018.

There is a slow but noticeable trend of consolidation in the Europeandistribution chain in the Turf & Landscape market.

Ornamental Horticulture

The Ornamental Horticulture market includes container nursery growers, pot-plants and Russian marketsbedding plants. Global demand has moderately recovered due to the improvement in global economy contributing to the housing and landscape market.

The drought in Europe improved demand for plants as consumers and public gardens are renewing their weak economies. plants who suffered from the high temperatures.

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 existedthe US the market for specialty fertilizers in the first halfornamental horticulture market remained competitive. In 2018 capacity as well as number 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 stable 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 share in response to anticipated excess capacity in the 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 demandsuppliers 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 of the euro during 2015 was mostly offset by the decline in costs in dollar terms in the companies operating in Europe. The 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 strategic core businesses. Although these divestments were concluded by the end of the second quarter 2015, the Company continues to provide manufacturing and infrastructure services to certain buyers of the divested businesses from its existing facilities in Germany under the terms of the sales agreements.

controlled release fertilizers increased.

Expected Expenses for Equity Compensation Plans

Remuneration granted in 2014 and 2015

As at December 31, 2015, we had made

Based on the followingexisting grants under our 2014 Equity Compensation Plans:

Following the approval of the Company’s Board of Directors on August 6, 2014, under the 2014 Equity 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 under the 2014 Equity Compensation Plan. 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 plan includes a “cap”expected expense for the value of a share where if, as at the exercise date, the closing price of an ordinary shareperiods ended December 31, 2019, December 31, 2020 and December 31, 2021 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 optionsapproximately $6.3 million, $2.1 million, 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, 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.

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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, 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 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 ManagementNote 21 to our Audited Financial Statements.

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Adjustments to reported operating and Employees—E. Share Ownership—net income (Non-GAAP financial measures)

We disclose in this Annual Report non-IFRS financial measures titled adjusted operating income and adjusted net income attributable to the Company’s shareholders. Our management uses adjusted operating income and adjusted net income attributable to the Company’s shareholders to facilitate operating performance comparisons from period to period.  We calculate our adjusted operating income by adjusting our operating income to add certain items, as set forth in the reconciliation table below. Certain of these items may recur. We calculate our adjusted net income attributable to the Company’s shareholders by adjusting our net income attributable to the Company’s shareholders to add certain items, as set forth in the reconciliation table below, excluding the total tax impact of such adjustments and adjustments attributable to the non-controlling interests.

You should not view adjusted operating income or adjusted net income attributable to the Company’s shareholders as a substitute for operating income or net income attributable to the Company’s shareholders determined in accordance with IFRS, and you should note that our definitions of adjusted operating income and adjusted net income attributable to the Company’s shareholders may differ from those used by other companies. However, we believe adjusted operating income and adjusted net income attributable to the Company’s shareholders provide useful information to both management and investors by excluding certain expenses that management believes are not indicative of our ongoing operations. Our management uses these non-IFRS measures to evaluate the Company's business strategies and management's performance. We believe that these non-IFRS measures provide useful information to investors because they improve the comparability of the financial results between periods and provide for greater transparency of key measures used to evaluate our performance.

The table below reconciles total adjusted operating income and total adjusted net income attributable to the shareholders of the Company, to the comparable IFRS measures:

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	For the Year Ended December 31,
	2018	2017	2016	2015	2014
	US$ millions

Operating income (loss)	1,519	629	(3)	765	758
Impact of employee strike (1)	-	-	-	248	17
Capital (gain) loss (2)	(841)	(54)	1	(215)	(36)
Impairment of assets (3)	19	32	489	90	71
Provision for early retirement and dismissal of employees (4)	7	20	39	48	-
Provision for legal claims (5)	31	25	5	38	149
Provision for historical waste removal and site closure costs (6)	18	-	51	20	-
Other	-	-	-	-	1
Total adjustments to operating income (loss)	(766)	23	585	229	202
Adjusted operating income	753	652	582	994	960
Net income (loss) attributable to the shareholders of the Company	1,240	364	(122)	509	464
Total adjustments to operating income (loss)	(766)	23	585	229	202
Adjustments to finance expenses (7)	10	-	38	-	31
Total tax impact of the above operating income & finance expenses adjustments	(7)	(4)	(81)	(58)	(64)
Tax assessment and deferred tax adjustments (8)	-	6	36	19	62
Adjustments attributable to the non-controlling interests	-	-	(5)	-	-
Total adjusted net income - shareholders of the Company	477	389	451	699	695

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This table includes various adjustments that were presented in separate lines in prior years. The adjustments are the same as in prior years and only the tabular presentation has changed.

(1)  Loss due to the strike that occurred in the Company’s facilities in Israel – in 2014 Equity Compensation Plan.”

The fairin ICL Rotem and in 2015 in DSW and ICL Neot Hovav.

(2) Capital loss (gain) from sale of low synergy businesses, transaction expenses relating to sale and acquisition of businesses and gain from consolidation and deconsolidation of businesses. In 2014, income from consolidation of previous equity method investee (increase in the rate of holdings from an investment accounted for using the equity method of accounting), in respect of a company in Brazil. In 2015, capital gain deriving mainly from the sale of low synergy business activities and from consolidation of previous equity method investee (Allana Afar). In 2017, capital gain from IDE divestiture, capital gain from the deconsolidation of Allana Afar in Ethiopia and additional consideration received regarding earn-out of 2015 divestitures. In 2018, capital gain from the sale of the Fire Safety and Oil Additives (P₂S₅) businesses. See also – Note 10 to our Audited Financial Statements.

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(3)  Impairment in value and write down of assets. In 2014, with respect to a write down of assets of a subsidiary 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, and impairment in the 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 issuanceactivities classified as “held for sale” pursuant to our CEO by the general meeting of our shareholders will be considered the grant date, and the fairIFRS 5 in Europe. In 2015, with respect to impairment in value of the CEO’s grant will be re-measured upon such approval. The fairactivities classified as “held for sale” pursuant to IFRS 5 in Europe and in the United States and impairment in the value will be expensed over the vesting periods (for a descriptionof assets of the vesting periods, see “Item 6. Directors, Senior Management and Employees—E. Share Ownership—The 2014 Equity Compensation Plan”). The expected expense forBromine facilities in Israel in view of the periods ended December 31, 2016, December 31, 2017 and December 31, 2018 is about $12.6 million, about $6.3 million, and about $2.0 million, respectively.

In addition, In August 2014, ICL’s Board of Directors decided to approve a long-term remuneration plan for approximately 11,800decision of the Company’s non-managerial employeesmanagement regarding the continued use of various facilities on the Company's sites. In 2016, with respect to the write down of assets (including closure cost) relating to the global ERP project (Harmonization Project), write down of assets relating to discontinuance of the activities of Allana Afar in IsraelEthiopia (including closure cost), and overseas, who are not managers that participatedimpairment in the Company’s optionsvalue of assets of a subsidiary in the United Kingdom. In 2017, relating to impairment of an intangible asset in Spain, write-down of an investment in Namibia and shares plan (that was approved onimpairment of assets in China and the same date),Netherlands. In 2018, write-off of Rovita’s assets following its divestment and write-off of an intangible asset regarding a specific ICL R&D project related to ICL’s phosphate-based products. See also – Note 13 to our Audited Financial Statements.

(4) Provision for early retirement and dismissal of employees in accordance with the terms stipulatedCompany’s comprehensive global efficiency plan in its production facilities throughout the group. In 2015, with respect to the Bromine’s facilities in Israel and the Company’s facilities in the plan. The maximum costUnited Kingdom. In 2016, with respect to the Bromine’s facilities in Israel, the Company’s facilities in the United Kingdomand the facilities of the plan is approximately $17 million. As atjoint venture in China (reflected also in the date of this Annual Report,non-controlling interests’ adjustment below). In 2017, provisions relating to ICL Rotem’s facilities in Israel, and to subsidiaries in North America (Everris NA Inc.) and Europe (Everris International B.V and BK Giulini GmbH). In2018, provision relating to the conditionsCompany’s facility in the United Kingdom (ICL Boulby). See also – Note 18 to our Audited Financial Statements.

(5) Provision for the aforesaid plan were not met and therefore no liability was includedlegal claims. In 2014, provision in connection with prior periods in respect of this plan.

royalties’ arbitration in Israel. In 2015, stemming mainly from provision in connection with prior periods in respect of costs of management services of the electricity system in DSW and ICL Rotem, pursuant to the Israeli Public Utilities Authority Electricity's resolution from 2015, to impose certain electricity system management services charges also on private electricity producers as opposed to only on private consumers, retroactively from June 2013, a provision in connection with prior periods in respect of royalties’ arbitration in Israel  and the settlement agreement that ended the Class Action brought by the farmers in Israel regarding potash prices. In 2016, stemming mainly from a provision in connection with prior periods in respect of royalties’ arbitration in Israel, the arbitration award ending the commercial price dispute with Haifa Chemicals and reversal of the provision for retroactive electricity charges in connection with prior periods. In 2017, a provision following the judgement relating to a dispute with the National Company for Roads in Israel regarding damage caused to bridges by DSW, a provision following a decision of the European Commission concerning past grants received by a subsidiary in Spain, a provision relating to claims for damages related to the contamination of the water in certain wells at the Suria site in Spain, a provision in connection with prior periods in respect of royalties’ arbitration in Israel, reversal of the provision for retroactive electricity charges in connection with prior periods, and settlement of the dispute with Great Lakes(a subsidiary of Chemtura Corporation). In 2018, an increase of a provision in connection with prior periods in respect of royalties’ arbitration in Israel, partly offset by a VAT refund related to prior periods in Brazil (2002-2015). See also – Note 20 to our Audited Financial Statements.

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(6) Provision for removal of waste in respect of prior periods and site closure costs. In 2015, in respect of removal of historical waste stemming from bromine production at the facilities in Israel in light of the government’s requirement to accelerate the waste removal schedule leading to additional cost of implementing a different technology. In 2016, provision for closure costs in the Sallent site in Spain related to the purification and removal of historical waste from the potash activities as a result of decisions made by the Spanish authorities in connection with the plan for treating the salt pile in the Sallent site leading to plan changes mainly related to the water pumping process involved in the salt treatment, and an increase of the provision in 2018 for the Sallent site closure costs as part of the restoration solution.

(7)  Interest and linkage expenses, mainly in connection with the royalties’ arbitration and tax assessments in Israel and Belgium relating to prior periods. In 2014, in connection with the royalties’ arbitration relating to prior periods. In 2016, in connection with the royalties’ arbitration relating to prior periods, and relating to a tax assessment in Israel relating to prior periods. In 2017, provision in light of a decision of the European Commission above and income following the resolution of the Appeals Court for Tax matters in Belgium. In 2018, increase of provision related to the royalties’ arbitration in Israel. See also – Note 17 and Note 20 to our Audited Financial Statements.

(8) In 2014, relating to a provision for taxes as a result of a change in Spain's Supreme Court judgment relating to prior periods. In 2015, relating to deferred taxes adjustment of prior periods in the magnesium. In 2016, relating to tax assessment in Israel and Belgium relating to prior periods. In 2017, tax provision as a result of an internal transaction in preparation of low synergy business divestitures (it should be noted that the capital gain from the divestment of the Fire Safety and Oil Additives (P₂S₅) businesses was adjusted in 2018) and tax income relating to the resolution of the Appeals Court for Tax matters in Belgium. See also – Note 10 and Note 17 to our Audited Financial Statements.

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Results of Operations

We have based the

The following discussion is based on our consolidated financial statements. Youstatements and should be read the following discussion together with our consolidated financial statements.

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We have presented below, a discussion of Contents

the period-to-period changes in the Company’s results of operations, and the primary drivers of these changes. These discussions are based in part on management’s best estimates of the impact of the main trends in its businesses. 

Year Ended December 31, 20152018 Compared to Year Ended December 31, 2014

2017

Set forth below are our results of operations for the years ended December 31, 20152018 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

2017.

	For the Years Ended December 31,		% Increase (Decrease)
	2018	2017
	$ millions	$ millions

Sales	5,556	5,418	3%
Cost of sales	3,702	3,746	(1)%
Gross profit	1,854	1,672	11%
Selling, transport and marketing expenses	798	746	7%
General and administrative expenses	257	261	(2)%
Research and development expenses	55	55	-
Other expenses	84	90	(7)%
Other income	(859)	(109)	688%
Operating income	1,519	629	141%
Finance expenses, net	158	124	27%
Share in earnings of equity-accounted investees	3	-	-
Income before income taxes	1,364	505	170%
Provision for income taxes	129	158	(18)%
Net income	1,235	347	256%
Net income attributable to the shareholders of the Company	1,240	364	241%
Earnings per share attributable to the shareholders of the Company:
Basic earnings per share (in dollars)	0.97	0.29	235%
Diluted earnings per share (in dollars)	0.97	0.29	235%

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Results of operations for the year 2018

	Sales	Expenses	Operating income
	$ millions

YTD 2017 figures	5,418	(4,789)	629
Total adjustments YTD 2017 *	-	23	23
Adjusted YTD 2017 figures	5,418	(4,766)	652
Divested businesses 2017	(343)	221	(122)
Adjusted YTD 2017 figures (excluding divested businesses)	5,075	(4,545)	530
Quantity	(87)	77	(10)
Price	419	-	419
Exchange rate	99	(93)	6
Raw materials	-	(88)	(88)
Energy	-	(2)	(2)
Transportation	-	(41)	(41)
Operating and other expenses	-	(64)	(64)
Adjusted YTD 2018 figures (excluding divested businesses)	5,506	(4,756)	750
Divested businesses 2018	50	(47)	3
Adjusted YTD 2018 figures	5,556	(4,803)	753
Total adjustments YTD 2018 *	-	766	766
YTD 2018 figures	5,556	(4,037)	1,519

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* See "Adjustments to reported operating and net income (Non-GAAP)" above.

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Sales –  the Company sales increased by $138 million compared to 2017. The increase derives mainly from an increase in the selling prices of potash (a $42 increase in the average realized price per tonne compared to the corresponding period last year), phosphate fertilizers, phosphate-based acids and food additives (as part of the value-focused strategy), specialty agriculture products and a positive price impact throughout most of Industrial Products segment’s business lines (see 'Price' above), as well as a positive exchange rate contribution, mainly due to the average upward revaluation of the euro against the dollar (see ‘Exchange rate’ above) and an increase in the quantities sold of dairy proteins, bromine- and phosphorous-based flame retardants and specialty agriculture products (part of the change in the ‘Quantity’ line above).

The increase was partly offset by the divestiture of the Fire Safety and Oil Additives businesses (see 'Divested businesses' rows above) and a decrease in the quantities sold of potash, phosphate fertilizers and phosphate-based acids and food additives (see ‘Quantity’ above).

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Cost of sales – the cost of sales decreased by $44 million compared to 2017. The decrease derives mainly from the divestiture of the Fire Safety, Oil Additives and Rovita businesses (see 'Divested businesses' rows above) together with a decline in the quantities sold of potash, phosphate fertilizers and phosphate-based acids and food additives (see ‘Quantity’ above).

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The decrease was partly offset by an increase in raw materials prices, mainly Sulphur, which increased costs of main raw materials throughout the phosphate value chain, raw materials used for bromine- and phosphorous-based flame retardants and various raw materials used for products of Innovative Ag Solutions segment (see ‘Raw materials’ above) together with the average upward revaluation of the euro against the dollar, which increased production costs (see ‘Exchange rate’ above) and an increase in the quantities sold of dairy proteins, bromine- and phosphorous-based flame retardants and specialty agriculture products (see ‘Quantity’ above).

-

Selling and marketing – selling and marketing expenses increased by $52 million compared to 2017. The increase derives mainly from an increase in marine transportation prices and exchange rate fluctuations (see ‘Transportation’ and ‘Exchange rate’ above).

-

General and administrative – general and administrative expenses decreased by $4 million compared to 2017. The company successfully maintained low level of general and administrative expenses following the efficiency measures that took place in 2017.

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Other income, net - other income, net, increased by $756 million compared to 2017. The increase derives mainly from capital gain recorded from the sale transaction of the Fire Safety and Oil Additives businesses, partly offset by capital gains recorded in the previous year related to divestiture of businesses, mainly IDE (see ‘Adjustments to reported operating and net income – Non-GAAP financial measures’ above).

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

	Year Ended December 31,
	2018	2017
	$ millions	$ millions

Europe	1,970	1,918
Asia	1,488	1,342
North America	978	1,175
South America	712	666
Rest of the world	408	317
Total	5,556	5,418

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Europe – the increase derives mainly from an increase in the year ended on December 31, 2015 amounted to $5,405 million, comparedquantities sold and selling prices of potash and bromine-based flame retardants, quantities sold of specialty agriculture products, selling prices of phosphorous-based flame retardants, together with $6,111 millionthe positive impact of the average upward revaluation of the euro against the dollar. The increase was partly offset mainly as a result of divested businesses together with a decline in the corresponding period last year.green phosphoric acid quantities sold.

Asia – the increase derives mainly from an increase in quantities sold of dairy proteins and specialty agriculture products, together with an increase in the selling prices of potash, phosphate fertilizers and bromine‑based flame retardants and industrial solutions. The increase was partly offset by a decline in green phosphoric acid quantities sold.

North America – the decrease is attributablederives mainly tofrom divestiture of the Fire Safety and Oil Additives (P₂S₅) businesses and a 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. Thispotash. The decrease was partly offset by an increase in the selling prices and quantities sold of phosphate fertilizers, quantities sold of clear brine fluids and phosphorous-based flame retardants and selling prices of potash.

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South America – the increase derives 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 andfrom 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.

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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 potash 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 resultsold.

Rest of the strike, andworld – the increase derives mainly 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 of dairy proteins products, clear brine fluids and selling priceelectricity surplus to third parties from ICL's new power plant in Sodom. 

Financing expenses, net

The net financing expenses in 2018 amounted to $158 million, compared with $124 million last year – an increase of $34 million. The change derives mainly from an increase in respect of the green phosphoric acidchange in India. In addition, there was a decline in sales in North America, mainly due to a decreaseexchange rate differences and hedging transaction results, in the quantities and priceamount of the potash sold, which is partly the$36 million.

An additional increase of $10 million derives from interest on past royalties recognized in 2018 as a result of a decision in the strike at ICL Dead Seaarbitration between the State and the Company (for further information see note 20 to our Audited Financial Statements).

This increase was partly offset by 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,interest expenses, in the amount of approximately $288$11 million, mainly due to the devaluationsignificant reduction of net financial liabilities, by using 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, compensationproceeds received from the Manufacturers Association relating tosale of the strike at ICL Dead SeaFire Safety and ICL Neot Hovav,Oil Additives (P₂S₅) businesses.

Furthermore, in 2018 and 2017, the amountCompany paid fees regarding early repayment of approximately $17long term loans of about $12 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$13 million, an increase in the depreciationrespectively.

Tax expenses

The tax expenses in 2018 amounted to $129 million, reflecting an effective tax rate of about 9%, which is significantly lower than the amount of approximately $14 million,Company’s usual tax rate, 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, mainlyexempt income 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 impactdivestment 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.

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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 fourthfirst 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.

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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 the2018, devaluation of the shekel against the dollar approximately 0.3%, compared withduring the year and a devaluation of about 12%decrease in 2014.

Taxtax provisions in Israel.

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Segment Information

Segment revenues, expenses

The tax expenses and results include inter-segment transfers, which are priced mainly based on transaction prices in the year endedordinary course of business – this being based on December 31, 2015 amounted to $162 million, compared with tax expensesreports that are regularly reviewed by the chief operating decision maker. These transfers are eliminated as part of $166 million last year. consolidation of the financial statements.

The tax ratesegment profit is measured based on the pre-taxoperating income, without certain expenses that are not allocated to the operating segments including general and administrative expenses, as it is 24%, compared withincluded in reports that are regularly reviewed by the chief operating decision maker.

Results of operations for the year 2018 – Industrial products segment

	2018	2017
	$ millions	$ millions

Total Sales	1,296	1,193
Sales to external customers	1,281	1,179
Sales to internal customers	15	14
Segment profit	350	303
Depreciation and Amortization	63	61
Capital expenditures	50	49

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Below is a tax rate on pre-tax incomegeographical breakdown of 26% last year.our sales to external customers, by customer location:

	Year Ended December 31,
	2018	2017
	$ millions	$ millions

Europe	473	456
Asia	399	351
North America	347	327
South America	21	18
Rest of the world	41	27
Total	1,281	1,179

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	Sales	Expenses	Operating income
	$ millions

YTD 2017 figures	1,193	(890)	303
Quantity	22	(19)	3
Price	70	-	70
Exchange rate	11	(11)	-
Raw materials	-	(13)	(13)
Energy	-	(2)	(2)
Transportation	-	1	1
Operating and other expenses	-	(12)	(12)
YTD 2018 figures	1,296	(946)	350

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-

Quantity – the positive impact on the segment’s profit derives mainly from an increase in the quantities sold of bromine-based flame retardants, phosphorous‑based flame retardants and industrial solutions and magnesia products, partly offset by a decrease in the quantities sold of bromine-based industrial solutions.

-

Price – the positive impact on the segment’s profit derives mainly from an increase in the selling prices of bromine-based industrial solutions and flame retardants, phosphorous-based flame retardants and magnesia products.

-

Exchange rate – the average upward revaluation of the euro against the dollar which increased the Company's revenue was fully offset by the average upward revaluation of the euro and the shekel against the dollar which increased production costs.

-

Raw materials –the negative impact on the segment’s profit derives mainly from an increase in the prices of raw materials used for bromine- and phosphorous-based flame retardants.

-

Operating and other expenses – the negative impact on the segment's profit derives mainly from inventory write-off and higher labor costs.

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Results of operations for the year 2018 - Potash segment

	2018	2017
	$ millions	$ millions

Total sales	1,623	1,383
Potash sales to external customers	1,280	1,119
Potash sales to internal customers	79	71
Other and eliminations*	264	193
Gross profit	696	539
Segment profit	393	282
Depreciation and Amortization	141	128
Capital expenditures	356	270
Average realized price (in $)**	278	236

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* Mainly includes Polysulphate produced in UK, salt produced in underground mines in UK and Spain, magnesium-based products and sales of electricity produced in Israel.

** Potash average realized price (dollar per tonne) is calculated by dividing total potash revenue by total sales’ quantities. The taxdifference between FOB price and average realized price is mainly marine transportation costs.

Below is a geographical breakdown of our sales to external customers, by customer location:

	Year Ended December 31,
	2018	2017
	$ millions	$ millions

Asia	518	432
South America	406	347
Europe	396	327
North America	107	116
Rest of the world	54	36
Total	1,481	1,258

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	Sales	Expenses	Operating income
	$ millions

YTD 2017 figures	1,383	(1,101)	282
Quantity	21	(25)	(4)
Price	197	-	197
Exchange rate	22	(27)	(5)
Energy	-	(3)	(3)
Transportation	-	(32)	(32)
Operating and other expenses	-	(42)	(42)
YTD 2018 figures	1,623	(1,230)	393

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-

Quantity – the moderate negative impact on the segment’s profit derives mainly from a product and site mix, due to increased sales of lower margin products, including electricity surplus from the new power plant in Sodom and Polysulphate.

-

Price – the positive impact on the segment’s profit derives from the increase in potash selling prices.

-

Exchange rate – the negative impact on the segment’s profit derives mainly from the average upward revaluation of the euro against the dollar.

-

Transportation – the negative impact on the segment’s profit derives mainly from an increase in marine transportation prices.

-

Operating and other expenses – the negative impact on the segment’s profit derives mainly from a capital gain due to sale of an office building in Israel which was recorded last year, an increase in royalties, as a result of higher revenue, higher depreciation expenses, expenses recorded in connection with DSW's collective labor agreement and higher operational costs, mainly as a result of annual production record level of potash in Israel.

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Potash – Production and Sales

Thousands of Tonnes

2018

2017

Production	4,880	4,773
Total sales (including internal sales)	4,895	5,039
Closing inventory	385	400

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-     Production – in 20152018, production of potash was favorably impacted by adjustment107 thousand tonnes higher than in 2017, due to increased production (about 230 thousand tonnes) in ICL Dead Sea and ICL Iberia, despite the stoppage of the deferred taxespotash operation in ICL RotemBoulby at the end of the second quarter of 2018, as part of the transition to the tax ratesPolysulphate production. The increased production in accordance withICL Dead Sea derived mainly from efficiency activity in planning, maintenance and operational excellence, which led to an annual production record level in ICL Dead Sea. The increased production in ICL Iberia derived mainly from an efficiency plan implemented at the Law for Encouragementbeginning of Capital Investments,2018 and from higher ore grade 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,mining area in the amountbeginning of about $19 million. In addition,2018.

-     Sales –  the effective tax ratequantity of potash sold in 2018, 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 rate144 thousand tonnes 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,2017, mainly due to assessments agreementsa decrease in potash sales to North and South America.

Results of subsidiariesoperations for the year 2018 – Phosphate Solutions segment

	2018	2017
	$ millions	$ millions

Total Sales	2,099	2,037
Sales to external customers	2,001	1,938
Sales to internal customers	98	99
Segment profit	208	149
Depreciation and Amortization	172	172
Capital expenditures	180	154

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Below is a geographical breakdown of our sales to external customers, by customer location:

	Year Ended December 31,
	2018	2017
	$ millions	$ millions

Europe	696	730
Asia	465	457
North America	405	368
South America	264	274
Rest of the world	171	109
Total	2,001	1,938

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	Sales	Expenses	Operating income
	$ millions

YTD 2017 figures	2,037	(1,888)	149
Divested businesses 2017	(32)	36	4
YTD 2017 figures (excluding divested businesses)	2,005	(1,852)	153
Quantity	(108)	98	(10)
Price	142	-	142
Exchange rate	44	(33)	11
Raw materials	-	(62)	(62)
Energy	-	1	1
Transportation	-	(10)	(10)
Operating and other expenses	-	(14)	(14)
YTD 2018 figures (excluding divested businesses)	2,083	(1,872)	211
Divested businesses 2018	16	(19)	(3)
YTD 2018 figures	2,099	(1,891)	208

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-

Divested businesses – sale of the assets and business of Rovita at the beginning of the third quarter of 2018.

-

Quantity – the negative impact on the segment’s profit derives mainly from a decrease in phosphate-based acids and food additives, together with phosphate fertilizers quantities sold, which was partly offset by an increase in dairy proteins quantities sold.

-

Price – the segment benefited from a positive price impact throughout most of the phosphate chain. The increase derives mainly from selling prices of phosphate fertilizers, together with phosphate-based acids, food additives and salts (mainly as part of value-focused strategy).

-

Exchange rate – the positive impact on the segment’s profit derives mainly from the average upward revaluation of the euro against the dollar increasing revenues. This increase was partly offset by the average upward revaluation of the euro and the Chinese yuan against the dollar increasing production costs.

-

Raw materials – the negative impact on the segment’s profit derives mainly from higher sulphur prices which increased the costs of the main raw materials throughout the phosphate value chain.

-

Transportation – the negative impact on the segment’s profit derives mainly from an increase in marine transportation prices.

-

Operating and other expenses – the negative impact on the segment’s profit derives mainly from an insurance income in Israel which was recorded last year and inventory write-off, partly offset by lower operational costs as a result of implementation of efficiency measures and an environment-related provision which was recorded last year.

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Phosphate Solutions: Backward Integrated Value Chain

Thousands of tonnes

2018

2017

Phosphate rock
Production	5,006	4,877
Green phosphoric acid
Used for production of phosphate commodities	552	451
Used for production of phosphate specialties	305	281
Other	17	28
Phosphate fertilizers
Production	2,304	2,094
Sales*	2,269	2,291
Pure phosphoric acid
Production	289	275

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* To external customers.

-     Production of phosphate rock – in Europe and2018, production of phosphate rock was higher by 129 thousand tonnes than in 2017, mainly due to shutdown at ICL Rotem Zin plant during the changesecond half of 2017 as a result of adjusting production volumes to the business environment.

-     Green phosphoric acid – in 2018, green phosphoric acid used for production of phosphate commodities was higher by 101 thousand tonnes than in 2017, mainly due to increased production of phosphate fertilizers in YPH joint venture. Green phosphoric acid used for production of phosphate specialties in 2018, was higher by 24 thousand tonnes than in 2017, mainly due to the dollar/shekel exchange rate that triggeredsegment's strategy for increasing production of phosphate-based specialty products.

-     Production of phosphate fertilizers – in 2018, production of phosphate fertilizers was higher by 210 thousand tonnes than in 2017, mainly due to increased production of phosphate fertilizers in YPH joint venture.

-     Sales of phosphate fertilizers – the quantity of phosphate fertilizers sold in 2018 was 22 thousand tonnes lower than in 2017, as an increase in the tax ratesales of the companies operatingYPH JV was more than offset by lower demand towards the end of 2018.

-     Production of pure phosphoric acid – in Israel2018, production of pure phosphoric acid was higher by 14 thousand tonnes than in 2017, mainly due to reduced production at ICL Rotem in 2017 that was unfavorably affected by a shortage of 4D acid, as well as due to higher demand in China.

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Results of operations for the sourceyear 2018 – Innovative Ag Solutions segment

	2018	2017
	$ millions	$ millions

Total Sales	741	692
Sales to external customers	719	671
Sales to internal customers	22	21
Segment profit	57	56
Depreciation and Amortization	19	19
Capital expenditures	15	12

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Below is a geographical breakdown of which is differences in the measurement bases.

our sales to external customers, by customer location:

	Year Ended December 31,
	2018	2017
	$ millions	$ millions

Europe	359	324
Asia	105	99
North America	97	87
South America	21	22
Rest of the world	137	139
Total	719	671

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	Sales	Expenses	Operating income
	$ millions

YTD 2017 figures	692	(636)	56
Quantity	17	(13)	4
Price	13	-	13
Exchange rate	19	(17)	2
Raw materials	-	(14)	(14)
Energy	-	-	-
Transportation	-	-	-
Operating and other expenses	-	(4)	(4)
YTD 2018 figures	741	(684)	57

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-

Quantity – the positive impact on the segment's profit derives mainly from specialty agriculture products, largely from liquid NPK, straight fertilizers and water-soluble NPK.

-

Price – the positive impact on the segment's profit derives mainly from an increase in the selling prices of straight fertilizers.

-

Exchange rate – the positive impact on the segment's profit derived mainly from the average upward revaluation of the euro against the dollar which increased revenue more than it contributed to the increase in production costs.

-

Raw materials – the negative impact on the segment's profit derives mainly from an increase in most of the segment's raw materials, mainly ammonia and caustic soda.

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Year Ended December 31, 20142017 Compared to Year Ended December 31, 2013

2016

Set forth below are our results of operations for the years ended December 31, 20142017 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

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2016.

Table

	For the Years Ended December 31,		% Increase (Decrease)
	2017	2016
	$ millions	$ millions	sales

Sales	5,418	5,363	1%
Cost of sales	3,746	3,703	1%
Gross profit	1,672	1,660	1%
Selling, transport and marketing expenses	746	722	3%
General and administrative expenses	261	321	(19)%
Research and development expenses	55	73	(25)%
Other expenses	90	618	(85)%
Other income	(109)	(71)	54%
Operating income (loss)	629	(3)	-
Finance expenses, net	124	132	(6)%
Share in earnings of equity-accounted investees	-	18	-
Income (loss) before income taxes	505	(117)	-
Provision for income taxes	158	55	187%
Net income (loss)	347	(172)	-
Net income (loss) attributable to the shareholders of the Company	364	(122)	-
Earnings (losses) per share attributable to the shareholders of the Company:
Basic earnings (losses) per share (in dollars)	0.29	(0.10)	-
Diluted earnings (losses) per share (in dollars)	0.29	(0.10)	-

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Results of Contents

operations for the year 2017

	Sales	Expenses	Operating income
	$ millions

YTD 2016 figures	5,363	(5,366)	(3)
Total adjustments YTD 2016*	-	585	585
Adjusted YTD 2016 figures	5,363	(4,781)	582
Quantity	52	(1)	51
Price	(6)	-	(6)
Exchange rate	9	(56)	(47)
Raw materials	-	25	25
Energy	-	(21)	(21)
Transportation	-	(12)	(12)
Operating and other expenses	-	80	80
Adjusted YTD 2017 figures	5,418	(4,766)	652
Total adjustments YTD 2017*	-	(23)	(23)
YTD 2017 figures	5,418	(4,789)	629

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* See "Adjustments to reported operating and net income (Non-GAAP)" above.

-

Sales – the company sales increased by $55 million compared to 2016. The quantity‑related increase derives mainly from an increase in the quantities sold of fire safety products (which were divested at the end of the first quarter of 2018), phosphate acids, bromine-based industrial solutions (mainly clear brine fluids), bromine‑based flame retardants and specialty agriculture products. The increase was partly offset by a decline in the quantities sold of phosphate rock, phosphate fertilizers and dairy proteins.

The price-related decrease derives mainly from a decline in the selling prices of phosphate fertilizers, phosphate acids, and specialty agriculture products. This decrease was partly offset by an increase in potash, phosphorous-based flame retardants and bromine-based industrial solutions selling prices.

The exchange rate increase derives mainly from the upward revaluation of the euro against the dollar.

-

Cost of sales – the cost of sales increased by $43 million compared to 2016. The increase derives mainly from the upward revaluation of the shekel against the dollar increasing production costs (see ‘Exchange rate’ above), higher energy prices in Israel, higher electricity costs in Europe (see ‘Energy’ above), inventory write-offs in ICL Potash, mainly in Europe and an increase in royalties paid due to higher revenues (see ‘Other’ above). The increase was partly offset by a decline in raw materials prices, mainly commodity fertilizer prices used in the specialty fertilizers business and sulphur prices used mainly in the phosphate value chain (see ‘Raw materials’ above).

-

Selling and marketing – selling and marketing expenses increased by $24 million compared to 2016. The increase derives mainly from an increase in marine transportation prices and exchange rate fluctuations, partly offset by a decrease in quantities sold of products of the Phosphate commodities business (see ‘Transportation’ and ‘Exchange rate’ above).

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-

General and administrative – general and administrative expenses decreased by $60 million compared to 2016. The decrease derives mainly from cost-saving measures and a reduction of professional services throughout the Company (see ‘Operating and other expenses’ above).

-

Other expenses, net - other expenses, net, decreased by $566 million compared to 2016. The decrease derives mainly from capital gains recorded this year related to divestiture of businesses (mainly IDE), together with non-operational expenses in the corresponding period last year, mainly from impairment of assets related to the Harmonization Project and to discontinuance of the activities of Allana Affar in Ethiopia (see ‘Adjustments to reported operating and net income – Non-GAAP financial measures’ above).

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

	Year Ended December 31,
	2017	2016
	$ millions	$ millions

Europe	1,918	1,863
Asia	1,342	1,275
North America	1,175	1,141
South America	666	588
Rest of the world	317	496
Total	5,418	5,363

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Europe– the increase derives mainly from a decreasean increase in selling prices, which led to a decrease in salesthe quantities sold of approximately $431 million.dairy protein products, phosphate fertilizers, clear brine fluids and specialty agriculture products. The decreaseincrease was partly offset by an increasea decrease in the quantities sold including the first-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.

Breakdown of sales by 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-based and chlorine-based biocides for water treatment, inorganic bromine products and magnesium products. In addition, there was anphosphate rock.

Asia – the increase in sales in Europe derivingderives mainly 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 of phosphoric acid, potash, bromine-based flame retardants, bromine-based industrial solutions, acids, specialty agriculture products 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.

Cost of Sales

Our cost of sales in 2014 amounted to approximately $3,915 million, compared with approximately $3,862 million 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-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.dairy protein products. 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 maintenancequantities sold of phosphate fertilizers and subcontractors and a decline in royalties due tophosphate rock.

North America – 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 in 2014.

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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-time consolidation of companies acquired in 2014 as well as due to professional 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 2013.

Other income and other expenses, net

Other expenses, net, in 2014, amounted to about $206 million, compared with about $ 94 million in 2013. Other expenses included mainly 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.

Financing expenses, net

Our net financing expenses amounted to approximately $157 million in 2014, compared with net finance expenses of approximately $26 million 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-mentioned provision, the financing expenses amounted to approximately $124 million – an increase of about $97 million, compared with 2013. The increase derives mainly from an increase in interest expenses, in the amountquantities sold and selling prices 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, comparedpotash together 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 2014.

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Tax expenses

Our tax expenses amounted to approximately $166 million in 2014, compared to approximately $281 million 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 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,fire-safety and anP₂S₅ product quantities sold. This increase in the Israeli Corporate Tax rate to 26.5%. In 2013, tax expenses included tax expenses recognized in respect of the release of trapped earnings, in the amount of approximately $107 million.

Segment Information

Segment Information for Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

		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 segments 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 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

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(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,was partly offset by strike insurance received, in the amount of about $8 million.

Potash – Production, Sales 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 2015 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

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Potash

Sales

The decrease in sales in the year ended on December 31, 2015 is attributable mainly to the strike at ICL Dead Sea, which led to a decrease in sales, in the amount of approximately $315 million, the impact of the change in currency exchange rates, in the amount of approximately $86 million, mainly from a devaluation of the exchange rates of the euro and the British pound against the dollar, and a decrease in the quantities sold of the Innovative Ag Solutions segment products and food phosphates and multi‑ingredient blends.

South America – the increase derives mainly from an increase in potash selling prices and quantities sold.

Rest of the world – the decrease derives mainly from a decrease in the amountquantities of approximately $34 million. On the other hand, thisdairy protein products sold and a decline in potash sales to an Israeli customer (Haifa Chemicals) facing operational difficulties due to new local regulation. The decrease was partly offset by an increase in the quantities sold in the amount of approximately $69 million.

Production and Sales

specialty agriculture products.

159

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Financing expenses, net

The quantity of potash sold to external customersnet financing expenses in the year ended December 31, 2017 amounted to $124 million, compared with $132 million last year – a decrease of $8 million. The decrease derives mainly from interest expenses recorded last year in the amount of $38 million in connection with interest on past royalties following an arbitration decision between the government of Israel and the Company, as well as interest on a tax assessment agreement signed with the Israel Tax Authority relating to prior periods and an increase in 2017 of income of about $10 million in respect of hedging transactions, net of exchange rate differences. On the other hand, in 2017 we recognized finance expenses as a result of revaluation of liabilities for employee benefits (in shekel terms) of about $20 million, fees paid with respect to early repayment of a long-term loan of about $13 million and interest expenses, mainly from an increase of the average interest rate on the Company’s debt of about $7 million.

Tax expenses

The tax expenses in 2017 amounted to $158 million reflecting an effective tax rate of about 31%. In 2016 and 2015 tax expenses were $55 million and $162 million reflecting about (47%) and about 24% effective tax rate, respectively. The increase in the effective tax rate in 2017 compared with prior years is mainly due to reduction of the tax benefits under the Israeli Encouragement Law as well as the mix of profits generated in various jurisdictions.

Tax expenses in 2017 were impacted by tax expenses following an internal transaction in preparation of divestitures of low synergy businesses together with an upward revaluation of the shekel against dollar that increased the tax expenses in the Israeli subsidiaries, and was approximately 775offset by tax income as a result of the resolution given by the Appeals Court in Belgium with respect to an appeal filed by the Company regarding allowance of deduction of certain expenses and tax income due to an adjustment to the deferred taxes following the tax reform in the US.

In 2016, the effective tax rate was impacted mainly by the loss from discontinuance of the global ERP project (Harmonization Project) and by the capital loss from discontinuance of the activities of Allana Afar in Ethiopia.

160

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Results of operations for the year 2017 – for Industrial Products segment

	2017	2016
	$ millions	$ millions

Total Sales	1,193	1,120
Sales to external customers	1,179	1,111
Sales to internal customers	14	9
Segment profit	303	286
Depreciation and Amortization	61	52
Capital expenditures	49	38

---

Below is a geographical breakdown of our sales to external customers, by customer location:

	Year Ended December 31,
	2017	2016
	$ millions	$ millions

Europe	456	424
Asia	351	301
North America	327	330
South America	18	24
Rest of the world	27	32
Total	1,179	1,111

---

161

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	Sales	Expenses	Operating income
	$ millions

YTD 2016 figures	1,120	(834)	286
Quantity	57	(21)	36
Price	12	-	12
Exchange rate	4	(16)	(12)
Raw materials		(1)	(1)
Energy		(2)	(2)
Transportation		(1)	(1)
Operating and other expenses		(15)	(15)
YTD 2017 figures	1,193	(890)	303

---

-

Quantity – the positive impact on the segment's profit derives mainly from an increase in the quantities sold of bromine-based flame retardants and bromine-based industrial solutions (mainly clear brine fluids).

-

Price – the positive impact on the sales and on the segment's profit derives mainly from an increase in the selling prices of phosphorous-based flame retardants and bromine-based industrial solutions.

-

Exchange rate – the negative impact on the segment's profit derives mainly from the upward revaluation of the shekel against the dollar increasing production costs, partly offset by the upward revaluation of the euro against the dollar increasing revenues.

-

Operating and other expenses - the negative impact on the segment's profit derives mainly from an increase in the royalties as a result of the increase in sales and from expenses recorded in relation with an extension of work agreement.

162

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Results of operations for the year 2017 – Potash segment

	2017	2016
	$ millions	$ millions

Total sales	1,383	1,338
Potash sales to external customers	1,119	1,085
Potash sales to internal customers	71	80
Other and eliminations*	193	173
Gross profit	539	499
Segment profit	282	282
Depreciation and Amortization	128	127
Capital expenditures	270	311
Average realized price (in $)**	236	226

---

* Mainly includes Polysulphate produced in UK, salt produced in underground mines in UK and Spain, magnesium-based products and sales of electricity produced in Israel.

** Potash average realized price (dollar per tonne) is calculated by dividing total potash revenue by total sales’ quantities. The difference between FOB price and average realized price is mainly marine transportation costs.

Below is a geographical breakdown of our sales to external customers, by customer location:

	Year Ended December 31,
	2017	2016
	$ millions	$ millions

Asia	432	395
South America	347	267
Europe	327	354
North America	116	93
Rest of the world	36	104
Total	1,258	1,213

---

163

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	Sales	Expenses	Operating income
	$ millions

YTD 2016 figures	1,338	(1,056)	282
Quantity	1	9	10
Price	41	-	41
Exchange rate	3	(14)	(11)
Energy		(11)	(11)
Transportation		(28)	(28)
Operating and other expenses		(1)	(1)
YTD 2017 figures	1,383	(1,101)	282

---

-       Quantity - the positive impact on the segment's profit derives mainly from lower sales of potash manufactured at sites having lower profitability rates.

-       Price – the positive impact on the sales and on the segment's profit derives from an increase in potash selling prices (a $10 increase in the average realized price per tonne compared to last year).

-       Exchange rate – the negative impact on the segment’s profit derives mainly from the upward revaluation of the shekel and the euro against the dollar increasing production costs. This decrease was partly offset by the upward revaluation of the euro against the dollar increasing revenues.

-       Energy –  the negative impact on the segment’s profit derives mainly from higher energy prices in Israel and higher electricity charges in Europe.

-       Transportation – the negative impact on the segment’s profit derives mainly from an increase in marine transportation prices.

-

Operating and other expenses - the negative impact on the segment’s profit derives mainly from an increase in inventory write-offs (mainly in Europe) and an increase in royalties and sales commissions. This negative impact was partly offset by expenses recorded last year in connection with DSW's collective labor agreement and a capital gain due to sale of an office building in Israel.

164

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Potash – Production and Sales

Thousands of Tonnes

2017

2016

Production	4,773	5,279
Total sales (including internal sales)	5,039	5,165
Closing inventory	400	666

---

-     Production – production of potash in 2017, was 506 thousand tonnes lower than in 2014,2016, mainly due to decreased production at ICL Boulby as a result of the transition from extracting and producing potash to producing Polysulphate™. The lower production in the first quarter of 2017, caused by an operational breakdown in the mine tailings channel, was renewed during the second quarter of 2017 and the overall production level was recovered during the course of the year. In addition, decreased production was recorded in Spain as a result of lower ore grade in the current mining area and in ICL Dead Sea as a result of maintenance operations at the plant in Sodom.

-     Sales –  the quantity of potash sold in 2017, was 126 thousand tonnes lower than in 2016, mainly due to a decrease in the quantities soldsales to the United States, India, BrazilIsrael and China. ProductionEurope, which was partially offset by an increase in sales to South America and Asia.

Results of potash inoperations for the year ended December 31, 2015 was approximately 948 thousand tonnes lower than in 2014, due 2017 – Phosphate Solutions segment

	2017	2016
	$ millions	$ millions

Total Sales	2,037	2,186
Sales to external customers	1,938	2,082
Sales to internal customers	99	104
Segment profit	149	224
Depreciation and Amortization	172	203
Capital expenditures	154	237

---

Below is a geographical breakdown of our sales to external customers, by customer location:

	Year Ended December 31,
	2017	2016
	$ millions	$ millions

Europe	730	697
Asia	457	501
North America	368	379
South America	274	276
Rest of the world	109	229
Total	1,938	2,082

---

165

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	Sales	Expenses	Operating income
	$ millions

YTD 2016 figures	2,186	(1,962)	224
Quantity	(109)	73	(36)
Price	(46)	-	(46)
Exchange rate	6	(33)	(27)
Raw materials		15	15
Energy		(8)	(8)
Transportation		16	16
Operating and other expenses		11	11
YTD 2017 figures	2,037	(1,888)	149

---

-       Quantity -  the negative impact on the segment's profit derives mainly from a decrease in the production in Israel as a result of the strike, whichphosphate fertilizers, phospahte rock and dairy proteins quantities sold. This negative impact was partly offset by an increase in production inphosphate-based acids quantities sold.

-       Price – the United Kingdom.

Operating income

The operating income innegative impact on the year ended December 31, 2015 was impacted bysales and on the strike at ICL Dead Sea, in the amount of approximately $193 million,segment's profit derives mainly from 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 salesand phosphate-based acids.

-       Exchange rate – the negative impact on the segment’s profit derives mainly from the upward revaluation of approximately $40 million. On the other hand, this increaseshekel and the euro against the dollar increasing production costs. This decrease 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 rateupward revaluation of the euro against the dollar increasing revenues.

-       Raw materials – the positive impact on the segment's profit derives mainly from a decrease in sulphur prices.

-       Energy –  the negative impact on the segment’s profit derives mainly from higher energy prices in Israel.

-       Transportation – the positive impact on the segment’s profit derives mainly from a decrease in quantities sold, partly offset by an increase in marine transportation prices.

-

Operating and other expenses - the positive impact on the segment’s profit derives mainly from a decrease in depreciation expenses due to lower production (lower stripping costs), a decrease in royalties paid and an insurance income in Israel, partly offset by an environment related provision.

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Phosphate Solutions: Backward Integrated Value Chain

Thousands of tonnes

2017

2016

Phosphate rock
Production	4,877	5,744
Green phosphoric acid
Used for production of phosphate commodities	451	645
Used for production of phosphate specialties	281	261
Other	28	28
Phosphate fertilizers
Production	2,094	2,725
Sales*	2,291	2,645
Pure phosphoric acid
Production	275	266

---

* To external customers.

-     Production of phosphate rock – in 2017, production of phosphate rock was lower by 867 thousand tonnes than in 2016, mainly due to adjusting production volumes to the business environment at ICL Rotem, which included a shutdown of the Zin plant during part of the third and the fourth quarters of 2017. The plant returned to activity towards the end of the fourth quarter. In addition, the production of phosphate rock decreased due to a declineproduction optimization process in salesYPH.

-     Green phosphoric acid – in 2017, green phosphoric acid used for production of phosphate commodities was lower by 194 thousand tonnes than in 2016, mainly due to decreased production of phosphate fertilizers in YPH. Green phosphoric acid used for production of phosphate specialties in 2017, was higher by 20 thousand tonnes than in 2016, mainly due the shift to specialty products in YPH.

-     Production of phosphate fertilizers – in 2017, production of phosphate fertilizers was lower by 631 thousand tonnes than in 2016, mainly due to decreased production in YPH as a result of the impact shift to specialty products.

-     Salesof phosphate fertilizers – the firequantity of phosphate fertilizers sold in 2017 was 354 thousand tonnes lower than in 2016, mainly due to a fertilizersdecrease in sales to Asia.

-     Production of pure phosphoric acid – in 2017, production facilityof pure phosphoric acid was higher by 9 thousand tonnes than in Israel,2016, mainly due to continuously growing demand in the amountChina.

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Results of approximately $51 million.

Operating income

The increase in operating income inoperations for the year ended December 31, 20152017 – Innovative Ag Solutions segment

	2017	2016
	$ millions	$ millions

Total Sales	692	661
Sales to external customers	671	632
Sales to internal customers	21	29
Segment profit	56	55
Depreciation and Amortization	19	17
Capital expenditures	12	7

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Below is a geographical breakdown of our sales to external customers, by customer location:

	Year Ended December 31,
	2017	2016
	$ millions	$ millions

Europe	324	314
Asia	99	72
North America	87	100
South America	22	19
Rest of the world	139	127
Total	671	632

---

	Sales	Expenses	Operating income
	$ millions

YTD 2016 figures	661	(606)	55
Quantity	46	(39)	7
Price	(12)	-	(12)
Exchange rate	(3)	1	(2)
Raw materials		12	12
Energy		-	-
Transportation		-	-
Operating and other expenses		(4)	(4)
YTD 2017 figures	692	(636)	56

---

-     Quantity – the positive impact on the segment's profit derives mainly from an increase in the quantities sold primarily as a result of specialty agriculture products.

-     Price – 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 thenegative 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.

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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 inon 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

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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.

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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-time consolidation of companies acquired, in the amount of approximately $38 million, a decline in raw-material prices, in the amount of approximately $8 million, and an increase in the selling prices, in the amount of approximately $1 million.

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Segment Information for Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

		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-segment sales.

		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, grosssegment's profit and operating income of our Fertilizers segment in 2014 and 2013, by areas of operation (before setoffs of inter-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.

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Potash – Production, Sales and Closing Inventories

Below is a breakdown of production, sales and closing 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
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 previous year, stems from a decrease in selling prices, which led to a decrease in sales, in the amount of about $ 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 $ 103 million and from the impact of the change in the currency exchange rates, in the amount of about $ 12 million.

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Operating income

The decrease in operating income in 2014 stemsderives mainly from a decrease in the selling prices of potash, which led to a decline, inspecialty agriculture products.

-     Raw materials – the amount of about $ 325 million, an increase inpositive impact on the cost of sales due to an increase in quantities sold, in the amount of about $ 19 million, and from an expense in connection with a provision for arbitration relating to royalties in respect of prior periods, in the amount of about $ 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 $ 103 million, a decline in the energy costs, in the amount of about $ 35 million,segment's profit derives mainly from a decline in shipping expenses, in the amount of about $ 7 million, and from a decline in other operating expenses, in the amount of about $ 3 million.

Production and Sales

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.

Fertilizers and Phosphates

Sales:

Revenue fromcommodity 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”)prices.

-    Operating and other products.

The decrease in sales in 2014 stems from a decrease in selling prices of phosphate fertilizers, which caused a decrease inexpenses – the sales of about $ 94 million. This decrease was partly offset as a result ofnegative impact on the change in the currency exchange rates, in the amount of about $ 18 million.

Operating income

The increase in operating income in 2014segment's profit derives mainly from a decrease in the prices of raw materials, in the amount of about $ 33 million, from a decline in salaries expenses, in the amount of about $ 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 $ 3 million, a drop in shipping expenses due to a fall in the quantities sold in the amount of about $ 2 million, and a decline in other operating costs, in the amount of about $ 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 $ 94 million, and 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. Operating income in 2013 was impacted by a provision for early retirement at ICL Rotem, in the amount of about $ 60 million.

Production and Sales

Production of phosphate fertilizers and phosphate rock, in 2014, was 157 thousand tonnes and 221 thousand tonnes lower, respectively, compared 2013, as a result of the strike at ICL Rotem that took place in the first half of 2014 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.

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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 $1,337 million – an increase of about $40 million compared with 2013. This increase stems from an increase in quantities sold, mainly of bromine-based flame retardants, bromine-based and chlorine-based biocides used for water treatment, inorganic bromine products and magnesium products, in the amount of about $65 million. This increase was partly offset by a decline in selling prices, mainly of inorganic bromine products and bromine-based flame retardants, which reduced sales by about $22 million, as well as the impact of the currency exchange rates, in the amount of about $3 million.

Operating income (loss)

The operating loss in 2014 totaled about $62 million, compared with operating income of about $115 million in 2013. Adjusted operating income, as detailed below, in 2014, amounted to about $128 million, compared with adjusted operating income in 2013, in the amount of about $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%.

The decrease in operating income is primarily a result of expenses incurredcommissions paid, due to a provision for royalties arbitration relating to prior periods in the amount of about $141 million, an impairment of assets in subsidiaries in the US and Europe, in the amount of about $49 million, a decrease in selling prices, which led to a decrease in profitability of about $22 million, the impact of changes in currency exchange rates, in the amount of about $15 million, an increase in royalty expenses relating to the current period as a result of the arbitration ruling, in the amount of about $12 million, an increase in shipping expenses due mainly to an increase in quantities sold, in the amount of about $8 million, and an increase in other operating expenses, in the amount of about $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 $24 million, and a decrease in raw-material and energy prices, which contributed about $15 million to profitability. The operating income in 2013 was impacted by a provision for treatment of waste and an impairment of assets, in the amounts of about $25 million and about $10 million, respectively.

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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 $1,614 million, an increase of approximately $39 million compared with 2013. This increase stems from the first-time consolidation of companies acquired during 2014, in the amount of approximately $56 million, and from an increase in selling prices of approximately $12 million. These impacts were partly offset by a decrease in quantities sold of approximately $21 million, and the impact of changes in currency exchange rates, in the amount of approximately $7 million.

Operating income

The segment’s operating income in 2014 amounted to approximately $197 million, an increase of approximately $2 million compared with 2013. This increase stems mainly from income due to entry into the consolidation, in the amount of $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 $12 million. This increase was partially offset by an impairment in value of assets in subsidiaries in Europe, in the amount of approximately $22 million, an increase in costs due to the strike at ICL Rotem in the amount of approximately $10 million (net of the insurance reimbursement received on account of the strike, in the amount of approximately $1 million), a decline in quantities sold, net of first-time consolidation of companies acquired during 2014, in the amount of approximately $9 million, and an increase in raw-material prices in the amount of approximately $5 million.

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B. LIQUIDITY AND CAPITAL RESOURCES

Overview

As at December 31, 2015,2018, ICL had a balance of approximately $161$213 million in cash, cash equivalents, short-term investments and cash equivalents.deposits. As at December 31, 2015,2018, the Company's net financial liabilities were approximately $3,230$2,212 million, including approximately $2,805$1,815 million of long-termlong‑term debt (excluding current maturities) and debentures, and approximately $673$610 million of short-termshort‑term debt (including current maturities of long-termlong‑term debt).

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The Company’sCompany's policy is to secure sources of financing for its operating activities and investments, while diversifying the sources of financing among various financial instruments, and between local and international financing entities. The Company’sCompany's sources of financing are short-short 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.receivables. The Company’sCompany's policy is to fully utilize the various financing facilities according to our cash flow requirements, alternative costs and market conditions.

ICL’s

ICL's management believes that its sources of liquidity and capital resources, including working capital, are adequate for its current requirements and business operations and should be adequate to satisfy its anticipated working-capitalworking‑capital requirements during the next twelve months, 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 ICL from its 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 the Company’sCompany's ability to meet its cash obligations.

In addition to the Company’sits operating expenses including its debt service,and dividend distributions, in 2018 the Company continued several major capital expenditure projects, such as the salt harvesting project, raising the coastal dykes in the evaporation ponds, investment in the new power station in Sodom, construction of a new pumping station in the Northern Basin of the Dead Sea and construction of phosphogypsum ponds in ICL Rotem. Additional major capital expenditures and dividend payments,scheduled to run over the coming years are investments in 2015,the YPH joint venture in China along with further investment in Spain. On the other hand, as part of its strategy of divesting low synergy businesses, in December 2017, the Company was required to make a one-time payment,completed sale of its holdings in the amountIDE Technologies Ltd., for net proceeds of $152 million, to the State of Israel as a result of the recent partial arbitration ruling concerning royalties, issued$168 million. In addition, on May 19, 2014. For additional information, see “Item 8. Financial Information—Legal Proceedings—Arbitration concerning Royalties at ICL Dead Sea Ltd.” Moreover, in March 2015,2018, the Company completed the acquisitionsale transaction of Prolactal, a leading European producer of dairy proteins for the foodFire Safety and beverage industry,Oil Additives businesses, for a total consideration of about $90 million. In June 2015, the Company acquired the balance of Allana’s shares (approximately 83.78%) for a total consideration of approximately $112$1,010 million, of which approximately $96$953 million wasis in cash and approximately $16 million was by means$57 is in the form of issuance of 2,225,337 ordinary sharesa long-term loan to a subsidiary of the Company, andbuyer. For additional information on divestitures currently in October 2015,progress, see “Item 3 - Key Information— A. Selected Financial Data”.

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On May 29, 2018, the Company completed a cash tender offer for any and all its debentures Series D, senior notes due in 2024 with a coupon of 4.5%. Following the establishmenttender offer, the Company repurchased an amount of $616 million out of the Joint Venture (YPH JV) with Yunnan Phosphate Chemicals Group Corporation Ltd. (“YTH”), China’s leading phosphate producer, for a total considerationoriginal principal of approximately $180$800 million. In January 2016,On October 31, 2018, ICL's Board of Directors authorized the purchase of 15%Company to repurchase from time to time up to an additional $80 million of the equity of YTH was completed byCompany's series D debentures due in 2024, which following the Company (this purchase was onecompletion of the termstender offer for closing the YPH deal), afterseries D debentures on May 29, 2018, amount to $184 million, pursuant for one or more privately negotiated transactions, at a price which shall not exceed the transaction was approved by the PRC Ministrymarket price of Commerce and the China Securities Regulatory Commission (CSRC), for a total consideration of approximately $250 million. During 2015,each such repurchase.

On May 31, 2018, the Company completed a private offering of senior unsecured notes (hereinafter – Series F Debentures) to institutional investors pursuant to Rule 144A and Regulation S under the salesU.S. Securities Act 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), for1933, as amended, in a total considerationamount of approximately $364 million.

On October 29, 2015,$600 million, due in 2038. The Series F Debentures carry an annual coupon of 6.375%, to be paid in semiannual installments on May 31 and November 30 of each year, commencing November 30, 2018 and until the credit rating company Standard & Poor’s revised its rating outlook of the Company’s credit, which isrepayment date. The Series F Debentures have been rated BBB (together with the rating of the debentures) from stable to negative. The Company’s local credit rating in IsraelBBB- by StandardS&P Global Inc. and Poor’s Maalot remained unchanged at ilAA,Fitch Rating Inc. with a stable rating outlook.

Subsequent to

On May 10, 2018 and on June 21, 2018, respectively, the balance sheet date, Fitch Ratings Services revised itscredit rating agency S&P ratified the Company’s international credit rating, BBB- with a stable rating outlook, and credit rating agency S&P Ma’alot ratified the Company’s credit rating, ‘ilAA’ with a stable rating outlook.

On October 29, 2018, the Company entered into an agreement according to which, its commitment under certain revolving credit facility agreements were reduced by a total aggregate amount of $655 million, to an amount of $1.2 billion (hereinafter – the agreement). In accordance with the agreement, the maturity date of the Company's$1.2 billion revolving credit which is rated BBB (togetherfacility has been extended from March 2022 to March 2023, with two options for an extension (at the ratingbanks’ option) of an additional one year each, so that the final maturity date, if all options are consummated, will be March 2025. All the other material original terms of the debentures) from stable to negative.

revolving credit facility agreements were maintained. The agreement entered into effect in November 2018.

Sources and Uses of Cash

The following table sets forth our cash flows for the periods indicated:

		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	)

	Year Ended December 31,
	2018	2017	2016
	$ millions	$ millions	$ millions

Net cash provided by operating activities	620	847	966
Net cash provided by (used in) investing activities	331	(333)	(800)
Net cash used in financing activities	(894)	(511)	(239)

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Operating Activities

Net

The cash flows fromprovided by operating activities are a significant source of liquidity for the Company. In 2015,2018, the net cash provided by operating activities was approximately $573 million, compared with approximately $893 million last year. Most of the decline in cash flows from operating activities amounted to $620 million, compared with $847 million last year. This decrease derives mainly from an increase in payments of royalties partly as a result of arbitration decision received at the declineend of 2018 and cash paid from losses in derivative transactions in the current year along with an increase in working capital in the current year compared with a decrease in the last year. This decrease was partly offset by return of advanced tax payment at the beginning of 2018 in the amount of $ 40 million.

In 2017, the cash flows from operating activities amounted to $847 million, compared with $966 million in 2016. This decrease derives mainly from an increase in payments of taxes along with higher cash payments made due to retirement of employees in 2017 as well as a lower reduction in the working capital, mainly from an increase in sales in Industrial Products and in the Fire Safety and Oil Additives businesses. In addition, there were cash payments relating to discontinuance of the activities of Allana Afar in Ethiopia and the global ERP project (Harmonization Project).

Investing Activities

The net income,cash provided from investing activities in 2018 amounted to $331 million, compared with $333 million used in investing activity last year. This increase derives mainly as a result of net proceeds received from selling the strike at ICL Dead Seafire safety 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.

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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 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 receivables and inventory) and from adjusting non-cash accounting expenses and income in respect of impairment of assets and income from entry into consolidation.

Investing Activities

In 2015, the net cash used in investing activities was approximately $547 million, compared with approximately $996 million in 2014. The decrease in cash used in investing activities derives mainly from a drop in investments in property, plant and 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 coreoil additives businesses in the amount of approximately $364$902 million andcompare with $168 million received from selling an equity-accounted investee (IDE) in last year. This increase in investments in intangible assets.

In 2014, net cash used in investing activities was approximately $996 million, compared with approximately $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 at the Dead Sea. Thepartly offset by higher cash flows used for investments in property, plant and equipmentequipment.

In 2017, the net cash used in 2014 declinedinvesting activities amounted to $333 million, compared with 2013 (approximately $752$800 million compared to $827 million) asin 2016. The decrease in the cash used in investing activities derives, mainly, from proceeds received from selling an equity-accounted investee (IDE), in the amount of $168 million, a result ofdecrease in the declinecash flows used for investment in said investments after setting off the effect of payments paid to property, plant and equipment, suppliers. Nonetheless,lower purchases of intangible assets due to the cash flow used in investing activities increased in 2014, mainly as a resultdiscontinuance of the increaseglobal ERP project (Harmonization Project) along with the acquisition of 15% of the shares of YTH made in payments2016, in exchange for business combinations, investments in intangible assets, and investments in investees treated under the equity method.

a consideration of about $250 million.

Financing Activities

Net

The net cash provided byused in financing activities in 20152018 amounted to approximately $15$894 million, as compared with $511 million last year. This increase is mainly due to $70 million in 2014. The primary reason forrepayment of short-term credit, from proceeds received from selling the net decrease in cash from financing activities is the reduction in the net amount of the long-termfire safety and short-term loans taken out in 2015,oil additives businesses, in the amount of $363$283 million, in contrastcompared with $916 million in 2014, mainly due to a special dividend payment in March 2014,short-term credit received in the amount of $500$147 million and the decreaselast year.

The net cash used in investmentfinancing 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.

The2017 amounted to $511 million, compared with net cash provided by financing activities of $239 million in 2014 amounted to $70 million, compared to $309 million used in financing activities in 2013.2016. The primary factor causing the increase in the net cash providedused by financing activities was the increase in the taking outis mainly due to repayment of net long-termlong term loans, in 2014net, in the amount of approximately $916$421 million, compared with approximately $325the amount of $87 million made in 2013, as a result of2016, along with higher dividend payments to the increase in investment activities in 2014 and the decrease in cash flow from current activities, as specified above, and the increase in dividends paidCompany’s shareholders, in the amount of approximately $211$75 million as a resultcompared with 2016. On the other hand, there was an increase in receipt of a special dividendshort-term credit from banks and others, net, in the amount of approximately $500$133 million, that was paid in March 2014.

compared with 2016.

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As at December 31, 2015,2018, the Company’s non-currentnon‑current liabilities consisted of loans from financial institutions in the amount of approximately $1,740$345 million and debentures in the amount of approximately $1,065$1,470 million. For information about the currencies in which the Company’sCompany's liabilities are denominated and their interest rates, see Note 1715 to the Company’s financial statements.our Audited Financial Statements. As at December 31, 2015,2018, the Company had approximately $519$1,134 million of unutilized long-termlong‑term credit lines.

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Subsequent to the balance sheet date,February 26, 2019, the Company increasedwithdrew an additional $94 million from 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-termexisting credit lines, in the amount of approximately $200 million.

facilities.

A portion of ICL’sICL's loans bear variable interest rates based on the short-termshort‑term LIBOR rate for a period of one to twelve months, plus a margin as defined in each loan agreement. Therefore, the Company is exposed to changes in the cash flows arising from changes in these interest rates. Some of the loans and debentures issued by ICL bear fixed interest for the entire loan period. The Company hedges part of this exposure using financial instruments to fix the range of the interest rates, in order to conform the actual interest-rateinterest‑rate structure to the projections regarding the anticipated developments in the interest rates.

For a description of material financial covenants in the Company’s loan agreements and any potential risk relating to compliance with them – see Note 1715 to theto our Audited Financial Statements.

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Credit Facilities:

The Company’s financial statements.

Credit Agreements

Incredit facilities, as at December 2010, the Company received a loan from a European Bank in the amount of €100 million. The loan was repaid on December 15, 2015.

On March 23, 2015, ICL entered into an agreement with a group of eleven international banks, which will provide ICL a revolving credit facility in the total amount of $1,705 million, on the following terms:

31, 2018, are as follows:

Issuer	European bank (1)	Group of twelve international banks (2)	European bank (3)
Date of the credit facility	March 2014	March 2015	December 2016
Date of credit facility termination	March 2019	March 2023	May 2025
The amount of the credit facility	USD 35 million Euro 100 million	USD 1,200 million	USD 100 million
Credit facility has been utilized	Euro 40 million	USD 200 million	USD 70 million
Interest rate	Up to 33% use of the credit: Libor/Euribor + 0.90%. From 33% to 66% use of the credit: Libor/Euribor + 1.15% 66% or more use of the credit: Libor/Euribor + 1.40%	Up to 33% use of the credit: Libor/Euribor + 0.70%. From 33% to 66% use of the credit: Libor/Euribor + 0.80% 66% or more use of the credit: Libor/Euribor + 0.95%	Libor + 0.45% + spread
Loan currency type	USD and Euro loans	USD and Euro loans	USD loans
Pledges and restrictions	Financial covenants - see Section D, a cross-default mechanism and a negative pledge.	Financial covenants - see Section D, a cross-default mechanism and a negative pledge.	Financial covenants - see Section D and a negative pledge.
Non-utilization fee	0.32%	0.21%	0.30%

(1)	a.After the date of the report, the Company elected not to realize the option of revolving credit facility extension, and to repay the utilized credit facility on the date of its termination.

(2)	The loanIn October 2018, the Company entered into an agreement is foraccording to which, its commitment under certain revolving credit facility agreements will be reduced by a termtotal aggregate amount of five full years from$655 million, to an amount of $1.2 billion.

(3)	In June 2018, the signingmaturity 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 applyfacility was extended to the amount of the loan actually used, scaled to the amount of2025. In November 2018, the credit facility actually used, as follows:

·Upwas reduced from $136 million to 33% use$100 million. As at the date of the credit:	Libor + 0.7%.
·From 33% to 66% usereport, the Company utilized $70 million of the credit:	Libor + 0.8% (on the entire sum used).
·66% or more use of the credit:	Libor + 0.95% (on the entire sum used).that credit facility.

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 facilities taken out in March 2011 and in December 2011 in the aggregate amount

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Sale 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 has been utilized in the amount of $1,330 million. Subsequent to the balance sheet date, the loan agreement termination date was extended for a period of one year, until March 2021. The amount and credit terms of the loan agreement remain unchanged.

In March 2014, the Company entered into an agreement with a European bank,receivables 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 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 Euribor plus a margin of between 0.9% and 1.4%. The non-utilization commission is 0.32% per year. On 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.

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On September 11, 2012, the Company received a loan in the amount of $50 million from a third party. The loan was repaid on December 11, 2015, and another loan was taken out, in the same amount, bearing interest at the three-month Libor rate plus a margin of 0.6%. This loan will be renewed every three months.

In December 2012, the Company entered into a credit facility agreement with a European bank for a loan of approximately €100 million. As at December 31, 2015, the Company utilized the 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 credit is LIBOR plus 1.4%.

In November 2013, the Company signed a loan agreement with several institutional entities, in the amount of approximately NIS 600 million, bearing fixed interest at a rate of 4.74%. The loan is payable in installments starting from 2015 and up to 2024. As at December 31, 2015, the total amount of the loan is approximately $148 million (approximately NIS 576 million).

In June 2014, the 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, the Company signed a loan agreement in the amount of 161 million Brazilian reals with a European bank. The loan is payable in installments starting 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 149 million Brazilian reals (approximately $38 million).

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.

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 1,682 million Chinese yuans (about $259 million), which were received from a Chinese bank and from the partner in the YPH JV. Most of the loans bear annual interest at a fixed rate of 4.6%-5.89% and they are scheduled for repayment in 2016.

Securitization Transaction

In July 2015, the Company and certain Group subsidiaries (hereinafter – “the Subsidiaries”)the Subsidiaries) signed a series of agreements regarding a securitization transaction with three international banks (hereinafter – the Lending Banks) for the sale of their customertrade receivables to a foreign company which was established specifically for this purpose and which is neithernot owned nor controlled by the ICL Group (hereinafter – “thethe Acquiring Company”)Company).

This agreement replaces

Those agreements replace the prior securitization agreement, in the amount of $350 million,agreements 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’sCompany's policy is to utilize the securitization limit based on its cash-flowcash flow needs, alternative financing sources and market conditions. The new securitization agreement will expire in July 2020. InUnder the agreement,agreements, 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 complymeet with the saidthis ratio, the Acquiring Company is allowed tocan discontinue acquiring new trade receivables (without affecting the existing acquisitions). As at the date of this Annual Report,the report, ICL is in compliance withmeet the aforementionedabove 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. As at December 31, 2018, the loan outamount 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 sale of the customer debts in the securitization transaction will be up to $405framework is $350 million.

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The acquisitions 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.

Once the Company transferred its trade receivables, it no longer has the right to sell them to another party. 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 majoritymost 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 the case of a credit default, the Company bears approximately 30% of the overall secured trade receivable balance.

In addition, as part of the agreements a number ofseveral 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, of which the customer portfolios of which do not meet the conditions provided, will no longer be included in the securitization agreement.

Theagreements. Based on the above terms, the securitization of trade receivables does not meet the conditions for disposalderecognition of financial assets prescribed in International Standard IAS 39,IFRS 9, 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 atof December 31, 2015,2018, utilization of the securitization facility and the balance of the trade receivables included inwithin this framework amounted to $285$ 332 million (as(December 31, 2017 - $331 million).

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Information on material loans and debentures outstanding as at December 31, 2014 – approximately $290 million).

Once2018:

Instrument type	Loan date	Original principal (millions)	Currency	Carrying amount ($ millions)	Interest rate	Principal repayment date	Additional information
Loan-Israeli institutions	November 2013	300	Israeli Shekel	67	4.74% (1)	2015-2024 (annual installment)	Partially prepaid
Debentures (private offering) – 3 series	January 2014	84 145 46	U.S Dollar	84 144 46	4.55% 5.16% 5.31%	January 2021 January 2024 January 2026
Loan-international institutions	July 2014	27	Euro	25	2.33%	2019-2024	Partially prepaid
Debentures - Series D	December 2014	800	U.S Dollar	182	4.50%	December 2024	(2)
Loan - European Bank	December 2014	161	Brazilian Real	19	CDI+1.35%	2015-2021 (Semiannual installment)
Debentures - Series E	April 2016	1,569	Israeli Shekel	416	2.45%	2021- 2024 (annual installment)
Loan - others	April - October, 2016	600	Chinese Yuan Renminbi	29	5.23%	2019	(3)
Loan - Asian Banks	June - October, 2018	600	Chinese Yuan Renminbi	87	4.79% - 5.44%	2019
Loan - Asian Bank	April 2018	400	Chinese Yuan Renminbi	58	CNH Hibor + 0.50%	2019
Debentures - Series F	May 2018	600	U.S Dollar	596	6.38%	May 2038	(4)
Loan - European Bank	December 2018	70	U.S Dollar	70	Libor + 0.66%	December 2021

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Additional information:

(1)          From April 2018, in accordance with the Companyloan agreement, there has transferred its trade receivables, it no longer has the right to sell them to another party. In the case ofbeen a credit default, the Company bears 30% of the total balance of the trade receivables.

2005 Debentures

In 2005, the Company issued debentures to institutional investors in a private issuancedecrease in the United States in the amount of $125 million bearing fixed interest. As at December 31, 2014, the outstanding balance of the debentures was approximately $67 million, bearing fixed interest at a rate, of 5.72%. On March 3, 2015, the debentures were repaid in full.

2013 Debentures

In November 2013, a wholly-owned and controlled subsidiary of the Company entered into an agreement with institutional and international investorsfrom 4.94% 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%.

20144.74%.

(2)          Debentures

On December 2, 2014, the Company completed the private Series D

Private issuance of senior notesdebentures 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.Israel. The notes bear an annual coupon of 4.5% to be paidare registered for trade 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 receivedthe TACT Institutional; by the Company for the debentures amount to about $794 million.Tel-Aviv Stock Exchange Ltd. The notes have been rated BBB (stable) by Standard and Poor’s and by Fitch. In March 2017, the rating company “Fitch Rating Ltd. The notes are registered for trading in the TACT Institutional, by the Tel-Aviv Stock Exchange Ltd.

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On October 29, 2015, Standard & Poor’s revised its rating outlook of” lowered the Company’s credit which is rated BBB (togetherrating, together with the rating of the debentures)debentures, from BBB to BBB- with a stable to negative.

Subsequent to balance sheet date, Fitch Ratings Services revised its rating outlook ofoutlook. In November 2017, the rating company “Standard & Poor’s” reaffirmed the Company’s credit which is rated BBB (togetherrating, together with the rating of the debentures)debentures, at BBB-, with a stable rating outlook. On May 29, 2018, the Company completed a cash tender offer for its Series D debentures. Following the tender offer, the Company repurchased an amount of $616 million out of the original principal amount of $800 million. 

On May 10, 2018 and on June 21, 2018, respectively, the credit rating agency S&P ratified the Company’s international credit rating, BBB- with a stable rating outlook, and credit rating agency Maalot ratified the Company’s credit rating, ‘ilAA’ with a stable rating outlook.

(3)          Loans from others

In July 2018, ICL and YTH agreed to convert their owner’s loans in the YPH joint venture (each company holds 50%) in the amount of $146 million into equity by issuing shares. As a result, the consolidated debt was reduced by $73 million against “non‑controlling interest” equity balance.

(4)          Debentures-Series F

On May 31, 2018, the Company completed a private offering of senior unsecured notes to institutional investors pursuant to Rule 144A and Regulation S under the U.S. Securities Act of 1933. According to the terms of the Series F Debentures, the Company is required to comply with certain covenants, including restrictions on sale and lease-back transactions, limitations on liens, and standard restrictions on merger and/or transfer of assets. The Company is also required to offer to repurchase the Series F Debentures upon the occurrence of a "change of control" event, as defined in the indenture for the Series F Debentures. In addition, the terms of the Series F Debentures include customary events of default, including a cross‑acceleration to other material indebtedness. The Company is entitled to optionally repay the outstanding Series F Debentures at any time prior to the final repayment date, under certain terms, subject to payment of an agreed early repayment premium. The Series F Debentures have been rated BBB- by S&P Global Inc. and Fitch Rating Inc. with a stable to negative.

rating outlook.

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Critical Accounting Policies and Estimates

The following is a descriptionpreparation of certain keyfinancial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies on which our financial condition and resultsthe reported amounts of operations are dependent. The key accounting policies generally involve complex quantitative analyses or are based on subjective judgments or assumptions. Management bases its estimatesassets, liabilities, income and judgments on historical experience and on various other factors that are believed to be reasonable under current circumstances.expenses. Actual results may differ from these estimates.

The evaluation of accounting estimates if assumptions and conditions change.

Employee Benefits

According to International Standard IAS 19, someused in the preparation 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-term increase in wages and an assessmentICL’s financial statements requires management of the life expectancyCompany to make assumptions regarding laws interpretations which apply to the Company, circumstances and events that involve considerable uncertainty. Management of the group of employees entitled to a pension. Assessment ofCompany prepares the interest rate for purposes of discounting our pension liabilityestimates based on past experience, various facts, external circumstances, and the pension fund assets isreasonable assumptions based on the ratepertinent circumstances of returneach estimate. Estimates and underlying assumptions are reviewed 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-term bonds changes accordingongoing basis. Revisions 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.

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 depositsaccounting estimates are measured according to their fair value. Changesrecognized in the period in which the estimates are revised and in any future periods affected.

Information about 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 accumulatedmade by ICL 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 usfuture and our legal advisors.

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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 indefinite 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 experiencereasons for uncertainty with respect to this asset or similar assets, and on our best assessments regarding the economic conditionsestimates that will exist during the asset’s remaining useful life.

The estimateshave a significant risk 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 determinedresulting 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.

Business Combinations

We are requiredmaterial adjustment 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 balancecarrying amounts 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 companiesnext financial year 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 details – 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’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 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 10. Additional Information—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.

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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.

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 17 regarding taxes on income
Uncertain tax positions	The extent of the certainty that ICL’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 several matters including interpretations of tax laws and the ICL’s experience.	Recognition of additional income tax expenses.	See Note 17 regarding taxes on income
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.	See Note 18 regarding employee benefits.
Assessment of probability of contingent and environmental liabilities including cost of waste removal/restoration	Whether it is more likely than not that an outflow of economic resources will be required in respect of potential liabilities under the environmental protection laws and legal claims pending against ICL and the estimation of their amounts. The waste removal/ restoration obligations depend on the reliability of the estimates of future removal costs and interpretation of regulations.	Creation, adjustment or reversal of a provision for a claim and/or environmental liability including cost of waste removal/restoration.	See Note 20 regarding contingent liabilities
Recoverable amount of a cash generating unit, among other things, containing goodwill	Expected cash-flow forecasts, the discount rate, market risk and the forecasted growth rate.	Change in impairment loss.	See Note 13 regarding impairment testing.
Assessment of the fair value of the assets and liabilities acquired in business combinations	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.
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.
Concessions, permits and business licenses	Forecast of obtaining renewed concessions, permits and business licenses which constitute the basis for the Company's continued operations and /or the Company's expectations regarding the holding of the operating assets by it and / or by a subsidiary until the end of their useful lives	Impact on the value of the operation, depreciation periods and residual values of related assets.	See Note 20 regarding contingent liabilities
Mineral reserves and resource deposits	Quantities and qualities estimates of mineral reserves and resource deposits are based on engineering, economic and geological data that is compiled and analyzed by the Company’s engineers and geologists.	Impact on the useful life of the assets relating to the relevant activity.

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Principal Capital Expenditures and Divestitures

We

ICL had cash capital expenditures of approximately $947$572 million, $958$457 million and $1,270$632 million in 2013, 2014for the years ended December 31, 2018, 2017 and 2015,2016, respectively. The above capital expenditures includecomprise of investments in fixed and intangible assets including such items which were consolidated as part of business combinations in the said years. Ourassets.

ICL’S principal capital expenditures since January 1, 20132016 have consisted of work on the dike surrounding the evaporation ponds of our Fertilizers segment at the Dead Sea, constructionfollowing main projects:

Construction work with respect to a new power station at Sodom. The cogeneration plant has the capacity to generate 230MW and 330 tonnes/hour of steam and is reducing ICL's carbon footprint. As of December 31, 2018, the plant was operational. The Company intends to operate the station concurrently with the existing power station, which will be operated on a partial basis in a "hot back up" format, for production of electricity and steam.

Consolidation of production site and expanding logistic capacity in Spain. A closure of a mine and processing plant, in parallel to a development of an adjacent mine and processing plants through a capacity increase of the remaining mine up to about 1.3 million ton KCl /year and surrounding logistics infrastructures. The investment includes a tunnel that will connect the mine to the surface plants through conveyor belts, as well as a new port loading bay facility at Barcelona.

Raising the coastal dykes of the evaporation ponds at the Dead Sea. The objective of the project is to protect the hotels, which are located on the Western coast of Pond 5 from flooding due to a rise in water levels in the evaporation pond, and until the harvest project (see below) will commence operations. The project is managed by the governmental Dead Sea Protection Company, and ICL is participating in 39.5% of its funding.

New pumping station (P-9) in Sodom. 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 therefore necessary. The new pumping station will serve as the main brine intake station for pumping brine from the Dead Sea to the coastal transmission system. The project consists of a sea base for the pumps, a bridge to the shore, a shore base, delivery pipes and an open canal. In 2017, the Board of Directors approved an investment in construction of the P-9 pumping station.  In 2017 and 2018, DSW signed agreements with several execution and infrastructure companies, in a total amount of $160 million (out of the total project cost of about $250 million), for construction of the P-9 Pumping Station. The P-9 Pumping Station is expected to commence its operation during the year 2020.

Salt harvesting in the Dead Sea. A project aiming to keep a constant solution level in Pond 5 that complies with the Israeli regulatory requirements of 15.1m, through dredging the salt settlement in the pond and transporting it for submergence in the Dead Sea. ICL's share in the project's funding is 80%. In October 2017, ICL signed a 12-year agreement that the cost of which for ICL is $280 million, for execution of the first stage of the salt harvesting project with Holland Shallow Seas Dredging Ltd., which includes, among others, the construction of a special dredger that is designed to execute the salt harvesting. The dredger is expected to enter into service towards the end of 2019.

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In 2018, the main capital investments (CAPEX) included the consolidation of the potash production capacity in Spain (mine, logistics and port), construction of a phosphogypsum pond in ICL Rotem (pond 5), raising the coastal dykes in the evaporation ponds, as well as investment in the new power station in Sodom, investmentscommencement of construction of the new pumping station (P-9) in the northern basin of the Dead Sea, the salt harvesting project in the Dead Sea and Clean Air Act related projects in Israel.

In 2019 the Company's plan is to focus on continuing the development of its production capacity in Spain, the new pumping station (P-9) in Sodom, Clean Air Act related projects in Israel and the salt harvesting project in the Dead Sea. In addition, the Company will be investing in a new production capacity of white phosphoric acid as part of a plan to gradually increase the production capacity of the Sodom plans, investments to increase the production capacity of our minesits partnership in Europe and improvements in our logistics setup and the purchase and refurbishing of isotanks for transporting bromine. We are financing ourChina (YPH).

The Company finances its capital expenditures from cash flows from operations and from credit facilities.

ICL’s integrated business model is based on its unique access to essential minerals that support its specialty downstream activities – with the focus on crop nutrition and industrial markets. Our capital expenditures in 2015 are primarily in Israel and Spain, and include expansionmodel creates significant operational synergies, which derive from the combination of our attractive assets and broad value‑added solutions. In 2018 ICL launched its “Business Culture of Leadership” strategy, focused on enhancing market leadership across its three core mineral value chains of bromine, potash production capacity atand phosphate, as well as realizing the Suria site in Spain (mine, facilities and logistics), the new power station in Sodom and continuationgrowth potential of Innovative Ag Solutions. As part of the investmentCompany's strategy to obtain leadership positions in the Harmonization project (planningall its activities and establishment of one centralized ERP system, for each company). In addition, the Company is the examination, planning and evaluation stages in connectiongiven ICL’s integrated business model we are constantly considering measures, including divestiture opportunities, with large projects in Africa and China. The Company is funding these capital expenditures using cash flows from operations and our credit facilities. The Company is continuing the arrangement 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. For additional details regarding this agreement – see Note 23respect to our audited financial statements.

Accordinglow synergy businesses and businesses where we cannot be the market leader. ICL is constantly monitoring the competitive environment and will continue to the Company’s strategy, from timeseek ways to time various possibilities are examined in connectionadhere with its non-core activities, includingstrategy.

In December 2017, the sale thereof. Accordingly, in 2015 the Company completed sale of the APW (Alumina, Paper, Water), Rhenoflex, Pharma/Cosmetics/Gypsum, Medentech and the Anti-Germ businesses, which produced over $350 million positive cash flows. In March 2016 we successfully completed the sale of Clearon (chlorine-based biocide activitiesits holdings in USA)IDE Technologies Ltd., for net proceeds of $168 million. in accordance with ICL strategy. Additional divestiture opportunitiesMarch 2018, the Company completed the sale transaction of the Fire Safety and Oil Additives businesses, for a total consideration of $1,010 million, of which $953 million is in our non-core businesses include IDE.

cash and $57 million is in the form of a long-term loan to a subsidiary of the buyer. Furthermore, in July 2018, the Company completed the sale of the assets and business of its subsidiary, Rovita, for no consideration.

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C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

Research and development

ICL’s R&D activities are part of its global strategic plan. The activities include both internal research and joint activities with a wide range of universities, research institutes and start-ups along with other long‑term innovative activities. ICL’s R&D is aimed towards present and future market needs and focuses on identifying additional uses for the minerals in use and their derivatives. 

Fields of R&D include:

Advanced crop nutrition: bio/no bio degradable coating; nutrient sensing; growth enhancers (bio/non bio stimulants); N fixation.

Advanced Materials: energy storage and low energy consumption applications; construction and paints & coatings additives; flame retardants; biocides; circular economy – "from waste to product" concept.

We proactively look for open innovation platforms with research institutes, academia, startups and others. In 2015, we2018, the Company significantly expanded ourstrengthened its core area research activities with third parties in our core areas: agriculture, food, and industrial materials. Also included in these activities are: establishment of an agronomicalparties. The Agronomic research collaboration between ICL group and the Volcani Center, whose activities areInstitute (CPFN), which is based in Gilat in the Southernsouthern part of Israel, executed 21 active projects in addition to field trials and establishmentagronomic workshops. The activities 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,ICL Innovation, which focusfocuses mainly on high‑risk technologies in the initial stages of development, andhas 22 running projects, which are high riskdone in comparisoncollaboration with ordinary research and developmentpartners from the academy and/or industry. YPRTECH, our JV in China, is running 10 projects 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.

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The cross-segment development teams that were set up in 2014 by the ICL R&D Management Forum, headed by the CTO, are continuing to work together based on common areas of interest and operations in order to promote the application of new products and technologies.

Severaltechnologies, based on Phosphor derivatives.

The CTO office leads ICL’s Technology Roadmap, which is driven from scouting of theglobal trends combined with ICL's constant development and improvement needs.

The defined goals of theour research and development operations are directed atare:

1.          Implement an innovation thinking in the expansion of ourcompany and encourage ideation processes;

2.          Focus on balanced portfolio based on time to market, value and risks;

3.          Increase the Company’s new products and new technologies portfolio, activities to improve processesratio;

4.          Continuous process improvement in ourthe Company’s manufacturing facilities (reducingby reducing production costs, per ton),operating optimization and cultivatingreduction of waste streams and environmental impacts based on circular economy environment;

5.          Cultivating the R&D human resources and the technological human capital.

Our R&D expenses, net were $83 million, $87 millionleadership;

6.          Investing in external collaboration for achieving new ideas and/or know-how knowledge; and $74 million

7.          Joining consortiums for external funding and backward integration over the entire project value-chain, in 2013, 2014order to reduce risks and 2015, respectively.

Our Fertilizers segment’senhance controls.

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Below are the main areas of the R&D activities in 2015 focused on the following items:

by segments:

Industrial Products

·

ImprovementNew Flame retardants for Printed wire boards: Development of processes and reduction of costs innew phosphorus‑based solutions for PWB according to new emerged demands from the phosphates and potash plants;market e.g. Polyquel® P100. This is a polymeric halogen free flame-retardant active ester curing agent for epoxy laminates with superior performance.

·

ImprovementBrominated polymeric flame retardants: Development of the quality of the products being sold;next generation polymeric/active brominated flame retardants which are more environmentally friendly and future substitutes for threatened products.

·

ResearchFlame retardants for polyurethanes: development of new phosphorus‑based solutions and integrated phosphorus/bromine solutions as flame-retardants for the polyurethane market (flexible and rigid foam). VeriQuel F100 is a new flexible halogen free active flame retardant for flexible polyurethane being launched to the market.

·

Textiles: continuing development of TexFRon®, a series of textile flame‑retardant products. The series includes TexFRon 9001, the FR acrylic binder TexFRon P and the low-melt polymeric TexFRon 4002. Additionally, it includes TexFRon AG and TexFRon 5001, both are non-halogen flame retardants. TexFRon®4002 is an effective and environmentally friendly solution for diverse textile products, replacing DECA and offering a transparent and laundry‑durable solution that is not currently available in the market. In addition, unique ATO-free (Antimony Trioxide) flame‑retardant systems were introduced to the market. These green solutions created interest among the Company's customers and are being commercially evaluated; TexFRon 4002 and TexFRon 5001 are Oeko-Tex® certified.

·

Energy storage: continued development of bromine‑based energy storage solutions for Br-Battery companies, using diverse compounds.

·

Ecological research to reduce emissions:  e.g. wastewater management, air emissions and solid/organic waste reuse.

·

Biocides: continued development of new materials for water treatment and prevention of biofilm in industrial water cooling systems and pulp & paper plants.

·

Phosphorus‑based products: development of new phosphorus‑based solutions for hydraulic fluids.

·

Magnesia-based products: development of formulations in order to fulfil unmet needs in the markets, such as replacing aluminum products in deodorants and zinc oxide in several consumer products.

·

Support of production: improving product quality, production cost, energy saving, recycling and waste treatment. Changing and improving processes while using the principles of green chemistry.

·

Trouble shooting and equipment maintenance cycle improvement using better construction materials preventing of accelerated corrosion, wear and tear, and equipment adaptation.

The total Industrial Products segment’s R&D expenses in 2018 were about $21 million.

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Potash

·

Activities of efficiency and synergy measures in order to increase potash production and reducing cost per tonne at the potash and magnesium plants in Sodom;

·

Advancement of research regarding environmental protection, including development of methods for reducingtreating and treatingreducing effluents;

·

Analysis of alternative methods for increasing the production capacity of carnallite;carnallite at the evaporation ponds;

·

ProductionImplementation of a new fertilizer from wastewater flows;the recommendations of the R&D department designed to clear bottlenecks, focused on the flotation and compaction areas, with the purpose of increasing the production capacity in Spain;

·

Further analysisPotashpluS compaction – commissioning of operation at the compaction facility and optimization of the compaction process parameters;

·

PotashpluS granulation – development is carried out at IFDC (International Fertilizer Development Center) and is currently at the stage of increasing production capacity to 400 kg per hour. This being a preliminary stage prior to development unto production on a full industrial scale;

·

Granular Polysulphate – optimization of the process on two aspects: output and quality, as well as implementation of a new organic coating.

The total Potash segment's R&D expenses in 2018 were about $8 million.

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Phosphate Solutions

·

The segment continues to check the adaptation of various potential types of phosphate rock (bituminous and brown phosphates) for the production of phosphoric acid and its downstream products as part of an effort to exploitutilize and increase existing phosphate reserves;reserves. In 2019 the segment will further analyze these types of phosphate including R&D, pilots, plant testing activities and its economic feasibility.

·

DevelopmentImprovement of a new process forprocesses and reduction of costs in the production of white acid at the China site;plants;

·

DevelopmentResearch regarding environmental protection, including development of products having a high-acid content allowing diverse applications of soluble fertilizers;methods for treating and reducing effluents;

·

Development of controlled-release products with coating materials of compositions and thicknesses unlike those currently available in the market with the addition of micro-nutrients;

·

Development of controlled-release fertilizers with improved environmental profile;

·

Development of applications preservingfor water conservation 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;

·

Examination of technologies for improvement of the production of polysulphate on the Company’s site in the UK; and

·

Development of a manufacturing processnew PK fertilizer fully soluble;

·

Implementation of software to track global product life cycle to support global visibility of projects and formulas;

·

The R&D unit continuously looks out for potassiumnew areas of innovation, for example to translate megatrends like sodium reduction with the target to create a full product portfolio based on ICL’s mineral tool box. This trend is relevant for processed meat applications. Furthermore, the segment participates in the trend of meat substitutes to complement a competitive product portfolio for classical phosphate customers in the meat, poultry and potassium sulfate in aseafood industries;

·

Successful launch of the phosphate-based additive HALOX® CW-314 into the paints & coatings market. The additive is enhancing the infrared (IR) reflectance and thermal emissivity of elastomeric roof coating while maintaining the dirt pick-up resistance (DPUR) and prevention of mildew growth; and

·

At the end of 2018, the R&D departments for food specialties and industrial phosphate applications were integrated into one support platform. The technical capabilities and the project of ICL in Ethiopia.portfolio were streamlined to fulfill the actual business needs and to realize financial synergies.

Our Fertilizers segment’s

The total Phosphate Solutions segment's R&D expenses in 20152018 were approximately $22about $12 million.

Innovative Ag Solutions

The R&D activities of our Industrial ProductsIAS segment are part of the Company’s strategic plan. The global research activities are based on internal research together with joint activities with a wide range of universitieswill function as ICL’s innovative arm, promoting innovation, developing new products and research institutes along with other long-term innovative activities. The units execute activities directed at the present and future needs of the market. The activities will be focused primarily on identifying additional uses for bromine or its derivatives,services as well as developments indigital platforms and technological solutions for farmers and agronomists.

The segment will drive collaborations with innovative technologies and its goal is to introduce and integrate new digital solutions for the area of magnesiaagricultural world by utilizing, among other things, external knowledge and phosphorus-based flame retardants.

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The R&D activities of our Industrial Products segment are as follows:

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Additional targets:

·

Brominated polymers: continued developmentImprovement 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.product portfolio with new product formulations; Mainly tailored formulations on customer demand

·

Textiles: continued development of TexFRon®, a series of textile flame-retardant products. TexFRon® 4002 is an effective and environmentally friendly solution for diverse textile products, replacing DECA and offering a transparent and laundry-durable solution that is not currently available on the market. In the prior year, nylon-intensive flame-retardant products were developed to satisfy an unmet need in 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.

·

Energy storage: continued development of bromine-based solutions for storing energy using diverse technologies.

·

Ecological research to improve sewage treatment systems, and to reduce air emissions and solid waste.

·

Biocides: continued development of new materials for water treatment and prevention of biofilm (algae) in irrigation systems and water coolants for industry. In addition, there is research activity for polymer synthesis with biocidal activity.

·

Phosphorus-based products: development of new reactive phosphorus-based products and/or integration of a phosphorus/bromine chemistries mainly flame-retardants for the polyurethane foam (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 clear solutions are been developed.

·

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 obsolescence.

Our Industrial Products segment’s total R&D expenses in 2015 were approximately $25 million.

The principal R&D activities of our Performance Products segment in 2015 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;

·

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);

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·

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, including fundamental research on process parameters;

·

Providing a tool box for modifying texture and stability of food 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 systemsimproved production options for sauces, dessert and bakery products;HiPeaK;

·

ContinuedDevelopment of controlled‑release NPK fertilizers with a quicker fully degradable coating;

·

Development of applications for water conservation and improving availability of the fertilizers around the root; and

·

Initiation and development uses of low-sodium salts based on raw materials from the Dead Sea and integration of SALONA into spice blends for meat applications and culinary sauces.new technologies to increase nutrient use efficiency.

Our Performance Products

The total Innovative Ag Solutions segment’s total R&D expenses in 20152018 were approximately $14about $11 million.

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-how is subject to OCS approval and to possible payments to the OCS in the event of transfer of the know-how outside of Israel.

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Intellectual property

We believe

The Company believes that protecting ourits intellectual property is one of the methods ofcrucial for protecting and developing ourits business activities.

Our Speciality Fertilizers Business ICL has 13 groups ofabout 850 granted patents mostly related to derivatives of the Osmocote brand, for specific soluble fertilizers, production technology of coatings (P₁, P₂), and for applications of controlled fertilizer compounds and plant protection products.

Industrial Products has approximately 278 patents that have been registered over the years and approximately 159 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 segment’s products. In 2015, 44 new patent applications filed by our Industrial Products segment were approved.

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Our Performance Products segment

ICL also has in various countries, approximately 1,012over 3,000 registered trademarks and approximately 302 registered patents.

worldwide, including inter-alia:

·

Fyrol® - a brand name for a range of phosphorus-containing flame retardants targeting flexible and rigid polyurethane foam applications.

·

Joha® - a global trademark for dairy specialties, which specializes in emulsifying salts for processed cheese.

·

Merquel® - a line of inorganic brominated salts which can be used to control mercury emissions from coal power plants.

·

Osmocote® - a leading brand in the area of controlled released fertilizers which uses innovative technologies and is used globally by container nursery stocks, pot- plant growers and more.

·

Peters® - a brand of water soluble fertilizers, specifically designed for bedding-, pot- and container nursery plants.

·

Tari® - a brand in the meat industry as well as in the artisan business which focuses on the production and processing of meat products with functional additives, spices and flavors.

·

Brifisol® - a global brand in the meat and seafood industries, which concentrates in improving texture by adding cryoprotectant for frozen food products such as meat, shrimp, fish filets and more.

We do not believe that the expirationloss of any patentsingle or violation by anygroup of our entitiesrelated patents or trademarks would have a material effect on our operations or our financial results.

D. TREND INFORMATION

D. TREND INFORMATION

Trend information is included throughout the other sections of this Item 5.“Item 5 - Operating and Financial Review and Prospects— A. Operating Results”. In addition, the fluctuations in the operating results may continue in the upcoming quarters. Specific material drivers of these trends are identified in the discussion above with respect to the years ended December 31, 2013, 20142018, 2017 and 2015.2016. Seasonality of our business is included inItem 4. “Item 4 - Information on the Company—B. Business OverviewOverview”.

E. OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2015,2018, we had no material off-balance sheet arrangements.

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arrangements, other than the amounts reported as operating lease obligations in “Item 5 – Operating and Financial Reviews and Prospects - .F - Contractual Obligations” and the amounts described in Note 15H (2) to our Audited Financial Statements.

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F. CONTRACTUAL OBLIGATIONS

The following table presents information related to our contractual obligations, including estimated interest payments, as of December 31, 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

____________________

2018.

	*As at December 31, 2018
	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 Total amount of approximately $250 million.(2)	12 months or less	1-2 years	3-5 years	More than 5 years
	$ millions	$ millions	$ millions	$ millions	$ millions

Credit from banks and others (not including current maturities)	556	556	-	-	-
Trade payables	715	715	-	-	-
Other payables	330	330	-	-	-
Operating lease obligations	359	50	45	103	161
Purchase obligations(1)	3,033	646	192	606	1,589
Employee Benefits	526	25	80	126	295
Long-term debt and debentures	2,855	152	453	1,084	1,166
Total	8,374	2,474	770	1,919	3,211

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(1)

This information excludes agreements in the ordinary course agreementsof business for purchases within the next twelve months.

		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

(2)

The amounts presented, including long-term items, are presented in nominal values (and include estimated interest, so that they differ from their carrying amount).

	As at December 31, 2018
	Total amount	12 months or less	1-2 years	3-5 Years	More than 5 years
	$ millions	$ millions	$ millions	$ millions	$ millions

Financial liabilities – derivative instruments utilized for economic hedging
Foreign currency and interest derivative instruments	16	16	-	-	-
Derivative instruments on energy and marine transport	5	4	1	-	-
	21	20	1	-	-

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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”Item 5. Operating and Financial Review and Prospects—F. Contractual obligations” above. For our cautionary statement on the forward-looking statements in this Annual Report, see “Special”Special Note Regarding Forward-Looking Statements,” on page ii of this Annual Report.

Statements”.

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Item 6. Directors, Senior Management and Employees

A.6 – DIRECTORS, SENIOR MANAGEMENT AND OFFICERS

EMPLOYEES

A.

DIRECTORS AND OFFICERS

The following table lists the names and ages of our directors as ofat the publication date of this Annual Report. The mailing address of our directors is c/o Israel Chemicals Ltd., 23 Aranha Street, Millennium Tower, Tel Aviv, 61070,6120201, Israel.

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Name	Age	PositionCommencement date as director
Nir Gilad**Johanan Locker	5962	ExecutiveApril 2016 and as Chairman of the Board of Directorssince August 2016
Aviad Kaufman	48	March 2014
Avisar Paz	5962	DirectorApril 2001
Aviad KaufmanLior Reitblatt	4561	DirectorNovember 2017
Ron Moskovitz Nadav Kaplan(1)	5373	DirectorAugust 2018
Ovadia Eli	74	August 2011
Reem Aminoach	58	March 2017
Ruth Ralbag	58	January 2018
Sagi Kabla	3942	DirectorFebruary 2016
Ovadia Eli Yoav Doppelt(2)	7150	Director
Yaacov Dior	72	External Director
Dr. Miriam Haran	66	External Director
Geoffery Merszei	65	Director
Shimon Eckhaus	65	Director
Stefan Borgas	51	DirectorDecember 2018

____________________

*(1)

Messrs. Yair Orgler and Victor Medina finished their tenuresOn August 20, 2018, the annual General Meeting of the Company's shareholders appointed Dr. Nadav Kaplan as an external director of the Company, directors in 2015.for a first three-year term of office. For further details about Dr. Kaplan, see below.

**(2)

On December 12, 2018, the Board of Directors appointed Mr. Nir Gilad will retire fromYoav Doppelt as a director of the company's Board at September 1, 2016. The Board has formedCompany, until the next annual General Meeting. For further details about Mr. Doppelt, see below.

(3)

On January 10, 2018, Mr. Shimon Eckhaus ceased serving as a Search Committee compriseddirector of two board members:the Company.

(4)

On February 13, 2018, Mr. Geoffery Merszei ceased serving as a director of the Company.

(5)

On February 26, 2018, Mr. Yaacov Dior Chairmanceased serving as an external director 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 inCompany.

(6)

On August 2016 to approve appointment29, 2018. Dr. Miriam Haran ceased serving as an external director 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.Company.

***

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.

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Dr. Nadav Kaplan and Ms. Ruth Ralbag are “external directors” pursuant to the Israeli Companies Law, 5759-1999 (the “Companies Law”), as described under “Item 6 - Directors, Senior Management and Employees — C. Board Practices — External Directors”.

Mr. Lior Reitblatt is an independent director pursuant to the Israeli Companies Law.

Ms. Ruth Ralbag, Messrs. Yaacov Dior, Miriam Haran, Geoffrey MerszeiNadav Kaplan, Reem Aminoach and Shimon EckhausLior Reitblatt are independent directors under the rules applicable to U.S. companies listed on the NYSE. Messrs. Nir Gilad,Johanan Locker, Avisar Paz, Aviad Kaufman, Ron Moskovitz, Sagi Kabla, Ovadia Eli and Stefan BorgasYoav Doppelt are not considered independent directors by virtue of the positions they hold with our controlling shareholder or in the Company; these directors are also not considered independent directors also under Israeli law due to atheir relationship with our controlling shareholder or with the Company. Two of our directors are “external directors” under the Israeli Companies Law, 1999 (the “Companies Law”) as described under “Item 6. Directors, Senior Management and Employees—C. Board Practices—External Directors”.

Nir Gilad

Johanan Locker. Mr. GiladLocker serves as chairman of the Board of Directors since January 2008 and as of May 12, 2015, as Executive Chairman of the Board. He serves as director in Oil Refineries Ltd. and until January 7, 2015, he served as president and chief executive officer of Israel Corporation. Mr. Gilad also served as deputy chief executive officer for business development and strategy in Israel Corporation. He served as chairman of the boards of directors of ZIM Integrated Shipping Services LTD., IC Power Israel Ltd., IC Green Energy Ltd., and H.L. Management and Consulting (1986) Ltd. Mr. Gilad served as director in companies fully owned by Israel Corporation, as director in Tower Semiconductor Ltd. and Qoros Automotive Co. Ltd. (formerly known as Chery Quantum Auto Co. Ltd. 2007) Ltd. Prior to joining Israel Corporation, Mr. Gilad was senior vice president of Migdal Insurance Company, chief executive officer of Migdal Investment Management Ltd. and chairman of Migdal Capital Markets Ltd. During his term of office as accountant general of the Ministry of Finance and deputy head of the budget 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. He also served as the chief 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 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 is chairman of the Friendsboard of the Soroka Medical Center Friends’ Association. Prior to joining the Board, Mr. Locker was the CEO of Clal Heavy Industries and isReal Estate Ltd. (2014-2016). He served as Chairman of the Boards of several companies, including Beit Shemesh Engines, Hadera Paper, the Golf & Co. Group and Clal Sun. He was also a directorBoard member at Mashav Initiating and Development, Taavura Holdings and Jafora-Tabori. Mr. Locker served as strategic consultant of Clal Industries Ltd. (2013-2014) and as the Military Secretary to the Prime Minister of Israel (2010-2012). Mr. Locker, a Major General (reserve), held various command positions in the Herzliya Interdisciplinary Center.Israeli Air Force, among them, IAF Chief of Staff, deputy IAF commander (2008-2010), Head of Air Division (2005-2008), Commander of the Hatzerim IAF Base (2001-2004) and Head of the Planning Division (1997-2001). Mr. GiladLocker held several positions in the Operations Department of the Israeli Air Force (1994-1996) and served as a fighter squadron commander (1991-1994). Mr. Locker holds a BA in Economics, Agricultural Administrationeconomics and Natural Sciencesbusiness administration (with honors) from the HebrewBar Ilan University and an MA in Business Administrationpublic administration from Bar Ilanthe Kennedy School of Government at Harvard University.

Avisar Paz

Aviad Kaufman. Mr. Paz serves as director since April 2001. HeKaufman 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 certified public accountant in Israel.

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Aviad Kaufman. Mr. Kaufman serves as director since March 2014. He is the chief financial officer of Quantum Pacific (UK) LLP, and is also achairman of the board member of Israel Corporation Ltd., a board member of Kenon Holdings Ltd., and IC Power Pte. Ltd.,other private companies, each of which may be associated with the same ultimate beneficiary, Mr. Idan Ofer. Mr. KaufmanPreviously, he served as chief financial officer of Quantum Pacific Advisory Limited (2008-2012)(UK) LLP (2008-2017). He served as director of international taxation and fulfilled differentheld various 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 inof Jerusalem (with distinction)honors), and an MBA majoring in Finance from Tel Aviv University.

Ron Moskovitz

Avisar Paz. Mr. Moskovitz was appointed as a director of the Company on February 8, 2016. Mr. MoskovitzPaz is the Chief Executive Officer of Quantum Pacific (UK) LLP,Israel Corporation and was previously Israel Corporation's Chief Financial Officer. Mr. Paz serves as chairman of the Boarddirector in various subsidiaries of Israel Corporation, including in Oil Refineries Ltd. Mr. Paz holds a BA in economics and Pacific Drilling S.A.accounting from Tel Aviv University 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 CPACertified Public Accountant in IsraelIsrael.

Lior Reitblatt. Mr. Reitblatt is a Certified Public Accountant, and holds a BA in Accountingaccounting and Economics from Haifa University and a Master of Business Administrationeconomics 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 CollegeUniversity of Management Studies.

Ovadia Eli.California, Berkeley. Until recently, Mr. Eli servesReitblatt served as directorCEO and Chairman of the Board of Super-Pharm (Israel) Ltd. Mr. Reitblatt has also previously served, among other things, as Chairman of the Board of Life Style Ltd. and member of the board of Office Depot Israel Ltd.

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Nadav Kaplan. Dr. Kaplan is the chairman of the board of ORAN Safety Glass, since August 2011.2008. He served as chairman of the board in 11 industrial companies and was also a board member of 4 Israeli public companies. Dr. Kaplan held the military rank of Colonel (res.), served as a combat navigator in regular and reserve service (1964-1997). Prior to his retirement (1986), he was the head of the Planning Division of IAF. Dr. Kaplan holds a BA in Economics and Business Administration from Bar Ilan University, a Master of Science in Management from Massachusetts Institute of Technology (M.I.T) and Ph.D from Haifa University in Memory Studies.

Ovadia Eli. Mr. Eli is Chairman of the Board of Oil Refineries Ltd. He served as Chairman of the Board of the Israel Airports Authority, Israel Military Industry (I.M.I), Shmanim BasisimBesisyim Haifa Ltd. and I.C.P.I. He was a member of the boardsBoards of directorsDirectors 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 Counselingeducational counseling and Bible Studiesbible studies from the Haifa University and is a graduate of the Lifshitz Teachers Academy,College in Jerusalem.

Yaacov Dior

Reem Aminoach. Mr. DiorAminoach is a Certified Public Accountant, and holds a BA in accounting and economics, Tel-Aviv University (academic honors, Dean's honor list) and MBA in business administration, Tel-Aviv University. Until recently, Mr. Aminoach served as externalthe founding partner of the accounting firm Shtainmetz Aminoach & Co. In his military service, Mr. Aminoach, Brigadier general, served as a member of the General Staff Forum of the IDF, Head of Budgets at the Ministry of Defense, financial advisor to the IDF Chief of Staff and Head of the IDF Budget Division. Mr. Aminoach served as director at Ofer Investments Ltd. and as director and Chairman of the Audit Committee at Zim Ltd., of the Israel Corporation group. Mr. Aminoach also served as a member of the Board of Governors of Hadassah Medical Center.

Ruth Ralbag. Ms. Ralbag has served as CFO of the Shaare Zedek Medical Center in Jerusalem since October 2011, and until October 2014previously served as Deputy Director of Medical Finance at the Tel Aviv Sourasky (Ichilov) Medical Center (2009-2011), Head of the Hospital Administration and servesDeputy Director General of Planning, Budget and Pricing at the Ministry of Health (2004-2009), VP and Head of Commercial and Retail Banking Division at FIBI (2001-2003). Ms. Ralbag also served, among other things, as Acting Chairperson of the Board of FIBI Mortgages Ltd. for a period of 4 years, Acting Chairperson of the Board of Atzmaut Mortgage Bank Ltd. for a period of 4 years, a Director at Sarel Ltd., a Director at ARAM Provident Fund and as an external director since February 2015. He isat Hachsharat HaYishuv Insurance Ltd. Ms. Ralbag presently serves, among other things, as an external director at Clal Insurance HoldingsHalman Aldubi Investment House Ltd. He was CEOand Golf & Co. Group Ltd. Ms. Ralbag holds a BA in economics and business administration and an MBA in public policy, both from the Hebrew University in Jerusalem.

Sagi Kabla. Mr. Kabla is the Chief Financial Officer of Israel Credit Cards Ltd., of Visa Alfa Ltd.,Corporation since December 2015. He serves as director in Bazan Group and of IDT Carmel Ltd. Hepreviously served as director on the boardsSenior Executive of Visa EuropeBusiness Development, Strategy and Visa International. HeIR in Israel Corporation. Prior to joining Israel Corp. he held various management roles in KPMG Corporate Finance. Mr. Kabla holds an MBA (Finance) from COMAS, B.A. in Economics and Accounting from Bar-Ilan University and was also chairmanqualified as CPA (Isr.).

Yoav Doppelt.Mr. Doppelt is, among others, Chairman of the boardBoard of Cellarix Mobile PaymentsOPC energy Ltd. and of Kneh Hacol Ltd. Mr. Dior is a member of the Friends Society and is chairman of the audit committee of Bar-Ilan University. Mr. Dior is also a member of the public council of Alut – the National Association for Autistic Children,(TASE:OPCE) and a member 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.

Dr. Miriam Haran. Dr. Haran serves as external director since September 2009. She served as director general of Israel’s Ministry of the Environment. She is currently head of Ono Academic College’s MBA Program in Environmental Management and is a board member in M.A.I (Recycling Electrical and Electronic Waste). Dr. Haran served as a board member of the Company for Environmental Services (2008-2012) and as chairperson of the Consumer Council (2012-2014). Dr. Haran holds a B.Sc. in Natural Sciences from the Hebrew University of Jerusalem and a PhD in Organic Chemistry from Brandeis University.

Geoffrey Merszei. Mr. Merszei serves as director 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 numberDirectors of positions at The Dow Chemical Company, including as its executive vice president (2005 to 2012) and chief financial officer (2005 to 2009), during which time he also served on Dow’s Board (2005 to 2009). Mr. Merszei was CEO and chairman of the Board of Dow Europe, the Middle East and Africa (2009 to 2012). In 2001 Mr. Merszei left Dow to be executive vice president and chief financial officer of Alcan Inc.Zim Integrated Shipping Services Ltd. 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 CEO of Kenon Holdings Ltd. (NYSE:KEN) and as an executive committee memberExecutive Chairman of ICpower Ltd. as well as the Founder and CEO of the European Chemical Industry Council (CEFIC) (2009 to 2012).Ofer Group private equity fund. Mr. MerszeiDoppelt holds a BA in Economicseconomics and management from Albion College, Michigan, U.S.A.

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Shimon Eckhaus. Mr. Eckhaus serves as director since February 2015. He serves asIndustrial Management at the president of Worldwide Integrated Network Ltd. and also serves on the board of directors of Orbit Technologies Ltd. and AqWise Ltd. Mr. Eckhaus is a strategic and marketing advisor to a number of private and public companies. From 2009 to 2011, Mr. Eckhaus served as chairman of the board 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,Technion and an M.Sc. in Materials and Processing Engineering, bothMBA degree from Ben GurionHaifa University.

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The following table lists the names, ages and positions of our Executive Officers (who are not directors) as of the publication date of this report. The address for sending notices is c/o Israel Chemicals Ltd., 23 Aranha Street, Millenium Tower, Tel Aviv, 61070,6120201, Israel.

Name	Age	Position
Stefan Borgas Raviv Zoller(1)	5155	ICL President & Chief Executive Officer
Asher Grinbaum Anat Tal-Ktalav(2)	66	ICL Chief Operating Officer
Kobi Altman	47	ICL Chief Financial Officer
Nissim Adar	6450	President, ICL FertilizersIndustrial Products Division
Charles M. Weidhas	5759	Chief Operating Officer
Eli Glazer(2)	62	President, ICL Industrial ProductsInnovative Agro Solutions Division
Mark Volmer Ilana Fahima(3)	52	President, ICL Performance Products
Eli Amit***	61	Senior Vice President, ICL Global Economics
Dan Chen***	6453	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 MielkeKobi Altman	6450	Executive Vice President, ICL Specialty FertilizersChief Financial Officer
Lizette Killian Lilach Geva-Harel(4)	5042	Senior Vice President, Global General Counsel
Miri Mishor(2)	55	Senior Vice President, Global Information Technology
Noam Goldstein(2)	58	President, ICL GlobalPotash Division
Ofer Lifshitz(2)	60	President, ICL Phosphate Solutions Division
Rani Lobenstein	47	Senior Vice President, Corporate Relations
Ido Lilian Amir Meshulam(5)	5242	ExecutiveSenior Vice President, ICL Global ProcurementInternal Auditor

____________________

*

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)

Mr. Raviv Zoller entered into office as CEO of the Company on May 14, 2018, replacing the Company's Acting CEO, Mr. Asher Grinbaum.

(2)

Further to the structural adjustments of the Company's business segments (see Note 5 to our Audited Financial Statements), as of August 31, 2018, Mr. Noam Goldstein serves as President of the Potash Segment, Ms. Anat Tal as President of the Industrial Products Segment, Mr. Ofer Lifshitz as President of the Phosphate Solutions Segment, and Mr. Eli Glazer as President of the Innovative Ag Solutions Segment. In addition, as of August 31, 2018 Mr. Noam Goldstein, Ms. Anat Tal and Ms. Miri Mishor, SVP Global IT are considered executive officeholders of the Company.

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(3)

On November 11, 2014, Eli Amit gave notice1, 2018, Mrs. Ilana Fahima joined ICL as EVP, Global HR, replacing Mr. Yakir Menashe which assumed the position of his wishEVP, Global Procurement as of such date. As of the date of her appointment, Mrs. Fahima is considered as an executive officeholder of the Company. Mrs. Fahima's terms of Compensation as well as her entitlement to retire from his position during 2016. On November 4, 2015, Mr. Dan Chen gave a noticethe insurance, indemnification and exemption arrangements as are currently in effect for the Company’s Executive Officers, were approved by the Company's HR & Compensation Committee and Board of his wish to retire from his position during 2016.Directors on October 25, 2018 and October 31, 2018, respectively.

Stefan Borgas

(4)

On February 1, 2019, Mrs. Lilach Geva Harel joined ICL as SVP, Global General Counsel, replacing Ms. Lisa Haimovitz. As of the date of her appointment, Mrs. Geva Harel is considered as an executive officeholder of the Company. Mrs. Geva Harel's terms of Compensation as well as her entitlement to the insurance, indemnification and exemption arrangements as are currently in effect for the Company’s Executive Officers, were approved by the Company's HR & Compensation Committee and Board of Directors on December 25 and 27, 2018, respectively.

(5)

see C. Board Practices – Internal Auditor.

Raviv Zoller. Mr. Borgas serves inZoller entered office as ICL's President & CEO on May 14, 2018, following his position since September 2012 and is also a directorappointment by the Board of the Company.Directors on February 25, 2018. Prior to joining ICL, from 2008, Mr. Borgas previouslyZoller served as chief executive officerthe CEO of Lonza-Group (2004 to 2012) andI.D.I. Insurance Company Ltd. (“Bituach Yashir”), which is director in the Syngenta Group. Mr. Borgas is a member of the board of the Israeli-German Chamber of Commerce and serveslisted on the board of directors of IFA, the International Fertilizers Association. He holds a BATel Aviv Stock Exchange. In 1999, he founded Ness Technologies Inc., which began trading on NASDAQ in Business Administration from the University of Saarbrucken (Germany)2004 and an MBA from the University of St. Gallen (Switzerland).

Asher Grinbaum.served as its President and CEO until 2007. Mr. GrinbaumZoller voluntarily serves in his position since January 2008. He is director in 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.Ethiopian National Project (ENP), a non-profit organization, since 2012. Mr. GrinbaumZoller holds a BAB.A. degree in Mechanical EngineeringEconomics and an MBAAccounting from Tel Aviv University, and is a qualified CPA.

Anat Tal-Ktalav. Mrs. Anat Tal-Ktalav has been serving as president of ICL´s Industrial Products Division since August 2018. Mrs. Tal-Ktalav joined ICL in 1995 and served in various leading positions in the Industrial Products business segment, including Marketing Director of Flame Retardants, Vice President for Industrial Solutions (Bromine and Compounds Business Management, bothLine), Deputy to the President of ICL Industrial products, and until recently, as the Executive Vice President of ICL Industrial Products. Mrs. Tal-Ktalav holds a degree in chemical engineering from Ben Gurion University.

Kobi Altman.

Charles M. Weidhas. Mr. Altman serves in his positionWeidhas has been serving as Chief Operating Officer (COO) since April 2015. He is director in Dead Sea Works Ltd., Rotem Amfert Negev Ltd., Dead Sea Bromine Company Ltd. and Bromine Compounds Ltd.– subsidiaries of the Company. Mr. Altman previously held several senior financial positions at Teva Pharmaceuticals Industries Ltd. (2006-March 2015). Mr. Altman is a qualified CPA in Israel and holds a BA in Accounting and Economics from Bar Ilan University and an MA from Bar Ilan University.

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Nissim Adar. Mr. Adar serves in his position since October 2013.July 2016. He previously served as chief executive officerCEO of theICL Industrial Products Segment (2008 to October 2013). Mr. Adar holds a BA in Chemical Engineering(2013-2016) and an MBA in Industrial Management from Ben Gurion University.

Charles M. Weidhas. Mr. Weidhas serves in his position since October 2013 and is currently chairmanas CEO of Tami IMI R&D Institute. He previously served as the chief executive officer of theICL Performance Products Segment (2007(2007-2013). Prior to 2013) and previouslyICL he held managementmanagerial positions with Monsanto and Solutia. Mr. Weidhas holds a B.Sc. in Chemical Engineering and an MBA from Northeastern University.

Mark Volmer.

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Eli Glazer. Mr. Volmer servesEli Glazer has been serving as President of ICL´s Innovative Ag Solutions Division since August 2018. Mr. Glazer joined ICL in his position since November 2013. Previously he served in different business manager roles at BASF1983 and has held numerous positions with the Company, including CEO of ICL Performance Products in Europe and Asia Pacific.Pacific for a period of 5 years and CEO of ICL China for a period of 5 years. Before that, Mr. Volmer holds an M.Sc.Glazer held various positions in Chemistry from Vrije University AmsterdamICL Industrial Products, including Business Division Director of Bromine Products and an MBA from the Rotterdam School of Management, Erasmus University.

Eli Amit.Compounds. Mr. Amit serves in his position since January 2002. He serves as director in Dead Sea Works Ltd., Rotem Amfert Negev Ltd., Dead Sea Bromine Company Ltd. and Bromine Compounds Ltd. Mr. AmitGlazer holds a BA in Economicseconomics and Philosophyan MA in industrial engineering from Ben Gurion University.

Ilana Fahima. Mrs. Ilana Fahima was appointed Executive Vice President, Global Human Resources, in November 2018. Prior to joining ICL, Ms. Fahima served as Vice President HR for Global Quality and Head of Israel HR at Teva Pharmaceutical Industries Ltd. Before joining Teva, she held several positions at Maccabi Health Services, among them Regional HR Director and Regional Service Manager. Ms. Fahima holds a BA in Social Work and an MBA in Health Care Management, both from Tel AvivBen Gurion University.

Kobi Altman. Mr. Altman has been serving as ICL CFO since April 2015. Mr. Altman previously held several senior positions at Teva Pharmaceutical Industries Ltd. (2006-2015). Mr. Altman is a Certified Public Accountant in Israel and holds a BA in Accounting and Economics from Bar Ilan University as well asand an MA in Economics from NorthwesternBar Ilan University.

Dan (Dani) Chen. Mr. Chen serves in his current position since October 2013. He was Chief Executive Officer

Lilach Geva-Harel. Mrs. Geva-Harel entered office as SVP, ICL's Global General Counsel on February 1, 2019, following her appointment by the Board of the Fertilizers segment until October 2013. Mr. Chen holds a BA in Electrical EngineeringDirectors on December 27, 2018. Prior to joining ICL, from the Technion-Israel Institute of Technology in Haifa and an MA in Industrial Management from Ben Gurion University of the Negev.

Lisa Haimovitz. Ms. Haimovitz serves in her position since May 2009. She2009, Mrs. Geva-Harel served as vice president for strategySenior Deputy to CEO and Head of Investments House's Headquarters of Psagot Investment House Ltd., as well as the general legal counsel. She previously served as a Partner in the Delek Group and has served in a number of positions in the Israel Securities Authority. SheMerger & Acquisitions Department at Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co Law Offices (GKH). Mrs. Geva-Harel holds an LLB and an MBALLM from Tel AvivBar Ilan University and is a member of the Israel Bar.

Hezi IsraelBar. Mr. Israel serves

Miri Mishor. Mrs. Mishor has been serving as Senior Vice President, ICL Information Technology since 2014. Mrs. Mishor joined ICL in his position since March 2012. He1986 and served as vice presidentin various positions, including CIO of strategy and business development for theICL Industrial Products Segment. Heand Vice President Information Systems of ICL Fertilizers. Mrs. Mishor holds a BAB.Sc. degree in EconomicsMathematics and PoliticalComputer Science and an MBA majoringa M.Sc. degree in Finance, bothIndustrial Management from Tel AvivBen Gurion University.

Yakir Menashe.

Noam Goldstein. Mr. Menashe servesNoam Goldstein has been serving as President of ICL´s Potash Division since August 2018. Mr. Goldstein joined ICL in his position since March 2013. He1986 and served as a vice president of compliance ®ulatory affairs and assistant to the chief executive officer of the Company. Mr. Menashe holds an LLB in Law from the College of Management and is a member of the Israel Bar.

Karl Georg Mielke. Mr. Mielke serves in his position since November 2013. He served as head of K+S Aktiengesellschaft Global salt business unit (2009–2013) and previously held various positions in the BASF Group.Potash business division, including Vice President of Business Development, CFO in Europe, Vice President of Infrastructure, Senior Vice President Operations at ICL Dead Sea, and until recently, Executive Vice President Potash and Magnesium.  He also serves as chair of the environmental committee and as a board member at Israel´s Manufacturing Association. Mr. MielkeGoldstein holds an MBAa B.A. in Economics and Business Administration from the Hebrew University and a M.A. in Economics from Ben Gurion University. He is also a graduate of Muenster, Germany.

Lizette Killianthe Heschel Sustainability Leadership Fellowship Program.

Ofer Lifshitz. Ms. Kilian serves Mr. Lifshitz has been serving as President of ICL´s Phosphate Solutions Division since August 2018. Mr. Lifshitz joined ICL in her position since December 2015. She previously held1996 and served in various strategic communicationssenior leadership positions inincluding Executive Vice President of ICL Industrial Products,  Senior Vice President of Global Processes and as the International Atomic Energy Agency, OPECcompany’s Integration Manager, Excutive Vice President for Special Projects, and the OPEC Fund. Ms. Kilianuntil recently, President of ICL Essential Minerals Division. Mr. Lifshitz holds a BABachelor’s degree in International RelationsEconomics and Political Science from Columbia University, New York.

Ido Lilian. Mr. Lilian serves in his position since the beginning of 2014. He previously served in several positions in the Industrial Products Segment, among others vice president operations, engineering and procurement (2012-2014), vice president of the supply chain and engineering (2011-2012), vice president of the magnesia division (2007-2011), head of the planning and purchasing division (2005-2007) and head of the technical department and purchasing division (2003-2007). Mr. Lilian holds a B.Sc. in Chemical Engineering and an MScMaster’s degree in Industrial Engineering and Management, both from Ben Gurion University.

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Rani Lobenstein. Mr. Lobenstein has been serving as Senior Vice President for Corporate Relations since 2017. Before Joining ICL in 2014, he served as Chief of Staff and senior advisor to the Director General of the Israeli Ministry of Finance (2002-2007). He served as CEO of ASIC, a subsidiary of Israel Corporation, where he served as a member of management between 2008 and 2014. In addition, Mr. Lobenstein served as Vice President for Strategy and Regulatory Affairs in OPC Rotem between 2010 and 2014. Mr. Lobenstein holds a B.Sc. in economics and agriculture from the Hebrew University of Jerusalem, and an MBA (financing) from the Israeli branch of Manchester 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.

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B. COMPENSATION

Under the Israeli Companies Law and regulations promulgated thereunder (collectively, the “Companies"Companies Regulations" or “Compensation Regulations”), the compensation of directors must comply with the company’sCompany's compensation policy and requires the approval of the Human ResourcesHR & Compensation Committee, the Board of Directors and Shareholders,the shareholders, in that order. The Companies Regulations set minimum and maximum amounts of cash compensation, depending on the size of the company, or cash and/or equity compensation that are relativeat a certain ratio to that ofthe compensation paid to other directors who are not controlling shareholders or employed thereby and who are not employed by the Company (collectively, “Other Directors”"Other Directors"). Until February 26, 2015, all the directors in the Company (excluding directors employed by Israel Corp.), were entitled to receive cash compensation in the maximum amount permitted by the Companies Regulations for external directors.

Directors who are employees ofoffice holders in Israel Corp. do not receive additional cash compensation for their services as directors. Instead, such fees are included in the annual management fees we pay to Israel Corp. pursuant to our agreement with them.

Onit. The management fees paid to Israel Corp. as of January 251, 2018, following the approval of the general meeting of shareholders from April 24, 2018, include, among other things, all compensation components, in equity (or the economic benefit thereof) and 26, 2015,in cash, for the Human Resources & Compensation Committee andservices of Company directors who are officer holders of Israel Corp.

At the Board of Directors, respectively, and on February 26, 2015, theAnnual General Meeting of Shareholders approved that theon December 23, 2015 (the "2015 AGM"), a ‘relative cash compensation to be paid to each of the directors (excluding directors employed by Israel Corp.)compensation’ for Non-Executive Directors (including external directors), who shall serve from time to time, shall includein accordance with Section 8A of the Companies Regulations  was approved, which consists of a fixed annual fee componentin the amount of NIS 200,000365,000 (approximately $50,850 on the date of the shareholders’ approval),$101,500) and a per meeting attendance fee which, as of August 29, 2015, would be reduced to equal 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. Suchin an amount equaled (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 (approximately $815) per meeting for directors who meet the qualifications of an expert director. Until August 29, 2015, per meeting attendance fee was paid in the maximum amount permitted by the Compensation Regulations. It was further approved by the authorized bodies in their meetings set forth above, to allocate 9,078 restricted shares to each of 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 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-The 2014 Equity Compensation Plan.”

On November 8 and 11, 2015, the Human Resources & Compensation Committee and the Board of Directors, respectively, and on December 23, 2015, the General Meeting of Shareholders, approved the cash compensation to be paid to each of the directors (excluding directors employed by Israel Corp.), 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 theICL’s size of ICL pursuant to the Compensation Regulations, as adjusted from time to time. Such amount equaled (on the date of the shareholders’ approval)time currently equals NIS 2,391 (approximately $610)(equivalent to approximately $665) per meeting for directors who do not meet the qualifications of an expert director and NIS 3,180 (approximately $811)(equivalent to approximately $885) per meeting for directors who meet the qualifications of an expert director. ItApproval was also given for the grant of equity compensation in restricted shares at a fixed annual value. As per the shareholders' approval in the extraordinary shareholders meeting that was held in February 26, 2015 (and thereafter in the general meetings that were held on December 23, 2015, January 3, 2017 and January 10, 2018), we pay the same cash and equity based compensation to all of our Non-Executive Directors, whether or not they are external directors as further detailed bellow, all in accordance with the Compensation Regulations. Accordingly, any changes to the directors’ compensation made from time to time, which require shareholder approval under Israeli law, including grants of additional equity based compensation, apply and will apply to all of our Non-Executive Directors, whether or not they are external directors (However, since the Company's Board of Directors currently consists of only one Other Director, the compensation currently paid to the external directors may not be changed as aforesaid, and therefore the annual equity compensation grant to our board members will be approved byeach year with equal value).

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On May 15, 2018, the authorized bodiesCompany received a formal ruling from the Israeli Securities Authority (hereinafter "ISA") in their meetingsresponse to the Company's application regarding the manner of implementation of the relative compensation mechanism with respect to external directors. According to the ISA's position, the Company acted lawfully in the manner of implementing the relative compensation to the Company's external directors, since the commencement of implementation of such mechanism in the Company.

As of February 13, 2018, Mr. Geoffery Merszei no longer serves as a board member of the Company and therefore, as of that date, there is only one Other Director serving at the date hereof (Mr. Reem Aminoach). At the Annual General Meeting of Shareholders that was held on August 20, 2018, Dr. Nadav Kaplan was elected as an external director, and was informed at that date that he will be entitled to receive equal compensation as the other external director, Mrs. Ralbag, for as long as Mrs. Ralbag remains in her first term of office (i.e., until January 9, 2021). Upon conclusion of Mrs. Ralbag’s first term of office (i.e., as of January 10, 2021), as per our HR & Compensation Committee and Board of Director’s decision, Dr. Kaplan’s compensation will be reduced to the fixed annual and per meeting compensation amounts paid to director who has "financial and accounting expertise" as set forth above,in tables in the Israeli Compensation Regulations pursuant to allocate 15,115 restricted shares to eachthe classification of the Company based on its shareholders' equity, and he will not be entitled to equity based compensation as well. Our HR & Compensation Committee and Board of Directors further resolved that as of such date, all Non-Executive board members that are entitled to compensation for their service as such, will receive the reduced compensation to be paid pursuant to the compensation tables in the Compensation Regulations, and will not be entitled to equity compensation.

The Company also covers and/or reimburses its directors (excluding the Company’s CEO, Mr. Stefan Borgas and the chairmanfor expenses (including travel expenses) incurred in connection with meetings of the Board Mr. Nir Gilad),and its committees or performing other services for no consideration,the Company in their capacity as directors, in accordance with the Company's Compensation Policy and the Compensation Regulations. Our Board Members are also entitled to the Company's insurance, indemnification and exemption arrangements for office holders.

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Equity Grants to Board Members:⁽¹⁾

Grant for Year	Offerrees	Allocation Date	Type of Equity(2)	Dates of Organs' Approvals	Grant Value (ILS)	Grant Amount	Exceptions & Comments
2018	each of our directors who serve from time to time (excluding the Chairman of the Board)	10.1.2018	restricted shares	HR & Comp.  Committee – 27.11.17 Board – 5.12.17 Shareholders (Annual GM) – 10.1.18	310,000	22,080	1.	Our former board members, Messrs. Geoffery Merszei and Yaacov Dior, whose term of office ended on February 13 and 26, respectively, were entitled to 2,057 and 2,843 Restricted Shares, reflecting their entitlement to the relative portion of the 2018 Grant.
							2.	Dr. Miriam Haran, whose term of office ended in August 2018, was allocated 14,793 restricted shares.
							3.	Dr. Nadav Kaplan was allocated 5,930 restricted shares on August 20, 2018.
							4.	Mr. Yoav Doppelt was allocated 758 restricted shares on December 12, 2018.
							5.	Messrs. Kaufman, Paz and Kabla waived in advance their entitlement to the equity compensation per 2018.
2019	each of our directors who serve from time to time (excluding the Chairman of the Board & Office Holders of IC)	1.1.2019	restricted shares	HR & Comp. Committee & Board – 19.6.18 Shareholders (Annual GM) – 20.8.18	310,000	14,623

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(1) The allocations are in accordance with the Company’s Equity Compensation Plan (2014), as specified below.amended in June 2016.

(2) The aforementioned authorized bodies further approved that the IC Directors and Mr. Aviad Kaufman will assign their Restricted Shares (or the economic benefit thereof)shares are subject to Israel Corp. and that Mr. Aviad Kaufman will also assign to Israel Corp. the 9,078 Restricted Shares that were grantedrestriction pursuant to Section 15C of the February 26, 2015, General Meeting’s approval,Securities Law.

* On June 6, 2018, Mr. Lior Reitblatt gave notice to the Company that he has independently purchased 58,850 shares of the Company on the Tel Aviv Stock Exchange, at a total amount of ILS 1 million. The total quantity of shares held by Mr. Reitblatt as further specified above. Mr. Aviad Kaufman will assign to Millennium his cash compensation paid byof the Company. Accordingly, 54,423 shares were allocated to Israel Corp.date of this annual report is 95,553.

** For further information on the fair value of the restricted shares and vesting conditions, see “E. Share Ownership-The 2014 Equity Compensation Plan.”

On May 12, 2015, Mr. Nir Gilad was appointed asNote 21 to our Executive Chairman ofAudited Financial Statements. For further details regarding the Board, a role which requires the devotion of 80% of his business hours. Mr. Gilad'sequity compensation terms were approved bygranted to 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 onNon-Executive directors, please see 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)Proxy Statement dated July 7, 2018 (Reference Number: 2018-02-067711). Mr. Gilad’s target bonus is calculated, according to the Companies 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 advance notice of 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 paidamount granted to all of the members of our senior management (GEC members) (including the officers listed in the table below)(Global Executive Committee – GEC) as of December 31, 2018, was approximately $8$12.5 million in 2015. for the year 2018.

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The following table and accompanying footnotes describe the compensations given in 2015granted for the year 2018 to the five highest earning senior officers in the Company and its subsidiaries.

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Table of Contents

				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 %

	Details of the Recipient			Payments for services
Name	Position	Scope of position	Holding in equity	Base Salary(1)	Compensation (2)	Bonus(3)	Equity based compensation (4)	Total
				US$ thousands
Raviv Zoller (5)	President & CEO since May 14, 2018	100%	*	420	1,035	523(6)	433	1,991
Johanan Locker (7)	Executive Chairman of the Board of Directors	90%	*	534	750	492	544	1,786
Charles Weidhas(9)	Chief Executive Officer, Industrial Products (COO) as of July 2016	100%	*	379	855	350	466	1,671
Asher Grinbaum (10)	Acting  CEO, ICL, between September 2016 to May 14, 2018	100%	*	172	477	909(11)	27	1,413
Kobi Altman(12)	Chief Financial Officer (CFO) as of April 2015	100%	*	391	523	367	467	1,357

* Less than 1%

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(1)

The compensationannual base salary for the officers in the above table was calculated according to their actual term of office in the Company in 2018.

(2)

The salary items (compensation) component set out in the above table includes all of the following components: monthly gross salary, employer social benefits, customary social and related provisions, company car, relocation expenses, rent and indemnification for tax payments in case of relocation, payments during advance notice period pursuant to the terms of employment agreements, inasmuch as relevant, and reimbursement of telephone and newspaper expenses. The compensation is in accordance with the Company's Compensation Policy.

(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 for Mr. Maimon was fully paid subsequent to his retirement.

(3)

The bonuses to officer holders for 2018, including the top-five earners in 2018, were approved by our HR & Compensation Committee and Board of Directors on February 4 and 5, 2019, respectively. The bonuses approved are in accordance with the provisions of our Compensation Policy, unless otherwise specifically mentioned.

(4)

The expense or income for the share-based payment component was calculated according to IFRS.

(5)

Mr. Stefan Borgas has servedRaviv Zoller entered into office as the Company's President & CEO on May 14, 2018. Mr. Zoller’s terms of employment were approved by our Chief Executive Officer since September 20, 2012.HR & Compensation Committee and Board of Directors on February 22 and 25, 2018, respectively, and by the general meeting of our shareholders on April 24, 2018, and they are as follows: (a) annual base salary of NIS 2,400 thousand (approximately $670 thousand), indexed to the Israeli Consumer Price Index (CPI). Mr. Borgas’ employment agreement is for an unlimited period and may be terminated by either party at any time. His monthlyZoller's annual base salary as of December 31, 2015,2018 is approximately $83,333. Stefan Borgas’ base salary is paidNIS 2,433 thousand (approximately $650 thousand); (b) annual cash bonus in accordance with ICL’s bonus plan and Compensation Policy. Mr. Zoller’s Target Bonus was set at NIS 2,500 thousand (approximately $695 thousand), with the maximum annual bonus set at the representative exchange rate onamount of NIS 3,750 thousand (approximately $1,040 thousand); (c) an annual equity compensation entitlement at the dateamount of payment. In addition to his monthly base salary, Mr. Borgas is entitled to 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,NIS 4,000 thousand (approximately $1,110 thousand), as well as participationan annual equity grant for 2018 at a total amount of NIS 4,000 thousand (approximately $1,110 thousand), which was granted to Mr. Zoller upon his entry into office, comprising half of options exercisable into Company shares at a value of NIS 2,000 thousand (approximately $555 thousand), and half of restricted shares at a value of NIS 2,000 thousand (approximately $555 thousand). For details regarding the equity compensation granted to Mr. Zoller for 2018, see to the description of the equity compensation grants, set forth in his medical insurance costs. With respect to severance, other than in cases where the right to compensation is revoked under Israeli law,table and respective foot notes below; (d) Mr. Borgas isZoller will be entitled to aan advance notice period equivalent to 6 months’ salary if his resignation is at his request, and equivalent toof 12 months’ salary if his resignation is initiatedmonths in case of termination by the Company. In additionCompany (not for cause) and will be required to give the Company a 6 months advance notice in case he resigns. During such advance notice period Mr. Zoller may be required to continue working for ICL, and therefore Mr. Zoller would continue to be entitled to all of his compensation terms, excluding an annual bonus in respect of the advanced notice period and excluding an equity grant, to the amounts provided regularly for pension and severance, additional severance compensation forextent granted during such advance notice period; (e) in addition, in case of termination of office,  Mr. BorgasZoller will be calculated and paid on the basis ofentitled to an additional severances equal to his last monthlyhis last base salary multiplied by the number of years that he is employed by the Company.

(4)

served as ICL’s President & CEO; (f) 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. ChenZoller is entitled to a notice period of 6 months. Accordingall 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, company car, etc., as well as the exemption, insurance and indemnification arrangements applying to the employment contractCompany’s office holders.

(6)

The annual bonus for 2018 to Mr. Zoller, as specified in the table above, reflects the outcome of implementation of the annual bonus formula as provided in the Company’s compensation policy and described in the salary updates,“Annual Bonus” section below with respect to Mr. Zoller's actual term of office in 2018 (i.e. beginning May 14, 2018), as decidedapproved by our HR & Compensation Committee and Board of Directors on February 4 and 5, 2019, respectively.

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(7)

Mr. Johanan Locker serves as director in the Company as of April 20, 2016, and as Chairman of our Board of Directors from time to time,(at a scope of no less than 90% of a full-time position) as of August 15, 2016. Mr. Chen’s monthlyLocker’s compensation terms were approved by our HR & Compensation Committee and Board of Directors on April 19, 2016, and on April 20, 2016, respectively, and by the general meeting of our shareholders on August 29, 2016, as follows: (1) annual base salary of NIS 1,920 thousand (approximately $535 thousand). Mr. Locker's annual base salary as of December 31, 2015 is approximately2018 has not changed; (2) annual cash bonus according to ICL’s bonus plan and compensation policy – the target bonus was set at NIS 117,056. Mr. Chen is entitled, in addition to the current provisions for pension funds and severance pay, to additional severance pay in1,900 thousand (approximately $530 thousand); (3) annual equity compensation entitlement at the amount of NIS 1,800 thousand (approximately $500 thousand). For details regarding an additional equity compensation granted to Mr. Locker in 2018, see to the description of the equity compensation grants, set forth in the table and respective foot notes below; (4) Mr. Locker will be entitled to an advance notice period of 12 months and will be required to give the Company a 6 months advance notice in case he resigns. During such advance notice period Mr. Locker may be required to continue working for ICL and therefore Mr. Locker would continue to be entitled to all of his compensation terms, including annual bonus; (5) in addition, in case of termination of service, Mr. Locker will be entitled to an additional severances equal to his last monthly salary multiplied by the number of years that he served as ICL’s Executive Chairman; (6) Mr. Locker 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, company car, etc.

(8)

On February 4 and 5, 2019, our HR & Compensation Committee and Board of his serviceDirectors approved, respectively, the annual bonus for 2018 to Mr. Locker, as Presidentfurther detailed in the “Annual Bonus” section below. In addition, at the same dates, the HR & Compensation Committee and Board of ICL Fertilizers.Directors, further resolved to grant a special bonus to Mr. Locker for 2018, in an amount equals to three (3) monthly salaries, or. NIS 480,000 (approximately $134 thousand). The valuespecial bonus is subject to approval of the equity componentgeneral meeting of our shareholders, and thus is not reflected in the table above includes the acceleration of unvested portions.above.

(5)(9)

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.

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(6)

Mr. Charles Weidhas serves as President, ICL Industrial Products,Chief Operating Officer (COO) as of OctoberJuly 1, 2013.2016. Mr. Weidhas’ employment agreementcontract is for an unlimited period and may be terminated by either party at any time by prior written notification.notice. Mr. Weidhas is entitled to aan advanced notice period and adjustment period of 6 months each and is entitled to life insurance and health insurance for himself and his family. ForBeginning on October 13, 2013, and for a period of 5 years thereafter, which was extended for an additional year by the HR & Compensation Committee and Board of Directors on October 25 and 31, 2018, respectively, Mr. Weidhas is entitled to reimbursement of his rent. As of March 2016, Mr. Weidhas’ monthly base salary asis paid in U.S. dollars. As of 31 December 31, 20152017, Mr. Weidhas’ monthly base salary 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.$30,468. Mr. Weidhas is also entitled, as long as he resides in Israel, 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 thefor pension fund and severance pay, Mr. Weidhas is entitled to additional severance paymentpay equal to his last salary multiplied by the number of his years he serves as President of employment withICL Industrial Products.in Israel. For details regarding Mr. Weidhas annual bonus for 2018, see the “Annual Bonus” section below.

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(7)(10)

Mr. Asher Grinbaum servesserved as Acting CEO of ICL between September 11, 2016 and May 13, 2018. During his service as Acting CEO, Mr. Grinbaum’s terms of employment remained similar to the terms he had in in his previous position in the Company – Executive Vice President and Chief Operating Officer since 2008. The 1994(COO). Mr. Grinbaum’s employment contract with Mr. Grinbaum, as amended to date, statesagreement (including amendments thereto), provided that Mr. Grinbaum’s base salary will be updated twice a year according to the rise in the CPIConsumer Price Index in the months that passed since such previous update. According to Mr. Grinbaum's employment agreement and the salary updates pursuant thereto, as decided by our Board of Directors from time to time, Mr. Grinbaum’s monthly base salary, as of December 31, 2018, was NIS 137,774 (approximately $35,600). Mr. Grinbaum's annual base salary in the above table was calculated according to the actual term of office in the Company in 2018, i.e. the relative portion calculated until the last day in office, May 13, 2018. Subsequent to his retirement on May 13, 2018, and pursuant to his employment agreement, Mr. Grinbaum was entitled to an accrued vacation period, between May 14, 2018 and July 16, 2018, which was followed by a 6 months advanced notice period. In the course of the two periods thereof, employer-employee relations continued to apply, and ceased on January 16, 2019. The Company has booked full provisions respecting the base salary for the remaining period of 2018 already as of December 31,2017, as well as for the accrued vacation period, the advanced notice period and Mr. Grinbaum's retirement benefits, except for the Special Bonus, as defined herein below. Therefore, all amounts that have been previously recorded in 2017 are not included in the table above.

(11)

The bonus amount in the above table includes: (A) an annual bonus for 2018, in an amount of NIS 1,570,000 (approximately $440,000), that was calculated in accordance with the Annual Bonus Calculation Formula and the provisions of our Compensation Policy, following the approval of HR & Compensation Committee and Board of Directors on February 4 and 5, 2019, respectively. In respect of the accrued vacation period and the advanced notice period, no Specific Personal Measurables (KPIs) were applied. For further details, see the “Annual Bonus” section below; (B) a Special Bonus in an amount of NIS 1,800,000 (approximately $500,550), that was granted to Mr. Grinbaum in light of his exceptional contribution and remarkable efforts when serving as our Acting CEO, as further set forth in the Proxy Statement for the Company's Annual General Meeting that was held on August 20, 2018. The Special Bonus was approved by the general meeting of our shareholders on August 20, 2018, following approval by our Compensation Committee and Board of Directors on June 19, 2018, and on February 4 and 5, 2019, respectively. According to the Company's Compensation Policy, the maximum special bonus payout with respect to the CEO in any given year cannot exceed the difference between three base monthly salaries and the non-measurable components of the annual bonus payout. In addition, the maximum special bonus payout in any given year with respect to any Executive Officer cannot exceed 6 base monthly salaries. Therefore, the special bonus to Mr. Grinbaum was approved by the general meeting of our shareholders in a deviation from the Company's Compensation Policy, according to section 272(C) to the Israeli Companies Law.

(12)

Mr. Kobi Altman serves as ICL’s Chief Financial Officer (CFO) as of April 1, 2015. Mr. Altman’s employment agreement provides that Mr. Altman’s base salary will be updated twice a year according to the rise in the Consumer Price Index in the months that passed since such previous update. The employment contract is not limited infor an unlimited period and may be terminated by either party at any time and will remain in force until it is ended by one of the parties by means of providing prioradvance written notification.notice. Mr. GrinbaumAltman is entitled to aan advance 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’sAltman’s monthly base salary, as of December 31, 2015 was2018, is approximately NIS 137,774.117,000 (approximately $31,215). In addition, Mr. GrinbaumAltman is entitled to all benefits customary in addition to the currentCompany, such as regular provisions for pension and severance, to additional severance pay equal todisability fund, company car, etc. Shortly after beginning his last salary multiplied byemployment, in April 2015, Mr. Altman was granted a special equity grant (as a signing bonus) of 59,391 restricted shares, the years of his service.

(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,value thereof at 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 expirationgrant 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 appearing1,600 thousand, which vested in the table reflects the aggregate expenditure recorded by us in 2015 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 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”).April 2018.

On August 4, 2014200

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The following table specifies the equity compensation details of each of the top-five earners among ICL’s senior officers, with respect to all equity compensation plans which the company had recognized an expense for in the period of the report, i.e. as of the equity compensation grant for 2014. The allocations to the top-five earners among ICL’s senior officers were made in the framework of annual compensation plans for Company executives and August 6, 2014 the Human Resources & Compensation Committeesenior employees, under which restricted shares 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 optionsnon-transferable option warrants were allocated for no considerationconsideration.

Year of grant	Approval dates	Offeree	Allocation date	Quantity of option warrants	Quantity of restricted shares	NIS exercise price (subject to adjustments)	Quantity of valid option warrants as at February 20, 2019	Weighted economic value of each option warrant (4)	Fair value of restricted shares	Exercise price of option warrants	Share price	Quantity of option warrants expired as at February 20, 2019	Notes
								On date immediately preceding allocation (NIS)		as at February 20, 2019 (NIS)
2014		Raviv Zoller	NA
		Johanan Locker	NA
		Charles Weidhas	September 27, 2014	95,129	22,250	28.71	63,418	6.57	28.09	25.289	20.2	31,711	Exercise price of the option warrants is 25.2% higher than the share price on February 20, 2019; hence the option warrants are “out of the money”.
		Asher Grinbaum(1)	September 27, 2014	95,129	22,250	28.71	63,418	6.57	28.09	25.289	20.2	31,711
		Kobi Altman	NA
2015	Compensation Committee and Board: May 10 and 12, 2015, respectively	Raviv Zoller	NA										Exercise price of the option warrants is 27.8% higher than the share price on February 20, 2019; hence the option warrants are “out of the money”.
		Johanan Locker	NA
		Charles Weidhas	July 8, 2015	137,363	23,200	27.76	45,787	4.55	26.94	25.829	20.2	91,576
		Asher Grinbaum(1)	July 8, 2015	137,363	23,200	27.76	45,787	4.55	26.94	25.829	20.2	91,576
		Kobi Altman	July 8, 2015	137,363	82,591(2)	27.76	45,787	4.55	26.94	25.829	20.2	91,576

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Year of grant	Approval dates	Offeree	Allocation date	Quantity of option warrants	Quantity of restricted shares	NIS exercise price (subject to adjustments)	Quantity of valid option warrants as at February 20, 2019	Weighted economic value of each option warrant (4)	Fair value of restricted shares	Exercise price of option warrants	Share price	Quantity of option warrants expired as at February 20, 2019	Notes
								On eve of allocation (NIS)		as at February 20, 2019 (NIS)
2016	Compensation Committee and Board: May 16 and 17, 2016, respectively. Respecting Mr. Locker, general meeting approval: August 29, 2016	Raviv Zoller	NA										Exercise price of the option warrants is 22.8% lower respecting Mr. Locker, 19.6% lower respecting Mr. Grinbaum and 22.2% lower respecting all others, than the share price on February 20, 2019, hence the option warrants are "in the money".
		Johanan Locker	August 29, 2016	186,335	55,215	17.05	186,335	4.19	15.42	15.595	20.2	-
		Charles Weidhas	June 30, 2016	133,747	39,632	17.05	133,747	4.83	16.3	15.716	20.2	-
		Asher Grinbaum(1)	February 14, 2017	114,065	37,592	17.22	114,065	5.83	17.69	16.233	20.2	-
		Kobi Altman	June 30, 2016	145,549	43,129	17.05	85,549(5)	4.83	16.3	15.716	20.2	-
2017	Compensation Committee and Board: June 19 and 20, 2017, respectively. Respecting Mr. Locker, general meeting approval: August 2, 2017	Raviv Zoller	NA										Exercise price of the option warrants is 22% lower respecting Mr. Locker and 28.5% lower respecting all others, than the share price on February 20, 2019, hence the option warrants are "in the money".
		Johanan Locker	August 2, 2017	164,916	52,910	16.49	164,916	5.46	17.01	15.744	20.2	-
		Charles Weidhas	June 20, 2017	128,627	42,089	15.31	128,627	5.17	15.8	14.448	20.2	-
		Asher Grinbaum(1) (3)	June 20, 2017	128,627	42,089	15.31	128,627	5.17	15.8	14.448	20.2	-
		Kobi Altman	June 20, 2017	128,627	42,089	15.31	128,627	5.17	15.8	14.448	20.2	-

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Year of grant	Approval dates	Offeree	Allocation date	Quantity of option warrants	Quantity of restricted shares	NIS exercise price (subject to adjustments)	Quantity of valid option warrants as at February 20, 2019	Weighted economic value of each option warrant (4)	Fair value of restricted shares	Exercise price of option warrants	Share price	Quantity of option warrants expired as at February 20, 2019	Notes
								On eve of allocation (NIS)		as at February 20, 2019 (NIS)
2018	Comp Com & BoD - February 22 and 25, 2018, respectively, general meeting April 24, 2018	Raviv Zoller	May 14, 2018	384,615	120,919	15.76	384,615	5.19	16.54	15.389	20.2	-	Exercise price of the option warrants is 23.8% lower respecting Mr. Zoller, 12.5% lower respecting Mr. Locker and 29.7% lower respecting all others, than the share price on February 20, 2019; hence the option warrants are “in of the money”.
	Comp Com & BoD - June 19, 2018, general meeting August 20, 2018	Johanan Locker	August 20, 2018(6)	402,685	47,244	18.06	402,685	5.96	19.05	17.679	20.2	-
	Comp Com & BoD – March 5 and 6, 2018, respectively	Charles Weidhas	March 6, 2018	140,000	43,894	14.52	140,000	4.75	15.15	14.205	20.2	-
	NA	Asher Grinbaum(1) (3)	NA
	Comp Com & BoD – March 5 and 6, 2018, respectively	Kobi Altman	March 6, 2018	140,000	43,894	14.52	140,000	4.75	15.15	14.205	20.2	-

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(1) Mr. Asher Grinbaum is subject to Mr. Stefan Borgas,“Rule 75”, provided in the Company’s equity plan, as well as 85,907amended in June 2016, whereby in case of termination of employment relations, and provided that the years of the offeree’s age plus his years of service with the Company equal or exceed 75, all option warrants and\or restricted share units and\or restricted shares under our 2014 Equity Compensation Plan. On December 11, 2014allocated thereto and yet to vest until termination of the optionsemployment relationship shall become vested, and may be exercised into shares for a period of 12 months following the termination of employer-employee relations. The expense for the vast amount of Mr. Grinbaum's equity compensation was recorded by the Company in 2017 for the total of option warrants 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. 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. Borgas, 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, 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). 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. Borgas, 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).

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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).

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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).

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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 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. Weidhas, 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 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, 2014 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 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. Weidhas, 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. 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). 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 optionsand restricted shares to Mr. Weidhas, 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).

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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-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. Grinbaum, 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. 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 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. Grinbaum, based on generally accepted accounting principles. The vesting price for converting the options intoMr. Grinbaum did not receive equity based compensation in 2018.

 (2) Shortly after beginning his employment, in April 2015, Mr. Altman was granted a special equity bonus of 59,391 restricted shares as a signing bonus, the value thereof at the time of March 14,such grant was NIS 1,600 thousand, which vested in April 2018.

 (3) At the date of this allocation Mr. Grinbaum served as Acting CEO of the Company, although this grant was made according to the compensation terms to which he was entitled in his previous position, as EVP and COO of the Company.

 (4) The economic value of the option warrants is determined according to the Black & Scholes model (except with respect to 2014, where it was determined according to the binomial model).

(5)

On November 4, 2018, Mr. Altman exercised 60,000 option warrants. The exercise price as at the date of the sale was NIS 15.97 (approximately $4.26), and the share price as at that date was NIS 21.86 (approximately $5.83). The amount of shares that derived from the exercise of the options and that was immediately sold reflected the difference between the exercise price and the share price at the relevant date (net exercise).

(6)

On June 19, 2018, our HR & Compensation Committee and our Board of Directors, approved and on August 20, 2018, our general meeting of shareholders approved an issuance to Mr. Locker, of options in a total value of NIS 2,400,000 (approximately $662,983), comprising of NIS 900,000 (approximately $248,619) as in the previous year, and an additional amount of Options for 2018 in the amount of NIS 1,500,000 (approximately $414,365), and of restricted shares in a total value of NIS 900,000 ($248,619), as in the previous year.

For further details respecting the equity compensation plans specified in the table above, including the vesting and expiration dates of the option warrants and\or restricted shares in each plan, see Note 21 to our Audited Financial Statements.

The Annual Bonus Component

Pursuant to our current compensation policy, as approved by the General Meeting of our Shareholders on August 29, 2016 (the “Company’s Compensation Policy”), a formula was established for the calculation of the annual bonus to our CEO and Chairman of the Board. With respect to our other officers, the Company's Compensation Policy provides that the annual bonuses may be calculated by using financial metrics and/or measurable key performance indicators, as pre-determined by our HR & Compensation Committee and Board of Directors, and/or a qualitative evaluation.

On February 4 and 5, 2019, our HR & Compensation Committee and Board of Directors, respectively, approved an annual bonus to officer holders for the year 2018, including to the top-five earners in 2018 among ICL’s senior officers, in accordance with the Company’s Compensation Policy.

Pursuant to the Company’s Compensation Policy, the bonus formula for the CEO (the “Annual Bonus Calculation Formula”) is calculated according to multiplication of the CEO’s annual target bonus by the annual financial factor. The product of this multiplication is updated upwards or downwards according to the CEO’s satisfaction of measurable quantitative personal targets set in the beginning of the year (KPIs), at a rate of 50%, and according to a qualitative evaluation of the CEO’s performance made by the Board, at a rate of 50%. The CEO’s target bonus represents the complete satisfaction (100%) by the CEO of all annual targets. According to the Company's compensation policy, the CEO's target bonus may be up to 120% of his annual salary. Mr. Zoller's actual target bonus as determined in his employment agreement is NIS 26.76 (about $6.88)2,500 thousand (approximately $667 thousand).

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The annual financial factor is calculated by adding two “sub-factors”, each having a weight of 50%. The first sub-factor is the share price on that day was NIS 16.9 (about $4.43).

On May 10 and May 12, 2015,outcome of the Human Resourcesreported adjusted net profit for the relevant year (subject to further adjustments, if any, as approved by the HR & Compensation Committee and the BoardBoard), divided by the average reported adjusted net profit in the three preceding years. The second financial sub-factor is the outcome of Directors approved an allocation of 137,363 non-negotiable optionsthe reported adjusted operating profit 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 27.76relevant year (subject to adjustments). The options and restricted shares will vest in three equal portionsfurther adjustments, if any, as follows: one third uponapproved by 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 firstCompensation Committee and the second portion isBoard), divided by the average reported adjusted operating profit in the three preceding years. In 2018, no further adjustments were made by the Compensation Committee and the Board beyond those in this Annual Report to the reported adjusted net and\or operating profit, as reported in the annual financial statements. The adjusted net income and adjusted operating income are not calculated in accordance with IFRS, but are based upon net income and operating income, pursuant to IFRS, which are adjusted for certain items, as set forth in the lapseCompany's compensation policy. For details regarding the adjustments made to the Company's net and operating income in 2018, see "Item 5 - Operating and Financial Review and Prospects– A. operating results– Adjustments to Reported Operating and Net Income (Non-GAAP Financial Measures)".

The annual bonus amount for 2018 to our President & CEO, Mr. Raviv Zoller's, reflects the outcome of 36 monthsimplementation 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 2015Annual Bonus Calculation Formula with respect to the allocationactual term he had worked in ICL in 2018, as approved by our HR & Compensation Committee and Board of optionsDirectors on February 4 and restricted shares5, 2019, respectively. Mr. Zoller's pro-rated target bonus for the relative portion of 2018 or NIS 1,582 thousand (approx. $422 thousand), was multiplied by ICL's financial factor in 2018 (0.97), and then updated according to a good performance of his KPIs, as were determined in the beginning of 2018 for the former acting CEO, Mr. Asher Grinbaum and to an exceptional performance for qualitative evaluation of his performance. The HR & Compensation Committee and Board of Directors noted in their decision that Mr. Zoller successfully entered into the role of ICL's President & CEO, while showing an impressive learning curve in understanding ICL's business, as well as leadership, capabilities and involvement in the Company's business. Accordingly, the annual bonus payout to Mr. Zoller for 2018, is NIS 1,958 thousand (approximately $523 thousand).

The annual bonus to our Chairman of the Board is calculated according to the Annual Bonus Calculation Formula (i.e., multiplication of Mr. Locker's annual target bonus by the annual financial factor), however, the formula with respect to the Chairman does not include upward or downward updates according to the satisfaction of measurable quantitative personal targets and a qualitative evaluation. The Chairman’s target bonus represents the complete satisfaction (100%) by the Chairman of all annual targets. According to the Company's compensation policy, the target bonus of the Chairman of the Board, Mr. Johanan Locker, can amount to up to 120% his annual salary. Mr. Locker's annual target bonus for 2018, NIS 1,900 thousand (approximately $495 thousand), was multiplied by ICL's financial factor in 2018 (0.97). Accordingly, the annual bonus payout to Mr. Locker for 2018, is NIS 1,958 thousand (approximately $492 thousand). The total bonus payout to Mr. Locker for 2018, including the annual bonus and the special bonus, to the extent approved by the general meeting of our shareholders, will be NIS 2,323 thousand (approximately $620 thousand).

The annual bonus for 2018 to ICL's former acting CEO, Mr. Asher Grinbaum was calculated according to the Annual Bonus Calculation Formula (i.e., multiplication of Mr. Grinbaum's annual target bonus for his previous position as COO by ICL's annual financial factor (0.97), and then update according to a good performance of his KPIs and to an exceptional performance for qualitative evaluation of his performance during the term he had served as acting CEO). In respect of the accrued vacation period and the advanced notice period, no Specific Personal Measurables (KPIs) were applied. The total bonus payout to Mr. Grinbaum based on generally accepted accounting principles. The vesting price for converting2018, including the options into sharesannual bonus and the special bonus for 2018, as approved by the general meeting of March 14, 2016our shareholders is NIS 27.07 (about $6.96),3,370 thousand (approximately $909 thousand).

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According to the share price on that day was NIS 16.9 (about $4.34).

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Thethe HR & Compensation Committee and Board of Directors, for purposes of determining the annual bonuses for 2018, the Annual Bonus Component

In its meeting dated March 15, 2016Calculation Formula was applied also to the board decided to further discuss the bonuses for 2015 in its upcoming meeting. Company's officers, including Messrs. Weidhas and Altman, as follows:

The bonus for Mr. Maimon was fully paid subsequent to his retirement.

The formula of the annual bonus to Mr. Maimon isWeidhas was calculated according to the Annual Bonus Calculation Formula as specified inaforesaid. The outcome of multiplying Mr. Weidhas' target bonus with ICL's financial factor (0.97) was updated according to a good performance of his KPIs and to a good qualitative evaluation of his performance.

The annual bonus to Mr. Altman was calculated according to the Compensation Policy (as amended), while the weightsAnnual Bonus Calculation Formula as aforesaid. The outcome of the various categories are as follows: Financial Indicators Category – 55%,multiplying Mr. Altman' target bonus with ICL's financial factor (0.97) was updated according to a good performance of his KPIs – 25%, Managerial Capabilities Evaluation – 10% and Manager Discretion – 10%. Mr. Maimon’s KPIs included efficiency, one ICL and communication indicators. Mr. Maimon metto a good qualitative evaluation of his targets.

Pensions,performance.

Pension, Retirement and Similar Benefits

We set aside approximately $1.2 million

The annual provision of the Company for pension or other retirement benefits for our senior management (GEC) in 2015.

2018 amounted to approximately $1 million.

C. BOARD PRACTICES

Board of Directors

According to our Articles of Association, we must have at leastno less than 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 the shareholders. AAccording to our Articles of Association, 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)directors as detailed below).

As of the date of this Annual Report, our Board of Directors consists of eleventen directors. In the event of equal votes of our Board of Directors, our Chairman of the Board has the right to cast the deciding vote. Mr. Lior Reitblatt is an independent director, as defined in the Israeli Companies Law, 5759-1999 (the “Companies Law”). Board members Ms. Ruth Ralbag, Messrs. Yaacov Dior, Miriam Haran, Geoffrey MerszeiNadav Kaplan, Reem Aminoach and Shimon EckhausLior Reitblatt are independent directors under the rules applicable to U.S. companies listed on the NYSE. Board members Messrs. Nir Gilad,Johanan Locker, Avisar Paz, Aviad Kaufman, Ron Moskovitz, Sagi Kabla, Ovadia Eli and Stefan BorgasYoav Doppelt are not considered independent directors by virtue of the positions they hold with our controlling shareholdershareholder's group or with the Company. Two of our directorsDr. Nadav Kaplan Ms. Ruth Ralbag are external directors“external directors” according to the Companies Law. We do not have service contracts with our current directors, excluding the CEO, Mr. Stefan Borgas and theour Executive Chairman of the Board, Mr. Nir Gilad.

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External Directors

As a public Israeli company, we are required by the Israeli 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 suchare very similar, and thus that we would generally expect a director who qualifies as one to also qualify as the other. SinceHowever, since the definitions provided in Israeli law and U.S. law are not identical, however, it is possible for a director to qualify as one andbut not necessarily as the other.

An external director must alsois required to have either financial and accounting expertise or professional qualifications, as defined in the relevant regulations promulgated under the Companies Law, and at least one of the external directors is required to have financial and accounting expertise. Our external directors, Ms. Ruth Ralbag and Dr. Nadav Kaplan, have financial and accounting expertise as defined in the Regulations. An external director is entitled to reimbursement of expenses and compensation as provided in regulationsthe Regulations promulgated under the Companies Law but is otherwise prohibited from receiving any other compensation from us, directly or indirectly, during his term of office and for two years thereafter.

Under the Companies Law, external directors must be elected at a shareholders’ meeting by a simple majority of the votes cast, onprovided that any of the matter, providedfollowing conditions is met: that such majority includes a majority of the votes cast by non-controllingnon‑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), unlessor that the votes cast by such shareholders againstopposing the election did not exceed 2% of our aggregate voting rights. ExternalGenerally, external directors serve for up to three terms of three years each, and our Audit and Accounting 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-controllingnon‑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. AThe term of office 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 loyaltytrust 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 committeeCompany’s Audit Committee and compensation committee.

We currentlyCompensation Committee, as further detailed below.

As of the date of this report, we have two external directors: Mr. Yaacov Dior,Ms. Ruth Ralbag, whose secondfirst term commenced on February 26, 2015,January 10, 2018 and Dr. Miriam Haran,Nadav Kaplan, whose thirdfirst term commenced on August 20, 2018. On February 26, 2018, Mr. Yaacov Dior ceased serving as an external director of the Company, after completing two three-year terms in the Company and on August 29, 2015.

2018, Dr. Miriam Haran ceased serving as an external director of the Company, after completing three three-year terms in the Company.

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Financial Experts

Our Board of Directors has resolved that at least three of its members must have financial and accounting expertise, as this term is defined in regulationsthe Regulations promulgated under the Companies Law. Our Board of Directors has determined that, tenbased on qualification statements delivered to the Company, seven out of our currentten serving directors meet such qualifications.

the said expertise requirements.

In addition, our Board of Directors has determined that all members of our Audit and Accounting Committee are financially literate as determined in accordance withfor purposes of meeting the NYSE rules and that Mr. DiorMs. Ralbag and Mr. MerszeiMessrs. Kaplan and Reitblatt are qualified to serve as “audit committee financial experts”“Audit Committee Financial Experts” as defined by SEC rules.

Alternate Directors

Our Articles of Association, provide, consistent with Israeli law, provide that any director may appoint another person who is not a director or an alternateanother 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, noNo alternate director was appointed.

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Our Board Committees

Our Board of Directors has established the following committees. Each committee operatesCommittees, which operate in accordance with a written chartercharters or procedures that setsset forth, theamong other things, such committee’s structure, manner of operations, qualification and membership requirements, responsibilities and authority to engage advisors.

of the committee, etc.

Audit and Accounting Committee

Under the Companies Law, the boardBoard of directorsDirectors of a public company must establish an audit committee.Audit Committee. The audit committeeAudit Committee must consist of at least three directors who meet certain independence criteria and must include all of the company’sCompany’s external directors. The chairmanChairman of the audit committeeAudit Committee is required to be an external director. The responsibilities of an audit committeeAudit Committee under the Companies Law include identifying and addressing flaws in the business management of the company,Company, reviewing and approving interested party transactions, establishing whistleblower procedures, overseeing the company’sCompany’s internal audit system and the performance of its internal auditor,Internal Auditor, and assessing the scope of the work and recommending the fees of the company’sCompany’s independent accounting firm. In addition, the audit committeeAudit Committee is required to review and determine whether certain interested party actions and transactions with a controlling shareholder or with a company officer are “material” or “extraordinary” for and whether they are negligible according to the purpose of the requisite approval procedures required under the Companies Law and to establish procedures for reviewing proposed transactions with a controlling shareholder.

company procedures.

In accordance with U.S. law and the NYSE requirements, our Audit and Accounting Committee is also responsible for the appointment, compensation and oversight of the work of our independent auditorsauditors. In accordance with such laws and according to such rules and towith the Israeli Companies Law and regulations by virtue thereof,promulgated thereunder, the Audit and Accounting 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

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As of the date of this report, our Audit and Accounting Committee consists of three directors: Mr. Yaacov Dior (Chairman)directors, and also includes our two external directors and our independent director, as follows: Ms. Ruth Ralbag (Chairman, external director), Dr. Miriam HaranNadav Kaplan (external director) and Mr. Geoffery Merszei. OurLior Reitblatt (independent director). In addition to meeting the requirements of Israeli law, our Audit and Accounting Committee also complies with the requirements applicable to U.S. companies that are listed on the NYSE. Mr. DiorNYSE and Dr. Haran are external directors as defined in the Companies Law and all thewith SEC rules. All Committee members are also independent directors as this term is defined in SEC rules and the NYSE listing requirements. Our Board of Directors has determined that all the members of the Audit and Accounting Committee are financially literate as determinedprovided in accordance withthe NYSE rules and that Mr. DiorMs. Ralbag and Mr. MerszeiMessrs. Kaplan and Reitblatt are qualified to serve as “audit committee financial experts” as defined by SEC rules.

Human Resources and Compensation Committee

Under the Companies Law, the boardBoard of directorsDirectors of a public company must establish a compensation committee.Compensation Committee. The compensation committeeCompensation Committee must consist of at least three directors who meet certain independence criteria and include all of the company’sCompany’s external directors, who are required to constitute a majority of its members. The chairmanChairman of the compensation committeeCompensation Committee must be an external director. The remaining members of the Compensation Committee are required to meet certain independence criteria and be paidremunerated for their service in accordance with the regulations governing the compensation of external directors. The responsibilities of a compensation committeeCompensation Committee under the Companies Law includeinclude: recommending to the boardBoard of directors, for ultimate shareholder approval by a special majority,Directors a policy governing the compensation of directors andcompany officers based on specified criteria, reviewing modificationsrecommending to and implementationthe Board of such compensation policyDirectors, from time to time, to update such compensation policy and approvingreviewing its implementation; deciding whether to approve transactions respecting the actual compensation terms of directorsoffice and employment of officers prior towhich require approval by the boardcompensation committee, including exemption from approval by the General Meeting, in accordance with the provisions of directors.

the Companies Law.

Our Compensation and Human ResourcesHR &Compensation Committee is also charged with oversight of our human resources strategy and key programs, including our “One ICL” program, senior leadership development,oversees the bonus and equity plans, andevaluation of top management evaluation and employees, succession planning.

planning and so forth.

Our HR & Compensation and Human Resources Committee consists of three directors and includes our two external directors and our independent director, as follows: Dr. Miriam Haran (Chairperson)Nadav Kaplan (Chairman, external director), Mr. Yaacov DiorMs. Ruth Ralbag (external director), and Mr. Shimon Eckhaus. Dr. Haran and Mr. Dior are external directors as defined in the Companies Law and all theLior Reitblatt (independent director). All Committee members are also independent directors as this term is defined in SEC rules andthe NYSE listing requirements.

requirements and SEC rules.

Environment, Safety and Public Affairs Committee

Our Environment, Safety and Public Affairs Committee is not a statutory committee, and is designed to assist our Board of Directors to overseein fulfilling its responsibilities respecting oversight of our environment and safety policies and programs, and our community outreach programs and public relations and advocacy programs.advocacy. Our Environment, Safety and Public Affairs Committee is not authorized to exercise any power of our Board of Directors. It consists of four directors,directors: Mr. Shimon EckhausReem Aminoach (Chairman), Dr. Miriam Haran,Nadav Kaplan, Mr. Ovadia Eli and Mr. Sagi Kabla.

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Operations Committee

The purpose of our

Our Operations Committee is not a statutory committee, and is designed to assist our Board of Directors in fulfilling its responsibilities with respect to our equity management, business operations and strategy implementation, including reviewing 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 six members,directors: Mr. Nir GiladJohanan Locker (Chairman), Mr. Avisar Paz, Mr. Sagi Kabla, Mr. Ovadia Eli, Mr. Geoffrey MerszeiReem Aminoach and Mr. Shimon Eckhaus. 

Lior Reitblatt.

Financing Committee

The purpose of our

Our Financing Committee is not a statutory committee, and its purpose is to assist our Board of Directors in fulfilling its responsibilities with respect to our financing and equity management and operations, including loans, equity offerings, hedging, debt offerings and other financing vehicles. Our Financing Committee is not authorized to exercise any power of our Board of Directors. The committeeAs of the date of this report, the Committee consists of five members,four directors: Mr. Avisar Paz (Chairman), Mr. Yaacov Dior, Mr. Sagi Kabla, Mr. Aviad Kaufman and Mr. Geoffery Merszei.

Ms. Ruth Ralbag.

Internal Auditor

Under the Companies Law, the boarda Company’s Board of directorsDirectors is required to appoint an internal auditor recommended byInternal Auditor pursuant to the audit committee.recommendation of the Audit Committee. The role of the internal auditorInternal Auditor is to examine, among other things, whether the company’sCompany’s actions comply with applicable law, company procedures and proper business procedures. The internal auditorUnder the Companies Law, 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 auditorInternal Auditor be ourthe company’s independent accountant or a representative thereof. Our chief internal auditorThe Internal Auditor oversees the work of various internal auditors acting on his behalf throughout the organization. As of the time of this report, our organization. Our chief internal auditorInternal Auditor is Mr. Shmuel Daniel, who isAmir Meshulam, a certified internal auditor and certified public accountant in Israel. The chief internal auditor servesIsrael, holds an LLB from the College of Management and is a member of the Israel Bar. Mr. Meshulam has served in this position since August 1,2018, replacing Mr. Shmuel Daniel, who served as our previous internal auditor since August 2014, and for a periodhas left on retirement. Mr. Meshulam appointment was approved by the Board of three years.

Director's on May 9, 2018, after receiving the Audit Committee's recommendation from May 8, 2018.

Insurance and 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.

(1)

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 AuditHR & Compensation Committee, the Board of Directors and the General Meeting of Shareholders,the shareholders, granted its officers an exemption and letters of indemnification, and has also taken outhas an insurance policy covering directors and officers. The insurance and the compensationindemnity do not apply to those cases specified in Section 263 of the Israeli Companies Law. The exemption is forrelates to damage caused and/or towill be caused, by suchthose officers due toas a result of 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, wasis limited to $300$350 million. The insurance is renewed annually. annually.

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On May 8, 2014September 14, 2017, our shareholders approved the General MeetingCompany's engagement in directors and officers insurance policies, as a three-year framework agreement. The insurance policies under the framework agreement include a joint primary tier with Israel Corp. with a joint liability cap of Shareholders approved an increaseup to $20 million, and a separate tier covering the Company alone, with a liability cap of up to $200 million, for a total liability limit of $220 million for both tiers. Under the insurance coverage as determined withinterms of the framework resolution, approved by the General Meetingour directors and officers are beneficiaries 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.both tiers. Pursuant to the New Policyframework agreement, the division of the premium amount between the Company and Israel Corp. in the joint tier was changed sois that 70% willare to be paid by the Company and 30% by the Israel Corporation, in accordance withCorp. According to the authority given toapproval of the general meeting of our shareholders, the HR & Compensation Committee and the Board of Directors will have the authority to approve changes from time to time in connection with the rate of the premium divisiondistribution 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 doesjoint tier, as recommended by the insurers and/or brokers, provided that the new rate of the premium distribution will not exceed 25% over the entire transaction period. Deviation from these limits shall require the shareholders approval. On December 4 and 5, 2017, the Audit & Accounting Committee and Board of Directors approved the renewal of the insurance policy, on the basis of the framework agreement, for an additional year beginning on January 1, 2018, and until December 31, 2018, with an annual premium of $900,000, which is within the maximum premium amount specified in the framework resolution.

On January 3 and 7, 2019, our Audit & Accounting Committee and Board of Directors approved the renewal of the insurance policy for 2019, according to the framework agreement, with a limit of $205 million, additional coverage Side A (directors only) limit of $20 million (as approved by our Audit & Accounting Committee on June 19, 2018 and December 10, 2018 and by the Board on June 19, 2018 and December 12, 2018) and a total premium of up to $1,400,000. This amount (including the Side A premium), does not exceed the maximum premium amount pursuant to the framework agreement. The allocation of the premium distribution between ICL and Israel Corp was revised to 80% ICL and 20% Israel Corp.

The terms of the New Policynew policy adhere to the terms of the framework resolution and of the Company's Compensation Policy.The coveragePolicy.

Other Information

We did not engage in effect (including a shared tier with the parent company of up to $20 million) stands at an aggregate amount of $220 million.

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Other Information

We do not have any agreementarrangements with directors providing for benefits upon termination of employment.

employment, with the following exceptions: (1) in case of termination of employer-employee relations, Mr. Johanan Locker will be entitled to a bonus at an amount equal two times his last monthly salary, multiplied by the number of his years of service as ICL’s Executive Chairman of the Board, and (2) In accordance with the Equity Plan, the board members' 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.

Number of meetings and average attendance rate of the ICL Board and its permanent committees

	Number of meetings in reported year	Average Attendance
General Board Meetings	16	97%
Audit & Accounting Committee	13	91%
Financing Committee	4	100%
Operations Committee	4	92%
Compensation Committee	11	100%
Environment Committee	4	94%

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D. EMPLOYEES

As ofat December 31, 2015,2018, we had a workforce of 13,55812,125 employees. Of these, 71 were employed at our headquarters and the balance were employed by our various subsidiaries.

Breakdown of Employees by Segment

		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

Segments

2018

2017

2016

Phosphate Solutions	5,259	5,533	6,274
Potash	2,855	3,109	3,196
Industrial Products	1,675	1,697	1,710
Innovative Ag Solutions	1,182	1,163	1,081
Global functions and headquarters	1,154	1,158	1,253
Total employees	12,125	12,660	13,514

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Geographic Breakdown of Employees

		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

2018

2017

2016

Israel	4,672	4,673	4,861
China	2,467	2,413	2,816
Spain	1,179	1,281	1,294
Germany	860	1,012	1,157
UK	659	836	827
USA	728	817	895
Netherlands	627	626	639
Brazil	276	280	264
France	125	125	127
Other	532	597	634
Total employees	12,125	12,660	13,514

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As at December 31, 2015, our2018, the Company’s workforce comprised of 13,55812,125 employees, compared to 12,45712,660 employees as at December 31, 20142017 – an increasea decrease of 1,101535 employees. The increasesaid decrease derives mainly from a decrease in the number of employees stems from the additional workforce in respect of acquisition of companies, mainly in China (YPH), in Europe (Prolactal) and Allana Ethiopia. This increase was partly offset by the sale of companies, mainly in Europe, in the Performance Products segment.

In most of ICL’s companies in Israel, labor disputes have been declared, partlyUK, due to the efficiency plan and the strategy that the Company is implementing, as well as a resultceased production of construction of the joint service center established in Israel. In some of the ICL’s production facilities in Israel, the employees have started to strike.

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, 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 subjects (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-scale strike at the 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 that 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 (“ICL Dead Sea”), the Workers Council of Dead Sea Works gave notice of a full-scale strike at ICL Dead Sea’s facilities in Sodom, including the bromine facility and the power station.

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On May 28, 2015, an agreement was signed between ICL Dead Sea and Bromine Compounds and between the General Workers Council (Histadrut), the Workers Council of 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 planspotash in  ICL Dead SeaBoulby mine and Bromine Compounds anda shift to implementationsole production 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 is not voluntary, shall take placePolysulphate; 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 Agreement.

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 companies, 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 addition to the employee 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 discuss the new employment agreement, and the failure to provide information pursuant to the Workers Council’s request.

The Company is conducting negotiations with the 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 January 2015, the Company inaugurated a new European headquarters in Amsterdam, in addition to the joint service center already operating in the United States (St. Louis), which will manage all of the Company’s activities in Europe, and in June 2015, the Company operated its joint services center in Israel (in Beer Sheba). The new headquarters will serve as ICL’s joint (shared) global service centers (together with the existing service center in the United States). The center established in Amsterdam 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 result in cost savings,Germany - mainly as a result of savings relating to procurement costs and consolidation of processes.

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During the fourth quarter of 2015, the Company completed the procurementsale of the YPH joint venture, together with YPC, China’s leading manufacturerFire Safety and Oil Additives (P₂S₅) in BKG, as well as the sale of phosphates. Through this transaction, the Company added about 2,100 employees to its headcount.

DuringRovita business; in the fourth quarterUS - as a result of 2015,sale of the Fire Safety Business and Oil Additives (P₂S₅), mainly in ICL North America ; in Spain - as a result of the depletionsale of potash reserves at the mineFire Safety and Oil Additives (P₂S₅), mainly in the United Kingdom, the Company decided to make a gradual transition from extracting and producing potash to producing polysulphate. In the framework of this process, the Company has commenced implementation of an efficiency plan whereby in the first quarter of 2016 a reduction of about 330 full time positions was completed.

Auxquimia SA.

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 ofat 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.

ICL

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Subsidiaries Rotem, Fertilizers and Chemical Materials Ltd. (“FCM”), Dead Sea Magnesium and Bromine Compounds have collective bargaining agreements with termination dates ranging from June 2016January 2017 (an agreement that has not yet been renewed-in DSM) up to the end of 2018. The work2022.

In May 2018, a collective labor agreement at ICLwas signed between Dead Sea expiredWorks Ltd. (“DSW”) and the DSW Workers’ Union, the New General Organization of Workers in September 2015.

Israel (the “Histadrut”) and the Negev District Organization of Workers, for a period of 5 years, commencing on October 1, 2017, the date of expiration of the previous labor agreement.

In November 2018, a collective labor agreement was signed between Mifalei Tovala Ltd. and the Mifalei Tovala Workers’ Union and the New General Organization of Workers in Israel (the “Histadrut”), for a period of 5 years, commencing on January 1, 2018, the date of expiration of the previous labor agreement

Senior employees in Israel serving in special positions and members of management are employed under individual agreements. These agreements are not limited in time and canmay be terminated with advance notice of a few months.

Local employees

Employees of ourICL’s subsidiaries overseas are employed according to the employment terms prevalentprevailing in the countries in which they are employed. Most of ourthe overseas employees, primarily in China, Germany, the Netherlands, the United Kingdom, Spain and the United States, are employed under collective bargaining agreements.

A relatively limitedsmall number of the employees at ourICL’s 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 received on October 2004 by ICL's Board of  the boards of directors of ICLDirectors and its Israeli subsidiaries, in October 2004, contractors who employ workers at ourICL’s plants in Israel are required to give more than the salary terms required by law to employees working on a regular basis for ICL salary terms beyond those required by law.ICL. Pursuant to this decision, the employers are obligated to grant these employees, in addition to a 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 PRCChinese labor law, it is a mandatory requirement for employers to enter into individual labor contract with their employees, in light ofemployees. As 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, workingwork safety, etc. Such collective agreements are mainly used for providing a benchmark tofor certain working conditions.

Promoting gender equality

In addition, 3C,January 2019 the Company announced that it is one of 230 public companies worldwide included in the subsidiaries within YPH JV, has entered into2019 Bloomberg Gender-Equality Index (GEI). The GEI distinguishes companies committed to transparency in reporting gender policy and advancing gender equality. The GEI includes public companies that score above a collective agreement withglobally-established threshold, based on transparency and their policies. The 2019 GEI includes firms from ten sectors headquartered across 36 countries and regions. Collectively, the firms have a combined market capitalization of $9 trillion and employ more than 15 million people, of which 7 million are women. ICL is the only Israeli company included in the index, as well as the only company among its female employees regarding special protectionmajor global peers in the specialty chemicals and fertilizers sectors.

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ICL strives to be an “employer of female workers.choice”, and as such, continually promotes equality, including the employment and promotion of women in its workplaces around the globe. For example, the percentage of women serving as executive officers of ICL increased from 11% in 2017 to 33% in 2018. The term ofCompany considers its inclusion in the collective agreement is two years starting from February 2015.

GEI to be a major achievement, highlighting ICL's transparency and commitment to promoting gender equality. 

Infrastructure, performance management processes and human resources development

In 2015,2018, the Company expanded the assimilation of the performance management infrastructure and the management of the human resources management.resource. In this context, the Company is assimilating a uniformunified technological infrastructure for managing and developing the human resourcesresource within all of its units worldwide, as well as globally uniformunified work processes. The assimilated system includes the administration of employees’ data, as well the learning and training processes,processes. In addition, the system enables managers 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 partemployees to participate in a performance management process based on goals, performance evaluation, and groupteam and individual development plans derivedderiving from them. The assimilationAssimilation of the global processes is expected to expand toand include additional processes in the fieldsareas of compensation and communications. Bycommunications, as well as to improve the beginning of 2017, it is expected to enhance the relationshiplink between performance and compensation,rewards.

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E. SHARE OWNERSHIP

Share-based payments to employees - Non-marketable options

Grant date

Employees entitled

Number of instruments (thousands)

Issuance's details

Instrument terms

Vesting conditions

Expiration date

August 6, 2014	Officers and senior employees	3,993	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan, to 450 ICL officers and senior employees in Israel and overseas.	Upon exercise, each option may be converted into one ordinary share of NIS 1 par value of the Company. In case of on 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 reduced so that the product of the exercised shares actually issued to an offeree multiplied by the share closing price will equal to the product of the number of exercised options multiplied by the Share Value Cap.	3 equal tranches: (1) One third on December 1, 2016 (2) One third on December 1, 2017 (3) One third on December 1, 2018	Two years from the vesting date.
December 11, 2014	Former CEO	367	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan.
May 12, 2015	Officers and senior employees	6,729	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan, to 550 ICL officers and senior employees in Israel and overseas.	Upon exercise, each option may be converted into one ordinary share of NIS 1 par value of the Company.	3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date	The first and second tranches is at the end of 36 months after the grant date for the third tranche is at the end of 48 months after the grant date.
June 29, 2015	Former CEO	530	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan.
	Former Chairman of BOD	404
June 30, 2016	Officers and senior employees	3,035	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan, to 90 ICL officers and senior employees in Israel and overseas.			June 30, 2023
September 5, 2016	Former CEO	625	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan.
	Chairman of BOD	186
February 14, 2017	Former CEO	114	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan.			February 14, 2024
June 20, 2017	Officers and senior employees	6,868	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan  to 498 ICL officers and senior employees in Israel and overseas.			June 20, 2024
August 2, 2017	Chairman of BOD	165	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan.

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Grant date

Employees entitled

Number of instruments (thousands)

Issuance's details

Instrument terms

Vesting conditions

Expiration date

March 6, 2018	Officers and senior employees	5,554	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan (as amended) to 508 ICL officers and senior employees in Israel and overseas, ICL CEO and Chairman of the BOD.	Upon exercise, each option may be converted into one ordinary share of NIS 1 par value of the Company.	3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date	March 6, 2025
May 14, 2018	CEO	385				May 14, 2025
August 20, 2018	Chairman of BOD	403				August 20, 2025

Share-based payments to employees - Restricted shares

Grant date

Employees entitled

Number of instruments (thousands)

Vesting conditions (*)

Instrument terms

Additional Information

Fair value at the grant date (Million)

August 6, 2014	Officers and senior employees	922	3 equal tranches: (1) One third on December 1, 2016 (2) One third on December 1, 2017 (3) One third on December 1, 2018	An issuance for no consideration, under the 2014 Equity Compensation Plan, to 450 ICL officers and senior employees in Israel and overseas.	The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the date approval of the BOD and/or the date of the approval of the General Meeting where required).	8.4
December 11, 2014	Former CEO	86		An issuance for no consideration, under the 2014 Equity Compensation Plan.
February 26, 2015	ICL’s Directors (excluding ICL's CEO)	99	3 tranches: (1) 50% will vest August 28, 2015 (2) 25% will vest February 26, 2017 (3) 25% will vest February 26, 2018	An issuance for no consideration, under the 2014 Equity Compensation Plan, to 11 ICL Directors.		0.7
May 12, 2015	Officers and senior employees	1,194	3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date	An issuance for no consideration, under the 2014 Equity Compensation Plan, to 550 ICL officers and senior employees in Israel and overseas.		9.7
June 29, 2015	Former CEO	90		An issuance for no consideration, under the 2014 Equity Compensation Plan.
	Former Chairman of the BOD	68
December 23, 2015	ICL’s Directors (excluding ICL's CEO & Chairman of the BOD)	121	3 equal tranches: (1) One third on December 23, 2016 (2) One third on December 23, 2017 (3) One third on December 23, 2018	An issuance for no consideration, under the 2014 Equity Compensation Plan, to 8 ICL Directors.		0.5

(*) The vesting date is subject to the employee entitled continuing to be employed by the Company and the directors continuing to cover about 80%serve in their positions on the vesting date, unless they ceased to hold office due to certain circumstances set forth in sections 231-232a and 233(2) of the Company’s personnel.

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Israeli Companies LawShare-based payments to employees - Restricted shares

Table

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Grant date

Employees entitled

Number of instruments (thousands)

Vesting conditions (*)

Instrument terms

Additional Information

Fair value at the grant date (Million)

June 30, 2016	Officers and senior employees	990	3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date	An issuance for no consideration, under the 2014 Equity Compensation Plan, to 90 ICL officers and senior employees in Israel and overseas.	The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the date approval of the BOD and/or the date of the approval of the General Meeting where required).	4.8
September 5, 2016	Chairman of the BOD	55		An issuance for no consideration, under the 2014 Equity Compensation Plan.
	Former CEO	185
January 3, 2017	ICL’s Directors (excluding ICL's Chairman of the BOD)	146		An issuance for no consideration, under the 2014 Equity Compensation Plan, to 8 ICL Directors. The value includes a reduction of 5% from the value of the equity compensation, pursuant to the decision of the directors in March 2016, to reduce their annual compensation for 2016 and 2017.		0.6
February 14, 2017	Former CEO	38		An issuance for no consideration, under the 2014 Equity Compensation Plan.		0.2
June 20, 2017	Officers and Senior employees	2,211		An issuance for no consideration, under the 2014 Equity Compensation Plan, to 494 ICL officers and senior employees in Israel and overseas.		10
August 2, 2017	Chairman of BOD	53		An issuance for no consideration, under the 2014 Equity Compensation Plan.		0.3
January 10, 2018	ICL’s Directors (excluding ICL's CEO & Chairman of the BOD)	137		An issuance for no consideration, under the 2014 Equity Compensation Plan, to 7 ICL Directors.		0.6

(*) The vesting date is subject to the employee entitled continuing to be employed by the Company and the directors continuing to serve in their positions on the vesting date, unless they ceased to hold office due to certain circumstances set forth in sections 231-232a and 233(2) of Contents

the Israeli Companies Law.

E. SHARE OWNERSHIP

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Share-based payments to employees - Restricted shares

Grant date

Employees entitled

Number of instruments (thousands)

Vesting conditions (*)

Instrument terms

Additional Information

Fair value at the grant date (Million)

March 6, 2018	Officers and senior employees	1,726	3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date	An issuance for no consideration, under the 2014 Equity Compensation Plan (as amended).	The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the date approval of the BOD and/or the date of the approval of the General Meeting where required).	8
May 14, 2018	CEO	121				0.6
August 20, 2018	Chairman of BOD	47				0.2
	ICL’s Directors (excluding ICL's CEO & Chairman of the BOD)	88	Acceleration at January 2019.			0.4

(*) The vesting date is subject to the employee entitled continuing to be employed by the Company and the directors continuing to serve in their positions on the vesting date, unless they ceased to hold office due to certain circumstances set forth in sections 231-232a and 233(2) of the Israeli Companies Law.

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Share-based payments to employees

Additional Information

For additional information regarding the 2014 Equity Compensation Plan and the grants in prior years made under the said Plan, see Note 21 to our Audited Financial Statements.

For information with respect to share ownership of members of our Management and Supervisory Boards and our senior management is included in “Item 7.see “Item 7 - Major Shareholders and Related (and Interested) Party TransactionsTransactions”.”

Incentive Compensation Plans

The 2014 Equity Compensation Plan

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.

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 on August 6, 2014, under 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 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.

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The 2012 Option Plan

On November 26, 2012, our Board of Directors approved the issue of up to 12,000,000 non-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 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 2010 Option Plan

On January 7, 2010, our Board of Directors approved an issuance of 10,930,500 non-marketable options for no consideration to 318 of our officers and senior employees in Israel and overseas. The issuance 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 issuance to the Chairman of the Board was approved. The 2010 Plan options vested in three equal 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 the date of approval of the Board of Directors; and one third at the end of 36 months from the date of approval of the Board of Directors. As at December 31, 2014, all the 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” 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.

Fair Value of Options

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 options granted under the 2012 and 2014 Equity Compensation Plan was estimated using the binomial model for pricing options. The parameters used in applying the 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

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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. 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).

The total fair value on the grant 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 in accordance with the approval of the Board of the Directors on May 12, 2015, is approximately $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 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 aforesaid plans will be recognized in profit and loss over the vesting period.

The 2013 and 2014 Cash Incentive Plans

In May 2013, ICL’s Board of Directors decided to approve a long-term remuneration plan for approximately 11,300 Company employees in Israel and overseas, who are not managers that participated in the Company’s option plans (which were approved in November 2012), in accordance with the terms stipulated in the plan. The maximum cost of the plan is approximately $45 million.

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 plans were not met and therefore no liability was included in respect of these plans.

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Item 7 -– MAJOR SHAREHOLDERS AND RELATED (AND INTERESTED) PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS

The following table presents, as of March 1, 2016February 26, 2018 (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)			587,128,391				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				*				—				—

____________________

	* Ordinary Shares Beneficially Owned(1)		Less than 1% Special State Share
Shareholders	Number	%	Number	%

**

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 1,275,217,894 ordinary shares issued and outstanding as of March 1, 2016 (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, 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.

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Israel Corporation Ltd.(2)	587,178,761	45.86%**	-	-
State of Israel(3)	-	-	1	100%
Johanan Locker	155,369	*	-	-
Avisar Paz	-	*	-	-
Aviad Kaufman	-	*	-	-
Sagi Kabla	-	*	-	-
Ovadia Eli	79,199	*	-	-
Nadav Kaplan	20,553	*	-	-
Lior Reitblatt	95,553	*	-	-
Reem Aminoach	36,703	*	-	-
Ruth Ralbag	36,703	*	-	-
Yoav Doppelt	15,381	*	-	-
Raviv Zoller	120,919	*	-	-
Kobi Altman	211,703	*	-	-
Lilach Geva Harel	-	*	-	-
Ilana Fahima	-	*	-	-
Rani Lobenstein	30,190	*	-	-
Charles Weidhas	171,065	*	-	-
Ofer Lifshitz	131,108	*	-	-
Eli Glazer	163,979	*	-	-
Noam Goldstein	55,327	*	-	-
Anat Tal-Ktalav	55,327	*	-	-
Amir Meshulam	20,793	*	-	-

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* Less than 1%

** For additional information, please see section (2) below.

*** The information above is correct as of Contents

February 26, 2019.

(2)

Israel Corp. is a public company listed for trading on the Tel Aviv Stock Exchange (TASE). Based on the information the Company received from Israel Corp. Millenium Investments Elad Ltd. (“Millenium”) and Mr. Idan Ofer are considered as controlling shareholders jointly of Israel Corp., for purposes of the Securities Law (each of Millenium and Mr. Ofer hold shares in Israel Corp. directly, and Mr. Idan Ofer serves as a director of Millenium and has an indirect interest in it as the beneficiary of the foreign discretionary trust that has indirect control of Millenium). Millenium holds approx. 46.94% of the share capital in Israel Corp. which holds approx. 46.04% of the voting rights and 48.88% of the issued share capital of the Company. Millenium is held by Mashat Investments Ltd. (“Mashat”) and by XT Investments Ltd. (“XT Investments”), with 80% and 20% holdings, respectively. Mashat is a private company, wholly owned by a Dutch company, Ansonia Holdings Singapore B.V. (“Ansonia”). Ansonia is a wholly-owned subsidiary of Jelany Corporation N.V. (registered in Curaçao), which is a wholly-owned subsidiary of the Liberian company, Court Investments Ltd. (“Court”). Court is wholly owned by a foreign discretionary trust, in which Mr. Idan Ofer is the beneficiary. XT Investments, which directly holds approximately 1.24% of the share capital of Israel Corp., is a shareholder in Millenium as stated. XT Investments is a private company, wholly owned by XT Holdings Ltd. (“XT Holdings”), a private company whose ordinary shares are held in equal shares by Orona Investments Ltd. (which is indirectly controlled by Mr. Ehud Angel) and by Lynav Holdings Ltd., a company that is controlled by a foreign discretionary trust in which Mr. Idan Ofer is a prime beneficiary. Mr. Ehud Angel holds, among other things, a special share that grants him, inter alia, under certain limitations and for certain issues, an additional vote on the board of directors of XT Holdings. In addition, Kirby Enterprises Inc., which is indirectly held by the 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 Corp. Furthermore, Mr. Idan Ofer holds directly approximately 3.85% of the share capital of Israel Corp. Furthermore, XT Investments directly holds approximately 0.03% of the Company’s capital (namely, 220 According to the information conveyed to the Company, on June 25, 2018, XT Investments Ltd. (who, up to the sale date, held 20% of the issued share capital of Millennium Investments Elad Ltd. (holding, on its part, 46.94% of Israel Corp. Ltd share capital)) sold 377,662 Ordinary Shares).

On September 24, 2014, we listed our ordinary shares of the Company that constituted, as at the sale date, approximately 0.03% of the Company’s issued share capital, in an off-market transaction according to a rate of ILS 17.10 per share. According to the information conveyed to the Company, following the sale, XT Investments Ltd. does not directly hold any shares of the Company.

On June 19 2018, our HR & Compensation Committee and the Board of Directors approved, and on August 20, 2018, the General Meeting of the shareholders approved, an issuance to our Executive Chairman of the Board, Mr. Johanan Locker, for no consideration, of an annual grant for 2018 of non-marketable options exercisable into Ordinary Shares and restricted Ordinary Shares, in a total value of NIS 3,300,000 (approx. $911,602). This amount was comprised of NIS 2,400,000 or $662,983 attributable to options (calculated on the NYSEbasis of a Black & Scholes model, and comprised of NIS 900,000 ($248,619) which was the same amount of options as was granted in connection2017, as well as an additional amount of options for 2018 in the amount of NIS 1,500,000 ($414,365)), collectively resulting in the grant of 402,685 options for 2018, and NIS 900,000 or $248,619 is attributable to the restricted shares, which was the same amount as was granted in 2017)which resulted in the grant of 41,244 restricted shares. See “Item 6 - Directors, Senior Management and Employees— B. Compensation”.

On July 12, 2018, our HR & Compensation Committee and the Board of Directors approved, respectively, and on August 20, 2018, the General Meeting of the shareholders approved an annual  equity grant for 2019, for no consideration, with a value per grant of NIS 310,000 (approximately $85,635), which amounted to 14,623 restricted shares, as determined according to the closing price of the Ordinary Shares on the TASE on December 31, 2018, being the trading day immediately preceding the Grant Date, to each of the Company's directors (excluding the Chairman of the Board, Mr. Johanan Locker and excluding Messrs. Aviad Kaufman, Avisar Paz, and Sagi Kabla, who are officers of our controlling shareholder, Israel Corporation Ltd.)), in accordance with the initial public offering ofCompany’s compensation policy. See Note 25 to our shares.Audited Financial Statements and “Item 6. Directors, Senior Management and Employees— E. Share Ownership”.

 (1) The offering, including the subsequent option exercise, included 42,222,942 of ourpercentages shown are based on 1,280,301,147 ordinary shares sold by Israel Corporationissued and 23,951,015outstanding as of our ordinary shares sold by certain forward counterparties. Immediately following the offering, Israel Corporation had voting rights with respect to approximately 46.18%date of our outstanding ordinary sharesthis report (after excluding shares held by us or our subsidiaries). In accordance with SEC rules, 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 of the date of this report. Shares issuable pursuant to options are deemed outstanding for computing the percentage of the person holding such options but are not considered outstanding for computing the percentage of any other person.

(2) Israel Corp. is a public company listed for trading on the Tel Aviv Stock Exchange (TASE). Based on the information provided by Israel Corp., Millenium Investments Elad Ltd. (“Millenium”) and Mr. Idan Ofer are considered as joint controlling shareholders of Israel Corp., for purposes of the Israeli Securities Law (each of Millenium and Mr. Ofer hold shares in Israel Corp. directly, and Mr. Idan Ofer serves as a director of Millenium and has an indirect interest in it as the beneficiary of the discretionary trust that has indirect control of Millenium, as stated below). Millenium holds approx. 46.94% of the share capital in Israel Corp., which holds as at December 31, 2018 approx. 45.86% of the voting rights and issued share capital of the Company. Millenium is held by Mashat Investments Ltd. (“Mashat”) and by XT Investments Ltd. (“XT Investments”), with 80% and 20% holding rates in the issued share capital, respectively. (It is noted that Mashat granted XT Investments a power of attorney for a fixed period (which is extendable) to vote according to XT's discretion  at General Meetings of Millenium in respect of shares constituting 5% of the voting rights in Millenium). Mashat is wholly owned by Ansonia Holdings Singapore B.V. (“Ansonia”) which is incorporated in the Netherlands. Ansonia is a wholly owned subsidiary of Jelany Corporation N.V. (registered in Curaçao), which is a wholly owned subsidiary of a Liberian company, Court Investments Ltd. (“Court”). Court is wholly owned by a foreign discretionary trust, in which Mr. Idan Ofer is the beneficiary. XT Investments is fully held by XT Holdings Ltd. (“XT Holdings”), a company whose ordinary shares are held in equal shares by Orona Investments Ltd. (which is indirectly controlled by Mr. Ehud Angel) and by Lynav Holdings Ltd., a company that is controlled by a foreign discretionary trust in which Mr. Idan Ofer is the beneficiary. Mr. Ehud Angel holds, among other things, a special share that grants him, inter alia, under certain limitations and for certain issues, an additional vote on the Board of Directors of XT Holdings. In addition, Kirby Enterprises Inc., which is indirectly held by the 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 Corp. Furthermore, Mr. Idan Ofer holds directly approximately 3.85% of the share capital of Israel Corp.

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As of December 31, 2018, the number of ICL's shares held by Israel Corp. does not include 9,909,848 ordinary shares, which are subject to certain forward sale agreements, as set forth on ICL's registration statement on Form F-1 (the "Forward Agreements"), filed with the Securities and Exchange Commission on 23 September 2014 (the "Financial Transaction"). Israel Corp. does not have voting rights or dispositive power with respect to the shares subject to the Financial Transaction, which have been made available to the financial entities (the “Forward Counterparties”) with whom it engaged in the Transaction. As at December 31, 2018, the settlement period of the Financial Transaction has commenced, which is expected to be executed, subject to its terms, in components at several settlement dates that will occur over a period of approx. 0.75 years. In accordance with the terms of the Financial Transaction, Israel Corp. will not regain voting rights and dispositive power with respect to the said shares (“physical settlement”), in whole or in part, unless it informs the Forward Counterparties otherwise at the relevant settlement dates specified in the Forward Agreements. Even though Israel Corporation hasCorp. holds less than 50% of ourthe Company’s ordinary shares, it still has a major impact ondecisive influence at the General MeetingMeetings of Shareholdersthe Company’s shareholders and, de factoeffectively, it has the power to appoint directors and has a strongto exert significant influence uponwith respect to the composition of ourthe Company’s Board of Directors.

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 of Share Capital—The Special State Share” in our registration statement on Form F-1 (File no. 333-198711) filed with the SEC on September 22, 2014.

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.

As of 31 December 2018, 141 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 $260 million.

(3) For a description of the different voting rights held by the holder of the Special State Share, see “Description of Share Capital—The Special State Share” in our registration statement on Form F-1 (File no. 333-198711) filed with the SEC on September 22, 2014.

(4) According to the annual statements of Nutrien Ltd., the controlling shareholder of PotashCorp, published on February 5, 2018, on January 24, 2018 the sale of the full holdings of PotashCorp in ICL was completed, at the amount of 176,088,630 Company shares, mainly to institutional bodies in Israel and the U.S.

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B. RELATED (AND INTERESTED) PARTY TRANSACTIONS

Approval of Related (and Interested) Party Transactions

Approval of Related (and interested)Interested) Party Transactions

Under the Companies Law, an 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 articlesArticles of associationAssociation of the company provide otherwise. Our Articles of Association provide that such a transaction, if it does not relatepertain to a director’s or officer’s compensation terms, may be approved by any of our Board of Directors, our Audit and FinanceAccounting 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 FinanceAccounting Committee and the Board of Directors, and, under certain circumstances, by the shareholders of the company.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.

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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 compensation and human resources committeeCompensation Committee if thesuch transaction is in connection with the terms of employment or service with the company, the boardBoard of directorsDirectors and the shareholders of the company.company (unless a relief exists pursuant to the Israeli Relief Regulation concerning Related Parties Transactions). 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-controllingnon‑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 at the discussion and voting on such transaction in the audit committeeAudit Committee or boardBoard of directors.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 committeeAudit 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.

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Approval of DirectorDirectors 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 HR & 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-controllingnon‑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 officerChief 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 HR & Compensation and Human Resources Committee, the Board of Directors and the Shareholders.Shareholders (unless a relief exists pursuant to the Israeli Relief Regulation concerning Related Parties Transactions). 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. Generally, the compensation terms of other officers who report directly to the chief executive officerChief Executive Officer require the approval of the HR & Compensation and Human Resources Committee and the Board of Directors, unless the HR & Compensation and Human Resources Committee approves that there is no material change to the terms of the compensation.

compensation, and if such possibility exists under the Compensation Policy.

On May 17, 2016 and July 17, 2013,7, 2016, our Board of Directors approved, and recommended that the general meeting of our shareholders approve, an updated compensation policy for our directors and officers in accordance with the recommendation of our HR & Compensation Committee in its meetings held on May 16, 2016 and Human Resources Committee, which approved the compensation policy on July 16, 2013. Our5, 2016. The Company’s compensation policy was approved by the general meeting of our Shareholdersshareholders on August 26, 2013. In March 2014, our 29, 2016 (the “Compensation and Human Resources Committee and our Board of Directors approved certain amendmentsPolicy”).

According to ourthe Companies Law, a 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 thea period exceeding three years prior torequires approval by the bonus,Board once every three years, based on a recommendation of 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,as well as approval by 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;

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·

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 related

Related (and Interested) Parties

Party Transactions

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.

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Controlling Shareholder

As of March 1, 2016,December 31, 2018, Israel Corporation heldholds approximately 48.88%45.86% of our outstanding ordinary shares and approximately 46.04%45% of the voting rights of our 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, 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 interested party transactions, since these must be approved by a majority of our non-related Shareholders.

shareholders.

Joint Insurance

On August 29, 2012, following approval bySeptember 14, 2017, our Auditshareholders approved the Company's engagement in directors and Finance Committee and our Board of Directors, our Shareholders approvedofficers insurance policies, as a newthree-year framework resolution to purchase anagreement. The insurance policy for two-tier coverage of director and officer liability jointlypolicies under the framework agreement include a joint primary tier with Israel Corporation. The first tier, which is sharedCorp. 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.

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In August 2013, following approval by our Human Resources & Compensation Committee and our Board of Directors, our Shareholders 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 uscovering the Company alone, forwith a liability cap of up to $200 million, for a total liability limit of $220 million withfor both tiers. Under the terms of the framework resolution, our directors and officers asare beneficiaries of both tiers. The new insurance policy was approved by our 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-year framework resolution approved by our Shareholders 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 Policyframework agreement, the division of the premium amount between the Company and Israel Corp. in the joint tier was changed sois that 70% willare to be paid by the Company and 30% by the Israel Corporation, in accordance withCorp.

According to the authority given toapproval of the general meeting of our shareholders, the HR & Compensation Committee and the Board of Directors will have the authority to approve changes from time to time in connection with the rate of the premium divisiondistribution between the ICL Group and the Israel Corp.Corporation Group in respect of the joint tier, as pertains torecommended by the shared tier, up to a deviation atinsurers and/or brokers, provided that the new rate of the premium distribution will not exceed 25% over the entire transaction period. Deviation from these limits shall require the shareholders approval. On December 4 and 5, 2017, the Audit & Accounting Committee and Board of Directors approved the renewal of the original division, in accordance withinsurance policy, on the basis of the framework agreement, for an additional year beginning on January 1, 2018, and until December 31, 2018, with an annual premium of $900,000, which is within the maximum premium amount specified in the framework resolution. The

On January 3 and 7, 2019, our Audit & Accounting Committee and Board of Directors approved the renewal of 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). According2019, according to the framework resolution, agreement, with a limit of $205 million, additional coverage Side A (directors only) limit of $20 million (as approved by our Audit & Accounting Committee on June 19, 2018 and December 10, 2018 and by the officersBoard on June 19, 2018 and December 12, 2018) and a total premium of up to $1,400,000. This amount (including the Side A premium), does not exceed the maximum premium amount pursuant to the framework agreement. The allocation of the premium distribution between 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. Israel Corp was revised to 80% ICL and 20% Israel Corp.

The terms of the New Policynew policy adhere to the terms of the framework resolution and of the Company's Compensation Policy.

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Management Fees to Controlling Shareholder

We have paidbeen paying our parent company, Israel Corporation, annual management fees for management services, since 1996. Management serviceswhich include service of board members and ongoing general consultation,consulting, such as professional, financial, strategic and managerial consulting, and consulting and representation in regulatory discussions and issues.consulting. The parties may agree to expand the management services to additional areas. In

On January 201517, 2018, our Human Resources & CompensationAudit and Accounting Committee and our Board of Directors approved, and on February 26, 2015April 24, 2018, our General Meeting of Shareholdersshareholders approved, an extension of the renewed management agreement that expiredeffective retroactively as of January 1, 2018, for an additional term of three years, expiring on December 31, 2014,2020. According to the renewed management agreement, the annual management fee paid to Israel Corp for each calendar year, shall not exceed $1,000,000, plus VAT. Such amount includes the overall value of the cash and equity compensation for the years 2015-2017, underservice of our directors whom are office holders of Israel Corp., and any and all prior or other compensation arrangements relating to such directors were cancelled. In addition, the same terms, except for the following changes: (1) upon approvalrenewed agreement was amended so as to no longer include an increase of the terms of office for the Executive Chairman of the Board, management fees shall be reduced to $1a threshold of $3.5 million plus VAT. InVAT in case the Chairmanan executive chairman of the Board is appointed Executive Chairmanon behalf of Israel Corporation. All other provisions of the Board and thereafter ceasesmanagement agreement remained unchanged. According to serve and be compensated as an Executive Chairmanthe decision of the Board, asGeneral Meeting of such timeour shareholders, the Audit & Accounting Committee will annually examine the reasonableness of the Management Fees paid in the previous year against the Management Services actually provided by Israel Corp to the Company in the same year. On February 4 and 25, 2019, the Audit & Accounting Committee examined the management services that were actually rendered in 2018 against the management fees shall once more be set at an amount of $3.5 million plus VAT; (2) to allowpaid in that year and concluded that the Company to grant equity compensation to incumbent and future directors who are employed byfees were reasonable.

Deposit agreement with 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 isControlling shareholder

For details regarding a director of Israel Corp.), and the directors employed bydeposit agreement with our controlling shareholder, Israel Corp., have conveyed their rightsee Note 25 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”).

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Relationships with Other Companies

A subsidiary in our Performance Products segment entered into a long-term agreement with an interested party of

In 2013, the Company for the acquisition of food-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 ourCompany's Board of Directors approvedauthorized to certain of our Israeli subsidiaries in our Industrial Products segmentIsrael to purchase electricity from OPC Rotem (a company related to the Company’s controlling shareholder).

In December 2017, each of the following: the Company, Oil Refineries Ltd. During 2013 additional subsidiaries from our Fertilizers segment entered into an(a public company one of whose controlling shareholders is Israel Corporation Ltd., whose controlling shareholders are related to Kenon Holdings Ltd. (“Kenon”)), and OPC Energy Ltd. (a public company which, as conveyed to the Company, views Kenon as its controlling shareholders for purposes of the Israeli Securities Law), engaged in a gas purchase agreement with OPC RotemEnergean Israel Limited (“Energean”), under which Energean will supply the Company with natural gas at a quantity of up to 13 BCM, at a value of $1.9 billion, over a period of 15 years. The agreement was examined and approved by an independent committee composed of external and independent directors of the Company on December 3, 2017, and thereafter by the Audit Committee and Board of Directors, on December 4 and 5, 2017, respectively. The Audit and Accounting Committee, in the presence of only Ms. Ruth Ralbag, Mr. Lior Reitblatt and Mr. Geoffrey Merszei, and the Company’s Board of Directors, have reapproved the agreement on January 17, 2018. The agreement was approved by the General Meeting of our shareholders on February 22, 2018. For further details regarding the gas agreement see “Item 5 - Operating and Financial Review and Prospects— A. Operating Results— Principal Factors Affecting our Results of Operations and Financial Condition”.

In addition to any other transaction with our controlling shareholder set forth in this annual report, in 2018 the following transactions were approved with respect to 2018 (all of which were classified by the Audit and Accounting Committee as transactions in the ordinary course of business, immaterial and in market terms), and approved by our Board of Directors:

1.

We obtain shipping services from Zim, an affiliate of Israel Corporation, and paid them about $8 million in each of the years 2016, 2017 and 2018.

2.

We purchase Sulfur from Oil Refineries Ltd., a subsidiary of Israel Corporation, and paid them about $2 million, $2.5 million and $3.2 million, in 2016, 2017 and 2018, respectively.

3.

We provide transportation services to ZIM, an affiliate of Israel Corporation, and were paid by them about $2.1 million, $1.6 million and $1.4 million in 2016, 2017 and 2018, respectively.

4.

We sell distilled water from Oil Refineries Ltd., a subsidiary of Israel Corporation, and were paid about $2 million in 2018.

In addition, the Company receives banking services in the ordinary course of business from Hamizrahi Bank, from time to time. To purchase electricitythe best of the Company's knowledge, Mr. Eyal Ofer, Mr. Idan Ofer's brother, is considered an interested party in accordance with the amended agreement approved in February 28, 2013.

Hamizrahi Bank.

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The table below sets forth certain income statement information with respect to balances of our related party transactions.

		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

	For the year ended December 31
	2018	2017	2016
	$ millions	$ millions	$ millions

Sales	5	8	35
Cost of sales	19	97	113
Selling, transport and marketing expenses	7	8	7
Financing expenses (income), net	3	(9)	-
General and administrative expenses	1	1	1
Management fees to the parent company	1	1	1

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The table below sets forth certain balance sheet information with respect to balances of our related party 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.

	As at December 31
	2018	2017
	$ millions	$ millions

Other current assets	28	38
Other current liabilities	7	191

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For additional information regarding our related party transactions, see note 29Note 25 to our audited financial statements.

Audited Financial Statements.

Option Plans

See “Item 6.

For a description of the Option Plans see “Item 6 - Directors, Senior Management and Employees—E. Share Ownership” for a description of the Option Plans.

Ownership”.

C. INTERESTS OF EXPERTS AND COUNSEL

Not Applicable.

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Item 8. Financial Information

A. CONSOLIDATED STATEMENTS AND OTHER8 – FINANCIAL INFORMATION

A.

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

The fixed operating costs for the years 2015, 2014ended December 31, 2018, 2017 and 20132016 amounted to approximately $2,335$2,188 million, $2,432$2,265 million and $2,328$2,304 million, respectively. The variable operating costs for the years 2015, 2014ended December 31, 2018, 2017 and 20132016 amounted to approximately $2,305$1,849 million, $2,921$2,524 million and $2,842$3,062 million, respectively.

See “Item 18.“Item 18 - Financial Statements.”

Legal Proceedings

Tax Proceedings

Statements”.

Business Concentration Law

On December 29,11, 2013, an assessment was received from the Israeli Tax Authorities whereby the Company is required to pay additional tax beyond the amount already paid for 2009 to 2011 in the amount of approximately 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, regarding the additional amount under the said assessment. The primary contention of the Tax Authorities is that our subsidiaries, ICL Dead Sea and ICL Rotem Amfert, are not entitled to benefits under the Law for Encouragement of Capital Investments commencing from the date onCompetition and Reduction of Business Concentration, 5774-2013 (the “Business Concentration Law"), was published, which Amendment No. 60includes, among other things, provisions requiring regulators authorized to this law enteredgrant rights in areas defined as essential infrastructure in Israel, to take into effect in 2005 or, alternatively, the miningaccount considerations for encouraging industry‑wide competition and water pumping activities, including the activitiesreducing business concentration in the evaporation ponds,overall economy prior to granting rights in public assets to private entities defined as high‑concentration entities. The Business Concentration Law sets forth a list of "rights", including authorization, license, concession or permit and a contract, and also includes a list of matters defined as an essential infrastructure, including areas in which we are not industrial activities and, accordingly, they are not entitled to benefits under the Law for Encouragementengaged, such as quarrying, mining, water, etc. The list of Capital Investments. The Company disagreeshigh‑concentration entities was published in accordance with the positioncriteria provided in the Business Concentration Law, and ICL and its main subsidiaries in Israel are included therein, as aforesaid. In our estimation, inclusion of the Taxes AuthorityCompany and its main subsidiaries in Israel in the list of high‑concentration entities is not expected to have a significant adverse effect on February 25, 2015, it filed an appealus and its financial results. However, in light of the order.

In the Company’s estimation, 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 includedfrequent changes in the financial statementsregulatory environment in respectIsrael and the existing uncertainty regarding the manner of the said assessment.

ICL Dead Sea Proceedings

Arbitration regarding Royalties at ICL Dead Sea Ltd.

Pursuantgranting rights in natural resources in a manner other than that provided in current legal provisions, among other things in relation 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 grantedmanner of granting a concession to utilize the resources of the Dead Sea and to lease the land required for its plants in Sodom for a period that 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 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 in respect of the annual quantity of potash sold in excess of 1.5 million is 10% (in place of 5%). 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 quarriesminerals extraction 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 collected2030, as statedwell as 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 ICL Dead Sea’s concession. The royalties in respect of the products manufactured by the Bromine Company are received by the Company from the Bromine Company, and the Company then pays them overrelation to the State. In addition, there is an arrangement relating to paymentgranting of royalties by ICL Magnesium for production of metal magnesium 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. 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.

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In 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 ICL Dead Sea decided to turn to arbitration for purposes of deliberating and deciding the issue of the manner of calculation of the royaltiesphosphate mining licenses, under the concession and royalties to be paid for magnesium metals and payment or refunds (if any) due deriving from these matters.

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.

On May 19, 2014, a partial arbitration decision was received regarding the royalties’ issue. Based on the principles of the decision received, ICL 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 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 ICL Dead Sea are to exhaust their discussions on the subject of the royalties to be paid by ICL 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, the Company recorded a provision in 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, and net of the tax effect, in the amount of about $45 million). The arbitrators’ decision is partial and its main decision is with respect to payment of royalties on downstream products, as mentioned above. All the principles have not yet been determined whereby the financial calculations 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 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, 2016, it submitted its position regarding calculation of the interest.

The Company estimates that the chances that its position will be accepted regarding the manner of calculating the royalties, based on the decision of the arbitrators in the partial decision, and regarding the principles for calculating the interest, are higher than the chances that they will be rejected.

In 2015, 2014 and 2013, ICL Dead Sea paid 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

In 2014, ICL received a petition submitted to the District Court in Israel in respect of a purported class action against its subsidiary, ICL Dead Sea. According to the petition, the plaintiff is a farmer who has bought and currently buys potash in Israel, which is produced by ICL Dead Sea, for fertilization purposes and seeks to represent a group of class members that would include all purchasers of potash or products containing potash since 2006, when potash prices were deregulated, through the date of the action. The plaintiff alleges that ICL Dead Sea charged an excessive price for potash, contrary to the Israeli business practices laws, and seeks damages in the amount of approximately NIS 96.4 million (approximately $24.7 million). In February 2016, the parties submitted a request to the court for approval of a compromise arrangement, the results of which are not expected to be significant with respect to the financial statements. As at the date of the Annual Report, the proceedings are continuing with respect to approval of the compromise arrangement by the court. In the Company's estimation, the chances that approval of the compromise arrangement will be confirmed exceed the chances it will be rejected. The Company has a sufficient provision in the financial statements.

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Personal Injury Claims

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 this Annual 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. In accordance with the Company’s management opinion, it is not possible, at this stage, to estimate the outcome of the above claims due to their complexity and the multiple parties involved.

Environmental Claims

Kishon River Wastewater Matters

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, claiming that the flowing of sewage into the Kishon River by each of the chemical plants operating on the river banks caused the plaintiffs' cancer and other illnesses. In 2013, a court decision was issued rejecting all the claims. In 2014, a notice of appeal was filed by seven plaintiffs that were subsequently rejected by the Supreme Court on 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. In June 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, except for one claim made by 17 soldiers. On September 24, 2015, the Supreme Court completely rejected the appeals of the soldiers, and also rejected the counter appeal regarding not charging the soldiers for expenses.

Spain Mining License Matters

Our subsidiary in Spain (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 ICL Iberia’s environmental mining license, contending that there were defects in provision of the license by the Government of Catalonia. On September 25, 2015, the Supreme Court affirmed this judgment. In February 2014, the regional court also disqualified the urban license, contending that the license does not comply with the required conditions for piling up salt on the site. In connection with the validity of the urban license after issuance of the decision of the Supreme Court, the local planning board (CUCC) of Catalonia determined new provisions, including limitation of the height 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 date 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 atIsraeli Mining Ordinance, it is possible that our estimation will prove to be inaccurate.

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 Price Monitoring

The prices of fertilizer‑grade phosphoric acid for local Israeli customers are regulated under the dateSupervision of this Annual Report,Prices for Commodities and Services Law 1996. The quantity of these products sold in Israel by the Phosphate Solutions segment is not material to ICL.

In the United States and Brazil, import of magnesium and magnesium alloys from China is subject to anti-dumping duties imposed in order to protect the local industry in these countries, which are the main markets in which ICL Iberia’s environmental mining license,Magnesium sells its products.

ICL and some of its subsidiaries have been declared a monopoly in Israel in the following areas: potash, phosphoric acid, sulphuric acid, ammonia, chemical fertilizers, granular triple super phosphate, phosphates, bromine and bromine compounds. Due to their having been declared monopolies, ICL and its subsidiaries are subject to limitations set forth in Chapter 4 of the Economic Competition Law, 1988 (formerly, Restrictive Business Practices Law, 1988), most significantly its prohibition on monopolies against abusing their positions as monopolies. In 2018 and 2017 approximately 4% and 3%, respectively, of our revenue derived from Israeli sales and, therefore, in our estimation, and without derogating 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 purposelegal implications 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 pileabove-mentioned declaration, on the Sallent site, including completion ofwhole, 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 constitutingsaid declaration does not have a material impact on us. We also have 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 salt after June 30, 2017, which is currently invalid, and will settle ICL Iberia’s obligations to subsequently restore the site.

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internal antitrust compliance program in place.

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Regarding the Suria site, in April 2014, after a favorable survey was received from the Environmental Protection Authority in Catalonia, ICL Iberia received an environmental license that complies with the new environmental protection regulations in Spain (autoritzacio substantive), this being after ICL Iberia received the municipal license.

In January 2016, following complaints from competitors in the salt market in Spain, the European Commission announced that it will investigate whether ICL Iberia received illegal aid from the Spanish authorities regarding two issues:

Legal Proceedings

Tax Proceedings

(1)1.

whether The Company and the guarantee amounts related to environmental protection (the guarantees that are supposed to cover the potential cost of rehabilitationmain operational companies in Israel (DSW, Rotem, Bromine, DSM, BCL and F&C), along with most of the land), which were originally set at $2 million, are lower than the amount required by the EUother companies in Israel, have received final tax assessments up to and nationalincluding 2011. The main subsidiaries outside of Israel have final tax assessments up to and regional environmental rules;including 2011 and 2012.

(2)2.

whether ICL Iberia should bear Israel - In December 2018, the cost ofIsraeli Tax Authorities (hereinafter - the environmental protection measures,ITA) rejected the company's objection relating to an assessment issued to the Company and to certain Israeli subsidiaries, and demanded an additional tax payment, for the years 2012‑2014, in the amount of about $9 million,$73 million. The Company disputes the assessment and filed an appeal to the Jerusalem District Court. In the Company’s estimation, it is more likely than not that its claims will be accepted.

In addition, regarding tax assessment for the years 2010-2015 for Tetrabrom (one of the downstream production companies in Israel), in October 2018, the company reached an agreement with the ITA, which resulted in immaterial amounts.

3.

The company's subsidiary in Belgium recognized a notion deduction on its capital based on its interpretation of the Belgian tax law, which was financedvalidated by the Spanish authorities.Court of Appeals in Belgium. The tax authorities dispute the eligibility of the deduction by appealing to the Supreme Court against the Court of Appeals' resolution and issuing tax assessments in a total amount of $27 million for the years commencing 2010. The Company believes, it is more likely than not that its tax position will also be accepted by the Supreme Court.

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4.

Currently, the Company is also under tax audits in Spain and Germany for the years 2012‑2015. As at the date of the report, there are no additional tax payment requests from the tax authorities, excluding immaterial amounts in Germany. The Company believes that the provisions in its books are sufficient.

Derivative Actions

1.

On July 10 and 19, 2016, two applications for certification of derivative actions were filed with the Economic Division of the Tel-Aviv District Court by two of our shareholders, with respect to the annual bonuses granted for the years 2014 and 2015 to our top-five highest-paid senior officers, including our CEO and Chairman of the Board at the time, alleging that such bonuses were granted in a manner deviating from our compensation policy and contrary to the Company’s best interest.

On December 6, 2016, the Court issued an order to dismiss the first application and to proceed with deliberation of the second application (the “Certification Application”).

The Company disagrees with the above claims and given the preliminary stagesecond application, at an estimated amount of these proceedings, the 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 above claims will 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 actionNIS 21 million (approximately $6 million), was filed against the Company, Israel Corporation, Potashcorp Cooperative Agricultural Society Ltd.,the aforementioned top-five highest paid senior officers and the members of our Board of Directors, who approved the grant of said bonuses. The Court was requested to order our top-five highest paid senior officers and our CEO,other officers to return the bonuses paid to them. Alternatively, the Court was filedrequested to compel the members of our Board of Directors to compensate the Company for damages incurred following the decision to approve these bonuses.

On December 15, 2016, our Board of Directors decided to establish an independent external special committee, its members being Hon. Justice (ret.) Prof. Oded Mudrick, Prof. Sharon Hannes and Prof. Haim Assayag, CPA, to examine all aspects arising from the Certification Application and to formulate conclusions and recommendations to our Board of Directors, including with respect to the possibility of filing a claim by the Company based on the allegations made in the DistrictCertification Application (the “External Committee”). On April 18, 2017 the Special Committee report was delivered, wherein the Special Committee recommended objecting to the Certification Application. Following the Committee's report which was adopted by ICL's Board of Directors, on June 6, 2017, the Company filed its response to the Certification Application, wherein the Court in Tel-Aviv, on the grounds of misleading information, deception and non-disclosure of material information in our reports, allegedly in violationwas requested to approve submission of the provisions of the Israeli Securities Law and the general laws. The aggregate amount of the damage claimed is $0.7 billion (NIS 2.75 billion) or $0.84 billion (NIS 3.28 billion). (The amount of the claim depends on the share price used to calculate the claimed damages). In November 2014,Special Committee’s report. On December 25, 2017, a hearing was held onrespecting the respondents’ motion to certifysubmit the claim as a class action. During 2015, proceedings took place to advance a compromise agreement that were later discontinued bySpecial Committee’s report, and on January 15, 2018, the parties. As at the date of this Annual Report, a court decision on the request had not yet been rendered. InCourt denied the Company’s opinion, basedrequest to submit the Special Committee’s report. Hence, on January 30, 2018, The Company filed an application for permission to appeal the position of its legal advisors,decision, wherein it requested 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 ICL Dead Sea Works Ltd. (hereinafter– "ICL Dead Sea") as part of its manufacturing inputs. PursuantSupreme Court to the agreement between ICL Dead Sea and Haifa Chemicals, the price for which Haifa Chemicals was charged was based on the average price, FOB, of ICL Dead Sea for its two largest customers in the preceding quarter. In 2008, an agreement between Haifa Chemicals and ICL Dead Sea was cancelled and the parties did not succeed in reaching a new agreement. Haifa Chemicals contends that the price ICL Dead Sea demanded in exchange for potash was unfair and that it was unable to operate at this price level. 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 ICL Dead Sea and Haifa Chemicals will be determined for a period of ten years from the date ofreverse the decision and with respectrule that the Company may submit the Special Committee’s report. On May 2, 2018, the Supreme Court accepted the Company's appeal. Following the Supreme Court's decision, the Company filed the Committee's report to the period fromDistrict Court. On July 1, 2018, the commencement of arbitration. The price formula providesplaintiff appealed to the District Court to reveal certain documents that the selling price during a quarter will be based on a price equalCompany filed to the lower ofCommittee and to subpoena Hon. Justice (ret.) Prof. Oded Mudrick. On November 22, 2018, the weighted average ofcourt accepted the lowest three FOB selling prices of potash sold by ICL Dead Sea inrequest. The application is scheduled for hearings on June and July 2019.

At this stage, the prior quartercompany is unable to estimate the risks involved and the average of the two lowest FOB selling prices of potash sold by ICL Dead Sea 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"). Based on the price formula, the possibility exists that under certain circumstances, an 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 will continue to apply to the remainder of the potash but 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 number of 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 meaningoutcome of this is thatproceeding. However, 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 onlymost cases, an application for the years 2012-2013 and, accordingly, the examination process will continue regarding ICL Dead Sea's costs in respect of these years. 

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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 2015, 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 its contentions included as part of the legal proceeding and the chances thereof to be accepted and given the production costs in ICL Dead Sea, the Company will not pay and will not receive significant amounts in respect of the past period (2009–2014). Accordingly, no provisions or income receivable were 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 claimderivative action, even if approved, does not constitute any exposure to the Company (rather to the contrary – sustaining it would lead to enrichment of the Company’s coffers).

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2.

On December 8, 2016, the Company received a motion for disclosure and review of documents, in accordance with Section 198A of the Israeli Companies Law. The motion was filed in the District Court in Tel Aviv by a shareholder of the Company, as a preliminary proceeding towards an application for certification of a derivative action with regard to the manner of management and discontinuation of the Harmonization Project (the global ERP project), which he claimed allegedly led to write-off of the amount invested in the project. On January 17, 2018, the Court denied the motion and imposed upon the applicant the legal expenses incurred by the respondent and its attorneys’ fees. To the best of the Company’s knowledge, on February 15, 2018 an application for permission to appeal was filed with the Supreme Court regarding the District Court’s decision to deny the motion. On October 11, 2018, the Supreme Court has rejected the application for permission to appeal, and imposed upon the applicant the legal expenses and attorney’s fees incurred by the respondent. For details regarding an application for certification of a class action against the Company concerning ICL's IT (Harmonization) Project that was filed by the same shareholder, and for details regarding a law suit filed by the Company against IBM due to the Failure of the said IT Project, see Note 20 to our Audited Financial Statements.

3.

On January 10, 2018, an application for certification of a derivative action was filed by a shareholder of Oil Refineries Ltd. (“Bazan”) with the Tel Aviv-Yafo District Court, against former and current board members of Bazan, OPC Energy Ltd. OPC Rotem Ltd., OPC Hadera Ltd. and the Company, (hereinafter, jointly: the “Additional Companies”), and against Israel Corporation Ltd., Mr. Idan Ofer and Mr. Ehud Angel (the “Application”).

The Application pertains to gas purchase transactions of the Company, Bazan and OPC, including the intercompany aspects thereof, which include a 2012 transaction involving Bazan for the purchase of natural gas from the Tamar gas field (the “Tamar Transaction”), as well as a class action

On June 7, 2015,transaction for the purchase of natural gas from Energean Israel Limited (the “Energean Transaction”). The Company’s engagement in the Energean Transaction was approved by the general meeting of our shareholders on February 22, 2018.

In a request was filed for its certification of a claimnut shell, the applicant argues that Bazan should have certify the Tamar Transaction as a class action,"Controlling Shareholder" transaction and that the Company and OPC enjoyed Bazan's economical advantages in the District Court in Tel Aviv–Jaffa, against elevenEnergean Transaction and thus must compensate it. On August 7, 2018, all the defendants including a subsidiary, Fertilizers and Chemical Ltd (ICL Haifa), in respect of claims relating to air pollution in Haifa Bay and forfiled their responses with the harm allegedly caused from it, to the residents of the Haifa Bay area. The amount of the claimcourt. Preliminary hearing 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. 23, 2019.

In light of the complexity of the process and the early stage of this proceeding, 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, basedchances and risks involved cannot be estimated. However, on the initial factual data provided tosurface it and the relevant court decisions, the chancesseems that the plaintiffs’ contentions will be rejected exceed the chances that they will be accepted.

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Company has good defense arguments.

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In addition to the contingencies referred to in the above sections, various

4.

According to the announcement issued by the Company on May 10, 2017, ICL Europe Coöperatief U.A. (“ICL Europe”), a subsidiary of the Company, filed a Notice of Arbitration against the Federal Democratic Republic of Ethiopia ("Ethiopia") under the Agreement of Encouragement and Reciprocal Protection of Investments between the Ethiopia and the Kingdom of the Netherlands ("the Ethiopia- Netherlands BIT"). A three-member arbitration tribunal ("Tribunal") was constituted under the Arbitration Rules of the United Nations Commission on International Trade Law ("UNCITRAL Rules") to hear the case, which is being administered by the Permanent Court of Arbitration located in The Hague, the Netherlands. Following ICL Europe's filing of Notice of Arbitration on May 10, 2017 and Ethiopia's response thereto on June 12, 2017, ICL Europe submitted to the Tribunal on June 19, 2018 its Statement of Claim seeking compensation in the amount of $181 million plus interest for damage its claims as a result of Ethiopia's coercive, arbitrary, discriminatory and unlawful conduct, culminating in the imposition without legal basis of a purported tax on ICL Europe's indirectly owned Ethiopian company, Allana Potash Afar Plc, and Ethiopia's violation of multiple provisions of the Ethiopia- Netherlands BIT, including the requirements to accord fair and equitable treatment to ICL Europe's investment, to provide full protection and security to ICL Europe's investment and not to expropriate unlawfully ICL Europe's investment. Ethiopia submitted to the Tribunal on October 19, 2018, its Statement of Defense and Objections to Jurisdiction. Among other things, Ethiopia argues that ICL Europe failed to make its investment in compliance with Ethiopian law and that the Tribunal lacks jurisdiction under the Ethiopia-Netherlands BIT as a result, that the challenged tax was lawful and does not provide a basis for presenting a claim under the Ethiopia- Netherlands BIT and that ICL terminated its investment for reasons unrelated to any of the alleged unlawful acts and omissions of Ethiopia.

For information regarding significant claims and legal proceeding, which are pending against the Company and various subsidiaries (including lawsuits). In respect of claims for an amount of upGroup, see Note 20 to about $21 million as of December 31, 2015, we have recorded a provision as at that date in the amount of about $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 mentioned claims.

our Audited Financial Statements.

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Dividend policy

On March 27, 2007,6, 2018 our Board of Directors revisited the dividend distribution policy that was previously approved in May 2016, and resolved that in the paymentyears 2018 and 2019 our dividend distribution rate shall continue to constitute up to 50% of a quarterlythe adjusted annual net profit (compared to our previous dividend at a ratedistribution policy of up to 70% of net profit, as was in place until revised in May 2016). Our Board of Directors will revisit this policy upon conclusion of the said period. In addition, dividends will be paid out inasmuch as declared by our net incomeBoard of Directors and reapproved that policy on May 24, 2010 and February 11, 2014. Any dividends mustmay be approveddiscontinued at any time. Such changes could include either a reduction in the amount or the targeted dividend, or modification of the calculation formula.

All decisions respecting dividend distribution are made by our Board of Directors, which will take into account variousconsiders a variety of factors, including inter alia, our profits, ability to pay our debt and obligations, investment plan, ourplans, financial position, the progress relating to our strategy plan, the conditions prevailing in the marketstate and additionalother factors, they deem appropriate. Dividend payments areas applicable. The distribution of a dividend is not guaranteedassured and our Board of Directors may decide, inat its absolutesole discretion, at any time and for any reason, not to pay dividends,distribute a dividend, to reduce the rate thereof, to modify the dividend payout policy, to paydistribute a special dividend, to change the dividend distribution policy or to a adopt a share buy-back plan.

The amount of distributable profits available for distribution as dividends as of December 31, 20152018 amounted to $ 2,6423,483 million.

The terms of certain of our existing indebtednessliabilities require us to maintain a minimum level of the Company’s equity, which could restrict our ability to pay dividends in the future. See note 17DNote 15D to our audited financial statementsAudited Consolidated 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. For a discussion of certain tax considerations affecting dividend payments, see “Item 10.“Item 10 - Additional Information—E. Taxation.”

On March 15, 2016, the Board 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 other metrics. No assurances can be provided that the Board of Directors will make any changes.

Taxation”.

B. SIGNIFICANT CHANGES

To the best of our knowledge, no significant changes have occurred since the date of our consolidated financial statements.

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Item 9. The Offer and Listing

A.9 – THE OFFER AND LISTING DETAILS

New York Stock Exchange

The following table sets forth, the annual, quarterly and monthly range of the highest closing price and the lowest closing price of the Company’s shares as they were reported by the New York Stock Exchange

		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 15, 2016, the last reported sale price of our ordinary shares on the New York Stock Exchange was $4.34 per share.

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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:
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 15, 2016, the last reported sale price of our ordinary shares on the TASE was NIS 16.90 per share, or $4.34 per share (based on the exchange rate reported by Bank of Israel on such date, which was NIS 3.89 = $1.00).

A.

OFFER AND LISTING DETAILS

Not applicable. 

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.

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F. EXPENSES OF THE ISSUE

Not applicable.

Item 10. Additional Information

10 – ADDITIONAL INFORMATION

A. SHARE CAPITAL

As of December 31, 2015,2018, our authorized share capital consisted of 1,484,999,999 ordinary shares, par value NIS 1 per share, of which 1,299,704,3031,304,890,778 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 validlylawfully issued and are fully paid and are non-assessable.paid. As of December 31, 2015, 24,590,041ordinary2018, 24,589,836 ordinary 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, 24,590,04124,589,836 have no voting rights.

As of December 31, 2015,2018, an additional 23,456,518quantity of approximately 18.9 million 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 approximately ILS 20.54 (about $5.48) per share. The weighted average exercise price of the outstanding vested options is approximately ILS 18.53 (about $4.94) per share. For additional information about the issuance of options and restricted shares to officers and senior employees and their exercise in 2014-2015,2017-2018, as well as the allocation of restricted shares to directors and approval of the issuance of restricted shares to directors, on February 26, 2015 and December 23, 2015, see Note 2421 to our audited financial statementsAudited Financial Statements and “Item 6.6 - Directors, Senior Management and Employees—E. Share Ownership—Incentive Compensation Plans.”

Ownership”.

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In 2013, 6,633,5742018, approximately 0.7 million options under our equity compensation plansplants were exercised resulting in the sale to certain of our officers and senior employees at a weighted average exercise price of NIS 47.01 of 312,558into approximately 0.15 million ordinary shares. In 20142016 and 2015,2017, 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 outstanding shares and voting rights.

In September 2014, we completed the initial public offering of our ordinary shares in the United States, pursuant to which Israel Corporation sold 36,207,12836 million ordinary shares and certain forward counterparties sold 23,951,01524 million ordinary shares to hedge their positions under forward sale agreements covering up to 36,207,12836 million ordinary shares owned by Israel Corporation. Subsequent to the closing of the initial public offering, the underwriters exercised their option to purchase an additional 6,015,8146 million ordinary shares from Israel Corporation.  We did not issue any ordinary shares in connection with the initial public offering or receive any proceeds from the sale of our ordinary shares by Israel Corporation or the forward counterparties. Israel Corporation ceased to have voting rights with respect to the ordinary shares subject to the forward sale agreements and made available to the forward counterparties under those agreements. However, Israel Corporation will regain voting rights with respect to all or a portion of 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 physicalshare 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 filedattached as Exhibit 3.2 to our registration statement on Form F-1 (File no. 333-198711) filed 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, as amended. Such description sets forth a summary of certain provisions of our articlesArticles of associationAssociation as currently in effect.

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The State of Israel holds a nontransferable Special State Share in ICL in order to preserve the State’s vital interests. Any change in the 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

The sale or transfer of material assets of the Company (in Israel) 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, isshall be invalid. TheUnless it received the approval of the holder of the Special State Share has the right tohow may 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 similarlyalso imposed on voluntary liquidation, mergers and reorganizations, excluding certain exceptional casesexceptions enumerated in our Articles of Association.

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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,aforesaid, 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-relatedasset‑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, 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.

met.

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 interests 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 willmight create a situation of significant conflicts of interest likely to negatively impact oneadversely affect any 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.residents of Israel. In general, meetings of our Board of Directors mustare to take place in Israel.

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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, 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, ICL Rotem, Dead Sea Bromine Company, Bromine Compounds, Tami and Dead Sea Magnesiumthe said subsidiaries 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.

To the best of our knowledge, an inter-ministry team has recently been established, headed by the Ministry of Finance, tasked with arranging the issue of authority and oversight relating to special state shares, interest decrees and reduction of the regulatory burden. As at the date hereof, we are unable to estimate what implications this process would have on the Company, if any, but it is possible that the introduction of an additional array of regulatory provisions, coupled with strict enforcement, may increase the uncertainty in the management of the Company operations relating to natural resources in Israel and may have a material adverse effect on our business, our financial condition and results of operations.

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.

For additional information on divestitures currently in progress, see “Item 3 - Key Information— A. Selected Financial Data”.

D. EXCHANGE CONTROLS

There are currently no Israeli currency control restrictions on the 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.

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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:

20132016–2018 and after:

2016 – 25%

2014

2017 – 26.5%

2015 – 26.5%

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2018 and after 23%

On January 4,December 22, 2016 the Israeli Knesset plenary Knesset passed the Economic Efficiency Law (Legislative Amendments for Amendment ofAchieving the Income Tax Ordinance No. 216Budget Targets for 2017 and 2018), 2016, which provides, inter alia,among other things, for a reduction of the Companies Tax rate commencing from 2016 and thereafter by25% to 23% in two steps – the first step to the rate of 1.5% such that24% commencing from 2017 and the second step to the rate will be 25%.

If the legislation had been effectively completed by December 31, 2015, the impactof 23% commencing from 2018 and thereafter, along with reduction of the change on the financial statements as at December 31, 2015 would have been reflected in a declinetax rate applicable to “Preferred Enterprises” (see A.2.b below) regarding factories in the balanceperipheral suburban areas, from 9% to 7.5%, as part of amendment of the liabilitiesLaw for deferred taxes, in the amountEncouragement 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.

Capital Investments.

The current taxes for the periods reported are calculated in accordance with the tax rates shown inabove.

2. Tax benefits under the table above.

3.

Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (hereinafter – “The Encouragement Law”)

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”)the Subsidiaries) have received “Beneficiary Enterprise” status under the Law of Encouragement for Capital Investments,law, as worded after Amendment No. 60 to the Law published in April 2005.

The benefits granted to the Companycompany are mainly:

1) Reduced tax rates

Regarding the “tax exemption” track, the

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.

a "tax exemption" track. The benefits deriving from a “Beneficiary Enterprise” under the “tax exemption”this track ended in 2014 while2014. Within those years the benefits deriving Company benefited from the “Ireland” track will endreduced tax rates as well as in 2017.

some cases full tax exemption.

A company having a “Beneficiary Enterprise” that distributes a dividend out of exempt income, will be subject to Companies Taxcompanies tax in the year in which the dividend was distributed on the amount distributed (including the amount of the Companies Taxcompanies 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

As at December 31, 2018, 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 in the amount of about $750$650 million (see also Section 3(a)c below).

of distributable amount and about $162 million of derived taxes.

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Under the “Ireland” track, the company paid reduced tax rate of 11.5% as of 2008 on parts of its income. The benefit deriving from the "Ireland" track ended in 2017.

The part of the taxable income entitled to benefits at reduced tax rates is calculated based on the basis of the ratio of the turnover of the “Benefited“Beneficiary Enterprise” to the Company’s total turnover. The turnover attributed to the “Benefited“Beneficiary 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“Beneficiary 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 2011‑2012, whereby the Law for the Encouragement of Capital Investments, 1959,law, was amended (hereinafter – “the Amendment”)the Amendment). The Amendment is effective from January 1, 2011 and its provisions will apply to preferred income derived or accrued by a Preferred Company,Enterprise, as defined in the Amendment, in 2011 and thereafter.

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The Amendment 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 proposedincluded as part of the 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 CompanyEnterprise in Development Area A will be 9% whereas the tax applicable to companies in the rest of Israel will be 16%. Pursuant to the amendment to the Encouragement law that was approved as part of the Economic Efficiency Law (Legislative Amendments for Achieving the Budget Targets for 2017 and 2018), 2016, the tax rate applicable to enterprises in the suburban areas was reduced from 9% to 7.5%. The Company has Preferred Enterprises at the tax rate of 7.5%.

On November 30, 2015, the Economic Efficiency Law was passed by the Knesset, which expanded the exception to all of anthe Enterprise’s activities up to the time of the first marketable product (for additional details – see Section 54 below). The Company has Preferred Enterprises at the tax rate of 9%. Nonetheless, tax benefits to which a BenefitedBeneficiary 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-residentIsraeli‑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 beis 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, unless a lower tax rate applies under a relevant treaty for prevention of double taxation.

3. The Law for the Encouragement of Capital Investments, 1959 (hereinafter – “the Temporary Order”)Industry (Taxation), 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.

In November 2013, the Company’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).

4.

The Law for the Encouragement of Industry (Taxation), 1969

1969

a) Some of the Company’s Israeli subsidiaries are “Industrial Companies”Enterprise”, as defined in the above-mentionedabove‑mentioned law. As such, these companies areIn respect of buildings, machinery and equipment owned and used by any "Industrial Enterprise", the Company is entitled to claim accelerated depreciation at increased ratesas provided by the Income Tax Regulations – Adjustments for equipment usedInflation (Depreciation Rates), 1986 which allow accelerated depreciation to any "Industrial Enterprise" as of the tax year in industrial activities, as stipulatedwhich each asset is first placed in the regulations published under the Inflationary Adjustments Law.

service.

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b) The industrial enterprisesIndustrial Enterprises owned by some of the Company’sCompany'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.

4. The Law for Taxation of Profits from Natural Resources 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”)the Law), which entered into effect onis effective since January 1, 2016, except with respect to ICL Dead Sea where the effective date is January 1, 2017.2016. The government take on natural resources in Israel includes three elements: Royalties, Natural Resources Tax and Companies Income Tax. 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:

In accordance with the Mines Ordinance, 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. For production of the phosphates, the royalty rate will beis 5% of the value of the quantity produced – in place of 2%). produced.

Pursuant to the salt harvesting agreement signed with the Government onin July 8, 2012, the parties agreed, among other things,inter‑alia, to an increase in the rate of the royalties from 5% to 10% of the sales, for every quantityquantities of chloride potash chloride sold by the Company in a given year,DSW sells in excess of a quantity of 1.5 million tons. As part oftonnes annually.

In addition, the salt harvesting agreement it was providedstates that if a lawlegislation is enacted that changes the specific fiscal policy in connection with reference to profits or royalties deriving from quarryingthe mining of quarries from the Dead Sea, the Company’sCompany's consent to the

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increasethe royalties' rate on the surplus quantities referred to above will not apply, after the enactment of the legislation, to the period in which such additional tax is collected as stated in the said legislation. In January 2016, the Law entered into effect and accordingly the rate of the royalties, as stated, will not apply. The Law entered into effect on January 1, 2016.royalties' provision was updated to 5%. For additional details –information - see Note 2320C to our audited financial statements.

Audited Financial Statements.

Imposition of Natural Resources Tax:

The Natural Resources Tax

is applied for all minerals from 2016 and for Potash from 2017. The tax base, which will be calculated for every resourcemineral separately, is the Company’smineral’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’smineral’s average working capital, and less an amount that reflects thea yield on the balance of the amortized cost of14% on the property, plant and equipment used for production and sale of the quarried material (hereinafter –”– the Yield on the Amortized Cost”)Property, Plant and Equipment). 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 CostProperty, Plant and Equipment in that year. For the Yield on the Amortized CostProperty, Plant and Equipment 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.

The above computations, including the right to use prior years’ losses, are made separately, without taking into account setoffs, for each natural resource production and sale activity.

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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.mineral. Nonetheless, regarding Magnesium, it was provided that commencing from 2017, upon sale of carnalite by Dead Sea Works (hereinafter – “ICL Dead Sea”)DSW to Magnesium and reacquisition of a Sylvanite by-productSylvinite by‑product by ICL Dead Sea,DSW, Magnesium will charge ICL Dead SeaDSW $100 per tontonne of potash which is produced from the SylvaniteSylvinite (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 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)(tonne) 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)(tonne) 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.

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The Company took a tax filing position, according to which, all the Dead Sea minerals should be taxed as a unified mineral under the above-mentioned mechanism.

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Companies Tax

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 exceptedexempted from inclusion in the Law.

The Natural Resource Tax will be deductible from the Company’sCompany's taxable income and the Company will pay the Companies Tax on the balance as is customary in Israel.

Taxation of Investors

The following are material Israeli income tax consequences to the investors described below of owningacquiring and disposing of our ordinary shares, but itshares. That stated does not purport to be a comprehensive description of all the tax considerations that may be relevant to a particular person’s decision to ownacquire and/or dispose the ordinary shares.

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-residentsnon‑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 indexConsumer 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 thea sale of shares, whether listed on a stock market or not, is the regular corporate tax rate in Israel (26.5% and commencing from January 1, 2016, 25%)of 23% 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 suchindividual shareholder is considered a “significant shareholder” at any time during the 12 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 with2018 taxpayers having taxable income that exceedsof NIS 800,000641,880 or above in a certain tax year (linked to the Israeli consumer price index each year—NIS 810,720 for 2015) will be subject to an additional tax payment at the rate of 2%3% on the portion of their taxable income for such tax year that is in excess such threshold. For this purpose, taxable income includes inter alia taxable capital gains from the sale of our shares and taxable income from dividend distributions.

Non-Israeli

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Non‑Israeli Residents

Non-Israeli

Under the domestic tax law, 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-Israelinon‑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.

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In addition, pursuant to the Convention between the Government of the United States of America and the Israeli government with respect to Taxestaxes on Income,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 the 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.

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). The 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 Enterprises are subject to withholding at the rate of 15%. Dividends paid from income derived from Preferred Enterprises are 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).

Non-Israeli

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As of January 1, 2018 taxpayers having taxable income of NIS 641,880 or above in a certain tax year will be subject to an additional tax payment at the rate 3% on the portion of their taxable income for such tax year that is in excess such threshold.

Non‑Israeli Residents

Non-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 Enterprises 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 will be subject to withholding at the rate of 20%.

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:

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·

certain financial institutions;institutions;

·

dealers or traders in securities that use a mark-to-market method of tax accounting;accounting;

·

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;shares;

·

persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;dollar;

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·

entities classified as partnerships for U.S. federal income tax purposes;purposes;

·

tax exempt entities, “individual retirement accounts” or “Roth IRAs”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;stock by vote or value; 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.

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 Annual Report  may affect the tax consequences described herein.

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:

is:

·

a citizen or individual resident of the United States;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.source.

U.S. Holders should consult their tax advisers concerning the U.S. federal, state local tax and non-U.S. consequences of owning and disposing of our ordinary shares in their particular circumstances.

circumstances.

This discussion assumes that we are not, and will not become, a passive foreign investment company, as described below.

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.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.

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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.

limitations.

Passive Foreign Investment Company Rules

In general, a 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. 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 2015.2018. 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.

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.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.

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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.

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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.

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.

Service.

Certain U.S. Holders who are individuals (and(or certain entities controlled by individuals)specified entities) may be required to report information relating to their ownership of securities of 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. financial institutions). U.S. Holders should consult their tax advisers regarding their reporting obligations with respect to the ordinary shares

F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G. STATEMENT BY EXPERTS

Not applicable.

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H. DOCUMENTS ON DISPLAY

We

In light of the listing of our ordinary shares for trade on the New York Stock Exchange (NYSE) within the framework of an initial public offering executed in 2014, we are subject to the informational requirements of the US Securities Exchange Act.Act of 1934. Accordingly, we are required to file or furnish reports and other information with the SEC pursuant to the requirements applying to foreign issuers, 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, theThe SEC maintains an Interneta 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

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 beyondnot at 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 insuch as 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 try and minimize this exposure as farmuch as possible by the use ofusing various hedging instruments. We do not currently hedge against some severance pay liabilities or our tax resultsbalances since the exposure isthey are long term. Weterm exposures. In addition, we do not use hedging instruments to hedge the prices of our products. For hedging against the pricesprice changes of crude oil,energy products and marine shipping prices,costs, projected income and expenses in currencies that are not the functional currency of our subsidiaries, and interest rates, our policy is to hedge part of the exposure, as described below.

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We regularly monitor the extent of our exposure and the hedging activities and rates for the various risks described below. TheWe execute 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 exposureactivities according to a value-at-risk model. Together with a report on the quarterly financial results, our Audit and Finance 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 the actual developments and expectations in the various markets.

We use financial instruments and derivatives for hedging purposes only. These hedging instruments reduce our exposure as described above. TheseSome of 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.earnings. The counterparties for our derivatives transactions are banks.banks or financial institutes. We believe the credit risk in respect thereof is negligible.

small.

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For additional information about our hedging activities, see Note 2723 to our audited financial statements.

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 majorityMost 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 majoritymost of our subsidiaries.

We have a number ofseveral 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 ratiosurplus of net income toor 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)revaluation). 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 usfor the Company and ourits 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.

these companies.

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

For Investment in subsidiaries whose functional currency is not the U.S. dollar, the end-of-period balance-sheet balancesend of period balance sheet accounts 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.

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Our Finance Forum (whose members are the senior financial managers of our Company and each of our segments)

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We examine periodically examines the extent of the hedging transactions implemented forto hedge each of the exposures described above and decides on the required scope of the hedging.hedging within the hedging policy frame. 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%.

Exchange rate:

As at December 31, 2015,2018, the liability in respect of thepositive fair value of the derivative instruments with respect to exchange rates was about $5 million. As$12 million compared to a result of income was recorded in the amount of about $62 million with reference to open transactions.

Energy

The liability in respect of thepositive fair value of derivative instruments for energy costs$63 million as at December 31, 2014 amounted2017. As a result, in 2018, an expense of about $51 million was recorded with respect to about $19 million, due to the decline in the price of crude oil in 2014 at the rate of 29%. these transactions.

Energy:

As at December 31, 2015,2018, the liability in respect of thenegative fair value of the derivative instruments with respect to energy costs was about $7 million. As$3 million compared to 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 thepositive fair value of derivative instruments for dry bulk marine shipping$2.2 million as at December 31, 2014 amounted2017. As a result, in 2018, an expense of about $5.2 million was recorded with respect to about $9 million, due to the decline in thethese transactions.

Dry bulk marine shipping prices in 2014 at the rate of 26%. shipping:

As at December 31, 2015,2018, the liability in respect of thenegative fair value of the derivative instruments with respect to dry bulk marine shipping was about $5 million.$2.3 million compared to a positive fair value of $1.9 million as at December 31, 2017. As a result, in 2018, an expense of incomeabout $4.2 million was recorded in the amount of about $4 million with referencerespect to openthese 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.

249

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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, 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

2018.

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

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

	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
USD/NIS	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 10%	Increase of 5%		Decrease of 5%	Decrease of 10%

Table of Contents

Cash and cash equivalents	(0.2)	(0.1)	1.8	0.1	0.2
Short term deposits and  loans	0.0	0.0	0.1	0.0	0.0
Trade receivables	(5.5)	(2.9)	60.2	3.2	6.7
Receivables and debit balances	(1.1)	(0.6)	11.8	0.6	1.3
Long-term deposits and loans	(0.1)	(0.1)	1.5	0.1	0.2
Credit from banks and others	2.8	1.4	(30.3)	(1.6)	(3.4)
Trade payables	24.1	12.6	(265.1)	(14.0)	(29.5)
Other payables	17.5	9.2	(192.3)	(10.1)	(21.4)
Long-term loans	6.6	3.5	(73.0)	(3.8)	(8.1)
Fixed rate debentures (series E)	38.8	20.3	(426.8)	(22.5)	(47.4)
Options	(74.8)	(40.9)	(13.8)	19.1	43.4
Forward	(32.0)	(16.7)	1.6	18.5	39.1
Swap	(47.6)	(24.9)	14.7	27.6	58.2
Total	(71.5)	(39.2)	(909.6)	17.2	39.3

---

	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
EUR/USD	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 10%	Increase of 5%		Decrease of 5%	Decrease of 10%

Cash and cash equivalents	(1.9)	(1.0)	21.3	1.1	2.4
Short term deposits and  loans	(0.2)	(0.1)	2.7	0.1	0.3
Trade receivables	(20.2)	(10.6)	221.9	11.7	24.7
Receivables and debit balances	(1.1)	(0.6)	11.7	0.6	1.3
Long-term deposits and loans	(0.1)	(0.1)	1.1	0.1	0.1
Credit from banks and others	15.1	7.9	(166.4)	(8.8)	(18.5)
Trade payables	17.1	8.9	(187.6)	(9.9)	(20.8)
Other payables	4.2	2.2	(46.0)	(2.4)	(5.1)
Long-term loans from banks	0.5	0.3	(5.4)	(0.3)	(0.6)
Options	4.6	2.1	1.3	(1.8)	(3.7)
Forward	9.5	4.5	2.5	(4.1)	(7.7)
Swap	33.6	16.8	(1.0)	(16.8)	(33.6)
Total	61.1	30.3	(143.9)	(30.5)	(61.2)

---

250

---

	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
GBP/USD	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 10%	Increase of 5%		Decrease of 5%	Decrease of 10%

Cash and cash equivalents	(0.4)	(0.2)	4.4	0.2	0.5
Trade receivables	(5.5)	(2.9)	60.3	3.2	6.7
Receivables and debit balances	0.0	0.0	0.4	0.0	0.0
Credit from banks and others	1.7	0.9	(18.7)	(1.0)	(2.1)
Trade payables	2.1	1.1	(22.7)	(1.2)	(2.5)
Other payables	0.6	0.3	(6.6)	(0.3)	(0.7)
Options	(1.3)	(0.6)	(0.1)	0.4	0.8
Forward	(3.5)	(1.7)	0.3	1.5	2.9
Total	(6.3)	(3.1)	17.3	2.8	5.6

---

	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
GBP/EUR	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 10%	Increase of 5%		Decrease of 5%	Decrease of 10%

Forward

(3.7)

(1.9)

0.3

2.1

4.5

---

	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
BRL/USD	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of   10%	Increase of 5%		Decrease of 5%	Decrease of 10%

Cash and cash equivalents	(0.5)	(0.2)	5.0	0.3	0.6
Trade receivables	(2.3)	(1.2)	25.2	1.3	2.8
Trade payables	1.0	0.5	(10.9)	(0.6)	(1.2)
Other payables	0.2	0.1	(2.2)	(0.1)	(0.2)
Long-term loans from banks	1.7	0.9	(19.1)	(1.0)	(2.1)
Total	0.1	0.1	(2.0)	(0.1)	(0.1)

---

	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
CNY/USD	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of   10%	Increase of 5%		Decrease of   5%	Decrease of 10%

Cash and cash equivalents	(3.4)	(1.8)	37.2	2.0	4.1
Trade receivables	(6.5)	(3.4)	71.5	3.8	7.9
Trade payables	6.5	3.4	(71.9)	(3.8)	(8.0)
Other payables	1.8	0.9	(19.4)	(1.0)	(2.2)
Credit from banks and others	16.7	8.8	(184.0)	(9.7)	(20.4)
Forward	(2.6)	(1.4)	(0.1)	1.5	3.2
Long-term loans (CNY)	0.1	0.0	(0.7)	0.0	(0.1)
Total	12.6	6.5	(167.4)	(7.2)	(15.5)

---

251

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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

2017.

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
USD/NIS	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 10%	Increase of 5%		Decrease of 5%	Decrease of 10%

		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			(1.9	)			(1.0	)			19.4				1.0				1.9
Trade receivables			(1.0	)			(0.5	)			10.0				0.5				1.0
Trade payables			0.2				0.1				(1.6	)			(0.1	)			(0.2	)
Other payables			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	)
Total			(1.9	)			(1.1	)			20.3				1.1				1.9

Cash and cash equivalents	(0.1)	(0.1)	1.4	0.1	0.1
Short term deposits and loans	0.0	0.0	0.1	0.0	0.0
Trade receivables	(5.9)	(3.0)	59.0	3.0	5.9
Receivables and debit balances	(3.9)	(2.0)	39.4	2.0	3.9
Credit from banks and others	3.3	1.6	(32.7)	(1.6)	(3.3)
Trade payables	28.9	14.4	(288.8)	(14.4)	(28.9)
Other payables	9.6	4.8	(96.3)	(4.8)	(9.6)
Long-term loans	7.8	4.1	(86.0)	(4.5)	(9.6)
Fixed rate debentures (series E)	42.8	22.4	(470.9)	(24.8)	(52.3)
Options	(35.6)	(9.1)	3.2	20.5	50.0
Forward	(39.1)	(20.5)	1.8	22.7	47.8
Swap	(52.9)	(27.4)	64.0	31.7	66.2
Total	(45.1)	(14.8)	(806.0)	29.9	70.2

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	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
EUR/USD	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 10%	Increase of 5%		Decrease of 5%	Decrease of 10%

Cash and cash equivalents	(1.8)	(0.9)	17.9	0.9	1.8
Short term deposits and loans	(0.1)	0.0	0.7	0.0	0.1
Trade receivables	(24.6)	(12.3)	246.4	12.3	24.6
Receivables and debit balances	(0.1)	0.0	0.9	0.0	0.1
Long-term deposits and loans	(0.1)	(0.1)	1.1	0.1	0.1
Credit from banks and others	15.8	7.9	(157.6)	(7.9)	(15.8)
Trade payables	18.2	9.1	(182.1)	(9.1)	(18.2)
Other payables	7.7	3.8	(76.9)	(3.8)	(7.7)
Long-term loans from banks	2.9	1.4	(29.0)	(1.4)	(2.9)
Options	5.7	2.8	(1.8)	(3.1)	(6.7)
Forward	35.0	16.6	(2.6)	(15.0)	(28.7)
Swap	5.3	2.7	(0.6)	(2.5)	(5.1)
Total	63.9	31.0	(183.6)	(29.5)	(58.4)

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252

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	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
GBP/USD	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 10%	Increase of 5%		Decrease of 5%	Decrease of 10%

Cash and cash equivalents	(0.7)	(0.3)	6.7	0.3	0.7
Trade receivables	(4.8)	(2.4)	47.8	2.4	4.8
Receivables and debit balances	0.0	0.0	0.1	0.0	0.0
Credit from banks and others	2.0	1.0	(20.3)	(1.0)	(2.0)
Trade payables	2.3	1.2	(23.0)	(1.2)	(2.3)
Other payables	1.5	0.7	(14.7)	(0.7)	(1.5)
Options	-	-	-	-	-
Forward	2.6	1.2	0.1	(1.1)	(2.2)
Total	2.9	1.4	(3.3)	(1.3)	(2.5)

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	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
GBP/EUR	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 10%	Increase of 5%		Decrease of 5%	Decrease of 10%

Forward

2.2

1.2

0.1

(1.3)

(2.7)

---

	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
BRL/USD	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of   10%	Increase of 5%		Decrease of 5%	Decrease of 10%

Cash and cash equivalents	(0.7)	(0.3)	6.5	0.3	0.7
Trade receivables	(3.1)	(1.5)	30.8	1.5	3.1
Trade payables	1.5	0.8	(15.5)	(0.8)	(1.5)
Other payables	0.2	0.1	(1.9)	(0.1)	(0.2)
Long-term loans from banks	3.0	1.5	(30.0)	(1.5)	(3.0)
Total	0.9	0.6	(10.1)	(0.6)	(0.9)

---

	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
CNY/USD	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of   10%	Increase of 5%		Decrease of   5%	Decrease of 10%

Cash and cash equivalents	(2.2)	(1.1)	21.6	1.1	2.2
Trade receivables	(9.2)	(4.6)	91.7	4.6	9.2
Trade payables	8.5	4.3	(85.3)	(4.3)	(8.5)
Other payables	2.1	1.0	(20.8)	(1.0)	(2.1)
Credit from banks and others	17.3	8.7	(173.3)	(8.7)	(17.3)
Forward	3.1	1.6	(0.7)	(1.8)	(3.8)
Long-term loans (CNY)	9.8	4.9	(98.1)	(4.9)	(9.8)
Total	29.4	14.8	(264.9)	(15.0)	(30.1)

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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

We use some hedging transactions in order to adjust the structurehedge some of the actual interest to our expectations with regard to the anticipated developments in interest rates, taking into account the cost of the hedging.above exposure. 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 at 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	)

2018.

	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 1%	Increase of 0.5%		Decrease of 0.5%	Decrease of 1%

Fixed-USD interest debentures	77.5	40.0	(1,068.9)	(42.7)	(88.4)
Swap transactions	7.7	3.9	0.4	(4.0)	(8.2)
NIS/USD swap	17.6	8.9	14.7	(9.1)	(18.4)
EUR/USD swap	(0.2)	(0.1)	(1.0)	0.1	0.2
Total	102.8	52.8	(1,054.8)	(55.8)	(115.0)

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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	)

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2017.

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	Increase (decrease) in fair value		Fair value	Increase (decrease)  in fair value
	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 1%	Increase of 0.5%		Decrease of 0.5%	Decrease of 1%

Fixed-USD interest debentures	58.2	29.6	(1,107.9)	(30.7)	(62.4)
Swap transactions	10.1	5.1	(2.7)	(5.3)	(10.8)
NIS/USD swap	33.1	22.4	64.0	(11.7)	(23.6)
Total	101.4	57.1	(1,046.6)	(47.7)	(96.8)

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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, 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

2018.

Sensitivity to changes in the shekel interest rate	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 1%	Increase of 0.5%		Decrease of 0.5%	Decrease of 1%

Fixed-interest long-term loan	2.7	1.4	(73.0)	(1.4)	(2.9)
Fixed rate debentures (series E)	14.5	7.4	(426.8)	(7.5)	(15.3)
NIS/USD swap	(18.5)	(9.4)	14.7	9.6	19.5
Total	(1.3)	(0.6)	(485.1)	0.7	1.3

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254

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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.

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

2017.

Sensitivity to changes in the shekel interest rate	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 1%	Increase of 0.5%		Decrease of 0.5%	Decrease of 1%

Fixed-interest long-term loan	3.7	1.9	(86.0)	(2.0)	(4.0)
Fixed rate debentures (series E)	20.1	10.2	(470.9)	(10.5)	(21.3)
NIS/USD swap	(25.9)	(13.1)	64.0	13.5	27.5
Total	(2.1)	(1.0)	(492.9)	1.0	2.2

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Energy Price Risk

Execution

We use Energy as part of operating our mines, facilities and logistics channels. We are executing some hedging is determined by appropriate personnel after consultation with Israeli and foreign energy advisors.

transactions to hedge some of this exposure.

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	)

2018.

	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 10%	Increase of 5%		Decrease of 5%	Decrease of 10%

Energy hedges

1.5

0.8

(3.0)

(0.9)

(2.0)

---

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												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	)

2017.

	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 10%	Increase of 5%		Decrease of 5%	Decrease of 10%

Energy hedges

2.1

1.0

2.2

(1.0)

(1.9)

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Marine Shipping Price Risk

We purchase hedges on partare shipping substantial amounts of goods worldwide using marine shipments. We execute some hedging transactions to reduce some of our exposure to marine bulk shipping prices. Hedging is executed by the appropriate personnel, after consultation with overseas experts.

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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	)

2018.

	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 10%	Increase of 5%		Decrease of 5%	Decrease of 10%

Marine shipping hedges

2.7

1.3

(2.2)

(1.3)

(2.7)

---

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												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	)

2017.

	Increase (decrease) in fair value		Fair value	Increase (decrease) in fair value
	$ millions	$ millions	$ millions	$ millions	$ millions
Type of instrument	Increase of 10%	Increase of 5%		Decrease of 5%	Decrease of 10%

Marine shipping hedges

2.2

1.1

1.9

(1.0)

(2.1)

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Item 12. Description of Securities Other than Equity Securities

12 – DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not Applicable.

PART II

Item 13. Defaults, Dividend Arrangements and Delinquencies

None.

13 – DEFAULTS, DIVIDEND ARRANGEMENTS AND DELINQUENCIES

Not Applicable.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

14 – MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not Applicable.

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Item 15. Controls and Procedures

15 – CONTROLS AND PROCEDURES

A. DISCLOSURE CONTROLS AND PROCEDURES

ICL’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of ICL’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(f)13a-15(e)) as of the end of the period covered by this annual report, have concluded that, as of such date, ICL’s disclosure controls and procedures were effective to ensure that the information required in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and such information is accumulated and communicated to its management, including its chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

B. MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING

ICL's board of directors and

ICL’s management areis responsible for establishing and maintaining adequate internal control over financial reporting. ICL'sICL’s internal control over financial reporting system was designed by, or under the supervision of, the Chief Executive Officer and Chief Financial Officer, and effected by our board of directors, 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 assets;

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 material effect on our financial statements.

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·

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our assets;

·

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 material effect on our financial statements.

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 internal 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 with the participation of our

257

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Our management, including our Chief Executive Officer and our Chief Financial Officer, we assessed the effectiveness of ICL'sICL’s internal control over financial reporting as of December 31, 2015.2018. In making this assessment, weour management used the criteria established in Internal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission of 2013 (COSO). Based on such assessment, our management believeshas concluded that, as of December 31, 2015, ICL's2018, ICL’s internal control over financial reporting is effective based on those criteria.

C. ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM

Attestation Report of the Registered Public Accounting Firm

Somekh Chaikin, member firm of KPMG International, an independent registered public accounting firm, has audited and reported on the effectiveness of ICL'sICL’s internal controls over financial reporting as of December 31, 2015.2018. See Somekh Chaikin'sChaikin’s attestation report beginning on page F-2 of this annual report.

D. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

Changes in internal control over financial reporting

There has been no identified change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15 or 15d-15 that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 16A. Audit Committee Financial Expert

16A – AUDIT AND ACCOUNTING COMMITTEE FINANCIAL EXPERT

Our Board of Directors has determined, based on qualification statements delivered to the Company, that Mr. Yaacov DiorBoard members Ms. Ruth Ralbag and Mr. Geoffery Merszei are audit committeeMessrs. Nadav Kaplan and Lior Reitblatt shall serve as financial experts of the Audit and Accounting Committee, as that term is defined in Item 16A(b) of Form 20-F, and that Mr. Dior, Mr. Merszeiall members of the Audit and Dr. Miriam HaranAccounting Committee, Ms. Ruth Ralbag and Messrs. Nadav Kaplan and Lior Reitblatt are financially literate and are independent directors for the purposes Rule of NYSE corporate governance rules and Rule 10A-3 of the Exchange Act.

Act and of the NYSE trade listing requirements.

Item 16B. Code of Ethics

16B – CODE OF ETHICS

Our Board of Directors have adopted a Code of Conduct that applies to our Board of Directors, senior management and employees, including our principalchief executive officer, principalchief financial officer, principalchief accounting officer or controller and any other persons who perform similar functions for us. TheOur Code of ConductEthics is available, free of charge, on our website, www.icl-group.com.

www.icl-group.com.

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Item 16C. Principal Accountant Fees and Services

16C – PRINCIPAL ACCOUNTANT FEES AND SERVICES

Somekh Chaikin, a member of KPMG International, has served as our independent registered public accounting firm for 20142018 and 2015.

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These accountants2017. Following are the billed the following fees, to us for their professional services in each of those fiscal 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)

Audit Fees are the aggregate fees billed for the audit of our annual financial statements. This category also includes services that generally the independent accountant provides, such as consents and assistance with and review of documents filed with the SEC.

(2)

Audit-Related Fees are the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit and are not reported under 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 are the aggregate fees billed for professional services rendered 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.

	2018	2017
	US$ thousands	US$ thousands

Audit fees(1)	4,897	5,132
Audit-related fees(2)	192	395
Tax fees(3)	1,751	1,473
Total	6,840	7,000

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(1) Audit fees are the aggregate fees billed or expected to be billed for the audit of our annual financial statements. This category also includes services that are generally provided by the independent accountant, such as consents and review of documents filed with the SEC.

(2) Audit-related Fees are the aggregate fees billed for assurance and related services rendered during the year ended December 31, 2018 that are reasonably related to the performance of the audit and are not reported under Audit fees. These fees include mainly audits of financial statements of a carve-out entity in anticipation of a divestiture and accounting consultation on proposed transactions.

(3) Tax fees are the aggregate fees billed for professional services rendered during the year ended December 31 rendered for tax compliance, tax advice, and tax planning, assistance with tax audits and appeals.

Audit Committee’s pre-approval policies and procedures

All services provided by our independent auditors are approved in advance by either the Audit and FinanceAccounting Committee or members thereof, to whom authority has been delegated, in accordance with the Audit and Finance Committee’sAccounting Committee's pre-approval policy.

procedure respecting such services.

Item 16D. Exemptions from the Listing Standards for Audit Committees

None.

16D – EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not Applicable.

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Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

16E – PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not Applicable.

Item 16F. Change in Registrant’s Certifying Accountant

None.

16F – CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not Applicable.

Item 16G. Corporate Governance

16G – CORPORATE GOVERNANCE

Corporate Governance Practices

We are incorporated in Israel and therefore subject to various corporate governance requirementsprovisions under the Companies Law and the regulations promulgated thereunder, 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. foreign companies listed for trade in the U.S.

As a foreign private issuer whose shares are listed on the NYSE, we have the option to follow certain Israeli corporate governance practices applying in the country of incorporation of the foreign company, Israel, 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 which we elected to follow instead. We intend to rely on this “foreign private issuer exemption” with respect to the following NYSE requirements:

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·

Majority Independent Board.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. Eightsix of our eleventen directors are not considered independent directors under Israeli law whether due to either atheir relationship with the Company, our controlling shareholder or the length of their tenure on our Board of Directors.

·

Nominating/Corporate Governance Committee.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’sOur controlling shareholder, Israel Corporation, has significant control over the appointment of our directors.

·

Equity Compensation Plans.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 Israeli Companies Law, under which approval of equity-compensationequity compensation plans and material revisions thereto is within the authority of our HR & Compensation Committee and the boardBoard of directors.Directors. However, under the Israeli 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 compensation plans, 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, among other things, to include a monetary cap on the value of equity compensation that may be granted to any director or officer.

260

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·

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,ordinary shares, 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 ordinary shares of common stock to be issued exceeds either 1% of the number of shares of commonordinary shares or 1% of the voting power outstanding before the issuance, and (b) issuing common stock,ordinary shares, or securities convertible into or exercisable for common stock,ordinary shares, if the common stockordinary share 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 ordinary shares of common stock to be issued is equal to or in excess of 20% of the number of ordinary 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 Israeli Companies Law, which are different from the requirements for seeking shareholder approval under Section 312.03 of the LCM. Under the Israeli 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 Israeli 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:

·

theThe securities issued amount to 20% or more of the company’s outstanding voting rights before the issuance;

·

someSome or all of the consideration is other than cash or listed securities or the transaction is not on market terms; and

·

theThe 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 virtually all the rules applicable to U.S. companies listed on the NYSE. We may decide in the future decide to use additional and/or other foreign private issuer exemptions with respect to some or all of the other NYSE listing requirements. Following governance practices of our home country, governance practices,Israel, 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 3.3 - 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 accordedafforded to investors under rules applicable to domestic issuersissuers”.”

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Item 16H. Mine Safety Disclosure

16H – MINE SAFETY DISCLOSURE

Not applicable.

PART III

Item 17. Financial Statements

17 – FINANCIAL STATEMENTS

See “Item 18.18 - Financial Statements.”

Statements”.

Item 18. Financial Statements

18 – FINANCIAL STATEMENTS

See page F-1.

Item 19 – EXHIBITS

We have filed certain exhibits to our Form 20-F filed with the SEC, which are available for perusal at: www.sec.gov.

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**	Amended Equity Compensation 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(2014), dated November 27, 2012June 2016 (unofficial translation from original Hebrew).
4.3**	Equity Compensation Plan (2014), dated August 20, 2014 (unofficial translation from original Hebrew).
4.4*	Compensation Policy for Directors and Officers, as adopted in July 2013 and approved by shareholders in August 2013.
4.5* 4.4*	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.
4.6* 4.5*	Registration Rights Agreement, dated September 12, 2014 by and among Israel Chemicals Ltd. and Israel Corporation Ltd.
4.7 4.6***	Revolving Credit Facility Agreement, dated March 23, 2015, by and among certain financial institutions, ICL Finance B.V., and Israel Chemicals Ltd.
4.8 4.7****	Purchase and Sale Agreement dated as of December 6, 2017 by and among Amsterdam Fertilizers B.V. BK Giulini, GmbH, ICL Germany Food and Chemical Specialties GmbH, ICL Iberia Limited, SCA, Israel Chemicals Ltd., and SK Invictus Holdings, L.P.
4.8	Amendment No. 1, dated October 29, 2018 to the Revolving Credit Facility Agreement, dated April 9,March 23, 2015, by and among certain financial institutions, ICL Finance B.V., and Israel Chemicals Limited and ICL Finance Inc.Ltd.
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 byand 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 statementannual report on Form S-820-F (file no. 333-205518),001-13742) for the year ended December 31, 2016, dated July 6, 2015. Other than as listed above, ICL has no instrument with respectMarch 16, 2017.

***	Incorporated by reference to long-term debt under whichour annual report on Form 20-F (file no. 001-13742) for the total amount of securities authorized exceeds 10% ofyear ended December 31, 2015, dated March 16, 2016.

****

Incorporated by reference to our annual report on Form 20-F (file no. 001-13742) for 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.  year ended December 31, 2017, dated March 7, 2018.

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262

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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
Kobi Altman		Name:	Lisa Haimovitz
		Title:	SeniorVice President, Global General Counsel and Corporate Secretary

	By:	/s/ Kobi Altman
		Name:	Kobi Altman
		Title:	Chief Financial Officer

	By:	/s/ Aya Landman
		Name:	Aya Landman
		Title:	Global Company Secretary

Date: March 16, 2016

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ICL

CONSOLIDATED FINANCIAL STATEMENTS

263

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As

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Consolidated Financial Statements as at December 31, 2015

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2018

 

Contents

Page

Auditors’Auditors' Report	F-2
Consolidated Statements of Financial Position	F-4F - 1
Consolidated Statements of Income	F-5F - 2
Consolidated Statements of Comprehensive Income	F-6F - 3
Consolidated Statements of Changes in Equity	F-7F - 4
Consolidated Statements of Cash Flows	F-10F - 7
Notes to the Consolidated Financial Statements	F-12F - 9

F-1

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Somekh Chaikin                               KPMG Millennium Tower 17 Ha'arba'a Street, PO Box  609 Tel Aviv 61006 Israel

Telephone    972 3  684  8000 Fax                972 3  684  8444 Internet        www.kpmg.co.il

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Israel Chemicals Ltd

Opinions on the Consolidated Financial Statements and Internal Control over Financial Reporting

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, 20152018 and 2014,2017, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the three yearthree-year period ended December 31, 2015.2018, and the related notes (collectively, the "consolidated financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 20152018, based on criteria established inInternal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2018, in conformity with International Financial Reporting Standards 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, 2018, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the 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 thesethe Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

---

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the consolidated financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, andas well as evaluating the overall presentation of the consolidated financial statement presentation.statements. 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.

opinions.

Definition and Limitations of Internal Control over Financial Reporting

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.International Financial Reporting Standards as issued by the International Accounting Standards Board. 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,International Financial Reporting Standards as issued by the International Accounting Standards Board, 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.

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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, 2015 and 2014, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2015, in conformity with International Financial Reporting Standards 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/

KPMG Somekh Chaikin

Certified Public Accountants (Isr.)
Member Firm of KPMG International

We have served as the Company’s auditor since 2006.

Tel Aviv, Israel
March 15, 2016

February 26, 2019

Somekh Chaikin, a partnership registered under the Israeli partnership

Ordinance, is the Israeli member firm of KPMG International,

a Swiss cooperative.

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Consolidated Statements of Financial Position
as at December 31

		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

		2018	2017
	Note	$ millions	$ millions

Current assets
Cash and cash equivalents		121	83
Short-term investments and deposits		92	90
Trade receivables		990	932
Inventories	6	1,290	1,226
Assets held for sale		-	169
Other receivables	7,14	295	225
Total current assets		2,788	2,725
Non-current assets
Investments in equity-accounted investees		30	29
Investments at fair value through other comprehensive income		145	212
Deferred tax assets	17	122	132
Property, plant and equipment	11	4,663	4,521
Intangible assets	12	671	722
Other non-current assets	9,14,18	357	373
Total non-current assets		5,988	5,989
Total assets		8,776	8,714
Current liabilities
Short-term credit	15	610	822
Trade payables		715	790
Provisions	19	37	78
Liabilities held for sale		-	43
Other current liabilities	14,16	647	595
Total current liabilities		2,009	2,328
Non-current liabilities
Long-term debt and debentures	15	1,815	2,388
Deferred tax liabilities	17	297	228
Long-term employee liabilities	18	501	640
Provisions	19	229	193
Other non-current liabilities		10	7
Total non-current liabilities		2,852	3,456
Total liabilities		4,861	5,784
Equity	21
Total shareholders’ equity		3,781	2,859
Non-controlling interests		134	71
Total equity		3,915	2,930
Total liabilities and equity		8,776	8,714

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The accompanying notes are an integral part of these consolidated financial statements.

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F - 1

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Consolidated Consolidated Statements of Income
for the Year Ended December 31

		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

		2018	2017	2016
	Note	$ millions	$ millions	$ millions

Sales	22	5,556	5,418	5,363
Cost of sales	22	3,702	3,746	3,703
Gross profit		1,854	1,672	1,660
Selling, transport and marketing expenses	22	798	746	722
General and administrative expenses	22	257	261	321
Research and development expenses	22	55	55	73
Other expenses	22	84	90	618
Other income	22	(859)	(109)	(71)
Operating income (loss)		1,519	629	(3)
Finance expenses		214	229	157
Finance income		(56)	(105)	(25)
Finance expenses, net	22	158	124	132
Share in earnings of equity-accounted investees		3	-	18
Income (loss) before income taxes		1,364	505	(117)
Provision for income taxes	17	129	158	55
Net income (loss)		1,235	347	(172)
Net loss attributable to the non-controlling interests		(5)	(17)	(50)
Net income (loss) attributable to the shareholders of the Company		1,240	364	(122)
Earnings (losses) per share attributable to the shareholders of the Company:	24
Basic earnings (losses) per share (in dollars)		0.97	0.29	(0.10)
Diluted earnings (losses) per share (in dollars)		0.97	0.29	(0.10)
Weighted-average number of ordinary shares outstanding:	24
Basic (in thousands)		1,277,209	1,276,072	1,273,295
Diluted (in thousands)		1,279,781	1,276,997	1,273,295

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The accompanying notes are an integral part of these consolidated financial statements.

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F - 2

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Consolidated Statements of Comprehensive Income for
for the Year Ended December 31

		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

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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

	2018	2017	2016
	$ millions	$ millions	$ millions

Net income (loss)	1,235	347	(172)
Components of other comprehensive income that will be reclassified subsequently to net income (loss)
Currency translation differences	(95)	152	(90)
Changes in fair value of derivatives designated as a cash flow hedge	-	-	(1)
Net changes of investments at fair value through other comprehensive income	-	(57)	17
Tax income (expenses) relating to items that will be reclassified subsequently to net income (loss)	-	5	(5)
	(95)	100	(79)
Components of other comprehensive income that will not be reclassified to net income (loss)
Net changes of investments at fair value through other comprehensive income	(58)	-	-
Actuarial gains (losses) from defined benefit plans	56	(17)	(48)
Tax income (expense) relating to items that will not be reclassified to net income (loss)	(3)	3	8
	(5)	(14)	(40)
Total comprehensive income (loss)	1,135	433	(291)
Comprehensive loss attributable to the non-controlling interests	(9)	(13)	(59)
Comprehensive income (loss) attributable to the shareholders of the Company	1,144	446	(232)

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(*)

Less than $1 million.

The accompanying notes are an integral part of these consolidated financial statements.

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F - 3

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Consolidated Statements of Changes in Equity (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 shareholders of the Company							Less than $1 million.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, 2018
Balance as at January 1, 2018	545	186	(333)	30	(260)	2,691	2,859	71	2,930
Share-based compensation	1	7	-	11	-	-	19	-	19
Dividends	-	-	-	-	-	(241)	(241)	(1)	(242)
Capitalization of subsidiary debt	-	-	-	-	-	-	-	73	73
Comprehensive income (loss)	-	-	(91)	(58)	-	1,293	1,144	(9)	1,135
Balance as at December 31, 2018	546	193	(424)	(17)	(260)	3,743	3,781	134	3,915

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The accompanying notes are an integral part of these consolidated financial statements.

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F - 4

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Consolidated Statements of Changes in Equity (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

(cont'd)

	(1)Attributable to the shareholders of the Company							Less than $1 million.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, 2017
Balance as at January 1, 2017	544	174	(481)	79	(260)	2,518	2,574	85	2,659
Share-based compensation	1	12	-	3	-	-	16	-	16
Dividends	-	-	-	-	-	(177)	(177)	(1)	(178)
Comprehensive income (loss)	-	-	148	(52)	-	350	446	(13)	433
Balance as at December 31, 2017	545	186	(333)	30	(260)	2,691	2,859	71	2,930

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The accompanying notes are an integral part of these consolidated financial statements.

F-9

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F - 5

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Consolidated Statements of Cash FlowsChanges in Equity (cont'd)

for the Year Ended December 31

		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

	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, 2016
Balance as at January 1, 2016	544	149	(400)	93	(260)	2,902	3,028	160	3,188
Share-based compensation	*-	25	-	(10)	-	-	15	-	15
Dividends	-	-	-	-	-	(222)	(222)	(4)	(226)
Changes in equity of equity-accounted investees	-	-	-	(15)	-	-	(15)	-	(15)
Non-controlling interests in business combinations from prior periods	-	-	-	-	-	-	-	(12)	(12)
Comprehensive loss	-	-	(81)	11	-	(162)	(232)	(59)	(291)
Balance as at December 31, 2016	544	174	(481)	79	(260)	2,518	2,574	85	2,659

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* Less than $1 million.

The accompanying notes are an integral part of these consolidated financial statements.

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F - 6

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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

	2018	2017	2016
	$ millions	$ millions	$ millions

Cash flows from operating activities
Net income (loss)	1,235	347	(172)
Adjustments for:
Depreciation and amortization	403	390	401
Impairment of non-current assets	17	28	5
Exchange rate and interest expenses, net	35	137	76
Share in earnings of equity-accounted investees, net	(3)	-	(18)
Loss (gain) from divestiture of businesses	(841)	(54)	1
Capital losses	-	-	432
Share-based compensation	19	16	15
Deferred tax expenses (income)	76	(46)	(2)
	(294)	471	910
Change in inventories	(115)	57	70
Change in trade and other receivables	(104)	21	150
Change in trade and other payables	(36)	(45)	(90)
Change in provisions and employee benefits	(66)	(4)	98
Net change in operating assets and liabilities	(321)	29	228
Net cash provided by operating activities	620	847	966
Cash flows from investing activities
Proceeds from deposits, net	(3)	(65)	(198)
Purchases of property, plant and equipment and intangible assets	(572)	(457)	(632)
Proceeds from divestiture of businesses net of transaction expenses	* 902	6	17
Proceeds from sale of equity-accounted investee	-	168	-
Dividends from equity-accounted investees	2	3	12
Proceeds from sale of property, plant and equipment	2	12	5
Other	-	-	(4)
Net cash provided by (used in) investing activities	331	(333)	(800)
Cash flows from financing activities
Dividends paid to the Company's shareholders	(241)	(237)	(162)
Receipt of long-term debt	1,746	966	1,278
Repayment of long-term debt	(2,115)	(1,387)	(1,365)
Short-term credit from banks and others, net	(283)	147	14
Other	(1)	-	(4)
Net cash used in financing activities	(894)	(511)	(239)
Net change in cash and cash equivalents	57	3	(73)
Cash and cash equivalents as at the beginning of the year	83	87	161
Net effect of currency translation on cash and cash equivalents	(24)	(2)	(1)
Cash and cash equivalents included as part of assets held for sale	5	(5)	-
Cash and cash equivalents as at the end of the year	121	83	87

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The accompanying notes are an integral part of these condensed consolidated financial statements.

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Table

* See Note 10.

F - 7

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Consolidated Statements of Contents

Cash Flows for the Year Ended
December 31 (cont'd)

Additional Information

	For the year ended 31, December
	2018	2017	2016
	$ millions	$ millions	$ millions

Income taxes paid, net of refunds	56	127	84
Interest paid	103	111	112

---

The accompanying notes are an integral part of these condensed consolidated financial statements.

F - 8

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Notes to the Consolidated Financial Statements as at December 31, 2015

2018

Note 1 – General

A. The reporting entity

Israel Chemicals Ltd. (hereinafter – “the Company” or “ICL”)the Company), is a company domiciled and incorporated in Israel and theIsrael. The Company's shares of which are traded on both the Tel-Aviv Stock Exchange (TASE) and on the New York Stock Exchange.Exchange (NYSE). The address of the Company’s registered officeheadquarter is 23 Aranha St., Tel Tel‑Aviv, Israel. The Company andis a subsidiary of Israel Corporation Ltd., a public company traded on the TASE. The Company together with its subsidiaries, associated companies and joint ventures (hereinafter – “the Group”)the Group or ICL), is a leading specialty minerals group that operates a unique, integrated business model. The Company competitively extractextracts certain minerals as raw materials and utilize sophisticatedutilizes processing and product formulation technologies to add value to customers in three attractivetwo main end-markets: agriculture and Industrial (including food and engineered materials. These three end-markets constitute over 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 Company’s principal assets include: One of the world’s richest, longest-life and lowest-cost sources of potash and bromine (the Dead Sea)additives). 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

vehicles.

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)21).

C. Definitions

1.Subsidiary – a company over which the Company has control and the financial statements of which are fully consolidated with the Company’s statements as part of the consolidated financial statements.

2.Investee company – Subsidiaries and companies, including a partnership or joint venture, the Company’s investment in which is stated, directly or indirectly, on the equity basis.

3.Related party– Within its meaning in IAS 24 (2009), “Related Party Disclosures”.

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Table of Contents

B. Definitions

1.

Subsidiary – a company over which the Company has control and the financial statements of which are fully consolidated with the Company's statements as part of the consolidated financial statements.

2.

Investee company – Subsidiaries and companies, including a partnership or joint venture, the Company's investment in which is accounted for, directly or indirectly, using the equity method.

3.

Related party – Within its meaning in IAS 24 (2009), “Related Party Disclosures”.

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 GroupICL 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 15, 2016.

February 26, 2019.

B. Functional and presentation currency

The consolidated financial statements are presented in United States Dollars (“US Dollars”; $), which is the functional currency of the Company and have been rounded to the nearest million, except when otherwise indicated.

Items included in the consolidated financial statements of the Company are measured using the currency of the primary economic environment in which the individual entity operates (“the functional currency”).

F - 9

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2 - Basis of Preparation of the Financial Statements (cont’d)

C. Basis of measurement

The consolidated financial statements are presented in United States Dollars (“US Dollars”; $), which is the functional currency of the Company.

C. Basis of measurement

The consolidated financial statements have beenwere prepared onusing the historical cost basis except for the following assets and liabilities: derivative financial instruments, securities held for trading that are measured at fair value, non-current assets groups held-for-sale, Investments in associates and joint ventures, deferred tax assets and liabilities, provisions and assets and liabilities in respect of employee benefits.

For further information regarding the measurement of these assets and liabilities, see Note 3 regarding significant accounting policies.

below.

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

The preparation of financial statements in conformity with IFRS requires the management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The preparationevaluation of accounting estimates used in the preparation of the Group’sICL’s financial statements requires management of the Company to make assumptions regarding laws interpretations which apply to the Company, circumstances and events that involve considerable uncertainty. Management of the Company prepares the estimates based on the basis of past experience, various facts, external circumstances, and reasonable assumptions according tobased on the pertinent circumstances of each estimate. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

F - 10

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2 - Basis of Preparation of the Financial Statements (cont'd)

E. Use of estimates and judgment (cont'd)

Information about assumptions made by the GroupICL with respect to the future and other reasons for uncertainty with respect to estimates that have a significant risk of resulting in a material adjustment to carrying amounts of assets and liabilities in the next financial year are included in the following notes:

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Table of Contents

Note 2 - Basis of Preparation of the Financial Statements (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 20.17 regarding taxes on income

Uncertain tax positions	The extent of the certainty that the Group’sICL’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 ofseveral matters including interpretations of tax laws and the Group’s pastICL’s experience.	Recognition of additional income tax expenses.	See Note 20.17 regarding taxes on income
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, seeSee Note 2118 regarding employee benefits.
Assessment of probability of contingent and environmental liabilities including cost of waste removal/restoration	Whether it is more likely than not that an outflow of economic resources will be required in respect of potential liabilities under the environmental protection laws and legal claims pending against ICL and the Companyestimation of their amounts. The waste removal/ restoration obligations depend on the reliability of the estimates of future removal costs and its investees.interpretation of regulations.	ReversalCreation, adjustment or creationreversal of a provision for a claim.claim and/or environmental liability including cost of waste removal/restoration.	For information on the Company’s exposure to claims, seeSee Note 2320 regarding contingent liabilities.liabilities
Recoverable amount of a cash generating unit, among other things, containing goodwill	TheExpected cash-flow forecasts, the discount rate, market risk and a budgetedthe forecasted growth rate.	Change in impairment loss.	For information on key assumptions used to determined value in use, seeSee Note 1513 regarding impairment testing.
Assessment of the fair value of the assets and liabilities acquired in a business combinationcombinations	Expected cash-flowcash‑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 accordinglyaccordingly.
Concessions, permits and business licenses	Forecast of obtaining renewed concessions, permits and business licenses which constitute the basis for the Company's continued operations and /or the Company's expectations regarding the holding of the operating assets by it and / or by a subsidiary until the end of their useful lives	Impact on the value of the operation, depreciation periods and residual values of related assets.	See Note 20 regarding contingent liabilities
Mineral reserves and resource deposits	Quantities and qualities estimates of mineral reserves and resource deposits are based on engineering, economic and geological data that is compiled and analyzed by the Company’s engineers and geologists.	Impact on the useful life of the assets relating to the relevant activity.

F - 11

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2 - Basis of Preparation of the Financial Statements (cont'd)

F. Changes in accounting policies

Improvements

1.

Initial application of IFRS 9 (2014), Financial Instruments

As of January 1, 2018, ICL applies IFRS 9, Financial Instruments (hereinafter - the standard), which replaces IAS 39, Financial Instruments: Recognition and Measurement (hereinafter - IAS 39) and the consequential amendments to IFRSs 2010-2013IFRS 7, Financial Instruments: Disclosures, and 2011-2013 projects

As partto IAS 1, Presentation of Financial Statements. Implementation of the Improvements to IFRSs projects, the IASB published amendments to 8 IFRS. The amendment that is relevant to the Group and has anStandard did not have a material effect on the financial statements is:

An amendmentand, therefore, the balance of retained earnings as of January 1, 2018 was not adjusted.

Classification and measurement of financial assets and financial liabilities

The standard contains three principal classification categories for financial assets: (1) measured at amortized cost; (2) fair value through profit or loss; and (3) fair value through other comprehensive income. The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. The standard eliminates the previous IAS 39 categories of held to maturity, loans and receivables and available for sale. There was no significant change to the classification or measurement of financial liabilities.

On the initial implementation date, the Company chose to designate the investment in YYTH shares at fair value through other comprehensive income (under IAS 24, “Related Party Disclosures”,39, the investment in YYTH shares was classified as an available-for-sale financial asset). For further information on definitionthe measurement and classification of financial instruments, see Note 3.

Financial assets value impairment

The standard replaces the impairment model of IAS 39 with an 'expected credit loss' (ECL) model. The model applies to financial assets measured at amortized cost, investments in debt instruments measured at fair value through other comprehensive income, contract assets (IFRS 15) and lease receivables. The model will not apply to investments in equity instruments.

2.

IFRS 15, Revenue from Contracts with Customers

As of January 1, 2018, ICL applies International Financial Reporting Standard 15 (hereinafter - the standard) which provides new guidance on revenue recognition. ICL elected to apply the standard using the cumulative effect approach. Implementation of the term “related party”. Standard did not have a material effect on the financial statements and, therefore, the balance of retained earnings as of January 1, 2018 was not adjusted.

The definitionstandard introduces a new five step model for recognizing revenue from contracts with customers: (1) Identifying the contract with the customer; (2) Identifying distinct performance obligations in the contract; (3) Determining the transaction price; (4) Allocating the transaction price to distinct performance obligations; and (5) Recognizing revenue when the performance obligations are satisfied.

ICL recognizes revenue when the customer obtains control over the promised goods or services. The revenue is measured according to the amount of the term was expanded so asconsideration to include entities that provide key management personnel (KMP)which ICL expects to be entitled in exchange for the goods or services promised to the reporting entity, directly or through another entity ofcustomer, other than amounts collected for third parties. For further information, see Note 3.

F - 12

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Notes to the Group. Separate disclosure is to be provided of the amounts recognizedConsolidated Financial Statements as an expense in respect of the management services provided by the management entity. Nevertheless, there is no requirement to disclose the amounts paid to specific people in the management entity who provide such services.

Application of the amendment expanded the types of transactions that require providing disclosures.

F-14

at December 31, 2018

Table of Contents

Note 3 - Significant Accounting Policies

The accounting policies in accordance with IFRS are consistently applied by the GroupICL companies for all the periods presented in these consolidated financial statements.

A. Basis for Consolidation

1. Business combinations

The Group

1.

Business combinations

ICL implements the 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 GroupICL is exposed or has rights to variable returns from its involvement with the acquiree and it has the ability tocould affect those returns through its power over the acquiree. Substantive rights held by the GroupICL and others are taken into accountconsidered when assessing control.

The Group

ICL 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 GroupICL 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 acquirerICL in a business combination such as: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

2.

Subsidiaries

Subsidiaries are entities that are controlled by the Group.ICL. The financial statements of the subsidiaries are included in the consolidated financial statements from the date control was acquiredcommenced until the date control ceases to exist. The accounting policies of subsidiaries have been changed when necessary to align them with the accounting policies adopted by ICL.

3.

Structured entities

ICL operates with structured entities for purposes of securitization of financial assets. ICL has no direct or indirect holdings in the Group.

3. Non-controlling interests

shares of the structured entities. A structured entity is included in the financial statements where it is controlled by the Company.

4.

Non-controlling interests

Non-controlling interests comprise of the subsidiary's equity of a subsidiary that cannot be attributed, directly or indirectly, to the parent company and they include additional 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-controllingcombination – 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 either fair value, or at their proportionate interest in the identifiable assets and liabilities of the acquiree.

acquiree, on a transaction-by-transaction basis.

F - 13

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

A. Basis for Consolidation (cont’d)

4.

Non-controlling interests (cont’d)

Allocation of profit or loss and other comprehensive income to the shareholders:

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

interests

Table of Contents

Note 3 - Significant Accounting Policies (cont’d)

A. Basis for Consolidation (cont’d)

Transactions with non-controlling interests, while retaining control:

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-controllingnon‑controlling interests is included in the owners’ share in equity of the Company.

owners of the Company directly in a separate category in equity.

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

5.

Loss of control

Upon the loss of control, the GroupICL 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 If ICL retains any interest in the previous subsidiary, then such interest is measured at fair value at the date that control is lost. The difference between the sum of the proceeds and fair value of the retained interest, and the derecognized balances is recognized in profit or loss under other income or other expenses. Subsequently the retained interest is accounted for as an equity-accounted investee or as a financial asset in accordance with the provisions of IFRS 9, depending on consolidation

the level of influence retained by ICL in the relevant company. The amounts recognized in capital reserves through other comprehensive income with respect to the same subsidiary are reclassified to profit or loss or to retained earnings.

6.

Transactions eliminated in 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’sICL’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)

F - 14

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

A. Basis for Consolidation (cont’d)

7.

Investment in associates and joint ventures

Associates are those entities in which the GroupICL has significant influence, but not control or joint control, over the financial and operating policies. SignificantThere is a rebuttable presumption that significant influence is presumed to existexists when the Groupa company 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.

considered.

Joint ventures are joint arrangements in which the GroupICL has rights 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 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 of the income and expenses in profit or loss and of other comprehensive income of equity accounted investees, after adjustments to align the accounting policies with those of the Group, 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 asset or subsidiary, as relevant.

On the date of losing significant influence, the Group measures at fair value any retained interest it has in the former associate or joint venture. The Company recognizes in profit or loss under other income or expenses any difference between the sum of the fair value of the retained interest and any proceeds received from the partial disposal of the investment in the associate or joint ventures, and the carrying amount of the investment on that date.

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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 same associate or joint ventures are reclassified to profit or loss or to retained earnings in the same manner that would have been applicable if the associate or joint venture had itself realized the same assets or liabilities.

B. Foreign Currency

1. Transactions in foreign currency

1.

Transactions in foreign currency

Transactions in foreign currency are translated intoto 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 adjusted for effective interest and payments during 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 consolidated statement of income. Non-monetary

Non‑monetary items denominated in foreign currency and measured in terms of historical cost are translated using the exchange rate in effect onat the date of the transaction.

2. Foreign operations

2.

Foreign operations

The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to USD at exchange rates at the reporting date. The income and expenses of foreign operations are translated to USD at exchange rates at the dates of the transactions.

Foreign currency differences are recognized in other comprehensive income and are presented in equity in the foreign currency translation reserve (hereinafter – “translation reserve”)–Translation Reserve).

When the foreign operation is a non-wholly-owned subsidiary of the Company, then the relevant proportionate share of the foreign operation translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserveTranslation Reserve related to that foreign operation is reclassified to profit or loss as a part of the gain or loss on disposal.

Furthermore, when the Group’sICL’s interest in a subsidiary that includes a foreign operation changes, while retaining control in the subsidiary, a proportionate part of the cumulative amount of the translation difference that was recognized in other comprehensive income is reattributed to non-controlling interests.

When

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Notes to 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.

Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

B. Foreign Currency (cont'd)

2.

Foreign operations (cont'd)

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 a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognized in other comprehensive income and are presented within equity in the translation reserve.

Translation Reserve.

C. Financial Instruments

1. Non-derivative financial assets

1.

Non-derivative financial assets (IFRS9)

Initial recognition of financial assets:

The Group

ICL initially recognizes loans andtrade receivables and depositsdebt instruments issued on the date that they are created.originated. All other financial assets acquired in a regular way purchase, including assets designated at fair value through profit or loss, are recognized initially on the trade date at which the GroupICL becomes a party to the contractual provisions of the instrument, meaninginstrument. A financial asset is initially measured at fair value plus transaction costs that are directly attributable to the acquisition or issuance of the financial asset. A trade receivable without a significant financing component is initially measured at the transaction price. Receivables originating from contract assets are initially measured at the carrying amount of the contract assets on the date the Group undertookclassification was changed from contract asset to purchase 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.

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receivables.

Table of Contents

Note 3 - Significant Accounting Policies (cont’d)

C. Financial Instruments (cont’d)

Derecognition of financial assets:

Financial assets are derecognized when the contractual rights of the GroupICL to the cash flows from the asset expire, or the GroupICL transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferredWhen ICL retains substantially all the risks and rewards of ownership of the financial assets that is created or retained byasset, it continues to recognize the Group is recognized as a separate asset or liability.

Regular way salesfinancial asset.

Classification of financial assets into categories and the accounting treatment of each category

Financial assets are recognizedclassified at initial recognition to one of the following measurement categories: (1) amortized cost; (2) fair value through other comprehensive income – investments in debt instruments; (3) fair value through other comprehensive income – investments in equity instruments; or (4) fair value through profit or loss. Financial assets are not reclassified in subsequent periods unless, and only if, ICL changes its business model for the management of financial debt assets, in which case the affected financial debt assets are reclassified at the beginning of the period following the change in the business model.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

C. Financial Instruments (cont'd)

1.

Non-derivative financial assets (IFRS9) (cont'd)

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated at fair value through profit or loss: (1) It is held within a business model whose objective is to hold assets so as to collect contractual cash flows; and (2) the contractual terms of the financial asset give rise to cash flows representing solely payments of principal and interest on the principal amount outstanding on specified dates.

In certain cases, on initial recognition of an equity investment that is not held for trading, ICL irrevocably elects to present subsequent changes in the investment’s fair value in other comprehensive income. This election is made on an investment-by-investment basis.

ICL has balances of trade date, meaning onand other receivables and deposits that are held within a business model whose objective is collecting contractual cash flows, which represent solely payments of principal and interest (for the datetime value and the Company undertook to sell the asset.

The Group classifies itscredit risk). Accordingly, these financial assets according to the following categories:

are measured at amortized cost.

Subsequent measurement and gains and losses - 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

These assets at fair value through profit or loss are subsequently measured at fair value,value. Net gains and changes thereinlosses, including any interest income or dividend income, are recognized in profit or loss. Financial assetsloss (other than certain derivatives designated as hedging instruments).

Subsequent measurement and gains and losses - Investments in equity instruments at fair value through other comprehensive income

These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss, include equity investments that otherwise would have been classified as available for sale.

Loansunless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and receivables

Loanslosses are recognized in other comprehensive income and receivables are non-derivative financialnever reclassified to profit or loss.

Subsequent measurement and gains and losses - Financial assets with fixed or determinable payments that are not quoted in an active market. Suchat amortized cost

These assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans and receivables aresubsequently measured at amortized cost using the effective interest method, less anymethod. The amortized cost is reduced by impairment losses.

Cash Interest income, foreign exchange gains and cash equivalents

Cashlosses 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 assetsimpairment 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 assetsprofit or loss. Any gain or loss on derecognition is recognized in profit or loss onloss.

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Notes to 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

Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

C. Financial Instruments (cont'd)

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 Groupliabilities:

ICL 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 GroupICL becomes a party to the contractual provisions of the instrument.

Subsequent Measurement of Financial Liabilities:

Financial liabilities (other than financial liabilities at fair value through profit or loss) are recognized initially at fair value plusless 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 designated 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.

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Note 3 - Significant Accounting Policies (cont’d)

C. Financial Instruments (cont’d)

Derecognition of financial liabilities:

liabilities:

Financial liabilities are derecognized when the obligation of the Group,ICL, as specified in the agreement, expires or when it is discharged or cancelled.

Change in terms of debt instruments:

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 liability 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 GroupICL examines, inter alia, whether there have also been changes in various economic parameters inherent in the exchanged debt instruments therefore(e.g. linkage).

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Notes to the Consolidated Financial Statements as a rule, exchangesat December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

C. Financial Instruments (cont'd)

2.

Non-derivative financial liabilities (cont'd)

Upon the swap of CPI-linked debt instruments with unlinkedequity instruments, equity instruments issued at the extinguishment and de-recognition of all or part of a liability, are a part of “consideration paid” for purposes of calculating the gain or loss from de-recognition of the financial liability. The equity instruments are considered exchanges with substantially different terms even if they do not meetinitially recognized at their fair value, unless fair value cannot be reliably measured – in which case the aforementioned quantitative criterion.

issued instruments are measured at the fair value of the derecognized liability. Any difference between the amortized cost of the financial liability and the initial measurement amount of the equity instruments is recognized in profit or loss under financing income or expenses.

Offset of financial instruments:

instruments:

Financial assets and liabilities are offset, and the net amount presented in the statement of financial position when, and only when, the GroupICL currently has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.

3. Derivative financial instruments

The Group

3.

Derivative financial instruments

ICL holds derivative financial instruments for the purpose of economic (non-accounting) hedging againstin order to reduce exposure to 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’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, wereare recorded through other comprehensive income directly in a capitalhedging reserve. With respect to the non-effectivenon‑effective part, changes in the fair value wereare recognized in the statement of income. The amount accumulated in the capital reserve wasis 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.

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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, then hedge accounting is discontinued.discontinued prospectively. The cumulative gain or loss previously recognized throughin the 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. Ifoccur and then, will be reclassified to 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.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

C. Financial Instruments (cont’d)

3.

Derivative financial instruments (cont'd)

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.

4.

4.

CPI-linked assets and liabilities not measured at fair value

The value

The carrying amount of index-linked financial assets and liabilities, which are not measured at fair value, are revaluedis re-measured every period in accordance with the actual rate of increase/ decrease in the CPI.

5.

Share capital

Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.

Incremental costs directly attributable to an expected issuance of an instrument that will be classified as an equity instrument are recognized as an asset in the statement of financial position. The costs are deducted from the equity upon the initial recognition of the equity instruments or are amortized as financing expenses in the statement of income when the issuance is no longer expected to take place.

Treasury shares

When share capital recognized as equity is repurchased by ICL, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. Repurchased shares are classified as treasury shares. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus on the transaction is carried to share premium, whereas a deficit on the transaction is deducted from retained earnings.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

D. Property, plant and equipment

1. Recognition and measurement

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 purchasethe acquisition of the asset.asset after deducting the related amounts of government grants. The cost of assets that were constructed independentlyself-constructed includes the cost of the materials and direct salary costs,labor, 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.site and capitalized borrowing costs. The cost of purchased software, which constitutes an inseparable part of operating the related equipment, is recognized as part of the cost of saidthe equipment.

Spare parts for facilities are valued at cost determined based on the moving average method, after recording a write write‑down in respect of obsolescence. The portion designated for current consumption is presented in the “inventories” category in the current 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 does not exceed its book value.value and any balance is recognized immediately in profit or loss. 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”other income or “other expenses” category,other expenses, 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 GroupICL and that its cost can be reliably measured. The book value of the part that was replaced is derecognized. Routine maintenance costs are charged to the statement of income as incurred.

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Table

2.

Subsequent Costs (after initial recognition)

The cost of Contents

replacing part of a fixed asset item and other subsequent expenses are capitalized if it is probable that the future economic benefits associated with them will flow to ICL and their cost can be measured reliably. The carrying amount of the replaced part of a fixed asset item is derecognized. The costs of day-to-day servicing are expensed as incurred.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

D. Property, plant and equipment (cont’d)

3.

3.

Depreciation

Depreciation

is a systematic allocation of the depreciable amount of an asset over its estimated useful life. The depreciable amount is the cost of the asset, or other amount substituted for cost, less its residual value. Depreciation of an item of property, plant and equipment begins when itthe asset is available for its intended 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.items, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. 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	15–3015-30
Facilities, machinery and equipment(1)equipment (1)	8–258-25
Dams and ponds(2)ponds (2)	20–4020-40
Heavy mechanical equipment, train cars and tanks	5–155-15
Office furniture and equipment, motor vehicles, computer equipment and other	3–103-10

 

Mainly 25 years

(1)

Mainly 25 years

(

2)

Mainly 40 years

Depreciation methods, useful lives and residual values are reviewed

Mainly 40 years

The Company reviews, at least at the end of eachevery reporting year, the estimates regarding the depreciation method, useful lives and adjustedthe residual value, and adjusts them if appropriate.

E. Intangible Assets

1. Goodwill

Goodwill is recorded Once every five years, the Company actively examines the useful lives of the main property, plant and equipment items and, if required, updates them. Over the years, the Company has succeeded in maintaining the useful lives of part of property, plant and equipment items – as a result of investments therein and other current, ongoing maintenance thereof.

E. Intangible Assets

1.

Goodwill

Goodwill recorded consequent to the acquisition of subsidiaries. Acquisition of non controlling interests are transactions with shareholders and goodwillsubsidiaries is not recognized on such acquisitions.

Subsequent measurement

Goodwill is measuredpresented at cost less accumulated losses from impairment.

2. Costs of exploration and evaluation of resources

impairment charges, under intangible assets.

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 theat cost basis less a provision for impairment.

impairment, under intangible assets. The cost includes, among other things,inter‑alia, 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

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

E. Intangible Assets (cont'd)

3.

Research and development

Expenditures for research activities are recognized in profit or lossexpensed as incurred.

Development expenditures are recordedrecognized 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 GroupICL 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 lossexpensed as incurred. Subsequent to initial recognition, development expenditures are measured at cost less accumulated amortization and any accumulated impairment loss.

4. Other intangible assets

losses.

4.

Other intangible assets

Other intangible assets purchased by the Group,ICL, with a defined useful life, are measured according to cost less accumulated amortization and accumulated losses from impairment.

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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

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.

6.

Amortization

Amortization

is a systematic allocation of the amortizable amount of an intangible asset over its useful life. The amortizable amount is the cost of the asset less its residual value. 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 based 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.

Internally generated intangible assets are not systematically amortized as long as they are not available for use, i.e. they are not yet on site or in working condition for their intended use. Accordingly, these intangible assets, such as development costs, are tested for impairment at least once a year, until such date as they are available for use.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

E. Intangible Assets (cont'd)

6.

Amortization (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	3–103-10
Trademarks	15–2015-20
Customer relationships	15–2515-25
Agreements with suppliers and non-competition agreement	10-15
Patents	7–207-20

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 GroupICL 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

ICL 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 GroupICL 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’sICL’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.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

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.

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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 ofattributable to 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

A qualifying asset is an asset that requires a significant period of time to prepare for its intended use or sale. Specific and non-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 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 "financing expenses" in the statement of income as incurred. Income earned on the temporary investment of specific

I. Impairment

1.

Non-derivative Financial assets

Provision for expected credit received for investinglosses in a qualifying asset is deducted from the borrowing costs eligible for capitalization.

I. Impairment

1. Financial assets

An impairmentrespect 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 hadamortized cost, including trade receivables, will be measured at an amount equal to the full lifetime of expected credit losses. Expected credit losses are a negative impact on theprobability-weighted 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 ofcredit losses. With respect to other debt instruments, provision for expected credit losses will be measured at an amount dueequal 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 market12-month expected credit losses, unless their credit risk has increased significantly since initial recognition. Provision 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 changessuch losses 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 valuerespect of a financial asset measured according toat amortized cost, is calculated aswill be presented net of the difference between thegross book value of the asset and the present value of the estimated future cash flows, discounted using the original effective interest rate. Losses are recognized in profit or loss and reflected in a provision for loss against the balance of the financial asset measured at amortized cost.

Impairment losses on available-for-sale financial assets are recognized by transferring the cumulative 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 profit or loss. Changes in impairment provisions attributable to application of the effective interest method are reflected in the item of financing income.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized (such as repayment by the debtor). For financial assets measured at amortized cost and available-for-sale financial assets that are debt securities, the reversal is recognized in profit or loss. For available-for-sale financial assets that are equity securities, the reversal is recognized directly in other comprehensive income.

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Table of Contents

Note 3 - Significant Accounting Policies (cont’d)

I. Impairment (cont’d)

2. Non-financial assets

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’sICL’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 GroupICL conducts an annual examination, on the same date, of the recoverable amount of goodwill and intangible assets with indefinite useful lives or those that are not available for use – or more frequently if there are indications of impairment.

F - 25

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

I.

Impairment (cont'd)

2.

Non-financial assets (cont'd)

Assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). Goodwill is not monitored for internal reporting purposes and, accordingly, it is allocated to the Company’s operating segments and not to the cash- generating units, the level of which is lower than the operating segment.

The recoverable amount of an asset or a cash-producingcash- generating unit is the higher of its value in use or the net selling price (fair value less cost of disposal). When determining the value in use the GroupICL discounts the anticipated future cash flows according to a 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 purposesthe cash- generating unit, in respect of testing impairment in value,which the assets are grouped together into the smallest group of assets that yieldsfuture cash flows expected to derive from continuing use, which is essentially independent of the other assets and other groups (“cashasset or the cash- generating unit”).

Subject to an operating segment ceiling test (before the aggregation of similar segments), for the purposes of goodwill impairment testing, cash-generating units to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the level at which goodwill is monitored for internal reporting purposes.

unit were not adjusted.

Assets of the Company’sCompany's headquarters – assets of the Company’s headquartersand administrative facilities do not produce separate cash flows and they serve more than one cash-producing unit. CertainSuch assets of the Company’s headquarters are allocated to cash-producingcash‑producing units on a reasonable and consistent basis and are examined for impairment as part of the examination of impairment of the cash-producingcash‑producing units to which they are allocated.

An impairment loss is

Impairment losses are recognized if the carrying amount of an asset or cash-generatingcash-producing unit in the books exceeds its estimated recoverable amount. Impairment lossesamount and are recognized in profit or loss.the statement of income. For operating segments that include goodwill, an impairment loss is recognized when the value of the operating segment in the books exceeds its recoverable value. Impairment losses recognized in respect of cash-generating unitsan operating segment are allocated first to reduce the carrying amount of anyits goodwill allocated to the units and then to reduce the carrying amounts of the other assets in the cash-generating unitof that segment on a pro rataproportionate basis.

An impairment loss is allocated between the owners of 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 is not reversible prospectively. A loss from impairment of other assets recognized in each reporting period an examinationprevious periods is made asexamined in future periods to assess whether there are signs indicating that these losses have decreased or no longer exist. A loss from impairment of value is cancelledreversed if there has beenis a change in the estimates used to determine the recoverable value, only if the book value of the asset, after cancellationreversal 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

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

I.

Impairment (cont'd)

3.

Investments in associates and joint ventures

An investment in an associate or joint venturesventure 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.

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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

ICL 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 Groupventure, ICL 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,venture, including their cash flows from operations of the associate or joint ventures and thetheir 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 partthe statements of the carrying amount of the investment in the associate or in the joint ventures.

income. 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

ICL has several post-employment benefit plans. The plans are funded partly by deposits with insurance companies, financial institutions or funds managed by a trustee, and theytrustee. The plans 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 GroupICL 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’samounts.

ICL’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.

Contributions to a defined contribution plan, that are due more than 12 months after the end of the period in which the employees render the service are discounted to their present value.

2. Defined benefit plans

Defined benefit plans are retirement benefit plans that are not defined contribution plans.

The Group’s

ICL’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 GroupICL 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 GroupICL 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.ICL. The calculations are performed by a qualified actuary using the projected unit credit method.

When on

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Notes to the basis of the calculationsConsolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

J. Employee Benefits (cont’d)

2. Defined benefit plans (cont’d)

When a net asset is created for the Group,ICL, 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:

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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.

(1)

Current service costs – the increase in the present value of the liability deriving from employees’ service in the current period.

(2)

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.

(3)

Exchange rate differences;

(4)

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.

The difference, as at the date of the report, between the net liability as at the beginning of the periodyear 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,year, 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 accountconsidering 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.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

J. Employee Benefits (cont’d)

4. Early retirement pay

Early retirement pay is recognized as an expense and as a liability when the GroupICL 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 GroupICL 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.

If benefits are payable more than 12 months after the reporting period, then they are discounted to their present value. The discount rate is the yield at the reporting date on high-quality, index-linked corporate debentures, the denominated currency of which is the payment currency and that have maturity dates approximating the terms of ICL’s obligations.

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.

provided or upon the actual absence of the employee when the benefit is not accumulated (such as maternity leave).

A provision for short-term employee benefits in respect of cash bonuses or profit-sharing plans is recognized for the amount expected to be paid, when the GroupICL has a current legal or implied obligation to pay for the said amount for services provided by the employee in the past and it is possible to reliably estimate the amount.

obligation.

Classification of employee benefits as a short short‑term employee benefit or a long long‑term employee benefit (for measurement purposes) is determined based on the Group’sICL'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 and non-market performance conditions, is adjusted to reflect the number of awards that are expected to vest.

F-26

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F - 29

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

K. Provisions

A provision is recognized when the GroupICL 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 flowan outflow 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 accountconsidering 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.

The Group

ICL 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 the reimbursement does not exceed the amount of the provision.

1. Warranty

(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.sold. The provision is based on historical data and on a weighting of all possible outcomes according to their probability of occurrence.

2. Provision for environmental costs

The Group

(2)

Provision for environmental costs

ICL 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 ICL.

(3)

Restructuring

A provision for restructuring is recognized when ICL has approved a detailed and formal restructuring plan, and the Group.

3. Legal claims

restructuring either has commenced or has been announced publicly. The provision includes direct expenditures caused by the restructuring and necessary for the restructuring, and which are not associated with the continuing activities of ICL.

(4)

Site restoration

In accordance with ICL’s environmental policy and applicable legal requirements, a provision for site restoration in respect of contaminated land, and the related expense, is recognized when the land is contaminated.

F - 30

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

K. Provisions (cont'd)

(5)

Legal claims

A provision for legal claims is recognized when the GroupICL has a present legal or constructive 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

Identifying a contract

ICL accounts for a contract with a customer only when the following conditions are met:

(a)

The parties to the contract have approved the contract (in writing, orally or according to other customary business practices) and they are committed to satisfying the obligations attributable to them;

(b)

ICL can identify the rights of each party in relation to the goods or services that will be transferred;

(c)

ICL can identify the payment terms for the goods or services that will be transferred;

(d)

The contract has a commercial substance (i.e. the risk, timing and amount of the entity’s future cash flows are expected to change as a result of the contract); and

(e)

It is probable that the consideration, to which ICL is entitled to in exchange for the goods or services transferred to the customer, will be collected.

For the purpose of goods

Revenueparagraph (e) above, ICL examines, inter alia, the percentage of the advance payments received and the spread of the contractual payments, past experience with the customer and the status and existence of sufficient collateral. If a contract with a customer does not meet all of the above criteria, consideration received 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 discountcustomer is recognized as a reductionliability until the criteria are met or when one of revenue when the sales are recognized.

M. Treasury stock

Where share capital recognized as equityfollowing events occurs: ICL has no remaining obligations to transfer goods or services to the customer and any consideration promised by the customer has been reacquired byreceived and cannot be returned; or the Group,contract has been terminated and the amountconsideration received from the customer cannot be refunded.

Combination of contracts

ICL combines two or more contracts entered into on the same date or on proximate dates with the same customer (or related parties of the consideration paid including direct expenses, is deducted from equity. The reacquired sharescustomer) and accounts for them as one contract when one or more of the following conditions are classifiedmet:

(a)

Negotiations were held on the contracts as one package with a single commercial purpose;

(b)

The amount of the consideration in one contract depends on the price or performance of a different contract; or

(c)

The goods or services promised in the contracts (or certain goods or services promised in each one of the contracts) are a single performance obligation.

F - 31

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Notes to the Consolidated Financial Statements as treasury shares and are presented as a deduction from equity.

F-27

at December 31, 2018

Table of Contents

Note 3 - Significant Accounting Policies (cont’d)

N.

L. Revenue Recognition (cont'd)

Identifying performance obligations

On the contract’s inception date, ICL assesses the goods or services promised in the contract with the customer and identifies as a performance obligation any promise to transfer to the customer one of the following:

(a)

Goods or services (or a bundle of goods or services) that are distinct; or

(b)

A series of distinct goods or services that are substantially the same and have the same pattern of transfer to the customer.

ICL identifies goods or services promised to the customer as being distinct when the customer can benefit from the goods or services on their own or in conjunction with other readily available resources and ICL’s promise to transfer the goods or services to the customer is separately identifiable from other promises in the contract. In order to examine whether a promise to transfer goods or services is separately identifiable, ICL examines whether it is providing a significant service of integrating the goods or services with other goods or services promised in the contract into one integrated outcome that is the purpose of the contract.

An option that grants the customer the right to purchase additional goods or services constitutes a separate performance obligation in the contract only if the option grants to the customer a material right it would not have received without the original contract.

Determining the transaction price

The transaction price is the amount of the consideration to which ICL expects to be entitled in exchange for the goods or services promised to the customer, other than amounts collected for third parties. ICL considers the effects of all the following elements when determining the transaction price: variable consideration, the existence of a significant financing component, non-cash consideration, and consideration payable to the customer. As ICL does not engage in agreements with payment terms exceeding one year, it applies the practical expedient included in the standard to not separate a significant financing component where the difference between the time of receiving payment and the time of transferring the goods or services to the customer is one year or less.

M. 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 fromon the disposal of available-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 or disposal 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.

F - 32

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

M. Financing Income and Expenses (cont'd)

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).

In the consolidated statements of cash flows, interest received and interest paid, are presented as part of cash flows from operating activities.

O. Dividends paid are presented as part of cash flows from financing activities.

N. Taxes on Income

Taxes on income include current and deferred taxes. Current tax and deferred tax are recognized in profit or loss except to the extent thatunless they relate to a business combination or are recognized directly in equity or in other comprehensive income to the extentwhen they relate to items recognized directly in equity or in other comprehensive income.

Current tax is the expected tax payable (or receivable) on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date. Current taxes also include taxes in respect of prior years and any tax arising from dividends. Current tax assets and liabilities are offset if there is a 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.

A provision for uncertain tax positions, including additional tax and interest expenses, is recognized when it is more likely than not that ICL will have to use its economic resources to pay the obligation.

Recognition of deferred taxes is according to the balance sheet approach, relatingrelates 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 GroupICL 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, based on the basis of the law that was finally legislated or effectively legislated as at the date of the report.

Deferred 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 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 are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

F - 33

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

N. Taxes on Income (cont'd)

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.

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Table of Contents

Note 3 - Significant Accounting Policies (cont’d)

O. Taxes on Income (cont’d)

The Group

ICL could become liable for additional taxes in the case of distribution of intercompany dividends between the GroupICL's companies. These additional taxes are not included in the financial statements in light of the policy of the Groupas ICL's companies decided 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.

Additional income taxes that arise from the distribution of dividends by the Company are recognized when the liability to pay the related dividend is recognized. 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.

P.

O. Earnings per share

The Group

ICL 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 after adjustment in respect of treasury shares and for the effect of restricted shares and options for shares granted to employees.

P. Transactions with controlling shareholder

Assets and liabilities included in a transaction with a controlling shareholder are measured at fair value on the date of the transaction. As the transaction is on the equity level, the Company includes the difference between the fair value and the consideration from the transaction in its equity.

Q. 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’sICL’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.

F - 34

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

Q. Non-current assets and disposal groups held for sale (cont'd)

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, which continue to be measured in accordance with the Group’sICL’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.

R. New Standards and Interpretations not yet Adopted

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.

adopted

IFRS 16, Leases

(hereinafter – “IFRS 16” or the "standard")

IFRS 16 The standard replaces International Accounting StandardIAS 17, – Leases (IAS 17) and its related interpretations. The standard’sstandard's instructions annul the existing requirement from lessees to classify leases as operating or finance leases. Instead of this, for lessees, theThe new standard presents a unified model for the accounting treatment of all leases according to which the lessee has to recognize ana right-of-use asset and a lease liability in respect of the lease in its financial statements. Similarly,

Manner of implementation and expected implementation

The standard will be implemented for annual periods starting on January 1, 2019. The Company plans to apply the transitional provision of recognizing a lease liability at the initial application date according to the present value of the future lease payments discounted at a group borrowing rate at that date, and concurrently recognizing a right-of-use asset at the same amount of the liability, adjusted for any repaid or accrued lease payments that were recognized as an asset or liability before the date of initial application. Therefore, application of the standard determines newis not expected to influence the balance of retained earnings and expanded disclosure requirements from those requiredequity at present.

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the date of initial application.

Table of Contents

Main Expedients the Company elected:

1)

Not applying the requirement to recognize a right-of-use asset and a lease liability in respect of short-term leases of up to one year. Furthermore, not applying the requirement to recognize a right-of-use asset and a lease liability for leases that end within 12 months from the date of initial application.

2)

Not separating non-lease components from lease components and instead accounting for all the lease components and related non-lease components as a single lease component.

3)

Relying on a previous assessment of whether an arrangement contains a lease in accordance with current guidance, IAS 17, Leases, and IFRIC 4, Determining whether an Arrangement contains a Lease, with respect to agreements that exist at the date of initial application.

4)

Not applying the requirement to recognize a right-of-use asset and a lease liability in respect of leases where the underlying asset has a low value.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 3 - Significant Accounting Policies (cont’d)

R. New Standards and Interpretations not yet Adopted (cont’d)

adopted (cont'd)

IFRS 16, Leases (hereinafter – “IFRS 16” or the "standard") (cont'd)

For leases in which the Company is the lessee and which were classified before the date of initial application as operating leases, except for when the Company has elected to apply the standard’s expedients as aforesaid, the Company will recognize a right-of-use asset and a lease liability at initial application for all the leases that award it control over the use of identified assets for a specified period of time. Based on the assessment as at December 31, 2018, the changes in the initial application are expected to result in an increase of $280 million in the balance of right-of-use assets and in the balance of the lease liabilities. Accordingly, depreciation and amortization expenses will be recognized in respect of the right of use asset, and the need for recognizing impairment of the right-of-use asset will be examined in accordance with IAS 36. Furthermore, financing expenses will be recognized in respect of the lease liabilities. Therefore, as from the date of initial application, the lease payments relating to assets leased under an operating lease, will be recognized as a right-of-use asset and depreciated in subsequent periods as a part of depreciation and amortization expenses and as interest expenses. ICL's discount rates used for measuring the lease liability are in the range of 3.4% to 6.4%. The standardCompany does not anticipate any material implications on its ability to satisfy the required financial covenants, as described in Note 15.

IFRIC 23, Uncertainty Over Income Tax Treatments (hereinafter – “IFRIC 23”)

IFRIC 23 clarifies how to apply the recognition and measurement requirements of IAS 12 for uncertainties in income taxes. According to IFRIC 23, when determining the taxable profit (loss), tax bases, unused tax losses, unused tax credits and tax rates when there is uncertainty over income tax treatments, the entity should assess whether it is probable that the tax authority will becomeaccept its tax position. If it is probable that the tax authority will accept the entity’s tax position, the entity will recognize the tax effects on the financial statements according to that tax position. If it is not probable that the tax authority will accept the entity’s tax position, the entity is required to reflect the uncertainty in its accounts. IFRIC 23 also emphasizes the need to provide disclosures of the judgments and assumptions made by the entity regarding uncertain tax positions.

IFRIC 23 is effective for annual reporting periods as ofbeginning on or after 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.2019. The standardinterpretation includes a number oftwo alternatives for applying the implementation of transitional provisions, so that companies can choose one of the following alternatives at the implementation date: fullbetween retrospective implementationapplication or implementationprospective application as from the effective date while adjustingfirst reporting period in which it initially applied the balance of retained earnings at that date. interpretation.

The Company is examininghas examined the effectsimplications of IFRS 16applying IFRIC 23, and in its opinion the effect on the financial statements.

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 tostatements will 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.

immaterial.

S. IndicesIndexes 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 based on the basis of the index relating to each linked asset or liability.

F - 36

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 4 - Determination of Fair Values

As part of the accounting policies and disclosures, the GroupICL 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.

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.

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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.

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.

A. Investments in securities

The fair value of financial assets classified as available-for-salefair value through other comprehensive income -investments in equity instruments and as held-for-tradingfair value through profit and loss, is determined based on their market price at date of the report. If the 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.

B. 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.

The fair value of currency options is determined based on the Black and Scholes model, taking into accountconsidering 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 based 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 and marine shipping prices are presented at fair value based 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 2723 regarding financial instruments.

F.

C. 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.

D. Share-based compensation

The fair value of employee share options and share appreciation rights is measured using the Black and Scholes model or a binomial model, in accordance with the plan (see Note 24)21). 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).

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F - 37

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 4 - Determination of Contents

Fair Values (cont'd)

E. Property, plant and equipment of the subsidiaries Dead Sea Works, Dead Sea Bromine and Dead Sea Magnesium in Israel

The fair value of property, plant and equipment, of the subsidiaries Dead Sea Works, Dead Sea Bromine and Dead Sea Magnesium (hereinafter - the Subsidiaries) was valuated based on the Replacement Cost Methodology. This evaluation was performed mainly for the Subsidiaries’ financial statements of 2016 and onward, which serve as a basis for the reports filed pursuant to the provisions of the Taxation of Natural Resources Law. For further information, see Note 20.

Note 5 - Operating Segments

A. General

1. Information on businessoperating segments:

ICL is a multi national enterprise, which operates mainly in the fields of fertilizersglobal specialty minerals 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 oncompany operating bromine, potash and phosphate liquid fertilizersmineral value chains in a unique, integrated business model. To align with ICL's strategy of enhancing market leadership across its three core-mineral value chains of bromine, potash and soluble fertilizers. ICL Fertilizers also manufactures compound fertilizersphosphate, as well as realizing the growth potential of Innovative Ag Solutions, commencing August 31, 2018, the Company operates via four segments: Industrial Products, Potash, Phosphate Solutions and Innovative Ag Solutions. The comparative data has been restated to reflect the change in the Netherlands, Germany and Belgium, liquid fertilizers and soluble fertilizers in Spain, slow-release fertilizers and controlled-release fertilizers in the Netherlands and in the United States, and phosphate-based food additives for livestock, in Turkey and in Israel.

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 partstructure of the Company’s activities consists of bulk transport of cargo of the ICL Fertilizers segment.

ICL reportable segments, as stated above.

Industrial Products – ICL Industrial Products segment 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 segment uses most of the bromine it produces for self self‑production of bromine compounds at its production sites in Israel, the Netherlands and China. In addition, ICL Industrial Products extractsthe segment produces several grades of potash, salt, magnesium chloride and magnesia and chlorine from Dead Sea brine, and produces chlorine-based products in Israel and the United States. In addition, ICL Industrial Products engagesproducts. The segment is also engaged in the production and marketing of phosphorous-based flame retardants and additional phosphorus-basedphosphorus‑based products.

ICL Performance Products

Potash – ICL Performance Products cleans someThe Potash segment uses an evaporation process to extract potash from the Dead Sea and uses conventional mining to produce potash and salt from an underground mine in Spain. The segment markets its potash fertilizers globally and also carries on certain other operations not solely related to the potash activities. At the end of the agricultural phosphoric acid manufactured bysecond quarter of 2018, the Company ceased the production of potash in the ICL Fertilizers, purchases clean phosphoric acid from other sourcesBoulby mine in the UK and shifted to sole production of Polysulphate™. The Polysulphate™ is produced in an underground mine at ICL Boulby in the UK, and is the basis for a significant part of the Company's FertilizerpluS product line. The segment also includes magnesium activities under which it produces, markets and sells pure magnesium and magnesium alloys, and also manufactures thermal phosphoric acid. The clean phosphoric acidproduces related by-products, including chlorine 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-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.

sylvinite. In addition, the Potash segment sells salt that produced in its underground mines in Spain and UK.

F - 38

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Notes to the segments described above, ICL has other operations, including production and marketing of pure magnesiumConsolidated Financial Statements as well as magnesium alloys.  

2. Segment Capital investment

Segment capital investments for each of the reporting periods 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.

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Note 5 - Operating Segments (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

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Note 5 - Operating Segments (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

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Note 5 - Operating SegmentsA. General (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

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Note 5 - Operating Segments (cont’d)

C.

1. Information on geographical segments

Followingoperating segments: (cont'd)

Phosphate Solutions – The Phosphate Solutions segment is data regardingbased on a phosphate value chain which uses phosphate commodity products, such as phosphate rock and fertilizer-grade phosphoric acid (“green phosphoric acid”), to produce specialty products with higher added value. The segment also produces and markets phosphate-based fertilizers.

Phosphate rock is mined and processed from open pit mines, three of which are located in the distribution ofNegev Desert in Israel while 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

Followingfourth is data regarding the distribution of the Group’s sales by geographical location of the assets:

		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
		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

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Note 5 - Operating Segments (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 waterlocated 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 foundYunnan province in phosphate rock. The ICL phosphate business’ main products are: phosphate rock,China. Sulphuric acid, green phosphoric acid and fertilizers.

Specialty Fertilizers (SF) – specialtyphosphate fertilizers are concentrated fertilizers with high efficiency, allowing a more precise deliveryproduced in facilities in Israel, China and Europe.

The Phosphate Solutions segment purifies some of the essential nutrientsits green phosphoric acid and manufactures thermal phosphoric acid to provide solutions based on specialty phosphate salts and acids 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,diversified industrial end markets, 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, magnesiaoral care, cleaning 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, water treatment, asphalt modification, construction and detergents industries. In addition,metal treatment. The specialty phosphate salts and acids are mainly produced in the unit supplies P2S5, a primary ingredientCompany’s facilities in lubricating oil additivesUS, Brazil, Germany and insecticides, as well as fire retardant products used mainly to fight forest fires.

Food Specialties – ICL Food SpecialtiesChina. The segment is also a leader in creativedeveloping and producing functional food ingredients and phosphate additives, which provide texture and stability solutions tofor the processed meat, fish,poultry, seafood, dairy, beverage and baked goods markets. In addition, the segment supplies pure phosphoric acid to ICL’s specialty fertilizers business 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

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Note 6 – Short-Term Investments, Depositsproduces milk and Loans

		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
		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
		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

whey proteins for the food ingredients industry.

 

(*)

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.

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Note 10 - 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 tradedInnovative Ag Solutions – The Innovative Ag Solutions segment was established 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 competitivenessfoundations of ICL’s specialty fertilizers business. The segment aims to achieve global leadership by enhancing its global positions in its core markets of specialty agriculture, ornamental horticulture, turf and landscaping, targeting high-growth markets such as Latin America, India and China, by leveraging its unique R&D capabilities, vast agronomic experience, global footprint, backward integration to potash and phosphate operations by providing ICL access to a low-cost phosphate rock operation with extensive reserves,and chemistry know-how, as well as seeking M&A opportunities. ICL is working to low-cost phosphoric acid.

On October 12, 2015,expand its broad product portfolio of controlled release fertilizers (CRF), water soluble fertilizers (WSF), liquid fertilizers, slow release fertilizers (SRF) and straights (MKP/MAP/Pekacid).

The Innovative Ag Solutions segment develops, manufactures, markets and sells fertilizers that are based primarily on nitrogen, potash (potassium chloride) and phosphate. It produces water soluble specialty fertilizers in Belgium and the Company completed the establishment of YPH JV. The closing occurred following fulfillment of the closing conditions to the parties’ satisfaction, including all necessary approvalsUS, liquid fertilizers and ICL’s net payment of approximately $172 millionsoluble fertilizers 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 CommerceIsrael and was pending final approval by the China Securities Regulatory Commission (CSRC).

The information relating to revenuesSpain, 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 stillcontrolled‑release fertilizers in the process of finalizing YPH JV’s Purchase Price Allocation (PPA).

Measurement of fair value

Presented hereunder is information regardingNetherlands and the techniques the Group usedUnited States. ICL's specialty fertilizers business markets its products worldwide, mainly in Europe, Asia, North America and Israel.

The segment will also function as ICL’s innovative arm, which will seek 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”) basedfocus 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 assetR&D, as well as all synergies whichimplementing digital innovation.

Other Activities – business activities that are specificnot reviewed regularly by the organization’s chief operating decision maker.

F - 39

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Notes to the acquisition. (2) apply contributory assets charges (“CAC”): cash flows are projected to be realized withConsolidated Financial Statements as at December 31, 2018

Note 5 - Operating Segments (cont’d)

A. General (cont’d)

2. Segment capital investments

The capital investments made by 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 flowssegments, for each of the reporting 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 Subsidiariesinclude mainly property, plant 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 priceequipment and intangible assets acquired in the ordinary course of business lessand as part of business combinations.

3. Inter–segment transfers and unallocated income (expenses)

Segment revenues, expenses and results include inter-segment transfers, which are priced mainly based on transaction prices in the estimated costsordinary course of completion and sale, and a reasonablebusiness – this being based on reports that are regularly reviewed by the chief operating decision maker. These transfers are eliminated as part of consolidation of the financial statements.

The segment profit marginis measured based on the effort requiredoperating income, without certain expenses that are not allocated to completethe operating segments including general and selladministrative expenses, as it is included in reports that are regularly reviewed by the inventories.

The aggregate cash flows derived forchief operating decision maker.

F - 40

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Notes to the GroupConsolidated Financial Statements as a result of the acquisition:

at December 31, 2018

Note 5 - Operating Segments (cont’d)

B. Operating segment data

	Industrial Products	Potash	Phosphate Solutions	Innovative Ag Solutions	Other Activities	Reconciliation	Consolidated
	$ millions
Cash and cash equivalents paid, net			172
Cash and cash equivalents of the JV			9

For the year ended December 31, 2018
Sales to external parties	1,281	1,481	2,001	719	74	-	5,556
Inter-segment sales	15	142	98	22	5	(282)	-
Total sales	1,296	1,623	2,099	741	79	(282)	5,556
Segment profit	350	393	208	57	9	(7)	1,010
General and administrative expenses							(257)
Other income not allocated to the segments							766
Operating income							1,519
Financing expenses, net							(158)
Share in earnings of equity-accounted investee							3
Income before income taxes							1,364
Capital expenditures	50	356	180	15	1	3	605
Depreciation, amortization and impairment	63	141	172	19	4	21	420

---

F - 41

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 5 - Operating Segments (cont'd)

B. Operating segment data (cont'd)

Industrial Products

Potash

163Phosphate Solutions

Innovative Ag Solutions

Other Activities

Reconciliation

Consolidated

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

For the year ended December 31, 2017
Sales to external parties	1,179	1,258	1,938	671	372	-	5,418
Inter-segment sales	14	125	99	21	12	(271)	-
Total sales	1,193	1,383	2,037	692	384	(271)	5,418
Segment profit	303	282	149	56	127	(4)	913
General and administrative expenses							(261)
Other expenses not allocated to the segments							(23)
Operating income							629
Financing expenses, net							(124)
Income before income taxes							505
Capital expenditures	49	270	154	12	19	3	507
Depreciation, amortization and impairment	61	128	172	19	8	30	418

---

F - 42

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Notes to the Consolidated Financial Statements as at December 31, 2018

 

*

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

5 - Operating Segments (cont’d)

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

Operating segment data (cont'd)

	Industrial Products	Potash	Phosphate Solutions	Innovative Ag Solutions	Other Activities	Reconciliation	Consolidated
	$ millions

For the year ended December 31, 2016
Sales to external parties	1,111	1,213	2,082	632	325	-	5,363
Inter-segment sales	9	125	104	29	15	(282)	-
Total sales	1,120	1,338	2,186	661	340	(282)	5,363
Segment profit	286	282	224	55	93	(37)	903
General and administrative expenses							(321)
Other expenses not allocated to the segments							(585)
Operating loss							(3)
Financing expenses, net							(132)
Share in earnings of equity-accounted investees							18
Loss before income taxes							(117)
Capital expenditures	38	311	237	7	1	58	652
Depreciation, amortization and impairment	52	127	203	17	3	4	406

---

F - 43

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 5 - Operating Segments (cont'd)

C. Information based on geographical location

The following table presents the distribution of ICL's sales by geographical location of the customer:

	2018		2017		2016
	$ millions	% of sales	$ millions	% of sales	$ millions	% of sales

USA	903	16	1,091	20	1,070	20
China	848	15	724	13	669	12
Brazil	656	12	594	11	521	10
United Kingdom	382	7	328	6	306	6
Germany	365	7	378	7	392	7
France	267	5	265	5	226	4
Spain	262	5	264	5	258	5
Israel	223	4	171	3	237	4
India	211	4	200	4	199	4
Australia	126	2	85	2	187	3
All other	1,313	23	1,318	24	1,298	25
Total	5,556	100	5,418	100	5,363	100

---

F - 44

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 5 - Operating Segments (cont'd)

C. Information based on geographical location (cont'd)

The following table presents the distribution of the operating segments sales by geographical location of the customer:

Balance as at January 1, 2015		Industrial Products	185Potash	Phosphate Solutions	Innovative Ag Solutions	Other Activities	Reconciliation	Consolidated
Changes during the year:	$ millions

For the year ended December 31, 2018
Europe	473	459	719	362	49	(92)	1,970
Asia	399	519	481	105	2	(18)	1,488
North America	347	107	405	103	24	(8)	978
South America	21	408	264	21	1	(3)	712
Rest of the world	56	130	230	150	3	(161)	408
Total	1,296	1,623	2,099	741	79	(282)	5,556

---

	Industrial Products	Potash	Phosphate Solutions	Innovative Ag Solutions	Other Activities	Reconciliation	Consolidated
	$ millions

For the year ended December 31, 2017
Europe	456	386	749	326	87	(86)	1,918
Asia	351	433	476	100	3	(21)	1,342
North America	327	116	369	94	282	(13)	1,175
South America	19	347	277	22	5	(4)	666
Rest of the world	40	101	166	150	7	(147)	317
Total	1,193	1,383	2,037	692	384	(271)	5,418

---

F - 45

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 5 - Operating Segments (cont'd)

C. Information based on geographical location (cont'd)

The following table presents the distribution of the operating segments sales by geographical location of the customer: (cont'd)

	Industrial Products	Potash	Phosphate Solutions	Innovative Ag Solutions	Other Activities	Reconciliation	Consolidated
Share in earnings									11
Dividends received			(19	)
Increase in rate of holdings in associated company – initial consolidation and  divestiture of equity accounted investees			(16	)
Cumulative translation adjustments			(2	)
Balance as at December 31, 2015			159	$ millions

F-42

Table

For the year ended December 31, 2016
Europe	424	421	717	319	77	(95)	1,863
Asia	301	396	511	74	6	(13)	1,275
North America	330	93	380	110	250	(22)	1,141
South America	25	267	274	19	1	2	588
Rest of the world	40	161	304	139	6	(154)	496
Total	1,120	1,338	2,186	661	340	(282)	5,363

---

F - 46

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 5 - Operating Segments (cont'd)

C. Information based on geographical location (cont'd)

The following table presents the distribution of Contents

ICL's sales by geographical location of the assets:

	For the year ended December 31
	2018	2017	2016
	$ millions	$ millions	$ millions

Israel	2,841	2,548	2,470
Europe	2,198	2,119	2,124
North America	831	1,045	1,045
Asia	617	583	556
Others	211	215	218
	6,698	6,510	6,413
Intercompany sales	(1,142)	(1,092)	(1,050)
Total	5,556	5,418	5,363

---

The following table presents operating income (loss) by geographical location of the assets from which it was produced:

	For the year ended December 31
	2018	2017	2016
	$ millions	$ millions	$ millions

Europe*	834	(45)	(117)
Israel	526	475	304
North America	74	154	83
Asia	52	8	(41)
Others	29	33	(203)
Intercompany eliminations	4	4	(29)
Total	1,519	629	(3)

---

* Europe profit for the year ended December 31, 2018 includes gain from divestiture of businesses in the amount of $841 million. For further information see Note 1010.

F - 47

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 5 - Operating Segments (cont'd)

C. Information based on geographical location (cont'd)

The following table present the non-current assets by geographical location of the assets (*)

	For the year ended December 31
	2018	2017
	$ millions	$ millions

Israel	3,570	3,387
Europe	1,228	1,227
Asia	401	455
North America	309	321
Other	59	94
Total	5,567	5,484

---

(*) Mainly consist of property, plant and equipment and intangible assets, non-current inventories and lease rights.

F - 48

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 6 – Inventories

	As at December 31
	2018	2017
	$ millions	$ millions

Finished products	772	709
Work in progress	258	269
Raw materials	216	212
Spare parts	143	142
Total inventories	1,389	1,332
Less – non-current inventories. mainly raw materials (presented in non-current assets)	99	106
Current inventories	1,290	1,226

---

Note 7 - Other Receivables

	As at December 31
	2018	2017
	$ millions	$ millions

Government institutions	108	78
Current tax assets	79	16
Prepaid expenses	52	43
Insurance receivables	1	26
Other	55	62
	295	225

---

F - 49

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 8 - Investments in Subsidiaries and Investee Companies (cont’d)

C. Condensed data

Non-controlling interests in subsidiaries

The following tables present information with respect to equity-accounted investees

Set forth below is condensed financial data with respect to equity-accounted investees which are individually insignificantnon-controlling interests in a Group subsidiary, YPH JV (at the rate of 50%), before elimination of inter-company transactions. The information includes fair value adjustments that were made on the acquisition date, other than goodwill and presented without adjustments for the ownership rates held by the Group.

		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

	2018	2017
	$ millions	$ millions

Current assets	192	197
Non-current assets	318	367
Current liabilities	225	241
Non-current liabilities	49	215
Equity	236	108

---

	2018	2017	2016
	$ millions	$ millions	$ millions

Sales	387	363	377
Operating loss	-	(21)	(78)
Depreciation and amortization	34	34	34
Operating income (loss) before depreciation and amortization	34	13	(44)
Net loss	(13)	(38)	(104)
Comprehensive income (loss)	3	(26)	(126)

---

Note 119 – Other non-current assets

	As at December 31
	2018	2017
	$ millions	$ millions

Lease rights	102	106
Non-current inventories	99	106
Surplus in defined benefit plan	73	89
Long-term loan	59	-
Derivatives	15	64
Other	9	8
	357	373

---

F - Assets and Liabilities held for sale

50

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 10 - Business Divestiture

Pursuant to the Company’s strategy in connection withto focus its operation on the continued integration of non-coremineral’s chains, divest low synergies businesses, activities, the Company completedreduce debt ratios and generate funds for growth initiatives, during 2015 the sale of these activities:

1. In January 2015, the alumina, paper and water industry (APW) sale transaction was closed. In February 2015, the sales of the thermoplastic products for the footwear industry (Renoflex) and the hygiene products for the food industry (Anti Germ) were closed and in June 20152018, the Company completed the sale of the pharmaceutical and gypsum businesses (PCG). As a result of completion of the sale of these activities,following divestitures:

1)

In December 2017, the Company entered into an agreement to sell its fire safety and oil additives business to SK Invictus Holding L.P., an affiliate of SK Capital (hereinafter – the Buyer). In March 2018, the Company completed the sale transaction for a consideration of $1,010 million, of which $953 million in cash and $57 million in the form of a long-term loan to a subsidiary of the Buyer. As a result, the Company recorded, in the financial statements of 2018, a capital gain of $841 million (net of transaction expenses), under "other income" in the statement of income. the table below presents the book value of the sold assets and liabilities.

	2018
	$ millions

Cash and cash equivalents	1
Trade and other receivables	34
Inventories	59
Property, plant and equipment	26
Intangible assets	64
Trade payables and other current liabilities	(28)
Deferred tax liabilities	(3)
Net assets and liabilities	153
Consideration received in cash (*)	938
Income tax paid	(35)
Cash disposed of	(1)
Net cash inflow	902

* The consideration received in 2015 the Company recognized a gain of about $214 million, which was included under “other income” in the statement of income ($162 millioncash is 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 these activities as “assets held for sale”. As a result of re-measurement of these assets, based on the lower of their carrying value in the books and their fair value (less selling expenses), in 2015 the Company recognized a loss in the amount of $47$16 million which was included under “other expenses” in the statement of income ($36 million net of tax).

Note 12 - Long-Term Deposits and Receivables

		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

transaction expenses.

 

*2)

The increaseIn June 2018, the Company entered into an agreement for the sale of the assets and business of its subsidiary, Rovita, for no consideration (hereinafter – the Agreement). Rovita produces commodity milk protein products, using by-products from the whey protein business of Prolactal, which is part of the Phosphate Solutions segment. In July 2018, the company completed the sales transaction and as a result, recognized a loss deriving from the write-off of all Rovita’s assets, in other receivables is mainly due to the establishmentamount of a joint venture (“YPH JV”). See Note 10 for additional details.$16 million ($12 million after tax), under “other expenses” in the statement of income.

F-43

Table of Contents

F - 51

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 1311 - 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

Table of Contents

Note 13 - 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)Land, roads and buildings	Installations and equipment	Dikes and evaporating ponds	Heavy mechanical equipment	Furniture, vehicles and equipment	Plants under construction and spare parts for installations – the changes represent additions during the year, net of transfers to property,(1)	Total
	$ millions	$ millions	$ millions	$ millions	$ millions	$ millions	$ millions

Cost
Balance as at January 1, 2018	844	5,788	1,888	150	242	898	9,810
Additions	42	789	100	5	20	(367)	589
Disposals	(2)	(19)	-	(2)	(7)	-	(30)
Translation differences	(23)	(76)	(13)	-	(4)	(16)	(132)
Balance as at December 31, 2018	861	6,482	1,975	153	251	515	10,237
Accumulated depreciation
Balance as at January 1, 2018	451	3,520	1,053	84	181	-	5,289
Depreciation for the year	24	234	96	7	12	-	373
Impairment	5	5	-	-	1	-	11
Disposals	(1)	(16)	-	(2)	(8)	-	(27)
Translation differences	(11)	(50)	(10)	-	(1)	-	(72)
Balance as at December 31, 2018	468	3,693	1,139	89	185	-	5,574
Depreciated balance as at December 31, 2018	393	2,789	836	64	66	515	4,663

---

(1) The additions for the year are presented net of items the construction of which were completed and accordingly were recorded in other categories in the “property, plant and equipment” section.

F - 52

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 11 - Property, Plant and Equipment (cont’d)

	Land, roads and equipment.buildings	Installations and equipment	Dikes and evaporating ponds	Heavy mechanical equipment	Furniture, vehicles and equipment	Plants under construction and spare parts for installations (1)	Total
	$ millions	$ millions	$ millions	$ millions	$ millions	$ millions	$ millions

F-45

Table

Cost
Balance as at January 1, 2017	763	5,408	1,715	149	244	879	9,158
Additions	42	302	140	7	13	(14)	490
Disposals	(6)	(28)	-	(12)	(17)	-	(63)
Translation differences	49	136	33	7	9	35	269
Reclassification to assets held for sale	(4)	(30)	-	(1)	(7)	(2)	(44)
Balance as at December 31, 2017	844	5,788	1,888	150	242	898	9,810
Accumulated depreciation
Balance as at January 1, 2017	409	3,232	944	83	181	-	4,849
Depreciation for the year	23	227	84	7	14	-	355
Impairment	-	13	-	-	-	-	13
Disposals	(4)	(23)	-	(12)	(17)	-	(56)
Translation differences	24	85	25	7	6	-	147
Reclassification to assets held for sale	(1)	(14)	-	(1)	(3)	-	(19)
Balance as at December 31, 2017	451	3,520	1,053	84	181	-	5,289
Depreciated balance as at December 31, 2017	393	2,268	835	66	61	898	4,521

---

(1) The additions for the year are presented net of Contents

items the construction of which were completed and accordingly were recorded in other categories in the “property, plant and equipment” section.

F - 53

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 1412 - 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

Table of Contents

A.

Composition

	Goodwill	Concessions and mining rights	Trademarks	Technology / patents	Customer relationships	Exploration and evaluation assets	Computer application	Others	Total
	$ millions	$ millions	$ millions	$ millions	$ millions	$ millions	$ millions	$ millions	$ millions

Cost
Balance as at January 1, 2018	348	216	91	80	183	39	76	34	1,067
Additions	-	-	-	1	-	1	13	1	16
Disposals	-	-	-	-	-	-	-	(2)	(2)
Translation differences	(17)	(6)	(3)	(6)	(5)	(1)	(2)	-	(40)
Balance as at December 31, 2018	331	210	88	75	178	39	87	33	1,041
Amortization and impairment losses
Balance as at January 1, 2018	22	63	24	35	94	25	61	21	345
Amortization for the year	-	5	3	5	10	1	4	2	30
Impairment	-	-	-	3	3	-	-	-	6
Disposals	-	-	-	-	-	-	-	(1)	(1)
Translation differences	-	-	(1)	(4)	(2)	(1)	(2)	-	(10)
Balance as at December 31, 2018	22	68	26	39	105	25	63	22	370
Amortized Balance as at December 31 ,2018	309	142	62	36	73	14	24	11	671

---

F - 54

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 1412 - Intangible Assets (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

(cont'd)

(1)A.

RegardingComposition (cont’d)

	Goodwill	Concessions and mining rights of a subsidiary in Spain see Note 23.	Trademarks	Technology / patents	Customer relationships	Exploration and evaluation assets	Computer application	Others	Total
	$ millions	$ millions	$ millions	$ millions	$ millions	$ millions	$ millions	$ millions	$ millions

F-47

Table of Contents

Cost
Balance as at January 1, 2017	398	205	86	80	214	35	65	76	1,159
Additions	-	-	-	3	-	1	10	3	17
Discontinuance of consolidation	(55)	-	-	-	-	-	-	-	(55)
Translation differences	16	11	7	7	16	3	2	1	63
Reclassification to assets held for sale	(11)	-	(2)	(10)	(47)	-	(1)	(46)	(117)
Balance as at December 31, 2017	348	216	91	80	183	39	76	34	1,067
Amortization and impairment losses
Balance as at January 1, 2017	21	57	19	34	88	9	57	50	335
Amortization for the year	-	6	3	5	12	1	3	5	35
Impairment	-	-	1	-	-	14	-	-	15
Translation differences	1	-	1	3	5	1	2	1	14
Reclassification to assets held for sale	-	-	-	(7)	(11)	-	(1)	(35)	(54)
								-
Balance as at December 31, 2017	22	63	24	35	94	25	61	21	345
Amortized Balance as at December 31 ,2017	326	153	67	45	89	14	15	13	722

---

F - 55

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 1412 - 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
		2015				2014
		$ millions
Intangible assets having a defined useful life			803				466
Intangible assets having an indefinite useful life			382				337
			1,185				803

	As at December 31
	2018	2017
	$ millions	$ millions

Intangible assets having a defined useful life	332	365
Intangible assets having an indefinite useful life	339	357
	671	722

---

Note 1513 - 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

Goodwill - The goodwill is not monitored for internal reporting purposes and, accordingly, it is allocated to the purposeCompany’s operating segments and not to the cash-generating units, the level of which is lower than the operating segment. The examination of impairment in the carrying amount of the goodwill is made accordingly.

Trademarks - For impairment testing goodwill and intangible assetspurpose, the trademarks with an indefinite useful life arewere allocated to the cash-generating units, which represent the lowest level within the Group at which the goodwill is monitored for internal management purposes.

Company.

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
	2018	2017
	$ millions	$ millions

*

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

Goodwill
Phosphate Solutions	127	140
Industrial Products	92	93
Innovative Ag. Solutions	71	73
Potash	19	20
	309	326
Trademarks
Industrial Products, United States	13	13
Phosphate Solutions, United States	12	12
Industrial Products, Europe	5	6
	30	31
	339	357

---

F - 56

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 13 - Impairment Testing (cont’d)

Impairment testing for intangible assets with an indefinite useful life (cont’d)

As a result of a structural change, which entered into effect on August 31, 2018, (see Note 5) the Company is operating through four business segments and consequently, goodwill has been reallocated to the new segments. The comparative Goodwill amounts have been restated to reflect this change.

In preparation of the goodwill impairment testing, the after‑tax discount rate used for the calculation of the recoverable amount of the operating segments is 9.5% nominal. The long‑term growth rate is between 0% and 2%, in industries and markets in which the Company is engaged.

The recoverable amount of the operating segments was determined based on their value in use, was determined by discountingwhich is an internal valuation of the discounted future cash flows that will be generated from the continuing operation of the cash-generating unit and was based onoperating segments. The examinations determined that the following key assumptions:

F-48

Table of Contents

Note 15 - Impairment Testing for Property, Plant and Equipment and Cash-Generating Units Containing Goodwill (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 valuecarrying amount of the above mentioned units is based on their value in use. The value in use of the units 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 statementsoperating segments is lower than their recoverable value,amount and, accordingly, no impairment loss has been recognized in respect of such units.

The estimates and assumptions represent Management’s assessment of the future trends in the industry and they are based on both internal and external sources.

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 the value in use. As a result of the said decision, it was determined that the recoverable amount of 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 the books and, accordingly, the Company recognized an impairment loss, in the amount of about $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 the activities designated for sale, from the Performance Products and Industrial Products segments based on the lower of their carrying amount in the books and their fair values (see Note 11 above).

recognized.

Note 1614 - 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

Table of Contents

	As at December 31, 2018		As at December 31, 2017
	Assets	Liabilities	Assets	Liabilities
	$ millions		$ millions

Included in current assets and liabilities:
Foreign currency and interest derivative instruments	13	(16)	1	(3)
Derivative instruments on energy and marine transport	-	(5)	4	-
	13	(21)	5	(3)
Included in non-current assets and liabilities:
Foreign currency and interest derivative instruments	15	-	64	(3)

---

F - 57

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 1715 - Credit from Banks and Others

A. Composition

		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

A.

Composition

	As at December 31
	2018	2017
	$ millions	$ millions

Short-term credit
From financial institutions	544	635
From the parent company	-	175
	544	810
Current maturities
Long-term loans from financial institutions	32	12
Long-term loans from others	34	-
Total Short-Term Credit	610	822
Long- term debt and debentures
Loans from financial institutions	377	786
Other loans	35	98
	412	884
Less – current maturities	66	12
	346	872
Marketable debentures	1,195	1,241
Non-marketable debentures	274	275
Total Long- term debt and debentures	1,815	2,388

---

For additional information, see Note 23.

B. Classified by currencyYearly movement in Credit from Banks and Others*

	As at December 31
	2018	2017
	$ millions	$ millions

Balance as at January 1	3,227	3,399
Changes from financing cash flows
Receipt of long-term debt	1,746	966
Repayment of long-term debt	(2,115)	(1,387)
Repayment of short-term credit, net of receipt	(283)	147
Interest paid	(103)	(111)
Total net financing cash flows	(755)	(385)
Effect of changes in foreign exchange rates	(63)	101
Other changes	33	112
Balance as at December 31	2,442	3,227

(*) Short term credit, loans and debentures, including 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

payables.

Table of Contents

F - 58

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 1715 - 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

(1)

The interest in respect of most of the dollar debt is determined based on LIBOR + a margin at a rate of about 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 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.

(6)

See Sections H, I.

C. Maturity periods

The

Following are the future maturity periods of 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:

	As at December 31
	2018	2017
	$ millions	$ millions

Second year	17	261
Third year	273	18
Fourth year	113	213
Fifth year	308	644
Sixth year and thereafter	1,104	1,252
	1,815	2,388

---

For additional information, see Note 17H hereafter for additional information.

F-51

15F below.

Table of Contents

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 setapply including financial covenants, a cross 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,
		2018

Total shareholder's equity	Equity greater than 2,000 million dollars	3,781 million dollars
The Ratio of the EBITDA to the net interest expenses	Equal to or greater than 3.5	11.17
Ratio of the net financial debt to EBITDA (2)	Less than 4.0	1.62
Ratio of certain subsidiaries loans to the total assets of the consolidated company	Less than 10%	1.87%

---

(1)

Examination of compliance with the above above‑mentioned financial covenants is made as required based on the data inCompany's consolidated financial statements. As at December 31, 2018, the Company complies with its financial covenants.

(2)

According to the Company’s consolidatedcovenants, the required ratio of the net financial statements.debt to EBITDA as of January 1, 2019 will be reduced to 3.5.

F - 59

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 15 - Credit from Banks and Others (cont'd)

E. Sale of receivables under securitization transaction

In July 2015, the Company and certain Group subsidiaries (hereinafter – “the Subsidiaries”)the Subsidiaries) signed a series of agreements regarding a securitization transaction with three international banks (hereinafter – “thethe Lending Banks”)Banks) for the sale of their customertrade receivables to a foreign company which was established specifically for this purpose and which is not owned by the ICL Group (hereinafter – “thethe Acquiring Company”)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’sCompany'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. InUnder the agreement,agreements, 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 complymeet with the saidthis ratio, the Acquiring Company is allowed tocan discontinue acquiring new trade receivables (without affecting the existing acquisitions). As at the reporting date of the report, ICL is in compliance withmeet the aforementionedabove 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. As at December 31, 2018, the loan outamount 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 sale of the customer debts in the securitization transaction will be up to $405framework is $350 million.

The acquisitions 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. Once the Company transferred its trade receivables, it no longer has the right to sell them to another party. 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 majoritymost 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 the case of a credit default, the Company bears approximately 30% of the overall secured trade receivable balance.

In addition, as part of the agreements a number ofseveral conditions were set in connection with the quality of the customer portfolios, which give the Lending Banks the option to end the undertaking or determine 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

agreements.

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F - 60

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 1715 - Credit from Banks and Others (cont’d)

(cont'd)

E. Sale of receivables under securitization transaction (cont’d)

The

Based on the above terms, the securitization of trade receivables does not meet the conditions for disposalderecognition of financial assets prescribed in International Standard IAS 39,IFRS 9, 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, 2015,2018, utilization of the securitization facility and trade receivables within this framework amounted to $285$ 332 million (as at December(December 31, 2014, approximately $2902017 - $331 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,
		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*			-				-				-

	Year ended December 31,
	2018	2017	2016
	$ millions	$ millions	$ millions

Carrying amount of the transferred assets	332	331	331
Fair value of the associated liabilities	332	331	331
Net position *	-	-	-

---

* Less than $1 million.

F. Issuance of Debentures

1. In 2005, we issued debentures

F - 61

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Notes to institutional investors in a private issuance in the United States in the amount of $125 million bearing fixed interest. As ofConsolidated Financial Statements as at December 31, 2014,2018

Note 15 - Credit from Banks and Others (cont'd)

F. Information on material loans and debentures outstanding as at December 31, 2018:

Instrument type	Loan date	Original principal (millions)	Currency	Carrying amount ($ millions)	Interest rate	Principal repayment date	Additional information
Loan-Israeli institutions	November 2013	300	Israeli Shekel	67	4.74% (1)	2015-2024 (annual installment)	Partially prepaid
Debentures (private offering) – 3 series	January 2014	84 145 46	U.S Dollar	84 144 46	4.55% 5.16% 5.31%	January 2021 January 2024 January 2026
Loan-international institutions	July 2014	27	Euro	25	2.33%	2019-2024	Partially prepaid
Debentures - Series D	December 2014	800	U.S Dollar	182	4.50%	December 2024	(2)
Loan - European Bank	December 2014	161	Brazilian Real	19	CDI+1.35%	2015-2021 (Semiannual installment)
Debentures - Series E	April 2016	1,569	Israeli Shekel	416	2.45%	2021- 2024 (annual installment)
Loan - others	April - October, 2016	600	Chinese Yuan Renminbi	29	5.23%	2019	(3)
Loan - Asian Banks	June - October, 2018	600	Chinese Yuan Renminbi	87	4.79% - 5.44%	2019
Loan - Asian Bank	April 2018	400	Chinese Yuan Renminbi	58	CNH Hibor + 0.50%	2019
Debentures - Series F	May 2018	600	U.S Dollar	596	6.38%	May 2038	(4)
Loan - European Bank	December 2018	70	U.S Dollar	70	Libor + 0.66%	December 2021

F - 62

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Notes to the outstanding balance of the debentures was approximately $67 million, bearing fixed interestConsolidated Financial Statements as at a rate of 5.72%. On March 3, 2015, the debentures were repaid in full.

2. In November 2013, a wholly ownedDecember 31, 2018

Note 15 - Credit from Banks and controlled subsidiary of ours entered into an agreement with institutionalOthers (cont'd)

F. Information on material loans 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%.

3. On December 2, 2014, the Company completed the privatedebentures: (cont’d)

Additional Information:

(1)

From April 2018, in accordance with the loan agreement, there has been a decrease in the interest rate, from 4.94% to 4.74%.

(2)

Debentures Series D

Private issuance of senior notesdebentures 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-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’s and by Fitch Rating Ltd.Israel. The notes are registered for trade in the TACT Institutional,Institutional; by the Tel-Aviv Stock Exchange Ltd.

On October 29, 2015, Standard & Poor’s Ratings Services revised its The notes have been rated BBB (stable). In March 2017, the rating outlook ofcompany “Fitch Rating Ltd.” lowered the Company’s credit which is rated BBB (togetherrating, together with the rating of the debentures)debentures, from BBB to BBB- with a stable to negative.

Subsequent to balance sheet date, Fitch Ratings Services revised its rating outlook ofoutlook. In November 2017, the rating company “Standard & Poor’s” reaffirmed the Company’s credit which is rated BBB (togetherrating, 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 unchangeddebentures, at ilAABBB-, with a stable rating outlook.

F-53

On May 29, 2018, the Company completed a cash tender offer for its Series D debentures. Following the tender offer, the Company repurchased an amount of $616 million out of the original principal amount of $800 million.

Table

On May 10, 2018 and on June 21, 2018, respectively, the credit rating agency S&P ratified the Company’s international credit rating, BBB- with a stable rating outlook, and credit rating agency Maalot ratified the Company’s credit rating, ‘ilAA’ with a stable rating outlook.

(3)

Loans from others

In July 2018, ICL and YTH agreed to convert their owner’s loans in the YPH joint venture (each company holds 50%) in the amount of Contents

$146 million into equity by issuing shares. As a result, the consolidated debt was reduced by $73 million against “non‑controlling interest” equity balance.

(4)

Debentures-Series F

On May 31, 2018, the Company completed a private offering of senior unsecured notes to institutional investors pursuant to Rule 144A and Regulation S under the U.S. Securities Act of 1933. According to the terms of the Series F Debentures, the Company is required to comply with certain covenants, including restrictions on sale and lease-back transactions, limitations on liens, and standard restrictions on merger and/or transfer of assets. The Company is also required to offer to repurchase the Series F Debentures upon the occurrence of a "change of control" event, as defined in the indenture for the Series F Debentures. In addition, the terms of the Series F Debentures include customary events of default, including a cross‑acceleration to other material indebtedness. The Company is entitled to optionally repay the outstanding Series F Debentures at any time prior to the final repayment date, under certain terms, subject to payment of an agreed early repayment premium. The Series F Debentures have been rated BBB- by S&P Global Inc. and Fitch Rating Inc. with a stable rating outlook.

F - 63

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 1715 - Credit from Banks and Others (cont’d)

(cont'd)

G.

In December 2010, the Company received a loan from a European Bank in the amount of €100 million. The loan was repaid on December 15, 2015.

H.

On March 23, 2015, ICL entered into an agreement with a group of eleven 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 the signing 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 Credit facilities:

Issuer	European bank (1)	Group of twelve international banks (2)	European bank (3)
Date of the credit facility	March 2014	March 2015	December 2016
Date of credit facility termination	March 2019	March 2023	May 2025
The amount of the credit facility	USD 35 million Euro 100 million	USD 1,200 million	USD 100 million
Credit facility has been utilized	Euro 40 million	USD 200 million	USD 70 million
Interest rate	Up to 33% use of the credit: Libor/Euribor + 0.90%. From 33% to 66% use of the credit: Libor/Euribor + 1.15% 66% or more use of the credit: Libor/Euribor + 1.40%	Up to 33% use of the credit: Libor/Euribor + 0.70%. From 33% to 66% use of the credit: Libor/Euribor + 0.80% 66% or more use of the credit: Libor/Euribor + 0.95%	Libor + 0.45% + spread
Loan currency type	USD and Euro loans	USD and Euro loans	USD loans
Pledges and restrictions	Financial covenants - see Section D, a cross-default mechanism and a negative pledge.	Financial covenants - see Section D, a cross-default mechanism and a negative pledge.	Financial covenants - see Section D and a negative pledge.
Non-utilization fee	0.32%	0.21%	0.30%

(1)

After the date of the report, the Company elected not to realize the option of revolving credit facility extension, and to repay the utilized credit facility on the date of its termination.

(2)

In October 2018, the Company entered into an agreement according to which, its commitment under certain revolving credit facility agreements will be reduced by a total aggregate amount of $655 million, to an amount of $1.2 billion.

(3)

In June 2018, the maturity date of the credit facility was extended to 2025. In November 2018, the credit facility was reduced from $136 million to $100 million. As at the date of the report, the Company utilized $70 million of that credit facility.

F - 64

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Notes to the amount of the loan actually used, scaled to the amount of the credit facility actually used,Consolidated Financial Statements as follows:

•     Up to 33% use 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:	Libor + 0.95% (on the entire sum used).

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 facilities 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 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 loan agreement remain unchanged.

I.

In March 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 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. On 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.

J.

On September 11, 2012, the Company received a loan in the amount of $50 million from a third party. 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-month Libor rate plus a margin of 0.6%. the loan will be extended every three months.

K.

In December 2012, the Company entered into a credit facility agreement with a European bank for a loan of approximately €100 million. As of December 31, 2015, the Company utilized the 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 credit is LIBOR plus 1.4%.

L.

In November 2013, the Company signed a loan agreement with several institutional entities, in the amount of NIS 600 million, bearing fixed interest at the rate of 4.74%. The loan is payable in installments starting from 2015 and up to 2024. As at December 31, 2015, the total amount of the loan is approximately $148 million (approximately NIS 576 million).

F-54

2018

Table of Contents

Note 1715 - Credit from Banks and Others (cont’d)

M.

In June 2014, the Company signed loan agreements with a number(cont'd)

H. Pledges and Restrictions Placed in Respect 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%.

N.

In December 2014, the Company signed a loan agreement in the amount of approximately Brazilian reals 161 million with a European bank. The loan is payable in installments starting 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
			2015				2014
			$ millions
Open accounts			702				569
Checks payable			14				16
			716				585

1)

The Group has undertaken various obligations in respect of loans and credit received from non‑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 further information regarding to the covenants in respect of these loans, see item D above.

2)

In the third quarter of 2018, YPH JV entered into loan agreements in the total amount of RMB 500 million ($74 million) with the Bank of China. Since the partner (YTH) provided the bank with a full guarantee against the said loan, the Company pledged a portion of its shares in YPH JV (22%), which represents its part of the debt to YTH (RMB 250 million). The pledge agreement does not include restrictions on, among others, management of YPH JV's operations. The realization of the pledge will take place only if the guarantee is forfeited. For further information relating to loan for Bank of China, see item F above.

3)

As at December 31, 2018 the total guarantees the Company provided were about $79 million.

Note 19 -16 – Other currentCurrent 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

___________________

	As at December 31
	2018	2017
	$ millions	$ millions

Employees	284	269
Accrued expenses	85	83
Governmental (mainly in respect of royalties) (1)	61	67
Current tax liabilities	112	88
Others	105	88
	647	595

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1.(1)

See Note 2320.

F-55

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F - 65

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2017 - 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 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:

20132016–2018 and after:

2016 – 25%

2014

2017 – 26.5%

2015 – 26.5%

24%

2018 and after 23%

On January 4,December 22, 2016 the Israeli Knesset plenary Knesset passed the Economic Efficiency Law (Legislative Amendments for Amendment ofAchieving the Income Tax Ordinance No. 216Budget Targets for 2017 and 2018), 2016, which provides, inter alia,among other things, for a reduction of the Companies Tax rate commencing from 2016 and thereafter by25% to 23% in two steps – the first step to the rate of 1.5% such that24% commencing from 2017 and the second step to the rate will be 25%.

If the legislation had been effectively completed by December 31, 2015, the impactof 23% commencing from 2018 and thereafter, along with reduction of the change on the financial statements as at December 31, 2015 would have been reflected in a declinetax rate applicable to “Preferred Enterprises” (see A.2.b below) regarding factories in the balanceperipheral suburban areas, from 9% to 7.5%, as part of amendment of the liabilitiesLaw for deferred taxes, in the amountEncouragement 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.

Capital Investments.

The current taxes for the periods reported are calculated in accordance with the tax rates shown in the table above.

3.

2. Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (hereinafter – “Thethe Encouragement Law”)

Law)

a) Beneficiary Enterprises

The production facilities of some of the Company’s subsidiaries in Israel (hereinafter – “the Subsidiaries”)the Subsidiaries) have received “Beneficiary Enterprise” status under the Law of Encouragement for Capital Investments,law, as worded after Amendment No. 60 to the Law published in April 2005.

The benefitsbenefit granted to the Company are mainly:

1) Reducedcompany is mainly reduced tax rates

Regarding the “tax exemption” track, therates.

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.

a "tax exemption" track. The benefits deriving from a “Beneficiary Enterprise” under the “tax exemption”this track ended in 2014 while2014. Within those years the benefits deriving Company benefited from the “Ireland” track will end reduced tax rates as well as in 2017.

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some cases full tax exemption.

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 Taxcompanies tax in the year in which the dividend was distributed on the amount distributed (including the amount of the Companies Taxcompanies 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

As at December 31, 2018, 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 in the amount of about $750$650 million (see also Section 3(a)c below).

of distributable amount and about $162 million of derived taxes.

F - 66

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 17 - Taxes on Income (cont’d)

A. Taxation of companies in Israel (cont’d)

2. Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (cont’d)

a) Beneficiary Enterprises (cont’d)

Under the “Ireland” track, the company paid reduced tax rate of 11.5% as of 2008 on parts of its income. The benefit deriving from the "Ireland" track ended in 2017.

The part of the taxable income entitled to benefits at reduced tax rates is calculated based on the basis of the ratio of the turnover of the “Benefited“Beneficiary Enterprise” to the Company’s total turnover. The turnover attributed to the “Benefited“Beneficiary 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“Beneficiary 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,law, was amended (hereinafter – “the Amendment”)the Amendment). The Amendment is effective from January 1, 2011 and its provisions will apply to preferred income derived or accrued by a Preferred Company,Enterprise, as defined in the Amendment, in 2011 and thereafter.

The Amendment 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 proposedincluded as part of the 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 CompanyEnterprise in Development Area A will be 9% whereas the tax applicable to companies in the rest of Israel will be 16%. Pursuant to the amendment to the Encouragement law that was approved as part of the Economic Efficiency Law (Legislative Amendments for Achieving the Budget Targets for 2017 and 2018), 2016, the tax rate applicable to enterprises in the suburban areas was reduced from 9% to 7.5%. The Company has Preferred Enterprises at the tax rate of 7.5%.

F - 67

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 17 - Taxes on Income (cont’d)

A. Taxation of companies in Israel (cont’d)

2. Tax benefits under the Israeli Law for the Encouragement of Capital Investments, 1959 (cont’d)

b) Preferred Enterprises (cont’d)

On November 30, 2015, the Economic Efficiency Law was passed by the Knesset, which expanded the exception to all of anthe Enterprise’s activities up to the time of the first marketable product (for additional details – see Section 54 below). The Company has Preferred Enterprises at the tax rate of 9%. Nonetheless, tax benefits to which a BenefitedBeneficiary 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-residentIsraeli‑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 beis 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 Capital Investments, 1959 (hereinafter – “the Temporary Order”), which offersunless a reducedlower tax rate arrangement to companies that received an exemption from Companies Taxapplies under the aforesaid law. The Temporary Order provides that companies that choose to apply the Temporary Order (effectivea relevant treaty for one year), will be entitled to a reduced tax rate on the “release”prevention of exempt profits.

In November 2013, the Company’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).

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double taxation.

Table of Contents

Note 20 - Taxes on Income (cont’d)

A. Taxation of companies in Israel (cont’d)

4.

3. 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-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.

a)

Some of the Company’s Israeli subsidiaries are “Industrial Enterprise”, as defined in the above‑mentioned law. In respect of buildings, machinery and equipment owned and used by any  "Industrial Enterprise", the Company is entitled to claim accelerated depreciation as provided by the Income Tax Regulations – Adjustments for Inflation (Depreciation Rates), 1986 which allow accelerated depreciation to any "Industrial Enterprise" as of the tax year in which each asset is first placed in service.

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.

4. The Law for Taxation of Profits from Natural Resources

On November 30, 2015, the Knesset passed the

The Law for Taxation of Profits from Natural Resources (hereinafter – “the Law”)the Law), which entered into effect onis effective since January 1, 2016, except with respect to Dead Sea Works where the effective date is January 1, 2017.2016. The government take on natural resources in Israel includes three elements: Royalties, Natural Resources Tax and Companies Income Tax. 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

Royalties:

In accordance with the Mines Ordinance, 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. For production of the phosphates, the royalty rate will beis 5% of the value of the quantity produced – in place of 2%). produced.

Pursuant to the salt harvesting agreement signed with the Government onin July 8, 2012, the parties agreed, among other things,inter‑alia, to an increase in the rate of the royalties from 5% to 10% of the sales, for every quantityquantities of chloride potash chloride sold by the Company in a given year,DSW sells in excess of a quantity of 1.5 million tons. As parttonnes annually.

F - 68

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 17 - Taxes on Income (cont'd)

A. Taxation of companies in Israel (cont'd)

4. The Law for Taxation of Profits from Natural Resources (cont’d)

In addition, the salt harvesting agreement it was providedstates that if a lawlegislation is enacted that changes the specific fiscal policy in connection with reference to profits or royalties deriving from quarryingthe mining of quarries from the Dead Sea, the Company’sCompany's consent to the increase of the royalties' rate on the surplus quantities referred to above will not apply, after the enactment of the royalties,legislation, to the period in which such additional tax is collected as stated will not apply. Thein the said legislation. In January 2016, the Law entered into effect on January 1, 2016.and accordingly the rate of the royalties' provision was updated to 5%. For additional details –information - see Note 23C.

20C.

Imposition of Natural Resources Tax:

The Natural Resources Tax:

is applied for all minerals from 2016 and for Potash from 2017. The tax base, which will be calculated for every resourcemineral separately, is the Company’smineral’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’smineral’s average working capital, and less an amount that reflects thea yield on the balance of the amortized cost of14% on the property, plant and equipment used for production and sale of the quarried material (hereinafter –”– the Yield on the Amortized Cost”)Property, Plant and Equipment). 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 CostProperty, Plant and Equipment in that year. For the Yield on the Amortized CostProperty, Plant and Equipment 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.

The above computations, including the right to use prior years’ losses, are made separately, without taking into account setoffs, for each natural resource production and sale activity.

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.mineral. Nonetheless, regarding Magnesium, it was provided that commencing from 2017, upon sale of carnalite by Dead Sea Works (hereinafter – “DSW”)DSW to Magnesium and reacquisition of a Sylvanite by-productSylvinite by‑product by DSW, Magnesium will charge DSW $100 per tontonne of potash which is produced from the SylvaniteSylvinite (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.

F - 69

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 17 - Taxes on Income (cont'd)

A. Taxation of companies in Israel (cont'd)

4. The Law for Taxation of Profits from Natural Resources (cont’d)

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.

1)

The price for a unit of bromine (tonne) 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)

1)

The price for a unit of phosphate (tonne) 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.

The price forCompany took a unit of phosphate (ton) provided intax filing position, according to which, all the transaction;

2) The normative price ofDead Sea minerals should be taxed as a unit of phosphate. The “normative price” of a unit of phosphate isunified mineral under 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.

above-mentioned mechanism.

Companies Tax:

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 exceptedexempted from inclusion in the Law.

The Natural Resource Tax will be deductible from the Company’sCompany's taxable income and the Company will pay the Companies Tax on the balance as is customary in Israel.

F - 70

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 17 - Taxes on Income (cont'd)

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

Country	Tax rate	Note
Brazil	34%
Germany	29%
United States	26%	(1)
Netherlands	25%	(3)
Spain	25%
China	25%
United Kingdom	19%	(2)

(1)

The tax rate above includes federal and states tax. In December 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (hereinafter - the Tax Act). The Tax Act significantly revises the future ongoing U.S. federal corporate income tax by, among other things, lowering U.S. corporate income tax rates and implementing a territorial tax system. The lower corporate income tax rates are effective as of January 1, 2018. The Company examined the effects of the Tax Act's implementation and found that the main impact is the re‑measurement of the deferred tax assets and liabilities to incorporate the lower Federal corporate tax rate of 21% and as a result, in the financial statements of 2017, the Company reduced the balances of the assets and liabilities for deferred taxes, in the net amount of $13 million.

The Tax Act is comprehensive and complex and may lead to future interpretations regarding the manner of its implementation, which may impact the Company’s estimations and conclusions. The Company believes the tax expenses and liabilities in its financial statements are in accordance with the Netherlands – tax rate of 25%Tax Act and represent its best estimate.

Subsidiary incorporated in Germany –

(2)

The tax rate of 29%. Subsidiary incorporated in the UK was reduced to 19% effective from April 1, 2017 and 17% commencing from April 1, 2020.

(3)

The tax rates in the Netherlands will be reduced, in stages, by the total of 4% by 2021, as follows: 1% in 2019, 1.5% in 2020 and 1.5% in 2021. In 2021, The tax rate will be 21%.

F - 71

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Notes to the United States – tax rate of 40%.

Subsidiary incorporated in Spain – tax rate of *28%.

Subsidiary incorporated in United Kingdom – tax rate of 20%.

Subsidiary incorporated in China – tax rate of 25%.

* The tax rate in Spain was reduced to 25% commencing from 2016.

F-59

Consolidated Financial Statements as at December 31, 2018

Table of Contents

Note 2017 - Taxes on Income (cont’d)

(cont'd)

C. Carried forward tax losses

As at December 31, 2015,2018, the balances of the carryforward tax losses of subsidiaries for which deferred taxes were recorded, amount tois about $397$477 million (December 31, 20142017 – about $351$308 million).

The

As at December 31, 2018, the balances of the carryforward tax losses to future lossesyears of subsidiaries for which deferred taxes were not recorded, is about $121$322 million (December 31, 20142017 – about $25$322 million).

As at the date of the report,December 31, 2018, the capital losses for tax purposes available for carryforward to future years for which deferred taxes were not recorded amount is about $134 million (December 31, 2017 – about $159 million).

As at December 31, 2018, the capital losses for tax purposes available for carryforward to future years for which deferred taxes were recorded is to about $41 million. In accordance$15 million (December 31, 2017 – about $16 million).

D. Tax assessments

1)

The Company and the main operational companies in Israel (DSW, Rotem, Bromine, DSM, BCL and F&C), along with most of the other companies in Israel, have received final tax assessments up to and including 2011. The main subsidiaries outside of Israel have final tax assessments up to and including 2011 and 2012.

2)

Israel - In December 2018, the Israeli Tax Authorities (hereinafter - the ITA) rejected the company's objection relating to an assessment issued to the Company and to certain Israeli subsidiaries, and demanded an additional tax payment, for the years 2012‑2014, in the amount of $73 million. The Company disputes the assessment and filed an appeal to the Jerusalem District Court. In the Company’s estimation, it is more likely than not that its claims will be accepted.

In addition, regarding tax assessment for the years 2010-2015 for Tetrabrom (one of the downstream production companies in Israel), in October 2018, the company reached an agreement with the IsraeliITA, which resulted in immaterial amounts.

3)

The company's subsidiary in Belgium recognized a notion deduction on its capital based on its interpretation of the Belgian tax law, which was validated by the Court of Appeals in Belgium. The tax authorities dispute the eligibility of the deduction by appealing to the Supreme Court against the Court of Appeals' resolution and issuing tax assessments in a total amount of $27 million for the years commencing 2010. The Company believes, it is more likely than not that its tax position will also be accepted by the Supreme Court.

4)

Currently, the Company is also under tax audits in Spain and Germany for the years 2012‑2015. As at the date of the report, there are no additional tax payment requests from the tax authorities, excluding immaterial amounts in Germany. The Company believes that the provisions in its books are sufficient.

F - 72

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 17 - Taxes on Income (cont'd)

E. Uncertain Tax Authorities, about $14 million of losses out of this amount may be utilized 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%.

D. Tax assessments

Position

The Company and the companies consolidated with it for Israeli tax purposes have received final tax assessments up to and including the 2008 tax year.

The restmeasurement of the Israeli subsidiaries have finalestimated Tax provisions as at December 31, 2018, requires judgment relating to certain tax assessments up to and includingpositions, which may result in future demand for additional tax payments by the 2009 tax year.

Significant subsidiaries outside of Israel have final tax assessments up to and including the 2010, 2011 and 2012 tax years (for the majority of them).

In December 2013, an assessment was received from the Israeli Tax Authority (“ITA”) wherebyauthorities. A provision will be recorded only when the Company estimates that the chances of its positions to be accepted are lower than the chances they will be rejected. It is required to paypossible that the tax in additionauthorities will demand additional tax payments that are not known to the amount it already paidCompany at this stage.

The Law for Taxation of Profits from Natural Resources in respect ofIsrael (hereinafter – the years 2009-2011, in the amount of about NIS 917 million (about $235 million). The Company has appealed the ITA’s assessment. On January 27, 2015, an Order was received from the ITALaw) is a new law that entered into effect with respect to the bromine, phosphate and magnesium minerals in 2016, and with regard to the potash mineral, in 2017. As at the date of the report, no regulations have yet been issued under the Law (except regarding to advanced tax payments regulations published in July 2018), no circulars have been published and no court decisions have been rendered as to the implementation of this Law. The manner of application of the Law, including preparation of the financial statements for each mineral, involves interpretations and assumptions on a number of significant matters, which require management’s judgment.

Based on the law's interpretation, the Company’s position is that the carrying amount of the additional tax demanded, as stated. The main contentionsproperty, plant and equipment for the purpose of preparation of the ITA are that ICL’s subsidiaries: Dead Sea WorksSubsidiaries’ financial statements for 2016 and Rotem Amfert Negev, are not entitledonward, which serve as a basis for the reports filed pursuant to benefits underthe provisions of the Law,  for Encouragementcan be presented on the basis of Capital Investments – this being fromfair value revaluation, on the date the Law enters into effect. Presenting property, plant and equipment based on fair value revaluation is in accordance with one of entry into effect of Amendment No. 60the permitted methods in International Financial Reporting Standards (IFRS), which apply to this Law,the Company and its Subsidiaries and are accepted accounting principles in 2005 or, alternatively, the mining and water pumping activities, including the activitiesIsrael. There is no resulting change in the evaporation ponds, are not industrial activities and, therefore, are not entitled to benefits under the Law for Encouragement of Capital Investments. Company's consolidated financial statements.

The Company disagrees with the ITA’stax authority's position and on February 25, 2015 it filed an appeal of the Order.

In the Company’s estimation, the chances that its claims willcould be accepted at the end of the appeal process are higher than the chances that they will be rejected and, therefore, no provision for tax was includedmaterially different, even in the financial statementsvery significant amounts, as a result of different interpretation regarding the said assessment.

In connectionimplementation of the Law, including regarding matters other than the measurement of the property, plant and equipment. If the above-mentioned tax position is rejected by the Israel tax authority, meaning measurement of the property, plant and equipment, for this purpose, should have been in accordance with historical values, the result would be an increase in the company's tax returnsliabilities in an aggregate amount of about $100 million for the years 2012-2014, in 20152016-2018.

The Company estimates that it is more likely than not that its position will be accepted. As at the date of the report, the Company receivedbelieves that the tax provision in its financial statements represents the best estimate of the tax payment expected to be incurred with reference to the Law.

Given the mineral's price environment, its effect on the profitability of the subsidiaries and after deduction of a refund14% return on the balance of advance tax deposits,property, plant and equipment, as stated in the amount of about NIS 452law, as at December 31, 2018, no natural resources tax liability was payable.

The total royalties paid by the company to the Israeli government in 2018 amounted to $133 million (about $117 million)(see Note 20).

F-60

Table of Contents

F - 73

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2017 - Taxes on Income (cont’d)

E.(cont'd)

F. 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
		$ 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

	In respect of financial position				In respect of carry forward tax losses	Total
	Depreciable property, plant and equipment and intangible assets	Inventories	Provisions for employee benefits	Other
	$ millions

Balance as at January 1, 2017	(374)	45	75	2	99	(153)
Changes in 2017:
Amounts recorded in the statement of income	74	(17)	1	11	(36)	33
Change in tax rate	13	-	-	-	-	13
Amounts recorded to a capital reserve	-	-	3	5	-	8
Translation differences	(6)	-	5	-	1	-
Transfer to the group assets held for sale	2	-	-	1	-	3
Balance as at December 31, 2017	(291)	28	84	19	64	(96)
Changes in 2018:
Amounts recorded in the statement of income	(123)	(2)	(6)	-	55	(76)
Amounts recorded to a capital reserve	-	-	(3)	2	-	(1)
Translation differences	2	-	(1)	(1)	(2)	(2)
Balance as at December 31, 2018	(412)	26	74	20	117	(175)

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F - 74

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Notes to the statement of financial positionConsolidated Financial Statements 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

at December 31, 2018

Table of Contents

Note 2017 - Taxes on Income (cont’d)

E.(cont'd)

F. Deferred income taxes (cont’d)

3.(cont'd)

2. The currencies in which the deferred taxes are denominated:

		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, 2015 are calculated mainly at the weighted-average tax rate of 25.6% (December 31, 2014 – 25.6%). Regarding companies outside of Israel – see B above.

F.

	As at December 31
	2018	2017
	$ millions	$ millions

Euro	22	33
British Pound	21	22
U.S Dollar	(7)	10
Israeli Shekels	(204)	(166)
Other	(7)	5
	(175)	(96)

---

G. Taxes on income included in the income statements

1.  Composition

		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.

of income tax expenses (income(

	For the year ended December 31
	2018	2017	2016
	$ millions	$ millions	$ millions

Current taxes	53	208	68
Deferred taxes	76	(23)	(45)
Taxes in respect of prior years	-	(27)	32
	129	158	55

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F - 75

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 17 - Taxes on Income (cont'd)

G. Taxes on income included in the income statements (cont'd)

2.  Theoretical tax

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

Note 20 - Taxes on Income (cont’d)

G.

	For the year ended December 31
	2018	2017	2016
	$ millions	$ millions	$ millions

Income (loss) before income taxes, as reported in the statements of income	1,364	505	(117)
Statutory tax rate (in Israel)	23%	24%	25%
Theoretical tax expense (income)	314	121	(29)
Add (less) – the tax effect of:
Tax benefits deriving from the Law for Encouragement of Capital Investments net of natural Resources Tax	(20)	(4)	(3)
Differences deriving from additional deduction and different tax rates applicable to foreign subsidiaries (1)	(186)	23	(38)
Income taxes from intercompany dividend distribution	-	18	-
Deductible temporary differences for which deferred taxes assets were not recorded and non–deductible expenses	24	15	135
Taxes in respect of prior years	-	(27)	32
Impact of change in tax rates	-	(13)	(32)
Differences in measurement basis (mainly ILS vs USD)	(11)	18	1
Other differences	8	7	(11)
Taxes on income included in the income statements	129	158	55

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(1)

Mainly related to the exempt income resulting from the sale of the fire safety and oil additives business in March 2018. For additional information see Note 10.

H. Taxes on income relating to items recorded in equity items

		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	)

	For the year ended December 31
	2018	2017	2016
	$ millions	$ millions	$ millions

Tax recorded in other comprehensive income
Actuarial gains from defined benefit plan	(3)	3	8
Change in investments at fair value through other comprehensive income	-	5	(5)
Taxes in respect of exchange rate differences on equity loan to a subsidiary included in translation adjustment	2	(5)	(1)
Total	(1)	3	2

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F - 76

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2118 - Employee Benefits

A. Composition

		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

Composition of employee benefits is presented in the statement of financial position as follows:

		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

benefits:

	As at December 31
	2018	2017
	$ millions	$ millions

Fair value of plan assets	518	631
Termination benefits	(111)	(142)
Defined benefit obligation	(860)	(1,068)
	(453)	(579)

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Composition of fair value of the plans’plan 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

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Table of Contents

	As at December 31
	2018	2017
	$ millions	$ millions

Equity instruments
With quoted market price	200	197
Debt instruments
With quoted market price	164	179
Without quoted market price	119	145
	283	324
Deposits with insurance companies	35	110
	518	631

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F - 77

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2118 - Employee Benefits (cont’d)

(cont'd)

B. Linkage terms

		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.

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.

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 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 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 recorded in the financial statements based on an actuarial calculation.

b)

The Group companies in Israel make current deposits in 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 the property of the employees. The amounts funded in respect of these policies are not reflected in the statements of financial position since they are not under the control and management of the Group.

c)

As to the balance of the liabilities that are not funded, as mention above, a provision is recorded in the financial statements based on an actuarial calculation.

2. Certain subsidiaries outside Israel

Since the

In countries wherein these subsidiaries operatesoperate that have no law requiring payment of severance pay, the Group hascompanies have not recorded 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.

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C. 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 for their retirement, which are controlled by the Company. Generally, according to the terms of the plans, as stated, 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. Some employees of a subsidiary in Israel are entitled to early retirement if they meet certain conditions, including age and seniority at the time of retirement.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2118 - Employee Benefits (cont’d)

D. Pension and early retirement

Some of the Group’s employees in and outside of Israel (some of whom have already left the Group) have defined benefit pension plans (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.

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.

Employees of a subsidiary in Sodom, Israel are entitled to early retirement if they meet certain conditions, including age and seniority at the time of retirement.

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” in the statement of income.

At the end of 2015, an efficiency plan was approved whereby it was decided to reduce the number of the Company’s employees in the United Kingdom. As a result of that stated, in 2015 an expense was recorded, in the amount of about $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.

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(cont'd)

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Note 21 - Employee Benefits (cont’d)

D.

C. 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(cont'd)

In addition, some Group companies have entered into plans 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.

2)

In May 2018, a collective labor agreement was signed between Dead Sea Works Ltd. (hereinafter - DSW) and the DSW’s Workers Council, the New General Organization of Workers in Israel and the Histadrut’s Negev District branch, for a period of five years (hereinafter – the Agreement), commencing on October 1, 2017, the termination date of the previous labor agreement. The key provisions of the Agreement are as follows:

a) Arrangement of wage increases to the employees to whom the Agreement applies;  b) completion of execution of the DSW efficiency plan by September 30, 2021, in accordance with the provisions specified in the Agreement; c) during the efficiency period, mentioned above, no collective dismissals shall be implemented; d) the declared labor disputes are cancelled and throughout the Agreement period appropriate labor relations shall be maintained and no actions shall be taken which may cause a work disruption; e) payment of a signing bonus upon signing of the Agreement.

Considering the aforesaid, in the financial statements for 2018, the Company recognized an expense in the amount of $5 million due to the signing bonus, under "salary expenses" in the statement of income.

3)

In January 2018, considering the Company's decision to discontinue the production of potash at ICL Boulby and to commence full production of Polysulphate in the second half of 2018, a personnel reduction's plan was approved. As a result, the Company recorded, in its financial statements of 2018, an increase of about $7 million under "provision for employee benefits".

F - 79

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Notes 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 conclusion of employment by about $42 million.

E.Consolidated Financial Statements as at December 31, 2018

Note 18 - Employee Benefits (cont'd)

D. 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.weekends. 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.

E. Movement in present value ofnet defined benefit plans

		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. Movementassets (liabilities) and in their components:

	Fair value of plan assets		Defined benefit obligation		Defined benefit obligation, net
	2018	2017	2018	2017	2018	2017
	$ millions	$ millions	$ millions	$ millions	$ millions	$ millions

Balance as at January 1	631	552	(1,068)	(934)	(437)	(382)
Income (costs) included in profit or loss:
Current service costs	-	-	(24)	(24)	(24)	(24)
Interest income (costs)	14	17	(26)	(29)	(12)	(12)
Past service cost	-	-	7	-	7	-
Effect of movements in exchange rates, net	(17)	23	37	(39)	20	(16)
Included in other comprehensive income:
Actuarial gains (losses) deriving from changes in financial assumptions	-	-	71	(42)	71	(42)
Other actuarial gains (losses)	(15)	25	-	-	(15)	25
Change in respect to translation differences, net	(19)	36	21	(65)	2	(29)
Other movements:
Benefits paid	(38)	(36)	73	64	35	28
Conversion to defined contribution plans	(49)	-	49	-	-	-
Transferred to assets held for sale	-	-	-	1	-	1
Employer contribution	11	14	-	-	11	14
Balance as at December 31	518	631	(860)	(1,068)	(342)	(437)

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The actual return (loss) on 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

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in 2018 is $(-1) million compare with $42 million in 2017 and $47 million in 2016.

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F - 80

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2118 - Employee Benefits (cont’d)

F. (cont’d)

3. Expenses recognized in the income statement

		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
		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
		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 atas of the reporting date (expressed as weighted averages):

		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

	For the year ended December 31
	2018	2017	2016
	%	%	%

Discount rate as at December 31	3.0	2.7	2.9
Future salary increases	3.3	3.2	2.6
Future pension increase	2.2	2.2	2.2

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The assumptions regarding the future mortality rate are based on published statistics and accepted mortality tables.

In 2014, it was determined that there is a deep market for high quality corporate debentures in Israel. Accordingly, commencing December 31, 2014, the 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 quality corporate debentures in accordance with IAS 19, Employee Benefits.

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Note 21 - Employee Benefits (cont’d)

F. (cont’d)

6b.

G. 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 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.

	December 2018
	Decrease 10%	Decrease 5%	Increase 5%	Increase 10%
	$ millions	$ millions	$ millions	$ millions

Significant actuarial assumptions
Salary increase	18	9	(9)	(18)
Discount rate	(32)	(16)	16	32
Mortality table	(17)	(9)	9	17

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H. Effect of the plans on the Group's future cash flows

The expenses recorded in respect of defined contribution plans in 2015 is about $232018 are $35 million (in 20142017 and
2013 – expenses were declared in the amounts of about $25.9 2016 $37 million and about $26.4$38 million, respectively).

The Group’sCompany’s estimate of the deposits expected to be made in 20162019 in funded defined benefit plans is about $16$10 million.

The Group’s estimate

In the Company’s estimation, as at December 31, 2018, the life of the defined benefit plans, (basedbased on a weighted average),average, is about 13.8 years (2017 – about 16.3 years).

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Notes to the Consolidated Financial Statements as at the end of the period of the report, is about 12.2 years (2014– about 12.8 years).

H. Long-term remuneration plan

In May 2013, ICL’s Board of Directors decided to approve a long-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’ plan (which was approved in November 2012) based on terms defined in the plan. The maximum cost of the plan is about $45 million.

In August 2014, ICL’s Board of Directors decided to approve a long-term remuneration plan for about 11,800 Company employees in and outside of Israel that are not managers, who participated in the Company’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, the said terms were not met and, accordingly, no liability was included in the books in respect of these plans.

December 31, 2018

Note 2219 – 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

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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
		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 recorded a provision for restoration of mines and mining sites. The provision is based on the present 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 minerals remaining in the mines.

2. Pursuant

	Restoration's site and equipment's dismantling	Legal claims	Other	Total
	$ millions	$ millions	$ millions	$ millions

Balance as at January 1, 2018	194	28	49	271
Provisions recorded during the period (1)	25	2	-	27
Provisions reversed during the period	(3)	-	(6)	(9)
Payments during the period	(6)	(11)	-	(17)
Translation differences	(5)	(1)	-	(6)
Balance as at December 31, 2018	205	18	43	266

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(1)

For additional information, see Note 20.

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Notes 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 to the Catalan Government Restoration Programs of mining sites for ICL Iberia’s two production sites, Suria and Sallent, (hereinafter – “the Restoration Plans”), which includes plans of removing the waste and dismantling of installations. The Restoration of Suria site is intended to last until year 2094 and for Sallent site until the year 2070. AsConsolidated Financial Statements as at December 31, 2015, based on the Restoration Plans and according to ICL Iberia’s estimation, the total provision in the ICL Iberia’s books amounts to about $11 million. The provision was calculated on the basis of discounting the projected costs of 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 Neot Hovav, Israel has solid waste. Pursuant to the requirements of the Israeli Ministry of Environmental Protection, the subsidiary is required to treat the existing waste (historical), which is stored on a special site on the facility's premises, as well as the ongoing 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 subsidiary, while part of the waste will be sent outside for treatment. As 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 recorded 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 amounts to about $65 million. In the Company's estimation, based on the information it has as at the approval date of the financial statements, the provision covers the estimated cost of treating the historical waste.

2018

Note 2320 - 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, 2022. The total amount of the commitments under the said purchase periods of the agreements is approximately $664 million as of December 31, 2015.

(2)

(1)

Several of the Group’s subsidiaries have entered into agreements with suppliers for the purchase of raw materials and energy in the ordinary course of business, for various periods ending on December 31, 2023. As of December 31, 2018, the total amount of the commitments under the said purchase periods of the agreements is about $2.67 billion. This item takes into consideration part of the agreements described below.

(2)

Several of the Group’s subsidiaries have entered into agreements with suppliers for the acquisition of property, plant and equipment. As at December 31, 2018, the subsidiaries have capital purchase commitments of about $368 million. This item takes into consideration part of the agreements described below.

(3)

In October 2017, Dead Sea Works (hereinafter - DSW) signed an agreement, the cost of which for ICL is $280 million, for the execution of the first stage of the Salt Harvesting Project, with a contracting company Holland Shallow Seas Dredging Ltd., which includes, among others, the construction of a special dredger that is designed to execute the salt harvesting. The dredger is expected to enter into service towards the end of 2019. For further information - see item C(2).

(4)

In 2017 and 2018, DSW signed agreements with several execution and infrastructure companies, in a total amount of $160 million (out of the total project cost of about $250 million), for construction of the new pumping station (hereinafter - the P-9 Pumping Station). The P-9 Pumping Station is expected to commence its operation during the year 2020. For further information – see item C(2).

(5)

Subsequent to the date of the report, in February 2019, the Company signed agreements for the sale of two office buildings, located in Be'er Sheva, Israel, for a total consideration of NIS 78 million ($21 million). The carrying amount of the two buildings is $7.3 million. Concurrent with the sale agreements, the Company signed lease agreements for the said buildings, for a period of 10 years with an option to terminate after four years. In accordance with IFRS16, since the above‑mentioned transactions meet the definition of sale and leaseback, part of the expected profit will be deferred by being deducted from the right‑to‑use asset.

(6)

In 2012, the Company started the construction of a new cogeneration power station (EPC) in Sodom, Israel (hereinafter – the Station). The Station has a production capacity of about 330 tonnes of steam per hour and about 230 MW, which supply electricity and steam requirements for the production plants at the Sodom site and for third party customers. In August 2018, the process of certification approval was completed, and the Power Station started operating in full. The Company intends to operate the Station concurrently with the existing power station, which will continue operating on a partial basis in a "hot back‑up" format, for production of electricity and steam. The total power produced at both stations can reach up to 245 MW.

Regarding to the construction agreement of the Station, in light of the continued violations by the executing contractor (the Spanish Company - Abengoa), in September 2017, the Company notified of the cancellation of the agreement. Due to financial disputes between the Company and Abengoa, in November 2018, the Company announced the initiation of an arbitration proceeding, in accordance with the provisions of the agreement.

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Notes to the Consolidated Financial Statements as at December 31, 2015,2018

Note 20 - Commitments, Concessions and Contingent Liabilities (cont'd)

A. Commitments (cont'd)

(6)

(cont'd)

In the subsidiaries had capital purchase commitmentsCompany's estimate, the damages caused by Abengoa amounted to about euro 77 million (about $ 84 million). On January 30, 2019, Abengoa submitted its response, denying ICL's claims, and claiming a payment of about $230 million.

(3) A subsidiary in England has entered into 114 long-term land contractseuro 15 million ($17 million) 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 2020contract's termination, which was, allegedly, done unlawfully and 2035. The contracts are usually signed for a term of 35 to 50 years.convenience. As at the date of the report, considering the remaining term covered byearly stages of the lease contracts range from 5proceedings, there is a difficulty in estimating the chances of the outcome.

(7)

In February 2018, the Company entered into two supply agreements with Tamar and “Leviathan” reservoir (hereinafter – the Agreements), to secure its gas supply needs until the end of 2025 or until the entry of the “Karish” and “Tanin” reservoirs into service, whichever occurs first. The gas price in the Agreements is in accordance with the gas price formulas stipulated under the government’s gas outline. The Company anticipates that the scope of the annual gas consumption will be about 0.75 BCM.

The Company is entitled to 23 years.

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Note 23 - Commitments, Concessions and Contingent Liabilities (cont’d)

A. Commitments (cont’d)

(4) In 2003, a long-term (20 year) supplyterminate the Agreements in order to start the new agreement with Energean Israel Ltd. (hereinafter – “Energean”), which was signed between an Israeli subsidiaryin December 2017. According to the new agreement, Energean will supply up to 13 BCM of natural gas over a period of 15 years, amounting to about $1.9 billion. Energean holds licenses for development of the Karish and a non-Israeli corporation commencingTanin gas reservoirs, which are located in Israel’s territorial waters. Supply of the natural gas is expected to commence, at the earliest, in the first half of 2021, depending on completion of the development and commencement of production of natural gas from January 2004,the reservoirs, and will be used for running ICL’s factories and power stations in Israel. In November 2018, following the completion of Energean's Financial Closing, all precedent conditions for the supply of bromine and bromine compounds by the subsidiary.

(5) The Articles of Associationclosing 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.

agreement have been met.

(8)

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 outhas 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 forrelates to damage caused and/or that will be caused, by suchthose officers due toas a result of a breach of the duty of care to the Company. Commencing from the date of registration of the Company’s shares for trading in the United States, theThe 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, wasis limited to $350 million ($250 million up to the date of registration of the Company’s shares for trading in the United States).million. 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.

(6) Several of the Group’s subsidiaries in Israel have signed agreements with various natural gas vendors for the supply of natural gas

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Notes to the Group’s manufacturing facilities in Israel. The Company committed to “take or 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 2016. The supply of the gas under the currently existing agreements is for a term ending September 30, 2017. 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, 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 Gas Authority Decision. In addition,Consolidated Financial Statements as part of the Gas 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, will be about BCM 0.76.

(7) In June 2012, the Company entered into agreements regarding a project to construct a new cogeneration power station in Sodom, Israel (hereinafter—“the Project”). The power station will 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. 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 megawatt hours. 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 project 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 is 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 complete the project and to commence operation of the power station in the second half of 2016, with additional costs that are not material.

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Table of Contents

Note 2320 - 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 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).

(cont'd)

B. Concessions

(1) Dead Sea Works Ltd. (DSW)

(1)

Dead Sea Works Ltd. (hereinafter – DSW)

Pursuant to the Israeli Dead Sea Concession Law, 1961 (hereinafter—”(hereinafter – the Concession Law”)Law), as amended in 1986, and the concession indenturedeed attached as an addendum to the Concession Law, the CompanyDSW 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 that 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.

concession to a third party.

In August 2015, the Minister of Finance appointed a team for the establishment ofto determine the “governmental activities to be conducted towards the end of the concession period”. In September 2015,The public’s comments in this matter were submitted to the teamteam. Based on the interim report and its recommendations published in May 2018, and following a request for commentspublic hearing, on January 21, 2019, the Israeli Ministry of Finance released the final report of the publicinter-ministry team headed by Mr. Yoel Naveh, former Chief Economist, which includes a series of guidelines and recommendations regarding positions and viewpoints in connection withthe actions that the government should take towards the end of the concession period. As at the date of the report, since the report includes guiding principles and a recommendation to establish sub-teams to implement such principles, the Company is unable to assess, at this stage, the concrete implications, manner in which are tothe recommendations would be submitted by the end of March 2016. The team is expected to submit its recommendations to the Minister of Finance by May 2016. Thereimplemented in practice and on which schedules. In addition, there is no certainty as to whathow the recommendations of this committee will be with regard toGovernment would interpret the procedures that the government will undertake in connection with the existing concessionConcession Law and as to the manner in which future mining rightsthis process and methodology would ultimately be implemented.

The Financial Statements were prepared under the assumption that DSW will be granted.

Accordingcontinue to operate the Concession Law,relevant assets for at least their remaining useful lives. In addition, the Financial Statements were prepared under the assumption that it is more likely than not that ICL has a right of first offerwill not sell DSW.

In addition, in 2015, 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 designatedheaded by the (former) Accountant General to establish certainty regardingevaluate the manner in which, according to the current concession, the replacement value of DSW’s tangible assets willwould be calculated assuming that these assets would be returned to the government at the end of the concession period. The determination date of the actual calculation is only in 2030. As far as the Company is aware, this work has not yet been completed.

In December 2018, the Company received an opinion from an independent appraiser regarding the fair value of the property, plant and equipment of the subsidiaries Dead Sea Works, Dead Sea Bromine and Dead Sea Magnesium in Israel (hereinafter – the Subsidiaries). The Opinion was prepared mainly for the Subsidiaries’ financial statements for 2016 and onward, which serve as a basis for the reports filed pursuant to the provisions of the Taxation of Natural Resources Law. The Property, Plant and Equipment value provided in the opinion is based on the Replacement Cost methodology and is estimated at about $6 billion, as at December 31, 2015, and at December 31, 2016.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 20 - Commitments, Concessions and Contingent Liabilities (cont’d)

B. Concessions (cont’d)

(1)

Dead Sea Works Ltd. (hereinafter – DSW) (Cont’d)

Though the assets assessed for tax purposes and the assets that may be valuated under the Concession Law are highly correlated, there is no complete identity between them. The Company believes that the applied Replacement Cost Methodology used in the opinion for estimating the fair value coincides with the methodology mentioned in the Concession Law for future valuation of the Property, Plant and Equipment upon termination of the concession period. Nevertheless, there could be other interpretations to the manner of implementation of the Concession Law’s provisions with respect to the valuation methodology, hence, the estimated value with respect to the Concession Law could materially differ from the value provided in the said opinion, even with respect to the same assets and dates. It is expected that the value of the Property, Plant and Equipment, at the end of the concession period, will change as time passes and as a result of purchase and disposal of assets included 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.

future valuation.

In consideration of the concession, the CompanyDSW 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 accordingexpenses. According to the Salt Harvesting agreement,Agreement signed in July 2012 (hereinafter – the royalties rate SLA), in respect ofcase the annual quantity of chloride potash sold is in excess of 1.5 million tons istonnes, the royalties rate would be 10% (in place of 5%). In addition, according to the Salt Harvesting agreement,SLA states that if legislation is enacted that changes the specific fiscal policy in connection with profits or royalties deriving from the mining of quarries from the Dead Sea, the Company’s consent will not apply regarding anto the increase inof the royalties' rate of royalties on the surplus quantities referred to above commencing fromwill not apply, after the date onenactment of the legislation, to the period in which such additional tax is collected as stated in the said legislation. On November 30, 2015,

In January 2016, the Economic Efficiency Law was published,for Taxation of Profits from Natural Resources, including the implementation of the Sheshinski Committee’s recommendations, which address royalties and taxation of excess profits from Dead Sea minerals. The lawminerals (hereinafter – the Law), entered into effect on January 1,effect. Accordingly, the rate of the royalties' provision was updated to 5%. The Company's position, pursuant to the SLA and its arguments in the royalties' arbitration, is that increasing royalties at a rate exceeding 5% requires the Company's consent, which expired with the enactment of the Law. The State holds a different position regarding the royalties' rate in 2016. For further details see – Note 20(5) above.

Nevertheless, in the Company's estimation, in the event this matter would be challenged in arbitration, it is more likely than not that its claims regarding the royalties' rate increase, following the enactment of the Law in 2016, will be accepted.

DSW granted a sub-concessionsub‑concession to Dead Sea Bromine Ltd. (hereinafter –the Bromine Company) to produce bromine and its compounds from the Dead Sea, the expiration date of which is concurrent with the DSW's concession. The royalties in respect of the products manufactured by the Bromine Company are received by DSW from the Bromine Company, and DSW then pays them over to the State.

In addition, there

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 20 - Commitments, Concessions and Contingent Liabilities (cont’d)

B. Concessions (cont’d)

(1)   Dead Sea Works Ltd. (hereinafter – DSW) (Cont’d)

There is an arrangement relating to payment of royalties by Dead Sea Magnesium (hereinafter – DSM) for the production of metal magnesium by virtue of a specific arrangement with the State provided in the Government’s decision dated September 5, 1993. Pursuant to thethis arrangement, royalties are paid by Dead Sea MagnesiumDSM on the basis of carnallite used for production of magnesium.

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Note 23 - Commitments, Concessions and Contingent Liabilities (cont’d)

B. Concessions (cont’d)

The arrangement with Dead Sea MagnesiumDSM provides that during 2006 the State may demand a reconsideration in connection with the amount of the royalties and the method orof their calculation for 2007 and thereafter. The State’s demand for reconsideration, as stated, was firstinitially received at the end of 2010, and the matter is presently in an arbitration proceeding, as described below.

In 2007, a letter was received from the former 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 thesecomprising of two arbitrators appointed by each party, who in turn jointly appoint a third arbitrator.

In 2011, the third). On January 9, 2011,arbitration proceeding commenced between the State of Israel and DSW, decided to turn to arbitration for purposes of deliberating and deciding the issue ofregarding the manner of calculation of the royalties under the concession and the royalties to be paid for magnesium metals and paymentthe payments 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.

matters, if any. In the statement of claim filed by the State of Israel in the arbitration proceedings, the State of Israel is claiming the amount ofclaimed for $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 the royalty payments from the sale of metal magnesium.

On May 19,

In 2014, a partial arbitration decision was received regarding the royalties’ issue. Based on the principles of the decision received,issue, whereby, 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 of 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 exhaustconclude their discussions on the subject of the amount 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

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Notes to the partial arbitration decision, the Company recorded a provision in 2014, in the amount of about $135 million for the years 2000 through 2013. The amount of this provision includes, among other things, interestConsolidated Financial Statements as at December 31, 2018

Note 20 - Commitments, Concessions 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 and net of the tax effect, in the amount of about $45 million). The arbitrators’ decision is partial and its main decision is with respect to payment of royalties on downstream products, as mentioned above. All the principles have not yet been determined whereby the financial calculations will be made. Such principles are being discussed in the second and current stage of the arbitration. Contingent Liabilities (cont’d)

B. Concessions (cont’d)

(1)   Dead Sea Works Ltd. (hereinafter – DSW) (Cont’d)

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 2015,2016, as part of the second stage of the royalties arbitration, which addressedthe State submitted an opinion on its behalffinancial calculation principles, the arbitrators issued their decisions regarding the various issues relating mainly, to the financial calculations. In addition, the arbitrators issued their resolution on the principles wherebyof calculating the interest and linkage differences to be added to the royalties’ paymentprincipal amounts paid to the State of Israel, according to which, the calculation of the principal amounts of the royalties paid for the period should be on an NIS basis and accordingly, NIS interest and linkage differences apply as stipulated in the relevant arbitration period isIsraeli Interest and Linkage Law.

In 2017, the State submitted a calculation, in the amount of about $120 million (before interest and linkage differences) relating to be calculated. Asthe years 2000 through 2014 reflecting, according to its contention, an additional amount of underpaid royalties. In October 2018, the arbitrators reached a decision resolving part of the said opinion,remaining unresolved disputes, and on December 12, 2018, in accordance with the arbitrators' instructions, discussions were held between the State presented two optionaland the Company which resulted in a settlement agreement on a series of additional disputes that were left open at that time. On December 31, 2018, the settlement agreement was approved by the arbitrators. On January 14, 2019, the arbitrators' decision regarding the remaining unresolved disputes was rendered adopting the Company's position.

Following the arbitrators' decision in October 2018 and the settlement agreement abovementioned, the Company recorded an expense in its 2018 financial statement of $43 million (including interest and linkage), which was paid to the State. On January 10, 2019, the State sent a letter disputing the said payment and argued that there is a gap of about $30 million, between the amount paid and the State's view of the calculations. The disputed calculation methods,is subject to the results of which yieldarbitrators' approval. In the amounts of NIS 230 million (about $59 million) and NIS 460 million (about $118 million).Company's estimation, it is more likely than not that its approach to the calculations will be accepted. The Company disagreesis conducting discussions with the State’s position and calculations, andState in January, 2016, it submitted its position regarding calculationorder to resolve all the remaining disputes. Considering the early stage of the interest.

discussions there is a difficulty in estimating whether they will mature into an agreement between the parties.

The Company estimates thattotal expense relating to the chances that its position will be accepted regardingroyalties' dispute, for the mannereighteen years between 2000 and 2017, recognized in the Company's financial statements commencing 2014, including payment of calculating the royalties, based on the decisionpart of the arbitratorsState's legal expenses, is $208 million ($33 million in the partial decision,2018) and regarding the principles for calculating the$70 million in respect of interest are higher than the chances that they will be rejected.

and linkage differences ($10 million in 2018).

In 2015, 20142018, 2017 and 2013,2016, DSW paid current royalties to the Government of Israel in the amounts of about $97$66 million, about $84$60 million, and about $110$53 million, respectively. In addition, in 2015,2018, the Company paid an amount of about $152$62 million, in respect of royalties relating to prior periods.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2320 - Commitments, Concessions and Contingent Liabilities (cont’d)

B. Concessions (cont’d)

(2) Rotem

(2)

Rotem Amfert Ltd. (hereinafter – “Rotem”)

Rotem has been mining phosphates in the Negev in Israel for more than fiftysixty years. The mining is conducted in accordance with the phosphate mining concessions, which are granted from time to time by the Minister of National Infrastructures, Energy and Water under the Mines Ordinance, throughby the Supervisor of Mines in his Office (hereinafter—“(hereinafter – the Supervisor”)Supervisor), accompanied byas well as the mining authorizations issued by the Israel Lands Administration (hereinafter—“Authority (hereinafter – the ILA”)Authority). The concessions relate to the quarryquarries (phosphate rock) whereas the authorizations relate tocover use of land as active mine sites.

mining areas.

Mining Concessions

Rotem has the following mining concessions:

i.

a)

Rotem Field (including the Hatrurim Field) – valid up to the end of 2021.

b)

Zafir Field (Oron‑Zin) – valid up to the end of 2021.

As at the enddate of 2021;

ii. Zafir Field – (Oron Zin) – valid up tothis report, the end of 2021;

iii. Hatrurim Field – the Supervisor has decidedcompany is working to extend the areasaid concessions with the relevant authorities.

Mining Royalties

As part 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 extensionterms of the area of the mining permit for the Rotem Field,concessions 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 in order 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 and utilization of the phosphates, and also recommended to approve mining in additional fields, such as, the Barir field.

As at the reporting date, 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 formatas stipulated in the Israeli Mines Ordinance. The calculation format for the royalties was updated in February 2010 as part ofIn January 2016, a compromise agreement that settled all the disputes regarding past royalties and formulas for future royalties. On November 30, 2015, the Economic Efficiency Law was published, including thelegislative amendment entered into effect covering implementation of the recommendations of the Sheshinski recommendations, which addressCommittee that changed the formula for the calculation of the royalties, by increasing the rates from 2% to 5% of the value of the quarried material and taxationleft the Supervisor the possibility of excess profits from Dead Sea minerals. The law entered into effect on January 1, 2016. For further details see – Note 20(5) above.

collecting royalties at a higher rate if he decided to grant a mining right in a competitive process wherein one of the selection indices is the royalty rate.

In 2015, 20142018, 2017 and 2013,2016, Rotem paid royalties to Israeli governmentthe State of Israel in the amounts of approximately $3.5$5 million, $3$4 million, and $4$5 million, respectively.

Planning and building

Building

The mining and quarrying activities require a 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 thethis report, there are various requests at different stages of deliberations pending before the planning authorities.

At

In November 2016, the end of 2009, according toDistrict Board for the recommendation ofSouthern District approved a team accompanying preparation of a newdetailed site plan for mining phosphate in the Zin-OronZin‑Oron area. This plan, which covers an area in Israel,of about 350 square kilometers, will permit the Local District Board approved extensioncontinued mining 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. 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 forphosphate located in the Zin valley and in the 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 areavalley for a period of time intended for completion25 years or up to exhaustion of the required processesraw material – whichever occurs first, with the possibility for depositextension (under the authority of the new planDistrict Planning Board).

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 20 - Commitments, Concessions and its actual approval.

Contingent Liabilities (cont’d)

B. Concessions (cont’d)

(2)   Rotem Amfert Ltd. (hereinafter – “Rotem”) (Cont’d)

The Company is working to promote the plan for mining phosphates in Barir field (which is located in the southern part of South Zohar South)field) in the Negev Desert.

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Note 23 - Commitments, Concessions and Contingent Liabilities (cont’d)

B. Concessions (cont’d)

In December 2015, the National Planning and Building Council (hereinafter – the National Council) approved the Policy Document regarding Mining and Quarrying of Industrial Minerals, (the "Policy Document"), which includes, among other things,included a recommendation to permit phosphatesphosphate mining including atin the Barir field. The Policy DocumentIn February 2017, the Committee for Principle Planning Matters, decided to continue advancement of the mining in the South Zohar field. Concurrently, and based on a decision of the National Council, instructions were prepared by the competent authorities with respect to the performance of an environmental survey of the Barir field for purposes of its further advancement. In April 2017, the National Council recommended to the government to approve National Outline Plan (hereinafter – NOP 14B), which includes South Zohar field, and determined that was approvedBarir field will set the basis for preparationbe advanced as part of a national outline plan (“thedetailed National Outline Plan”) for mining and quarrying to also bePlan, which was approved by the National Planning and Building Council. Alonggovernment’s Housing Cabinet in January 2018.

In January 2018, the Minister of Health filed an appeal of the said approval, requiring compliance with the approvalMinistry of Health’s recommendation to conduct a survey regarding the health impact in each site included in NOP 14B. As part of a discussion regarding the appeal, which was held in the Housing Cabinet, it was decided, with the consent of the Policy Document,Ministries of Health, Finance and Energy, to remove the appeal and to approve the NOP 14B. In addition, it was decided to establish a team with representatives of the ministries of Treasury, Health, Transportation, Environmental Protection and Energy, which will present to the Housing Cabinet a report that includes health aspects for NOP 14B. In April 2018, the NOP 14B was formally published.

In July 2018, a petition was submitted to the Israeli Supreme Court of Justice by the municipality of Arad against the National Planning and Building Council, ordered the Planning AdministrationMinistry of Health, the Ministry of Environmental Protection and Rotem, to raiserevoke the matterapproval of NOP 14B. In January 2019, residents of the orderBedouin diaspora in the "Arad Valley" submitted a petition to preparethe High Court of Justice (hereinafter – the Court) against the National Council, the Government of Israel and Rotem, in which the Court was requested to cancel the provisions of NOP 14B and the decision of the National Council from December 5, 2017, regarding to the advancement of 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 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 South Zohar South area duefield. In addition, the Court was requested to their fear from environmentalissue an interim injunction preventing the implementation of the NOP 14B instructions and health dangers. The Company believes that the mining activities in Barir field do not involve any risks to the environment or to people.

There is no certainty that the National Outline Plan andCouncil's said decision until a final resolution. On January 22, 2019, the Barir Plan will be approved at all or as will be submitted, in lightSupreme Court consolidated the hearing of the opposing position ofpetition together with the Health Ministry, among other things. Moreover,petition filed against NOP 14B and decided that at this stage there is no certainty regardingbasis for granting the timelines forinterim injunction. On February 5, 2019, the submission ofCompany filed its response.

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Notes to the Plans, the approval thereof or of further developments with respect to Barir field.

If mining approval is not received for the Barir field, this will significantly impact the Group’s future mining reserves in the mediumConsolidated Financial Statements as at December 31, 2018

Note 20 - Commitments, Concessions and long term.

(3) Contingent Liabilities (cont’d)

B. Concessions (cont’d)

(3)

Spain

A subsidiary in Spain from the ICL Fertilizers segment (hereinafter – “ICL Iberia”)ICL Iberia) was granted mining rights based on legislation of Spain’s Government from 1973 and the regulations accompanying this legislation. Further to the legislation, as stated, the Government of the Catalonia region published special mining regulations whereby ICL Iberia received individual licenses for each of the 126 different sites that are relevant to the current and possible future mining activities. Some of the licenses are valid up to 2037 whileand the rest are effective up to 2067. Regarding “Reserva Catalana”The concession for the "Reserva Catalana", an additional site wherein mining has not yet been commenced, it was clarified thatexpired in 20072012. The Company is acting in cooperation with the Spanish Government to obtain a process was commenced for extensionrenewal of the concession period, which ended in 2012, for an additional 30 years. In light of the changeover of the governments in Spain, the administrative processes of the National Mining Authority with respect to extending the concession period have not yet been completed. As at the reporting date, ICL Iberia is in the process of renewing the rights.concession. 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—”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 ICL UK operates, and mining rights in the North Sea granted by the British Crown (“Crown Estates”). As at the date of the report, all the lease periods, licenses, easements and rights of way are effective – some of the said periods will expire up to 2020 whereas some will continue up to 2038. In 2015, the mining royalties amounted to about $5 million.

(5) ICL UK has peat mines in the U.K. (Creca, Nutberry and Douglas Water). Peat is used as a raw material for production of professional grade growing media for ornamental plants.

The Nutberry and Douglas Water mining sites are owned by the ICL UK, while the Creca mine is held under a long-term lease. The mining permits are granted up to the end of 2024. The mining permits are granted by the local authorities and are renewed after examination 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) renewal.

(4)

United Kingdom

A.

The mining rights of a subsidiary in the United Kingdom (hereinafter – ICL Boulby), 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 ICL Boulby operates, and mining rights under the North Sea granted by the British Crown (Crown Estates), which includes provisions to explore and exploit the resources of the Polysulphate mineral. The said mining rights cover a total area of about 374 square kilometers. As at the date of this report, all the lease periods, licenses, easements and rights of way are effective until 2038. In 2018 and 2017, the mining royalties amounted to $1.3 million and $2 million, respectively.

B.

A UK subsidiary from ICL Innovative Ag Solutions segment (hereinafter – Everris UK), has peat mines in the UK (Creca, Nutberry and Douglas Water). Peat is used as a raw material for production of detached beds for soil improvement and use as soil substitutes in growing media. The Nutberry and Douglas Water mining sites are owned by Everris UK, while the Creca mine is held under a long‑term lease. The mining permits are granted by the local authorities and are renewed after examination of the local authorities. The mining permits were granted up to the end of 2024.

(5)

China

YPH JV which is controlled by ICL UK, holds two phosphate mining licenses that were issued in July 2015, by the Division of Land and Resources of the Yunnan district in China, withChina. With reference to the Haikou Mine (“Haikou”)(hereinafter – Haikou), whichthe mining license is valid up to January 2043, andwhereas regarding the Baitacun Mine (“Baitacun”)(hereinafter – Baitacun), which is valid up tothe mining license expired in November 2018.

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The mining activities at Haikou are carried out in accordance with the above‑mentioned license. Regarding Baitacun, the Company is examining the option to renew the concession, subject to the phosphate reserves soil survey results and achieving the required understanding with the authorities.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2320 - Commitments, Concessions and Contingent Liabilities (cont’d)

B. Concessions (cont’d)

The mining right of Haikou was previously owned by YPC. According

(5)

China (cont'd)

Natural Resources Royalties

With respect 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 retainin accordance with the Haikou and Baitacun licenses,"Natural Resources Tax Law", YPH JV has to comply withwill pay royalties of 8% on the provisionsselling price based on the market price of the relevant Chinese lawsrock prior to its processing. In 2018 and regulations regarding mining activities. In particular,2017, YPH JV has to conduct annual check with regard to its mining licenses. The items to be examinedpaid royalties in the annual check mainly include: whether the taxes, fees, premiums relating to the mining licenseamount of $3 million 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.

$2 million, respectively.

Grant of Mining Rights to Lindu - according to

In 2016, YPC issued a statement issued bywhereby in 2010 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”)(hereinafter - Lindu Company), according to which Lindu canCompany is permitted to mine up to two million tonstonnes of phosphate rock from a certain area of 621 mu (equivalent tomeasuring 0.414 km2),square kilometers within the area of the Haikou (the “Daqing Area”)mine (hereinafter – the Daqing Area) and to sell such phosphate rock to any third party atin 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 formationestablishment of YPH JV, YPC proposed to the relevant local authority of Jinning County and Lindu Company to swap the rights granted to Lindu Company in the Daqing Area with another area whichthat is not a part of the Haikou and havemine, where Lindu Company minewould mine. In March 2016, in a meeting held between YPC, ICL and other relevant parties, YPC stated that area, so asit could not exchange its other mines to ensure thatreplace the interest of YPH JV would not be affected byDaqing Area since Lindu Company’s benefit is connected to the mining and sale conducted by Lindu Company. However, due to personnel changes inDaqing Area. Under the relevant local authority of Jinning County and Lindu Company, the negotiation is still on-going.above‑mentioned statement, YPC undertakes to continue to promote the negotiation, so as to ensurehas undertaken 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.

(7) Thearrangements. It was decided that YPH should conduct further communications with YPC and Lindu Company, holds a potash mining license for the Danakhil minepurpose of protecting its legal rights and to urge the parties to reach a fair, just, and reasonable solution to this issue, as soon as possible.

F - 92

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 20 - Commitments, Concessions and Contingent Liabilities (cont’d)

C. Contingent liabilities

(1)

Ecology

A.

In 2015, a request was filed for 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., 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 13.4 billion (about $3.5 billion). In the Company’s estimation, based on the factual material provided to it and the relevant court decision, it is more likely than not that the plaintiffs’ contentions will be rejected.

B.

In connection with the 2017 event of the partial collapse of the dyke in Pond 3, which is used for accumulation of phosphogypsum water that is created as part of the production processes in Rotem plants in Israel, the Company is taking action to rectify environmental impacts caused to the Ashalim Stream and its surrounding area, to the extent required. The Company’s actions are being carried out in full coordination and close cooperation with the Israeli environmental authorities. The Company is committed to the matter of environmental protection, and for years has worked closely with the Israeli environmental protection authorities to maintain the Negev’s natural reserves in the area of its facilities. As at the date of this report, the event is being investigated by the Ministry of Environmental Protection and the Nature and Natural Parks Authority. In 2017, the Company recognized restoration costs, in immaterial amounts, that were incurred in the short term. Several applications for certification of claims as class actions were filed against the Company (see item C below) contending, among others, that the Company should bear the restoration costs in the long‑term. In light of the complexity of the process and the uncertainty regarding the final restoration plans to be determined by the relevant authorities, the Company is unable at this stage to estimate the expected costs of the restoration work, as stated. The Company is in contact with its insurance carriers to activate the insurance policies in respect of the matters described above.

Relating to the active gypsum Pond 5 in Rotem Amfert plants in Israel, and the process of obtaining a permit for its operation, in January 2018, an appeal was filed by Adam Teva V’Din - Israeli Association for Environmental Protection (hereinafter - ATD) to the District Planning and Building Appeals Committee of the Southern District (hereinafter – the Appeals Committee) against the Local Council and Rotem, in connection with the decision of the Local Committee from December 2017, to dismiss ATD’s objection to approval of the leniency and issuance of a building permit for Pond 5. In light of the Appeals Committee's dismissal of ATD's said claims, in May 2018 ATD filed an administrative petition against the Appeal Committee requesting the Court to order that: (1) the Appeals Committee's ruling is void, as well as any permit issued by virtue thereof; (2) the “relief” in implementation of the outline plan applying to the region, as provided in the Afar regionAppeals Committee ruling, constitutes a breach of the provisions of the outline plan applying to the region; and (3) the Local Committee shall act to enforce the law and abstain from further planning procedures and permits until such enforcement actions are taken.

F - 93

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 20 - Commitments, Concessions and Contingent Liabilities (cont’d)

C. Contingent liabilities (cont’d)

(1)

Ecology (cont'd)

B.

(cont’d)

On October 11, 2018, the Court approved a settlement agreement between ATD and the Company, the main points of which are: withdrawing the abovementioned petition, 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 validreturn 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 datere-deliberation of the mining license).As atAppeals Committee on its decision regarding the implementation of the relief for obtaining building permits for the operation of Pond 5 and future restoration of Ponds 1-4. On October 24, 2018, the Appeals Committee approved the issuing of the building permits for the operation of Pond 5, until the date of December 31, 2020. In November 2018, the report,building and use permits for Pond 5 were received. The Company is working with the relevant authorities to obtain all the required permits, for the continued operation of the gypsum ponds beyond 2020, and this is in accordance with the requirements set by law and/or instructions of the Planning and Building Committee.

C.

In July and August 2017, three applications for certification of claims as class actions were filed against the Company, as a result of a partial collapse of the dyke in the evaporation pond of Rotem Amfert Israel, which caused contamination of the Ashalim Stream and its surrounding area. The claimants contend that the Company breached various provisions of the environmental laws, including, the provisions of the Law for Prevention of Environmental Hazards, the Water Law as well as provisions of the Torts Ordinance, breach of a statutory duty and negligence. In the framework of the first application, the Court was requested to instruct the Company to rectify the harm caused as a result of its omissions in order to prevent recurrence of the damage caused as well as to grant a monetary remedy for non‑pecuniary damages. The monetary remedy was not defined, however, according to the claimants, the amount of the personal claim is NIS 1,000 ($267) for each resident of the State of Israel, which totals approximately 8.68 million persons. In the framework of the second application, the Court was requested to grant a monetary remedy in an amount of no less than NIS 250 million ($67 million), and concurrently to award personal compensation in the amount of NIS 2,000 ($534) for each resident of the State of Israel, this being in respect of non‑pecuniary damages. Furthermore, the Court was requested to instruct the Company to comply with the relevant laws and the rules provided thereunder. As part of the third application, the Court was requested to instruct the Company, among other things, to prepare plans for removal of the pollution, restoration of the Ashalim Stream and its surrounding area, for control and prevention of recurrence of the damage caused, to pay monetary relief to the class of injured parties, in the amount of NIS 202.5 million ($54 million), and to provide compensation by means of restoring the natural values impaired and returning the area to its former condition. On May 1, 2018, the Nature and Parks Authority (hereinafter – NPA) filed a motion with the Be’er Sheva District Court to strike the three applications mentioned above as, according to NPA, it is the entity most suitable to serve as the representative plaintiff in a class action in this regard.

F - 94

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 20 - Commitments, Concessions and Contingent Liabilities (cont’d)

C. Contingent liabilities (cont’d)

(1)

Ecology (cont'd)

Concurrently, NPA filed an application for certification of a class action against the Company, Rotem and past and present officers of the Company and Rotem (jointly hereinafter - the Respondents), with respect to the Ashalim incident. According to NPA, the Respondents, jointly and/or severally, are liable for compensation due to the Ashalim incident, among other things by virtue of torts law and/or unjust enrichment law and by virtue of any other law. In the Application, the Court was requested, among other things, to issue orders the purpose of which is to take all necessary measures to prevent the recurrence of the environmental hazard, and also to cooperate with NPA and the State's authorities in order to minimize the ecological and environmental damage and see to the restoration of the nature reserve. Furthermore, the Court was requested to grant monetary relief to the public injured by the ecological and environmental damage, and to grant a monetary relief for the purpose of the restoration of the nature reserve, in the aggregate amount of NIS 397 million (about $106 million).

In October 2018, the Company was notified that all four applicants had not yet completedagreed to join efforts and manage the developmentclass actions in a joint and coordinated manner. Consequently, in November 2018, the parties have informed the Court of their consent to take part in a mediation process in an attempt to resolve the disputes outside of court. In February 2019, the mediation process was initiated. As at the reporting date, considering the early stage of the proceedings, there is a difficulty in estimating their outcome.

In May 2018, the Company was served with a motion for discovery and therefore,perusal of documents (hereinafter – the Government of Ethiopia may revoke the mining license. The Company is holding discussionsMotion), filed with the GovernmentTel Aviv District Court, by a shareholder of Ethiopia relatedthe Company (hereinafter – the Movant), as a preliminary proceeding in preparation for the possible filing of an application for certification of a multiple derivative action against officers of the Company and Rotem who, according to the application submittedMovant, caused the alleged damages incurred and to be incurred by the Company for the transferas a result of the mining licenseAshalim incident. In August 2018, the Company submitted its position to a newly established companythe Court. In December 2018, the parties reached an arrangement, according to which, the said legal proceedings will be held until the relevant investigation's materials will be provided to Rotem.

D.

In March 2018, an application for certification of a claim as a class action was filed with the District Court in Be’er Sheva by two groups: the first class constituting the entire public in the State of Israel and the second class constituting visitors of Bokek stream and the Dead Sea (hereinafter – the Applicants), against the subsidiaries, Rotem Amfert Negev Ltd. and Periclase Dead Sea Ltd. (hereinafter – the Respondents).

According to the claim, the Respondents have allegedly caused continuous, severe and extending the development period in lightextreme environmental hazards through pollution of the Company’s takeover“Judea group – Zafit formation” groundwater aquifer (hereinafter – the Aquifer) and the Ein Bokek spring with industrial wastewater, and in doing so the Respondents have violated various provisions of Allana, which can result to additional payments. Inproperty law and environmental protection law, including the Company’s estimation, an arrangement will be reached with the Ethiopian authorities for extensionprovisions of the development period.

The Company is currently researchingLaw for Prevention of Environmental Hazards and the project’s feasibilityWater Law, as well as violations relating to the Torts Ordinance – breach of statutory duty, negligence and technicalunjust enrichment.

F - 95

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 20 - Commitments, Concessions 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).

Contingent Liabilities (cont’d)

C. Contingent liabilities

(1) (cont’d)

(1)

Ecology (cont'd)

D.

(cont’d)

As a result, the Court was requested to order the Respondents to eliminate the proprietary violation in reference to the Aquifer and Bokek stream by restoration thereof and to pay the public compensation in an estimated amount of December 31, 2015, the total guarantees provided by the Group to third parties amount to $78 million. The guaranties provided by the Group in respect of loans taken out by the Group’s subsidiaries amount to about $1,996 million.

(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.NIS 1.4 billion (about $410 million). As at the date of the 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. In accordance with the Company’s management opinion, it is not possible, at this stage, to estimate the outcome of the above claims due to their complexity and the 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

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, claiming that the flowing of sewage into the Kishon River by each of the chemical plants operating on the river banks caused the plaintiffs’ cancer and other illnesses. In 2013, a court decision was issued rejecting all the claims. In 2014, a notice of appeal was filed by seven plaintiffs that were subsequently rejected by the Supreme Court on September 2015.

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Table of 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 (“the Claims of the Soldiers”).

In June 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, except for one claim made by 17 soldiers. On September 24, 2015, the Supreme Court completely 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 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 andconsidering the early stage of the proceeding as well as the factand due to unprecedented issues, that opinions have not yet been receivedarise from the various experts, itrequest, there is difficult to predict the outcome of the proceeding. Nonetheless,a difficulty in the Company’s estimation, based on the initial factual data provided to it and the relevant court decisions,estimating the chances that the plaintiffs’ contentionsapplication will be rejected exceed the chances that they will be accepted.

(4) Increase in level of Pond 5, Israel

E.

In October 2018, an application for certification of a class action was filed with the Beer Sheva Magistrate Court against Dead Sea Works Ltd. and Dead Sea Bromine Company Ltd., with respect to a bromine leak that occurred in June 2018, within the premises of Dead Sea Works. According to the plaintiff, the alleged air pollution caused an environmental hazard and a health risk to passersby and to those present in the vicinity of the plant, as well as in the settlements Neot Hakikar and Ein Tamar, and the blocking of Route 90. According to the statement of claim, the Court is requested to award compensation for the alleged damages, in the total amount of about NIS 1.5 million (about $0.4 million). In December 2018, the parties signed a settlement agreement at immaterial amounts to conclude the application proceeding for certification of a class action. The agreement is subject to the Court's approval.

(2)

Increase in level of Pond 5 (hereinafter – the Pond)

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 (Pond 5), in one of the sites of Dead Sea Works (hereinafter – “DSW”)DSW). The precipitated salt creates a layer on the pondPond bed of approximately 20 million tonstonnes annually. The process of production of the raw material requires that a fixed brine volume is preserved in the pond.Pond. To this end, the watersolutions level of the pondPond is raised by approximately 20 centimeters annually.

each year according to the rate at which the pool floor rises.

The Ein Boqeq and Hamei Zohar hotels, the townsettlement of Neve Zohar and other facilities and infrastructures are located on the western beach of this pond.the Pond. Raising the water level of the pondPond 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 oninfrastructures located along the western shoreline of the pond.Pond. This situation requires establishment of defenses for the facilities and infrastructures of the hotels located on the shores of the Pond.

F - 96

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 20 - Commitments, Concessions and Contingent Liabilities (cont’d)

C. Contingent liabilities (cont’d)

(2)

Increase in level of Pond 5 (hereinafter – the Pond) (cont'd)

The project for construction of the coastline defenses with respect to the hotels and infrastructures on the coastline of the Pond has been underway for several years. As part of such defenses, from time to time, the dyke along the western beachfront of the Pond, across from the hotels, is raised, together with, in many places, a system for lowering subterranean water. As at the date of the report, the construction work with respect to the hotels coastline is complete, and the related dykes have been raised to accommodate the maximal brine level (15.1 meters). The current brine level is 14.6 meters. Nevertheless, there is additional ongoing work on raising the roads level along pond 5.

In December 2007,

There is an agreement was signed between the StateDSW and the Company and in July 2012 an appendix was added thereto, addressingGovernment of Israel that the urgent shoreline protections the purpose of which is to permit raising the water level while 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). DSWCompany will bear 39.5% of the costs of financing the coastline defenses and the government of IsraelGovernment will bearfinance the remaining cost.

balance thereof. In July 2012, an agreement was signed with the Government of Israel, regarding “Execution"Execution and Funding of the Dead Sea Works Protection Project and Increase of the Royalties Paid to the State”State" (hereinafter – “thethe Salt Harvesting Project”)Project).

The purpose of the Salt Harvesting Project is to constituteprovide a permanent solution for the raising of the water level in the Pond 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 highlights of the agreement are set forth below:

A.

a.

The planning and execution of the Salt Harvesting Project will be performed by DSW.

b.

The Salt Harvesting Project as well as the project for the new pumping station that is to be constructed (hereinafter – the P-9 Pumping Station), 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 the pond will not rise above 15.1 meters in DSW’s network (about 390 meters below sea level). DSW will be required to pay compensation in respect of any damages caused, if at all, as a result of a rise of the water level beyond the level determined. In the case of a material deviation from the timetables for the execution of the Salt Harvesting Project will be performed by DSW. B. The Salt Harvesting Project as well as the project for 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 (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 Project 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 to 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 stated above.

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Notes 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 stated above.

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Consolidated Financial Statements as at December 31, 2018

Table of Contents

Note 2320 - Commitments, Concessions and Contingent Liabilities (cont’d)

C. Contingent liabilities (cont’d)

In December 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 in the northern 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 to be in a nominal 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 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 exceed the Discounted Amount, linked to the CPI and bearing interest 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. 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 5%, only on annual sales exceeding 3.0 million tons.

F. In July 2012, the Government committed that at this time it sees no need to make additional changes to its specific fiscal policy regarding mining from the quarries at the Dead Sea, including the commercial utilization thereof and, accordingly, at this time, it will not initiate and will not object to, as applicable, 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.

(2)

Increase in level of Pond 5 (hereinafter – the Pond) (cont'd)

d.

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 tonnes annually. This increase applies to sales starting January 1, 2012. In July 2012, as part of the agreement, the Government committed that at this time it sees no need to make additional changes to its specific fiscal policy regarding mining from the quarries at the Dead Sea, including the commercial utilization thereof and, accordingly, at this time, it will not initiate and will even object to, as applicable, proposed laws regarding this matter. The Company’s consent to the increase of the rate of the royalties is contingent on implementation of the Government of Israel’s decision.

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 anto the increase in theof royalties' rate of royalties on the surplus quantities referred to above commencing fromwill not apply, after the date onenactment of the legislation, to the period in which such additional tax is collected as stated in the said legislation. On November 30, 2015,In January 2016, the Economic Efficiency Law was published, including the implementationfor Taxation of Profits from Natural Resources, which includes the Sheshinski Committee’s recommendations whichthat address royalties and taxation of excess profits from Dead Sea minerals. The lawminerals (hereinafter – the Law), entered into effect on January 1, 2016.effect. Accordingly, the rate of the royalties' provision was update to 5%. For further detailsinformation, see – Note 20(5)item B(1) above.

(5)

The subsidiaryCompany will bear 80% and the Government will bear 20% of the cost of the Salt Harvesting Project, however the Government's share will not exceed NIS 1.4 billion.

In 2015 and in Spain2016, the National Infrastructures Committee and the Israeli Government, respectively, approved National Infrastructures Plan 35A (hereinafter – "ICL Iberia") has two potash production centersthe Plan), which includes the statutory infrastructure for establishment of the Salt Harvesting Project in SpainPond 5, and construction of the P-9 pumping station in the towns of Suria and Sallent. As a by-productnorthern basin of the potash production process, salt is produced and heaps up in piles, most of which,Dead Sea. As at the present time,date of the report, the building permits for the Salt Harvesting Project and the P-9 pumping station have been received and the construction work has commenced. The P-9 pumping station is not usable. To operate in Spain, an environmental licenseexpected to commence its operations during 2020. For further information see item A above relating commitments.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 20 - Commitments, Concessions and an urban license are required.

RegardingContingent Liabilities (cont’d)

C. Contingent liabilities (cont’d)

(3)

Spain

A.

The subsidiary in Spain (hereinafter – ICL Iberia) has two potash production centers – Suria and Sallent. As part of the efficiency plan, the Company intends to consolidate the activities of ICL Iberia into one site by means of expanding the Suria production site and discontinuing the mining activities on the Sallent site. The mining activities in Spain require an environmental mining license and an urban license.

Sallent site

Environmental mining license – in October 2013, the regional courtSpanish Regional Court issued a judgment disqualifyinginvalidating ICL Iberia's environmental mining license, contending that there were defectsflaws in provision of the license by the Government of Catalonia. OnCatalonia including no environmental impact assessment of the Cogulló salt deposit (hereinafter - the salt pile). In September 25, 2015, the Spanish Supreme Court affirmed this judgment. In February

Following the Company’s request and as part of the Company’s effort to obtain the environmental mining license, in August 2017, the Mining Authorities issued a new environmental mining license, which includes a new environmental impact assessment approved by the Environmental Authorities. The environmental mining license replaces definitively the license previously invalidated and accordingly ICL Iberia is allowed to continue its activity.

Urban license – in 2014, the regional court also disqualifiedDistrict Court of Barcelona determined that the urban license contending thatwas not valid. In January 2017, the license does not comply withRegional Court affirmed this judgment. An appeal process was conducted before the Supreme Court. Following the resolution, the municipality of Sallent initiated a protection case relating to urban planning legality and the Company was required conditions for piling upto legalize its salt onpile activity by obtaining the site.urban license. In connection withJuly 2018, the validity ofCity Council issued the urban license after issuanceto the Company.

As part of enforcement of the decision of the Supreme Court,judgement, the local planning board (CUCC) of Cataloniathe Catalonian government (CUCC) determined new provisions, includingwhich include limitation ofover the height of the salt pile of up to 538 meters and a 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 atactivity. The Company received the date ofCUCC's approval to continue piling up the report,salt up to June 30, 2019, and the height of the salt pile is 509514 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 salt after June 30, 2017, which is currently invalid, and will settle ICL Iberia’s obligations to subsequently restore the site.

Regarding the

Suria site in

In April 2014, after a favorable survey was received from the Environmental Protection Authority in Catalonia, ICL Iberia received an environmental license that complies with the new environmental protection regulations in Spain (autoritzacio substantive)(autoritzacio substantive), this being after ICL Iberia received the municipalurban license.

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F - 99

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2320 - Commitments, Concessions and Contingent Liabilities (cont’d)

C. Contingent liabilities (cont’d)

In January 2016, following complaints from competitors in the salt market in Spain, the European Commission announced that it will investigate whether ICL Iberia received illegal aid from the Spanish authorities regarding two issues:

(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(3)

Spain (cont'd)

(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

Restoration plan

In 2015, in accordance with the above claims and given the preliminary stage of these proceedings, the 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 above claims will be rejected are higher than the chances that they will be accepted.

(6)In August 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 $0.70 billion (NIS 2.75 billion) or $0.84 billion (NIS 3.28 billion) (the amount of the claim depends on the share price used for calculating the alleged damages). In November 2014, a hearing on the motion to certify a class action was held. During the year 2015, proceedings took place to advance a compromise agreement that were later discontinued by the parties. As at the date of the report, a court decision on the request had not yet been rendered. In the Company's estimation, 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.

(7) In 2014,Spanish Waste Management regulation, ICL received a petitionIberia submitted to the District Court in Israel in respectGovernment of Catalonia a purported class action against its subsidiary, Dead Sea Works. Accordingmining site restoration plan for the two production sites Suria and Sallent, which includes a plan for handling the salt piles and dismantling of facilities. The restoration plan for the Suria site is scheduled to run up to 2094, whereas for the petition,Sallent site up to 2070. In June 2018, 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 containing potash since 2006, when potash prices were deregulated, throughnew restoration plan was approved.

Regarding the dateestimation of the action. The plaintiff alleges that Dead Sea Works charged an excessive priceprojected costs for potash, contrarythe closure and restoration of the Sallent site, as part of the restoration solution, the Company is taking action to utilize the Israeli business practices laws,salt for production and seeks damagessale as a product in the De-icing business. In light of changes in market conditions, mainly in the future selling prices of the said product, the Company updated its provision in the amount of approximately NIS 96.4$18 million, (approximately $24.7 million). In February 2016,under "other expenses" in the parties submittedStatement of Income.

The provision is based on a requestlong‑term forecast, covering a period of more than 50 years, along with observed estimates and, accordingly, the final amount that will be required to restore the Court for approval of a compromise arrangement,Sallent site could change, even significantly, from the results of which are not expected to be significant with respect to the financial statements. As at the dateamount of the report, the proceedings are continuing with respect to approval of the compromise agreement by the Court. present provision. In the Company’s estimation, the chances that approvalprovision in its books reflects the best estimate of the compromise arrangement will be confirmed exceed the chances it will be rejected. The Company has a sufficient provision in the financial statements.

(8) Haifa Chemicals acquires potash from Dead Sea Works Ltd. (hereinafter – "DSW") as part of its manufacturing inputs. Pursuantexpense required to settle this obligation.

B.

Further to the court decision received in 2016 providing that ICL Iberia bears sole responsibility for contamination of the water in certain wells on Suria and Sallent sites (due to an over concentration of salt), in January 2018, claims were received from several owners of the land surrounding the wells, whereby ICL Iberia is required to compensate them for their damages, in the aggregate amount of $22 million. In the Company's estimation, it is more likely than not that it will be required to compensate the owners in the amount of $12 million. Accordingly, in 2017 a provision was recorded.

(4)

In December 2018, an application for certification of a class action was filed with the Tel Aviv District Court against the Company, Israel Corporation, and office holders, including directors who held office during the said dates which are stated in the application, with respect to the manner in which the IT (the Harmonization) project was managed and terminated. According to the allegations made in the Application, the Company failed to properly report negative developments which occurred on certain dates during the said IT project whose failure caused the company immense financial damages.

F - 100

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Notes 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 DSW was cancelled and the parties did not succeed in reaching a new agreement. Haifa Chemicals contends that the price DSW demanded in exchange for potash was unfair and that it was unable to operateConsolidated Financial Statements as at this price level. 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"). Based on the price formula, the possibility exists that under certain circumstances, an 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 will continue to apply to the remainder of the 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 MayDecember 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 2015, 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 its contentions included as part of the legal proceeding and the chances thereof to be accepted and given the production costs in DSW, the Company will not pay and will not receive significant amounts in respect of the past period (2009–2014). Accordingly, no provisions or income receivable were recorded in the financial statements.

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Note 2320 - Commitments, Concessions and Contingent Liabilities (cont’d)

C. Contingent liabilities (cont’d)

(9) In August

(4)

(cont'd)

The represented class was defined in the application as all those who acquired the Company's share at any time during the period commencing on June 11, 2015 as further updatedand did not sell them until September 29, 2016. The aggregate amount of the claim, for all members of the represented class, is estimated to be between $113 million (about NIS 426 million) for maximal damage, and $7 million (about NIS 26 million), for minimal damage. The Company denies the allegations made 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, DSWapplication 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 relatingwill file its position to the said matter wherebyCourt as required by law. Considering the companies are requiredearly stage of the proceedings, there is a difficulty in estimating the chances the application will be accepted.

(5)

In July 2018, an application for certification of a class action was filed with the Central District Court against the Company and its subsidiaries, Rotem Amfert Negev Ltd. and Fertilizers and Chemicals Ltd. (jointly hereinafter – the Defendants). The causes of action are the alleged exploitation of the Defendants' monopolistic position to charge consumers in Israel excessive and unfair prices for products classified as "solid phosphate fertilizer" between 2011 and 2018, contrary to the provisions of the Restrictive Trade Practices Law, and unjust enrichment at the expense of the plaintiff and the represented group. The representative plaintiff is a Kibbutz member who grows various plants and trees in his yard and in a nearby orchard. The represented group includes all the consumers who purchased, directly or indirectly, solid phosphate fertilizer products manufactured by the Defendants, or farming produce fertilized with solid phosphate fertilizer or food products that include such farming produce as stated above, in the years 2011-2018 (hereinafter – the Represented Group).

According to pay about $35 millionthe statement of claim, the plaintiff requests, among other things, that the Court rules in his favor and in favor of the Represented Group, awarding them compensation for the period from June 2013 updamages allegedly caused to 2015. There is a significant disagreement between DSW, Rotem and the Electric Company with respect to some of the elementsthem, 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 thetotal amount of $20NIS 56 million relating(about $15 million), based on a calculation pursuant to prior periods was recordedthe "difference test", measuring the difference between the price of a product and its cost, as described in the "other expenses" category whilestatement of claim, or in the amount of about $15NIS 73 million relating(about $20 million), based on the "comparison test", comparing the price of a product to 2015 was recordedits price in other markets, as described in the "coststatement of sales" category.

(10) On June 16, 2015, a petition wasclaim. It should be noted that the Company's total sales of solid phosphate fertilizers in Israel during 2017 were negligible. In December 2018, the Company filed inits written response. In the Company’s estimation, it is more likely than not that its claims will be accepted.

(6)

In 2015, an appeal was filed in the Israeli Court for Water Matters by Adam Teva V’Din - Israeli Association for Environmental Protection (ATD) wherein the Court was requested to order the Government Water and Sewage Authority to issue a production license to DSW pursuant to the Water Law with respect to the transfer of water from the North Basin of the Dead Sea to the evaporation ponds in the Sea’s South Basin in order to regulate and supervise, within the framework of the production license, transfer of the water, as stated, in connection with certain aspects, including limitation of the quantities transferred.

F - 101

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 20 - Commitments, Concessions and Contingent Liabilities (cont’d)

C. Contingent liabilities (cont’d)

(6)

(cont'd)

In August 2016, the Government Water and Sewage Authority is requestedissued directives to act to regulate and superviseDSW (not in the use of water sources by DSW, this being, among other things, by means of determining pumping limits as partframework of the production licenseslicense), after hearing the latter’s position, which included limitations on the quantities of water transferred, as well as mechanisms for reporting of pumping volume. As at the reporting date, summaries have been filed by all the parties and impositionthe case is waiting for the Court's judgement. In the Company’s estimation, the legal proceedings in this matter will end without material influence on its operations.

(7)

In September 2017, a decision of the District Court in Beer Sheva was received regarding a dispute between the National Company for Roads in Israel and DSW, whereby the Company is to participate in restoration of the bridges and bear responsibility for the damage caused as a result of leakage of chemical materials from DSW’s trucks. In October 2017, DSW filed an appeal in the Supreme Court of the District Court’s decision, and in November 2017, the National Company for Roads in Israel filed a counter appeal. In November 2018, the parties agreed to start a mediation process. Considering the early stage of the proceeding, there is a difficulty in estimating its chances.

(8)

Following the discontinuation of the Harmonization Project (global ERP system), the Company entered into a mediation proceeding with the lead supplier in the Project (hereinafter - IBM Israel), for settlement of mutual monetary disputes that arose upon the said discontinuation. In December 2018, following the termination of the mediation proceeding, under which the Company had paid an immaterial amount, the Company filed a lawsuit in the Tel Aviv District Court, against IBM Israel, in the amount of $300 million (about NIS 1.1 billion), for compensation of the damages incurred to the Company due to IBM’s failure to meet its undertakings within the Project, which led to the failure of the Project. Considering the early stages of the proceedings, there is a difficulty in estimating the certainty of the outcome.

(9)

In October 2018, a petition was filed to the International Trade Administration of the U.S. Department of Commerce and the U.S. International Trade Commission by a US Magnesium company (hereinafter - US Magnesium), to impose antidumping and countervailing duties on imports of magnesium from Israel. US Magnesium claims that imports of magnesium produced in Israel by Dead Sea Magnesium Ltd. are being subsidized and sold at less than fair value in the U.S. market. The US Department of Commerce is expected to issue its preliminary determination with respect to subsidies on May 2, 2019.

Considering the early stage of production levies. The Company estimates thatthe proceedings, there is a difficulty in estimating the chances that the petition will be accepted are lower than chances itsor whether tariffs 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,imposed in the total amount of about $19 million (netfuture.

(10)

In addition to the contingent liabilities, as stated above, as at the reporting date, the contingent liabilities regarding the matters of environmental protection and legal claims, which are pending against the Group, are in immaterial amounts. It is noted that part of the above claims is covered by insurance. According to the Company’s estimation, the provisions recognized in its financial statements are sufficient.

F - 102

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Notes to 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, inConsolidated Financial Statements as at December 31, 2018

Note 21 – Equity

A. Composition:

	As at December 31, 2018		As at December 31, 2017
	Authorized	Issued and paid	Authorized	Issued and paid

Number of Ordinary shares of Israeli Shekel 1 par value (in millions)	1,485	* 1,305	1,485	* 1,303
Number of Special State share of Israeli Shekel 1 par value	1	1	1	1

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(*) For information regarding 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 $21 million as of December 31, 2015, the Group has recorded a provision as at that date in the amount of about $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-mentioned claims.

treasury shares, see Note 24 – Equity

A. 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

21.G.(1).

The reconciliation of the number of shares outstanding at the beginning and at the end of the periodyear is as follows:

Period

Number of Outstanding Shares (in (in millions)

As at January 1, 20142017			1,295	1,301
Options exercised during the yearIssuance of shares			1	2
As at December 31, 20142017			1,296	1,303
Issuance of shares			4	2
As at December 31, 20152018			1,300	1,305

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Note 24 – Equity (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 ofat December 31, 2015,2018, the number of shares reserved for issuance under the Company’s option plans was 18 million.

F - 103Plans were 23.7 million.

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 21 – Equity (cont’d)

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:

–1.

The ordinary shares confer upon their holders voting rights (including appointment of directors by a simple majority at General Meetings of the shareholders), 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.

2.

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.

During the second half of 2018, an inter-ministerial team was set up, headed by the Ministry of Finance, whose purpose is, among other things, to regulate the authority and supervision in respect of the Special State of Israel Share, as well as reduce the regulatory burden. As at the date of the report, the Company is unable to estimate the implications of this process over the Company.

F - 104

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 21 – Equity (cont'd)

C. Share-based payments to employees

1.

Non-marketable options

Grant date

Employees entitled

Number of instruments (thousands)

Issuance's details

Instrument terms

Vesting conditions

Expiration date

August 6, 2014	Officers and senior employees	3,993	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan, to 450 ICL officers and senior employees in Israel and overseas.	Upon exercise, each option may be converted into one ordinary share of NIS 1 par value of the Company. In case of on 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 reduced so that the product of the exercised shares actually issued to an offeree multiplied by the share closing price will equal to the product of the number of exercised options multiplied by the Share Value Cap.	3 equal tranches: (1) One third on December 1, 2016 (2) One third on December 1, 2017 (3) One third on December 1, 2018	Two years from the vesting date.
December 11, 2014	Former CEO	367	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan.
May 12, 2015	Officers and senior employees	6,729	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan, to 550 ICL officers and senior employees in Israel and overseas.	Upon exercise, each option may be converted into one ordinary share of NIS 1 par value of the Company.	3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date	The first and second tranches is at the end of 36 months after the grant date for the third tranche is at the end of 48 months after the grant date.
June 29, 2015	Former CEO	530	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan.
	Former Chairman of BOD	404
June 30, 2016	Officers and senior employees	3,035	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan, to 90 ICL officers and senior employees in Israel and overseas.			June 30, 2023
September 5, 2016	Former CEO	625	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan.
	Chairman of BOD	186
February 14, 2017	Former CEO	114	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan.			February 14, 2024
June 20, 2017	Officers and senior employees	6,868	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan  to 498 ICL officers and senior employees in Israel and overseas.			June 20, 2024
August 2, 2017	Chairman of BOD	165	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan.

F - 105

1. On January 7, 2010, ICL’s Board of Directors approved issuance of 10,930,500 non-marketable options for no consideration to 318 ICL executives and senior employees in Israel and overseas. The issuance included a significant private placement of 1,100,000 options to former Chief Executive Officer and 800,000 options

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Notes to the Company’s Chairman of the Board. On February 15, 2010, an extraordinary general meeting of ICL’s shareholders approved the issuance to the Chairman of the Board. The 2010 plan options vested in three equal annual installmentsConsolidated Financial Statements as follows: one-third at the end of 12 months from the date of the Board’s approval; one-third at the end of 24 months from the date of the Board’s approval; and one-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 issue 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 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 an ordinary 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 to 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 tranches is at the end of 60 months from the issuance date.

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Note 2421 – Equity (cont’d)

(cont'd)

C. Share-based payments to employees  (cont’d)(cont'd)

1.

Non-marketable options (cont'd)

Grant date

Employees entitled

Number of instruments (thousands)

Issuance's details

Instrument terms

Vesting conditions

Expiration date

March 6, 2018	Officers and senior employees	5,554	An issuance of non-marketable and non-transferrable options, for no consideration, under the 2014 Equity Compensation Plan (as amended) to 508 ICL officers and senior employees in Israel and overseas, ICL CEO and Chairman of the BOD.	Upon exercise, each option may be converted into one ordinary share of NIS 1 par value of the Company.	3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date	March 6, 2025
May 14, 2018	CEO	385				May 14, 2025
August 20, 2018	Chairman of BOD	403				August 20, 2025

F - 106

3. Following the approval of the Company’s Board of Directors on August 6, 2014, under the 2014 Equity Compensation Plan, ICL issued, for no consideration, 4,360,073 non marketable options, exercisable for up to 4,360,073 of the Company’s ordinary shares, and 1,007,651 restricted shares, to approximately 450 of the Company’s officers and senior employees. The issuance includes a significant private placement of 367,294 options and 85,907 restricted shares

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Notes to the Company’s Chief Executive Officer, which was approved by the General Meeting of the Company’s shareholders. This grant format of the options plan includes a “cap” for the value of a share where if,Consolidated Financial Statements 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 issuedDecember 31, 2018

Note 21 – Equity (cont'd)

C. Share-based payments to the offeree multiplied by the share closing price will equal the product of the number of exercisedemployees (cont'd)

1. Non-marketable 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.

4. On January 25 and 26, 2015, the Company’s Remuneration and Human Resources Committee and the Board of Directors, respectively, and on February 26, 2015 the General Meeting of the Company’s shareholders, approved the issuance, under the 2014 Equity Compensation Plan, for no consideration, of 99,858 restricted shares to Company directors (excluding the Company’s 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.

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. (cont'd)

Additional Information

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.Ordinance. The Company elected to perform the issuance will be performed 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 2010in 2014, as part of 2014 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 options granted under the 2012 and 2014 equity compensation plans was estimated using the binomial model for pricing options. The grants in 2015, 2016, 2017 and 2018 under the 2014 Equity Compensation Plan were estimated using the Black & Scholes model for pricing options. The parameters used in applying the 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
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

	2014 Plan
	Granted 2014	Granted 2015	Granted 2016	Granted 2017	Granted 2018

Share price (in $)	8.2	7.0	3.9	4.5	4.4
CPI-linked exercise price (in $)	8.4	7.2	4.3	4.3	4.3
Expected volatility:
First tranche	29.40%	25.40%	30.51%	31.88%	28.86%
Second tranche	31.20%	25.40%	30.51%	31.88%	28.86%
Third tranche	40.80%	28.80%	30.51%	31.88%	28.86%
Expected life of options (in years):
First tranche	4.3	3.0	7.0	7.0	7.0
Second tranche	5.3	3.0	7.0	7.0	7.0
Third tranche	6.3	4.0	7.0	7.0	7.0
Risk-free interest rate:
First tranche	(0.17)%	(1.00)%	0.01%	0.37%	0.03%
Second tranche	0.05%	(1.00)%	0.01%	0.37%	0.03%
Third tranche	0.24%	(0.88)%	0.01%	0.37%	0.03%
Fair value (in $ millions)	8.4	9.0	4.0	11.3	8.8
Weighted average grant date fair value per option (in $)	1.9	1.2	1.1	1.6	1.4

---

F - 107

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 21 – Equity (cont'd)

C. Share-based payments to employees (cont'd)

1.

Non-marketable options (cont'd)

The expected volatility was determined on the basis of the historical volatility in the Company’s share prices. For every tranche shownprices in the above table, the vesting period is different. Since the expected life for each tranche is different, the Company used different expected volatility and risk-free interest rates for each tranche.

Tel-Aviv Stock Exchange.

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 or similar to the anticipated life of the option.

The total fair value of the restricted shares allotted 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 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, 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.

The total fair value on the grant 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 that were allotted pursuant to the approval of the Board of Directors on May 12, 2015, is approximately $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 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

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Note 24 – Equity (cont’d)

C. Share-based payments to employees (cont’d)

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 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 Equity Compensation Plans (2010, 2012 and 2014)Plan 2014 is recognized in the statement of income over the vesting period of each portion. Accordingly, in 2015, 20142018, 2017, and 2013,2016, the Company recorded expenses of about$19 million, $16 million $12and $15 million, and $22 million, respectively.

The movement in the options during 20152018 and 20142017 are as follows:

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

	Number of options (in millions)
	2014 Plan

Balance as at January 1, 2017	14
Movement in 2017:
Granted during the year	7
Forfeited during the year	(1)
Total options outstanding as at December 31, 2017	20
Movement in 2018:
Granted during the year	6
Expired during the year	(6)
Forfeited during the year	(1)
Exercised during the year	(1)
Total options outstanding as at December 31, 2018	18

---

F - 108

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 21 – Equity (cont'd)

C. Share-based payments to employees (cont'd)

1. Non-marketable options (cont'd)

The exercise priceprices for options outstanding at the beginning and end of each period are as follows:

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

December 31, 2018

December 31, 2017

December 31, 2016

Granted 2014 US Dollar	6.77	7.43	6.81
Granted 2015 US Dollar	6.92	7.59	6.95
Granted 2016 US Dollar	4.21	4.68	4.35
Granted 2017 US Dollar	3.89	4.35	-
Granted 2018 US Dollar	3.89	-	-

---

The number of outstanding vested options vested at the end of each period and the weighted average exercise price for these options are as follows:

		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

follows (*):

December 31, 2018

December 31, 2017

December 31, 2016

Number of options exercisable (In Millions)	11	12	10
Weighted average exercise price in Israeli Shekel	18.53	22.56	30.49
Weighted average exercise price in US Dollar	4.94	6.51	7.93

---

(*) The share price as of December 31, 2018 is NIS 21.20 and $5.66.

The range of exercise prices for the options outstanding vested at the end of each period are as follows:

December 31, 2015 2018

December 31, 2014 2017

December 31, 2013 2016

Range of exercise price in Israeli Shekel	14.26-25.93	15.01-26.3	16.59-40.78
Range of exercise price in NISUS Dollar	3.81-6.92	4.33-7.59	26.92-40.74				28.24-42.18				44.59-45.66
Range of exercise price in US$			6.9-10.44				7.26-10.85				12.85-13.16	4.31-10.61

---

The average remaining contractual life for the outstanding vested options at the end of each period are as follows:

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December 31, 2018

December 31, 2017

December 31, 2016

Average remaining contractual life

3.90

2.60

2.40

---

F - 109

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2421 – Equity (cont’d)

(cont'd)

C. Share-based payments to employees (cont’(cont'd)

2.

Restricted shares

Grant date

Employees entitled

Number of instruments (thousands)

Vesting conditions (*)

Instrument terms

Additional Information

Fair value at the grant date (Million)

August 6, 2014	Officers and senior employees	922	3 equal tranches: (1) One third on December 1, 2016 (2) One third on December 1, 2017 (3) One third on December 1, 2018	An issuance for no consideration, under the 2014 Equity Compensation Plan, to 450 ICL officers and senior employees in Israel and overseas.	The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the date approval of the BOD and/or the date of the approval of the General Meeting where required).	8.4
December 11, 2014	Former CEO	86		An issuance for no consideration, under the 2014 Equity Compensation Plan.
February 26, 2015	ICL’s Directors (excluding ICL's CEO)	99	3 tranches: (1) 50% will vest August 28, 2015 (2) 25% will vest February 26, 2017 (3) 25% will vest February 26, 2018	An issuance for no consideration, under the 2014 Equity Compensation Plan, to 11 ICL Directors.		0.7
May 12, 2015	Officers and senior employees	1,194	3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date	An issuance for no consideration, under the 2014 Equity Compensation Plan, to 550 ICL officers and senior employees in Israel and overseas.		9.7
June 29, 2015	Former CEO	90		An issuance for no consideration, under the 2014 Equity Compensation Plan.
	Former Chairman of the BOD	68
December 23, 2015	ICL’s Directors (excluding ICL's CEO & Chairman of the BOD)	121	3 equal tranches: (1) One third on December 23, 2016 (2) One third on December 23, 2017 (3) One third on December 23, 2018	An issuance for no consideration, under the 2014 Equity Compensation Plan, to 8 ICL Directors.		0.5

(*) The vesting date is subject to the employee entitled continuing to be employed by the Company and the directors continuing to serve in their positions on the vesting date, unless they ceased to hold office due to certain circumstances set forth in sections 231-232a and 233(2) of the Israeli Companies Law.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

F - 110

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 21 – Equity (cont'd)

C. Share-based payments to employees (cont'd)

2.

Restricted shares (cont’d)

Grant date

Employees entitled

Number of instruments (thousands)

Vesting conditions (*)

Instrument terms

Additional Information

Fair value at the grant date (Million)

June 30, 2016	Officers and senior employees	990	3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date	An issuance for no consideration, under the 2014 Equity Compensation Plan, to 90 ICL officers and senior employees in Israel and overseas.	The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the date approval of the BOD and/or the date of the approval of the General Meeting where required).	4.8
September 5, 2016	Chairman of the BOD	55		An issuance for no consideration, under the 2014 Equity Compensation Plan.
	Former CEO	185
January 3, 2017	ICL’s Directors (excluding ICL's Chairman of the BOD)	146		An issuance for no consideration, under the 2014 Equity Compensation Plan, to 8 ICL Directors. The value includes a reduction of 5% from the value of the equity compensation, pursuant to the decision of the directors in March 2016, to reduce their annual compensation for 2016 and 2017.		0.6
February 14, 2017	Former CEO	38		An issuance for no consideration, under the 2014 Equity Compensation Plan.		0.2
June 20, 2017	Officers and Senior employees	2,211		An issuance for no consideration, under the 2014 Equity Compensation Plan, to 494 ICL officers and senior employees in Israel and overseas.		10
August 2, 2017	Chairman of BOD	53		An issuance for no consideration, under the 2014 Equity Compensation Plan.		0.3
January 10, 2018	ICL’s Directors (excluding ICL's CEO & Chairman of the BOD)	137		An issuance for no consideration, under the 2014 Equity Compensation Plan, to 7 ICL Directors.		0.6

(*) The vesting date is subject to the employee entitled continuing to be employed by the Company and the directors continuing to serve in their positions on the vesting date, unless they ceased to hold office due to certain circumstances set forth in sections 231-232a and 233(2) of the Israeli Companies Law.

F - 111

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 21 – Equity (cont'd)

C. Share-based payments to employees (cont'd)

3.

Restricted shares (cont’d)

Grant date

Employees entitled

Number of instruments (thousands)

Vesting conditions (*)

Instrument terms

Additional Information

Fair value at the grant date (Million)

March 6, 2018	Officers and senior employees	1,726	3 equal tranches: (1) one third at the end of 12 months after the grant date (2) one third at the end of 24 months after the grant date (3) one third at the end of 36 months after the grant date	An issuance for no consideration, under the 2014 Equity Compensation Plan (as amended).	The value of the restricted shares was determined according to the closing price on the TASE on the most recent trading day preceding the grant date (the date approval of the BOD and/or the date of the approval of the General Meeting where required).	8
May 14, 2018	CEO	121				0.6
August 20, 2018	Chairman of BOD	47				0.2
	ICL’s Directors (excluding ICL's CEO & Chairman of the BOD)	88	Acceleration at January 2019.			0.4

(*) The vesting date is subject to the employee entitled continuing to be employed by the Company and the directors continuing to serve in their positions on the vesting date, unless they ceased to hold office due to certain circumstances set forth in sections 231-232a and 233(2) of the Israeli Companies Law.

F - 112

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 21 – Equity (cont’d)

D. Dividends distributed to the Company’sCompany'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

Board of Directors decision date 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 (in $)

March 15, 2016	April 18, 2016	67	67	0.05
May 17, 2016	June 22, 2016	35	35	0.03
August 9, 2016	September 27, 2016	60	60	0.05
November 22, 2016	January 4, 2017	60	60	0.05
February 14, 2017	April 4, 2017	57	57	0.04
May 9, 2017	June 20, 2017	34	32	0.03
August 2, 2017	September 13, 2017	32	32	0.02
November 7, 2017	December 20, 2017	57	56	0.04
February 13, 2018	March 14, 2018	70	69	0.05
May 10, 2018	June 20, 2018	52	51	0.04
July 31, 2018	September 4, 2018	56	56	0.04
October 31, 2018	December 19, 2018	66	65	0.05
February 5, 2019 (after the reporting date)*	March 13, 2019	62	61	0.05

---

(*) The record date is February 28, 2019 and the balance sheetpayment date onis March 15, 2016, the Company’s Board of Directors decided to distribute a dividend in the amount of $67 million, about $0.05 per share. The dividend will be distributed on 18 April, 2016.

13, 2019.

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 share‑based compensation to employees against a corresponding increase in equity (see section C. above) and change in investment at fair value through other comprehensive income (investment in 15% of the share capital of YYTH, see Note 23.B).

F - 113

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 21 – Equity (cont’d)

G. Treasury shares

1) On August 4, 2014, the Company received 2.2 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 share capital – out of the Company’s distributable earnings in accordance with the Israeli Companies Law. In total, 22.4 million shares were acquired by the Company under this purchase plan, constituting approximately 1.74% of the Company’s issued and paid share capital, for a total consideration of approximately $258 million.

3)

1)

During 2008 and 2009 22.4 million shares were acquired by the Company under a purchase plan, for a total consideration of approximately $258 million. Total shares held by the company and it's subsidiaries are 24.5 million.

2)

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‑acquisitions (that are presented separately in the “treasury shares” category in the equity section).

H. Retained earnings

The retained earnings available for distribution as a dividend pursuantinclude actuarial gains (see Note 18.E) and dividends to the Israeli Companies Law, a deduction must be made from the balance of the retained earnings the amount of self-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-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

shareholders.

Table of Contents

Note 2622 - 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

Table of Contents

	For the year ended December 31
	2018	2017	2016
	$ millions	$ millions	$ millions

Sales	5,556	5,418	5,363
Cost of sales
Materials	1,643	1,504	1,546
Cost of labor	791	777	753
Depreciation and amortization	384	363	317
Energy	349	343	315
Other	535	759	772
	3,702	3,746	3,703

---

F - 114

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2622 - Details of Income Statement Items (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)

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

	For the year ended December 31
	2018	2017	2016
	$ millions	$ millions	$ millions

Selling, transport and marketing expenses
Transport	553	497	475
Cost of labor	125	122	119
Other	120	127	128
	798	746	722
General and administrative expenses
Cost of labor	172	170	188
Professional Services	44	49	77
Other	41	42	56
	257	261	321
Research and development expenses, net
Cost of labor	38	40	48
Other	17	15	25
	55	55	73

---

	For the year ended December 31
	2018	2017	2016
	$ millions	$ millions	$ millions

Other income
Capital gain	841	54	-
Past service cost	7	-	14
Retroactive electricity charges	-	6	16
Insurance compensation	-	30	30
Other	11	19	11
Other income recorded in the income statements	859	109	71
Other expenses
Provision for legal claims	31	31	21
Impairment of assets	19	32	489
Provision for historical waste removal and site closure costs	18	-	51
Provision for early retirement and dismissal of employees	7	20	39
Environment related provisions	1	7	-
Other	8	-	18
		��
Other expenses recorded in the income statements	84	90	618

---

F - 115

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 22 - Details of Contents

Income Statement Items (cont’d)

	For the year ended December 31
	2018	2017	2016
	$ millions	$ millions	$ millions

Financing income and expenses
Financing income:
Financing income recorded in relation to employee benefits	7	-	-
Net change in fair value of derivative financial instruments	-	104	24
Net gain from changes in exchange rates and interest income	49	1	1
	56	105	25
Financing expenses:
Interest expenses to banks and others	117	120	151
Financing expenses in relation to employee benefits	-	38	17
Banks and finance institutions commissions (mainly commission on early repayment of loans)	18	16	4
Net change in fair value of derivative financial instruments	101	-	-
Net loss from changes in exchange rates	-	78	7
Financing expenses	236	252	179
Net of borrowing costs capitalized	22	23	22
	214	229	157
Net financing expenses recorded in the income statements	158	124	132

---

F - 116

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2723 - 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) hedging ofto reduce the exposure to foreign currency risks, commodity price risks, energy and marine transport 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

We regularly monitor on a regular basis the extent of the exposuresour exposure 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 frameworkrate of the annual budget. The Finance Committee ofhedging transactions for 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 management implements the policies that are determined, while taking into considerationvarious risks described below. We execute hedging transactions according to our hedging policy with reference to the actual developments and anticipated developmentsexpectations in the various markets.

B. Groups and measurement bases of financial assets and financial liabilities

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

)

	As at December 31, 2018
	Financial assets			Financial liabilities
	Measured at fair value through the statement of income	Measured at fair value through the statement of comprehensive income	Measured at amortized cost	Measured at fair value through the statement of income	Measured at amortized cost
	$ millions	$ millions	$ millions	$ millions	$ millions

Cash and cash equivalents	-	-	121	-	-
Short-term investments and deposits	-	-	92	-	-
Trade receivables	-	-	990	-	-
Other receivables	13	-	30	-	-
Investments at fair value through other comprehensive income	-	145	-	-	-
Other non-current assets	15	-	66	-	-
Total financial assets	28	145	1,299	-	-
Short term credit	-	-	-	-	(610)
Trade payables	-	-	-	-	(715)
Other current liabilities	-	-	-	(21)	(330)
Long-term debt and debentures	-	-	-	-	(1,815)
Other non-current liabilities	-	-	-	-	(6)
Total financial liabilities	-	-	-	(21)	(3,476)
Total financial instruments, net	28	145	1,299	(21)	(3,476)

---

F - 117

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 23 - Financial Instruments and Risk Management (cont'd)

B. Groups and measurement bases of financial assets and financial liabilities (cont'd)

	As at December 31, 2017
	Financial assets			Financial liabilities
	Measured at fair value through the statement of income	Measured at fair value through the statement of comprehensive income	Measured at amortized cost		Measured at fair value through the statement of income	Measured at amortized cost
	$ millions	$ millions	$ millions		$ millions	$ millions

Cash and cash equivalents	-	-	83	-	-
Short-term investments and deposits	-	-	90	-	-
Trade receivables	-	-	932	-	-
Other receivables	5	-	81	-	-
Investments at fair value through other comprehensive income	-	212	-	-	-
Other non-current assets	64	-	9	-	-
Total financial assets	69	212	1,195	-	-
Short term credit	-	-	-	-	(822)
Trade payables	-	-	-	-	(790)
Other current liabilities	-	-	-	(3)	(311)
Long-term debt and debentures	-	-	-	-	(2,388)
Other non-current liabilities	-	-	-	(3)	(1)
Total financial liabilities	-	-	-	(6)	(4,312)
Total financial instruments, net	69	212	1,195	(6)	(4,312)

---

F - 118

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 23 - Financial Instruments and Risk Management (cont'd)

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 it 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. AllMost of 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 amount of approximately $5$6 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 iswhich are considered doubtful.

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.

F - 119

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 23 - Financial Instruments and Risk Management (cont'd)

C. Credit risk (cont’d)

(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 ($ 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

	As at December 31
	Carrying amount ($ millions)
	2018	2017

Cash and cash equivalents	121	83
Short term investments and deposits	92	90
Trade receivables	990	932
Other receivables	43	86
Investments at fair value through other comprehensive income	145	212
Other non-current assets	81	73
	1,472	1,476

---

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 ($ millions)
	2018	2017

Western Europe	294	332
Asia	342	293
North America	150	131
South America	106	70
Israel	72	70
Other	26	36
	990	932

---

F - 120

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2723 - Financial Instruments and Risk Management (cont’d)

(cont'd)

C. Credit risk (cont’d)

(cont'd)

(3) Aging of debts and impairment losses

The aging of trade receivables at the reporting date was:

		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	)

	As at December 31
	2018		2017
	Gross	Impairment	Gross	Impairment
	$ millions	$ millions	$ millions	$ millions

Not past due	829	-	785	-
Past due up to 3 months	114	-	125	-
Past due 3 to 12 months	38	(1)	23	(6)
Past due over 12 months	12	(2)	10	(5)
	993	(3)	943	(11)

---

The movement in the allowance of doubtful accounts during the year was as follows:

		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

	2018	2017
	$ millions	$ millions

Balance as at January 1	11	6
Additional allowance	1	5
Write offs	(7)	(1)
Reversals	(1)	-
Changes due to translation differences	(1)	1
Balance as at December 31	3	11

---

F - 121

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 23 - Financial Instruments and Risk Management (cont'd)

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

Table of Contents

	As at December 31, 2018
	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)	544	556	-	-	-
Trade payables	715	715	-	-	-
Other current liabilities	330	330	-	-	-
Long-term debt and debentures	1,881	152	453	1,084	1,166
	3,470	1,753	453	1,084	1,166
Financial liabilities – derivative instruments utilized for economic hedging
Foreign currency and interest derivative instruments	16	16	-	-	-
Derivative instruments on energy and marine transport	5	4	1	-	-
	21	20	1	-	-

---

F - 122

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2723 - Financial Instruments and Risk Management (cont’d)

(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

(cont'd)

	As at December 31, 2017
	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)	810	822	-	-	-
Trade payables	790	790	-	-	-
Other current liabilities	310	310	-	-	-
Long-term debt and debentures	2,400	102	345	1,085	1,358
	4,310	2,024	345	1,085	1,358
Financial liabilities – derivative instruments utilized for economic hedging
Foreign currency and interest derivative instruments	6	3	-	-	3

---

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.

F - 123

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 23 - Financial Instruments and Risk Management (cont'd)

E. Market risk (cont'd)

1. Interest risk (cont'd)

(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

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	)

	As at December 31
	2018	2017
	$ millions	$ millions

Fixed rate instruments:
Financial assets	151	88
Financial liabilities	(1,728)	(1,800)
	(1,577)	(1,712)
Variable rate instruments
Financial assets	128	97
Financial liabilities	(714)	(1,428)
	(586)	(1,331)

---

(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 wouldwill 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.

(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, 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

constant.

	As at December 31, 2018
	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	$ millions	$ millions	$ millions

Changes in U.S Dollar interest
Non-derivative instruments	(1)	(1)	1	1
SWAP instruments	(18)	(9)	9	18
	(19)	(10)	10	19
Changes in Israeli Shekel interest
SWAP instruments	19	10	(10)	(19)

---

F - 124

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 23- Financial Instruments and Risk Management (cont'd)

E. Market risk (cont’d)

1. Interest risk (cont’d)

(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

Table of Contents

	As at December 31, 2018
	Carrying amount (fair value)	Stated amount	Maturity date	Interest rate range
	$ millions	$ millions	Years	%

U.S Dollar
SWAP contracts from variable interest to fixed interest	-	250	2019-2024	1.7%-2.6%
Israeli Shekel
Swap contracts from fixed ILS interest to fixed USD interest	15	486	30/3/2024	2.45%-4.74%
Euro
Swap contracts from variable USD interest to fixed EUR interest	(1)	334	15/2/2019	1-month Libor

---

	As at December 31, 2017
	Carrying amount (fair value)	Stated amount	Maturity date	Interest rate range
	$ millions	$ millions	Years	%

U.S Dollar
SWAP contracts from variable interest to fixed interest	(3)	350	2018-2024	1.36% - 2.6%
Israeli Shekel
SWAP contracts from fixed ILS interest to fixed USD interest	64	489	1/3/2024	2.45% - 4.74%
Euro
SWAP contracts from variable USD interest to fixed EUR interest	(1)	51	15/8/2018	1-month Libor

---

F - 125

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 27 -23- 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.

Turkey Lira.

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% strengtheningincrease 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)
		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	)

	As at December 31
	Impact on profit (loss)
	2018	2017
	$ millions	$ millions

Non-derivative financial instruments
U.S Dollar/Euro	(64)	(9)
U.S Dollar/Israeli Shekel	92	92
U.S Dollar/British Pound	(3)	3
U.S Dollar/Chinese Yuan	(12)	(4)
U.S Dollar/Turkey Lira	(1)	(1)

---

A 10% weakeningdecrease of the US$ against the above currencies at December 31 would have the same effect but in the opposite direction.

F - 126

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 23 - Financial Instruments and Risk Management (cont'd)

E. Market risk (cont'd)

2. Currency risk (cont'd)

(a) Sensitivity analysis (cont'd)

Presented hereunder is a sensitivity analysis of the Group’s foreign currency derivative instruments as at December 31, 2015.2018. 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. 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

Table of Contents

	As at December 31, 2018
	Increase 10%	Increase 5%	Decrease 5%	Decrease 10%
	$ millions	$ millions	$ millions	$ millions

Euro/ U.S Dollar
Forward transactions	9	4	(4)	(8)
Options	5	2	(2)	(4)
SWAP	34	17	(17)	(34)
U.S Dollar/Israeli Shekel
Forward transactions	(32)	(17)	19	39
Options	(75)	(41)	19	43
SWAP	(48)	(25)	28	58
British Pound/U.S Dollar
Forward transactions	(4)	(2)	2	3
Options	(1)	(1)	-	1
U.S Dollar/Chinese Yuan  Renminbi
Forward transactions	(3)	(1)	2	3
British Pound/Euro
Forward transactions	(4)	(2)	2	4

---

F - 127

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2723 - Financial Instruments and Risk Management (cont’d)

(cont'd)

E. Market risk (cont’d)

(cont'd)

2.  Currency risk (cont'd)

(b) Terms of derivative financial instruments used to economically hedgereduce foreign currency risk

		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

	As at December 31, 2018
	Carrying amount	Stated amount	Average
	$ millions	$ millions	exchange rate

Forward contracts
U.S Dollar/Israeli Shekel	2	352	3.7
Euro/U.S Dollar	2	86	1.2
Euro/British Pound	1	19	0.9
U.S Dollar/British Pound	-	32	1.3
U.S Dollar/Chinese Yuan Renminbi	-	29	6.5
Other	-	37	-
Currency and interest SWAPs
U.S Dollar/Israeli Shekel	15	486	3.7
Euro/U.S Dollar	(1)	334	1.1
Put options
U.S Dollar/Israeli Shekel	1	695	3.6
Euro/U.S Dollar	2	45	1.2
U.S Dollar/Japanese Yen	-	3	114.3
U.S Dollar/British Pound	-	11	1.3
Call options
U.S Dollar/Israeli Shekel	(15)	695	3.6
Euro/U.S Dollar	-	45	1.2
U.S Dollar/Japanese Yen	-	3	114.3
U.S Dollar/British Pound	-	11	1.3

---

F - 128

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 23 - Financial Instruments and Risk Management (cont'd)

E. Market risk (cont'd)

2. Currency risk (cont'd)

(b) Terms of derivative financial instruments used to reduce foreign currency risk (cont’d)

	As at December 31, 2017
	Carrying amount	Stated amount	Average exchange rete
	$ millions	$ millions

Forward contracts
U.S Dollar/Israeli Shekel	2	430	3.5
Euro/U.S Dollar	(3)	320	1.2
Euro/British Pound	-	20	0.9
U.S Dollar/British Pound	-	24	1.3
U.S Dollar/Chinese Yuan  Renminbi	(1)	33	6.7
Other	-	33	-
Currency and interest SWAPs
U.S Dollar/Israeli Shekel	64	489	3.7
Put options
U.S Dollar/Israeli Shekel	5	525	3.4
Euro/U.S Dollar	-	63	1.2
U.S Dollar/Japanese Yen	-	3	115.5
Call options
U.S Dollar/Israeli Shekel	(1)	525	3.4
Euro/U.S Dollar	(2)	63	1.2
U.S Dollar/Japanese Yen	-	3	115.5

---

The maturity date of all of the derivatives used to economically hedge foreign currency risk is up to a year.

F-93

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F - 129

---

Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2723 - Financial Instruments and Risk Management (cont’d)

(cont'd)

E. Market risk (cont’d)

(cont'd)

2. Currency risk (cont'd)

(c) Linkage terms of monetary balances – in millions 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

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	As at December 31, 2018
	US Dollar	Euro	British Pound	Israeli Shekel	Brazilian Real	Chinese Yuan Renminbi	Others

Non-derivative instruments:
Cash and cash equivalents	41	21	4	2	5	37	11
Short term investments and deposits	74	3	-	-	-	12	3
Trade receivables	516	222	60	60	25	72	35
Other receivables	6	12	-	12	-	-	-
Investments at fair value through other comprehensive income	-	-	-	-	-	145	-
Other non-current assets	60	1	-	1	4	-	-
Total financial assets	697	259	64	75	34	266	49
Short-term credit	201	166	19	34	6	184	-
Trade payables	150	188	23	265	11	72	6
Other current liabilities	55	46	7	192	2	19	9
Long term debt, debentures and others	1,322	5	-	480	13	1	-
Total financial liabilities	1,728	405	49	971	32	276	15
Total non-derivative financial instruments, net	(1,031)	(146)	15	(896)	2	(10)	34
Derivative instruments:
Forward transactions	-	86	51	352	-	29	37
Cylinder	-	45	11	695	-	-	3
SWAPS – U.S Dollar into Israeli Shekel	-	-	-	486	-	-	-
SWAPS – U.S Dollar into Euro	-	334	-	-	-	-	-
Total derivative instruments	-	465	62	1,533	-	29	40
Net exposure	(1,031)	319	77	637	2	19	74

---

F - 130

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2723 - 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

(cont'd)

Table

2. Currency risk (cont'd)

(c) Linkage terms of Contents

monetary balances – in millions of Dollars (cont'd)

	As at December 31, 2017
	US Dollar	Euro	British Pound	Israeli Shekel	Brazilian Real	Chinese Yuan Renminbi	Others

Non-derivative instruments:
Cash and cash equivalents	19	18	7	1	7	22	9
Short term investments and deposits	82	1	-	-	-	5	2
Trade receivables	419	246	48	59	31	92	37
Other receivables	40	1	-	39	-	-	1
Investments at fair value through other comprehensive income	-	-	-	-	-	212	-
Other non-current assets	5	1	-	-	3	-	-
Total financial assets	565	267	55	99	41	331	49
Short-term credit	427	158	20	36	8	173	-
Trade payables	187	182	23	289	15	85	9
Other current liabilities	95	77	15	96	2	21	5
Long term debt, debentures and others	1,721	29	-	522	22	98	-
Total financial liabilities	2,430	446	58	943	47	377	14
Total non-derivative financial instruments, net	(1,865)	(179)	(3)	(844)	(6)	(46)	35
Derivative instruments:
Forward transactions	-	320	44	430	-	33	33
Cylinder	-	63	-	525	-	-	3
Total derivative instruments	-	383	44	955	-	33	36
Net exposure	(1,865)	204	41	111	(6)	(13)	71

---

F - 131

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2723 - Financial Instruments and Risk Management (cont’d)

(cont'd)

E. Market risk (cont’d)

3. Other price risk

A. Investment in securities

shares

The Group companies haveCompany has an investment in marketable securities,of 15% of the issued and outstanding share capital on a fully diluted basis of YYTH, in the amount of approximately $26 million.$145 million (as at December 31, 2018). The impact of the changeinvestment is measured at fair value, and fair value updates, are recognized directly in the fair value of this investment will be recorded in theconsolidated statement of income in “financing expenses” category.

comprehensive income.

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, 2015,2018, the fair value of the marine shipping and energy derivatives was approximately $9.9 million (liability).

$(5) million.

F. Fair value of financial instruments

The carrying amounts in the books of certain financial 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, short-term credit, payables and other credit balances, long-term loans bearing variable interest and other liabilities, and derivative financial instruments, correspond to or approximate their fair value.

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

	As at December 31, 2018		As at December 31, 2017
	Carrying amount	Fair value	Carrying amount	Fair value
	$ millions	$ millions	$ millions	$ millions

Loans bearing fixed interest (1)	238	244	271	279
Debentures bearing fixed interest
Marketable (2)	1,201	1,217	1,247	1,291
Non-marketable (3)	281	279	281	288
	1,720	1,740	1,799	1,858

---

(1) The fair value 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, 20142018 for the shekel, euro and dollaryuan loans – 3.22%was 2.8%, 1.53%1.7%, and 3.18%5.0%, respectively (December 31, 2017 for the shekel, euro and yuan loans - 2.4%, 1.7%, and 6.1%, respectively).

F - 132

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 23 - Financial Instruments and Risk Management (cont'd)

F. Fair value of financial instruments (cont'd)

(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 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, 20152018 was 4.85%5.3% (December 31, 20142017 – 4.04%4.57%).

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)4).

The following levels were defined:

F-96

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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

Table

	As at December 31, 2018
	Level 2
	$ millions

Investments at fair value through other comprehensive income (1)	145
Derivatives used for economic hedging, net	7
	152

---

	As at December 31, 2017
	Level 2
	$ millions

Investments at fair value through other comprehensive income (1)	212
Derivatives used for economic hedging, net	63
	275

---

(1) Investment in the share capital of Contents

YYTH was subject to a three-year lock‑up period as required by Chinese law, which was expired in January 2019. Measurement of the fair value of the discount rate in respect of the lock‑up period was calculated by use of the Finnerty 2012.

The impact deriving from a possible and reasonable change in these data items, which are not observed, is not material.

F - 133

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2824 - Earnings per Share

Basic earnings per share

Calculation of the basic earnings per share for the year ended December 31, 2015,2018, 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
		2015				2014				2013
		$ millions
Earnings attributed to the shareholders of the Company			509				464				819

	For the year ended December 31
	2018	2017	2016
	$ millions	$ millions	$ millions

Earnings (losses) attributed to the shareholders of the Company

1,240

364

(122)

---

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
	2018	2017	2016
	Shares thousands	Shares thousands	Shares thousands

Balance as at January 1	1,276,238	1,274,298	1,272,516
Shares issued during the year	73	1,054	-
Shares vested	898	720	779
Weighted average number of ordinary shares used in computation of the basic earnings per share	1,277,209	1,276,072	1,273,295

---

F - 134

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 2824 - Earnings per Share (cont’d)

Diluted earnings per share

Calculation of the diluted earnings per share for the year ended December 31, 2015,2018, 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
		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
		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

	For the year ended December 31
	2018	2017	2016
	Shares thousands	Shares thousands	Shares thousands

Weighted average number of ordinary shares used in the computation of the basic earnings per share	1,277,209	1,276,072	1,273,295
Effect of stock options and restricted shares	2,572	925	-
Weighted average number of ordinary shares used in the computation of the diluted earnings per share	1,279,781	1,276,997	1,273,295

---

At December 31, 2015, 242018, 5 million options (at December 31, 20142017 and 2013, 162016 – 20 million options)options and 14 million options, respectively), were excluded from the diluted weighted average number of ordinary shares calculation as their effect would have been anti-dilutive.

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

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Note 2925 - Related and Interested Parties

Related parties within its meaning in IAS 24 (2009), “Related Parties Disclosure”; Interested parties within their meaning in Paragraph 1 of the definition of an “interested party” in Section 1 of the Israeli Securities Law, 1968.

A. Parent company and subsidiaries

The Group's parent company is Israel Corporation Ltd. (“Israel Corp.”).

A.

Parent company and subsidiaries

Israel Corp. is a public company listed for trading on the Tel Aviv Stock Exchange (TASE). Based on the information the Company received fromprovided by Israel Corp., Millenium Investments Elad Ltd. (“Millenium”) and Mr. Idan Ofer are considered as joint controlling shareholders jointly of Israel Corp., for purposes of the Israeli Securities Law (each of Millenium and Mr. Idan Ofer hold shares in Israel Corp. directly, and Mr. Idan Ofer serves as a director of Millenium and has an indirect interest in it as the beneficiary of the foreign discretionary trust that has indirect control of Millenium)Millenium, as stated below). Millenium holds approx. 46.94%approximately 46.94% of the share capital in Israel Corp., which holds approx. 46.04%as at December 31, 2018 approximately 45.86% of the voting rights and 48.88% of the issued share capital of the Company.

F - 135

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 25 - Related and Interested Parties (cont’d)

A. Parent company and subsidiaries (cont’d)

Millenium is held by Mashat Investments Ltd. (“Mashat”) and by XT Investments Ltd. (“XT Investments”), with 80% and 20% holdings,holding rates in the issued share capital, respectively. (It is noted that Mashat granted XT Investments a power of attorney for a fixed period (which is extendable) to vote according to XT's discretion at General Meetings of Millenium in respect of shares constituting 5% of the voting rights in Millenium). Mashat is a private company, wholly owned by a Dutch company, Ansonia Holdings Singapore B.V. (“Ansonia”). which is incorporated in the Netherlands. Ansonia is a wholly-ownedwholly owned subsidiary of Jelany Corporation N.V. (registered in Curaçao), which is a wholly-ownedwholly owned subsidiary of thea Liberian company, Court Investments Ltd. (“Court”). Court is wholly owned by a foreign discretionary trust, in which Mr. Idan Ofer is the beneficiary. XT Investments which directly holds approximately 1.24% of the share capital of Israel Corp., is a shareholder in Millenium as stated. XT Investments is a private company, wholly ownedfully held by XT Holdings Ltd. (“XT Holdings”), a private company whose ordinary shares are held in equal shares by Orona Investments Ltd. (which is indirectly controlled by Mr. Ehud Angel) and by Lynav Holdings Ltd., a company that is controlled by a foreign discretionary trust in which Mr. Idan Ofer is a primethe beneficiary. Mr. Ehud Angel holds, among other things, a special share that grants 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 the 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 Corp. Furthermore, Mr. Idan Ofer holds directly approximately 3.85% of the share capital of Israel Corp. Furthermore, XT Investments directly holds approximately 0.03%

As of December 31, 2018, the number of ICL's shares held by Israel Corp. does not include 9,909,848 ordinary shares, which are subject to certain forward sale agreements, as set forth on ICL's registration statement on Form F-1 (hereinafter - the Forward Agreements), filed with the Securities and Exchange Commission on September 23, 2014 (the "Financial Transaction"). Israel Corp. does not have voting rights or dispositive power with respect to the shares subject to the Financial Transaction, which have been made available to the financial entities (hereinafter - the Forward Counterparties) with whom it engaged in the Transaction. As of December 31, 2018, the settlement period of the Company's capital (namely, 377,662 Ordinary Shares). RegardingFinancial Transaction has commenced, which is expected to be executed, subject to its terms, in components at several settlement dates that will occur over a period of approximately nine months. In accordance with the group subsidiaries – see terms of the Financial Transaction, Israel Corp. will not regain voting rights and dispositive power with respect to the said shares (“physical settlement”), in whole or in part, unless it informs the Forward Counterparties otherwise at the relevant settlement dates specified in the Forward Agreements. Even though Israel Corp. holds less than 50% of the Company’s ordinary shares, it still has decisive influence at the General Meetings of the Company’s shareholders and, effectively, it has the power to appoint directors and to exert significant influence with respect to the composition of the Company’s Board of Directors.

As of December 31, 2018, 141 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 $260 million.

F - 136

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 30, regarding the Group entities.

25 - Related and Interested Parties (cont’d)

B. Benefits to key management personnel (including directors)

The senior managers, in addition to their salaries, are entitled to non-cash benefits (such as vehicle and telephone, mobile 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)21).

Benefits

Set forth below are details of the benefits for key management personnel (in total 25in 2018 and 232017.

The Company's key management personnel in 2018, consists of 27 individuals, of whom 14 are not employed by the company (directors). The number of key management personnel in 2018, includes 7 individuals whose tenure was terminated during 2018. The Company's key management personnel in 2017, consisted of 21 individuals, of whom 10 were not employed by the Company (directors).

	For the year ended December 31
	2018	2017
	$ millions	$ millions

Short-term benefits	11	8
Post-employment benefits	1	1
Share-based payments	4	4
Total *	16	13
* To interested parties employed by the Company	5	4
* To interested parties not employed by the Company	1	1

---

The General Meeting of the Company’s shareholders held on April 24, 2018 approved the service and employment conditions of the Company’s incoming CEO, Mr. Raviv Zoller, including directors, in 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

Subsequentequity compensation; a special bonus to the balance sheet date,Executive Chairman of the Company’s Board of Directors, Mr. Johanan Locker, in respect of 2017; and renewal of the management services agreement with the Company’s controlling shareholder, Israel Corporation Ltd.

On May 14, 2018, Mr. Raviv Zoller entered into office as CEO of the Company, announced thatreplacing the Company's Acting CEO, 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 nominationAsher Grinbaum. Pursuant 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 appointmentapproval of the newly elected candidateGeneral Meeting of the Company’s shareholders, as wellaforementioned upon entering into office as his termsCEO, Mr. Zoller was granted with an annual equity compensation for 2018 at a total value of tenure,ILS 4 million, consisting of 120,919 restricted shares and by this allow an orderly overlap between Mr. Gilad and384,615 options exercisable into Company shares.

F - 137

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Notes to the new elected Chairman.

F-100

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Table of Contents

Note 2925 - Related and Interested Parties (cont’d)

B. Benefits to key management personnel (including directors) (cont'd)

The Annual General Meeting of the Company's shareholders was held on August 20, 2018, approved an equity compensation for the year 2019 to each of the Company’s directors, as may serve from time to time, excluding the Chairman of the Company’s Board of Directors, Mr. Johanan Locker, and the directors who are officeholders in our controlling shareholder, Israel Corporation Ltd., Messrs. Aviad Kaufman, Avisar Paz and Sagi Kabla, to be issued on January 1, 2019, in the form of restricted Ordinary Shares, with a value per grant of NIS 310,000 (approximately $85,635), an equity compensation for 2018 to our Chairman of the Company’s Board, Mr. Johanan Locker  and annual bonus for 2017 in an amount of NIS 1,198,000 (approximately $330,939) and a special bonus in an amount of NIS 1,800,000 (approximately $497,238), to our retired Acting CEO of the Company, Mr. Asher Grinbaum, pursuant to the AGM's resolution out of the special bonus.

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 a “Negligible” transaction“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 – “thethe Negligibility Threshold”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 the Company’sCompany'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 (assets acquired or 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.

Acquisition of assets

Assets ratio – the amount of the assets in the transaction divided by total assets.

Sale of assets

Assets ratio – the amount of the assets in the transaction divided by total assets.

Profit ratio – the profit or loss attributed to the transaction divided by the total annual comprehensive income or loss during the period.

Financial liabilities

Liabilities ratio – the amount of the liabilities in the transaction divided by the total liabilities.

Financing expenses ratio – the expected financing expenses in the specific transaction divided by the total financing expenses in the statement of income.

F - 138

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Notes to the Consolidated Financial Statements as at December 31, 2018

Note 25 - Related and Interested Parties (cont’d)

C. Ordinary transactions that are not exceptional (cont'd)

Acquisition and sale of products, services and manufacturing inputs

Revenue ratio – estimated revenue from the transaction divided by the annual revenue, or

Manufacturing expenses ratio – the amount of the expenses in the transaction divided by the annual cost of sales.

(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
		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 the Company and is in effect until 2018. Additionally, on February 28, 2013, the Company’s Audit Committee and

	For the year ended December 31
	2018	2017	2016
	$ millions	$ millions	$ millions

Sales	5	8	35
Cost of sales	19	97	113
Selling, transport and marketing expenses	7	8	7
Financing expenses (income), net	3	(9)	-
General and administrative expenses	1	1	1
Management fees to the parent company	1	1	1

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(1)

A subsidiary in the Phosphate Solutions segment is engaged in a long-term agreement with Nutrien, for acquisition of food‑quality phosphoric acid. The agreement is in effect until the end of 2018. In October 2017, the Company signed a new agreement with Nutrien for acquisition of phosphoric acid commencing January 2019 up to 2025. Nutrien was an interested party up to January 2018.

(2)

In 2013, the Company's Board of Directors authorized certain subsidiaries in Israel to purchase electricity from OPC Rotem (a company related to the Company’s controlling shareholder).

(3)

On January 17, 2018, our Audit and Accounting Committee and our Board of Directors approved, and on April 24, 2018, our General Meeting of shareholders approved, the renewed management agreement effective retroactively as of January 1, 2018, for an additional term of three years, expiring on December 31, 2020. According to the renewed management agreement, the annual management fee paid to Israel Corp for each calendar year, shall not exceed $1 million plus VAT. Such amount includes the overall value of the cash and equity compensation for the service of our directors whom are office holders of Israel Corp., and any and all prior or other compensation arrangements relating to such directors were cancelled. In addition, the renewed agreement was amended so as to no longer include an increase of management fees to a threshold of $3.5 million plus VAT in case an executive chairman of the Board is appointed on behalf of Israel Corporation. All other provisions of the management agreement remained unchanged. According to the decision of the General Meeting of our shareholders, the Audit & Accounting Committee will annually examine the reasonableness of the Management Fees paid in the previous year against the Management Services actually provided by Israel Corp to the Company in the same year. On February 4 and 25, 2019, the Audit & Accounting Committee examined the management services that were actually rendered in 2018 against the management fees paid in that year and concluded that the fees were reasonable

F - 139

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Notes 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

Consolidated Financial Statements as at December 31, 2018

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Note 2925 - 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.

parties(cont’d)

(4)

In March 2017, ICL's Audit and Accounting Committee and its Board of Directors approved a framework agreement with the controlling shareholder, Israel Corporation Ltd. (hereinafter – Israel Corp.), for three years, according to which Israel Corp. can deposit, occasionally, an amount of up to $150 million in short‑term U.S. dollar or shekel deposits in ICL subject to ICL’s approval. In August 2017, the terms of the framework agreement were expanded to up to $250 million. The terms and conditions of the deposits, including the interest rate, will be determined on the date of the deposits. The deposits will be received by ICL without security. In fourth quarter of 2017, the Company received short-term loans, in a total amount of $175 million, for a period of 6 months, bearing interest at an annual rate of 1.72%–1.99%, which were repaid in the first quarter of 2018.

(5)

In December 2017, the Company, Oil Refineries Ltd. (a public company controlled by Israel Corporation Ltd.) and OPC Energy Ltd. (a public company that is controlled indirectly by one of the Company’s controlling shareholders) signed individual agreements with Energean Israel Limited for supply of natural gas. The company share will be up to 13 BCM of natural gas over a period of 15 years, in the total amount of about $1.9 billion. For further information see Note 20.

E. Balances with related and interested parties

1)

Composition:

		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

	As at December 31
	2018	2017
	$ millions	$ millions

Other current assets	28	38
Other current liabilities	7	191

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F - 140

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Notes to the exchange rate on the effective date.Consolidated Financial Statements as at December 31, 2018

Note 26 – Group Main Entities

		Ownership interest in its subsidiary and investee companies for the year ended December 31
Name of company	Principal location of the company’s activity	2018	2017
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	0.00%	100.00%
Fertilizers and Chemicals Ltd.	Israel	100.00%	100.00%
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%
ICL Puriphos B.V.	The Netherlands	100.00%	100.00%
ICL-IP America Inc.	United States of America	100.00%	100.00%
ICL Specialty Products Inc.	United States of America	100.00%	100.00%
Everris N.A. Inc.	United States of America	100.00%	100.00%
Phosphorus Derivatives Inc.**	United States of America	0.00%	100.00%
BK Giulini GmbH	Germany	100.00%	100.00%
ICL Holding Germany GmbH	Germany	100.00%	100.00%
ICL I.P. Bitterfeld GmbH	Germany	100.00%	100.00%
Rovita GmbH	Germany	100.00%	100.00%
Prolactal GmbH	Austria	100.00%	100.00%
Cleveland Potash Ltd.	United Kingdom	100.00%	100.00%
ICL Brasil, Ltda.	Brazil	100.00%	100.00%
ICL (Shanghai) Investment Co. Ltd.	China	100.00%	100.00%
Yunnan Phosphate Haikou Co. Ltd.	China	50.00%	50.00%
Sinobrom Compounds Co. Ltd., China	China	75.00%	75.00%
ICL Asia Ltd.	Hong Kong	100.00%	100.00%
ICL Trading (HK) Ltd.	Hong Kong	100.00%	100.00%
Allana Potash Afar PLC***	Ethiopia	100.00%	100.00%

*            The company was merged into "Bromine Compounds Ltd.".

**         Company enters hedging transactionsold.

***       Company 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

liquidation proceedings.

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Note 30

F - 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

141

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