SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains statements that constitute “forward‑looking statements,” many of which can be identified by the use of forward‑looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate”, "strive", "forecast", "targets" and “potential,” among others.
Forward‑looking statements appear in a number of places in this Annual Report and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward‑looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and the actual results may differ materially from those expressed or implied in the forward‑looking statements due to various factors, including, but not limited to, those identified in “Item 3 - Key Information— D. Risk Factors” in this Annual Report. These risks and uncertainties include factors relating to:
Loss or impairment of business licenses or miningmineral extractions permits or concessions; volatility of supply and demand and the impact of competition; the difference between actual reserves and our reserve estimates; natural disasters; failure to raise"harvest" salt which could lead to accumulation of salt at the water level inbottom of the evaporation Pond 5 in the Dead Sea; construction of a new pumping station; disruptions at our seaport shipping facilities or regulatory restrictions affecting our ability to export our products overseas; general market, political or economic conditions in the countries in which we operate; price increases or shortages with respect to our principal raw materials; delays in the completion of major projects by third party contractors and/or termination of engagements with contractors and/or governmental obligations; the inflow of significant amounts of water into the Dead Sea could adversely affect production at our plants; labor disputes, slowdowns and strikes involving our employees; pension and health insurance liabilities; the ongoing COVID-19 pandemic, which has impacted, and may continue to impact our sales, operating results and business operations by disrupting our ability to purchase raw materials, by negatively impacting the demand and pricing for some of our products, by disrupting our ability to sell and/or distribute products, impacting customers' ability to pay us for past or future purchases and/or temporarily closing our facilities or the facilities of our suppliers or customers and their contract manufacturers, or restricting our ability to travel to support our sites or our customers around the world; changes to governmental incentive programs or tax benefits, creation of new fiscal or tax related legislation; changes in our evaluations and estimates, which serve as a basis for the recognition and manner of measurement of assets and liabilities; higher tax liabilities; failure to integrate or realize expected benefits from mergers and acquisitions, organizational restructuring and joint ventures; currency rate fluctuations; rising interest rates; government examinations or investigations; disruption of our, or our service providers', information technology systems or breaches of our, or our service providers', data security; failure to retain and/or recruit key personnel; inability to realize expected benefits from our cost reduction program according to the expected timetable; inability to access capital markets on favorable terms; cyclicality of our businesses; changes in demand for our fertilizer products due to a decline in agricultural product prices, lack of available credit, weather conditions, government policies or other factors beyond our control; Imposingsales of antidumpingour magnesium products being affected by various factors that are not within our control; our ability to secure approvals and countervailing duties on imports of magnesiumpermits from the authorities in Israel to U.S.;continue our phosphate mining operations in Rotem; volatility or crises in the financial markets; uncertainties surrounding the proposed withdrawal of the United Kingdom from the European Union; hazards inherent to mining and chemical manufacturing; the failure to ensure the safety of our workers and processes; cost of compliance with environmental regulatory legislative and licensing restrictions; hazards inherentlaws and regulations related to, chemical manufacturing;and physical impacts of climate change and greenhouse gas emissions; litigation, arbitration and regulatory proceedings; exposure to third party and product liability claims; Productproduct recalls or other liability claims as a result of food safety and food-borne illness concerns; insufficiency of insurance coverage; closing of transactions, mergers and acquisitions; war or acts of terror and/or political, economic and military instability in Israel and its region; filing of class actions and derivative actions against the Company, its executives and Board members; The Company is exposed to risks relating to its current and future activity in emerging markets; and other risk factors discussed under ”Item 3 - Key Information— D. Risk Factors".
Forward‑looking statements speak only as at the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.
This Annual Report contains forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from future results as a result of factors such as those set forth in “Item 3 - Key Information— D. Risk Factors” and ”Item 5 - Operating and Financial Review and Prospects.”
The financial information included in this Annual Report has been prepared in accordance with the International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). None of the financial information in this Annual Report has been prepared in accordance with accounting principles generally accepted in the United States.
This Annual Report contains translations of certain NIScurrencies amounts into U.S. dollars at specified rates solely for your convenience. Unless otherwise indicated, we have translated NIS amounts as at December 31, 2018,2020, into U.S. dollars at an exchange rate of NIS 3.748 to $1.00, and euro amounts into U.S. dollars at an exchange rate of €0.8733.215 to $1.00, the daily representative exchange rate reported by the Bank of Israel for December 31, 2018.2020. Euro amounts were translated into U.S. dollars at an exchange rate of €0.815 to $1.00.
Market data and certain industry data used in this Annual Report were obtained from internal reports and studies, where appropriate, as well as estimates, market research, publicly available information and industry publications, including publications, reports or releases of the International Monetary Fund (“IMF”), the U.S. Census Bureau, the Food and Agriculture Organization of the United Nations (“FAO”), the International Fertilizers Association (“IFA”), the United States Department of Agriculture (“USDA”), the United States Geological Survey, the CRU Group ("CRU"), and Fertecon, the Fertilizer Association of India (“FAI”) and the Brazilian National Fertilizer Association (“ANDA”). Industry publications generally state that the information they include has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Similarly, internal reports and studies, estimates and market research, which we believe to be reliable and accurately extracted by us for use in this Annual Report, have not been independently verified. However, we believe such data is accurate. There is only a limited amount of independent data available about certain aspects of our industry, market and competitive position. As a result, certain data and information about our market rankings in certain product areas are based on our good faith estimates, which are derived from our review of internal data and information, information that we obtain from our customers, and other third-party sources. We believe these internal surveys and management estimates are reliable; however, no independent sources have verified such surveys and estimates.
In presenting and discussing our financial position, operating results and net income results, the management uses certain non-IFRS financial measures. These non-IFRS financial measures should not be viewed in isolation or as alternatives to the equivalent IFRS measures and should be used in conjunction with the most directly comparable IFRS measures. A discussion of non-IFRS measures included in this Annual Report and a reconciliation of such measures to the most directly comparable IFRS measures are contained in this Annual Report under “Item 5 – Operating and Financial Review and Prospects— A. Operating Results”.
In this Annual Report, unless otherwise indicated or the context otherwise requires, all references to “ICL,” the “Group,” the “Company,” “we,” “our,” “ours,” “us” or similar terms refer to Israel ChemicalsICL Group Ltd., together with its consolidated subsidiaries. When we refer to our “parent company”Company” or to “Israel Corporation,” we refer to our controlling shareholder, Israel Corporation Ltd. Unless otherwise indicated or the context otherwise requires, references in this Annual Report to “NIS” are to the legal currency of Israel, “U.S. dollars”, “$” or “dollars” are to United States dollars, “euro” or “€” are to the Euro, the legal currency of certain countries of the European Union, and “British pound” or “£” are to the legal currency of the United Kingdom. See “Item 4 - Information on the Company— A. History and Development of the Company”. We own or have rights to trademarks or trade names that we use in conjunction with the operation of our business. Solely for convenience, trademarks and trade names referred to in this Annual Report may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent of the law, our rights or the rights of the applicable licensor to these trademarks and trade names. In this Annual Report, we also refer to product names, trademarks, and trade names that are the property of other companies. Each of the trademarks and trade names of other companies appearing in this Annual Report belongs to its owners. Our use or display of other companies’ product names, trademarks, or trade names is not intended to and does not imply a relationship with, or endorsement or sponsorship by us of, the product, trademark, or trade name owner, unless we otherwise indicate.
GLOSSARY OF SELECTED TERMS
The following is a glossary of selected terms used in this Annual Report.
| Bromine | A chemical element used as a basis for a wide variety of uses and compounds, and mainly as a component in flame retardants or fire prevention substances. Unless otherwise stated, the term “bromine” refers to elemental bromine. |
| CDP | Carbon Disclosure Project - A non-profit leading organization in the greenhouse gas emissions reporting field. |
| CFR | Cost and freight. In a CFR transaction, the prices of goods to the customer includes, in addition to FOB expenses, marine shipping costs and all other costs that arise after the goods leave the seller’s factory gates and up to the destination port. |
| CLP | Classification, Labeling and Packaging of Substances and Mixtures– EU regulation. |
| CPI | The Consumer Price Index, as published by the Israeli Central Bureau of Statistics. |
| CRU | Intelligence Company providing information on global mining, metal and fertilizers market. |
| Dead Sea Bromine Company | Dead Sea Bromine Company Ltd., included in Industrial Products segment. |
| DAP | Diammonium Phosphate - a fertilizer containing nitrate and phosphorus oxide. |
| EPA | US Environmental Protection Agency. |
| FAO | The Food and Agriculture Organization of the United Nations. |
| FOB | Free on boardon-board expenses are expenses for overland transportation, loading costs and other costs, up to and including the port of origin. In an FOB transaction, the seller pays the FOB expenses and the buyer pays the other costs from the port of origin onwards. |
F&CICL Haifa (Fertilizers & Chemicals) | Fertilizers and Chemicals Ltd., included in Innovative Ag Solutions segment. |
| GHG | Greenhouse gases – air emissions contributing to climate change. |
| Granular | Fertilizer having granular particles. |
| ICL Boulby | A United Kingdom companyCompany included in the Potash segment. |
ICL Iberia (Iberpotash) | Iberpotash S.A., a Spanish companyCompany included in Potash segment. |
| IC | Israel Corporation Ltd. |
| ICL Dead Sea (DSW) | Dead Sea Works Ltd., included in Potash segment. |
| ICL Dead Sea Magnesium (DSM) | Dead Sea Magnesium Ltd., included in Potash segment. |
| ICL Neot Hovav | Subsidiaries in the Neot Hovav area in the south of Israel, including facilities of Bromine Compounds Ltd. Included in Industrial Products segment. |
| ICL Rotem | Rotem Amfert Negev Ltd., included in Phosphate Solutions segment. |
| IFA | The International Fertilizers Industry Association, an international association of fertilizers manufacturers. |
| ILA | Israel Land AuthorityAuthority. |
| IMF | International Monetary Fund. |
| K | The element potassium, one of the three main plant nutrients. |
KNO3 | Potassium Nitrate, soluble fertilizer containing N&P used as a stand-alone product or as a key component of some water-soluble blends. |
| KOH | Potassium hydroxide 50% liquid. |
| MGA | Merchant grade phosphoric acid. |
| MoEP | Israel Ministry of Environmental Protection. |
| N | The element nitrogen, one of the three main plant nutrients. |
| NPK | Complex fertilizer comprised primarily of 3 primary nutrients (N,P,K). |
| NYSE | The New York Stock Exchange. |
| P | The element phosphorus, one of the three main plant nutrients, which is also used as a raw material in industry. |
| Phosphate | Phosphate rock that contains the element phosphorus. Its concentration is measured in units of P2O5. |
| Polyhalite | A mineral marketed by ICL under the brand name Polysulphate™, composed of potash, sulphur, calcium, and magnesium. 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. |
| Polymer | A chemical compound containing a long chain of repeating units linked by a chemical bond and created by polymerization. |
| Potash | Potassium chloride (KCl), used as a plant’s main source of potassium. |
P2O5 | Phosphorus pentoxide. |
P2S5 | Phosphorus pentasulfide. |
| REACH | Registration, Evaluation,, Authorization and Restriction of Chemicals, a framework within the European Union. |
Red MOP | Natural or artificially reddish color MOP. |
| Salt | Unless otherwise specified, sodium chloride (NaCl). |
| S | Sulphur – a chemical used for the production of sulfuric acid for sulfate and phosphate fertilizers, and other chemical processes. |
| Soluble NPK | Soluble fertilizer containing the three basic elements for plant development (nitrogen, phosphorus and potash). |
SOP | Potassium of Sulfate or 0-0-50, used as low chloride potassium source. |
| Standard | Fertilizer having small particles. |
| Tami | Tami (IMI) Research and Development Institute Ltd., the central research institute of ICL. |
| TASE | Tel Aviv Stock Exchange, Ltd. |
| USDA | United States Department of Agriculture. |
| WPA | White Phosphoric Acid, purified from MGA. |
| Urea | A white granular or prill solid fertilizer containing 46% nitrogen. |
| YTH/YPC | The Chinese partner in the Company’s joint venture YPH in China. |
| 4D | Clean green phosphoric acid, used as a raw material for purification processes. |
| PM | Particular matter |
Item 1
– IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
Not Applicable.
Item 2 – OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable.
Item 3 – KEY INFORMATION
A. SELECTED FINANCIAL DATA
We have derived the consolidated statements of income data for the years ended December 31, 2020, 2019, 2018, 2017 2016, 2015 and 20142016 and the consolidated statements of financial position as of December 31, 2020, 2019, 2018, 2017 2016, 2015 and 20142016 from our audited consolidated financial statements which have been prepared in accordance with IFRS, as issued by the IASB for the years ended, December 31, 2020, 2019, 2018, 2017 2016, 2015 and 2014.2016. You should read the consolidated financial data set forth below in conjunction with our consolidated audited financial statements and related notes and the information under “Item 5 - Operating and Financial Review and Prospects”, appearing elsewhere in this Annual Report. Our reporting currency is the U.S. dollar. Our historical results are not necessarily indicative of our results to be expected in any future period.
| | For the Year Ended December 31, |
| | 2018 | 2017 | 2016 | 2015 | 2014 |
| | US$ millions, except for the share data |
| | For the Year Ended December 31, |
| | 2020 | 2019 | 2018 | 2017 | 2016 |
| | US$ millions, except for the share data |
| Sales | 5,556 | 5,418 | 5,363 | 5,405 | 6,111 | | | | | |
| Gross profit | 1,854 | 1,672 | 1,660 | 1,803 | 2,196 | | | | | |
| Operating income (loss) | 1,519 | 629 | (3) | 765 | 758 | | | | | |
| Income (loss) before income taxes | 1,364 | 505 | (117) | 668 | 632 | | | | | |
| Net income (loss) attributable to the shareholders of the Company | 1,240 | 364 | (122) | 509 | 464 | | | | | |
| Earnings (loss) per share (in dollars) : | | | |
Earnings (loss) per share (in dollars): | | |
| Basic earnings (loss) per share | 0.97 | 0.29 | (0.10) | 0.40 | 0.37 | | | | | |
| Diluted earnings (loss) per share | 0.97 | 0.29 | (0.10) | 0.40 | 0.37 | | | | | |
| Weighted average number of ordinary shares outstanding: | | | |
| Basic (in thousands) | 1,277,209 | 1,276,072 | 1,273,295 | 1,271,624 | 1,270,426 | | | | | |
| Diluted (in thousands) | 1,279,781 | 1,276,997 | 1,273,295 | 1,272,256 | 1,270,458 | | | | | |
| Dividends declared per common share (in dollars) | 0.18 | 0.13 | 0.18 | 0.28 | 0.67 | |
Dividends declared per share (in dollars) | | | | | | |
| | As at December 31, |
| | 2018 | 2017 | 2016 | 2015 | 2014 |
| | US$ millions |
| | For the Year Ended December 31, |
| | 2020 | 2019 | 2018 | 2017 | 2016 |
| | US$ millions |
| Statements of Financial Position Data: | | | |
| Total assets | 8,776 | 8,714 | 8,552 | 9,077 | 8,348 | | | | | |
| Total liabilities | 4,861 | 5,784 | 5,893 | 5,889 | 5,348 | | | | | |
| Total equity | 3,915 | 2,930 | 2,659 | 3,188 | 3,000 | | | | | |
B. CAPITALIZATION AND INDEBTEDNESS
Not Applicable.
C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not Applicable.
D. RISK FACTORS
Summary of Risk Factors
Our business, liquidity, financial condition and results of operations could be materially and adversely affected, and even materially so, if any of the risks described below occur. As a result, the trading price of our securities could decline, and investors could lose all or part of their investment. This Annual Report also contains forward‑looking statements that involve risks and uncertainties, see “Special Note Regarding Forward‑Looking Statements.” Our actual results could differ materially and adversely from those anticipated, as a result of certain factors, including the risks facing the Company as described below and elsewhere in the Annual Report. Material risks that may affect our business, operating results and financial condition include, but are not necessarily limited to, those relating to:
RisksOur ability to operate and/or expand our production and operating facilities worldwide is dependent on our receipt of, and compliance with, permits issued by governmental authorities. A decision by a government authority to deny any of our permit applications may impair the Company’s business and its operations.
As a mining and industrial chemicals Company, we are exposed to various legislative and licensing restrictions in the areas of environmental protection and safety. Related to Our Businesscompliance costs and liabilities may adversely affect the results of our operations.
Our miningmineral extraction operations are dependent on concessions, licenses and permits granted to us by the respective governments in the countries wherein they are locatedin which we operate.
Securing the future of the phosphate mining operations at Rotem Israel depends on obtaining several approvals and permits from the authorities in Israel.
The COVID-19 outbreak has impacted and could in the future materially and adversely affect our financial condition and results of operations.
Our operations and sales are exposed to volatility in the supply and demand, mergers of key producers\customers\suppliers, expansion of production capacity and competition from some of the world’s largest chemical and mining companies.
The accumulation of salt at the bottom of Pond 5, the central evaporation pond in our solar evaporation ponds system used to extract minerals from the Dead Sea, requires regular harvesting of the salt in order to maintain a fixed brine volume and thereby sustain the production capacity of extracted minerals and prevent potential damage to the foundations and structures of the hotels and other buildings situated close to the edge of the Pond.
The receding water level in the Northern Basin of the Dead Sea, may require capital and/or operational expenses in order to enable the continuation of the Company's operations in the Dead Sea.
We are exposed to risks associated with our international sales and operations, which could adversely affect our sales to customers as well as our operations and assets in various countries. Some of these factors may also make it less attractive to distribute cash generated by our operations outside Israel to our shareholders, use cash generated by our operations in one country to fund our operations or repayments of our indebtedness in another country and support other corporate purposes or the distribution of dividends.
ICL Group Limited 3
Changes in our evaluations and estimates, which serve as a basis for analyzing our contingent liabilities and for the recognition and measurement of assets and liabilities, including provisions for waste removal and the reclamation of mines, may adversely affect our business dependsresults and financial situation.
Our tax liabilities may be higher than expected.
Due to the nature of our Company, we are exposed to administrative and legal proceedings, both civil and criminal, including as a result of alleged environmental contamination caused by certain of our facilities.
Risks Related to Our Business
Our mineral extraction operations are dependent on concessions, licenses and permits granted to us by the respective governments in the countries in which we operate
Our mineral extraction businesses depend on concessions granted to us by the respective governments in the countries in which we operate. Loss of concessions, licenses and/or permits, as well as material changes to the conditions of these concessionsthereof, could materially and adversely affect our business, financial condition and results of operations.
We extract potash, phosphate, bromine, magnesium and certain other minerals in Israel, potash and salt in Spain, Polysulphate™Polysulphate®, salt, and certain other minerals in the United Kingdom and phosphate in China, pursuant to concessions and permits in those countries.
Israel
In Israel,Pursuant to the Israeli Dead Sea Concession Law, 1961 (hereinafter – the Concession Law), as amended in 1986, and the concession thatdeed attached as an addendum to the Concession Law, DSW was granted by the governmenta concession to utilize the resources of the Dead Sea (mainly potash, bromine and magnesium) endsto lease the land required for its plants in Sodom for a period ending on March 31, 2030. In consideration, we pay royalties2030, accompanied by a priority right to receive the Israeli government.concession after its expiration, should the Government decide to offer a new concession. There is no assurance that the Company will continue to hold the concession will be renewed atbeyond that time.period.
In 2015, the Minister of Finance appointed a team to determine the “governmental activities to be conducted towards the endaccordance with section 24 (a) of the concession period”. The public’s comments in this matter were submittedSupplement 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.
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 assumingit is stated, among other things, that these assets would be returned to the government at the end of the concession period. The determination dateperiod all the tangible assets at the concession area will be transferred to the government, in exchange of their amortized replacement value – 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 andassets as if they are purchased as new at the remaining useful life of the fixed assets 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. There is no resulting change in the Company's consolidated financial statements.
The Property, Plant and Equipment value provided in the opinion is based on the Replacement Cost methodology which is one of the methods in international accounting standards (IFRS) for the measurement of fixed assets 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 terminationend of the concession period. Nevertheless, there could be other interpretations toperiod, less their technical depreciation based on their maintenance condition and the manner of implementationunique characteristics 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. Dead Sea area.
There is no certainty as to the manner of interpretation of the provisions of the Concession Law in this context as will be adopted in a legal proceeding, to the extent such proceeding would occur. It is expected that the value of the Property, Plant and Equipment, at the end of the concession period, will change, even materially, as time passes and as a result of purchase and disposal of assets included in the future valuation.For further information, see Note 18(b) to our Audited Financial Statements.
See “ItemICL Group Limited 4 - Information on the Company— D. Property, Plant and Equipment— Mineral Extraction and Mining Operations” and “Concessions and Mining Rights”.
We mine phosphate rock from phosphate deposits in the Negev desert in accordance with threetwo mining concessions from the State of Israel, thatwhich are valid until the end of 2021. For further information on recent developments regarding the extension of the concessions for an additional period of three years, see Note 18(b) to our Audited Financial Statements. In consideration thereof, we are requiredaddition, Rotem has two lease agreements in effect until 2024 and 2041 and an additional lease agreement of the Oron plant, which the Company has been working to pay royaltiesextend since 2017, by exercising the extension option provided in the agreement.
The Company is acting to renew the said concessions and leases, and believes that it is likely to occur since it is the only entity with appropriate production facilities; nevertheless, there is no certainty that these concessions and leases will be renewed under the same terms or at all. Failure to renew the said concessions and leases or different terms could materially and adversely affect our business, financial condition and results of operations. For further information on concessions, leases and permits, see Note 18(b) to the Israeli government. Company's Audited Financial Statements.
Our existing phosphate mines in the Negev desert hold limited reserves of phosphate rock designated for phosphoric acid production. The Company is acting for renewal of said concessions, and is the only entity having the appropriate production facilities; however, there can be no certainty that these concessions will be renewed on the same terms or at all following their expiration in 2021, failure to extend the said concessions could materially and adversely affect our business, financial condition and results of operations.
The Company is working to promote the plan for mining phosphates in Barir field, (whichwhich is located in the southern part of the South Zohar field)deposit in the Negev Desert. In 2015, the National Planning and Building Council (hereinafter – the National Council) approved the Policy Document regarding Mining and Quarrying of Industrial Minerals, which included a recommendation to permit phosphate mining in the Barir field. In 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 by the government’s Housing Cabinet in January 2018.
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 discussion regarding the 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 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, the Ministry of Health, the Ministry of Environmental Protection and Rotem, to revoke the approval of NOP 14B. In January 2019, residents of the Bedouin diaspora in the "Arad Valley" submitted a petition to the 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 phosphate mining in the 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 this stage there is no basis for granting the interim injunction. On February 5, 2019, the Company filed its response.
There is no certainty regarding the timelines for the submission of the Plans, theplan, its approval, thereof, or of further developments with respect to the South Zohar. If miningBarir field site. Failure to obtain such approval is not received for South Zohar, thereor a significant delay in receiving it or in finding alternative sources of phosphates in Israel, will behave a significant negative impact on the Group’s future mining reserves in the medium and long term. Ourour business, financial condition and results of operations maywill be adversely affected, even materially,materially. For further information, see “Item 3 - Key Information— D. Risk Factors— Securing the future of the phosphate mining operations at Rotem Israel depends on obtaining several approvals and permits from the authorities in case of failure to receive such approval and to find alternative sources of phosphates in Israel. For additional information on phosphate rock reserves, concessions and mining activities, see “itemIsrael”, “Item 4 -‑ Information on the Company— D. Property, Plant and Equipment— Mineral Extraction and Mining Operations” - Negev”, “Concessions“Concessions and Mining Rights”Rights” and “Reserves”., and Note 18(b) to our Audited Financial Statements.
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 "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 concession. According to the Spanish authorities, the concession period is valid until a final decision is made regarding the renewal. In consideration thereof, ICL pays royalties to the Spanish government. Maintaining the mining activity in Spain also requires municipal and environmental licenses. If such licenses are not renewed, this would be expected to affect, possibly in a substantial manner, the mining activity at certain sites in Spain and the Company’s financial results. For additionalfurther information, respecting issues relating to mining permits in Spain, see “Item 4 - Information on the Company— D. Property, Plant and Equipment— Mineral Extraction and Mining Operations” and “Concessions and Mining Rights” and “Reserves”, and Note 2018(b) to our Audited Financial Statements.
United Kingdom
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. The lease rights with the Crown Estates, include provisions to explore and exploit theall targeted and known Polysulphate mineral resources of the Polysulphate mineral.interest to ICL Boulby. The said mining rightsmineral leases cover a total area of about 374720 square kilometers.kilometers (onshore leases totaling around 90 square kilometers and the offshore leases from the Crown Estates covering around 630 square kilometers). As at the date of this report, all the lease periods, licenses, easements and rights of way are effective, untilsome up to 2022 and others up to 2038. The Company is acting to renew the rights necessary for the mining operation which expire in 2022 or alternatively will seek to obtain ownership of these rights. The Company believes, it is more likely than not, that it will obtain renewal or ownership of all the needed rights. Nevertheless, in the event such Rights are not obtained, the mining activity in the UK may be substantially affected. For further information, see “Item 4 - Information on the Company— D. Property, Plant and Equipment— Mineral Extraction and Mining Operations” and “Concessions and Mining Rights”, and Note 18(b) to our Audited Financial Statements.
China
In China, theThe Company holds a joint venture (“YPH JV”) with Yunnan Phosphate Chemicals Group (“YPC”), a phosphate producer operating in China. YPH JV holds two phosphate mining licenses that were issued in July 2015, by the Division of Land and Resources of the Yunnan district in China. With reference toChina: (1) a mining license for the Haikou Mine (hereinafter – Haikou), in which the mining licenseCompany runs its operations and which is valid up to January 2043, whereas regardingand (2) a mining license for the Baitacun Mine, (hereinafter – Baitacun), the mining licensewhich expired in November 2018. TheIn order to preserve the rights for the Baitacun mining activities at Haikou are carried outlicense and facilitate its renewal in accordance with2021, the above‑mentioned license. Regarding Baitacun, theCompany paid an advance in an immaterial amount. The Company is examining the option to renewfeasibility of renewing the Baitacun concession, subject to theand will base its decision, among other things, on phosphate reserves soil survey results and achievingon the required understanding to be achieved with the authorities. With respectauthorities. If Haikou's license is not renewed, this would be expected to affect, possibly in a substantial manner, the mining rights,activity in China and the Company pays royalties and a resource tax to the Chinese government. SeeCompany’s financial results. For further information, see “Item 4 - Information on the Company— D. Property, Plant and Equipment— ConcessionsMineral Extraction and Mining Rights”.
In addition,Operations” and “Concessions and Mining Rights" and “Reserves”, and Note 18(b) to our concession agreements and/or licenses include obligations relating to the expiration of the concession and/or licenses at some of the various activity sites, including reclamation and clearing of the sites (restoring the site to its former state). The scope of restoration required is uncertain, as is estimating what actions would need to be executed upon expiration of the concession and/or license period, and the costs involved in such actions.Audited Financial Statements.
Our ability to operate and/or expand our production and operating facilitiesworldwide is dependent on our receipt of, and compliance with, permits issued by governmental authorities. A decision by a government authority to deny any of our permit applications may impair the Company’s business and its operations
Existing permits are subject to challenges with respect to their validity, revocation, modification and non‑renewal, including as a result of environmental events or other unforeseeable occurrences. Any successfulunsuccessful challenges with respect to the validity of our permits or the revocation, modification or non‑renewal of our permits could lead to significant costs and materially adversely affect our operations and financial condition. In addition, a failure to comply with the terms of our permits could result in payment of substantial fines and subject usthe Company and the Company’sits managers to criminal sanctions.
It wouldFurthermore, our production processes generate byproducts, some of which are saleable while others must be notedreused or disposed of as waste. Storage, transportation, reuse and waste disposal are generally regulated by governmental authorities in this context thatthe jurisdictions in which we operate. Permits issued by governmental authorities are contingent on our compliance with relevant regulations in the jurisdictions in which we operate. If the validity of our permits or the revocation, modification or non-renewal of our permits occurs as a result of our noncompliance with regulations relating to the active gypsum Pond 5 in Rotem Amfert plants in Israel,storage, transportation, reuse 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)waste disposal, production may be interrupted or even ceased, which can lead to the District Planningsignificant costs adversely affecting our operations 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 Appeals 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.financial condition.
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 return for a re-deliberation of the Appeals 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 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.
Our operations and sales are exposed to volatility in the supply and demand, mergers of key producers\customers\suppliers, expansion of production capacity and competition from some of the world’s largest chemical and mining companies
In addition to seasonal and cyclical variations, the Company’s businesses are exposed to fluctuations caused, in part, by factors on the supply side, such as entry into the market of new manufacturers and products, mergers of key players (producers\suppliers), expansion of the production capacity of existing manufacturers, and changes on the demand side, such as mergers or collaborations between key customers. Our competitors include some of the world’s largest chemical and mining companies, some of which are state‑owned or government‑subsidized. The potential production capacity is currently greater than the global demand, which has affected price levels. In light of the fact that some of our products are commodities available from several sources, the primary competitive factor with respect to our products is the price. The prices of our products are influenced by the prices prevailing in the market, while the oversupply as compared to demand constitutes a negative factor in the field of commodity prices such as potash and phosphates, as do low prices in the agricultural sector. Additional competitive factors include product quality, customer service and technical assistance. If we are unable to compete effectively with these companies, our results of operations would almost certainly be significantly and adversely affected.
Moreover, some of our products are marketed through distributors, mainly as pertains to the activity of the Phosphate Solutions segment and Specialty Fertilizers business.
Any replacement of, or modification into the composition of our distributors might adversely affect the Company’s competitive ability and cause a decrease in the scope of sales in certain markets, at least in the short term.
Overestimation of mineral and resource reserves could result in lower than expectedlower-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.operations
We base our estimates of mineral and resource reserves on engineering, economic and geological data that is compiled and analyzed by our engineers and geologists. However, reserves estimates are by nature imprecise and rely to some extent on statistical inferences drawn from available drilling data, which may prove unreliable/inaccurate. There are numerous inherent uncertainties in estimating quantities and qualities of mineral deposits and reserve deposits, as well the quality of the ore, and the costs of mining recoverable reserves and the economic feasibility thereof, including many factors beyond our control. Estimates of economically feasible commercial reserves necessarily rely on a number of factors and assumptions, all of which may vary considerably from the actual results, such as:
| · | Geological and mining conditions and/or effects of prior mining that may not be fully identified/assessed within the available data or that may differ from those based on experience; |
| · | Assumptions concerning future prices of products, operating costs, updates to the statistical model and geological parameters according to past experience and developing practices in this field, mining technology improvements, development costs and reclamation costs; and |
| · | Assumptions concerning future effects of regulation, including the issuance of required permits and taxes imposed by governmental agencies. |
If these factors and assumptions change, we may need to revise our mineral and resource reserves estimates.
Any revisions to our previous reserve estimates or inaccuracies in our estimates related to our existing mineral and resource reserves could result in lower than expectedlower-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.
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 complyCommencing with these new disclosure requirements beginning with our annual report for the fiscal year ended December 31, 2021, although early voluntary compliance is permitted. As at the date of this report, we have not adoptedwill comply with these new disclosure requirements and have not determined when we will elect to adopt them. When we implementrequirements. Upon implementation of the new methodology in connection withas part of the adoption of these new disclosure requirements, we will present information respecting resource and reserve estimates and the information presentedwhich may differ materially from the reserve estimates to those presented historically and in this Annual Report under the existing SEC rules.
In addition, weWe do not currently present reserves estimates in Spain (because we continue to evaluate our reserves there) and in the UK (because currently we don't believe that the polysulphatePolysulphate® we are producing there is material)material to the overall Group results). In the absence of published reserves, we are unable to provide life of mine estimates in accordance with SEC Industry Guide 7, that determine how long we are able to continue production,, and the life of mine may be shorter than you expect.expect.
For additionalfurther information, see “Item 4 - Information on the Company— D. Property, Plant and Equipment— Reserves”.
The locations of some of our mines and facilities expose us to various natural disasters
We are exposed to natural disasters, such as flooding and earthquakes which may cause material damage to our business. InFor example, in Israel, some of our plants are located on the Jordan Rift Valley, or Syro-African Depression, a seismically active area. Furthermore, in recent years sinkholes and underground cavities have been discovered in the area of the Dead Sea, which could cause harm to the Company’s plants. In addition, an “undermining” process has begun in the northern part of the Arava stream, at the end of which, there are located, on both banks, are the evaporation ponds of the Company’s plants at the Dead Sea, this being a reaction to the recession of the Dead Sea water level.Sea. There is a risk that this phenomenon would jeopardize the stability of the Company’s dikes and evaporation ponds. In the Sodom area, where many of the Company’s plants in Israel are located, there are occasional flash floods in the streambeds. While we have insurance coverage that coversfor these types of damage, subject to payment of deductibles, the insurance may not be sufficient to cover all of these damages.costs. In addition, we have underground mines in the United Kingdom and Spain and a mine in China. Water leakages into these mines or other natural disasters might cause disruptions to our mining activities or even to a loss of the mine. We do not have full property insurance with respect to all our property/assets.
ICL Group Limited 8
The accumulation of salt at the bottom of Pond 5, the central evaporation pond in our solar evaporation pondponds system used to extract minerals from the Dead Sea, requires the water levelregular harvesting of the pond to be constantly raisedsalt in order to maintain a fixed brine volume and thereby sustain the production capacity of extracted minerals and prevent potential damage to the foundations and structures of the hotels and other buildings situated close to the edge of the Pond
The minerals from the Dead Sea are extracted by way of solar evaporation, whereby salt precipitates onto the bed of one ofPond 5 (hereinafter – the evaporation ponds at Sodom (Pond 5)Pond), located in one of the sites of Dead Sea Works (hereinafter – DSW). The precipitated salt creates a layer on the Pond bed with a volume of approximately 2016 million tonnes annually.cubic meters per year. The process of production of the raw material requires that a fixed brine volume is preserved in the Pond. Failure to maintain a constant volume of solutions in the Pond could result in a reduction in production capacity. To this end, up to the solutionsend of 2021, the raising of the solutions' level of the Pond is raised each yearwill continue according to the rate at which the poolpond floor rises.rises, while performing the salt harvest, initiated in the fourth quarter of 2020. The solutions' level maximum height (15.1) is expected to be reached by the end of 2021. From 2022 onwards, the solutions' volume in the Pond will be preserved only by way of harvesting the salt.
Failure to correspondingly raise the water level will cause a reduction in our production capacity. However, raisingRaising the water level of the pondPond above a certain level may cause structural damage to the foundations ofand the hotel structuresbuildings situated close to the water’s edge, to the settlement of Neve Zohar and to other infrastructures oninfrastructure located along the western shoreline of the Pond. Up to the end of 2020, in order to ensure that the Pond 5.
We are currently working withwater level does not exceed the Israeli government both with respect tomaximum height (15.1), the Government of Israel, through the Dead Sea Preservation Government Company Ltd., implemented a project for construction of the coastline defenses, andtogether with DSW (who financed 39.5% of the project's cost), as part of which the dyke along the western beachfront of the Pond, across from the hotels, is raised, together with a system for lowering subterranean water. The construction work with respect to the permanent solution, which consists of harvesting ofhotels' coastlines is complete and at present, the saltDead Sea Preservation Government Company Ltd. is carrying out elevation work in such a manner whereby raising the waterintermediate area between the two hotel complexes. The Pond level in Pond 5 would no longerwill be necessary after completion of the harvesting. The coastline defenses are supposed to provide protection pending the implementationmaintained as part of the permanent solution (the salt harvesting project) described below, which is supposed toshould provide protectiona defense until the end of the current concession period in 2030.
In 2015 and in 2016, the National Infrastructures Committee and the Israeli Government, respectively, approved National Infrastructures Plan 35A (hereinafter – the Plan), which includes the statutory infrastructure for establishment of the Salt Harvesting Project in Pond 5, and construction of the P-9 pumping station in the northern basin of the Dead Sea. As at the 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 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 NIS 1.4 billion.
In October 2017, DSW signed an agreement 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.
There is no assuranceguarantee that the coastline defenses orsaid projects for maintaining the permanent solutionPond’s water level will be fully implementedat the cost we currently estimate or that the implementation will prevent damage to the surrounding infrastructure or to our operations at Pond 5. Failurein the Pond. Higher cost of the harvesting process or failure to provide solutions and/or any proof of damage caused as aforesaid, could materially and adversely affect our business, financial condition and results of operations.
For morefurther information about the coastline defenses and the permanent solution (the Salt Harvesting Project), see “Item 4 -– Information on the Company—Company — D. Property, Plant and Equipment—Equipment — Mineral Extraction and Mining Operations” and “Concessions and Mining Rights”.Note 18(c) to our Audited Financial Statements.
Construction of a new pumping station is required due to theThe receding water level in the northern basinNorthern Basin of the Dead Sea, may require capital and/or operational expenses in order to enable the continuation of the Company's operations in the Dead Sea
Due to the hydrological deficit, the water level of the Northern Basin of the Dead Sea is receding at the rate of over 1 meter per year. As part of our production process in Israel, we pump water from the Northern Basin of the Dead Sea through a special pumping station and deliver it throughout a feeding channel to the salt and carnallite ponds. Due to the receding water levelevaporation ponds in the northern basin of the Dead Sea,Southern Basin. As the water line is receding from the current pumping station and construction of a new pumping station (hereinafter – the P‑9 Pumping Station) is therefore necessary. We expect that the P-9 pumping station will be able to pump water until the end of the current concession period.
In 2017, DSW signed agreements with several execution and infrastructure companies for construction of the P-9 pumping station. The P-9 Pumping Station is expected to commence its operation during the year 2020.
Failure to construct the new pumping station as aforesaid or a significant delay in the planned timetables could have a material adverse effect on the Company’s business, its financial condition and results of operations.
In addition, as the water level of the northern basin of the Dead Sea recedes, we may be pressured to reduce our usage of minerals from the Dead Sea, which could have a material adverse effect on our business, financial condition and results of operations.
Our ability to pump water relies on an active pumping station at the water line of the Northern Basin of the Dead Sea. Due to the receding water level in this area, the water line is receding from the current pumping station area and construction of a new pumping station (hereinafter – the P‑9 Pumping Station) was therefore required. The P-9 Pumping Station is expected to commence its operation during the second half of 2021. The Company expects that it will be able to continue pumping water in the coming years. Failure to construct and operate the P-9 pumping station or a significant delay in the planned timetables or failure to extend its life in future years could have a material adverse effect on the Company’s business, its financial condition and results of operations.
For information respecting the petition that was filed with the Israeli Court for Water Matters by Adam Teva V’Din, 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 Northern Basin of the Dead Sea to the evaporation ponds in the Sea’s Southern Basin, see Note 18(c) to our Audited Financial Statements.
Additional risk of the decline of the Dead Sea level is the erosion of Arava stream, which flows along the international border between Israel and Jordan and into the Dead Sea. This erosion could endanger the stability of the eastern dykes in the future in the array of salt and carnallite ponds and any breach or damage to the salt and carnallite ponds could materially and adversely affect our business, financial condition and results of operations. The Company is endeavoring to analyze the matter and to find solutions for preventing or retarding this occurrence in the long term. The Company is conducting ongoing monitoring and acting on site in order to protect the dykes. As part of these efforts, a joint research was conducted with the Jordanian potash company APC (Arab Potash Company), designed to gather information for the detailed planning of a project to prevent the continued erosion of the stream. A pre-planning report based thereupon is expected to be received during the first half of 2021. Detailed planning work, based on the said report, will serve as foundation for a building permit application. Prior to commencing the project, obtaining permits from the authorities is required, due to its engineering complexity, proximity to the border, soil instability and environmental sensitivity of the entire area. Insofar as it is decided to commence with the project, the Company estimates that its completion is likely to take several years.
Furthermore, as a result of the decline of the Dead Sea level, sinkholes and underground cavities have been discovered in the area of the Dead Sea. The appearance of sinkholes in the Dead Sea area is increasing over the years. Most of the sinkholes develop in the Northern Basin of the Sea, where there is low activity by ICL Dead Sea (DSW). However, in recent years there has been a steady development of sinkholes in the area of the feeding channel, through which water is pumped from the Northern Basin to the Southern Basin. DSW takes actions to monitor the development of these sinkholes and to fill them when they appear. The development of sinkholes in areas where we operate, together with a failure to detect and treat those sinkholes can cause significant damage and could materially and adversely affect our business, financial condition and results of operations.
Any malfunction in the transportation systems we use to ship our products could have a material adverse effect on our business, financial condition and results of operations.operations
Part of our sales turnover is comprised of sales of bulk products characterized by large quantities. Most of this production quantity is shipped through dedicated facilities from two seaports in Israel, one seaport in Spain and another seaport in the United Kingdom. It is not possible to ship large quantities in bulk from other facilities in Israel. Any significant disruption with regard toregarding the seaport facilities and/or the array of transportation from the seaports, including due to strikes by port workers, regulatory restrictions and changes in the rights of use of seaport facilities, could delay or prevent exports of our products to our customers, which could materially and adversely affect our business, financial condition and results of operations. In addition, any significant disruption in the array of transportation to the seaports and between various sites, primarily through trains and trucks, might materially and adversely affect the Company’s operations, its financial condition and results of operations.
In addition, the Company transports hazardous materials through the use ofusing specialized transport facilities, such as isotanks for the transportation of bromine. A malfunction in the transportation of hazardous materials, in one of our specialized transport facilities might have an environmental impact and\or cause harm to the welfare of local residents, and, as a result, expose the Company to lawsuits and\or administrative proceedings or fines, and also cause a shutdown of such materials’ transportation systems for a certain period until the cause for such malfunction has been discovered and\or for purposes of preventative maintenance and improvement of the transportation array, and as a result may have material adverse effect on the Company’s operations, financial condition and results of operations.
We are exposed to risks associated with our international sales and operations, which could adversely affect our sales to customers in various countries as well as our operations and assets in various countries. Some of these factors may also make it less attractive to distribute cash generated by our operations outside Israel to our shareholders, use cash generated by our operations in one country to fund our operations or repayments of our indebtedness in another country and support other corporate purposes or the distribution of dividends
As a multinational company,Company, we sell in many countries where we do not produce. A considerable portion of our production is designated for export. As a result, we are subject to numerous risks and uncertainties relating to international sales and operations, including:
| · | Difficulties and costs associated with complying with a wide variety of complex laws, treaties and regulations, including the U.S. Foreign Corrupt Practices Act (the “FCPA”), the UK. Bribery Act of 2010 and Section 291A of the Israeli Penal Law; |
| · | Unexpected changes in regulatory environments; |
Unexpected changes in regulatory environments and increased government ownership and regulation in the countries in which we operate;
Political and economic instability, including civil unrest, inflation and adverse economic conditions resulting from governmental attempts to reduce inflation, such as imposition of higher interest rates and wage and price controls;
| · | Increased government ownershipPublic health crises, such as pandemics and epidemics; and regulation in the countries in which we operate; |
| · | Political and economic instability, including civil unrest, inflation and adverse economic conditions resulting from governmental attempts to reduce inflation, such as imposition of higher interest rates and wage and price controls; and |
| · | The imposition of tariffs, exchange controls, trade barriers, new taxes or tax rates or other restrictions, including the current trade dispute between the US and China. |
The occurrence of any of the above in the countries in which we operate or elsewhere could jeopardize or limit our ability to transact business there and could materially adversely affect our revenue and operating results and the value of our assets.
The COVID-19 outbreak has impacted and could in the future materially and adversely affect our financial condition and results of operations
In December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in Wuhan, China, resulting in shutdowns of manufacturing and commerce in the months that followed. In March 2020, the World Health Organization declared COVID-19 a pandemic. Since then, the pandemic has continued to spread across the globe at varying infection rates and has introduced significant business and economic uncertainty and volatility to global markets. Accordingly, there has been, and may continue to be, a significant decline in global economic activity, including depressed commodity prices (including oil prices), in part, due to preventative ongoing measures taken by various governmental organizations around the world, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns.
The spread of the above risks might make it economically unattractiveCOVID-19 pandemic during 2020 has led us to utilize cash generatedmodify our business practices, including implementing policies, health and safety measures and procedures to protect our employees in all of our facilities and offices. We may need to take further actions as required by government authorities or that we determine are in the best interest of our employees, customers, partners and suppliers.
For example, at the end of March 2020, our potash mining operations in one countrySpain were temporarily halted for approximately three weeks and since then gradually ramped back up to fundnormal capacity at the Suria site; Polysulphate® mining activities in the UK were curtailed and gradually ramped back up to normal capacity; and some of our operationsexternal contractors declared force majeure that led to a delay in few of our projects. There is no certainty that such measures will be sufficient to mitigate the risks posed by the pandemic. Furthermore, our ability to perform certain functions might be affected if we are required to take additional steps.
The emergence of the COVID-19 pandemic had a negative impact on our business performance during 2020, as revenues decreased, mainly due to lower demand for some of our Industrial Products segment's products such as clear brine fluids, as a result of a significant decline in oil prices and demand, and such as certain flame retardants, due to lower activity in the automotive and electronics industries. In addition, our operating results were negatively impacted, mainly as a result of lower production in Europe and other operational costs related to the COVID‑19 pandemic.
We expect a continuing impact on our results also over the next few quarters, though the full future effect of the COVID-19 pandemic on the global economy and our business is uncertain, and it may be difficult to assess or repaymentspredict. The extent of liabilitiesthe impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including, but not limited to:
The duration, severity and spread of the pandemic and the actions required by government authorities or other health organizations to contain the disease or treat its impact, including the effectiveness of the vaccinations developed and already administered in another country, supportmost countries.
The duration and severity of the sustained global recession, and the uncertainty as to when global economy will fully recover.
The possibility of additional outbreaks of the virus, or the development of more harmful and resistant variants of the virus, or any possible recurrence of other corporate purposessimilar types of pandemics, or any other widespread public health emergencies.
Significant disruption of global financial markets and needscredit markets, which may reduce our ability to access capital or distribute dividends.our customers’ ability to pay us for past or future purchases, which could negatively affect our liquidity.
The possibility of temporary closures of our facilities or the facilities of our suppliers, customers, their contract manufacturers, and the possibility of certain industries shutting down.
Lower demand and/or pricing for our products and a potential global economic recession could lead to reduced demand in our end markets, particularly bromine compounds. In addition, the significant decline in crude oil prices and the oil markets’ current ability to absorb excess supplies and rebalance inventory is likely to continue to result in decreased demand for our clear brine fluids.
The ability of our suppliers, contractors and third-party providers to meet their obligations to us at previously anticipated costs and timelines without significant disruption.
Our ability to continue to meet the manufacturing and supply arrangements with our customers at previously anticipated costs and timelines without significant disruption.
The ability to purchase raw materials that we use to produce our products, due to shortages resulting from supply chain disruptions, quarantines, lockdown orders and production shutdowns.
We continue to closely monitor the effects and implications of the pandemic. The ultimate impact of the COVID-19 pandemic, or a similar health epidemic, is highly uncertain and subject to change. To the extent that the COVID-19 pandemic negatively impacts our business, results of operations, liquidity or financial condition, it may also have the effect of increasing many of the other risks described in this “Risk Factors” section.
Our operations could be adversely affected by price increases or shortages with respect to water, energy and our principal raw materials, as well as by increases in transportation costs
We use water, energy and various raw materials as inputs and we could be affected by higher costs or shortages in these materials, as well as by changes in transportation prices.
OurFor example, our phosphate facilities use large quantities of water purchased from Mekorot, Israel’s national water company, at prices set by the government. If these prices rise significantly, our costs will rise as well. In our plants in Sodom, we obtain water from an independent system that is not part of the national water system. A shortage of water at the water sources in proximity to the plants or the imposition of additional costs/charges for water usage would force the Company to obtain water from sources located further away and/or at a higher cost. For information regarding the amendment to the Israeli Water Law in Israel and its impact on the Company’s production costs at the Dead Sea, see Note 17 to our Audited Financial Statements.
Our plants consume large amounts of energy. Moreover, energy is a significant component of the shipping costs of a considerable share of our products. Significant price increases for energy, or energy shortages, would affect shipping costs, production costs and/or quantities.
The supply of electricity to our production processes and facilities at our magnesium plant require a continuous supply of electricity. While our magnesium plant has two power supply sources —in Israel is provided by our power station in Sodom and the national power grid. Our operations in Israel is dependent on these two sources, so significant malfunctions at the power station and/or interruption of power supply from the national grid in Israel — there ismay lead to additional financial liabilities and potential shutdowns at our production facilities, which could negatively affect ICL's ability to supply its products to both external customers and other ICL's sites using them as raw materials and reduce revenue from decreased production capacity. In addition, our magnesium plant requires a riskcontinuous supply of damage toelectricity, so any interruption in the power supply from these two sources concurrently. Prolongedto the magnesium plant may cause a significant damage to regular power supply may damage the plants and the environment.our magnesium production process.
In addition, during the third quarter of 2018, the Company’s new power plant in Sodom became operational. The new power plant is fueled by natural gas.The current supply of natural gas to our power plant and to our subsidiaries in Israel is dependent on a single supplier and also on a single gas pipeline with limited transmission capacity.
While our plants are prepared for the use of alternative energy sources (fuel oil and/or diesel fuel), an increase in our energy costs, or energy shortages, could materiallyadversely and adverselymaterially affect our business, financial condition and results of operations.
Furthermore, an increase in price or shortage of raw materials, such asinter alia: ammonia, sulphur, WPA and 4D (which we purchase from third parties) could adversely and materially affect our results of operations, financial position, and our business.
We can provide no assurance that we will be able to pass on to our customers increased costs relatingwith respect to water, energy or otherand our principal raw materials, such as sulphur, ammonia and white acid that are supplied by third parties.well as increases in transportation costs. Our inability to pass on such cost increases could adversely affect our margins. In addition, shortages in our principal raw materials may disrupt our production capacity and adversely affect our business performance.
For further information, see “Item 4 ‑ Information on the Company— B. Business Overview— Segment Information”12.
Completion of certain of the Company’s major projects may be dependent on third‑party contractors and/or governmental obligations. Furthermore, termination of engagements with contractors might entail additional costs
In the coming years, the Company plans to complete several key projects, whosethe completion of which is very important to the Company’s continued operation and ability to significantly improve its competitive position in some markets. Thus, for example, we are advancing the salt harvest project in Pond 5 in the Dead Sea, the construction of the new pumping station (P-9) in the Dead Sea, the construction of the white acid (WPA) facility in the YPH JV in China, the consolidation of potash mines in Spain including completion of the new mine access tunnel at Suria,Súria, and significant investments in environmental investments.projects. The completion of key projects of the Company could also be dependent uponon third-party contractors. InFor example, a project in Spain for example, the project incurred several delays and budget expansions that were associated, among others, with the third-party contractor. Situations wherein such contractors encounter financial or operational difficulties, or other significant disagreements with the Company, could cause a significant delay in the planned timetables for completion of a project and\or material deviations from the project’s budget and may even jeopardize completion of the project altogether, andaltogether. This could adversely and even materially affect the Company’s business, its financial condition and results of operations.
There is a risk that the outcome of this proceeding, or related proceeding, could amount to a significant monetary expense for us and it may have a material adverse effect on our business, our financial condition and results of operations.
The inflow of significant amounts of water into the Dead Sea could adversely affect production at our plants
The inflow of significant amounts of water into the Dead Sea could adversely affect production at our plants due to the inflow of significant amounts of water into the Dead Seaand might alter the composition of the Dead Sea water, in a manner that would lower the concentration of sodium chloride (NaCl) in the water, which could adversely affect production at ICL plants. This risk may materialize, among other things, as a result of the construction of a canal connecting the Mediterranean Sea with the Dead Sea, the inflow of water from the Sea of Galilee (Kinneret) to the Dead Sea via the Jordan River, or the construction of a canal from the Red Sea to the Dead Sea.
An examination conducted byIf the World Bank, which is reviewing the construction of the canal connecting the Red Sea and the Dead Sea indicated that, a discharge of up to 400 million cubic meters into the Dead Sea will have no adverse environmental effects,potential inflows, as no layering effect will be caused, and the water will evaporate and/or mix with the water of the Dead Sea. For this reason it appears that inflow on such a scale will also create no significant damage to our plants, although the actual impacts may be different. However, if the Red Sea-Dead Sea Canal resultsdescribed above, result in a lower concentration of sodium chloride in the water inof the Dead Sea, it could adversely and materially affect production at our plants, our results of operations financial position, and our business.
We are exposed to the risk of labor disputes, slowdowns and strikes
From time to time, we experience labor disputes, slowdowns and strikes. A significant partportion of our employees are subject to collective labor agreements, mainly in Israel, China, Germany, United Kingdom, Spain and the Netherlands. Prolonged slowdowns or strikes at any of our plants could disrupt production and cause the non-delivery of products that had already been ordered, andordered. Also, ramp-up time is needed in order to return to full production capacity at the facilities. Furthermore, due to the mutual dependency between ICL plants, slowdowns or strikes in any one of ICL plant may affect the production capacity and/or production costs at otheranother ICL plants. Labor disputes, slowdowns or strikes, as well as the renewal of collective labor agreements, may lead to significant costs and loss of profits, which could adversely, and even materially, affect our operating results and our ability to implement future operational changes for efficiency purposes. In the course of labor disputes, the workers union may impose certain sanctions which may include blocking or delaying the transfer of goods through the factory gates; such disputes may escalate into a strike.
Some of our employees have pension and health insurance arrangements that are our responsibility
Some of our employees have pension and health insurance arrangements that are our responsibility. Against some of these liabilities, we have monetary reserves that are invested in financial assets. Changes in life expectancy, changes in the capital marketmarkets or changes in other parameters by which undertakings to employees and retirees are calculated, as well as statutory amendments, could increase our net liabilityliabilities for these arrangements. For information about our employee benefits liabilities and composition of plan assets, see Note 1816 to our Audited Financial Statements.
The discontinuation, cancellation or expiration of government incentive programs or tax benefits; entry into force of new or amended legislation or regulations with respect to additional and/or increased fiscal liabilities to be imposed on us; or imposition of new taxes or changes to existing tax rates, could all adversely affect our business results
Any of the following may have a material adverse effect on our operating expenses, effective tax rate and overall business results:
| · | Some government programs may be discontinued, expire or be cancelled; |
Some government incentive programs may be discontinued, expire or be cancelled;
Governments may initiate new legislation or amend existing legislation in order to impose additional and/or increased fiscal liabilities on our business, such as additional royalties, natural resource taxes or required investments, as has occurred in Israel;
| · | Governments may initiate new legislation or amend existing legislation in order to impose additional and/or increased fiscal liabilities on our business, such as additional royalties or natural resource taxes, as has occurred in Israel; |
The applicable tax rates may increase;
| · | The applicable tax rates may increase; |
We may no longer be able to meet the requirements for continuing to qualify for some incentive programs;
| · | We may no longer be able to meet the requirements for continuing to qualify for some programs; |
Such incentive programs and tax benefits may be unavailable at their current levels;
| · | Such programs and tax benefits may be unavailable at their current levels; |
Upon the expiration of a particular benefit, we may not be eligible to participate in a new program or qualify for a new tax benefit that would offset the loss of the expiring tax benefit.
| · | Upon the expiration of a particular benefit, we may not be eligible to participate in a new program or qualify for a new tax benefit that would offset the loss of the expiring tax benefit. |
Changes in trade agreements between countries, such as in the trade agreements between the United States and China.
| · | Changes in trade agreements between countries, such as in the trade agreements between the United States and China. |
Changes in international taxation laws, as may be adopted by several countries we operate in, or sell to, may result in additional taxes or high tax rates being imposed on our operations.
Changes in our evaluations and estimates, which serve as a basis for analyzing our contingent liabilities and for the recognition and manner of measurement of assets and liabilities, including provisions for thewaste removal of waste and the reclamation of mines, may adversely affect our business results and financial situation
As part of the preparation and composition of our financial statements, we are required to exercise discretion, make use of evaluations and estimates and make assumptions that affect, among other things, the amounts of assets and liabilities, income and expenses. When formulating such estimates, the Company is required to make assumptions concerning circumstances and events that involve uncertainty, even great uncertainty.uncertainty, such as, legal claims pending against ICL. We exercise our discretion based on our past experience, various facts, external factors and reasonable assumptions, according to the circumstances relevant to each estimate. It should be noted that actual results may differ, and even materially so, from such estimates and thereforeestimates. Therefore, this may adversely affect our financial results. For further information, see Note 2 to our Audited Financial Statements.
Regarding pending legal matters, the Company is required to estimate the probability of their outcome, which could be substantially different from their actual results due to the inherent complexity and the uncertainty of such proceedings. For example, as part of the arbitration proceeding conducted between a Spanish subsidiary and Akzo Nobel Industrial Chemicals B.V. (currently - Nobian), concerning the termination of the partnership agreement between them, in May 2019, Nobian submitted a statement of claim to the Arbitral Tribunal, whereby it seeks to determine that the agreement termination by the Company constitutes an unlawfully breach of contract and therefore it is entitled to enforce the agreement and to be compensated in an immaterial amount. Alternatively, in case it is determined that the agreement is not enforceable, Nobian outlines several different compensation alternatives in the amounts of up to $152 million. The Company believes that the agreement was lawfully terminated and that it is more likely than not that Nobian claims will be rejected. Failure to predict the actual outcome could materially and adversely affect our financial results.
In some of our various sites of operation, concession agreements and/or licenses include obligations relating to the expiration thereof, including reclamation and clearing of the sites (restoring the site to its former state). There is uncertainty regarding the actions that would be required upon expiration of the concession and/or license period and, accordingly, the costs involved in the execution of such actions, including the scope of restoration required. For example, with respect to the estimated costs of reclamation of our mining in Israel, we are required to make assessments considering numerous assumptions, including future additional restoration requirements and the impact thereof, in light of regulatory developments in this field in recent years. It is very difficult to assess the estimates for site restoration and clearing due to the complexity of soil restoration treatments, the scope and costs required for restoration, which are occasionally discovered only during actual execution of restoration works, the absence of a single, unified global standard determining environmental restoration requirements, and the absence of any significant precedents in this matter in Israel. Additional example is the estimation of the projected costs for the closure and restoration of the Sallent site as part– the main cost of the estimated costs for closure and restoration solution,is attributed to the salt pile restoration. The Company is taking actionacting to utilizetreat the salt pile, by both utilizing the salt for production and sale asfor De-icing purposes, and by processing the material and removing it to the sea via 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.
Collector. The provisionestimation is based on a long‑termlong-term forecast, covering a period of more than 50 years, along with observed estimates and, accordingly,therefore, the final amountactual costs that willmay be required to restore the Sallent site could change,may differ, even significantly,substantially, from the amount of the present provision.current provision. In the Company’sCompany's estimation, the provision in its books reflects the best estimate of the expense required to settle this obligation.obligation.
For further information, see Note 17 and 18 to our Audited Financial Statements.
Our tax liabilities may be higher than expected.expected
Our tax expenses and the resulting effective tax rate reflected in our consolidated financial statements may increase over time as a result of changes in corporate income tax rates andand/or other changes in tax laws in the various countries in which we operate. We are subject to taxes in many jurisdictions, including jurisdictions in which we have a limited presence, and discretion is required in the determination of the provisions for our tax liability. In light of recent trends in international tax law and OECD recommendations, significant changes to international tax laws and practices may be adopted by various jurisdictions. Such changes could result in us being subject to tax in jurisdictions in which we currently are not subject to tax (including jurisdictions in which we have limited or no operations other than performing sales activities). Similarly, we are subject to examination by the tax authorities in many different jurisdictions. As part of thesesuch tax examinations, the relevant tax authorities may disagree with the amount of taxable income reported, deriving from our inter‑company agreements and may also dispute our interpretation of the applicable tax legislation. For example, thelegislation relating, among other things, to inter‑company agreements.
The Law for Taxation of Profits from Natural Resources
The Law for Taxation of Profits from Natural Resources in Israel (hereinafter – the Law) 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 under the Law have yet been issued under the Lawenacted (except for regulations regarding to advancedadvances on account of 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 applicationnew Law that was imposed, to the best of the Law, including preparation of theCompany's knowledge, only on one other company. The financial statements of Dead Sea Works, Dead Sea Bromine and Dead Sea Magnesium (hereinafter – the Subsidiaries), serve as a basis for eachthe mineral based financial reports (hereinafter – Surplus Profit Reports) required to be filed for tax calculation under the Law. Such calculation involves interpretations and assumptions as per a number ofon several significant matters, which require management’s judgmentjudgment.
BasedThe Company's position is that the Surplus Profit Levy should be calculated on the law's interpretation,Dead Sea Solution, which is the natural resource used by the Company, and not for each product produced from the Dead Sea Solution. Furthermore, based on the Company’s position is thatunderstanding of the law, the carrying amount of the property, plant and equipment, for the purpose of preparation of the Subsidiaries’ financial statements for 2016 and onward of the Subsidiaries, which serve as athe basis for the reports filed pursuant to the provisions of the Law, can beSurplus Profit Reports, are presented on the basis of fair value revaluation,their replacement cost (as used assets), on the date the Law entersentered into effect. Presenting property, plant and equipment based on fair value revaluation is in accordance with one of the permitted methods in International Financial Reporting Standards (IFRS), which apply to the Company and its Subsidiaries and are accepted accounting principles in Israel. There is no resulting change in the Company's consolidated financial statements.
The tax authority'sTax Authority's position could be materially different, even in very significant amounts, mainly, as a result of the different interpretation regarding the implementation of the Law, including matters other thanwith respect to the measurementcarrying amount for natural resources tax purposes of the property, plant and equipment. If
Should the above‑mentioned tax position is rejected byIsraeli Tax Authority, and subsequently the Israel tax authority, meaningapplicable District Court, in case of an appeal, decides that the measurement of the property, plant and equipment, for this purpose, should have beenbe in accordance with depreciated historical values,cost, and fully rejects the Company's arguments with respect to this and other issues, the result wouldcan be an increase in the company'sCompany's tax liabilities in an aggregate amount of about $100$185 million (including interest and linkage and net of Corporate income tax) for the years 2016-2018.2016-2020.
The Company estimates that it is more likely than not that its position will be accepted. As atSubsequent to the date of the report,reports, the Company believeslearned that the tax provision in its financial statements represents the best estimate of the tax payment expectedITA intends to be incurred with referenceissue an assessment to the Law.Company for the years 2016‑2017, which will include a demand for surplus profit levy, in the amount of about NIS 240 million (not including interest and linkage). The Company intends to submit its objection to the said assessment to the ITA.
Given the mineral's price environment, its effect on the profitability of the subsidiaries and after deduction of a 14% return on the balance of property, plant and equipment, as stated in the law, as at December 31, 2018, no natural resources tax liability was payable.CFC taxation
In December 2017, the U.S. tax reform was approved through legislation, and became effective on January 1, 2018. 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. For further details, see Note 17 to our Audited Financial Statements.
The companyCompany operates in many countries around the world.world. Under certain conditions, the tax lawlaws in certain countries considersprovide that income from passive activities (and in certain cases, active activities) from controlled foreign companiesControlled Foreign Companies ("CFC") asshall be considered taxable income even if not distributed. The conditions include, among other, the ratio between active and passive income and tax rates applied in the foreign countries. countries. Although the Company is acting in accordance with the relevant tax legislation, there is a risk that the tax authorities will require additional tax payment,payments, to the extent that the Company's position regarding meeting the conditions of a Controlled Foreign Companies (CFC) will not be acceptedaccepted.
BEPS regulation
The base erosionBase Erosion and profit shiftingProfit Shifting (“BEPS”) project undertaken by the Organization for Economic Cooperation and Development (“OECD”) may have adverse consequences to our tax liabilities. The BEPS project contemplates changes to numerous international tax principles, as well as national tax incentives, and these changes, when adopted by individual countries, could adversely affect our provision for income taxes. Countries have only recently begun to translate the BEPS recommendations into specific national tax laws, and it remains difficult to predict the magnitude of the effect of such new rules on our financial results.
We have expanded our business through mergers and acquisitions, oras well as organizational restructuring and various initiatives designed to increase production capacity and reduce costs of our existing operations. This could result in a diversion of resources and significant expenses, a disruption of our existing business operations and an adverse effect on our financial condition and results of operations
Negotiation processes with respect to potential acquisitions or joint ventures, as well as the integration of acquired or jointly developed businesses, require management to invest time and resources, in addition to significant financial investments, and we may not be able to realize or benefit from the potential involved in such opportunities. Future acquisitions could lead to substantial cash expenditures, dilution due to issuances of equity securities, the incurrence of debt and contingent liabilities, including liabilities for environmental damage caused by acquired businesses before we acquired them, a decrease in our profit margins, impairment of intangible assets and goodwill; and increased governmental oversight over the Company’s activity in certain areas. There is no guarantee that businesses that have been or will be acquired or joint ventures will be successfully integrated with our current productsbusinesses and operations, and we may not realize the anticipated benefits of such acquisitions or joint ventures and even incur losses as a result thereof.
Futurethereof, particularly if such acquisitions could lead to:
| · | Substantial cash expenditures; |
| · | Dilution due to issuances of equity securities; |
| · | The incurrence of debt and contingent liabilities, including liabilities for environmental damage caused by acquired businesses before we acquired them; |
| · | A decrease in our profit margins; |
| · | Impairment of intangible assets and goodwill; and |
| · | Increased governmental oversight over the Company’s activity in certain areas. |
If future acquisitionsor joint ventures disrupt our operations, our business may be materially and adversely affected.operations.
Some of our partners or potential partners in these business initiatives are governments, governmental bodies or publicly owned companies. We may face certain risks in connection with our investments in the joint ventures and/or partnerships including, for example, if our partners' needs, desires or intents change, if the government changes or if the ownership structure of our partners changes.
In addition, we are employing a number ofseveral initiatives to improve our existing operations, including initiatives to increase production in Spain and Israel and reduce operating costs at our facilities. In ICL Iberia in Spain we are consolidating all our facilities into a single site which includes a mine and a processing plant, which wouldin order to reduce costs per tontonne and allow for the elimination of additional bottlenecks and further expansion. In ICL Boulby we have made a transition from the production of potash to the production of Polysulphate™ and have expanded the mining area in order to provide more resources. In YPH JV in China we are expanding the JV’s activities in the fieldproduction of specialty phosphate solution,solutions, among other things, throughby the construction of a white phosphoric acid (WPA) facility. TheseSuch initiatives may involve very high costs and/or take longer than we anticipate and may not be realized and\or ultimately achieve their goals. If these initiatives will not succeed, our financial situation and results of business and operations, as well as competitive position, could be materially and adversely affected.
In addition, as part of our plan to create available sources for funding further investments, as well as decrease our current leverage level, we are considering, among other things, various opportunities for divesting of subsidiaries and/or assets having low synergies with our minerals chain and/or portfolio. Accordingly, in 2018 the Company completed the sale of its fire safety, oil additives and Rovita businesses. These divestments, at least in the short-term, cause a decrease in the scope of our business activities and there is no certainty that we will be able to decrease by an identical proportion the fixed costs required in order to manage our business activities, which would adversely the results of our ongoing operations.
See “Item 4 - Information on the Company— B. Business Overview— Our Strategy”.
As a multinational company,Company, our sales may be adversely affected by currency fluctuations and restrictions, as well as by credit risks
Our global activities expose us to the impact of currency exchange rate fluctuations. Our financial statements are prepared in U.S. dollars. Our sales are made in a variety of currencies, primarily in U.S. dollars and euros. As a result, we are currently subject to significant foreign currency risks and may face greater risks as we enter new markets. We may also be exposed to credit risks in some of these markets. The imposition of price controls and restrictions on the conversion of foreign currencies could also have a material adverse effect on our financial results. Part of our operating costs are incurred in currencies other than U.S. dollars, particularly in euros, ILS, GBP, BRL and RMB. As a result, fluctuations in exchange rates between the currencies in which such costs are incurred and the U.S. dollar may have a material adverse effect on the results of our operations, the value of the balance sheet items measured in foreign currencies and our financial condition.
We use derivative financial instruments and "hedging" measures to manage some of our net exposure to currency exchange rate fluctuations in the major foreign currencies in which we operate. However, not all of our potential exposure is covered, and certain elements of the Company’s financial statements, such as operating profit, long-term employee liabilities (IAS 19), lease liabilities (IFRS 16) and equity, are not fully protected against foreign currency exposures. Therefore, our exposure to exchange rate fluctuations could have a material adverse effect on our financial results.
See “Item“Item 11 -– Quantitative and Qualitative Disclosures about Market Risk—Risk — Exchange Rate Risk”.
Because some of the Company’s liabilities bear interest at variable rates, we are exposed to the risk of interest rate increases, including in connection with the end of LIBOR rate calculations in 2021
A portion of our liabilities bear interest at variable rates and therefore, we are exposed to the risk stemming from an increase in interest rates, which would increase our financing expenses and adversely affect our results. Such increase in interest rates may also occur as a result of downgrade in our rating.
Further, a portion of ICL's loans bear variable interest rates based on the short‑term London interbank offered rate for deposits of US dollars (LIBOR) rate for a period of one to twelve months, plus a margin as defined in each loan agreement. LIBOR tends to fluctuate based on general interest rates, rates set by the Federal Reserve and other central banks, the supply of and demand for credit in the London interbank market and general economic conditions. OnIn July 27, 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, is considering replacing U.S. dollar LIBOR with a newly created index, calculated with a broad set of short-term repurchase agreements backed by treasury securities. ItAny new benchmark rate will likely not replicate LIBOR exactly, and it is not possible to predict the effect of thesesuch changes, other reforms or the establishment of alternative reference rates in the US or elsewhere. To the extent these interest rates increase, our interest expense will increase, in which event we may have difficulties making interest payments and funding our other fixed costs, and our available cash flow for general corporate requirements may be adversely affected. See “Item“Item 11 -– Quantitative and Qualitative Disclosures about Market Risk—Risk — Interest Rate Risk”.
We are exposed to material fines, penalties and other sanctions and other adverse consequences arising out of FCPA investigations and related matters
We are required to comply with the U.S. Foreign Corrupt Practices Act (the "FCPA"), the UK Bribery Act and similar anti-corruption laws in other jurisdictions around the world, in the countries where we operate. We operate and sell in countries that may be considered to be ofas high risk in this regard. Compliance with these laws has been subject to increasing focus and activity by regulatory authorities, both in the United States and elsewhere, in recent years. Actions by our employees, as well as third party intermediaries acting on our behalf, in violation of such laws, whether carried out in the United States or elsewhere in connection with the conduct of our business, could expose us to significant liability for violations of the FCPA or other anti-corruption laws and accordingly may have a material adverse effect on our reputation and our business, financial condition and results of operations.
Significant disruptions in our, or our service providers’, information technology systems or breaches of our, or our service providers’, information security systems could adversely affect our business
OurInformation technology (IT) systems, including our hardware, software and telecommunications networks, as well as data centers and other information technology systems of third parties are critical to the operation of our business and essential to our ability to successfully perform day-to-day operations. Our operations also depend on the timely maintenance, upgrade and replacement of such systems, as well as pre-emptive expenses to mitigate the risks of failures. An intrusion, interruption, destruction or breakdown of our, or our service providers’, information technology systems and/or infrastructure by authorized or unauthorized persons could adversely affect our business and operations and in some cases even lead to environmental damage. In addition, a significant disruption to our, or our service providers’, computerized systems could cause harm of damage to the civilian population located in the vicinity of our production facilities. Moreover, we could experience business interruption, information or money theft and/or reputational damage as a result of cyber-attacks, which may compromise our, or our service providers’, systems, lead to data leakage and to disruption of sensitive production facilities and/or the security thereof, whether internally or at our third-party providers. Our, and some of our service providers’, systems have been, and are expected to continue to be, the target of malware and other cyber-attacks. In spite ofDespite our investment in measures to reduce these risks, we cannot guarantee that these measures will be successful in preventing compromise and/or disruption of our information technology systems and related data. In addition, asdata or that such systems and data held and operated by our service providers will be secure. We have a limited ability to control the operations and security of the information systems used on our behalf or provided to us by our service providers and may have limited recourse with such service providers in the event an issue arises. As we become more dependent on information technologies to conduct our operations, and as the number and sophistication of cyber-attacks increase, the risks associated with cyber security increase. These risks apply both to us, and to third parties on whose systems we rely for the conduct of our business. Cyber threats are persistent and constantly evolving.evolving and include, but are not limited to, installation of malicious software, ransomware, viruses, social engineering (including phishing attacks), denial of service or other attacks, employee theft or misuse, unauthorized access to data and other electronic security breaches. Threats may derive from human error, fraud or malice on the part of employees or third parties, or may result from accidental technological failure. Such threats have increased in frequency, scope and potential impact in recent years, which increaseincreased the difficulty of detecting and successfully defending against them. As cyber threats continue to evolve, we may be required to incur additional expenses in order to enhance our protective measures or to remediate any information security vulnerability. Cyber-attacks and other intrusion, interruption, destruction or breakdown of our information technology systems and/or infrastructure could also could require significant management attention and resources, expose us to legal liabilities, negatively impact our reputation among our customers, business partners and the public, and cause us to incur significant costs, any of which could have a material adverse effect on our business, financial condition and results of operations.
Our operations depend, among other things, on the timely maintenance, upgrade and replacement of networks, equipment, and information systems, as well as pre-emptive expenses to mitigate the risks of failures. We regularly evaluate the need to upgrade and/or replace our information systems to protect our information technology environment, to stay current on vendor supported products and to improve the efficiency and scope of our systems and information technology capabilities. The implementation of new systems and information technology could adversely impact our operations by requiring substantial capital expenditures, diverting management’s attention, and/or causing delays or difficulties in transitioning to new systems. In addition, our systems implementations may not result in productivity improvements at the levels anticipated. Systems implementation disruption and any other information technology disruption, if not anticipated and appropriately mitigated, could have an adverse and material effect on our business.
Failure to retain and\or recruit personnel for key personnel,operational/professional positions, or to attract additional executive and managerial talent, could adversely affect our business
Given our increasing size, complexity and the global reach of our businesses, each of which could constitute a significant stand-alone company, we greatly rely upon our ability to recruit and retain highly qualified and skilled management and other employees.employees, including engineers, agronomists, scientists, technical equipment operators, programmers, data scientists, and other employees with special expertise. Much of our competitive advantage is based on the expertise, experience and know-how of our key management personnel. Any loss of service of key members of our organization, or any diminution in our ability to continue to attract high-quality employees may delay or prevent the achievement of major business objectives and may have a material adverse effect on our business, financial condition and results of operations.
We may not succeed in reducing our operating expenses within the framework of various efficiency programs implemented by the Company in its various sites
In order to cope with the challenging business environment prevailing in recent years and the increasing level of competition, we constantly review our total expenses and cost structure, and accordingly implement, from time to time, various efficiency programs designed to reduce costs. Such programs are subject to risks and uncertainties, and actual results may differ, even materially, differ from those planned or expected, and might adversely affect our operations, as well as our ability to realize other aspects of our strategy. For example, in ICL Iberia in Spain we are consolidating all our sites into a single mine with a single processing plant, which is expected to lead to decreased cost per tonne and create the possibility of removing other bottlenecks and further expansion. The plan involves significant capital investments, as well as manpower reduction. The plan is subject to risks and uncertainties, and actual results may materially differ from those planned or expected and could adversely affect our operations.
In recent years, the Company’s leverage degree has changed significantlyThe Company borrows money from various sources to fund its operations and weit frequently engageengages in refinancing activities, and we therefore rely on access to the capital markets
The level at which the Company is leveraged could affect our ability to obtain additional financing for acquisitions, refinancing of existing debt, working capital or other purposes, could adversely affect our credit rating, and could make us more vulnerable to industry downturns and competitive pressures, as well as to interest rate and other refinancing risks. In addition, capital markets have been more volatile in recent years. Such volatility may adversely affect our ability to obtain financing on favorable terms at times in which we need to access the capital markets. Our ability to refinance existing debt and meet our debt service obligations will be dependent upon our future performance and access to capital markets, which will be subject to financial, business and other factors affecting our operations (including our long-term credit ratings), many of which are beyond our control. Our credit rating may be downgraded, among other things, due to our future performance, the degree to which we are leveraged and deterioration of the business environment.
The instruments relating to our debt contain covenants and, in some cases, require us to meet certain financial ratios. Any failure to comply with these covenants could result in an event of default under the applicable instrument, which could result in the related debt and the debt issued under other instruments becoming immediately due and payable. In such event, we would need to raise funds from alternative sources, which may not be available to us on favorable terms or at all. Alternatively, any such default could require us to sell our assets or otherwise curtail operations in order to satisfy our obligations to our creditors.
The Company is exposed to risks relating to its current and future activity in emerging markets
We operate in several emerging markets, and may have future activities in additional emerging markets. Activity in these regions is exposed to the socioeconomic conditions, as well as to the laws and regulations governing the agricultural, food and industrial sectors in these countries. The additional risks entailed in operating in emerging markets include, but are not limited to, high inflation rates; extreme fluctuations in exchange rates, martial law, war or civil war; social unrest; organized crime; expropriations and nationalizations; rescindment of existing licenses, approvals, permits and contracts; frequent and significant changes in taxation policies; restrictions on the use and trade of foreign currency. Governments in certain jurisdictions often intervene in the country’s economy, and at times even introduce significant changes to policy and regulations. Changes in the policies governing the food, agricultural and industrial sectors or changes in political attitudes in the countries wherein we operate could adversely affect our operations or profitability. Our operations could be affected at various degrees by governmental regulations relating to production limitations, price controls, controls of export, currency transfer, product imports and supply, taxes and royalties, divesture of property, licenses, approval and permits, environmental issues, real estate claims by local residents, water use and workplace safety. Failure to comply with domestic laws, regulations and procedures may result in the loss, revocation or divesture of licenses, imposition of additional local oversight of activities or other interests. We are monitoring the developments and policies in the emerging markets wherein we operate, and regularly assess their effect on our operations; however, such developments cannot be accurately anticipated, which, insofar as they occur, could adversely and even materially affect our activity and/or profitability.
Risks Related to Our Industry
Sales of our fertilizer products are subject to the situationconditions in the agricultural industry
Most of our fertilizer products are sold to producers of agricultural produce. Fertilizer sales may be adversely affected as a result of a decline in agricultural produce prices or the availability of credit, or other events that cause farmers to plant less and consequently reduce their use of fertilizers. For example, periods of high demand, increasing profits and high capacity utilization tend to lead to new investment in crops and increased production. This growth increases supply until the market is over‑saturated, leading to declining prices and declining capacity utilization until the cycle repeats. As a result, the prices and quantities of fertilizer products sold have been volatile. As potash and phosphate prices and quantities sold have a very significant influence on our business results, low prices and/or low quantities could cause our results of operations to fluctuate and, potentially, materially deteriorate.
The price at which we sell our fertilizer products and our sales volumes could fall in the event of industry oversupply conditions, which could have a material adverse effect on our business, financial condition and results of operations. Alternatively, high prices may lead our customers to delay purchases in anticipation of lower prices in the future, thereby decreasing our sales volumes. These factors could materially and adversely affect our business, financial condition and results of operations.
In addition, government policies, and specifically, subsidy levels, may affect the amount of agricultural crops and, as a result, sales of our fertilizer products. Generally, reductions in agricultural subsidies to the farmer or increases in subsidies to local fertilizer manufacturers in countries where we sell our products have an adverse effect on our fertilizer business. In addition, the ongoing trade dispute between the United States and China may also affect the sales of some of the Company’s products through continued imposition of existing tariffs or increased tariffs or other trade barriers that may negatively affect our sales directly and\or indirectly by affecting our customers’ business and operations, which could materially and adversely affect our business, financial condition and results of operations.
Finally, the agricultural industry is strongly affected by local weather conditions. Conditions such as heavy storms, long periods of drought, floods, or extreme seasonal temperatures could affect the local crop’s quality and yield and cause a reduction in the use of fertilizers. Loss of sales in an agricultural season in a target country as a result of weather‑related events can cause a loss of sales for the whole year.
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In addition, our Polysulphate® business in ICL Boulby mine in the UK, is exposed to new potential producers entering the market. Polysulphate® is the basis for many of the products in the Company's FertilizerpluS premium fertilizers business line. It should be noted, in this context, that a new potential producer holds a concession to develop a polyhalite mine with a capacity of up to 20 million tonnes per year, in a mine which is located in the same area of our Boulby mine. If eventually this producer proceeds to develop this capacity, 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 position in all its activities. ICL is constantly monitoring the competitive environment and will continue to seek ways to adhere with its strategy. If we are unable to compete effectively with new producers, our business, financial condition and results of operations could be materially and adversely affected. For further information, see “Item 4 – Information on the Company — B. Business Overview — Segment Information – Potash Segment”.
Sales of our Industrial Products and Phosphate Solutions segments’ products are affected by various factors that are not within our control, including developments in the end markets of industrialmaterials and food, legislative changes, recession or economic slowdown and changes in currency exchange rates
The sales of oil drilling products depend on the extent of operations in the oil drilling market, mainly in deep-sea drilling, which in turn is dependent on oil prices, and on the decisions of oil companies regarding rates of production and areas of production of oil and gas.
Sales of our Industrial Products and Phosphate Solutions segments’ products are also affected by global economic conditions in the markets in which we operate. For example, our sales may be affected by the slow economic recovery or any reversal thereof in Europe. In addition, we have significant manufacturing operations in Europe and a large portion of our European sales are in euros, while some of our competitors are manufacturers located outside Europe whose operational currency is the U.S. dollar. As a result, a strengthening of the euro exchange rate against the U.S. dollar increases the competitive advantage of these competitors.
The sales of oil drilling products depend on the extent of operations in the oil drilling market, mainly in deep-sea drilling, which in turn is dependent on oil prices, and on the decisions of oil companies regarding rates of production and areas of production of oil and gas.
The operation of the Phosphate Solutions segment in the food industry is affected by legal provisions and licensing regulations relating to health. This area is characterized by stringent regulatory requirements that are updated from time to time by enforcement agencies. Adjustments of our operations to the changes in regulation, including the technological complexity and feasibility of such adjustments, may adversely affect the sales of our products, incidental to any specific prohibitions and/or adjustments required in order to meet regulatory requirements.
In addition, the ongoing trade dispute between the United States and China may also affect the sales of some of our products through continued imposition of the existing tariffs or increased tariffs or other trade barriers that may negatively affect our sales directly and\or indirectly by affecting our customers’ business and operations, which could materially and adversely affect our business, financial condition and results of operations.
OurSales of our magnesium salesproducts are affected by various factors that are not within our control, including developments in the Unites Statesend markets of magnesium, legislative changes, recession or economic slowdown, changes in currency exchange rates, antidumping and countervailing duties
Sales of our magnesium products are under investigationaffected by global economic conditions in the International Trade Administration ofmarkets in which we operate. For example, our sales may be affected by any economic reversal in the U.S. Department of Commercealuminum sector, steel sector, and the U.S. International Trade Commissioncasting sector of parts made of magnesium alloys (mainly for uses in the vehicle industry).
In October 2018, a petition was filedaddition, environmental regulations, significant changes in the USD against the ILS exchange rate and trade barriers may negatively affect our sales directly and\or indirectly by affecting our customers’ business and operations, which could materially and adversely affect our business, financial condition and results of operations.
The Company’s magnesium activities may be subject 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 producedare imposed in Israel by Dead Sea Magnesium Ltd. are being subsidized and sold at less than fair valueorder to protect the local producer 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.target markets. If these petitions proceed andsuch duties are successful, these petitions couldimposed, it may result in the imposition of tariffs on future imports of our magnesium sales in the United States.
A decision by U.S. authorities to impose antidumping and countervailing duties on the Company’s magnesium activities in the U.S. and the Company'sdifficulties or inability to sell its magnesium on other markets could adversely and materially affect our magnesium business. products in these markets and thus negatively affect the Company's magnesium activities economic viability.
Securing the future of the phosphate mining operations at Rotem Israel depends on obtaining several approvals and permits from the authorities in Israel
Securing the future of the phosphate mining operations at Rotem depends on obtaining several approvals and permits from the authorities in Israel, as follows:
Emission permit under the Israeli Clean Air Act (hereinafter - the Law): In 2018, the Company conducted two risk assessments by external experts regarding the possibility to execute all the clean air tasks required by the emission permit as per their approved timeline. The risk assessments focused on the technical and safety considerations arising from implementation of a large number of projects in parallel, in an industrial site. The assessments indicated that there is no operational feasibility to implement the full requirements of the permit within the defined timeline, and accordingly the Company is unable to meet the timeline set in the current permit. In 2019, following discussions with the Israeli Ministry of Environmental Protection (hereinafter - MoEP), the MoEP informed the Company that during the course of discussions to renew Rotem Israel's emission permit, which currently remains unchanged, they will consider the safety constraints, the complexity and multiplicity of projects, as well as the Company's diligence to comply with the present permit conditions and their schedules, while prioritizing projects with significant environmental impact. The Company provided the MoEP with its updated projects' outline, schedule and completion status.
The Company is continuing its discussions with the relevant authorities, inter alia due to the COVID‑19 pandemic and the business uncertainty, until the required approvals and permits are granted. Additionally, the Company increased its efforts to accelerate the discussions with the State of Israel on making decisions regarding future phosphate rock sources, in order to secure long-term certainty for Rotem Israel. The Company estimates that it is more likely than not that the said approvals, permits and future phosphate rock sources will be granted within a timeframe which will not materially impact the Company's results. Nevertheless, there is no certainty as to the receipt of such approvals, permits and future phosphate rock sources and/or the date of their receipt. Failure to obtain these approvals, permits and future phosphate rock resources, or a significant delay in receiving them can lead to a material impact on the Company's business, financial position and results of operations.
As at December 31, 2020, Rotem employs more than 1,400 people, and the overall book value of its property, plant and equipment amounts to about $727 million.
Our operations are subject to a crisis in the financial markets.markets
We areThe ICL Group is a multinational companyCompany and ourits financial results are affected by global economic trends, changes in the terms of trade and financing and fluctuations of currency exchange rates. A crisis in the financial markets could cause a reduction in the international sources of credit available for the purpose of financing business operations. The impact of such a crisis might be expressed in terms of availability of credit to us and our customers, as well as the price of credit. In addition, the volatility and uncertainty in the European Union affect our activities in this market.
The decision by British voters to exituncertainty surrounding the proposed withdrawal of the United Kingdom from the European Union may materially and adversely affect our business.business
Currently,There is considerable uncertainty concerning the terms of the withdrawal of the UK is scheduled to leavefrom the European Union, effective March 29, 2019, but the relationship between the UK andreferred to as “Brexit”. The United Kingdom officially left the European Union following a UK departure has not been determined yet. As a result,on January 31, 2020, while the impact of Brexit is not yet known and dependstransitional period ended on any agreements the UK and European Union may make to retain access to each other's markets, either during a transition period or more permanently. In the absence of a future trade deal, the UK’s trade with the European Union and the rest of the world would be subject to tariffs and duties set by the World Trade Organization. Additionally, theDecember 31, 2020. The movement of goods between the UK and the remaining member states of the European Union will beis subject to additional inspections and documentation checks, leading to possible delays at ports of entry and departure. These changesChanges to the trading relationship between the U.KUK and the European Union would likelycould result in increased cost of goods imported into and exported from the UK and may decrease the profitability of our UK and other operations. In 2018, 7% of our revenues were generated from our UK operations and 35% of our revenues were generated from our European operations.
In addition, Brexit could lead to legal uncertainly and potentially divergent national laws and regulations, including with respect to data privacy. Itregulations. More broadly, it is also unclear what financial, trade, legal and employment implications the withdraw of the UK from the European Union would have and how the withdrawal would affect us. Adverse consequences such as reduced consumer spending, deterioration in economic conditions, volatility in exchange rates, and prohibitive laws and regulations could materially and adversely affect our business, financial situation and results of operation.
As a chemical industry company,mining and industrial chemicals Company, we are inherently, and by the nature of our activity, exposed to hazards relating to materials, processes, production and mining.mining
Although we take precautions to enhance the safety of our operations and minimize the risk of disruptions, we are subject to hazards inherent in chemical manufacturing and the related storage and transportation of raw materials, products and waste. These hazards include explosions, fires, mechanical failures, remediation complications, chemical spills and discharges or releases of toxic or hazardous substances. These and other hazards are also inherent inDuring our mining operations, particularly underground mining.mining, additional hazards may occur, such as high levels of temperature requiring proper ventilation of the mine, high levels of dust which negatively affect the mining operation, flooding of the mine and others. These hazards can cause personal injury and loss of life, severe damage to or destruction of property and equipment, and environmental damage, personal injury and loss of life and may result in suspension of operation and the imposition of civil or criminal penalties. For example, 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 addition, 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.
Our manufacturing facilities contain sophisticated manufacturing equipment. In the event of a major disruption in the operations of any of this equipment, we may not be able to resume manufacturing operations for an extended period of time. The occurrence of material operating problems at our facilities including, but not limited to, the events described above, may have aan adverse and even material adverse effect on us, during and after the period of such operational difficulties, as we areand expose us to significant liabilities and costs, dependent on the continued operation of our production facilities. For example, a malfunction in the operation of the dredger as part of the salt harvesting activity in DSW, designed to maintain a fixed brine volume at Pond 5, could harm, and even materially so, the production capacity of extracted minerals, and thereby adversely and materially affect our operations.
For further information, see “Item 4 – Information on the Company — B. Business Overview —Regulatory and Environmental, Health and Safety Matters” and Note 18 to our Audited Financial Statements.
Accidents occurring during our industrial and mining operations and failure to ensure the safety of workers and processes, could adversely affect our business
Various occupational hazards are inherent in our industrial and mining operations. Thus, our operations require taking special precautionary measures to maintain a safe and healthy work environment. To ensure the safety of workers and others in the Company's facilities, the Company is subject to strict occupational health and safety standards, prescribed by local, national and international laws, regulations and standards. Additionally, we are exposed to operational risks associated with industrial or engineering activities, such as maintenance problems or equipment failures.
Failure in implementation or deviation from our safety measures and standards, or failure to prevent or appropriately respond to a safety-related incident, or other operational risks may result in personnel injuries or fatalities, production shutdowns, disruption of operations and significant legal and financial liabilities. The occurrence of material safety incidents at our facilities could have a material adverse effect on us, and we may be exposed to substantial liabilities and costs under thesesuch circumstances.
For additionalfurther information, see “Item 4 -– Information on the Company—Company — B. Business Overview— RegulatoryOverview —Regulatory and Environmental, Health and Safety Matters” and Note 20 to our Audited Financial Statements.Matters“.
As ana mining and industrial chemicals company,Company, we are exposed to various legislative and licensing restrictions in the areas of environmental protection and safety. Related compliance costs and liabilities may adversely affect the results of our operations
As a chemical industry company,mining and industrial chemicals Company, we are significantly affected by the legal provisions and licensing regime in the areas of environmental protection and safety. Recent years have been characterized by a substantial increase in the stringency and enforcement of legal provisions and regulatory requirements in these areas; the cost of adjustment to and compliance with such regulatory changes, including the technological complexity of such adjustment, as well as compliance with standardization, have all shown a significant upward trend.
Legislative changes around the world may prohibit or restrict use of our products, due to environmental protection, health or safety considerations. Standards adopted in the future may affect us and change our methods of operation. Furthermore, some of our licenses, including business licenses and mining licenses, are for fixed periods and must be renewed from time to time. Renewal of such permits is not certain and may be made contingent on additional conditions and significant costs. Difficulties in obtaining such permits could have an adverse effect on our operations, business and results of operations. For example, in Israel, emission permits are received under the Israeli Clean Air Law. In order to comply with the emission permits received in connection with some of our operations in Israel, we are required to make significant capital investment over the next few years. See For further information, see "Securing the future of the phosphate mining operations at Rotem Israel depends on obtaining several approvals and permits from the authorities in Israel” above, “Item 4 – Information on the Company — B. Business Overview —Regulatory and Environmental, Health and Safety Matters” and “B. Business Overview —Business Licenses and Other Permits”.
Current and future laws and regulations regarding climate change and greenhouse gas (GHG) emissions, as well as the physical impacts of climate change, may affect our operations and businesses
Over the past several years, climate change and GHG emissions have been of increasing concern worldwide. In addition to legislative, regulatory, business and market impacts related to climate change, such as current and future legislation and regulation regarding GHG emissions, there may be significant physical effects of climate change including changes in the weather patterns, such as, water shortages or changes in water quality, changing sea and temperature levels, increases in storm intensities, as well as changes in availability of natural resources and damage to facilities or equipment.
Acute and/or chronic physical risks to our installations could potentially reduce ICL's production capacities. Climate change is expected to increase the frequency and likelihood of extreme weather events such as floods. ICL’s Dead Sea facilities, for example, are located in an area that has already been impacted by severe floods in the past. Another (less likely) risk could be rising sea levels that could damage several of ICL sites which are in proximity of the ocean. Such extreme floods and/or rising sea levels could cause significant property damages and loss of profits. Physical climate change risks could also involve upstream raw material supply and/or downstream distribution. For instance, the ICL Ludwigshafen site is located on the bank of the Rhine river in Germany. Freight boats carry Phosphate rocks into the site and carry produced phosphate fertilizers to customers. However, in dry seasons, the river level could be lowered to a point not allowing these freight boats to transport the raw materials/products, and climate change increases the potential frequency of such dry periods. The potential impact is the added cost of transporting these raw materials/products via road, in freight trucks.
Regulatory-related climate risks could cause additional costs to the Company, through emerging carbon taxes or mandatory cap-and-trade emission trading schemes. These taxes/schemes have become more likely since the 2015 global climate Paris accord. Currently, this risk impacts three of ICL Europe's sites (ICL Iberia Suria and Sallent, and ICL Boulby) which are included in the EU-ETS carbon trade program. Until now, these sites were allocated sufficient EUA emission credits to avoid the need for purchasing external EUA's. However, it is still unclear how much EUA's will be freely allocated in phase 4 of the EU-ETS (or in ICL Boulby's case - in the upcoming local replacement trading scheme, following Brexit). In addition, in 2017, China also initiated a national emission trading scheme. YPH JV, in China, is one of the Company's largest production sites and produces GHG emissions (directly and indirectly). For now, this trading scheme does not include the business sector relevant to this site. However, the plan could potentially expand to additional business sectors in the future. There has not been an indication of upcoming carbon taxes/trading schemes in Israel or the US states where ICL operates, but this option could become viable in the future, with even further concerns regarding climate change. The potential impact for these risks could be the need to purchase external carbon credits through the specific programs and/or new Capex expenses for reduction engines for the site.
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Climate change also causes market risks. ICL is a producer of fertilizers for the global agricultural industry. One of the main effects of climate change is expected to be an increased frequency of extreme weather events, which impact the agricultural industry. Storms, long periods of drought, floods and extreme temperature change can affect crop quality and quantity, resulting potentially in decreased fertilizer usage. If these affect regions where ICL is a significant fertilizer supplier, and the demand for fertilizers drops, lCL might need to reduce its prices, thereby reducing its profits, or otherwise lose sales.
The potential impact of climate change and associated laws and regulations on the Company's operations and business, and those of our customers and suppliers is uncertain. The cost of adjustment to and compliance with legislative and regulatory changes regarding climate change and GHG emissions, and adjustments to the physical impacts of climate change, could materially and adversely affect our business, financial situation and results of operation. Apart from implementing physical measures to deal with extreme weather conditions, ICL has acquired insurance to protect itself from exposure to natural disasters.
For further information, see “Item 4 - Information on the Company— B. Business Overview—Regulatory and Environmental, Health and Safety Matters” and “D. Property, Plant and Equipment— Other Leases, Licenses and Permits”Matters”.
Due to the nature of our Company, we are exposed to administrative and legal proceedings, both civil and criminal, including as a result of alleged environmental contamination caused by certain of our facilities
From time to time we are exposed to administrative and legal proceedings, both civil and criminal, including as a result of alleged environmental contamination caused by certain of our facilities. It should be noted, in that regard, that the Company may be exposed to criminal proceedings, fines and significant impairment of the operation of our facilities as a result of failing to meet the requirements of our emissions permits including the provisions of the Israeli Clean Air Law, and particularly, regarding the scope of current and future requirements as prescribed by the Israeli Ministry of Environmental Protection respecting the implementation of the Law’s provisions at the Company’s plants in Rotem Israel, as well as compliance with the timeframes for implementation of such requirements. In addition, from time to time examinations and investigations are conducted by enforcement authorities.
Furthermore, from time to time we are exposed to claims alleging physical or property damage, which may cause us financial harm.
In addition, some of the manufacturing or marketing activities (and sometimes transportation and storage as well) entail safety risks that we attempt to minimize but are not able to eliminate. In various countries, including Israel and the United States, legislation exists that can impose liability on us irrespective of our actual intent or negligence. Other laws impose liability on defendants jointly and severally, and sometimes retroactively, and therefore can cause us to be liable for activities executed jointly with others and at times solely by others. We may also be found liable for claims related to land treatment where mining operations and other activities were conducted, even after such activities have ceased.
In addition, over the past several years, there has been an upward trend in the filing of claims together with a request for their certification as class and derivative actions. Due to the nature of such actions, these claims may be for very high amounts and the costs of defending against such actions may be substantial, even if the claims are without merit from the outset. In addition, our insurance policies include coverage limitations, are restricted to certain causes of action and may not cover claims relating to certain types of damages, such as intangible damages, etc.
For information respecting legal proceedings and actions, see Note 2018 to our Audited Financial Statements and “Item 8 - Financial Information— A. Consolidated Statements and Other Financial Information— Legal Proceedings”.
We are exposed to the risk of third‑party and product liability claims
We are also exposed to risk of liability related to damage caused to third parties by our operations or by our products. For example, we are subject to claims alleging liability for the impacts from the rising water level at one of our evaporation ponds at the Dead Sea. See Note 20 to our Audited Financial Statements. We have third‑party liability insurance for damages caused by our operations and for product liability. However, there is no certainty that this insurance will fully cover all damage for such liability. Moreover, sale of defective products by us might lead to a recall of products by us or by our customers who had used our products. In addition, the sale of defective products, as well as damage caused to third parties by our activities or our products may harm our public image and reputation and,, as a result, materially and adversely affect our business, financial situation and results of operation.
Product recalls or other liability claims as a result of food safety and food-borne illness concerns could materially and adversely affect us.us
We develop and produce functional food ingredients and phosphate additives for the food industry. Selling ingredients and additives that will be used in products sold for human consumption involves inherent legal and other risks, including product contamination, spoilage, product tampering, allergens, or other adulteration. We could decide to, or be required to, recall products due to suspected or confirmed product contamination, adulteration, misbranding, tampering, or other deficiencies. Product recalls or market withdrawals could result in significant losses due to their costs, the destruction of product inventory, and lost sales due to the unavailability of the product for a period of time.
Because food safety issues could be experienced at the source or by food suppliers or distributors, food safety could, in part, be out of our control. Regardless of the source or cause, any report of food-borne illness or other food safety issues such as food tampering or contamination of products that contain our ingredients or additives could adversely impact our reputation, hindering our ability to renew contracts on favorable terms or to obtain new business, and have a negative impact on our sales. Even instances of food-borne illness, food tampering or contamination of products that do not contain our ingredients or additives could result in negative publicity and could negatively impact our sales.
We may also suffer losses if our products or operations violate applicable laws or regulations, or if our products cause injury, illness, or death. A significant product liability or other legal judgment or a related regulatory enforcement action against us, or a significant product recall, may materially and adversely affect our reputation and profitability. Awards of damages, settlement amounts and fees and expenses resulting from such claims and the public relations implications of any such claims could have an adverse effect on our business. The availability and price of insurance to cover claims for damages are subject to market forces that we do not control, and such insurance may not cover all the costs of such claims and would not cover damage to our reputation. Moreover, even if a product liability or fraud claim is unsuccessful, has no merit, or is not pursued, the negative publicity surrounding assertions against our products or processes could materially and adversely affect our business, financial condition and results of operations.
Our insurance policies may not be sufficient to cover all actual losses that we may incur in the future
We maintain, among others, property, environmental, business interruption, casualty and malpractice insurance policies. However, we are not fully insured against all potential hazards and risks incidental to our business, including to damages which may be caused to us by the negligence of our employees. We are subject to various self‑retentions and deductibles under these insurance policies. As a result of market conditions, our loss experience and other factors, our premiums, self‑retentions and deductibles for insurance policies can increase substantially and, in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage. In addition, significantly increased costs could lead us to decide to reduce, or possibly eliminate, coverage. As a result, a disruption of the operations at one of our key facilities or a significant casualty could have a material adverse effect on our financial condition and results of operations. Furthermore, our insurance may not fully cover our expenses related to claims and lawsuits that may be filed against us, or expenses related to legislation that is being promoted and enacted with adverse effect on us. In addition, it is possible that there are risks that we did not identify and are thus not covered by the insurance policies acquired by the Company.
Risks Related to the Company’s Operations in Israel and/or to the Company being an Israeli companyCompany
Due to our location in Israel and/or being an Israeli company,Company, our operations may be exposed to war or acts of terror. In addition, we are exposed to risks of terrorist acts, war and governmental instability in the regions outside Israel where we operate
War, acts of terror and\or governmental instability in the regions where we operate are likely to negatively impact us. This impact may manifest itself in production delays, distribution delays, loss of property, injury to employees, and increased insurance premiums. In addition, our plants may be targets for terrorist acts due to the chemicals they store. We do not have property insurance against war or acts of terror, other than compensation from the State of Israel pursuant to Israeli law, which covers only physical property damage, without accounting for reinstatement values.
It is noted that since the construction of our initial facilities in the 1950s, we have never experienced material business interruptions as a result of war or acts of terror, but we can provide no assurance that we will not be subject to any such interruptions in the future.
Our computer and communications networks, and production technologies constitute a basic platform for operational continuity and are also potential targets for acts of terror. Potential cyber threats can cause damage to systems and plants, data loss, software vulnerability and external and internal access to sensitive and confidential information. We have implemented a plan for safeguarding and backing up the information systems. The activities include:include separation of our information networks from the computerized process systems, physical protection of the computer rooms and terminals and training of employees. However, there is no assurance that the Company will successfully accomplish its goals.
We conduct operations in Israel and therefore our business, financial condition and results of operations may be materially and adversely affected by political, economic and military instability in Israel and its region
Our headquarters, some of our operations, and some of our mining facilities are located in Israel and many of our key employees, directors and officers are residents of Israel. Accordingly, political, economic and security conditions in Israel and the surrounding region may directly affect our business. Since the establishment of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab neighbors, Hamas (an Islamist militia and political group in the Gaza Strip) and Hezbollah (an Islamist militia and political group in Lebanon). Any hostilities involving Israel or the interruption or curtailment of trade within Israel or between Israel and its trading partners could materially and adversely affect our business, financial condition and results of operations and could also make it more difficult for us to raise capital. Recent political uprisings, social unrest and violence in various countries in the Middle East and North Africa, including Israel’s neighbors Egypt and Syria, are affecting the political stability of those countries. This instability may lead to deterioration of the political relationships that exist between Israel and these countries and has raised concerns regarding security in the region and the potential for armed conflict. In addition, Iran has threatened to attack Israel and is widely believed to be developing nuclear weapons.
In addition, the assessment is that Iran has a strong influence among parties hostile to Israel in areas that neighbor Israel, such as the Syrian government, Hamas in Gaza and Hezbollah in Lebanon. Any armed conflicts, terrorist activities or political instability in the region could materially and adversely affect our business, financial condition and results of operations. In addition, the political and security situation in Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to comply with their undertakings under those agreements pursuant to force majeure provisions in such agreements. In addition, because we are an Israeli company,Company, our sales may be subject to economic boycotts or other sanctions on our products.
Our operations may be disrupted as a result of the obligation of Israeli citizens to perform military reserve service
Many Israeli citizens are obligated to perform one month, and in some cases more, of annual military reserve service until the age of 45 (or older, for reservists with certain occupations) and, in the event of a military conflict, may be called to active duty. Although periods of significant call‑ups of military reservists which occurred in the past in response to terrorist activities have had no significant impact on our operations, it is possible that military reserve duty call‑ups will occur in the future, which might disrupt our operations.
It may be difficult to enforce a U.S. judgment against us and our directors and officers, in Israel or the United States, or to serve process on our directors and officers
We are incorporated under Israeli law. Many of our directors and executive officers reside outside the United States, and most of our assets are located outside the United States. Therefore, a judgment obtained in the United States against us or many of our directors and executive officers, including one based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States and may not be enforced by an Israeli court. It also may be difficult for an investor to effect service of process on these persons in the United States or to assert claims under the U.S. securities laws in original actions instituted in Israel.
The rights and responsibilities as a shareholder are governed by Israeli law which may differ in some respects from the rights and responsibilities of shareholders of U.S. companies
We are incorporated under Israeli law. The rights and responsibilities of the holders of our ordinary shares are governed by our Articles of Association and Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular, a shareholder of an Israeli companyCompany has a duty to act in good faith toward the companyCompany and other shareholders and to refrain from abusing its power in the company,Company, including, among other things, in voting at the general meeting of shareholders on matters such as amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and acquisitions and interested party transactions requiring shareholder approval. In addition, a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or to appoint or prevent the appointment of a director or executive officer in the companyCompany has a duty of fairness toward the company.Company. There is limited case law available to assist us in understanding the implications of these provisions that govern shareholders’ actions.
These provisions may be interpreted to impose additional obligations and liabilities on holders of our ordinary shares that are not typically imposed on shareholders of U.S. corporations.
In addition, in light of the Company’s listing for trading on a stock exchange in the United States, and also considering the fact that our parent companyCompany is subject only to the Israeli securities law, we are subject, in certain aspects, to both Israeli law and U.S. law, a fact which may cause us to face both reporting and legal conflicts.
In recent years we have seen a significant rise in the filing of class actions andin Israel against public Companies, including derivative actions against the Company, its executives and Board members
In recent years we have seen a significant rise in the filing of class actions and derivative actions in Israel against companies, executives and Board members. While the vast majority of such claims are dismissed, companies like us are forced to increasingly invest resources, including monetary expenses and investment of management attention due to these claims. This state of affairs could adversely affect the willingness of our executives and Board members to make decisions which could have benefitted our business operations. Such legal actions could also be taken with respect to the validity or reasonableness of the decisions of our Board of Directors.
Risks Related to Our Ordinary Shares
We have one key shareholder who is our controlling shareholder. This controlling shareholder may influence the making of decisions with which other shareholders may disagree
As at December 31, 2018,2020, the Israel Corporation Ltd. (“Israel Corp.”) holds the controlling interest in the Company.
The interests of Israel Corporation may differ from the interests of other 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 6 - Directors, Senior Management and Employees— C. Board Practices— External Directors”The composition of our Board of Directors (other than external directors, as described under “Item 6 - Directors, Senior Management and Employees— C. Board Practices— External Directors”);
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| · | Mergers, acquisitions, divestitures or other business combinations; |
| · | Future issuances of ordinary shares or other securities; |
| · | Amendments to our Articles of Association, excluding provisions of the Articles of Association that were determined by virtue of the Special State Share; and |
| · | Dividend distribution policy. |
In addition, this concentration of ownership may delay, prevent or deter a change in control, or deprive the investor of a possible premium for his ordinary shares as part of a sale of our Company. Moreover, as a result of the Company’s control structure, our shares may be subject to low tradability, which may hinder the sale and/or exercise of our shares. Furthermore, Israel Corp. may conduct material transactions in our shares, such as its existing margin loans that are secured by pledges of ICL shares, and/or in their organizational structure, that we will not be able to influence but that may have a material adverse effect on our share price.
The existence of a Special State Share gives the State of Israel veto power over transfers of certain assets and shares above certain thresholds, and may have an anti‑takeover effect
The State of Israel holds a Special State Share in our Company and in some of our Israeli subsidiaries. The Special State Share entitles the State of Israel, among other things, to restrict the transfer of certain assets and some acquisitions of shares by any person that would become a holder of specified amounts of our share capital. Because the Special State Share restricts the ability of a shareholder to gain control of our Company, the existence of the Special State Share may have an anti‑takeover effect and therefore depress the price of our ordinary shares. Furthermore, the existence of the Special State Share may prevent us from realizing and developing business opportunities that we may come across. To the best of the Company’s knowledge, during the second half of 2018, an inter-ministryinter-ministerial team has recently been established,was set up, headed by the Ministry of Finance, tasked with arrangingwhose purpose is, among other things, to regulate the issue of authority and oversight relating to special state shares, interest decrees and reductionsupervision in respect of the Special State of Israel Share, as well as reduce the regulatory burden. In January 2019, the work of this team was put on hold until further notice due to the dissolution of the Knesset and lack of permanent Government. As at the date of thisthe report, the Company is unable to estimate whatthe implications of this process would have onover 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 Companycompany operations relating to natural resources in Israel and may have a material adverse effect on our business, our financial condition and results of operations.
The market price of our ordinary shares is subject to fluctuation, which could result in substantial losses for our investors
The stock market in general and the market price of our ordinary shares, in particular, are subject to fluctuation, and changes in our share price may occur unrelated to our operating performance. The market price of our ordinary shares on the TASE or NYSE has fluctuated in the past, and we expect it will continue to do so. The market price of our ordinary shares is and will be subject to a number ofseveral factors, including:
| · | Expiration or termination of licenses and/or concessions; |
| · | General stock market conditions; |
| · | Decisions by governmental entities that affect us; |
| · | Variations in our and our competitors’ results of operations; |
| · | Changes in earnings estimates or recommendations by securities analysts; and |
| · | General market conditions and other factors, including factors unrelated to our operating performance. |
These factors and any corresponding price fluctuations may materially and adversely affect the market price of our ordinary shares and result in substantial losses for our investors.
If equity research analysts issue unfavorable commentary or cease publishing reports about our ordinary shares, the price of our ordinary shares could decline
The trading market for our ordinary shares relies in part on the research and reports that equity research analysts publish about us and our business. The price of our ordinary shares could decline if one or more securities analysts downgrade our ordinary shares or if those analysts issue other unfavorable commentary or cease publishing reports about us or our business.
You may be diluted by the future issuance of additional ordinary shares, among other reasons, for purposes of carrying out future acquisitions, financing needs, and also as a result of our incentive and compensation plans
As at the date of this Annual Report, we have approximately 181180 million ILS 1 par value (approximately $48$56 million) shares authorized but unissued. We may choose to raise substantial equity capital in the future in order: to acquire or invest in businesses, products or technologies and other strategic relationships and to finance unanticipated working capital requirements in order to respond to competitive pressures. The issuance of any additional ordinary shares in the future, or any securities that are exercisable for or convertible into our ordinary shares, will have a dilutive effect on our shareholders as a consequence of the reduction in the percentage ownership.
Moreover, these securities may have rights, preferences or privileges senior to those of our existing shareholders. For example, as at the date of the report, there are about 18.927 million outstanding options for our ordinary shares that were issued under our incentive and compensation plan. For additionalfurther information, see Note 21 to our Audited Financial Statements and “Item 6 - Directors, Senior Management and Employees— E. Share Ownership”Ownership.. Any ordinary shares that we issue, including under any option plans, would dilute the percentage ownership held by investors.
We may not be able to maintain our dividend payment
The Company's dividend distribution policy as determined by our Board of Directors on May 2016 with respect to 2016 and 2017, and again in March 2018 with respect to 2018 and 2019, is that the Company’s dividend distribution rate will be up to 50% of the annual adjusted net profit, compared with the prior dividend distribution policy of up to 70% of the net profit. Our Board of Directors will reexamine the dividend policy at the end of the said period. There is no certainty that our Board of Directors will make changes to the updated dividend policy. In addition, dividends will be paid as declared by the Board of Directors and may be discontinued at any time. All decisions regarding dividend distributions are made by the Board of Directors, which takes into accountconsiders various factors including our profits, investment plans, financial position and additional factors as it deems appropriate. Dividend payments are not guaranteed and our Board of Directors may decide, in its exclusive discretion, at any time and for whatever reason, not to pay dividends, to reduce the rate of dividends paid, to pay a special dividend, to modify the dividend payout policy or to adopt a share buyback program.
Our ordinary shares are traded on different markets which may result in price variations
Our ordinary shares have been traded on the TASE since 1992 and have been listed on the NYSE since September 2014. Trading in our ordinary shares on these markets occurs in different currencies (U.S. dollars on the NYSE and ILS on the TASE) and takes place at different times (resulting from different time zones, different trading days and different public holidays in the United States and Israel). The trading prices of our ordinary shares on these two markets may differ due to these and other factors. Any decrease in the price of our ordinary shares on one of these markets could cause a decrease in the trading price of our ordinary shares on the other market.
As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of applicable SEC and NYSE requirements, which may result in less protection than is afforded to investors under rules applicable to domestic issuers
As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required by the NYSE for domestic issuers. For instance, we have elected to follow home country practices in Israel with respect to, among other things, composition and function of the Audit and Finance Committee and other committees of our Board of Directors and certain general corporate governance matters. In addition, in certain instances we will follow our home country law, instead of NYSE rules applicable to domestic issuers, which require that we obtain shareholder approval for certain dilutive events, such as an issuance that will result in a change of control of our Company, certain transactions other than a public offering involving issuances of a 20% or more interest in our Company and certain acquisitions of the stock or assets of another company. Following our home country corporate governance practices as opposed to the requirements that would otherwise apply to a U.S. company listed on the NYSE may provide less protection than is afforded to investors under the NYSE rules applicable to domestic issuers.
In addition, as a foreign private issuer, we are exempt from the rules and regulations under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), related to the furnishing and content of proxy statements and the requirements of Regulation FD (Fair Disclosure), and our directors, officers and principal shareholders are exempt from the reporting and short‑swing profit recovery provisions of Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as domestic companies whose securities are registered under the Exchange Act.
The Company has a history of quarterly fluctuations in the results of its operations due to the seasonal nature of some of its products and its dependence on the commodities markets. We expect these fluctuations to continue. Fluctuations in the results of our operations may disappoint investors and result in a decline in our share price
We have experienced, and expect to continue to experience, fluctuations in our quarterly results of operations. Our sales have historically, and less significantly so over the last three years, been stronger in the second and third quarters of each year. This is due to the mix of products we sell in those quarters, as well as the mix of sales in different countries. If, for any reason, our revenues in the second and third quarters are below seasonal norms, we may not be able to recover these sales in subsequent quarters and our annual results of operations may not meet expectations. If this occurs, the market price of our ordinary shares could decline.
Item 4 – INFORMATION ON THE COMPANY
A. HISTORY AND DEVELOPMENT OF THE COMPANY
Our legal name is ICL Group Ltd. (formerly Israel Chemicals Ltd.) and our commercial name is ICL. We are a public companyCompany and operate today as a limited liability companyCompany under the laws of Israel. Our registered headquarters is located at Millennium Tower, 23 Aranha Street, P.O. Box 20245, Tel Aviv 61202, Israel. The telephone number at our registered office is +972‑3‑684‑4400. Our website address is www.icl‑group.com. The reference to our website is intended to be an inactive textual reference and the information on, or accessible through, our website is not intended to be part of this Annual Report.
ICL was established in Israel in 1968 as a government-owned and -operated companyCompany in Israel and operates today as a limited liability companyCompany under the laws of Israel. In 1975, the shares of certain companies (including, among others, ICL Dead Sea, the consolidated companies ICL Rotem, the bromine companiesDead Sea Bromine, Bromine Compounds and Tami) were transferred to ICL. In 1992, following a decision of the Israeli government to privatize ICL, the State published its tender prospectus, 20% of the Company's shares were sold to the public and its shares were registered for trading on the Tel‑Aviv Stock Exchange. Prior to our public share issuance, a Special State Share in our Company and our main Israeli subsidiaries was issued to the State of Israel (for additionalfurther 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 the Company (representing approximately 24.9% of our shares) to Israel Corporation Ltd., a publicpublicly 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, 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.
As of December 31, 2018,2020, Israel Corporation Ltd. holds approximately 45%44.9% of our outstanding ordinary shares and approximately 45.87%45.85% of the shareholders' voting rights.
The following is a list of significant acquisitions, divestitures and joint ventures over the last several years:
| · | 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. |
In January 2021, the Company completed the acquisition of Agro Fertilaqua Participações S.A., one of Brazil's leading specialty plant nutrition companies, for a consideration of $122 million (before deduction of Fertilaqua's net debt of $40 million).
| · | In May 2020, the Company completed the sale of Hagesüd Interspice Gewürzwerke GmbH, including related real-estate assets, to Solina Corporate SAS. The sale's consideration is about $35 million, of which about $9 million represent a contingent consideration. The contingent consideration will be received subject to meeting a specific sales target for a subsequent period of 12 months, ending on June 30, 2021. In February 2020, the Company completed the acquisition of Growers Holdings, Inc., an innovator in the field of process and data-driven farming. For further information see "Item 5 – Operating and Financial Review and Prospects – C. Research and Development, Patents and Licenses, etc. – Research and Development". 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 was in cash and $57 million in the form of a long-term loan to a subsidiary of the buyer. In 2017, the Company completed the sale of its holdings in IDE Technologies Ltd., constituting 50% of IDE’s share capital. |
| · | In 2016, ICL completed the sale of Clearon (chlorine-based biocide activities in USA). |
| · | In 2015, ICL, together with YPC, completed the formation of YPH JV. YPH JV’s activities include operation of a phosphate rock mine and other phosphate operations. In January 2016, ICL completed the investment in 15% of the issued and outstanding share capital on a fully diluted basis of YTH (Chinese traded company which holds YPH JV together with ICL).
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| · | In 2015, ICL completed the divestiture of the following non‑core business activities: the alumina, paper and water industry (APW), the thermoplastic products for the footwear industry (Renoflex), the hygiene products for the food industry (Anti‑Germ) and the pharmaceutical and gypsum businesses (PCG). |
For information about our principal capital expenditures and divestitures during the last three fiscal years, see “Item 5 - Operating and Financial Review and Prospects— B. Liquidity and Capital Resources— Principal Capital Expenditures and Divestitures”.
B. BUSINESS OVERVIEW
Company Overview
ICL Group Ltd. is a leading global specialty minerals and chemicals company operatingCompany that creates impactful solutions for humanity’s sustainability challenges in global food, agriculture, and industrial markets. ICL leverages its unique bromine, potash and phosphate mineral value chains in a unique, integrated business model. ICL extracts raw materials from well-positioned mineral assetsresources, its professional employees, and utilizes technologyits strong focus on R&D and industrial know-howtechnological innovation to add value for customers in key agricultural and industrial markets worldwide. ICL focuses on strengthening leadership positions in all ofdrive growth across its core value chains. It also expects to strengthen and diversify its offerings of innovative agro solutions by leveraging its existing capabilities and agronomic know-how, as well as the Israeli technological ecosystem. In August 2018, we commenced working under an aligned organizational structure according to which the Company'send markets. Our operations are divided intoorganized under four segments: Industrial Products (Bromine), Potash, Phosphate Solutions and Innovative Ag Solutions. Comparative data has been restated to reflect the change in the structure of the reportable segments, as stated above.
Our principal assets include:
| · | Access to one of the world’s richest, longest‑life and lowest‑cost sources of potash and bromine (the Dead Sea). |
| · | Two potash mines and processing facilities in Spain. The Company is in the process of restructuring the operations in Spain from two sites into one site.
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| · | Bromine compounds processing facilities located in Israel, the Netherlands and China.
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| · | A unique integrated phosphate value chain, from phosphate rock mines in Israel and in China to our value‑added downstream products in Israel, Europe, the United States, Brazil and China. Our specialty phosphates serve the food industry by providing texture and stability solutions to the meat, poultry, sea food, dairy and bakery markets and many industrial markets such as metal treatment, water treatment, oral care, carbonated drinks, asphalt modification, paints and coatings and more. |
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Potash mine and processing facilities in Spain. The Company is in the process of consolidating its potash operations in Spain into one site.
| · | Polysulphate resources in the United Kingdom.
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Bromine compounds processing facilities located in Israel, the Netherlands and China.
| · | Production of tailor-made, highly-effective specialty fertilizers offering both improved value to the grower and precise nutrition which is essential for plant development, optimization of crop yields and reduced environmental impacts. |
A unique integrated phosphate value chain, from phosphate rock mines in Israel and in China to our value‑added downstream products in Israel, Europe, the United States, Brazil and China. Our specialty phosphates serve the food industry by providing texture and stability solutions to the meat, meat alternatives, poultry, sea food, dairy and bakery markets and many industrial markets such as metal treatment, water treatment, oral care, carbonated drinks, asphalt modification, paints and coatings and more.
| · | A focused and highly experienced group of technical experts developing production processes, new applications, formulations and products for our agricultural and industrial markets. |
| · | An extensive global logistics and distribution network with operations in over 30 countries. |
Polysulphate® resources in the United Kingdom.
Production of tailor-made, highly effective specialty fertilizers offering both improved value to the grower and essential nutrition for plant development, optimization of crop yields and reduced environmental impact.
A focused and highly experienced team of technical experts developing production processes, new applications, formulations and products for our agricultural and industrial markets.
Strong crop nutrition sales and marketing infrastructure, which optimizes distribution channels of commodity, specialty and semi-specialty fertilizers by achieving commercial excellence, increasing efficiency of its global operations and better leveraging region-specific knowledge, agronomic and R&D capabilities, logistical assets and customer relationships.
Research and Development: Leveraging its proximity to the globally leading high-tech and agri-tech eco-system in Israel, as well as vast agronomy and chemistry knowledge accumulated over decades, ICL has developed an extensive global R&D infrastructure, with 250 knowledgeable and highly experienced employees and 20 R&D centers around the global, yielding 750 granted patents in 250 patent families. ICL's R&D supports the development of new, innovative products, applications and formulations for each of the Company's operating segments, through internal research, employee ideation and collaborative research with external third parties.
An extensive global logistics and distribution network with operations in over 30 countries.
In the year ended December 31, 2018,2020, we generated total sales of $5,556$5,043 million, operating income of $1,519$202 million, adjusted operating income of $753$509 million, net income attributable to the shareholders of the companyCompany of $1,240$11 million and adjusted net income attributable to the shareholders of the companyCompany of $477$258 million. See "Item 5 – Operating and Financial Review and Prospects – A.A. Operating Results – Adjustments to reported operating and net income (Non-GAAP financial measures)"Results of Operations".
Sales of the Industrial Products segment amounted to $1,296$1,255 million and the operating incomeprofit attributable to the segment amounted to $350$303 million, sales of the Potash segment amounted to $1,623$1,346 million and the operating incomeprofit attributable to the segment amounted to $393$120 million, sales of the Phosphate Solutions segment amounted to $2,099$1,948 million and the operating incomeprofit attributable to the segment amounted to $208$66 million, and sales of the Innovative Ag Solutions segment amounted to $741$731 million and the operating incomeprofit attributable to the segment amounted to $57 million.
$40 million.
For a breakdown 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”Results– Segment Information”.
OurMarkets and Industries
The majorityGeneral
ICL's integrated business model is structured around three minerals – Bromine potash and phosphate. These minerals are the main raw materials for most of our businesses competethe value-added downstream products in the global fertilizerCompany’s portfolio. The Company’s operations are organized under four reporting segments: Industrial Products (Bromine), Potash, Phosphate Solutions and specialty chemicalsInnovative Ag Solutions (IAS), with three of the four segments representing a specific value chain. In the first three segments, ICL benefits from a leadership position: either in terms of market share or cost competitiveness.
The Industrial Products segment primarily operates the bromine value chain, which includes elemental bromine and bromine compounds for various industrial applications, as well as several complementary businesses, mainly phosphorous based flame retardants and additional Dead Sea minerals for the pharma, food, oil & gas and de-icing industries.
The Potash Segment operates the Company’s potash value chain and includes primarily potash fertilizers, as well as Polysulphate®-based fertilizers. This segment also produces and markets magnesium - a byproduct of potash production.
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 which are used mostly as fertilizers.
The fourth segment, IAS, currently includes the specialty fertilizers business. ICL is focused on expanding and strengthening its Innovative Ag Solutions offerings, by maximizing its existing capabilities and agronomic expertise. In addition, the Company would like to expand and diversify globally through M&A, such as the January 2021 acquisition of Fertiláqua, a Brazilian specialty crop nutrition company.
Industrial Markets
ICL’s Industrial Products segment and ICL's specialty phosphates business serve various industrial markets.
Industrial Products
Bromine is a member of the halogen family and is found naturally in seawater, underground brine deposits and other water reservoirs, such as the Dead Sea. Bromine concentration and the method of extraction varies depending upon the nature of its source. The lower the concentration of bromine in the brines, the more difficult and expensive it is to extract. The Dead Sea, which spans between Israel and Jordan, is the world’s premier source of bromine, and accounts for about half of the global supply. The Dead Sea is the most competitive source of bromine as it has the highest concentration. As a result, the least amount of water must be extracted and evaporated to produce bromine, which minimizes energy costs.
ICL's bromine solutions are embedded in numerous products, making consumer goods safer and industrial production more efficient and sustainable. The largest commercial use of bromine is in flame retardants, which are used by the electronics and components, automotive, building and construction, furniture, and textiles end-markets. Bromine and its derivatives are also used in various other industries, including rubber production, oil and gas drilling, water purification, and in the pharmaceutical and food industries.
Demand for the products manufactured by ICL's Industrial Products segment is driven by population growth, increased standards of living, higher environmental and safety awareness and increased focus on cost effective industrial production. Increased regulation and environmental awareness also drive demand for polymeric and reactive bromine and phosphorus-based flame retardants, which are considered more environmentally friendly. ICL estimates bromine demand is relatively stable and finds market growth is primarily linked to global population growth.
On the supply side, Chinese producers have significantly decreased their bromine production over the past few years due to resource depletion, increased environmental-related regulatory pressure and the reduced availability of land for bromine production. This, combined with a shortage of economically viable bromine resources globally, has resulted in price increases due to tight supply and demand.
Specialty Phosphates
ICL’s specialty phosphates business is centered around the Company's vertical integration into phosphate rock and fertilizer-grade phosphoric acid, also known as green phosphoric acid, which goes through a chemical process to become purified phosphoric acid, also referred to as white phosphoric acid (WPA). As part of its value-add proposition, ICL produces and markets purified acids and phosphate salts in addition to commodity phosphates.
In the food industry, phosphate salts are used as functional food ingredients and phosphate additives, providing texture and stability solutions for the processed meat, poultry & seafood industries, meat alternatives, dairy, beverage and baked goods. On the industrial side, ICL's specialty phosphates are found in water and metal treatment supplies, cleaning and construction materials, cola beverages, oral care, paints and coatings, and more.
As part of its food specialties business, ICL developed its proprietary ROVITARIS® alternative protein technology for the meat alternatives market. By using ROVITARIS® technology, food manufacturers can create plant-based meat alternatives, which are virtually indistinguishable from their traditional meat counterparts and are allergen free.
According to ICL's estimates, the Company has a leading position in specialty phosphates in Europe, North America and Latin America with approximately 24% market share in total. Demand for purified phosphoric acid - a key raw material for water soluble fertilizers - is expected to continue to grow, driven by rapid growth in fruit & vegetable consumption and changing agricultural production systems. Similarly, phosphate salts used in processed meats, cheeses and baking goods, have seen strong consumption growth in developing countries.
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, have resulted in growing demand for more sophisticated, protein-enriched, unprocessed (“clean label”) and non-allergenic (“free from”) food products with longer shelf lives and 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 drive long‑term demand for food additives, such as phosphate derivatives and phosphate and protein formulations for the processed meat, bakery, dairy and beverages industries.
Agriculture Markets
Fertilizers
ICL's potash & phosphate commodity, FertilizerpluS and specialty fertilizers businesses serve agriculture markets worldwide.
Fertilizers serve an important role in global agriculture by providing vital nutrients that help increase both the yield and the quality of 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 no artificial substitutes for potassium and phosphorous. 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.
Each of these three nutrients plays a different role in plant development.development and helps crops achieve their growth potential. 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 produceproducts in storage and transportation, thereby prolonging the shelf life of produce.
In the short term, demand for fertilizers is volatile and seasonal, and is affected by factors such as weather in the world’s key agricultural growing regions, fluctuations in planting main crops, agricultural input costs, agricultural product prices and developments in biotechnology. Some of these factors are influenced by subsidies and lines of credit granted to farmers or to producers of agriculture inputs 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 fertilizers worldwide. In spite ofNevertheless, the volatility that may be caused in the short term as a result of these factors, we believecommon perception is that the policy of most countries is to ensure an orderly and high‑quality supply of food to the population and to this end, to encourage agricultural production. Therefore, we expectICL expects the long‑term growth trend of the fertilizers market to be maintained. Due to the existing entry barriers and 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.
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.
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:
| · | 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. |
| · | PotashpluS – a compressed mixture of Polysulphate™ and potash. The product includes potassium, sulphur, calcium and magnesium. |
| · | PKPlus – a unique combination of phosphate, potash and Polysulphate™. |
| · | NovaPhos – ensures an effective supply of slow-release phosphorus, calcium, magnesium and micronutrients for crops, specifically tailored for use in acidic soil. |
| · | 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. |
| · | 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.
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.
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.
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.
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 also driven mainly by the supply/demand balance in respect of grains and other agriculture products markets, 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 2.0reach 7.6 billion in 2020 and to reach 9.89.1 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%6.3% and 6.5%5.0% in 20192021 and 2020,2022, 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 0.170.18 hectares per person between 20142020 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 doubleincrease by 18.1% between 20072020 and 2050. 77%2050, while practically all of the growth is expected to be attributed to increase in yields.
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 2018,2020 soybean, corn and wheat prices increased by 8.4%31.2%, 12.3% and 19.3%,18.5% respectively, while rice price decreased by 3.5%. These price increases occurred during the COVID-19 pandemic, leading countries to have increased concerns regarding food security for their people, while in China this was boosted by a recovery from the African swine fever. Good agricultural fundamentals supported this, mainly in Brazil, expressed as high barter ratios, leading to a record high soybean export, but also in India and in the US. It should be noted that during the middle of this year rice prices decreased by 4.8% and 9.9%, respectively.jumped to their highest levels in the last twelve years following production reduction in some south Asian countries, leading them to ban its export. WASDE report published by the USDA in February 2019 showed2021 further support the above, while showing a decrease in the expected ratio of the global inventories of grains to annual consumption, to 29.2% at29.3% for the end of2020/21 agriculture year, compared to 30.4% for the 2019/20 agriculture year, and 30.6% for 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 Agriculturefertilizer markets are growing faster than the markets for conventional fertilizers and are estimated to be growing at a rateCAGR of 5-15% a year,5% to 7% from 2020 to 2025, depending on the market segment (IFA, 2017)(Luclntel, 2021). Farmers use specialty fertilizers that are customized to meet the needs of specific crops, soil types and climates, to achieve a more efficient and effective fertilization and to maximize yield and quality. The decrease in arable land per capita due to population growthspecialty fertilizers allow more precise application of the critical foundations for development of the plant (phosphorus acid, potassium and the increasing pursuit of an improved quality of lifenitrogen) and micro‑nutrients. Specialty fertilizers are leading to a higher consumption ofgenerally used for specialty crops (such as fruits and vegetables, whichgreenhouses and horticulture) but are consideredalso expanding into usage for larger specialty crops, and supportfield crops. Increase in the use of more sophisticated fertilizers that will enable higher yields. Increased environmental awarenessdemand for food is also contributingexpected to drive an increase in the use of specialty fertilizers. These fertilizers (since they resultinclude, among others, enhanced efficiency fertilizers such as controlled release fertilizers (CRF), which allow for precision in higher nutrient efficiency)the release of nutrients over time, and delayed or 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.
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 newcontrolled release 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).fertigation, among other initiatives. Another example is the EU Nitrate Directive, which sets a limit toon the amount of nitrates found in the water.water supply. Specialty Fertilizers, such as CRFs, can optimize the availability of nitrogen to the crop. (EU Nitrate Directive, European Commission, 2014)crop, thereby reducing nitrate levels. 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 SolubleWater-Soluble NPKs.
The ongoing improvements in agricultural technology have resulted in a significantan increase in the usage of drip irrigation (more than 10% per year) and an increase in demand for liquid and water solublewater-soluble fertilizers.
All of the above are expected to contribute to a higher long-term demand for specialty fertilizer solutions.
OurICL's Competitive Strengths
ICL attributes its business strength to the following competitive advantages:
| · | 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.Unique portfolio of mineral assets. ICL benefits from access to the Dead Sea - 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 with vast resources in Spain. 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 effect5. For further information, see “Item 4 - Information on the profitability of the subsidiaries resulted to a natural resources tax liabilities. See “Item 3 - Key Information—Company— D. Risk Factors— Risks Related to Our Business”Property, Plant and Equipment— Mineral Extraction and Mining Operations”.
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).Kingdom. 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 excavation of the access ramp was completed in the fourth quarter of 2020, and full operations are expected to commence during the first half of 2021. The project also consists of expanding the above-mentioned processing facility’s capacity, logistics adjustments and improvements andas well as the construction of a new terminal in the Port of Barcelona.Barcelona which was completed in early 2020. 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 effectivecost-effective solution, as its production does not require chemical processing.
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%A majority 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 miningminerals extraction operations are dependent on concessions, licenses and permits granted to us by the respective governments in the countries wherein they are located”in which we operate”.
| · | 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. |
| · | 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.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, about third of production as well as most of the excess capacity in the market. In the potash market the Dead Sea operations has leading competitive positions and according to CRU, the Dead Sea is among the most competitive potash suppliers to China, India and Brazil. 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.
45Strategically 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 40% of 2020 sales) and developed economies (approximately 60% of 2020 sales).
| · | Strategically located production and logistics assets.Strong cash generation andclosely monitored capital allocation approach. Continuous focus on cash 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 $804 million in 2020, a decrease of 19% compared to 2019. Despite the year‑over‑year decline related to COVID-19 and lower commodities prices, 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 (at least BBB- by S&P and Fitch). On February 12, 2020, the Company’s Board of Directors resolved to extend the Company's dividend policy of a payout ratio of up to 50% of annual adjusted net income, until further notice. In respect to 2020 adjusted net income, the Company declared total dividends in the amount of $129 million, reflecting a dividend yield rate of approximately 2.7% (based on the average share price for the year). See “Item 8 - Financial Information— A. Consolidated Statements and Other Financial Information— Dividend policy”. 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). |
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.
| · | 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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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, food and other 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 supportscan support long‑term stability and growth.
